DEFIANCE, Ohio, Oct. 15, 2008 (GLOBE NEWSWIRE) -- Rurban Financial Corp. (Nasdaq:RBNF), a diversified financial services holding company and parent of The State Bank and Trust Company (State Bank) and RDSI Banking Services (RDSI), reported third quarter 2008 earnings of $1.42 million, or $0.29 per diluted share, an increase of 64.9 percent and 70.6 percent, respectively, above the $864,000, or $0.17 per diluted share, reported in the third quarter of 2007. In addition, this improvement was 5.0 percent and 3.6 percent, respectively, above the 2008 second quarter earnings of $1.36 million, or $0.28 per diluted share.
Consolidated earnings for the 2008 third quarter included a net after-tax gain of $86,000 ($131,000 pre-tax) from the combined impact of the sale of the real estate of a closed branch office for $160,000 ($243,000 pre-tax) less an after-tax loss of $74,000 ($112,000 pre-tax) for the write-down of a piece of foreclosed real estate. Excluding this net after-tax gain of $86,000, Operating Income was $1.34 million, or $0.27 per diluted share for the 2008 quarter, compared with $864,000, or $0.17 per diluted share, for the prior-year third quarter, up 54.9 percent and 58.8 percent, respectively.
President and CEO Ken Joyce commented, "We continue to improve our quarterly financial performance as a result of the strong foundation in place for franchise and profit growth. Despite the turmoil that exists throughout the banking industry, Rurban remains admirably positioned. We have been cautious of double-digit loan growth because our markets are mature. Rather, we look to measured and steady loan growth combined with intelligent and constructive underwriting to maintain consistency and soundness from our lending activities. At the same time, we look for opportunities for greater efficiencies and improved distribution of our services throughout our expanding bank footprint. We are managing these issues one at a time, with gratifying results."
"In this market environment--and perhaps forevermore--," added Mr. Joyce, "deposits are king. Our success with deposit gathering is growing each quarter, with non-maturity deposit balances increasing 10.2 percent year-to-date. This has allowed us to reduce our reliance on more expensive time deposits. We appointed a Chief Deposit Officer over a year ago, and at the same time, introduced a number of creative and productive deposit-generating programs bank-wide. These initiatives have been gathering momentum over the past year favorably impacting our funding costs, and improving our liability-sensitive balance sheet position during this declining interest rate environment. These factors contributed to a 60 basis point improvement in consolidated net interest margin year-over-year. While these are but a few of the major points of our current quarter, we continue to make progress on all fronts."
Highlights of Rurban's consolidated 2008 third quarter performance include:
* The third quarter net interest margin improved by 60 basis points year-over-year, to 3.56 percent for the current quarter. The 20.3 percent improvement was the primary factor contributing to Rurban's 21.5 percent growth in net interest income. The return on average assets (ROAA), for the quarter, was 0.99 percent compared with 0.62 percent for the year-ago quarter, up 37 basis points. Excluding the one-time gain in the quarter, operating income for the 2008 third quarter ROAA was 0.93 percent compared with 0.62 percent for the year-ago quarter, an improvement of 31 basis points. * In the context of the current credit environment, asset quality remains stable, with non-performing assets declining slightly to 1.07 percent of total assets. There have been no significant additions to the problem loan portfolio during the first nine months. The Bank has no exposure to subprime loans, credit card debt, or impaired investment securities such as Freddie Mac or Fannie Mae common or preferred stock. * State Bank's deposit gathering initiatives are producing excellent results. Growth in NOW and Money Market accounts have enabled State Bank to substantially reduce its reliance on time deposits as a funding source. Since year-end 2007, lower cost non-maturity deposits collectively increased 10.2 percent, and currently account for nearly 50 percent of total deposits, up from 45 percent at December 31, 2007. * Rurban is on target for a fourth quarter close on its acquisition of NBM Bancorp, Incorporated (assets of $109.2 million), based in Montpelier, Ohio. The merger, pending Regulatory approval, will provide State Bank with access to Williams County through a network of five banking offices.
For the first nine months of 2008, consolidated net income was $3.89 million, or $0.79 per diluted share, an increase of 65.4 percent and 68.1 percent, respectively, above the $2.35 million, or $0.47 per diluted share, recorded for the comparable 2007 period. Consolidated net income for the first nine months of 2008 included a net non-recurring after-tax gain of $319,000 ($484,000 pre-tax) from the combined impact of the following non-recurring pre-tax items: a $243,000 gain on the sale of the closed branch, a $200,000 recovery of legal fees associated with RFCBC (Rurban's loan workout company), $197,000 of proceeds from the partial recovery of previously written-off WorldCom securities, $132,000 of proceeds from the sale of equity securities derived from the VISA Inc. Initial Public Offering (IPO), expenses of $176,000 from the wind down of RFCBC, and a loss of $112,000 from the write-down of foreclosed real estate. The first nine months of 2007 included an after-tax merger-related expense of $63,000 ($95,000 pre-tax). Excluding the after-tax impact of non-recurring items in both years, nine month operating income was $3.41 million, or $0.73 per diluted share, in 2008 compared with $2.41 million, or $0.48 per diluted share in 2007, up 47.9 percent and 52.1 percent, respectively.
