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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A



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(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2004



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
             to



Commission file number 0-23134



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NB&T FINANCIAL GROUP,
INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Ohio                                                           |  | 31-1004998                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



48 N. South Street,
Wilmington, Ohio 45177

(Address of principal executive offices) (Zip Code)



Registrants telephone number: (937) 382-1441



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Securities registered pursuant to Section 12(b) of the Act: None



Securities registered pursuant to 12(g) of the Act:



Common Shares, without par value

(Title of Class)



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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈



Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)    Yes ̈No  x



Based on the closing sales price on March 7, 2005 of $25.15 per, the aggregate market value of the issuers shares held by nonaffiliates was $48,788,963.



As of March 7, 2005, 3,227,063 common shares were issued and outstanding.



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EXPLANATORY NOTE



This amendment to the Annual Report on Form 10-K for the fiscal year ended December 31, 2004, of NB&T Financial Group, Inc. (the
Company) is being filed to correct a phone number on the cover page and to correct a typographical error in Note 3 to the Consolidated Financial Statements in Item 8 of the Form 10-K. The carrying value of securities pledged as
collateral at December 31, 2003 was $144,878,000. This number was originally reported as $14,878,000. Updated certifications of the Chief Executive Officer and the Chief Financial Officer are attached to this amendment as exhibits, as well as a
consent from BKD, LLP, as the auditors of the Company.



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##### Table of Contents

PART II



Item 8. Financial Statements and
Supplementary Data



- I N D E X -



|                                                 |  |      
|------------------------------------------------ |  | -----
|                                                 |  | PAGE 
|REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM |  | 4    
|                                                 | 
|FINANCIAL STATEMENTS                             |  |      
|                                                 | 
|Consolidated Balance Sheets                      |  | 5    
|                                                 | 
|Consolidated Statements of Income                |  | 6-7  
|                                                 | 
|Consolidated Statements of Shareholders Equity  |  | 8    
|                                                 | 
|Consolidated Statements of Cash Flows            |  | 9-10 
|                                                 | 
|Notes to Consolidated Financial Statements       |  | 11-30



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Report of Independent Registered Public Accounting Firm



Board of Directors

NB&T Financial Group, Inc.

Wilmington, Ohio



We have audited the accompanying consolidated balance sheets of NB&T Financial Group, Inc. as of December 31, 2004 an 2003, and the
related consolidated statements of income, stockholders equity, and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of NB&T Financial Group, Inc. as of December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity
with accounting principles generally accepted in the United States of America.



/s/ BKD, LLP



Cincinnati, Ohio

February 4, 2005



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##### Table of Contents

NB&T Financial Group, Inc.

Consolidated Balance Sheets

December 31, 2004 and 2003

(Dollars
in Thousands)



|                                                                                           |  |      |         |   |      |   |         |  
|------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                           |  | 2004 |         |   | 2003 |  
|Assets                                                                                     |  |      |         |   |      |   |         |  
|Cash and due from banks                                                                    |  | $    | 13,248  |   |      | $ | 19,789  |  
|Interest-bearing demand deposits                                                           |  |      | 563     |   |      |   | 65      |  
|Federal funds sold                                                                         |  |      | 16,240  |   |      |   | 2,364   |  
|                                                                                           |  |      |         |   |      |   |         |  
|Cash and cash equivalents                                                                  |  |      | 30,051  |   |      |   | 22,218  |  
|                                                                                           |  |      |         |   |      |   |         |  
|Available-for-sale securities                                                              |  |      | 169,745 |   |      |   | 153,121 |  
|Held-to-maturity securities                                                                |  |      |        |   |      |   | 38,681  |  
|Loans held for sale                                                                        |  |      |        |   |      |   | 86      |  
|Loans, net of allowance for loan losses of $4,212 and $4,830 at December 31, 2004 and 2003 |  |      | 398,627 |   |      |   | 404,905 |  
|Premises and equipment                                                                     |  |      | 14,096  |   |      |   | 14,057  |  
|Federal Reserve and Federal Home Loan Bank stock                                           |  |      | 8,176   |   |      |   | 7,877   |  
|Earned income receivable                                                                   |  |      | 3,393   |   |      |   | 3,492   |  
|Goodwill                                                                                   |  |      | 3,625   |   |      |   | 3,625   |  
|Core deposits and other intangibles                                                        |  |      | 3,344   |   |      |   | 3,414   |  
|Bank-owned life insurance                                                                  |  |      | 12,150  |   |      |   | 11,631  |  
|Other                                                                                      |  |      | 2,116   |   |      |   | 1,821   |  
|                                                                                           |  |      |         |   |      |   |         |  
|Total assets                                                                               |  | $    | 645,323 |   |      | $ | 664,928 |  
|                                                                                           |  |      |         |   |      |   |         |  
|Liabilities and Stockholders Equity                                                       |  |      |         |   |      |   |         |  
|Liabilities                                                                                |  |      |         |   |      |   |         |  
|Deposits                                                                                   |  |      |         |   |      |   |         |  
|Demand                                                                                     |  | $    | 58,451  |   |      | $ | 56,781  |  
|Savings, NOW and money market                                                              |  |      | 207,900 |   |      |   | 217,297 |  
|Time                                                                                       |  |      | 186,242 |   |      |   | 176,422 |  
|                                                                                           |  |      |         |   |      |   |         |  
|Total deposits                                                                             |  |      | 452,593 |   |      |   | 450,500 |  
|                                                                                           |  |      |         |   |      |   |         |  
|Short-term borrowings                                                                      |  |      | 18,023  |   |      |   | 21,909  |  
|Long-term debt                                                                             |  |      | 111,673 |   |      |   | 132,519 |  
|Interest payable and other liabilities                                                     |  |      | 4,433   |   |      |   | 3,304   |  
|                                                                                           |  |      |         |   |      |   |         |  
|Total liabilities                                                                          |  |      | 586,722 |   |      |   | 608,232 |  
|                                                                                           |  |      |         |   |      |   |         |  
|Commitments and Contingencies                                                              |  |      |         |   |      |   |         |  
|                                                                                           |  |     
|Stockholders Equity                                                                       |  |      |         |   |      |   |         |  
|Preferred stock, no par value, authorized 100,000 shares; none issued                      |  |      |         |   |      |   |         |  
|Common stock, no par value; authorized 6,000,000 shares; issued  3,818,950 shares         |  |      | 1,000   |   |      |   | 1,000   |  
|Additional paid-in capital                                                                 |  |      | 9,828   |   |      |   | 9,692   |  
|Retained earnings                                                                          |  |      | 54,688  |   |      |   | 52,883  |  
|Unearned employee stock ownership plan (ESOP) shares                                       |  |      | (1,337  | ) |      |   | (1,506  | )
|Accumulated other comprehensive income                                                     |  |      | 225     |   |      |   | 477     |  
|Treasury stock, at cost                                                                    |  |      |         |   |      |   |         |  
|Common; 2004  591,887 shares, 2003  596,667 shares                                       |  |      | (5,803  | ) |      |   | (5,850  | )
|                                                                                           |  |      |         |   |      |   |         |  
|Total stockholders equity                                                                 |  |      | 58,601  |   |      |   | 56,696  |  
|                                                                                           |  |      |         |   |      |   |         |  
|Total liabilities and stockholders equity                                                 |  | $    | 645,323 |   |      | $ | 664,928 |  
|                                                                                           |  |      |         |   |      |   |         |  



See Notes to Consolidated Financial
Statements.



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##### Table of Contents

NB&T Financial Group, Inc.

Consolidated Statements of Income

Years Ended December 31, 2004, 2003 and 2002

(Dollars in Thousands, except per share amounts)



|                                                              |  |      |        |      |   |        |  |   |       
|------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                                              |  | 2004 |        | 2003 |   | 2002  
|Interest and Dividend Income                                  |  |      |        |      |   |        |  |   |       
|Loans                                                         |  | $    | 24,895 |      | $ | 26,471 |  | $ | 29,002
|Securities                                                    |  |      |        |      |   |        |  |   |       
|Taxable                                                       |  |      | 4,638  |      |   | 5,515  |  |   | 8,178 
|Tax-exempt                                                    |  |      | 2,076  |      |   | 2,488  |  |   | 2,713 
|Federal funds sold                                            |  |      | 180    |      |   | 104    |  |   | 157   
|Dividends on Federal Home Loan and Federal Reserve Bank stock |  |      | 341    |      |   | 323    |  |   | 336   
|Deposits with financial institutions                          |  |      | 5      |      |   | 3      |  |   | 14    
|                                                              |  |      |        |      |   |        |  |   |       
|Total interest and dividend income                            |  |      | 32,135 |      |   | 34,904 |  |   | 40,400
|                                                              |  |      |        |      |   |        |  |   |       
|Interest Expense                                              |  |      |        |      |   |        |  |   |       
|Deposits                                                      |  |      | 5,554  |      |   | 6,859  |  |   | 11,028
|Short-term borrowings                                         |  |      | 271    |      |   | 198    |  |   | 338   
|Long-term debt                                                |  |      | 6,079  |      |   | 6,314  |  |   | 5,944 
|                                                              |  |      |        |      |   |        |  |   |       
|Total interest expense                                        |  |      | 11,904 |      |   | 13,371 |  |   | 17,310
|                                                              |  |      |        |      |   |        |  |   |       
|Net Interest Income                                           |  |      | 20,231 |      |   | 21,533 |  |   | 23,090
|                                                              |  |      |       
|Provision for Loan Losses                                     |  |      | 1,900  |      |   | 3,919  |  |   | 2,100 
|                                                              |  |      |        |      |   |        |  |   |       
|Net Interest Income After Provision for Loan Losses           |  |      | 18,331 |      |   | 17,614 |  |   | 20,990
|                                                              |  |      |        |      |   |        |  |   |       
|Noninterest Income                                            |  |      |        |      |   |        |  |   |       
|Trust income                                                  |  |      | 991    |      |   | 863    |  |   | 926   
|Service charges on deposits                                   |  |      | 2,748  |      |   | 2,687  |  |   | 2,270 
|Other service charges and fees                                |  |      | 668    |      |   | 617    |  |   | 489   
|ATM network fees                                              |  |      | 315    |      |   | 435    |  |   | 578   
|Insurance agency commissions                                  |  |      | 2,494  |      |   | 2,519  |  |   | 2,355 
|Net realized gains on sales of available-for-sale securities  |  |      | 787    |      |   | 915    |  |   | 420   
|Income from bank owned life insurance                         |  |      | 520    |      |   | 531    |  |   | 787   
|Other                                                         |  |      | 716    |      |   | 848    |  |   | 1,127 
|                                                              |  |      |        |      |   |        |  |   |       
|Total noninterest income                                      |  |      | 9,239  |      |   | 9,415  |  |   | 8,952 
|                                                              |  |      |        |      |   |        |  |   |       



See Notes to Consolidated Financial
Statements.



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##### Table of Contents

NB&T Financial Group, Inc.

