<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000.
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________TO ________________________
COMMISSION FILE NUMBER 0-13507
________
RURBAN FINANCIAL CORP.
- ------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-1395608
- ------------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
401 Clinton Street, Defiance, Ohio 43512
----------------------------------------
(Address of principal executive officers)
(Zip Code)
(419) 783-8950
---------------
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has file all
reports required to be filed by section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----------- ----------
The number of common share of Rurban Financial Corp.
outstanding was 4,140,718 on May 1, 2000.
1
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
The interim condensed consolidated financial statements of
Rurban Financial Corp. are unaudited; however, the information contained herein
reflects all adjustments which are, in the opinion of management, necessary for
a fair presentation on financial condition and results of operations for the
interim periods presented. All adjustments reflected in these financial
statements are of a normal recurring nature in accordance with Rule 10-01 (b)
(8) of Regulation S-X. Results of operations for the three months ended March
31, 2000 are not necessarily indicative of results for the complete year.
2
<PAGE> 3
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
-------------- ------------
(Unaudited) (Note)
ASSETS
<S> <C> <C>
Cash and due from banks $ 19,336,049 $ 18,571,702
Federal funds sold 0 11,000
------------ ------------
Total cash and cash equivalents 19,336,049 18,582,702
Interest-bearing deposits in other
financial institutions 110,000 110,000
Securities available for sale 85,964,330 83,118,908
Loan held for sale, net of valuation allowance
($-0-) 6,563,302 7,149,585
Loans, net of allowance for losses of $6,519,685
in 2000 and $6,193,712 in 1999 506,641,976 495,137,666
Premises and equipment, net 10,876,118 11,140,327
Accrued interest and other assets 13,276,087 12,544,336
------------ ------------
Total assets $642,767,862 $627,783,524
============ ============
</TABLE>
3
(Continued)
<PAGE> 4
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED (UNAUDITED)
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
------------- -------------
(Unaudited) (Note)
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
<S> <C> <C>
Noninterest bearing $ 44,554,202 $ 49,005,311
Interest bearing 484,138,055 470,290,773
------------- -------------
Total deposits 528,692,257 519,296,084
Federal funds purchased 18,637,000 10,900,000
Advances from Federal Home Loan Bank (FHLB) 38,869,033 40,035,303
Other borrowed funds 5,600,000 7,000,000
Accrued interest payable 2,845,196 2,513,798
Other liabilities 3,156,735 4,137,868
------------- -------------
Total liabilities 597,800,221 583,883,053
Shareholders' equity
Common stock, stated value $2.50 per share;
shares authorized: 10,000,000;
shares issued: 4,575,702;
shares outstanding: 4,140,718 11,439,255 11,439,255
Additional paid-in capital 11,518,469 11,518,469
Retained earnings 31,110,340 30,047,158
Accumulated other comprehensive loss, net of
tax of $(808,209) in 2000 and $(790,008) in 1999 (1,568,878) (1,533,547)
Unearned ESOP shares (unearned shares:
2000 - 48,706, 1999 - 50,334) (868,695) (908,014)
Treasury stock; shares at cost 2000 - 434,984,
1999 - 434,984 (6,662,850) (6,662,850)
------------- -------------
Total shareholders' equity 44,967,641 43,900,471
------------- -------------
Total liabilities and shareholders' equity $ 642,767,862 $ 627,783,524
============= =============
</TABLE>
See notes to condensed consolidated financial statements (unaudited)
Note: The balance sheet at December 31, 1999 has been derived from the
audited consolidated financial statements at that date.
