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Rurban Financial Corp. Reports First Quarter 2013 Results

  • Consolidated earnings up 36 percent year over year
  • Nonperforming assets declined to 1.30 percent of total assets
  • Portfolio loans increased $15.7 million, or 3.6 percent, year over year
  • Tangible leverage of 5.87 percent, up 20 percent year over year
  • Expense levels remained flat to the prior year
  • Net interest margin at 3.86 percent, up 26 basis points year over year

DEFIANCE, Ohio, April 22, 2013 (GLOBE NEWSWIRE) -- Rurban Financial Corp. (Nasdaq:RBNF) ("Rurban" or the "Company"), a diversified financial services company providing full-service community banking, mortgage banking, wealth management and item processing services, today reported earnings for the first quarter ended March 31, 2013.

Consolidated earnings for Rurban Financial Corp. include the results of Rurban's Banking Group, consisting primarily of The State Bank and Trust Company ("State Bank" or the "Bank"), and Rurban's data services subsidiary, Rurbanc Data Services, Inc. (dba "RDSI Banking Systems" or "RDSI"). For the quarter ended March 31, 2013, Rurban reported net income of $1.32 million, or $0.27 per diluted share, compared to net income of $0.97 million, or $0.20 per diluted share for the quarter ended March 31, 2012, and net income of $1.52 million, or $0.31 per diluted share, for the quarter ended December 31, 2012.

Mark Klein, president and chief executive officer of Rurban Financial Corp., stated, "Our first quarter results continued our progress toward higher performance. Earnings are up 36 percent, our loan portfolio experienced nearly $16 million in growth and asset quality showed another quarter of improvement. The hallmark of our success over these last two years has been our relentless focus on asset quality, solid steady loan growth and revenue diversity. These traits have served us well in this quarter and should continue to provide momentum in the future. We were also pleased to have met another benchmark, when earlier this month we initiated shareholder dividends after an extended absence."

RESULTS OF OPERATIONS

Consolidated Revenue

Total revenue, consisting of net interest income fully tax equivalent (FTE) and noninterest income, was $8.96 million for the first quarter of 2013, up $0.42 million, or 4.9 percent, from the first quarter of 2012, but lower by $0.94 million, or 9.5 percent, from the linked quarter. Revenue was impacted in the quarter by the 23.1 percent decline in mortgage originations from the linked quarter.

Net interest income (FTE) for the 2013 first quarter was $5.39 million, up 8.6 percent year over year, from the combined impact of increases in earning assets and lower funding costs. The net interest margin (FTE) was 3.86 percent for the first quarter of 2013 compared to 3.60 percent for the first quarter of 2012. Mr. Klein continued, "We have focused on shifting our earning assets into higher yielding products. Compared to the year prior, we have seen a reduction of $12 million from lower yielding securities and an increase of $16 million in loans. The margin this quarter also benefited from the lower interest rate on our trust preferred securities that were brought current at the end of 2012."

Noninterest Income

Noninterest income was $3.57 million for the first quarter of 2013, which held steady to the prior year but was lower than the linked quarter by $1.08 million. While mortgage production continued its strong momentum, the drop off from the record setting fourth quarter of 2012 drove down mortgage banking revenue by 27.3 percent.

Mortgage Banking ($000's) Three Months Ended
Mar. 2013 Dec. 2012 Sep. 2012 Jun. 2012 Mar. 2012
Mortgage originations $ 71,967 $ 93,619 $ 90,685 $ 79,901 $ 68,331
Mortgage sales 68,431 93,993 81,862 75,227 64,212
Mortgage servicing portfolio 548,493 528,086 488,930 459,380 422,802
Mortgage servicing rights 4,068 3,775 3,346 3,359 3,359
Mortgage servicing revenue:
Loan servicing fees 338 319 297 274 259
OMSR amortization (330) (362) (369) (254) (349)
Net administrative fees 8 (43) (72) 20 (90)
OMSR valuation adjustment 171 195 (120) (185) 419
Net loan servicing fees 179 152 (192) (165) 329
Gain on sale of mortgages 1,484 2,136 1,572 1,395 1,181
Mortgage banking revenue, net $1,663 $2,288 $1,380 $1,230 $1,510

Mortgage loan originations for the first quarter of 2013 were $72.0 million, up $3.64 million, or 5.3 percent, from the $68.3 million generated in the first quarter of 2012. Sales into the secondary market were also higher: $68.4 million, up $4.22 million, or 6.6 percent, above the $64.2 million sold in the year ago-quarter. In addition to the higher volume of sales, first quarter 2013 spreads were also stronger, totaling 2.17 percent of loans sold compared to 1.84 percent for the year-earlier quarter.

Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.66 million for the first quarter of 2013 compared to $2.29 million for the linked quarter and $1.51 million for the year-ago first quarter. The mortgage servicing valuation adjustment in the first quarter of 2013 was a favorable $0.17 million, compared to $0.20 million for the linked quarter. The mortgage servicing portfolio at the end of the first quarter 2013 was $548.5 million, up $125.7 million, or 29.7 percent, from the end of the first quarter 2012.

Our fee income diversity also includes wealth management, deposit fees and income from bank owned life insurance. Wealth management increased revenue by 6.1 percent from the linked quarter as assets under management grew by $20.6 million in the first quarter. In addition, this quarter we sold several FSA agriculture credits which generated gains of $0.16 million. Noninterest income contributed 39.8 percent of first quarter 2013 revenue (FTE); this compares to a 41.9 percent contribution of revenue (FTE) for first quarter 2012.

Data Services ($000's) Mar. 2013 Dec. 2012 Sep. 2012 Jun. 2012 Mar. 2012
Data Processing & Network Services $ 270 $ 179 $ 229 $ 194 $ 177
Payment Solutions 484 549 488 633 708
Contract Buyout -- -- 53 -- 551
Vendor Settlement -- 334 -- -- --
RDSI Gross Revenue 754 1,062 780 827 1,436
Less: Intercompany (340) (251) (285) (251) (793)
Net Data Services Fees $ 414 $ 811 $ 485 $ 576 $ 643
Core Data Service Fees $ 414 $ 477 $ 432 $ 576 $ 553

Gross revenue generated by RDSI, including services provided to Rurban/State Bank, was $0.75 million for the first quarter of 2013. Net data services fees, excluding Rurban/State Bank intercompany transactions, were $0.41 million in the first quarter of 2013, down $0.23 million from the year-ago quarter.

Loan Loss Provision

The loan loss provision was $0.30 million for the first quarter of 2013, a decline of $0.15 million from the first quarter of 2012. The decreased provision expense reflects a 15.7 percent decline in nonperforming loans and a 68.1 percent reduction in net charge-offs from the prior year. The loan loss reserve at first quarter-end 2013 was 1.54 percent of total loans, providing 114.9 percent coverage of nonperforming loans; this compares to reserve coverage of 81.6 percent at first quarter-end 2012.

Noninterest Expense

For the first quarter of 2013, noninterest expense was $6.67 million, level with the $6.68 million reported for the 2012 first quarter. Compared to the linked quarter, expense levels are down $0.54 million, a 7.5 percent reduction. Linked quarter reductions centered on compensation, due to lower mortgage commission and legal costs from the settlement of the New Core litigation. Mr. Klein added "We are encouraged that our expense levels were flat to the prior year this quarter and down significantly from the linked quarter. We were able to maintain our expense levels while increasing revenue 4.9 percent over the prior year."

Balance Sheet

Total assets as of March 31, 2013 were $641.3 million, a decline of $3.68 million, or 0.6 percent, from first quarter-end 2012. Total deposits as of first quarter-end 2013 were $532.3 million, lower by $3.23 million than at first quarter-end 2012. As a result of the balance sheet deleveraging, combined with lower cash reserves, State Bank was able to reduce its reliance on higher cost repos and FHLB advances from the prior-year; they now stand at $28.5 million.

Loan Portfolio ($000's) Mar. 2013 Dec. 2012 Sep. 2012 Jun. 2012 Mar. 2012 Variance YOY
Commercial $ 80,431 $ 81,491 $ 76,043 $ 75,964 $ 78,450 $ 1,981
% of Total 17.7% 17.6% 16.7% 16.8% 17.8% 2.5%
Commercial RE 199,615 201,392 198,682 199,918 188,984 10,631
% of Total 43.8% 43.5% 43.6% 44.2% 43.0% 5.6%
Agriculture 37,950 42,276 42,988 41,093 37,741 209
% of Total 8.3% 9.1% 9.4% 9.1% 8.6% 0.6%
Residential RE 89,669 87,859 85,727 85,046 84,771 4,898
% of Total 19.7% 19.0% 18.8% 18.8% 19.3% 5.8%
Consumer & Other 47,778 50,371 51,581 50,089 49,775 (1,997)
% of Total 10.5% 10.9% 11.3% 11.1% 11.3% (4.0%)
Total Loans $455,443 $463,389 $455,021 $452,110 $439,721 $ 15,722
3.6%