CONSOLIDATED - THIRD QUARTER RESULTS (Dollars in thousands except per share data) OPERATING EARNINGS: 3Q 2008 2Q 2008 3Q 2007 ------------------- -------- -------- -------- Net interest income $ 4,448 $ 4,432 $ 3,661 Non-interest income from operations 6,746(1) 6,801 6,783 Operating revenue 11,194 11,233 10,444 Provision for loan losses 146 213 140 Non-interest expense 9,167(1) 9,311(2) 9,106 Net income (GAAP) 1,424 1,356 864 Operating income 1,338(1) 1,224(2) 864 Diluted GAAP EPS $ 0.29 $ 0.28 $ 0.17 Diluted operating EPS $ 0.27(1) $ 0.25(2) $ 0.17 (1) Excludes a net non-recurring gain for 3Q 2008 of $86,000 after-tax ($131,000 pre-tax) which includes a $243,000 pre-tax gain from the sale of a branch and a $112,000 pre-tax loss from OREO write-downs. (2) Excludes for 2Q 2008 the after-tax gain of $132,000 (pre-tax $200,000) from the recovery of legal fees associated with RFCBC.
Revenue, consisting of net interest income and non-interest income, was $11.4 million for the third quarter of 2008, up 9.5 percent from the year-ago quarter. Operating revenue was $11.2 million for the third quarter of 2008, up 7.2 percent from the year-ago quarter. Net interest income increased $788,000, or 21.5 percent, compared to the year-ago quarter. Growth in net interest income was driven primarily by the 60 basis point, or 20.3 percent, improvement in the year-over-year consolidated net interest margin, which reached 3.56 percent for the current quarter. In addition, average earning assets grew 3.7 percent over the past 12 months.
Non-interest income was $6.99 million for the third quarter of 2008 compared to $6.78 million for the prior-year quarter. Excluding the one-time gain for the branch sale, non-interest income was virtually flat. Increases in deposit fees were offset by a reduction in trust fees. The reduction in trust fees is due to the market conditions as Reliance Financial Services fees are collected based on market value.
Non-interest expenses were $9.28 million for the third quarter of 2008, an increase of $172,000 or 1.9 percent, from the year-ago quarter. Excluding the write-down of the specific piece of real estate, non-interest expenses increased a negligible $61,000, or 0.7 percent, year-over-year. Expenses were well-controlled, mainly resulting from reductions of nine FTE employees down to 271 at 2008 third quarter-end. Salaries and employee benefits were virtually unchanged, down 1.2 percent, while postage and delivery expense and state and local taxes increased $119,000 and $132,000, respectively, from year-ago levels. In the first quarter of 2008, RDSI switched from outsourcing their preparation and mailing activities to managing these mailing operations in-house; this pass-through expense creating increases in revenue. The state and local tax increase is due to a tax credit received in 2007.
BANKING GROUP RESULTS
Rurban's Banking Group consists of The State Bank and Trust Company, a $563 million asset organization and RFCBC, Inc., a loan workout company, with one remaining credit relationship of $448,000, which is classified as non-performing, but is making significant, regular debt reduction payments.
The 2008 third quarter earnings for the Banking Group were $1.23 million compared with $675,000 reported for the prior-year quarter, an increase of 82.9 percent. Excluding the one-time items in the quarter, operating income for the Banking Group was $1.15 million compared with $675,000 reported for the prior-year quarter, an increase of 70.2 percent.
Mr. Joyce commented, "State Bank has evolved into a solid, profitable and efficiently managed institution as a result of a strong, creative, and quality management team. We are building a model that allows us to expand efficiently through acquisitions, as well as organically. The organic expansion is progressing, as for example, we recently purchased a building for our Columbus Loan Production Office. This office follows our strategy to grow the Loan Production Office to $25 million plus in loans followed by an expansion to a full-service branch in the Columbus area."
(Dollars in thousands except per share data) OPERATING EARNINGS: 3Q 2008 2Q 2008 3Q 2007 ------------------- -------- -------- -------- Net interest income $ 4,892 $ 4,881 $ 4,170 Non-interest income from operations 1,742(1) 1,848 1,769 Provision for loan losses 146 213 140 Non-interest expense 4,891(1) 4,612(2) 4,873 Net income (GAAP) $ 1,233 $ 1,217 $ 675 Operating income $ 1,147(1) $ 1,085(2) $ 675 (1) 3Q 2008 Operating Income excludes previously mentioned net non- recurring gains of $86,000. (2) 2Q 2008 Operating Income excludes an after-tax gain of $132,000 (pre-tax $200,000) from the recovery of legal fees associated with RFCBC.
