DEFIANCE, Ohio, Oct. 23, 2012 (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 nine months ended September 30, 2012. Consolidated earnings for Rurban Financial Corp. include the results of Rurban's Banking Group, consisting primarily of The State Bank and Trust Company ("State Bank" or "the Bank"), and Rurban's data services subsidiary, Rurbanc Data Services, Inc. (dba "RDSI Banking Systems" or "RDSI"). For the quarter ended September 30, 2012, Rurban reported net income of $1.3 million, or $0.27 per diluted share, compared to net income of $0.60 million, or $0.12 per diluted share, for the quarter ended September 30, 2011, and net income of $1.0 million, or $0.21 per diluted share, for the quarter ended June 30, 2012. For the first nine months of 2012, net income was $3.3 million, or $0.68 per common share, compared to $1.4 million, or $0.29 per common share, for the prior-year nine month period. Excluding non-recurring items totaling $0.86 million after tax ($1.3 million pretax) from the first nine months of 2011, mainly from a balance sheet restructuring and a contract buyout penalty paid to RDSI, core earnings for the first nine months of 2011 were $0.53 million, or $0.11 per share. Key items for the 2012 third quarter include:
Profitability improvement continues. The return on average assets rose to 82 bps this quarter, raising the YTD return to 69 bps.
Mortgage originations and gains on sale both reached a record level this past quarter.
Quarterly noninterest expense continues to trend downward albeit at a modest pace. Profitability improvement in 2012 has been derived primarily from fee income.
Portfolio loans increased by $16 million over the past twelve months, up 3.7 percent, led by commercial real estate. Recent growth consisted primarily of HELOCs and agricultural loans.
Nonperforming assets declined by $1.2 million, or 11 percent compared to September 30, 2011; they now stand at $9.4 million, or 1.49 percent of total assets. Reserve coverage of nonperforming loans at quarter-end was 96 percent.
Tangible leverage improved by 32 basis points from the prior quarter, to 5.53 percent; all bank regulatory ratios are in excess of "well-capitalized" levels.
"Our increasingly strong performance reflects the growing synergies within our organization," stated Mark Klein, president and chief executive officer of Rurban Financial Corp. "Our strategy to build revenue is based on harnessing the energy and expertise of our bankers to build exceptional client relationships. State Bank is unique for a bank its size, with high level regional decision-makers located in the field alongside their bankers whom they quarterback on a day-to-day basis. Proximity to both clients and staff ensures that all aspects of the relationship are addressed and working smoothly. This includes impeccable service as well as the identification and fulfillment of client product needs.
"As a result of these growing synergies, we continue to attract new relationships as well as deepen existing ones. Our clients provide us with numerous opportunities to book high quality loans that are well-structured and appropriately priced. Despite the competitive loan environment, we have not compromised our strong underwriting standards. Our deposit market share is growing in nearly every region, and the mix continues to improve, all of which contributed to a 19 percent decline in our funding costs compared to last year. Every department of the Bank is positioned to refer opportunities to other areas of the Bank; 74 percent of all employees generated a referral last year that resulted in an additional piece of business. Similarly, we are seeing the impact with our mortgage lenders who just completed a record quarter of originations, and with our credit administration staff, where 2012 losses have declined to 23 basis points of average loans.
"Finally, we are also seeing it in our growing cash flow, which has enabled us to repay one quarter earlier than we had anticipated the interest on our trust preferred securities, which we had deferred since September 2010. Beginning next year, we should see a benefit to earnings from these reduced interest costs. "Although revenue at RDSI has been declining due to market constraints, we have been successful in expanding several relationships and reducing costs to maintain a profit year to date. "Overall," concluded Mr. Klein, "we are pleased with our continuing progress to become a higher-performing bank, and have every reason to expect that the strategies we have in place will continue to build momentum." RESULTS OF OPERATIONSConsolidated Revenue Total revenue, consisting of net interest income on a fully tax equivalent basis ("FTE") and noninterest income, was $8.9 million for the third quarter of 2012, up $0.97 million, or 12.2 percent, from the third quarter of 2011, and higher by $0.37 million, or 4.3 percent, from the linked quarter.
Net interest income (FTE) for the 2012 third quarter was $5.52 million, 0.7 percent ahead of third quarter 2011. Average earning assets grew 2.4 percent; however, volume gains were partially offset by a seven basis point decline year over year in the net interest margin (FTE) to 3.91 percent. Relative to the 2012 second quarter, net interest income (FTE) grew 3.2 percent (12.7 percent annualized) as a result of substantial loan growth (up 1.7 percent for the quarter, or 6.8 percent annualized); this change in asset mix contributed to a ten basis point improvement in the net interest margin despite modestly declining yields.
Noninterest Income Noninterest income was $3.4 million for the third quarter of 2012, an increase of $0.93 million from the $2.5 million reported for the year-ago third quarter and $0.2 million higher than the second quarter of 2012. Higher gains on loan sales, which for the third quarter included non-mortgage SBA and FSA loan sales, more than offset the decline in RDSI fee income.
