Edgar Filing: RURBAN FINANCIAL CORP

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

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RURBAN FINANCIAL CORP.
----------------------------------------------
(Name of Registrant as Specified In Its Charter)

______________________________________________________________________
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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 10, 2005

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 W. Second Street, Defiance, Ohio, on Thursday, April 21, 2005,
at 10:00 a.m., Eastern Daylight Savings 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 22, 2005 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. Your vote 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 card 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 if your common shares are
registered in your name. 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 card are being mailed to
shareholders of Rurban Financial Corp. (the "Company") on or about March 10,
2005, in connection with the solicitation of proxies by the Board of Directors
of the Company for use at the Annual Meeting of Shareholders (the "Annual
Meeting") called to be held on Thursday, April 21, 2005, or at any
adjournment(s) thereof. The Annual Meeting will be held at 10:00 a.m., Eastern
Daylight Savings Time, at the Eagles Club, 711 W. Second Street, Defiance, Ohio.

A proxy card for use at the Annual Meeting accompanies this proxy
statement. Whether or not you plan to attend the Annual Meeting, you may ensure
your representation by completing, signing, dating and promptly returning the
enclosed proxy card in the envelope provided. Without affecting any vote
previously taken, you may revoke your proxy at any time before it is actually
voted at the Annual Meeting (1) by giving written notice of revocation to the
Secretary of the Company at the address of the Company shown on the cover page
of this proxy statement; (2) by executing and returning a later-dated proxy card
which is received by the Company prior to the Annual Meeting; or (3) by
attending the Annual Meeting and giving notice of revocation in person (but only
if you are the registered owner of your common shares). 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 22, 2005 (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, 4,568,388 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.

Shareholders holding common shares in "street name" with a broker,
financial institution or other holder of record may be eligible to appoint their
proxy electronically via the Internet or telephonically and may incur costs
associated with electronic access. Such shareholders should review the
information provided to them by their broker or other holder of record. This
information will describe the procedures to be followed in instructing the
holder of record how to vote the street name common shares and how to revoke
previously given instructions.

Common shares represented by properly executed proxy cards that are
returned to the Company prior to the Annual Meeting will be counted toward the
establishment of a quorum for the Annual Meeting even though they are marked
"Abstain," "Against," "Withhold Authority" or "For All Except" or not marked at
all. Brokers who hold their customers' common shares in street name may, under
the applicable rules of the exchange or other self-regulatory organizations of
which the brokers are members, sign and submit proxy cards for such common
shares and may vote such common shares on routine matters, such as the election
of directors. However, brokers who hold common shares in street name may not
vote such common shares on non-routine matters, including proposals to approve
equity compensation plans, without specific instructions from the customer who
owns the common shares.

Proxy cards that are signed and submitted by brokers which have not been voted
on certain matters as described in the previous sentence are referred to as
"broker non-votes." Broker non-votes count toward the establishment of a quorum
at the Annual Meeting.

The Company will bear the costs of preparing, printing and mailing this
proxy statement, the accompanying proxy card and any other related materials, as
well as all other costs incurred in connection with the solicitation of proxies
on behalf of the Company's Board of Directors other than the Internet and
telephone usage charges incurred if a shareholder appoints a proxy
electronically through a holder of record. 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 brokers, voting trustees, financial institutions and other
custodians, nominees and fiduciaries, who are record holders of common shares
not beneficially owned by them, for forwarding materials to and obtaining
proxies from the beneficial owners of common shares entitled to vote at the
Annual Meeting.

If you are a participant in the Employee Stock Ownership and Savings Plan
of Rurban Financial Corp. (the "Rurban ESOP and Savings Plan") and common shares
have been allocated to your account in the Rurban ESOP and Savings Plan, you
will be entitled to instruct the trustee of the Rurban ESOP and Savings Plan how
to vote those common shares and you may receive your voting instruction card
separately. If you do not provide voting instructions, the common shares
allocated to your account in the Rurban ESOP and Savings Plan will not be voted.

The Annual Report to the Shareholders of the Company for the fiscal year
ended December 31, 2004 (the "2004 fiscal year") is being delivered with this
proxy statement.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table furnishes information concerning the beneficial
ownership of common shares of the Company, as of the Record Date, by each person
known by the Company to own more than 5% of the outstanding common shares of the
Company, each current director, each person nominated for election as a
director, each executive officer named in the Summary Compensation Table, and
all current executive officers and directors of the Company as a group:

Amount and Nature of Beneficial Ownership (1)

Common Shares Which Can
Be Acquired Upon
Exercise of Options
Currently Exercisable
Name of Common Shares Becoming Exercisable Percent of
Beneficial Owner Presently Held Within 60 Days Total Class (2)
--------------------------------- -------------- ----------------------- ------- ----------

James E. Adams (3) 1,485 (4) 2,000 3,485 (5)
Thomas A. Buis 4,317 (6) 3,376 7,693 (5)
Thomas M. Callan 37,388 (7) 3,376 40,764 (5)
John R. Compo 43,978 (8) 6,394 50,372 1.10%
Robert W. Constien (3) 29,062 (9) 14,469 43,521 (5)
John Fahl 21,170 6,394 27,564 (5)
Robert A. Fawcett, Jr. 7,335 (10) 6,394 13,729 (5)
Richard L. Hardgrove 1,000 1,000 2,000 (5)
Eric C. Hench 22,484 (11) 6,394 28,878 (5)
Kenneth A. Joyce (3) 15,049 (12) 16,469 31,518 (5)
Rita A. Kissner 0 0 0 (5)
Henry R. Thiemann (3) 5,232 (13) 7,027 12,259 (5)
Steven D. VanDemark 13,865 (14) 9,193 23,058 (5)
J. Michael Walz, D.D.S. 24,635 (15) 6,394 30,823 (5)
All executive officers and
directors as a group (14 persons) 227,000 (16) 88,880 315,880 6.91%

(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. All fractional common shares have been rounded up to the nearest
whole common share. The mailing address of each of the current executive
officers and directors of the Company is 401 Clinton Street, Defiance,
Ohio 43512. The mailing address of the Administrator of the Employee Stock
Ownership and Savings Plan of Rurban Financial Corp. is Reliance Financial
Services, 401 Clinton Street, Defiance, Ohio 43512.

