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EX-31.1 - SB FINANCIAL GROUP, INC.v199885_ex31-1.htm
EX-32.1 - SB FINANCIAL GROUP, INC.v199885_ex32-1.htm
EX-31.2 - SB FINANCIAL GROUP, INC.v199885_ex31-2.htm
EX-32.2 - SB FINANCIAL GROUP, INC.v199885_ex32-2.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010
OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________________to___________________________

Commission file number 0-13507
 
RURBAN FINANCIAL CORP. 

(Exact name of registrant as specified in its charter)

Ohio
 
34-1395608
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
   

401 Clinton Street, Defiance, Ohio 43512
(Address of principal executive offices)
(Zip Code)

                                 (419) 783-8950                                 
(Registrant’s telephone number, including area code)

                                                               None                                                              
(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ¨ No   x
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ¨   No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  Large Accelerate Filer ¨  Accelerated Filer ¨  Non-Accelerated Filer ¨ Smaller Reporting Company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨   No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Shares, without par value
 
4,861,779 shares 
 
(Class)
 
(Outstanding at October 25, 2010)
 
 
 
 

 
 
RURBAN FINANCIAL CORP.

FORM 10-Q

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
 
   
Item 1.
Financial Statements
  3
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  30
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
  39
Item 4.
Controls and Procedures
  39
   
PART II – OTHER INFORMATION
 
   
Item 1.
Legal Proceedings
  41
Item 1A.
Risk Factors
  41
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  42
Item 3.
Defaults Upon Senior Securities
  43
Item 4.
[Reserved]
  43
Item 5.
Other Information
  43
Item 6.
Exhibits
  43
   
Signatures
  44
 
 
2

 

PART I – FINANCIAL INFORMATION
 
Item 1. Financial Statements

The interim condensed consolidated financial statements of Rurban Financial Corp. (“Rurban” or the “Company”) are unaudited; however, the information contained herein reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of financial condition, results of operations and cash flows for the interim periods presented. Results for the three and six months ended June 30, 2010 are impacted by significant software and equipment impairments related to the Company’s data processing subsidiary. Results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of results for the complete year.

 
3

 
 
Rurban Financial Corp.
Condensed Consolidated Balance Sheets
June 30, 2010 and December 31, 2009
 
   
June 30
   
December 31
 
   
2010
   
2009
 
   
(Unaudited)
       
ASSETS
           
Cash and cash equivalents
  $ 20,278,740     $ 24,824,785  
Available-for-sale securities
    111,140,374       105,083,112  
Loans held for sale
    11,649,780       16,857,648  
Loans, net of unearned income
    437,275,407       452,557,581  
Allowance for loan losses
    (7,000,513 )     (7,030,178 )
Premises and equipment, net
    15,135,862       16,993,640  
Purchased software
    600,827       5,338,319  
Federal Reserve and Federal Home Loan Bank Stock
    3,748,250       3,748,250  
Foreclosed assets held for sale, net
    1,648,026       1,767,953  
Accrued interest receivable
    2,339,958       2,324,868  
Goodwill
    21,414,790       21,414,790  
Core deposits and other intangibles
    4,577,245       4,977,513  
Cash value of life insurance
    13,001,493       12,792,045  
Other assets
    10,536,672       11,398,776  
                 
Total assets
  $ 646,346,911     $ 673,049,102  
 
See notes to condensed consolidated financial statements (unaudited)

Note: 
The balance sheet at December 31, 2009 has been derived from the audited consolidated financial statements at that date
 
 
4

 
 
Rurban Financial Corp.
Condensed Consolidated Balance Sheets
June 30, 2010 and December 31, 2009
 
   
June 30
   
December 31
 
   
2010
   
2009
 
   
(Unaudited)
       