Consolidated Statements of Income

Years Ended December 31, 2004, 2003 and
2002

(Dollars in Thousands, except per share amounts)



|                               |  |   |        |  |   |        |  |   |       
|------------------------------ |  | - | ------ |  | - | ------ |  | - | ------
|Noninterest Expense            |  |   |        |  |   |        |  |   |       
|Salaries and employee benefits |  | $ | 11,055 |  | $ | 10,997 |  | $ | 11,512
|Net occupancy expense          |  |   | 1,743  |  |   | 1,790  |  |   | 1,568 
|Equipment expense              |  |   | 2,213  |  |   | 2,643  |  |   | 2,748 
|Data processing fees           |  |   | 684    |  |   | 601    |  |   | 526   
|Professional fees              |  |   | 1,388  |  |   | 1,294  |  |   | 1,281 
|Marketing expense              |  |   | 628    |  |   | 577    |  |   | 785   
|Printing, postage and supplies |  |   | 809    |  |   | 827    |  |   | 941   
|State franchise tax            |  |   | 701    |  |   | 685    |  |   | 548   
|Amortization of intangibles    |  |   | 705    |  |   | 712    |  |   | 616   
|Other                          |  |   | 1,626  |  |   | 2,345  |  |   | 1,495 
|                               |  |   |        |  |   |        |  |   |       
|Total noninterest expense      |  |   | 21,552 |  |   | 22,471 |  |   | 22,020
|                               |  |   |        |  |   |        |  |   |       
|Income Before Income Tax       |  |   | 6,018  |  |   | 4,558  |  |   | 7,922 
|                               |  |   |       
|Provision for Income Taxes     |  |   | 1,064  |  |   | 454    |  |   | 1,391 
|                               |  |   |        |  |   |        |  |   |       
|Net Income                     |  | $ | 4,954  |  | $ | 4,104  |  | $ | 6,531 
|                               |  |   |        |  |   |        |  |   |       
|Basic Earnings Per Share       |  | $ | 1.57   |  | $ | 1.31   |  | $ | 2.11  
|                               |  |   |        |  |   |        |  |   |       
|Diluted Earnings Per Share     |  | $ | 1.56   |  | $ | 1.30   |  | $ | 2.10  
|                               |  |   |        |  |   |        |  |   |       



See Notes to Consolidated Financial
Statements.



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NB&T Financial Group, Inc.

Consolidated Statements of Stockholders Equity

Years Ended December 31, 2004, 2003 and 2002

(Dollars in Thousands)



|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----- | ------------------------ | - | ---------------- |  | - | ------------------ | - |  | ------------------------------------------ | ------ | - | ------------- | - | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                |  | CommonStockAmount |       | AdditionalPaid-inCapital |   | RetainedEarnings |  |   | UnearnedESOPShares |   |  | AccumulatedOtherComprehensiveIncome (Loss) |        |   | TreasuryStock |   |        | Total | 
|Balance, January 1, 2002                                                                                        |  |                   | 1,000 |                          |   | 9,129            |  |   | 48,109             |   |  |                                            | (1,871 | ) |               |   | (145   | )     |  |   | (5,246 | ) |  |   | 50,976 |  
|Comprehensive income                                                                                            |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Net income                                                                                                      |  |                   |       |                          |   |                  |  |   | 6,531              |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 6,531  |  
|Change in unrealized (loss) on securities available for sale, net of reclassification adjustment and tax effect |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   | 2,209  |       |  |   |        |   |  |   | 2,209  |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Total comprehensive income                                                                                      |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 8,740  |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Dividends on common stock, $.92 per share                                                                       |  |                   |       |                          |   |                  |  |   | (2,848             | ) |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | (2,848 | )
|Sale of stock to ESOP (5,728 shares)                                                                            |  |                   |       |                          |   | 83               |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   | 49     |   |  |   | 132    |  
|Stock options exercised                                                                                         |  |                   |       |                          |   | 30               |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   | 78     |   |  |   | 108    |  
|ESOP shares earned                                                                                              |  |                   |      |                          |   | 28               |  |   |                   |   |  |                                            | 168    |   |               |   |       |       |  |   |       |   |  |   | 196    |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2002                                                                                      |  |                   | 1,000 |                          |   | 9,270            |  |   | 51,792             |   |  |                                            | (1,703 | ) |               |   | 2,064  |       |  |   | (5,119 | ) |  |   | 57,304 |  
|Comprehensive income                                                                                            |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Net income                                                                                                      |  |                   |       |                          |   |                  |  |   | 4,104              |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 4,104  |  
|Change in unrealized gain on securities available for sale, net of reclassification adjustment and tax effect   |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   | (1,587 | )     |  |   |        |   |  |   | (1,587 | )
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Total comprehensive income                                                                                      |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 2,517  |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Dividends on common stock, $.96 per share                                                                       |  |                   |       |                          |   |                  |  |   | (3,013             | ) |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | (3,013 | )
|Purchase of Stock (45,245 shares)                                                                               |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   | (1,138 | ) |  |   | (1,138 | )
|Tax benefit on stock options exercised                                                                          |  |                   |       |                          |   | 172              |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 172    |  
|Stock options exercised                                                                                         |  |                   |       |                          |   | 186              |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   | 407    |   |  |   | 593    |  
|ESOP shares earned                                                                                              |  |                   |      |                          |   | 64               |  |   |                   |   |  |                                            | 197    |   |               |   |       |       |  |   |       |   |  |   | 261    |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2003                                                                                      |  |                   | 1,000 |                          |   | 9,692            |  |   | 52,883             |   |  |                                            | (1,506 | ) |               |   | 477    |       |  |   | (5,850 | ) |  |   | 56,696 |  
|Comprehensive income                                                                                            |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Net income                                                                                                      |  |                   |       |                          |   |                  |  |   | 4,954              |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 4,954  |  
|Change in unrealized gain on securities available for sale, net of reclassification adjustment and tax effect   |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   | (252   | )     |  |   |        |   |  |   | (252   | )
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Total comprehensive income                                                                                      |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 4,702  |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Dividends on common stock, $1.00 per share                                                                      |  |                   |       |                          |   |                  |  |   | (3,149             | ) |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | (3,149 | )
|Tax benefit on stock options exercised                                                                          |  |                   |       |                          |   | 16               |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   | 16     |  
|Stock options exercised                                                                                         |  |                   |       |                          |   | 42               |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   | 47     |   |  |   | 89     |  
|ESOP shares earned                                                                                              |  |                   |      |                          |   | 78               |  |   |                   |   |  |                                            | 169    |   |               |   |       |       |  |   |       |   |  |   | 247    |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2004                                                                                      |  | $                 | 1,000 |                          | $ | 9,828            |  | $ | 54,688             |   |  | $                                          | (1,337 | ) |               | $ | 225    |       |  | $ | (5,803 | ) |  | $ | 58,601 |  
|                                                                                                                |  |                   |       |                          |   |                  |  |   |                    |   |  |                                            |        |   |               |   |        |       |  |   |        |   |  |   |        |  



See Notes to Consolidated Financial
Statements.



8



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##### Table of Contents

NB&T Financial Group, Inc.

Consolidated Statements of Cash Flows

Years Ended December 31, 2004, 2003 and 2002

(Dollars in Thousands)



|                                                             |  |      |         |   |      |   |          |      |  |   |          |  
|------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                             |  | 2004 |         |   | 2003 |   |          | 2002 | 
|Operating Activities                                         |  |      |         |   |      |   |          |      |  |   |          |  
|Net income                                                   |  | $    | 4,954   |   |      | $ | 4,104    |      |  | $ | 6,531    |  
|Items not requiring (providing) cash                         |  |      |         |   |      |   |          |      |  |   |          |  
|Depreciation and amortization                                |  |      | 2,435   |   |      |   | 2,491    |      |  |   | 1,855    |  
|Provision for loan losses                                    |  |      | 1,900   |   |      |   | 3,919    |      |  |   | 2,100    |  
|Amortization of premiums and discounts on securities         |  |      | 1,183   |   |      |   | 1,910    |      |  |   | 946      |  
|ESOP shares earned                                           |  |      | 247     |   |      |   | 261      |      |  |   | 196      |  
|Deferred income taxes                                        |  |      | 529     |   |      |   | (620     | )    |  |   | (440     | )
|Proceeds from sale of loans held for sale                    |  |      | 874     |   |      |   | 1,954    |      |  |   | 4,791    |  
|Originations of loans held for sale                          |  |      | (766    | ) |      |   | (1,980   | )    |  |   | (3,856   | )
|Gain from sale of loans                                      |  |      | (22     | ) |      |   | (60      | )    |  |   | (143     | )
|Net realized (gains) losses on available-for-sale securities |  |      | (787    | ) |      |   | (915     | )    |  |   | (420     | )
|FHLB stock dividends                                         |  |      | (299    | ) |      |   | (279     | )    |  |   | (309     | )
|Changes in                                                   |  |      |         |   |      |   |          |      |  |   |          |  
|Interest receivable                                          |  |      | 99      |   |      |   | 621      |      |  |   | 861      |  
|Other assets                                                 |  |      | (1,095  | ) |      |   | (892     | )    |  |   | 1,189    |  
|Interest payable and other liabilities                       |  |      | 1,591   |   |      |   | (420     | )    |  |   | (1,029   | )
|                                                             |  |      |         |   |      |   |          |      |  |   |          |  
|Net cash provided by operating activities                    |  |      | 10,843  |   |      |   | 10,094   |      |  |   | 12,272   |  
|                                                             |  |      |         |   |      |   |          |      |  |   |          |  
|Investing Activities                                         |  |      |         |   |      |   |          |      |  |   |          |  
|Purchases of available-for-sale securities                   |  |      | (71,340 | ) |      |   | (146,732 | )    |  |   | (159,328 | )
|Proceeds from maturities of available-for-sale securities    |  |      | 49,995  |   |      |   | 116,295  |      |  |   | 137,539  |  
|Proceeds from the sales of available-for-sale securities     |  |      | 42,106  |   |      |   | 42,509   |      |  |   | 27,520   |  
|Proceeds from maturities of held-to-maturity securities      |  |      | 519     |   |      |   | 5,815    |      |  |   |         |  
|Purchases of Federal Reserve Bank stock                      |  |      |        |   |      |   |         |      |  |   | (375     | )
|Net change in loans                                          |  |      | 4,378   |   |      |   | (28,163  | )    |  |   | (2,801   | )
|Purchases of premises and equipment                          |  |      | (2,086  | ) |      |   | (1,005   | )    |  |   | (2,482   | )
|Acquisitions of bank and insurance agencies                  |  |      | (635    | ) |      |   |         |      |  |   |         |  
|                                                             |  |      |         |   |      |   |          |      |  |   |          |  
|Net cash provided (used) in investing activities             |  |      | 22,937  |   |      |   | (11,281  | )    |  |   | 73       |  
|                                                             |  |      |         |   |      |   |          |      |  |   |          |  



See Notes to Consolidated Financial
Statements.



9



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##### Table of Contents

NB&T Financial Group, Inc.