Data Services
($'s in thousands)
Sep. 2012
Jun. 2012
Mar. 2012
Dec. 2011
Sep. 2011
Data Processing & Network Services
$ 229
$ 194
$ 177
$ 320
$ 292
Payment Solutions
541
633
708
720
784
Contract Buyout
(53)
--
551
--
--
RDSI Gross Revenue
717
827
1,436
1,040
1,076
Less: Intercompany
(232)
(251)
(793)
(369)
(333)
Net Data Services Fees
$ 485
$ 576
$ 643
$ 671
$ 743
Gross revenue generated by RDSI, including services provided to Rurban/State Bank, was $0.72 million for the third quarter of 2012. Excluding Rurban/State Bank intercompany transactions from the quarter, net data services fees were $0.49 million for the current quarter compared to $0.74 million for the year-ago third quarter, a decline of $0.26 million.
Mortgage Banking
Three Months Ended
($'s in thousands)
Sep. 2012
Jun. 2012
Mar. 2012
Dec. 2011
Sep. 2011
Mortgage originations
$ 90,685
$ 79,901
$ 68,331
$ 85,114
$ 68,989
Mortgage sales
81,862
75,227
64,212
81,046
56,438
Mortgage servicing portfolio
488,930
459,380
422,802
402,062
370,033
Mortgage servicing rights
3,346
3,359
3,359
2,820
2,709
Mortgage servicing revenue:
Loan servicing fees
297
274
259
242
226
OMSR amortization
(369)
(254)
(349)
(329)
(251)
Net administrative fees
(72)
20
(90)
(87)
(25)
OMSR valuation adjustment
(120)
(185)
419
(221)
(771)
Net loan servicing fees
(192)
(165)
329
(308)
(796)
Gain on sale of mortgages
1,571
1,395
1,181
1,529
1,101
Mortgage banking revenue, net
$1,379
$1,230
$1,510
$1,221
$ 305
Mortgage banking continued its banner year, with third quarter loan originations reaching a new high: $90.7 million, up $21.7 million, or 31 percent, from the $69.0 million generated in the third quarter of 2011, and higher by $10.8 million than the previous quarter. Sales into the secondary market kept pace, with third quarter sales of $81.9 million, up $25.4 million, or 45 percent, above the $56.4 million sold in the year ago-quarter.
Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.38 million for the third quarter of 2012 compared to $1.23 million for the linked quarter and $0.31 million for the year-ago third quarter. Year-to-date, the net mortgage servicing valuation adjustment was $0.11 million; the last two quarter's negative valuation adjustments have virtually offset the large gain of the first quarter. The mortgage servicing portfolio at the end of the third quarter of 2012 was $488.9 million, up $118.9 million, or 32.1 percent, from 2011 third quarter-end.
Mortgage banking revenues accounted for 40.5 percent of noninterest income in the third quarter of 2012 compared to 12.3 percent in the year-earlier third quarter where impairment valuations reduced the contribution of mortgage banking. Excluding mortgage banking and data services fees, the $1.5 million remainder of noninterest income in the third quarter of 2012 was derived primarily from wealth management and customer service fees; each of these two business lines have contributed a remarkably stable stream of fee income modestly in excess of $0.6 million every quarter. In addition, during the third quarter, Rurban sold several SBA and FSA guaranteed loans which generated $170,000 of revenue. These gains offset $151,000 of losses on residential real estate properties sold at auction during the quarter. Rurban's revenue stream has benefited from the magnitude and diversity of its fee income. The Company remains highly diversified for its asset size; core noninterest income contributed 37.8 percent of third quarter 2012 core revenue; this compares to 31.1 percent for the year-ago third quarter. Loan Loss Provision The loan loss provision was $300,000 for the third quarter of 2012, unchanged from the third quarter of 2011, but higher by $100,000 from the linked quarter. The provision expense declined by $744,000, or 44 percent, year to date, reflecting a 19 percent decline in nonperforming loans, as well as a 64 percent decline in net charge-offs. As of September 30, 2012, the loan loss reserve was 1.47 percent of total loans, relatively unchanged throughout the past twelve months as a percentage of loans. At current levels, the loan loss reserve provides 96 percent coverage of nonperforming loans compared to reserve coverage of 72 percent at third quarter-end 2011.
Noninterest Expense
For the third quarter of 2012, noninterest expense was $6.73 million compared to $6.87 million and $6.82 million for the linked and year-ago quarters, respectively. Rurban has taken steps to make its salary structure more responsive to revenue growth through the implementation of incentive and commission-based compensation. Excluding $0.55 million and $0.27 million of commissions paid primarily to State Bank's mortgage bankers in the third quarters of 2012 and 2011, respectively, salary expense declined 8.0 percent, consistent with a decline of 16 full-time equivalent staff, or 7.4 percent, over the past twelve-month period. Reflecting this improvement in third quarter 2012 operating revenue and expense, the core efficiency ratio declined to 73.0 percent, from 83.1 percent for the year-ago quarter. Balance Sheet Total assets as of September 30, 2012 were $630.2 million, an increase of $6.4 million, or 1.0 percent, from September 30, 2011. Over the same twelve-month time frame, total deposits grew $0.9 million and loans grew $16.1 million. This higher level of loans outstanding relative to assets has provided support to Rurban's net interest margin as has the shift in deposit mix further toward lower-cost non-maturity deposits, which now comprise 61 percent of total deposits compared to 57 percent for the year-ago quarter. Improvements in the deposit mix, combined with the continuing decline in interest rates, reduced the cost of interest-bearing liabilities a further 21 basis points, or 17.7 percent, during the course of the past twelve months, to 98 basis points. The same factors, a change in the mix and declining rates, contributed to the 29 basis point, or 5.7 percent, decline in earning asset yields.