(2) The percent of class is based upon 4,568,388 common shares outstanding on
the Record Date and entitled to vote at the Annual Meeting, and the number
of common shares, if any, as to which the named person or group has the
right to acquire beneficial ownership upon the exercise of options which
are currently exercisable or will become exercisable within 60 days after
the Record Date.

(3) Individual named in the Summary Compensation Table. Mr. Joyce also serves
as a director of the Company.

(4) Includes 1,000 common shares held jointly by Mr. Adams and his wife, as to
which he exercises shared voting and investment power; and 485 common
shares held for the account of Mr. Adams in the Rurban ESOP and Savings
Plan.

(5) Reflects ownership of less than 1% of the outstanding common shares of the
Company.

(6) Includes 1,707 common shares held in the name of Mr. Buis' wife, as to
which she exercises sole voting and investment power.

(7) Includes 32,730 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.

(8) Includes 2,756 common shares held jointly by Mr. Compo and his wife, as to
which he exercises shared voting and investment power.

(9) Includes 28,391 common shares held for the account of Mr. Constien in the
Rurban ESOP and Savings Plan.

(10) Includes 6,198 common shares held by the Robert A. Fawcett Jr. Trust as to
which Mr. Fawcett has sole voting and investment power.

(11) Includes 22,484 common shares held by the Eric C. Hench Agency Trust as to
which Mr. Hench has sole voting and investment power.

(12) Includes 100 common shares held in the name of Mr. Joyce's son for which
Mr. Joyce is custodian; and 4,518 common shares held for the account of
Mr. Joyce in the Rurban ESOP and Savings Plan.

(13) Includes 601 common shares held jointly by Mr. Thiemann and his wife, as
to which he exercises shared voting and investment power; and 3,064 common
shares held for the account of Mr. Thiemann in the Rurban ESOP and Savings
Plan.

(14) 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.

(15) 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.

(16) See Notes (4) and (6) through (15) above.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To the Company's knowledge, based solely on a review of the reports
furnished to the Company and written representations that no other reports were
required during the 2004 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.

ELECTION OF DIRECTORS

There are currently eleven individuals serving as members of the Board of
Directors - four in the class whose terms expire at the Annual Meeting, three in
the class whose terms expire in 2006 and four in the class whose terms expire in
2007. On September 15, 2004, upon the recommendation of the Governance and
Nominating Committee, Rita A. Kissner was elected as a director of the Company.
Ms. Kissner was recommended to the Governance and Nominating Committee by the
directors and executive officers of the Company.

The Board of Directors has reviewed, considered and discussed each
director's relationships, both direct or indirect, with the Company and its
subsidiaries and the compensation and other payments, if any, each director has,
both directly or indirectly, received from or made to the Company and its
subsidiaries in order to determine whether such director qualifies as
independent under Rule 4200(a)(15) of the Marketplace Rules of The Nasdaq Stock
Market, Inc. ("Nasdaq"), and has determined that the Board of Directors 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 the Company's common shares as described in this
proxy statement) and thus qualifies as independent under Nasdaq Marketplace Rule
4200(a)(15): Thomas A. Buis, Thomas M. Callan, John R. Compo, John Fahl, Robert
A. Fawcett, Jr., Richard L. Hardgrove, Eric C. Hench, Rita A. Kissner, Steven D.
VanDemark and J. Michael Walz, D.D.S.

The Board of Directors proposes that each of the four nominees identified
below be elected for a new term of three years. Each nominee was recommended to
the Board of Directors by the Governance and Nominating Committee. Each
individual elected as a director at the Annual Meeting will hold office for a
term of three years and until his or her successor is elected and qualified, or
until his or her earlier resignation, removal from office or death. Common
shares represented by properly executed and returned proxy cards will be voted
FOR the election of the Board of Directors' nominees unless authority to vote
for one or more nominees is withheld. If a nominee who would otherwise receive
the required number of votes becomes unavailable or unable to serve as a
director, the individuals designated as proxy holders reserve full discretion to
vote the common shares represented by the proxies they hold for the election of
the remaining nominees and for the election of any substitute nominee designated
by the Board of Directors. The Board of Directors has no reason to believe that
any of the nominees named below will not serve if elected.

The following table gives certain information, as of the Record Date,
concerning each nominee for election as a director of the Company. Unless
otherwise indicated, each person has held his or her 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 60 Chairman of Board and President of 1987 2008
Compo Corporation, Defiance, Ohio
(automotive parts manufacturer and
wholesaler) since 1984; Director of
The State Bank and Trust Company
("State Bank") since 1985.

John Fahl 68 (Retired) President from 1994 to 1996 2008
2001 of Tire Operations, and
Director from 1992 to 2001, of
Cooper Tire & Rubber Company,
Findlay, Ohio (tire and rubber
manufacturer); Director of Lehigh
Technologies, LLC, manufacturer of
rubber powders, since 2004; Director
of State Bank since 2004; Chairman of
the Board and Director of RFCBC, Inc.
since 2004.

Robert A. Fawcett, Jr. 63 Insurance Agent, Fawcett, Lammon, 1992 2008
Recker and Associates Insurance
Agency, Inc., Ottawa, Ohio, since
1998; Director of State Bank since
2004.

Rita A. Kissner 59 (Retired) Mayor of City of September 15, 2008
Defiance, Ohio from 1992 to 2000; 2004
Director of State Bank since
September 2004

The following table gives certain information, as of the Record Date,
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
Company and its Subsidiaries Continuously Term
Name Age and Principal Occupation(s) Since Expiring In
------------------------- --- ------------------------------------- --------------- -----------

Thomas A. Buis 67 Consultant, Blanchard Valley Health 2001 2006
Association, Findlay, Ohio, a
non-profit parent corporation of an
integrated regional health system,
since 2004; Chairman since 2000, and
President from 1975 to 2000, of
Spencer-Patterson Agency, Inc.,
Findlay, Ohio, an insurance agency ;
Director of Reliance Financial
Services, N.A. ("RFS") since 2003;
Director of State Bank since 2004.

