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
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 Section 240.14a-11c or Section 240.14a-12
RURBAN FINANCIAL CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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RURBAN FINANCIAL CORP.
401 CLINTON STREET
DEFIANCE, OHIO 43512
(419) 783-8950
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------------
Defiance, Ohio
March 22, 2004
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 the
Eagles Club, 711 E. Second Street, Defiance, Ohio, on Monday, April 26, 2004, at
5:30 p.m., local time, for the following purposes:
1. To elect four (4) 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 February 27, 2004
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/ Kenneth A. Joyce
Kenneth A. Joyce
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 March 22, 2004, 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 Monday, April 26,
2004, or at any adjournment(s) thereof. The Annual Meeting will be held at 5:30
p.m., local time, at the Eagles Club, 711 W. Second Street, Defiance, Ohio.
The Company's wholly-owned subsidiaries include: (1) The State Bank and
Trust Company, Defiance, Ohio ("State Bank"); (2) RFC Banking Company, loan
subsidiary ("RFCBC"), Defiance, Ohio; (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
February 27, 2004 (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, 4,567,296 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 in attendance at the Annual Meeting in person or by proxy.
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 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.
1
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, 2003 (the "2003 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)
---------------- --------------- -------------------- ----- ---------
(Exercisable within
60 Days)
Rurban Financial Corp.
Employee Stock Ownership
& Savings Plan 0 626,950 13.73%
James E. Adams 500 0 500 (4)
Thomas A. Buis 2,610 (3) 2,062 4,672 (4)
Thomas M. Callan 35,388 (5) 2,062 37,450 (4)
John R. Compo 41,222 (6) 5,080 46,302
Robert W. Constien 28,402 11,419 39,821 (4)
John Fahl 15,170 5,080 20,250 (4)
Robert A. Fawcett, Jr. 6,389 (7) 5,080 11,469 (4)
Richard L. Hardgrove 0 0 0 (4)
Eric C. Hench 20,728 (8) 5,080 25,808 (4)
Kenneth A. Joyce 13,473 (9) 11,419 24,892 (4)
Gary A. Koester 1,613 2,062 3,675 (4)
Henry R. Thiemann 4,627 3,977 8,604 (4)
Steven D. VanDemark 13,865 (10) 6,773 20,638 (4)
J. Michael Walz, D.D.S. 24,625 (11) 5,080 29,705 (4)
Richard C. Warrener 8,143 0 8,143 (4)
All executive officers and
directors as a group (15 persons) 908,879 19.90%(12)
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(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 4,567,296 common shares outstanding
on the Record Date.
(3) 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.
(4) Reflects ownership of less than 1% of the outstanding common shares of
the Company.
(5) Includes 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.
(6) Does not include 2,756 common shares held in the name of Mr. Compo's
wife, as to which she exercises sole voting and investment power.
(7) Includes 6,389 common shares held by the Robert A. Fawcett Jr. Trust as
to which Mr. Fawcett has sole voting and investment power.
(8) Includes 20,728 common shares held by the Eric C. Hench Agency Trust as
to which Mr. Hench has sole voting and investment power.
(9) Includes 100 common shares held in the name of Mr. Joyce's son for
which Mr. Joyce is custodian.
(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) 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. and includes
737 common shares held by Dr. Walz and his spouse to which Dr. Walz
exercises shared voting and investment power.
(12) Also includes an aggregate of 35,612 common shares allocated to the
respective accounts of executive officers of the Company in the
Employee Stock Ownership Plan ("ESOP"). Does not include common shares
held by wives of executive officers and directors if such wives
exercise sole voting and investment powers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 2003 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.
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ELECTION OF DIRECTORS
The Board of Directors has reviewed, considered and discussed each
director's relationships, either directly or indirectly, with the Company and
its subsidiaries and the compensation each director receives, directly or
indirectly, from the Company and its subsidiaries in order to determine whether
such director meets the current independence requirements of The NASDAQ Stock
Market, Inc. ("NASDAQ") Corporate Governance Standards, and has determined that
the Board has at least a majority of independent directors. The Board of
Directors has determined that each of the following directors has no financial
or personal ties, either directly or indirectly, with the Company or its
subsidiaries (other than compensation as a director of the Company and its
subsidiaries, banking relationships in the ordinary course of business with the
Company's banking subsidiaries and ownership of common shares of the Company as
described in this proxy statement) and thus qualifies as independent: Thomas A.
Buis, Thomas M. Callan, John R. Compo, John Fahl, Robert A. Fawcett, Jr.,
Richard L. Hardgrove, Eric C. Hench, Steven D. VanDemark and J. Michael Walz,
D.D.S.
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"), four (4)
directors are to be elected for terms of three (3) years each and until their
respective successors are elected and qualified. The four persons standing for
election as directors of the Company are Thomas M. Callan, Richard L. Hardgrove,
Eric C. Hench and Steven D. VanDemark.
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
------- --- --------------------------- --------------- -----------
Thomas M. Callan 61 President of Defiance Stamping 2001 2007
Company; Director of State Bank
since 1996.
Richard L. Hardgrove 65 Retired; President & CEO of Sky Newly Nominated 2007
Bank from 1998 to 2001
Eric C. Hench 50 Chairman of Chief Supermarkets, 1997 2007
Inc. 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.
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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
------- --- --------------------------- --------------- -----------
Steven D. VanDemark 51 General Manager of Defiance 1991 2007
Publishing 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; Director of RDSI since 1997.
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 be
unavailable or unable to serve if elected to the Board. Under Ohio law and the
Company's Amended Regulations, the four 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 66 Agent for Spencer-Patterson Agency 2001 2006
Inc., Findlay, Ohio, a general
insurance agency; Chairman of
Spencer-Patterson Agency, Inc. 2000 to
2003; President of Spencer-Patterson
Agency Inc. from 1975 to 2000;
Director of Peoples Bank of RFCBC from
1990 to 2003; Director of RFS since
2003; Director of State Bank since
2004.
John R. Compo 59 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.
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
---- --- ---------------------------- --------------- -------
John Fahl 67 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. 62 Agent, Fawcett, Lammon, Recker and 1992 2005
Associates, Inc., Ottawa, Ohio, sales
and service of property and casualty
insurance policies since 1998;
Director of Ottawa of RFCBC since 1982.
