DEFIANCE, Ohio, Oct. 26, 2011 (GLOBE NEWSWIRE) -- Rurban Financial Corp. (Nasdaq:RBNF) ("Rurban" or "the Company"), a diversified financial services company providing full-service community banking, mortgage banking, wealth management and item processing services, today reported earnings for the third quarter and first nine months of 2011.
Consolidated earnings for Rurban Financial Corp. include the results of Rurban's Banking Group, consisting primarily of The State Bank and Trust Company ("State Bank" or "the Bank"), and Rurban's data services subsidiary, Rurbanc Data Services, Inc. (dba "RDSI Banking Systems" or "RDSI"). Net income for the third quarter of 2011 was $602,000, or $0.12 per diluted share, compared to $777,000, or $0.16 per diluted share for the second quarter of 2011, and $26,000, or $0.01 per diluted share for the 2010 third quarter. For the first nine months of 2011, Rurban reported net income of $1.39 million, or $0.29 per diluted share, compared to a net loss of $9.03 million, or ($1.86) per diluted share for the first nine months of 2010.
Excluding after-tax losses of $18,000 and $85,000 on the sale of foreclosed real estate in the third quarters of 2011 and 2010, respectively, core earnings from operations were $620,000, or $0.13 per diluted share for the 2011 third quarter compared to $111,000, or $0.02 per diluted share for the year-ago third quarter. Core earnings for the second quarter of 2011 were $20,000, or $0.00 per diluted share. (The reconciliation of GAAP to core earnings can be found in the financial tables.)
Key items for the 2011 third quarter include:
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Core earnings showed significant improvement in response to recent and ongoing initiatives.
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Net interest income continued its upward growth trend, primarily from improvements in funding mix.
-
Core noninterest income is stabilizing following the loss of data processing fee income, and remains highly diversified.
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Third quarter mortgage loan originations were exceptionally robust; however, interest rate volatility continues to impact the valuation of mortgage servicing rights, reducing net revenue from mortgage banking.
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Corporate-wide expense reductions have more than offset the decline in RDSI revenue.
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Asset quality continues to trend in a strongly positive direction.
- Both the Bank and the holding company remain well-capitalized.
Mark Klein, President and Chief Executive Officer of Rurban Financial Corp., stated, "We continue to build momentum after working our way through the challenges of 2010. Core earnings rebounded as several ongoing initiatives began to bear fruit: expense control, improvement in asset quality, and balance sheet deleveraging. As a result of these initiatives, we are increasingly positioned for growth and greater profitability, which we anticipate to continue in the upcoming quarters.
"Elevated costs associated with the administration of problem assets are fairly well behind us, and we are focusing more intensively on improving efficiencies within the Bank. Operating expenses have been subjected to greater scrutiny, and I am pleased to report that we've saved approximately $500,000 in assorted categories compared to last quarter.
"Whereas many banks are struggling to grow revenue, we have been fairly successful in this area. As a result of improvements on the liability side, net interest income has continued its upward growth trend despite marginal loan growth. The lending environment is still quite competitive, and commercial loan demand remains weak. The balance sheet deleveraging we completed in the second quarter has improved our funding mix to a significant extent, although we don't anticipate additional savings on the funding side going forward. We regard our non-bank products as a major source of revenue growth, and we have been cross-training our staff to become more knowledgeable so that they can identify and respond more effectively to customer needs."
RESULTS OF OPERATIONS
Consolidated Revenue
Total revenue from operations, consisting of net interest income on a fully tax-equivalent basis and noninterest income, was $8.0 million for the third quarter of 2011, down $1.6 million, or 17.1 percent, from the $9.6 million reported for the 2010 third quarter. Compared to the linked quarter, total revenue declined by $2.5 million, or 24.0 percent. Year to date, total revenue was $26.3 million, down $4.8 million, or 15.4 percent, from the prior-year nine month period. The lower level of revenue year over year and year to date relates primarily to the loss of RDSI's data processing business.
Net interest income for the third quarter of 2011 on a tax-equivalent basis was $5.5 million, up $0.4 million, or 8.2 percent, from the third quarter of 2010; growth was derived from a 32 basis point, or 8.7 percent, improvement in the net interest margin on a fully-taxable basis, to 3.98 percent, partially offset by a $2.9 million, or 0.53 percent, decline in average earning assets. Compared to the linked quarter, net interest income increased by $0.11 million, or 2.1 percent, resulting from a 15 basis point, or 3.9 percent, improvement in the net interest margin partially offset by a $9.6 million, or 1.7 percent, decline in average earning assets.
Although Rurban's funding mix has been improving on a quarterly basis, the deleveraging transaction completed in the 2011 second quarter enabled Rurban to further reduce its higher-cost borrowings. Year to date, net interest income (fully-taxable) was $15.9 million, up $0.5 million, or 3.0 percent, compared to year to date 2010. The net interest margin (fully-taxable) was 3.79 percent compared to 3.65 percent for the 2010 nine-month period. The 14 basis point improvement in the net interest margin resulted from a 46 basis point decrease in the cost of interest-bearing liabilities, partially offset by a 34 basis point decline in the yield on earning assets.
Noninterest Income
Noninterest income was $2.5 million for the third quarter of 2011, a decline of $2.1 million, or 45.4 percent, from the year-ago quarter; the decline from the linked quarter was $2.6 million. Excluding one-time or non-core items, third quarter 2011 noninterest income from operations was $2.5 million compared to $2.9 million and $4.7 million for the linked and year-ago quarters, a decline of 12.7 percent and 46.4 percent, respectively. Second quarter 2011 was distorted primarily by the one-time gain of $1.9 million resulting from the sale of securities as part of the balance sheet deleveraging. The following table provides a reconciliation of core and non-core items to noninterest income on a GAAP basis.
| Three Months Ended | Nine Months Ended | ||||||
| Noninterest Income*: (000's) | Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, |
| 2011 | 2011 | 2011 | 2010 | 2010 | 2011 | 2010 | |
| Data service fees | 743 | 785 | 912 | 1,054 | 2,044 | 2,440 | 8,683 |
| Trust fees | 629 | 669 | 695 | 664 | 651 | 1,993 | 1,884 |
| Customer service fees | 664 | 640 | 581 | 615 | 644 | 1,885 | 1,846 |
| Gain on sale of mortgage & OMSR's | 1,101 | 565 | 425 | 1,840 | 1,436 | 2,091 | 2,654 |
| Gain on sale of non-mortgage loans | -- | 38 | 43 | 74 | 125 | 81 | 233 |
| Mortgage loan servicing fees, net | (25) | 123 | 139 | (59) | (24) | 237 | 183 |
| OMSR valuation adjustment | (771) | (127) | -- | 660 | (400) | (898) | (575) |
| Other income | 161 | 174 | 168 | 200 | 188 | 503 | 538 |
| Core noninterest income | 2,502 | 2,867 | 2,963 | 5,048 | 4,664 | 8,332 | 15,446 |
| Non-core items: | |||||||
| Contract buyout (2) | -- | 519 | -- | -- | -- | 519 | -- |
| Net gain/(loss) on sales of securities (1) | -- | 1,871 | -- | (1) | -- | 1,871 | 451 |
| Investment securities recoveries (1) | -- | -- | -- | -- | -- | -- | 74 |
| Loss on sale or disposal of assets (1) | (27) | (160) | (100) | (40) | (129) | (287) | (159) |
| Non-core noninterest income | (27) | 2,230 | (100) | (41) | (129) | 2,103 | 366 |
| Total Noninterest Income (GAAP) | 2,475 | 5,097 | 2,863 | 5,007 | 4,535 | 10,435 | 15,812 |
|
*Line items identified as (1) are reported in the financial statements of State Bank, while items identified as a (2) are part of RDSI |
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For the third quarter of 2011, noninterest income from operations contributed 31.4 percent of total revenues, a substantial shift from the 48.6 percent contribution in the prior-year third quarter. However, the current level of noninterest income still represents approximately double the 16 percent median value for banks ranging between $500 million-to-$1 billion in asset size. Non-bank fee income from data service fees, trust fees, and mortgage banking activities accounted for $1.7 million of third quarter 2011 noninterest income from operations, or 67.0 percent. This compares with $2.0 million, or 70.3 percent, and $3.7 million, or 79.5 percent, for the linked and year-ago quarters, respectively. Trust fees from Rurban's wealth management division, Reliance Financial Services, were $2.0 million for the first nine months of 2011, up 5.8 percent from the first nine months of 2010.