Kenneth A. Joyce 56 President and Chief Executive Officer 2002 2006
of the Company since August 2002;
Chairman and Chief Executive Officer
of Rurbanc Data Services, Inc.,
("RDSI") since October 1997; Director
of State Bank since 2002; Director of
RFCBC, Inc. since 2004; Director of
RDSI since 1997.

J. Michael Walz, D.D.S. 61 General Dentist in Defiance, Ohio; 1992 2006
Director of State Bank since 1989;
Director of RFCBC, Inc. since 2004;
Director of RFS since 1997.

Thomas M. Callan 62 President of Defiance Stamping 2001 2007
Company, Defiance Ohio, a metal
stamping company since 1980; Director
of State Bank since 1996.

Richard L. Hardgrove 65 (Retired) President and Chief 2004 2007
Executive Officer of Sky Bank, from
1998 to 2001; Director of State Bank
since 2004.

Eric C. Hench 51 Chairman since 2000, and Chief 1997 2007
Executive Officer since 1990, of Chief
Supermarkets, Inc.; Director of State
Bank since 1985; Director of RFCBC,
Inc. since 2004.

Steven D. VanDemark 52 General Manager of Defiance Publishing 1991 2007
Company, Defiance, Ohio (newspaper
publisher) since 1985; Chairman of
the Board of the Company since 1992;
Director of State Bank since 1990;
Chairman of the Board of State Bank
since 1992; Director of RDSI since
1997.

There are no family relationships among any of the directors, nominees for
election as directors and executive officers of the Company.

RECOMMENDATION AND VOTE

Under Ohio law and the Company's Code of Regulations (as amended), the
four nominees receiving the greatest number of votes will be elected.

Common shares represented by properly executed and returned proxy cards
will be voted FOR the election of the Board of Directors' nominees named above
unless authority to vote for one or more nominees is withheld. Shareholders may
withhold authority to vote for the entire slate as nominated or, by writing the
name of one or more nominees on the line provided on the proxy card, withhold
the authority to vote for one or more nominees. Common shares as to which the
authority to vote is withheld and broker non-votes will be counted for quorum
purposes, but will not be counted toward the election of directors or toward the
election of the individual nominees specified on the proxy card.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED ABOVE.

MEETINGS OF AND COMMUNICATIONS WITH THE BOARD OF DIRECTORS

The Board of Directors of the Company held a total of thirteen meetings
during the 2004 fiscal year. Each incumbent director attended 75% or more of the
aggregate of the number of meetings held by the Board of Directors and the
number of meetings held by the Board committees on which he or she served,
except for John Fahl who attended 69%. In accordance with the Nasdaq Marketplace
Rules, the independent directors meet in executive session as appropriate
matters for their consideration arise.

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 Ms. Kissner) attended the Company's last annual
meeting of shareholders held on April 26, 2004. Ms. Kissner did not attend the
Company's last annual meeting of shareholders as she did not join the Company's
Board of Directors until September 15, 2004.

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 Valda Colbart, the Company's Investor Relations Manager, or
another corporate officer is forwarded to all members of the Board, has served
the needs of the Board and the Company's shareholders. There is no screening
process, and all shareholder communications that are received by officers for
the Board's attention are forwarded to the Board.

Any communication to the Board may be mailed to the Board, in care of
Valda Colbart, the Company's Investor Relations Manager, at the Company's
headquarters, 401 Clinton Street, Defiance, Ohio 43512. 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 Manager will make copies of all such communications and
circulate them to the appropriate director or directors without any screening.

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,
Kenneth A. Joyce, Steven D. VanDemark, and J. Michael Walz, D.D.S. 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 2004 fiscal year.

Compensation Committee

The Board of Directors of the Company 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 Board of Directors has determined that each member of
the Compensation Committee qualifies as independent under Rule 4200(a)(15 of the
Nasdaq Marketplace Rules. In addition, each member of the Compensation Committee
qualifies as an "outside director" for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and as
a "non-employee director" for purposes of Section 16b-3 under the Exchange Act.

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
Company's executive officers, including the President and Chief Executive
Officer. The Compensation Committee also evaluates and makes recommendations
regarding the compensation of the directors, including their compensation for
services on Board committees. The Compensation Committee also administers the
Stock Option Plan. The Compensation Committee met twice during the 2004 fiscal
year.

Audit Committee

The Board of Directors of the Company has an Audit Committee comprised of
Thomas M. Callan, Robert A. Fawcett, Jr., Richard L. Hardgrove (since April 26,
2004) and Rita A. Kissner (since January 19, 2005). The Board of Directors has
determined that each member of the Audit Committee qualifies as

independent under Nasdaq Marketplace Rules 4200(a)(15) and 4350(d)(2) as well as
under Rule 10A-3 promulgated under the Exchange Act. The Audit Committee met
eight times during the 2004 fiscal year.

The Board of Directors has determined that 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, and is
qualified to discharge his or her duties to the Company and its subsidiaries. In
addition, the Board of Directors has determined that Richard L. Hardgrove
qualifies as an "audit committee financial expert" for purposes of Item 401(h)
of Regulation S-K promulgated by the Securities and Exchange Commission ("SEC")
by virtue of his service as the President and Chief Executive Officer of Sky
Bank prior to his retirement.