Kenneth A. Joyce 56 President and Chief Executive Officer 2002 2006
of the Company since August 2002;
Chairman and Chief Executive Officer
of RDSI since October 1997; Director
of State Bank since 2002; Director of
RFCBC since 2002.
Gary A. Koester 43 President of Koester Metals, Inc., a 2001 Resigned
quality electrical enclosures and 12/01/03
precision sheet metal fabrication
company and privately held "S"
corporation. Owner since January
1992; Director of RDSI since 1997.
J. Michael Walz, D.D.S. 60 General Dentist in Defiance, Ohio; 1992 2006
Director of State Bank since 1989;
Director of RFS since 1997.
There are no family relationships among any of the directors, nominees
for election as directors or executive officers of the Company.
The Board of Directors of the Company held a total of fourteen meetings
during the Company's 2003 fiscal year. This total does not include monthly
subsidiary board meetings and various other subsidiary committee meetings of
which these directors also attend. Each incumbent director attended 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.
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The Company encourages all incumbent directors and director nominees to
attend each annual meeting of shareholders. All of the incumbent directors and
director nominees (other than Mr. Hardgrove) attended the Company's last annual
meeting of shareholders held on April 28, 2003.
Although the Company has not to date developed formal processes by
which shareholders may communicate directly with directors, it believes that the
informal process, in which any communication sent to the Board either generally
or in care of Sandra L. Stockhorst, the Company's Investor Relations Officer, or
another corporate officer is forwarded to all members of the Board, has served
the Board's and the Company's shareholders' needs. There is no screening
process, and all shareholder communications that are received by officers for
the Board's attention are forwarded to the Board.
In view of recently adopted SEC disclosure requirements related to this
issue, the Governance and Nominating Committee may consider development of more
specific procedures. Until any other procedures are developed, any communication
to the Board may be mailed to the Board, in care of Sandra L. Stockhorst, the
Company's Investor Relations Officer, at the Company's headquarters in Defiance,
Ohio. The mailing envelope must contain a clear notation indicating that the
enclosed letter is a "Shareholder-Board Communication" or "Shareholder-Director
Communication." In addition, communication via the Company's website at
www.rurbanfinancial.net may be used. All such communications, whether via mail
or the website, must identify the author as a shareholder and clearly state
whether the intended recipients are all members of the Board or just certain
specified individual directors. The Investor Relations Officer will make copies
of all such communications and circulate them to the appropriate director or
directors.
COMMITTEES OF THE BOARD
The Board of Directors has five standing committees: the
Executive-Compliance Committee, the Compensation Committee, the Audit Committee,
the Loan Review Committee and the Governance and Nominating Committee.
Executive Compliance Committee
The Board of Directors of the Company has an Executive-Compliance
Committee comprised of John R. Compo, Robert A. Fawcett, Jr., Eric C. Hench,
Steven D. VanDemark, J. Michael Walz, D.D.S. and Kenneth A. Joyce. The function
of the Executive-Compliance Committee is to act on behalf of the Board of
Directors between regularly scheduled meetings of the Board of Directors and to
monitor corporate compliance with applicable laws and regulations. The
Executive-Compliance Committee met five times during the 2003 fiscal year.
Compensation Committee
The Board of Directors of the Company has a Compensation Committee
comprised of five directors who satisfy the independence requirements of the
NASDAQ Corporate Governance Standards and applicable rules and regulations of
the SEC: 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 and the other executive
officers of the Company. The Committee shall also evaluate and make
recommendations regarding the compensation of the directors, including their
compensation for services on Board committees. The Compensation Committee met
three times during the 2003 fiscal year.
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Audit Committee
The Board of Directors of the Company has an Audit Committee comprised
of Thomas M. Callan, Robert A. Fawcett, Jr., and Eric C. Hench. In addition,
Todd Taylor, a Director of RDSI, serves as an advisor to the Audit Committee.
Each member of the Audit Committee qualifies as independent under the NASDAQ
Corporate Governance Standards and Rule 10A-3 promulgated under Section
10A(m)(3) of the Exchange Act. No member of the Audit Committee is an affiliated
person of the Company or any of its subsidiaries other than in his capacity as a
member of the Board of Directors of the Company (and committees thereof) and its
subsidiaries (and committees thereof). No member of the Audit Committee has
received or accepted, directly or indirectly, any consulting, advisory, or other
compensatory fee from the Company or any of its subsidiaries other than ordinary
fees and benefits received in his capacity as a director of the Company and its
subsidiaries. The Audit Committee met nine times during the 2003 fiscal year.
Each member of the Audit Committee is able to read and understand
financial statements, including the Company's balance sheet, income statement
and cash flow statement. Under rules adopted by the SEC, the Company is required
to disclose whether it has an "audit committee financial expert" serving on its
Audit Committee. Although the Board of Directors has determined that each member
of the Audit Committee is qualified to discharge his duties, the Board has not
designated any particular member of the Audit Committee as qualifying as an
"audit committee financial expert" under the SEC's rules. The Board of Directors
has determined that each member of the Audit Committee is capable of: (i)
understanding accounting principles generally accepted in the United States ("US
GAAP") and financial statements; (ii) assessing the general application of US
GAAP in connection with the accounting for estimates, accruals and reserves;
(iii) analyzing and evaluating the Company's consolidated financial statements;
(iv) understanding internal control over financial reporting; and (v)
understanding audit committee functions, all of which are attributes of an
"audit committee financial expert" under the SEC's rules. If RICHARD L.
HARDGROVE is elected to the Board at the Annual Meeting, the Board anticipates
appointing him to the Audit Committee and designating him as its "audit
committee financial expert" under the SEC's rules. As the Board, specifically
the Nominating and Governance Committee, considers new director nominees, one of
the criteria to be strongly considered will be the financial background and
expertise of prospective directors.
