DEF 14A 1 l93542adef14a.txt RURBAN FINANCIAL CORP. DEFINITIVE PROXY ================================================================================ SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) [x] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12. RURBAN FINANCIAL CORP. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) XXXXXXXXXXXXXXXX (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ....... (2) Aggregate number of securities to which transaction applies: .......... (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ............ (4) Proposed maximum aggregate value of transaction: ...................... (5) Total fee paid: ....................................................... [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ............................................... (2) Form, Schedule or Registration Statement No.: ......................... (3) Filing Party: ......................................................... (4) Date Filed: ........................................................... ================================================================================ RURBAN FINANCIAL CORP. 401 CLINTON STREET DEFIANCE, OHIO 43512 (419) 783-8950 --------------------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS --------------------------- Defiance, Ohio April 30, 2002 To the Shareholders of Rurban Financial Corp.: NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders (the "Annual Meeting") of Rurban Financial Corp. (the "Company") will be held at Kettenring Country Club, 211 Carpenter Road, Defiance, Ohio, on Thursday, May 30, 2002, at 10:00 a.m., local time, for the following purposes: 1. To elect three (3) directors to serve for terms of three (3) years each. 2. To transact such other business as may properly come before the Annual Meeting and any adjournment(s) thereof. Shareholders of record at the close of business on April 15, 2002 will be entitled to receive notice of, and to vote at, the Annual Meeting and any adjournment(s) thereof. You are cordially invited to attend the Annual Meeting. The vote of each shareholder is important, whatever the number of common shares held. Whether or not you plan to attend the Annual Meeting, please sign, date and return your proxy promptly in the enclosed envelope. If you attend the Annual Meeting and desire to revoke your proxy, you may do so and vote in person. Attendance at the Annual Meeting will not, in and of itself, constitute revocation of a proxy. By Order of the Board of Directors, /s/ Thomas C. Williams ------------------------------------ Thomas C. Williams President and Chief Executive Officer RURBAN FINANCIAL CORP. 401 CLINTON STREET DEFIANCE, OHIO 43512 (419) 783-8950 PROXY STATEMENT --------------- This Proxy Statement and the accompanying proxy are being mailed to shareholders of Rurban Financial Corp., an Ohio corporation (the "Company"), on or about April 30, 2002, in connection with the solicitation of proxies by the Board of Directors of the Company for use at the Annual Meeting of Shareholders of the Company (the "Annual Meeting") called to be held on Thursday, May 30, 2002, or at any adjournment(s) thereof. The Annual Meeting will be held at 10:00 a.m., local time, at Kettenring Country Club, 211 Carpenter Road, Defiance, Ohio. The Company's wholly-owned subsidiaries include: (1) The State Bank and Trust Company, Defiance, Ohio ("State Bank"); (2) RFC Banking Company ("RFCBC"), which is comprised of the following banking divisions: The Peoples Banking Company, Findlay, Ohio ("Peoples Bank"), The First Bank of Ottawa, Ottawa, Ohio ("Ottawa") and The Citizens Savings Bank Company, Pemberville, Ohio ("Citizens"); (3) Rurbanc Data Services, Inc., Defiance, Ohio ("RDSI"); and (4) Rurban Life Insurance Company, Defiance, Ohio ("Rurban Life"). State Bank has two-wholly owned subsidiaries, Reliance Financial Services, N.A. ("RFS"), a nationally-chartered trust and financial services company and Rurban Mortgage Company ("RMC"), an Ohio corporation and mortgage company with its principle offices located in Defiance, Ohio. A proxy for use at the Annual Meeting accompanies this Proxy Statement and is solicited by the Board of Directors of the Company. A shareholder of the Company may use his proxy if he is unable to attend the Annual Meeting in person or wishes to have his common shares voted by proxy even if he does attend the Annual Meeting. Without affecting any vote previously taken, any shareholder executing a proxy may revoke it at any time before it is voted by (1) filing with the Secretary of the Company, at the address of the Company set forth on the cover page of this Proxy Statement, written notice of such revocation; (2) executing a later-dated proxy which is received by the Company prior to the Annual Meeting; or (3) attending the Annual Meeting and giving notice of such revocation in person. Attendance at the Annual Meeting will not, in and of itself, constitute revocation of a proxy. Only shareholders of the Company of record at the close of business on April 15, 2002 (the "Record Date") are entitled to receive notice of, and to vote at, the Annual Meeting and any adjournment(s) thereof. At the close of business on the Record Date, 4,564,513 common shares were outstanding and entitled to vote. Each common share of the Company entitles the holder thereof to one vote on each matter to be submitted to shareholders at the Annual Meeting. A quorum for the Annual Meeting is a majority of the outstanding common shares. The Company's common shares are listed on the NASDAQ National Market. Common shares represented by signed proxies that are returned to the Company will be counted toward the quorum in all matters even though they are marked "Abstain," "Against" or "Withhold Authority" on one or more or all matters or they are not marked at all. Broker/dealers who hold their customers' common shares in street name may, under the applicable rules of the self-regulatory organizations of which the broker/dealers are members, sign and submit proxies for such common shares and may vote such common shares on routine matters, which, under such rules, typically include the election of directors, but broker/dealers may not vote such common shares on other matters, which typically include amendments to the articles of incorporation of a corporation and the approval of certain stock compensation plans, without specific 1 instructions from the customer who owns such common shares. Proxies signed and submitted by broker/dealers which have not been voted on certain matters as described in the previous sentence are referred to as broker non-votes. Such proxies count toward the establishment of a quorum. The Company will bear the costs of preparing and mailing this Proxy Statement, the accompanying proxy and any other related materials and all other costs incurred in connection with the solicitation of proxies on behalf of the Board of Directors. Proxies will be solicited by mail and may be further solicited, for no additional compensation, by officers, directors or employees of the Company and its subsidiaries by further mailing, by telephone or by personal contact. The Company will also pay the standard charges and expenses of brokerage houses, voting trustees, banks, associations and other custodians, nominees and fiduciaries, who are record holders of common shares not beneficially owned by them, for forwarding such materials to and obtaining proxies from the beneficial owners of such common shares. The Annual Report to the Shareholders of the Company for the fiscal year ended December 31, 2001 (the "2001 fiscal year") is enclosed herewith. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -------------------------------- As of the Record Date, other than the Employee Stock Ownership Plan and Savings Plan of Rurban Financial Corp., no person or entity had beneficial ownership of more than 5% of the outstanding common shares of the Company. The following table sets forth, as of the Record Date, certain information concerning the beneficial ownership of common shares by each director of the Company, by each person nominated for election as a director of the Company, by each of the executive officers named in the Summary Compensation Table and by all current executive officers and directors of the Company as a group:

Amount & Nature Common Shares Which Percent Name of of Beneficial Can Be Acquired Upon of Beneficial Owner Ownership (1) Exercise of Options Total Class (2) ---------------- ------------- ------------------- ----- --------- Rurban Financial Corp. Employee Stock Ownership & Savings Plan 681,968 (3) 0 681,968 14.94% Thomas A. Buis 2,378 (4) 1,048 3,426 (5) Thomas M. Callan 34,998 (6) 1,048 36,046 (5) John R. Compo 40,853 (7) 3,143 43,996 (5) Robert W. Constien 26,408 6,284 32,692 (5) John Fahl 3,270 3,143 6,413 (5) Robert A. Fawcett, Jr. 6,389 (8) 3,143 9,532 (5) Eric C. Hench 17,280 (9) 3,143 20,423 (5) Kenneth A. Joyce 7,527 6,284 13,811 (5) Gary A. Koester 1,327 1,048 2,375 (5) Mark A. Soukup 6,030 6,284 12,314 (5) Steven D. VanDemark 12,879 (10) 4,190 17,069 (5) J. Michael Walz, D.D.S. 24,372 (11) 3,143 27,515 (5) Richard C. Warrener 6,585 6,284 12,869 (5) Thomas C. Williams 7,433 15,711 23,144 (5)

2 All current executive officers and 943,593 (11) 20.67% directors as a group (14 persons) (1) Unless otherwise noted, the beneficial owner has sole voting and investment power with respect to all of the common shares reflected in the table. (2) The percent of class is based upon 4,564,513 common shares outstanding on the Record Date. (3) Does not include an aggregate of 38,045 common shares allocated to the respective accounts of executive officers of the Company in the Employee Stock Ownership Plan ("ESOP") but which common shares are reflected in the totals for each executive officer in this table. (4) Does not include 1,707 common shares held in the name of Mr. Buis' wife, as to which she exercises sole voting and investment power. (5) Reflects ownership of less than 1% of the outstanding common shares of the Company. (6) Does include 30,730 common shares held in a trust for the benefit of the wife of Mr. Callan as to which he exercises shared voting and investment power. (7) Does not include 2,756 common shares held in Mr. Compo's wife name, as to which she exercises sole voting and investment power. (8) Includes 6,389 common shares held by the Robert A. Fawcett Jr. Trust as to which Mr. Fawcett has sole voting and investment power. (9) Includes 17,280 common shares held by the Eric C. Hench Agency Trust as to which Mr. Hench has sole voting and investment power. (10) Includes 4,390 common shares held jointly by Mr. VanDemark and his wife, as to which he exercises shared voting and investment power. Also includes 4,132 common shares held in the names of Mr. VanDemark's children for which Mr. VanDemark is custodian. (11) Does not include 206 common shares held in IRA for the benefit of the wife of Dr. Walz, as to which she exercises sole voting and investment power. Includes 21,100 common shares held in the Krouse Evans Inc. Profit Sharing Plan, as to which Dr. Walz exercises shared voting and investment power with Reliance Financial Services, N.A. (12) Includes common shares jointly held by executive officers and directors and other persons. Also includes an aggregate of 38,045 common shares allocated to the respective accounts of executive officers of the Company in the ESOP. Does not include common shares held by wives of executive officers and directors if such wives exercise sole voting and investment powers. To the Company's knowledge, based solely on a review of the copies of the reports furnished to the Company and written representations that no other reports were required during the 2001 fiscal year, all filing requirements applicable to officers, directors and owners of more than 10% of the outstanding common shares of the Company under Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), were complied with. 3 ELECTION OF DIRECTORS --------------------- In accordance with Article FIFTH of the Amended Articles of Incorporation of the Company (the "Amended Articles") and Section 2.02 of the Amended Regulations of the Company (the "Amended Regulations"), three (3) directors are to be elected for terms of three (3) years each and until their respective successors are elected and qualified. The three directors standing for election as directors of the Company are John R. Compo, John Fahl and Robert A. Fawcett, Jr. It is the intention of the persons named in the accompanying proxy to vote the common shares represented by the proxies received pursuant to this solicitation for the nominees named below who have been designated by the Board of Directors, unless otherwise instructed on the proxy. The following table gives certain information concerning each nominee for election as a director of the Company. Unless otherwise indicated, each person has held his principal occupation for more than five years.

Director of the Position(s) Held with the Company Nominee Company and its Subsidiaries Continuously for Term Nominee Age and Principal Occupation(s) Since Expiring in ------- --- ------------------------------- ----------------- ------------ John R. Compo 57 Chairman of Board and President of 1987 2005 Compo Corporation, Defiance, Ohio, an automotive parts manufacturer and wholesaler; Director of State Bank since 1985 and of Rurban Life since 1995. John Fahl 65 Retired in 2001 as President, Tire 1996 2005 Operations, and a Director, of Cooper Tire & Rubber Company Findlay, Ohio, a tire and rubber manufacturing company; Director of Peoples Bank of RFCBC since 1994. Robert A. Fawcett, Jr. 60 Partner, Fawcett, Lammon, Recker 1992 2005 and Associates, Inc., Ottawa, Ohio, a general insurance agency since 1993; President of Fawcett Insurance Agency, Inc., Ottawa, Ohio, a general insurance agency, from 1979 to 1993; Director of Ottawa of RFCBC since 1982.

While it is contemplated that all nominees will stand for election, if one or more of the nominees at the time of the Annual Meeting should be unavailable or unable to serve as a candidate for election as a director of the Company, the proxies reserve full discretion to vote the common shares represented by the proxies for the election of the remaining nominees and any substitute nominee(s) designated by the Board of Directors. The Board of Directors knows of no reason why any of the above-mentioned persons will 4 be unavailable or unable to serve if elected to the Board. Under Ohio law and the Company's Regulations, the three nominees receiving the greatest number of votes will be elected as directors. The Board of Directors recommends a Vote FOR the election of the above nominees. --- The following table gives certain information concerning the current directors whose terms will continue after the Annual Meeting. Unless otherwise indicated, each person has held his principal occupation for more than five years.

