Exhibit 99.1
Investor Contact:Valda Colbart, 419-784-2759, rfcinv@rurban.net
Rurban Financial Corp. Reports Third Quarter 2006 Earnings of $814,000, Up
65.3% over Third Quarter 2005
DEFIANCE, Ohio, October 18, 2006 — Rurban Financial Corp. (Nasdaq: RBNF), a diversified provider of full-service community banking, investment management, trust services and bank data processing, today reported third quarter 2006 earnings. Highlights of the quarter include:
| • | | Net income of $814,000, up $322,000 or 65.3 percent, compared with net income of $492,000 reported for the third quarter of 2005. Diluted earnings per share were $0.16 for the current quarter, up 45.5 percent from $0.11 reported for the 2005 third quarter; average diluted shares outstanding increased 10.0 percent year-over-year. |
| |
| • | | Consolidated non-performing assets at 2006 third quarter-end, including RFCBC, the loan workout subsidiary, were $6.1 million or 1.07 percent of total assets, compared with $15.0 million or 3.43 percent of assets for the prior-year third quarter. |
| |
| • | | On October 10th, Rurban announced that it filed an application to open a full-service banking center in Fort Wayne, Indiana where it presently has a Loan Production Office. |
| |
| • | | Since January 1, 2006, Rurban’s Banking Group, consisting of The State Bank and Trust Company and The Exchange Bank, reported organic loan growth of $37.3 million, or 11.4 percent (15.2 percent annualized). Deposit growth since year-end 2005 was $27.3 million or 7.1 percent (9.5 percent annualized). |
| |
| • | | The Company’s efficiency ratio was 88.15 percent for the consolidated entity. The efficiency of the Banking Group continues to reduce from 93.53 percent a year-ago to 84.01 percent for the current quarter. |
| |
| • | | RDSI, the data processing subsidiary, reported a strong quarter with revenue of $4.1 million, up 22.3 percent from third quarter last year. Net income of $478,000 was $187,000 or 64.3 percent higher. RDSI completed its acquisition of Lansing, Michigan based Diverse Computer Marketers (DCM) on September 2, 2006. DCM will operate as a subsidiary of RDSI. |
Kenneth A. Joyce, President and Chief Executive Officer, commented, “We continue to make progress as a result of the initiatives we began in 2005. Rurban had solid core earnings for three consecutive quarters and the expense of the expansion initiatives has been moderating throughout 2006. We believe we are now positioned to achieve greater growth and profitability as we take Rurban into new markets and products.”
| | | | | | | | | | | | | |
| Earnings: (Three months ended) | | Sept. 2006 | | | Dec. 2005 | | | Sept. 2005 | |
| (Dollars in thousands except per share data) | | | | | | | | | | | | |
| Diluted EPS | | $ | 0.16 | | | $ | (0.08 | ) | | $ | 0.11 | |
| Net interest income | | | 3,756 | | | | 3,147 | | | | 2,982 | |
| Provision (credit) for loan losses | | | 35 | | | | 613 | | | | (382 | ) |
| Non-interest income | | | 5,903 | | | | 4,477 | | | | 4,595 | |
| Non-interest expense | | | 8,515 | | | | 7,632 | | | | 7,219 | |
| Net income (loss) | | | 814 | | | | (344 | ) | | | 492 | |
CONSOLIDATED RESULTS
Total revenue, consisting of net interest income plus non-interest income, was $9.7 million for the third quarter of 2006, up $2.1 million or 27.5 percent, compared with $7.6 million for the prior-year third quarter. Net interest income was $3.8 million, up $773,000 or 25.9 percent, from the 2005 third quarter. Average earning assets rose $110.0 million or 27.7 percent over the 12-month period, of which approximately $72.9 million was derived from the acquisition of Exchange Bank at year-end 2005. Year-over-year, the net interest margin was unchanged at 3.10 percent; the $8.9 million decline in non-performing assets over the course of the year, combined with a lower cost of funds from deposits acquired in the Exchange Bank acquisition, and the approximately $60.4 million in deposits from the two branches purchased in the Lima market in June of 2005, were offset by rising funding costs, which gradually eroded the interest margin from its first quarter 2006 high of 3.37 percent.
Non-interest income was $5.9 million for the third quarter of 2006 compared with $4.6 million for the prior-year third quarter, an increase of $1.3 million or 28.5 percent. RDSI, Rurban’s data processing subsidiary, accounts for approximately $4.1 million or 69.2 percent of non-interest income and 56.7 percent of the growth; the remainder was derived from mortgage banking activities ($254,000 from gains on sale) and a swing of $61,900 from the sale of OREOs, partially offset by a $34,000 lower level of securities gains than last year. The quarter was also impacted by a $265,000 increase in other income, which was driven by the payments on impaired loans and the sale of previously charged-off loans at Exchange Bank.
Revenue for the quarter continued to grow faster than non-interest expense; year-over-year expense growth was $1.3 million or 17.9 percent compared with revenue growth of $2.1 million or 27.5 percent. The $1.3 million expense increase was primarily due to the addition of Exchange Bank’s $1.2 million of operating expenses, partially offset by a $438,000 improvement in State Bank’s operating expenses since the acquisition of the Lima branches in the second quarter of 2005.
Mr. Joyce continued, “Asset quality continues to improve. The decisive steps we took at year-end 2005 to sell $8.4 million of problem loans and add to reserves were a turning point on our road to recovery. With fewer troubled assets, we could devote ourselves to building a profitable financial institution. We have continued to reduce non-performing assets over the past year from $15.0 million or 3.43 percent of assets to a current level of
$6.1 million or 1.07 percent of assets, and the negative financial impact on Rurban has declined commensurately. We are working hard to reduce the remaining non-performing assets to a level consistent with our peers. With every quarter, we get closer to meeting our Ohio peer banks at around 60 to 65 basis points.”
| | | | | | | | | | | | | |
| Asset Quality: (Three months ended) | | Sept. 2006 | | | Dec. 2005 | | | Sept. 2005 | |
| (Dollars in thousands) | | | | | | | | | | | | |
| Net Charge-Offs / (Recoveries) | | $ | (54 | ) | | $ | 1,638 | | | $ | 14 | |
| Net Charge-Offs / Avg. loans | | | (0.06 | %) | | | 2.40 | % | | | 0.02 | % |
| Allowance for Loan Loss | | | 4,522 | | | | 4,700 | | | | 4,814 | |
| Allowance for Loan Loss / Loans | | | 1.24 | % | | | 1.44 | % | | | 1.77 | % |
| Non-Performing Assets | | | 6,126 | | | | 8,878 | | | | 15,025 | |
| NPA / Total Assets | | | 1.07 | % | | | 1.67 | % | | | 3.43 | % |
Non-performing assets (non-performing loans, OREO & OAO) were $6.1 million or 1.07% percent of total assets at September 30, 2006, a decline of $8.9 million from twelve months ago, despite an additional $1.5 million of non-performing assets acquired with Exchange Bank, which were not included in the prior-year third quarter financial results. Of the $6.1 million of remaining non-performing assets, $1.1 million remain in the loan workout company RFCBC. “We are getting closer to resolution on several large credits and expect to hit our target of reducing non-performing assets to total assets below 1% by year end,” commented Mr. Joyce. The loan loss reserve now stands at 1.24 percent of period-end loans.
Balance sheet growth over the past twelve months has been achieved through a combination of acquisitions and organic growth. Year-over-year, assets increased $131.4 million or 30.0 percent. Since December 31, 2005, loan growth has been exclusively organic; loans increased $37.3 million or 15.2 percent annualized over the past nine months, and by $4.5 million over the last quarter, equivalent to 5.0 percent growth annualized. Mr. Joyce continued, “We are being selective in this environment in terms of asset quality and our ability to fund at a reasonable spread. We received $6.2 million in commercial loan payoffs in late September, however; our loan pipelines remain strong and we continue to see an increase in mortgage banking activity.”
Rurban continues to be very well capitalized. Stockholders’ equity at September 30, 2006 was $56.1 million, equivalent to 9.8 percent of total assets; on a tangible basis, the ratio was 6.3 percent. The total risk-based capital ratio was 16.0 percent, well in excess of the “well-capitalized” regulatory threshold of 10 percent. At quarter-end, Rurban had 5,027,433 of its 10,000,000 authorized shares outstanding. Mr. Joyce concluded, “We are making progress in each of our business units, but at different rates. We are well into a year that has been transformative in terms of profit generation, the reduction of business risk, and the clarification of our strategic direction. Our new management team has been successfully integrated into the Rurban family and our progress should begin to accelerate going forward.”
