Rurban Financial Corp. Reports 2012 Fourth Quarter and Full-Year Results

Rurban Financial Corp. Reports 2012 Fourth Quarter and Full-Year Results

  *Full year earnings per share of $0.99, nearly triple the results of 2011
  *Loan growth of 4.7% year over year
  *Nonperforming assets declined to 1.40% of total assets
  *Tangible leverage of 5.70% -- approaching near-term goal of 6%
  *Fourth quarter ROA at 95 basis points

DEFIANCE, Ohio, Jan. 23, 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
fourth quarter and twelve months ended December 31, 2012.

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
2012 fiscal year, net income was $4.81 million, or $0.99 per diluted share,
compared to $1.66 million, or $0.34 per diluted share, for the 2011 fiscal
year. Excluding a 2012 net gain of $0.20 million after-tax ($0.30 million
pretax) from non-recurring items, primarily from the settlement of RDSI
matters, including litigation and contract buyouts, 2012 core earnings were
$4.62 million, or $0.95 per diluted share. This compares to 2011 core earnings
of $1.46 million, or $0.30 per common share, excluding a net gain of $0.21
million ($0.32 million pretax), primarily from balance sheet restructuring,
RDSI contract buyouts and RDSI write-downs.

RURBAN FINANCIAL CORP.
Reconciliation of Non-GAAP Financial Matters to GAAP Financial Matters
                                                               
               Three Months Ended                           Twelve Months
                                                             Ended
($ in           December September June 2012 March  December December December
Thousands)      2012     2012                2012   2011     2012     2011
GAAP Earnings   $1,524 $1,304  $1,014  $972 $274   $4,814 $1,664
Realized
securities      --       --        --        --     --       --       (1,871)
gains (1)
Prepayment      --       --        --        --     --       --       1,083
penalties (1)
RDSI Settlement (334)    --        --        --     --       (334)    --
(2)
Branch          65       --        --        --     --       65       --
writedown (1)
Hardware        --       --        --        --     609      --       609
write-offs (2)
New Core
litigation      115      --        --        --     --       115      --
costs (2)
Contract        --       (53)      --        (90)   --       (143)    (519)
buyouts (2)
Writedown of
goodwill and    --       --        --        --     381      --       381
intangibles (2)
Total non-core  (154)    (53)      --        (90)   990      (297)    (317)
items
Income tax
effect on       52       18        --        31     (336)    101      108
non-core items
After-tax non-  (102)    (35)      --        (59)   653      (196)    (209)
core items
Core recurring  $1,442 $1,269  $1,014  $913 $927   $4,618 $1,455
net income
(1) State Bank                                                 
(2) RDSI                                                        

For the quarter ended December 31, 2012, Rurban reported net income of $1.52
million, or $0.31 per diluted share, compared to net income of $0.27 million,
or $0.06 per diluted share, for the fourth quarter 2011. Excluding a one-time
net gain of $0.10 million ($0.15 million pretax) for the 2012 fourth quarter
and a net charge of $0.65 million ($0.99 million pretax) for the 2011 fourth
quarter, operating earnings were $1.42 million for the quarter ended December
31, 2012 compared to $0.93 million for the fourth quarter 2011, up 53.4
percent. For the 2012 third quarter, net income was $1.3 million on a GAAP
basis, and $1.27 million from operations; earnings from operations for the
2012 fourth quarter were 13.6 percent ahead of the linked quarter.

Mark Klein, president and chief executive officer of Rurban Financial Corp.,
stated, "I continue to be pleased with our progress toward higher performance.
Our primary focus this past year has been to improve profitability. With our
strong fourth quarter, we have moved closer to our near-term goal of one
percent ROA and top-quartile performance. Over the last twelve month period,
we have significantly improved our risk profile, reducing nonperforming assets
to under $9 million, while strengthening reserves and tangible capital.
Although growth is not our primary consideration, it is gratifying to have
expanded our loan portfolio by nearly five percent, especially since loan
growth in the community banking sector has been difficult for many banks to
achieve. In this context, Rurban has distinguished itself not only with strong
loan growth, but also strong asset quality and an attractive fee-generating
capability, another rarity among community banks. These three qualities – loan
growth, asset quality and revenue diversity – position us to manage our bottom
line more successfully than many banks our size. We see no impediments on the
near horizon to interfere with our controlled pace of performance
enhancement."

RESULTS OF OPERATIONS

Consolidated Revenue

Total revenue, consisting of net interest income on a fully tax equivalent
basis ("FTE") and noninterest income, was $35.9 million for 2012, up $0.8
million, or 2.4 percent, from the prior-year twelve-month period. For the
fourth quarter of 2012, total revenue was $9.9 million, up $1.1 million, or
12.4 percent, from the year-ago quarter.

Net interest income (FTE) for 2012 was $21.1 million, virtually unchanged from
the $21.3 million reported for 2011. The 0.76 percent decline in net interest
income resulted from a five basis point, or 1.3 percent, decline in the net
interest margin (FTE), to an average of 3.76 percent for the twelve months of
2012, partially offset by a $2.8 million, or 0.5 percent, increase in average
earning assets. Net interest income (FTE) for the 2012 fourth quarter was
$5.25 million, a decline of $0.13 million, or 2.5 percent, from the fourth
quarter 2011. Average earning assets grew $8.6 million year over year:
however, average loan growth was $17.7 million. The $9.1 million difference
was funded from the securities portfolio. Mr. Klein continued, "Our funding
costs continue to decline, albeit more modestly in recent quarters. We have
preserved our margins to the extent possible in this challenging interest-rate
environment by shifting our earning asset mix in favor of higher-yielding
loans."