Net interest income increased 17.3 percent to $4.89 million for the 2008 third quarter over 2007 third quarter, reflecting average earning asset growth of 3.7 percent combined with a Banking Group net interest margin of 3.84 percent for the third quarter of 2008, up 43 basis points, or 12.6 percent, over the year-ago period. "In an environment with declining interest rates and a scarcity of true core deposits (liquidity), State Bank is achieving solid margin improvement," Mr. Joyce added.
Non-interest income was $1.99 million, increasing $216,000, or 12.2 percent. Excluding the one-time $243,000 gain on the branch sale, non-interest income decreased approximately $27,000. Modest increases in gain-on-sale of loans and deposit fees were offset by decreases in trust fees. The increase in gain-on-sale of loans was driven by sales of the guaranteed portion of agricultural real estate loans. State Bank has long been an originator of agriculture real estate loans with long-term maturities, which are periodically sold into the secondary market. The continued decline of equity markets was the primary factor for the trust fee decreases.
The Banking Group recorded a provision for loan losses this quarter of $146,000 and net charge-offs of $336,000. Over the past five quarters the average provision for loan losses of $167,000 has exceeded the average level of net charge-offs of $120,000. Further, the reserve for loan losses at quarter-end was 1.01 percent of average loans outstanding, which has remained fairly stable year-over-year, while non-performing assets declined as a percentage of total assets; for the most recent quarter, non-performing assets were 1.07 percent of total assets compared with 1.16 percent for the linked-quarter and 1.14 percent for the year-ago quarter.
Non-interest expenses were $5 million for the third quarter of 2008, up $130,000 from the prior-year third quarter. Excluding the quarterly one-time write down of real estate of $112,000, expenses were virtually unchanged. Expenses were well-controlled at all levels; savings in employee benefits offset the modest growth in compensation. The efficiency ratio for the Banking Group was nominally higher at 71.1 percent for the current quarter, compared with 69.9 percent for the linked quarter, and down significantly from the 80.1 percent for the prior-year third quarter.
BALANCE SHEET
Total loans, net of unearned income, were $399.9 million at September 30, 2008, up $11.6 million, or 3.0 percent, over the past 12 months; loans declined $4.5 million from the linked-quarter. Growth over the past 12 months was derived primarily from commercial real estate loans. The reductions in loans during the third quarter were attributable to the payoff of several loans and the sale of several FSA agricultural loans sold during the quarter.
Total deposits at September 30, 2008 were $406.5 million, down $6.7 million, or 1.6 percent, from the third quarter of 2007 deposits of $413.2 million, with FHLB advances, up $21.2 million, providing the funding for growth. It is noted that the quarter-end balance for FHLB advances was higher than normal by $6 million due to State Bank's testing of its correspondent bank lines of credit. Time deposits declined $28.3 million over the past 12 months, or 12.1 percent, while NOW and Money Market deposits grew $9.5 million (up 18.5 percent) and $12.5 million (up 20.0 percent), respectively. Mr. Joyce added, "Our 2008 profit improvement can be largely attributed to our success in managing our balance sheet into a liability-sensitive position and our success at attracting lower cost deposits. Although interest rates have declined industry-wide, there are few banks that have managed to improve their margin to the extent that we have, as our average funding costs are down 98 basis points compared to an average earning asset rate decline of 54 basis points year-over-year."
ASSET QUALITY (Dollars in thousands except percent data) ASSET QUALITY 3Q 2008 2Q 2008 3Q 2007 ------------- -------- -------- -------- Net charge-offs $ 336 $ (18) $ 28 Net charge-offs to avg. loans (Ann.) 0.33% (0.02)% 0.03% Non-performing loans $ 4,659 $ 5,141 $ 6,361 OREOs + OAO $ 1,611 $ 1,566 $ 71 Non-performing assets (NPAs) $ 6,270 $ 6,707 $ 6,432 NPA / Total assets 1.07% 1.16% 1.14% Allowance for loan losses $ 4,057 $ 4,247 $ 3,937 Allowance for loan losses / Loans 1.01% 1.04% 1.01%
"We have managed to maintain our problem assets at a moderate, relatively stable, level over the past year, while all around us asset quality has taken a sharp turn downward. The lessons we learned from our last credit cycle have remained, with underwriting and administration policies that are proving their value in this new credit cycle. While our present situation is never a guarantee of future performance, we are comfortable with the current performance of our portfolio and see no alarming signs of weakness that we have not already identified," commented Mr. Joyce.
Non-performing assets (loans + OREO + OAO) were $6.27 million, or 1.07 percent, of total assets on September 30, 2008 compared with $6.71 million (1.16 percent of total assets) for the linked-quarter and $6.43 million (1.14 percent of total assets) 12 months ago. Total problem assets have remained relatively stable as a percent of total assets over the past 12 months. Non-accrual loans are distributed among all asset classes, without any major concentrations.
RDSI RESULTS
Mr. Joyce observed, "We continue to be pleased with RDSI's contribution to Rurban's performance. RDSI has been a key component of our successful strategy of diversification and its solid base of fee income has been a strategic and competitive advantage for Rurban and contributes to shareholder value. We should expect to see some slowing, or even stabilization, of revenue and net income growth, as a result of current banking conditions."
