Exhibit 99.1
Investor Contact: Valda Colbart, 419-784-2759, rfcinv@rurban.net
RURBAN FINANCIAL CORP. REPORTS SUBSTANTIAL INCREASE IN EARNINGS
FOR FIRST QUARTER
DEFIANCE, Ohio, April 16, 2008 — Rurban Financial Corp. (NASDAQ: RBNF), a leading provider of full-service community banking, investment management, trust services and bank data and item processing, reported first quarter 2008 earnings of $1.11 million, or $0.22 per diluted share, an increase of 58.0% and 60.0%, respectively, above the $702 thousand, or $0.14 per diluted share, reported in first quarter 2007. Improved performance reflects across-the-board improvement at both of Rurban’s subsidiary companies, The State Bank and Trust Company and RDSI. The growth initiatives and improved efficiencies implemented over the past two years are providing clear and positive results.
Consolidated earnings for the 2008 first quarter include one-time pre-tax gains of $197,000 and $132,000, respectively, from the partial recovery of previously written-off WorldCom securities and proceeds from the sale of equity securities derived from VISA Inc.’s Initial Public Offering (IPO). These gains were partially offset by $176,000 of one-time expenses associated with the wind-down of RFCBC, Rurban’s workout subsidiary. These one-time items resulted in a net after-tax gain of $101,000. The 2007 first quarter included a pre-tax merger-related expense of $95,000 ($63,000 after-tax). Excluding the after-tax impact of the $101,000 net gain for the 2008 quarter and the $63,000 expense for the year-ago quarter, operating earnings were $1.0 million in 2008, compared with $765,000 for the prior-year quarter, up 31.8%.
“This has been a break-through quarter for Rurban,” commented Kenneth Joyce, President and CEO of Rurban Financial Corp. “While much of the banking industry has suffered from the financial and economic crises that began over a year ago, Rurban has proven to be more resilient. Our combination of fee and loan income provides balance to our revenue stream, and enables us to be more resistant to interest rate swings. From our earlier experience with problem loans, we have built a credit infrastructure with strong controls and a disciplined lending team. These are the primary factors - revenue growth and asset quality - that influence our present and future performance, and that of the banking industry as a whole. We believe that Rurban is well-positioned for the current environment, and we know there are still many additional opportunities as we continue down this path.”
The Banking Group (including RFCBC, the workout company) increased earnings from $571,000 for the first quarter of 2007, to $917,000 for the first quarter of 2008, an increase of 60.6%. Excluding earnings from the one-time net after-tax gain in the first quarter of 2008, and merger-related expenses from 2007, 2008 first quarter operating earnings were $881,000 versus $634,000 in 2007, up $247,000, or 39.0%.
RDSI had a record first quarter. The first quarter of 2008 net income was $800,000, compared with $690,000 in the 2007 first quarter, up $110,000, or 15.9%.
Highlights of Rurban’s consolidated first quarter performance include:
| · | Rurban’s revenue stream has benefited from the complementary contributions of both subsidiaries. RDSI revenue consists entirely of non-interest income, while State Bank has a mix of 66.3% net interest income and 33.6% non-interest income. The consolidated mix is approximately 66.3% non-interest and the remainder net interest income, a significant advantage in the current banking interest rate environment. |
| · | Rurban’s Banking Group entered this declining rate environment liability-sensitive and has benefited from this positioning in the current interest rate environment. First quarter 2008 banking net interest margin was 3.45%, up 2 basis points from the linked quarter. |
| · | Consolidated return on average assets (ROAA) was 0.78% for the first quarter of 2008, compared with 0.51% for the year-ago quarter, up 27 basis points. On a core operating basis, first quarter ROAA was 0.71% in 2008, and 0.56% in 2007, an increase of 15 basis points. |
| · | Profitability has benefited largely from revenue growth; as a percent of average assets, annualized revenue has increased from 7.45% in the first quarter of 2007, to 7.99% for the current quarter - an improvement of 54 basis points. Meanwhile, annualized operating expenses were a stable percent of average assets, at 6.77%. As Rurban continues with the successful implementation of its expansion strategy, operating leverage should provide growing profitability. |
| · | Loans grew $18.7 million, or 5.0%, over the past twelve months, reflecting Rurban’s entry into higher-growth markets, such as Lima, Toledo, Fort Wayne and Columbus. Its strategy to complete acquisitions and open loan production offices, followed by full-service branches, has been a cost-effective approach to building its franchise. |
CONSOLIDATED - FIRST QUARTER RESULTS
(Dollars in thousands except per share data) | | | | | | | | | | |
| | | | | | | | | | | |
OPERATING EARNINGS:* | | | 1Q 2008 | | | 4Q 2007 | | | 1Q 2007 | |
| | | | | | | | | | | |
| Net interest income | | $ | 3,817 | | $ | 3,783 | | $ | 3,593 | |
| | | | | | | | | | | |
| Recurring non-interest income | | | 7,186 | | | 6,832 | | | 6,739 | |
| | | | | | | | | | | |
| Operating revenue | | | 11,003 | | | 10,615 | | | 10,332 | |
| | | | | | | | | | | |
| Provision for loan losses | | | 192 | | | 143 | | | 93 | |
| | | | | | | | | | | |
| Operating expense | | | 9,601 | | | 9,164 | | | 9,300 | |
| | | | | | | | | | | |
| Net income (GAAP) | | | 1,109 | | | 906 | | | 702 | |
| | | | | | | | | | | |
| Operating income | | | 1,008 | | | 906 | | | 765 | |
| | | | | | | | | | | |
| Diluted EPS | | $ | 0.22 | | $ | 0.18 | | $ | 0.14 | |
| * Nonrecurring items in 1Q 2008 are [pre-tax] gains of $197,500 from WorldCom recovery, $132,000 of proceeds from VISA IPO and expenses of $176,000 associated with RFCBC. Nonrecurring item in 1Q 2007 was $95,000 of merger-related expense. |
Operating revenue, consisting of net interest income and recurring non-interest income, was $11.0 million for the first quarter of 2008, up 6.5% from the year-ago quarter. For both quarters, non-interest income contributed approximately 65% of total operating revenue. Both Banking and RDSI contributed to this growth - net interest income and fee income grew 10.4% and 5.8%, respectively, over first quarter 2007 results. Net interest income, contributed by the Banking Group, grew 10.4% from the combined impact of a 4.9% increase in average loans and a 7.2% improvement in net interest margin.