The Audit Committee is organized and conducts its business pursuant to
a written charter adopted by the Board of Directors, which is attached to this
proxy statement as Appendix A. At least annually, the Audit Committee reviews
and reassesses the adequacy of its charter and recommends any proposed changes
to the full Board for approval. The purposes of the Audit Committee are to
assist the board of directors in its oversight of:
o the accounting and financial reporting principles and policies
and the internal accounting and disclosure controls and
procedures of the Company and its subsidiaries;
o the Company's internal audit function;
o the certification of the Company's quarterly and annual
financial statements and disclosures; and
o the Company's consolidated financial statements and the
independent audit thereof.
The Audit Committee is also directly responsible for the appointment,
compensation, retention and oversight of the work of any independent auditor
engaged for the purpose of preparing or issuing an audit report or performing
other audit, review or attestation services. The independent auditor reports
directly to the Audit Committee. The Audit Committee evaluates the independence
of the independent auditors on an ongoing basis. Additionally, the Audit
Committee is responsible for establishing procedures for the receipt, retention
and treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, including the confidential,
anonymous
8
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
Loan Review Committee
The Board of Directors of the Company has an independent Loan Review
Committee comprised of Thomas A. Buis, Thomas M. Callan and J. Michael Walz,
D.D.S. The function of the Loan Review Committee is to assist the board of
directors in fulfilling its oversight responsibilities of credit quality in
subsidiary banks and is comprised of independent, outside directors who are not
involved in the loan approval process at subsidiary banks. The Loan Review
Committee has an established charter and met eleven times during the 2003 fiscal
year.
Governance and Nominating Committee
The Board of Directors of the Company has a Governance and Nominating
Committee comprised of Thomas A. Buis, Robert A. Fawcett, Jr., J. Michael Walz,
D.D.S. and Steven D. VanDemark. The Board of Directors has determined that all
of the Governance and Nominating Committee members meet the current independence
requirements of NASDAQ Corporate Governance Standards and applicable rules and
regulations of the SEC. The function of the Governance Committee is to assist
the Board of Directors of the Company and its subsidiaries ("Boards") in
identifying qualified individuals to become directors, determining the
composition of the Boards and its committees, monitoring a process to assess
Board effectiveness and developing and implementing the Corporation's corporate
governance guidelines. The Governance and Nominating Committee also evaluates
the performance of the current members of the Company's Board on an annual
basis. The Governance Committee met three times during the 2003 fiscal year. The
Governance and Nominating Committee Charter of the Company is posted on the
Company's website at www.rurbanfinancial.net.
NOMINATING PROCEDURES
As described above, the Company has a standing Governance and
Nominating Committee that has the responsibility to identify and recommend
individuals qualified to become directors. When considering potential candidates
for the Board, the Governance and Nominating Committee strives to assure that
the composition of the Board, as well as its practices and operation, contribute
to value creation and to the effective representation of the Company's
shareholders. The Governance and Nominating Committee may consider those factors
it deems appropriate in evaluating director candidates including judgment,
skill, strength of character and experience. Depending upon the current needs of
the Board, certain factors may be weighed more or less heavily by the Governance
and Nominating Committee.
In considering candidates for the Board, the Governance and Nominating
Committee evaluates the entirety of each candidate's credentials and does not
have any specific minimum qualifications that must be met by a nominee. However,
the Governance and Nominating Committee strives to select candidates who have
the highest personal and professional integrity; who have demonstrated
exceptional ability and judgment; who shall be most effective, in conjunction
with the other members of the Board, in serving the long-term interests of the
Company's shareholders; who can devote the necessary time to serve as a
director; and who have a working knowledge of financial statements and a sense
of proper corporate governance. In addition, no person who is 70 years old or
older will be eligible to be elected or re-elected to the Board.
The Governance and Nominating Committee considers candidates for the
Board from any reasonable source, including shareholder recommendations. The
Governance and Nominating Committee does not evaluate candidates differently
based on who has made the recommendation. The Governance and Nominating
Committee has the authority under its charter to hire and pay a fee to
9
consultants or search firms to assist in the process of identifying and
evaluating candidates. No such consultants or search firms have been used to
date and, accordingly, no fees have been paid to consultants or search firms.
Shareholders may recommend director candidates for consideration by the
Governance and Nominating Committee by writing to Steven D. VanDemark, Chairman
of the Board of the Company, Thomas A. Buis, Chairman of the Governance and
Nominating Committee, Kenneth A. Joyce, President and Chief Executive Officer of
the Company, or Sandra Stockhorst, the Company's Investor Relations Officer.
Submissions must be received at the Company's executive offices in Defiance,
Ohio no later than June 30 of the year preceding the annual meeting of
shareholders and must state the qualifications of the proposed candidate.
Shareholders who wish to nominate an individual for election as a
director at an annual meeting of shareholders of the Company must comply with
the Company's Code of Regulations regarding shareholder nominations. All
shareholder nominations must be made in writing and delivered or mailed (by
first class mail, postage prepaid) to the Secretary of the Company at the
Company's principal office in Defiance, Ohio. Nominations for an annual meeting
of shareholders must be received by the Secretary of the Company on or before
the later of (a) the February 1 immediately preceding the date of the annual
meeting of shareholders or (b) the 60th day prior to the first anniversary of
the most recent annual meeting of shareholders at which directors were elected.
However, if the annual meeting of shareholders is not held on or before the 31st
day next following the first anniversary of the most recent annual meeting of
shareholders at which directors were elected, then nominations must be received
by the Secretary of the Company within a reasonable time prior to the date of
the annual meeting of shareholders. Nominations for a special meeting of
shareholders at which directors are to be elected must be received by the
Secretary of the Company no later than the close of business on the 7th day
following the day on which the notice of the special meeting was mailed to
shareholders. In any event, each nomination must contain the following
information: (a) the name, age, business address and residence address of each
proposed nominee; (b) the principal occupation or employment of each proposed
nominee; (c) the number of common shares owned beneficially and of record by
each proposed nominee and the length of time the proposed nominee has owned such
shares; and (d) any other information required to be disclosed with respect to a
nominee for election as a director under the proxy rules promulgated under the
Exchange Act. Nominations not made in accordance with the Company's Code of
Regulations will not be considered.