Noninterest Income

Noninterest income was $14.8 million for the year ended December 31, 2012, an
increase of $1.0 million, or 7.1 percent, from the $13.9 million reported for
2011. Non-core gains for 2012 totaled $0.48 million, all related to RDSI
matters, including contract buyouts and a vendor settlement, while for 2011,
non-core gains totaled $2.4 million, including RDSI contract buyouts and $1.87
million of securities gains. Excluding these one-time items, noninterest
income from operations grew 25.3 percent, from $11.5 million in 2011 to $14.4
million for 2012. Fourth quarter 2012 noninterest income, less the $0.33
million vendor settlement, grew 26 percent to $4.3 million.

Despite the loss of RDSI data processing fee income, Rurban continues to
report an exceptional level of noninterest income. Fees contributed 45 percent
of operating revenue for the 2012 fourth quarter, and 41 percent for the full
year. Higher gains on loan sales and a lower impairment of mortgage servicing
rights (MSR) in both the fourth quarter and the full year contributed to the
growth of 2012 noninterest income.

Data Services                                             
                            Three Months Ended            Twelve Months Ended
($'s in thousands)           Dec.  Sep.  Jun.  Mar.  Dec.  Dec. 2012 Dec. 2011
                             2012  2012  2012  2012  2011
Data Processing & Network    $179 $229 $194 $177 $320 $779     $1,281
Services
Payment Solutions            549   488   633   708   720   2,378     3,254
Contract Buyout              --    53    --    551   --    604       519
Vendor Settlement            334   --    --    --    --    334       --
RDSI Gross Revenue           1,062 780   827   1,436 1,040 4,095     5,054
Less: Intercompany           (251) (285) (251) (793) (369) (1,580)   (1,424)
Net Data Services Fees       $811 $485 $576 $643 $671 $ 2,515   $ 3,630
Core Data Services Fees      $477 $432 $576 $553 $671 $ 2,038   $ 3,111

RDSI gross revenue was $4.1 million for 2012, a decline of $0.96 million, or
19 percent, from the $5.0 million reported for 2011. Included in revenue for
both years were certain one-time items arising from RDSI's transition to
become an exclusive provider of item processing and network services; for
2012, contract buyouts and a vendor settlement boosted gross revenue by $0.94
million while in 2011, the gain from a contract buyout contributed $0.52
million. Excluding these one-time items, gross revenue from operations was
$3.2 million compared to $4.5 million for 2011, a decline of 30.4 percent year
over year. Intercompany sales to State Bank accounted for $1.6 million in
2012, including a one-time contract buyout fee of $0.46 million paid by State
Bank to RDSI in the first quarter of 2012; for 2011, intercompany sales were
$1.4 million.Excluding intercompany sales and one-time items, core net data
services fees to third parties were $2.0 million in 2012 and $3.1 million in
2011, a decline of $1.1 million or 34.5 percent.

During the fourth quarter of 2012, RDSI settled all pending litigation with
New Core Holdings relating to earlier agreements and transactions, incurring
one-time legal expenses of $115,000. In addition, RDSI recognized a $0.33
million gain from the settlement of a vendor agreement. According to Mr.
Klein, "RDSI has nearly completed its transformation to a more focused
organization committed to network services and item processing for the banking
sector. At the same time, we continue to explore opportunities to leverage our
technology toward applications that might expand our core expertise into new
and profitable directions."

Mortgage                                                   
Banking
              Three Months Ended                           Twelve Months Ended
($'s in        Dec.     Sep.     Jun.     Mar.     Dec.     Dec. 2012 Dec. 2011
thousands)     2012     2012     2012     2012     2011
Mortgage       $93,619 $90,685 $79,901 $68,331 $85,114 $332,535 $220,208
originations
Mortgage sales 93,993   81,862   75,227   64,212   81,046   315,294   197,500
Mortgage
servicing      528,086  488,930  459,380  422,802  402,062  528,086   402,062
portfolio
Mortgage
servicing      3,775    3,346    3,359    3,359    2,820    3,775     2,820
rights
                                                               
Mortgage
servicing                                                       
revenue:
Loan servicing 319      297      274      259      242      1,149     894
fees
Less: OMSR     (362)    (369)    (254)    (349)    (329)    1,335     745
amortization
Net
administrative (43)     (72)     20       (90)     (87)     (186)     149
fees
Less: OMSR
valuation      195      (120)    (185)    419      (221)    310       (1,119)
adjustment
Net loan       152      (192)    (165)    329      (308)    124       (970)
servicing fees
Gain on sale   2,136    1,572    1,395    1,181    1,529    6,284     3,620
of mortgages
Mortgage
banking        $2,288   $1,380   $1,230   $1,510   $1,221   $6,408    $2,650
revenue, net

Mortgage banking continued its banner year, with fourth quarter loan
originations reaching a new high: $93.6 million, up $8.5 million, or 10
percent, from the $85.1 million generated in the fourth quarter of 2011, and
higher by $2.9 million than the third quarter. For the twelve month period,
originations were $332.5 million, up 51 percent above 2011, with loan sales
into the secondary market also at record levels: $315.3 million, up $118
million, or 60 percent above 2011 levels.