Operating expenses, excluding non-recurring items, were $9.4 million for the first quarter of 2008, compared with $9.2 million for the first quarter of 2007, an increase of $200,000, or 2.4%. RDSI took billing for postage in-house during the quarter resulting in additional postage expense of $230,000 being recorded. This is offset by increases in revenues. Excluding all non-recurring items, operating expenses were flat for the first quarter 2008 compared to the first quarter of 2007. Expenses are well-controlled, mainly as a result of the efficiencies completed throughout 2007. The reduction in staff kept salaries and employee benefits in check, and virtually unchanged, over the course of the past twelve months.
BANK OPERATING RESULTS
Net income for the Banking Group was $917,000 for the first quarter of 2008 compared with $571,000 reported for the prior-year quarter, an increase of 60.6%. Included in first quarter 2008 results are 50% of the $197,500 recovery on previously charged-off WorldCom bond, (the other 50% was recorded at the holding company level), $132,000 in proceeds from the VISA Inc. IPO, and the $176,000 of one-time expenses.
Mr. Joyce commented, "Our staff has worked hard and smart to obtain these first quarter results. Not only has the Banking Group produced improved earnings, but also, we’ve repositioned the bank according to the plan that we developed over the course of two years, and it’s exciting to see this plan deliver. While current quarter results benefited from a number of nonrecurring items, our performance is still at improved levels, whether measured by GAAP, or by operating earnings. All of our banking offices have been instrumental in expanding our loan portfolio and generating mortgage originations. We originated $18.0 million in mortgage loans during the first quarter 2008 - this compares to $8.4 million for the first quarter of 2007. These positive results reflect several changes in structure and function we had implemented in 2007, and will continue to execute in 2008."
BANKING - QUARTERLY RESULTS
(Dollars in thousands except per share data) | | | | | | | | | | |
| | | | | | | | | | | |
OPERATING EARNINGS: | | | 1Q 2008 | | | 4Q 2007 | | | 1Q 2007 | |
| | | | | | | | | | | |
| Net interest income | | $ | 4,295 | | $ | 4,287 | | $ | 4,131 | |
| | | | | | | | | | | |
| Recurring non-interest income | | | 1,938 | | | 1,945 | | | 1,894 | |
| | | | | | | | | | | |
| Operating revenue | | | 6,233 | | | 6,232 | | | 6,025 | |
| | | | | | | | | | | |
| Provision for loan losses | | | 192 | | | 143 | | | 93 | |
| | | | | | | | | | | |
| Operating expense | | | 5,018 | | | 4,908 | | | 5,188 | |
| | | | | | | | | | | |
| Net income (GAAP) | | | 917 | | | 836 | | | 571 | |
| | | | | | | | | | | |
| Operating income | | $ | 881 | | $ | 836 | | $ | 634 | |
Operating revenue, consisting of net interest income and recurring non-interest income, totaled $6.2 million for the first quarter of 2008, compared with $6.0 million for the first quarter of 2007, an increase of 3.5%. Net interest income increased 4.0% to $4.3 million, reflecting earning asset growth of 3.0% and a two basis point expansion in the net interest margin to 3.45%. Mr. Joyce added, “State Bank’s net interest margin is being well-managed in this declining interest rate environment and we are being aided by our balance sheet positioning. Non-interest income, excluding non-recurring items, increased to $1.94 million, or 2.3%, compared to the first quarter of 2007. Growth in deposit and mortgage banking fees was offset by slight declines in other income and loan servicing fees.”
The Banking Group took a slightly larger provision for loan losses than in previous quarters. The $192,000 loan loss provision more than replaced the level of loans charged-off, which totaled $166,000. Total Allowance for loan losses to total loans was 1.02%, and consistent with the previous year levels.
Operating expenses, excluding non-recurring, items were $4.8 million for the first quarter of 2008, down $251,000, or 4.9%, reported for the prior-year quarter. This decline is attributable to the reduction of 25 full-time equivalent positions during the first quarter of 2007. Reflecting this improvement, the efficiency ratio declined to 75.90% for the current quarter, compared with 76.68% for the linked quarter, and 85.47% for the prior-year quarter.
Total loans were $392.0 million on March 31, 2008, up $18.7 million, or 5.0%, from 12 months ago and up $2.7 million, or an annualized 2.8%, from the linked quarter. Growth over the past twelve months was derived primarily from commercial real estate loans, up $17.4 million, and commercial business loans, up $9.3 million. Commercial loans now account for 65.9% of the loan portfolio, compared with 62.3%, twelve months ago. Linked quarter growth came from agricultural loans, up $4.1 million, and commercial real estate loans, up $2.9 million. Growth for both periods was primarily offset by slight declines in consumer and residential loans.
