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, 2001 -------------- 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 offices) (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 filed all reports required to be filed by sections 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or for such shorter period 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 shares of Rurban Financial Corp. outstanding was 4,347,238 on May 1, 2001. 1
2 PART I - 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 of 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, 2001 are not necessarily indicative of results for the complete year. 2
3 RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) <TABLE> <CAPTION> March 31, December 31, March 31, 2001 2000 2000 ------------------ ---------------- ----------------- (Unaudited) (Note) (Unaudited) ASSETS <S> <C> <C> <C> Cash and due from banks $ 17,628,648 $ 18,431,717 $ 19,336,049 Interest-bearing deposits in other financial institutions 110,000 110,000 110,000 Securities available for sale 91,150,408 88,904,958 85,964,330 Loans held for sale, net of valuation allowance of $0. 1,951,794 1,166,716 6,563,302 Loans, net of allowance for losses of $7,661,778 at March 31, 2001, $7,214,970 at December 31, 2000 and $6,519,685 at March 31, 2000 571,315,451 569,421,255 506,641,976 Accrued interest receivable 5,967,447 5,716,048 4,864,365 Premises and equipment, net 12,290,959 10,902,749 10,876,118 Other assets 7,167,240 6,164,259 8,411,722 ----------------- ---------------- ---------------- Total assets $ 707,581,947 $ 700,817,702 $ 642,767,862 ================= ================ ================ </TABLE> 3 (Continued)
4 RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) <TABLE> <CAPTION> March 31, December 31, March 31, 2001 2000 2000 ------------- -------------- -------------- (Unaudited) (Note) (Unaudited) <S> <C> <C> <C> LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits Noninterest-bearing $ 41,713,708 $ 47,989,547 $ 44,554,202 Interest-bearing 543,400,228 518,331,214 484,138,055 ------------- ------------- ------------- Total deposits 585,113,936 566,320,761 528,692,257 Federal funds purchased 2,000,000 13,200,000 18,637,000 Advances from Federal Home Loan Bank (FHLB) 51,493,382 52,163,914 38,869,033 Other borrowed funds - - 5,600,000 Junior subordinated debentures 9,694,609 9,690,677 - Accrued interest payable 4,965,611 4,613,173 2,845,196 Other liabilities 2,256,821 4,688,991 3,156,735 ------------- ------------- ------------- Total liabilities 655,524,359 650,677,516 597,800,221 Shareholders' equity Common stock, stated value $2.50 per share; shares authorized: 10,000,000; shares issued: 4,575,702; shares outstanding: 4,347,238 at March 31, 2001, 4,347,238 at December 31, 2000 and 4,140,718 at March 31, 2000 11,439,255 11,439,255 11,439,255 Additional paid-in capital 11,113,340 11,113,340 11,518,469 Retained earnings 32,522,826 31,450,244 31,110,340 Accumulated other comprehensive income (loss), net of tax of $584,177 at March 31, 2001, $169,222 at December 31, 2000 and $(808,209) at March 31, 2000 1,133,992 328,490 (1,568,878) Unearned ESOP shares (682,124) (721,442) (868,695) Treasury stock; shares at cost March 31, 2001 - 228,464, December 31, 2000 - 228,464 and March 31, 2000 - 434,984 (3,469,701) (3,469,701) (6,662,850) ------------- ------------- ------------- Total shareholders' equity 52,057,588 50,140,186 44,967,641 ------------- ------------- ------------- Total liabilities and shareholders' equity $ 707,581,947 $ 700,817,702 $ 642,767,862 ============= ============= ============= </TABLE> See notes to condensed consolidated financial statements (unaudited) Note: The balance sheet at December 31, 2000 has been derived from the audited consolidated financial statements at that date. 4
5 RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) <TABLE> <CAPTION> Three Months Ended March 31, ------------------------------------------- 2001 2000 <S> <C> <C> Interest income Interest and fees on loans $ 13,328,068 $ 11,320,731 Interest and dividends on securities: Taxable 1,341,548 1,141,317 Tax-exempt 156,576 140,136 Other 14,294 57,406 ------------------- ------------------- Total interest income 14,840,486 12,659,590 Interest expense Deposits 6,959,511 5,378,964 Borrowings 1,229,958 963,949 ------------------- ------------------- Total interest expense 8,189,469 6,342,913 ------------------- ------------------- Net interest income 6,651,017 6,316,677 Provision for loan losses 525,000 450,000 ------------------- ------------------- Net interest income after provision for loan losses 6,126,017 5,866,677 Noninterest income Service charges on deposit