DEFIANCE, Ohio, Oct. 22, 2009 (GLOBE NEWSWIRE) -- Rurban Financial Corp.
(Nasdaq:RBNF), a leading provider of full-service community banking, investment
management, trust services and bank data and item processing, announced that its
Board of Directors has approved proceeding with the appropriate filings with the
SEC in connection with the contemplated spin-off of Rurban's technology
subsidiary, Rurbanc Data Services, Inc. ("RDSI Banking Systems"). Rurban and
RDSI Banking Systems are in the process of preparing the SEC filings and plan to
begin filing with the SEC within the next few weeks.
Rurban currently anticipates that the spin-off would be completed in the first
quarter of 2010, subject to the satisfaction of a number of conditions. The
conditions include final approval by the Rurban Board of Directors of the
spin-off and its terms, the SEC filings becoming effective under applicable SEC
laws and regulations, the successful conversion of The State Bank and Trust
Company, Rurban's banking subsidiary, to New Core Banking Systems' Single
Source(TM) software, and the satisfaction of the conditions to the merger
between RDSI Banking Systems and New Core Banking Systems under the terms of the
Agreement and Plan of Reorganization entered into on April 25, 2009.
The contemplated spin-off would be effected through a dividend of the common
shares of RDSI Banking Systems to the shareholders of Rurban, resulting in RDSI
Banking Systems becoming a separate and independent public company. The
shareholders of Rurban would retain their shares of Rurban, which would continue
as a publicly-held corporation with The State Bank and Trust Company as its
primary holding. The State Bank and Trust Company has assets of approximately
$650 million and operates in the Northwest corner of Ohio with lending services
in Columbus, Ohio and a banking center in Fort Wayne, Indiana.
It is anticipated that the merger of RDSI Banking Systems and New Core Banking
Systems will be completed immediately following the contemplated spin-off of
RDSI Banking Systems. As previously announced, the shareholders of New Core
Banking Systems will be entitled to receive up to 31% of the outstanding common
shares of RDSI Banking Systems immediately following the merger. The issuance of
the common shares to the shareholders of New Core Banking Systems in the merger
will have the effect of diluting the ownership percentage represented by the
common shares of RDSI Banking Systems received by Rurban shareholders in the
spin-off, and RDSI Banking Systems will own the intellectual property of New
Core Banking Systems by virtue of the merger.
Following the spin-off, RDSI Banking Systems will continue as a data and item
processing company. RDSI is already offering New Core Banking Systems' Single
Source(TM) software to its current data processing customers who are now being
serviced using ITI software. The sales process of offering the Single Source(TM)
software is a complex effort involving software presentations, viewing of test
software, and the individual bank client's due diligence, concluding with
approval by the client's board of directors. While RDSI anticipates loss of some
banking clients, RDSI is encouraged that it currently has one banking site
utilizing the software, a major conversion scheduled for the fourth quarter of
2009 (The State Bank and Trust Company), four executed contracts, and nine
letters of intent to convert to the new software. RDSI currently has 49
proposals submitted to various banks. RDSI believes this represents the largest
launch of a new core banking system in the U.S.
Anticipating an end to data processing operations using the current ITI
software, Rurban commenced an accelerated depreciation expense of its ITI
software and associated software starting in August 1, 2009, with the entire
balance of $4.7 million expected to be written-off by the last half of 2010.
Non-recurring legal and compliance expenses will also be incurred as the
documentation for the spin-off is completed and the transition is executed.
These expenses began in the first quarter of 2009 and will continue through the
first quarter of 2010.
As part of the spin-off, there will be a number of executive changes affecting
the new RDSI Banking Systems and Rurban. Kenneth A. Joyce will continue as
Chairman and CEO of RDSI Banking Systems and will also temporarily take the role
of President of RDSI Banking Systems. Henry R. Thiemann will be retiring in the
fourth quarter of 2009 after ten successful years in various positions with
Rurban, including the last two years as RDSI Banking Systems' President. Duane
L. Sinn, currently Rurban's Chief Financial Officer, will be joining RDSI
Banking Systems as its Chief Financial Officer effective upon the completion of
the contemplated spin-off. John J. Aranowicz, the founder and current CEO of New
Core Banking Systems, will be joining RDSI Banking Systems as an Executive Vice
President with responsibility for Software Development and other
responsibilities.
Rurban's post spin-off executive management structure will reflect these
anticipated changes. The State Bank and Trust Company, including the trust
operation of Reliance Financial Services, will continue under the leadership of
Mark A. Klein, President and CEO, who will also be assuming the CEO
responsibility for Rurban effective January 1, 2010. Mr. Joyce, who currently
serves as Rurban's President and CEO, will assume the role of Executive Vice
Chairman of Rurban effective January 1, 2010 through March 31, 2010. Following
this date, Mr. Joyce will maintain a consulting relationship with Rurban through
the end of 2010 to assist with the transition. Rurban is currently conducting a
search for a new CFO to replace Mr. Sinn.
