Exhibit 99.1

 

 

FOR FURTHER INFORMATION:

 

Anthony V. Cosentino

Executive Vice President and

Chief Financial Officer

419.785.3663

Tony.Cosentino@thebank-sbt.com

 

Rurban Financial Corp. Reports 2012 Third Quarter Results

 

DEFIANCE, Ohio, October 23, 2012 (GlobeNewswire) -- Rurban Financial Corp. (NASDAQ: RBNF) (“Rurban” or “the Company”), a diversified financial services company providing full-service community banking, mortgage banking, wealth management and item processing services, today reported earnings for the third quarter and nine months ended September 30, 2012.

 

Consolidated earnings for Rurban Financial Corp. include the results of Rurban’s Banking Group, consisting primarily of The State Bank and Trust Company (“State Bank” or “the Bank”), and Rurban's data services subsidiary, Rurbanc Data Services, Inc. (dba “RDSI Banking Systems” or "RDSI"). For the quarter ended September 30, 2012, Rurban reported net income of $1.3 million, or $0.27 per diluted share, compared to net income of $0.60 million, or $0.12 per diluted share, for the quarter ended September 30, 2011, and net income of $1.0 million, or $0.21 per diluted share, for the quarter ended June 30, 2012.

 

For the first nine months of 2012, net income was $3.3 million, or $0.68 per common share, compared to $1.4 million, or $0.29 per common share, for the prior-year nine month period. Excluding non-recurring items totaling $0.86 million after tax ($1.3 million pretax) from the first nine months of 2011, mainly from a balance sheet restructuring and a contract buyout penalty paid to RDSI, core earnings for the first nine months of 2011 were $0.53 million, or $0.11 per share.

 

Key items for the 2012 third quarter include:

 

·

Profitability improvement continues. The return on average assets rose to 82 bps this quarter, raising the YTD return to 69 bps.

 

·

Mortgage originations and gains on sale both reached a record level this past quarter.

 

·

Quarterly noninterest expense continues to trend downward albeit at a modest pace. Profitability improvement in 2012 has been derived primarily from fee income.

 

·

Portfolio loans increased by $16 million over the past twelve months, up 3.7 percent, led by commercial real estate. Recent growth consisted primarily of HELOCs and agricultural loans.

 

   

	·	Nonperforming assets declined by $1.2 million, or 11 percent compared to September 30, 2011; they now stand at $9.4 million, or 1.49 percent of total assets. Reserve coverage of nonperforming loans at quarter-end was 96 percent.

·

Tangible leverage improved by 32 basis points from the prior quarter, to 5.53 percent; all bank regulatory ratios are in excess of “well-capitalized” levels.

 

 

“Our increasingly strong performance reflects the growing synergies within our organization,” stated Mark Klein, president and chief executive officer of Rurban Financial Corp. “Our strategy to build revenue is based on harnessing the energy and expertise of our bankers to build exceptional client relationships. State Bank is unique for a bank its size, with high level regional decision-makers located in the field alongside their bankers whom they quarterback on a day-to-day basis. Proximity to both clients and staff ensures that all aspects of the relationship are addressed and working smoothly. This includes impeccable service as well as the identification and fulfillment of client product needs.

 

“As a result of these growing synergies, we continue to attract new relationships as well as deepen existing ones. Our clients provide us with numerous opportunities to book high quality loans that are well-structured and appropriately priced. Despite the competitive loan environment, we have not compromised our strong underwriting standards. Our deposit market share is growing in nearly every region, and the mix continues to improve, all of which contributed to a 19 percent decline in our funding costs compared to last year. Every department of the Bank is positioned to refer opportunities to other areas of the Bank; 74 percent of all employees generated a referral last year that resulted in an additional piece of business. Similarly, we are seeing the impact with our mortgage lenders who just completed a record quarter of originations, and with our credit administration staff, where 2012 losses have declined to 23 basis points of average loans.

 

“Finally, we are also seeing it in our growing cash flow, which has enabled us to repay one quarter earlier than we had anticipated the interest on our trust preferred securities, which we had deferred since September 2010. Beginning next year, we should see a benefit to earnings from these reduced interest costs.

 

“Although revenue at RDSI has been declining due to market constraints, we have been successful in expanding several relationships and reducing costs to maintain a profit year to date.

 

“Overall,” concluded Mr. Klein, “we are pleased with our continuing progress to become a higher-performing bank, and have every reason to expect that the strategies we have in place will continue to build momentum.”

 

 

RESULTS OF OPERATIONS

 

Consolidated Revenue

 

Total revenue, consisting of net interest income on a fully tax equivalent basis (“FTE”) and noninterest income, was $8.9 million for the third quarter of 2012, up $0.97 million, or 12.2 percent, from the third quarter of 2011, and higher by $0.37 million, or 4.3 percent, from the linked quarter.

 

Net interest income (FTE) for the 2012 third quarter was $5.52 million, 0.7 percent ahead of third quarter 2011. Average earning assets grew 2.4 percent; however, volume gains were partially offset by a seven basis point decline year over year in the net interest margin (FTE) to 3.91 percent. Relative to the 2012 second quarter, net interest income (FTE) grew 3.2 percent (12.7 percent annualized) as a result of substantial loan growth (up 1.7 percent for the quarter, or 6.8 percent annualized); this change in asset mix contributed to a ten basis point improvement in the net interest margin despite modestly declining yields.