The Audit Committee is organized and conducts its business pursuant to a
written charter adopted by the Board of Directors. At least annually, the Audit
Committee reviews and reassesses the adequacy of its charter and recommends
changes to the full Board of Directors as necessary. The purposes of the Audit
Committee are to assist the Board of Directors in its oversight of:

- the accounting and financial reporting principles and policies
and the internal accounting and disclosure controls and
procedures of the Company and its subsidiaries;

- the Company's internal audit function;

- the certification of the Company's quarterly and annual
financial statements and disclosures; and

- 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 the independent registered
public accounting firm engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attestation services. The
independent registered public accounting firm reports directly to the Audit
Committee. The Audit Committee evaluates the independence of the independent
registered public accounting firm on an ongoing basis. Additionally, the Audit
Committee reviews and pre-approves all audit services and permitted non-audit
services provided by the independent registered public accounting firm to the
Company or any of its subsidiaries and ensures that the independent registered
public accounting firm is not engaged to perform the specific non-audit services
prohibited by law, rule or regulation. The Audit Committee is also 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 submission
by employees of the Company of concerns regarding questionable accounting or
auditing matters. The Audit Committee's report relating to the 2004 fiscal year
begins at page 25.

Loan Review Committee

The Board of Directors of the Company has a 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.
The Loan Review Committee is comprised of independent directors who are not
involved in the loan approval process at subsidiary banks. The Loan Review
Committee has an established charter and met ten times during the 2004 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., Steven D.
VanDemark and J. Michael Walz, D.D.S. The Board of Directors has determined that
each member of the Governance and Nominating Committee qualifies as independent
under Nasdaq Marketplace Rule 4200(a)(15). The function of the Governance and
Nominating Committee is to assist the Board of Directors in identifying
qualified individuals to become directors of the Company and its subsidiaries,
determining the composition of the boards of directors and their committees,
monitoring a process to assess the effectiveness of the boards of directors and
developing and implementing the Company's corporate governance guidelines. The
Governance and Nominating Committee also evaluates the performance of the
current members of the Company's Board of Directors on an annual basis. The
Governance and Nominating Committee met four times during the 2004 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. The Governance and Nominating Committee selected
the nominees for re-election as directors at the Company's Annual Meeting. When
considering potential candidates for the Board of Directors, the Governance and
Nominating Committee strives to assure that the composition of the Board of
Directors, 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 of Directors, certain factors may be weighed more or less heavily by the
Governance and Nominating Committee.

In considering candidates for the Board of Directors, 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 of Directors.

The Governance and Nominating Committee considers candidates for the Board
of Directors 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
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 Valda Colbart, the Company's
Investor Relations Manager. To be considered, recommendations must be received
at the Company's executive offices located at 401 Clinton Street, Defiance, Ohio
43512 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 located at 401 Clinton Street, Defiance, Ohio 43512.
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 1st
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, 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.

CODE OF CONDUCT

In accordance with the applicable sections of the Nasdaq Marketplace Rules
and rules of the SEC, the Board of Directors has adopted the Rurban Financial
Corp. Code of Conduct and Ethics which applies to the directors, officers and
employees of the Company and its subsidiaries. The Code of Conduct and Ethics is
posted on the "Corporate Governance" page of the Company's website at
www.rurbanfinancial.net.

DIRECTORS' COMPENSATION

Each director of the Company who is not an employee of the Company or one
of its subsidiaries (a "non-employee director") currently receives an annual
cash retainer in the amount of $9,000 paid in twelve monthly installments of
$750. The Chairman of the Board of Directors of the Company (Steven D.
VanDemark) receives an additional annual cash retainer of $12,000 paid in twelve
monthly installments of $1,000. Each non-employee director also receives an
annual cash retainer of $500 for each committee of the Board of Directors on
which he or she serves, except that members of the Executive-Compliance
Committee receive an annual cash retainer of $1,000 and the member of the Audit
Committee designated as the "audit committee financial expert" (Richard L.
Hardgrove) receives an annual cash retainer of $3,500. Each non-employee
director also receives $100 for each meeting of a committee of the Board of
Directors attended, except that members of the Executive-Compliance Committee
receive $250 for each meeting attended.

Each non-employee director of the Company also serves on the board of
directors of one or more of the Company's subsidiaries, and receives an annual
cash retainer for such service as well as fees for attendance at meetings of the
board of directors of the appropriate Company subsidiary (and committees of that
board). The following table summarizes the aggregate amount of fees paid in cash
to each incumbent non-employee director of the Company for service on the board
of directors of a subsidiary of the Company (and committees of that board)
during the 2004 fiscal year:

Aggregate Aggregate
Subsidiary Subsidiary
Name Fees Name Fees
--------------------- ---------- -------------------- ----------

Thomas A. Buis $ 12,450 Richard L. Hardgrove $ 5,000
Thomas M. Callan $ 7,542 Eric C. Hench $ 15,450
John R. Compo $ 8,750 Rita A. Kissner $ 2,375
John Fahl $ 18,375 Steven D. VanDemark $ 15,125
Robert A. Fawcett, Jr. $ 8,850 J. Michael Walz, D.D.S $ 18,500

From time to time, non-employee directors of the Company also receive
options to purchase common shares of the Company. These options are awarded
under the Rurban Financial Corp. Stock Option Plan at the discretion of the
Compensation Committee. During the 2004 fiscal year, each non-employee director,
except Mr. VanDemark received an option to purchase 5,000 common shares of the
Company. Mr. VanDemark received an option to purchase 10,000 common shares of
the Company. The other directors (Messrs. Joyce, Constien, Adams and Thiemann)
also received options during the 2004 fiscal year as described under
"COMPENSATION OF EXECUTIVE OFFICERS--GRANTS OF OPTIONS."

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 Deferred Compensation
Plan is to advance the interests of the Company and its shareholders by allowing
the directors of the Company and/or its subsidiaries an opportunity to elect to
defer payment of all or a portion of their compensation received for their
services as directors.

The Plan is administered by the Board of Directors of the Company. Subject
to the express provisions of the Plan, the Board has sole discretion and
authority to determine from time to time the individuals eligible to participate
in the Plan.

Each director of the Company and its subsidiaries is eligible to
participate in the Plan by electing to defer the receipt of all or a portion of
the compensation to be received by such director or otherwise payable to him
during any calendar year.

As of this date, no director of the Company or its subsidiaries has opted
to participate in the Plan.

