Sb Financial Group, Inc. · NASDAQ:SBFG
Sb Financial — Shareholder Meeting (April 2013)
59 slides from Sb Financial's shareholder meeting presentation, Apr 24, 2013
Slide 1: Annual Meeting of Shareholders
ANNUAL MEETING OF SHAREHOLDERS April 24, 2013 RURBAN op J 20 1 2
Slide 2: Shareholder Proposals
Shareholder Proposals G — to elect three (3) directors to serve for terms of three (3) years each: Mr. Richard L. Hardgrove, Mr. Lynn Isaac, and Mr. Mark Klein. Q — to ratify the appointment of BKD, LLP as the independent registered public accounting firm of Rurban Financial Corp. for the fiscal yea
Slide 3: Annual Meeting Agenda
Rurban Financial Corp. Annual Meeting Agenda « Introductions ¢ Rurban 2012 Overview * Questions, Comments, and Proposal Discussion Voting Results Adjournment EAR IN REVIEW
Slide 4: Special Guests
Rurban Financial Corp. Special Guests * Troy Gilstorf, Scott Hopf 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 & Ass
Slide 5: Community Advisory Boards
COMMUNITY ADVISORY BOARDS The Eyes and Ears for us in our Communities... (TO) RURBAN, 012 YEAR IN REVIEW
Slide 6: State Bank and Trust Company Advisory Board Members
he State Bank and Trust Company Advisory Board Members Board Liaison: Thomas L. Sauer + Mike McCann * Doug McDonald « Jerry Overmier * Sue Strausbaugh 012 EAR IN REVIEW
Slide 7: State Bank and Trust Company Advisory Board Members
he State Bank and Trust Company Advisory Board Members Board Liaison: + Virginia Neuenschwander Gaylyn J. Finn « Edward Nofziger « Joseph O'Neil ¢ Joseph Short « Kevin Whitlock 012 EAR IN REVIEW
Slide 8: State Bank and Trust Company Advisory Board Members
he State Bank and Trust Company Advisory Board Members ‘Lima Region Board Liaison: + Dr. Patrick Chaney Timothy J. Stolly » Joseph Guagenti * Ronald Miller 012 EAR IN REVIEW
Slide 9: State Bank and Trust Company Advisory Board Members
he State Bank and Trust Company Advisory Board Members Board Liaison: Robert A. Fawcett - George Carter * Floyd Furrow Dr. John Saxton « Rex Williamson 012 EAR IN REVIEW
Slide 10: State Bank and Trust Company Advisory Board Members
he State Bank and Trust Company Advisory Board Members ‘Williams County — Board Liaison: » Jerry Kneipp William Martin Rita Kissner Glen Newcomer Richard Reed Michael Spangler Duane A. Weiss 012 EAR IN REVIEW
Slide 11: Retired Director: Thomas A. Buis
Rurban Financial Corp. Retired Director: ThomasA. Buis - Twenty-three year Director of our Company - Former Chairman of Governance and Nominating Committee - Insurance Agency Executive and Owner for over 40 years EAR IN REVIEW
Slide 12: New Director in 2013: Gary M. Cates
Rurban Financial Corp. New Director in 2013: Gary M. Cates - Appointed Director in February 2013 + President of ProMedica Defiance Regional Hospital and ProMedica Transportation - M.B.A. in Finance and International Business from University of Michigan YY - B.A. in Journalism from Michigan State Uni
Slide 13: Board of Directors
Board of Directors 2013 2014 Richard L. Hardgrove* Robert A. Fawcett, Jr. Lynn “Zac” A. Isaac Gaylyn J. Finn Mark A. Klein* Rita A. Kissner* * Indicates an RDS| Board Member Rurban Financial Corp. 2015 Gary M. Cates Thomas L. Sauer Timothy J. Stolly 2012 WEAR INREVIEW
Slide 14: Rurban Financial: Director Committees
Rurban Financial: Director Committees Audit Committee ° Chairman: Rita A. Kissner ° Financial Expert: Gaylyn J. Finn Compensation Committee ° Chairman: Robert A. Fawcett, Jr. Governance and Nominating Committee ° Chairman: Lynn A. Isaac Loan Review Committee ° Chairman: Gaylyn J. Finn WEAR IN REVIEW
Slide 15: Forward-Looking Statements
orward-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 unce
Slide 16: What a Difference a Year Makes!