| Data Services | |||||
| ($000) | 3Q 2011 | 2Q 2011 | 1Q 2011 | 4Q 2010 | 3Q 2010 |
| Data Processing & Network Services | 292 | 302 | 367 | 451 | 1,124 |
| Payment Solutions | 784 | 823 | 927 | 1,008 | 1,215 |
| Contract Buyout | 519 | ||||
| RDSI Revenue | 1,076 | 1,644 | 1,294 | 1,459 | 2,339 |
| Less: Intercompany | (333) | (340) | (382) | (405) | (295) |
| Net Data Services Fees | 743 | 1,304 | 912 | 1,054 | 2,044 |
| Net Operating Expense | 925 | 1,016 | 1,125 | 8,373 | 2,023 |
Net data services fees derived from Rurban's data services subsidiary, RDSI, were $0.74 million in the third quarter of 2011, down $0.56 million from the $1.3 million reported for the previous quarter, and a decline of $1.3 million from the year-ago quarter. Including fees paid by Rurban/State Bank to RDSI for data and item processing and excluding the one-time contract buyout fee received in the previous quarter, RDSI reported core revenue of $1.08 million for the current quarter compared to $1.13 million for the linked quarter; the decline resulted primarily from the loss of the acquired client. Net operating expenses for RDSI have been reduced by $1.1 million, or 54.3 percent, from the prior year third quarter.
| Mortgage Banking | |||||||||
| Three Months Ended | Nine Months Ended | ||||||||
| (000's) |
Sept. 30, 2011 |
June 30, 2011 |
March 31, 2011 |
Dec. 31, 2010 |
Sept. 30, 2010 |
Sept. 30, 2011 |
Sept. 30, 2010 |
||
| Mortgage originations | 68,989 | 38,099 | 28,005 | 90,268 | 69,084 | 135,093 | 148,894 | ||
| Mortgage sales | 56,438 | 30,017 | 29,999 | 79,059 | 66,036 | 116,454 | 147,184 | ||
| Mortgage servicing portfolio | 370,033 | 351,888 | 341,600 | 328,435 | 276,298 | 370,033 | 276,298 | ||
| Mortgage servicing rights | 2,709 | 3,294 | 3,316 | 3,190 | 2,042 | 2,709 | 2,042 | ||
| Mortgage serving revenue: | |||||||||
| Loan servicing fees | 226 | 217 | 209 | 191 | 168 | 652 | 417 | ||
| Less: OMSR amortization | 251 | 94 | 70 | 250 | 192 | 415 | 234 | ||
| Net administrative fees | (25) | 123 | 139 | (59) | (24) | 237 | 183 | ||
| Less: OMSR valuation adj. | 771 | 127 | -- | (660) | 400 | 898 | 575 | ||
| Net loan servicing fees | (796) | (4) | 139 | 601 | (424) | (661) | (392) | ||
| Plus: Gain on sale of mortgages | 1,101 | 565 | 425 | 1,840 | 1,436 | 2,091 | 2,654 | ||
| Mortgage banking revenue, net | 305 | 561 | 564 | 2,441 | 1,012 | 1,430 | 2,262 | ||
For the third quarter of 2011, net mortgage banking revenue, consisting of gains on the sale of mortgages and net loan servicing fees, was $0.31 million, down $0.25 million from the linked quarter, and lower by $0.71 million than the year-ago quarter. For the nine months year to date, net mortgage banking revenue was $1.43 million, a decline of $0.83 million, or 36.8 percent. While originations and gains on the sale of mortgages were sharply higher than for the preceding quarter, a valuation adjustment on Originated Mortgage Servicing Rights ("OMSR") of $0.77 million lowered net revenue for the current quarter.
Rurban continues to aggressively seek mortgage originations through its Northwest Ohio and Northeast Indiana regions, and its loan production office in Columbus. Originations for the September 2011 quarter increased above the June 2011 quarter by $30.9 million, or 81.1 percent, and were at the same level as the year-ago third quarter when government incentives were still in place. State Bank sold $56.4 million of loans in the third quarter of 2011, up $26.4 million from the linked quarter, but lower by $9.6 million, or 14.5 percent, than the 2010 third quarter. Gains on sale of mortgage loans were $1.1 million for the current quarter, or 1.95 percent of mortgage loans sold; this compares to spreads of 1.88 percent in the 2011 second quarter and 2.17 percent for the year-ago quarter. The spread reflects the mix of mortgage loans sold; State Bank retains servicing on conventional mortgages but sells its servicing on all other types of mortgages.
Loan Loss Provision
The loan loss provision was $0.3 million for the third quarter of 2011, a decrease of $0.6 million from both the second quarter of 2011 and the year-ago third quarter. The decreased provision expense reflects the decline in nonperforming loans over the past twelve months, in addition to a lower level of delinquencies. Nonperforming loans declined by $2.8 million year over year, while total delinquencies were $4.7 million lower than the year-ago quarter. The loan loss reserve now stands at 1.42 percent of total loans, providing 85 percent coverage of nonperforming loans; this compares to reserve coverage of 80 percent and 64 percent for the linked and year-ago quarters, respectively. Net charge-offs for the third quarter of 2011 were $0.5 million compared to $1.0 million and $1.4 million for the linked and year-ago quarters, respectively.
Noninterest Expense
Noninterest expense was $6.8 million for the third quarter of 2011, down $1.6 million, or 18.8 percent, from the previous quarter, and lower by $1.9 million, or 21.9 percent, from the year-ago quarter. Year to date, noninterest expense was $22.3 million, a decline of $14.1 million, or 38.8 percent, from the $36.4 million reported for the 2010 period. The following table provides a reconciliation of core and non-core items to noninterest expense on a GAAP basis.