Loan Portfolio
($ in Thousands)
Sep. 2012
Jun. 2012
Mar. 2012
Dec. 2011
Sep. 2011
Variance YOY
Commercial & Industrial (C&I)
$ 76,043
$ 75,964
$ 78,450
$ 78,112
$ 77,269
$ (1,226)
% of Total
16.7%
16.8%
17.8%
17.7%
17.6%
(1.6%)
Commercial Real Estate
198,682
199,918
188,984
187,829
186,411
12,271
% of Total
43.6%
44.2%
43.0%
42.4%
42.4%
6.6%
Agriculture
42,988
41,093
37,741
38,361
38,601
4,387
% of Total
9.4%
9.1%
8.6%
8.7%
8.8%
11.4%
Residential Real Estate
85,727
85,046
84,771
87,656
85,399
328
% of Total
18.8%
18.8%
19.3%
19.8%
19.5%
0.4%
Consumer & Other
51,581
50,089
49,775
50,596
51,246
335
% of Total
11.3%
11.1%
11.3%
11.4%
11.7%
0.7%
Total Loans
$455,021
$452,110
$439,721
$442,554
$438,926
$ 16,095
3.7%
Total loans were $455.0 million at September 30, 2012 compared to $438.9 million for the prior-year period, up $16.1 million, or 3.7 percent. Commercial real estate ("CRE") loans accounted for 76 percent of total loan growth over the past twelve-month period, up $12.3 million, or 6.6 percent. CRE loans currently comprise 43.6 percent of State Bank's loan portfolio, followed by residential real estate and C&I loans, at 18.8 percent and 16.7 percent, respectively. Although CRE loans showed the largest dollar increase at $12.3 million, agriculture loans showed the highest growth rate year over year, at 11.4 percent.
Asset Quality
Nonaccruing loans were $5.2 million as of September 30, 2012, a decline of $2.1 million, or 28 percent from the year-earlier level. The greatest improvement was reflected in the CRE portfolio, where nonaccrual loans declined over the past twelve months by $1.8 million, or 80 percent, to $0.45 million as of September 30, 2012. Currently, Rurban has only two nonperforming relationships that exceed $1.0 million; together, they account for $2.3 million, or 25 percent, of nonperforming assets.
Summary of Nonperforming Assets
($ in Thousands)
Nonaccruing Loan Category
Sep. 2012
Jun. 2012
Mar. 2012
Dec. 2011
Sep. 2011
Commercial & Industrial (C&I)
$ 1,362
$ 1,467
$ 2,021
$ 2,393
$ 2,466
% of Total C&I loans
1.78%
1.93%
2.58%
3.06%
3.19%
Commercial Real Estate
448
1,345
1,481
1,456
2,210
% of Total CRE loans
0.23%
0.67%
0.78%
0.78%
1.19%
Agriculture
3
--
113
--
87
% of Total Ag loans
0.01%
--
0.30%
--
0.23%
Residential Real Estate
2,607
1,958
1,840
2,471
2,107
% of Total Res. RE loans
3.04%
2.30%
2.17%
2.82%
2.47%
Consumer & Other
829
545
1,056
580
461
% of Consumer & Other loans
1.61%
1.09%
2.12%
1.15%
0.90%
Total Nonaccruing Loans
5,249
5,315
6,511
6,900
7,331
% of Total Loans
1.15%
1.18%
1.48%
1.56%
1.67%
Accruing Restructured Loans
1,735
1,837
1,593
1,334
1,311
Total Nonperforming Loans
$ 6,984
$ 7,152
$ 8,104
$ 8,234
$ 8,642
% of Total Loans
1.53%
1.58%
1.84%
1.86%
1.97%
OREO & Repossessed Vehicles
2,415
1,708
1,807
1,830
1,970
Total Nonperforming Assets
9,399
$ 8,860
$ 9,911
$ 10,064
$ 10,612
% of Total Assets
1.49%
1.40%
1.54%
1.60%
1.70%
Rurban moved one large loan in excess of $500,000 to nonperforming status this past quarter. Apart from this one major addition, problem assets continue to reduce at an expeditious rate.
NONPERFORMING ASSET RECONCILIATION
($ in Thousands)
Sep. 2012
Jun. 2012
Mar. 2012
Dec. 2011
Sep. 2011
Beginning Balance
$ 8,860
$ 9,911
$ 10,064
$ 10,612
$ 11,441
Additions
1,396
1,209
906
1,193
432
Returns to performing status
(163)
(306)
(419)
(169)
(206)
Principal payments
(146)
(1,773)
(402)
(375)
(281)
Sale of OREO/OAO
(152)
(147)
(23)
(358)
(246)
Loan charge-offs
(294)
(220)
(474)
(648)
(527)
Valuation write-downs
--
(58)
--
(214)
--
Restructured Loan Activity
(102)
244
259
23
(1)
Net Change
522
(1,051)
(153)
(548)
(829)
Total
$ 9,399
$ 8,860
$ 9,911
$ 10,064
$ 10,612
Capitalization Capital ratios continue to improve, but still remain at the low end of management's objectives. Tangible leverage increased 90 basis points over the past twelve months, and now stands at 5.53 percent. All bank regulatory ratios remain in excess of "well-capitalized" levels, and have improved relative to the prior year and linked quarter; holding company ratios have shown consistent quarterly improvement since mid-year 2011. At September 30, 2012, State Bank's Total Risk-Based Capital was $58.0 million, $20.7 million above the well-capitalized level; the Total Risk-based Capital Ratio was 12.4 percent. As of September 30, 2012, Rurban had 4,861,779 common shares outstanding.
