Exhibit 99.1

 

 

Rurban Financial Corp. Reports 2011 Full Year and Fourth Quarter Results

DEFIANCE, Ohio, February 1, 2012 (GlobeNewswire) — 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 fourth quarter and fiscal year ended December 31, 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"). For the year ended December 31, 2011, Rurban reported net income of $2.1 million, or $0.42 per diluted share, compared to a net loss of $15.6 million, or $(3.21) per diluted share for the year ended December 31, 2010. Net income for the fourth quarter of 2011 was $675,000, or $0.14 per diluted share, compared to $602,000, or $0.12 per diluted share, for the third quarter of 2011, and a loss of $6.6 million, or $(1.35) per diluted share, for the 2010 fourth quarter.

 

Earnings from operations exclude one-time or non-core items, primarily related to the June 2010 termination of the proposed spinoff and merger of RDSI with New Core Holdings. These non-core or one-time items include the following:

 

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
		Three Months Ended												Twelve Months Ended
($ in Thousands)		Dec. 2011				Sept. 2011				Dec. 2010				Dec. 2011				Dec. 2010
GAAP Earnings		$	675			$	602			$	(6,584	)		$	2,066			$	(15,613	)
Net securities gains			-				-				1				(788	)			(525	)
Loss on sales of assets			46				27				41				333				200
OREO writedown			214				-				757				214				972
Net charges at RDSI related to termination of merger			381				-				6,273				(138	)			16,259
Total non-core items			641				27				7,071				(379	)			16,907
Applicable income tax effect on non-core items			(218	)			(9	)			(2,404	)			129				(5,748	)
After-tax non-core items		$	423			$	18			$	4,667			$	(250	)		$	11,158
Core Earnings from Operations		$	1,098			$	620			$	(1,917	)		$	1,816			$	(4,455	)
Core Earnings per Diluted Share		$	0.23			$	0.13			$	(0.39	)		$	0.37			$	(0.92	)

 

 

Excluding a net one-time gain of $250,000 after tax in 2011 and a net charge of $11.2 million after tax in 2010, Rurban reported earnings from operations of $1.82 million in 2011, or $0.37 per diluted share, compared to a 2010 net loss from operations of $4.46 million, or $(0.92) per diluted share. For the fourth quarters of 2011 and 2010, excluding after-tax non-core charges of $423,000 and $4.67 million, respectively, earnings from operations were $1.1 million, or $0.23 per diluted share, compared to a loss of $1.9 million, or $(0.39) per diluted share, for the 2010 fourth quarter. Net income for the third quarter of 2011 was $602,000, or $0.12 per diluted share, with virtually no one-time items. (A detailed reconciliation of GAAP to core earnings can be found in the financial tables.)

 

Key items for the 2011 fourth quarter and full year include:

 

	·	Net income improvement of $17.7 million year over year; earnings from operations (“core earnings”) improvement of $6.3 million; and pre-tax, pre-provision core earnings improvement of $2.4 million compared to full-year 2010.
	·	Net interest income on a fully tax equivalent (FTE) basis benefited from lower funding costs and a boost from a deleveraging transaction completed in June 2011. For 2011, the net interest margin (FTE) was 3.81 percent, up 14 basis points from 2010.
	·	Core noninterest income declined by $8.7 million year over year, impacted in 2011 by the volatility of the mortgage market and the loss of RDSI data processing fee income. Wealth management and customer service fees have provided ongoing stability to fee income, totaling $5.1 million in 2011, substantially unchanged from 2010.
	·	2011 mortgage loan originations were only modestly below the record 2010 level. However, lower loan sales and spreads, in addition to higher OMSR valuation adjustments and amortization, lowered net mortgage banking revenue by 44 percent year over year: $2.7 million in 2011 versus $4.7 million in 2010.
	·	Excluding one-time charges, corporate-wide expenses declined $10.2 million year over year both as a result of the downsizing of RDSI and from efficiencies implemented at State Bank. Full-time equivalent employees declined by 32, or 13 percent, since December 31, 2010.
	·	Asset quality has improved year over year, but suffered a modest setback compared to third quarter 2011. Nonperforming assets declined 25 percent, to $11.1 million, or 1.77 percent of total assets over the past twelve months. Costs associated with credit administration and OREO declined by $0.75 million. Including provisions and one-time items, the total savings from credit improvements at State Bank were nearly $7 million in 2011.
	·	The Bank remains well-capitalized. On a consolidated level, Rurban’s tangible leverage improved by 76 basis points over the course of the year. At 4.93 percent, it remains a focus of management attention.

 

 

·

Loan growth of $14.7 million in 2011, or 3.5 percent, reflects a solid performance in a slowly recovering economy and a competitive banking environment.

 

Mark Klein, President and Chief Executive Officer of Rurban Financial Corp., stated, “Our profit potential is emerging more clearly as we resolve several of the ancillary issues that have impacted our performance and competed for our attention. Net income has remained in positive territory throughout the year, while operating earnings have been accelerating. Much has come together for us in the fourth quarter of 2011. Mortgage banking originations approached the record levels we reported for 2010, and RDSI revenue has substantially stabilized. We have a stronger, cleaner balance sheet, and we are seeing the results of our year-long focus on efficiency improvements. In the last quarter alone, our efficiency ratio improved by more than eight percentage points, to 74.7 percent.

 

“We made important progress during 2011 resolving the issues at RDSI, our data services operation. Over the past twelve months, we reduced noninterest expenses by nearly $15 million to align with revenues now derived almost exclusively from item processing. With the distractions of downsizing behind us, and a leaner more focused team, we are better positioned to capitalize on opportunities related specifically to item processing, where RDSI has a strong competency and a distinct market advantage.

 

“There are still operating improvements to be achieved throughout our organization, but the urgency is diminished following our major 2011 cost-saving initiatives, including approximately $2 million of savings at State Bank. Revenue growth has become increasingly important as we identify opportunities that exist within our customer base, and devise strategies to enhance cross-sell and profit per household.

 

“We have been quite successful this past year with our new jumbo residential loan product that we introduced to our highly qualified private banking clients. We retained over $20 million of these and other variable-rate mortgages in our portfolio, which has more than offset the anticipated roll-off of residential mortgages during 2011. We continue to sell the remainder of our loan production into the secondary markets, which amounted to $198 million in 2011. Still, we are somewhat disappointed that the superb achievements of our mortgage lenders have been masked by the volatility of the marketplace. While our mortgage banking activities generated nearly $2.7 million of net revenue in 2011, our full profit potential was compromised by the declining interest rate environment and the refinancing frenzy. We are hopeful that mortgage rates have finally bottomed out, and a more stable environment going forward will allow mortgage banking revenues to more closely reflect our strong activity levels. There are additional benefits to our mortgage banking initiative as we’ve added a sizeable number of new households to our customer base, providing us with an opportunity to introduce the full platform of State Bank services.