| Three Months Ended | Nine Months Ended | |||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||
| Noninterest Expense*: (000's) | 2011 | 2011 | 2011 | 2010 | 2010 | 2011 | 2010 | |
| Salaries and employee benefits | 3,583 | 3,573 | 3,530 | 3,868 | 4,058 | 10,686 | 14,065 | |
| Occupancy & equipment expense | 1,258 | 1,235 | 1,295 | 1,544 | 1,359 | 3,788 | 7,063 | |
| FDIC Insurance expense | 145 | 254 | 318 | 461 | 260 | 717 | 676 | |
| Data processing fees | 158 | 192 | 144 | 108 | 211 | 494 | 635 | |
| Professional fees | 377 | 577 | 474 | 722 | 619 | 1,428 | 1,823 | |
| Employee expense | 143 | 172 | 96 | 163 | 148 | 411 | 655 | |
| Other intangible amortization expense | 185 | 197 | 197 | 200 | 200 | 579 | 601 | |
| Other expenses | 974 | 1,115 | 1,006 | 1,809 | 1,883 | 3,095 | 3,814 | |
| Core Noninterest Expense | 6,823 | 7,315 | 7,060 | 8,875 | 8,738 | 21,198 | 29,332 | |
| Non-Core Items | ||||||||
| OREO Impairment (1) | -- | -- | -- | 757 | -- | -- | 215 | |
| Goodwill Impairment (2) | -- | -- | -- | 4,681 | -- | -- | -- | |
| Hardware impairment/ write-off (2) | -- | -- | -- | -- | -- | -- | 2,792 | |
| Software impairment/ write-off (2) | -- | -- | -- | -- | -- | -- | 3,247 | |
| FHLB/REPO Prepayment Penalties (1) | -- | 1,083 | -- | -- | -- | 1,083 | -- | |
| Intangible impairment (2) | -- | -- | -- | 1,592 | -- | -- | -- | |
| Contract write-off (2) ** | -- | -- | -- | -- | -- | -- | 193 | |
| New Core Loan (2) ** | -- | -- | -- | -- | -- | -- | 624 | |
| Non-Core Noninterest Expense | -- | 1,083 | -- | 7,030 | -- | 1,083 | 7,071 | |
| Noninterest Expense (GAAP) | 6,823 | 8,398 | 7,060 | 15,905 | 8,738 | 22,281 | 36,403 | |
| * Line items identified as (1) are reported in the financial statements of State Bank, while items identified as a (2) are part of RDSI | ||||||||
| ** Items marked with double asterisks were included in Other Expense | ||||||||
Non-core expenses reported during the first nine months of 2011 were substantially reduced from 2010 levels: $1.1 million in 2011 compared to $7.1 million for the 2010 nine-month period. At the banking level, State Bank incurred a $1.1 million prepayment penalty during the second quarter of 2011 and $0.2 million of OREO write-downs in the second quarter of 2010. Year to date, RDSI did not have any one-time or non-core charges; by comparison, RDSI wrote off or wrote down $6.8 million of hardware and software assets in the first nine-months of 2010. Excluding these non-core charges, noninterest expense from operations was $21.2 million year to date compared to $29.3 million for the prior-year nine-month period, lower by $8.1 million, or 27.7 percent.
The majority of operational savings during 2011 still relate to the downsizing of RDSI in response to the loss of its data processing business. More recent cost savings have been the result of efficiencies at the bank level; noninterest expense from operations for the third quarter of 2011 was $6.8 million, a decrease of $0.5 million from the linked quarter. Savings were derived in several areas, including data processing, employee expense and professional expenses, as well as from lower FDIC insurance expense as a result of Dodd-Frank premium reductions for small banks. As a result of these initiatives, the efficiency ratio improved to 83.1 percent for the third quarter, down 325 basis points and 465 basis points from the linked and year-ago quarters, respectively. Year to date, the efficiency ratio was 85.2 percent compared to 93.5 percent for the prior-year nine month period.
Balance Sheet
Total assets as of September 30, 2011 were $623.8 million, up $5.7 million, or 0.9 percent, from the linked quarter, and down $57.4 million, or 8.4 percent, from the year-earlier quarter. In a series of transactions completed during June of 2011, State Bank sold $43 million of investment securities with a weighted average yield of 3.97 percent, recognizing a gain on sale of $1.9 million. Proceeds were applied to pay down $32.0 million in borrowings with a weighted average rate of 4.64 percent. The prepayment penalty for the pay down of the $30 million in repos and $2 million in FHLB advances was $1.1 million.
Total loans increased by $1.4 million from the linked quarter, to $438.9 million at September 30, 2011, primarily from a $1.9 increase in Commercial and Industrial ("C&I") loans; since year-end 2010, total loans increased by $11.4 million, or 2.7 percent. Commercial loans, including Commercial Real Estate ("CRE") and C&I loans accounted for the majority of growth.
| Loan Portfolio | |||||
| (000's) | 3Q 2011 | 2Q 2011 | 1Q 2011 | 4Q 2010 | 3Q 2010 |
| Construction & Development | 15,992 | 19,538 | 17,658 | 16,177 | 15,310 |
| Farmland | 22,814 | 22,596 | 23,207 | 24,439 | 21,071 |
| HELOC | 38,569 | 38,950 | 38,077 | 38,681 | 39,120 |
| Residential Real Estate | 98,772 | 93,468 | 93,122 | 96,257 | 95,371 |
| Commercial RE – Owner | 70,432 | 72,172 | 67,602 | 65,552 | 67,288 |
| Commercial RE – Investor | 89,772 | 90,460 | 87,833 | 86,956 | 87,271 |
| Total Real-estate related | $336,351 | $337,184 | $327,499 | $328,062 | $325,251 |
| Commercial & Industrial | 72,622 | 70,741 | 67,551 | 69,510 | 69,917 |
| Agriculture | 15,787 | 15,858 | 13,999 | 16,390 | 16,152 |
| Consumer | 9,475 | 9,891 | 9,961 | 10,653 | 9,457 |
| Other | 4,691 | 3,877 | 3,156 | 2,929 | 4,219 |
| Total Loans | $438,926 | $437,551 | $422,166 | $427,544 | $424,996 |
CRE, the largest loan category, accounts for 36.5 percent of total loans, or $160.2 million, up $7.7 million, or 5.0 percent, since year-end. Along with $16.0 million of construction and development loans, these commercial real estate categories together accounted for 40.1 percent of total loans at September 30, 2011, up from 39.5 percent at December 31, 2010. State Bank's portfolio of 1-4 family residential real estate loans currently stands at $98.8 million, or 22.5 percent of total loans. This segment grew by approximately $2.5 million since December 31, 2010; in addition to strong sales into the secondary market, State Bank has underwritten jumbo real estate loans to highly-qualified private banking clients, which it retains for its own portfolio. C&I loans now stand at $72.6 million, up $3.1 million, or 4.5 percent, since year-end.
Total deposits as of September 30, 2011 were $514.3 million, down $8.0 million, or 1.5 percent, from the prior-year third quarter, but higher by $18.5 million than at the end of the linked quarter. Increases were distributed among all deposit categories except savings, with noninterest-bearing demand deposits and time deposits each up by four percent, and Money Market accounts higher by nine percent compared to the linked quarter. As a result of the balance sheet deleveraging, combined with lower cash reserves, State Bank was able to reduce repos and FHLB advances by $43.8 million since the prior-year third quarter; they now stand at $31.7 million.
Asset Quality
The quality of Rurban's loan portfolio has remained stronger than most Midwest banks throughout the current credit cycle. Rurban continues to improve on its performance, reporting nonperforming assets ("NPAs") of $9.3 million for the current quarter, or 1.49 percent of total assets. NPAs declined $0.8 million, or 8.2 percent, since the linked quarter, and were lower by $2.8 million, or 22.8 percent, than the year-ago third quarter.
| Nonperforming Assets by Category | |||||
| ($000) | 3Q 2011 | 2Q 2011 | 1Q 2011 | 4Q 2010 | 3Q 2010 |
| Construction & Development | -- | -- | -- | -- | 634 |
| Farmland | 87 | 87 | 87 | -- | 56 |
| HELOC | 440 | 373 | 200 | 474 | 469 |
| Residential Real Estate | 2,107 | 2,436 | 3,466 | 3,285 | 3,419 |
| Commercial RE - Owner | 1,308 | 1,723 | 4,709 | 2,183 | 448 |
| Commercial RE – Investor | 902 | 897 | 627 | 3,246 | 2,510 |
| Total Real Estate-Related | $4,844 | $5,516 | $9,089 | $9,188 | $7,536 |
| Commercial &Industrial | 2,466 | 2,507 | 2,950 | 3,031 | 2,477 |
| Consumer | 21 | 50 | 82 | 64 | 94 |
| Total Non-performing Loans | $7,331 | $8,073 | $12,121 | $12,283 | $10,107 |
| OREO/OAO | 1,970 | 2,056 | 924 | 1,538 | 1,947 |
| Nonperforming Assets | $9,301 | $10,129 | $13,044 | $13,822 | $12,054 |
Nonperforming loans stand at $7.3 million at September 30, 2011, down $0.74 million, or 9.2 percent, and $2.8 million, or 27.5 percent, from the linked and year-ago quarters, respectively. Real estate-related loans account for 66 percent of problem loans: $4.84 million at September 30, 2011, down $0.67 million and $2.7 million from the linked and year-ago quarters. Currently, State Bank has only three nonperforming relationships that exceed $1.0 million; together, they account for $5.0 million, or 54 percent, of nonperforming assets; each accounts for approximately one-third of the total.