Director of the Position(s) Held with the Company Term Company and its Subsidiaries Continuously Expires Name Age and Principal Occupation(s) Since In ---- --- ------------------------------- --------- ------- Thomas A. Buis 64 Chairman & Secretary of 2001 2003 Spencer-Patterson Agency Inc., Findlay, Ohio, a general insurance agency since January 2000; President of Spencer-Patterson Agency Inc. from 1975 to January 2000; Director of Peoples Bank of RFCBC since 1990 Thomas M. Callan 59 President of Defiance Stamping 2001 2004 Company; Director of State Bank since 1996 Eric C. Hench 47 Chairman of Chief Supermarkets, Inc. 1997 2004 since June 2000; Chief Executive Officer of Chief Supermarkets, Inc. and Sun Management Services from 1990 to June 2000; Director of RDSI from 1990 to October of 1997; Director of State Bank since 1985. Gary A. Koester 41 President of Koester Metals, Inc., a 2001 2004 quality electrical enclosures and precision sheet metal fabrication company and privately held "S" corporation. Owner since January 1992; Director of RDSI since 1997 Steven D. VanDemark 49 General Manager of Defiance Publishing 1991 2004 Company, Defiance, Ohio a newspaper publisher; Chairman of the Board of the Company; Director of State Bank since 1990; Chairman of the Board of State Bank since 1992; Director of RFCBC since 2001; Chairman of RFCBC since 2001; Director of RDSI since 1997. J. Michael Walz, D.D.S. 58 General Dentist in Defiance, Ohio; 1992 2003 Director of State Bank since 1990; Director of RFS since 1997.

5

Director of the Position(s) Held with the Company Term Company and its Subsidiaries Continuously Expires Name Age and Principal Occupation(s) Since In ---- --- ------------------------------- --------- ------- Thomas C. Williams 53 President and Chief Executive Officer 1995 2003 of the Company since June, 1995; President and Chief Executive Officer of State Bank, June 1995 to August 1996; Director of State Bank since 1995; Director of RDSI since 1995; Director of RFCBC from 1997 to August 2001; Director of Rurban Life since 1997; Director of RFS since 1997.