TRANSACTIONS INVOLVING MANAGEMENT

During the 2004 fiscal year, 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 entered into banking transactions with the Company's
subsidiaries (State Bank, RDSI and RFS) in the ordinary course of their
respective businesses and in compliance with applicable federal and state laws
and regulations. 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, 2004, was $3,958,771. As of the date hereof, all of such loans were
performing loans.

REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

Kenneth A. Joyce and James E. Adams received compensation from the Company
for services rendered during the 2004 fiscal year in their capacities as
executive officers of the Company and one or more of its subsidiaries. Robert W.
Constien and Henry R. Thiemann received compensation from State Bank for
services rendered during the 2004 fiscal year in their capacities as executive
officers of State Bank.

The Compensation Committee is comprised of five independent directors. The
Compensation Committee reviews and recommends to the full Board of Directors 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. The
Compensation Committee has developed, implemented and maintains an executive
compensation program that supports the overall objectives and performance of the
Company and provides compensation levels that enable the organization to
attract, retain and reward competent executive officers.

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 "Incentive Compensation Plan") which directly links bonuses to the
financial performance of the Company.

During 2004, 2003 and 2002, 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, analysis of how the Company's and its subsidiarie's
compensation of its employees compares to compensation of individuals holding
comparable positions with 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 for the 2004 fiscal year.

The salary paid to Mr. Joyce for services rendered in his capacities as
President and Chief Executive Officer of the Company during the 2004 fiscal year
represented no increase over the salary paid with respect to the 2003 fiscal
year. Mr. Joyce did not receive a salary for services rendered in his capacity
as Chairman and Chief Executive Officer of RDSI.

The salary paid to Mr. Constien for services rendered in his capacities as
President and Chief Executive Officer of State Bank during the 2004 fiscal year
represented no increase over the salary paid with respect to the 2003 fiscal
year. Mr. Constien did not receive a salary for services rendered in his
capacity as Chairman of RFS.

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
2004 fiscal year represented no increase over the salary paid with respect to
the 2003 fiscal year.

The salaries paid to Mr. Thiemann for services rendered in his capacities
of Executive Vice President and Chief Operating Officer of State Bank during the
2004 fiscal year represented no increase over the salary paid with respect to
the 2003 fiscal year. Mr. Thiemann did not receive a salary for services
rendered in his capacity as President and Chief Executive Officer of RFCBC, Inc.

Incentive Compensation

In 2004, the Company implemented the Incentive and Compensation Plan,
linking executive officers' incentive compensation directly to the Company's
performance. The Incentive Compensation Plan is designed to better match
incentive compensation to shareholder value. The Incentive Compensation Plan
increases the "at-risk" portion of executive officer total compensation by
directly linking a greater percentage of executive officers' total compensation
to the Company's performance and thereby to shareholder value.

For Messrs. Joyce, Constien, Adams and Thiemann to receive bonus payouts
under the Incentive Compensation Plan, the Company must meet or exceed its
budget and State Bank, RDSI and RFS must obtain a "Satisfactory" rating or
better on examinations and significant audits.

Messrs. Joyce, Constien, Adams and Thiemann received no bonuses under the
Incentive Compensation Plan for fiscal year 2004.

Stock Option Plan

The Company believes that it is also important to provide
compensation which serves to be an incentive for long-term corporate financial
performance. In that regard, the Board of Directors of the Company adopted, and
the shareholders of the Company approved, the Rurban Financial Corp. Stock
Option Plan (the "Stock Option Plan"). Under the Stock Option Plan, directors,
officers and other key employees of the Company and its subsidiaries have been
selected by the Compensation Committee to receive awards. The Stock Option Plan
authorizes the granting of (i) incentive stock options (as defined in Section
422 of the Internal Revenue Code), (ii) non-qualified stock options and (iii)
stock appreciation rights. The purpose of the Stock Option Plan is to encourage
participants 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. Each option awarded under the Stock Option Plan
has an exercise price equal to 100% of the fair market value of the Company's
common shares on the date of grant. If there is no appreciation in the market
value of the common shares, the options will be valueless. Thus, in contrast to
the base salary and incentive components of compensation, option grants are tied
directly to the price performance of the Company's common shares.

During the 2004 fiscal year, the Compensation Committee administered the
Stock Option Plan and approved the grant of options covering an aggregate of
177,000 common shares to the directors, executive officers and sixty-four key
employees of the Company and its subsidiaries. The options awarded to the
Company's executive officers are described in table under "GRANTS OF OPTIONS."
No stock appreciation rights have ever been awarded under the Stock Option Plan.

Rurban ESOP and Savings Plan

The officers and employees of the Company and its subsidiaries are
encouraged to maintain a significant long-term stock ownership position with the
Company. This has been fostered not only through the grant of options under the
Stock Option Plan, but also by the Rurban ESOP and Savings Plan. The Rurban ESOP
and Savings Plan has two main components - an employee stock ownership component
and a 400(k) component. With respect to the employee stock ownership component,
each year the Company and its subsidiaries may contribute an amount in cash
and/or Company common shares determined by the Compensation Committee to the
Rurban ESOP and Savings Plan. The contribution is

allocated to the accounts of participants pro rata based on the amount of the
participant's compensation. The Company and its subsidiaries contributed an
aggregate amount of $430,000 to the Rurban ESOP and Savings Plan with respect to
the 2004 fiscal year. Each of Messrs. Joyce, Constien, Adams and Thiemann
participates in the Rurban ESOP and Savings Plan. As of the date of this Proxy
Statement, no determination has been made as to the amount to be allocated to
the accounts of Messrs. Joyce, Constien, Adams and Thiemann under the Rurban
ESOP and Savings Plan with respect to the 2004 fiscal year.