| Nonperforming Asset Reconciliation | |||||
| ($000) | 3Q 2011 | 2Q 2011 | 1Q 2011 | 4Q 2010 | 3Q 2010 |
| Beginning Balance | $10,129 | $13,044 | $13,822 | $12,053 | $14,052 |
| Additions | 432 | 289 | 1,076 | 4,590 | 837 |
| Returns to performing status | (206) | (352) | (83) | (321) | (128) |
| Principal payments | (281) | (843) | (118) | 25 | 313 |
| Sale of OREO/OAO | (246) | (416) | (1,014) | (235) | (1,438) |
| Loan charge-offs | (527) | (1,593) | (639) | (1,591) | (1,583) |
| Valuation write-downs | -- | -- | -- | (699) | -- |
| Total | $9,301 | $10,129 | $13,044 | $13,822 | $12,053 |
New additions to nonperforming status for the current quarter were $0.43 million compared to $0.29 million and $1.1 million in the two preceding quarters. Additions to nonperforming status were more than offset by the $1.3 million decline from the combination of asset sales, principal payments and improved performance during the third quarter.
Capitalization
As of September 30, 2011, the capital ratios of Rurban's banking subsidiary, State Bank, were all in excess of the regulatory thresholds for a "well-capitalized" institution. The Bank's Tier I Leverage ratio was 7.95 percent of total assets, a substantial improvement from the 6.90 percent reported at year-end 2010. The Total Risk-Based Capital ratio was 11.85 percent of risk-weighted assets, with the Tier 1 Risk-Based Capital ratio at 10.60 percent.
About Rurban Financial Corp.
Based in Defiance, Ohio, Rurban Financial Corp. is a financial services holding company with two wholly-owned subsidiaries: The State Bank and Trust Company (State Bank) and RDSI Banking Systems (RDSI). State Bank operates through 18 banking centers in seven Northwestern Ohio counties, one center in Fort Wayne, Indiana; and loan production offices in Columbus, Ohio and Angola, Indiana. The Bank offers a full range of financial services for consumers and small businesses, including trust services, mortgage banking, commercial and agricultural lending. RDSI provides item processing services to community banks located in the Midwest. Rurban's common stock is listed on the NASDAQ Global Market under the symbol RBNF.
Forward-Looking Statements
Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in the national and regional banking, insurance and mortgage industries, competitive factors specific to markets in which Rurban and its subsidiaries operate, future interest rate levels, legislative and regulatory actions, capital market conditions, general economic conditions, geopolitical events, the loss of key personnel and other factors. Forward-looking statements speak only as of the date on which they are made, and Rurban undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made except as required by law. All subsequent written and oral forward-looking statements attributable to Rurban or any person acting on its behalf are qualified by these cautionary statements.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this release contains certain non-GAAP financial measures. Management believes that providing certain non-GAAP financial measures provides investors with information useful in understanding Rurban's financial performance, its performance trends and financial position. Specifically, Rurban provides measures based on "core operating earnings," which excludes merger, integration and restructuring expenses that are not reflective of on-going operations or not expected to recur. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.
| RURBAN FINANCIAL CORP. & SUBSIDIARIES | |||||
| CONSOLIDATED BALANCE SHEETS - (Unaudited) | |||||
| September | June | March | December | September | |
| 2011 | 2011 | 2011 | 2010 | 2010 | |
| ASSETS | |||||
| Cash and due from banks | $ 13,764,025 | $ 10,485,573 | $ 38,090,470 | $ 30,417,813 | $ 60,600,672 |
| Investment Securities: | |||||
| Securities available for sale, at fair value | 104,614,877 | 104,769,578 | 131,052,629 | 132,762,058 | 115,993,828 |
| Non-marketable securities - FRB and FHLB Stock | 3,748,250 | 3,748,250 | 3,748,250 | 3,748,250 | 3,748,250 |
| Total investment securities | 108,363,127 | 108,517,828 | 134,800,879 | 136,510,308 | 119,742,078 |
| Loans held for sale | 10,589,706 | 7,211,433 | 5,423,901 | 9,055,268 | 13,453,782 |
| Loans, net of unearned income | 438,926,037 | 437,550,602 | 422,166,393 | 427,544,414 | 424,995,825 |
| Allowance for loan losses | (6,235,230) | (6,443,873) | (6,593,279) | (6,715,397) | (6,451,422) |
| Net Loans | 432,690,807 | 431,106,729 | 415,573,114 | 420,829,017 | 418,544,403 |
| Premises and equipment, net | 14,120,118 | 14,359,437 | 14,361,382 | 14,622,541 | 14,999,354 |
| Purchased software | 805,286 | 874,954 | 947,061 | 1,021,036 | 545,606 |
| Cash surrender value of life insurance | 12,133,693 | 12,041,915 | 11,951,006 | 13,211,247 | 13,107,086 |
| Goodwill | 16,733,830 | 16,733,830 | 16,733,830 | 16,733,830 | 21,414,790 |
| Core deposits and other intangibles | 2,005,945 | 2,190,707 | 2,387,920 | 2,585,132 | 4,377,111 |
| Foreclosed assets held for sale, net | 1,970,028 | 2,056,046 | 921,660 | 1,538,307 | 1,946,653 |
| Mortgage servicing rights | 2,709,222 | 3,294,494 | 3,316,228 | 3,190,389 | 2,041,698 |
| Accrued interest receivable | 2,061,201 | 1,958,748 | 2,363,645 | 2,068,965 | 2,560,938 |
| Other assets | 5,846,400 | 7,229,610 | 8,096,914 | 8,503,832 | 7,855,586 |
| Total assets | $623,793,388 | $618,061,304 | $654,968,010 | $660,287,685 | $681,189,757 |
| LIABILITIES AND EQUITY | |||||
| Deposits | |||||
| Non interest bearing demand | $ 62,079,685 | $ 59,650,822 | $ 64,027,818 | $ 62,745,906 | $ 64,671,378 |