 

“‘Over the past twelve months, our ongoing focus on asset quality has reduced nonperforming assets by more than 25 percent. Costs associated with the administration and resolution of these problem assets have continued to decline, providing a substantial boost to 2011 earnings.

 

 

“The totality of these successful initiatives has had a favorable impact on our bank regulatory capital ratios, where the cushion above “well-capitalized” levels continues to grow. On a consolidated basis, the impact on leverage of the recent charge-offs is diminishing, with tangible equity benefiting disproportionately following the write off of RDSI goodwill, which, with the fourth quarter charge of $380,000, is now entirely off our balance sheet. There is still room for improvement on all fronts — as there always is and will be — but the message for 2012 is definitely more positive than we have felt for the past eighteen months.”

 

RESULTS OF OPERATIONS

 

Consolidated Revenue

 

Total revenue, consisting of net interest income (FTE) and noninterest income, was $35.1 million in 2011, down $6.3 million, or 15.2 percent, from the prior-year twelve month period. For the fourth quarter of 2011, total revenue was $8.8 million, a decline of $1.5 million, or 14.6 percent, from the $10.3 million reported for the 2010 fourth quarter. The lower level of revenue for the year and the fourth quarter versus comparable 2010 periods relates primarily to the loss of RDSI’s data processing business.

 

Net interest income (FTE) for 2011 was $21.3 million, up $0.54 million, or 2.6 percent, compared to 2010. The net interest margin (FTE) was 3.81 percent for 2011 compared to 3.67 percent for the 2010 twelve-month period; the 14 basis point, or 3.8 percent, improvement 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. Year over year, average earning assets declined $6.5 million, or 1.2 percent.

 

Although Rurban’s funding mix has been improving on a quarterly basis, the deleveraging transaction completed in June of 2011 enabled Rurban to further reduce its higher-cost borrowings. In a series of transactions, State Bank sold $43 million of investment securities with a weighted average yield of 3.97 percent, recognizing a $1.9 million gain on sale. Proceeds were applied to pay down $32.0 million of borrowings ($30 million of repos and $2 million of FHLB advances) with a weighted average rate of 4.64 percent. The prepayment penalty for the pay down was $1.1 million. Thus, in addition to margin improvement, the net one-time gain from the deleveraging was $0.79 million.

 

Net interest income (FTE) for the fourth quarter of 2011 was $5.4 million, up $79,000, or 1.5 percent, from the fourth quarter of 2010. This growth was derived from an 11 basis point, or 2.9 percent, improvement in the net interest margin (FTE), to 3.87 percent, partially offset by a $7.6 million, or 1.35 percent, decline in average earning assets. For the fourth quarter of 2011, average earning assets comprised 87 percent of average assets compared to 82 percent for the prior-year fourth quarter. Compared to the third quarter, net interest income (FTE) declined 2.0 percent from the impact of an eleven basis point, or 2.8 percent, decline in the net interest margin (FTE) partially offset by a 0.8 percent growth in average earning assets.

 

Noninterest Income

 

Noninterest income was $13.9 million for the year ended December 31, 2011, a decline of $7.0 million, or 33.4 percent, from the $20.8 million reported for 2010. Excluding non-core items totaling 2.1 million and $0.33 million in 2011 and 2010, respectively, 2010 noninterest income from operations was $11.8 million, a decline of $8.7 million from the prior year. The following table provides a reconciliation of core and non-core items to noninterest income on a GAAP basis:

 

 

Reconciliation of Noninterest Income from Core to GAAP

 

		Three Months Ended																				Twelve Months Ended
		Dec. 31,				Sept. 30,				June 30,				March 31,				Dec. 31,				Dec. 31,				Dec. 31,
Noninterest Income*: (000’s)		2011				2011				2011				2011				2010				2011				2010
Data service fees			671				743				785				912				1,054				3,111				9,736
Trust fees			623				629				669				695				664				2,616				2,548
Customer service fees			647				664				640				581				615				2,531				2,461
Gain on sale of mortgage & OMSR’s			1,529				1,101				565				425				1,840				3,620				4,494
Gain on sale of non-mortgage loans			127				-				38				43				74				208				307
Mortgage loan servicing fees, net			(88	)			(25	)			123				139				(59	)			149				191
OMSR valuation adjustment			(221	)			(771	)			(127	)			-				660				(1,119	)			85
Other income			180				161				174				168				200				684				672
Core noninterest income			3,468				2,502				2,867				2,963				5,048				11,800				20,494
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)			46				27				160				100				40				333				200
Non-core noninterest income			46				27				(2,230	)			100				41				(2,057	)			(325	)
Total Noninterest Income (GAAP)			3,423				2,475				5,097				2,863				5,007				13,857				20,819

 

*Line items identified as (1) are reported in the financial statements of State Bank, while items identified as a (2) are part of RDSI

 

Among major non-core items, the $1.87 million gain on the sale of securities that originated as part of the deleveraging strategy accounted for the majority of 2011 non-core items; it was partially offset by a prepayment penalty of $1.08 million, resulting in a net gain of $0.79 million.

 

With respect to operating income, the loss of RDSI’s data processing fee income accounted for a $6.6 million decline in recurring fee income compared to 2010. The remaining $2.1 million decline reflects a lower level of mortgage banking revenue, both from a lower gain on mortgage sales and a more volatile mortgage banking environment that impacted servicing fee revenue. For the fourth quarter of 2011, core noninterest income was $3.47 million. Compared to the year-ago fourth quarter, core noninterest income declined $1.6 million or 31.3 percent.

 

Despite the loss of data processing fees, Rurban remains highly diversified for a bank of its asset size. Core noninterest income contributed 39.2 percent of 2011 core revenue; this compares to a 48.8 percent contribution for 2010.

 

 

Data Services

 

($000)			4Q 2011				3Q 2011				2Q 2011				1Q 2011				4Q 2010
Data Processing & Network Services			320				292				302				367				451
Payment Solutions			720				784				823				927				1,008
Contract Buyout											519
RDSI Gross Revenue			1,040				1,076				1,644				1,294				1,459
Less: Intercompany			(369	)			(333	)			(340	)			(382	)			(405	)
Net Data Services Fees		$	671			$	743			$	1,304			$	912			$	1,054

 

Gross revenue generated by RDSI, including services provided to Rurban/State Bank was $1.04 million for the fourth quarter of 2011, virtually unchanged from the previous quarter, but lower by $0.42 million compared to the year-ago fourth quarter where data processing clients were still deconverting. Net data services fees, excluding Rurban/State Bank intercompany transactions, were $0.67 million in the fourth quarter of 2011, down $0.38 million from the year-ago quarter.