Total loans held for investment (HFI) were $455.4 million at March 31, 2013 compared to $439.7 million for the prior-year quarter-end, up $15.7 million, or 3.6 percent. Commercial real estate loans ("CRE") accounted for the majority of growth, up $10.6 million, or 5.6 percent, and residential real estate loans, up $4.90 million, or 5.8 percent. Year-to-date, loans declined by $7.95 million, primarily from a $4.33 million decline in agriculture loans.

Asset Quality

Rurban continues to improve on its asset quality, reporting nonperforming assets of $8.35 million for the current quarter, lower by $1.56 million, or 15.7 percent, than the prior year first quarter. Net charge-offs of $0.12 million were just 10 basis points for the quarter and were down from both the prior year and the linked quarter of $0.37 and $0.29 million respectively. Delinquency levels have remained steady, with the 30-89 day category totaling $0.69 million at the end of the 2013 first quarter compared to $0.57 million for the prior-year first quarter, and down significantly from the $2.60 million for the linked quarter. Mr. Klein continued "all of our asset quality measures have shown improvement. Total delinquencies are just 0.64 percent of our portfolio and nonperforming assets are at 1.3 percent of total assets. We have been at or below the 1.5 percent nonperforming asset level for five consecutive quarters. This is a testament to our strong underwriting and credit administration expertise."


Summary of Nonperforming Assets ($000's)
Nonperforming Loan Category Mar. 2013 Dec. 2012 Sep. 2012 Jun. 2012 Mar. 2012
Commercial 1,135 $ 1,246 $ 1,362 $ 1,467 $ 2,021
% of Total Commercial loans 1.41% 1.53% 1.78% 1.93% 2.58%
Commercial RE loans 457 782 448 1,345 1,481
% of Total CRE loans 0.23% 0.39% 0.23% 0.67% 0.78%
Agriculture -- -- 3 -- 113
% of Total Ag loans -- -- 0.01% -- 0.30%
Residential RE 2,614 2,631 2,607 1,958 1,840
% of Total Res. RE loans 2.92% 2.99% 3.04% 2.30% 2.17%
Consumer & Other 605 646 829 545 1,056
% of Consumer & Other loans 1.27% 1.28% 1.61% 1.09% 2.12%
Total Nonaccruing Loans 4,811 5,305 5,249 5,315 6,511
% of Total Loans 1.06% 1.14% 1.15% 1.18% 1.48%
Accruing Restructured Loans 1,273 1,258 1,735 1,837 1,593
Total Nonaccruing & Restructured $ 6,084 $ 6,563 $ 6,984 $ 7,152 $ 8,104
% of Total Loans 1.34% 1.42% 1.53% 1.58% 1.84%
OREO & Repossessed Vehicles 2,270 2,367 2,415 1,708 1,807
Total Nonperforming Assets $ 8,354 $ 8,930 $ 9,399 $ 8,860 $ 9,911
% of Total Assets 1.30% 1.40% 1.49% 1.40% 1.54%

Capitalization

Capital ratios continue to improve, however it still remains a primary focus of management. The tangible leverage ratio improved by 99 basis points over the past twelve months, and now stands at 5.87 percent. All bank regulatory ratios remain in excess of "well-capitalized" levels. At March 31, 2013, State Bank's Total Risk-Based Capital was estimated to be $58.0 million, $20.7 million above the well-capitalized level. The Total Risk-based Capital Ratio is estimated at 12.1 percent.

About Rurban Financial Corp.

Based in Defiance, Ohio, Rurban Financial Corp. is a financial services holding company with two wholly-owned operating subsidiaries: The State Bank and Trust Company (State Bank) and RDSI Banking Systems (RDSI). State Bank operates through 17 banking centers in seven Northwestern Ohio counties, one center in Fort Wayne, Indiana; and three loan production offices: two in Columbus, Ohio and one in Angola, Indiana. The Bank offers a full range of financial services for consumers and small businesses, including wealth management, mortgage banking, commercial and agricultural lending. RDSI provides item processing services to community banks located in the Midwest. Rurban's common stock is listed on the NASDAQ Global Market under the symbol RBNF.