Total revenue for the third quarter of 2008 was $5.29 million, virtually unchanged from the $5.33 million reported for the year-ago quarter. Net income was also unchanged in the third quarter year-over-year comparison: $664,000 in 2008 compared with $659,000 for 2007.
As of September 30, 2008, RDSI had 115 banking organizations as clients, with Data Processing services provided to 75 clients and Item Processing to 91 clients. RDSI added one new client in the current quarter, with the conversion set for late fourth quarter 2008.
Operating expenses were $4.29 million for third quarter 2008, down $48,000, or 1.1 percent, from the third quarter of 2007; compensation and benefits expense decreased a combined $144,000, or 8.3 percent, year-over-year along with an $89,000, or 6.9 percent, decline in equipment expense, partially offset by a $123,000 increase in the previously-mentioned postage expenses, which were taken in-house first quarter of 2008. Excluding the change in postage expense, operating expenses decreased $171,000, or 3.9 percent, reflecting numerous efficiencies gained from streamlined procedures within the Item Processing segment of RDSI's business.
CAPITAL BASE
Rurban continues to maintain a strong capital position and supporting earnings, providing opportunities for a stable cash dividend, share repurchases and acquisitions. Stockholders' equity totaled $60.1 million at September 30, 2008, an increase of $1.6 million, or 2.8 percent, from 12 months ago. Period-end tangible equity to tangible assets remains strong at 7.5 percent, while capital ratios exceeded the regulatory minimums for a well-capitalized institution. Last quarter the Company raised its third quarter cash dividend by 12.5 percent, or $0.01 per share, to $0.09 per share, which represented a 33.8 percent payout of earnings and a 4.0 percent yield at an approximate market price of $9.00. The share repurchase program, authorized in April 2007 and extended in July 2008 to acquire 250,000 shares, has repurchased 121,807 shares at an average of $11.54 per share through September 30, 2008.
ABOUT RURBAN FINANCIAL CORP.
Rurban Financial Corp. is a publicly-held financial services holding company based in Defiance, Ohio. Rurban's wholly-owned subsidiaries are The State Bank and Trust Company, including Reliance Financial Services and Rurbanc Data Services, Inc. (RDSI), including DCM. The State Bank and Trust Company offers financial services through its 17 branches in Allen, Defiance, Fulton, Lucas, Paulding and Wood Counties, Ohio and Allen County, Indiana and a Loan Production Office in Franklin County, Ohio. 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, Nebraska, Nevada, 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 4,903,826 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 CONSOLIDATED BALANCE SHEETS September 30, 2008, December 31, 2007 and September 30, 2007 September December September 2008 2007 2007 ---- ---- ---- (Unaudited) (Unaudited) ASSETS Cash and due from banks $ 25,408,171 $ 15,183,627 $ 12,859,263 Federal funds sold -- 2,000,000 -- ------------ ------------ ------------ Cash and cash equivalents 25,408,171 17,183,627 12,859,263 Available-for-sale securities 94,436,350 92,661,386 102,759,847 Loans held for sale 1,478,333 1,649,758 -- Loans, net of unearned income 399,910,475 389,268,744 388,264,099 Allowance for loan losses (4,057,213) (3,990,455) (3,936,545) Premises and equipment, net 15,496,474 15,128,754 15,290,795 Purchased software 5,964,281 4,282,563 4,500,417 Federal Reserve and Federal Home Loan Bank Stock 4,148,400 4,021,200 4,021,200 Foreclosed assets held for sale, net 1,534,207 124,131 64,805 Accrued interest receivable 2,835,552 3,008,968 3,374,265 Goodwill 13,940,618 13,940,618 13,940,618 Core deposits and other intangibles 4,615,084 5,135,228 5,322,647 Cash value of life insurance 12,513,124 12,160,581 12,048,425 Other assets 