 

Mortgage Banking

 

		Three Months Ended																				Twelve Months Ended
($000s)		Dec. 31, 2011				Sept 30,  2011				June 30,  2011				March 31,  2011				Dec. 31,  2010				Dec. 31, 2011				Dec. 31, 2010
Mortgage originations			85,114				68,989				38,099				28,005				90,268				220,208				239,162
Mortgage sales			81,046				56,438				30,017				29,999				79,059				197,800				226,243
Mortgage servicing portfolio			402,062				370,033				351,888				341,600				328,435				402,062				328,435
Mortgage servicing rights			2,820				2,709				3,294				3,316				3,190				2,820				3,190
Mortgage servicing revenue:
Loan servicing fees			242				226				217				209				191				894				608
Less: OMSR amortization			329				251				94				70				250				745				484
Net administrative fees			(88	)			(25	)			123				139				(59	)			149				124
Less: OMSR valuation adj.			221				771				127				-				(660	)			1,119				(85	)
Net loan servicing fees			(309	)			(796	)			(4	)			139				601				(970	)			209
Plus: Gain on sale of mortgages			1,529				1,101				565				425				1,840				3,620				4,494
Mortgage banking revenue, net		$	1,221			$	305			$	561			$	564			$	2,441			$	2,651			$	4,702

 

 

Rurban continues to aggressively seek mortgage originations throughout its Northwest Ohio and Northeast Indiana community franchise, as well as through its loan production office in Columbus, Ohio. For the twelve months of 2011, mortgage loan originations were $220.2 million, down $19 million, or 7.9 percent, from 2010’s record level of $239.2 million. The fourth quarter in both years contributed to strong full-year performance, with $85.1 million of residential mortgage loans originated in the 2011 fourth quarter compared to $90.3 million in 2010, a decline of $5.2 million, or 5.8 percent. However, Rurban retained in portfolio over 10 percent of mortgage loan originations in 2011, or $22.4 million, primarily jumbo loans to highly-qualified private banking clients, while in 2010, Rurban retained $13 million, or 5.4 percent of originations; as a result, mortgages sold declined $28.7 million, or 12.7 percent. Reflecting a change in the mix of mortgage loans sold, spreads on both the servicing retained and the loans sold were lower in 2011 compared to 2010. Rurban retains servicing on conventional mortgages but sells its servicing on all other types of mortgages. These two factors – a 12.7 percent decline in loans sold and an eight percent decline in spread income – lowered the gain on mortgage loans sold by 19.4 percent to $3.6 million for 2011 compared to $4.5 million in 2010.

 

 

The loan servicing portfolio at year-end 2011 was $402.1 million, up $73.6 million, or 22.4 percent, from year-end 2010. As a result of volatile market conditions, however, with declining interest rates and a high level of refinancing activity, the capitalized value of servicing rights declined 11.6 percent during the course of the year, to $2.8 million. Loan servicing fees, which average 25 basis points of the average servicing portfolio, were $0.89 million, up 47.2 percent from the $0.61 million reported in 2010. However, higher amortizations and valuation adjustments reduced the cash value of servicing fees to a negative $0.97 million in 2011 compared to income of $0.21 million in 2010, a negative swing of $1.18 million. Still, Rurban posted net mortgage banking revenue, consisting of gains on mortgage loan sales plus net servicing fees, of $2.65 million for 2011. Compared to 2010, mortgage banking revenue declined $2.1 million, or 43.6 percent, from the $4.7 million reported in 2010.

 

Loan Loss Provision

 

The loan loss provision was $2.0 million for 2011, a decline of $8.6 million from 2010. Excluding the $3 million provision related to an RDSI loan charged off in 2010, the provision declined $5.6 million, or 73.7 percent. The decreased provision expense reflects a 35 percent decline in nonaccruing loans over the past twelve months, and lower net charge-offs. The loan loss reserve at year-end 2011 was 1.48 percent of total loans, providing 82 percent coverage of nonaccruing loans at December 31, 2011; this compares to reserve coverage of 55 percent at year-end 2010. Nonaccruing loans declined by $4.3 million year over year, while net charge-offs, excluding the RDSI loan, declined by $5.4 million. For the fourth quarter of 2011, the $0.3 million provision compares to net charge-offs of like amount. For the fourth quarter of 2010, the provision was $1.8 million compared to net charge-offs of $1.5 million.

 

Noninterest Expense

 

Noninterest expense for 2011 was $29.6 million, a decline of $22.7 million, or 43.3 percent, from the $52.3 million reported for the 2010 period. Non-core expenses reported during the twelve months of 2011 were substantially reduced from 2010 levels: $1.7 million in 2011 compared to $14.1 million for the 2010 twelve-month period. Excluding these one-time or non-core items, noninterest expense from operations was $28.0 million in 2011, a decline of $10.2 million, or 26.8 percent. The following table provides a reconciliation of core and non-core items to noninterest expense on a GAAP basis.

 

 

Reconciliation of Noninterest Expense from Core to GAAP

 

		Three Months Ended																				Twelve Months Ended
		Dec. 31,				Sept. 30,				June 30,				March 31,				Dec. 31,				Dec. 31,				Dec. 31,
Noninterest Expense*: ($000s)		2011				2011				2011				2011				2010				2011				2010
Salaries and employee benefits			3,488				3,583				3,573				3,530				3,868				14,174				17,933
Occupancy & equipment expense			1,240				1,258				1,235				1,295				1,544				5,028				8,607
FDIC Insurance expense			191				145				254				318				461				908				1,137
Data processing fees			131				158				192				144				108				625				743
Professional fees			493				377				577				474				722				1,920				2,545
Credit administration and OREO exp			172				146				94				150				378				562				1,317
Employee expense			113				143				172				96				163				524				818
Other intangible amortization expense			157				185				197				197				200				737				801
Other expenses			783				828				1,021				856				1,431				3,488				4,306
Core Noninterest Expense		$	6,768			$	6,823			$	7,315			$	7,060			$	8,875			$	27,966			$	38,207
Non-Core Items
OREO Impairment (1)			214				-				-				-				757				214				972
Goodwill Impairment (2)			381				-				-				-				6273				381				6,273
Hardware impairment/ write-off (2)			-				-				-				-				-				-				2,792
Software impairment/ write-off (2)			-				-				-				-				-				-				3,247
FHLB/Repo Prepayment Penalties (1)			-				-				1,083				-				-				1,083				-
Contract write-off (2) **			-				-				-				-				-				-				193
New Core Loan write-off (2) **			-				-				-				-				-				-				624
Non-Core Noninterest Expense			595				-				1,083				-				7,030				1,678				14,101
Noninterest Expense (GAAP)		$	7,363			$	6,823			$	8,398			$	7,060			$	15,905			$	29,644			$	52,308

 

*	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

In addition to the $1.08 million prepayment penalty arising from the deleveraging transaction in June 2011, 2011 non-core charges were limited to $0.60 million of goodwill and OREO impairments recorded in the fourth quarter of 2011. This compares to $14.1 million of 2010 charges, of which RDSI accounted for $13.1 million.