Consolidated Statements of Cash Flows

Years Ended December 31, 2004, 2003 and
2002

(Dollars in Thousands)



|                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                   |  | 2004 |         |   | 2003 |   |         | 2002 | 
|Financing Activities                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|Net increase (decrease) in demand deposits, money market, now and savings accounts |  | $    | (7,727  | ) |      | $ | 13,577  |      |  | $ | 1,018   |  
|Net increase (decrease) in certificates of deposit                                 |  |      | 9,820   |   |      |   | (31,173 | )    |  |   | (12,162 | )
|Net decrease in short-term borrowings                                              |  |      | (3,886  | ) |      |   | 2,669   |      |  |   | (2,815  | )
|Proceeds from long-term debt                                                       |  |      |        |   |      |   | 20,000  |      |  |   | 8,000   |  
|Repayment of long-term debt                                                        |  |      | (21,094 | ) |      |   | (3,927  | )    |  |   | (6,398  | )
|Proceeds from stock options exercised                                              |  |      | 89      |   |      |   | 593     |      |  |   | 108     |  
|Sale (purchase) of treasury stock                                                  |  |      |        |   |      |   | (1,138  | )    |  |   | 132     |  
|Dividends paid                                                                     |  |      | (3,149  | ) |      |   | (3,013  | )    |  |   | (2,848  | )
|                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash used in financing activities                                              |  |      | (25,947 | ) |      |   | (2,412  | )    |  |   | (14,965 | )
|                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Increase (Decrease) in Cash and Cash Equivalents                                   |  |      | 7,833   |   |      |   | (3,599  | )    |  |   | (2,620  | )
|                                                                                   |  |      |        
|Cash and Cash Equivalents, Beginning of Year                                       |  |      | 22,218  |   |      |   | 25,817  |      |  |   | 28,437  |  
|                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Cash and Cash Equivalents, End of Year                                             |  | $    | 30,051  |   |      | $ | 22,218  |      |  | $ | 25,817  |  
|                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Supplemental Cash Flows Information                                                |  |      |         |   |      |   |         |      |  |   |         |  
|Interest paid                                                                      |  | $    | 12,401  |   |      | $ | 13,474  |      |  | $ | 17,705  |  
|                                                                                   |  |      |        
|Income taxes paid (net of refunds)                                                 |  |      | 380     |   |      |   | 1,043   |      |  |   | 1,977   |  



See Notes to Consolidated Financial
Statements.



10



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##### Table of Contents

NB&T Financial Group, Inc.

Notes to Consolidated Financial Statements

Years Ended December 31, 2004, 2003 and 2002



Note 1: Nature of Operations and Summary of Significant Accounting Policies



Nature of Operations



NB&T Financial Group, Inc. (Company) is a bank holding company whose principal activity is the ownership and management of its wholly-owned subsidiaries,
The National Bank and Trust Company (the Bank) and NB&T Statutory Trust I (Trust I). In accordance with FIN 46, Trust I is not consolidated into these financial statements. The Bank is primarily engaged in providing a
full range of banking and financial services to individual and corporate customers in Adams, Brown, Clermont, Clinton, Hardin, Highland, and Warren counties in Ohio. The Bank offers insurance products including property, casualty and life through
its wholly-owned subsidiary, NB&T Insurance Agency, Inc. (Agency). The Bank is subject to competition from other financial institutions. The Bank is subject to the regulation of certain federal and state agencies and undergoes
periodic examinations by those regulatory authorities.



Principles of
Consolidation



The consolidated financial statements include the
accounts of the Company, Bank and the Agency. All significant intercompany accounts and transactions have been eliminated in consolidation.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.



Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management obtains independent appraisals for significant properties.



Cash Equivalents



The Company considers all liquid investments with original maturities of three months or less to be cash equivalents.



Securities



Available-for-sale securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the
future, are carried at fair value. Unrealized gains and losses are recorded, net of related income tax effects, in other comprehensive income.



Held-to-maturity securities, which include any security for which the Company has the positive intent and ability to hold until maturity, are carried at historical cost
adjusted for amortization of premiums and accretion of discounts.



Amortization
of premiums and accretion of discounts are recorded as interest income from securities. Realized gains and losses are recorded as net security gains (losses). Gains and losses on sales of securities are determined on the specific-identification
method.



Loans Held for Sale



Mortgage loans originated and intended for sale in the secondary market are carried at the
lower of cost or fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.



Loans



Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for any charge-offs, the allowance for
loan losses, any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan
term. Generally, loans are placed on non-accrual status at ninety days past due and interest is considered a loss, unless the loan is well-secured and in the process of collection.



11



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##### Table of Contents

Allowance for Loan Losses



The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income.
Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.



The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the
collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral and prevailing economic
conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.



A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the
scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting
scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls
on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record and the amount of the shortfall
in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loans effective interest rate, the
loans obtainable market price or the fair value of the collateral if the loan is collateral dependent.



Large groups of smaller balance homogenous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment measurements.



Premises and Equipment



Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged
to expense using the straight-line method over the estimated useful lives of the assets.



Federal Reserve and Federal Home Loan Bank Stock



Federal Reserve and Federal Home Loan Bank stock are required investments for institutions that are members of the Federal Reserve and Federal Home Loan Bank systems. The required investment in the common stock is
based on a predetermined formula.



Foreclosed Assets Held for Sale



Assets acquired through, or in lieu of, loan foreclosure are held for
sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or
fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net income or expense from foreclosed assets.



Goodwill



Goodwill is annually tested for impairment. If the implied fair value of goodwill is lower than its carrying amount, a goodwill impairment is indicated and goodwill is
written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements.



Intangible Assets



Intangible assets are being amortized on an accelerated basis over periods ranging from seven to eleven years. Such assets are periodically evaluated as to the
recoverability of their carrying value.



Treasury Stock



Treasury stock is stated at cost. Cost is determined based on the
average cost of all shares.



12



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##### Table of Contents

Stock Options



At December 31, 2004, the Company has a stock-based employee compensation plan, which is described more fully in Note 16. The Company accounts for this plan under the
recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those
plans had an exercise price equal to the market value of the underlying common stock on the grant date. The following table illustrates the effect on net income and earnings per share if the company had applied the fair value provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation (thousands, except per share amounts):



|                                                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                                                     |  | Year Ended December 31 |      
|                                                                                                                     |  | 2004                   |       |   | 2003 |   |       | 2002 | 
|Net income, as reported                                                                                              |  | $                      | 4,954 |   |      | $ | 4,104 |      |  | $ | 6,531 |  
|Less: Total stock-based employee compensation cost determined under the fair value based method, net of income taxes |  |                        | (51   | ) |      |   | (75   | )    |  |   | (71   | )
|                                                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |  
|Pro forma net income                                                                                                 |  | $                      | 4,903 |   |      | $ | 4,029 |      |  | $ | 6,460 |  
|                                                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |  
|Earnings per share:                                                                                                  |  |                        |       |   |      |   |       |      |  |   |       |  
|Basic  as reported                                                                                                  |  | $                      | 1.57  |   |      | $ | 1.31  |      |  | $ | 2.11  |  
|                                                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |  
|Basic  pro forma                                                                                                    |  | $                      | 1.56  |   |      | $ | 1.29  |      |  | $ | 2.09  |  
|                                                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |  
|Diluted  as reported                                                                                                |  | $                      | 1.56  |   |      | $ | 1.30  |      |  | $ | 2.10  |  
|                                                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |  
|Diluted  pro forma                                                                                                  |  | $                      | 1.55  |   |      | $ | 1.28  |      |  | $ | 2.07  |  
|                                                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |  



Income Taxes



Deferred tax assets and liabilities are recognized for the tax effects of differences
between the financial statement and tax bases of assets and liabilities. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized. The Company files consolidated
income tax returns with its subsidiaries.



Earnings Per Share



Earnings per share have been computed based upon the weighted-average
common shares outstanding during each year. Unearned ESOP shares which have not vested have been excluded from the computation of average shares outstanding.



Reclassifications



Certain reclassifications have been made to the 2003 and 2002 financial statements to conform to the 2004 financial statement presentation. These reclassifications had no
effect on net income.



Note 2: Restriction on Cash and Due From Banks



The Bank is required to maintain reserve funds in cash and/or on deposit
with the Federal Reserve Bank. The reserve required at December 31, 2004 was $7,510,000.



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##### Table of Contents

Note 3: Securities



The amortized cost and approximate fair values of securities are as follows (thousands):



|                                |  |                |         |                        |   |                         |  |                        |       |  |   |        
|------------------------------- |  | -------------- | ------- | ---------------------- | - | ----------------------- |  | ---------------------- | ----- |  | - | -------
|Available-for-Sale Securities:  |  | Amortized Cost |         | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Approximate Fair Value
|December 31, 2004:              |  |                |         |                        |   |                         |  |                        |       |  |   |        
|                                |  |                |         |                       
|U.S. government agencies        |  | $              | 69,135  |                        | $ |                        |  | $                      | 1,046 |  | $ | 68,089 
|Mortgage-backed securities      |  |                | 61,923  |                        |   | 473                     |  |                        | 323   |  |   | 62,073 
|State and political subdivision |  |                | 38,336  |                        |   | 1,269                   |  |                        | 32    |  |   | 39,573 
|Other securities                |  |                | 10      |                        |   |                        |  |                        |      |  |   | 10     
|                                |  |                |         |                        |   |                         |  |                        |       |  |   |        
|                                |  | $              | 169,404 |                        | $ | 1,742                   |  | $                      | 1,401 |  | $ | 169,745
|                                |  |                |         |                        |   |                         |  |                        |       |  |   |        
|December 31, 2003:              |  |                |         |                        |   |                         |  |                        |       |  |   |        
|                                |  |                |         |                       
|U.S. government agencies        |  | $              | 60,502  |                        | $ | 239                     |  | $                      | 308   |  | $ | 60,433 
|Mortgage-backed securities      |  |                | 84,076  |                        |   | 1,022                   |  |                        | 537   |  |   | 84,561 
|State and political subdivision |  |                | 7,810   |                        |   | 307                     |  |                        |      |  |   | 8,117  
|Other securities                |  |                | 10      |                        |   |                        |  |                        |      |  |   | 10     
|                                |  |                |         |                        |   |                         |  |                        |       |  |   |        
|                                |  | $              | 152,398 |                        | $ | 1,568                   |  | $                      | 845   |  | $ | 153,121
|                                |  |                |         |                        |   |                         |  |                        |       |  |   |        



|                                 |  |                |        |                        |   |                         |  |                        |    |  |   |       
|-------------------------------- |  | -------------- | ------ | ---------------------- | - | ----------------------- |  | ---------------------- | -- |  | - | ------
|Held to Maturity Securities:     |  | Amortized Cost |        | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Approximate Fair Value
|December 31, 2003:               |  |                |        |                        |   |                         |  |                        |    |  |   |       
|State and political subdivisions |  | $              | 38,681 |                        | $ | 1,398                   |  | $                      | 20 |  | $ | 40,059
|                                 |  |                |        |                        |   |                         |  |                        |    |  |   |       



In the third quarter of 2004, all
held-to-maturity securities, which were comprised mostly of out-of-state municipal bonds, were transferred to available-for-sale because such securities were no longer eligible for pledging against public deposits. The amortized cost of these
securities and the unrealized gain at the time of transfer was $38,160,000 and $571,000, respectively.



The amortized cost and fair value of securities available for sale at December 31, 2004, by contractual maturity, are shown below (thousands). Expected maturities will differ from contractual maturities because
issuers may have the right to call or prepay obligations with or without call or prepayment penalties.



|                              |  |               |         |            |   |        
|----------------------------- |  | ------------- | ------- | ---------- | - | -------
|                              |  | AmortizedCost |         | Fair Value
|Within one year               |  | $             |        |            | $ |       
|One to five years             |  |               | 69,235  |            |   | 68,195 
|Five to ten years             |  |               | 1,510   |            |   | 1,496  
|After ten years               |  |               | 36,726  |            |   | 37,971 
|                              |  |               |         |            |   |        
|                              |  |               | 107,471 |            |   | 107,662
|Mortgage-backed securities    |  |               | 61,923  |            |   | 62,073 
|Other asset-backed securities |  |               | 10      |            |   | 10     
|                              |  |               |         |            |   |        
|Totals                        |  | $             | 169,404 |            | $ | 169,745
|                              |  |               |         |            |   |        



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##### Table of Contents

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $88,070,000
at December 31, 2004, and $144,878,000 at December 31, 2003. The book value of securities sold under agreements to repurchase amounted to $25,540,000 and $26,865,000 at December 31, 2004 and 2003, respectively.