4
<PAGE> 5
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
2000 1999
<S> <C> <C>
Interest income
Interest and fees on loans $ 11,320,731 $ 8,944,759
Interest and dividends on securities:
Taxable 1,141,317 997,837
Tax-exempt 140,136 119,340
Other 57,406 112,627
------------ ------------
Total interest income 12,659,590 10,174,563
Interest expense
Deposits 5,378,964 4,428,269
Borrowings 963,949 409,659
------------ ------------
Total interest expense 6,342,913 4,837,928
------------ ------------
Net interest income 6,316,677 5,336,635
Provision for loan losses 450,000 276,000
------------ ------------
Net interest income after provision
for loan losses 5,866,677 5,060,635
Noninterest income
Service charges on deposit accounts 396,534 336,971
Loan servicing fees 166,769 110,543
Trust fees 780,570 648,642
Data service fees 1,340,463 1,028,862
Net gain (loss) on securities (80,540) 732
Net gain on sales of loans 170,462 368,103
Other income 176,975 193,912
------------ ------------
Total noninterest income 2,951,233 2,687,765
Noninterest expense
Salaries and employee benefits 3,711,821 3,542,866
Net occupancy expense of premises 291,815 300,004
Equipment rentals, depreciation and maintenance 814,989 713,384
Other expenses 1,734,534 1,773,321
------------ ------------
Total noninterest expense 6,553,159 6,329,575
------------ ------------
Income before income tax expense 2,264,751 1,418,825
Income tax expense 746,090 366,775
------------ ------------
Net income $ 1,518,661 $ 1,052,050
============ =============
Basic and diluted earnings per common share $ .37 $ .26
============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited)
5
<PAGE> 6
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-In Retained Comprehensive
Stock Capital Earnings Income(Loss), Net of Tax
----- ------- -------- ------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 2000 $ 11,439,255 $ 11,518,469 $ 30,047 ($ 1,533,547)
Net income for the three month period -- -- 1,518,661 --
Net change in unrealized appreciation
(depreciation) on securities available
for sale, net of tax of ($18,201) -- -- -- (35,331)
Total comprehensive income 1,483,330
Cash dividends declared ($0.11 per share) -- -- (455,479) --
Paydown of ESOP loan -- -- -- --
--------------------------------------------------------------------------
Balance at March 31, 2000 $ 11,439,255 $ 11,518,469 $ 31,110,340 ($ 1,568,878)
============ ============ ============ ============
<CAPTION>
Unearned
ESOP Treasury
Shares Stock Totals
------ ----- ------
<S> <C> <C> <C>
Balance at January 1, 2000 ($ 908,014) ($ 6,662,850) $ 43,900,471
Net income for the three month period -- -- 1,518,661
Net change in unrealized appreciation
(depreciation) on securities available
for sale, net of tax of ($18,201) -- -- (35,331)
------------
Total comprehensive income
Cash dividends declared ($0.11 per share) -- -- (455,479)
Paydown of ESOP loan 39,319 -- 39,319
--------------------------------------------------
Balance at March 31, 2000 ($ 868,695) ($ 6,662,850) $ 44,967,641
============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited)
6
<PAGE> 7
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-In Retained Comprehensive
Stock Capital Earnings Income (Loss), Net of Tax
------------ ------------ ------------ -------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1999 $ 11,439,255 $ 11,518,727 $ 26,508,897 $ 202,922
Net income for the three month period -- -- 1,052,050 --
Net change in unrealized appreciation
(depreciation) on securities available
for sale, net of tax of ($97,474) -- -- -- (189,214)
Total comprehensive income 862,836
Cash dividends declared ($0.10 per share) -- -- (409,107) --
Paydown of ESOP loan -- -- -- --
Issuance of 200 treasury shares due to
exercise of stock options -- (258) -- --
------------------------------------------------------------------------------------
Balance at March 31, 1999 $ 11,439,255 $ 11,518,469 $ 27,151,840 $ 13,708
====================================================================================
<CAPTION>
Unearned
ESOP Treasury
Shares Stock Totals
------------- ------------- ------------
<S> <C> <C> <C>
Balance at January 1, 1999 ($ 1,100,905) ($ 6,665,946) $ 41,902,950
Net income for the three month period -- -- 1,052,050
Net change in unrealized appreciation
(depreciation) on securities available
for sale, net of tax of ($97,474) -- -- (189,214)
------------
Total comprehensive income
Cash dividends declared ($0.10 per share) -- -- (409,107)
Paydown of ESOP loan 39,318 -- 39,318
Issuance of 200 treasury shares due to
exercise of stock options -- 3,096 2,838
-----------------------------------------------------------
Balance at March 31, 1999 ($ 1,061,587) ($ 6,662,850) $ 42,398,835
===========================================================
</TABLE>
See notes to condensed consolidated financial statements (unaudited)
7
<PAGE> 8
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------------
2000 1999
<S> <C> <C>
Cash Flows From Operating Activities:
Cash received from customers' fees and commissions $ 2,861,311 $ 2,318,930
Cash paid to suppliers and employees (7,542,800) (3,195,608)
Loans originated for sale (6,116,437) (33,359,424)
