Sb Financial Group, Inc. · NASDAQ:SBFG
Sb Financial — Rurban Financial — Shareholder Meeting (May 2011)
51 slides from Sb Financial's shareholder meeting presentation, May 5, 2011
Slide 1: Focusing on the Future
Focusing on the Future 2011 Annual Meeting of Shareholders May 5, 2011
Slide 2: Welcome and Call to Order
Welcome and Call to Order Mark M k Klein Kl i President & CEO Rurban Financial Corp. p The State Bank and Trust Company
Slide 3: Mark Klein, President & CEO
Mark M k Klein Kl i President & CEO Rurban Financial Corp. p The State Bank and Trust Company
Slide 4: Annual Meeting Agenda
Rurban Financial Corp. Annual Meeting Agenda • Introductions • Chairman Remarks - Richard LL. Hardgrove • Rurban Overview - Mark M k A. A Klein Kl i CEO - Tony Cosentino CFO • Election Results • Questions
Slide 5: Special Guests
Rurban Financial Corp. S Special i lGGuests t • Craig Liechty-BKD, Liechty BKD LLP – Independent Auditor • Chuck DeRousie and Tony Weis-Vorys, Sater, Seymour & Pease, LLP – Columbus, SEC Counsel • Curt Loveland-Porter Wright – Columbus, Board Counsel • Stan Yoder and Steve Hubbard-Weaner, Hubbard We
Slide 6: The State Bank and Trust Company Advisory Board Members
The State Bank and Trust Company Ad i Advisory B dM Board b Members Fulton Countyy g County Paulding y Board Liaison: Gaylyn Finn Board Liaison: Bob Fawcett James M. McDonnall George W. Carter Virginia E. Neuenschwander Floyd F. Furrow Ed ward d L. L Nofziger N f i J h H. John H Kauser K Joseph P. O
Slide 7: Annual Meeting Agenda
Rurban Financial Corp. A Annuall M ti A Meeting Agendad • Introductions I t d ti • Chairman Remarks – Richard L. Hardgrove • Rurban Overview – Mark A. Klein CEO – Tony Cosentino CFO • Election Results • Questions
Slide 8: Director Overview and Insight
Rurban Financial Corp. Di t O Director i Overview d IInsight and i ht Richard L. L Hardgrove Chairman of the Board Rurban Financial Corp. The State Bank and Trust Company RDSI Banking Systems
Slide 9: Retired Directors
Retired Directors: As of July 31 31, 2010 • Thomas Callan: 14 years of service • John Compo: 23 years of service • Steve VanDemark: 19 years of service • J. Michael Walz: 18 years of service
Slide 10: New Directors in 2010
Rurban Financial Corp. N New Di t Directors iin 2010 • Mark Klein – Joined The State Bank and Trust Company in January of 2006 – Was appointed President and CEO and Director of Rurban January 2010 • Tim Stolly – Brings to the Board over 30 years of insurance industry experience – Lima Advisory Board
Slide 11: Board of Directors Standing for Election - 2011
Rurban Financial Corp. Board of Directors g for Election - 2011 Standing • Robert A. Fawcett, Jr. • Gaylyn y y J. Finn • Rita A. Kissner* Term Expiring 2012 Term Expiring 2013 • Thomas A. Buis • Richard L. Hardgrove* g • Thomas L. Sauer • Mark A. Klein* • Timothy J. Stolly * Indicates an RDSI Board
Slide 12: Director Committees
Rurban Financial: Director Committees • Audit Committee – Chairman: Rita A. Kissner – Financial Expert: Gaylyn J. J Finn • Compensation Committee – Chairman: Ch i Robert b t A. Fawcett, tt Jr. • Governance and Nominating Committee – Chairman: Thomas A. Buis • Loan Review Committee – Chairman: Gaylyn
Slide 13: Rurban Overview
Rurban Overview i Mark A. Klein Anthony V. Cosentino President & CEO Chief Financial Officer Rurban Financial Corp. and The State Bank and Trust Company