Gross gains of $824,000, $915,000 and $420,000 and gross losses of $37,000, $0 and $0
resulting from sales of available-for-sale securities were realized for 2004, 2003 and 2002, respectively. The tax expense for net gains on securities transactions for 2004, 2003 and 2002 was $268,000, $311,000 and $143,000, respectively.



The table below indicates the gross unrealized losses and fair value,
aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2004 and 2003.



|                                       |  |                     |        |                   |   |            |  |                 |        |            |   |                 |  |   |         |  |   |      
|-------------------------------------- |  | ------------------- | ------ | ----------------- | - | ---------- |  | --------------- | ------ | ---------- | - | --------------- |  | - | ------- |  | - | -----
|                                       |  | Less than 12 months |        | 12 months or more |   | Total     
|                                       |  | Fair Value          |        | Unrealized Loss   |   | Fair Value |  | Unrealized Loss |        | Fair Value |   | Unrealized Loss
|December 31, 2004                      |  |                     |        |                   |   |            |  |                 |        |            |   |                 |  |   |         |  |   |      
|U.S. Treasuries & U.S. Agency Notes    |  | $                   | 62,230 |                   | $ | 908        |  | $               | 5,859  |            | $ | 138             |  | $ | 68,089  |  | $ | 1,046
|U.S. Agency mortgage-backed securities |  |                     | 2,298  |                   |   | 6          |  |                 | 3,518  |            |   | 57              |  |   | 5,816   |  |   | 63   
|Other mortgage-backed securities       |  |                     | 22,207 |                   |   | 200        |  |                 | 3,241  |            |   | 60              |  |   | 25,448  |  |   | 260  
|Municipals                             |  |                     | 2,531  |                   |   | 32         |  |                 | 0      |            |   | 0               |  |   | 2,531   |  |   | 32   
|Other securities                       |  |                     | 0      |                   |   | 0          |  |                 | 0      |            |   | 0               |  |   | 0       |  |   | 0    
|                                       |  |                     |        |                   |   |            |  |                 |        |            |   |                 |  |   |         |  |   |      
|Total Securities                       |  | $                   | 89,266 |                   | $ | 1,146      |  | $               | 12,618 |            | $ | 255             |  | $ | 101,884 |  | $ | 1,401
|                                       |  |                     |        |                   |   |            |  |                 |        |            |   |                 |  |   |         |  |   |      
|December 31, 2003                      |  |                     |        |                   |   |            |  |                 |        |            |   |                 |  |   |         |  |   |      
|U.S. Treasuries & U.S. Agency Notes    |  | $                   | 27,769 |                   | $ | 309        |  | $               | 0      |            | $ | 0               |  | $ | 27,769  |  | $ | 309  
|U.S. Agency mortgage-backed securities |  |                     | 4,648  |                   |   | 50         |  |                 | 0      |            |   | 0               |  |   | 4,648   |  |   | 50   
|Other mortgage-backed securities       |  |                     | 29,198 |                   |   | 486        |  |                 | 0      |            |   | 0               |  |   | 29,198  |  |   | 486  
|Municipals                             |  |                     | 1,994  |                   |   | 14         |  |                 | 337    |            |   | 6               |  |   | 2,331   |  |   | 20   
|Other securities                       |  |                     | 0      |                   |   | 0          |  |                 | 0      |            |   | 0               |  |   | 0       |  |   | 0    
|                                       |  |                     |        |                   |   |            |  |                 |        |            |   |                 |  |   |         |  |   |      
|Total Securities                       |  | $                   | 63,609 |                   | $ | 859        |  | $               | 337    |            | $ | 6               |  | $ | 63,946  |  | $ | 865  
|                                       |  |                     |        |                   |   |            |  |                 |        |            |   |                 |  |   |         |  |   |      



Management evaluates securities for
other-than-temporary impairment on a periodic basis. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition of the issuer; and (3) the intent and ability of the
company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. At December 31, 2004, there were five securities with unrealized losses greater than 12 months old. All of these
securities were either guaranteed by the U.S. Government or its agencies or secured by mortgage loans. The unrealized losses relate principally to current interest rates for similar types of securities. As management has the ability to hold these
securities until the foreseeable future, no declines are deemed to be other-than-temporary.



Note 4: Loans and Allowance for Loan Losses



Categories of loans at December 31, include (thousands):



|                                                     |  |      |         |   |      |   |         |  
|---------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                     |  | 2004 |         |   | 2003 |  
|Commercial and industrial                            |  | $    | 85,681  |   |      | $ | 89,621  |  
|Agricultural                                         |  |      | 22,284  |   |      |   | 22,841  |  
|Real estate construction                             |  |      | 13,114  |   |      |   | 11,296  |  
|Commercial real estate                               |  |      | 52,251  |   |      |   | 35,399  |  
|Residential real estate                              |  |      | 148,644 |   |      |   | 158,880 |  
|Consumer                                             |  |      | 80,978  |   |      |   | 88,009  |  
|Other                                                |  |      | 119     |   |      |   | 4,011   |  
|                                                     |  |      |         |   |      |   |         |  
|Total loans                                          |  |      | 403,071 |   |      |   | 410,057 |  
|                                                     |  |     
|Less: Net deferred loan fees, premiums and discounts |  |      | (232    | ) |      |   | (322    | )
|Allowance for loan losses                            |  |      | (4,212  | ) |      |   | (4,830  | )
|                                                     |  |      |         |   |      |   |         |  
|Net loans                                            |  | $    | 398,627 |   |      | $ | 404,905 |  
|                                                     |  |      |         |   |      |   |         |  



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Activity in the allowance for loan losses was as follows (thousands):



|                                   |  |      |        |   |      |   |        |      |  |   |        |  
|---------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                   |  | 2004 |        |   | 2003 |   |        | 2002 | 
|Balance, beginning of year         |  | $    | 4,830  |   |      | $ | 4,010  |      |  | $ | 3,810  |  
|Provision charged to expense       |  |      | 1,900  |   |      |   | 3,919  |      |  |   | 2,100  |  
|Recoveries of previous charge-offs |  |      | 680    |   |      |   | 523    |      |  |   | 285    |  
|Losses charged off                 |  |      | (3,198 | ) |      |   | (3,622 | )    |  |   | (2,185 | )
|                                   |  |      |        |   |      |   |        |      |  |   |        |  
|Balance, end of year               |  | $    | 4,212  |   |      | $ | 4,830  |      |  | $ | 4,010  |  
|                                   |  |      |        |   |      |   |        |      |  |   |        |  



Impaired loans totaled $1,017,000 and
$3,827,000 at December 31, 2004 and 2003, respectively. An allowance for loan losses of $146,000 and $1,537,000 relates to impaired loans of $458,000 and $3,182,000, at December 31, 2004 and 2003, respectively. At December 31, 2004 and 2003,
impaired loans of $559,000 and $645,000 had no related allowance for loan losses.



Interest of $149,000 and $5,000 was recognized on average impaired loans of $3,951,000 and $4,250,000 for 2004 and 2003. Interest of $149,000 and $98,000 was recognized on impaired loans on a cash basis during 2004 and 2003.



At December 31, 2004 and 2003, accruing loans delinquent 90 days or more totaled $-0- and
$248,000, respectively. Non-accruing loans at December 31, 2004 and 2003 were $2,874,000 and $5,599,000, respectively.



Note 5: Premises and Equipment



Major classifications of premises and equipment, stated at cost, are as follows (thousands):



|                                               |  |      |         |   |      |   |         |  
|---------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                               |  | 2004 |         |   | 2003 |  
|Land                                           |  | $    | 1,854   |   |      | $ | 1,880   |  
|Buildings and improvements                     |  |      | 12,668  |   |      |   | 12,851  |  
|Leasehold improvements                         |  |      | 430     |   |      |   | 476     |  
|Construction in progress                       |  |      | 20      |   |      |   |        |  
|Equipment                                      |  |      | 11,471  |   |      |   | 9,952   |  
|                                               |  |      |         |   |      |   |         |  
|                                               |  | $    | 26,443  |   |      | $ | 25,159  |  
|Less accumulated depreciation and amortization |  |      | (12,347 | ) |      |   | (11,102 | )
|                                               |  |      |         |   |      |   |         |  
|Net premises and equipment                     |  | $    | 14,096  |   |      | $ | 14,057  |  
|                                               |  |      |         |   |      |   |         |  



Note 6: Operating Leases



The Bank has entered into certain operating leases for some of its branch
locations. Operating lease expense was $97,000, $125,000, and $127,000 for years 2004, 2003, and 2002, respectively.



The minimum future lease payments for each of the next five years is as follows:



|     |  |   |   
|---- |  | - | --
|2005 |  | $ | 98
|2006 |  |   | 80
|2007 |  |   | 71
|2008 |  |   | 37
|2009 |  |   | 30





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Note 7: Goodwill



During 2002, the Company changed its method of accounting and financial reporting for goodwill and other intangible assets by adopting the provisions of Statement of
Financial Accounting Standards No. 142. There was no material impact of the adoption on the financial statements.



All goodwill is allocated to the banking segment of the business and totaled $3,625,000 at December 31, 2004 and 2003.



Note 8: Other Intangible Assets



The carrying basis and accumulated amortization of recognized intangible assets at December
31, 2004 and 2003, were (thousands):



|              |  |                       |       |                          |      |        |                       |  |                          |       |  |   |        |  
|------------- |  | --------------------- | ----- | ------------------------ | ---- | ------ | --------------------- |  | ------------------------ | ----- |  | - | ------ | -
|              |  | 2004                  |       |                          | 2003 |       
|              |  | Gross Carrying Amount |       | Accumulated Amortization |      |        | Gross Carrying Amount |  | Accumulated Amortization |      
|Core deposits |  | $                     | 3,051 |                          | $    | (1,603 | )                     |  | $                        | 3,051 |  | $ | (1,098 | )
|Other         |  |                       | 2,325 |                          |      | (429   | )                     |  |                          | 1,690 |  |   | (229   | )
|              |  |                       |       |                          |      |        |                       |  |                          |       |  |   |        |  
|              |  | $                     | 5,376 |                          | $    | (2,032 | )                     |  | $                        | 4,741 |  | $ | (1,327 | )
|              |  |                       |       |                          |      |        |                       |  |                          |       |  |   |        |  



Amortization expense for the years
ended December 31, 2004 and 2003, was $705,000 and $712,000, respectively. Estimated amortization expense for each of the following five years is (thousands):



|     |  |   |    
|---- |  | - | ---
|2005 |  | $ | 678
|2006 |  |   | 597
|2007 |  |   | 515
|2008 |  |   | 429
|2009 |  |   | 294



Note 9: Interest-Bearing Deposits



Interest-bearing deposits in denominations of $100,000 or more were
$42,977,000 on December 31, 2004, and $35,332,000 on December 31, 2003. At December 31, 2004, the scheduled maturities of time deposits are as follows (thousands):



|           |  |   |        
|---------- |  | - | -------
|2005       |  | $ | 116,265
|2006       |  |   | 35,353 
|2007       |  |   | 13,252 
|2008       |  |   | 2,881  
|2009       |  |   | 2,525  
|Thereafter |  |   | 15,966 
|           |  |   |        
|           |  | $ | 186,242
|           |  |   |        



Note 10: Short-Term Borrowings



Short-term borrowings included the following (thousands):



|                                            |  |      |        |      |   |       
|------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                            |  | 2004 |        | 2003
|Securities sold under repurchase agreements |  | $    | 16,864 |      | $ | 21,108
|U. S. Treasury demand notes                 |  |      | 1,159  |      |   | 801   
|                                            |  |      |        |      |   |       
|Total short-term borrowings                 |  | $    | 18,023 |      | $ | 21,909
|                                            |  |      |        |      |   |       



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Securities sold under agreements to repurchase consist of obligations of the Company to other parties. The obligations
are secured by U.S. agency notes and such collateral is held by the Federal Reserve Bank. The maximum amount of outstanding agreements and mortgage-backed securities at any month end during 2004 and 2003 totaled $38,397,000 and $32,416,000 and the
daily average of such agreements totaled $25,181,000 and $23,886,000. The agreements at December 31, 2004, mature daily.