 

Approximately half of the $10.2 million of 2011 operational savings reflect the continued downsizing of RDSI in response to the loss of its data processing business. Of the 32 FTE total staff reductions in 2011, 17 were from RDSI. More recent cost savings have been the result of efficiencies at the bank level; savings were derived in several areas, including employee and professional expenses, as well as from lower credit administration and OREO expense, which declined by $0.76 million over the past year. For the fourth quarter of 2011, noninterest expense from operations was $6.8 million, a decline of $2.1 million, or 23.7 percent, from the fourth quarter of 2010, and virtually unchanged from the third quarter of 2011. As a small community bank, State Bank is benefiting from FDIC premium reductions as a result of the Dodd-Frank legislation; the fourth quarter 2011 premium was $0.19 million, down $0.27 million from the year-ago quarter.

 

Balance Sheet

 

Total assets as of December 31, 2011 were $629.1 million, a decline of $31.2 million, or 5.0 percent, from year-end 2010. The deleveraging transactions completed during June of 2011 contributed to a $37 million decline in second quarter assets to $618.1 million, from $655 million at the March quarter-end. The investment securities portfolio declined $26.3 million, ending the June quarter at $108.5 million, while surplus cash declined by $27.6 million, to $10.5 million at June 30, 2011. Approximately $15 million of surplus cash was used to fund loan growth in the second quarter. Since June 30, 2011, Rurban’s assets increased by $11.0 million.

 

Loan Portfolio

($ in Thousands)		Dec. 2011				Sept. 2011				June 2011				March 2011				Dec. 2010				r YOY
Residential real estate		$	101,236			$	98,772			$	93,468			$	93,122			$	96,257
HELOC			38,013				38,569				38,950				38,077				38,681
Residential Real Estate			139,249				137,341				132,418				131,199				134,938			$	4,311
% of Total			31.5	%			31.3	%			30.3	%			31.1	%			31.6	%			3.2	%
Construction			16,563				15,992				19,538				17,658				16,177
Farmland			23,202				22,814				22,596				23,207				24,439
Commercial RE – owner occupied			70,615				70,432				72,172				67,602				65,552
Commercial RE – investor owned			90,896				89,772				90,460				87,833				86,956
Commercial Real Estate			201,276				199,010				204,766				196,300				193,124			$	8,152
% of Total			45.5	%			45.3	%			46.8	%			46.5	%			45.2	%			4.2	%
Total Real Estate-Related			340,525				336,351				337,184				327,499				328,062			$	12,463
% of Total			77.0	%			76.6	%			77.1	%			77.6	%			76.7	%			3.8	%
Commercial & Industrial			73,770				72,622				70,741				67,551				69,510
Agriculture			14,997				15,787				15,858				13,999				16,390
Commercial, Non RE			88,767				88,409				86,599				81,550				85,900			$	2,867
% of Total			20.0	%			20.1	%			19.8	%			19.3	%			20.1	%			3.3	%
Consumer			8,863				9,475				9,891				9,961				10,653
Other			4,399				4,691				3,877				3,156				2,929
% Total Loans		$	442,554			$	438,926			$	437,551			$	422,166			$	427,544			$	15,010
% of Total			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			3.5	%
Loans held for sale		$	5,238			$	10,590			$	7,211			$	5,424			$	9,055

Total loans held for investment (HFI) were $442.6 million at December 31, 2011, compared to $427.5 million at the prior year-end, up $15.0 million, or 3.4 percent. Real estate loans accounted for the majority of growth, namely, commercial real estate (“CRE”), up $8.2 million, or 4.2 percent, and residential mortgages, up $4.3 million, or 3.2 percent. Commercial & Industrial (“C&I”) loans increased by $2.9 million, or 3.3 percent.

 

The Bank’s loan portfolio is well-diversified. Approximately $201 million, or 45.5 percent, consists of commercial real estate loans, primarily owner-occupied CRE (16.0 percent of total loans) and investor-owned CRE (20.6 percent of total loans). Its portfolio of 1-4 family residential real estate loans (1^st & 2^nd) currently stands at $139 million, or 31.5 percent of total loans. This segment grew by approximately $4.3 million since December 31, 2010 primarily as a result of State Bank’s successful initiative to cross-sell its jumbo mortgage product to its private banking clients.

 

  

Total deposits as of December 31, 2011 were $518.8 million, higher by $3.1 million than at year-end 2010. As a result of the balance sheet deleveraging, combined with lower cash reserves, State Bank was able to reduce higher cost repos and FHLB advances by $37.0 million since the prior-year fourth quarter; they now stand at $31.6 million.

 

Asset Quality

 

The quality of Rurban’s loan portfolio has remained strong throughout the current credit cycle. Rurban continues to improve on its performance, reporting nonaccruing assets of $10.0 million for the current quarter, which were lower by $4.0 million, or 29.1 percent, than the prior year-end. Accruing restructured loans totaled $1.3 million, substantially unchanged from December 31, 2010. However, recent 30-89 day delinquencies increased by $1.2 million above the third quarter 2011 level, primarily from delinquent residential real estate loans; they now stand at $2.0 million compared to $1.6 million at year-end 2010.

 

Summary of Nonperforming Assets 

 

($ in Thousands)

 

Nonperforming Loan Category		Dec. 2011				Sept. 2011				June 2011				March 2011				Dec. 2010
Residential RE loans			3,033				2,547				2,809				3,666				3,759
% of Total Res. RE loans			2.18	%			1.85	%			2.12	%			2.79	%			2.79	%
Commercial RE loans			1,456				2,297				2,707				5,422				5,429
% of Total CRE loans			0.72	%			1.15	%			1.32	%			2.76	%			2.81	%
Non-RE Commercial loans			3,475				2,466				2,507				2,950				3,032
% of Total Commercial, Non RE loans			3.93	%			2.79	%			2.89	%			3.62	%			3.53	%
Consumer & Other			18				21				50				82				64
Total Nonaccruing Loans (1)			7,964				7,331				8,073				12,121				12,283
% of Total Loans			1.80	%			1.67	%			1.85	%			2.87	%			2.87	%
Accruing Restructured Loans (2)			1,334				1,311				1,312				1,229				1,107
Loans 90+ days Past Due			-				-				-				-				-
Total Nonperforming Loans		$	9,299			$	8,642			$	9,386			$	13,350			$	13,390
% of Total Loans			2.10	%			1.97	%			2.15	%			3.16	%			3.13	%
OREO & Repossessed Vehicles			1,830				1,970				2,056				924				1,538
Total Nonperforming Assets		$	11,129			$	10,612			$	11,442			$	14,273			$	14,929
% of Total Assets			1.77	%			1.70	%			1.85	%			2.18	%			2.26	%

 

(1)	Includes $3.20 million of restructured loans on nonaccruing status at December 31, 2011.
(2)	Accruing restructured loans at December 31, 2011 consist primarily of residential and commercial real estate loans that have been modified and are performing in accordance with those modified terms.