Forward-Looking Statements

Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in the national and regional banking, insurance and mortgage industries, competitive factors specific to markets in which Rurban and its subsidiaries operate, future interest rate levels, legislative and regulatory actions, capital market conditions, general economic conditions, geopolitical events, the loss of key personnel and other factors. Additional factors that could cause results to differ from those described above can be found in Rurban's Annual Report on Form 10-K and documents subsequently filed by Rurban with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and Rurban undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made except as required by law. All subsequent written and oral forward-looking statements attributable to Rurban or any person acting on its behalf are qualified by these cautionary statements.

Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this release contains certain non-GAAP financial measures. Management believes that providing certain non-GAAP financial measures provides investors with information useful in understanding Rurban's financial performance, its performance trends and financial position. Specifically, Rurban provides measures based on "core operating earnings," which excludes merger, integration and restructuring expenses that are not reflective of on-going operations or not expected to recur. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.

RURBAN FINANCIAL CORP. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Unaudited)

($ in Thousands)
March
2013
December
2012
September
2012
June
2012
March
2012
ASSETS
Cash and due from banks $ 28,031 $ 19,144 $ 10,289 $ 14,636 $ 29,602
Securities available for sale, at fair value 98,390 98,702 101,247 102,537 110,603
Other securities - FRB and FHLB Stock 3,748 3,748 3,748 3,748 3,685
Total investment securities 102,138 102,450 104,995 106,285 114,288
Loans held for sale 8,560 6,147 11,584 10,595 11,384
Loans, net of unearned income 455,443 463,389 455,021 452,110 439,721
Allowance for loan losses (6,992) (6,811) (6,696) (6,618) (6,609)
Net loans 448,451 456,578 448,325 445,492 433,112
Premises and equipment, net 12,738 12,633 12,898 13,190 13,282
Purchased software 300 330 334 355 386
Cash surrender value of life insurance 12,659 12,577 12,491 12,401 12,312
Goodwill 16,353 16,353 16,353 16,353 16,353
Core deposits and other intangibles 1,066 1,219 1,376 1,534 1,691
Foreclosed assets held for sale, net 2,270 2,367 2,415 1,708 1,807
Mortgage servicing rights 4,068 3,775 3,346 3,359 3,359
Accrued interest receivable 1,618 1,235 1,832 1,597 1,802
Other assets 3,048 3,426 3,967 5,026 5,598
Total assets $ 641,300 $ 638,234 $ 630,205 $ 632,531 $ 644,976
LIABILITIES AND EQUITY
Deposits
Non interest bearing demand $ 79,579 $ 77,799 $ 69,250 $ 68,918 $ 71,077
Interest bearing demand 123,748 117,289 112,230 109,268 118,898
Savings 62,404 57,461 53,505 53,777 52,599
Money market 81,130 80,381 78,006 81,114 82,799
Time deposits 185,398 194,071 202,259 205,584 210,119
Total deposits 532,259 527,001 515,250 518,661 535,492
Notes payable 1,424 1,702 1,975 2,249 2,519
Advances from Federal Home Loan Bank 17,500 21,000 18,500 17,500 12,611
Repurchase agreements 10,983 10,333 13,735 15,824 17,771
Trust preferred securities 20,620 20,620 20,620 20,620 20,620
Accrued interest payable 515 138 4,223 3,836 3,556
Other liabilities 3,704 4,156 3,972 3,567 3,381
Total liabilities 587,005 584,950 578,275 582,257 595,950
Equity
Preferred stock -- -- -- -- --
Common stock 12,569 12,569 12,569 12,569 12,569
Additional paid-in capital 15,381 15,374 15,363 15,350 15,338
Retained earnings 26,476 25,280 23,755 22,452 21,438
Accumulated other comprehensive income 1,623 1,830 2,012 1,672 1,450
Treasury stock (1,754) (1,769) (1,769) (1,769) (1,769)
Total equity 54,295 53,284 51,930 50,274 49,026
Total liabilities and equity $ 641,300 $ 638,234 $ 630,205 $ 632,531 $ 644,976
RURBAN FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except share data) Three Months Ended
Interest income March
2013
December
2012
September
2012
June
2012
March
2012
Loans
Taxable $ 5,883 $ 5,840 $ 6,106 $ 6,037 $ 5,928
Nontaxable 24 22 21 24 23
Securities
Taxable 330 330 383 403 399
Nontaxable 170 157 156 146 147
Total interest income 6,407 6,349 6,666 6,610 6,497
Interest expense
Deposits 606 653 694 768 854
Other borrowings 14 15 17 (2) 34
Repurchase Agreements 2 3 11 60 68
Federal Home Loan Bank advances 90 92 92 75 74
Trust preferred securities 403 431 418 441 592
Total interest expense 1,115 1,194 1,232 1,342 1,622
Net interest income 5,292 5,155 5,434 5,268 4,875
Provision for loan losses 299 400 300 200 450
Net interest income after provision for loan losses 4,993 4,755 5,134 5,068 4,425
Noninterest income
Data service fees 414 811 485 576 643
Trust fees 643 606 646 607 642
Customer service fees 616 648 677 668 631
Gain on sale of mtg. loans & OMSR's 1,484 2,136 1,572 1,395 1,181
Mortgage loan servicing fees, net 179 152 (192) (165) 329
Gain on sale of non-mortgage loans 156 94 170 -- --
Net gain on sales of securities 20 -- -- -- --
Loss on sale or disposal of assets (105) (54) (151) (50) (56)
Other income 160 255 201 177 211
Total non-interest income 3,567 4,648 3,408 3,208 3,581
Noninterest expense
Salaries and employee benefits 3,439 3,825 3,597 3,597 3,499
Net occupancy expense 518 494 515 528 548
Equipment expense 755 692 722 712 711
FDIC insurance expense 132 100 91 223 214
Fixed asset and software impairment -- 65 -- -- --
Data processing fees 77 132 103 121 113
Professional fees 429 686 451 390 385
Marketing expense 108 115 85 103 90
Printing and office supplies 46 46 39 67 78
Telephone and communication 158 146 151 139 144
Postage and delivery expense 215 204 223 200 229
State, local and other taxes 134 136 128 118 120
Employee expense 152 113 118 119 106
Other intangible amortization expense 153 158 157 158 157
OREO Impairment 33 -- -- 58 --
Other expenses 321 300 345 338 282
Total non-interest expense 6,670 7,212 6,725 6,871 6,676
Income before income tax expense 1,890 2,191 1,817 1,405 1,330
Income tax expense 572 667 513 391 358
Net income $ 1,318 $ 1,524 $ 1,304 $ 1,014 $ 972
Common share data:
Basic earnings per common share $ 0.27 $ 0.31 $ 0.27 $ 0.21 $ 0.20
Diluted earnings per common share $ 0.27 $ 0.31 $ 0.27 $ 0.21 $ 0.20
Average shares outstanding ($ in thousands):
Basic: 4,863 4,862 4,862 4,862 4,862
Diluted: 4,870 4,862 4,862 4,862 4,862
RURBAN FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share data) Three Months Ended