Proceeds from sales of loans held for sale 6,873,182 31,615,426
Interest received 12,187,383 9,570,065
Interest paid (6,011,515) (4,921,625)
------------ ------------
Net cash from operating activities 2,251,124 2,027,764
Cash Flows From Investing Activities:
Principal repayments, maturities and calls of
securities available for sale 1,534,045 11,484,555
Proceeds from sales of securities available for sale 9,063,566 385,880
Purchase of securities available for sale (13,577,105) (12,430,600)
Net change in loans (12,042,914) (20,443,611)
Recoveries on loans charged-off 88,604 241,551
Net purchases of premises and equipment (219,918) (355,060)
------------ ------------
Net cash from investing activities (15,153,722) (21,117,285)
Cash Flows From Financing Activities:
Net change in deposits 9,396,173 9,713,028
Net change in federal funds purchased 7,737,000 (1,100,000)
Net change in advances on line of credit (1,400,000) 3,100,000
Proceeds from advances from FHLB 0 1,000,000
Repayments of advances from FHLB (1,166,270) (1,162,265)
Cash dividends paid (910,958) (823,159)
Proceeds from exercise of stock options 0 2,838
------------ ------------
Net cash from financing activities 13,655,945 10,730,442
------------ ------------
Net change in cash and cash equivalents 753,347 (8,359,079)
Cash and cash equivalents at beginning of period 18,582,702 25,509,144
------------ ------------
Cash and cash equivalents at end of period $ 19,336,049 $ 17,150,065
============ ============
</TABLE>
8
(Continued)
<PAGE> 9
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------
2000 1999
<S> <C> <C>
Reconciliation of Net Income to Net
Cash From Operating Activities
Net Income $ 1,518,661 $ 1,052,050
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation 484,127 385,258
Amortization of intangible assets 75,000 71,558
Provision for loan losses 450,000 276,000
Net (gain)/loss on securities 80,540 (732)
Loans originated for sale (6,116,437) (33,359,424)
Proceeds from sales of loans held for sale 6,873,182 31,615,426
Net gain on sales of loans (170,462) (368,103)
Paydown of ESOP loan 39,319 39,318
Change in accrued interest receivable and other assets (788,550) (688,568)
Change in accrued interest payable and other liabilities (194,256) 3,004,981
------------ ------------
Net cash from operating activities $ 2,251,124 $ 2,027,764
============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited)
9
<PAGE> 10
RURBAN FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
For further information, refer to the consolidated financial statements and
footnotes included in the Corporation's annual report for the year ended
December 31, 1999.
NOTE B--EARNINGS AND DIVIDENDS PER COMMON SHARE
Earnings per common share have been computed based on the weighted average
number of shares outstanding during the periods presented. The number of shares
used in the computation of basic earnings per common share was 4,091,198 for the
three months ended March 31, 2000 and 4,067,198 for the three months ended March
31, 1999. The number of shares used in the computation of diluted earnings per
common share was 4,091,198 for the three months ended March 31, 2000 and
4,104,362 for the three months ended March 31, 1999.
NOTE C-- ACCOUNTING STANDARD IMPLEMENTED IN 2000
No new accounting standards have been implemented during the first three months
of 2000.
NOTE D-- RISK ELEMENTS AND LOAN LOSS RESERVE
There have been no significant changes in the Risk Elements and Loan Loss
Reserve activity that would materially effect the Corporation's financial
position or results of operations for the three months ended March 31, 2000.
NOTE E - BENEFIT PLANS
The Corporation's Board of Directors adopted a stock option plan in 1997. Under
the terms of this plan, options for up to 400,000 shares of the Corporation's
common stock may be granted to key employees and directors of the Corporation
and its subsidiaries. Stock option plans are used to reward employees and
provide them with an additional equity interest. Options are issued for 10 year
periods with varying vesting periods. The exercise price of the options is
determined at the time of grant by a committee of the Board of Directors and
cannot be less than the fair market value of the stock on the date of grant.
SFAS No. 123 requires proforma disclosures for companies that do not adopt its
fair value accounting method for stock-based employee compensation. Accordingly,
the following proforma information presents net income and earnings per common
share had the fair value method been used to measure compensation cost for stock
option plans. Compensation cost actually recognized for stock options was $-0-
for the three months ended March 31, 2000 and 1999.
10
(Continued)
<PAGE> 11
NOTE E - BENEFIT PLANS (Continued)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net income as reported for the three months ended March 31 $ 1,518,661 $ 1,052,050
Proforma net income for the three months ended March 31 1,484,874 1,010,805
Basic and diluted earnings per common share as reported $ .37 $ .26
Proforma basic and diluted earnings per common share $ .36 $ .25
</TABLE>
The proforma effects are computed using option pricing models, using the
following weighted-average assumptions as of grant date.