About Rurban Financial Corp.
Based in Defiance, Ohio, Rurban Financial Corp. is a financial services holding company with two wholly-owned operating subsidiaries: The State Bank and Trust Company (State Bank) and RDSI Banking Systems (RDSI). State Bank operates through 18 banking centers in seven Northwestern Ohio counties, and one center in Fort Wayne, Indiana; and three loan production offices: two in Columbus, Ohio and one in Angola, Indiana. The Bank offers a full range of financial services for consumers and small businesses, including wealth management, mortgage banking, commercial and agricultural lending. RDSI provides item processing services to community banks located in the Midwest. Rurban's common stock is listed on the NASDAQ Global Market under the symbol RBNF. Forward-Looking Statements Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in the national and regional banking, insurance and mortgage industries, competitive factors specific to markets in which Rurban and its subsidiaries operate, future interest rate levels, legislative and regulatory actions, capital market conditions, general economic conditions, geopolitical events, the loss of key personnel and other factors. Forward-looking statements speak only as of the date on which they are made, and Rurban undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made except as required by law. All subsequent written and oral forward-looking statements attributable to Rurban or any person acting on its behalf are qualified by these cautionary statements. Non-GAAP Financial Measures In addition to results presented in accordance with GAAP, this release contains certain non-GAAP financial measures. Management believes that providing certain non-GAAP financial measures provides investors with information useful in understanding Rurban's financial performance, its performance trends and financial position. Specifically, Rurban provides measures based on "core operating earnings," which excludes merger, integration and restructuring expenses that are not reflective of on-going operations or not expected to recur. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.
RURBAN FINANCIAL CORP. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Unaudited)
September
June
March
December
September
($ in Thousands)
2012
2012
2012
2011
2011
ASSETS
Cash and due from banks
$ 10,289
$ 14,636
$ 29,602
$ 14,846
$ 13,764
Securities available for sale, at fair value
101,247
102,537
110,603
111,978
104,615
Other securities - FRB and FHLB Stock
3,748
3,748
3,685
3,685
3,748
Total investment securities
104,995
106,285
114,288
115,663
108,363
Loans held for sale
11,584
10,595
11,384
5,238
10,590
Loans, net of unearned income
455,021
452,110
439,721
442,554
438,926
Allowance for loan losses
(6,696)
(6,618)
(6,609)
(6,529)
(6,235)
Net loans
448,325
445,492
433,112
436,025
432,691
Premises and equipment, net
12,898
13,190
13,282
13,773
14,120
Purchased software
334
355
386
159
805
Cash surrender value of life insurance
12,491
12,401
12,312
12,224
12,134
Goodwill
16,353
16,353
16,353
16,353
16,734
Core deposits and other intangibles
1,376
1,534
1,691
1,849
2,006
Foreclosed assets held for sale, net
2,415
1,708
1,807
1,830
1,970
Mortgage servicing rights
3,346
3,359
3,359
2,820
2,709
Accrued interest receivable
1,832
1,597
1,802
1,635
2,061
Other assets
3,967
5,026
5,598
6,249
5,846
Total assets
$ 630,205
$ 632,531
$ 644,976
$ 628,664
$ 623,793
LIABILITIES AND EQUITY
Deposits
Non interest bearing demand
$ 69,250
$ 68,918
$ 71,077
$ 65,963
$ 62,080
Interest bearing demand
112,230
109,268
118,898
107,446
103,229
Savings
53,505
53,777
52,599
49,665
48,146
Money market
78,006
81,114
82,799
74,244
79,163
Time deposits
202,259
205,584
210,119
221,447
221,731
Total deposits
515,250
518,661
535,492
518,765
514,349
Notes payable
1,975
2,249
2,519
2,788
2,865
Advances from Federal Home Loan Bank
18,500
17,500
12,611
12,776
12,940
Repurchase agreements
13,735
15,824
17,771
18,779
18,778
Trust preferred securities
20,620
20,620
20,620
20,620
20,620
Accrued interest payable
4,223
3,836
3,556
2,954