BANKING GROUP RESULTS
| • | | Mr. Joyce commented, “All of our bank-related businesses are growing and becoming more profitable. We are particularly pleased with the progress being made at State Bank and Trust where third quarter net income increased 82.4 percent over the past twelve months.” State Bank and Trust Company opened a Loan Production Office in Fort Wayne in January 2006. It announced on October 10th that it has applied to open a new full-service branch office in Fort Wayne, which will incorporate the present LPO. The Fort Wayne branch is expected to open in the fourth quarter of 2006, subject to regulatory approvals and the normal contingencies of a purchase agreement for the branch site. |
| |
| • | | On a consolidated basis, third quarter net income for the banking group was $631,000 compared with $454,000 for the year-ago quarter, an increase of 39.0 percent. Revenue increased 25.8 percent to $5.4 million. Exchange Bank turned profitable in the second quarter, and has continued to improve its performance in the current quarter. |
RELIANCE FINANCIAL SERVICES, N.A. (RFS)
Rurban’s trust company is building profitability under its new CEO. Revenue increased 17.7 percent in the third quarter compared to the prior-year quarter, while expenses increased only 5.2 percent. Net income for the quarter was $251,000, up $75,000 or 42.6 percent year-over-year. This quarter included approximately $104,000, net of federal income tax, of a one time fee income associated with the buy-out of a third party customer.
RURBANC DATA SERVICES, INC. (RDSI)
On September 2nd, Rurbanc Data Services, Inc., Rurban’s data and item processing subsidiary, completed its acquisition of Diverse Computer Marketers (DCM). Similarly to RDSI, DCM provides check-processing services to 48 financial institutions in several Midwest states, primarily Michigan and Indiana.
RDSI’s revenue for the quarter was $4.1 million, an increase of $733,000 or 21.9 percent from the year-ago quarter; and 12.4 percent ahead of the linked quarter. Net income for the quarter was $478,000, up an exceptionally strong 64.3 percent from the prior-year period; net income increased 6.0 percent compared to the second quarter. The twenty-two new bank contracts over the past year are having a positive impact on revenue growth, as is the addition of DCM’s revenue stream. “DCM is proving to be an excellent acquisition for us,” commented Joyce. “We expected the acquisition to be accretive to earnings and the first month’s results appear to support our assumptions and projections. We continue to be very excited about the potential of this acquisition and the potential synergies with RDSI.”
About Rurban Financial Corp.
Rurban Financial Corp. is a publicly-held financial services holding company based in Defiance, Ohio. Rurban’s wholly-owned subsidiaries are The State Bank and Trust Company, The Exchange Bank, Reliance Financial Services, N.A., Rurbanc Data Services, Inc. (RDSI), Diverse Computer Marketers (DCM) and RFCBC, Inc. The two community banks, State Bank and Exchange Bank, offer a full range of financial services through 19 offices in Allen, Defiance, Fulton, Lucas, Paulding and Wood Counties, Ohio and Allen County, Indiana. Reliance Financial Services offers a diversified array of trust and financial services to customers throughout the Midwest. RDSI and DCM provide data and item processing services to community banks in Arkansas, Florida, Illinois, Indiana, Michigan, Missouri, Ohio and Wisconsin. Rurban’s common stock is quoted on the Nasdaq Global Market under the symbol RBNF. The Company currently has 10,000,000 shares of stock authorized and 5,027,433 shares outstanding. The Company’s website is http://www.rurbanfinancial.net .
Forward-Looking Statements
Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in the national and regional banking, insurance and mortgage industries, competitive factors specific to markets in which Rurban and its subsidiaries operate, future interest rate levels, legislative and regulatory actions, capital market conditions, general economic conditions, geopolitical events, the loss of key personnel and other factors.
Forward-looking statements speak only as of the date on which they are made, and Rurban undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. All subsequent written and oral forward-looking statements attributable to Rurban or any person acting on our behalf are qualified by these cautionary statements.
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2006 and December 31, 2005
| | | | | | | | | |
| | | September | | | December | |
| | | 2006 | | | 2005 | |
| | | (Unaudited) | | | | | |
ASSETS | | | | | | | | |
| Cash and due from banks | | $ | 18,333,213 | | | $ | 12,650,839 | |
| Federal funds sold | | | — | | | | — | |
| | | | | | | |
| Cash and cash equivalents | | | 18,333,213 | | | | 12,650,839 | |
| Interest-earning deposits in other financial institutions | | | 150,000 | | | | 150,000 | |
| Available-for-sale securities | | | 127,863,121 | | | | 139,353,329 | |
| Loans held for sale | | | 282,100 | | | | 224,000 | |
| Loans, net of unearned income | | | 364,343,193 | | | | 327,048,229 | |
| Allowance for loan losses | | | (4,521,911 | ) | | | (4,699,827 | ) |
| Premises and equipment, net | | | 13,790,324 | | | | 13,346,632 | |
| Purchased software | | | 4,722,746 | | | | 3,916,913 | |
| Federal Reserve and Federal Home Loan Bank Stock | | | 3,994,000 | | | | 3,607,500 | |
| Foreclosed assets held for sale, net | | | 490,256 | | | | 2,309,900 | |
| Accrued interest receivable | | | 3,399,893 | | | | 3,010,355 | |
| Goodwill | | | 14,169,292 | | | | 8,917,373 | |
| Core deposits and other intangibles | | | 5,375,386 | | | | 3,742,333 | |
| Cash value of life insurance | | | 10,706,737 | | | | 10,443,487 | |
| Other assets | | | 6,888,763 | | | | 6,521,213 | |
| | | | | | | |
| | | | | | | | | |
| Total assets | | $ | 569,987,113 | | | $ | 530,542,276 | |
| | | | | | | |
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Demand | | $ | 44,369,103 | | | $ | 52,073,751 | |
| Savings, interest checking and money market | | | 133,184,971 | | | | 124,206,115 | |
| Time | | | 234,623,570 | | | | 208,558,046 | |
| | | | | | | |
| Total deposits | | | 412,177,644 | | | | 384,837,912 | |
| Notes payable | | | 2,468,646 | | | | 938,572 | |
| Advances from Federal Home Loan Bank | | | 38,500,000 | | | | 45,500,000 | |
| Fed Funds Purchased | | | 800,000 | | | | 4,600,000 | |
| Repurchase Agreements | | | 31,784,052 | | | | 6,080,420 | |
| Trust preferred securities | | | 20,620,000 | | | | 20,620,000 | |