There are no family relationships among any of the directors, nominees for election as directors and executive officers of the Company. The Board of Directors of the Company held a total of nine meetings during the Company's 2001 fiscal year. Each incumbent director attended at least 75% or more of the aggregate of the total number of meetings held by the Board of Directors and meetings of committees on which he served. The Board of Directors of the Company has an Executive Committee comprised of John R. Compo, Robert A. Fawcett, Jr., Eric C. Hench, Steven D. VanDemark, J. Michael Walz, D.D.S. and Thomas C. Williams. The function of the Executive Committee is to act on behalf of the Board of Directors between regularly scheduled meetings of the Board of Directors. The Executive Committee did not meet during the 2001 fiscal year. The Board of Directors of the Company has a Directors' Committee comprised of Thomas A. Buis, Robert A. Fawcett, Jr., Gary A. Koester, J. Michael Walz, D.D.S., Steven D. VanDemark and Thomas C. Williams. In addition, Scott Weasel, a Director of RFCBC, serves as an advisor to the Directors' Committee. The function of the Directors' Committee is to identify and recommend to the Board of Directors of the Company and the respective Boards of Directors of the Company's subsidiaries, candidates for positions as directors of the Company and its subsidiaries. The Directors' Committee met 3 times during the 2001 fiscal year. The Board of Directors of the Company also has a Compensation Committee comprised of John R. Compo, John Fahl, Eric C. Hench, Steven D. VanDemark and J. Michael Walz, D.D.S. The function of the Compensation Committee is to review and recommend to the Board of Directors of the Company the salary, bonus and other cash compensation to be paid to, and the other benefits to be received by, the President and Chief Executive Officer of the Company, Thomas C. Williams, and the other executive officers of the Company. The Compensation Committee did not meet during the 2001 fiscal year. The Board of Directors of the Company has an Audit Committee comprised of Thomas A. Buis, Thomas M. Callan, Robert A. Fawcett, Jr., and Gary A. Koester. In addition, Todd Taylor, a Director of RDSI serves as an advisor to the Audit Committee. The function of the Audit Committee is to review the adequacy of the Company's system of internal controls, to investigate the scope and adequacy of the work of the Company's independent and internal auditors and to recommend to the Board of Directors a firm of accountants to serve as the Company's independent auditors. The Audit Committee met 5 times during the 2001 fiscal year. 6 REPORT OF THE AUDIT COMMITTEE ----------------------------- GENERAL In accordance with the written Audit Committee Charter adopted by the Company's Board of Directors, the Audit Committee assists the board in fulfilling their responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company. Each member of the Audit Committee qualifies as independent. The Board of Directors of the Company adopted the charter of the Audit Committee in April 1999 and amended the Audit Committee Charter to its current form on February 21, 2001. The Audit Committee Charter is included at the end of the proxy statement as APPENDIX A. REVIEW AND DISCUSSION WITH INDEPENDENT ACCOUNTANTS AND AUDITORS In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from Crowe, Chizek and Company LLP ("Crowe"), a formal written statement describing all relationships between the Company and Crowe that might bear on Crowe's independence consistent with Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, discussed with Crowe any relationships or services that may impact the objectivity and independence of Crowe and satisfied itself as to Crowe's independence. The Audit Committee also discussed with management and Crowe the adequacy and effectiveness of the Company's internal accounting and financial controls. In addition, the Audit Committee discussed and reviewed with Crowe all communications required by auditing standards generally accepted in the United States of America, including those described in Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, and, with and without management present, discussed and reviewed the results of Crowe's examination of the financial statements. REVIEW WITH MANAGEMENT The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the fiscal year ended December 31, 2001 with management. Management has the responsibility for the preparation of the Company's consolidated financial statements and Crowe has the responsibility for the audit of those statements. AUDIT FEES The aggregate fees billed for professional services rendered by Crowe for the audit of the Company's annual consolidated financial statements for the 2001 fiscal year and the reviews of the consolidated financial statements included in the Company's Quarterly Reports on Form 10-Q for the 2001 fiscal year (collectively, the "Audit Services") were $127,000. 7 FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES Crowe did not render any of the professional services described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X (17 VFR 210.2-01(c)(4)(ii)) (the "Financial Information Systems Design and Implementation Services") during the 2001 fiscal year for the Company or its subsidiaries. ALL OTHER FEES The aggregate fees billed for services rendered by Crowe, other than Audit Services and Financial Information Systems Design and Implementation Services, for the 2001 fiscal year (the "Other Services") were $243,727. CONCLUSION Based on the reviews and discussions with management and Crowe noted above, the Audit Committee recommended to the board of directors that the Company's audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 to be filed with the SEC and the board approved such recommendation. The Audit Committee also determined that the provision of the Other Services was compatible with maintaining Crowe's independence. Submitted by the Audit Committee of the Company's Board of Directors. Robert A. Fawcett, Jr., Chairman, Thomas A. Buis, Thomas M. Callan, and Gary A, Koester TRANSACTIONS INVOLVING MANAGEMENT --------------------------------- During the Company's 2001 fiscal year, the Company's subsidiaries including State Bank, RFCBC, RFS and RMC entered into banking-related transactions, in the ordinary course of their respective businesses, with certain executive officers and directors of the Company (including certain executive officers of the Company's subsidiaries), members of their immediate families and corporations or organizations with which they are affiliated. It is expected that similar transactions will be entered into in the future. Loans to such persons have been made on substantially the same terms, including the interest rate charged and collateral required, as those prevailing at the time for comparable transactions with persons not affiliated with the Company or its subsidiaries. These loans have been, and are presently, subject to no more than a normal risk of uncollectibility and present no other unfavorable features. The amount of loans to directors and executive officers of the Company (including certain executive officers of the Company's subsidiaries) and their associates as a group at March 31, 2002, was $8,633,907.18. As of the date hereof, all of such loans were performing loans. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION ----------------------------------------------------------- Steven D. VanDemark, who is Chairman of the Board of the Company, is a member of the Compensation Committee of the Company's Board of Directors. Other members of the Company's Compensation Committee are John R. Compo, Eric C. Hench, J. Michael Walz, D.D.S. and John Fahl, Chairman. 8 REPORT ON EXECUTIVE COMPENSATION -------------------------------- Notwithstanding anything to the contrary set forth in any of the Company's previous filings under the Securities Act of 1933, as amended, or the Exchange Act, that might incorporate future filings, including this Proxy Statement, in whole or in part, this Report and the performance graph set forth on pages 16 and 17 shall not be incorporated by reference into any such filings. Thomas C. Williams, President and Chief Executive Officer of the Company, Robert W. Constien, Senior Executive Vice President and Chief Operating Officer of the Company, President and Chief Executive Officer of State Bank and Chief Executive Officer of RFS and Richard C. Warrener, Executive Vice President and Chief Financial Officer of the Company, received compensation from the Company for services rendered during the 2001 fiscal year as executive officers of the Company. Mark A. Soukup, the former President and Chief Executive Officer of State Bank, was paid by State Bank for services rendered in his capacity as an executive officer of State Bank during fiscal year 2001. Mr. Soukup's employment with State Bank terminated during April, 2002. Kenneth A. Joyce, Chairman and Chief Executive Officer of RDSI was paid by RDSI for services rendered in his capacity as an executive officer of RDSI during fiscal year 2001. Mr. Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce participate in the various compensation plans of the Company addressed below. The Board of Directors has directed the Compensation Committee to develop, implement and maintain an Executive Compensation Program that supports the overall objectives and performance of the corporation; provides compensation levels that enable the organization to attract, retain and reward competent executive officers; and meets all regulatory requirements. The Compensation Committee is comprised of five outside directors including, Steven D. VanDemark, who also serves as Chairman of the Board of the Company, John R. Compo, Eric C. Hench, J. Michael Walz, D.D.S. and its Chairman, John Fahl. The Compensation Committee reviews and recommends to the full Board the salaries, bonuses and other cash compensation to be paid to, and the other benefits to be received by, the executive officers of the Company. During 2001, no compensation decisions by the Compensation Committee were modified or rejected in any material way by the full Board. COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS In determining the compensation of the executive officers of the Company, the Compensation Committee has sought to create a compensation program which is competitive with programs of a peer group of similar organizations and that links compensation to financial performance, rewards above-average corporate performance and recognizes individual contributions and achievements. There are two components of the annual cash compensation program for the executive officers of the Company: (1) a base salary component; and (2) an incentive bonus component payable under the Rurban Financial Corp. Incentive Compensation Plan (the "Company Bonus Plan") which directly links the bonus to be paid to the financial performance of the Company. The Compensation Committee utilized the services of L.R. Webber Associates, Inc. ("Webber"), a regionally recognized independent compensation consulting company, to review and to make recommendations regarding the competitiveness and effectiveness of the Corporation's executive compensation program. As part of that review, Webber was requested to review executive compensation programs of banking organizations that shared one or more common traits with the Corporation (such as 9 asset size and geographic location). The information and recommendations of Webber have been utilized by the Compensation Committee and the Board of Directors. SALARIES The determination of the base salaries of the executive officers of the Company is based upon an overall evaluation of a number of factors, including a subjective evaluation of individual performance, contributions to the Company and its subsidiaries, experience and an analysis of how the Company's compensation of its employees compares to compensation of individuals holding comparable positions with bank holding companies of similar asset size and complexity of operations. In addition, the determination of the base salary of Mr. Joyce also took into account the compensation of individuals holding comparable positions with bank data processing companies. Peer group compensation was the primary factor in setting of the salary of the executive officers of the Company. The salary paid to Mr. Williams for services rendered in his capacities as President and Chief Executive Officer of the Company during the 2001 fiscal year was approved by the Compensation Committee on December 20, 2000, and represented, on an annualized basis, an increase of 6.0% over the salary paid to Mr. Williams with respect to the 2000 fiscal year. The salary paid to Mr. Constien for services rendered in his capacities as Senior Executive Vice President of the Company and Chief Executive Officer of RFS during the 2001 fiscal year represented, on an annualized basis, an increase of 14.4% over the salary paid to Mr. Constien with respect to the 2000 fiscal year. Mr. Constien was appointed President and Chief Executive Officer of State Bank on April 8, 2002. The salary paid to Mr. Warrener for services rendered in his capacities as Executive Vice President and Chief Financial Officer of the Company during the 2001 fiscal year represented an increase of 16.6% over the salary paid to Mr. Warrener with respect to the 2000 fiscal year. The salary paid to Mr. Soukup for services rendered in his capacity as the former President and Chief Executive Officer of State Bank during the 2001 fiscal year represented no increase over the salary paid to Mr. Soukup with respect to the 2000 fiscal year. The salary paid to Mr. Joyce for services rendered in his capacities as Chairman and Chief Executive Officer of RDSI during the 2001 fiscal year represented on an annualized basis, an increase of 7.0% over the salary paid to Mr. Joyce with respect to the 2000 fiscal year. INCENTIVE COMPENSATION In 1999, the Rurban Financial Corp. 1999 Incentive Compensation Plan (the "1999 Incentive Compensation Plan") was implemented, linking executive officers' incentive compensation directly to the Company's return on equity. This plan is designed to better match incentive compensation to shareholder value. It is the Compensation Committee's philosophy, over time, to increase the "at-risk" portion of executive officer total compensation by directly linking a greater percentage of executive officers' total compensation to the Company's return on equity and thereby to shareholder value. Under the 1999 Incentive Compensation Plan, the year-end bonus was determined under a sliding scale based on the Company's return on equity ("ROE"). The determination of the amounts of bonuses to be paid and the payment of such bonuses is made during the first quarter of the following fiscal year. Under this bonus plan, Mr. Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce received 10 no bonuses under the Company Bonus Plan with respect to the 2001 fiscal year as a result of the Company's financial performance. Other employees of the Company and subsidiaries are eligible to receive bonuses under the Company Incentive Compensation Plan. STOCK OPTION PLAN On March 12, 1997, the Board of Directors of the Company adopted, the Rurban Financial Corp. Stock Option Plan (the "Stock Option Plan") for directors and officers of the Company and its subsidiaries (the "Key Employees"). The Stock Option Plan was approved by the Company's shareholders at the April 28, 1997 Annual Meeting. The Stock Option Plan authorizes the granting of (i) incentive stock options ("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) non-qualified stock options ("NQSOs") and (iii) stock appreciation rights ("SARs") (ISOs and NQSOs are sometimes referred to collectively herein as "Options"). The purpose of the Stock Option Plan is to encourage Key Employees to acquire or increase and retain a financial interest in the Company, to remain in the service of the Company, and to put forth maximum efforts for the success of the Company, and to enable the Company and its subsidiaries to compete effectively for the services of potential employees and directors by furnishing an additional incentive to join the service of the Company and its subsidiaries. The Stock Option Plan also provides an incentive to Key Employees of the Company and its subsidiaries to put forth a maximum effort to increase the value of the Company's common shares, because, under the Stock Option Plan, the exercise price of the Options cannot be less than the fair market value of the common shares on the date the Options are granted. Options for approximately 8,313 of the Company's common shares were granted to newly appointed directors, officers and employees of the Company and/or its subsidiaries during 2001; however, none of the executive officers listed in the Summary Compensation Table of this proxy statement were issued options during the 2001 fiscal year. ADDITIONAL COMPENSATION PLANS To enhance the long-term commitment of the officers and employees of the Company and its subsidiaries, the Company adopted the Employee Stock Ownership Plan ("ESOP") in 1985, and The Rurban Financial Corp. Savings Plan and Trust (the "Savings Plan") in 1988. Mr. Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce as well as all officers and employees of the Company and its subsidiaries who meet applicable eligibility criteria, may participate in the ESOP and the Savings Plan. Each year, the Company and each of its subsidiaries may contribute an amount in cash and/or common shares of the Company to the ESOP which does not exceed the amount of the annual net profits of the corporation making the contribution. Pro rata allocations of amounts contributed by the Company or one of its subsidiaries are made to the accounts of the participants in the ESOP. The Company and its subsidiaries contributed an aggregate amount of $736,000 to the ESOP with respect to the 2001 fiscal year. As of the date of this Proxy Statement, no determination has been made as to the amount to be allocated to the account of Mr. Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce under the ESOP with respect to the 2001 fiscal year. Three types of contributions are contemplated under the Savings Plan: (1) pre-tax elective deferral contributions by each participant in the Savings Plan of a percentage of his or her annual 11 compensation; (2) matching contributions made by the Company or the corporation employing the Savings Plan participant in cash in an amount determined by the Board of Directors of the Company; and (3) qualified rollover contributions by a Savings Plan participant from other qualified plans. The Board of Directors of the Company determined that for 2001, the amount of the matching contributions to be made on behalf of each participant in the Savings Plan would be 50% of the amount of such participant's pre-tax elective deferral contributions, but only upon that portion of his or her pre-tax elective deferral contributions which did not exceed 6% of his or her annual compensation. Matching contributions in the amount of $5,250, $2,132, $5,250, $5,250 and $5,250 were made on behalf of Mr. Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce, respectively, to match their respective 2001 pre-tax elective deferral contributions made to the Savings Plan. Submitted by the Compensation Committee of the Company's Board of Directors: John Fahl, Chairman, John R. Compo, Eric C. Hench,, Steven D. VanDemark & J. Michael Walz, D.D.S COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table shows, for the last three years, the cash compensation paid by the Company and its subsidiaries, as well as certain other compensation paid or earned for those years, to Thomas C. Williams, the Company's President and Chief Executive Officer, Robert W. Constien, Senior Executive Vice President of the Company, President and Chief Executive Officer of State Bank and Chief Executive Officer of RFS, Richard C. Warrener, Executive Vice President and Chief Financial Officer of the Company, Mark A. Soukup, former President and Chief Executive Officer of State Bank and Kenneth A. Joyce, Chairman and Chief Executive officer of RDSI. SUMMARY COMPENSATION TABLE