accounts 465,145 396,534 Loan servicing fees 167,666 166,769 Trust fees 725,801 780,570 Data service fees 1,486,774 1,340,463 Net loss on securities - (80,540) Net gain on sales of loans 180,034 170,462 Other income 212,537 176,975 ------------------- ------------------- Total noninterest income 3,237,957 2,951,233 Noninterest expense Salaries and employee benefits 3,961,182 3,711,821 Net occupancy expense of premises 306,774 291,815 Equipment rentals, depreciation and maintenance 915,348 814,989 Other expenses 1,837,708 1,734,534 ------------------- ------------------- Total noninterest expense 7,021,012 6,553,159 ------------------- ------------------- Income before income tax expense 2,342,962 2,264,751 Income tax expense 748,711 746,090 ------------------- ------------------- Net income $ 1,594,251 $ 1,518,661 =================== =================== Basic and diluted earnings per common share (Note B) $ 0.37 $ 0.35 =================== =================== Dividends declared per share $ 0.12 $ 0.105 =================== =================== </TABLE> See notes to condensed consolidated financial statements (unaudited) 5
6 RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) <TABLE> <CAPTION> Three Months Three Months Ended Ended March 31, 2001 March 31, 2000 Total Total Shareholders' Shareholders' Equity Equity -------------------- --------------------- <S> <C> <C> Balance at beginning of period $50,140,186 $43,900,471 Net Income 1,594,251 1,518,661 Other comprehensive income (loss): Net change in unrealized gains (losses) on securities available for sale, net 805,502 (35,331) -------------------- --------------------- Total comprehensive income 2,399,753 1,483,330 Cash dividends declared (521,669) (455,479) Paydown of ESOP loan 39,318 39,319 -------------------- --------------------- Balance at end of period $52,057,588 $44,967,641 ==================== ===================== </TABLE> See notes to condensed consolidated financial statements (unaudited) 6
7 RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) <TABLE> <CAPTION> Three Months Ended March 31, ------------------------------------------------- 2001 2000 <S> <C> <C> Cash Flows From Operations Cash received from customers' fees and commissions $ 3,057,923 $ 2,861,311 Cash paid to suppliers and employees (8,648,176) (7,542,800) Loans originated for sale (7,775,672) (6,116,437) Proceeds from sales of loans held for sale 7,170,628 6,873,182 Interest received 14,589,087 12,187,383 Interest paid (7,837,031) (6,011,515) Income taxes paid (1,900,000) -- ---------------------- --------------------- Net cash from operating activities (1,343,241) 2,251,124 Cash Flows From Investing Activities: Proceeds from principal repayments, maturities and calls of securities available for sale 9,011,215 1,534,045 Proceeds from sales of securities available for sale -- 9,063,566 Purchase of securities available for sale (10,036,208) (13,577,105) Net change in loans (2,510,709) (12,042,914) Recoveries on loan charge-offs 91,513 88,604 Premises and equipment expenditures, net (1,894,945) (219,918) ---------------------- --------------------- Net cash from investing activities (5,339,134) (15,153,722) Cash Flows From Financing Activities: Net change in deposits 18,793,175 9,396,173 Net change in federal funds purchased (11,200,000) 7,737,000 Proceeds from FHLB advances 13,500,000 -- Repayments of FHLB advances (14,170,532) (1,166,270) Net change in other borrowed funds -- (1,400,000) Cash dividends paid (1,043,337) (910,958) ---------------------- --------------------- Net cash from financiing activities 5,879,306 13,655,945 ---------------------- --------------------- Net change in cash and cash equivalents (803,069) 753,347 Cash and cash equivalents at beginning of period 18,431,717 18,582,702 ---------------------- --------------------- Cash and cash equivalents at end of period $ 17,628,648 $ 19,336,049 ====================== ===================== </TABLE> 7 (Continued)
8 RURBAN FINANCIAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED) <TABLE> <CAPTION> Three Months Ended March 31, ----------------------------------------------- 2001 2000 <S> <C> <C> Reconciliation Of Net Income To Net Cash From Operating Activities Net Income $ 1,594,251 $ 1,518,661 Adjustments to reconcile net income to net cash from operating activities: Depreciation 506,735 484,127 Amortization of intangible assets 45,000 75,000 Amortization of deferred debt issue costs 3,932 -- Provision for loan losses 525,000 450,000 Net loss on securities -- 80,540 Loans originated for sale (7,775,672) (6,116,437) Proceeds from sales of loans held for sale 7,170,628 6,873,182 Net gain on sales of loans (180,034) (170,462) Paydown of ESOP loan 39,318 39,319 Change in accrued interest receivable (251,399) (472,207) Change in other assets (1,462,936) (316,343) Change in accrued interest payable 352,438 331,398 Change in other liabilities (1,910,502) (525,654) -------------------- --------------------- Net cash from operating activities $ (1,343,241) $ 2,251,124 ==================== ===================== </TABLE> See notes to condensed consolidated financial statements (unaudited) 8