| Accrued interest payable | | | 2,108,320 | | | | 1,373,044 | |
| Other liabilities | | | 5,417,278 | | | | 12,141,680 | |
| | | | | | | |
| | | | | | | | | |
| Total liabilities | | | 513,875,940 | | | | 476,091,628 | |
| | | | | | | | | |
| Shareholders’ Equity | | | | | | | | |
| Common stock: stated value $2.50 per share; shares authorized: 10,000,000; shares issued: 5,027,433; shares outstanding: 2006 - 5,027,433, December 31, 2005 - 5,027,433 | | | 12,568,583 | | | | 12,568,583 | |
| Additional paid-in capital | | | 14,852,930 | | | | 14,835,110 | |
| Retained earnings | | | 29,998,511 | | | | 28,702,817 | |
| Accumulated other comprehensive loss | | | (1,308,851 | ) | | | (1,655,862 | ) |
| | | | | | | |
| | | | | | | | | |
| Total shareholders’ equity | | | 56,111,173 | | | | 54,450,648 | |
| | | | | | | |
| | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 569,987,113 | | | $ | 530,542,276 | |
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
For The Third Quarter Ended September 30, 2006 and 2005
| | | | | | | | | | | | | |
| | | | | | | | | | | Increase/ | |
| | | Third Quarter | | | Third Quarter | | | (Decrease) | |
| | | 2006 | | | 2005 | | | $ | |
| Interest income Loans Taxable | | $ | 6,641,379 | | | $ | 4,187,543 | | | $ | 2,453,836 | |
| Tax-exempt | | | 18,326 | | | | 17,898 | | | | 428 | |
| Securities Taxable | | | 1,306,979 | | | | 1,095,151 | | | | 211,828 | |
| Tax-exempt | | | 183,466 | | | | 71,264 | | | | 112,202 | |
| Other | | | 7,323 | | | | 57,498 | | | | (50,175 | ) |
| | | | | | | | | | |
| Total interest income | | | 8,157,473 | | | | 5,429,354 | | | | 2,728,119 | |
| | | | | | | | | | | | | |
| Interest expense Deposits | | | 3,017,993 | | | | 1,615,308 | | | | 1,402,685 | |
| Other borrowings | | | 67,773 | | | | 67,162 | | | | 611 | |
| Repurchase Agreements | | | 182,007 | | | | 23,874 | | | | 158,133 | |
| Federal Home Loan Bank advances | | | 667,749 | | | | 440,175 | | | | 227,574 | |
| Trust preferred securities | | | 466,417 | | | | 300,360 | | | | 166,057 | |
| | | | | | | | | | |
| Total interest expense | | | 4,401,939 | | | | 2,446,879 | | | | 1,955,060 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Net interest income | | | 3,755,534 | | | | 2,982,475 | | | | 773,059 | |
| | | | | | | | | | | | | |
| Provision for loan losses | | | 35,000 | | | | (382,000 | ) | | | 417,000 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Net interest income after provision for loan losses | | | 3,720,534 | | | | 3,364,475 | | | | 356,059 | |
| | | | | | | | | | | | | |
| Non-interest income Data service fees | | | 3,785,037 | | | | 3,042,996 | | | | 742,041 | |
| Trust fees | | | 753,449 | | | | 767,969 | | | | (14,520 | ) |
| Customer service fees | | | 542,518 | | | | 526,197 | | | | 16,321 | |
| Net gain on sales of loans | | | 283,123 | | | | 28,895 | | | | 254,228 | |
| Net realized gains on sales of available-for-sale securities | | | — | | | | 34,050 | | | | (34,050 | ) |
| Loan servicing fees | | | 96,754 | | | | 79,186 | | | | 17,568 | |
| Gain (loss) on sale of assets | | | 25,914 | | | | (36,011 | ) | | | 61,925 | |
| Other income | | | 415,961 | | | | 151,328 | | | | 264,633 | |
| | | | | | | | | | |
| Total non-interest income | | | 5,902,756 | | | | 4,594,610 | | | | 1,308,146 | |
| | | | | | | | | | | | | |
| Non-interest expense Salaries and employee benefits | | | 4,253,924 | | | | 3,607,270 | | | | 646,654 | |
| Net occupancy expense | | | 468,855 | | | | 312,661 | | | | 156,194 | |
| Equipment expense | | | 1,445,073 | | | | 1,294,686 | | | | 150,387 | |
| Data processing fees | | | 146,703 | | | | 99,085 | | | | 47,618 | |
| Professional fees | | | 481,132 | | | | 467,951 | | | | 13,181 | |
| Marketing expense | | | 168,031 | | | | 144,954 | | | | 23,077 | |
| Printing and office supplies | | | 126,765 | | | | 115,320 | | | | 11,445 | |
| Telephone and communication | | | 467,692 | | | | 388,900 | | | | 78,792 | |
| Postage and delivery expense | | | 142,957 | | | | 77,979 | | | | 64,978 | |
| State, local and other taxes | | | 188,464 | | | | 146,683 | | | | 41,781 | |
| Employee expense | | | 235,429 | | | | 225,032 | | | | 10,397 | |
| Other expenses | | | 389,631 | | | | 338,556 | | | | 51,075 | |
| | | | | | | | | | |
| Total non-interest expense | | | 8,514,656 | | | | 7,219,077 | | | | 1,295,579 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Income before income tax expense | | | 1,108,634 | | | | 740,008 | | | | 368,626 | |
| Income tax expense | | | 294,893 | | | | 247,824 | | | | 47,069 | |
| | | | | | | | | | | | | |
Net income | | $ | 813,741 | | | $ | 492,184 | | | $ | 321,557 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | |
| Basic | | $ | 0.16 | | | $ | 0.11 | | | $ | 0.05 | |
| | | | | | | | | | |
| Diluted | | $ | 0.16 | | | $ | 0.11 | | | $ | 0.05 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Average diluted shares outstanding | | | 5,027,704 | | | | 4,569,316 | | | | | |
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
For The Third Quarter Ended September 30, 2006 and Second Quarter 2006
| | | | | | | | | | | | | |
| | | | | | | | | | | Increase/ | |
| | | Third Quarter | | | Second Quarter | | | (Decrease) | |
| | | 2006 | | | 2006 | | | $ | |
| Interest income | | | | | | | | | | | | |
| Loans | | | | | | | | | | | | |
| Taxable | | $ | 6,641,379 | | | $ | 6,043,057 | | | $ | 598,322 | |
| Tax-exempt | | | 18,326 | | | | 15,157 | | | | 3,169 | |
| Securities | | | | | | | | | | | | |
| Taxable | | | 1,306,979 | | | | 1,333,858 | | | | (26,879 | ) |
| Tax-exempt | | | 183,466 | | | | 136,570 | | | | 46,896 | |
| Other | | | 7,323 | | | | 14,046 | | | | (6,723 | ) |
| Total interest income | | | 8,157,473 | | | | 7,542,688 | | | | 614,785 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 3,017,993 | | | | 2,556,180 | | | | 461,813 | |
| Other borrowings | | | 67,773 | | | | 26,148 | | | | 41,625 | |
| Repurchase Agreements | | | 182,007 | | | | 159,276 | | | | 22,731 | |
| Federal Home Loan Bank advances | | | 667,749 | | | | 533,845 | | | | 133,904 | |
| Trust preferred securities | | | 466,417 | | | | 436,776 | | | | 29,641 | |
| | | | | | | | | | |
| Total interest expense | | | 4,401,939 | | | | 3,712,225 | | | | 689,714 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Net interest income | | | 3,755,534 | | | | 3,830,463 | | | | (74,929 | ) |
| | | | | | | | | | | | | |
| Provision for loan losses | | | 35,000 | | | | 56,321 | | | | (21,321 | ) |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Net interest income after provision for loan losses | | | 3,720,534 | | | | 3,774,142 | | | | (53,608 | ) |