Long-term Compensation Awards Name and Securities Underlying All Other Principal Position Year Salary($) Bonus($) Options(#) Compensation ($) ------------------ ---- --------- -------- ---------- ---------------- Thomas C. Williams, 2001 $238,500 $0 0 $41,681(1) President and Chief 2000 $225,000 $67,500 9,000 $35,649(1) Executive Officer of the 1999 $225,000 $78,750 0 $34,803(1) Company Robert W. Constien, Senior 2001 $165,880 $0 0 $ 5,942(2) Executive Vice President 2000 $145,000 $43,500 5,000 $18,159(2) and Chief Operating 1999 $145,000 $50,750 0 $21,562(2) Officer of the Company, President and CEO of State Bank and CEO of RFS

12

Long-term Compensation Awards --------- Name and Securities Underlying All Other Principal Position Year Salary($) Bonus($) Options(#) Compensation ($) ------------------ ---- --------- -------- ---------- ---------------- Richard C. Warrener, 2001 $145,788 $0 0 $13,182(3) Executive Vice President 2000 $125,000 $37,500 5,000 $23,514(3) and Chief Financial Officer 1999 $125,000 $43,750 0 $19,251(3) of the Company Mark A. Soukup, Former 2001 $145,000 $16,313 0 $10,235(4) President and Chief 2000 $145,000 $16,313 5,000 $21,104(4) Executive Officer of State 1999 $145,000 $50,750 0 $17,138(4) Bank Kenneth A. Joyce, Chairman 2001 $155,150 $0 0 $14,815(5) and Chief Executive Officer 2000 $145,000 $43,500 5,000 $17,532(5) of RDSI 1999 $145,000 $50,750 0 $10,949(5)