9 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 for 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, 2000. 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 and diluted earnings per common share was: March 31, --------- 2001 2000 ---- ---- Basic earnings per share 4,297,124 4,295,757 Diluted earnings per share 4,300,353 4,295,757 NOTE C--ACCOUNTING STANDARDS IMPLEMENTED IN 2001 On January 1, 2001, the Corporation adopted SFAS No. 133 which requires derivatives to be recorded at fair value. Unless designated as hedges, changes in the fair values will be recorded in the income statement. Fair value changes involving hedges will generally be recorded by offsetting gains and losses on the hedge and on the hedged items, even if the fair value of the hedged item is not otherwise recorded. Adoption of this standard on January 1, 2001 did not have a material effect on the Corporation's financial condition or results of operations. NOTE D - RECLASSIFICATIONS Certain amounts appearing in the December 31, 2000 financial statements have been reclassified to conform to the current presentation. 9 (Continued)
10 NOTE E--RISK ELEMENTS AND LOAN LOSS RESERVE ALLOWANCE FOR LOAN LOSSES The following is a summary of the activity in the allowance for loan losses account for the three months ended March 31, 2001 and 2000 and the year ended December 31, 2000. <TABLE> <CAPTION> March 31, December 31, March 31, 2001 2000 2000 ---- ---- ---- <S> <C> <C> <C> Beginning balance $7,214,970 $6,193,712 $6,193,712 Provision for loan losses 525,000 2,100,000 450,000 Recoveries of previous charge-offs 91,513 490,752 88,604 Losses charged to the allowance (169,705) (1,569,494) (212,631) --------- ----------- ---------- Ending balance $7,661,778 $7,214,970 $6,519,685 ========== ========== ========== </TABLE> At March 31, 2001, December 31, 2000 and March 31, 2000 loans past due more than 90 days and still accruing interest approximated $1,938,000, $1,927,000 and $1,231,000. Impaired loans were as follows: <TABLE> <CAPTION> March 31, December 31, 2001 2000 ---- ---- <S> <C> <C> Loans with no allowance for loan losses allocated $6,595,000 $4,189,000 Loans with allowance for loan losses allocated 3,383,000 3,923,000 --------- --------- Total impaired loans $9,978,000 $8,112,000 ========== ========== Amount of allowance allocated $2,332,000 $2,410,000 ========== ========== </TABLE> There have been no 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, 2001. 10 (Continued)
11 NOTE F--BENEFIT PLANS The Corporation's shareholders adopted a stock option plan in 1997. Under the terms of this plan, options for up to 420,000 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 pro forma disclosure for companies that do not adopt a fair value accounting method for stock-based employee compensation. Accordingly, the following pro forma 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, 2001 and 2000. <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Net income for the three months ended March 31 $1,594,251 $1,518,661 Pro forma net income for the three months ended March 31 $1,543,627 $1,484,874 Basic and diluted earnings per common share as reported for the three months ended March 31 $ .37 $ .35 Pro forma basic and diluted earnings per common share for the three months ended March 31 $ .36 $ .34 </TABLE> There were no options granted during the three months ended March 31, 2001. In future years, the pro forma effect of not applying this standard is expected to increase as additional options are granted. Information about option grants, forfeitures and exercises follows: Number of Outstanding Options ----------- Outstanding, January 1, 2001 317,105 Forfeited during three months ended March 31, 2001 (1,262) ----------- Outstanding, March 31, 2001 315,843 =========== Options exercisable at March 31, 2001 totaled 116,391. 11 (Continued)