  

 

Progress with the resolution of CRE loans more than offset the recent setback with respect to residential and C&I nonaccruals, accounting for the majority of the year over year improvement in the nonaccrual portfolio. By year-end 2011, only 0.7 percent of CRE loans were on nonaccrual status compared to 2.81 percent at the prior year-end, an improvement of $4.0 million, or 72 percent. Currently, State Bank has only four nonperforming relationships that exceed $1.0 million; together, they account for $5.4 million, or 55 percent, of nonaccruing assets.

NONPERFORMING ASSET RECONCILIATION

		December 31,				September 30,				June 30,				March 31,
($ in Thousands)		2011				2011				2011				2011
Beginning Balance		$	10,612			$	11,442			$	14,273			$	14,929
Additions			2,258				432				289				1,076
Returns to performing status			(169	)			(206	)			(352	)			(83	)
Principal payments			(375	)			(280	)			(842	)			(118	)
Sale of OREO/OAO			(358	)			(246	)			(416	)			(1,014	)
Loan charge-offs			(648	)			(527	)			(1,593	)			(639	)
Valuation write-downs			(214	)			-				-				-
Restructured Loan Activity			23				(1	)			83				122
Net Change			517				(828	)			(2,831	)			(656	)
Total		$	11,129			$	10,612			$	11,442			$	14,273

Capitalization

 

As of December 31, 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 8.01 percent of total assets, a substantial improvement from the 6.90 percent reported at year-end 2010. The Total Risk-Based Capital ratio was 12.01 percent of risk-weighted assets, with the Tier 1 Risk-Based Capital ratio at 10.76 percent.

 

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, 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.

 

Contact Information:

At Rurban Financial Corp.:

Anthony V. Cosentino, CFO

419-785-3663

Tony.Cosentino@thebank-sbt.com

RURBAN FINANCIAL CORP. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - (Unaudited)

 

		December				September				June				March				December
		2011				2011				2011				2011				2010
ASSETS
Cash and due from banks		$	14,846,362				13,764,025			$	10,485,573			$	38,090,470			$	30,417,813
Investment Securities:
Securities available for sale, at fair value			111,977,673				104,614,877				104,769,578				131,052,629				132,762,058
Non-marketable securities - FRB and FHLB Stock			3,685,100				3,748,250				3,748,250				3,748,250				3,748,250
Total investment securities			115,662,773				108,363,127				108,517,828				134,800,879				136,510,308
Loans held for sale			5,237,914				10,589,706				7,211,433				5,423,901				9,055,268
Loans, net of unearned income			442,554,386				438,926,037				437,550,602				422,166,393				427,544,414
Allowance for loan losses			(6,529,208	)			(6,235,230	)			(6,443,873	)			(6,593,279	)			(6,715,397	)
Net loans			436,025,178				432,690,807				431,106,729				415,573,114				420,829,017
Premises and equipment, net			13,800,607				14,120,118				14,359,437				14,361,382				14,622,541
Purchased software			739,962				805,286				874,954				947,061				1,021,036
Cash surrender value of life insurance			12,223,931				12,133,693				12,041,915				11,951,006				13,211,247
Goodwill			16,353,082				16,733,830				16,733,830				16,733,830				16,733,830
Core deposits and other intangibles			1,848,550				2,005,945				2,190,707				2,387,920				2,585,132
Foreclosed assets held for sale, net			1,830,288				1,970,028				2,056,046				923,685				1,538,307
Mortgage servicing rights			2,819,939				2,709,222				3,294,494				3,316,228				3,190,389
Accrued interest receivable			1,635,322				2,061,201				1,958,748				2,363,645				2,068,965
Other assets			6,041,424				5,846,400				7,229,610				8,094,889				8,503,832
Total assets		$	629,065,332				623,793,388			$	618,061,304			$	654,968,010			$	660,287,685
LIABILITIES AND EQUITY
Deposits
Non interest bearing demand		$	65,963,133				62,079,685			$	59,650,822			$	64,027,818			$	62,745,906
Interest bearing demand			107,445,961				103,229,318				101,972,099				107,940,091				105,708,472
Savings			49,665,067				48,145,958				48,771,404				48,983,184				47,662,315
Money market			74,243,505				79,163,033				72,822,730				77,481,943				84,635,537
Time deposits			221,447,059				221,730,681				212,652,611				214,528,353				214,925,512
Total deposits			518,764,725				514,348,675				495,869,666				512,961,389				515,677,742
Notes payable			2,788,123				2,865,123				3,142,048				3,218,211				3,290,471
Advances from Federal Home Loan Bank			12,775,866				12,939,598				24,602,002				16,679,942				22,807,351
Fed funds purchased			-				-				2,000,000				-				-
Repurchase agreements			18,778,522				18,777,909				19,866,731				49,499,424				45,785,254
Trust preferred securities			20,620,000				20,620,000				20,620,000				20,620,000				20,620,000
Accrued interest payable			2,953,541				2,704,466				2,391,743				2,195,926				1,971,587
Other liabilities			4,051,301				3,985,333				3,555,204				3,528,328				4,111,182
Total liabilities			580,732,078				576,241,104				572,047,394				608,703,220				614,263,587
Equity
Preferred stock			-				-				-				N/A				N/A
Common stock			12,568,583				12,568,583				12,568,583				12,568,583				12,568,583
Additional paid-in capital			15,323,182				15,302,194				15,280,945				15,258,113				15,235,206
Retained earnings			20,867,671				20,192,317				19,589,825				18,813,030				18,802,106
Accumulated other comprehensive income			1,343,129				1,258,501				343,868				1,394,375				1,187,514
Treasury stock			(1,769,311	)			(1,769,311	)			(1,769,311	)			(1,769,311	)			(1,769,311	)
Total equity			48,333,254				47,552,284				46,013,910				46,264,790				46,024,098
Total liabilities and equity		$	629,065,332				623,793,388			$	618,061,304			$	654,968,010			$	660,287,685

RURBAN FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATION - (Unaudited) 