| | | | | | | | | | | | | |
| Non-interest income | | | | | | | | | | | | |
| Data service fees | | | 3,785,037 | | | | 3,286,586 | | | | 498,451 | |
| Trust fees | | | 753,449 | | | | 792,227 | | | | (38,778 | ) |
| Customer service fees | | | 542,518 | | | | 542,687 | | | | (169 | ) |
| Net gain on sales of loans | | | 283,123 | | | | 71,664 | | | | 211,459 | |
| Loan servicing fees | | | 96,754 | | | | 117,785 | | | | (21,031 | ) |
| Gain (loss) on sale of assets | | | 25,914 | | | | 78,558 | | | | (52,644 | ) |
| Other income | | | 415,961 | | | | 378,745 | | | | 37,216 | |
| | | | | | | | | | |
| Total non-interest income | | | 5,902,756 | | | | 5,268,252 | | | | 634,504 | |
| | | | | | | | | | | | | |
| Non-interest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 4,253,924 | | | | 3,795,252 | | | | 458,672 | |
| Net occupancy expense | | | 468,855 | | | | 425,918 | | | | 42,937 | |
| Equipment expense | | | 1,445,073 | | | | 1,347,634 | | | | 97,439 | |
| Data processing fees | | | 146,703 | | | | 119,368 | | | | 27,335 | |
| Professional fees | | | 481,132 | | | | 524,902 | | | | (43,770 | ) |
| Marketing expense | | | 168,031 | | | | 242,498 | | | | (74,467 | ) |
| Printing and office supplies | | | 126,765 | | | | 173,361 | | | | (46,596 | ) |
| Telephone and communication | | | 467,692 | | | | 407,648 | | | | 60,044 | |
| Postage and delivery expense | | | 142,957 | | | | 122,267 | | | | 20,690 | |
| State, local and other taxes | | | 188,464 | | | | 190,436 | | | | (1,972 | ) |
| Employee expense | | | 235,429 | | | | 260,523 | | | | (25,094 | ) |
| Other expenses | | | 389,631 | | | | 470,068 | | | | (80,437 | ) |
| | | | | | | | | | |
| Total non-interest expense | | | 8,514,656 | | | | 8,079,875 | | | | 434,781 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Income before income tax expense | | | 1,108,634 | | | | 962,519 | | | | 146,115 | |
| | | | | | | | | | |
| Income tax expense | | | 294,893 | | | | 248,996 | | | | 45,897 | |
| | | | | | | | | | | | | |
Net income | | $ | 813,741 | | | $ | 713,523 | | | $ | 100,218 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | |
| Basic | | $ | 0.16 | | | $ | 0.14 | | | $ | 0.02 | |
| | | | | | | | | | |
| Diluted | | $ | 0.16 | | | $ | 0.14 | | | $ | 0.02 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Average diluted shares outstanding | | | 5,027,704 | | | | 5,028,397 | | | | | |
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
For The Nine Months Ended September 30, 2006 and 2005
| | | | | | | | | | | | | |
| | | | | | | | | | | Increase/ | |
| | | Nine Months | | | Nine Months | | | (Decrease) | |
| | | 2006 | | | 2005 | | | $ | |
| Interest income | | | | | | | | | | | | |
| Loans | | | | | | | | | | | | |
| Taxable | | $ | 18,238,590 | | | $ | 12,098,708 | | | $ | 6,139,882 | |
| Tax-exempt | | | 45,718 | | | | 48,227 | | | | (2,509 | ) |
| Securities | | | | | | | | | | | | |
| Taxable | | | 3,953,438 | | | | 3,134,559 | | | | 818,879 | |
| Tax-exempt | | | 451,869 | | | | 165,462 | | | | 286,407 | |
| Other | | | 57,635 | | | | 159,716 | | | | (102,081 | ) |
| Total interest income | | | 22,747,250 | | | | 15,606,672 | | | | 7,140,578 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 7,695,387 | | | | 4,012,052 | | | | 3,683,335 | |
| Other borrowings | | | 120,220 | | | | 204,365 | | | | (84,145 | ) |
| Retail Repurchase Agreements | | | 465,560 | | | | 60,328 | | | | 405,232 | |
| Federal Home Loan Bank advances | | | 1,684,415 | | | | 1,581,052 | | | | 103,363 | |
| Trust preferred securities | | | 1,331,615 | | | | 842,170 | | | | 489,445 | |
| | | | | | | | | | |
| Total interest expense | | | 11,297,197 | | | | 6,699,967 | | | | 4,597,230 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Net interest income | | | 11,450,053 | | | | 8,906,705 | | | | 2,543,348 | |
| | | | | | | | | | | | | |
| Provision for loan losses | | | 337,321 | | | | (30,000 | ) | | | 367,321 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Net interest income after provision for loan losses | | | 11,112,732 | | | | 8,936,705 | | | | 2,176,027 | |
| | | | | | | | | | | | | |
| Non-interest income | | | | | | | | | | | | |
| Data service fees | | | 10,312,757 | | | | 9,312,961 | | | | 999,796 | |
| Trust fees | | | 2,361,127 | | | | 2,351,509 | | | | 9,618 | |
| Customer service fees | | | 1,635,272 | | | | 1,409,199 | | | | 226,073 | |
| Net gain on sales of loans | | | 415,833 | | | | 46,243 | | | | 369,590 | |
| Net realized gains (losses) on sales of available-for-sale securities | | | — | | | | 25,300 | | | | (25,300 | ) |
| Loan servicing fees | | | 301,233 | | | | 225,326 | | | | 75,907 | |
| Gain (loss) on sale of assets | | | 85,346 | | | | (18,935 | ) | | | 104,281 | |
| Other income | | | 1,067,739 | | | | 513,714 | | | | 554,025 | |
| | | | | | | | | | |
| Total non-interest income | | | 16,179,307 | | | | 13,865,317 | | | | 2,313,990 | |
| | | | | | | | | | | | | |
| Non-interest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 11,906,909 | | | | 10,339,614 | | | | 1,567,295 | |
| Net occupancy expense | | | 1,334,722 | | | | 897,058 | | | | 437,664 | |
| Equipment expense | | | 4,168,534 | | | | 3,831,477 | | | | 337,057 | |
| Data processing fees | | | 402,661 | | | | 303,781 | | | | 98,880 | |
| Professional fees | | | 1,525,399 | | | | 1,697,020 | | | | (171,621 | ) |
| Marketing expense | | | 536,977 | | | | 308,925 | | | | 228,052 | |
| Printing and office supplies | | | 453,110 | | | | 397,153 | | | | 55,957 | |
| Telephone and communication | | | 1,277,707 | | | | 1,144,334 | | | | 133,373 | |
| Postage and delivery expense | | | 397,217 | | | | 236,006 | | | | 161,211 | |
| State, local and other taxes | | | 512,757 | | | | 380,036 | | | | 132,721 | |
| Employee expense | | | 745,341 | | | | 726,561 | | | | 18,780 | |
| Other expenses | | | 1,283,228 | | | | 1,163,450 | | | | 119,778 | |
| | | | | | | | | | |
| Total non-interest expense | | | 24,544,562 | | | | 21,425,415 | | | | 3,119,147 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Income before income tax expense | | | 2,747,477 | | | | 1,376,607 | | | | 1,370,870 | |
| Income tax expense | | | 697,668 | | | | 359,661 | | | | 338,007 | |
| | | | | | | | | | |
Net income | | $ | 2,049,809 | | | $ | 1,016,946 | | | $ | 1,032,863 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | |
| Basic | | $ | 0.41 | | | $ | 0.22 | | | $ | 0.19 | |
| | | | | | | | | | |
| Diluted | | $ | 0.41 | | | $ | 0.22 | | | $ | 0.19 | |
| | | | | | | | | | |