(1) "All Other Compensation" for fiscal years 2001, 2000 and 1999 includes: (i) a contribution of $5,250, $5,250 and $5,977, respectively, to the Savings Plan on behalf of Mr. Williams to match 2001, 2000 and 1999 pre-tax elective deferral contributions (included under "Salary") made by him to the Savings Plan, (ii) payments of $12,586, $13,755 and $12,797, respectively, during fiscal years 2001, 2000, and 1999 representing the grossed-up premiums for a life insurance policy which Mr. Williams personally owns, (iii) for fiscal years 2001, 2000 and 1999, payments of $690, $690 and $1,704, respectively, which represent the premiums paid on Mr. Williams' behalf for a group term life insurance policy which has a death benefit equal to 200% of Mr. Williams' annual salary less $50,000. The amounts allocated to the account of Mr. Williams under the ESOP for 2000 and 1999 were $11,015 and $9,902, respectively. The amount to be allocated to the account of Mr. Williams under the ESOP with respect to fiscal year 2001 has not been determined as of the date of this Proxy Statement. (2) "All Other Compensation" for 2001, 2000 and 1999 includes (i) contributions of $2,132, $4,936 and $4,572 respectively, to the Savings Plan on behalf of Mr. Constien to match 2001, 2000 and 1999 pre-tax elective deferral contributions (included under "Salary") made by him to the Savings Plan, (ii) payments of $242, $134 and $182 which represent the premiums paid on Mr. Constien's behalf for a group term life insurance policy which has a death benefit equal to 200% of Mr. Constien's annual salary less $50,000. The amounts allocated to the account of Mr. Constien under the ESOP for 2000 and 1999 were $11,015 and $9,416, respectively. The amount to be allocated to the account of Mr. Constien under the ESOP with respect to fiscal year 2001 has not been determined as of the date of this Proxy Statement. (3) "All Other Compensation" for 2001, 2000 and 1999 includes (i) contributions of $5,250, $5,249, and $3,928 respectively, to the Savings Plan on behalf of Mr. Warrener to match 2001, 2000 and 1999 pre-tax elective deferral contributions (included under "Salary") made by him to the Savings Plan, (ii) payments of $1,249, $1,032 and $1,416 which represent the premiums paid on Mr. Warrener's behalf for a group term life insurance policy which has a death benefit equal to 200% of Mr. Warrener's annual salary less $50,000. The amounts allocated to the account of Mr. 13 Warrener under the ESOP for 2000 and 1999 were $11,015 and $7,958, respectively. The amount to be allocated to the account of Mr. Warrener under the ESOP with respect to fiscal year 2001 has not been determined as of the date of this Proxy Statement. (4) "All Other Compensation" for 2001, 2000 and 1999 includes (i) contributions of $5,250, $5,250 and $4,447 respectively, to the Savings Plan on behalf of Mr. Soukup to match 2001, 2000 and 1999 pre-tax elective deferral contributions (included under "Salary") made by him to the Savings Plan, (ii) payments of $432, $346 and $324 which represent the premiums paid on Mr. Soukup's behalf for a group term life insurance policy which has a death benefit equal to 200% of Mr. Soukup's annual salary less $50,000. The amounts allocated to the account of Mr. Soukup under the ESOP for 2000 and 1999 were $11,015 and $9,123, respectively. The amount to be allocated to the account of Mr. Soukup under the ESOP with respect to fiscal year 2001 has not been determined as of the date of this Proxy Statement. (5) "All Other Compensation" for 2001, 2000 and 1999 includes (i) contributions of $5,250, $2,938 and $2,787 respectively, to the Savings Plan on behalf of Mr. Joyce to match 2001, 2000 and 1999 pre-tax elective deferral contributions (included under "Salary") made by him to the Savings Plan, (ii) payments of $690, $795 and $1,022 which represent the premiums paid on Mr. Joyce's behalf for a group term life insurance policy which has a death benefit equal to 200% of Mr. Joyce's annual salary less $50,000. The amounts allocated to the account of Mr. Joyce under the ESOP for 2000 and 1999 were $11,015 and $8,646, respectively. The amount to be allocated to the account of Mr. Joyce under the ESOP with respect to fiscal year 2001 has not been determined as of the date of this Proxy Statement. OPTION EXERCISES AND HOLDINGS The following table sets forth information with respect to Options exercised during, and unexercised Options held as of the end of, the 2001 fiscal year by each of the executive officers named in the Summary Compensation Table.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES Number of Securities Value of Unexercised Number of Underlying Unexercised In-the-money Securities Value Options At Fy-end (#) Options At Fy-end($)(1) Underlying --------------------------- -------------------------- Options Exercised Realized($) Exercisable Unexercisable Exercisable Unexercisable --------------------- ----------- ----------- ------------- ----------- ------------- Thomas C. Williams 0 $0 15,711 12,521 $7,960 $17,285 Richard C. Warrener 0 $0 6,284 6,185 $3,951 $9,983 Robert W. Constien 0 $0 6,284 6,185 $3,951 $9,983 Mark A. Soukup 0 $0 6,284 6,185 $3,951 $9,983 Kenneth A. Joyce 0 $0 6,284 6,185 $3,951 $9,983