Net mortgage banking income, consisting primarily of gains on the sale of
mortgage loans and to a lesser extent, net loan servicing fees, was $6.4
million for the 2012 fiscal year. Loan sales strengthened with each successive
quarter throughout the year, and generated a higher spread every quarter as
well. The gain on sale of mortgages averaged 1.36 percent for 2012 compared to
a spread of 1.08 percent for 2011, generating $6.3 million of 2012 gains – 74
percent ahead of 2011. 

Net mortgage servicing fees were $0.12 million in 2012 compared to a loss of
$0.97 million for 2011. The net mortgage servicing valuation adjustment ended
2012 in positive territory, with a gain of $0.31 million for the twelve month
period; this compares to the $1.1 million charge incurred for 2011. The
mortgage servicing portfolio at the end of the fourth quarter of 2012 was $528
million, up $126 million, or 31.3 percent, from 2011 fourth quarter-end.

"Like many banks in this environment," explained Mr. Klein, "we have looked to
mortgage banking to drive revenue growth. We have succeeded on all fronts this
past year. With two-thirds of our total production coming from clients new to
our bank, we have opportunities to leverage this entry-level, yet highly
visible, mortgage servicing product into multifaceted, profitable
relationships."

Mortgage banking revenues accounted for 43 percent of noninterest income
during the twelve months of 2012 compared to 19 percent in 2011 where
impairment valuations reduced the contribution of mortgage banking. Excluding
mortgage banking and data services fees, the remainder of noninterest income
in both years was derived primarily from wealth management and customer
service fees; each of these two business lines has contributed a remarkably
stable stream of fee income modestly in excess of $2.5 million every year. In
addition, Rurban sold several SBA and FSA guaranteed loans which generated
revenue of $264,000 in 2012 and $208,000 in 2011.

Loan Loss Provision

The loan loss provision was $1.35 million for 2012, a decline of $0.64
million, or 32 percent, from the previous year. The decreasing provision
expense reflects a 20 percent decline in nonperforming loans over the past
twelve months, and a $1.1 million lower level of charge-offs. The loan loss
reserve at year-end 2012 was 1.47 percent of total loans, providing 104
percent coverage of nonperforming loans at December 31, 2012; this compares to
reserve coverage of 79 percent at year-end 2011. For the fourth quarter of
2012, the $0.40 million provision more than replaced net charge-offs of $0.29
million.

Noninterest Expense

Noninterest expense for 2012 was $27.5 million compared to $30.3 million for
the previous year. In 2012, nonrecurring charges totaled $0.18 million,
including $0.12 million for the settlement of all pending New Core litigation
and $0.65 million for a branch writedown, all of which occurred in the 2012
fourth quarter; for 2011, nonrecurring charges totaled $2.1 million, including
$1.1 million of prepayment penalties incurred during the Bank's balance sheet
restructuring, and $1.0 million of RDSI write-downs and write-offs. Excluding
these one-time items, 2012 operating expenses declined by 3.1 percent year
over year.

Savings were achieved across the board, with the exception of salaries and
benefits expense, which grew $0.34 million, or 2.4 percent.Increased
compensation expense reflects the higher level of mortgage banking activity,
since mortgage bankers receive commissions based on volume of
originations.Excluding mortgage banking commission of $2.1 million in 2012
and $0.9 million in 2011, the remaining consolidated total compensation
expense declined by $1.0 million, or 6.3 percent year over year. Mr. Klein
added, "We are making steady progress with our cost-savings initiatives, but
much of our progress is masked by our growing and highly profitable non-bank
activities, where expense growth, especially compensation
expense,hasbeenmore closely tied to revenue growth." Reflecting this
improvement, the core efficiency ratio declined to 73.8 percent, from 77.6
percent for the preceding year.

For the fourth quarter of 2012, noninterest expense was $7.2 million compared
to $8.0 million for the 2011 fourth quarter. Excluding nonrecurring items
totaling $0.18 million in 2012 and $1.0 million in 2011, noninterest expense
from operations was virtually unchanged at $7.0 million for both fourth
quarters.

BALANCE SHEET

Total assets as of December 31, 2012 were $638.2 million, an increase of $9.6
million, or 1.5 percent, above levels at December 31, 2011. Over the same
twelve-month time frame, total deposits grew $8.2 million, or 1.6 percent, and
loans grew $20.8 million, or 4.7 percent. This higher level of loans
outstanding relative to assets has provided support to Rurban's net interest
margin as has the shift in deposit mix further toward lower-cost non-maturity
deposits, which now comprise 63 percent of total deposits compared to 57
percent for the prior year-end. The continuing decline in interest rates,
combined with a lower-cost deposit mix, has contributed to a 25 basis point
decline in the cost of fourth quarter deposits compared to the year-earlier
fourth quarter; however, the improvement has narrowed by only three basis
points from the linked quarter, suggesting that further progress may be more
difficult.

Declining interest rates also contributed to the 37 basis point decline in
earning asset yield over the past year. Management's decision to fund
higher-yielding loans from the securities portfolio has moderated the decline
in earning asset yield, which currently stands at 4.56 percent as of the
fourth quarter of 2012. Unlike deposit costs, however, asset yields have
continued to decline, with fourth quarter lower by 22 basis points compared to
the linked quarter.