The Bank has an unused letter of credit with the Federal Home Loan Bank in the amount of $10,000,000 expiring March 31, 2005.



Note 11: Long-Term Debt



Long-term debt consisted of the following components (thousands):



|                                |  |      |         |      |   |        
|------------------------------- |  | ---- | ------- | ---- | - | -------
|                                |  | 2004 |         | 2003
|Federal Home Loan Bank Advances |  | $    | 103,425 |      | $ | 124,519
|Junior subordinated debentures  |  |      | 8,248   |      |   | 8,000  
|                                |  |      |         |      |   |        
|Total                           |  | $    | 111,673 |      | $ | 132,519
|                                |  |      |         |      |   |        



The Federal Home Loan Bank advances
are secured by mortgage loans and investment securities totaling $155,477,000 at December 31, 2004. Advances, at interest rates from 4.60 to 6.26 percent, are subject to restrictions or penalties in the event of prepayment.



On June 26, 2002, NB&T Statutory Trust I (Trust I), a wholly owned subsidiary
of the Corporation, closed a pooled private offering of 8,000 Capital Securities with a liquidation amount of $1,000 per security. The proceeds of the offering were loaned to the Corporation in exchange for junior subordinated debentures with terms
similar to the Capital Securities. The sole assets of Trust I are the junior subordinated debentures of the Corporation and payments thereunder. The junior subordinated debentures and the back-up obligations, in the aggregate, constitute a full and
unconditional guarantee by the Corporation of the obligations of Trust I under the Capital Securities. Distributions on the Capital Securities are payable quarterly at the annual rate of 3.45% over the 3 month LIBOR and are included in interest
expense in the consolidated financial statements. These securities are considered Tier 1 capital (with certain limitations applicable) under current regulatory guidelines.



In December 2003, FASB issued a revision to FIN 46 to clarify certain provisions which affected the accounting for trust preferred
securities. As a result of the provisions in FIN 46, the trust was deconsolidated as of March 31, 2004, with the Company accounting for its investment in the trust as assets, its subordinated debentures as debt, and the interest paid thereon as
interest expense. The Company had always classified the trust preferred securities as debt but eliminated its common stock investment.



The junior subordinated debentures are subject to mandatory redemption, in whole or in part, upon repayment of the Capital Securities at maturity or their earlier
redemption at the liquidation amount. Subject to the Corporation having received prior approval of the Federal Reserve, if then required, the Capital Securities are redeemable prior to the maturity date of June 26, 2032, at the option of the
Corporation; on or after June 26, 2007 at par. Upon occurrence of specific events defined within the trust indenture, the Capital Securities may also be redeemed prior to June 26, 2007 at a premium. The Corporation has the option to defer
distributions on the Capital Securities from time to time for a period not to exceed 20 consecutive semi-annual periods.



Aggregate annual maturities of Federal Home Loan Bank Advances at December 31, 2004, are (thousands):



|           |  |      |        
|---------- |  | ---- | -------
|           |  | Debt
|2005       |  | $    |       
|2006       |  |      | 4,925  
|2007       |  |      |       
|2008       |  |      | 45,000 
|2009       |  |      |       
|Thereafter |  |      | 53,500 
|           |  |      |        
|           |  | $    | 103,425
|           |  |      |        





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Note 12: Income Taxes



The provision for income taxes includes these components (thousands):



|                        |  |      |       |      |   |       |      |  |   |       |  
|----------------------- |  | ---- | ----- | ---- | - | ----- | ---- |  | - | ----- | -
|                        |  | 2004 |       | 2003 |   |       | 2002 | 
|Taxes currently payable |  | $    | 535   |      | $ | 1,074 |      |  | $ | 1,831 |  
|Deferred income taxes   |  |      | 529   |      |   | (620  | )    |  |   | (440  | )
|                        |  |      |       |      |   |       |      |  |   |       |  
|Income tax expense      |  | $    | 1,064 |      | $ | 454   |      |  | $ | 1,391 |  
|                        |  |      |       |      |   |       |      |  |   |       |  



A reconciliation of income tax expense
at the statutory rate to the Companys actual income tax expense is shown below (thousands):



|                                     |  |      |       |   |      |   |       |      |  |   |       |  
|------------------------------------ |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                     |  | 2004 |       |   | 2003 |   |       | 2002 | 
|Computed at the statutory rate (34%) |  | $    | 2,046 |   |      | $ | 1,550 |      |  | $ | 2,693 |  
|Increase (decrease) resulting from   |  |      |       |   |      |   |       |      |  |   |       |  
|Tax exempt interest                  |  |      | (670  | ) |      |   | (788  | )    |  |   | (847  | )
|ESOP dividend                        |  |      | (161  | ) |      |   | (141  | )    |  |   | (142  | )
|Bank owned life insurance            |  |      | (177  | ) |      |   | (180  | )    |  |   | (267  | )
|Other                                |  |      | 26    |   |      |   | 13    |      |  |   | (46   | )
|                                     |  |      |       |   |      |   |       |      |  |   |       |  
|Actual tax expense                   |  | $    | 1,064 |   |      | $ | 454   |      |  | $ | 1,391 |  
|                                     |  |      |       |   |      |   |       |      |  |   |       |  



The tax effects of temporary
differences related to deferred taxes shown on the balance sheets were (thousands):



|                                                  |  |      |        |   |      |   |        |  
|------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                  |  | 2004 |        |   | 2003 |  
|Deferred tax assets                               |  |      |        |   |      |   |        |  
|Intangible asset amortization                     |  | $    | 55     |   |      | $ | 20     |  
|Allowance for loan losses                         |  |      | 1,267  |   |      |   | 1,463  |  
|Accruals not currently deductible                 |  |      | 261    |   |      |   | 401    |  
|AMT credit carry forward                          |  |      | 516    |   |      |   | 225    |  
|                                                  |  |      |        |   |      |   |        |  
|                                                  |  | $    | 2,099  |   |      | $ | 2,109  |  
|                                                  |  |      |        |   |      |   |        |  
|Deferred tax liabilities                          |  |      |        |   |      |   |        |  
|Depreciation                                      |  |      | (706   | ) |      |   | (360   | )
|FHLB stock dividends                              |  |      | (1,021 | ) |      |   | (919   | )
|Prepaid assets currently deductible               |  |      | (69    | ) |      |   |       |  
|Unrealized gains on available-for-sale securities |  |      | (116   | ) |      |   | (246   | )
|                                                  |  |      |        |   |      |   |        |  
|                                                  |  |      | (1,912 | ) |      |   | (1,525 | )
|                                                  |  |      |        |   |      |   |        |  
|Net deferred tax asset                            |  | $    | 187    |   |      | $ | 584    |  
|                                                  |  |      |        |   |      |   |        |  





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Note 13: Other Comprehensive Income (Loss)



Other comprehensive income (loss) components and related taxes were as follows (thousands):



|                                                           |  |      |      |   |      |   |        |      |  |   |      
|---------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ------ | ---- |  | - | -----
|                                                           |  | 2004 |      |   | 2003 |   |        | 2002
|Unrealized gains (losses) on securities available for sale |  | $    | 405  |   |      | $ | (1,490 | )    |  | $ | 3,767
|Reclassification for realized amount included in income    |  |      | 787  |   |      |   | 915    |      |  |   | 420  
|                                                           |  |      |      |   |      |   |        |      |  |   |      
|Other comprehensive income (loss), before tax effect       |  |      | (382 | ) |      |   | (2,405 | )    |  |   | 3,347
|Tax expense (benefit)                                      |  |      | (130 | ) |      |   | (818   | )    |  |   | 1,138
|                                                           |  |      |      |   |      |   |        |      |  |   |      
|Other comprehensive income (loss)                          |  | $    | (252 | ) |      | $ | (1,587 | )    |  | $ | 2,209
|                                                           |  |      |      |   |      |   |        |      |  |   |      



Note 14: Regulatory Matters



The Company and the subsidiary bank are subject to various regulatory
capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Companys financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary bank must meet specific capital guidelines that involve
quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.



Quantitative measures
established by regulation to ensure capital adequacy require the Company and the subsidiary bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2004, that the Company and the subsidiary bank meet all capital adequacy requirements to which they are subject.



As of December 31, 2004, the most recent notification from the regulators
categorized the Company as well capitalized under the regulatory framework for prompt corrective action. To be categorized, the Company must maintain capital ratios as set forth in the table. There are no conditions or events since that notification
that management believes have changed the Companys category.



The Company
and subsidiary banks actual capital amounts and ratios are also presented in the following table (thousands):



|                                                  |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |     
|------------------------------------------------- |  | ------ | ------ | ----- | ----------------------------- | - | ------ | ---------------------------------------------------------------- | ------ |  | --- | ------ |  | ----- | ------ |  | ----
|                                                  |  | Actual |        |       | For Capital Adequacy Purposes |   |        | To Be Well Capitalized Under Prompt Corrective Action Provisions
|                                                  |  | Amount |        | Ratio |                               |   | Amount |                                                                  | Ratio  |  |     | Amount |  | Ratio
|As of December 31, 2004                           |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |     
|Total Risk-Based Capital(to Risk-Weighted Assets) |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |     
|Consolidated                                      |  | $      | 63,619 |       | 15.06                         | % |        | $                                                                | 33,803 |  | 8.0 | %      |  | $     |        |  | NA  
|Bank                                              |  |        | 56,688 |       | 13.46                         |   |        |                                                                  | 33,691 |  | 8.0 |        |  |       | 42,113 |  | 10.0
|                                                  |  |        |        |       |                               |  
|Tier I Capital(to Risk-Weighted Assets)           |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |     
|Consolidated                                      |  |        | 59,407 |       | 14.06                         |   |        |                                                                  | 16,901 |  | 4.0 |        |  |       |        |  | NA  
|Bank                                              |  |        | 52,476 |       | 12.46                         |   |        |                                                                  | 16,845 |  | 4.0 |        |  |       | 25,268 |  | 6.0 
|                                                  |  |        |        |       |                               |  
|Tier I Capital(to Average Assets)                 |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |     
|Consolidated                                      |  |        | 59,407 |       | 9.18                          |   |        |                                                                  | 25,873 |  | 4.0 |        |  |       |        |  | NA  
|Bank                                              |  |        | 52,476 |       | 8.13                          |   |        |                                                                  | 25,821 |  | 4.0 |        |  |       | 32,341 |  | 5.0 