Slide 14: Forward Looking Statements
Forward Looking Statements Rurban would like to remind everyone that comments made during this presentation t ti regarding di Rurban's R b ' anticipated ti i t d future f t performance f are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the
Slide 15: Corp Profile
Rurban Financial Corp. Corp Profile • q Headquartered in Defiance, Ohio p Rurban Financial Corp. RBNF • Listed on NASDAQ Global Market: RBNF The State Bank • Two wholly-owned subsidiaries & RDSI Trust Company • Diversified financial services and Reliance Financial organization Services DCM • 262 emp
Slide 16: 2010: A Transitional Year
Rurban Financial Corp. 2010 2010: A Transitional T iti lYYear • Consolidated HC and State Bank to improve efficiencies ; reduced staff by seven FTE • Achieved a record year at State Bank for mortgage loan originations : $235 million • Improving economy and $7.9 million of net charge-offs at the Bank
Slide 17: Earnings
Rurban Financial Corp. Earnings Rurban Net Income g Pre-Tax, Pre-Provision Core Earnings $8.2 $5.7 $5.9 $3.0 $1.3 $2.8 $3.3 $5.2 $0.4 $ RDSI: Took $14.1 million of write-downs and charge-offs State Bank: Provision expense of $7.6 million -$15.6 2006 2007 2008 2009 2010
Slide 18: The State Bank and Trust Company
The State Bank and Trust Company
Slide 19: Credit Costs Impacted Earnings of State Bank for Past Two Years
Credit Costs Impacted Earnings of State Bank for Past TTwo o Years Bank Net Income Pre-Tax, Pre-Provision Core Earnings $12.0 Provision Expense: $0.7mm $5.7mm $7.6 mm $10.0 $8 0 $8.0 $8.0 $7.1 $7.0 $6.0 $5.1 $4.8 $4 6 $4.6 $3.5 $4.0 $3.3 $2.1 $$2.0 $0.1 $0.0 2006 2007 2008 2009 2010
Slide 20: Asset Quality Initiatives
The State Bank and Trust Company A Assett Q lit IInitiatives Quality iti ti • Expanded E d d credit dit underwriting d iti and d loan l review Departments • Focused on reduction of non-performing assets • Involvement of corporate directors in loan review process and with Advisory Boards • Independen
Slide 21: Asset Quality: An Improving Picture
The State Bank and Trust Company A Assett Q lit A Quality: An IImproving i Pi t Picture NPA/Assets NCO/ Avg. Loans 4.00% 4 00% 3.27% 2.92% 3.00% 2.45% 2 45% 2.07% 1.97% 2.00% 1.06% 0.99% 1.00% 0.82% 0.69% 0.58% 0.07% 0.19% 0.00% 2007 2008 2009 2010 1Q 2011 1Q '11 Median* * Peer group consists of 77
Slide 22: Asset Quality: An Improving Picture
The State Bank and Trust Company A Assett Q lit A Quality: An IImproving i Pi t Picture Loan Loss Reserve/ Loans Reserves/NPLs 4.00% 4 00% 120% 102% 100% 3.00% 71% 80% 52% 56% 55% 2.00% 60% 36% 40% 1.00% 2.19% 1.50% 1.53% 1.55% 20% 1.02% 1.10% 0.00% 0% 2007 2008 2009 2010 1Q 2011 1Q '11 Median* *P P
Slide 23: Expense Control Initiatives
The State Bank and Trust Company Expense Control Initiatives • Savings of approximately $5 million over the last four years from operational, fixed asset and personnel costs: – Reduced Bank/ BHC staff by 16 FTE since 2009 – Consolidated Exchange Bank, Reliance Financial Services & Rurban Operations
Slide 24: Non-Interest Expense Comparison
The State Bank and Trust Company N I t tE Non-Interest Expense C i Comparison 1st Qtr 2009 1st Qtr 2011 Non‐Interest Expense = Non‐Interest Expense = $6,317,175 $5,734,869 Salary & Salary & Benefits Benefits 22% 31% Occupancy & O Occupancy & 48% Equipment Equipment 6% FDIC 51% FDIC 1% 22% Other Othe
Slide 25: Expanding from Our NW Ohio Base