Total deposits on March 31, 2008 were $416.7 million, up $4.1 million, or 1.0%, from the March 2007 quarter-end. The more robust linked quarter results reflect Money Market Deposit growth of $11.3 million and Interest Checking Deposits growth of $5.2 million. These increases were partially offset by a $2.9 million decline in Retail Time Deposits, a $2.1 million decline in Brokered Time Deposits, and a $1.0 million decline in Savings Deposits. The High Performance Checking promotion begun in April of 2007 has generated $6.2 million in new retail checking account balances at a funding cost of 1.00%. Retail Time Deposits have declined by $10.3 million from the year-ago quarter, reflecting the execution of run-off of municipal deposits as part of the planned balance sheet restructuring.
“We have spent a considerable amount of time restructuring our balance sheet over the past two years,” commented Mr. Joyce. “We have dedicated as much time on the liability side of our balance sheet as we have on the asset side. The percentage of transaction account balances to total deposits increased to 47.6% for the current quarter compared to 43.8% for the prior-year first quarter. This has contributed significantly to our reduction in cost of funds.”
ASSET QUALITY
(Dollars in thousands except percent data) | | | | | | | |
| | | | | | | | |
ASSET QUALITY | | 1Q 2008 | | 4Q 2007 | | 1Q 2007 | |
| | | | | | | | |
| Net charge-offs | | $ | 166 | | $ | 89 | | $ | 41 | |
| | | | | | | | | | | |
| (Ann.) Net charge-offs to avg. loans | | | 0.17 | % | | 0.09 | % | | 0.04 | % |
| | | | | | | | | | | |
| Non-performing assets (NPAs) | | $ | 6,967 | | $ | 6,162 | | $ | 4,112 | |
| | | | | | | | | | | |
| NPA / Total assets | | | 1.22 | % | | 1.10 | % | | 0.75 | % |
| | | | | | | | | | | |
| Allowance for loan losses | | $ | 4,016 | | $ | 3,990 | | $ | 3,769 | |
| | | | | | | | | | | |
| Allowance for loan losses / Loans | | | 1.02 | % | | 1.03 | % | | 1.01 | % |
Non-performing assets (loans + OREO + OAO) were $7.0 million, or 1.22 %, of total assets on March 31, 2008, compared with $6.2 million, or 1.10%, of assets for the linked quarter and $4.1 million, or 0.75%, of assets 12 months ago. The increase in non-performing asset was primarily due to four credits. Management does not anticipate losses on these credits. Also during the quarter, the company was successful in taking title to one of the three remaining legacy credits, which increased OREO balances. This represents a step in clearing this asset off the balance sheet, aiding us in our goal of reducing NPA’s during 2008.
RDSI RESULTS
First quarter 2008 net income for RDSI was $800,000, an increase of 15.9 % from the $690,000 reported for the prior-year first quarter. Mr. Joyce commented, “RDSI continues to improve its performance through strong revenue growth and disciplined control of expenses. We converted thirteen new clients over the past year, and have a pipeline in place that should support continued growth through 2008.”
Total revenue for first quarter of 2008 was $5.6 million, an increase 8.7% above the $5.2 million reported for the first quarter of 2007. The increase in revenue was aided by $237,000 of revenue associated with postage fees. During the first quarter, RDSI brought the billing for postage associated with client banks in-house. Excluding this change, revenue increased $214,000, or 16.6%, on an annualized basis.
As of March, 2008 the RDSI (including DCM) roster of clients totaled 116 banking organizations, representing a net increase of ten clients since March 31, 2007. RDSI provided Data Processing Services to 76 clients and Item Processing Services to a total of 92 clients.
Operating expenses were $4.4 million for first quarter 2008, up $285,000, or 6.9%, from the first quarter of 2007. The increase was due largely to postage expenses associated with the aforementioned in-house process. Excluding the postage change, operating expenses increased $55,000, or 1.3%, reflecting several efficiencies gained on consolidations within the item processing segment of RDSI’s business.
Mr. Joyce concluded, “We are very pleased with RDSI’s performance this past quarter, and continue to improve upon both revenue and expenses - identifying new key growth areas and conservatively managing operating expenses - to continue our net income growth. As always, we will be working to maximize growth and profitability for Rurban Financial Corp. and its shareholders.”
Rurban continues to maintain a strong capital position. Stockholders’ equity totaled $59.9 million, on March 31, 2008, an increase of $2.2 million, or 3.7%, from 12 months ago. Capital ratios exceed the regulatory minimums for a well-capitalized institution.
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, including Reliance Financial Services and Rurbanc Data Services, Inc. (RDSI), including DCM. The State Bank and Trust Company offers financial services through its 16 branches in Allen, Defiance, Fulton, Lucas, Paulding and Wood Counties, Ohio and Allen County, Indiana and a Loan Production Office in Franklin County, Ohio. Reliance Financial Services, a division of the Bank, 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, Nebraska, Nevada, 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 4,941,933 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.