<TABLE>
<CAPTION>
1999 Grant 1998 Grant 1997 Grant
---------- ---------- ----------
<S> <C> <C> <C>
Risk-free interest rate 4.79% 5.38% 6.50%
Expected option life 10 10 10
Expected stock price volatility 7.14% 5.45% 5.45%
Expected dividend yield 2.67% 2.16% 2.39%
</TABLE>
In future years, the proforma effect of not applying this standard is expected
to increase as additional options are granted.
<TABLE>
<CAPTION>
Information about option grants follows: Weighted
Number of Average
Outstanding Exercise
Options Price
----------- ---------
<S> <C> <C>
Outstanding, January 1, 2000 219,100 $ 15.17
Granted 0 0
Forfeitures (2,500) 15.05
--------
Outstanding, March 31, 2000 216,600 $ 15.17
</TABLE>
Options outstanding and exercisable at March 31, 2000 were as follows:
<TABLE>
<CAPTION>
Weighted
Average
Exercise Exercise
Prices Number Price
------ ------ -----
<S> <C> <C>
$14.19 60,900 $14.19
$18.50 7,500 18.50
------
Outstanding at March 31, 2000 68,400 $14.66
</TABLE>
11
(Continued)
<PAGE> 12
NOTE F - SEGMENT INFORMATION
The reportable segments are determined by the products and services offered,
primarily distinguished between banking, mortgage banking and data processing
operations. Other segments include the accounts of the holding company, Rurban
Financial Corp., which provides management and operations services to its
subsidiaries; Reliance Financial Services, N.A., which provides trust and
financial services to customers nationwide; and Rurban Life, which provides
insurance products to customers of the Corporation's subsidiary banks.
Information reported internally for performance assessment follows.
12
(Continued)
<PAGE> 13
NOTE F - SEGMENT INFORMATION (Continued)
MARCH 31, 2000
<TABLE>
<CAPTION>
Mortgage Data
Banking Banking Processing
------- ------- ----------
<S> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Net interest income (expense) $ 6,195,136 $ 105,782 (21,083)
Other revenue - external
customers 672,668 92,749 1,340,463
Other revenue - other segments -- -- 351,782
------------ ------------ ------------
Net interest income
and other revenue 6,867,804 198,531 1,671,162
Noninterest expense 3,991,273 223,232 1,349,587
Significant non-cash items:
Depreciation and
amortization 234,549 50,419 232,908
Provision for loan losses 450,000 -- --
Income tax expense (benefit) 798,509 (9,000) 109,176
Segment profit (loss) 1,628,022 (15,701) 212,399
BALANCE SHEET INFORMATION:
Total assets 640,668,084 14,899,713 4,496,290
Goodwill and intangibles 435,000 -- --
Premises and equipment 184,387 (68,220) 53,527
expenditures, net
<CAPTION>
Total Intersegment Consolidated
Other Segments Elimination Totals
----- -------- ----------- ----------
<S> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Net interest income (expense) 36,842 6,316,677 $ -- $ 6,316,677
Other revenue - external
customers 845,353 2,951,233 -- 2,951,233
Other revenue - other segments 451,938 803,720 (803,720) --
------------ ------------ ------------ ------------
Net interest income
and other revenue 1,334,133 10,071,630 (803,720) 9,267,910
Noninterest expense 1,792,787 7,356,879 (803,720) 6,553,159
Significant non-cash items:
Depreciation and
amortization 41,251 559,127 -- 559,127
Provision for loan losses -- 450,000 -- 450,000
Income tax expense (benefit) (152,595) 746,090 -- 746,090
Segment profit (loss) (306,059) 1,518,661 -- 1,518,661
BALANCE SHEET INFORMATION:
Total assets 3,862,802 663,926,889 (21,159,027) 642,767,862
Goodwill and intangibles -- 435,000 -- 435,000
Premises and equipment 50,224 219,918 -- 219,918
expenditures, net
</TABLE>
13
<PAGE> 14
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Rurban Financial Corp. ("Rurban") was incorporated on February 23, 1983, under
the laws of the State of Ohio. Rurban is a bank holding company registered with
the Federal Reserve Board under the Bank Holding Company Act of 1956, as
amended. Rurban's subsidiaries, The State Bank and Trust Company ("State Bank"),
The Peoples Banking Company ("Peoples Bank"), The First National Bank of Ottawa
("First National Bank") and The Citizens Savings Bank Company ("Citizens Bank")
are engaged only in the industry segment of commercial banking. Rurban's
subsidiary, Rurbanc Data Services, Inc. ("RDSI"), provides computerized data
processing services to community banks and businesses and the Corporation's
subsidiary banks. Rurban's subsidiary, Rurban Life Insurance Company ("Rurban
Life") has a certificate of authority from the State of Arizona to transact
insurance as a domestic life and disability reinsurer.