 

  

Noninterest Income

 

Noninterest income was $3.4 million for the third quarter of 2012, an increase of $0.93 million from the $2.5 million reported for the year-ago third quarter and $0.2 million higher than the second quarter of 2012. Higher gains on loan sales, which for the third quarter included non-mortgage SBA and FSA loan sales, more than offset the decline in RDSI fee income.

  

 

Data Services

($’s in thousands)		Sep. 2012				Jun. 2012				Mar. 2012				Dec. 2011				Sep. 2011
Data Processing & Network Services		$	229			$	194			$	177			$	320			$	292
Payment Solutions			541				633				708				720				784
Contract Buyout			(53	)			-				551				-				-
RDSI Gross Revenue			717				827				1,436				1,040				1,076
Less: Intercompany			(232	)			(251	)			(793	)			(369	)			(333	)
Net Data Services Fees		$	485			$	576			$	643			$	671			$	743

 

Gross revenue generated by RDSI, including services provided to Rurban/State Bank, was $0.72 million for the third quarter of 2012. Excluding Rurban/State Bank intercompany transactions from the quarter, net data services fees were $0.49 million for the current quarter compared to $0.74 million for the year-ago third quarter, a decline of $0.26 million.

 

Mortgage Banking

 

		Three Months Ended
($’s in thousands)		Sep. 2012				Jun. 2012				Mar. 2012				Dec. 2011				Sep. 2011
Mortgage originations		$	90,685			$	79,901			$	68,331			$	85,114			$	68,989
Mortgage sales			81,862				75,227				64,212				81,046				56,438
Mortgage servicing portfolio			488,930				459,380				422,802				402,062				370,033
Mortgage servicing rights			3,346				3,359				3,359				2,820				2,709
Mortgage servicing revenue:
Loan servicing fees			297				274				259				242				226
OMSR amortization			(369	)			(254	)			(349	)			(329	)			(251	)
Net administrative fees			(72	)			20				(90	)			(87	)			(25	)
OMSR valuation adjustment			(120	)			(185	)			419				(221	)			(771	)
Net loan servicing fees			(192	)			(165	)			329				(308	)			(796	)
Gain on sale of mortgages			1,571				1,395				1,181				1,529				1,101
Mortgage banking revenue, net		$	1,379			$	1,230			$	1,510			$	1,221			$	305

 

   

Mortgage banking continued its banner year, with third quarter loan originations reaching a new high: $90.7 million, up $21.7 million, or 31 percent, from the $69.0 million generated in the third quarter of 2011, and higher by $10.8 million than the previous quarter. Sales into the secondary market kept pace, with third quarter sales of $81.9 million, up $25.4 million, or 45 percent, above the $56.4 million sold in the year ago-quarter.

 

Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.38 million for the third quarter of 2012 compared to $1.23 million for the linked quarter and $0.31 million for the year-ago third quarter. Year-to-date, the net mortgage servicing valuation adjustment was $0.11 million; the last two quarter’s negative valuation adjustments have virtually offset the large gain of the first quarter. The mortgage servicing portfolio at the end of the third quarter of 2012 was $488.9 million, up $118.9 million, or 32.1 percent, from 2011 third quarter-end.

 

Mortgage banking revenues accounted for 40.5 percent of noninterest income in the third quarter of 2012 compared to 12.3 percent in the year-earlier third quarter where impairment valuations reduced the contribution of mortgage banking. Excluding mortgage banking and data services fees, the $1.5 million remainder of noninterest income in the third quarter of 2012 was derived primarily from wealth management and customer service fees; each of these two business lines have contributed a remarkably stable stream of fee income modestly in excess of $0.6 million every quarter. In addition, during the third quarter, Rurban sold several SBA and FSA guaranteed loans which generated $170,000 of revenue. These gains offset $151,000 of losses on residential real estate properties sold at auction during the quarter.

 

Rurban’s revenue stream has benefited from the magnitude and diversity of its fee income. The Company remains highly diversified for its asset size; core noninterest income contributed 37.8 percent of third quarter 2012 core revenue; this compares to 31.1 percent for the year-ago third quarter.

 

Loan Loss Provision

 

The loan loss provision was $300,000 for the third quarter of 2012, unchanged from the third quarter of 2011, but higher by $100,000 from the linked quarter. The provision expense declined by $744,000, or 44 percent, year to date, reflecting a 19 percent decline in nonperforming loans, as well as a 64 percent decline in net charge-offs. As of September 30, 2012, the loan loss reserve was 1.47 percent of total loans, relatively unchanged throughout the past twelve months as a percentage of loans. At current levels, the loan loss reserve provides 96 percent coverage of nonperforming loans compared to reserve coverage of 72 percent at third quarter-end 2011.

 

Noninterest Expense

 

For the third quarter of 2012, noninterest expense was $6.73 million compared to $6.87 million and $6.82 million for the linked and year-ago quarters, respectively. Rurban has taken steps to make its salary structure more responsive to revenue growth through the implementation of incentive and commission-based compensation. Excluding $0.55 million and $0.27 million of commissions paid primarily to State Bank’s mortgage bankers in the third quarters of 2012 and 2011, respectively, salary expense declined 8.0 percent, consistent with a decline of 16 full-time equivalent staff, or 7.4 percent, over the past twelve-month period. Reflecting this improvement in third quarter 2012 operating revenue and expense, the core efficiency ratio declined to 73.0 percent, from 83.1 percent for the year-ago quarter.