CONSOLIDATED BALANCE SHEETS
March 31, 2008, December 31, 2007 and March 31, 2007
| | | March | | December | | March | |
| | | 2008 | | 2007 | | 2007 | |
| | | (Unaudited) | | | | (Unaudited) | |
ASSETS | | | | | | | |
| Cash and due from banks | | $ | 15,758,593 | | $ | 15,183,627 | | $ | 10,627,291 | |
| Federal funds sold | | | 6,400,000 | | | 2,000,000 | | | 6,500,000 | |
| Cash and cash equivalents | | | 22,158,593 | | | 17,183,627 | | | 17,127,291 | |
| Interest-earning deposits in other financial institutions | | | - | | | - | | | 150,000 | |
| Available-for-sale securities | | | 94,378,377 | | | 92,661,386 | | | 97,148,409 | |
| Loans held for sale | | | 2,464,643 | | | 1,649,758 | | | 110,697 | |
| Loans, net of unearned income | | | 391,962,691 | | | 389,268,744 | | | 373,293,814 | |
| Allowance for loan losses | | | (4,016,230 | ) | | (3,990,455 | ) | | (3,768,814 | ) |
| Premises and equipment, net | | | 15,180,760 | | | 15,128,754 | | | 15,912,493 | |
| Purchased software | | | 4,149,202 | | | 4,282,563 | | | 4,482,113 | |
| Federal Reserve and Federal Home Loan Bank Stock | | | 4,062,100 | | | 4,021,200 | | | 4,040,700 | |
| Foreclosed assets held for sale, net | | | 1,572,644 | | | 124,131 | | | 9,400 | |
| Accrued interest receivable | | | 2,752,252 | | | 3,008,968 | | | 2,820,915 | |
| Goodwill | | | 13,940,618 | | | 13,940,618 | | | 13,690,092 | |
| Core deposits and other intangibles | | | 4,961,846 | | | 5,135,228 | | | 5,683,598 | |
| Cash value of life insurance | | | 12,276,003 | | | 12,160,581 | | | 10,861,017 | |
| Other assets | | | 5,889,849 | | | 6,638,895 | | | 7,323,829 | |
| | | | | | | | | | | |
| Total assets | | $ | 571,733,348 | | $ | 561,213,998 | | $ | 548,885,554 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | |
| Deposits | | | | | | | | | | |
| Non interest bearing demand | | $ | 41,748,793 | | $ | 41,541,297 | | $ | 43,759,627 | |
| Interest bearing NOW | | | 59,547,916 | | | 54,308,665 | | | 47,026,613 | |
| Savings | | | 24,289,198 | | | 25,320,126 | | | 27,738,612 | |
| Money Market | | | 72,676,846 | | | 61,380,252 | | | 61,989,662 | |
| Time Deposits | | | 218,449,515 | | | 223,480,842 | | | 232,078,426 | |
| Total deposits | | | 416,712,268 | | | 406,031,182 | | | 412,592,940 | |
| Notes payable | | | 817,584 | | | 922,457 | | | 2,515,911 | |
| Advances from Federal Home Loan Bank | | | 23,000,000 | | | 24,000,000 | | | 17,500,000 | |
| Repurchase Agreements | | | 43,536,570 | | | 43,006,438 | | | 30,827,195 | |
| Trust preferred securities | | | 20,620,000 | | | 20,620,000 | | | 20,620,000 | |
| Accrued interest payable | | | 2,481,629 | | | 2,532,914 | | | 2,233,625 | |
| Other liabilities | | | 4,694,986 | | | 4,775,773 | | | 4,884,579 | |
| | | | | | | | | | | |
| Total liabilities | | | 511,863,037 | | | 501,888,764 | | | 491,174,250 | |
| | | | | | | | | | | |
| Shareholders' Equity | | | | | | | | | | |
| Common stock | | | 12,568,583 | | | 12,568,583 | | | 12,568,583 | |
| Additional paid-in capital | | | 14,944,315 | | | 14,923,571 | | | 14,872,424 | |
| Retained earnings | | | 32,956,244 | | | 32,361,106 | | | 30,808,105 | |
| Accumulated other comprehensive income (loss) | | | 432,429 | | | 82,235 | | | (537,808 | ) |
| Treasury stock | | | (1,031,260 | ) | | (610,260 | ) | | - | |
| | | | | | | | | | | |
| Total shareholders' equity | | | 59,870,311 | | | 59,325,235 | | | 57,711,304 | |
| | | | | | | | | | | |
| Total liabilities and shareholders' equity | | $ | 571,733,348 | | $ | 561,213,998 | | $ | 548,885,554 | |
RURBAN FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
For The Three Months Ended March 31, 2008 and 2007 and December 2007
| | | First Quarter | | Fourth Quarter | | First Quarter | |
| | | 2008 | | 2007 | | 2007 | |
| Interest income | | | | | | | |
| Loans | | | | | | | | | | |
| Taxable | | $ | 6,808,196 | | $ | 7,056,261 | | $ | 6,676,813 | |
| Tax-exempt | | | 21,350 | | | 22,240 | | | 17,293 | |
| Securities | | | | | | | | | | |
| Taxable | | | 1,039,894 | | | 1,106,834 | | | 1,091,197 | |
| Tax-exempt | | | 158,367 | | | 161,830 | | | 153,057 | |
| Other | | | 97,409 | | | 61,257 | | | 78,468 | |
| Total interest income | | | 8,125,216 | | | 8,408,422 | | | 8,016,828 | |
| | | | | | | | | | | |
| Interest expense | | | | | | | | | | |
| Deposits | | | 3,091,902 | | | 3,383,225 | | | 3,333,730 | |