The State Bank and Trust Company Expanding from Our NW Ohio Base 19 Retail Banking Offices within Our 10 County Footprint 10-County 2 Loan Production Offices (LPOs) Counties • Defiance - 4 • Allen (Ohio and Indiana) – 1 each • Franklin - LPO • Fulton - 3 • Lucas - 1 • Paulding - 2 • Steuben - LPO •
Slide 26: Organic Growth from Synergies within State Bank
Organic Growth from Synergies within State Bank • Leadership by in-market in market regional executives • Interdepartmental referrals • Relationship-based selling • Cross-selling Cross selling • Top-down driven sales culture
Slide 27: Well-Diversified Balance Sheet
The State Bank and Trust Company W ll Di ifi d B Well-Diversified l Balance Sh Sheett Total Assets = $655Million Cash & Due, 9% Securities, 17% Other, 5% Intangibles 3% Intangibles, Loan Portfolio = $428 Million HELOC, 9% 1-4 Family RE, 25% C&D 4% C&D, Loans (Net) Consumer & Other, 3% and HFS, 66% M
Slide 28: Local, Low-Cost Deposit Mix
The State Bank and Trust Company LLocal,l LLow-Cost C tD it Mi Deposit Mix B Borrowings, i 14% Other, 1% Deposit Portfolio = Capital, 7% $513 million Deposits, 78% Non-Interest DDA, 11% NOW, 19% Non‐maturity deposits = Non‐ Savings, 8% 58% of total deposits Weighted average cost of deposits = .82% T
Slide 29: Expansion of Non-Interest Income
The State Bank and Trust Company E i Expansion off N I t t IIncome Non-Interest • Community Banking • Mortgage Banking • Deposit D it FFees • Wealth Management • SBA / FSA Loan Sales • Insurance
Slide 30: Referrals by Year
The State Bank and Trust Company R f l b Referrals by Y Year 2500 2242 2000 1941 Gross 1500 1331 Closed 1050 1000 860 872 500 397 289 0 2007 2008 2009 2010 $33.4 MM $38.4 MM $86.9 MM $60.4 MM
Slide 31: State Bank: Diversified Revenue Stream
State Bank: Di ifi d R Diversified Revenue St Stream** $40 (Millions) $29.6 $30.1 Trust/Brokerage $30 $25.8 $21.2 Service Charges $20 Mortgage Banking (Net) $10 Net Interest Income $0 2007 2008 2009 2010 * Excluding gains/losses on the sale of securities, proceeds from investments and recoveries 31
Slide 32: Mortgage Servicing Portfolio
Mortgage Servicing Portfolio $350,000 $350 000 $328,435 $328 435 $300,000 $250,000 $204 810 $204,810 $200,000 $150,000 $100,000 $71,158 $50,000 $39,528 $0 2007 2008 2009 2010 Servicing Portfolio
Slide 33: Mortgage Banking Activity
M t Mortgage B ki A Banking ti it Activity Gain on Sales Loan Service Fees g Originations $2,500 $2 500 $100 king Income ($000’s) Orig $2,000 $80 ginations ($millions) $1,500 $60 Mortgage Bank $1,000 $40 $500 $20 $0 $0 3Q'09 4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
Slide 34: Reliance Financial Services
Reliance Financial Services
Slide 35: Reliance Financial Services 2010 Initiatives
Reliance Financial Services 2010 IInitiatives iti ti • Integration with State Bank client base • Competitive Market Returns • Leverage Regional Executive presence • Incentive plan emphasis on performance improvement p
Slide 36: Reliance Financial Services Assets Under Management
Reliance Financial Services Assets Under Management 450,000 usands 400,000 350,000 , Dollars in Thou 300,000 250,000 200,000 150,000 Assets Under 100,000 Management 50,000 0 2006 2007 2008 2009 2010 YTD March 2011 Annualized
Slide 37: RDSI Banking Systems
RDSI Banking Systems
Slide 38: Overview of RDSI Banking Systems
