DEFIANCE, Ohio, Oct. 17, 2007 (PRIME NEWSWIRE) -- Rurban Financial Corp. (Nasdaq:RBNF), a leading provider of full-service community banking, investment management, trust services and bank data processing, reported third quarter 2007 net income of $864,000, an increase of 6.1 percent over the $814,000 reported for the third quarter of 2006. Third quarter 2007 earnings were $0.17 per diluted share, an increase of 6.3 percent from the $0.16 reported for the prior-year period. Compared with the second quarter of 2007, net income and diluted earnings per share increased by 10.0 and 6.5 percent, respectively.
For the nine months ended September 30, 2007, Rurban reported net income of $2,351,000, up $301,000, or 14.7 percent, from the $2,050,000 reported for the nine months ended September 30, 2006. Diluted earnings per share were $0.47 for the current year, up 14.6 percent compared with the $0.41 reported for the prior year.
Highlights of the quarter include:
* RDSI, Rurban's data processing subsidiary, reported another exceptional quarter. Revenue from RDSI rose 30.5 percent above the prior-year third quarter, accounting for 51.1 percent of Rurban's total revenue. Net income for RDSI was $659,000, up 38.0 percent from the year-ago quarter. Year-over-year growth reflects RDSI's continued organic expansion, greater penetration of its markets, entry into new markets, and the results of DCM, an item processing company acquired on September 2, 2006. * Following the consolidation of the operational activities of The Exchange Bank into The State Bank and Trust Company in the first quarter of 2007, The State Bank and Trust Company has been growing its loan portfolio as it capitalizes on the new markets, as well as its recent entry into Fort Wayne, Indiana. The Bank continues to implement an aggressive calling strategy resulting in year-to-date consolidated loan growth of $18.2 million, up 4.9 percent from December 31, 2006, driven primarily by increases in commercial loans. * Credit quality remains solid; non-performing assets increased slightly to $6.4 million or 1.14 percent, of total assets for the current quarter, from $6.1 million, or 1.07 percent, a year-ago. Non-performing assets increased by $435,000 from the second quarter 2007. The increase on a quarter-to-quarter basis reflects modest deterioration, which is diversified across several business lines: residential real estate, agriculture and consumer loans. Net loan charge-offs were nominal at $28,000 for the quarter and $159,000 for the nine months ended September 30, 2007. * On April 12, 2007, Rurban initiated a stock repurchase program, authorizing the repurchase of up to 250,000 shares, or approximately five percent, of the Company's outstanding shares. As of September 30, 2007, Rurban has repurchased 28,000 shares at an average cost of $12.52; 16,000 of these shares were repurchased during the third quarter of 2007 at an average cost of $12.58.
Kenneth A. Joyce, Rurban's President and Chief Executive Officer, commented, "This was a relatively quiet quarter for Rurban showing continuing progress on most fronts. We are improving our earnings performance through continued attention to, and mitigation of, the many risks in this challenging environment. Our consolidation initiatives are reducing operating expenses consistent with our projections. Also, RDSI in particular has been making an ever-stronger contribution to earnings growth. The recent 50 basis point reduction in the Federal Funds Discount Rate and the subsequent change in the prime rate should improve net interest income over the course of the next six to twelve months as our Bank is liability-sensitive. We had a number of one-time adjustments in the comparison to past quarters, but overall the net interest margin at our Bank held firm. Most importantly, we do not see any material deterioration of credit quality as non-performing assets have held relatively steady, as have delinquencies. We realize that we have much work to do, but we are keeping our goals in sight, paying attention to basic blocking and tackling, and we believe we are on the right track for Rurban and for the investors in our stock."
CONSOLIDATED OPERATIONS ------------------------------------------------------------------ Earnings: (Three months ended) Sept. 2007 June 2007 Sept. 2006 ------------------------------------------------------------------ (Dollars in thousands except per share data) ------------------------------------------------------------------ Total Revenue $10,444 $10,258 $ 9,659 Net interest income 3,661 3,750 3,756 Provision for loan losses 140 146 35 Non-interest income 6,783 6,508 5,903 Non-interest expense 9,106 9,065 8,515 Net income $ 864 $ 785 $ 814 ------------------------------------------------------------------ Diluted EPS $ 0.17 $ 0.16 $ 0.16 ------------------------------------------------------------------
Total revenue, consisting of net interest income plus non-interest income, was $10.4 million for the third quarter of 2007, an increase of $785,000, or 8.1 percent, compared with $9.7 million for the prior-year third quarter. Compared with the second quarter of this year, total revenue increased $186,000, or 1.8 percent. Net interest income was $3.7 million in the current quarter, a decrease of $95,000, or 2.5 percent, from the 2006 third quarter, as a result of portfolio restructuring that lowered the level of Earning Assets. Net interest income decreased $89,000, or 2.4 percent, from the $3.8 million reported for the second quarter of this year, due to one-time items in the second quarter.