LIABILITIES AND SHAREHOLDERS' EQUITY
           
Deposits
           
Non interest bearing demand
  $ 57,301,649     $ 57,229,795  
Interest bearing NOW
    90,283,830       87,511,973  
Savings
    45,069,665       43,321,364  
Money Market
    79,045,113       86,621,953  
Time Deposits
    210,062,500       216,557,067  
Total deposits
    481,762,757       491,242,152  
Notes payable
    3,415,856       2,146,776  
Advances from Federal Home Loan Bank
    26,046,944       35,266,510  
Fed Funds Purchased
    10,500,000       5,000,000  
Repurchase Agreements
    45,602,027       47,042,820  
Trust preferred securities
    20,620,000       20,620,000  
Accrued interest payable
    1,378,388       1,507,521  
Other liabilities
    3,819,772       8,515,668  
                 
Total liabilities
    593,145,744       611,341,447  
                 
Shareholders' Equity
               
Common stock
    12,568,583       12,568,583  
Additional paid-in capital
    15,179,118       15,186,042  
Retained earnings
    25,360,487       34,415,316  
Accumulated other comprehensive income
    1,862,290       1,307,025  
Treasury stock
    (1,769,311 )     (1,769,311 )
                 
Total shareholders' equity
    53,201,167       61,707,655  
                 
Total liabilities and shareholders' equity
  $ 646,346,911     $ 673,049,102  
 
See notes to condensed consolidated financial statements (unaudited)

Note: 
The balance sheet at December 31, 2009 has been derived from the audited consolidated financial statements at that date.
 
 
5

 
 
Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended

   
Three Months Ended
 
   
June 30
 
   
2010
   
2009
 
Interest income
           
Loans
           
Taxable
  $ 6,749,644     $ 6,855,627  
Tax-exempt
    17,381       25,390  
Securities
               
Taxable
    380,586       1,134,573  
Tax-exempt
    382,889       244,331  
Other
    (31,261 )     29,745  
Total interest income
    7,499,239       8,289,666  
                 
Interest expense
               
Deposits
    1,285,833       1,657,345  
Other borrowings
    30,695       33,411  
Retail Repurchase Agreements
    432,658       431,336  
Federal Home Loan Bank advances
    289,008       411,556  
Trust preferred securities
    403,024       394,629  
Total interest expense
    2,441,218       2,928,277  
                 
Net interest income
    5,058,021       5,361,389  
                 
Provision for loan losses - Bank Only
    3,498,710       798,850  
Provision for loan losses - RDSI
    3,000,000       -  
                 
Net interest income / (expense) after provision for loan losses
    (1,440,689 )     4,562,539  
                 
Non-interest income
               
Data service fees
    2,608,769       4,956,034  
Trust fees
    590,697       641,033  
Customer service fees
    614,944       649,003  
Net gain on sales of loans
    609,047       938,345  
Net realized gain on sales of securities
    -       423,784  
Loan servicing fees
    130,248       103,863  
Gain (loss) on sale or disposal of assets
    (1,429 )     16,241  
Other income
    158,552       169,488  
Total non-interest income
    4,710,828       7,897,791  
 
See notes to condensed consolidated financial statements (unaudited)
 
 
6

 
 
Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended
 
   
Three Months Ended
 
   
June 30
 
   
2010
   
2009
 
Non-interest expense
           
Salaries and employee benefits
    4,902,735       5,298,604  
Net occupancy expense
    566,468       865,599  
FDIC Insurance expense
    197,913       46,120  
Equipment expense
    2,385,561       1,698,905  
Software and fixed asset impairment
    4,323,696       -  
Data processing fees
    229,478       208,726  
Professional fees
    561,209       642,988  
Marketing expense
    112,625       234,557  
Printing and office supplies
    97,326       117,335  
Telephone and communication
    339,341       399,835  
Postage and delivery expense
    456,430       514,490  
State, local and other taxes
    (156,595 )     233,157  
Employee expense
    227,304       257,204  
OREO Impairment
    215,000       -  
Other expenses
    1,631,111       590,537  
Total non-interest expense
    16,089,602       11,108,057  
                 
Income / (loss) before income tax expense / (benefit)
    (12,819,463 )     1,352,273  
Income tax expense/(benefit)
    (4,612,572 )     348,687  
                 
Net income (loss)
  $ (8,206,891 )   $ 1,003,586  
                 
Earnings (loss) per common share:
               