 

   

Balance Sheet

 

Total assets as of September 30, 2012 were $630.2 million, an increase of $6.4 million, or 1.0 percent, from September 30, 2011. Over the same twelve-month time frame, total deposits grew $0.9 million and loans grew $16.1 million. This higher level of loans outstanding relative to assets has provided support to Rurban’s net interest margin as has the shift in deposit mix further toward lower-cost non-maturity deposits, which now comprise 61 percent of total deposits compared to 57 percent for the year-ago quarter. Improvements in the deposit mix, combined with the continuing decline in interest rates, reduced the cost of interest-bearing liabilities a further 21 basis points, or 17.7 percent, during the course of the past twelve months, to 98 basis points. The same factors, a change in the mix and declining rates, contributed to the 29 basis point, or 5.7 percent, decline in earning asset yields.

 

Loan Portfolio

($ in Thousands)		Sep. 2012				Jun. 2012				Mar. 2012				Dec. 2011				Sep. 2011				Variance YOY
Commercial & Industrial (C&I)		$	76,043			$	75,964			$	78,450			$	78,112			$	77,269			$	(1,226	)
% of Total			16.7	%			16.8	%			17.8	%			17.7	%			17.6	%			(1.6	%)
Commercial Real Estate			198,682				199,918				188,984				187,829				186,411				12,271
% of Total			43.6	%			44.2	%			43.0	%			42.4	%			42.4	%			6.6	%
Agriculture			42,988				41,093				37,741				38,361				38,601				4,387
% of Total			9.4	%			9.1	%			8.6	%			8.7	%			8.8	%			11.4	%
Residential Real Estate			85,727				85,046				84,771				87,656				85,399				328
% of Total			18.8	%			18.8	%			19.3	%			19.8	%			19.5	%			0.4	%
Consumer & Other			51,581				50,089				49,775				50,596				51,246				335
% of Total			11.3	%			11.1	%			11.3	%			11.4	%			11.7	%			0.7	%
Total Loans		$	455,021			$	452,110			$	439,721			$	442,554			$	438,926			$	16,095
																							3.7	%

 

Total loans were $455.0 million at September 30, 2012 compared to $438.9 million for the prior-year period, up $16.1 million, or 3.7 percent. Commercial real estate (“CRE”) loans accounted for 76 percent of total loan growth over the past twelve-month period, up $12.3 million, or 6.6 percent. CRE loans currently comprise 43.6 percent of State Bank’s loan portfolio, followed by residential real estate and C&I loans, at 18.8 percent and 16.7 percent, respectively. Although CRE loans showed the largest dollar increase at $12.3 million, agriculture loans showed the highest growth rate year over year, at 11.4 percent.

 

  

Asset Quality

 

Nonaccruing loans were $5.2 million as of September 30, 2012, a decline of $2.1 million, or 28 percent from the year-earlier level. The greatest improvement was reflected in the CRE portfolio, where nonaccrual loans declined over the past twelve months by $1.8 million, or 80 percent, to $0.45 million as of September 30, 2012. Currently, Rurban has only two nonperforming relationships that exceed $1.0 million; together, they account for $2.3 million, or 25 percent, of nonperforming assets.

 

 

Summary of Nonperforming Assets
($ in Thousands)
Nonaccruing Loan Category		Sep. 2012				Jun. 2012				Mar. 2012				Dec. 2011				Sep. 2011
Commercial & Industrial (C&I)		$	1,362			$	1,467			$	2,021			$	2,393			$	2,466
% of Total C&I loans			1.78	%			1.93	%			2.58	%			3.06	%			3.19	%
Commercial Real Estate			448				1,345				1,481				1,456				2,210
% of Total CRE loans			0.23	%			0.67	%			0.78	%			0.78	%			1.19	%
Agriculture			3				-				113				-				87
% of Total Ag loans			0.01	%			-				0.30	%			-				0.23	%
Residential Real Estate			2,607				1,958				1,840				2,471				2,107
% of Total Res. RE loans			3.04	%			2.30	%			2.17	%			2.82	%			2.47	%
Consumer & Other			829				545				1,056				580				461
% of Consumer & Other loans			1.61	%			1.09	%			2.12	%			1.15	%			0.90	%
Total Nonaccruing Loans			5,249				5,315				6,511				6,900				7,331
% of Total Loans			1.15	%			1.18	%			1.48	%			1.56	%			1.67	%
Accruing Restructured Loans			1,735				1,837				1,593				1,334				1,311
Total Nonperforming Loans		$	6,984			$	7,152			$	8,104			$	8,234			$	8,642
% of Total Loans			1.53	%			1.58	%			1.84	%			1.86	%			1.97	%
OREO & Repossessed Vehicles			2,415				1,708				1,807				1,830				1,970
Total Nonperforming Assets			9,399			$	8,860			$	9,911			$	10,064			$	10,612
% of Total Assets			1.49	%			1.40	%			1.54	%			1.60	%			1.70	%

 

 

Rurban moved one large loan in excess of $500,000 to nonperforming status this past quarter. Apart from this one major addition, problem assets continue to reduce at an expeditious rate.