Kenneth A. Joyce, President and CEO of Rurban Financial Corp., commented, "The
Board has elected to move forward with the strategic course laid out over the
past several years. Assuming the completion of the spin-off, this strategic
change will result in RDSI becoming an independent company with the ability to
grow and create its valuation using proprietary intellectual property, while
continuing to provide outstanding service, and a world-class sales process. It
also provides The State Bank and Trust Company, Rurban's banking subsidiary,
banking development opportunities while retaining the stability of Rurban. We
have exciting times and challenges ahead, but we are looking forward to the
success of both companies. I have mentioned in the past that we believed that
the valuation of RDSI was hidden within Rurban's stock. This action will provide
the means for RDSI's value to be recognized within the market, and with this
spin-off, we believe we've found an excellent opportunity for RDSI to obtain
fair valuation."
About Rurban Financial Corp.
Rurban Financial Corp. is a publicly-held financial services holding company
based in Defiance, Ohio. Rurban's wholly-owned subsidiaries are The State Bank
and Trust Company, including Reliance Financial Services and RDSI Banking
Systems (RDSI), including DCM. The State Bank and Trust Company offers financial
services through its 20 banking centers in Allen, Defiance, Fulton, Lucas,
Paulding, Williams and Wood Counties, Ohio and Allen County, Indiana and a Loan
Production Office in Franklin County, Ohio. Reliance Financial Services, a
division of the Bank, offers a diversified array of trust and financial services
to customers throughout the Midwest. RDSI and DCM provide data and item
processing services to community banks in Arkansas, Florida, Illinois, Indiana,
Kansas, Michigan, Missouri, Nebraska, Nevada, Ohio and Wisconsin. Rurban's
common stock is quoted on the NASDAQ Global Market under the symbol RBNF. The
Company currently has 10,000,000 shares of stock authorized and 4,861,779 shares
outstanding. The Company's website is http://www.rurbanfinancial.net.
Forward-Looking Statements
Certain statements within this document, which are not statements of historical
fact, constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve
risks and uncertainties and actual results may differ materially from those
predicted by the forward-looking statements. These risks and uncertainties
include, but are not limited to, risks and uncertainties inherent in the
national and regional banking, insurance and mortgage industries, competitive
factors specific to markets in which Rurban and its subsidiaries operate, future
interest rate levels, legislative and regulatory actions, capital market
conditions, general economic conditions, geopolitical events, the loss of key
personnel and other factors.
Forward-looking statements speak only as of the date on which they are made, and
Rurban undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which the statement is made
except as required by law. All subsequent written and oral forward-looking
statements attributable to Rurban or any person acting on our behalf are
qualified by these cautionary statements.
Additional Information
Rurban and/or RDSI plan to make appropriate filings with the SEC concerning the
contemplated spin-off and the merger transaction between RDSI Banking Systems
and New Core Banking Systems. Those filings will include a combined information
statement to be delivered to Rurban shareholders in connection with the spin-off
and a proxy statement/disclosure document to be delivered to the New Core
shareholders in connection with the approval of the merger transaction by the
New Core shareholders. The combined information statement/proxy
statement/disclosure document and other documents filed by Rurban and/or RDSI
with the SEC will contain important information about Rurban, RDSI, New Core and
the merger transaction. WE URGE INVESTORS AND NEW CORE SHAREHOLDERS TO READ
CAREFULLY THE COMBINED INFORMATION STATEMENT/PROXY STATEMENT/DISCLOSURE
STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC, INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS ALSO FILED WITH THE SEC. NEW CORE SHAREHOLDERS IN PARTICULAR SHOULD
READ THE COMBINED INFORMATION STATEMENT/PROXY STATEMENT/DISCLOSURE DOCUMENT
CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER TRANSACTION. Investors
and shareholders will be able to obtain a free copy of the combined information
statement/proxy statement/disclosure document -- along with other filings
containing information about Rurban and RDSI -- at the SEC's website at
http://www.sec.gov. Copies of the combined information statement/proxy
statement/disclosure document, and any filings with the SEC incorporated by
reference in such document, can also be obtained free of charge by directing a
request to Rurban Financial Corp., 401 Clinton Street, Defiance, Ohio 43512;
Attention: Ms. Valda Colbart, Investor Relations Officer; Telephone: (419)
784-2759.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities nor shall there be any sale of securities in any
jurisdiction in which the offer, solicitation, or sale is unlawful before
registration or qualification of the securities under the securities laws of the
jurisdiction. Rurban and RDSI contemplate that the RDSI common shares to be
issued to shareholders of New Core Banking Systems in the merger will not be
registered under the Securities Act of 1933, as amended, in reliance upon an
applicable exemption from registration requirements. In this case, the RDSI
common shares issued to shareholders of New Core Banking Systems in the merger
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
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CONTACT: Rurban Financial Corp.
Investor Contact:
Valda Colbart
419-784-2759
rfcinv@rurban.net