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|                                                  |  |        |        |       |                              |   |        |                                                               |        |  |     |        |  |       |        |  |     
|------------------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | ------------------------------------------------------------- | ------ |  | --- | ------ |  | ----- | ------ |  | ----
|                                                  |  | Actual |        |       | For Capital AdequacyPurposes |   |        | To Be Well CapitalizedUnder PromptCorrective ActionProvisions
|                                                  |  | Amount |        | Ratio |                              |   | Amount |                                                               | Ratio  |  |     | Amount |  | Ratio
|As of December 31, 2003                           |  |        |        |       |                              |   |        |                                                               |        |  |     |        |  |       |        |  |     
|Total Risk-Based Capital(to Risk-Weighted Assets) |  |        |        |       |                              |   |        |                                                               |        |  |     |        |  |       |        |  |     
|Consolidated                                      |  | $      | 62,010 |       | 14.57                        | % |        | $                                                             | 34,050 |  | 8.0 | %      |  | $     |        |  | NA  
|Bank                                              |  |        | 55,692 |       | 13.10                        |   |        |                                                               | 34,010 |  | 8.0 |        |  |       | 42,513 |  | 10.0
|                                                  |  |        |        |       |                              |  
|Tier I Capital(to Risk-Weighted Assets)           |  |        |        |       |                              |   |        |                                                               |        |  |     |        |  |       |        |  |     
|Consolidated                                      |  |        | 57,180 |       | 13.44                        |   |        |                                                               | 17,018 |  | 4.0 |        |  |       |        |  | NA  
|Bank                                              |  |        | 50,862 |       | 11.97                        |   |        |                                                               | 17,005 |  | 4.0 |        |  |       | 25,508 |  | 6.0 
|                                                  |  |        |        |       |                              |  
|Tier I Capital(to Average Assets)                 |  |        |        |       |                              |   |        |                                                               |        |  |     |        |  |       |        |  |     
|Consolidated                                      |  |        | 57,180 |       | 8.61                         |   |        |                                                               | 26,562 |  | 4.0 |        |  |       |        |  | NA  
|Bank                                              |  |        | 50,862 |       | 7.66                         |   |        |                                                               | 26,562 |  | 4.0 |        |  |       | 33,971 |  | 5.0 



The Bank is subject to certain
restrictions on the amount of dividends that it may declare without prior regulatory approval. At December 31, 2004, approximately $3,271,000 of retained earnings were available for dividend declaration without prior regulatory approval.



Note 15: Related Party Transactions



The Bank had loans outstanding to executive officers, directors, significant shareholders
and their affiliates (related parties). A summary of the related party loan activity follows (thousands):



|                     |  |      |       |   |      |   |        |  
|-------------------- |  | ---- | ----- | - | ---- | - | ------ | -
|                     |  | 2004 |       |   | 2003 |  
|Balance, January 1   |  | $    | 3,490 |   |      | $ | 4,093  |  
|New loans            |  |      | 37    |   |      |   | 2,492  |  
|Payments             |  |      | (369  | ) |      |   | (3,095 | )
|Other changes        |  |      | (15   | ) |      |   |       |  
|                     |  |      |       |   |      |   |        |  
|Balance, December 31 |  | $    | 3,143 |   |      | $ | 3,490  |  
|                     |  |      |       |   |      |   |        |  



In managements opinion, such
loans and other extensions of credit and deposits were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with
other persons. Further, in managements opinion, these loans did not involve more than normal risk of collectibility or present other unfavorable features.



Deposits from related parties held by the Bank at December 31, 2004 and 2003 totaled $692,000 and $656,000 respectively.



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Note 16: Employee Benefits



The Company has a retirement savings 401(k) plan covering substantially all employees. Employees may contribute up to 50% of their
compensation. The Bank will match up to 3% of an employees compensation for the first 8% of their compensation contributed to the plan. Employer contributions charged to expense for 2004, 2003 and 2002 were $146,000, $139,000 and $148,000,
respectively.



Also, the Bank has a deferred compensation agreement with
certain active and retired officers. The agreement provides level monthly or annual payments ranging from four to twenty years after retirement. The charge to expense for the agreement was $246,000, $283,000 and $167,000 for 2004, 2003 and 2002,
respectively. Such charges reflect the straight-line accrual over the period until full eligibility of the present value of benefits due each participant on the full eligibility date, using a 6.1% discount factor.



The Company sponsors a leveraged employee stock ownership plan (ESOP) that covers
substantially all employees who meet minimum age and length of service requirements. Shares of the Companys common stock held by the ESOP were purchased with the proceeds of external borrowings and borrowings from the Company. The Company
makes annual contributions to the ESOP equal to the ESOPs debt service less dividends on unallocated shares received by the ESOP. All dividends on unallocated shares received by the ESOP are used to pay debt service. The ESOP shares initially
were pledged as collateral for its debt. As the debt is repaid, shares are released from collateral and allocated to plan participants, based on the proportion of debt service paid in the year to total expected debt service. The Bank accounts for
its ESOP in accordance with Statement of Position 93-6, with the exception of shares acquired in 1986. All shares acquired in 1986 were fully allocated in 2003. Accordingly, the external debt of the ESOP is recorded as debt of the Company and the
shares pledged as collateral are reported as unearned ESOP shares in the balance sheet. As shares are released from collateral, the Company reports compensation expense equal to the current fair value of the shares. Dividends on allocated ESOP
shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a reduction of debt and accrued interest.



Compensation expense for ESOP shares acquired in 1986 is equal to the principal repaid on the related borrowing plus any additional cash contributions.



ESOP compensation expense was $247,000, $261,000 and $201,000 for years 2004, 2003 and 2002,
respectively. The ESOP shares as of December 31 were as follows:



|                                             |  |              |           |                |   |             |  |        
|-------------------------------------------- |  | ------------ | --------- | -------------- | - | ----------- |  | -------
|                                             |  | 2004         |           | 2003          
|                                             |  | Total Shares |           | SOP 93-6Shares |   | 1986 Shares
|Allocated shares                             |  |              | 526,336   |                |   | 28,546      |  | 510,201
|Shares released for allocation               |  |              | 8,292     |                |   | 6,947       |  | 15,668 
|Unearned shares                              |  |              | 68,062    |                |   | 76,355      |  | -0-    
|                                             |  |              |           |                |   |             |  |        
|Total ESOP shares                            |  |              | 602,690   |                |   | 111,848     |  | 525,869
|                                             |  |              |           |                |   |             |  |        
|Fair value of unearned shares at December 31 |  | $            | 1,923,000 |                | $ | 2,405,000   |  |        
|                                             |  |              |           |                |   |             |  |        



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Note 17: Stock Option Plan



The Company has a fixed option plan under which the Company may grant options that vest over five years to selected employees for up to
267,327 shares of common stock. The exercise price of each option is intended to equal the fair value of the Companys stock on the date of grant. An options maximum term is ten years.



A summary of the status of the plan at December 31, 2004, 2003 and 2002, and changes during
the years then ended is presented below:



|                                 |  |         |   |      |                                |       |        |         |   |                                |   |        |  |         |                                |  |   |      
|-------------------------------- |  | ------- | - | ---- | ------------------------------ | ----- | ------ | ------- | - | ------------------------------ | - | ------ |  | ------- | ------------------------------ |  | - | -----
|                                 |  | 2004    |   | 2003 |                                | 2002 
|                                 |  | Shares  |   |      | Weighted- AverageExercisePrice |       | Shares |         |   | Weighted- AverageExercisePrice |   | Shares |  |         | Weighted- AverageExercisePrice
|Outstanding, beginning of year   |  | 112,080 |   |      | $                              | 21.52 |        | 168,976 |   |                                | $ | 18.95  |  | 141,476 |                                |  | $ | 18.06
|Granted                          |  | 35,000  |   |      |                                | 29.86 |        | 20,500  |   |                                |   | 24.50  |  | 36,500  |                                |  |   | 20.71
|Exercised                        |  | (4,780  | ) |      |                                | 18.60 |        | (44,996 | ) |                                |   | 13.18  |  | (9,000  | )                              |  |   | 12.00
|Expired                          |  | (7,200  | ) |      |                                | 20.61 |        | (32,400 | ) |                                |   | 21.69  |  |        |                                |  |   |      
|                                 |  |         |   |      |                                |       |        |         |   |                                |   |        |  |         |                                |  |   |      
|Outstanding, end of year         |  | 135,100 |   |      | $                              | 23.84 |        | 112,080 |   |                                | $ | 21.52  |  | 168,976 |                                |  | $ | 18.95
|                                 |  |         |   |      |                                |       |        |         |   |                                |   |        |  |         |                                |  |   |      
|Options exercisable, end of year |  | 61,360  |   |      | $                              | 21.72 |        | 56,400  |   |                                | $ | 21.15  |  | 82,956  |                                |  | $ | 16.96
|                                 |  |         |   |      |                                |       |        |         |   |                                |   |        |  |         |                                |  |   |      



The fair value of options granted is
estimated on the date of the grant using an option-pricing model with the following weighted-average assumptions:



|                                                               |  |      |               |      |   |         |  |   |        
|-------------------------------------------------------------- |  | ---- | ------------- | ---- | - | ------- |  | - | -------
|                                                               |  | 2004 |               | 2003 |   | 2002   
|Dividend yields                                                |  |      | 3.35%         |      |   | 3.97%   |  |   | 4.4%   
|Volatility factors of expected market price of common stock    |  |      | 16.2% - 20.0% |      |   | 16.7%   |  |   | 17.0%  
|Risk-free interest rates                                       |  |      | 1.6%          |      |   | 2.0%    |  |   | 2.0%   
|Expected life of options                                       |  |      | 9 years       |      |   | 9 years |  |   | 9 years
|Weighted-average fair value of options granted during the year |  | $    | 2.65  3.51   |      | $ | 2.27    |  | $ | 1.62   



The following table summarizes
information about stock options under the plan outstanding at December 31, 2004:



|                         |  |                     |  |                                           |  |                                |       |        |        |                                |   |      
|------------------------ |  | ------------------- |  | ----------------------------------------- |  | ------------------------------ | ----- | ------ | ------ | ------------------------------ | - | -----
|                         |  | Options Outstanding |  | Options Exercisable                      
|Range of Exercise Prices |  | NumberOutstanding   |  | Weighted-AverageRemainingContractual Life |  | Weighted-AverageExercise Price |       | Shares |        | Weighted-AverageExercise Price
|$12.00 to $17.25         |  | 24,400              |  | 4.6 years                                 |  | $                              | 15.95 |        | 17,200 |                                | $ | 15.41
|$20.50 to $23.25         |  | 34,500              |  | 6.4 years                                 |  |                                | 21.54 |        | 19,200 |                                |   | 22.02
|$24.50 to $30.00         |  | 76,200              |  | 7.6 years                                 |  |                                | 26.56 |        | 24,960 |                                |   | 24.89



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Note 18: Earnings Per Share



Earnings per share (EPS) were computed as follows (thousands, except per share amounts):



|                                                    |  |      |           |      |   |           |  |   |          
|--------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                                    |  | 2004 |           | 2003 |   | 2002     
|Basic earnings per share:                           |  |      |           |      |   |           |  |   |          
|Net income                                          |  | $    | 4,954     |      | $ | 4,104     |  | $ | 6,531    
|                                                    |  |      |           |      |   |           |  |   |          
|Weighted average common shares outstanding          |  |      | 3,148,241 |      |   | 3,132,791 |  |   | 3,088,976
|Basic earnings per share                            |  | $    | 1.57      |      | $ | 1.31      |  | $ | 2.11     
|                                                    |  |      |           |      |   |           |  |   |          
|Diluted earnings per share:                         |  |      |           |      |   |           |  |   |          
|Net income                                          |  | $    | 4,954     |      | $ | 4,104     |  | $ | 6,531    
|                                                    |  |      |           |      |   |           |  |   |          
|Weighted average common shares outstanding          |  |      | 3,148,241 |      |   | 3,132,791 |  |   | 3,088,976
|Effect of dilutive securities  stock options       |  |      | 17,708    |      |   | 18,977    |  |   | 27,926   
|                                                    |  |      |           |      |   |           |  |   |          
|Average shares and dilutive potential common shares |  |      | 3,165,949 |      |   | 3,151,768 |  |   | 3,116,902
|                                                    |  |      |           |      |   |           |  |   |          
|Diluted earnings per share                          |  | $    | 1.56      |      | $ | 1.30      |  | $ | 2.10     
|                                                    |  |      |           |      |   |           |  |   |          



Options to purchase 39,500 shares of
common stock at $28.00 to $30.50 per share were outstanding at December 31, 2004, but were not include in the computation of diluted EPS because the options exercise price was greater than the average market price of the common shares.