		Three Months Ended																				Twelve Months Ended
		December				September				June				March				December				December				December
		2011				2011				2011				2011				2010				2011				2010
Interest income
Loans
Taxable		$	6,171,295				6,250,747			$	6,170,234			$	5,852,367			$	6,396,391			$	24,444,643			$	25,838,773
Nontaxable			24,133				24,140				14,930				11,494				12,761				74,697				62,721
Securities
Taxable			386,539				446,342				566,609				610,524				587,516				2,010,014				2,266,719
Nontaxable			169,622				171,739				301,556				335,969				339,436				978,886				1,395,143
Other			598				56				3				83				48				740				260
Total interest income			6,752,187				6,893,024				7,053,332				6,810,437				7,336,152				27,508,980				29,563,616
Interest expense
Deposits			945,977				976,336				1,010,170				1,049,393				1,187,283				3,981,876				5,123,015
Other borrowings			22,416				24,691				24,457				24,629				19,043				96,193				120,188
Repurchase Agreements			70,413				71,900				344,215				425,519				435,234				912,047				1,731,227
Federal Home Loan Bank advances			76,823				79,033				113,379				133,016				220,712				402,251				1,093,659
Trust preferred securities			357,791				355,632				347,713				344,578				355,304				1,405,714				1,533,806
Total interest expense			1,473,420				1,507,592				1,839,934				1,977,135				2,217,576				6,798,081				9,601,895
Net interest income			5,278,767				5,385,432				5,213,398				4,833,302				5,118,576				20,710,899				19,961,721
Provision for loan losses			299,040				297,368				898,440				498,840				1,798,890				1,993,688				10,587,603
Net interest income after provision
for loan losses			4,979,727				5,088,064				4,314,958				4,334,462				3,319,686				18,717,211				9,374,118
Noninterest income
Data service fees			670,563				743,114				1,303,658				912,254				1,053,841				3,629,589				9,736,416
Trust fees			623,018				628,994				669,161				695,321				663,705				2,616,494				2,547,699
Customer service fees			646,579				663,691				640,151				580,942				614,572				2,531,363				2,460,733
Gain on sale of mortgage loans and OMSR's			1,529,365				1,100,557				565,049				425,130				1,839,977				3,620,101				4,493,671
Mortgage loan servicing fees, net			(308,414	)			(795,995	)			(4,042	)			138,927				600,456				(969,524	)			276,568
Gain on sale of non-mortgage loans			127,211				-				37,644				42,779				74,070				207,634				307,141
Net realized gain (loss) on sales of securities			-				-				1,871,387				-				(589	)			1,871,387				450,885
Investment securities recoveries			-				-				-				-				-				-				73,774
Loss on sale or disposal of assets			(45,810	)			(26,816	)			(160,453	)			(100,209	)			(40,837	)			(333,288	)			(199,903	)
Other income			180,150				161,377				174,410				167,682				201,435				683,619				671,839
Total non-interest income			3,422,662				2,474,922				5,096,965				2,862,826				5,006,630				13,857,375				20,818,823
Noninterest expense
Salaries and employee benefits			3,487,829				3,582,982				3,573,103				3,530,106				3,867,605				14,174,020				17,932,196
Net occupancy expense			531,449				568,173				517,414				584,057				533,362				2,201,093				2,172,749
Equipment expense			708,653				689,662				717,826				711,051				1,010,194				2,827,192				6,433,537
FDIC insurance expense			191,471				145,261				253,939				317,639				461,153				908,310				1,137,615
Software impairment expense			-				-				-				-				-				-				4,892,231
Data processing fees			131,291				157,686				191,801				143,744				108,145				624,522				743,538
Professional fees			492,653				377,322				576,752				473,536				722,103				1,920,263				2,545,552
Marketing expense			92,743				89,192				89,892				55,976				125,754				327,803				455,967
Printing and office supplies			52,073				86,071				118,516				76,148				83,860				332,808				453,702
Telephone and communication			139,375				140,995				143,366				156,640				198,606				580,376				1,191,497
Postage and delivery expense			235,227				260,477				258,621				344,309				333,016				1,098,634				1,748,545
State, local and other taxes			76,893				102,577				133,988				143,568				424,838				457,026				543,673
Employee expense			113,393				143,355				171,801				95,884				163,407				524,433				818,375
Goodwill Impairment			380,748				-				-				-				4,680,960				380,748				4,680,960
Other intangible amortization expense			157,396				184,763				197,212				197,212				1,791,979				736,583				2,392,591
OREO Impairment			214,200				-				-				-				756,517				214,200				971,517
Other expenses			357,573				294,621				1,454,047				229,821				643,454				2,336,062				3,194,201
Total non-interest expense			7,362,967				6,823,137				8,398,278				7,059,691				15,904,953				29,644,073				52,308,446
Income (loss) before income tax expense			1,039,422				739,849				1,013,645				137,597				(7,578,637	)			2,930,513				(22,115,505	)
Income tax expense (benefit)			364,068				137,356				236,852				126,672				(994,341	)			864,948				(6,502,295	)
Net income (loss)		$	675,354				602,493			$	776,793			$	10,925			$	(6,584,296	)		$	2,065,565			$	(15,613,210	)
Common share data:
Basic earnings (loss) per common share		$	0.14				0.12			$	0.16			$	0.00			$	(1.35	)		$	0.42			$	(3.21	)
Diluted earnings (loss) per common share		$	0.14				0.12			$	0.16			$	0.00			$	(1.35	)		$	0.42			$	(3.21	)
Average shares outstanding:
Basic:			4,861,779				4,861,779				4,861,779				4,861,779				4,861,779				4,861,779				4,861,779
Diluted:			4,861,779				4,861,779				4,861,779				4,861,779				4,861,779				4,861,779				4,861,779

 

RURBAN FINANCIAL CORP.

CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)

 