WHAT A DIFFERENCE A YEAR MAKES! 2012 __ YEAR IN REVIEW
Slide 17: 2012 in Review: Becoming a Top Performing Community Bank
2012 IN REVIEW: Becoming a Top Performing Community Bank * Net income nearly tripled to $4.8 million ($0.99 per share) * Nonperforming assets declined 11% to $8.9 million * Originated over $300 million of mortgages * Portfolio loans grew $21 million, up 4.7% * RDSI stabilized ° Stock price rose 147%
Slide 18: A Top Performing Bank: What Does This Mean?
A Top Performing Bank: What Does This Mean? Internally: Welook to achieve continuous improvement over time Externally: We benchmark Rurban’s performance relative to banks with a similar size and strategy Investors: We track the growth of shareholder value We aspire to perform in the top quartile of
Slide 19: Rurban Rises in the Ranks of Community Banks
Rurban Rises in the Ranks of Community Banks 2012: Overall Performance Ranks #21* Among Microcap Peer Banks Rurban Ranking vs. Microcap Peers ¢ Rurban rose 37 places in 3 yrs. * Strongest 3-year improvement among microcap peer banks *Ranking based on composite of core metrics as calculated and repor
Slide 20: Improved Operating Performance Reflected in Stock Price Appreciation
Improved Operating Performance Reflected in Stock Price Appreciation 2012: Third Highest Increase in Shareholder Value Among Microcap Peer Banks —RBNF 2012 Price Change + Rurban stock price increased ‘SNL U.S. Bank Index $500M-$1B* 147% d uring 2012 200% $500M-$1B Microcap Banks averaged 29% price a
Slide 21: Closing the Gap to Top Performance
Closing the Gap to Top Performance 4 Quarter Return On Average Assets Approaches Top Tier Performance HRBNF B Top Quartile Peer Group * Recovery reflects combination ¢ Higher revenue « Less credit costs « Lower operating expenses RETURN ON AVERAGE ASSETS (%) 2012 YEAR IN REVIEW
Slide 22: Rurban: A Leader in Non-Interest Income
Rurban: A Leader in Non-Interest Income 2012: Ranked #4 in Peer Group for Fee Income as a Percent of Operating Revenue $50.3 $40.8 $346 $35.6 (Sin millions) Total Operating Revenue Expanded 2.9% from $34.6 million to $35.6 million in 2012 2009 2010 2011 2012 Top Tier Peer Group m FEE INCOME m SPREAD
Slide 23: Diversity in Fee Income
Diversity in Fee Income Despite $15.0 Million Decline in Fee Income 2009 Fee Income 2012 Fee Income $29.3 million $14.9 million RDSI, ; $18.9 i Mtg. Banking, Mtg. Service Wealth ae Fees, Mgmt, ‘e $2.6 $2.5 YEAR IN REVIEW
Slide 24: Stable Contribution of Spread Income
Stable Contribution of Spread Income Avg. Earning Assets © Net Interest Income Cc: 8; 2009 2010 2011 2012 2012 YEAR IN REVIEW
Slide 25: Operating Expenses Continue to Right-Size
Operating Expenses Continue to Right-Size 2009 Operating Expenses 2012 Operating Expenses $44.8 million $27.5 million Other, $1.3.@° DSI, oes $17.3 million in Cost Savings BAN INANCIAL CORP. EAR IN REVIEW
Slide 26: Enhanced Cross-Sell: The Power of Numbers
Enhanced Cross-Sell: The Power of Numbers 946 Closed Referrals 2012 Total Referrals I Mortgage II Consumer loans DE papciosed $78 million Volume _ Deposits {j Trust/Brokerage
Slide 27: Active Investment Management
rc ‘Active Investment Management® ‘First and Second Residential Mortgage “Retirement Plans/IRAs* “First-Time Home Buyer ‘Trustee Services* “Construction ‘Estate and Financial Planning” ‘Agricultural “Brokerage Investments, Annuities ‘investment Property ‘and insurance® Bridge Loan \ stine of Cea sDi
Slide 28: Mortgage Banking
Mortgage Bankin Consistently A Star Pe Fee income derived from mortgage loan ser Mtg. Servicing Portfolio ($ in Millions) $402 Wear IN REVIEW
Slide 29: Our Mortgage Banking Strategy
Our Mortgage Banking Strategy Defiance — Traditional Footprint Columbus — Loan Production Office Mortgage Originations (Millions) $333 $220 li Defiance Region Columbus Region 2012 YEAR IN REVIEW CIAL CORP.