| Average diluted shares outstanding | | | 5,030,084 | | | | 4,578,981 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Rurban Financial Corp. | | | | | | | | | | | | | | | |
| CONSOLIDATED | | | | | | | | | | | | | | | |
| FINANCIAL HIGHLIGHTS | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | |
| (dollars in thousands | | | | | | | | | | | | | | | |
| except per share data) | | 2006 | | | 2006 | | | 2006 | | | 2005 | | | 2005 | |
EARNINGS | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 3,756 | | | $ | 3,830 | | | $ | 3,864 | | | $ | 3,147 | | | $ | 2,982 | |
| Provision for loan loss | | $ | 35 | | | $ | 56 | | | $ | 246 | | | $ | 613 | | | $ | (382 | ) |
| Non-interest income | | $ | 5,903 | | | $ | 5,268 | | | $ | 5,008 | | | $ | 4,477 | | | $ | 4,595 | |
| Revenue (net interest income plus non-interest income) | | $ | 9,659 | | | $ | 9,098 | | | $ | 8,872 | | | $ | 7,624 | | | $ | 7,577 | |
| Non-interest expense | | $ | 8,515 | | | $ | 8,080 | | | $ | 7,950 | | | $ | 7,632 | | | $ | 7,219 | |
Net income (loss) | | $ | 814 | | | $ | 714 | | | $ | 523 | | | $ | (344 | ) | | $ | 492 | |
| | | | | | | | | | | | | | | | | | | | | |
PER SHARE DATA | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.16 | | | $ | 0.14 | | | $ | 0.10 | | | $ | (0.08 | ) | | $ | 0.11 | |
| Diluted earnings per share | | $ | 0.16 | | | $ | 0.14 | | | $ | 0.10 | | | $ | (0.08 | ) | | $ | 0.11 | |
| Book value per share | | $ | 11.16 | | | $ | 10.75 | | | $ | 10.75 | | | $ | 10.83 | | | $ | 10.99 | |
| Tangible book value per share | | $ | 7.19 | | | $ | 8.28 | | | $ | 8.28 | | | $ | 8.31 | | | $ | 9.39 | |
| Cash dividend per share | | $ | 0.05 | | | $ | 0.05 | | | $ | 0.05 | | | $ | 0.05 | | | $ | 0.05 | |
| | | | | | | | | | | | | | | | | | | | | |
PERFORMANCE RATIOS | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.59 | % | | | 0.52 | % | | | 0.39 | % | | | (0.31 | %) | | | 0.44 | % |
| Return on average equity | | | 5.95 | % | | | 5.28 | % | | | 3.86 | % | | | (2.63 | %) | | | 3.90 | % |
| Net interest margin (tax equivalent) | | | 3.10 | % | | | 3.25 | % | | | 3.37 | % | | | 3.18 | % | | | 3.10 | % |
| Non-interest expense / Average assets | | | 6.15 | % | | | 5.93 | % | | | 5.95 | % | | | 6.91 | % | | | 6.49 | % |
| Efficiency Ratio — bank (non-GAAP) | | | 84.01 | % | | | 84.67 | % | | | 88.99 | % | | | 107.58 | % | | | 93.53 | % |
| Non-interest income/Total operating revenue (net interest income plus non-interest income) | | | 61.11 | % | | | 57.90 | % | | | 56.45 | % | | | 58.72 | % | | | 60.64 | % |
| | | | | | | | | | | | | | | | | | | | | |
MARKET DATA PER SHARE | | | | | | | | | | | | | | | | | | | | |
| Market value per share — Period end | | $ | 11.92 | | | $ | 11.00 | | | $ | 12.42 | | | $ | 11.78 | | | $ | 12.75 | |
| Market as a % of book | | | 1.07 | | | | 1.02 | | | | 1.16 | | | | 1.09 | | | | 1.16 | |
| Cash dividend yield | | | 1.68 | % | | | 1.82 | % | | | 1.61 | % | | | 1.70 | % | | | 1.57 | % |
| Period-end common shares outstanding (000) | | | 5,027 | | | | 5,027 | | | | 5,027 | | | | 5,027 | | | | 4,576 | |
| Common stock market capitalization ($000) | | $ | 59,927 | �� | | $ | 55,302 | | | $ | 62,441 | | | $ | 59,223 | | | $ | 58,340 | |
| | | | | | | | | | | | | | | | | | | | | |
CAPITAL & LIQUIDITY | | | | | | | | | | | | | | | | | | | | |
| Equity to assets | | | 9.8 | % | | | 9.8 | % | | | 10.0 | % | | | 10.3 | % | | | 11.5 | % |
| Period-end tangible equity to assets | | | 6.3 | % | | | 7.5 | % | | | 7.7 | % | | | 7.9 | % | | | 9.8 | % |
| Tier 1 risk-based capital ratio | | | 14.6 | % | | | 16.7 | % | | | 17.3 | % | | | 17.7 | % | | | 20.8 | % |
| Total risk-based capital ratio | | | 16.0 | % | | | 18.1 | % | | | 18.9 | % | | | 19.3 | % | | | 23.0 | % |
| Average loans to average deposits | | | 90.2 | % | | | 86.4 | % | | | 84.6 | % | | | 86.3 | % | | | 84.1 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Rurban Financial Corp. | | | | | | | | | | | | | | | |
| CONSOLIDATED | | | | | | | | | | | | | | | |
| FINANCIAL HIGHLIGHTS | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | |
| (dollars in thousands | | | | | | | | | | | | | | | |
| except per share data) | | 2006 | | | 2006 | | | 2006 | | | 2005 | | | 2005 | |
ASSET QUALITY | | | | | | | | | | | | | | | | | | | | |
| Net charge-offs / (Recoveries) | | $ | (54 | ) | | $ | (33 | ) | | $ | 597 | | | $ | 1,638 | | | $ | 14 | |
| Net loan charge-offs (Ann.) / Average loans | | | (0.06 | %) | | | (0.04 | %) | | | 0.72 | % | | | 2.40 | % | | | 0.02 | % |
| Non-performing loans | | $ | 5,636 | | | $ | 5,479 | | | $ | 6,031 | | | $ | 6,270 | | | $ | 12,507 | |
| OREO / OAOs | | $ | 490 | | | $ | 430 | | | $ | 2,802 | | | $ | 2,608 | | | $ | 2,518 | |
| Non-performing assets | | $ | 6,126 | | | $ | 5,909 | | | $ | 8,833 | | | $ | 8,878 | | | $ | 15,025 | |
| Non-performing assets / Total assets | | | 1.07 | % | | | 1.07 | % | | | 1.64 | % | | | 1.67 | % | | | 3.43 | % |
| Allowance for loan losses / Total loans | | | 1.24 | % | | | 1.23 | % | | | 1.29 | % | | | 1.44 | % | | | 1.77 | % |
| Allowance for loan losses / Non-performing Assets | | | 73.8 | % | | | 75.1 | % | | | 49.2 | % | | | 52.9 | % | | | 32.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
END OF PERIOD BALANCES | | | | | | | | | | | | | | | | | | | | |
| Total loans, net of unearned income | | $ | 364,343 | | | $ | 359,854 | | | $ | 337,729 | | | $ | 327,048 | | | $ | 271,409 | |
| Allowance for loan loss | | $ | 4,522 | | | $ | 4,438 | | | $ | 4,349 | | | $ | 4,700 | | | $ | 4,814 | |
| Total assets | | $ | 569,987 | | | $ | 551,845 | | | $ | 538,201 | | | $ | 530,542 | | | $ | 438,582 | |
| Deposits | | $ | 412,178 | | | $ | 400,956 | | | $ | 398,526 | | | $ | 384,838 | | | $ | 318,492 | |
| Stockholders’ equity | | $ | 56,111 | | | $ | 54,026 | | | $ | 54,052 | | | $ | 54,451 | | | $ | 50,281 | |
| Full-time equivalent employees | | | 271 | | | | 279 | | | | 275 | | | | 281 | | | | 238 | |
| | | | | | | | | | | | | | | | | | | | | |
AVERAGE BALANCES | | | | | | | | | | | | | | | | | | | | |
| Loans | | $ | 368,324 | | | $ | 345,941 | | | $ | 331,711 | | | $ | 273,288 | | | $ | 270,985 | |
| Total earning assets | | $ | 506,594 | | | $ | 487,637 | | | $ | 474,087 | | | $ | 409,566 | | | $ | 396,616 | |
| Total assets | | $ | 553,465 | | | $ | 545,074 | | | $ | 534,371 | | | $ | 442,024 | | | $ | 444,815 | |
| Deposits | | $ | 408,247 | | | $ | 400,581 | | | $ | 392,323 | | | $ | 316,570 | | | $ | 322,225 | |
| Stockholders’ equity | | $ | 54,702 | | | $ | 54,039 | | | $ | 54,251 | | | $ | 52,366 | | | $ | 50,441 | |
Rurban Financial Corp.