Basic
  $ (1.69 )   $ 0.20  
Diluted
  $ (1.69 )   $ 0.20  

See notes to condensed consolidated financial statements (unaudited)

 
7

 
 
Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited)
Six Months Ended
 
   
Six Months Ended
 
   
June 30
 
   
2010
   
2009
 
Interest income
           
Loans
           
Taxable
  $ 13,161,226     $ 13,670,260  
Tax-exempt
    36,296       50,847  
Securities
               
Taxable
    1,082,841       2,214,070  
Tax-exempt
    701,952       472,215  
Other
    187       29,877  
Total interest income
    14,982,502       16,437,269  
                 
Interest expense
               
Deposits
    2,660,124       3,555,649  
Other borrowings
    68,778       47,803  
Retail Repurchase Agreements
    859,625       858,823  
Federal Home Loan Bank advances
    641,825       804,128  
Trust preferred securities
    789,648       793,614  
Total interest expense
    5,020,000       6,060,017  
                 
Net interest income
    9,962,502       10,377,252  
                 
Provision for loan losses - Bank Only
    4,890,143       1,293,992  
Provision for loan losses - RDSI
    3,000,000       -  
                 
Net interest income after provision for loan losses
    2,072,359       9,083,260  
                 
Non-interest income
               
Data service fees
    6,638,175       9,928,583  
Trust fees
    1,233,483       1,224,656  
Customer service fees
    1,202,345       1,223,702  
Net gain on sales of loans
    1,326,061       2,016,392  
Net realized gain on sales of securities
    451,474       477,591  
Investment securities recoveries
    73,774       -  
Loan servicing fees
    284,090       171,736  
(Loss) on sale or disposal of assets
    (30,081 )     (42,414 )
Other income
    314,533       345,050  
Total non-interest income
    11,493,854       15,345,296  
 
See notes to condensed consolidated financial statements (unaudited)
 
 
8

 
 
Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited)
Six Months Ended
 
   
Six Months Ended
 
   
June 30
 
   
2010
   
2009
 
Non-interest expense
           
Salaries and employee benefits
    10,006,275       10,222,726  
Net occupancy expense
    1,152,691       1,195,457  
FDIC Insurance expense
    416,816       388,663  
Equipment expense
    4,550,662       3,312,298  
Software and fixed asset impairment
    4,892,231       -  
Data processing fees
    424,264       344,462  
Professional fees
    1,204,019       1,141,043  
Marketing expense
    190,226       423,303  
Printing and office supplies
    258,428       331,877  
Telephone and communication
    725,547       806,228  
Postage and delivery expense
    1,026,863       1,123,512  
State, local and other taxes
    (35,556 )     466,053  
Employee expense
    507,229       517,142  
OREO Impairment
    215,000       -  
Other expenses
    2,346,605       1,310,317  
Total non-interest expense
    27,881,300       21,583,081  
                 
Income (loss) before income tax expense / (benefit)
    (14,315,087 )     2,845,475  
Income tax expense/(benefit)
    (5,260,258 )     738,336  
                 
Net income (loss)
  $ (9,054,829 )   $ 2,107,139  
                 
Earnings (loss) per common share:
               
Basic
  $ (1.86 )   $ 0.43  
Diluted
  $ (1.86 )   $ 0.43  
 
See notes to condensed consolidated financial statements (unaudited)
 
 
9

 

RURBAN FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY (UNAUDITED)
 
   
Three Months Ended
   
Six Months Ended
 
   
June 30, 2010
   
June 30, 2009
   
June 30, 2010
   
June 30, 2009
 
                         
Balance at beginning of period
  $ 60,854,543     $ 63,620,510     $ 61,707,655     $ 61,662,004  
                                 
Net Income / (Loss)
    (8,206,891 )     1,003,586       (9,054,829 )     2,107,139  
                                 
Unrealized gains (losses) on securities
                               
Unrealized holding gains (losses) arising during the year, net of tax
    604,066       (464,173 )     853,239       915,432  
Less: reclassification adjustment for gains realized in net income, net of tax
    -       279,697       297,974       315,210  
Total comprehensive income / (loss)
    (7,602,825 )     259,716       (8,499,564 )     2,707,361  
                                 