| Other borrowings | | | 17,506 | | | 25,215 | | | 51,072 | |
| Retail Repurchase Agreements | | | 460,552 | | | 484,118 | | | 343,849 | |
| Federal Home Loan Bank advances | | | 302,336 | | | 276,492 | | | 249,587 | |
| Trust preferred securities | | | 435,704 | | | 456,427 | | | 445,314 | |
| Total interest expense | | | 4,308,000 | | | 4,625,477 | | | 4,423,552 | |
| | | | | | | | | | | |
Net interest income | | | 3,817,216 | | | 3,782,945 | | | 3,593,276 | |
| | | | | | | | | | | |
| Provision for loan losses | | | 192,218 | | | 142,663 | | | 92,640 | |
| | | | | | | | | | | |
Net interest income after provision | | | | | | | | | | |
for loan losses | | | 3,624,998 | | | 3,640,282 | | | 3,500,636 | |
| | | | | | | | | | | |
| Non-interest income | | | | | | | | | | |
| Data service fees | | | 5,264,565 | | | 4,914,328 | | | 4,834,136 | |
| Trust fees | | | 855,107 | | | 873,069 | | | 826,382 | |
| Customer service fees | | | 586,207 | | | 593,665 | | | 528,424 | |
| Net gain on sales of loans | | | 274,603 | | | 137,611 | | | 54,279 | |
| Net realized gain on sales of securities | | | | | | 1,631 | | | | |
| Net proceeds from liquidation | | | | | | | | | | |
| of equity securities | | | 132,106 | | | - | | | - | |
| Investment securities recoveries | | | 197,487 | | | - | | | - | |
| Loan servicing fees | | | 62,940 | | | 80,590 | | | 108,706 | |
| Gain (loss) on sale of assets | | | (71,032 | ) | | (32,362 | ) | | 35,967 | |
| Other income | | | 213,530 | | | 263,583 | | | 350,848 | |
| Total non-interest income | | | 7,515,513 | | | 6,832,115 | | | 6,738,742 | |
| | | | | | | | | | | |
| Non-interest expense | | | | | | | | | | |
| Salaries and employee benefits | | | 4,438,764 | | | 4,134,242 | | | 4,396,787 | |
| Net occupancy expense | | | 566,016 | | | 587,150 | | | 527,133 | |
| Equipment expense | | | 1,567,637 | | | 1,678,311 | | | 1,605,873 | |
| Data processing fees | | | 96,567 | | | 97,092 | | | 156,181 | |
| Professional fees | | | 570,687 | | | 586,327 | | | 677,391 | |
| Marketing expense | | | 181,747 | | | 218,549 | | | 155,685 | |
| Printing and office supplies | | | 186,052 | | | 151,943 | | | 198,092 | |
| Telephone and communication | | | 421,929 | | | 451,918 | | | 445,204 | |
| Postage and delivery expense | | | 602,634 | | | 376,777 | | | 392,261 | |
| State, local and other taxes | | | 180,768 | | | 115,441 | | | 199,741 | |
| Employee expense | | | 230,611 | | | 281,682 | | | 255,069 | |
| Other expenses | | | 557,948 | | | 485,154 | | | 290,836 | |
| Total non-interest expense | | | 9,601,360 | | | 9,164,586 | | | 9,300,253 | |
| | | | | | | | | | | |
Income before income tax expense | | | 1,539,151 | | | 1,307,811 | | | 939,125 | |
| Income tax expense | | | 429,795 | | | 402,275 | | | 236,672 | |
| | | | | | | | | | | |
Net income | | $ | 1,109,356 | | $ | 905,536 | | $ | 702,453 | |
| | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | |
| Basic | | $ | 0.22 | | $ | 0.18 | | $ | 0.14 | |
| Diluted | | $ | 0.22 | | $ | 0.18 | | $ | 0.14 | |
| | | | | | | | | | | |
| Average diluted shares outstanding | | | 4,962,428 | | | 4,988,493 | | | 5,027,613 | |
RURBAN FINANCIAL CORP. | | | | | | | | | | | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS | | | | | | | | | | | |
(Unaudited) | | | | | | | | | | | |
| | | 1st Qtr | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr | |
(dollars in thousands except per share data) | | 2008 | | 2007 | | 2007 | | 2007 | | 2007 | |
| | | | | | | | | | | | |
EARNINGS | | | | | | | | | | | |
| Net interest income | | $ | 3,817 | | $ | 3,783 | | $ | 3,661 | | $ | 3,750 | | $ | 3,593 | |
| Provision for loan loss | | $ | 192 | | $ | 143 | | $ | 140 | | $ | 146 | | $ | 93 | |
| Non-interest income | | $ | 7,516 | | $ | 6,832 | | $ | 6,783 | | $ | 6,508 | | $ | 6,739 | |
| Revenue (net interest income plus non-interest income) | | $ | 11,333 | | $ | 10,615 | | $ | 10,444 | | $ | 10,258 | | $ | 10,332 | |
| Non-interest expense | | $ | 9,601 | | $ | 9,164 | | $ | 9,106 | | $ | 9,065 | | $ | 9,301 | |
Net income | | $ | 1,109 | | $ | 906 | | $ | 864 | | $ | 785 | | $ | 702 | |
| | | | | | | | | | | | | | | | | |
PER SHARE DATA | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.22 | | $ | 0.18 | | $ | 0.17 | | $ | 0.16 | | $ | 0.14 | |