AUDIT COMMITTEE MATTERS
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 under applicable
Securities and Exchange Commission and Nasdaq regulations. The Audit Committee
is organized and operates under a written charter, a copy of which 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 BKD, a formal written statement describing all
relationships between the Company and BKD that might bear on BKD's independence
consistent with Independence Standards Board Standard No. 1,
10
Independence Discussions with Audit Committees, discussed with BKD any
relationships or services that may impact the objectivity and independence of
BKD and satisfied itself as to BKD's independence. The Audit Committee also
discussed with management and BKD the adequacy and effectiveness of the
Company's internal accounting and financial controls. In addition, the Audit
Committee discussed and reviewed with BKD 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 BKD'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, 2003 with management. Management has the responsibility for the preparation
of the Company's consolidated financial statements and BKD has the
responsibility for the audit of those statements.
Conclusion
Based on the reviews and discussions with management and BKD 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, 2003 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 BKD's independence.
Submitted by the Audit Committee of the Company's Board of Directors.
Robert A. Fawcett, Jr., Chairman, Thomas M. Callan, and Eric C. Hench
PRE-APPROVAL POLICY
Under applicable SEC rules, the Audit Committee is required to
pre-approve the audit and non-audit services performed by the independent
auditors in order to assure that they do not impair the auditors' independence
from the Company. The SEC's rules specify the types of non-audit services that
an independent auditor may not provide to its audit client and establish the
Audit Committee's responsibility for administration of the engagement of the
independent auditor. Accordingly, the Audit Committee pre-approves all audit and
permitted non-audit services proposed to be provided by the Company's
independent auditors. The pre-approval of audit and non-audit services and fees
of the independent auditor may be documented by a member of the Audit Committee
signing annual or periodic engagement letters that define in general terms the
type of services to be provided and the range of fees that are considered
acceptable for such services, or as otherwise documented in the minutes of the
Audit Committee meetings. The actual compensation paid to the independent
auditor for all such pre-approved services and fees is to be reported to the
Audit Committee on at least a quarterly basis.
11
SERVICES OF THE INDEPENDENT AUDITOR FOR THE 2003 FISCAL YEAR
During the fiscal years ended 2003 and 2002, the Company paid the
following to BKD for audit, audit-related, tax and other services rendered:
2003 2002
Audit Fees $ 115,700 $ 88,500
Audit Related Fees (1) (2) 89,080 7,520
Tax Fees (3) 26,235 2,345
All Other Fees -- --
(1) Consultation concerning financial accounting and reporting
standards.
(2) Internal control review (SAS 70) for data processing center.
(3) Tax return preparation and tax planning.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors of the Company appointed
the firm of BKD, LLP to serve as independent auditors for the Company. The Board
of Directors expects that representatives of BKD, LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
TRANSACTIONS INVOLVING MANAGEMENT
During the Company's 2003 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 and all such loans comply with Regulation O of the federal banking
laws and comparable laws of the State of Ohio. 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 December 31, 2003, was
$2,065,217. 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.
12
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 15 and 16 shall not be incorporated by reference into any such filings.
Kenneth A. Joyce, President and Chief Executive Officer of the Company,
Robert W. Constien, President and Chief Executive Officer of State Bank and
Chief Executive Officer of RFS, James E. Adams, Executive Vice President and
Chief Financial Officer of the Company, Henry R. Thiemann, Executive Vice
President and Chief Operations Officer of State Bank and President and Chief
Executive Officer of RFCBC and Richard C. Warrener, retired Executive Vice
President and Chief Financial Officer of the Company, received compensation from
the Company for services rendered during the 2003 fiscal year as executive
officers of the Company. Mr. Warrener retired on March 31, 2003.
During 2003, Mr. Joyce, Mr. Constien, Mr. Adams, Mr. Thiemann and Mr.
Warrener participated 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 Company; 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 2003, 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.
During 2001, 2002 and 2003, 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 Company'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 Company (such as 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
13
compensation of its employees compares to compensation of individuals holding
comparable positions with bank holding companies of similar asset size and
complexity of operations. Peer group compensation was the primary factor in
setting of the salary of the executive officers of the Company.
The salary paid to Mr. Joyce for services rendered in his capacities as
President and Chief Executive Officer of the Company during the 2003 fiscal year
was approved by the Compensation Committee and represented a 19.5% increase over
the salary paid with respect to the 2002 fiscal year.
The salary paid to Mr. Constien for services rendered in his capacities
as President and Chief Executive Officer of State Bank during the 2003 fiscal
year represented a 3% increase over the salary paid with respect to the 2002
fiscal year.
The salary paid to Mr. Adams for services rendered in his capacities of
Executive Vice President and Chief Financial Officer of the Company during the
2003 fiscal year was approved by the Compensation Committee. Mr. Adams was
appointed Executive Vice President and Chief Financial Officer of the Company on
March 17, 2003.
The salaries paid to Mr. Thiemann for services rendered in his
capacities of Executive Vice President and Chief Operations Officer of State
Bank and President and Chief Executive Officer of RFCBC during the 2003 fiscal
year represented a 10.4% increase over the salary paid with respect to the 2002
fiscal year.
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 2003 fiscal year represented no increase over the salary paid to Mr.
Warrener with respect to the 2002 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. Joyce, Mr. Constien, Mr. Adams, Mr. Thiemann and Mr.
Warrener received no bonuses under the 1999 Incentive Compensation Plan with
respect to the 2003 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 1999 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
14
("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.
There were no options of the Company's common shares granted to
directors, officers and employees of the Company and/or its subsidiaries during
2003.
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. Joyce, Mr. Constien, Mr. Adams and Mr.
Thiemann, as well as all officers and employees of the Company and its
subsidiaries who met applicable eligibility criteria, participated in the ESOP
and the Savings Plan during 2003.
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. 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 $439,694 to the ESOP with
respect to the 2003 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. Joyce, Mr. Constien, Mr. Adams and Mr. Thiemann under the ESOP with respect
to the 2003 fiscal year. Mr. Warrener will not receive an allocation with
respect to the 2003 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 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 2003, 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 $5,615, $5,091, $3,646, $4,412 and $1,463 were made on behalf of Mr.
Joyce, Mr. Constien, Mr. Adams, Mr. Thiemann and Mr. Warrener, respectively, to
match their respective 2003 pre-tax elective deferral contributions made to the
Savings Plan.