With respect to the 401(k) component of the Rurban ESOP and Savings Plan,
three types of contributions are contemplated: (1) pre-tax elective deferral
contributions by each participant of a percentage of his or her annual
compensation; (2) matching contributions made by the employer in cash in an
amount determined by the Board of Directors, upon recommendation of the
Compensation Committee; and (3) qualified rollover contributions by a
participant from another qualified plan. The Board of Directors, upon
recommendation of the Compensation Committee has determined that for the 2004
fiscal year, the amount of the matching contributions to be made on behalf of
each participant in the Rurban ESOP and Savings Plan is 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 $6,892, $5,127, $4,635 and $4,752 were made on behalf of Messrs.
Joyce, Constien, Adams and Thiemann, respectively, to match their respective
2004 pre-tax elective deferral contributions made to the Rurban ESOP and 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

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 or for the account of each individual who
served as an executive officer of the Company during the 2004 fiscal year.
Dollar amounts have been rounded up to the nearest whole dollar.

SUMMARY COMPENSATION TABLE

Long-Term
Compensation
Annual Compensation Awards
------------------------ ------------
Name and Common Shares All Other
Principal Position Year Salary($) Bonus($) Underlying Options(#) Compensation ($)
--------------------------- ---- --------- -------- --------------------- ----------------

Kenneth A. Joyce, President 2004 $240,000 $0 20,000 $ 11,204(1)
and CEO of the Company and 2003 $240,000 $0 0 $ 18,844(1)
Chairman and CEO of RDSI 2002 $200,839 $0 0 $ 21,453(1)

Robert W. Constien, 2004 $170,856 $0 10,000 $ 12,802(2)
President and CEO of State 2003 $169,676 $0 0 $ 19,422(2)
Bank and Chairman of the 2002 $165,880 $0 0 $ 17,706(2)
Board of RFS

James E. Adams, Executive 2004 $150,000 $0 10,000 $ 62,830(3)
Vice President and Chief 2003 $115,385 -- -- $ 24,152(3)
Financial Officer of the 2002 -- -- -- --
Company

Henry R. Thiemann, 2004 $154,500 $0 10,000 $ 10,333(4)
Executive Vice President 2003 $160,729 $0 0 $ 21,030(4)
and Chief Operating Officer 2002 $139,943 $0 0 $ 59,228(4)
of State Bank and President
and CEO of RFCBC, Inc.

(1) "All Other Compensation" for fiscal years 2004, 2003 and 2002 includes:
(i) a contribution of $6,892, $5,615 and $5,500, respectively, to the
Rurban ESOP and Savings Plan on behalf of Mr. Joyce to match 2004, 2003
and 2002 pre-tax elective deferral contributions (included under "Salary")
made by him to the Rurban ESOP and Savings Plan, (ii) $3,369, $1,576 and
$5,932 received by Mr. Joyce from the Company during fiscal years 2004,
2003 and 2002, respectively, as an automobile usage/allowance and (iii)
payments of $943, $1,290 and $684 which represent the premiums paid on Mr.
Joyce's behalf for a group term life insurance policy which has a death
benefit of $50,000 for fiscal year 2004 and had a death benefit equal to
200% of Mr. Joyce's annual salary less $50,000 for fiscal years 2003 and
2002 respectively. The amounts allocated to the account of Mr. Joyce under
the ESOP for 2003 and 2002 were $10,363 and $9,337, respectively. The
amount to be allocated to the account of Mr. Joyce under the ESOP with
respect to fiscal year 2004 has not been determined as of the date of this
Proxy Statement.

(2) "All Other Compensation" for 2004, 2003 and 2002 includes (i)
contributions of $5,127, $5,091 and $4,976 respectively, to the Rurban
ESOP and Savings Plan on behalf of Mr. Constien to match 2004, 2003 and
2002 pre-tax elective deferral contributions (included under "Salary")
made by him to the Rurban ESOP and Savings Plan, (ii) $7,087, $4,972 and
$4,752 received by Mr. Constien from the Company during fiscal years 2004,
2003 and 2002, respectively, as an automobile usage/allowance and (iii)
payments of $588 and $262 for 2004 and 2003 respectively, which represent
the premiums paid on Mr. Constien's behalf for a group term life insurance
policy which has a death benefit of $50,000. The amounts allocated to the
account of Mr. Constien under the ESOP for 2003 and 2002 were $9,064 and
$7,978, respectively. The amount to be allocated to the account of Mr.
Constien under the ESOP with respect to fiscal year 2004 has not been
determined as of the date of this Proxy Statement.

(3) "All Other Compensation" for 2004 includes (i) contributions of $4,752 and
$3,646, respectively, to the Rurban ESOP and Savings Plan on behalf of Mr.
Adams to match 2004 and 2003 pre-tax elective deferral contributions
(included under "Salary") made by him to the Rurban ESOP and

Savings Plan, (ii) $8,400 and $6,150 received by Mr. Adams from the
Company during fiscal years 2004 and 2003, respectively, as an automobile
usage/allowance, (iii) $48,232 received by Mr. Adams for reimbursement of
moving expenses and (iv) payments of $943 and $605 which represent the
premiums paid on Mr. Adam's behalf for a group term life insurance policy
which has a death benefit of $50,000 for fiscal year 2004 and had a death
benefit equal to 200% of Mr. Adam's annual salary less $50,000 for fiscal
years 2003. The amount allocated to the account of Mr. Adams under the
ESOP for 2003 was $6,664. The amount to be allocated to the account of Mr.
Adams under the ESOP with respect to fiscal year 2004 has not been
determined as of the date of this Proxy Statement.

(4) "All Other Compensation" for 2004, 2003 and 2002 includes (i)
contributions of $4,635, $4,412 and $2,026 respectively, to the Rurban
ESOP and Savings Plan on behalf of Mr. Thiemann to match 2004, 2003 and
2002 pre-tax elective deferral contributions (included under "Salary")
made by him to the Rurban ESOP and Savings Plan, (ii) $4,756, $7,000 and
$8,400 received by Mr. Thiemann from the Company during fiscal years 2004,
2003 and 2002, respectively, as an automobile usage/allowance and (iii)
payments of $1,447, $1,290 and $1,132 which represent the premiums paid on
Mr. Thiemann's behalf for a group term life insurance policy which has a
death benefit of $50,000 for fiscal year 2004 and had a death benefit
equal to 200% of Mr. Thiemann's annual salary less $50,000 for fiscal
years 2003 and 2002 respectively. The amounts allocated to the account of
Mr. Thiemann under the ESOP for 2003 and 2002 were $8,328 and $8,743
respectively. The amount to be allocated to the account of Mr. Thiemann
under the ESOP with respect to fiscal year 2004 has not been determined as
of the date of this Proxy Statement.