($ in thousands except per share data)		Three Months Ended																				Twelve Months Ended
		December				September				June				March				December				December				December
SUMMARY OF OPERATIONS		2011				2011				2011				2011				2010				2011				2010
Net interest income		$	5,279				5,385				5,213				4,833				5,119				20,711				19,962
Less: Non core item		$	-				-				-				-				-				-				(130	)
Tax-equivalent adjustment		$	100				101				163				179				181				543				751
Tax-equivalent net interest income (core)		$	5,379				5,486				5,376				5,012				5,300				21,254				20,583
Provision for loan loss		$	299				297				898				499				1,799				1,994				10,588
Less: Non core RDSI item		$	-				-				-				-				-				-				3,000
Core provision for loan loss		$	299				297				898				499				1,799				1,994				7,588
Noninterest income		$	3,423				2,475				5,097				2,863				5,007				13,857				20,819
Less: Non core items		$	46				27				(2,230	)			100				41				(2,057	)			(325	)
Core noninterest income		$	3,468				2,502				2,867				2,963				5,048				11,800				20,494
Total revenue, tax-equivalent		$	8,801				7,961				10,473				7,875				10,307				35,111				41,401
Core revenue, tax-equivalent		$	8,847				7,988				8,243				7,975				10,348				33,054				41,077
Noninterest expense		$	7,363				6,823				8,398				7,060				15,905				29,644				52,308
Less: Non core items		$	595				-				1,083				-				7,030				1,678				14,101
Core noninterest expense		$	6,768				6,823				7,315				7,060				8,875				27,966				38,207
Pre provision pretax income (loss)		$	1,338				1,037				1,912				636				(5,780	)			4,924				(11,528	)
Core pre provision pretax income		$	1,979				1,064				765				737				1,292				4,545				2,118
Pretax income (loss)		$	1,039				740				1,014				138				(7,579	)			2,931				(22,116	)
Net income (loss)		$	675				602				777				11				(6,584	)			2,066				(15,613	)
Core earnings (loss) after tax		$	1,098				620				20				77				(1,917	)			1,815				(4,455	)
PER SHARE INFORMATION:
Basic & diluted earnings		$	0.14				0.12				0.16				0.00				(1.35	)			0.42				(3.21	)
Core earnings		$	0.23				0.13				0.00				0.02				(0.39	)			0.37				(0.92	)
Book value per common share		$	9.94				9.78				9.46				9.52				9.47				9.94				9.47
PERFORMANCE RATIOS:
Return on average assets			0.42	%			0.38	%			0.48	%			0.01	%			(3.83	)%			0.32	%			(2.32	)%
Core return on average assets			0.69	%			0.40	%			0.01	%			0.05	%			(1.12	)%			0.28	%			(0.66	)%
Return on average common equity			5.63	%			5.12	%			6.66	%			0.09	%			(49.25	)%			4.39	%			(27.26	)%
Core return on avg. tangible common equity			14.99	%			8.78	%			0.29	%			1.14	%			(27.60	)%			6.55	%			(13.75	)%
Earning asset yield			4.93	%			5.07	%			5.14	%			5.04	%			5.34	%			5.03	%			5.37	%
Cost of interest bearing liabilities			1.15	%			1.19	%			1.39	%			1.46	%			1.59	%			1.30	%			1.76	%
Core efficiency ratio			74.72	%			83.10	%			86.35	%			86.05	%			83.86	%			82.38	%			91.09	%
Core noninterest expense/average assets			4.25	%			4.35	%			4.51	%			4.27	%			5.17	%			4.35	%			5.67	%
Core noninterest income/operating revenue			39.41	%			31.42	%			27.37	%			37.63	%			48.98	%			33.61	%			49.50	%
Net interest margin			3.80	%			3.90	%			3.71	%			3.48	%			3.63	%			3.71	%			3.54	%
Tax equivalent effect			0.07	%			0.08	%			0.12	%			0.13	%			0.13	%			0.10	%			0.13	%
Net interest margin - fully tax equivalent basis			3.87	%			3.98	%			3.83	%			3.61	%			3.76	%			3.81	%			3.67	%
ASSET QUALITY RATIOS:
Gross charge-offs		$	948				527				1,593				639				1,591				3,706				11,334
Recoveries		$	642				21				545				18				56				1,226				432
Net charge-offs		$	306				506				1,048				621				1,535				2,481				10,901
Nonaccruing loans/total loans			1.80	%			1.67	%			1.85	%			2.87	%			2.87	%			1.80	%			2.87	%
Nonperforming loans/total loans			2.10	%			1.97	%			2.15	%			3.16	%			3.13	%			2.10	%			3.13	%
Nonaccruing assets/ loans & OREO			2.20	%			2.11	%			2.30	%			3.08	%			3.22	%			2.20	%			3.22	%
Nonperforming assets/total assets			1.77	%			1.70	%			1.85	%			2.18	%			2.26	%			1.77	%			2.26	%
Allowance for loan loss/nonaccruing loans			81.98	%			85.05	%			79.82	%			54.40	%			54.67	%			81.98	%			54.67	%
Allowance for loan loss/total loans			1.48	%			1.42	%			1.47	%			1.56	%			1.57	%			1.48	%			1.57	%
Net loan charge-offs/average loans (ann.)			0.28	%			0.46	%			0.97	%			0.59	%			1.44	%			0.57	%			1.81	%
Loan loss provision/net charge-offs			97.82	%			58.77	%			85.74	%			80.33	%			117.20	%			80.37	%			97.12	%
CAPITAL & LIQUDITY RATIOS:
Loans/Deposits			85.31	%			85.34	%			88.24	%			82.30	%			82.91	%			85.31	%			82.91	%
Equity/Assets			7.68	%			7.62	%			7.44	%			7.06	%			6.97	%			7.68	%			6.97	%
Tangible equity/Tangible assets			4.93	%			4.76	%			4.52	%			4.27	%			4.17	%			4.93	%			4.17	%
State Bank & Trust:
Total risk-based capital ratio			12.01	%			11.85	%			11.89	%			11.97	%			11.69	%			12.01	%			11.69	%
Tier 1 leverage risk-based capital ratio			10.76	%			10.60	%			10.64	%			10.71	%			10.44	%			10.76	%			10.44	%
Tier 1 leverage capital ratio			8.01	%			7.95	%			7.54	%			7.24	%			6.90	%			8.01	%			6.90	%
END OF PERIOD BALANCES
Total loans		$	442,554				438,926				437,551				422,166				427,544				442,554				427,544
Total assets		$	629,065				623,793				618,061				654,968				660,288				629,065				660,288
Deposits		$	518,765				514,349				495,870				512,961				515,678				518,765				515,678
Stockholders equity		$	48,333				47,552				46,014				46,265				46,024				48,333				46,024
Tangible equity		$	30,132				28,813				27,089				27,143				26,705				30,132				26,705
Full-time equivalent employees			210				215				228				227				242				210				242
Period-end common shares outstanding			4,862				4,862				4,862				4,862				4,862				4,862				4,862
AVERAGE BALANCES
Total loans		$	437,020				437,744				430,363				422,519				426,629				431,965				436,711
Total earning assets		$	556,004				551,744				561,353				554,975				563,609				558,022				564,556
Total assets		$	636,932				627,291				648,681				661,621				687,058				643,528				673,781
Deposits		$	522,472				512,190				510,591				520,045				534,168				516,281				509,783
Stockholders equity		$	47,972				47,087				46,629				46,229				53,478				47,035				57,281

 

RURBAN FINANCIAL CORP.