12 NOTE G - COMMITMENTS AND CONTINGENCIES There are various contingent liabilities that are not reflected in the consolidated financial statements, including claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material effect on the Corporation's consolidated financial condition or results of operations. NOTE H - SEGMENT INFORMATION The reportable segments are determined by the products and services offered, primarily distinguished between banking and data processing operations. Other segments include the accounts of the holding company, Rurban Financial Corp., which provides management services to its subsidiaries; Reliance Financial Services, N.A., which provides trust and financial services to customers nationwide; Rurban Life, which provides insurance products to customers of the Corporation's subsidiary banks; Rurban Mortgage Company, which provides mortgage banking services; and Rurban Statutory Trust 1 which issued Capital Securities. Information reported internally for performance assessment follows. 12 (Continued)
13 NOTE H -- SEGMENT INFORMATION (Continued) As of and for three months ended March 31, 2001 <TABLE> <CAPTION> Data Total Intersegment Consolidated Banking Processing Other Segments Elimination Totals ------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Income statement information: - ----------------------------- Net interest income (expense) $ 6,629,615 ($37,229) $ 58,631 $ 6,651,017 $ -- $ 6,651,017 Other revenue - external customers 957,217 1,486,774 793,966 3,237,957 -- 3,237,957 Other revenue - other segments -- 373,332 645,405 1,018,737 (1,018,737) -- Net interest income ------------ ----------- ------------ ------------ ------------ ------------ and other revenue 7,586,832 1,822,877 1,498,002 10,907,711 (1,018,737) 9,888,974 Noninterest expense 4,320,757 1,528,798 2,190,194 8,039,749 (1,018,737) 7,021,012 Significant non-cash items: Depreciation and amortization 244,725 260,882 50,060 555,667 -- 555,667 Provision for loan losses 525,000 -- -- 525,000 -- 525,000 Income tax expense (benefit) 887,416 99,987 (238,692) 748,711 -- 748,711 Segment profit (loss) 1,853,659 194,092 (453,500) 1,594,251 -- 1,594,251 Balance sheet information: - -------------------------- Total assets 703,399,069 5,975,562 16,873,400 726,248,031 (18,666,084) 707,581,947 Goodwill and intangibles 255,000 -- -- 255,000 -- 255,000 Premises and equipment expenditures, net 304,521 1,573,954 16,470 1,894,945 -- 1,894,945 </TABLE> 13
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 insurer. Rurban's subsidiary, Rurban Statutory Trust I ("RST") was established in September 2000 for the purpose of managing the Corporation's junior subordinated debentures. Reliance Financial Services, N.A. ("Reliance"), a wholly owned subsidiary of State Bank, provides trust and financial services to customers nationwide. 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 $111 million at March 31, 2001, compared to $109 million at December 31, 2000. Management recognizes securities may need to be sold in the future to help fund loan demand and, accordingly, as of March 31, 2001, the entire securities portfolio of $91 million was classified as available for sale. Significant additional off balance sheet liquidity is available in the form of FHLB advances, unused federal funds lines from correspondent banks, the Rurban $15 million line of credit and the national certificate of deposit market. CAPITAL RESOURCES Total shareholders' equity net of unearned ESOP shares was $52,057,588 as of March 31, 2001, an increase of $1,917,402, over the $50,140,186 as of December 31, 2000 and an increase of $7,089,947 over the $44,967,641 as of March 31, 2000. The increase for the three months ended March 31, 2001 was a result of first quarter's net income of $1,594,251, a net $805,502 increase in net unrealized appreciation on securities available for sale, net of tax; offset by dividends declared of $521,669. The Corporation and each of the Corporation's subsidiary banks exceed the applicable "well capitalized" regulatory capital requirements at March 31, 2001. To supplement regulatory capital, in September 2000, the Corporation issued $10,000,000 of junior subordinated debt securities which qualify as their 1 capital for regulatory purposes, subject to certain limitations. This additional capital is intended to position the Corporation to sustain its growth while continuing to maintain regulatory "well-capitalized" status. 14 (Continued)