2,704
Other liabilities
3,972
3,567
3,381
4,050
3,985
Total liabilities
578,275
582,257
595,950
580,732
576,241
Equity
Preferred stock
--
--
--
--
--
Common stock
12,569
12,569
12,569
12,569
12,569
Additional paid-in capital
15,363
15,350
15,338
15,323
15,302
Retained earnings
23,755
22,452
21,438
20,466
20,192
Accumulated other comprehensive income
2,012
1,672
1,450
1,343
1,258
Treasury stock
(1,769)
(1,769)
(1,769)
(1,769)
(1,769)
Total equity
51,930
50,274
49,026
47,932
47,552
Total liabilities and equity
$ 630,205
$ 632,531
$ 644,976
$ 628,664
$ 623,793
RURBAN FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except per share data)
Three Months Ended
Nine Months Ended
September
June
March
December
September
September
September
Interest income
2012
2012
2012
2011
2011
2012
2011
Loans
Taxable
$ 6,106
$ 6,037
$ 5,928
$ 6,171
$ 6,251
$ 18,071
$ 18,273
Nontaxable
21
24
23
24
24
68
50
Securities
Taxable
383
403
399
387
446
1,185
1,623
Nontaxable
156
146
147
170
172
449
810
Total interest income
6,666
6,610
6,497
6,752
6,893
19,773
20,756
Interest expense
Deposits
694
768
854
946
976
2,316
3,035
Other borrowings
17
(2)
34
22
25
49
74
Repurchase Agreements
11
60
68
70
72
139
842
Federal Home Loan Bank advances
92
75
74
77
79
241
325
Trust preferred securities
418
441
592
358
356
1,451
1,049
Total interest expense
1,232
1,342
1,622
1,473
1,508
4,196
5,325
Net interest income
5,434
5,268
4,875
5,279
5,385
15,577
15,431
Provision for loan losses
300
200
450
299
297
950
1,694
Net interest income after provision for loan losses
5,134
5,068
4,425
4,980
5,088
14,627
13,737
Noninterest income
Data service fees
485
576
643
671
743
1,704
2,959
Trust fees
646
607
642
623
629
1,895
1,993
Customer service fees
677
668
631
647
664
1,976
1,885
Gain on sale of mortgage and OMSR's
1,572
1,395
1,181
1,529
1,101
4,148
2,091
Mortgage loan servicing fees, net
(192)
(165)
329
(308)
(796)
(28)
(661)
Gain on sale of non-mortgage loans
170
--
--
127
--
170
81
Net gain on sales of securities
--
--
--
--
--
--
1,871
Loss on sale or disposal of assets
(151)
(50)
(56)
(46)
(27)
(257)
(287)
Other income
201
177
211
180
161
589
503
Total non-interest income
3,408
3,208
3,581
3,423
2,475
10,197
10,435
Noninterest expense
Salaries and employee benefits
3,597
3,597
3,499
3,488
3,583
10,693
10,686
Net occupancy expense
515
528
548
531
568
1,591
1,669
Equipment expense
722
712
711
709
690
2,145
2,119
FDIC insurance expense
91
223
214
191
145
528
717
Fixed asset and software impairment
--
--
--
609
--
--
--
Data processing fees
103
121
113
131
158
337
494
Professional fees
451
390
385
493
377
1,226
1,428
Marketing expense
85
103
90
93
89
278
235
Printing and office supplies
39
67
78
52
86
184
281
Telephone and communication
151
139
144
139
141
434
441
Postage and delivery expense
223
200
229
235
260
652
863
State, local and other taxes
128
118
120
77
103
366
381
Employee expense
118
119
106
113
143
343
411
Other intangible amortization expense
157
158
157
157
185
472
579
OREO Impairment
--
58
--
214
--
58
--
Other expenses
345
338
282
359
295
965
1,977
Total non-interest expense
6,725
6,871
6,676
7,972
6,823
20,272
22,281
Income before income tax expense
1,817
1,405
1,330
431
740
4,552
1,891
Income tax expense
513
391
358
157
137
1,262
500
Net income
$ 1,304
$ 1,014
$ 972
$ 274
$ 603
$ 3,290
$ 1,391
Common share data:
Basic earnings per common share
$ 0.27
$ 0.21
$ 0.20
$ 0.06
$ 0.12
$ 0.68
$ 0.29
Diluted earnings per common share
$ 0.27
$ 0.21
$ 0.20
$ 0.06
$ 0.12
$ 0.68
$ 0.29
Average shares outstanding ($ in thousands):
Basic:
4,862
4,862
4,862
4,862
4,862
4,862
4,862
Diluted:
4,862
4,862
4,862
4,862
4,862
4,862
4,862
RURBAN FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share data)
Three Months Ended
Nine Months Ended
September
June
March
December
September
September
September
SUMMARY OF OPERATIONS
2012
2012
2012
2011
2011
2012
2011
Net interest income
$ 5,434
5,268
4,875
5,279
5,385
15,577
15,431
Tax-equivalent adjustment
$ 91
88
88
100
101
266
443
Tax-equivalent net interest income (core)
$ 5,525
5,356
4,963
5,379
5,486
15,843
15,874
Provision for loan loss