 

NONPERFORMING ASSET RECONCILIATION
($ in Thousands)		Sep. 2012				Jun. 2012				Mar. 2012				Dec. 2011				Sep. 2011
Beginning Balance		$	8,860			$	9,911			$	10,064			$	10,612			$	11,441
Additions			1,396				1,209				906				1,193				432
Returns to performing status			(163	)			(306	)			(419	)			(169	)			(206	)
Principal payments			(146	)			(1,773	)			(402	)			(375	)			(281	)
Sale of OREO/OAO			(152	)			(147	)			(23	)			(358	)			(246	)
Loan charge-offs			(294	)			(220	)			(474	)			(648	)			(527	)
Valuation write-downs			-				(58	)			-				(214	)			-
Restructured Loan Activity			(102	)			244				259				23				(1	)
Net Change			522				(1,051	)			(153	)			(548	)			(829	)
Total		$	9,399			$	8,860			$	9,911			$	10,064			$	10,612

 

Capitalization

 

Capital ratios continue to improve, but still remain at the low end of management’s objectives. Tangible leverage increased 90 basis points over the past twelve months, and now stands at 5.53 percent. All bank regulatory ratios remain in excess of “well-capitalized” levels, and have improved relative to the prior year and linked quarter; holding company ratios have shown consistent quarterly improvement since mid-year 2011. At September 30, 2012, State Bank’s Total Risk-Based Capital was $58.0 million, $20.7 million above the well-capitalized level; the Total Risk-based Capital Ratio was 12.4 percent. As of September 30, 2012, Rurban had 4,861,779 common shares outstanding.

 

About Rurban Financial Corp.

 

Based in Defiance, Ohio, Rurban Financial Corp. is a financial services holding company with two wholly-owned operating subsidiaries: The State Bank and Trust Company (State Bank) and RDSI Banking Systems (RDSI). State Bank operates through 18 banking centers in seven Northwestern Ohio counties, and one center in Fort Wayne, Indiana; and three loan production offices: two in Columbus, Ohio and one in Angola, Indiana. The Bank offers a full range of financial services for consumers and small businesses, including wealth management, mortgage banking, commercial and agricultural lending. RDSI provides item processing services to community banks located in the Midwest. Rurban’s common stock is listed on the NASDAQ Global Market under the symbol RBNF.

 

Forward-Looking Statements

 

Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in the national and regional banking, insurance and mortgage industries, competitive factors specific to markets in which Rurban and its subsidiaries operate, future interest rate levels, legislative and regulatory actions, capital market conditions, general economic conditions, geopolitical events, the loss of key personnel and other factors. Forward-looking statements speak only as of the date on which they are made, and Rurban undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made except as required by law. All subsequent written and oral forward-looking statements attributable to Rurban or any person acting on its behalf are qualified by these cautionary statements.

 

Non-GAAP Financial Measures

 

In addition to results presented in accordance with GAAP, this release contains certain non-GAAP financial measures. Management believes that providing certain non-GAAP financial measures provides investors with information useful in understanding Rurban’s financial performance, its performance trends and financial position. Specifically, Rurban provides measures based on “core operating earnings,” which excludes merger, integration and restructuring expenses that are not reflective of on-going operations or not expected to recur. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.

 

 

RURBAN FINANCIAL CORP.  & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Unaudited)
		September				June				March				December				September
($ in Thousands)		2012				2012				2012				2011				2011
ASSETS
Cash and due from banks		$	10,289			$	14,636			$	29,602			$	14,846			$	13,764
Securities available for sale, at fair value			101,247				102,537				110,603				111,978				104,615
Other securities - FRB and FHLB Stock			3,748				3,748				3,685				3,685				3,748
Total investment securities			104,995				106,285				114,288				115,663				108,363
Loans held for sale			11,584				10,595				11,384				5,238				10,590
Loans, net of unearned income			455,021				452,110				439,721				442,554				438,926
Allowance for loan losses			(6,696	)			(6,618	)			(6,609	)			(6,529	)			(6,235	)
Net loans			448,325				445,492				433,112				436,025				432,691
Premises and equipment, net			12,898				13,190				13,282				13,773				14,120
Purchased software			334				355				386				159				805
Cash surrender value of life insurance			12,491				12,401				12,312				12,224				12,134
Goodwill			16,353				16,353				16,353				16,353				16,734
Core deposits and other intangibles			1,376				1,534				1,691				1,849				2,006
Foreclosed assets held for sale, net			2,415				1,708				1,807				1,830				1,970
Mortgage servicing rights			3,346				3,359				3,359				2,820				2,709
Accrued interest receivable			1,832				1,597				1,802				1,635				2,061
Other assets			3,967				5,026				5,598				6,249				5,846
Total assets		$	630,205			$	632,531			$	644,976			$	628,664			$	623,793
LIABILITIES AND EQUITY
Deposits
Non interest bearing demand		$	69,250			$	68,918			$	71,077			$	65,963			$	62,080
Interest bearing demand			112,230				109,268				118,898				107,446				103,229
Savings			53,505				53,777				52,599				49,665				48,146
Money market			78,006				81,114				82,799				74,244				79,163
Time deposits			202,259				205,584				210,119				221,447				221,731
Total deposits			515,250				518,661				535,492				518,765				514,349
Notes payable			1,975				2,249				2,519				2,788				2,865
Advances from Federal Home Loan Bank			18,500				17,500				12,611				12,776				12,940
Repurchase agreements			13,735				15,824				17,771				18,779				18,778
Trust preferred securities			20,620				20,620				20,620				20,620				20,620
Accrued interest payable			4,223				3,836				3,556				2,954				2,704
Other liabilities			3,972				3,567				3,381				4,050				3,985
Total liabilities			578,275				582,257				595,950				580,732				576,241
Equity
Preferred stock			-				-				-				-				-
Common stock			12,569				12,569				12,569				12,569				12,569
Additional paid-in capital			15,363				15,350				15,338				15,323				15,302
Retained earnings			23,755				22,452				21,438				20,466				20,192
Accumulated other comprehensive income			2,012				1,672				1,450				1,343				1,258
Treasury stock			(1,769	)			(1,769	)			(1,769	)			(1,769	)			(1,769	)
Total equity			51,930				50,274				49,026				47,932				47,552
Total liabilities and equity		$	630,205			$	632,531			$	644,976			$	628,664			$	623,793