Loan Portfolio                                                   
($ in Thousands)    Dec. 2012 Sep. 2012 Jun. 2012 Mar. 2012 Dec. 2011 Variance
                                                                      YOY
Commercial &        $81,491  $76,043  $75,964  $78,450  $78,112  $3,379
Industrial (C&I)
% of Total          17.6%     16.7%     16.8%     17.8%     17.7%     4.3%
Commercial Real     201,392   198,682   199,918   188,984   187,829   13,563
Estate
% of Total          43.5%     43.6%     44.2%     43.0%     42.4%     7.2%
Agriculture         42,276    42,988    41,093    37,741    38,361    3,915
% of Total          9.1%      9.4%      9.1%      8.6%      8.7%      10.2%
Residential Real    87,859    85,727    85,046    84,771    87,656    203
Estate
% of Total          19.0%     18.8%     18.8%     19.3%     19.8%     0.2%
Consumer & Other    50,371    51,581    50,089    49,775    50,596    (225)
% of Total          10.9%     11.3%     11.1%     11.3%     11.4%     (0.4%)
                                                                
Total Loans         $463,389  $455,021  $452,110  $439,721  $442,554  $ 20,835
                                                                4.7%

Total loans were $463.4 million at December 31, 2012 compared to $442.6
million for the prior-year period, up $20.8 million, or 4.7 percent.
Commercial real estate ("CRE") loans accounted for nearly 65 percent of total
loan growth over the past twelve-month period, up $13.6 million, or 7.2
percent. CRE loans currently comprise 43.5 percent of State Bank's loan
portfolio, followed by residential real estate and C&I loans, at 19.0 percent
and 17.6 percent, respectively. Although CRE loans showed the largest dollar
increase, agriculture loans grew by a robust 10.2 percent, adding nearly $4
million this past year.

ASSET QUALITY

Rurban's strong underwriting and credit administration expertise continue to
position the asset quality in the top quartile of its peers, with only 1.42
percent of its loan portfolio on nonperforming status. Nonaccruing loans were
$5.3 million as of December 31, 2012, a decline of $1.6 million, or 23 percent
from the year-earlier level. The greatest improvement was reflected in the C&I
portfolio, where nonaccrual loans declined over the past twelve months by $1.1
million, or 48 percent; they now stand at $1.2 million as of December 31,
2012. Currently, Rurban has only one nonperforming relationship that exceeds
$1.0 million; the three largest nonperforming loans total $3.0 million,
accounting for 33 percent of nonperforming assets.

Summary of Nonperforming Assets
($ in Thousands)                                                 
Nonaccruing Loan Category    Dec. 2012 Sep. 2012 Jun. 2012 Mar. 2012 Dec. 2011
Commercial & Industrial      $1,246   $1,362   $1,467   $2,021   $2,393
(C&I)
% of Total C&I loans         1.53%     1.78%     1.93%     2.58%    3.06%
Commercial Real Estate (CRE) 782       448       1,345     1,481     1,456
% of Total CRE loans         0.39%     0.23%     0.67%     0.78%     0.78%
Agriculture                  --        3         --        113       --
% of Total Ag loans          --        0.01%     --        0.30%     --
Residential Real Estate      2,631     2,607     1,958     1,840     2,471
% of Total Res. RE loans     2.99%     3.04%     2.30%     2.17%     2.82%
Consumer & Other             646       829       545       1,056     580
% of Consumer & Other loans  1.28%     1.61%     1.09%     2.12%     1.15%
Total Nonaccruing Loans      5,305     5,249     5,315     6,511     6,900
% of Total Loans             1.14%     1.15%     1.18%     1.48%     1.56%
Accruing Restructured Loans  1,258     1,735     1,837     1,593     1,334
Total Nonperforming Loans    $6,563   $6,984   $7,152   $8,104   $8,234
% of Total Loans             1.42%     1.53%     1.58%     1.84%     1.86%
OREO & Repossessed Vehicles  2,367     2,415     1,708     1,807     1,830
Total Nonperforming Assets   $8,930   $9,399   $ 8,860  $9,911   $10,064
% of Total Assets            1.40%     1.49%     1.40%     1.54%     1.60%

Rurban's strong underwriting and credit administration expertise position the
quality of its loan portfolio in the top quartile of its asset peers, with
only 1.42 percent of loans on nonperforming status. Nonaccruing loans were
$5.3 million as of December 31, 2012, a decline of $1.6 million, or 23 percent
from the year-earlier level. The greatest improvement was reflected in the C&I
portfolio, where nonaccrual loans declined over the past twelve months by $1.1
million, or 48 percent; they now stand at $1.2 million as of December 31,
2012. Currently, Rurban has only one nonperforming relationship that exceeds
$1.0 million; the three largest nonperforming loans total $3.0 million,
accounting for 33 percent of nonperforming assets.

