Sb Financial Group, Inc. · NASDAQ:SBFG
Sb Financial — Rurban Financial — Shareholder Meeting (April 2012)
50 slides from Sb Financial's shareholder meeting presentation, Apr 26, 2012
Slide 1: Annual Meeting of Shareholders
ANNUAL MEETING OF SHAREHOLDERS April 26, 2012 BNANCIALCOR?, Sine
Slide 2: Welcome and Call to Order
PNANCIAL CORP Welcome and Call to Order ENANCIAN CORP 201 1 YEAR IN REVIEW
Slide 3: Annual Meeting Agenda
Rurban Financial Corp. Annual Meeting Agenda • Introductions • Rurban Overview • Election Results • Questions from Shareholders
Slide 4: Special Guests
Rurban Financial Corp. Special Guests • Craig Liechty and David Tedtman, BKD, LLP – Independent Auditor • Tony Weis , Vorys, Sater, Seymour & Pease, LLP – Counsel, Columbus • Stan Yoder and Jim Weaner, Weaner, Zimmerman, Bacon, & Yoder Ltd. -- Local Counsel • Linda Margolin, Margolin & Associates, I
Slide 5: Advisory Board Members: Fulton County
The State Bank and Trust Company Advisory Board Members Fulton County Board Liaison: • James McDonnall Gaylyn J. Finn • Virginia Neuenschwander • Edward Nofziger • Joseph O’Neil • Joseph Short • Samuel Witt
Slide 6: Advisory Board Members: Lima Region
The State Bank and Trust Company Advisory Board Members Lima Region Board Liaison: • Dr. Patrick Chaney Timothy J. Stolly • Joseph Guagenti • Ronald Miller
Slide 7: Advisory Board Members: Paulding County
The State Bank and Trust Company Advisory Board Members Paulding County Board Liaison: • George Carter Robert A. Fawcett • Floyd Furrow • John Kauser • Dr. John Saxton • Rhonda Stabler • Rex Williamson
Slide 8: Advisory Board Members: Williams County
The State Bank and Trust Company Advisory Board Members Williams County Board Liaison: • Alan Fiser Rita Kissner • Jerry Kneipp • William Martin • Glen Newcomer • Richard Reed • Michael Spangler
Slide 9: Advisory Board Members: Defiance County
The State Bank and Trust Company Advisory Board Members Defiance County Board Liaison: • Gary Cates Thomas L. Sauer • Mike McCann • Doug McDonald • Jerry Overmier • Sue Strausbaugh
Slide 10: New Director in 2011: Lynn “Zac” A. Isaac
Rurban Financial Corp. New Director in 2011: Lynn “Zac” A. Isaac • Appointed Director in October 2011 • Executive VP, Isaac Property Company • J.D. from Ohio Northern University Law School • B.A. in Accounting & Economics from Duke University • Resident of Toledo area
Slide 11: Rurban Financial Corp. Board of Directors
Rurban Financial Corp. Board of Directors Term Expiring 2012 2013 2014 Thomas A. Buis Richard L. Hardgrove* Robert A. Fawcett, Jr. Thomas L. Sauer Lynn “Zac” A. Isaac Gaylyn J. Finn Timothy J. Stolly Mark A. Klein* Rita A. Kissner* * Indicates an RDSI Board Member
Slide 12: Board Committees
Audit Committee • Chairman: Rita A. Kissner • Financial Expert: Gaylyn J. Finn Compensation Committee • Chairman: Robert A. Fawcett, Jr. Governance and Nominating Committee • Chairman: Thomas A. Buis Loan Review Committee • Chairman: Gaylyn J. Finn
Slide 13: 2011 in Review
ANCIAL CORE. 2011 in Review ENANCIAL CORP
Slide 14: Forward-Looking Statements
Forward-Looking Statements Rurban would like to remind everyone that comments made during this presentation regarding Rurban's anticipated future performance are forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and therefore involve risks and unc
Slide 15: We improved virtually every aspect of our business during 2011
We improved virtually every aspect of our business during 2011 • Net income improved $17.3 million year over year • Nonperforming assets declined 33% • Third year of $200 million+ mortgage originations • Portfolio loan growth of $15.0 million, up 3.5% • RDSI restructured and moving forward on a more
Slide 16: P&L and RDSI
P&L 2010 2011 $ Change RDSI $ 34.6 Total Revenue $ 40.8 MM MM $ (6.2) MM $ (6.2) MM Noninterest $ (40.2) $ (29.1) $ +11.1 +9.8 Expense Loan Loss $ ( 10.6) $ ( 2.0) $ + 8.6 +3.0 Provision Impairments (12.1) (1.2) $ +10.9 +10.2 Pretax Income $ (22.1) $ 2.3 $ +24.4 +16.9 Net Income $ (15.6) $ 1.7 $ +17