Submitted by the Compensation Committee of the Company's Board of Directors:
John Fahl, Chairman, John R. Compo, Eric C. Hench,, Steven D. VanDemark & J.
Michael Walz, D.D.S
15
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the last three years, the cash
compensation paid by the Company and its subsidiaries, as well as certain other
compensation paid or earned for those years, to Kenneth A. Joyce, President and
Chief Executive Officer of the Company, Robert W. Constien, President and Chief
Executive Officer of State Bank and Chief Executive Officer of RFS, James E.
Adams, Executive Vice President and Chief Financial Officer of the Company,
Henry R. Thiemann, Executive Vice President and Chief Operations Officer of
State Bank and President and Chief Executive Officer of RFCBC and Richard C.
Warrener, retired Executive Vice President and Chief Financial Officer of the
Company.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
------
Name and Securities Underlying All Other
Principal Position Year Salary($) Bonus($) Options(#) Compensation ($)
------------------ ---- --------- -------- ---------- ----------------
Kenneth A. Joyce, Chairman 2003 $240,000 $0 0 $ 8,481(1)
and Chief Executive Officer 2002 $200,839 $0 0 $21,453(1)
of the Company 2001 $155,150 $0 0 $25,245(1)
Robert W. Constien, Senior 2003 $169,676 $0 0 $10,357(2)
Executive Vice President 2002 $165,880 $0 0 $17,706(2)
and Chief Operating 2001 $165,880 $0 0 $16,371(2)
Officer of the Company,
President and CEO of State
Bank and CEO of RFS
James E. Adams, Executive 2003 $115,385 $0 0 $17,487(3)
Vice President and Chief 2002 -- -- -- --
Financial Officer of the 2001 -- -- -- --
Company
Henry R. Thiemann, 2003 $160,729 $0 0 $12,702(4)
Executive Vice President 2002 $139,943 $0 0 $59,228(4)
and Chief Operations 2001 $121,264 $0 0 $15,879(4)
Officer of State Bank and
President and Chief
Executive Officer of RFCBC
16
Long-Term
Compensation
Awards
------
Name and Securities Underlying All Other
Principal Position Year Salary($) Bonus($) Options(#) Compensation ($)
------------------ ---- --------- -------- ---------- ----------------
2003 $ 44,858 $0 0 $ 5,773(5)
Richard C. Warrener, 2002 $145,788 $0 0 $16,186(5)
retired Executive Vice 2001 $145,788 $0 0 $23,611(5)
President and Chief
Financial Officer of the
Company
(1) "All Other Compensation" for fiscal years 2003, 2002 and 2001 includes:
(i) a contribution of $5,615, $5,500 and $5,250, respectively, to the
Savings Plan on behalf of Mr. Joyce to match 2003, 2002 and 2001
pre-tax elective deferral contributions (included under "Salary") made
by him to the Savings Plan, (ii) $1,576, $5,932 and $8,875 received by
Mr. Joyce from the Company during fiscal years 2003, 2002 and 2001,
respectively, as an automobile usage/allowance and (iii) payments of
$1,290, $684 and $690 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 2002 and 2001
were $9,337 and $10,429, respectively. The amount to be allocated to
the account of Mr. Joyce under the ESOP with respect to fiscal year
2003 has not been determined as of the date of this Proxy Statement.
(2) "All Other Compensation" for 2003, 2002 and 2001 includes (i)
contributions of $5,091, $4,976, and $2,132 respectively, to the
Savings Plan on behalf of Mr. Constien to match 2003, 2002 and 2001
pre-tax elective deferral contributions (included under "Salary") made
by him to the Savings Plan, (ii) $4,972, $4,752 and $3,568 received by
Mr. Constien from the Company during fiscal years 2003, 2002 and 2001,
respectively, as an automobile usage/allowance and (iii) payments of
$262 and $242 for 2003 and 2001 respectively, 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 2002 and 2001 were $7,978 and $10,429,
respectively. The amount to be allocated to the account of Mr. Constien
under the ESOP with respect to fiscal year 2003 has not been determined
as of the date of this Proxy Statement.
(3) "All Other Compensation" for 2003 includes (i) contributions of $3,646
to the Savings Plan on behalf of Mr. Adams to match 2003 pre-tax
elective deferral contributions (included under "Salary") made by him
to the Savings Plan, (ii) $6,150 received by Mr. Adams from the Company
during fiscal year 2003 as an automobile usage/allowance and (iii)
payments of $605 which represent the premiums paid on Mr. Adam's behalf
for a group term life insurance policy which has a death benefit equal
to 200% of Mr. Adam's annual salary less $50,000. The amount to be
allocated to the account of Mr. Adams under the ESOP with respect to
fiscal year 2003 has not been determined as of the date of this Proxy
Statement.
(4) "All Other Compensation" for 2003, 2002 and 2001 includes (i)
contributions of $4,412, $2,026 and $4,752 respectively, to the Savings
Plan on behalf of Mr. Thiemann to match 2003, 2002 and 2001 pre-tax
elective deferral contributions (included under "Salary") made by him
to the Savings Plan, (ii) $7,000, $8,400 and $8,400 received by Mr.
Thiemann from the Company during fiscal years 2003, 2002 and 2001,
respectively, as an automobile usage/allowance and (iii) payments of
$1,290, $1,132 and $996 which represent the premiums paid on Mr.
Thiemann's behalf for a group term life insurance policy which has a
death benefit equal to 200% of Mr.
17
Thiemann's annual salary less $50,000. The amounts allocated to the
account of Mr. Thiemann under the ESOP for 2002 were $8,743. The amount
to be allocated to the account of Mr. Thiemann under the ESOP with
respect to fiscal year 2003 has not been determined as of the date of
this Proxy Statement.
(5) "All Other Compensation" for 2003, 2002 and 2001 includes (i)
contributions of $1,463, $4,373 and $5,250, respectively, to the
Savings Plan on behalf of Mr. Warrener to match 2003, 2002 and 2001
pre-tax elective deferral contributions (included under "Salary") made
by him to the Savings Plan, (ii) $3,590 and $6,683 received by Mr.