| Diluted earnings per share | | $ | 0.22 | | $ | 0.18 | | $ | 0.17 | | $ | 0.16 | | $ | 0.14 | |
| Book value per share | | $ | 12.11 | | $ | 11.92 | | $ | 11.70 | | $ | 11.43 | | $ | 11.48 | |
| Tangible book value per share | | $ | 8.10 | | $ | 8.00 | | $ | 7.87 | | $ | 7.83 | | $ | 7.69 | |
| Cash dividend per share | | $ | 0.08 | | $ | 0.07 | | $ | 0.07 | | $ | 0.06 | | $ | 0.06 | |
| | | | | | | | | | | | | | | | | |
PERFORMANCE RATIOS | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.78 | % | | 0.64 | % | | 0.62 | % | | 0.57 | % | | 0.51 | % |
| Return on average equity | | | 7.50 | % | | 6.15 | % | | 5.97 | % | | 5.45 | % | | 4.91 | % |
| Net interest margin (tax equivalent) | | | 3.26 | % | | 3.12 | % | | 2.96 | % | | 3.19 | % | | 3.04 | % |
| Net interest margin (Bank Only) | | | 3.45 | % | | 3.43 | % | | 3.41 | % | | 3.56 | % | | 3.45 | % |
| Non-interest expense / Average assets | | | 6.77 | % | | 6.48 | % | | 6.56 | % | | 6.60 | % | | 6.71 | % |
| Efficiency Ratio - bank (non-GAAP) | | | 73.20 | % | | 76.68 | % | | 80.17 | % | | 77.23 | % | | 87.20 | % |
| | | | | | | | | | | | | | | | | |
MARKET DATA PER SHARE | | | | | | | | | | | | | | | | |
| Market value per share -- Period end | | $ | 10.24 | | $ | 12.49 | | $ | 12.65 | | $ | 12.82 | | $ | 11.84 | |
| Market as a % of book | | | 0.85 | | | 1.05 | | | 1.08 | | | 1.12 | | | 1.03 | |
| Cash dividend yield | | | 3.13 | % | | 2.24 | % | | 2.21 | % | | 1.87 | % | | 2.03 | % |
| Period-end common shares outstanding (000) | | | 4,942 | | | 4,979 | | | 4,999 | | | 5,015 | | | 5,027 | |
| Common stock market capitalization ($000) | | $ | 50,605 | | $ | 62,188 | | $ | 63,237 | | $ | 64,298 | | $ | 59,525 | |
| | | | | | | | | | | | | | | | | |
CAPITAL & LIQUIDITY | | | | | | | | | | | | | | | | |
| Equity to assets | | | 10.5 | % | | 10.6 | % | | 10.3 | % | | 10.5 | % | | 10.5 | % |
| Period-end tangible equity to tangible assets | | | 7.2 | % | | 7.3 | % | | 7.2 | % | | 7.4 | % | | 7.3 | % |
| Tier 1 risk-based capital ratio | | | 14.9 | % | | 14.8 | % | | 14.6 | % | | 14.9 | % | | 14.8 | % |
| Total risk-based capital ratio | | | 15.8 | % | | 16.0 | % | | 15.7 | % | | 16.1 | % | | 15.9 | % |
| | | | | | | | | | | | | | | | | |
ASSET QUALITY | | | | | | | | | | | | | | | | |
Net charge-offs / (Recoveries) | | $ | 166 | | $ | 89 | | $ | 28 | | $ | 90 | | $ | 41 | |
| Net loan charge-offs (Ann.) / Average loans | | | 0.17 | % | | 0.09 | % | | 0.03 | % | | 0.09 | % | | 0.04 | % |
| Non-performing loans | | $ | 5,305 | | $ | 5,990 | | $ | 6,361 | | $ | 5,913 | | $ | 4,103 | |
| OREO / OAOs | | $ | 1,662 | | $ | 172 | | $ | 71 | | $ | 84 | | $ | 9 | |
| Non-performing assets | | $ | 6,967 | | $ | 6,162 | | $ | 6,432 | | $ | 5,997 | | $ | 4,112 | |
| Non-performing assets / Total assets | | | 1.22 | % | | 1.10 | % | | 1.14 | % | | 1.09 | % | | 0.75 | % |
| Allowance for loan losses / Total loans | | | 1.02 | % | | 1.03 | % | | 1.01 | % | | 1.00 | % | | 1.01 | % |
| Allowance for loan losses / Non-performing Assets | | | 57.6 | % | | 64.8 | % | | 61.2 | % | | 63.8 | % | | 91.6 | % |
| | | | | | | | | | | | | | | | | |
END OF PERIOD BALANCES | | | | | | | | | | | | | | | | |
| Total loans, net of unearned income | | $ | 391,963 | | $ | 389,084 | | $ | 388,264 | | $ | 381,662 | | $ | 373,294 | |
| Allowance for loan loss | | $ | 4,016 | | $ | 3,990 | | $ | 3,937 | | $ | 3,824 | | $ | 3,769 | |
| Total assets | | $ | 571,733 | | $ | 561,214 | | $ | 565,674 | | $ | 548,200 | | $ | 548,886 | |
| Deposits | | $ | 416,712 | | $ | 406,031 | | $ | 413,152 | | $ | 407,585 | | $ | 412,593 | |
| Stockholders' equity | | $ | 59,870 | | $ | 59,325 | | $ | 58,504 | | $ | 57,349 | | $ | 57,711 | |
| Full-time equivalent employees | | | 272 | | | 275 | | | 280 | | | 285 | | | 294 | |
| | | | | | | | | | | | | | | | | |
AVERAGE BALANCES | | | | | | | | | | | | | | | | |
| Loans | | $ | 389,917 | | $ | 389,526 | | $ | 385,126 | | $ | 379,191 | | $ | 371,724 | |
| Total earning assets | | $ | 498,731 | | $ | 496,782 | | $ | 488,798 | | $ | 482,036 | | $ | 484,110 | |
| Total assets | | $ | 567,129 | | $ | 565,779 | | $ | 555,451 | | $ | 549,426 | | $ | 554,631 | |
| Deposits | | $ | 412,424 | | $ | 413,473 | | $ | 411,948 | | $ | 410,392 | | $ | 415,887 | |
| Stockholders' equity | | $ | 59,149 | | $ | 58,928 | | $ | 57,830 | | $ | 57,617 | | $ | 57,192 | |
Rurban Financial Corp.