| Interest bearing NOW | 103,229,318 | 101,972,099 | 107,940,091 | 105,708,472 | 99,647,367 |
| Savings | 48,145,958 | 48,771,404 | 48,983,184 | 47,662,315 | 46,092,866 |
| Money Market | 79,163,033 | 72,822,730 | 77,481,943 | 84,635,537 | 87,407,976 |
| Time Deposits | 221,730,681 | 212,652,611 | 214,528,353 | 214,925,512 | 224,501,334 |
| Total deposits | 514,348,675 | 495,869,666 | 512,961,389 | 515,677,742 | 522,320,921 |
| Notes payable | 2,865,123 | 3,142,048 | 3,218,211 | 3,290,471 | 3,368,266 |
| Advances from Federal Home Loan Bank | 12,939,598 | 24,602,002 | 16,679,942 | 22,807,351 | 25,429,671 |
| Fed Funds Purchased | -- | 2,000,000 | -- | -- | -- |
| Repurchase Agreements | 18,777,909 | 19,866,731 | 49,499,424 | 45,785,254 | 50,117,031 |
| Trust preferred securities | 20,620,000 | 20,620,000 | 20,620,000 | 20,620,000 | 20,620,000 |
| Accrued interest payable | 2,704,466 | 2,391,743 | 2,195,926 | 1,971,587 | 1,683,116 |
| Other liabilities | 3,985,333 | 3,555,204 | 3,528,328 | 4,111,182 | 3,582,414 |
| Total liabilities | 576,241,104 | 572,047,394 | 608,703,220 | 614,263,587 | 627,121,419 |
| Equity | |||||
| Common stock | 12,568,583 | 12,568,583 | 12,568,583 | 12,568,583 | 12,568,583 |
| Additional paid-in capital | 15,302,194 | 15,280,945 | 15,258,113 | 15,235,206 | 15,208,434 |
| Retained earnings | 20,192,317 | 19,589,825 | 18,813,030 | 18,802,106 | 25,386,403 |
| Accumulated other comprehensive income (loss) | 1,258,501 | 343,868 | 1,394,375 | 1,187,514 | 2,674,229 |
| Treasury stock | (1,769,311) | (1,769,311) | (1,769,311) | (1,769,311) | (1,769,311) |
| Total Equity | 47,552,284 | 46,013,910 | 46,264,790 | 46,024,098 | 54,068,338 |
| Total liabilities and equity | $623,793,388 | $618,061,304 | $654,968,010 | $660,287,685 | $681,189,757 |
| RURBAN FINANCIAL CORP. | |||||||
| CONSOLIDATED STATEMENTS OF OPERATION - (Unaudited) | |||||||
| Three Months Ended | Nine Months Ended | ||||||
| September | June | March | December | September | September | September | |
| Interest income | 2011 | 2011 | 2011 | 2010 | 2010 | 2011 | 2010 |
| Loans | |||||||
| Taxable | $ 6,250,747 | $ 6,170,234 | $ 5,852,367 | $ 6,396,391 | $ 6,281,157 | $ 18,273,348 | $ 19,442,383 |
| Nontaxable | 24,140 | 14,930 | 11,494 | 12,761 | 13,664 | 50,564 | 49,960 |
| Securities | |||||||
| Taxable | 446,342 | 566,609 | 610,524 | 587,516 | 596,362 | 1,623,475 | 1,679,203 |
| Nontaxable | 171,739 | 301,556 | 335,969 | 339,436 | 353,755 | 809,264 | 1,055,707 |
| Other | 56 | 3 | 83 | 48 | 24 | 142 | 211 |
| Total interest income | 6,893,024 | 7,053,332 | 6,810,437 | 7,336,152 | 7,244,962 | 20,756,793 | 22,227,464 |
| Interest expense | |||||||
| Deposits | 976,336 | 1,010,170 | 1,049,393 | 1,187,283 | 1,275,607 | 3,035,899 | 3,935,731 |
| Other borrowings | 24,691 | 24,457 | 24,629 | 19,043 | 32,367 | 73,777 | 101,145 |
| Repurchase Agreements | 71,900 | 344,215 | 425,519 | 435,234 | 436,369 | 841,634 | 1,295,994 |
| Federal Home Loan Bank advances | 79,033 | 113,379 | 133,016 | 220,712 | 231,122 | 325,428 | 872,947 |
| Trust preferred securities | 355,632 | 347,713 | 344,578 | 355,304 | 388,854 | 1,047,923 | 1,178,502 |
| Total interest expense | 1,507,592 | 1,839,934 | 1,977,135 | 2,217,576 | 2,364,319 | 5,324,661 | 7,384,319 |
| Net interest income | 5,385,432 | 5,213,398 | 4,833,302 | 5,118,576 | 4,880,643 | 15,432,132 | 14,843,145 |
| Provision for loan losses | 297,368 | 898,440 | 498,840 | 1,798,890 | 898,570 | 1,694,648 | 8,788,713 |
| Net interest income after provision for loan losses | 5,088,064 | 4,314,958 | 4,334,462 | 3,319,686 | 3,982,073 | 13,737,484 | 6,054,432 |
| Noninterest income | |||||||
| Data service fees | 743,114 | 1,303,658 | 912,254 | 1,053,841 | 2,044,400 | 2,959,026 | 8,682,575 |
| Trust fees | 628,994 | 669,161 | 695,321 | 663,705 | 650,511 | 1,993,476 | 1,883,994 |
| Customer service fees | 663,691 | 640,151 | 580,942 | 614,572 | 643,816 | 1,884,784 | 1,846,161 |
| Gain on sale of mortgage loans and OMSR's | 1,100,557 | 565,049 | 425,130 | 1,839,977 | 1,435,581 | 2,090,736 | 2,653,693 |
| Mortgage loan servicing fees, net | (795,995) | (4,042) | 138,927 | 600,456 | (423,939) | (661,110) | (397,577) |
| Gain on sale of non-mortgage loans | -- | 37,644 | 42,779 | 74,070 | 125,122 | 80,423 | 233,071 |
| Net realized gain (loss) on sales of securities | -- | 1,871,387 | -- | (589) | -- | 1,871,387 | 451,474 |
| Investment securities recoveries | -- | -- | -- | -- | -- | -- | 73,774 |
| Loss on sale or disposal of assets | (26,816) | (160,453) | (100,209) | (40,837) | (128,985) | (287,478) | (159,066) |
| Other income | 161,377 | 174,410 | 167,682 | 201,435 | 188,055 | 503,469 | 544,094 |
| Total non-interest income | 2,474,922 | 5,096,965 | 2,862,826 | 5,006,630 | 4,534,561 | 10,434,713 | 15,812,193 |
| Noninterest expense | |||||||
| Salaries and employee benefits | 3,582,982 | 3,573,103 | 3,530,106 | 3,867,605 | 4,058,316 | 10,686,191 | 14,064,591 |
| Net occupancy expense | 568,173 | 517,414 | 584,057 | 533,362 | 486,695 | 1,669,644 | 1,639,386 |
| Equipment expense | 689,662 | 717,826 | 711,051 | 1,010,194 | 872,681 | 2,118,539 | 5,423,343 |
| FDIC Insurance expense | 145,261 | 253,939 | 317,639 | 461,153 | 259,646 | 716,839 | 676,462 |
| Software impairment expense | -- | -- | -- | -- | -- | -- | 4,892,231 |
| Data processing fees | 157,686 | 191,801 | 143,744 | 108,145 | 211,129 | 493,231 | 635,393 |
| Professional fees | 377,322 | 576,752 | 473,536 | 722,103 | 619,430 | 1,427,610 | 1,823,449 |
| Marketing expense | 89,192 | 89,892 | 55,976 | 125,754 | 139,987 | 235,060 | 330,213 |
| Printing and office supplies | 86,071 | 118,516 | 76,148 | 83,860 | 111,414 | 280,735 | 369,842 |