Reliance Financial Services, N.A. ("Reliance"), a wholly owned subsidiary of
State Bank, provides trust and financial services to customers nationwide.
Rurban Mortgage Company ("Rurban Mortgage"), a wholly owned subsidiary of State
Bank, operates a residential mortgage loan production office in Clearwater,
Florida. This office underwrites, processes, closes and sells residential
mortgages acquired through a network of real estate mortgage lenders in the
Tampa Bay, Florida market and community banks in Ohio, including the four Rurban
subsidiary banks.
LIQUIDITY
Liquidity relates primarily to the Corporation's ability to fund loan demand,
meet deposit customers' withdrawal requirements and provide for operating
expenses. Assets used to satisfy these needs consist of cash, federal funds
sold, securities available-for-sale and loans held for sale. These assets are
commonly referred to as liquid assets. Liquid assets were $112 million at March
31, 2000, compared to $109 million at December 31, 1999. The $3 million decrease
in liquid assets represents normal fluctuation and was not due to any change in
policy of management regarding liquidity. Management recognizes securities may
need to be sold in the future to help fund loan demand and, accordingly, as of
March 31, 2000, the entire securities portfolio of $86.0 million was classified
as available for sale.
The Gramm-Leach-Bliley Act, commonly referred to as the The Financial Services
Modernization Act (FSMA), provides the opportunity for a bank to enter into new
lines of business. One significant benefit of FSMA for community banks (under
$500 million in assets) is the requirement that the Federal Home Loan Banks
expand the types of collateral permissible to be pledged for FHLB advances. It
is anticipated that during late 2000 the implementation of new collateral rules
will significantly expand the FHLB borrowing capacity of the Corporations's four
subsidiary banks.
CAPITAL RESOURCES
Total shareholder's equity net of unearned ESOP shares was $44,967,641 as of
March 31, 2000, an increase of $1,067,170 over $43,900,471 as of December 31,
1999. The increase was a result of first quarter's net income of $1,518,661 and
a reduction in unearned ESOP shares of $39,319 offset by dividends declared of
$455,479 and net change in unrealized depreciation on securities available for
sale, net of tax of $35,331.
Each of the Corporation's subsidiary banks exceed the applicable "well
capitalized" regulatory capital requirements at March 31, 2000.
14
<PAGE> 15
As of March 31, 2000, management is not aware of any current recommendations by
banking regulatory authorities which, if they were to be implemented, would
have, or are reasonably likely to have, a material adverse effect on the
Corporation's liquidity, capital resources or operations. .
SUPPLEMENTAL INFORMATION
Non performing loans increased $370,752 from December 31, 1999 to $2,525,097 or
0.50% of net loans at March 31, 2000.
MATERIAL CHANGES IN FINANCIAL CONDITION
Net loans and loans held for sale increased $11 million from December 31, 1999
to $513 million at March 31, 2000; an annualized rate of 8.7%.
Deposits grew $9 million from December 31, 1999 to $529 million at March 31,
2000; an annualized rate of 7.2%.
Federal funds purchased, other borrowed funds and Federal Home Loan Bank
advances increased $5 million from December 31, 1999 to $63 million at March 3,
2000; an annualized increase of 35.7%.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net interest income for the quarter ended March 31, 2000 was $6,316,677, an
increase of $980,042 (18.4%) over the same period in 1999. This increase was
primarily due to an increase in the amount of earning assets.
Total non-interest income increased $263,468 to $2,951,233 for the quarter. Data
service fees increased $311,601 to $1,340,463 (30.3%). Trust fees increased
$131,928 to $780,570 (20.3%). Service charges on deposit accounts increased
$59,563 to $396,534 (17.7%). Losses on sales of securities were $80,540 for the
three months ended March 31, 2000 compared to a gain of $732 for the same period
of 1999. Net gains on sales of loans decreased $197,641 to $170,462 (53.7%).
