EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
MEDIA CONTACT: Tina Farrington, 419-784-2549, rfcmkt@rurban.net
INVESTOR CONTACT: Sandra Stockhorst, 419-784-4023, rfcinv@rurban.net
RURBAN FINANCIAL CORP. REPORTS
SECOND QUARTER 2003 EARNINGS
DEFIANCE, Ohio, July 24, 2003/PRNewswire-FirstCall/ -- Rurban Financial Corp.
(Nasdaq: RBNF - News; "Rurban"), a leading provider of full-service banking,
investment management, trust services and bank data processing, today announced
second quarter earnings and the on-target completion of the restructuring plan
previously communicated to shareholders. Earnings for the second quarter 2003
are $6.5 million or $1.42 per diluted share compared with a loss of $7.6 million
or $1.68 per diluted share for the same period a year ago. Earnings totaled
$11.8 million or $2.59 per diluted share for the six months ended June 30, 2003,
compared with a loss of $7.4 million or $1.64 per diluted share for the same
six-month period in 2002.
Rurban's President and Chief Executive Officer, Kenneth A. Joyce said, "We have
completed the final phase of our corporate restructuring during the second
quarter with the sale of our Hancock and Putnam County Branches. Rurban reduced
debt levels at the holding company and significantly increased our risk based
capital levels with the pretax gains of approximately $12.0 million from the
branch sale. Expenses incurred during the quarter, associated with the
restructuring, totaled approximately $2.2 million and are reflected principally
in the Professional Fees category which included such items as legal costs and
consulting fees."
Joyce cautioned, "We have made significant progress in turning Rurban around,
however, our future growth will continue to be influenced by general economic
conditions and the overall economic recovery which appears to be slowly
underway."
Net interest income, on a linked quarter basis, declined approximately $1.6
million from the first quarter of 2003. These reductions were expected and
budgeted as a natural result of the sale of the Hancock and Putnam County
branches during the quarter. Included in the branch sale were approximately $77
million of loans and the related interest income on those earning assets.
Earning asset levels associated with these branches were reduced by
approximately $74 million earlier in the quarter in anticipation of the
liquidity needed for closing the transaction. The State Bank and Trust Company
also experienced a reduction of loan volume of approximately $40 million
primarily in the commercial loans and secondarily residential mortgages as
consumers continued their refinancing activity. The company attributes the
current loan level decline at State Bank to its exiting of the Cleveland market
and having its loan staff focused on loan work outs, training as well as policy
and procedure enhancement. The results of this investment will provide the
foundation for the bank to achieve its goal of a high performance organization.
Non-interest income, on a linked quarter basis, excluding the branch sales gains
recorded in both the first and second quarter of this year, decreased by almost
five percent or $203,000. Expected lower data service fees and bank customer
service fees, due to the branch sales, were principally responsible for this
decrease. Although overall trust fees were slightly lower; profit improvement
was achieved. Significant effort was expended throughout the second quarter of
2003 relating to exploring opportunities to improve the fee income portion of
our revenue stream with the recommendations projected to be implemented during
the third and fourth quarter of 2003.
Non-interest expenses, on a linked quarter basis, were up almost 15% from first
quarter 2003 levels. Driving this expense increase were fees and costs primarily
associated with the branch sales, which included both consulting fees, legal
costs, and higher professional fee levels, associated with the revenue
enhancement and expense reduction project completed in the second quarter. Costs
related to relocations resulting from the restructuring and other staff changes
were recognized in other expenses. The reductions in the other expense
categories, such as occupancy, printing and office supplies and postage and
delivery expenses were a function of the branch sales and elimination of
associated overhead expenses.
Joyce summarized, "Rurban's second quarter marked the very successful completion
of key initiatives which will provide us the ability to focus on rebuilding our
franchise, improving customer service levels and creating shareholder value. We
have successfully laid the ground work in the company to allow us to return to a
more normal business environment during the second half of the year." Joyce
added, "We will continue to be relentless in our pursuit of excellence
throughout the Corporation in all of our banking and business practices."
ABOUT RURBAN FINANCIAL CORP.
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Rurban Financial Corp. is a publicly held bank holding company based in
Defiance, Ohio and is located on the Internet at http://www.rurbanfinancial.net.
Rurban's common stock is quoted on the Nasdaq National Market System under the
symbol RBNF. The Company currently has 10,000,000 shares of stock authorized and
4,565,721 shares outstanding.
Rurban's wholly owned subsidiaries are The State Bank and Trust Company,
Reliance Financial Services, N.A., Rurbanc Data Services, Inc. (RDSI) and RFCBC
Loan Subsidiary. The bank offers a full range of financial services through
their offices in Defiance, Paulding and Fulton Counties. Reliance Financial
Services offers a diversified array of trust and financial services to customers
nationwide. RDSI provides data processing services to community banks in Ohio,
Michigan and Indiana.