Cash dividend
    -       (438,333 )     -       (877,291 )
                                 
Purchase of treasury shares
    -       (59,246 )     -       (139,494 )
                                 
Share-based compensation
    (50,551 )     30,066       (6,924 )     60,133  
                                 
Balance at end of period
  $ 53,201,167     $ 63,412,713     $ 53,201,167     $ 63,412,713  
                                 
Dividends declared per share
  $ -     $ 0.09     $ -     $ 0.18  
   
See notes to condensed consolidated financial statements (unaudited)
 
 
10

 

Rurban Financial Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
 
   
June 30, 2010
   
June 30, 2009
 
             
Operating Activities
           
Net income/(loss)
  $ (9,054,829 )   $ 2,107,139  
Items not requiring (providing) cash
               
Depreciation and amortization
    2,492,871       1,830,970  
Provision for loan losses
    7,890,143       1,293,922  
Expense of share-based compensation plan
    (6,924 )     60,133  
Amortization of premiums and discounts on securities
    653,169       324,964  
Amortization of intangible assets
    400,268       443,822  
Deferred income taxes
    (3,001,762 )     (984,182 )
Proceeds from sale of loans held for sale
    117,528,701       204,379,921  
Originations of loans held for sale
    (110,994,772 )     (211,849,075 )
Gain from sale of loans
    (1,326,061 )     (2,016,392 )
Gain on available for sale securities
    (451,474 )     (477,591 )
Software and fixed asset impairment
    4,892,231       -  
OREO impairment
    215,000       -  
Loss on sale of foreclosed assets
    17,887       15,414  
Loss on sales of fixed assets
    12,194       27,000  
Changes in
               
Interest receivable
    (15,090 )     451,877  
Other assets
    519,381       (1,903,768 )
Interest payable and other liabilities
    (2,109,313 )     (583,503 )
                 
Net cash from / (used in) operating activities
    7,661,620       (6,879,349 )
                 
Investing Activities
               
Purchases of available-for-sale securities
    (41,525,452 )     (44,042,933 )
Proceeds from maturities of available-for-sale securities
    26,112,083       21,932,628  
Proceeds from sales of available-for-sale securities
    9,995,724       15,790,787  
Proceeds from sales of Fed Stock
    -       700,000  
Purchase of FHLB Stock
    -       (204,150 )
Net change in loans
    4,371,388       8,095,458  
Purchase of premises and equipment and software
    (1,294,300 )     (613,597 )
Proceeds from sales of premises and equipment
    504,468       40,877  
Proceeds from sale of foreclosed assets
    2,999,099       321,231  
                 
Net cash from / (used in ) investing activities
  $ 1,163,010     $ 2,020,301  

See notes to condensed consolidated financial statements (unaudited)

 
11

 

Rurban Financial Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)
Six Months Ended
 
   
June 30, 2010
   
June 30, 2009
 
             
Financing Activities
           
Net increase/(decrease) in demand deposits, money market, interest checking and savings accounts
  $ (2,984,828 )   $ 11,731,106  
Net decrease in certificates of deposit
    (6,494,567 )     (22,958,151 )
Net decrease in securities sold under agreements to repurchase
    (1,440,793 )     (722,346 )
Net increase in federal funds purchased
    5,500,000       10,000,000  
Proceeds from Federal Home Loan Bank advances
    2,000,000       7,500,000  
Repayment of Federal Home Loan Bank advances
    (11,219,566 )     (3,680,481 )
Proceeds from notes payable
    2,250,000       4,200,000  
Repayment of notes payable
    (980,920 )     (2,636,313 )
Purchase of treasury stock
    -       (139,494 )
Dividends paid
    -       (877,291 )
                 
Net cash from / (used in) financing activities
    (13,370,674 )     2,417,030  
                 
Decrease in Cash and Cash Equivalents
    (4,546,045 )     (2,442,018 )
                 
Cash and Cash Equivalents, Beginning of Year
    24,824,785       28,059,532  
                 
Cash and Cash Equivalents, End of Period
  $ 20,278,740     $ 25,617,514  
                 
Supplemental Cash Flows Information
               
                 
Interest paid
  $ 5,149,133     $ 6,275,766  
                 
Transfer of loans to foreclosed assets
  $ 2,897,059     $ 297,042  

See notes to condensed consolidated financial statements (unaudited)

 
12

 
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A—BASIS OF PRESENTATION
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly present the financial position, results of operations and cash flows of Rurban Financial Corp. (the “Company”). Results for the three and six months ended June 30, 2010 are impacted by significant software and equipment impairments related to the Company’s data processing subsidiary. Results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of results for the complete year.