15 As of March 31, 2001, 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 - ------------------------ Material Changes in Financial Condition - --------------------------------------- Net loans and loans held for sale increased $3 million to $573 million at March 31, 2001. Commercial loans increased $5 million while consumer loans decreased $1 million. Real estate loans (residential and commercial) changed minimally. Premises and equipment and other assets combined increased $2.5 million. This was primarily due to the purchase of the mainframe computer equipment and related maintenance contract at RDSI. Deposits increased $19 million during the first three months of 2001 as a result of competitive rate offerings on standard and special certificate of deposit (CD) products, targeted direct calling programs and periodic entry into the national CD market. This deposit increase was offset by decreases in federal funds purchased of $11 million and advances from FHLB of $1 million. Material Changes in Results of Operations - ----------------------------------------- Net interest income increased $334,340 (5%) to $6,651,017 for the three months ended March 31, 2001 compared to $6,316,677 for the first quarter of 2000. Both interest income and interest expense increased during the quarter ended March 31, 2001 compared to the same period of 2000, with interest income increasing more than interest expense. The increase was due to increases in both earning assets and deposits and borrowed funds. Noninterest income was $3,237,957 for the quarter ended March 31, 2001 compared to $2,951,233 for the same period in 2000 an increase of $286,724 (10%). The increase in noninterest income was primarily a result of increases in data service fees and service charges on deposits. Noninterest expense increased $467,853 (7%) to $7,021,012 for the quarter ended March 31, 2001 compared to $6,553,159 for the same period of 2000. Increases in salaries and benefits and equipment rentals, depreciation and maintenance accounted for the majority of this increase. The provision for loan losses of $525,000 increased $75,000 (17%) compared to the first three months of 2000 due to increases in loan balances and increases in the level of past due, nonperforming and impaired loans. Net income for the first quarter of 2001 was $1,594,251 or $0.37 basic earnings per share, compared to net income of $1,518,661 or basic earnings per share of $0.35 in the first quarter of 2000. 15 (Continued)
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, 2000. The following table compares rate sensitive assets and liabilities as of March 31, 2001 to December 31, 2000. Principal/notational amount maturing in: (Dollars in thousands) <TABLE> <CAPTION> First Years Year 2 to 5 Thereafter Total ---- ------ ---------- ----- <S> <C> <C> <C> <C> Total rate sensitive assets: At March 31, 2001 $282,614 $253,706 $135,869 $672,189 At December 31, 2000 273,463 254,653 138,702 666,818 -------- -------- -------- -------- Increase (decrease) $ 9,151 $ ( 947) $ (2,833) $ 5,371 ======== ======== ======== ======== Total rate sensitive liabilities: At March 31, 2001 $329,089 $210,027 $109,186 $648,302 At December 31, 2000 345,651 187,793 107,938 641,382 -------- -------- -------- -------- Increase $(16,562) $ 22,234 $ 1,248 $ 6,920 ======== ======== ======== ======== </TABLE> Total rate sensitive assets increased approximately $5.4 million for the three months ended March 31, 2001 due to a $3.1 million increase in gross loans during the period and a $2.2 million increase in AFS securities. Variable rate (primarily prime indexed) loans increased $9.9 million and fixed rate loans increased $3.4 million while adjustable rate (primarily treasury indexed) loans declined $10.2 million. Total rate sensitive liabilities increased approximately $6.9 million during the three months ended March 31, 2001. Certificates of deposit (CD) balances increased $29.0 million while demand deposits, money market accounts and federal funds purchased declined by $7.5, $2.6 and $11.2 million, respectively. During the period, the decline in market interest rates caused many customers to lengthen the maturity of their certificates of deposit, which accounted for the majority of the increase in the "Years 2 - 5" category. That lengthening of CD maturities, combined with the $11.2 million reduction in the short-term federal funds purchased resulted in the $16.6 million decline in the "First Year" category. 16
17 PART II - 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 - ----------------------------------------------------------- At the annual meeting of shareholders held in April, 2001, shareholders voted on the election of certain directors. Item 5. Other Information - ------------------------- Not applicable Item 6. Exhibits and Reports on Form 8-K - ---------------------------------------- (A) EXHIBIT None (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 14, 2001 By /s/ Thomas C. Williams --------------- ------------------------------ Thomas C. Williams President & Chief Executive Officer By /s/ Richard C. Warrener ------------------------------ Richard C. Warrener Executive Vice President & Chief Financial Officer 17