Slide 30: Wealth Management: Expands Relationships with Key Segment of Client Base
Wealth Management: Expands Relationships with Key Segment of Client Base ° Supports professionals, small businesses and their owners ¢ Reorganized to integrate and work more closely with regional execs ° Stable source of fee income contributes to diversity ° Investment activity tied to health of eco
Slide 31: RDSI Has Stabilized
RDSI Has Stabilized ° Released from regulatory constraints in 1Q 2013 ° Now primarily focused on two product lines: ° Item Processing ° Network Services ¢ Further reduced staff by nine and expenses by $2 million in 2012 ° Data Processing was transferred to State Bank in-house 012 YEAR IN REVIEW INAN
Slide 32: At the Heart of Rurban
AT THE HEART OF RURBAN STATE BANK AND TRUST RURBO Nee oa
Slide 33: Mortgage Lending Leadership
MORTGAGE LENDING LEADERSHIP Pam Benedict, Defiance Region Steve Watson, Columbus Region 2012 YEAR IN REVIEW
Slide 34: Different Markets / Same Goals
Different Markets/ Same Goals Population (millions) Median HH Income Wt. Avg. 2012 Unemployment Total Number of Loans Closed Dollar Loan Volume New Money* Volume New Home Purchases $50,600 8.45% 6.3% 1,093 1,000 2,093} $142M $191M —$333M $85M $130M = $224M $39M $84 2012 YEAR IN REVIEW
Slide 35: Different Markets / Same Goals
Different Markets/ Same Goals Population (millions) Median HH Income Wt. Avg. 2012 Unemployment Total Number of Loans Closed Dollar Loan Volume New Money* Volume New Home Purchases $50,600 8.45% 6.3% 1,093 1,000 2,093} $142M $191M —$333M $85M $130M = $224M $39M $84 2012 YEAR IN REVIEW
Slide 36: Columbus Leadership
COLUMBUS LEADERSHIP David Homoelle, Regional President RECURS 7012 YEAR IN REVIEW
Slide 37: Our Columbus Strategy: Expanding State Bank's Presence
Our Columbus Strategy: Expanding State Bank’s Presence in the Best Market in Ohio Loans Outstanding (millions) * Portfolio consists primarily of: m@CRE Res. Mtg. | Consumer « Jumbo / Variable Rate Mortgages si] * Commercial Real Estate loans to business owners 2010 2011 2012 2012 YEAR IN REVIEW
Slide 38: Our Columbus Strategy
ur Columbus Strategy: ° Residential mortgages are the gateway to household growth We grow organically through networking ° Private banking mentality ° Synergy exists between mortgage lending group and commercial lenders ° Great service and competitive products 012 EAR IN REVIEW
Slide 39: Commercial Lending
COMMERCIAL LENDING Jon Gathman, Senior Lender 2012 YEAR IN REVIEW
Slide 40: Commercial Lending: Meeting the Needs of Our Local Businesses
Commercial Lending: Meeting the Needs of Our Local Businesses ° Niche Market: small & mid-size business * Commercial loans comprise 70% of portfolio ¢ State Bank maintains a reputation for outstanding service and loyalty to customers, especially during periods of tight credit 2012 WEAR IN REVIEW
Slide 41: Loan Sales: A Key to Revenue Growth while Conserving Capital
Loan Sales: A Key to Revenue Growth while Conserving Capital @ Originations OLoan Sales/ Amort/ Paydowns. BNet Portfolio Growth 2012 Loan Activity Mortgage Loans CommercialLoans Consumer Loans URBAN, 2012 YEAR IN REVIEW
Slide 42: For State Bank, Small Business Means Big Opportunity
For State Bank, Small Business Means Big Opportunity Status of SBA Initiative: ° Strategic fit with State Bank’s small business target market ° Awarded Express Status in early 2013 ° Preferred Lender Status in process ° In-house training of lenders completed EAR IN REVIEW