Total noninterest expense increased $223,584 (3.5%) for the quarter ended March
31, 2000 when compared to the same period in 1999. Salaries and employee
benefits increased $168,955 (4.8%).
Equipment rentals, depreciation and maintenance expense increased $101,605
(14.2%). Other expenses and net occupancy expense of premises decreased $46,976
(2.3%).
Income tax expense for the quarter was $746,090, an increase of $379,315 over
the same period in 1999.
The net result of these factors was an increase in net income of $466,611
(44.4%) to $1,518,661 for the three months ended March 31, 2000 when compared to
the same period in 1999.
15
<PAGE> 16
Item 3: Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Corporation's quantitative and
qualitative market risks since December 31, 1999. The following table compares
rate sensitive assets and liabilities as of March 31, 2000 to December 31, 1999.
Principal/notional amount maturing in:
(Dollars in thousands)
<TABLE>
<CAPTION>
First Years
Year 1 to 5 Thereafter Total
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Comparison of 3/31/00 to 12/31/99
Total rate sensitive assets:
At March 31, 2000 $ 253,589 $ 239,033 $ 106,614 $ 599,236
At December 31, 1999 293,282 266,263 25,373 584,918
--------- --------- --------- ---------
Increase (decrease) (39,693) (27,230) 81,241 14,318
Total rate sensitive liabilities:
At March 31, 1999 $ 377,090 $ 119,834 $ 94,874 $ 591,798
At December 31, 1999 352,800 128,483 95,948 577,231
--------- --------- --------- ---------
Increase (decrease) 24,290 (8,649) (1,074) 14,567
</TABLE>
Rate sensitive assets increased approximately $14 million for the three months,
due to a $11 million increase in loans. During the quarter, The Corporation
reviewed its methodology for calculating prepayments. Consequently, prepayments
speeds were decreased. This refinement in prepayment assumptions is the primary
factor in rate sensitive assets within one year decreasing by approximately $40
million. The interest sensitivity of the underlying portfolio has not changed
significantly.
Total rate sensitive liabilities increased approximately $15 million during the
three months. During the period, the continued increase in rates has caused many
customers to shorten the maturity of their certificates of deposit. This is the
primary factor in the approximately $24 million increase in rate sensitive
liabilities with maturities within one year.
16
<PAGE> 17
PART 11 - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
See exhibit 27, Financial Data Schedule, on pages 18 and 19
(B) REPORTS ON FORM 8-K
-------------------
None
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
RURBAN FINANCIAL CORP.
Date May 15, 2000 By /s/ Thomas C. Williams
--------------------------
Thomas C. Williams
President & CEO
By /s/ Richard C. Warrener
--------------------------
Richard C. Warrener
Executive Vice President &
Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,336,049
<INT-BEARING-DEPOSITS> 110,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 85,964,330
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 519,724,963
<ALLOWANCE> 6,519,685
<TOTAL-ASSETS> 642,767,862
<DEPOSITS> 528,692,257
<SHORT-TERM> 32,087,000
<LIABILITIES-OTHER> 6,001,931
<LONG-TERM> 31,019,033
11,439,255
0
<COMMON> 0
<OTHER-SE> 33,528,386
<TOTAL-LIABILITIES-AND-EQUITY> 624,767,862
<INTEREST-LOAN> 11,320,731
<INTEREST-INVEST> 1,281,453
<INTEREST-OTHER> 57,406
<INTEREST-TOTAL> 12,659,590
<INTEREST-DEPOSIT> 5,378,964
<INTEREST-EXPENSE> 6,342,913
<INTEREST-INCOME-NET> 6,316,677
<LOAN-LOSSES> 450,000
<SECURITIES-GAINS> (80,540)
<EXPENSE-OTHER> 6,553,159
<INCOME-PRETAX> 2,264,751
<INCOME-PRE-EXTRAORDINARY> 1,518,661
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,518,661
<EPS-BASIC> .37
<EPS-DILUTED> .37
<YIELD-ACTUAL> 4.29
<LOANS-NON> 1,294,161
<LOANS-PAST> 1,230,936
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 6,937,431
<ALLOWANCE-OPEN> 6,193,712
<CHARGE-OFFS> 212,631
<RECOVERIES> 88,604
<ALLOWANCE-CLOSE> 6,519,685
<ALLOWANCE-DOMESTIC> 4,552,832
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,966,853
</TABLE>