Forward-Looking Statements
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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 - UNAUDITED
June 30, 2003, December 31, 2002 and June 30, 2002
June December June
2003 2002 2002
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ASSETS
Cash and due from banks $ 28,290,819 $ 37,018,337 $ 21,902,810
Federal funds sold 45,300,000 14,000,000 5,950,000
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Cash and cash equivalents 73,590,819 51,018,337 27,852,810
Interest-earning deposits in other financial institutions 660,000 260,000 270,000
Available-for-sale securities 77,686,612 115,108,762 94,620,537
Loans held for sale 0 63,536,309 1,780,835
Loans, net of allowance for loan losses of $12,299,309 at
June 30, 2003; $17,693,841 at December 31, 2002;
and $19,016,725 at June 30, 2002 313,029,132 469,780,785 624,295,651
Premises and equipment, net 11,749,767 14,695,613 13,215,071
Federal Reserve and Federal Home Loan Bank Stock 3,728,900 3,665,900 3,593,500
Foreclosed assets held for sale, net 1,198,070 1,960,276 274,469
Accrued interest receivable 2,169,656 3,966,721 4,891,489
Deferred income taxes 5,397,313 5,495,812 1,945,129
Goodwill 2,144,303 2,323,643 2,475,573
Core deposits and other intangibles 706,742 770,777 654,325
Other assets 655,343 9,733,744 12,411,335
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Total assets $ 492,716,657 $ 742,316,679 $ 788,280,724
============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Demand $ 45,991,520 $ 46,114,153 $ 52,876,568
Savings, NOW and money market 107,058,255 117,738,013 184,632,246
Time 211,632,260 404,007,515 408,821,624
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Total deposits 364,682,035 567,859,681 646,330,438
Deposits held for sale 0 68,175,660 0
Notes payable 14,461,049 6,000,000 7,000,000
Advances from Federal Home Loan Bank 39,500,000 47,850,000 57,350,000
Trust preferred securities 10,000,000 10,000,000 10,000,000
Accrued interest payable 2,241,987 2,971,448 2,997,021
Other liabilities 13,674,495 3,077,558 21,796,083
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Total liabilities 444,559,566 705,934,347 745,473,542
Shareholders' Equity
Common stock: stated value $2.50 per share;
shares authorized: 10,000,000; shares issued: 4,575,702;
shares outstanding: 2003 - 4,565,721; 2002 - 4,565,721 11,439,255 11,439,255 11,439,255
Additional paid-in capital 11,009,733 11,009,733 11,009,733
Retained earnings 25,683,244 13,904,212 19,888,360
Accumulated other comprehensive income (loss),
net of tax of $320,074 in 2003 and $342,530 in 2002 621,320 664,911 1,195,173
Unearned ESOP shares (281,447) (320,765) (410,325)
Treasury stock (315,014) (315,014) (315,014)
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Total shareholders' equity 48,157,091 36,382,332 42,807,182
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Total liabilities and shareholders' equity $ 492,716,657 $ 742,316,679 $ 788,280,724
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RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
For The Second Quarter Ended June 30, 2003 and First Quarter 2003
Second Quarter First Quarter
2003 2003
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Interest income
Loans $ 6,362,205 $ 8,790,024
Taxable 638,845 811,477
Tax-exempt 44,391 39,925
Other 179,205 101,023
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Total interest income 7,224,646 9,742,449
Interest expense
Deposits 2,886,822 3,839,800
Other borrowings 150,247 93,764
Federal Home Loan Bank advances 599,801 653,502
Trust preferred securities 267,944 265,000
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Total interest expense 3,904,814 4,852,066
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NET INTEREST INCOME 3,319,832 4,890,383
Provision for loan losses 300,000 1,194,000
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,019,832 3,696,383
Noninterest income
Data service fees 2,186,261 2,223,184
Trust fees 596,432 671,502
Customer service fees 559,037 636,256
Net gain on sales of loans 150,998 151,412
Net realized gains (losses) on sales of
available-for-sale securities (2,901) 26,533
Loan servicing fees 111,484 117,453
Gain (loss) on sale of assets 11,914,699 8,035,912
Other income 155,384 133,153
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Total noninterest income 15,671,394 11,995,405
Noninterest expense
Salaries and employee benefits 3,710,122 3,814,914
Net occupancy expense 303,215 396,354
Equipment expense 1,057,472 1,059,154
Data processing fees 129,392 89,687
Professional fees 2,034,581 774,662
Marketing expense 92,677 100,854
Printing and office supplies 133,323 165,137
Telephone and communication 186,846 197,511
Postage and delivery expense 140,876 191,074
State, local and other taxes 169,032 158,399
Other expenses 895,838 721,739
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Total noninterest expense 8,853,374 7,669,485
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INCOME BEFORE INCOME TAX EXPENSE 9,837,852 8,022,303
Income tax expense 3,358,451 2,722,672