Warrener from the Company during fiscal years 2002 and 2001,
respectively, as an automobile usage/allowance and (iii) payments of
$384, $1,249 and, $1,249 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. Warrener under the
ESOP for 2002 and 2001 were $6,974 and $10,419, respectively. There was
not an allocation made to the account of Mr. Warrener under the ESOP
with respect to fiscal year 2003.
Option Exercises and Holdings
The following table sets forth information with respect to Options
exercised during, and unexercised Options held as of the end of, the 2003 fiscal
year by each of the executive officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money
Securities Value Options at FY-End (#) Options at FY-End($)(1)
Underlying ----- --------------------- -----------------------
Options Exercised Realized($) Exercisable Unexercisable Exercisable Unexercisable
----------------- ----------- ----------- ------------- ----------- -------------
Kenneth A. Joyce 0 $0 11,419 2,100 $10,393 $5,838
Robert W. Constien 0 $0 11,419 2,100 $10,393 $5,838
James E. Adams 0 $0 0 0 $ 0 $ 0
Henry R. Thiemann 0 $0 3,977 2,100 $ 6,334 $5,838
Richard C. Warrener 0 $0 0 0 $ 0 $ 0
(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, 2003
($13.85) less the exercise price of the options at the end of the 2003 fiscal
year.
Salary Continuation Agreements
The Company has entered into Executive Salary Continuation Agreements
(the "Agreements") with Kenneth A. Joyce, Robert W. Constien, Henry R. Thiemann
and Richard C. Warrener. 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
18
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.
Change in Control Agreements
The Company also maintains change in control agreements with Kenneth A. Joyce,
Robert W. Constien and Henry R. Thiemann. Under these agreements, the named
executives will receive (a) a cash payment equal to twice the executive's base
salary for the year the change in control occurs or for the preceding calendar
year, whichever is highest (this amount is payable whether or not the
executive's employment terminates after the change in control) and (b) if the
executive's employment is terminated within one year after the change in
control, the Company also is obliged to continue the executive's life, health
and disability insurance coverage ("insurance benefits") for the shorter of 24
months after employment terminates or the date the executive is employed by
another employer, whether or not that employer provides comparable coverage.
However, none of these benefits are due if the change in control occurs after
the executive reaches age 65 and the insurance benefits are not due if the
Executive's employment is terminated because of personal dishonesty,
incompetence (i.e., the Executive's failure to perform his duties as measured
against prevailing standards in the Ohio banking industry), material breach of
the agreement, breach of a fiduciary duty involving personal gain or profit,
intentional failure to perform stated duties, willful and material breach of the
policies and procedures for the operation of the Company provided to the
executive by formal action of the Board of Directors, willful violation of any
law, rule, regulation (other than a law, rule or regulation relating to traffic
violations or similar offenses) or final cease-and-desist order or willful
misconduct. For purposes of these payments, a "change in control" means (a) the
acquisition by a person or persons acting in concert of the power to vote
twenty-five percent or more of a class of the Company's voting securities, (b)
the acquisition by a person of the power to direct the Company's management or
policies, if the Board of Director has made a determination that such
acquisition constitutes or will constitute an acquisition of control of the
Company for the purposes of the Bank Holding Company Act or the Change in Bank
Control Act and the regulations thereunder, (c) during any period of two
consecutive years during the term of the agreement, individuals who at the
beginning of which period constitute the Board of Directors of the Company cease
for any reason to constitute at least a majority thereof, unless the election of
each director who was not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds of the
directors then in office who were directors in office at the beginning of the
period,
19
(d) the Company shall have merged into or consolidated with another corporation,
or merged another corporation into the Company on a basis whereby less than
fifty percent of the total voting power of the surviving corporation is
represented by shares held by former shareholders of the Company prior to such
merger or consolidation, or (e) the Company shall have sold substantially all of
its assets to another person.
Other Severance Agreements
The Company also maintains an additional severance agreement with
Robert W. Constien and Henry R. Thiemann. Under these agreements, the named
executives will receive a cash payment if (a) Mr. Kenneth A. Joyce's employment
as President and Chief Executive Officer of the Company is terminated any time
before June 25, 2004 and (b) the executive's employment is terminated for any
reason other than cause (as defined in the change in control agreements
described above) or (c) the executive terminates employment after his
responsibilities and/or compensation are substantially reduced without his
consent. The amount payable under this agreement is the larger of the
executive's base salary for (a) the period between the executive's employment
termination date and June 25, 2004 or (b) six months. As a condition of
receiving this payment, the executives also must agree not to compete with the
Company for two years after employment terminates and within 50 miles of the
Company and, for twelve months after termination, not to solicit any Company
employee to become employed by another employer.
Directors' Compensation
During the 2003 fiscal year, each outside director of the Company who
served the entire year received an annual retainer of $9,000.
Mr. Steven D. VanDemark, who serves as the Chairman of the Board of
Directors of the Company, received an additional $12,000 during the 2003 fiscal
year for his services as Chairman of the Board of Directors of the 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, 2003.
20
[PERFORMANCE GRAPH]
PERIOD ENDING
INDEX 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
Rurban Financial Corp. 100.00 89.47 83.74 107.32 74.25 110.81
NASDAQ - Total US 100.00 185.43 111.83 88.76 61.37 91.75
NASDAQ Bank Index 100.00 96.15 109.84 118.92 121.74 156.62
Note: Index data supplied by company.
21
SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Any qualified shareholder who desires to present a proposal for
consideration at the 2005 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 22, 2004, 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 2005 Annual Meeting of
Shareholders. If a shareholder intends to present a proposal at the 2005 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
7, 2005, or the Company's management proxies for the 2005 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.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to any shareholder, on the
written request of such shareholder, a copy of the Company's Annual Report on
Form 10-K, including financial statements and schedules thereto, required to be
filed under the Securities Exchange Act of 1934, as amended, for the Company's
fiscal year ended December 31, 2003. Such written request should be directed to
Sandra Stockhorst, Vice President, Investor Relations, Rurban Financial Corp.,
401 Clinton Street, Defiance, Ohio 43512.
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 2004
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.
March 22, 2004 By Order of the Board of Directors,
/s/ Kenneth A. Joyce
Kenneth A. Joyce
President and Chief Executive Officer
22
APPENDIX A
RURBAN FINANCIAL CORP.