GRANTS OF OPTIONS

The following table summarizes information concerning individual grants of
options made during the 2004 fiscal year to each of the individuals named in the
Summary Compensation Table. The Company has never granted stock appreciation
rights.

OPTION GRANTS IN LAST FISCAL YEAR

% of Total
Original
Options or of Potential Realizable
Total Reload Value at Assumed
Number of Options, as Annual Rates of Share
Common Shares Appropriate, Price Appreciation
Underlying Granted to Exercise for Option Term (1)
Options Employees in Price Expiration ----------------------
Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
------------------ ------------- ------------- --------- ---------- ---------- ---------

Kenneth A. Joyce 20,000 16.4% $13.85 1/21/14 $ 174,204 $ 441,467

Robert W. Constien 10,000 8.2% $13.85 1/21/14 $ 87,102 $ 220,733

James E. Adams 10,000 8.2% $13.85 1/21/14 $ 87,102 $ 220,733

Henry R. Thiemann 10,000 8.2% $13.85 1/21/14 $ 87,102 $ 220,733

(1) The dollar amounts reflected in this table are the result of
calculations at the 5% and 10% annual appreciation rates set by the SEC for
illustrative purposes, and assume the options are held until their respective
expiration dates. The dollar amounts are rounded down to the nearest whole
dollar. The dollar amounts are not intended to forecast future financial
performance or possible future appreciation in the price

of the Company's common shares. Shareholders are therefore cautioned against
drawing any conclusions from the appreciation data shown, aside from the fact
that optionees will only realize value from the option grants shown if the price
of the Company's common shares appreciates, which benefits all shareholders of
the Company commensurately.

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 2004 fiscal
year by each of the executive officers named in the Summary Compensation Table.
Dollar amounts have been rounded up to the nearest whole dollar.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

Number of Common Shares Value of Unexercised
Underlying Unexercised In-the-Money
Number of Common Options at Fiscal Year-End(#) Options at Fiscal Year-End($)(1)
Shares Underlying Value ----------------------------- --------------------------------
Options Exercised Realized ($) Exercisable Unexercisable Exercisable Unexercisable
----------------- ------------ ----------- ------------- ----------- -------------

Kenneth A. Joyce 0 $0 16,469 17,050 $18,899 $3,772

Robert W. Constien 0 $0 14,469 9,050 $18,799 $3,372

James E. Adams 0 $0 2,000 8,000 $ 100 $ 400

Henry R. Thiemann 0 $0 7,027 9,050 $11,986 $3,372

(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, 2004
($13.90) less the exercise price of the options at the end of the 2004 fiscal
year.

SALARY CONTINUATION AGREEMENTS

The Company has entered into Executive Salary Continuation Agreements (the
"Agreements") with Kenneth A. Joyce, Robert W. Constien and Henry R. Thiemann.
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, 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.

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, (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.

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, 2004.

RURBAN FINANCIAL CORP.

[PERFORMANCE GHAPH]

PERIOD ENDING
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INDEX 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
----- -------- -------- -------- -------- -------- --------

Rurban Financial Corp. 100.00 93.59 119.95 82.98 123.85 124.30
NASDAQ Composite 100.00 60.82 48.16 33.11 49.93 54.49
NASDAQ Bank Index* 100.00 114.23 123.68 126.65 162.92 186.45

AUDIT COMMITTEE MATTERS

REPORT OF THE AUDIT COMMITTEE FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

In accordance with the SEC's rules, the Audit Committee has issued the
following report for the 2004 fiscal year:

Role of the Audit Committee, the Independent Registered Public Accounting Firm
and Management

The Audit Committee assists the Board of Directors in fulfilling its
responsibility for the 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 Nasdaq Marketplace Rules
4200(a)(15) and 4350(d)(2) as well as under Rule 10A-3 promulgated under the
Exchange Act. The Audit Committee is organized and operates under a written
charter.

During the 2004 fiscal year, the Audit Committee met eight times and
discussed the interim financial and other information contained in each
quarterly earnings release and periodic SEC filings with management and BKD, LLP
("BKD") the independent registered public accounting firm employed by the
Company for the 2004 fiscal year.

Management is responsible for the Company's consolidated financial
statements and the accounting and financial reporting processes of the Company,
including the establishment and maintenance of adequate internal controls over
financial reporting. Management is responsible for preparing the Company's
consolidated financial statements and management's report on the establishment
and maintenance of, and assessment of the effectiveness of, the Company's
internal control over financial reporting. BKD is responsible for auditing the
Company's consolidated financial statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States) and issuing its
report on the Company's consolidated financial statements and its attestation
report on management's assessment of the effectiveness of the Company's internal
control over financial reporting.

Review and Discussion With Independent Registered Public Accounting Firm and
Internal 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, 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
control over financial reporting and related accounting and financial controls,
and the internal audit function's organization, responsibilities, budget and
staffing. The Audit Committee reviewed with both BKD and the internal auditors
their respective audit plans, audit scope and identification of audit risks.

In addition, the Audit Committee discussed and reviewed with BKD all
communications required by the standards of the Public Company Accounting
Oversight Board (United States), including those described in Statement on
Auditing Standards No. 61 and 90, Communication with Audit Committees, and, with
and without management present, discussed and reviewed the results of BKD's
examination of the Company's consolidated financial statements.

The Audit Committee reviewed and discussed the audited consolidated
financial statements of the Company as of and for the fiscal year ended December
31, 2004 with management.