Slide 17: Credit Quality: Now a Strength of Rurban
Credit Quality: Now a Strength of Rurban • Took $16.3 million of Loan Loss Provision during 2009 & 2010 versus $2.0 in 2011 • Charged off $14.7 million of bad loans in 2009 & 2010 versus $2.2 million in 2011 • Built – and now maintain – loan loss reserves at approximately 1.50% of loans outstanding
Slide 18: Reduced Problem Assets by Over 50%
Reduced Problem Assets by Over 50% Nonperforming Assets ($MM) NPA as a % of Total Assets 25.0 $22.0 3.27% 20.0 $14.9 2.26% 15.0 1.87% $10.1 1.60% 10.0 5.0 0.0 FY2009 FY2010 FY2011 FY 2009 FY 2010 FY 2011 Peer Group* Top Quartile Credit quality now in Top Quartile of 67 bank Microcap Peer Group * Pee
Slide 19: Third Straight Year of Mortgage Originations Above $200 million
Third Straight Year of Mortgage Originations Above $200 million Mortgage Originations ($MM) Defiance loans $225 MM $239 MM $220 MM Columbus loans $113 $99 $130 Ranked #9 in Columbus for 2011! $126 $121 $95 FY 2009 FY 2010 FY 2011
Slide 20: Mortgage Banking Adds Diversity to Revenue Stream
Mortgage Banking Adds Diversity to Revenue Stream… Data Services, $3.6mm Along with: Trust, $2.6mm • Data services Service Fees, • Trust Net Interest $2.5 Income, • Service fees $20.7 mm Mtg. Banking, $2.7mm • Other Other, $2.5mm Total 2011 Revenue = $34.6 million
Slide 21: Rurban Remains Highly Diversified for a Bank Its Size
Rurban Remains Highly Diversified…for a Bank Its Size Total Op. Rev: $45 $50 $41 $35 (in millions) 100% Net Interest Income Noninterest Income 80% 39% 42% 49% 60% 60% 75% 40% Still A 61% 58% Top 51% 20% 40% Quartile 25% Performer 0% in 2011 FY'08 FY'09 FY'10 FY'11 Top Quartile Peer Group* * Peer Gro
Slide 22: Enhanced Cross-Sell: Referrals Encourage Teamwork
Enhanced Cross-Sell: Referrals Encourage Teamwork • 89% employee participation in 2011 • 83% of employees provided a referral that closed • 42.5% of total referrals were closed Gross Closed Number of Referrals 2,242 2,144 1,941 1,331 1,050 860 872 912 397 289 FY2007 FY2008 FY2009 FY2010 FY 2011
Slide 23: Enhanced Cross-Sell: Referrals Build Revenue
Enhanced Cross-Sell: Referrals Build Revenue $100 $86.9 MM $60.5 MM $64.9 MM = Total Annual Volume of Closed $3.8 $80 Referrals $6.1 $6.8 $60 $5.9 $8.0 $5.8 $5.9 Deposits $6.2 $40 Consumer Loans Trust $44.2 Comm Loans $20 $66.9 $39.7 Home Equity Mortgages $0 FY 2009 FY 2010 FY 2011
Slide 24: Ohio economy and loan growth
• Ohio economy slowly improving; unemployment is declining • Loan growth lags throughout the U.S. • Rurban’s Peer Group reported a negative 2% for median loan growth • Rurban’s 3.5% loan growth is virtually in the top quartile (3.68%) for banks • Strong 2011 loan growth across the board: Residenti
Slide 25: Non-CD Deposits Enhance Franchise Value
Non-CD Deposits Enhance Franchise Value Cost of Deposits Declined to 0.77% in 2011 CDs MM & Savings DDA 600 500 26% 30% 32% 33% 400 24% 57% 45% 300 24% 21% 26% 26% 24% 200 55% 50% 43% 100 44% 42% 0 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Slide 26: Transition of RDSI Completed
Transition of RDSI Completed • Now focused almost exclusively on item processing • Reduced FTE employees by 83 since YE 2009 • Reduced annualized expenses from 2009 by $12.6 million • RDSI is in a holding pattern until consent order is lifted
Slide 27: Right-Sizing Rurban to Reflect Lower Revenue
Right-Sizing Rurban to Reflect Lower Revenue • Cut operating expenses by $12.9 million in 2011 o Corporate FTE employees down 32 in 2011 o Compensation expense reduced by $4 million • Working smarter: Performance-based pay o 2011: Reduced salaries, benefits and ESOP o Instead: Paid 4% of salary ($45
Slide 28: How Do We Stand Out?
The State Bank & Trust Company How Do We Stand Out?