| Telephone and communication | 140,995 | 143,366 | 156,640 | 198,606 | 267,344 | 441,001 | 992,891 |
| Postage and delivery expense | 260,477 | 258,621 | 344,309 | 333,016 | 388,666 | 863,407 | 1,415,529 |
| State, local and other taxes | 102,577 | 133,988 | 143,568 | 424,838 | 154,391 | 380,133 | 118,835 |
| Employee expense | 143,355 | 171,801 | 95,884 | 163,407 | 147,739 | 411,040 | 654,968 |
| Goodwill Impairment | -- | -- | -- | 4,680,960 | -- | -- | -- |
| Other intangible amortization expense | 184,763 | 197,212 | 197,212 | 1,791,979 | 200,344 | 579,187 | 600,613 |
| OREO Impairment | -- | -- | -- | 756,517 | -- | -- | 215,000 |
| Other expenses | 294,621 | 1,454,047 | 229,821 | 643,454 | 820,633 | 1,978,489 | 2,550,747 |
| Total non-interest expense | 6,823,137 | 8,398,278 | 7,059,691 | 15,904,953 | 8,738,415 | 22,281,106 | 36,403,493 |
| Income (loss) before income tax expense | 739,849 | 1,013,645 | 137,597 | (7,578,637) | (221,781) | 1,891,091 | (14,536,868) |
| Income tax expense (benefit) | 137,356 | 236,852 | 126,672 | (994,341) | (247,696) | 500,880 | (5,507,954) |
| Net income (loss) | $ 602,493 | $ 776,793 | $ 10,925 | $ (6,584,296) | $ 25,915 | $ 1,390,211 | $ (9,028,914) |
| Common share data: | |||||||
| Basic earnings (loss) per common share | $ 0.12 | $ 0.16 | $ 0.00 | $ (1.35) | $ 0.01 | $ 0.29 | $ (1.86) |
| Diluted earnings (loss) per common share | $ 0.12 | $ 0.16 | $ 0.00 | $ (1.35) | $ 0.01 | $ 0.29 | $ (1.86) |
| RURBAN FINANCIAL CORP. | |||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited) | |||||||
| ($ in thousands except per share data) | Three Months Ended | Nine Months Ended | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |
| SUMMARY OF OPERATIONS | 2011 | 2011 | 2011 | 2010 | 2010 | 2011 | 2010 |
| Net interest income | $ 5,385 | 5,213 | 4,833 | 5,119 | 4,881 | 15,432 | 14,843 |
| Less: Non core item | $ -- | -- | -- | -- | -- | -- | (130) |
| Tax-equivalent adjustment | $ 101 | 163 | 179 | 181 | 189 | 443 | 570 |
| Tax-equivalent net interest income (core) | $ 5,486 | 5,376 | 5,012 | 5,300 | 5,070 | 15,875 | 15,282 |
| Provision for loan loss | $ 297 | 898 | 499 | 1,799 | 899 | 1,695 | 8,789 |
| Less: Non core RDSI item | $ -- | -- | -- | -- | -- | -- | 3,000 |
| Core provision for loan loss | $ 297 | 898 | 499 | 1,799 | 899 | 1,695 | 5,789 |
| Noninterest income | $ 2,475 | 5,097 | 2,863 | 5,007 | 4,535 | 10,435 | 15,812 |
| Less: Non core items | $ 27 | (2,230) | 100 | 41 | 129 | (2,103) | (366) |
| Core noninterest income | $ 2,502 | 2,867 | 2,963 | 5,048 | 4,664 | 8,332 | 15,446 |
| Total revenue, tax-equivalent | $ 7,961 | 10,473 | 7,875 | 10,307 | 9,604 | 26,310 | 31,095 |
| Core revenue, tax-equivalent | $ 7,988 | 8,243 | 7,975 | 10,348 | 9,733 | 24,207 | 30,729 |
| Noninterest expense | $ 6,823 | 8,398 | 7,060 | 15,905 | 8,738 | 22,281 | 36,403 |
| Less: Non core items | $ -- | 1,083 | -- | 7,030 | -- | 1,083 | 7,071 |
| Core Noninterest Expense | $ 6,823 | 7,315 | 7,060 | 8,875 | 8,738 | 21,198 | 29,332 |
| Pre Provision Pretax income (loss) | $ 1,037 | 1,912 | 636 | (5,780) | 677 | 3,586 | (5,748) |
| Core Pre Provision Pretax income (loss) | $ 1,064 | 765 | 737 | 1,292 | 806 | 2,566 | 826 |
| Pretax income (loss) | $ 740 | 1,014 | 138 | (7,579) | (222) | 1,891 | (14,537) |
| Net income (loss) | $ 602 | 777 | 11 | (6,584) | 26 | 1,390 | (9,029) |
| Core Earnings After Tax | $ 620 | 20 | 77 | (1,917) | 111 | 717 | (2,538) |
| PER SHARE INFORMATION: | |||||||
| Basic & Diluted earnings | $ 0.12 | 0.16 | 0.00 | (1.35) | 0.01 | 0.29 | (1.86) |
| Core earnings | $ 0.13 | 0.00 | 0.02 | (0.39) | 0.02 | 0.15 | (0.52) |
| Book value per common share | $ 9.78 | 9.46 | 9.52 | 9.47 | 11.12 | 9.78 | 11.12 |
| Tangible book value per common share | $ 5.91 | 5.55 | 5.56 | 4.18 | 5.79 | 5.91 | 5.79 |
| PERFORMANCE RATIOS: | |||||||
| Return on average assets | 0.38% | 0.48% | 0.01% | (3.83%) | 0.02% | 0.29% | (1.80%) |
| Core return on average assets | 0.40% | 0.01% | 0.05% | (1.12%) | 0.07% | 0.15% | (0.50%) |
| Return on average common equity | 5.12% | 6.66% | 0.09% | (49.25%) | 0.19% | 3.96% | (20.53%) |
| Core return on avg. tangible common equity | 8.78% | 0.29% | 1.14% | (27.60%) | 1.57% | 3.44% | (10.42%) |
| Cost of interest bearing liabilities | 1.19% | 1.39% | 1.46% | 1.59% | 1.73% | 1.35% | 1.81% |
| Core efficiency ratio | 83.10% | 86.35% | 86.05% | 83.86% | 87.75% | 85.18% | 93.53% |
| Core noninterest expense/Average assets | 4.35% | 4.51% | 4.27% | 5.17% | 5.26% | 4.37% | 5.83% |
| Core noninterest income/Operating revenue | 31.42% | 27.37% | 37.63% | 48.98% | 48.56% | 31.67% | 49.67% |
| Net interest margin | 3.90% | 3.71% | 3.48% | 3.63% | 3.52% | 3.68% | 3.52% |
| Tax equivalent effect | 0.08% | 0.12% | 0.13% | 0.13% | 0.14% | 0.11% | 0.13% |
| Net interest margin - fully tax equivalent basis | 3.98% | 3.83% | 3.61% | 3.76% | 3.66% | 3.79% | 3.65% |
| ASSET QUALITY RATIOS: | |||||||
| Gross charge-offs | $ 527 | 1,593 | 639 | 1,591 | 1,583 | 2,759 | 9,743 |
| Net charge-offs | $ 506 | 1,048 | 621 | 1,535 | 1,448 | 2,175 | 9,367 |
| Non-performing loans/total loans | 1.67% | 1.85% | 2.87% | 2.87% | 2.38% | 1.67% | 2.38% |
| Non-performing assets/ Loans & OREO | 2.11% | 2.30% | 3.08% | 3.22% | 2.82% | 2.11% | 2.82% |
| Non-performing assets/total assets | 1.49% | 1.64% | 1.99% | 2.09% | 1.77% | 1.49% | 1.77% |
| Allowance for loan loss/non-performing loans | 85.05% | 79.82% | 54.40% | 54.67% | 63.83% | 85.05% | 63.83% |
| Allowance for loan loss/total loans | 1.42% | 1.47% | 1.56% | 1.57% | 1.52% | 1.42% | 1.52% |
| Net loan charge-offs/average loans (ann.) | 0.46% | 0.97% | 0.59% | 1.44% | 1.35% | 0.67% | 1.88% |