Nonperforming Asset Reconciliation
                                                           
($ in Thousands)        Dec. 2012 Sep. 2012 Jun. 2012 Mar. 2012 Dec. 2011
Beginning Balance       $9,399   $8,860   $9,911   $10,064  $10,612
                                                           
Additions               1,026     1,396     1,209     906       1,193
Returns to performing   (226)     (163)     (306)     (419)     (169)
status
Principal payments      (228)     (146)     (1,773)   (402)     (375)
Sale of OREO/OAO        (264)     (152)     (147)     (23)      (358)
Loan charge-offs        (300)     (294)     (220)     (474)     (648)
Valuation write-downs   --        --        (58)      --        (214)
Restructured Loan       (477)     (102)     244       259       23
Activity
Net Change              469       522       (1,051)   (153)     (548)
                                                           
Ending Balance          $8,930   $9,399   $8,860   $9,911   $10,064

Nonperforming assets now stand at $8.9 million, or 1.40 percent of assets.
They declined by $1.1 million over the past twelve months, or approximately
$0.28 million per quarter, through a combination of asset sales, charge-offs,
principal payments, and credit improvements. The loan loss provision has
exceeded net charge-offs each quarter.

30-89 Day Loan Delinquencies December September June  March December
($ in thousands)             2012     2012      2012  2012  2011
                                                       
30-59 days past due          $ 2,058  434       1,385 271   1,002
60-89 days past due          $ 537    221       778   294   978
Total 30-89 Days Delinquent  $ 2,595  655       2,163 565   1,980
% of Total Loans             0.56%    0.14%     0.48% 0.13% 0.45%

CAPITALIZATION

Capital ratios continue to improve, but still remain at the low end of
management's objectives. The tangible leverage ratio improved by 85 basis
points over the past twelve months, and now stands at 5.70 percent. All bank
regulatory ratios remain in excess of "well-capitalized" levels, and have
improved relative to the prior year; holding company ratios have also
demonstrated consistent quarterly improvement since mid-year 2011. At December
31, 2012, State Bank's Total Risk-Based Capital was estimated to be $57.1
million, $19.6 million above the well-capitalized level; with the Total
Risk-based Capital Ratio estimated at 12.0 percent. As of December 31, 2012,
Rurban had 4,861,779 common shares outstanding.

About Rurban Financial Corp.

Based in Defiance, Ohio, Rurban Financial Corp. is a financial services
holding company with two wholly-owned operating subsidiaries: The State Bank
and Trust Company (State Bank) and RDSI Banking Systems (RDSI). State Bank
operates through 18 banking centers in seven Northwestern Ohio counties, and
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 materially from those described above can be
found in Rurban's 2011 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)        December   September  June       March      December
                        2012       2012       2012       2012       2011
ASSETS                                                          
Cash and due from banks $19,144  $10,289  $14,636  $29,602  $14,846
                                                               
Securities available    98,702    101,247   102,537   110,603   111,978
for sale, at fair value
Other securities - FRB  3,748     3,748     3,748     3,685     3,685
and FHLB Stock
Total investment        102,450   104,995   106,285   114,288   115,663
securities
                                                               
Loans held for sale     6,147     11,584    10,595    11,384    5,238
                                                               
Loans, net of unearned  463,389   455,021   452,110   439,721   442,554
income
Allowance for loan      (6,811)   (6,696)   (6,618)   (6,609)   (6,529)
losses
Net loans               456,578   448,325   445,492   433,112   436,025
                                                               
Premises and equipment, 12,633    12,898    13,190    13,282    13,773
net
Purchased software      330       334       355       386       159
Cash surrender value of 12,577    12,491    12,401    12,312    12,224
life insurance
Goodwill                16,353    16,353    16,353    16,353    16,353
Core deposits and other 1,219     1,376     1,534     1,691     1,849
intangibles
Foreclosed assets held  2,367     2,415     1,708     1,807     1,830
for sale, net
Mortgage servicing      3,775     3,346     3,359     3,359     2,820
rights
Accrued interest        1,235     1,832     1,597     1,802     1,635
receivable
Other assets            3,426     3,967     5,026     5,598     6,249
Total assets            $638,234 $630,205 $632,531 $644,976 $628,664
                                                               
LIABILITIES AND EQUITY                                          
Deposits                                                        
Non interest bearing    $77,799  $69,250  $68,918  $71,077  $65,963
demand
Interest bearing demand 117,289   112,230   109,268   118,898   107,446
Savings                 57,461    53,505    53,777    52,599    49,665
Money market            80,381    78,006    81,114    82,799    74,244
Time deposits           194,071   202,259   205,584   210,119   221,447
Total deposits          527,001   515,250   518,661   535,492   518,765
                                                               
Notes payable           1,702     1,975     2,249     2,519     2,788
Advances from Federal   21,000    18,500    17,500    12,611    12,776
Home Loan Bank
Repurchase agreements   10,333    13,735    15,824    17,771    18,779
Trust preferred         20,620    20,620    20,620    20,620    20,620
securities
Accrued interest        138       4,223     3,836     3,556     2,954
payable
Other liabilities       4,156     3,972     3,567     3,381     4,050
Total liabilities       584,950   578,275   582,257   595,950   580,732
                                                               
Equity                                                          
Preferred stock         --       --       --       --       --
Common stock           12,569    12,569    12,569    12,569    12,569
Additional paid-in      15,374    15,363    15,350    15,338    15,323
capital
Retained earnings       25,280    23,755    22,452    21,438    20,466
Accumulated other       1,830     2,012     1,672     1,450     1,343
comprehensive income
Treasury stock          (1,769)   (1,769)   (1,769)   (1,769)   (1,769)
Total equity            53,284    51,930    50,274    49,026    47,932
                                                               