 

  

RURBAN FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)

  

($ in thousands, except per share data)			Three Months Ended																				Nine Months Ended
			September				June				March				December				September				September				September
Interest income			2012				2012				2012				2011				2011				2012				2011
Loans
Taxable		$	6,106			$	6,037			$	5,928			$	6,171			$	6,251			$	18,071			$	18,273
Nontaxable			21				24				23				24				24				68				50
Securities
Taxable			383				403				399				387				446				1,185				1,623
Nontaxable			156				146				147				170				172				449				810
Total interest income			6,666				6,610				6,497				6,752				6,893				19,773				20,756
Interest expense
Deposits			694				768				854				946				976				2,316				3,035
Other borrowings			17				(2	)			34				22				25				49				74
Repurchase Agreements			11				60				68				70				72				139				842
Federal Home Loan Bank advances			92				75				74				77				79				241				325
Trust preferred securities			418				441				592				358				356				1,451				1,049
Total interest expense			1,232				1,342				1,622				1,473				1,508				4,196				5,325
Net interest income			5,434				5,268				4,875				5,279				5,385				15,577				15,431
Provision for loan losses			300				200				450				299				297				950				1,694
Net interest income after provision
for loan losses			5,134				5,068				4,425				4,980				5,088				14,627				13,737
Noninterest income
Data service fees			485				576				643				671				743				1,704				2,959
Trust fees			646				607				642				623				629				1,895				1,993
Customer service fees			677				668				631				647				664				1,976				1,885
Gain on sale of mortgage  and OMSR's			1,572				1,395				1,181				1,529				1,101				4,148				2,091
Mortgage loan servicing fees, net			(192	)			(165	)			329				(308	)			(796	)			(28	)			(661	)
Gain on sale of non-mortgage loans			170				-				-				127				-				170				81
Net gain on sales of securities			-				-				-				-				-				-				1,871
Loss on sale or disposal of assets			(151	)			(50	)			(56	)			(46	)			(27	)			(257	)			(287	)
Other income			201				177				211				180				161				589				503
Total non-interest income			3,408				3,208				3,581				3,423				2,475				10,197				10,435
Noninterest expense
Salaries and employee benefits			3,597				3,597				3,499				3,488				3,583				10,693				10,686
Net occupancy expense			515				528				548				531				568				1,591				1,669
Equipment expense			722				712				711				709				690				2,145				2,119
FDIC insurance expense			91				223				214				191				145				528				717
Fixed asset and software impairment			-				-				-				609				-				-				-
Data processing fees			103				121				113				131				158				337				494
Professional fees			451				390				385				493				377				1,226				1,428
Marketing expense			85				103				90				93				89				278				235
Printing and office supplies			39				67				78				52				86				184				281
Telephone and communication			151				139				144				139				141				434				441
Postage and delivery expense			223				200				229				235				260				652				863
State, local and other taxes			128				118				120				77				103				366				381
Employee expense			118				119				106				113				143				343				411
Other intangible amortization expense			157				158				157				157				185				472				579
OREO Impairment			-				58				-				214				-				58				-
Other expenses			345				338				282				359				295				965				1,977
Total non-interest expense			6,725				6,871				6,676				7,972				6,823				20,272				22,281
Income before income tax expense			1,817				1,405				1,330				431				740				4,552				1,891
Income tax expense			513				391				358				157				137				1,262				500
Net income		$	1,304			$	1,014			$	972			$	274			$	603			$	3,290			$	1,391
Common share data:
Basic earnings per common share		$	0.27			$	0.21			$	0.20			$	0.06			$	0.12			$	0.68			$	0.29
Diluted earnings per common share		$	0.27			$	0.21			$	0.20			$	0.06			$	0.12			$	0.68			$	0.29
Average shares outstanding ($ in thousands):
Basic:			4,862				4,862				4,862				4,862				4,862				4,862				4,862
Diluted:			4,862				4,862				4,862				4,862				4,862				4,862				4,862

 

 