6,797,920 6,638,895 7,164,456 ------------ ------------ ------------ Total assets $585,021,776 $561,213,998 $565,674,291 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non interest bearing demand $ 40,952,936 $ 41,541,297 $ 41,486,691 Interest bearing NOW 60,842,082 54,308,665 51,330,059 Savings 24,402,064 25,320,126 24,314,993 Money Market 74,958,096 61,380,252 62,450,277 Time Deposits 205,299,166 223,480,842 233,570,398 ------------ ------------ ------------ Total deposits 406,454,344 406,031,182 413,152,418 Notes payable -- 922,457 1,025,992 Advances from Federal Home Loan Bank 40,229,923 24,000,000 19,000,000 Fed Funds Purchased 5,000,000 -- 4,400,000 Repurchase Agreements 44,553,855 43,006,438 42,566,025 Trust preferred securities 20,620,000 20,620,000 20,620,000 Accrued interest payable 1,575,146 2,532,914 2,409,523 Other liabilities 6,471,375 4,775,773 3,995,977 ------------ ------------ ------------ Total liabilities 524,904,643 501,888,764 507,169,936 Shareholders' Equity Common stock 12,568,583 12,568,583 12,568,583 Additional paid-in capital 14,996,187 14,923,571 14,902,827 Retained earnings 34,898,499 32,361,106 31,805,145 Accumulated other comprehensive income (loss) (944,518) 82,235 (421,721) Treasury stock (1,401,618) (610,260) (350,480) ------------ ------------ ------------ Total shareholders' equity 60,117,133 59,325,235 58,504,355 ------------ ------------ ------------ Total liabilities and shareholders' equity $585,021,776 $561,213,998 $565,674,291 ============ ============ ============ RURBAN FINANCIAL CORP CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2008 2007 2008 2007 ---- ---- ---- ---- Interest income Loans Taxable $ 6,736,100 $ 7,072,488 $20,567,604 $20,725,807 Tax-exempt 22,125 16,668 63,944 51,211 Securities Taxable 1,135,931 1,041,177 3,266,395 3,176,674 Tax-exempt 109,805 169,719 433,970 483,621 Other 17,635 50,288 130,424 163,894 ----------- ----------- ----------- ----------- Total interest income 8,021,596 8,350,340 24,462,337 24,601,207 Interest expense Deposits 2,258,470 3,497,275 7,973,962 10,212,672 Other borrowings 16,803 32,026 43,792 140,644 Retail Repurchase Agreements 465,452 435,216 1,376,767 1,130,898 Federal Home Loan Bank advances 416,696 268,289 1,096,178 760,534 Trust preferred securities 415,686 456,582 1,273,775 1,352,093 ----------- ----------- ----------- ----------- Total interest expense 3,573,107 4,689,389 11,764,474 13,596,842 ----------- ----------- ----------- ----------- Net interest income 4,448,489 3,660,951 12,697,863 11,004,365 Provision for loan losses 146,173 140,409 551,388 378,643 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 4,302,316 3,520,543 12,146,475 10,625,723 Non-interest income Data service fees 4,947,727 5,004,394 15,161,075 14,467,788 Trust fees 780,726 819,989 2,451,567 2,512,251 Customer service fees 626,008 588,447 1,825,040 1,650,080 Net gain on sales of loans 132,999 128,947 590,747 436,390 Net realized gain on sales of securities -- -- -- 367 Net proceeds from VISA IPO -- -- 132,106 -- Investment securities recoveries -- -- 197,487 -- Loan servicing fees 57,356 27,284 175,516 146,427 Gain on sale of assets 222,815 11,862 151,393 61,839 Other income 221,081 201,920 620,452 754,144 ----------- ----------- ----------- ----------- Total non-interest income 6,988,712 6,782,842 21,305,383 20,029,285 Non-interest expense Salaries and employee benefits 4,239,578 4,290,961 13,113,999 12,873,072 Net occupancy expense 526,301 514,742 1,603,496 1,547,800 Equipment expense 1,553,188 1,625,762 4,746,533 4,908,311 Data processing fees 120,151 102,292 321,510 372,716 Professional fees 489,910 461,844 1,345,133 1,640,250 Marketing expense 247,120 259,196 584,957 601,979 Printing and office supplies 115,667 130,363 421,405 509,817 Telephone and communication 415,120 446,465 1,258,907 1,329,359 Postage and delivery expense 511,522 392,211 1,649,969 1,168,563 