Total liabilities and   $638,234 $630,205 $632,531 $644,976 $628,664
equity



RURBAN FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
                                                               
($ in
thousands,    Three Months Ended                            Twelve Months Ended
except share
data)
Interest      December September June     March    December December  December
income        2012     2012      2012     2012     2011     2012      2011
Loans                                                           
Taxable       $5,840 $6,106  $6,037 $5,928 $6,171 $23,911 $24,444
Nontaxable    22      21       24      23      24      90       75
Securities                                                      
Taxable       330     383      403     399     387     1,515    2,010
Nontaxable    157     156      146     147     170     606      980
Total
interest      6,349   6,666    6,610   6,497   6,752   26,122   27,509
income
                                                               
Interest                                                        
expense
Deposits      653     694      768     854     946     2,969    3,982
Other         15      17       (2)     34      22      64       96
borrowings
Repurchase    3       11       60      68      70      142      912
Agreements
Federal Home
Loan Bank     92      92       75      74      77      333      402
advances
Trust
preferred     431     418      441     592     358     1,882    1,406
securities
Total
interest      1,194   1,232    1,342   1,622   1,473   5,390    6,798
expense
                                                               
Net interest  5,155   5,434    5,268   4,875   5,279   20,732   20,711
income
                                                               
Provision for 400     300      200     450     299     1,350    1,994
loan losses
                                                               
Net interest
income after  4,755   5,134    5,068   4,425   4,980   19,382   18,717
provision for
loan losses
                                                               
Noninterest                                                     
income
Data service  811     485      576     643     671     2,515    3,630
fees
Trust fees    606     646      607     642     623     2,501    2,616
Customer      648     677      668     631     647     2,624    2,531
service fees
Gain on sale
of mtg. loans 2,136   1,572    1,395   1,181   1,529   6,284    3,620
& OMSR's
Mortgage loan
servicing     152     (192)    (165)   329     (308)   124      (970)
fees, net
Gain on sale
of            94      170      --     --     127     264      208
non-mortgage
loans
Net gain on
sales of      --     --      --     --     --     --      1,871
securities
Loss on sale
or disposal   (54)    (151)    (50)    (56)    (46)    (311)    (333)
of assets
Other income  255     201      177     211     180     844      684
Total
non-interest  4,648   3,408    3,208   3,581   3,423   14,845   13,857
income
                                                               
Noninterest                                                     
expense
Salaries and
employee      3,825   3,597    3,597   3,499   3,488   14,518   14,174
benefits
Net occupancy 494     515      528     548     531     2,085    2,201
expense
Equipment     692     722      712     711     709     2,837    2,827
expense
FDIC
insurance     100     91       223     214     191     628      908
expense
Fixed asset
and software  65      --      --     --     609     65       609
impairment
Data
processing    132     103      121     113     131     469      625
fees
Professional  686     451      390     385     493     1,912    1,920
fees
Marketing     115     85       103     90      93      393      328
expense
Printing and
office        46      39       67      78      52      230      333
supplies
Telephone and 146     151      139     144     139     580      580
communication
Postage and
delivery      204     223      200     229     235     856      1,099
expense
State, local
and other     136     128      118     120     77      502      457
taxes
Employee      113     118      119     106     113     456      524
expense
Goodwill      --     --      --     --     381     --      381
Impairment
Other
intangible    158     157      158     157     157     630      737
amortization
expense
OREO          --     --      58      --     214     58       214
Impairment
Other         300     345      338     282     359     1,265    2,336
expenses
Total
non-interest  7,212   6,725    6,871   6,676   7,972   27,484   30,253
expense
                                                               
Income before
income tax    2,191   1,817    1,405   1,330   431     6,743    2,322
expense
Income tax    667     513      391     358     157     1,929    658
expense
                                                               
Net income    $1,524 $1,304  $1,014 $972   $274   $4,814  $1,664
                                                               
Common share                                                    
data:
Basic
earnings per  $0.31  $0.27   $0.21  $0.20  $0.06  $0.99   $0.34
common share
Diluted
earnings per  $0.31  $0.27   $0.21  $0.20  $0.06  $0.99   $0.34
common share
                                                               
Average
shares
outstanding                                                     
($ in
thousands):
Basic:        4,862   4,862    4,862   4,862   4,862   4,862    4,862
Diluted:      4,862   4,862    4,862   4,862   4,862   4,862    4,862