Segment Reporting
Three Months Ended September 30, 2006
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Banking | | | | |
| | | | | | | | | | | RFCBC | | | Intersegment | | | Banking | |
| | | State Bank | | | Exchange | | | (Loan Workout | | | Elimination | | | Related | |
| | | and Trust | | | Bank | | | Company) | | | Entries | | | Entities | |
Income Statement Measures | | | | | | | | | | | | | | | | | | | | |
| Interest Income | | $ | 6,784 | | | $ | 1,447 | | | $ | 1 | | | $ | (23 | ) | | $ | 8,209 | |
| Interest Expense | | | 3,491 | | | | 475 | | | | — | | | | (23 | ) | | | 3,943 | |
| Net Interest Income | | | 3,293 | | | | 972 | | | | 1 | | | | — | | | | 4,266 | |
| Provision For Loan Loss | | | 33 | | | | 35 | | | | (33 | ) | | | — | | | | 35 | |
| Non-interest Income | | | 843 | | | | 337 | | | | 2 | | | | — | | | | 1,182 | |
| Non-interest Expense | | | 3,236 | | | | 1,180 | | | | 161 | | | | — | | | | 4,577 | |
| Net Income Before Taxes | | | 867 | | | | 94 | | | | (125 | ) | | | — | | | | 836 | |
| Income Taxes | | | 216 | | | | 32 | | | | (43 | ) | | | — | | | | 205 | |
| Net Income QTR | | $ | 651 | | | $ | 62 | | | $ | (82 | ) | | $ | — | | | $ | 631 | |
| | | | | | | | | | | | | | | | | | | | | |
Performance Measures | | | | | | | | | | | | | | | | | | | | |
| Average Assets — Quarter | | $ | 463,601 | | | $ | 88,141 | | | $ | 2,451 | | | $ | (1,572 | ) | | $ | 552,621 | |
| ROAA | | | 0.56 | % | | | 0.28 | % | | | 0.00 | % | | | 0.00 | % | | | 0.46 | % |
| Average Equity — Quarter | | $ | 39,911 | | | $ | 12,119 | | | $ | 2,261 | | | $ | — | | | $ | 54,290 | |
| ROAE | | | 6.52 | % | | | 2.05 | % | | | 0.00 | % | | | 0.00 | % | | | 4.65 | % |
| Efficiency Ratio — % | | | 78.24 | % | | | 90.15 | % | | | 0.00 | % | | | 0.00 | % | | | 84.01 | % |
| Average Loans — Quarter | | $ | 305,910 | | | $ | 64,153 | | | $ | 1,138 | | | $ | — | | | $ | 371,201 | |
| Average Deposits — Quarter | | $ | 347,062 | | | $ | 71,990 | | | $ | — | | | $ | (180 | ) | | $ | 418,872 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | RFS | | | | | | | Parent | | | Intersegment | | | Rurban | |
| | | (Trust and | | | | | | | Company | | | Elimination | | | Financial | |
| | | Investment Co.) | | | RDSI | | | and Other | | | Entries | | | Corp. | |
Income Statement Measures | | | | | | | | | | | | | | | | | | | | |
| Interest Income | | $ | 15 | | | $ | — | | | $ | 1 | | | $ | (68 | ) | | $ | 8,157 | |
| Interest Expense | | | — | | | | 68 | | | | 459 | | | | (68 | ) | | | 4,402 | |
| Net Interest Income | | | 15 | | | | (68 | ) | | | (458 | ) | | | — | | | | 3,755 | |
| Provision For Loan Loss | | | — | | | | — | | | | — | | | | — | | | | 35 | |
| Non-interest Income | | | 935 | | | | 4,152 | | | | 1,052 | | | | (1,418 | ) | | | 5,903 | |
| Non-interest Expense | | | 568 | | | | 3,360 | | | | 1,427 | | | | (1,418 | ) | | | 8,514 | |
| Net Income Before Taxes | | | 382 | | | | 724 | | | | (833 | ) | | | — | | | | 1,109 | |
| Income Taxes | | | 131 | | | | 246 | | | | (287 | ) | | | — | | | | 295 | |
| Net Income QTR | | $ | 251 | | | $ | 478 | | | $ | (546 | ) | | $ | — | | | $ | 814 | |
| | | | | | | | | | | | | | | | | | | | | |
Performance Measures | | | | | | | | | | | | | | | | | | | | |
| Average Assets — Quarter | | $ | 2,390 | | | $ | 14,442 | | | $ | 75,666 | | | $ | (91,653 | ) | | $ | 553,465 | |
| ROAA | | | 42.01 | % | | | 13.24 | % | | | 0.00 | % | | | 0.00 | % | | | 0.59 | % |
| Average Equity — Quarter | | $ | 1,905 | | | $ | 8,995 | | | $ | 53,593 | | | $ | (64,082 | ) | | $ | 54,702 | |
| ROAE | | | 52.70 | % | | | 21.26 | % | | | 0.00 | % | | | 0.00 | % | | | 5.95 | % |
| Efficiency Ratio — % | | | 59.79 | % | | | 82.27 | % | | | 0.00 | % | | | 0.00 | % | | | 88.15 | % |
| Average Loans — Quarter | | $ | — | | | $ | — | | | $ | — | | | $ | (2,877 | ) | | $ | 368,324 | |
| Average Deposits — Quarter | | $ | — | | | $ | — | | | $ | — | | | $ | (10,625 | ) | | $ | 408,247 | |
Rurban Financial Corp.
Segment Reporting
Nine Months Ended September 30, 2006
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Banking | | | | |
| | | | | | | | | | | RFCBC | | | Intersegment | | | Banking | |
| | | State Bank | | | Exchange | | | (Loan Workout | | | Elimination | | | Related | |
| | | and Trust | | | Bank | | | Company) | | | Entries | | | Entities | |
Income Statement Measures | | | | | | | | | | | | | | | | | | | | |
| Interest Income | | $ | 19,036 | | | $ | 3,928 | | | $ | 36 | | | $ | (116 | ) | | $ | 22,884 | |
| Interest Expense | | | 8,881 | | | | 1,219 | | | | — | | | | (116 | ) | | | 9,984 | |
| Net Interest Income | | | 10,155 | | | | 2,709 | | | | 36 | | | | — | | | | 12,900 | |
| Provision For Loan Loss | | | 393 | | | | 33 | | | | (89 | ) | | | — | | | | 337 | |
| Non-interest Income | | | 2,284 | | | | 851 | | | | 145 | | | | (3 | ) | | | 3,277 | |
| Non-interest Expense | | | 9,601 | | | | 3,647 | | | | 642 | | | | (3 | ) | | | 13,887 | |
| Net Income Before Taxes | | | 2,445 | | | | (120 | ) | | | (372 | ) | | | — | | | | 1,953 | |
| Income Taxes | | | 606 | | | | (42 | ) | | | (127 | ) | | | — | | | | 437 | |
| Net Income YTD | | | 1,839 | | | | (78 | ) | | | (245 | ) | | | — | | | | 1,516 | |
| | | | | | | | | | | | | | | | | | | | | |
Performance Measures | | | | | | | | | | | | | | | | | | | | |
| Average Assets — YTD | | $ | 448,906 | | | $ | 84,497 | | | $ | 4,852 | | | $ | (1,572 | ) | | $ | 536,683 | |
| ROAA | | | 0.55 | % | | | (0.12 | %) | | | 0.00 | % | | | 0.00 | % | | | 0.38 | % |
| Average Equity — YTD | | $ | 39,505 | | | $ | 12,081 | | | $ | 4,867 | | | $ | — | | | $ | 56,453 | |
| ROAE | | | 6.20 | % | | | (0.86 | %) | | | 0.00 | % | | | 0.00 | % | | | 3.57 | % |
| Efficiency Ratio — % | | | 77.20 | % | | | 102.45 | % | | | 0.00 | % | | | 0.00 | % | | | 85.85 | % |
| Average Loans — YTD | | $ | 288,537 | | | $ | 61,225 | | | $ | 2,162 | | | $ | — | | | $ | 351,924 | |
| Average Deposits — YTD | | $ | 340,687 | | | $ | 70,203 | | | $ | — | | | $ | (180 | ) | | $ | 410,710 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | RFS | | | | | | | Parent | | | Intersegment | | | Rurban | |
| | | (Trust and | | | | | | | Company | | | Elimination | | | Financial | |
| | | Investment Co.) | | | RDSI | | | and Other | | | Entries | | | Corp. | |
Income Statement Measures | | | | | | | | | | | | | | | | | | | | |
| Interest Income | | $ | 45 | | | $ | 12 | | | $ | 2 | | | $ | (196 | ) | | $ | 22,747 | |
| Interest Expense | | | — | | | | 177 | | | | 1,332 | | | | (196 | ) | | | 11,297 | |
| Net Interest Income | | | 45 | | | | (165 | ) | | | (1,330 | ) | | | — | | | | 11,450 | |
| Provision For Loan Loss | | | — | | | | — | | | | — | | | | | | | | 337 | |
| Non-interest Income | | | 2,595 | | | | 11,520 | | | | 3,247 | | | | (4,460 | ) | | | 16,179 | |
| Non-interest Expense | | | 1,721 | | | | 9,117 | | | | 4,279 | | | | (4,460 | ) | | | 24,544 | |
| Net Income Before Taxes | | | 919 | | | | 2,238 | | | | (2,362 | ) | | | — | | | | 2,748 | |
| Income Taxes | | | 313 | | | | 761 | | | | (813 | ) | | | — | | | | 698 | |
| Net Income YTD | | | 606 | | | | 1,477 | | | | (1,549 | ) | | | — | | | | 2,050 | |
| | | | | | | | | | | | | | | | | | | | | |
Performance Measures | | | | | | | | | | | | | | | | | | | | |
| Average Assets — YTD | | $ | 2,406 | | | $ | 13,924 | | | $ | 76,923 | | | $ | (79,982 | ) | | $ | 549,954 | |
| ROAA | | | 33.63 | % | | | 14.14 | % | | | 0.00 | % | | | 0.00 | % | | | 0.50 | % |
| Average Equity — YTD | | $ | 2,017 | | | $ | 7,922 | | | $ | 53,625 | | | $ | (65,566 | ) | | $ | 52,434 | |
| ROAE | | | 40.12 | % | | | 24.86 | % | | | 0.00 | % | | | 0.00 | % | | | 5.21 | % |
| Efficiency Ratio — % | | | 65.17 | % | | | 80.31 | % | | | 0.00 | % | | | 0.00 | % | | | 88.36 | % |
| Average Loans — YTD | | $ | — | | | $ | — | | | $ | — | | | $ | (2,877 | ) | | $ | 349,047 | |
| Average Deposits — YTD | | $ | — | | | $ | — | | | $ | — | | | $ | (10,625 | ) | | $ | 400,085 | |
Rurban Financial Corp.