RURBAN FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share data)		Three Months Ended																				Nine Months Ended
		September				June				March				December				September				September				September
SUMMARY OF OPERATIONS		2012				2012				2012				2011				2011				2012				2011
Net interest income		$	5,434				5,268				4,875				5,279				5,385				15,577				15,431
Tax-equivalent adjustment		$	91				88				88				100				101				266				443
Tax-equivalent net interest income (core)		$	5,525				5,356				4,963				5,379				5,486				15,843				15,874
Provision for loan loss		$	300				200				450				299				297				950				1,694
Noninterest income		$	3,408				3,208				3,581				3,423				2,475				10,197				10,435
Less: Non core items		$	(53	)			-				(90	)			-				-				(143	)			(2,390	)
Core noninterest income		$	3,355				3,208				3,491				3,423				2,475				10,054				8,044
Total revenue, tax-equivalent		$	8,933				8,564				8,544				8,802				7,961				26,040				26,309
Core revenue, tax-equivalent		$	8,880				8,564				8,454				8,802				7,961				25,897				23,918
Noninterest expense		$	6,725				6,871				6,676				7,972				6,823				20,272				22,281
Less: Non core items		$	-				-				-				990				-				-				1,083
Core noninterest expense		$	6,725				6,871				6,676				6,982				6,823				20,272				21,198
Pre provision pretax income		$	2,117				1,605				1,780				730				1,037				5,502				3,585
Core pre provision pretax income		$	2,064				1,605				1,690				1,720				1,037				5,359				2,277
Pretax income		$	1,817				1,405				1,330				431				740				4,552				1,891
Net income		$	1,304				1,014				972				274				603				3,290				1,391
Core earnings after tax		$	1,269				1,014				913				927				603				3,196				528
PER SHARE INFORMATION:
Basic & diluted earnings		$	0.27				0.21				0.20				0.06				0.12				0.68				0.29
Core earnings		$	0.26				0.21				0.19				0.19				0.12				0.66				0.11
Book value per common share		$	10.68				10.34				10.08				9.86				9.78				10.68				9.78
PERFORMANCE RATIOS:
Return on average assets			0.82	%			0.63	%			0.61	%			0.17	%			0.38	%			0.69	%			0.29	%
Core return on average assets			0.80	%			0.63	%			0.57	%			0.58	%			0.38	%			0.67	%			0.11	%
Return on average common equity			10.25	%			8.20	%			8.04	%			2.33	%			5.12	%			8.84	%			3.97	%
Core return on avg. tangible common equity			15.49	%			13.01	%			12.18	%			13.21	%			8.80	%			13.57	%			2.54	%
Earning asset yield			4.78	%			4.76	%			4.77	%			4.93	%			5.07	%			4.77	%			5.06	%
Cost of interest bearing liabilities			0.98	%			1.05	%			1.28	%			1.15	%			1.19	%			1.10	%			1.35	%
Core efficiency ratio			72.61	%			77.66	%			76.17	%			74.80	%			83.05	%			75.43	%			85.18	%
Core net interest income/ Average assets			3.48	%			3.33	%			3.12	%			3.38	%			3.50	%			3.31	%			3.28	%
Core noninterest income/ Average assets			2.11	%			1.99	%			2.20	%			2.15	%			1.58	%			2.10	%			1.66	%
Core noninterest expense/ Average assets			4.24	%			4.27	%			4.20	%			4.39	%			4.35	%			4.23	%			4.38	%
Core noninterest income/ Operating revenue			37.56	%			37.46	%			40.86	%			38.89	%			31.09	%			38.61	%			30.58	%
Net interest margin			3.85	%			3.75	%			3.53	%			3.80	%			3.90	%			3.71	%			3.68	%
Tax equivalent effect			0.06	%			0.06	%			0.07	%			0.07	%			0.08	%			0.06	%			0.11	%
Net interest margin - fully tax equivalent basis			3.91	%			3.81	%			3.60	%			3.87	%			3.98	%			3.77	%			3.79	%
ASSET QUALITY RATIOS:
Gross charge-offs		$	302				252				474				648				527				1,028				2,759
Recoveries		$	78				62				104				642				21				244				584
Net charge-offs		$	223				190				370				6				506				784				2,175
Nonaccruing loans/ Total loans			1.15	%			1.18	%			1.48	%			1.56	%			1.67	%			1.15	%			1.67	%
Nonperforming loans/ Total loans			1.53	%			1.58	%			1.84	%			1.86	%			1.97	%			1.53	%			1.97	%
Nonperforming assets/ Loans & OREO			2.05	%			1.95	%			2.24	%			2.26	%			2.41	%			2.05	%			2.41	%
Nonperforming assets/ Total assets			1.49	%			1.40	%			1.54	%			1.60	%			1.70	%			1.49	%			1.70	%
Allowance for loan loss/ Nonperforming loans			95.9	%			92.5	%			81.6	%			79.3	%			72.1	%			95.9	%			72.1	%
Allowance for loan loss/ Total loans			1.47	%			1.46	%			1.50	%			1.48	%			1.42	%			1.47	%			1.42	%
Net loan charge-offs/ Average loans (ann.)			0.20	%			0.17	%			0.34	%			0.01	%			0.46	%			0.23	%			0.67	%
Loan loss provision/ Net charge-offs			134.46	%			105.22	%			121.52	%			5243.77	%			58.69	%			121.22	%			77.92	%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits			88.31	%			87.17	%			82.12	%			85.31	%			85.34	%			88.31	%			85.34	%
Equity/ Assets			8.24	%			7.95	%			7.60	%			7.62	%			7.62	%			8.24	%			7.62	%
Tangible equity/ Tangible assets			5.53	%			5.21	%			4.88	%			4.85	%			4.63	%			5.53	%			4.63	%
END OF PERIOD BALANCES
Total loans		$	455,021				452,110				439,721				442,554				438,926				455,021				438,926
Total assets		$	630,205				632,531				644,976				628,664				623,793				630,205				623,793
Deposits		$	515,250				518,661				535,492				518,765				514,349				515,250				514,349
Stockholders equity		$	51,930				50,274				49,026				47,932				47,552				51,930				47,552
Tangible equity		$	33,867				32,032				30,596				29,571				28,007				33,867				28,007
Full-time equivalent employees			199				204				203				210				215				199				215
AVERAGE BALANCES
Total loans		$	454,634				446,786				436,384				437,020				437,744				445,982				435,855
Total earning assets		$	565,144				562,169				552,016				556,004				551,744				559,795				558,721
Total assets		$	635,012				643,859				635,849				636,932				627,291				638,275				645,803
Deposits		$	515,795				527,992				523,193				522,472				512,190				522,149				514,197
Stockholders equity		$	50,905				49,464				48,377				47,035				47,087				49,622				46,742
Tangible equity		$	32,779				31,165				29,981				28,082				27,414				31,405				27,711