14 ------------------------- (1) "Value of Unexercised In-the-Money Options at FY-End" is based upon the fair market value of the Company's common shares on December 31, 2001 ($13.68) less the exercise price of the options at the end of the 2001 fiscal year. SALARY CONTINUATION AGREEMENTS The Company has entered into Executive Salary Continuation Agreements (the "Agreements") with Thomas C. Williams, President and Chief Executive Officer of the Company, on December 21, 2000, Robert W. Constien, Senior Executive Vice President of the Company, President and Chief Executive Officer of State Bank and Chief Executive Officer of RFS on December 21, 2000, Richard C. Warrener, the Executive Vice President and Chief Financial Officer, on February 25, 1998, Mark A. Soukup, former President and Chief Executive Officer of State Bank on December 21, 2000 and Kenneth A. Joyce, Chairman and Chief Executive Officer of RDSI on December 3, 2001. Under the Agreements, if the executive officer remains in the continuous employment of the Company until the first December 31st after his 65th birthday (unless by action of the Board of Directors of the Company, his period of active employment with the Company for purposes of the Agreement is shortened or extended), he is to retire as of that date. Upon such retirement, such executive officer (and, upon his death, his designated beneficiary) will be entitled to receive an annual benefit equal to 15% of his annual base salary as in effect immediately prior to his retirement in equal monthly installments (of 1/12th of the annual benefit) for a period of 180 months. If the executive officer dies while actively employed by the Company prior to his retirement, the Company will pay an annual benefit equal to 15% of his annual base salary as in effect immediately prior to his death in equal monthly installments (of 1/12th of the annual benefit) for a period of 180 months to his designated beneficiary. In the event that the executive officer's employment is terminated as a result of his voluntary action, the Agreement will terminate immediately on the date of such termination of employment and the Company will pay to such executive officer as severance compensation monthly for fifteen years an amount of money on an annual basis equal to: (a) 5% of such executive officer's annual base salary as in effect immediately prior to the date of his termination of employment, if, at the termination date, such executive officer is between age 55 and 60; (b) 10% of such annual base salary if, at the termination date, such executive officer is between age 60 and 65; and (c) 15% of such annual base salary if (i) at the termination date, such executive officer is age 65 or over; (ii) such termination of employment occurs after there has been a change in control of the ownership of the Company; or (iii) such termination of employment occurs after the Company merges or consolidates with another company or organization, permits its business activities to be taken over by another organization, ceases its business activities or terminates its existence. If the Company discharges the executive officer for cause, no compensation will be payable to him under the terms of the Agreement. The executive officer will not receive any benefits under the Agreement if he engages in any activity that directly or indirectly competes with the Company's interest, within 25 miles of any office of the Company and its subsidiaries existing at the time of his retirement or termination of employment. The payment of the benefits contemplated by the Agreement will be accelerated if, after such executive officer's retirement, the leverage capital ratio and/or the risk-based capital ratio of the Company fall below the minimum ratios established by the Company's regulatory authority for well-capitalized bank holding companies and/or the Company fails to have net income in any two successive fiscal years. DIRECTORS' COMPENSATION During the 2001 fiscal year, each outside director of the Company who served the entire year received an annual retainer of $9,000. 15 Mr. Steven D. VanDemark, who serves as the Chairman of the Board of Directors of the Company, received an additional $12,000 during the 2001 fiscal year for his services as Chairman of the Board of Directors of the Company and an additional $6,000 during the 2001 fiscal year for his services as Interim Chairman of the Board of Directors of RFC Banking Company. RURBAN FINANCIAL CORP. PLAN TO ALLOW DIRECTORS TO ELECT TO DEFER COMPENSATION On March 12, 1997, the Board of Directors of the Company adopted the Rurban Financial Corp. Plan to Allow Directors to Elect to Defer Compensation (the "Deferred Compensation Plan"). The purpose of the Plan is to advance the interests of the Company and its shareholders by allowing the directors of the Company and the directors of any of the Company's subsidiaries an opportunity to elect to defer payment of all or a portion of their compensation received for their services as directors. The annual directors' fees to be received by the directors of the Company and the directors of the Company's subsidiaries will not be increased as a result of the adoption of the Deferred Compensation Plan. PERFORMANCE GRAPH ----------------- Set forth on the following page is a line graph comparing the yearly percentage change in the Company's cumulative total shareholder return on its common shares with an index for the NASDAQ Stock Market (U.S. Companies) comprised of all domestic common shares traded on the NASDAQ National Market System and the NASDAQ Small-Cap Market and an index for NASDAQ Bank Stocks comprised of all depository institutions (SIC Code #602) and holding and other investment companies (SIC Code #671) that are traded on the NASDAQ National Market System and the NASDAQ Small-Cap Market ("NASDAQ Bank Stocks") for the five-year period ended December 31, 2001. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN Rurban Financial Corp., NASDAQ Stock Market (U.S. Companies), and S&P 500

NASDAQ STOCK MARKET RURBAN (U.S. YEAR FINANCIAL CORP COMPANIES) S&P 500 ------------------------------------------------------------------------------- 1996 100.00 100.00 100.00 1997 94.04 122.48 133.45 1998 109.50 172.68 172.19 1999 89.91 320.89 208.54 2000 89.89 193.01 189.97 2001 114.04 153.15 167.56