State, local and other taxes 235,647 103,674 602,833 468,590 Employee expense 272,315 266,227 806,298 801,374 Other expenses 552,379 512,663 1,535,564 1,250,192 ----------- ----------- ----------- ----------- Total non-interest expense 9,278,898 9,106,400 27,990,604 27,472,023 ----------- ----------- ----------- ----------- Income before income tax expense 2,012,130 1,196,984 5,461,254 3,182,984 Income tax expense 588,090 333,384 1,572,034 831,885 ----------- ----------- ----------- ----------- Net income $ 1,424,040 $ 863,600 $ 3,889,220 $ 2,351,099 =========== =========== =========== =========== Earnings per common share: Basic $ 0.29 $ 0.17 $ 0.79 $ 0.47 =========== =========== =========== =========== Diluted $ 0.29 $ 0.17 $ 0.79 $ 0.47 =========== =========== =========== =========== RURBAN FINANCIAL CORP CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) ------------------------------ Three Months Ended Nine Months Ended September 30, September 30, (dollars in thousands except ------------- ------------- per share data) 2008 2007 2008 2007 ------------------------------ -------- -------- -------- -------- EARNINGS Net interest income $ 4,448 $ 3,661 $ 12,698 $ 11,004 Provision for loan loss $ 146 $ 140 $ 551 $ 379 Non-interest income $ 6,989 $ 6,783 $ 21,305 $ 20,029 Revenue (net interest income plus non-interest income) $ 11,437 $ 10,444 $ 34,003 $ 31,033 Non-interest expense $ 9,279 $ 9,106 $ 27,991 $ 27,472 Net income $ 1,424 $ 864 $ 3,889 $ 2,351 PER SHARE DATA Basic earnings per share $ 0.29 $ 0.17 $ 0.79 $ 0.47 Diluted earnings per share $ 0.29 $ 0.17 $ 0.79 $ 0.47 Book value per share $ 12.25 $ 11.70 $ 12.25 $ 11.70 Tangible book value per share $ 8.65 $ 7.87 $ 8.65 $ 7.87 Cash dividend per share $ 0.09 $ 0.07 $ 0.25 $ 0.19 PERFORMANCE RATIOS Return on average assets 0.99% 0.62% 0.90% 0.57% Return on average equity 9.54% 5.97% 8.69% 5.44% Net interest margin (tax equivalent) 3.56% 2.96% 3.42% 3.10% Net interest margin - banking group 3.84% 3.41% 3.71% 3.47% Non-interest expense / Average assets 6.44% 6.56% 6.50% 6.63% Efficiency Ratio - bank (non-GAAP) 71.13% 80.14% 72.25% 80.52% MARKET DATA PER SHARE Market value per share -- Period end $ 9.00 $ 12.65 $ 9.00 $ 12.65 Market as a % of book 73% 108% 73% 108% Cash dividend yield 4.00% 2.21% 3.70% 2.00% Period-end common shares outstanding (000) 4,906 4,999 4,906 4,999 Common stock market capitalization ($000) $ 44,154 $ 63,237 $ 44,154 $ 63,237 CAPITAL & LIQUIDITY Equity to assets 10.3% 10.3% 10.3% 10.3% Period-end tangible equity to tangible assets 7.5% 7.2% 7.5% 7.2% Tier 1 risk-based capital ratio 15.2% 14.6% 15.2% 14.6% Total risk-based capital ratio 16.2% 15.7% 16.2% 15.7% ASSET QUALITY Net charge-offs / (Recoveries) $ 336 $ 28 $ 485 $ 159 Net loan charge-offs (Ann.) / Average loans 0.33% 0.03% 0.16% 0.06% Non-performing loans $ 4,659 $ 6,361 $ 4,659 $ 6,361 OREO / OAOs $ 1,611 $ 71 $ 1,611 $ 71 Non-performing assets $ 6,270 $ 6,432 $ 6,270 $ 6,432 Non-performing assets / Total assets 1.07% 1.14% 1.07% 1.14% Allowance for loan losses / Total loans 1.01% 1.01% 1.01% 1.01% Allowance for loan losses / Non-performing Assets 64.7% 61.2% 64.7% 61.2% END OF PERIOD BALANCES Total loans, net of unearned income $399,910 $388,264 $399,910 $388,264 Allowance for loan loss $ 4,057 $ 3,937 $ 4,057 $ 3,937 Total assets $585,022 $565,674 $585,022 $565,674 Deposits $406,454 $413,152 $406,454 $413,152 Stockholders' equity $ 60,117 $ 58,504 $ 60,117 $ 58,504 Full-time equivalent employees 271 280 271 280 AVERAGE BALANCES Loans $401,790 $385,126 $398,808 $378,733 Total earning assets $506,760 $488,798 $505,297 $485,624 Total assets $576,774 $555,452 $574,439 $552,657 Deposits $403,064 $411,948 $409,242 $412,587 Stockholders' equity $ 59,717 $ 57,830 $ 59,690 $ 57,607 RURBAN FINANCIAL CORP CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) -------------------- -------- -------- -------- -------- -------- (dollars