RURBAN FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
                                                                 
($ in
thousands,     Three Months Ended                              Twelve Months
except per                                                     Ended
share data)
SUMMARY OF     December   September June     March    December December December
OPERATIONS     2012       2012      2012     2012     2011     2012     2011
Net interest   $5,155   5,434    5,268   4,875   5,279   20,732  20,709
income
Tax-equivalent $92      91       88      88      100     359     543
adjustment
Tax-equivalent
net interest   $5,247   5,525    5,356   4,963   5,379   21,091  21,252
income (core)
Provision for  $400     300      200     450     299     1,350   1,994
loan loss
Noninterest    $4,648   3,408    3,208   3,581   3,423   14,845  13,857
income
Less: Non core $(334)   (53)     --     (90)    --     (477)   (2,390)
items
Core
noninterest    $4,314   3,355    3,208   3,491   3,423   14,368  11,467
income
Total revenue, $9,895   8,933    8,564   8,544   8,802   35,936  35,111
tax-equivalent
Core revenue,  $9,561   8,880    8,564   8,454   8,802   35,459  32,720
tax-equivalent
Noninterest    $7,212   6,725    6,871   6,676   7,972   27,484  30,253
expense
Less: Non core $180     --      --     --     990     180     2,073
items
Core
noninterest    $7,032   6,725    6,871   6,676   6,982   27,304  28,180
expense
Pre provision  $2,591   2,117    1,605   1,780   730     8,093   4,315
pretax income
Core pre
provision      $2,437   2,064    1,605   1,690   1,720   7,796   3,997
pretax income
Pretax income  $2,191   1,817    1,405   1,330   431     6,743   2,322
Net income     $1,524   1,304    1,014   972     274     4,814   1,664
Core earnings  $1,422   1,269    1,014   913     927     4,618   1,455
after tax
                                                                 
PER SHARE                                                         
INFORMATION:
Basic &
diluted        $0.31    0.27      0.21     0.20     0.06     0.99    0.34
earnings
Core earnings  $0.29    0.26      0.21     0.19     0.19     0.95    0.30
Book value per $10.96   10.68    10.34   10.08   9.86    10.96   9.86
common share
                                                                 
PERFORMANCE                                                       
RATIOS:
Return on      0.95%      0.82%     0.63%    0.61%    0.17%    0.75%    0.26%
average assets
Core return on 0.89%      0.80%     0.63%    0.57%    0.58%    0.72%    0.23%
average assets
Return on
average common 11.64%     10.25%    8.20%    8.04%    2.33%    9.57%    3.54%
equity
Core return on
avg. tangible  16.55%     15.49%    13.01%   12.18%   13.21%   14.39%   5.38%
common equity
Earning asset  4.50%      4.78%     4.76%    4.77%    4.93%    4.72%    5.06%
yield
Cost of
interest       0.96%      0.98%     1.05%    1.28%    1.15%    1.07%    1.35%
bearing
liabilities
Core
efficiency     69.47%     72.61%    77.66%   76.17%   74.80%   73.79%   77.55%
ratio
Core net
interest       3.28%      3.48%     3.33%    3.12%    3.38%    3.31%    3.30%
income/
Average assets
Core
noninterest    2.70%      2.11%     1.99%    2.20%    2.15%    2.25%    1.78%
income/
Average assets
Core
noninterest    4.40%      4.24%     4.27%    4.20%    4.39%    4.28%    4.38%
expense/
Average assets
Core
noninterest
income/        43.60%     37.56%    37.46%   40.86%   38.89%   39.98%   32.66%
Operating
revenue
Net interest   3.65%      3.85%     3.75%    3.53%    3.80%    3.70%    3.71%
margin
Tax equivalent 0.07%      0.06%     0.06%    0.07%    0.07%    0.06%    0.10%
effect
Net interest
margin - fully 3.72%      3.91%     3.81%    3.60%    3.87%    3.76%    3.81%
tax equivalent
basis
                                                                 
ASSET QUALITY                                                     
RATIOS:
Gross          $300     302      252     474     648     1,328   3,406
charge-offs
Recoveries     $15      78       62      104     642     259     1,226
Net            $285     223      190     370     6       1,068   2,181
charge-offs
Nonaccruing
loans/ Total   1.14%      1.15%     1.18%    1.48%    1.56%    1.14%    1.56%
loans
Nonperforming
loans/ Total   1.42%      1.53%     1.58%    1.84%    1.86%    1.42%    1.86%
loans
Nonperforming
assets/ Loans  2.02%      2.05%     1.95%    2.24%    2.26%    2.02%    2.26%
& OREO
Nonperforming
assets/ Total  1.40%      1.49%     1.40%    1.54%    1.60%    1.40%    1.60%
assets
Allowance for
loan loss/     103.8%     95.9%     92.5%    81.6%    79.3%    103.8%   79.3%
Nonperforming
loans
Allowance for
loan loss/     1.47%      1.47%     1.46%    1.50%    1.48%    1.47%    1.48%
Total loans
Net loan
charge-offs/   0.25%      0.20%     0.17%    0.34%    0.01%    0.24%    0.50%
Average loans
(ann.)
Loan loss
provision/ Net 140.56%    134.46%   105.22%  121.52%  5243.77% 126.39%  77.92%
charge-offs
                                                                 
CAPITAL &
LIQUIDITY                                                         
RATIOS:
Loans/         87.93%     88.31%    87.17%   82.12%   85.31%   87.93%   85.31%
Deposits
Equity/ Assets 8.35%      8.24%     7.95%    7.60%    7.62%    8.35%    7.62%
Tangible
equity/        5.70%      5.53%     5.21%    4.88%    4.85%    5.70%    4.85%
Tangible
assets
                                                                 
END OF PERIOD                                                     
BALANCES
Total loans    $463,389 455,021  452,110 439,721 442,554 463,389 442,554
Total assets   $638,234 630,205  632,531 644,976 628,664 638,234 628,664
Deposits       $527,001 515,250  518,661 535,492 518,765 527,001 518,765
Stockholders   $53,284  51,930   50,274  49,026  47,932  53,284  47,932
equity
Tangible       $35,382  33,867   32,032  30,596  29,571  35,382  29,571
equity
Full-time
equivalent     204        199      204     203     210     204     210
employees
                                                                 