Slide 43: Ag Lending: A Profitable Niche
Ag Lending: A Profitable Niche Valued by Our Farm Community * Portfolio loans were $42 million at year-end 2012, up 10.9% ° Loans guaranteed by Farm Service Agency (FSA) * Proactive advice from our two farmer/ ag lenders provides a key competitive advantage. ° Farm profitability reduced credit needs
Slide 44: Financial Review
FINANCIAL REVIEW Tony Cosentino, CFO 2012 YEAR IN REVIEW
Slide 45: Building Momentum
Building Momentum ™mNet Income ™CoreEarnings im Pre-Tax, Pre-Prc $4.8 $4.6 2012 YEAR IN REVIEW
Slide 46: Stabilized Net Interest Margin
Stabilized Net Interest Margi Earning Asset Yield Cost of Int-bearing 2009 2010 2011 2012 =) FINA! \L CORP. YEAR IN REVIEW
Slide 47: Operating Efficiencies Improving
perating Efficiencies Improving ¢ Historic operating expense always too high *« RDSl revenue decline offset with lower operating expense 85.14% 82.38% 1 79.38% . ee | In millions: = Operating Revenue Operating Expenses e Efficiency Ratio 2009 2010 2011 2012 RURBAN 2012 NANCIAL CORP. YEAR IN REVIEW
Slide 48: Asset Quality - A Source of Strength
Asset Quality —A Source of Strength « Problem assets peaked in 2009 * Aggressive action taken in 2010 reduced problem assets to more acceptable levels Strong loss reserve coverage provides flexibility to manage potential losses with less impact on profits (000) 2009 2010 2011 2012 Nonperforming Asse
Slide 49: Credit Costs Decline Rapidly
Credit Costs Decline Rapidly 2009 2012 $9,863 $2,677 (S in millions) (S in millions) @ Charge-offs ™ Charge-offs @ Provision ™ Provision @ OREO/ Foreclosure OREO/ Foreclosure 2 REVIEW
Slide 50: State Bank Remains Well-Capitalized
State Bank Remains Well-Capitalized - Losses at RDSI impacted holding company (RFC) capital - BASEL III impacts still an open question - Since low points at mid-year 2011, all RFC capital ratios now show improvement. - State Bank remains well-capitalized RFC Capital Risk-based Capital Ratio 12.65% 1
Slide 51: In Summary...
In Summary... Mark Klein, CEO 2012 WEAR IN REVIEW:
Slide 52: Our Corporate Mission
Our Corporate Mission To become a * High-performing (top-tier), * Community-focused, ° Financial services leader By meeting the needs of our customers, employees, shareholders and communities we serve 012 EAR IN REVIEW
Slide 53: Multiple brands...
Multiple brands... ELIANCE RURBAN FINANCIAL CORP. THE RIAU IGE ESTATE BANK RFC IN 2012
Slide 54: One Company, One Vision
One Company, One Vision @ financialgroup Symbol: SBFG
Slide 55: One Company, One Vision
One Company, One Vision @ statebank Sound advice. Smart money.
Slide 56: 1st Quarter 2013
1st Quarter 2013 * Net income in excess of $1.3 million ¢ Return on Average Assets of 83 bps * Nonperforming assets down 16% since last year 1Q, to 1.3% of total assets * $15.7 million loan growth since 1Q 2012, or 3.6% * Capital position continues to build at RFC and the bank; shareholder equity no
Slide 57: Annual Meeting Agenda
Rurban Financial Corp. Annual Meeting Agenda Introductions ¢ Rurban 2012 Overview * Questions, Comments and Proposal Discussion ° Voting Results ° Adjournment a 202,
Slide 58: Annual Meeting Agenda
Rurban Financial Corp. Annual Meeting Agenda Introductions ¢ Rurban 2012 Overview * Questions, Comments and Proposal Discussion ° Voting Results ¢ Adjournment
Slide 59: Thank you for joining us!
Annual Meeting of Shareholders Thank you for joining us! @ financial \ AR IN REVIEW
SB Financial Group — Shareholder Meeting (April 2013) on 6ix