 

 

		RURBAN FINANCIAL CORP.
		Rate Volume Analysis - (Unaudited)
		For the Three and Nine Months Ended September 30, 2012 and 2011
($ in Thousands)		Three Months Ended September 30, 2012												Three Months Ended September 30, 2011
		Average								Average				Average								Average
Assets			Balance				Interest				Rate				Balance				Interest				Rate
Taxable securities		$	87,528				383				1.75	%		$	91,436				446				2.25	%
Non-taxable securities			15,566				236				6.06	%			15,762				260				6.60	%
Federal funds sold			-				-				N/A				-				-				N/A
Loans, net			462,050				6,138				5.31	%			444,546				6,287				5.66	%
Total earning assets		$	565,144				6,757				4.78	%		$	551,744				6,994				5.07	%
Cash and due from banks			13,407												16,391
Allowance for loan losses			(6,707	)											(6,502	)
Premises and equipment			15,390												17,009
Other assets			47,778												48,649
Total assets		$	635,012											$	627,291
Liabilities
Savings and interest-bearing demand		$	243,004				47				0.08	%		$	230,591				88				0.15	%
Time deposits			203,104				647				1.28	%			218,647				889				1.71	%
Repurchase agreements			13,972				11				0.31	%			18,643				72				3.33	%
Advances from FHLB			18,082				92				2.04	%			14,967				79				2.56	%
Junior subordinated debentures			20,620				403				7.82	%			20,620				356				6.90	%
Notes payable & other borrowed funds			2,076				31				5.97	%			3,048				25				6.53	%
Total interest-bearing liabilities		$	500,858				1,232				0.98	%		$	506,516				1,508				1.19	%
Non interest-bearing demand			69,687												62,952
Other liabilities			13,562												10,736
Total liabilities			584,107												580,204
Equity		$	50,905											$	47,087
Total liabilities and equity		$	635,012											$	627,291
Net interest income (tax equivalent basis)						$	5,525											$	5,486
Net interest income as a percent of average interest-earning assets											3.91	%											3.98	%

 

 

 

		Nine Months Ended September 30, 2012												Nine Months Ended September 30, 2011
		Average								Average				Average								Average
Assets		Balance				Interest				Rate				Balance				Interest				Rate
Taxable securities		$	91,917				1,185				1.72	%		$	98,863				1,623				2.19	%
Non-taxable securities			14,911				680				6.08	%			24,003				1,226				6.81	%
Federal funds sold			-				-				N/A				-				-				N/A
Loans, net			452,967				18,174				5.35	%			435,855				18,350				5.61	%
Total earning assets		$	559,795				20,039				4.77	%		$	558,721				21,200				5.06	%
Cash and due from banks			21,740												27,660
Allowance for loan losses			(6,506	)											(6,659	)
Premises and equipment			14,962												16,837
Other assets			48,285												49,244
Total assets		$	638,275											$	645,803
Liabilities
Savings and interest-bearing demand		$	244,744				167				0.09	%		$	234,951				297				0.17	%
Time deposits			208,645				2,149				1.37	%			215,647				2,739				1.69	%
Repurchase agreements			16,344				139				1.14	%			35,552				842				3.16	%
Advances from FHLB			14,641				241				2.19	%			16,632				325				2.61	%
Junior subordinated debentures			20,620				1,396				9.03	%			20,620				1,048				6.78	%
Notes payable & other borrowed funds			2,315				103				5.94	%			3,171				74				3.10	%
Total interest-bearing liabilities		$	507,308				4,196				1.10	%		$	526,574				5,325				1.35	%
Non interest-bearing demand			68,761												63,599
Other liabilities			12,584												8,889
Total liabilities			588,653												599,061
Equity		$	49,622											$	46,742
Total liabilities and equity		$	638,275											$	645,803
Net interest income (tax equivalent basis)						$	15,843											$	15,875
Net interest income as a percent of average interest-earning assets											3.77	%											3.79	%

 

 

 

Rurban Financial Corp.

Segment Reporting - (Unaudited)

Three Months Ended September 30, 2012

  

($ in Thousands)		Banking				Parent Company and Other				Total Banking, Parent and  Other				Data Services				Elimination Entries				Rurban Financial Corp.
Income Statement Measures
Interest income		$	6,666			$	-			$	6,666			$	-			$	-			$	6,666
Interest expense			798				418				1,216				16				-				1,232
Net interest income			5,868				(418	)			5,450				(16	)			-				5,434
Provision for loan loss			300				-				300				-				-				300
Non-interest income			3,017				84				3,101				717				(410	)			3,408
Non-interest expense			6,068				290				6,358				736				(369	)			6,725
Net income - QTD		$	1,776			$	(437	)		$	1,339			$	(24	)		$	(11	)		$	1,304
Performance Measures
Average  assets - QTD		$	627,556			$	-			$	632,423			$	2,589			$	-			$	635,012
Return on average assets			1.13	%			-				0.85	%			-3.71	%			-				0.82	%
Average equity - QTD		$	71,875			$	-			$	50,905			$	(1,270	)		$	-			$	50,905
Return on average equity			9.88	%			-				10.52	%			-				-				10.25	%
Average loans - QTD		$	462,050			$	2,000			$	464,050			$	-			$	(2,000	)		$	462,050
Average deposits - QTD		$	518,100			$	-			$	518,100			$	-			$	(2,304	)		$	515,795

 

 

Rurban Financial Corp.