Options to purchase 7,100 shares of common stock at $28.00 per share were
outstanding at December 31, 2003, but were not included in the computation of diluted EPS because the options exercise price was greater than the average market price of the common shares.



Options to purchase 51,700 shares of common stock at $21.375 to $28.00 per share were
outstanding at December 31, 2002, but were not included in the computation of diluted EPS because the options exercise price was greater than the average market price of the common shares.



Note 19: Disclosures about Fair Value of Financial Instruments



The following table presents estimated fair values of the Companys financial
instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or
liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these
financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate. (thousands):



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|                                         |  |                   |         |                   |   |                |  |            |         |  |   |        
|---------------------------------------- |  | ----------------- | ------- | ----------------- | - | -------------- |  | ---------- | ------- |  | - | -------
|                                         |  | December 31, 2004 |         | December 31, 2003
|                                         |  | CarryingAmount    |         | Fair Value        |   | CarryingAmount |  | Fair Value
|Financial assets                         |  |                   |         |                   |   |                |  |            |         |  |   |        
|Cash and cash equivalents                |  | $                 | 30,051  |                   | $ | 30,051         |  | $          | 22,218  |  | $ | 22,218 
|Available-for-sale securities            |  |                   | 169,745 |                   |   | 169,745        |  |            | 153,121 |  |   | 153,121
|Held-to-maturity securities              |  |                   |        |                   |   |               |  |            | 38,681  |  |   | 40,059 
|Loans including loans held for sale, net |  |                   | 398,627 |                   |   | 394,850        |  |            | 404,991 |  |   | 405,457
|Stock in FRB and FHLB                    |  |                   | 8,176   |                   |   | 8,176          |  |            | 7,877   |  |   | 7,877  
|Cash surrender value of life insurance   |  |                   | 12,150  |                   |   | 12,150         |  |            | 11,631  |  |   | 11,631 
|Interest receivable                      |  |                   | 3,393   |                   |   | 3,393          |  |            | 3,492   |  |   | 3,492  
|                                         |  |                   |         |                  
|Financial liabilities                    |  |                   |         |                   |   |                |  |            |         |  |   |        
|Deposits                                 |  |                   | 452,593 |                   |   | 451,487        |  |            | 450,500 |  |   | 413,237
|Short-term borrowings                    |  |                   | 18,023  |                   |   | 18,023         |  |            | 21,909  |  |   | 21,909 
|Long-term debt                           |  |                   | 111,673 |                   |   | 117,676        |  |            | 132,519 |  |   | 142,481
|Interest payable                         |  |                   | 715     |                   |   | 715            |  |            | 802     |  |   | 802    



For purposes of the above disclosures
of estimated fair value, the following assumptions were used as of December 31, 2004 and 2003. The estimated fair value for cash and cash equivalents, interest-bearing deposits, FRB and FHLB stock, cash surrender value of life insurance, accrued
interest receivable, demand deposits, savings accounts, NOW accounts, certain money market deposits, short-term borrowings, and interest payable is considered to approximate cost. The estimated fair value for securities is based on quoted market
values for the individual securities or for equivalent securities. The estimated fair value for loans receivable, including loans held for sale, net, is based on estimates of the rate the Bank would charge for similar loans at December 31, 2004 and
2003 applied for the time period until the loans are assumed to reprice or be paid. The estimated fair value for fixed-maturity time deposits as well as borrowings is based on estimates of the rate the Bank would pay on such liabilities at December
31, 2004 and 2003, applied for the time period until maturity. The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present
creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit and lines of credit is based on
fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.



Note 20: Commitments and Credit Risk



Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Each customers creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on managements credit evaluation of the counterparty. Collateral held varies, but may include accounts
receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.



At December 31, 2004 and 2003, the Bank had outstanding commitments to originate business loans aggregating approximately $3,381,000 and $4,771,000, respectively. The commitments extended over varying periods of time
with the majority being disbursed within a one-year period. Loan commitments at fixed rates of interest amounted to $215,000 and $793,000 at December 31, 2004 and 2003, respectively, with the remainder at floating market rates.



Letters of credit are conditional commitments issued by the Bank to guarantee the performance
of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans to customers.



The
Bank had total outstanding letters of credit amounting to $1,046,000 and $949,000, at December 31, 2004 and 2003, respectively, with terms ranging from 30 days to 4 years.



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Mortgage loans in the process of origination represent amounts that the Bank plans to fund within a normal period of 60
to 90 days, some of which are intended for sale to investors in the secondary market. Forward commitments to sell mortgage loans are obligations to deliver loans at a specified price on or before a specified future date. The Bank acquires such
commitments to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale.



Total mortgage loans in the process of origination amounted to $1,155,000 and $1,328,000 and mortgage loans held for sale amounted to $0 and $86,000, at December 31, 2004
and 2003, respectively. Included in mortgage loans in the process of origination were commitments to originate loans at fixed rates of interest of $160,000 and $0 at December 31, 2004 and 2003, respectively.



Lines of credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each
customers creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on managements credit evaluation of the counterparty. Collateral held varies but may include accounts
receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.



At December 31, 2004, the Bank had granted unused lines of credit to borrowers aggregating
approximately $22,996,000 and $21,820,000 for commercial lines and open-end consumers lines, respectively. At December 31, 2003, unused lines of credit to borrowers aggregated approximately $37,206,000 for commercial lines and $20,258,000 for
open-end consumer lines.



At December 31, 2004, the Bank had approximately
$436,000 on deposit with US Bank. In addition, the Bank had $16,000,000 in Federal Funds sold invested at Southwest Bank of St. Louis at December 31, 2004.





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##### Table of Contents

Note 21: Condensed Financial Information (Parent Company Only)



Presented below is condensed financial information as to financial position, results of
operations and cash flows of the Company (thousands):



Condensed Balance Sheets



|                                                 |  |      |        |      |   |       
|------------------------------------------------ |  | ---- | ------ | ---- | - | ------
|                                                 |  | 2004 |        | 2003
|Assets                                           |  |      |        |      |   |       
|Cash and due from banks                          |  | $    | 6,354  |      | $ | 6,317 
|Investment in common stock of banking subsidiary |  |      | 59,427 |      |   | 58,126
|Investment in nonbanking subsidiary              |  |      | 264    |      |   | 256   
|Due from bank subsidiary                         |  |      | 247    |      |   |      
|Other assets                                     |  |      | 1,364  |      |   | 1,018 
|                                                 |  |      |        |      |   |       
|Total assets                                     |  | $    | 67,656 |      | $ | 65,717
|                                                 |  |      |        |      |   |       
|Liabilities                                      |  |      |        |      |   |       
|Long-term debt                                   |  | $    | 8,248  |      | $ | 8,248 
|Other liabilities                                |  |      | 807    |      |   | 773   
|                                                 |  |      |        |      |   |       
|Total liabilities                                |  |      | 9,055  |      |   | 9,021 
|                                                 |  |     
|Stockholders Equity                             |  |      | 58,601 |      |   | 56,696
|                                                 |  |      |        |      |   |       
|Total liabilities and stockholders equity       |  | $    | 67,656 |      | $ | 65,717
|                                                 |  |      |        |      |   |       



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Condensed Statements of Income



|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  
|--------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                                                                  |  | 2004 |       |   | 2003 |   |       | 2002 | 
|Income                                                                            |  |      |       |   |      |   |       |      |  |   |        |  
|Dividends from banking subsidiary                                                 |  | $    | 3,500 |   |      | $ | 2,500 |      |  | $ | 8,000  |  
|Other income                                                                      |  |      |      |   |      |   |      |      |  |   | 8      |  
|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  
|Total income                                                                      |  |      | 3,500 |   |      |   | 2,500 |      |  |   | 8,008  |  
|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  
|Expenses                                                                          |  |      |       |   |      |   |       |      |  |   |        |  
|Interest expense                                                                  |  |      | 411   |   |      |   | 390   |      |  |   | 215    |  
|Amortization of loan costs                                                        |  |      | 9     |   |      |   | 9     |      |  |   | 4      |  
|Other expenses                                                                    |  |      | 26    |   |      |   | 35    |      |  |   | 4      |  
|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  
|Total expenses                                                                    |  |      | 446   |   |      |   | 434   |      |  |   | 223    |  
|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  
|Income Before Income Tax and Equity in Undistributed Income of Banking Subsidiary |  |      | 3,054 |   |      |   | 2,066 |      |  |   | 7,785  |  
|                                                                                  |  |      |      
|Income Tax Expense (Benefit)                                                      |  |      | (339  | ) |      |   | (312  | )    |  |   | (251   | )
|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  
|Income Before Equity in Undistributed Income of Banking Subsidiary                |  |      | 3,393 |   |      |   | 2,378 |      |  |   | 8,036  |  
|                                                                                  |  |      |      
|Equity in Undistributed Income of Banking Subsidiary                              |  |      | 1,553 |   |      |   | 1,718 |      |  |   | (1,505 | )
|                                                                                  |  |      |      
|Equity in Undistributed Income of Nonbanking Subsidiary                           |  |      | 8     |   |      |   | 8     |      |  |   |       |  
|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  
|Net Income                                                                        |  | $    | 4,954 |   |      | $ | 4,104 |      |  | $ | 6,531  |  
|                                                                                  |  |      |       |   |      |   |       |      |  |   |        |  



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Condensed Statements of Cash Flows



|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                       |  | 2004 |        |   | 2003 |   |        | 2002 | 
|Operating Activities                                   |  |      |        |   |      |   |        |      |  |   |         |  
|Net income                                             |  | $    | 4,954  |   |      | $ | 4,104  |      |  | $ | 6,531   |  
|Items not requiring (providing) cash                   |  |      | (1,857 | ) |      |   | (1,634 | )    |  |   | 1,150   |  
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|Net cash provided by (used in) by operating activities |  |      | 3,097  |   |      |   | 2,470  |      |  |   | 7,681   |  
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|Investing Activities                                   |  |      |        |   |      |   |        |      |  |   |         |  
|Investment in banking subsidiary                       |  |      |       |   |      |   |       |      |  |   | (12,500 | )
|Investment in nonbanking subsidiary                    |  |      |       |   |      |   |       |      |  |   | (248    | )
|Proceeds from sale of securities available for sale    |  |      |       |   |      |   |       |      |  |   | 5,992   |  
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|Net cash provided by (used in) investing activities    |  |      |       |   |      |   |       |      |  |   | (6,756  | )
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|Financing Activities                                   |  |      |        |   |      |   |        |      |  |   |         |  
|Cash dividends paid                                    |  |      | (3,149 | ) |      |   | (3,013 | )    |  |   | (2,848  | )
|Proceeds from the issuance of subordinated debt        |  |      |       |   |      |   |       |      |  |   | 8,248   |  
|Repayment of long-term debt                            |  |      |       |   |      |   | (108   | )    |  |   | (108    | )
|Proceeds from stock options exercised                  |  |      | 89     |   |      |   | 593    |      |  |   | 108     |  
|Sale/(Purchase) of treasury stock                      |  |      |       |   |      |   | (1,138 | )    |  |   | 132     |  
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|Net cash provided by (used in) financing activities    |  |      | (3,060 | ) |      |   | (3,666 | )    |  |   | 5,532   |  
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|Net Change in Cash and Cash Equivalents                |  |      | 37     |   |      |   | (1,196 | )    |  |   | 6,457   |  
|                                                       |  |      |       
|Cash and Cash Equivalents at Beginning of Year         |  |      | 6,317  |   |      |   | 7,513  |      |  |   | 1,056   |  
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  
|Cash and Cash Equivalents at End of Year               |  | $    | 6,354  |   |      | $ | 6,317  |      |  | $ | 7,513   |  
|                                                       |  |      |        |   |      |   |        |      |  |   |         |  