AUDIT COMMITTEE CHARTER
This Charter identifies and delegates the purpose, composition, duties
and responsibilities of the Audit Committee of the Board of Directors of Rurban
Financial Corp.
PURPOSE:
The purpose of the Audit Committee is to assist the Board of Directors:
o In its oversight of the accounting and financial reporting
principles and policies and the internal accounting and
disclosure controls and procedures of Rurban Financial Corp.
and its subsidiaries (collectively, the "Corporation");
o In its oversight and supervision of the Corporation's internal
audit function;
o In its oversight of the certification of the Corporation's
quarterly and annual financial statements and disclosures and
assessment of internal disclosure controls by the
Corporation's Chief Executive Officer and Chief Financial
Officer;
o In its oversight of the Corporation's consolidated financial
statements and the independent external audit thereof; and
o In evaluating the independence of the internal and independent
auditors.
The Audit Committee shall be directly responsible for the appointment,
compensation, retention and oversight of the work of any independent auditor
engaged for the purpose of preparing or issuing an audit report or performing
other audit, review or attestation services for the Corporation, and the
independent auditor must report directly to the Audit Committee.
The management of the Corporation is responsible for the preparation,
presentation and integrity of the Corporation's consolidated financial
statements. Management is responsible for maintaining appropriate accounting and
financial reporting principles and policies and internal accounting standards in
accordance with applicable laws and regulations.
The independent auditors are responsible for planning and carrying out
a proper audit of the Corporation's annual consolidated financial statements,
reviews of the Corporation's quarterly consolidated financial statements prior
to the filing of each quarterly report on Form 10-Q, and other procedures.
The Audit Committee shall pre-approve all audit and permitted non-audit
services proposed to be provided by the Corporation's independent auditors in
compliance with Section 202 of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder. The independent auditors shall submit to the
Audit Committee annually a formal written statement delineating all
relationships between the independent auditors and the Corporation ("Statement
as to Independence"), addressing each non-audit service provided to the
Corporation. The Audit Committee shall be responsible for considering whether
any services provided by the independent auditor would cause the independent
auditor to not be independent of the Corporation.
MEMBERSHIP:
The members of the Audit Committee shall serve at the pleasure of the
Board of Directors. The Audit Committee shall be comprised of at least three
members of the Board of Directors. Each member of the Audit Committee shall be
free of any relationship that, in the opinion of the Board of Directors, may
interfere with the exercise of his or her independent judgment in carrying out
his or her responsibilities as a director of the Corporation. All Audit
Committee members must satisfy the independence requirements prescribed by
applicable rules of NASDAQ as well as Section 10A of the Securities Exchange Act
of 1934 and the rules promulgated by the Securities and Exchange Commission
("SEC") thereunder.
Each member of the Audit Committee must be able to read and understand
financial statements, including the Corporation's balance sheet, income
statement and cash flow statement. Additionally, at least one member of the
Audit Committee must be an "audit committee financial expert" as defined in the
applicable rules or criteria established by the SEC and NASDAQ and as determined
by the Audit Committee.
FREQUENCY OF MEETINGS:
23
The Audit Committee shall meet at least four times annually and may
convene more frequently if the Audit Committee determines that circumstances
dictate additional meetings. All Audit Committee members are expected to attend
each meeting in person or via conference call or other means of appropriate
electronic communication.
The Audit Committee shall meet with management, the internal auditor
and the independent auditor in separate executive sessions to discuss any
matters that the Audit Committee or any one of these persons or groups believes
should be discussed privately.
The Audit Committee may request any officer or employee of the
Corporation, or the Corporation's independent counsel, or independent auditors
to attend a meeting of the Audit Committee or to meet with any members of, or
consultants to, the Audit Committee, as the Audit Committee deems necessary or
desirable to provide the information the Audit Committee needs to carry out its
duties and responsibilities.
Members of the Audit Committee may participate in a meeting of the
Audit Committee by means of conference call or similar communications equipment
by means of which all persons participating in the meeting can hear each other.
DUTIES/RESPONSIBILITIES:
The Audit Committee shall carry out the following duties and
responsibilities:
GENERAL RESPONSIBILITIES
o To provide avenues of communication among the internal
auditor, the accounting firm engaged to provide internal audit
services, the independent auditor and the Board of Directors.
o To report Audit Committee actions to the full Board of
Directors and make appropriate recommendations.
o The Audit Committee shall have the authority to engage
independent legal counsel, auditors and other advisors for
special audits, reviews and other procedures as it deems
necessary to carry out its duties.
o The Audit Committee may take any other action as may be
required from time to time by applicable laws and regulations,
the Corporation's Articles and Code of Regulations or the
Board of Directors.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT AUDITORS AND APPOINTING THE
INTERNAL AUDITOR
o The Audit Committee shall be directly responsible for the
appointment, compensation, retention and oversight of the work
of the independent auditor (including the resolution of
disagreements between management and the independent
auditors), and the independent auditor must report directly to
the Audit Committee.
o The Audit Committee shall pre-approve the audit engagement,
including fees and terms, and all other audit or permitted
non-audit services performed by the Corporation's independent
auditor. The Audit Committee shall also evaluate the
independent auditor's independence. The pre-approval of audit
and non-audit services and fees of the independent auditor may
be documented by a member of the Audit Committee signing
annual or periodic engagement letters that define in general
terms the type of services to be provided and the range of
fees that are considered acceptable for such services, or as
otherwise documented in the minutes of the Audit Committee
meetings. The actual compensation paid to the independent
auditor, for all such pre-approved services and fees, is to be
reported to the Audit Committee by management on at least a
quarterly basis.
o To review and approve the appointment, replacement,
reassignment or dismissal of the internal auditor and the
accounting firm performing the internal audit services. To
review and approve audit related fees paid to the accounting
firm performing the internal audit services.
o The Audit Committee will assess and assure the independence of
the internal auditor and the accounting firm engaged to
provide the internal audit services, including a review of
management consulting services provided to the Corporation by
the independent auditor and the fees paid for them.