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NET INCOME $ 6,479,401 $ 5,299,631
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Earnings per common share:
Basic $ 1.42 $ 1.17
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Diluted $ 1.42 $ 1.17
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RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
For The Second Quarter Ended June 30, 2003 and 2002
Second Quarter Second Quarter
2003 2002
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Interest income
Loans $ 6,362,205 $ 11,303,046
Taxable 638,845 1,256,627
Tax-exempt 44,391 59,375
Other 179,205 25,182
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Total interest income 7,224,646 12,644,230
Interest expense
Deposits 2,886,822 5,124,762
Other borrowings 150,247 188,905
Federal Home Loan Bank advances 599,801 743,646
Trust preferred securities 267,944 267,944
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Total interest expense 3,904,814 6,325,257
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NET INTEREST INCOME 3,319,832 6,318,973
Provision for loan losses 300,000 11,852,000
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,019,832 (5,533,027)
Noninterest income
Data service fees 2,186,261 1,829,902
Trust fees 596,432 656,884
Customer service fees 559,037 672,747
Net gain on sales of loans 150,998 54,118
Net realized gains (losses) on sales of
available-for-sale securities (2,901) (1,737,232)
Loan servicing fees 111,484 94,571
Gain (loss) on sale of assets 11,914,699 (3,393)
Other income 155,384 147,338
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Total noninterest income 15,671,394 1,714,935
Noninterest expense
Salaries and employee benefits 3,710,122 3,894,342
Net occupancy expense 303,215 334,893
Equipment expense 1,057,472 966,455
Data processing fees 129,392 154,582
Professional fees 2,034,581 812,252
Marketing expense 92,677 126,264
Printing and office supplies 133,323 231,344
Telephone and communication 186,846 211,569
Postage and delivery expense 140,876 145,155
State, local and other taxes 169,032 194,848
Other expenses 895,838 694,165
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Total noninterest expense 8,853,374 7,765,869
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INCOME BEFORE INCOME TAX EXPENSE 9,837,852 (11,583,961)
Income tax expense 3,358,451 (3,953,676)
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NET INCOME $ 6,479,401 $ (7,630,285)
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Earnings per common share:
Basic $ 1.42 $ (1.68)
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Diluted $ 1.42 $ (1.68)
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RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
For The Six Months Ended June 30, 2003 and 2002
Six Months Six Months
2003 2002
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Interest income
Loans $ 15,152,228 $ 22,587,172
Taxable 1,450,322 2,657,512
Tax-exempt 84,316 113,663
Other 280,229 38,586
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Total interest income 16,967,095 25,396,933
Interest expense
Deposits 6,726,621 10,579,230
Other borrowings 244,012 308,308
Federal Home Loan Bank advances 1,253,302 1,462,407
Trust preferred securities 532,944 532,944
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Total interest expense 8,756,879 12,882,889
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NET INTEREST INCOME 8,210,216 12,514,044
Provision for loan losses 1,494,000 13,984,000
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 6,716,216 (1,469,956)
Noninterest income
Data service fees 4,409,445 3,568,766
Trust fees 1,267,933 1,369,766
Customer service fees 1,195,292 1,281,010
Net gain on sales of loans 302,410 183,806
Net realized gains (losses) on sales of
available-for-sale securities 23,632 (1,817,938)
Loan servicing fees 228,938 200,185
Gain (loss) on sale of assets 19,950,611 (1,766)
Other income 288,538 329,492
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Total noninterest income 27,666,799 5,113,321
Noninterest expense
Salaries and employee benefits 7,525,035 7,762,032
Net occupancy expense 699,569 641,824
Equipment expense 2,116,626 1,848,986
Data processing fees 219,079 286,189
Professional fees 2,809,242 1,454,654
Marketing expense 193,531 235,080
Printing and office supplies 298,459 418,796
Telephone and communication 384,357 391,680
Postage and delivery expense 331,950 299,228
State, local and other taxes 327,430 355,183
Other expenses 1,617,582 1,262,559
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Total noninterest expense 16,522,860 14,956,211
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INCOME BEFORE INCOME TAX EXPENSE 17,860,155 (11,312,846)
Income tax expense 6,081,123 (3,889,110)
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NET INCOME $ 11,779,032 $ (7,423,736)
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Earnings per common share:
Basic $ 2.59 $ (1.64)
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Diluted $ 2.59 $ (1.64)
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