The condensed consolidated balance sheet of the Company as of December 31, 2009 has been derived from the audited consolidated balance sheet of the Company as of that date. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

NOTE B—EARNINGS PER SHARE

Earnings per share (EPS) has been computed based on the weighted average number of shares outstanding during the periods presented. For the periods ended June 30, 2010 and 2009, share based awards totaling 404,213 and 327,263 common shares, respectively, were not considered in computing EPS as they were anti-dilutive. The number of shares used in the computation of basic and diluted earnings per share were:
   
Three Months Ended
   
Six Months Ended
 
   
June 30
   
June 30
 
   
2010
   
2009
   
2010
   
2009
 
Basic earnings per share
    4,861,779       4,868,063       4,861,779       4,871,978  
Diluted earnings per share
    4,861,779       4,868,063       4,861,779       4,871,978  

NOTE C – LOANS, RISK ELEMENTS AND ALLOWANCE FOR LOAN LOSSES

Total loans on the balance sheet are comprised of the following classifications:

   
June 30,
2010
   
December 31,
2009
 
Commercial
  $ 79,129,809     $ 84,462,860  
Commercial real estate
    175,054,896       179,909,135  
Agricultural
    39,582,159       41,485,301  
Residential real estate
    90,675,563       92,971,599  
Consumer
    52,863,188       53,655,238  
Lease financing
    249,273       221,190  
Total loans
    437,554,888       452,885,323  
Less
               
Net deferred loan fees, premiums and discounts
    (279,481 )     (327,742 )
                 
Loans, net of unearned income
  $ 437,275,407     $ 452,557,581  
Allowance for loan losses
  $ (7,000,513 )   $ (7,030,178 )
 
 
13

 
 
The following is a summary of the activity in the allowance for loan losses account for the three and six months ended June 30, 2010 and 2009:

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Balance, beginning of period
  $ 6,075,126     $ 5,348,952     $ 7,030,178     $ 5,020,197  
Provision charged to expense
    6,498,710       798,850       7,890,143       1,293,992  
Recoveries
    106,770       60,921       240,503       81,915  
Loans charged off
    (5,680,093 )     (335,577 )     (8,160,311 )     (522,958 )
Balance, end of period
  $ 7,000,513     $ 5,873,146     $ 7,000,513     $ 5,873,146  
 
The following schedule summarizes nonaccrual, past due and impaired loans:

   
June 30,
   
December 31,
 
   
2010
   
2009
 
Non-accrual loans
  $ 12,401,498     $ 18,543,368  
                 
Accruing loans which are contractually past due 90 days or more as to interest or principal payments
    0       0  
Total non-performing loans
  $ 12,401,498     $ 18,543,368  
 
Individual loans determined to be impaired were as follows:

   
June 30,
2010
   
December 31,
2009
 
                 
Loans with no allowance for loan losses allocated
  $ 1,726,714     $ 1,099,912  
Loans with allowance for loan losses allocated
    9,182,108       14,912,035  
Total impaired loans
  $ 10,908,822     $ 16,011,947  
                 
Amount of allowance for loan losses allocated
  $ 2,281,302     $ 3,041,967  
 
NOTE D – NEW ACCOUNTING PRONOUNCEMENTS
 
In June 2009, the Financial Accounting Standards Board (the “FASB”) issued new guidance relating to the accounting for transfers of financial assets. The new guidance was adopted into the FASB’s Accounting Standards Codification (“ASC”) in December 2009 through the issuance of Accounting Standards Update (“ASU”) 2009-16. The new standard provides guidance to improve the relevance, representational faithfulness, and comparability of the information that an entity provides in its financial statements about: a transfer of financial assets; the effects of a transfer of financial assets on the entity’s financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The Company has adopted the new guidance for 2010 and has determined it to have no effect on the consolidated financial statements.
 