24
o The Audit Committee will consider, in consultation with the
independent auditor and the internal auditor, the audit scope
and procedural plans made by the internal auditors and the
independent auditor.
o The Audit Committee will listen to management and the
independent auditor if either thinks there might be a need to
engage additional auditors. The Audit Committee will decide
whether to engage an additional firm and, if so which one.
o The Audit Committee will make sure that the internal auditor
and the independent auditor coordinate the internal and
external audits. The purpose of coordinating these efforts is
to assure completeness of coverage, reduce redundancy and use
audit resources effectively.
RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT
AND THE REVIEW OF QUARTERLY AND ANNUAL FINANCIAL STATEMENTS
o The Audit Committee will take measures to assure that the
independent auditor (a) views the Board of Directors as its
client, (b) will be available to the full Board of Directors
and (c) will provide the Audit Committee with a timely
analysis of significant financial reporting issues.
o The Audit Committee will question management, the internal
auditor and the independent auditor about significant risks
and exposures and assess management's steps to minimize them.
The Audit Committee may request detailed reports from
management, the independent auditor, or the internal auditor
related to significant matters affecting the financial
reporting process, internal controls or other areas of special
interest or concern.
o The Audit Committee will review the following with the
independent auditor and the internal auditor:
- The adequacy of the Corporation's internal controls,
including computerized information system controls
and security.
- Any significant findings and recommendations made by
the independent auditor or the internal auditing
function, together with management's responses to
them.
o Shortly after the annual independent audit is completed, the
Audit Committee will to review the following with management
and the independent auditor:
- The Corporation's annual financial statements and
related footnotes.
- The independent auditor's audit of and report on the
financial statements.
- The independent auditor's qualitative judgments
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.
- Any serious difficulties or disputes with management
encountered during the course of the audit.
- The independent auditor's "management letter"
regarding:
1. Recommendations for improvements in internal
control and its operation.
2. An update on new accounting pronouncements.
- The independent auditor's "SAS 61 Letter" regarding
required communications with the Audit Committee.
o The Audit Committee will consider and review with management
and the internal auditor:
- Any significant internal audit findings and
recommendations during the year and management's
responses to them.
25
- Any difficulties encountered in the internal auditing
process, including any restrictions on the scope of
work or access to required information.
- Any changes to the planned scope of the internal
audit plan that the Audit Committee thinks advisable.
- The internal auditing department's budget and
staffing.
o The Audit Committee will consider and review with management
any regulatory agency examination reports and management's
responses, including:
- Safety and Soundness examinations
- Compliance and CRA examinations
o The Audit Committee will review annual filings with the SEC
and other documents made available to the public containing
the Corporation's financial statements and will consider
whether such information is consistent with the information in
the financial statements.
o The Audit Committee will review interim financial statements
and reports with management, the independent auditor and the
internal auditor prior to their official release to the public
or filing with the SEC or other regulators.
OTHER RESPONSIBILITIES
o The Audit Committee will review this Charter annually and
update this Charter as necessary.
o The Audit Committee will review policies and procedures
covering officers' expense accounts and perquisites, including
their use of corporate assets, and consider the results of any
review of those areas by the internal auditor or the
independent auditor.
o The Audit Committee shall have the responsibility for
establishing procedures for the receipt, retention and
treatment of complaints received by the Corporation regarding
accounting, internal accounting controls or auditing matters,
including the confidential, anonymous submission by employees
of the Corporation of concerns regarding questionable
accounting or auditing matters. The Audit Committee shall also
establish procedures to ensure that no retaliation will be
allowed to occur against anyone who reports potential fraud or
a complaint in good faith.
o The Audit Committee will review legal and regulatory matters
that may have a material effect on the Corporation's financial
statements, compliance policies and programs and reports from
regulators.
o The Audit Committee will meet with the internal auditor, the
accounting firm performing the internal audit services, the
independent auditor and management in separate executive
sessions to discuss any matters the Audit Committee or these
groups believe should be discussed privately with the Audit
Committee.
o The Audit Committee will approve any waivers from the
Corporation's Code of Business Conduct and Ethics for
directors and executive officers.
FUNDING:
The Corporation shall provide the Audit Committee with appropriate
funding, as determined by the Audit Committee; for payment of:
o Compensation to any independent auditors engaged for the
purpose of preparing or issuing an audit report or performing
other audit, review or attestation services for the
Corporation;
o Compensation to any advisors employed by the Audit Committee;
and
o Ordinary administrative expenses of the Audit Committee that
are necessary or appropriate in carrying out its
responsibilities.
26
ADOPTED NOVEMBER 11, 2003
BD APPROVED NOV. 19, 2003
27
PLEASE MARK VOTES REVOCABLE PROXY
[X] AS IN THIS EXAMPLE RURBAN FINANCIAL CORP. WITH- FOR ALL
FOR HOLD EXCEPT
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS 1. To elect four (4) directors to
TO BE HELD ON APRIL 26, 2004 serve for terms of three years each: [ ] [ ] [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS THOMAS M. CALLAN RICHARD L. HARDGROVE
ERIC C. HENCH STEVEN D. VANDEMARK
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME
The undersigned holder(s) of common shares of Rurban IN THE SPACE PROVIDED BELOW.
Financial Corp. (the "Company") hereby constitutes and
appoints Kenneth A. Joyce and James E. Adams, or either of --------------------------------------------------------------------
them, the Proxy or Proxies of the undersigned, with full 2. In their discretion, the Proxies are authorized to vote
power of substitution, to attend the Annual Meeting of upon such other matters as may properly come before the
Shareholders of the Company (the "Annual Meeting") to be Annual Meeting or any adjournment(s) thereof.
held on Monday, April 26, 2004, at Eagles Club (First
Floor), 711 W. Second Street, Defiance, Ohio at 5:30 P.M., WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED
local time, and any adjournment(s) thereof, and to vote all BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT
of the common shares of the Company which the undersigned is VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE COMMON
entitled to vote at such Annual Meeting or at any SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
adjournment(s) thereof: 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.
Please be sure to sign and date Date All proxies previously given or executed by the
this Proxy in the box below. ----------------- 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
Shareholder sign above Co-holder (if any) sign above December 31, 2003.
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.)
/\ 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.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE
ENVELOPE PROVIDED.
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