Segment Reporting - (Unaudited)

Nine Months Ended September 30, 2012

  

		Banking				Parent Company and Other				Total Banking, Parent and  Other				Data Services				Elimination Entries				Rurban Financial Corp.
Income Statement Measures
Interest income		$	19,856			$	-			$	19,856			$	-			$	(83	)		$	19,773
Interest expense			2,697				1,451				4,147				99				(50	)			4,196
Net interest income			17,160				(1,451	)			15,709				(99	)			(33	)			15,577
Provision for loan loss			950				-				950				-				-				950
Non-interest income			8,802				223				9,025				2,980				(1,808	)			10,197
Non-interest expense			18,597				954				19,551				2,461				(1,740	)			20,272
Net income - YTD		$	4,539			$	(1,456	)		$	3,084			$	277			$	(71	)		$	3,290
Performance Measures
Average  assets - YTD		$	630,910			$	-			$	635,356			$	2,919			$	-			$	638,275
Return on average assets			0.96	%			-				0.65	%			12.68	%			-				0.69	%
Average equity - YTD		$	70,649			$	-			$	49,622			$	(1,613	)		$	-			$	49,622
Return on average equity			8.57	%			-				8.29	%			-				-				8.84	%
Average loans - YTD		$	453,495			$	2,000			$	455,495			$	-			$	(2,528	)		$	452,967
Average deposits - YTD		$	523,970			$	-			$	523,970			$	-			$	(1,821	)		$	522,149

 

 

 

RURBAN FINANCIAL CORP.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
		Three Months Ended																				Nine Months Ended
($ in Thousands)		September				June				March				December				September				September				September
		2012				2012				2012				2011				2011				2012				2011
GAAP Earnings		$	1,304			$	1,014			$	972			$	274			$	603			$	3,290			$	1,391
Realized securities gains (1)			-				-				-				-				-				-				(1,871	)
Prepayment penalties (1)			-				-				-				-				-				-				1,083
Hardware write-offs (2)			-				-				-				609				-				-				-
Contract buyouts (2)			(53	)			-				(90	)			-				-				(143	)			(519	)
Writedown of goodwill and other intangibles (2)			-				-				-				381				-				-				-
Total non-core Items			(53	)			-				(90	)			990				-				(143	)			(1,307	)
Applicable income tax effect on non-core Items			18				-				31				(336	)			-				49				445
After-tax non core Items			(35	)			-				(59	)			653				-				(94	)			(863	)
Core recurring net income		$	1,269			$	1,014			$	913			$	927			$	603			$	3,196			$	528

 

(1) State Bank & Trust

(2) RDSI

 

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

 

 

		September				June				March				December				September				September				September
($ in Thousands)		2012				2012				2012				2011				2011				2012				2011
Recurring total revenue - excluding realized securities gains/losses, gains/losses on sales of assets, interest accrued on RDSI loans ("Core revenue")			8,933				8,564				8,454				8,802				7,961				25,950				23,918
Tax equivalent adjustment (1)			91				88				88				100				101				266				443
Contract buyouts (2)			-				-				(90	)			-				-				(90	)			(519	)
Realized securities gains (1)			-				-				-				-				-				-				(1,871	)
(Gains)/losses on sales of assets (1)			-				-				-				-				-				-				-
																							-				-
Total nonrecurring items			91				88				(2	)			100				101				176				(1,947	)
																							-				-
Total GAAP revenue			8,842				8,476				8,456				8,702				7,860				25,774				25,866
Recurring net Interest Income - excluding interest accrued on New Core loan ("Core noninterest income")			5,525				5,356				4,963				5,379				5,486				15,843				15,874
Tax equivalent adjustment (1)			91				88				88				100				101				266				443
Total nonrecurring items			91				88				88				100				101				266				443
GAAP Net interest income			5,434				5,268				4,875				5,279				5,385				15,577				15,431
Recurring noninterest income - excluding realized securities gains/losses, gains/losses on sales of assets, etc. ("Core noninterest income")			3,355				3,208				3,491				3,423				2,475				10,054				8,044
Contract buyouts (2)			(53	)			-				(90	)			-				-				(143	)			(519	)
Realized securities gains (1)			-				-				-				-				-				-				(1,871	)
Total nonrecurring items			(53	)			-				(90	)			-				-				(143	)			(2,390	)
GAAP noninterest income			3,408				3,208				3,581				3,423				2,475				10,197				10,435
Recurring loan loss provision			300				200				450				299				297				950				1,694
Total nonrecurring items			-				-				-				-				-				-				-
GAAP loan loss provision			300				200				450				299				297				950				1,694
Recurring noninterest expense -- excluding unrealized OREO writedowns, writedowns of goodwill and other intangibles, software and hardware writedowns, contract write-offs, early termination fees and RDSI loan write-off			6,725				6,871				6,676				6,982				6,823				20,272				21,198
FHLB/REPO prepayment penalties (1)			-				-				-				-				-				-				1,083
Hardware write-offs (2)			-				-				-				609				-				-				-
Writedown of goodwill and other intangibles (2)			-				-				-				381				-				-				-
																							-				-
Total Nonrecurring items			-				-				-				990				-				-				1,083
																							-				-
GAAP Noninterest Expense			6,725				6,871				6,676				7,972				6,823				20,272				22,281