--------------------------------------------------------------------- Margin (QTR) Sept. 2007 June 2007 Sept. 2006 --------------------------------------------------------------------- (Bank Only) Balance Rate Balance Rate Balance Rate --------------------------------------------------------------------- (Dollars in thousands) --------------------------------------------------------------------- Loans $386,337 7.32% $380,598 7.41% $370,063 7.22% Investments $ 97,952 5.00% $ 99,411 4.87% $132,129 4.47% Earning Assets $488,240 6.84% $482,447 6.88% $504,391 6.49% Deposits $418,764 3.32% $418,391 3.24% $419,052 2.87% Total Funds $475,973 3.51% $469,363 3.41% $494,313 3.16% Net Interest Margin 3.41% 3.56% 3.40% ---------------------------------------------------------------------
Net interest margin for the Bank for the quarter ended September 30, 2007 was 3.41%, a one basis point increase from the 2006 third quarter margin of 3.40% and a 15 basis point drop from the 2007 second quarter margin of 3.56%. The margin for second quarter of 2007 was aided by a $70,000 recovery of interest income on non-accrual loans and other loan fees that are included in the yield. The yields on loans increased 10 basis points from third quarter 2007 compared to the third quarter 2006. The yield on investments increased by 53 basis points due to the balance sheet restructuring that was completed at year-end. The yield on Earning Assets increased 35 basis points year-over-year for the third quarter. Total cost of deposits increased 45 basis points for the third quarter 2007, compared to the third quarter 2006. Total funding cost increased by 35 basis points year-over-year.
"Margin pressure remains a challenge for the banking industry," said Joyce. "We are very encouraged that we have been able to maintain our margin in the Bank during the past twelve months. Our yield on Earning Assets increased by 35 basis points and was offset by an increase in cost of funds of an equivalent 35 basis points. We feel that our cost of deposits have hit a plateau and we expect them to decrease going forward. We will experience some decrease in our yield on loans going forward due to the Fed's rate cut. However, we have been successful in reducing our offering rates on deposits, which we believe will more than offset the decrease in loan rates. We have been very focused on increasing our core deposits, for example, our interest bearing checking accounts have increased by $4.9 million during the past twelve months. We remain confident that we are improving our Bank's fundamentals each quarter."
Non-interest income, derived primarily from RDSI, continues to be an increasingly significant contributor to Rurban's revenue stream, accounting for 51.1 percent of total revenue for the third quarter of 2007, compared with 42.3 percent for the year-ago quarter. Non-interest income grew $880,000, or 14.9 percent, increasing to $6.8 million when compared to the previous-year quarter; compared with the linked quarter, non-interest income grew $275,000, or 4.2 percent. On both a year-over-year and a linked quarter basis, growth in non-interest income was driven by data service fees, which increased $1.2 million and $375,100, respectively. The year-over-year increase is mainly due to the acquisition of DCM, which occurred on September 2, 2006. DCM accounted for $758,000 of the $1.2 million increase in data service fees. Trust fees, the second largest component of non-interest income, increased $66,500, or 8.8%, from the prior-year quarter. Excluding second quarter 2007 $45,000 fees for tax preparation, trust fees remained flat compared with the linked quarter. The growth in data processing fees and trust fees were offset by lower gains on the sale of mortgage loans and a reduction to other income. The other income decrease was due to one-time recoveries of $174,000 in the 2006 third quarter relating to The Exchange Bank.
The provision for loan losses was $140,000 compared with $35,000 for the third quarter of 2006, and $146,000 for the second quarter of 2007, reflecting both loan portfolio growth and a slightly higher level of non-performing assets.
Third quarter 2007 non-interest expense was $9.1 million, up $592,000, or 6.9 percent, from the prior-year third quarter. The year-over-year increase is due to the acquisition of DCM. Excluding the DCM acquisition, non-interest expense decreased by $203,000 reflecting the expense reductions identified and taken in the beginning of 2007. Compared with the second quarter, operating expenses were virtually unchanged, up $41,000, or 0.5 percent. Salaries and benefits increased marginally as a result of the growth being experienced at RDSI and DCM. Marketing expenses increased slightly due to the increased marketing expenses associated with the High Performance Checking account promotion at the Bank. Other expenses increased slightly due to the write-down of Other Assets Owned. Many of the expense categories experienced decreases due to the efficiencies gained following the merger of The Exchange Bank into The State Bank and Trust Company. At quarter-end, Rurban had 280 FTE employees, 37 fewer than at year-end 2006. The majority of this reduction is accounted for within the Bank.
Rurban continues to be very well capitalized. Shareholders' equity at September 30, 2007 was $58.5 million, equivalent to 10.3 percent of total assets; on a tangible basis, the ratio was 7.9 percent. The total risk-based capital ratio was 15.7 percent, well in excess of the "well-capitalized" regulatory threshold of 10 percent.
THE STATE BANK AND TRUST COMPANY
The State Bank and Trust Company reported net income of $714,000 for the quarter, compared with $872,000 for the prior-year quarter, a decrease of 18.4 percent. Compared with the second quarter of 2007, income decreased $203,000, or 22.2 percent. Revenue for the Bank (net interest income plus non-interest income) was $5.9 million for the current quarter, a decline of $454,000, or 7.1 percent, from the year earlier level of $6.4 million. During the 2006 third quarter, $265,000 of additional revenue was recorded on payments of impaired loans and the sale of previously charged-off loans at Exchange Bank. The Company also experienced a decrease in gain on sale of loans of $209,000 due to a decrease in residential real estate lending. Revenue decreased $191,000, or 3.1 percent, from the linked quarter's results. This, once again, was primarily due to the decrease in gains from saleable real estate loans and the aforementioned $70,000 recovery of interest on non-accrual loans during the second quarter 2007. Non-interest expense decreased $166,000 to $4.8 million for the current quarter compared with $5.0 million for the third quarter of 2006. The decrease continued to be driven by the operating efficiencies completed at the end of the first quarter. Non-interest expense increased $92,000 in the third quarter of 2007 compared to the second quarter of 2007. This increase was due to an increase in health care costs and additional advertising expenses associated with the High Performance Checking account promotion.