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Note 22: Selected Quarterly Data (Unaudited)



The following tables summarize selected quarterly results of operations for 2004 and 2003 (thousands, except per share
amounts):



|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|--------------------------------------------------- |  | ----- | ----- | ---- | - | --------- |  | -------- | ----- |  | - | ----- | -
|December 31, 2004                                   |  | March |       | June |   | September |  | December |      
|Interest and dividend income                        |  | $     | 8,142 |      | $ | 8,023     |  | $        | 7,989 |  | $ | 7,981 |  
|Interest expense                                    |  |       | 2,950 |      |   | 2,934     |  |          | 2,978 |  |   | 3,042 |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Net interest income                                 |  |       | 5,192 |      |   | 5,089     |  |          | 5,011 |  |   | 4,939 |  
|Provision for loan losses                           |  |       | 450   |      |   | 450       |  |          | 450   |  |   | 550   |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Net interest income after provision for loan losses |  |       | 4,742 |      |   | 4,639     |  |          | 4,561 |  |   | 4,389 |  
|Noninterest income                                  |  |       | 2,632 |      |   | 2,162     |  |          | 2,211 |  |   | 2,234 |  
|Noninterest expense                                 |  |       | 5,623 |      |   | 5,203     |  |          | 5,378 |  |   | 5,348 |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Income before income tax                            |  |       | 1,751 |      |   | 1,598     |  |          | 1,394 |  |   | 1,275 |  
|Income tax expense                                  |  |       | 330   |      |   | 328       |  |          | 219   |  |   | 187   |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Net income                                          |  | $     | 1,421 |      | $ | 1,270     |  | $        | 1,175 |  | $ | 1,088 |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Earnings per share                                  |  |       |       |      |   |           |  |          |       |  |   |       |  
|Basic                                               |  | $     | 0.45  |      | $ | 0.40      |  | $        | 0.37  |  | $ | 0.35  |  
|Diluted                                             |  |       | 0.45  |      |   | 0.40      |  |          | 0.37  |  |   | 0.34  |  
|                                                    |  |       |       |     
|Dividends per share                                 |  |       | 0.25  |      |   | 0.25      |  |          | 0.25  |  |   | 0.25  |  
|                                                    |  |       |       |     
|December 31, 2003                                   |  | March |       | June |   | September |  | December |      
|Interest and dividend income                        |  | $     | 9,256 |      | $ | 8,959     |  | $        | 8,311 |  | $ | 8,378 |  
|Interest expense                                    |  |       | 3,655 |      |   | 3,531     |  |          | 3,171 |  |   | 3,014 |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Net interest income                                 |  |       | 5,601 |      |   | 5,428     |  |          | 5,140 |  |   | 5,364 |  
|Provision for loan losses                           |  |       | 540   |      |   | 487       |  |          | 1,289 |  |   | 1,603 |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Net interest income after provision for loan losses |  |       | 5,061 |      |   | 4,941     |  |          | 3,851 |  |   | 3,761 |  
|Noninterest income                                  |  |       | 2,635 |      |   | 2,637     |  |          | 2,118 |  |   | 2,025 |  
|Noninterest expense                                 |  |       | 5,710 |      |   | 5,526     |  |          | 5,157 |  |   | 6,078 |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Income before income tax                            |  |       | 1,986 |      |   | 2,052     |  |          | 812   |  |   | (292  | )
|Income tax expense                                  |  |       | 349   |      |   | 461       |  |          | 2     |  |   | (358  | )
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Net income                                          |  | $     | 1,637 |      | $ | 1,591     |  | $        | 810   |  | $ | 66    |  
|                                                    |  |       |       |      |   |           |  |          |       |  |   |       |  
|Earnings per share                                  |  |       |       |      |   |           |  |          |       |  |   |       |  
|Basic                                               |  | $     | 0.52  |      | $ | 0.51      |  | $        | 0.26  |  | $ | 0.02  |  
|Diluted                                             |  |       | 0.52  |      |   | 0.50      |  |          | 0.26  |  |   | 0.02  |  
|                                                    |  |       |       |     
|Dividends per share                                 |  |       | 0.24  |      |   | 0.24      |  |          | 0.24  |  |   | 0.24  |  



During the fourth quarter of 2003, the
Company increased its provision for loan losses to $1.6 million based on charge-offs during the quarter and managements evaluation of the allowance for loan losses. Non-interest expense also included $704,000 of reorganization costs associated
with the closing of three branch facilities announced October 2003 and closed January 31, 2004.



30



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##### Table of Contents

PART IV



Item 15. Exhibits and Financial Statement Schedules



The following documents are filed as part of this Form 10-K/A:



INDEX TO EXHIBITS



|              |  |                                                                    
|------------- |  | -------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                        
|23            |  | Consent of Independent Accountants  BKD, LLP                      
|              | 
|31.1          |  | Rule 13a-14(a)/Section 302 Certification of Chief Executive Officer
|              | 
|31.2          |  | Rule 13a-14(b)/Section 302 Certification of Chief Financial Officer
|              | 
|32.1          |  | Rule 13a-14(b)/Section 906 Certification of Chief Executive Officer
|              | 
|32.2          |  | Rule 13a-14(b)/Section 906 Certification of Chief Financial Officer



31



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##### Table of Contents

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.





|               |  |                            |  |                                      
|-------------- |  | -------------------------- |  | -------------------------------------
|               |  | NB&T Financial Group, Inc.
|               |  |                           
|               |  | By                         |  | /s/ Timothy L. Smith                 
|April 11, 2005 |  |                            |  | Timothy L. Smith                     
|               |  |                            |  | President and Chief Executive Officer
|               |  |                            |  | (Principal Executive Officer)        



32



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##### Table of Contents

INDEX TO EXHIBITS



|              |  |                                                                                                               |  |                                                                                                                                                       
|------------- |  | ------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                                                                   |  | PAGE REFERENCE                                                                                                                                        
|3.1           |  | Third Amended and Restated Articles of Incorporation of NB&T Financial Group, Inc.                            |  | Incorporated by reference to Definitive Proxy Statement filed on March 31, 2003, Exhibit A.                                                           
|              |  |                                                                                                              
|3.2           |  | Amended and Restated Code of Regulations of NB&T Financial Group, Inc.                                        |  | Incorporated by reference to Definitive Proxy Statement filed on March 31, 2003.                                                                      
|              |  |                                                                                                              
|10.1          |  | InterCounty Bancshares, Inc. 1993 Stock Option Plan                                                           |  | Incorporated by reference to the Registration Statement on Form S-8 filed with the Securities and Exchange Commission on March 23, 1995, Exhibit 4(c).
|              |  |                                                                                                              
|10.2          |  | InterCounty Bancshares, Inc. Non-qualified Stock Option Plan                                                  |  | Incorporated by reference to the S-1, Exhibit 10.1                                                                                                    
|              |  |                                                                                                              
|10.3          |  | NB&T Financial Group, Inc. Supplemental Executive Retirement Plan                                             |  | Incorporated by reference to Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2002, Exhibit 10.1.                                    
|              |  |                                                                                                              
|10.4          |  | NB&T Financial Group, Inc. Supplemental Executive Retirement Plan Participation Agreement  Timothy L. Smith  |  | Incorporated by reference to Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2002, Exhibit 10.2.                                    
|              |  |                                                                                                              
|10.5          |  | NB&T Financial Group, Inc. Supplemental Executive Retirement Plan Participation Agreement  Charles L. Dehner |  | Incorporated by reference to Annual Report on Form 10-K for the Year Ended December 31, 2002, Exhibit 10.5.                                           
|              |  |                                                                                                              
|10.6          |  | Severance Agreement with Andrew J. McCreanor                                                                  |  | Incorporated by reference to Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004, Exhibit 10.1                                          
|              |  |                                                                                                              
|10.7          |  | Severance Agreement with Craig F. Fortin                                                                      |  | Incorporated by reference to Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004, Exhibit 10.2                                          
|              |  |                                                                                                              
|10.8          |  | Severance Agreement with Stephen G. Klumb                                                                     |  | Incorporated by reference to Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004, Exhibit 10.3                                          
|              |  |                                                                                                              
|10.9          |  | Severance Agreement with Walter R. Rowsey                                                                     |  | Incorporated by reference to Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004, Exhibit 10.4                                          
|              |  |                                                                                                              
|10.10         |  | Severance Agreement with Howard T. Witherby                                                                   |  | Incorporated by reference to Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004, Exhibit 10.5                                          
|              |  |                                                                                                              
|10.11         |  | Management Annual Incentive Plan                                                                              |  | Incorporated by reference to Amendment to Quarterly Report on Form 10-Q/A filed on November 9, 2004, Exhibit 10.6                                     
|              |  |                                                                                                              
|14            |  | NB&T Financial Group, Inc. Amended Code of Ethics                                                             |  | Incorporated by reference to Annual Report on Form 10-K for the Year Ended December 31, 2003, Exhibit 14.                                             
|              |  |                                                                                                              
|21            |  | Subsidiaries of NB&T Financial Group, Inc.                                                                    |  | Incorporated by reference to Annual Report on Form 10-K for the Year Ended December 31, 2004 filed on March 16, 2005                                  
|              |  |                                                                                                              
|23            |  | Consent of Independent Accountants  BKD, LLP                                                                 |  | 34                                                                                                                                                    
|              |  |                                                                                                              
|31.1          |  | Rule 13a-14(a)/Section 302 Certification of Chief Executive Officer                                           |  | 35                                                                                                                                                    
|              |  |                                                                                                              
|31.2          |  | Rule 13a-14(b)/Section 302 Certification of Chief Financial Officer                                           |  | 36                                                                                                                                                    
|              |  |                                                                                                              
|32.1          |  | Rule 13a-14(b)/Section 906 Certification of Chief Executive Officer                                           |  | 37                                                                                                                                                    
|              |  |                                                                                                              
|32.2          |  | Rule 13a-14(b)/Section 906 Certification of Chief Financial Officer                                           |  | 38                                                                                                                                                    
|              |  |                                                                                                              
|99.1          |  | Safe Harbor Under the Private Securities Litigation Reform Act of 1995                                        |  | Incorporated by reference to Annual Report on Form 10-K for the Year Ended December 31, 2004 filed on March 16, 2005                                  
|              |  |                                                                                                              
|99.2          |  | Proxy Statement for 2005 annual meeting of shareholders                                                       |  | Incorporated by reference to definitive proxy statement to be filed on or before March 28, 2005.                                                      



33