Slide 29: A Small Bank in a Big Banking World
State Bank: A Small Bank in a Big Banking World • Total deposits of $7.4 trillion in U.S. banking industry • State Bank has deposits of $519 million, or less than 0.001% BUT… State Bank is a Big Bank in a Small Banking World The # 2 community bank in our 7-county Northwest Ohio footprint, with a 3.9
Slide 30: Customer Needs are Our First Priority
The State Bank & Trust Company Customer Needs are Our First Priority
Slide 31: Regional Presidents and CEO
David Anderson, Lima J Arnold , Fort Wayne John Kendzel, Toledo Mark Klein, CEO David Homoelle, Jon Columbus Gathman , Defiance Ryan Miller, Fulton/Williams County
Slide 32: We Make Banking a Positive Experience
We Make Banking a Positive Experience Getting Things Right the First Time • Experienced bankers understand client needs • Senior-level support staff is personally involved • Clients know who to call when a need arises
Slide 33: Personalized Relationship Banking
Personalized Relationship Banking Bohl Equipment wanted a personal relationship with their bankers. John Kendzel, Toledo Regional President, met that need. State Bank provided the sophisticated products and services Bohl had used at a much larger bank.
Slide 34: Your Relationship Manager is Your Trusted Advisor
Your Relationship Manager is Your Trusted Advisor • The stability, maturity, and extensive experience of our key personnel provides a strong foundation • Our bankers think ahead, and plan for the future of the relationship
Slide 35: Trusted Advisors
Trusted Advisors C&G Distributing Co appreciates the sound financial advice they receive from David Anderson, Lima Regional President.. Craig Kuhlman, Reliance Financial Services, takes time to personally meet with each employee to ensure their 401K retirement plan is properly planned.
Slide 36: Investing in Technology as Well as People
Investing in Technology as Well as People • We strive to make banking more Convenient Secure Cost-effective • Our products and services are competitive • Our people are well-trained and responsive Coming soon to State Bank… • Mobile banking app for remote check deposit • Online consumer loan a
Slide 37: Dedicated to Finding Solutions
Dedicated to Finding Solutions Riley Tractor expects the same kind of innovation from their bank as they put into their business. Ryan Miller strives to be a proactive and trustworthy partner as he helps Riley Tractor to expand their business. Kristen Nusbaum implemented a cash management system tha
Slide 38: Community support and charitable giving
• Over 7,000 hours of staff time donated in 2011 • Support of more than 150 charities within our franchise • Building a reputation for community concern throughout our footprint
Slide 39: Financial Review
Financial Review Tony Cosentino, CFO
Slide 40: Net Income and Core Earnings
Net Income Core Earnings Pre‐Tax, Pre‐Provision Core Earnings $10 $8.0 $5.2 $5.5 $5.0 $5 $2.1 $1.7 $0.4 $0 $5.2 $2.0 $0.4 -$4.4 ‐$5 ‐$10 ($15.6) ‐$15 FY 2008 FY 2009 FY 2010 FY 2011
Slide 41: Strengthened Our Net Interest Margin
Strengthened Our Net Interest Margin… Despite A Falling Interest Rate Environment Earning Asset Yield Net Interest Income Cost of Int-bearing Liabilities Net Interest Margin 6.85% 6.51% $21.0 $20.7 $20.0 5.82% 5.37% $17.5 $14.8 4.07% 5.03% 3.21% 2.14% 3.79% 3.81% 3.53% 3.67% 3.11% 1.76% 1.30% FY'07
Slide 42: Operating Efficiencies Still Need to Improve
Operating Efficiencies Still Need to Improve • Historic operating expense always too high • Already offset loss of RDSI revenue with lower operating expense • 4Q 2011 run rate reflects ongoing expense improvement 85.14% 82.38% 80.70% 79.38% 74.72% In millions: Operating Revenue $50.3 $45.6 $44.8 $40
Slide 43: Problem assets and loss reserves
• Problem assets peaked in 2009 • Aggressive remediation in 2010 reduced problem assets to more acceptable levels • Strong loss reserve now provides flexibility to manage future potential losses with less impact on profits ($000) FY 2008 FY 2009 FY 2010 FY 2011 Nonperforming Assets 6,738 22,011 14,9
Slide 44: State Bank Remains Well-Capitalized
State Bank Remains Well-Capitalized • Loan losses at the Bank and recent losses at RDSI impacted holding company (RFC) capital • Constraints remain on ability to pay dividends until RFC capital ratios improve • Since low points at mid-year 2011, all RFC capital ratios now show improvement. RFC Capit
Slide 45: In Summary
In Summary... Mark Klein, CEO RURBAN 2011 YEAR IN REVIEW
Slide 46: The Rurban Vision
The Rurban Vision To become a • High-performing (top-tier), • Community-focused, • Financial services provider By meeting the needs of our customers, employees, shareholders and communities We are making progress.
Slide 47: 1st Quarter 2012: A Big Step Forward
1st Quarter 2012: A Big Step Forward • Net income in excess of $972 thousand • Return on Average Assets of 61 bps • Nonperforming assets down 30% since last year 1Q, to 1.5% of total assets • $17.6 million loan growth since 1Q 2011, or 4.2% • Capital position continues to build at RFC and the bank;
Slide 48: Election Results
PNANCIANCORE. Election Results ENANCIAN CORP 201 1 YEAR IN REVIEW
Slide 49: We will now take your questions
We will now take your questions.
Slide 50: Thank you for joining us!
ANNUAL MEETING OF SHAREHOLDERS Thank you for joining us! RURBAN, 2011