Segment Reporting
First Quarter Ended March 31, 2008
| | | Total Banking | | Data Processing | | Parent Company and Other | | Elimination Entries | | Rurban Financial Corp. | |
Income Statement Measures | | | | | | | | | | | |
| Interest Income | | $ | 8,151 | | $ | - | | $ | 1 | | $ | (27 | ) | $ | 8,125 | |
| | | | | | | | | | | | | | | | | |
| Interest Expense | | | 3,856 | | | 44 | | | 435 | | | (27 | ) | $ | 4,308 | |
| | | | | | | | | | | | | | | | | |
| Net Interest Income | | | 4,295 | | | (44 | ) | | (434 | ) | | - | | $ | 3,817 | |
| | | | | | | | | | | | | | | | | |
| Provision For Loan Loss | | | 192 | | | - | | | - | | | | | $ | 192 | |
| | | | | | | | | | | | | | | | | |
| Non-interest Income | | | 2,169 | | | 5,650 | | | 407 | | | (710 | ) | $ | 7,516 | |
| | | | | | | | | | | | | | | | | |
| Non-interest Expense | | | 5,018 | | | 4,394 | | | 899 | | | (710 | ) | $ | 9,601 | |
| | | | | | | | | | | | | | | | | |
| Net Income QTD | | $ | 917 | | $ | 800 | | $ | (608 | ) | $ | - | | $ | 1,109 | |
| | | | | | | | | | | | | | | | | |
Performance Measures | | | | | | | | | | | | | | | | |
| Average Assets -QTD | | $ | 547,502 | | $ | 20,103 | | $ | 81,297 | | $ | (81,773 | ) | $ | 567,129 | |
| | | | | | | | | | | | | | | | | |
| ROAA | | | 0.67 | % | | 15.92 | % | | - | | | - | | | 0.78 | % |
| | | | | | | | | | | | | | | | | |
| Average Equity - QTD | | $ | 59,044 | | $ | 15,282 | | $ | 59,149 | | $ | (74,326 | ) | $ | 59,149 | |
| | | | | | | | | | | | | | | | | |
| ROAE | | | 6.21 | % | | 20.94 | % | | - | | | - | | | 7.50 | % |
| | | | | | | | | | | | | | | | | |
| Efficiency Ratio - % | | | 75.90 | % | | 77.28 | % | | - | | | - | | | 83.19 | % |
| | | | | | | | | | | | | | | | | |
| Average Loans - QTD | | $ | 391,379 | | $ | - | | $ | - | | $ | (1,462 | ) | $ | 389,917 | |
| | | | | | | | | | | | | | | | | |
| Average Deposits - QTD | | $ | 418,409 | | $ | - | | $ | - | | $ | (5,985 | ) | $ | 412,424 | |
Rurban Financial Corp.
Proforma Performance Measurement
Quarterly Comparison - First Quarter 2008
| | | Banking Related Entities | | RDSI | | Parent Company and Other | | Intersegment Elimination Entries | | Rurban Financial Corp. | |
Revenue | | | | | | | | | | | |
| 1Q08 | | $ | 6,464 | | $ | 5,606 | | $ | (27 | ) | $ | (710 | ) | $ | 11,333 | |
| 4Q07 | | $ | 6,232 | | $ | 5,184 | | $ | (114 | ) | $ | (687 | ) | $ | 10,615 | |
| 3Q07 | | $ | 5,939 | | $ | 5,332 | | $ | (100 | ) | $ | (727 | ) | $ | 10,444 | |
| 2Q07 | | $ | 6,130 | | $ | 4,949 | | $ | (82 | ) | $ | (739 | ) | $ | 10,258 | |
| 1Q07 | | $ | 6,025 | | $ | 5,155 | | $ | (116 | ) | $ | (732 | ) | $ | 10,332 | |
| 1st Quarter Comparison | | $ | 439 | | $ | 451 | | $ | 89 | | $ | - | | $ | 1,001 | |
| | | | | | | | | | | | | | | | | |
Non-interest Expenses | | | | | | | | | | | | | | | | |
| 1Q08 | | $ | 5,018 | | $ | 4,394 | | $ | 899 | | $ | (710 | ) | $ | 9,601 | |
| 4Q07 | | $ | 4,908 | | $ | 4,202 | | $ | 742 | | $ | (687 | ) | $ | 9,164 | |
| 3Q07 | | $ | 4,874 | | $ | 4,334 | | $ | 626 | | $ | (727 | ) | $ | 9,106 | |
| 2Q07 | | $ | 4,849 | | $ | 4,228 | | $ | 728 | | $ | (739 | ) | $ | 9,065 | |
| 1Q07 | | $ | 5,188 | | $ | 4,109 | | $ | 736 | | $ | (732 | ) | $ | 9,301 | |
| 1st Quarter Comparison | | $ | (170 | ) | $ | 285 | | $ | 163 | | $ | - | | $ | 300 | |