14

 
FASB ASU 2010-20, “Receivables: Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” (ASC Topic 310), issued on July 21, 2010, concerns improved disclosures regarding the credit quality in a financial institution’s loan portfolio. The guidance requires additional disaggregation of the credit portfolio by portfolio segment and class of receivable, a revised roll forward of the allowance for credit losses, presentation of the credit portfolio by credit quality indicators, an aging schedule of past due receivables, disclosure of troubled debt restructurings and purchases and sales of receivables by portfolio segment. The period-end disclosures are effective for periods ending on or after December 15, 2010 (December 31, 2010 for the Company). The activity disclosures are effective for periods beginning on or after December 15, 2010 (January 1, 2011 for the Company). The adoption of FASB ASU 2010-20 is not expected to have a material effect on the Company’s financial condition or results of operations.
 
NOTE E – SEGMENT INFORMATION
  
The Company has two reportable segments: (1) banking; and (2) data processing, which are determined by the products and services offered. “Other” segment information includes the accounts of the holding company, Rurban Financial Corp. (“Rurban”), which provides management and operational services to its subsidiaries. Segment results for the three and six months ended June 30, 2010 and 2009 were as follows:
 
 
15

 

NOTE E — SEGMENT INFORMATION (Continued)

As of and for the three months ended June 30, 2010

         
Data
         
Total
   
Intersegment
   
Consolidated
 
Income statement information:
 
Banking
   
Processing
   
Other
   
Segments
   
Elimination
   
Totals
 
                                      
Net interest income (expense)
  $ 5,639,927     $ (210,558 )   $ (371,348 )   $ 5,058,021           $ 5,058,021  
                                               
Non-interest income – external customers
    2,081,469       2,608,768       20,591       4,710,828             4,710,828  
                                               
Non-interest income - other segments
    24,738       226,343       155,319       406,400       (406,400 )     -  
                                                 
Total revenue
    7,746,134       2,624,553       (195,438 )     10,175,249       (406,400 )     9,768,849  
                                                 
Non-interest expense
    6,641,773       9,576,293       277,936       16,496,002       (406,400 )     16,089,602  
                                                 
Significant non-cash items:
                                               
Depreciation and amortization
    247,925       848,212       15,648       1,111,785       -       1,111,785  
Fixed asset & software impairment
    -       4,323,696       -       4,323,696       -       4,323,696  
Provision for loan losses
    3,498,710       3,000,000       -       6,498,710       -       6,498,710  
                                                 
Income tax expense (benefit)
    (914,787 )     (3,505,992 )     (191,793 )     (4,612,572 )     -       (4,612,572 )
                                                 
Segment profit (loss)
  $ (1,479,562 )   $ (6,445,748 )   $ (281,581 )   $ (8,206,891 )   $ -     $ (8,206,891 )
                                                 
Balance sheet information:
                                               
Total assets
  $ 634,047,112     $ 13,063,769     $ 5,456,742     $ 652,567,623     $ (6,220,712 )   $ 646,346,911  
                                                 
Goodwill and intangibles
  $ 19,151,849     $ 6,840,186     $ -     $ 25,992,035     $ -     $ 25,992,035  
                                                 
Premises and equipment expenditures
  $ 25,688     $ 515,342     $ -     $ 541,030     $ -     $ 541,030  

 
16

 

NOTE E — SEGMENT INFORMATION (Continued)

As of and for the three months ended June 30, 2009

         
Data
         
Total
   
Intersegment
   
Consolidated
 
Income statement information:
 
Banking
   
Processing
   
Other
   
Segments
   
Elimination
   
Totals
 
                                     
Net interest income (expense)
  $ 5,789,863     $ (34,003 )   $ (394,471 )   $ 5,361,389           $ 5,361,389  
                                               
Non-interest income - external customers
    2,917,326       4,959,034       21,431       7,897,791             7,897,791  
                                               