| Loan loss provision/ Net charge-offs | 58.77% | 85.74% | 80.33% | 117.20% | 62.07% | 77.92% | 93.83% |
| CAPITAL & LIQUDITY RATIOS: | |||||||
| Loans/ Deposits | 85.34% | 88.24% | 82.30% | 82.91% | 81.37% | 85.34% | 81.37% |
| Equity/Assets | 7.62% | 7.44% | 7.06% | 6.97% | 7.94% | 7.62% | 7.94% |
| Tangible equity/ Tangible assets | 4.76% | 4.52% | 4.27% | 4.17% | 4.31% | 4.76% | 4.31% |
| State Bank & Trust: | |||||||
| Total Risk-based Capital Ratio | 11.85% | 11.89% | 11.97% | 11.69% | 11.59% | 11.85% | 11.59% |
| Tier 1 leverage risk-based capital ratio | 10.60% | 10.64% | 10.71% | 10.44% | 10.34% | 10.60% | 10.34% |
| Tier 1 leverage capital ratio | 7.95% | 7.54% | 7.24% | 6.90% | 7.06% | 7.95% | 7.06% |
| END OF PERIOD BALANCES | |||||||
| Total Loans | $ 438,926 | 437,551 | 422,166 | 427,544 | 424,996 | 438,926 | 424,996 |
| Total Assets | $ 623,793 | 618,061 | 654,968 | 660,288 | 681,190 | 623,793 | 681,190 |
| Deposits | $ 514,349 | 495,870 | 512,961 | 515,678 | 522,321 | 514,349 | 522,321 |
| Stockholders Equity | $ 47,552 | 46,014 | 46,265 | 46,024 | 54,068 | 47,552 | 54,068 |
| Tangible Equity | $ 28,813 | 27,089 | 27,143 | 26,705 | 28,276 | 28,813 | 28,276 |
| Full-time equivalent employees | 215 | 228 | 227 | 242 | 257 | 215 | 257 |
| Period-end common shares outstanding | 4,862 | 4,862 | 4,862 | 4,862 | 4,862 | 4,862 | 4,862 |
| AVERAGE BALANCES | |||||||
| Total Loans | $ 437,744 | 430,363 | 422,519 | 426,629 | 430,414 | 430,268 | 449,281 |
| Total Earning Assets | $ 551,744 | 561,353 | 554,975 | 563,609 | 554,685 | 558,721 | 562,894 |
| Total Assets | $ 627,291 | 648,681 | 661,621 | 687,058 | 664,981 | 645,803 | 668,605 |
| Deposits | $ 512,190 | 510,591 | 520,045 | 534,168 | 513,448 | 514,197 | 501,591 |
| Stockholders Equity | $ 47,087 | 46,629 | 46,229 | 53,478 | 54,154 | 46,742 | 58,500 |
| Tangible Equity | $ 28,251 | 27,596 | 27,003 | 27,782 | 28,242 | 27,711 | 32,394 |
| RURBAN FINANCIAL CORP. | ||||||
| Rate Volume Analysis | ||||||
| For the Three and Nine Months Ended September 30, 2011 and 2010 ($ in thousands) | ||||||
| ($ in Thousands) | Three Months Ended September 30, 2011 | Three Months Ended September 30, 2010 | ||||
| Average | Average | Average | Average | |||
| Assets | Balance | Interest | Rate | Balance | Interest | Rate |
| Taxable Securities | $ 91,436 | 446 | 1.95% | $ 82,320 | 596 | 2.90% |
| Non-taxable Securities | 15,762 | 260 | 6.60% | 33,946 | 536 | 6.32% |
| Federal funds sold | -- | -- | N/A | -- | -- | N/A |
| Loans, net | 444,546 | 6,287 | 5.66% | 438,419 | 6,302 | 5.75% |
| Total earning assets | $ 551,744 | 6,994 | 5.07% | $ 554,685 | 7,434 | 5.36% |
| Cash and due from banks | 16,391 | 47,352 | ||||
| Allowance for loan losses | (6,502) | (7,096) | ||||
| Premises and equipment | 17,009 | 16,976 | ||||
| Other assets | 48,649 | 53,064 | ||||
| Total assets | $ 627,291 | $ 664,981 | ||||
| Liabilities | ||||||
| Savings and interest-bearing demand | $ 230,591 | 88 | 0.15% | $ 230,728 | 163 | 0.28% |
| Time deposits | 218,647 | 889 | 1.63% | 219,974 | 1,112 | 2.02% |
| Repurchase Agreements | 18,643 | 72 | 1.54% | 47,938 | 436 | 3.64% |
| Advances from FHLB | 14,967 | 79 | 2.11% | 25,640 | 231 | 3.61% |
| Junior subordinated debentures | 20,620 | 356 | 6.90% | 20,620 | 389 | 7.54% |
| Notes Payable & other borrowed funds | 3,048 | 25 | 3.24% | 2,431 | 32 | 5.33% |
| Total interest-bearing liabilities | $ 506,516 | 1,508 | 1.19% | $ 547,331 | 2,364 | 1.73% |
| Non interest-bearing demand | 62,952 | 62,746 | ||||
| Other liabilities | 10,736 | 750 | ||||
| Total liabilities | 580,204 | 610,826 | ||||
| Equity | $ 47,087 | $ 54,154 | ||||
| Total liabilities and equity | $ 627,291 | $ 664,981 | ||||
| Net interest income (tax equivalent basis) | $ 5,486 | $ 5,070 | ||||
| Net interest income as a percent of average interest-earning assets | 3.98% | 3.66% | ||||
| Nine Months Ended September 30, 2011 | Nine Months Ended September 30, 2010 | |||||
| Average | Average | Average | Average | |||
| Balance | Interest | Rate | Balance | Interest | Rate | |
| Assets | ||||||
| Taxable Securities | $ 98,863 | 1,623 | 2.19% | $ 79,960 | 1,679 | 2.80% |
| Non-taxable Securities | 24,003 | 1,226 | 6.81% | 33,652 | 1,600 | 6.34% |
| Federal funds sold | -- | -- | N/A | -- | -- | N/A |
| Loans, net | 435,855 | 18,350 | 5.61% | 449,281 | 19,518 | 5.79% |
| Total earning assets | $ 558,721 | 21,200 | 5.06% | $ 562,894 | 22,797 | 5.40% |
| Cash and due from banks | 27,660 | 38,472 | ||||
| Allowance for loan losses | (6,659) | (7,005) | ||||
| Premises and equipment | 16,837 | 20,832 | ||||
| Other assets | 49,244 | 53,411 | ||||
| Total assets | $ 645,803 | $ 668,605 | ||||
| Liabilities | ||||||
| Savings and interest-bearing demand | $ 234,951 | 297 | 0.17% | $ 227,390 | 468 | 0.27% |
| Time deposits | 215,647 | 2,739 | 1.69% | 213,554 | 3,468 | 2.17% |
| Repurchase Agreements | 35,552 | 842 | 3.16% | 47,766 | 1,296 | 3.62% |
| Advances from FHLB | 16,632 | 325 | 2.61% | 29,607 | 873 | 3.93% |
| Junior subordinated debentures | 20,620 | 1,048 | 6.78% | 20,620 | 1,179 | 7.62% |
| Notes Payable & other borrowed funds | 3,171 | 74 | 3.10% | 3,964 | 101 | 3.40% |
| Total interest-bearing liabilities | $ 526,574 | 5,325 | 1.35% | $ 542,900 | 7,384 | 1.81% |
| Non interest-bearing demand | 63,599 | 60,647 | ||||
| Other liabilities | 8,889 | 6,558 | ||||
| Total liabilities | 599,061 | 610,105 | ||||
| Equity | $ 46,742 | $ 58,500 | ||||
| Total liabilities and equity | $ 645,803 | $ 668,605 | ||||
| Net interest income (tax equivalent basis) | $ 15,875 | $ 15,413 | ||||
| Net interest income as a percent of average interest-earning assets | 3.79% | 3.65% | ||||