SUMMARY OF OPERATIONS
March
2013
December
2012
September
2012
June
2012
March
2012
Net interest income $ 5,292 5,155 5,434 5,268 4,875
Tax-equivalent adjustment $ 100 92 91 88 88
Tax-equivalent net interest income $ 5,392 5,247 5,525 5,356 4,963
Provision for loan loss $ 299 400 300 200 450
Noninterest income $ 3,567 4,648 3,408 3,208 3,581
Total revenue, tax-equivalent $ 8,959 9,895 8,933 8,564 8,544
Noninterest expense $ 6,670 7,212 6,725 6,871 6,676
Pre provision pretax income $ 2,189 2,591 2,117 1,605 1,780
Pretax income $ 1,890 2,191 1,817 1,405 1,330
Net income $ 1,318 1,524 1,304 1,014 972
PER SHARE INFORMATION:
Basic & diluted earnings per share $ 0.27 0.31 0.27 0.21 0.20
Book value per common share $ 11.16 10.96 10.68 10.34 10.08
PERFORMANCE RATIOS:
Return on average assets 0.83% 0.95% 0.82% 0.63% 0.61%
Return on average common equity 9.82% 11.64% 10.25% 8.20% 8.04%
Return on avg. tangible common equity 14.56% 17.57% 15.91% 13.01% 12.97%
Core efficiency ratio 72.02% 71.47% 72.07% 77.66% 76.98%
Earning asset yield 4.65% 4.50% 4.78% 4.76% 4.77%
Cost of interest bearing liabilities 0.90% 0.96% 0.98% 1.05% 1.28%
Net interest margin 3.76% 3.65% 3.85% 3.75% 3.53%
Tax equivalent effect 0.10% 0.07% 0.06% 0.06% 0.07%
Net interest margin - fully tax equivalent basis 3.86% 3.72% 3.91% 3.81% 3.60%
ASSET QUALITY RATIOS:
Gross charge-offs $ 136 300 302 252 474
Recoveries $ 18 15 78 62 104
Net charge-offs $ 118 285 223 190 370
Nonaccruing loans/ Total loans 1.06% 1.14% 1.15% 1.18% 1.48%
Nonperforming loans/ Total loans 1.34% 1.42% 1.53% 1.58% 1.84%
Nonperforming assets/ Loans & OREO 1.95% 2.02% 2.05% 1.95% 2.24%
Nonperforming assets/ Total assets 1.30% 1.40% 1.49% 1.40% 1.54%
Allowance for loan loss/ Nonperforming loans 114.9% 103.8% 95.9% 92.5% 81.6%
Allowance for loan loss/ Total loans 1.54% 1.47% 1.47% 1.46% 1.50%
Net loan charge-offs/ Average loans (ann.) 0.10% 0.25% 0.20% 0.17% 0.34%
Loan loss provision/ Net charge-offs 253.39% 140.56% 134.46% 105.22% 121.52%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits 85.57% 87.93% 88.31% 87.17% 82.12%
Equity/ Assets 8.49% 8.35% 8.24% 7.95% 7.60%
Tangible equity/ Tangible assets 5.87% 5.70% 5.53% 5.21% 4.88%
END OF PERIOD BALANCES
Total loans $ 455,443 463,389 455,021 452,110 439,721
Total assets $ 641,300 638,234 630,205 632,531 644,976
Deposits $ 532,259 527,001 515,250 518,661 535,492
Stockholders equity $ 54,295 53,284 51,930 50,274 49,026
Tangible equity $ 36,576 35,382 33,867 32,032 30,596
Full-time equivalent employees 204 204 199 204 203
AVERAGE BALANCES
Total loans $ 459,988 455,705 454,634 446,786 436,384
Total earning assets $ 559,383 564,564 565,144 562,169 552,016
Total assets $ 638,801 639,048 635,012 643,859 635,849
Deposits $ 524,901 522,970 515,795 527,992 523,193
Stockholders equity $ 53,711 52,351 50,905 49,464 48,377
Intangibles $ 17,512 17,665 18,126 18,299 18,396
Tangible equity $ 36,199 34,686 32,779 31,165 29,981
RURBAN FINANCIAL CORP.
Rate Volume Analysis - (Unaudited)
For the Three Months Ended March 31, 2013 and 2012
($ in Thousands) Three Months Ended March 31, 2013 Three Months Ended March 31, 2012
Assets Average
Balance