Return Based on $100 invested on December 31, 1996 and the reinvestment of dividends. All market values used in determining the return have been restated for stock splits and stock dividends. 16 SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING ------------------- Any qualified shareholder who desires to present a proposal for consideration at the 2003 Annual Meeting of Shareholders must submit the proposal in writing to the Company. If the proposal is received by the Company on or before November 25, 2002, and otherwise meets the requirements of applicable state and federal law, it will be included in the proxy statement and form of proxy of the Company relating to its 2003 Annual Meeting of Shareholders. If a shareholder intends to present a proposal at the 2003 Annual Meeting, but has not sought the inclusion of such proposal in the Company's proxy materials, such proposal must be received by the Company prior to February 12, 2003, or the Company's management proxies for the 2003 Annual Meeting will be entitled to use their discretionary voting authority should such proposal then be raised, without any discussion of the matter in the Company's proxy materials. NOTIFICATION OF APPOINTMENT --------------------------- OF INDEPENDENT AUDITORS ----------------------- The Board of Directors of the Company has appointed the firm of Crowe, Chizek and Company LLP to serve as independent auditors for the Company for the 2001 fiscal year. That firm has served as independent auditors for the Company since 1988. The board of directors expects that representatives of Crowe, Chizek and Company LLP will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. OTHER MATTERS ------------- As of the date of this Proxy Statement, the Board of Directors knows of no other business to be presented for action by the shareholders at the 2002 Annual Meeting of Shareholders other than as set forth in this Proxy Statement. However, if any other matter is properly presented at the Annual Meeting, or at any adjournment(s) thereof, it is intended that the persons named as proxies in the enclosed proxy may vote the common shares represented by such proxy on such matters in accordance with their best judgment in light of the conditions then prevailing. IT IS IMPORTANT THAT PROXIES BE VOTED AND RETURNED PROMPTLY. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE FILL IN, DATE, SIGN AND RETURN THE PROXY PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU WISH TO DO SO. April 30, 2002 By Order of the Board of Directors, /s/ Thomas C. Williams ----------------------- Thomas C. Williams President and Chief Executive Officer 17 APPENDIX A AUDIT COMMITTEE CHARTER ----------------------- Purpose/Function: The primary function of the audit committee is to assist the board of directors in fulfilling its oversight responsibilities by reviewing all audit processes, financial reporting and the systems of internal control established by management and the board of directors. Membership: Three or more independent outside directors. Frequency of Meetings: Generally, once per quarter on a regularly scheduled basis and at such other times as requested by a committee member, management, the internal audit coordinator or the independent accountant. Duties/Responsibilities: GENERAL RESPONSIBILITIES 1. To provide avenues of communication among the internal audit coordinator(s), the internal audit outsourcing firm, the independent accountant and the board of directors. 2. To report committee actions to the full board of directors and make appropriate recommendations. 3. To conduct or authorize investigations into matters within the committee's scope of responsibilities. The committee is authorized to retain independent counsel, accountants or others needed to assist in an investigation. RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS AND APPOINTING THE INTERNAL AUDITOR OR INTERNAL AUDIT COORDINATOR(S) 1. To select the independent accountants for company audits. The committee's selection is subject to approval by the full board of directors. The audit committee also will review and approve audit related fees paid to the independent accountants and review and approve a change in the independent accountants. 2. To review and approve the appointment, replacement, reassignment or dismissal of the internal auditor and/or internal audit coordinator(s) and the internal audit outsourcing firm. To review and approve audit related fees paid to the internal audit outsourcing firm. 3. To assure the independence of the internal auditor or internal audit coordinator(s) and the independent accountant, including a review of management consulting services provided by the independent accountant and the fees paid for such consulting services. 1 RESPONSIBILITIES FOR REVIEWING THE ANNUAL EXTERNAL AUDIT AND THE ANNUAL FINANCIAL STATEMENTS, INTERNAL AUDITS AND REGULATORY EXAMINATIONS. 1. To assure that the independent accountant views the board of directors as its client, that it will be available to the full board of directors and that it will provide the committee with a timely analysis of significant financial reporting issues. 2. To question management, the internal auditor or internal audit coordinator(s) and the independent accountant about significant risks and exposures and to assess management's steps to minimize them. 3. To consider, in consultation with the independent accountant and the internal auditor or internal audit coordinator(s), the audit scope and procedural plans for the internal audit and the independent audit and to assure effective coordination of internal and external audits. 4. To review the following with the independent accountant and the internal auditor or internal audit coordinator(s): a. The adequacy of the company's internal controls, including computerized information system controls and security. b. Any significant findings and recommendations made by the independent accountant or the internal auditing function, together with management's responses to them. 5. Shortly after the annual independent audit is completed, to review the following with management and the independent accountant: a. The company's annual financial statements and related footnotes. b. The independent accountant's audit of and report on the financial statements. c. The independent accountant's qualitative judgements regarding the appropriateness of accounting principles and financial disclosures and their evaluation of the degree of aggressiveness/conservatism of the accounting principles and underlying estimates. d. Any serious difficulties or disputes with management encountered during the course of the audit. e. The independent accountant's management letter regarding: 1. Recommendations for improvements in internal control and its operation. 2. An update on new accounting pronouncements. f. The independent accountant's "SAS 61 Letters regarding required communications with the Audit Committee. 6. To consider and review with management and the internal auditor or internal audit coordinator(s): a. Any significant internal audit findings and recommendations during the year and management's responses to them. b. Any difficulties encountered in the internal auditing process, including any restrictions on the scope of work or access to required information. c. Any changes to the planned scope of management's internal audit plan that the committee thinks advisable. 2 d. The internal auditing department's budget and staffing. 7. To consider and review with management regulatory agency examination reports and management's responses, including: a. Safety and Soundness examinations b. Compliance and CRA examinations PERIODIC RESPONSIBILITIES 1. To review and update, if necessary, the committee's charter annually. 2. To review legal and regulatory matters that may have a material effect on the organization's financial statements, compliance policies and programs and reports from regulators. 3 [X] PLEASE MARK VOTES REVOCABLE PROXY AS IN THIS EXAMPLE RURBAN FINANCIAL CORP. ------------------------------------------------------------------------------- PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 30, 2002 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned holder(s) of common shares of Rurban Financial Corp. (the "Company") hereby constitutes and appoints Thomas C. Williams and Richard C. Warrener, or either of them, the Proxy or Proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be held on Thursday, May 30, 2002, at Kettenring Country Club, 211 Carpenter Road, Defiance, Ohio at 10:00 A.M., local time, and any adjournment(s) thereof, and to vote all of the common shares of the Company which the undersigned is entitled to vote at such Annual Meeting or at any adjournment(s) thereof: With- For All For hold Except 1. To elect three (3) directors to serve [ ] [ ] [ ] for terms of three years each: John R. Compo John Fahl Robert A. Fawcett, Jr. INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For All Except" and write that nominee's name in the space provided below. _______________________________________________________________________________ 2. In their discretion, the Proxies are authorized to vote upon such other matters as may properly come before the Annual Meeting or any adjournment(s) thereof. WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE COMPANY. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT(S) THEREOF OR IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY RECOMMEND. ALL PROXIES PREVIOUSLY GIVEN OR EXECUTED BY THE UNDERSIGNED ARE HEREBY REVOKED. The undersigned acknowledges receipt of the accompanying Notice of Annual Meeting to Shareholders and Proxy Statement for the Annual Meeting and the Annual Report to Shareholders for the fiscal year ended December 31, 2001. Please sign exactly as your name appears hereon. When common shares are registered in two names, both shareholders should sign. When signing as executor, administrator, trustee, guardian, attorney or agent, please give full title as such. If shareholder is a corporation, please sign in full corporate name by president or other authorized officer. If shareholder is a partnership, please sign in partnership name by authorized person. (Please note any change of address on this proxy.) ---------------------------- PLEASE BE SURE TO SIGN AND DATE DATE THIS PROXY IN THE BOX BELOW -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SHAREHOLDER SIGN ABOVE CO-HOLDER (IF ANY) SIGN ABOVE -- DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. -- RURBAN FINANCIAL CORP. -------------------------------------------------------------------------------- THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RURBAN FINANCIAL CORP. IT IS IMPORTANT THAT PROXIES BE VOTED AND RETURNED PROMPTLY. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE FILL IN, DATE, SIGN AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED SELF-ADDRESSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU WISH TO DO SO. -------------------------------------------------------------------------------- HAS YOUR ADDRESS CHANGED? -------------------------------------- -------------------------------------- --------------------------------------