$ 300
200
450
299
297
950
1,694
Noninterest income
$ 3,408
3,208
3,581
3,423
2,475
10,197
10,435
Less: Non core items
$ (53)
--
(90)
--
--
(143)
(2,390)
Core noninterest income
$ 3,355
3,208
3,491
3,423
2,475
10,054
8,044
Total revenue, tax-equivalent
$ 8,933
8,564
8,544
8,802
7,961
26,040
26,309
Core revenue, tax-equivalent
$ 8,880
8,564
8,454
8,802
7,961
25,897
23,918
Noninterest expense
$ 6,725
6,871
6,676
7,972
6,823
20,272
22,281
Less: Non core items
$ --
--
--
990
--
--
1,083
Core noninterest expense
$ 6,725
6,871
6,676
6,982
6,823
20,272
21,198
Pre provision pretax income
$ 2,117
1,605
1,780
730
1,037
5,502
3,585
Core pre provision pretax income
$ 2,064
1,605
1,690
1,720
1,037
5,359
2,277
Pretax income
$ 1,817
1,405
1,330
431
740
4,552
1,891
Net income
$ 1,304
1,014
972
274
603
3,290
1,391
Core earnings after tax
$ 1,269
1,014
913
927
603
3,196
528
PER SHARE INFORMATION:
Basic & diluted earnings
$ 0.27
0.21
0.20
0.06
0.12
0.68
0.29
Core earnings
$ 0.26
0.21
0.19
0.19
0.12
0.66
0.11
Book value per common share
$ 10.68
10.34
10.08
9.86
9.78
10.68
9.78
PERFORMANCE RATIOS:
Return on average assets
0.82%
0.63%
0.61%
0.17%
0.38%
0.69%
0.29%
Core return on average assets
0.80%
0.63%
0.57%
0.58%
0.38%
0.67%
0.11%
Return on average common equity
10.25%
8.20%
8.04%
2.33%
5.12%
8.84%
3.97%
Core return on avg. tangible common equity
15.49%
13.01%
12.18%
13.21%
8.80%
13.57%
2.54%
Earning asset yield
4.78%
4.76%
4.77%
4.93%
5.07%
4.77%
5.06%
Cost of interest bearing liabilities
0.98%
1.05%
1.28%
1.15%
1.19%
1.10%
1.35%
Core efficiency ratio
72.61%
77.66%
76.17%
74.80%
83.05%
75.43%
85.18%
Core net interest income/ Average assets
3.48%
3.33%
3.12%
3.38%
3.50%
3.31%
3.28%
Core noninterest income/ Average assets
2.11%
1.99%
2.20%
2.15%
1.58%
2.10%
1.66%
Core noninterest expense/ Average assets
4.24%
4.27%
4.20%
4.39%
4.35%
4.23%
4.38%
Core noninterest income/ Operating revenue
37.56%
37.46%
40.86%
38.89%
31.09%
38.61%
30.58%
Net interest margin
3.85%
3.75%
3.53%
3.80%
3.90%
3.71%
3.68%
Tax equivalent effect
0.06%
0.06%
0.07%
0.07%
0.08%
0.06%
0.11%
Net interest margin - fully tax equivalent basis
3.91%
3.81%
3.60%
3.87%
3.98%
3.77%
3.79%
ASSET QUALITY RATIOS:
Gross charge-offs
$ 302
252
474
648
527
1,028
2,759
Recoveries
$ 78
62
104
642
21
244
584
Net charge-offs
$ 223
190
370
6
506
784
2,175
Nonaccruing loans/ Total loans
1.15%
1.18%
1.48%
1.56%
1.67%
1.15%
1.67%
Nonperforming loans/ Total loans
1.53%
1.58%
1.84%
1.86%
1.97%
1.53%
1.97%
Nonperforming assets/ Loans & OREO
2.05%
1.95%
2.24%
2.26%
2.41%
2.05%
2.41%
Nonperforming assets/ Total assets
1.49%
1.40%
1.54%
1.60%
1.70%
1.49%
1.70%
Allowance for loan loss/ Nonperforming loans
95.9%
92.5%
81.6%
79.3%
72.1%
95.9%
72.1%
Allowance for loan loss/ Total loans
1.47%
1.46%
1.50%
1.48%
1.42%
1.47%
1.42%
Net loan charge-offs/ Average loans (ann.)
0.20%
0.17%
0.34%
0.01%
0.46%
0.23%
0.67%
Loan loss provision/ Net charge-offs
134.46%
105.22%
121.52%
5243.77%
58.69%
121.22%
77.92%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits
88.31%
87.17%
82.12%
85.31%
85.34%
88.31%
85.34%
Equity/ Assets
8.24%
7.95%
7.60%
7.62%
7.62%
8.24%
7.62%
Tangible equity/ Tangible assets
5.53%
5.21%
4.88%
4.85%
4.63%
5.53%
4.63%
END OF PERIOD BALANCES
Total loans
$ 455,021
452,110
439,721
442,554
438,926
455,021
438,926
Total assets
$ 630,205
632,531
644,976
628,664
623,793
630,205
623,793
Deposits
$ 515,250
518,661
535,492
518,765
514,349
515,250
514,349
Stockholders equity
$ 51,930
50,274
49,026
47,932
47,552
51,930
47,552
Tangible equity
$ 33,867
32,032
30,596
29,571
28,007
33,867
28,007
Full-time equivalent employees
199
204
203
210
215
199
215
AVERAGE BALANCES
Total loans
$ 454,634
446,786
436,384
437,020
437,744
445,982
435,855
Total earning assets
$ 565,144
562,169
552,016
556,004
551,744
559,795
558,721
Total assets
$ 635,012
643,859
635,849
636,932
627,291
638,275
645,803
Deposits
$ 515,795
527,992
523,193
522,472
512,190
522,149
514,197
Stockholders equity
$ 50,905
49,464
48,377
47,035
47,087
49,622
46,742
Tangible equity
$ 32,779
31,165
29,981
28,082
27,414
31,405
27,711
RURBAN FINANCIAL CORP.