Loan growth over the past twelve months was $23.9 million, or 6.6 percent, reaching $388.3 million at September 30, 2007. Compared with the linked quarter, loans grew $6.6 million, or an annualized 6.9 percent. Year-over-year loan growth was primarily attributable to increases in commercial real estate (CRE) loans and commercial and industrial (C&I) loans. Partially offsetting these increases were declines in consumer loans and residential mortgages.
Deposits at September 30, 2007 were $413.2 million, up $1.0 million, or 0.2 percent, from the third quarter of 2006, and up $5.6 million from the linked quarter. The increase from the previous quarter resulted from an $8.5 million increase in retail time deposits, and a $2.5 million increase in NOW accounts, and other transaction accounts. The increase was partially offset by a $5.2 million decrease in savings and money market accounts. Rurban's deposit mix continued to shift toward core deposits, which accounted for 87.0 percent of total deposits at period-end, compared with 86.8 percent for the linked quarter, and 83.8 percent for the prior-year quarter.
ASSET QUALITY --------------------------------------------------------------------- Asset Quality Sept. 2007 June 2007 Sept. 2006 --------------------------------------------------------------------- (Dollars in thousands) --------------------------------------------------------------------- Net charge-offs / (Recoveries) $28 $90 $(54) --------------------------------------------------------------------- Net charge-offs (Ann.) / Avg. loans 0.03% 0.09% (0.06%) --------------------------------------------------------------------- Allowance for loan loss $3,937 $3,824 $4,522 --------------------------------------------------------------------- Allowance for loan loss / Loans 1.01% 1.00% 1.24% --------------------------------------------------------------------- Non-performing assets $6,432 $5,997 $6,126 --------------------------------------------------------------------- NPA / Total assets 1.14% 1.09% 1.07% ---------------------------------------------------------------------
Non-performing assets (loans + OREO + OAO) were $6.4 million, or 1.14 percent, of total assets at September 30, 2007, an increase of $306,000 from twelve months ago, and an increase of $435,000 from the second quarter. Rurban's non-performing assets continue to be impacted by three legacy credits totaling $2.1 million. Net charge-offs for the second quarter were $28,000, compared with a recovery of $54,000 in the third quarter of 2006, and net charge-offs of $90,000 for the linked quarter. The loan loss reserve is 1.01 percent of period-end loans.
RFCBC, Inc. (Loan Workout Company)
RFCBC's sole remaining loan relationship is currently in litigation; with resolution, Rurban expects to close out the loan workout company by 2007 year-end or first quarter 2008. RFCBC recorded a nominal loss of $39,000 for the quarter compared to $82,000 for the previous-year quarter. The majority of the expenses are being incurred from litigation costs associated with the remaining loan and past legal issues; there are no employees at RFCBC, as the remaining workout activity is being outsourced.
RURBANC DATA SERVICES, INC (RDSI)
Revenue for the quarter was $5.3 million, up $1.2 million, or 30.5 percent, above the $4.1 million reported for the third quarter of 2006; compared with the linked quarter, revenue increased $383,000, or 7.7 percent. RDSI continues to build its client base signing three new data processing clients during the third quarter of 2007. There are four conversions scheduled over the next several months, which will continue to build RDSI revenue and net income. Currently, RDSI services 113 community banks.
Earnings for the third quarter were $659,000, compared to $478,000 for the year-ago quarter, up $181,000, or 38.0 percent; on a linked quarter basis, third quarter net income increased by $183,000, or 38.5 percent
ABOUT RURBAN FINANCIAL CORP.
Rurban Financial Corp. is a publicly-held financial services holding company based in Defiance, Ohio with assets of $565.7 million as of September 30, 2007. Rurban's wholly-owned subsidiaries are The State Bank and Trust Company, including Reliance Financial Services; Rurbanc Data Services, Inc. (RDSI); and DCM. The State Bank and Trust Company offers financial services through its 18 branches in Allen, Defiance, Fulton, Lucas, Paulding and Wood Counties, Ohio and Allen County, Indiana. Reliance Financial Services, a division of the Bank, offers a diversified array of trust and financial services to customers throughout the Midwest. RDSI and DCM provide data and item processing services to community banks in Arkansas, Florida, Illinois, Indiana, Michigan, Missouri, Ohio and Wisconsin. Rurban's common stock is quoted on the NASDAQ Global Market under the symbol RBNF. The Company currently has 10,000,000 shares of stock authorized and 4,999,433 shares outstanding. The Company's website is http://www.rurbanfinancial.net.
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. All subsequent written and oral forward-looking statements attributable to Rurban or any person acting on our behalf are qualified by these cautionary statements.
RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2007 and December 31, 2006 September December 2007 2006 ---- ---- (Unaudited) ASSETS Cash and due from banks $ 12,859,263 $ 13,381,791 Federal funds sold -- 9,100,000 ------------- ------------- Cash and cash equivalents 12,859,263 22,481,791 Interest-earning deposits in other financial institutions -- 150,000 Available-for-sale securities 102,759,847 102,462,075 Loans held for sale -- 390,100 Loans, net of unearned income 388,264,099 370,101,809 Allowance for loan losses (3,936,545) (3,717,377) Premises and equipment, net 15,290,795 15,449,774 Purchased software 4,500,417 4,618,691 Federal Reserve and Federal Home Loan Bank Stock 4,021,200 3,993,450 Foreclosed assets held for sale, net 64,805 82,397 Accrued interest receivable 3,374,265 3,129,774 Goodwill 13,940,618 13,674,058 Core deposits and other intangibles 5,322,647 5,858,982 Cash value of life insurance 12,048,425 10,771,843 Other assets 7,164,456 6,559,886 ------------- ------------- Total assets $ 565,674,291 $ 556,007,253 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits Demand $ 41,486,691 $ 46,565,554 Savings, interest checking and money market 138,095,329 130,267,333 Time 233,570,398 237,722,558 ------------- ------------- Total deposits 413,152,418 414,555,445 Notes payable 1,025,992 2,589,207 Advances from Federal Home Loan Bank 19,000,000 21,000,000 Fed Funds Purchased 4,400,000 -- Repurchase Agreements 42,566,025 32,270,900 Trust preferred securities 20,620,000 20,620,000 Accrued interest payable 2,409,523 2,224,413 Other liabilities 3,995,977 5,792,135 ------------- ------------- Total liabilities 507,169,936 499,052,100 Shareholders' Equity Common stock 12,568,583 12,568,583 Additional paid-in capital 14,902,827 14,859,165 Retained earnings 31,805,145 30,407,298 Accumulated other comprehensive loss (421,721) (879,893) Treasury stock (350,480) -- ---------------------------- Total shareholders' equity 58,504,355 56,955,153 ------------- ------------- Total liabilities and shareholders' equity $ 565,674,291 $ 556,007,253 ============= ============= RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED For The Third Quarter Ended September 30, 2007 and 2006 Increase/ Third Third --------- Quarter Quarter (Decrease) 2007 2006 --------- ---- ---- $ - Interest income Loans Taxable $ 7,072,488 $ 6,641,379 $ 431,109 Tax-exempt 16,668 18,326 (1,658) Securities Taxable 1,041,177 1,306,979 (265,802) Tax-exempt 169,719 141,943 27,776 Other 50,288 48,846 1,442 ----------- ----------- ----------- Total interest income 8,350,340 8,157,473 192,867 Interest expense Deposits 3,497,275 3,017,993 479,282 Other borrowings 32,026 67,773 (35,747) Retail Repurchase Agreements 435,216 182,007 253,209 Federal Home Loan Bank advances 268,289 667,749 (399,460) Trust preferred securities 456,582 466,417 (9,835) ----------- ----------- ----------- Total interest expense 4,689,389 4,401,939 287,450 ----------- ----------- ----------- Net interest income 3,660,951 3,755,534 (94,583) Provision for loan losses 140,409 35,000 105,409 ----------- ----------- ----------- Net interest income after provision for loan losses 3,520,543 3,720,534 (199,991) Non-interest income Data service fees 5,004,394 3,785,037 1,219,357 Trust fees 819,989 753,449 66,540 Customer service fees 588,447 542,518 45,929 Net gain on sales of loans 73,581 283,123 (209,542) Net realized gains on sales of available-for-sale securities -- -- -- Loan servicing fees 82,651 96,754 (14,103) Gain on sale of assets 11,862 25,914 (14,052) Other income 201,920 415,961 (214,041) ----------- ----------- ----------- Total non-interest income 6,782,842 5,902,756 880,086 Non-interest expense Salaries and employee benefits 4,290,961 4,253,924 37,037 Net occupancy expense 514,742 468,855 45,887 Equipment expense 1,625,762 1,445,073 180,689 Data processing fees 102,292 146,703 (44,411) Professional fees 461,844 481,132 (19,288) Marketing expense 259,196 168,031 91,165 Printing and office supplies 130,363 126,765 3,598 Telephone and communication 446,465 467,692 (21,227) Postage and delivery expense 392,211 142,957 249,254 State, local and other taxes 103,674 188,464 (84,790) Employee expense 266,227 