Proforma Performance Measurement
Quarterly Comparison — Third Quarter 2006
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | RFCBC | | | Banking | | | | |
| | | | | | | | | | | (Loan | | | Intersegment | | | Banking | |
| | | State Bank | | | Exchange | | | Workout | | | Elimination | | | Related | |
| | | and Trust | | | Bank | | | Company) | | | Entries | | | Entities | |
Average Assets | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 463,601 | | | $ | 88,141 | | | $ | 2,451 | | | $ | (1,572 | ) | | $ | 552,621 | |
| 2Q06 | | $ | 446,579 | | | $ | 85,449 | | | $ | 5,477 | | | $ | (4,001 | ) | | $ | 533,504 | |
| 1Q06 | | $ | 436,239 | | | $ | 83,209 | | | $ | 6,675 | | | $ | (1,071 | ) | | $ | 525,052 | |
| 4Q05 | | $ | 424,432 | | | | N/A | | | $ | 13,896 | | | $ | (847 | ) | | $ | 437,481 | |
| 3Q05 | | $ | 421,009 | | | | N/A | | | $ | 15,375 | | | $ | (2,234 | ) | | $ | 434,150 | |
| Linked Quarter Change | | $ | 17,022 | | | $ | 2,692 | | | $ | (3,026 | ) | | | | | | $ | 19,117 | |
| | | | | | | | | | | | | | | | | | | | | |
Revenue | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 4,136 | | | $ | 1,309 | | | $ | 3 | | | $ | — | | | $ | 5,448 | |
| 2Q06 | | $ | 4,173 | | | $ | 1,214 | | | $ | 85 | | | $ | (2 | ) | | $ | 5,469 | |
| 1Q06 | | $ | 4,131 | | | $ | 1,036 | | | $ | 93 | | | $ | (2 | ) | | $ | 5,258 | |
| 4Q05 | | $ | 4,389 | | | | N/A | | | $ | (256 | ) | | $ | (2 | ) | | $ | 4,131 | |
| 3Q05 | | $ | 4,291 | | | | N/A | | | $ | 40 | | | $ | (2 | ) | | $ | 4,329 | |
| Linked Quarter Change | | $ | (37 | ) | | $ | 95 | | | $ | (82 | ) | | | | | | $ | (21 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Non-interest Expenses | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 3,236 | | | $ | 1,180 | | | $ | 161 | | | $ | — | | | $ | 4,577 | |
| 2Q06 | | $ | 3,131 | | | $ | 1,195 | | | $ | 307 | | | $ | (2 | ) | | $ | 4,631 | |
| 1Q06 | | $ | 3,234 | | | $ | 1,273 | | | $ | 174 | | | $ | (2 | ) | | $ | 4,679 | |
| 4Q05 | | $ | 3,564 | | | | N/A | | | $ | 882 | | | $ | (2 | ) | | $ | 4,444 | |
| 3Q05 | | $ | 3,674 | | | | N/A | | | $ | 377 | | | $ | (2 | ) | | $ | 4,049 | |
| Linked Quarter Change | | $ | 105 | | | $ | (15 | ) | | $ | (146 | ) | | | | | | $ | (54 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Net Income | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 651 | | | $ | 62 | | | $ | (82 | ) | | | | | | $ | 631 | |
| 2Q06 | | $ | 687 | | | $ | 15 | | | $ | (109 | ) | | | | | | $ | 593 | |
| 1Q06 | | $ | 502 | | | $ | (156 | ) | | $ | (54 | ) | | | | | | $ | 292 | |
| 4Q05 | | $ | 479 | | | | N/A | | | $ | (1,058 | ) | | | | | | $ | (579 | ) |
| 3Q05 | | $ | 357 | | | | N/A | | | $ | 97 | | | | | | | $ | 454 | |
| Linked Quarter Change | | $ | (36 | ) | | $ | 47 | | | $ | 27 | | | | | | | $ | 38 | |
| | | | | | | | | | | | | | | | | | | | | |
Efficiency Ratio | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | 78.24 | % | | | 90.15 | % | | | | | | | | | | | 84.01 | % |
| 2Q06 | | | 75.03 | % | | | 98.41 | % | | | | | | | | | | | 84.67 | % |
| 1Q06 | | | 78.28 | % | | | 122.84 | % | | | | | | | | | | | 88.99 | % |
| 4Q05 | | | 81.20 | % | | | N/A | | | | | | | | | | | | 107.58 | % |
| 3Q05 | | | 85.62 | % | | | N/A | | | | | | | | | | | | 93.53 | % |
| Linked Quarter Change | | | 3.21 | % | | | (8.26 | %) | | | | | | | | | | | (0.66 | %) |
| | | | | | | | | | | | | | | | | | | | | |
NPA/Total Assets | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | 0.92 | % | | | 0.77 | % | | | | | | | | | | | 1.07 | % |
| 2Q06 | | | 0.70 | % | | | 1.66 | % | | | | | | | | | | | 1.07 | % |
| 1Q06 | | | 0.70 | % | | | 1.77 | % | | | | | | | | | | | 1.64 | % |
| 4Q05 | | | 0.64 | % | | | 2.03 | % | | | | | | | | | | | 1.67 | % |
| 3Q05 | | | 0.65 | % | | | N/A | | | | | | | | | | | | 3.43 | % |
| Linked Quarter Change | | | 0.22 | % | | | (0.90 | %) | | | | | | | | | | | (0.00 | %) |
| | | | | | | | | | | | | | | | | | | | | |
ROAA | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | 0.56 | % | | | 0.28 | % | | | | | | | | | | | 0.46 | % |
| 2Q06 | | | 0.62 | % | | | 0.07 | % | | | | | | | | | | | 0.44 | % |
| 1Q06 | | | 0.46 | % | | | (0.75 | %) | | | | | | | | | | | 0.22 | % |
| 4Q05 | | | 0.45 | % | | | N/A | | | | | | | | | | | | (0.40 | %) |
| 3Q05 | | | 0.34 | % | | | N/A | | | | | | | | | | | | 0.58 | % |
| Linked Quarter Change | | | (0.05 | %) | | | 0.21 | % | | | | | | | | | | | 0.02 | % |
| | | | | | | | | | | | | | | | | | | | | |
ROAE | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | 6.52 | % | | | 2.05 | % | | | | | | | | | | | 4.65 | % |
| 2Q06 | | | 7.03 | % | | | 0.50 | % | | | | | | | | | | | 5.52 | % |
| 1Q06 | | | 5.08 | % | | | (5.09 | %) | | | | | | | | | | | 3.16 | % |
| 4Q05 | | | 4.94 | % | | | N/A | | | | | | | | | | | | (2.88 | %) |
| 3Q05 | | | 3.68 | % | | | N/A | | | | | | | | | | | | 4.76 | % |
| Linked Quarter Change | | | (0.51 | %) | | | 1.55 | % | | | | | | | | | | | (0.87 | %) |
| | | | | | | | | | | | | | | | | | | | | |
Average Equity | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 39,911 | | | $ | 12,119 | | | $ | 2,261 | | | $ | — | | | $ | 54,291 | |
| 2Q06 | | $ | 39,078 | | | $ | 12,015 | | | $ | 5,393 | | | $ | — | | | $ | 56,486 | |
| 1Q06 | | $ | 39,522 | | | $ | 12,228 | | | $ | 7,001 | | | $ | — | | | $ | 58,751 | |
| 4Q05 | | $ | 38,784 | | | $ | 8,109 | | | $ | 13,731 | | | $ | — | | | $ | 60,624 | |
| 3Q05 | | $ | 38,768 | | | | N/A | | | $ | 14,161 | | | $ | — | | | $ | 52,929 | |