Rate Volume Analysis - (Unaudited)
For the Three and Nine Months Ended September 30, 2012 and 2011
($ in Thousands)
Three Months Ended September 30, 2012
Three Months Ended September 30, 2011
Average
Average
Average
Average
Assets
Balance
Interest
Rate
Balance
Interest
Rate
Taxable securities
$ 87,528
383
1.75%
$ 91,436
446
2.25%
Non-taxable securities
15,566
236
6.06%
15,762
260
6.60%
Federal funds sold
--
--
N/A
--
--
N/A
Loans, net
462,050
6,138
5.31%
444,546
6,287
5.66%
Total earning assets
$ 565,144
6,757
4.78%
$ 551,744
6,994
5.07%
Cash and due from banks
13,407
16,391
Allowance for loan losses
(6,707)
(6,502)
Premises and equipment
15,390
17,009
Other assets
47,778
48,649
Total assets
$ 635,012
$ 627,291
Liabilities
Savings and interest-bearing demand
$ 243,004
47
0.08%
$ 230,591
88
0.15%
Time deposits
203,104
647
1.28%
218,647
889
1.71%
Repurchase agreements
13,972
11
0.31%
18,643
72
3.33%
Advances from FHLB
18,082
92
2.04%
14,967
79
2.56%
Junior subordinated debentures
20,620
403
7.82%
20,620
356
6.90%
Notes payable & other borrowed funds
2,076
31
5.97%
3,048
25
6.53%
Total interest-bearing liabilities
$ 500,858
1,232
0.98%
$ 506,516
1,508
1.19%
Non interest-bearing demand
69,687
62,952
Other liabilities
13,562
10,736
Total liabilities
584,107
580,204
Equity
$ 50,905
$ 47,087
Total liabilities and equity
$ 635,012
$ 627,291
Net interest income (tax equivalent basis)
$ 5,525
$ 5,486
Net interest income as a percent of average interest-earning assets
3.91%
3.98%
Nine Months Ended September 30, 2012
Nine Months Ended September 30, 2011
Average
Average
Average
Average
Assets
Balance
Interest
Rate
Balance
Interest
Rate
Taxable securities
$ 91,917
1,185
1.72%
$ 98,863
1,623
2.19%
Non-taxable securities
14,911
680
6.08%
24,003
1,226
6.81%
Federal funds sold
--
--
N/A
--
--
N/A
Loans, net
452,967
18,174
5.35%
435,855
18,350
5.61%
Total earning assets
$ 559,795
20,039
4.77%
$ 558,721
21,200
5.06%
Cash and due from banks
21,740
27,660
Allowance for loan losses
(6,506)
(6,659)
Premises and equipment
14,962
16,837
Other assets
48,285
49,244
Total assets
$ 638,275
$ 645,803
Liabilities
Savings and interest-bearing demand
$ 244,744
167
0.09%
$ 234,951
297
0.17%
Time deposits
208,645
2,149
1.37%
215,647
2,739
1.69%
Repurchase agreements
16,344
139
1.14%
35,552
842
3.16%
Advances from FHLB
14,641
241
2.19%
16,632
325
2.61%
Junior subordinated debentures
20,620
1,396
9.03%
20,620
1,048
6.78%
Notes payable & other borrowed funds
2,315
103
5.94%
3,171
74
3.10%
Total interest-bearing liabilities
$ 507,308
4,196
1.10%
$ 526,574
5,325
1.35%
Non interest-bearing demand
68,761
63,599
Other liabilities
12,584
8,889
Total liabilities
588,653
599,061
Equity
$ 49,622
$ 46,742
Total liabilities and equity
$ 638,275
$ 645,803
Net interest income (tax equivalent basis)
$ 15,843
$ 15,875
Net interest income as a percent of average interest-earning assets
3.77%
3.79%
Rurban Financial Corp.
Segment Reporting - (Unaudited)
Three Months Ended September 30, 2012
($ in Thousands)
Banking
Parent Company and Other
Total Banking, Parent and Other
Data Services
Elimination Entries
Rurban Financial Corp.
Income Statement Measures
Interest income
$ 6,666
$ --
$ 6,666
$ --
$ --
$ 6,666
Interest expense
798
418
1,216
16
--
1,232
Net interest income
5,868
(418)
5,450
(16)
--
5,434
Provision for loan loss
300
--
300
--
--
300
Non-interest income
3,017
84
3,101
717
(410)
3,408
Non-interest expense
6,068
290
6,358
736
(369)
6,725
Net income - QTD
$ 1,776
$ (437)
$ 1,339
$ (24)
$ (11)
$ 1,304
Performance Measures
Average assets - QTD
$ 627,556
--
$ 632,423
$ 2,589
$ --
$ 635,012
Return on average assets
1.13%
--
0.85%
-3.71%
--
0.82%
Average equity - QTD
$ 71,875
--
$ 50,905
$ (1,270)
--
$ 50,905
Return on average equity
9.88%
--
10.52%
--
--
10.25%
Average loans - QTD
$ 462,050
2,000
$ 464,050
--
$ (2,000)
$ 462,050
Average deposits - QTD
$ 518,100
--
$ 518,100
--
$ (2,304)
$ 515,795
Rurban Financial Corp.