235,429 30,798 Other expenses 512,663 389,631 123,032 ----------- ----------- ----------- Total non-interest expense 9,106,400 8,514,656 591,744 ----------- ----------- ----------- Income before income tax expense 1,196,985 1,108,634 88,351 Income tax expense 333,384 294,893 38,491 ----------- ----------- ----------- Net income $ 863,601 $ 813,741 $ 49,860 =========== =========== =========== Earnings per common share: Basic $ 0.17 $ 0.16 $ 0.01 =========== =========== =========== Diluted $ 0.17 $ 0.16 $ 0.01 =========== =========== =========== Average diluted shares outstanding 5,008,334 5,027,704 =========== =========== RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED For The Three Months Ended September 30, 2007 and June 30, 2007 Increase/ Third Second --------- Quarter Quarter (Decrease) 2007 2007 --------- ---- ---- $ - Interest income Loans Taxable $ 7,072,488 $ 6,976,506 $ 95,982 Tax-exempt 16,668 17,250 (582) Securities Taxable 1,041,177 1,044,300 (3,123) Tax-exempt 169,719 160,845 8,874 Other 50,288 35,138 15,150 ----------- ----------- ----------- Total interest income 8,350,340 8,234,039 116,301 Interest expense Deposits 3,497,275 3,381,667 115,608 Other borrowings 32,026 57,546 (25,520) Retail Repurchase Agreements 435,216 351,833 83,383 Federal Home Loan Bank advances 268,289 242,658 25,631 Trust preferred securities 456,582 450,197 6,385 ----------- ----------- ----------- Total interest expense 4,689,389 4,483,901 205,488 ----------- ----------- ----------- Net interest income 3,660,951 3,750,138 (89,187) Provision for loan losses 140,409 145,594 (5,185) ----------- ----------- ----------- Net interest income after provision for loan losses 3,520,543 3,604,544 (84,001) Non-interest income Data service fees 5,004,394 4,629,258 375,136 Trust fees 819,989 865,880 (45,891) Customer service fees 588,447 533,209 55,238 Net gain on sales of loans 73,581 174,168 (100,587) Net realized gains on sales of available-for-sale securities -- 367 (367) Loan servicing fees 82,651 89,432 (6,781) Gain on sale of assets 11,862 14,010 (2,148) Other income 201,920 201,376 544 ----------- ----------- ----------- Total non-interest income 6,782,842 6,507,700 275,142 Non-interest expense Salaries and employee benefits 4,290,961 4,185,324 105,637 Net occupancy expense 514,742 505,925 8,817 Equipment expense 1,625,762 1,676,676 (50,914) Data processing fees 102,292 114,243 (11,951) Professional fees 461,844 501,015 (39,171) Marketing expense 259,196 187,098 72,098 Printing and office supplies 130,363 181,362 (50,999) Telephone and communication 446,465 437,690 8,775 Postage and delivery expense 392,211 384,091 8,120 State, local and other taxes 103,674 165,175 (61,501) Employee expense 266,227 280,078 (13,851) Other expenses 512,663 446,693 65,970 ----------- ----------- ----------- Total non-interest expense 9,106,400 9,065,370 41,030 ----------- ----------- ----------- Income before income tax expense 1,196,985 1,046,874 150,111 Income tax expense 333,384 261,829 71,555 ----------- ----------- ----------- Net income $ 863,601 $ 785,045 $ 78,556 =========== =========== =========== Earnings per common share: Basic $ 0.17 $ 0.16 $ 0.01 =========== =========== =========== Diluted $ 0.17 $ 0.16 $ 0.01 =========== =========== =========== Average diluted shares outstanding 5,008,334 5,031,458 RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED For The Nine Months Ended September 30, 2007 and 2006 Increase/ --------- Nine Months Nine Months (Decrease) 2007 2006 ---------- ---- ---- $ - Interest income Loans Taxable $ 20,725,807 $ 18,238,590 $ 2,487,217 Tax-exempt 51,211 45,718 5,493 Securities Taxable 3,176,674 3,953,438 (776,764) Tax-exempt 483,621 410,346 73,275 Other 163,894 99,158 64,736 ------------ ------------ ------------ Total interest income 24,601,207 22,747,250 1,853,957 Interest expense Deposits 10,212,672 7,695,387 2,517,285 Other borrowings 140,644 120,220 20,424 Repurchase Agreements 1,130,898 465,560 665,338 Federal Home Loan Bank advances 760,534 1,684,415 (923,881) Trust preferred securities 1,352,093 1,331,615 20,478 ------------ ------------ ------------ Total interest expense 13,596,842 11,297,197 2,299,645 ------------ ------------ ------------ Net interest income 11,004,365 11,450,053 (445,688) Provision for loan losses 378,643 337,321 41,322 ------------ ------------ ------------ Net interest income after provision for loan losses 10,625,723 11,112,732 (487,009) Non-interest income Data service fees 14,467,788 10,312,757 4,155,031 Trust fees 2,512,251 2,361,127 151,124 Customer service fees 1,650,080 1,635,272 14,808 Net gain on sales of loans 302,028 415,833 (113,805) Net realized gains on sales of available-for- sale securities 367 -- 367 Loan servicing fees 280,789 301,233 (20,444) Gain on sale of assets 61,839 85,346 (23,507) Other income 754,144 1,067,739 (313,595) ------------ ------------ ------------ Total non-interest income 20,029,284 16,179,307 3,849,977 Non-interest expense Salaries and employee benefits 12,873,072 11,906,909 966,163 Net occupancy expense 1,547,800 1,334,722 213,078 Equipment expense 4,908,311 4,168,534 739,777 Data processing fees 372,716 402,661 (29,945) Professional fees 1,640,250 1,525,399 114,851 Marketing expense 601,979 536,977 65,002 Printing and office supplies 509,817 453,110 56,707 Telephone and communication 1,329,359 1,277,707 51,652 Postage and delivery expense 1,168,563 397,217 771,346 State, local and other taxes 468,590 512,757 (44,167) Employee expense 801,374 745,341 56,033 Other expenses 1,250,192 1,283,228 (33,036) ------------ ------------ ------------ Total non-interest expense 27,472,023 24,544,562 2,927,461 ------------ ------------ ------------ Income before income tax expense 3,182,984 2,747,477 435,507 Income tax expense 831,885 697,668 134,217 ------------ ------------ ------------ Net income $ 2,351,099 $ 2,049,809 $ 301,290 ============ ============ ============ Earnings per common share: Basic $ 0.47 $ 0.41 $ 0.06 ============ ============ ============ Diluted $ 0.47 $ 0.41 $ 0.06 ============ ============ ============ Average diluted shares outstanding 5,021,939 5,029,338 ============ ============ RURBAN FINANCIAL CORP. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) ------------------------ --------- --------- --------- --------- (dollars in thousands 3rd Qtr YTD 3rd Qtr YTD except per share data) 2007 2007 2006 2006 ------------------------ --------- --------- --------- --------- EARNINGS Net interest income $ 3,661 $ 11,004 $ 3,756 $ 11,450 Provision for loan loss $ 140 $ 379 $ 35 $ 337 Non-interest income $ 6,783 $ 20,029 $ 5,903 $ 16,179 Revenue (net interest income plus non- interest income) $ 10,444 $ 31,034 $ 9,659 $ 27,629 Non-interest expense $ 9,106 $ 27,472 $ 8,515 $ 24,545 Net income (loss) $ 864 $ 2,351 $ 814 $ 2,050 PER SHARE DATA Basic earnings per share $ 0.17 $ 0.47 $ 0.16 $ 0.41 Diluted earnings per share $ 0.17 $ 0.47 $ 0.16 $ 0.41 Book value per share $ 11.70 $ 11.70 $ 11.16 $ 11.16 Tangible book value per share $ 7.87 $ 7.87 $ 7.19 $ 7.19 Cash dividend per share $ 0.07 $ 0.19 $ 0.05 $ 0.15 PERFORMANCE RATIOS Return on average assets 0.62% 0.57% 0.59% 0.50% Return on average equity 5.97% 5.44% 5.95% 5.21% Net interest margin (tax equivalent) 2.96% 3.10% 3.10% 3.12% Net interest margin (Bank Only) 3.41% 3.47% 3.40% 3.82% Non-interest expense / Average assets 6.56% 6.63% 6.15% 5.95% Efficiency Ratio - bank (non-GAAP) 80.14% 80.52% 84.01% 85.85% MARKET DATA PER SHARE Market value per share -- Period end $ 12.65 $ 12.65 $ 11.92 $ 11.92 Market as a % of book 1.08 1.08 1.07 1.07 Cash dividend yield 2.21% 2.00% 1.68% 1.82% Period-end common shares outstanding (000) 4,999 4,999 5,027 5,027 Common stock market capitalization ($000) $ 63,237 $ 63,237 $ 59,927 $ 59,927 CAPITAL & LIQUIDITY Equity to assets 10.3% 10.3% 9.8% 9.8% Period-end tangible equity to assets 7.0% 7.0% 6.3% 6.3% Tier 1 risk-based capital ratio 14.6% 14.6% 14.6% 14.6% Total risk-based capital ratio 15.7% 15.7% 16.0% 16.0% ASSET QUALITY Net charge-offs / (Recoveries) $ 28 $ 159 $ (54) $ 510 Net loan charge-offs (Ann.) / Average loans 0.03% 0.06% (0.06%) 0.29% Non-performing loans $ 6,361 $ 6,361 $ 5,636 $ 5,636 OREO / OAOs $ 71 $ 71 $ 490 $ 490 Non-performing assets $ 6,432 $ 6,432 $ 6,126 $ 6,126 Non-performing assets / Total assets 1.14% 1.14% 1.07% 1.07% Allowance for loan losses / Total loans 1.01% 1.01% 1.24% 1.24% Allowance for loan