Management's Representations and Audit Committee Recommendations

Management has represented to the Audit Committee that the audited
consolidated financial statements as of and for the fiscal year ended December
31, 2004, were prepared in accordance with accounting principles generally
accepted in the United States of America and the Audit Committee has reviewed
and discussed the audited consolidated financial statements, and management's
report on the establishment and maintenance of, and assessment of the
effectiveness of, the Company's internal control over financial reporting, with
management and BKD. Based on the Audit Committee's discussions with management
and BKD and the Audit Committee's review of the report of BKD to the Audit
Committee, the Audit Committee recommended to the Board of Directors (and the
Board of Directors has approved) that the audited consolidated financial
statements and management's report on the establishment and maintenance of, and
assessment of the effectiveness of, the Company's internal control over
financial reporting, be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2004, for filing with the SEC.

Submitted by the Audit Committee of the Company's Board of Directors.

Robert A. Fawcett, Jr., Chairman, Thomas M. Callan, Richard L. Hardgrove and
Rita A. Kissner

PRE-APPROVAL OF SERVICES PERFORMED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

Under applicable SEC rules, the Audit Committee is required to pre-approve
the audit and non-audit services performed by the Company's independent
registered public accouting firm in order to assure that they do not impair the
independent registered public accouting firm's independence from the Company.
The SEC's rules specify the types of non-audit services that an independent
registered public accouting firm may not provide to its audit client and
establish the Audit Committee's responsibility for administration of the
engagement of the independent registered public accouting firm. Accordingly, the
Audit Committee pre-approves all audit and permitted non-audit services proposed
to be provided by the Company's independent registered public accouting firm.
The pre-approval of audit and non-audit services and fees of the independent
registered public accouting firm 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 registered public accouting firm for all such pre-approved services
and fees is to be reported to the Audit Committee on at least a quarterly basis.

SERVICES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2004
FISCAL YEAR

During the fiscal years ended 2004 and 2003, the Company paid the
following amounts to BKD for audit, audit-related, tax and other services
rendered:

2004 2003
---------- ----------

Audit Fees $ 131,445 $ 127,700
Audit Related Fees (1) (2) 40,865 89,080
Tax Fees (3) 19,230 26,235
All Other Fees -- --

(1) Consultation concerning financial accounting and reporting matters.

(2) Internal control review (SAS 70) for data processing subsidiary, RDSI.

(3) Tax return preparation and tax planning.

NOTIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

On September 14, 2004, the Audit Committee appointed BKD to serve as the
independent registered public accounting firm for the Company for the 2005
fiscal year. On August 27, 2002, the Audit Committee appointed BKD to serve as
the independent registered public accounting firm for the Company for the 2004
fiscal year. Representatives of BKD 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.

SHAREHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING

Proposals by shareholders intended to be presented at the 2006
Annual Meeting of Shareholders must be received by the Secretary of the Company
no later than November 10, 2006, to be eligible for inclusion in the Company's
proxy card, notice of meeting and proxy statement relating to the 2006 Annual
Meeting. Upon receipt of a shareholder proposal, the Company will determine
whether or not to include the proposal in the proxy materials in accordance with
the applicable rules and regulations of the SEC.

Keeta J. Diller, Corporate Secretary
401 Clinton Street
Defiance, Ohio 43512

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
required to be filed under the Exchange Act for the Company's fiscal year ended
December 31, 2004. Such written request should be directed to Valda Colbart,
Investor Relations, Rurban Financial Corp., 401 Clinton Street, Defiance, Ohio
43512.

DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS

Last year, the Company provided each registered shareholder at a shared
address with a separate notice of the Company's intention to household proxy
materials. Only one copy of the Company's proxy statement for the Annual Meeting
and Annual Report to Shareholders for the 2004 fiscal year is being delivered to
previously notified multiple registered shareholders who share an address unless
the Company has received contrary instructions from one or more of the
shareholders. A separate proxy card and a separate Notice of Annual Meeting of
Shareholders is being included for each account at the shared address.

Registered shareholders who share an address and would like to receive a
separate Annual Report to Shareholders for the 2004 fiscal year and/or a
separate proxy statement for the Annual Meeting delivered to them, or have
questions regarding the householding process, may contact Valda Colbart,
Investor Relations Manager by calling 800-273-5820, or forwarding a written
request addressed to Rurban Financial Corp., Attention: Valda Colbart, Investor
Relations Manager, 401 Clinton Street, Defiance Ohio 43512. Promptly upon
request, additional copies of the Annual Report to Shareholders for the 2004
fiscal year and/or a separate proxy statement for the Annual Meeting will be
sent. By contacting Valda Colbart, registered shareholders sharing an address
can also (i) notify the Company that the registered shareholders wish to receive
separate annual reports to shareholders and/or proxy statements in the future or
(ii) request delivery of a single copy of annual reports to shareholders or
proxy statements in the future if registered shareholders at the shared address
are receiving multiple copies.

Beneficial shareholders, who hold common shares through a broker,
financial institution or other record holder, should contact their broker,
financial institution or other record holder for specific information on the
householding process as it applies to their accounts.

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 Annual
Meeting other than those discussed in this proxy statement. If any other matter
is properly presented at the Annual Meeting, the persons named as proxies in the
enclosed proxy cards solicited by the Board of Directors may vote the common
shares represented by such proxy cards 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 AND YOUR COMMON
SHARES ARE REGISTERED IN YOUR NAME, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON
IF YOU WISH TO DO SO.

March 10, 2005 By Order of the Board of Directors,

/s/ Kenneth A. Joyce
-------------------------------
Kenneth A. Joyce
President and Chief Executive Officer

[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE RURBAN FINANCIAL CORP.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 2005
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 Kenneth A. Joyce and James E. Adams,
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, April 21, 2005, at Eagles Club (First
Floor), 711 W. Second Street, 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:

-------------------------
Please be sure to sign and date Date
this Proxy in the box below.
------------------------------------------------------------------------------

------Shareholder sign above -------------- Co-holder (if any) sign above----

For
With- All
For hold Except
1. To elect four (4) directors to serve for [ ] [ ] [ ]
terms of three years each:

JOHN R. COMPO JOHN FAHL
ROBERT A. FAWCETT, JR. RITA A. KISSNER

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.

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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, 2004.

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.)

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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.

--------------------------------------------