Segment Reporting - (Unaudited)
Nine Months Ended September 30, 2012
Banking
Parent Company and Other
Total Banking, Parent and Other
Data Services
Elimination Entries
Rurban Financial Corp.
Income Statement Measures
Interest income
$ 19,856
$ --
$ 19,856
$ --
$ (83)
$ 19,773
Interest expense
2,697
1,451
4,147
99
(50)
4,196
Net interest income
17,160
(1,451)
15,709
(99)
(33)
15,577
Provision for loan loss
950
--
950
--
--
950
Non-interest income
8,802
223
9,025
2,980
(1,808)
10,197
Non-interest expense
18,597
954
19,551
2,461
(1,740)
20,272
Net income - YTD
$ 4,539
$ (1,456)
$ 3,084
$ 277
$ (71)
$ 3,290
Performance Measures
Average assets - YTD
$ 630,910
$ --
$ 635,356
$ 2,919
$ 638,275
Return on average assets
0.96%
--
0.65%
12.68%
--
0.69%
Average equity - YTD
$ 70,649
$ --
$ 49,622
$ (1,613)
$ --
$ 49,622
Return on average equity
8.57%
--
8.29%
--
--
8.84%
Average loans - YTD
$ 453,495
$ 2,000
$ 455,495
$ --
$ (2,528)
$ 452,967
Average deposits - YTD
$ 523,970
$ --
$ 523,970
$ --
$ (1,821)
$ 522,149
RURBAN FINANCIAL CORP.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
Three Months Ended
Nine Months Ended
($ in Thousands)
September
June
March
December
September
September
September
2012
2012
2012
2011
2011
2012
2011
GAAP Earnings
$ 1,304
$ 1,014
$ 972
$ 274
$ 603
$ 3,290
$ 1,391
Realized securities gains (1)
--
--
--
--
--
--
(1,871)
Prepayment penalties (1)
--
--
--
--
--
--
1,083
Hardware write-offs (2)
--
--
--
609
--
--
--
Contract buyouts (2)
(53)
--
(90)
--
--
(143)
(519)
Writedown of goodwill and other intangibles (2)
--
--
--
381
--
--
--
Total non-core Items
(53)
--
(90)
990
--
(143)
(1,307)
Applicable income tax effect on non-core Items
18
--
31
(336)
--
49
445
After-tax non core Items
(35)
--
(59)
653
--
(94)
(863)
Core recurring net income
$ 1,269
$ 1,014
$ 913
$ 927
$ 603
$ 3,196
$ 528
(1) State Bank & Trust
(2) RDSI
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
September
June
March
December
September
September
September
($ in Thousands)
2012
2012
2012
2011
2011
2012
2011
Recurring total revenue - excluding realized securities gains/losses, gains/losses on sales of assets, interest accrued on RDSI loans ("Core revenue")
8,933
8,564
8,454
8,802
7,961
25,950
23,918
Tax equivalent adjustment (1)
91
88
88
100
101
266
443
Contract buyouts (2)
--
--
(90)
--
--
(90)
(519)
Realized securities gains (1)
--
--
--
--
--
--
(1,871)
(Gains)/losses on sales of assets (1)
--
--
--
--
--
--
--
Total nonrecurring items
91
88
(2)
100
101
176
(1,947)
Total GAAP revenue
8,842
8,476
8,456
8,702
7,860
25,774
25,866
Recurring net Interest Income - excluding interest accrued on New Core loan ("Core noninterest income")
5,525
5,356
4,963
5,379
5,486
15,843
15,874
Tax equivalent adjustment (1)
91
88
88
100
101
266
443
Total nonrecurring items
91
88
88
100
101
266
443
GAAP Net interest income
5,434
5,268
4,875
5,279
5,385
15,577
15,431
Recurring noninterest income - excluding realized securities gains/losses, gains/losses on sales of assets, etc. ("Core noninterest income")
3,355
3,208
3,491
3,423
2,475
10,054
8,044
Contract buyouts (2)
(53)
--
(90)
--
--
(143)
(519)
Realized securities gains (1)
--
--
--
--
--
--
(1,871)
Total nonrecurring items
(53)
--
(90)
--
--
(143)
(2,390)
GAAP noninterest income
3,408
3,208
3,581
3,423
2,475
10,197
10,435
Recurring loan loss provision
300
200
450
299
297
950
1,694
Total nonrecurring items
--
--
--
--
--
--
--
GAAP loan loss provision
300
200
450
299
297
950
1,694
Recurring noninterest expense -- excluding unrealized OREO writedowns, writedowns of goodwill and other intangibles, software and hardware writedowns, contract write-offs, early termination fees and RDSI loan write-off
6,725
6,871
6,676
6,982
6,823
20,272
21,198
FHLB/REPO prepayment penalties (1)
--
--
--
--
--
--
1,083
Hardware write-offs (2)
--
--
--
609
--
--
--
Writedown of goodwill and other intangibles (2)
--
--
--
381
--
--
--
Total Nonrecurring items
--
--
--
990
--
--
1,083
GAAP Noninterest Expense
6,725
6,871
6,676
7,972
6,823
20,272
22,281
CONTACT: Anthony V. Cosentino Executive Vice President & CFO 419-785-3663