AVERAGE                                                           
BALANCES
Total loans    $455,705 454,634  446,786 436,384 437,020 448,294 438,383
Total earning  $564,564 565,144  562,169 552,016 556,004 560,858 558,022
assets
Total assets   $639,048 635,012  643,859 635,849 636,932 638,035 643,528
Deposits       $522,970 515,795  527,992 523,193 522,472 522,412 516,282
Stockholders   $52,351  50,905   49,464  48,377  47,035  50,300  47,035
equity
Intangibles    $17,968  18,126   18,299  18,396  18,953  18,217  19,981
Tangible       $34,383  32,779   31,165  29,981  28,082  32,083  27,054
equity



RURBAN FINANCIAL CORP.
Rate Volume Analysis - (Unaudited)
For the Three and Twelve Months Ended December 31, 2012 and 2011
($ in Thousands)  Three Months Ended December 31, Three Months Ended December
                  2012                            31, 2011
Assets            Average     Interest   Average  Average    Interest  Average
                  Balance                Rate     Balance              Rate
Taxable           $84,945   330       1.55%    $93,999  387      1.64%
securities
Non-taxable       15,985     238       5.96%    15,235    257      6.75%
securities
Federal funds     --        --       N/A     870       1        0.26%
sold
Loans, net        463,635    5,873     5.07%    445,900   6,208    5.57%
Total earning     $564,564  6,441     4.56%    $556,004 6,852    4.93%
assets
                                                                 
Cash and due from 18,185                       22,965             
banks
Allowance for     (6,842)                      (6,161)            
loan losses
Premises and      15,344                       16,699             
equipment
Other assets      47,595                       47,425             
Total assets      $638,847                    $636,932          
                                                                 
Liabilities                                                       
Savings and
interest-bearing  $247,866  44        0.07%    $233,149 57       0.10%
demand
Time deposits     198,657    609       1.23%    223,179   889      1.59%
Repurchase        11,711     3         0.10%    18,711    70       1.51%
agreements
Advances from     18,245     92        2.03%    12,832    77       2.39%
FHLB
Junior
subordinated      20,620     419       8.13%    20,620    358      6.94%
debentures
Notes payable &
other borrowed    1,791      27        6.03%    2,824     22       3.17%
funds
Total
interest-bearing  $498,890  1,194     0.96%    $511,314 1,473    1.15%
liabilities
                                                                 
Non
interest-bearing  76,447                       66,144             
demand
Other liabilities 11,159                       11,501             
Total liabilities 586,496                      588,959            
Equity            $52,351                     $47,972           
                                                                 
Total liabilities $638,847                    $636,932          
and equity
                                                                 
Net interest
income (tax                  $5,247                     $5,379  
equivalent basis)
                                                                 
Net interest
income as a
percent of                             3.72%                       3.87%
average
interest-earning
assets
                                                                 
                 Twelve Months Ended December    Twelve Months Ended December
                  31, 2012                        31, 2011
Assets            Average     Interest   Average  Average    Interest  Average
                  Balance                Rate     Balance              Rate
Taxable           $90,182   1,515     1.68%    $97,528  2,010    2.06%
securities
Non-taxable       15,160     919       6.06%    21,892    1,483    6.77%
securities
Federal funds     --        --       N/A     219       1        0.25%
sold
Loans, net        455,516    24,047    5.28%    438,383   24,558   5.60%
Total earning     $560,858  26,481    4.72%    $558,022 28,052   5.03%
assets
                                                                 
Cash and due from 20,728                       26,477             
banks
Allowance for     (6,591)                      (6,534)            
loan losses
Premises and      15,360                       16,797             
equipment
Other assets      47,680                       48,766             
Total assets      $638,035                    $643,528          
                                                                 
Liabilities                                                       
Savings and
interest-bearing  $245,528  210       0.09%    $234,497 182      0.08%
demand
Time deposits     206,135    2,759     1.34%    217,546   3,800    1.75%
Repurchase        15,180     142       0.94%    31,307    912      2.91%
agreements
Advances from     15,547     333       2.14%    15,674    402      2.57%
FHLB
Junior
subordinated      20,620     1,815     8.80%    20,620    1,406    6.82%
debentures
Notes payable &
other borrowed    2,058      131       6.36%    3,085     96       3.12%
funds
Total
interest-bearing  $505,068  5,390     1.07%    $522,728 6,798    1.30%
liabilities
                                                                 
Non
interest-bearing  70,749                       64,239             
demand
Other liabilities 11,919                       9,526              
Total liabilities 587,736                      596,493            
Equity            $50,300                     $47,035           
                                                                 
Total liabilities $638,035                    $643,528          
and equity
                                                                 
Net interest
income (tax                  $21,091                    $21,253 
equivalent basis)
                                                                 
Net interest
income as a
percent of                             3.76%                       3.81%
average
interest-earning
assets

CONTACT: Investor Contact Information:
         Anthony Cosentino
         Executive Vice President and
         Chief Financial Officer
         419.785.3663
         Tony.Cosentino@thebank-sbt.com
 
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