losses / Non-performing Assets 61.2% 61.2% 73.8% 73.8% END OF PERIOD BALANCES Total loans, net of unearned income $ 388,264 $ 388,264 $ 364,343 $ 364,343 Allowance for loan loss $ 3,937 $ 3,937 $ 4,522 $ 4,522 Total assets $ 565,674 $ 565,674 $ 569,987 $ 569,987 Deposits $ 413,152 $ 413,152 $ 412,178 $ 412,178 Stockholders' equity $ 58,504 $ 58,504 $ 56,111 $ 56,111 Full-time equivalent employees 280 280 271 271 AVERAGE BALANCES Loans $ 385,126 $ 378,733 $ 368,324 $ 349,047 Total earning assets $ 488,798 $ 485,624 $ 506,594 $ 501,689 Total assets $ 555,452 $ 552,657 $ 553,465 $ 549,954 Deposits $ 411,948 $ 412,587 $ 408,247 $ 400,085 Stockholders' equity $ 57,830 $ 57,607 $ 54,702 $ 52,434 Rurban Financial Corp. Segment Reporting Third Quarter Ended September 30, 2007 -------------------------------- RFCBC (Loan Income Statement State Bank Workout Total Measures and Trust Company) Banking ---------------- -------------------------------- Interest Income $ 8,383 $ -- $ 8,383 Interest Expense 4,213 -- 4,213 Net Interest Income 4,170 -- 4,170 Provision For Loan Loss 150 (10) 140 Non-interest Income 1,769 -- 1,769 Non-interest Expense 4,804 69 4,873 Net Income Before Taxes 985 (59) 926 Income Taxes 271 (20) 251 Net Income QTD $ 714 $ (39) $ 675 Performance Measures -------------------- Average Assets -QTD $535,129 $ 1,341 $536,470 ROAA 0.53% -- 0.50% Average Equity - QTD $ 55,534 $ 1,270 $ 56,804 ROAE 5.15% -- 4.76% Efficiency Ratio - % 78.97% -- 80.14% Average Loans - QTD $386,337 $ 574 $386,911 Average Deposits - QTD $418,764 $ -- $418,764 --------------------------------------------- Parent Company Rurban Income Statement Data and Elimination Financial Measures Processing Other Entries Corp. ---------------- --------------------------------------------- Interest Income $ -- $ 1 $ (34) $ 8,350 Interest Expense 53 457 (34) $ 4,689 Net Interest Income (53) (456) -- $ 3,661 Provision For Loan Loss -- -- -- $ 140 Non-interest Income 5,385 356 (727) $ 6,783 Non-interest Expense 4,334 627 (727) $ 9,107 Net Income Before Taxes 998 (727) -- $ 1,197 Income Taxes 339 (257) -- $ 333 Net Income QTD $ 659 $ (470) $ -- $ 864 Performance Measures -------------------- Average Assets -QTD $ 19,739 $ 79,380 $(80,137) $555,452 ROAA 13.35% -- -- 0.62% Average Equity - QTD $ 14,732 $ 57,830 $(71,536) $ 57,830 ROAE 17.89% -- -- 5.97% Efficiency Ratio - % 80.04% -- -- 85.47% Average Loans - QTD $ -- $ -- $ (1,785) $385,126 Average Deposits - QTD $ -- $ -- $ (6,816) $411,948 Rurban Financial Corp. Segment Reporting Nine Months Ended September 30, 2007 -------------------------------- RFCBC (Loan Income Statement State Bank Workout Total Measures and Trust Company) Banking ---------------- -------------------------------- Interest Income $ 24,721 $ 1 $ 24,722 Interest Expense 12,148 -- 12,148 Net Interest Income 12,573 1 12,574 Provision For Loan Loss 400 (21) 379 Non-interest Income 5,532 -- 5,532 Non-interest Expense 14,500 421 14,921 Net Income Before Taxes 3,205 (399) 2,806 Income Taxes 866 (135) 731 Net Income YTD $ 2,339 $ (264) $ 2,075 Performance Measures Average Assets - YTD $532,945 $ 1,599 $534,544 ROAA 0.59% -- 0.52% Average Equity - YTD $ 55,091 $ 1,372 $ 56,463 ROAE 5.66% -- 4.90% Efficiency Ratio - % 78.20% -- 80.52% Average Loans - YTD $380,221 $ 590 $380,811 Average Deposits - YTD $420,483 $ -- $420,483 --------------------------------------------- Parent Company Rurban Income Statement Data and Elimination Financial Measures Processing Other Entries Corp. ---------------- --------------------------------------------- Interest Income $ 1 $ 3 $ (125) $ 24,601 Interest Expense 221 1,352 (125) 13,596 Net Interest Income (220) (1,349) -- 11,005 Provision For Loan Loss -- -- -- 379 Non-interest Income 15,656 1,051 (2,209) 20,030 Non-interest Expense 12,671 2,090 (2,209) 27,473 Net Income Before Taxes 2,765 (2,388) -- 3,183 Income Taxes 940 (839) -- 832 Net Income YTD $ 1,825 $ (1,549) $ -- $ 2,351 Performance Measures Average Assets - YTD $ 20,237 $ 79,294 $(81,418) $552,657 ROAA 12.02% -- -- 0.57% Average Equity - YTD $ 14,172 $ 57,607 $(70,635) $ 57,607 ROAE 17.17% -- -- 5.44% Efficiency Ratio - % 80.83% -- -- 86.79% Average Loans - YTD $ -- $ -- $ (2,078) $378,733 