Interest
Average
Rate
Average
Balance

Interest
Average
Rate
Taxable securities $ 83,512 330 1.58% $ 95,050 399 1.68%
Non-taxable securities 15,883 258 6.49% 14,618 223 6.10%
Federal funds sold -- -- N/A -- -- N/A
Loans, net 459,988 5,919 5.15% 442,348 5,963 5.39%
Total earning assets $ 559,383 6,507 4.65% $ 552,016 6,585 4.77%
Cash and due from banks 24,167 27,453
Allowance for loan losses (6,862) (6,442)
Premises and equipment 15,120 15,504
Other assets 46,993 47,318
Total assets $ 638,801 $ 635,849
Liabilities
Savings and interest-bearing demand $ 259,809 21 0.03% $ 240,750 68 0.11%
Time deposits 188,195 585 1.24% 214,686 786 1.46%
Repurchase agreements 9,970 2 0.08% 17,129 68 1.59%
Advances from FHLB 17,606 90 2.04% 12,668 74 2.34%
Junior subordinated debentures 20,620 403 7.82% 20,620 592 11.48%
Notes payable & other borrowed funds 1,516 14 3.69% 2,559 34 5.31%
Total interest-bearing liabilities $ 497,716 1,115 0.90% $ 508,412 1,622 1.28%
Non interest-bearing demand 76,897 67,757
Other liabilities 10,477 11,303
Total liabilities 585,090 587,472
Equity $ 53,711 $ 48,377
Total liabilities and equity $ 638,801 $ 635,849
Net interest income (tax equivalent basis) $ 5,392 $ 4,963
Net interest income as a percent of average interest-earning assets 3.86% 3.60%

CONTACT: Anthony Cosentino Executive Vice President and Chief Financial Officer 419.785.3663 Tony.Cosentino@thebank-sbt.comSource:Rurban Financial Corp.