O i Overview off RDSI B ki Banking S t Systems • Unsuccessful p p planned spin-off of RDSI in June 2010 • Announced exit from data processing and deconverted all DP clients • Currently focused on Item Processing: – 30 stable community y banking g clients – DCM is a low-cost provider – Investigating
Slide 39: RDSI Banking Systems Revenue
RDSI Banking Systems Revenue $25,000 $21,566 $20,620 $20,254 $20,000 housands $15,000 $10,569 Th $10,000 $5,175 $5,000 $0 2007 2008 2009 2010 1Q 2011 Annualized
Slide 40: RDSI Banking Systems Revenue by Line
RDSI Banking Systems: Revenue ($millions) 4Q’09 1Q’10 2Q’10 3Q’10 4Q’10 1Q’11 Data Processing 2.69 2.47 1.28 0.99 0.37 0.30 Network Services 0.24 0.26 0.19 0.13 0.08 0.07 Payment Solutions 1.56 1.70 1.38 1.21 1.01 0.93 RDSI Revenue 4.52 4.43 2.85 2.34 1.46 1.23 Less: Intercompany (0.40) (0.40) (0.24
Slide 41: RDSI Banking Systems: Right-sizing the Organization
RDSI Banking Systems: Ri ht i i Right-sizing th the O i ti Organization • Took charges totaling $14.1 million for impairments, write-downs and charge-offs in 2010 • Reduced staff by 79 since YE 2009 for savings of $7 million • Excluding E l di salaries, l i reduced d d operating ti expenses by over
Slide 42: Rurban Financial Corp: Focusing on the Future
Focusing on the Future Rurban Financial Corp
Slide 43: Where Do We Go from Here?
Rurban Financial Corp. Wh Where D Do WWe G Go ffrom H ? Here? • Back to the Basics of Banking • Maintain asset quality • Control expenses • Emphasis on new sources of non-interest income • Improve capital • Drive sales culture
Slide 44: Preferred Shares
Rurban Financial Corp. P f d Sh Preferred Shares • Capital ratios key in the banking environment oposed participation • Proposed pa c pa o in SSmall a Business us ess Lending Fund (SBLF) • More we lend, the lower the cost of capital • Preferred shares are non-voting • Can be redeemed any time
Slide 45: Strategic Vision
Rurban Financial Corp. Strategic Vision: To become a high performing, diversified financial services high‐performing, organization with $1 billion in assets and ROAA of 1.0% • Benchmark performance progress against universe of micro-cap banks • Local presence in communities enhances efficiency, resp
Slide 46: RDSI / New Core Review
Rurban Financial Corp. RDSI / New N C Core R i Review Richard L. L Hardgrove Chairman of the Board Rurban Financial Corp. The State Bank and Trust Company RDSI Banking Systems
Slide 47: RDSI / New Core Review
Rurban Financial Corp. RDSI / New N C Core R i Review Richard L. L Hardgrove Chairman of the Board Rurban Financial Corp. The State Bank and Trust Company RDSI Banking Systems
Slide 48: RDSI / New Core Review
Rurban Financial Corp. RDSI / New N C Core R i Review Richard L. L Hardgrove Chairman of the Board Rurban Financial Corp. The State Bank and Trust Company RDSI Banking Systems
Slide 49: Annual Meeting Agenda
Rurban Financial Corp. A Annuall M ti Meeting A d Agenda • Introductions • Chairman Remarks – Richard LL. Hardgrove • Rurban Overview – Mark A. Klein i CEO – Tony Cosentino CFO • Election Results • Questions
Slide 50: Annual Meeting Agenda
Rurban Financial Corp. A Annuall M ti Meeting A d Agenda • Introductions • Chairman Remarks – Richard LL. Hardgrove • Rurban Overview – Mark A. Klein i CEO – Tony Cosentino CFO • Election Results • Questions
Slide 51: Thank You for Attending
Thank a You ou for o Attending g 2011 Annual Meeting of Shareholders May 5, 2011