| Linked Quarter Change | | $ | 833 | | | $ | 104 | | | $ | (3,132 | ) | | | | | | $ | (2,195 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | RFS | | | | | | | | | | | | | | |
| | | (Trust and | | | | | | �� | Parent | | | Intersegment | | | Rurban | |
| | | Investment | | | | | | | Company | | | Elimination | | | Financial | |
| | | Co.) | | | RDSI | | | and Other | | | Entries | | | Corp. | |
Average Assets | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 2,390 | | | $ | 14,442 | | | $ | 75,666 | | | $ | (91,653 | ) | | $ | 553,465 | |
| 2Q06 | | $ | 2,583 | | | $ | 13,368 | | | $ | 74,679 | | | $ | (79,060 | ) | | $ | 545,074 | |
| 1Q06 | | $ | 2,138 | | | $ | 11,579 | | | $ | 78,706 | | | $ | (83,104 | ) | | $ | 534,371 | |
| 4Q05 | | $ | 2,469 | | | $ | 9,783 | | | $ | 71,938 | | | $ | (79,647 | ) | | $ | 442,024 | |
| 3Q05 | | $ | 2,504 | | | $ | 10,128 | | | $ | 64,332 | | | $ | (66,299 | ) | | $ | 444,815 | |
| Linked Quarter Change | | $ | (193 | ) | | $ | 1,074 | | | $ | 987 | | | | | | | $ | 8,391 | |
| | | | | | | | | | | | | | | | | | | | | |
Revenue | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 950 | | | $ | 4,084 | | | $ | 594 | | | $ | (1,418 | ) | | $ | 9,658 | |
| 2Q06 | | $ | 834 | | | $ | 3,632 | | | $ | 537 | | | $ | (1,374 | ) | | $ | 9,098 | |
| 1Q06 | | $ | 856 | | | $ | 3,637 | | | $ | 789 | | | $ | (1,668 | ) | | $ | 8,872 | |
| 4Q05 | | $ | 823 | | | $ | 3,686 | | | $ | (163 | ) | | $ | (854 | ) | | $ | 7,624 | |
| 3Q05 | | $ | 807 | | | $ | 3,351 | | | $ | (43 | ) | | $ | (868 | ) | | $ | 7,577 | |
| Linked Quarter Change | | $ | 116 | | | $ | 452 | | | $ | 57 | | | | | | | $ | 560 | |
| | | | | | | | | | | | | | | | | | | | | |
Non-interest Expenses | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 568 | | | $ | 3,360 | | | $ | 1,427 | | | $ | (1,418 | ) | | $ | 8,514 | |
| 2Q06 | | $ | 553 | | | $ | 2,949 | | | $ | 1,321 | | | $ | (1,374 | ) | | $ | 8,080 | |
| 1Q06 | | $ | 601 | | | $ | 2,807 | | | $ | 1,531 | | | $ | (1,668 | ) | | $ | 7,950 | |
| 4Q05 | | $ | 606 | | | $ | 2,812 | | | $ | 575 | | | $ | (805 | ) | | $ | 7,632 | |
| 3Q05 | | $ | 540 | | | $ | 2,845 | | | $ | 609 | | | $ | (824 | ) | | $ | 7,219 | |
| Linked Quarter Change | | $ | 16 | | | $ | 411 | | | $ | 106 | | | | | | | $ | 434 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Income | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 251 | | | $ | 478 | | | $ | (546 | ) | | | | | | $ | 814 | |
| 2Q06 | | $ | 186 | | | $ | 451 | | | $ | (516 | ) | | | | | | $ | 714 | |
| 1Q06 | | $ | 168 | | | $ | 548 | | | $ | (485 | ) | | | | | | $ | 523 | |
| 4Q05 | | $ | 143 | | | $ | 577 | | | $ | (484 | ) | | | | | | $ | (344 | ) |
| 3Q05 | | $ | 176 | | | $ | 291 | | | $ | (428 | ) | | | | | | $ | 492 | |
| Linked Quarter Change | | $ | 65 | | | $ | 27 | | | $ | (30 | ) | | | | | | $ | 101 | |
| | | | | | | | | | | | | | | | | | | | | |
Efficiency Ratio | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | 59.79 | % | | | 82.27 | % | | | | | | | | | | | 88.15 | % |
| 2Q06 | | | 66.21 | % | | | 81.18 | % | | | | | | | | | | | 88.05 | % |
| 1Q06 | | | 70.23 | % | | | 77.17 | % | | | | | | | | | | | 88.87 | % |
| 4Q05 | | | 73.63 | % | | | 76.29 | % | | | | | | | | | | | 99.32 | % |
| 3Q05 | | | 66.91 | % | | | 84.92 | % | | | | | | | | | | | 94.54 | % |
| Linked Quarter Change | | | (6.42 | %) | | | 1.09 | % | | | | | | | | | | | 0.11 | % |
| | | | | | | | | | | | | | | | | | | | | |
NPA/Total Assets | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | | | | | | | | | | | | | | | | | 1.07 | % |
| 2Q06 | | | | | | | | | | | | | | | | | | | 1.07 | % |
| 1Q06 | | | | | | | | | | | | | | | | | | | 1.64 | % |
| 4Q05 | | | | | | | | | | | | | | | | | | | 1.67 | % |
| 3Q05 | | | | | | | | | | | | | | | | | | | 3.43 | % |
| Linked Quarter Change | | | | | | | | | | | | | | | | | | | (0.00 | %) |
| | | | | | | | | | | | | | | | | | | | | |
ROAA | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | 42.01 | % | | | 13.24 | % | | | | | | | | | | | 0.59 | % |
| 2Q06 | | | 28.81 | % | | | 13.50 | % | | | | | | | | | | | 0.52 | % |
| 1Q06 | | | 31.45 | % | | | 18.93 | % | | | | | | | | | | | 0.39 | % |
| 4Q05 | | | 25.84 | % | | | 23.59 | % | | | | | | | | | | | (0.31 | %) |
| 3Q05 | | | 26.81 | % | | | 11.49 | % | | | | | | | | | | | 0.44 | % |
| Linked Quarter Change | | | 13.20 | % | | | (0.26 | %) | | | | | | | | | | | 0.06 | % |
| | | | | | | | | | | | | | | | | | | | | |
ROAE | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | | 52.70 | % | | | 21.26 | % | | | | | | | | | | | 5.95 | % |
| 2Q06 | | | 31.88 | % | | | 21.39 | % | | | | | | | | | | | 5.28 | % |
| 1Q06 | | | 32.42 | % | | | 31.59 | % | | | | | | | | | | | 3.86 | % |
| 4Q05 | | | 33.18 | % | | | 40.75 | % | | | | | | | | | | | (2.63 | %) |
| 3Q05 | | | 37.59 | % | | | 21.61 | % | | | | | | | | | | | 3.90 | % |
| Linked Quarter Change | | | 20.83 | % | | | (0.13 | %) | | | | | | | | | | | 0.67 | % |
| | | | | | | | | | | | | | | | | | | | | |
Average Equity | | | | | | | | | | | | | | | | | | | | |
| 3Q06 | | $ | 1,905 | | | $ | 8,995 | | | $ | 53,593 | | | $ | (64,082 | ) | | $ | 54,702 | |
| 2Q06 | | $ | 2,334 | | | $ | 8,437 | | | $ | 53,593 | | | $ | (66,811 | ) | | $ | 54,039 | |
| 1Q06 | | $ | 2,074 | | | $ | 6,938 | | | $ | 54,251 | | | $ | (67,763 | ) | | $ | 54,251 | |
| 4Q05 | | $ | 1,724 | | | $ | 5,664 | | | $ | 52,366 | | | $ | (68,012 | ) | | $ | 52,366 | |
| 3Q05 | | $ | 1,873 | | | $ | 5,386 | | | $ | 50,441 | | | $ | (60,188 | ) | | $ | 50,441 | |
| Linked Quarter Change | | $ | (429 | ) | | $ | 558 | | | $ | — | | | | | | | $ | 663 | |