Rate Volume Analysis

 

   For the Three and Twelve Months Ended December 31, 2011 and 2010 (unaudited)

 

($ in Thousands)		Three Months Ended December 31, 2011												Three Months Ended December 31, 2010
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
Assets
Taxable securities		$	93,999				387				1.64	%		$	96,921				588				2.42	%
Non-taxable securities			15,235				257				6.75	%			30,862				514				6.67	%
Federal funds sold			870				1				0.26	%			-				-				N/A
Loans, net			445,900				6,208				5.57	%			435,825				6,416				5.89	%
Total earning assets		$	556,004				6,852				4.93	%		$	563,609				7,518				5.34	%
Cash and due from banks			22,965												53,780
Allowance for loan losses			(6,161	)											(6,640	)
Premises and equipment			16,699												17,555
Other assets			47,425												58,755
Total assets		$	636,932											$	687,058
Liabilities
Savings and interest-bearing demand		$	233,149				57				0.10	%		$	242,881				209				0.34	%
Time deposits			223,179				889				1.59	%			221,936				978				1.76	%
Repurchase agreements			18,711				70				1.51	%			47,724				435				3.65	%
Advances from FHLB			12,832				77				2.39	%			24,474				221				3.61	%
Junior subordinated debentures			20,620				358				6.94	%			20,620				355				6.89	%
Notes payable & other borrowed funds			2,824				22				3.17	%			1,586				19				4.80	%
Total interest-bearing liabilities		$	511,314				1,473				1.15	%		$	559,221				2,218				1.59	%
Non interest-bearing demand			66,144												69,351
Other liabilities			11,501												5,008
Total liabilities			588,959												633,580
Equity		$	47,972											$	53,478
Total liabilities and equity		$	636,932											$	687,058
Net interest income (tax equivalent basis)						$	5,379											$	5,300
Net interest income as a percent of average interest-earning assets											3.87	%											3.76	%

 

		Twelve Months Ended December 31, 2011												Twelve Months Ended December 31, 2010
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
Assets
Taxable securities		$	97,528				2,010				2.06	%		$	84,452				2,267				2.68	%
Non-taxable securities			21,892				1,483				6.77	%			31,895				2,114				6.63	%
Federal funds sold			219				1				0.25	%			-				-				N/A
Loans, net			438,383				24,558				5.60	%			448,209				25,934				5.79	%
Total earning assets		$	558,022				28,052				5.03	%		$	564,556				30,314				5.37	%
Cash and due from banks			26,477												43,024
Allowance for loan losses			(6,534	)											(6,913	)
Premises and equipment			16,797												20,336
Other assets			48,766												52,777
			-
Total assets		$	643,528											$	673,781
Liabilities
Savings and interest-bearing demand		$	234,497				182				0.08	%		$	231,294				622				0.27	%
Time deposits			217,546				3,800				1.75	%			215,668				4,501				2.09	%
Repurchase agreements			31,307				912				2.91	%			47,755				1,731				3.63	%
Advances from FHLB			15,674				402				2.57	%			28,313				1,094				3.86	%
Junior subordinated debentures			20,620				1,406				6.82	%			20,620				1,534				7.44	%
Notes payable & other borrowed funds			3,085				96				3.12	%			2,336				120				5.14	%
Total interest-bearing liabilities		$	522,728				6,798				1.30	%		$	545,987				9,602				1.76	%
Non interest-bearing demand			64,239												62,821
Other liabilities			9,526												7,693
Total liabilities			596,493												616,500
Equity		$	47,035											$	57,281
Total liabilities and equity		$	643,528											$	673,781
Net interest income (tax equivalent basis)						$	21,253											$	20,712
Net interest income as a percent of average interest-earning assets											3.81	%											3.67	%

Rurban Financial Corp.

Segment Reporting - Three Months Ended December 31, 2011 (unaudited)

 

($ in Thousands)		Banking				Parent Company and Other				Total Banking, Parent and Other				Data Services				Elimination Entries				Rurban Financial Corp.
Income Statement Measures
Interest income		$	6,772				30				6,802				-				(50	)			6,752
Interest expense			1,094				358				1,452				71				(50	)			1,473
Net interest income			5,678				(328	)			5,350				(71	)			-				5,279
Provision for loan loss			299				-				299				-				-				299
Non-interest income			2,821				42				2,863				698				(139	)			3,422
Non-interest expense			5,795				408				6,203				1,605				(445	)			7,363
Net income - QTD		$	1,648				(503	)			1,145				(776	)			306				675
Performance Measures
Average  assets - QTD		$	628,911				-				632,383				4,549				-				636,932
Return on average assets			1.05	%			-				0.72	%			-68.23	%			-				0.42	%
Average equity - QTD		$	68,841				-				47,972				(1,221	)			-				47,972
Return on average equity			9.58	%			-				9.55	%			-				-				5.63	%
Average loans - QTD		$	447,294				2,000				449,294				-				(3,394	)			445,900
Average deposits - QTD		$	523,868				-				523,868				-				(1,396	)			522,472

   

Rurban Financial Corp.

Segment Reporting - Twelve Months Ended December 31, 2011 (unaudited)

 

		Banking				Parent Company and Other				Total Banking, Parent and Other				Data Services				Elimination Entries				Rurban Financial Corp.
Income Statement Measures
Interest income		$	27,598				120				27,718				-				(209	)			27,509
Interest expense			5,297				1,406				6,703				304				(209	)			6,798
Net interest income			22,301				(1,286	)			21,015				(304	)			-				20,711
Provision for loan loss			1,994				-				1,994				-				-				1,994
Non-interest income			10,487				178				10,665				4,720				(1,528	)			13,857
Non-interest expense			24,172				1,580				25,752				5,726				(1,834	)			29,644
Net income - YTD		$	4,799				(2,045	)			2,754				(995	)			306				2,065
Performance Measures
Average  assets - YTD		$	635,249				-				637,411				6,117								643,528
Return on average assets			1.01	%			-				0.58	%			-21.69	%			-				0.32	%
Average equity - YTD		$	67,489				-				47,035				(982	)			-				47,035
Return on average equity			9.48	%			-				7.81	%			-				-				4.39	%
Average loans - YTD		$	439,933				2,000				441,933				-				(3,550	)			438,383
Average deposits - YTD		$	517,360				-				517,360				-				(1,079	)			516,281

RURBAN FINANCIAL CORP.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

 

		Three Months Ended																				Twelve Months Ended
		December				September				June				March				December				December				December
($ in Thousands)		2011				2011				2011				2011				2010				2011				2010
GAAP Earnings		$	675				602				777				11				(6,584	)			2,066				(15,613	)
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)			46				27				160				100				41				333				200
OREO writedown (1)			214				-				-				-				757				214				972
(Gains)/losses on sales of assets (2)			-				-				-				-				-				-				-
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)			381				-				-				-				6,273				381				6,273
Total non-core Items			641				27				(1,147	)			100				7,071				(379	)			16,907
Applicable income tax effect on non-core Items			(218	)			(9	)			390				(34	)			(2,404	)			129				(5,748	)
After-tax non core Items			423				18				(757	)			66				4,667				(250	)			11,158
Core recurring net income			1,098				620				20				77				(1,917	)			1,815				(4,455	)
(1) State Bank & Trust
(2) RDSI