| | | | | | | | | | | | | | | | | |
Net Income | | | | | | | | | | | | | | | | |
| 1Q08 | | $ | 917 | | $ | 800 | | $ | (608 | ) | $ | - | | $ | 1,109 | |
| 4Q07 | | $ | 836 | | $ | 648 | | $ | (578 | ) | $ | - | | $ | 906 | |
| 3Q07 | | $ | 674 | | $ | 659 | | $ | (470 | ) | $ | - | | $ | 864 | |
| 2Q07 | | $ | 830 | | $ | 476 | | $ | (521 | ) | $ | - | | $ | 785 | |
| 1Q07 | | $ | 571 | | $ | 690 | | $ | (559 | ) | $ | - | | $ | 702 | |
| 1st Quarter Comparison | | $ | 346 | | $ | 110 | | $ | (49 | ) | $ | - | | $ | 407 | |
| | | | | | | | | | | | | | | | | |
Average Assets | | | | | | | | | | | | | | | | |
| 1Q08 | | $ | 547,502 | | $ | 20,103 | | $ | 81,297 | | $ | (81,773 | ) | $ | 567,129 | |
| 4Q07 | | $ | 546,609 | | $ | 20,014 | | $ | 80,827 | | $ | (81,671 | ) | $ | 565,779 | |
| 3Q07 | | $ | 536,470 | | $ | 19,739 | | $ | 79,380 | | $ | (80,137 | ) | $ | 555,451 | |
| 2Q07 | | $ | 530,618 | | $ | 20,320 | | $ | 78,908 | | $ | (80,420 | ) | $ | 549,426 | |
| 1Q07 | | $ | 536,543 | | $ | 20,217 | | $ | 79,251 | | $ | (81,380 | ) | $ | 554,631 | |
| 1st Quarter Comparison | | $ | 10,959 | | $ | (114 | ) | $ | 2,046 | | $ | - | | $ | 12,498 | |
| | | | | | | | | | | | | | | | | |
ROAA | | | | | | | | | | | | | | | | |
| 1Q08 | | | 0.67 | % | | 15.92 | % | | - | | | - | | | 0.78 | % |
| 4Q07 | | | 0.61 | % | | 12.95 | % | | - | | | - | | | 0.64 | % |
| 3Q07 | | | 0.50 | % | | 13.35 | % | | - | | | - | | | 0.62 | % |
| 2Q07 | | | 0.63 | % | | 9.37 | % | | - | | | - | | | 0.57 | % |
| 1Q07 | | | 0.43 | % | | 13.65 | % | | - | | | - | | | 0.51 | % |
| 1st Quarter Comparison | | | 0.24 | % | | 2.44 | % | | - | | | - | | | 0.27 | % |
| | | | | | | | | | | | | | | | | |
Average Equity | | | | | | | | | | | | | | | | |
| 1Q08 | | $ | 59,044 | | $ | 15,282 | | $ | 59,149 | | $ | (74,326 | ) | $ | 59,149 | |
| 4Q07 | | $ | 58,115 | | $ | 15,222 | | $ | 58,928 | | $ | (73,337 | ) | $ | 58,928 | |
| 3Q07 | | $ | 56,805 | | $ | 14,732 | | $ | 57,830 | | $ | (71,536 | ) | $ | 57,830 | |
| 2Q07 | | $ | 56,249 | | $ | 14,182 | | $ | 57,617 | | $ | (70,431 | ) | $ | 57,617 | |
| 1Q07 | | $ | 56,330 | | $ | 13,378 | | $ | 57,192 | | $ | (69,708 | ) | $ | 57,192 | |
| 1st Quarter Comparison | | $ | 2,714 | | $ | 1,904 | | $ | 1,957 | | | | | $ | 1,957 | |
| | | | | | | | | | | | | | | | | |
ROAE | | | | | | | | | | | | | | | | |
| 1Q08 | | | 6.21 | % | | 20.94 | % | | - | | | - | | | 7.50 | % |
| 4Q07 | | | 5.75 | % | | 17.03 | % | | - | | | - | | | 6.15 | % |
| 3Q07 | | | 4.75 | % | | 17.89 | % | | - | | | - | | | 5.97 | % |
| 2Q07 | | | 5.90 | % | | 13.43 | % | | - | | | - | | | 5.45 | % |
| 1Q07 | | | 4.05 | % | | 20.63 | % | | - | | | - | | | 4.91 | % |
| 1st Quarter Comparison | | | 2.16 | % | | 0.31 | % | | - | | | - | | | 2.59 | % |
| | | | | | | | | | | | | | | | | |
Efficiency Ratio | | | | | | | | | | | | | | | | |
| 1Q08 | | | 75.90 | % | | 77.28 | % | | - | | | - | | | 83.19 | % |
| 4Q07 | | | 76.68 | % | | 79.77 | % | | - | | | - | | | 84.49 | % |
| 3Q07 | | | 80.17 | % | | 80.04 | % | | - | | | - | | | 85.47 | % |
| 2Q07 | | | 77.23 | % | | 84.09 | % | | - | | | - | | | 86.61 | % |
| 1Q07 | | | 85.47 | % | | 78.52 | % | | - | | | - | | | 88.33 | % |
| 1st Quarter Comparison | | | (9.57 | %) | | (1.24 | %) | | - | | | - | | | (5.14 | %) |