Non-interest income - other segments
    24,164       391,439       355,002       770,605       (770,605 )     -  
                                                 
Total revenue
    8,731,353       5,316,470       (18,038 )     14,029,785       (770,605 )     13,259,180  
                                                 
Non-interest expense
    6,506,659       4,394,358       977,645       11,878,662       (770,605 )     11,108,057  
                                                 
Significant non-cash items:
                                               
Depreciation and amortization
    260,966       638,417       25,027       924,410       -       924,410  
Provision for loan losses
    798,850       -       -       798,850       -       798,850  
                                                 
Income tax expense (benefit)
    379,246       313,518       (344,077 )     348,687       -       348,687  
                                                 
Segment profit (loss)
  $ 1,046,598     $ 608,594     $ (651,606 )   $ 1,003,586     $ -     $ 1,003,586  
                                                 
Balance sheet information:
                                               
Total assets
  $ 639,781,723     $ 22,837,374     $ 3,753,803     $ 666,372,900     $ (4,827,945 )   $ 661,544,955  
                                                 
Goodwill and intangibles
  $ 19,792,840     $ 7,014,064     $ -     $ 26,806,904     $ -     $ 26,806,904  
                                                 
Premises and equipment expenditures
  $ 226,491     $ 25,854     $ 13,981     $ 266,326     $ -     $ 266,326  

 
17

 
 
NOTE E — SEGMENT INFORMATION (Continued)

As of and for the six months ended June 30, 2010

         
Data
         
Total
   
Intersegment
   
Consolidated
 
Income statement information:
 
Banking
   
Processing
   
Other
   
Segments
   
Elimination
   
Totals
 
                                     
Net interest income (expense)
  $ 10,980,625     $ (271,961 )   $ (746,162 )   $ 9,962,502           $ 9,962,502  
                                               
Non-interest income - external customers
    4,777,802       6,638,175       77,877       11,493,854             11,493,854  
                                               
Non-interest income - other segments
    49,810       596,153       428,773       1,074,736       (1,074,736 )     -  
                                                 
Total revenue
    15,808,237       6,962,367       (239,512 )     22,531,092       (1,074,736 )     21,456,356  
                                                 
Non-interest expense
    12,702,246       15,245,545       1,008,245       28,956,036       (1,074,736 )     27,881,300  
                                                 
Significant non-cash items:
                                               
Depreciation and amortization
    506,447       2,564,909       31,512       3,102,868       -       3,102,868  
Fixed asset & software impairment
    -       4,892,231       -       4,892,231       -       4,892,231  
Provision for loan losses
    4,890,143       3,000,000       -       7,890,143       -       7,890,143  
                                                 
Income tax expense (benefit)
    (842,958 )     (3,958,681 )     (458,619 )     (5,260,258 )     -       (5,260,258 )
                                                 
Segment profit (loss)
  $ (941,194 )   $ (7,324,497 )   $ (789,138 )   $ (9,054,829 )   $ -     $ (9,054,829 )
                                                 
Balance sheet information:
                                               
Total assets
  $ 634,047,112     $ 13,063,769     $ 5,456,742     $ 652,567,623     $ (6,220,712 )   $ 646,346,911  
                                                 
Goodwill and intangibles
  $ 19,151,849     $ 6,840,186     $ -     $ 25,992,035     $ -     $ 25,992,035  

 
18

 

NOTE E — SEGMENT INFORMATION (Continued)

As of and for the six months ended June 30, 2009

         
Data
         
Total
   
Intersegment
   
Consolidated
 
Income statement information:
 
Banking
   
Processing
   
Other
   
Segments
   
Elimination
   
Totals
 
                                     
Net interest income (expense)
  $ 11,229,516     $ (59,078 )   $ (793,186 )   $ 10,377,252           $ 10,377,252  
                                               
Non-interest income - external customers
    5,399,246       9,903,705       42,345       15,345,296             15,345,296  
                                               
Non-interest income - other segments
    44,036       819,455       733,595       1,597,086       (1,597,086 )     -  
                                                 
Total revenue
    16,672,798       10,664,082