| RURBAN FINANCIAL CORP. | |||||
| Summary of Non-performing Assets | |||||
| ($ in Thousands) | September 30, | June 30, | March 31, | December 31, | September 30, |
| 2011 | 2011 | 2011 | 2010 | 2010 | |
| Non-performing loans: | |||||
| Non-accrual loans (1) | $ 7,331 | 8,073 | 12,121 | 12,283 | 10,107 |
| Loans 90 + days past due, still accruing interest | $ -- | -- | -- | -- | -- |
| Total non-performing loans | $ 7,331 | 8,073 | 12,121 | 12,283 | 10,107 |
| Other Real Estate Owned (OREO), | |||||
| Repossessed Vehicles | $ 1,970 | 2,056 | 924 | 1,538 | 1,947 |
| Total non-performing assets | $ 9,301 | 10,129 | 13,044 | 13,822 | 12,053 |
| Total allowance for loan losses | $ 6,235 | 6,444 | 6,593 | 6,715 | 6,451 |
| Accruing restructured loans (2) | $ 1,311 | 1,312 | 1,229 | 1,107 | 1,230 |
| (1) Includes $2.22 million of restructured loans on non-accrual status at September 30, 2011 | |||||
| (2) Accruing restructured loans at September 30, 2011 consists primarily of residential and commercial real estate loans that have been modified and are performing in accordance with those modified terms. | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2011 | 2010 | 2011 | 2010 | 2010 | |
| 30-59 Days Past Due | $ 573 | 1,121 | 861 | 1,073 | 1,568 |
| 60-89 Days Past Due | $ 146 | 248 | 44 | 568 | 1,326 |
| 90 + Days Past Due | $ 6,052 | 6,808 | 10,572 | 10,493 | 8,556 |
| Total Delinquent Loans | $ 6,771 | 8,177 | 11,476 | 12,133 | 11,450 |
| RURBAN FINANCIAL CORP. | |||||||
| Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | |||||||
| Three Months Ended | Nine Months Ended | ||||||
| ($ in Thousands) | September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, |
| 2011 | 2011 | 2011 | 2010 | 2010 | 2011 | 2010 | |
| GAAP Earnings | $ 602 | 777 | 11 | (6,584) | 26 | 1,390 | (9,029) |
| Realized securities gains (1) | -- | (1,871) | -- | 1 | -- | (1,871) | (451) |
| Investment securities recoveries (1) | -- | -- | -- | -- | -- | -- | (74) |
| Prepayment penalties (1) | -- | 1,083 | -- | -- | -- | 1,083 | -- |
| (Gains)/losses on sales of assets (1) | 27 | 160 | 100 | 41 | 129 | 287 | 159 |
| OREO writedown (1) | -- | -- | -- | 757 | -- | -- | 215 |
| Software impairment/ Write-offs (2) | -- | -- | -- | -- | -- | -- | 3,247 |
| Hardware write-offs (2) | -- | -- | -- | -- | -- | -- | 2,792 |
| Contract impairment/ Write-offs (2) | -- | -- | -- | -- | -- | -- | 193 |
| New Core Loan write-off (2) | -- | -- | -- | -- | -- | -- | 624 |
| New Core Loan (2) | -- | -- | -- | -- | -- | -- | 3,000 |
| Accrued interest on New Core Loan (2) | -- | -- | -- | -- | -- | -- | 130 |
| Contract Buyouts (2) | -- | (519) | -- | -- | -- | (519) | -- |
| Writedown of goodwill and other intangibles (2) | -- | -- | -- | 6,273 | -- | -- | -- |
| Total Non-Core Items | 27 | (1,147) | 100 | 7,071 | 129 | (1,020) | 9,835 |
| Applicable income tax effect on Non-Core Items | (9) | 390 | (34) | (2,404) | (44) | 347 | (3,344) |
| After-tax Non Core Items | 18 | (757) | 66 | 4,667 | 85 | (673) | 6,491 |
| Core Recurring Net Income | 620 | 20 | 77 | (1,917) | 111 | 717 | (2,538) |
| (1) State Bank & Trust | |||||||
| (2) RDSI | |||||||
| Rurban Financial Corp. | ||||||
| Segment Reporting - Three Months Ended September 30, 2011 | ||||||
| Banking |
Parent Company and Other |
Total Banking, Parent and Other |
Data Services |
Elimination Entries |
Rurban Financial Corp. |
|
| ($ in Thousands) | ||||||
| Income Statement Measures | ||||||
| Interest Income | $ 6,915 | 31 | 6,946 | -- | (53) | 6,893 |
| Interest Expense | 1,128 | 357 | 1,485 | 76 | (53) | 1,508 |
| Net Interest Income | 5,787 | (326) | 5,461 | (76) | -- | 5,385 |
| Provision For Loan Loss | 297 | -- | 297 | -- | -- | 297 |
| Non-interest Income | 1,846 | 42 | 1,888 | 1,080 | (493) | 2,475 |
| Non-interest Expense | 5,744 | 314 | 6,058 | 1,258 | (493) | 6,823 |
| Net Income - QTD | $ 1,162 | (391) | 771 | (169) | -- | 602 |
| Performance Measures | ||||||
| Average Assets - QTD | $ 618,878 | -- | 621,994 | 5,297 | -- | 627,291 |
| Return on Average Assets | $ 0.75% | -- | 0.50% | -12.76% | -- | 0.38% |
| Average Equity - QTD | $ 67,391 | -- | 47,087 | (909) | -- | 47,087 |
| Return on Average Equity | 6.90% | -- | 6.55% | -- | -- | 5.12% |
| Average Loans - QTD | $ 446,042 | 2,000 | 448,042 | -- | (3,496) | 444,546 |
| Average Deposits - QTD | $ 513,442 | -- | 513,442 | -- | (1,252) | 512,190 |
| Rurban Financial Corp. | ||||||
| Segment Reporting - Nine Months Ended September 30, 2011 | ||||||
| Banking |
Parent Company and Other |
Total Banking, Parent and Other |
Data Services |
Elimination Entries |
Rurban Financial Corp. |
|
| Income Statement Measures | ||||||
| Interest Income | $ 20,826 | 90 | 20,916 | -- | (159) | 20,757 |
| Interest Expense | 4,203 | 1,048 | 5,251 | 233 | (159) | 5,325 |
| Net Interest Income | 16,623 | (958) | 15,665 | (233) | -- | 15,432 |
| Provision For Loan Loss | 1,695 | -- | 1,695 | -- | -- | 1,695 |
| Non-interest Income | 7,666 | 136 | 7,802 | 4,022 | (1,389) | 10,435 |
| Non-interest Expense | 18,377 | 1,172 | 19,549 | 4,121 | (1,389) | 22,281 |
| Net Income - YTD | $ 3,151 | (1,542) | 1,609 | (219) | -- | 1,390 |
| Performance Measures | ||||||
| Average Assets - YTD | $ 637,872 | -- | 639,177 | 6,626 | 645,803 | |
| Return on Average Assets | 0.66% | -- | 0.34% | -4.41% | -- | 0.29% |
| Average Equity - YTD | $ 67,033 | -- | 46,742 | (887) | -- | 46,742 |
| Return on Average Equity | 6.27% | -- | 4.59% | -- | -- | 3.96% |
| Average Loans - YTD | $ 437,452 | 2,000 | 439,452 | -- | (3,597) | 435,855 |
| Average Deposits - YTD | $ 515,166 | -- | 515,166 | -- | (970) | 514,197 |