in thousands except 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr per share data) 2008 2008 2008 2007 2007 -------------------- -------- -------- -------- -------- -------- EARNINGS Net interest income $ 4,448 $ 4,432 $ 3,817 $ 3,783 $ 3,661 Provision for loan loss $ 146 $ 213 $ 192 $ 143 $ 140 Non-interest income $ 6,989 $ 6,801 $ 7,516 $ 6,832 $ 6,783 Revenue (net interest income plus non-interest income) $ 11,437 $ 11,233 $ 11,333 $ 10,615 $ 10,444 Non-interest expense $ 9,279 $ 9,111 $ 9,601 $ 9,164 $ 9,106 Net income $ 1,424 $ 1,356 $ 1,109 $ 906 $ 864 PER SHARE DATA Basic earnings per share $ 0.29 $ 0.28 $ 0.22 $ 0.18 $ 0.17 Diluted earnings per share $ 0.29 $ 0.28 $ 0.22 $ 0.18 $ 0.17 Book value per share $ 12.25 $ 12.08 $ 12.11 $ 11.92 $ 11.70 Tangible book value per share $ 8.65 $ 8.41 $ 8.10 $ 8.00 $ 7.87 Cash dividend per share $ 0.09 $ 0.08 $ 0.08 $ 0.07 $ 0.07 PERFORMANCE RATIOS Return on average assets 0.99% 0.94% 0.78% 0.64% 0.62% Return on average equity 9.54% 9.09% 7.50% 6.15% 5.97% Net interest margin (tax equivalent) 3.56% 3.55% 3.26% 3.12% 2.96% Net interest margin (Bank Only) 3.84% 3.83% 3.45% 3.43% 3.41% Non-interest expense / Average assets 6.44% 6.29% 6.77% 6.48% 6.56% Efficiency Ratio - bank (non-GAAP) 71.13% 69.85% 75.90% 76.68% 80.14% MARKET DATA PER SHARE Market value per share -- Period end $ 9.00 $ 9.52 $ 10.24 $ 12.49 $ 12.65 Market as a % of book 73% 79% 85% 105% 108% Cash dividend yield 4.00% 3.36% 3.13% 2.24% 2.21% Period-end common shares outstanding (000) 4,906 4,914 4,942 4,979 4,999 Common stock market capitalization ($000) $ 44,154 $ 46,781 $ 50,605 $ 62,188 $ 63,237 CAPITAL & LIQUIDITY Equity to assets 10.3% 10.3% 10.5% 10.6% 10.3% Period-end tangible equity to tangible assets 7.5% 7.4% 7.2% 7.3% 7.2% Tier 1 risk-based capital ratio 15.2% 14.6% 14.9% 14.8% 14.6% Total risk-based capital ratio 16.2% 15.7% 15.8% 16.0% 15.7% ASSET QUALITY Net charge-offs / (Recoveries) $ 336 $ (18) $ 166 $ 89 $ 28 Net loan charge-offs (Ann.) / Average loans 0.33% (0.02%) 0.17% 0.09% 0.03% Non-performing loans $ 4,659 $ 5,141 $ 5,305 $ 5,990 $ 6,361 OREO / OAOs $ 1,611 $ 1,566 $ 1,662 $ 172 $ 71 Non-performing assets $ 6,270 $ 6,707 $ 6,967 $ 6,162 $ 6,432 Non-performing assets / Total assets 1.07% 1.16% 1.22% 1.10% 1.14% Allowance for loan losses / Total loans 1.01% 1.04% 1.02% 1.03% 1.01% Allowance for loan losses / Non-performing Assets 64.7% 63.3% 57.6% 64.8% 61.2% END OF PERIOD BALANCES Total loans, net of unearned income $399,910 $404,435 $391,963 $389,084 $388,264 Allowance for loan loss $ 4,057 $ 4,247 $ 4,016 $ 3,990 $ 3,937 Total assets $585,022 $576,513 $571,733 $561,214 $565,674 Deposits $406,454 $402,558 $416,712 $406,031 $413,152 Stockholders' equity $ 60,117 $ 59,362 $ 59,870 $ 59,325 $ 58,504 Full-time equivalent employees 271 273 272 275 280 AVERAGE BALANCES Loans $401,790 $404,756 $389,917 $389,526 $385,126 Total earning assets $506,760 $510,521 $498,731 $496,782 $488,798 Total assets $576,774 $579,004 $567,129 $565,779 $555,451 Deposits $403,064 $412,080 $412,424 $413,473 $411,948 Stockholders' equity $ 59,717 $ 59,671 $ 59,149 $ 58,928 $ 57,830 Rurban Financial Corp. Segment Reporting Three Months Ended September 30, 2008 ($ in Thousands) ------------------------------------------------- Parent Company Rurban Income Statement Total Data and Elimination Financial Measures Banking Processing Other Entries Corp. ---------------- ------------------------------------------------- Interest Income $ 8,042 $ 1 $ -- $ (20) $ 8,023 Interest Expense 3,150 22 422 (20) $ 3,574 Net Interest Income 4,892 (21) (422) -- $ 4,449 Provision For Loan Loss 146 -- -- -- $ 146 Non-interest Income 1,985 5,315 428 (738) $ 6,990 Non-interest Expense 5,003 4,286 728 (738) $ 9,279 Net Income QTD $ 1,233 $ 664 $ (473) $ -- $ 1,424 Performance Measures ----------- Average Assets - QTD $557,306 $ 20,344 $ 81,707 $(82,583) $576,774 ROAA 0.88% 13.06% -- -- 0.99% Average Equity - QTD $ 59,899 $ 16,063 $ 59,717 $(75,962) $ 59,717 ROAE 8.23% 16.53% -- -- 9.54% Efficiency Ratio - % 71.13% -- -- -- 79.60% Average Loans - QTD $402,940 $ -- $ -- $ (1,150) $401,790 Average Deposits - QTD $408,535 $ -- $ -- $ (5,471) $403,064 Rurban Financial Corp. Segment Reporting Nine Months Ended September 30, 2008 ($ in Thousands) ------------------------------------------------- Parent Company Rurban Income Statement Total Data and Elimination Financial Measures Banking Processing Other Entries Corp. ---------------- ------------------------------------------------- Interest Income $ 24,532 $ 1 $ 1 $ (71) $ 24,463 Interest Expense 10,464 98 1,274 (71) $ 11,765 Net Interest Income 14,068 (97) (1,273) -- $ 12,698 Provision For Loan Loss 551 -- -- -- $ 551 Non-interest Income 6,001 16,282 1,237 (2,214) $ 21,306 Non-interest Expense 14,834 12,996 2,375 (2,214) $ 27,991 Net Income YTD $ 3,367 $ 2,104 $ (1,582) $ -- $ 3,889 Performance Measures ----------- Average Assets - YTD $555,019 $ 20,217 $ 81,698 $(82,495) $574,439 ROAA 0.81% 13.88% -- -- 0.90% Average Equity - YTD $ 59,448 $ 15,827 $ 59,690 $(75,275) $ 59,690 ROAE 7.55% 17.72% -- -- 8.69% Efficiency Ratio - % 72.25% -- -- -- 80.79% Average Loans - YTD $400,133 $ -- $ -- $ (1,325) $398,808 Average Deposits - YTD $415,137 $ -- $ -- $ (5,895) $409,242 Rurban Financial Corp. Proforma Performance Measurement Quarterly Comparison - Third Quarter 2008 ($ in Thousands) ------------------------------------------------- Parent Company Rurban Total Data and Elimination Financial Banking Processing Other Entries Corp. ------------------------------------------------- Revenue ------- 3Q08 $ 6,877 $ 5,294 $ (20) $ (702) $ 11,449 2Q08 $ 6,729 $ 5,285 $ (15) $ (766) $ 11,233 1Q08 $ 6,464 $ 5,606 $ (27) $ (710) $ 11,333 4Q07 $ 6,232 $ 5,184 $ (114) $ (687) $ 10,615 3Q07 $ 5,939 $ 5,332 $ (100) $ (727) $ 10,444 3rd Quarter Comparison $ 938 $ (38) $ 80 $ -- $ 1,005 Non-interest Expenses ------------ 3Q08 $ 5,003 $ 4,286 $ 728 $ (738) $ 9,279 2Q08 $ 4,812 $ 4,316 $ 748 $ (766) $ 9,110 1Q08 $ 5,018 $ 4,394 $ 899 $ (710) $ 9,601 4Q07 $ 4,908 $ 4,202 $ 742 $ (687) $ 9,164 3Q07 $ 4,874 $ 4,334 $ 626 $ (727) $ 9,106 3rd Quarter Comparison $ 129 $ (48) $ 102 $ -- $ 173 Net Income ---------- 3Q08 $ 1,233 $ 664 $ (473) $ -- $ 1,424 2Q08 $ 1,217 $ 640 $ (501) $ -- $ 1,356 1Q08 $ 917 $ 800 $ (608) $ -- $ 1,109 4Q07 $ 836 $ 648 $ (578) $ -- $ 906 3Q07 $ 675 $ 659 $ (470) $ -- $ 864 3rd Quarter Comparison $ 558 $ 5 $ (3) $ -- $ 560 Average Assets -------------- 3Q08 $557,306 $ 20,344 $ 81,707 $(82,583) $576,774 2Q08 $560,223 $ 20,214 $ 81,579 $(83,011) $579,004 1Q08 $547,502 $ 20,103 $ 81,297 $(81,773) $567,129 4Q07 $546,609 $ 20,014 $ 80,827 $(81,671) $565,779 3Q07 $536,470 $ 19,739 $ 79,380 $(80,137) $555,451 3rd Quarter Comparison $ 20,836 $ 605 $ 2,327 $ -- $ 21,323 ROAA ---- 3Q08 0.88% 13.06% -- -- 0.99% 2Q08 0.87% 12.66% -- -- 0.94% 1Q08 0.67% 15.92% -- -- 0.78% 4Q07 0.61% 12.95% -- -- 0.64% 3Q07 0.50% 13.35% -- -- 0.62% 3rd Quarter Comparison 0.38% (0.29%) -- -- 0.37% Average Equity -------------- 3Q08 $ 59,899 $ 16,063 $ 59,717 $(75,962) $ 59,717 2Q08 $ 59,395 $ 15,861 $ 59,671 $(75,256) $ 59,671 1Q08 $ 59,044 $ 15,282 $ 59,149 $(74,326) $ 59,149 4Q07 $ 58,115 $ 15,222 $ 58,928 $(73,337) $ 58,928 3Q07 $ 56,805 $ 14,732 $ 57,830 $(71,536) $ 57,830 3rd Quarter Comparison $ 3,094 $ 1,332 $ 1,888 $ -- $ 1,887 ROAE ---- 3Q08 8.23% 16.53% -- -- 9.54% 2Q08 8.20% 16.14% -- -- 9.09% 1Q08 6.21% 20.94% -- -- 7.50% 4Q07 5.75% 17.03% -- -- 6.15% 3Q07 4.75% 17.89% -- -- 5.97% 3rd Quarter Comparison 3.48% (1.36%) -- -- 3.57% Efficiency Ratio ---------------- 3Q08 71.13% 79.79% -- -- 79.60% 2Q08 69.85% 80.50% -- -- 79.56% 1Q08 75.90% 77.28% -- -- 83.19% 4Q07 76.68% 79.77% -- -- 84.49% 3Q07 80.17% 80.04% -- -- 85.47% 3rd Quarter Comparison (9.04%) (0.25%) -- -- (5.87%)