Average Deposits - YTD $ -- $ -- $ (7,896) $412,587 Rurban Financial Corp. Proforma Performance Measurement Quarterly Comparison - Third Quarter 2007 --------------------------------- RFCBC Banking State Bank (Loan Workout Related Average Assets and Trust Company) Entities -------------- --------------------------------- 3Q07 $ 535,129 $ 1,341 $ 536,470 2Q07 $ 529,071 $ 1,547 $ 530,618 1Q07 $ 534,629 $ 1,914 $ 536,543 4Q06 $ 549,777 $ 2,178 $ 551,955 3Q06 $ 549,931 $ 2,451 $ 552,382 3rd Quarter Comparison $ (14,802) $ (1,110) $ (15,912) Revenue ------- 3Q07 $ 5,939 $ -- $ 5,939 2Q07 $ 6,130 $ -- $ 6,130 1Q07 $ 6,024 $ 1 $ 6,025 4Q06 $ 6,345 $ 124 $ 6,469 3Q06 $ 6,393 $ 3 $ 6,396 3rd Quarter Comparison $ (454) $ (3) $ (457) Non-interest Expenses ------------ 3Q07 $ 4,804 $ 69 $ 4,873 2Q07 $ 4,712 $ 137 $ 4,849 1Q07 $ 4,973 $ 215 $ 5,188 4Q06 $ 5,747 $ 278 $ 6,025 3Q06 $ 4,970 $ 161 $ 5,131 3rd Quarter Comparison $ (166) $ (92) $ (258) Net Income ---------- 3Q07 $ 714 $ (39) $ 675 2Q07 $ 917 $ (87) $ 830 1Q07 $ 707 $ (136) $ 571 4Q06 $ 569 $ (89) $ 480 3Q06 $ 872 $ (82) $ 790 3rd Quarter Comparison $ (158) $ 43 $ (115) Efficiency Ratio ---------------- 3Q07 78.97% -- 80.14% 2Q07 74.99% -- 77.23% 1Q07 82.20% -- 85.47% 4Q06 88.78% -- 91.37% 3Q06 75.96% -- 78.44% 3rd Quarter Comparison 3.01% -- 1.70% NPA/Total Assets ---------------- 3Q07 1.07% -- -- 2Q07 1.03% -- -- 1Q07 0.66% -- -- 4Q06 0.61% -- -- 3Q06 0.90% -- -- 3rd Quarter Comparison 0.18% -- -- ROAA ---- 3Q07 0.53% -- 0.50% 2Q07 0.69% -- 0.63% 1Q07 0.53% -- 0.43% 4Q06 0.41% -- 0.35% 3Q06 0.63% -- 0.57% 3rd Quarter Comparison (0.10%) -- 0.03% ROAE ---- 3Q07 5.15% -- 4.76% 2Q07 6.68% -- 5.90% 1Q07 5.16% -- 4.05% 4Q06 4.20% -- 3.43% 3Q06 6.72% -- 5.83% 3rd Quarter Comparison (1.57%) -- (0.26%) Average Equity -------------- 3Q07 $ 55,534 $ 1,270 $ 56,804 2Q07 $ 54,905 $ 1,344 $ 56,249 1Q07 $ 54,828 $ 1,502 $ 56,330 4Q06 $ 54,249 $ 1,714 $ 55,963 3Q06 $ 51,917 $ 2,261 $ 54,178 3rd Quarter Comparison $ 3,617 $ (991) $ 2,626 ----------------------------------------------- Parent Intersegment Rurban Company Elimination Financial Average Assets RDSI and Other Entries Corp. -------------- ----------------------------------------------- 3Q07 $ 19,739 $ 79,380 $ (80,137) $ 555,452 2Q07 $ 20,320 $ 78,908 $ (80,420) $ 549,426 1Q07 $ 20,217 $ 79,251 $ (81,380) $ 554,631 4Q06 $ 19,695 $ 78,234 $ (80,077) $ 569,807 3Q06 $ 14,442 $ 75,666 $ (89,023) $ 553,465 3rd Quarter Comparison $ 5,297 $ 3,714 $ -- $ 1,987 Revenue -------- 3Q07 $ 5,332 $ (100) $ (727) $ 10,444 2Q07 $ 4,949 $ (82) $ (739) $ 10,258 1Q07 $ 5,155 $ (116) $ (732) $ 10,332 4Q06 $ 4,944 $ 247 $ (500) $ 11,160 3Q06 $ 4,085 $ (219) $ (603) $ 9,659 3rd Quarter Comparison $ 1,247 $ 119 $ -- $ 785 Non-interest Expenses ------------ 3Q07 $ 4,334 $ 627 $ (727) $ 9,107 2Q07 $ 4,228 $ 728 $ (739) $ 9,065 1Q07 $ 4,109 $ 736 $ (732) $ 9,301 4Q06 $ 4,026 $ 822 $ (514) $ 10,359 3Q06 $ 3,375 $ 612 $ (603) $ 8,515 3rd Quarter Comparison $ 959 $ 15 $ -- $ 592 Net Income ---------- 3Q07 $ 659 $ (470) $ -- $ 864 2Q07 $ 476 $ (521) $ -- $ 785 1Q07 $ 690 $ (559) $ -- $ 702 4Q06 $ 606 $ (376) $ -- $ 710 3Q06 $ 478 $ (454) $ -- $ 814 3rd Quarter Comparison $ 181 $ (16) $ -- $ 50 Efficiency Ratio ---------------- 3Q07 80.04% -- -- 85.47% 2Q07 84.09% -- -- 86.61% 1Q07 78.52% -- -- 88.33% 4Q06 80.40% -- -- 91.34% 3Q06 82.20% -- -- 86.80% 3rd Quarter Comparison (2.17%) -- -- (1.33%) NPA/Total Assets ---------------- 3Q07 -- -- -- 1.14% 2Q07 -- -- -- 1.09% 1Q07 -- -- -- 0.75% 4Q06 -- -- -- 0.70% 3Q06 -- -- -- 1.07% 3rd Quarter Comparison -- -- -- (0.86%) ROAA ---- 3Q07 13.35% -- -- 0.62% 2Q07 9.37% -- -- 0.57% 1Q07 13.65% -- -- 0.51% 4Q06 12.31% -- -- 0.50% 3Q06 13.24% -- -- 0.59% 3rd Quarter Comparison 0.03% -- -- 0.03% ROAE ---- 3Q07 17.89% -- -- 5.97% 2Q07 13.43% -- -- 5.45% 1Q07 20.63% -- -- 4.91% 4Q06 19.06% -- -- 5.08% 3Q06 21.26% -- -- 5.95% 3rd Quarter Comparison (0.26%) -- -- (0.26%) Average Equity -------------- 3Q07 $ 14,732 $ 57,830 $ (71,536) $ 57,830 2Q07 $ 14,182 $ 57,617 $ (70,431) $ 57,617 1Q07 $ 13,378 $ 57,192 $ (69,708) $ 57,192 4Q06 $ 12,721 $ 55,963 $ (68,684) $ 55,963 3Q06 $ 8,995 $ 54,702 $ (63,173) $ 54,702 3rd Quarter Comparison $ 5,737 $ 3,128 $ -- $ 3,128