Rurban Financial Corp. Operating Income Increases 55 Percent


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%)


            

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