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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant Section 240.14a-11(c)
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, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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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(3) Filing Party:
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(4) Date Filed:
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RURBAN FINANCIAL CORP.
401 CLINTON STREET
DEFIANCE, OHIO 43512
(419) 783-8950
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------------
Defiance, Ohio
March 23, 2001
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 in the
banquet room at the Serrick Center located at The Defiance College, 701 N.
Clinton Street, Defiance, Ohio, on Monday, April 23, 2001, at 10:00 a.m., local
time, for the following purposes:
1. To elect five (5) directors; four (4) to serve for terms of
three (3) years each and one (1) to serve for a term of two
(2) years.
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 March 9, 2001 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. Whether or not you plan to attend the Annual
Meeting, please sign, date and return your proxy promptly in the enclosed
envelope. If you attend the Annual Meeting and desire to revoke your proxy, you
may do so and vote in person. Attendance at the Annual Meeting will not, in and
of itself, constitute revocation of a proxy.
By Order of the Board of Directors,
/s/ Thomas C. Williams
Thomas C. Williams, President and
Chief Executive Officer
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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 23, 2001, 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 23,
2001, or at any adjournment(s) thereof. The Annual Meeting will be held at 10:00
a.m., local time, in the banquet room at the Serrick Center located at The
Defiance College, 701 N. Clinton Street, Defiance, Ohio.
The Company has six wholly-owned subsidiaries. They include: The State
Bank and Trust Company, Defiance, Ohio ("State Bank"); The Peoples Banking
Company, Findlay, Ohio ("Peoples Bank"); The First National Bank of Ottawa,
Ottawa, Ohio ("Ottawa"); The Citizens Savings Bank Company, Pemberville, Ohio
("Citizens"); Rurbanc Data Services, Inc., Defiance, Ohio ("RDSI"); and 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
March 9, 2001 (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, 4,347,238 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.
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
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shares. Proxies signed and submitted by broker/dealers which have not been voted
on certain matters as described in the previous sentence are referred to as
broker non-votes. Such proxies count toward the establishment of a quorum.
The Company will bear the costs of preparing and mailing this Proxy
Statement, the accompanying proxy and any other related materials and all other
costs incurred in connection with the solicitation of proxies on behalf of the
Board of Directors. Proxies will be solicited by mail and may be further
solicited, for no additional compensation, by officers, directors or employees
of the Company and its subsidiaries by further mailing, by telephone or by
personal contact. The Company will also pay the standard charges and expenses of
brokerage houses, voting trustees, banks, associations and other custodians,
nominees and fiduciaries, who are record holders of common shares not
beneficially owned by them, for forwarding such materials to and obtaining
proxies from the beneficial owners of such common shares.
The Annual Report to the Shareholders of the Company for the fiscal
year ended December 31, 2000 (the "2000 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 640,566 0 640,566 14.7%
Thomas A. Buis 1,727 735 2,462 (4)
Richard C. Burrows 40,394 2,205 42,599 (4)
Thomas M. Callan 3,360 735 4,095 (4)
John R. Compo 37,163 2,205 39,368 (4)
Robert W. Constien 22,845 4,410 27,255 (4)
John Fahl 1,115 2,205 3,320 (4)
Robert A. Fawcett, Jr 5,875 2,205 8,080 (4)
Richard Z. Graham 34,185 2,205 36,390 (4)
Eric C. Hench 14,797 2,205 17,002 (4)
Kenneth A. Joyce 2,105 4,410 6,515 (4)
Gary A. Koester 671 735 1,406 (4)
W. Scott Muir 2,512 2,205 4,717 (4)
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Mark A. Soukup 4,028 4,410 8,438 (4)
Steven D. VanDemark 10,479 2,940 13,419 (4)
J. Michael Walz, D.D.S 21,988 2,205 24,193 (4)
Richard C. Warrener 4,651 4,410 9,061 (4)
Thomas C. Williams 5,742 11,025 16,768 (4)
All current executive officers
and directors as a group (17 905,656(12) 20.84%
persons)
(1) Unless otherwise noted, the beneficial owner has sole voting and
investment power with respect to all of the common shares reflected in
the table.
(2) The percent of class is based upon 4,347,238 common shares outstanding
on the Record Date.
(3) Does not include 1,626 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) Does not include 6,560 common shares held in a trust for the benefit of
the wife of Mr. Burrows as to which she exercises sole voting and
investment power.
(6) Does not include 29,267 common shares held in a trust for the benefit
of the wife of Mr. Callan as to which she exercises sole voting and
investment power.
(7) Does not include 2,625 common shares held in the name of Mr. Compo's
wife, as to which she exercises sole voting and investment power.
(8) Includes 33,720 common shares held by the Graham I LTD Investment
Trust, as to which he shares voting and investment power and 365 common
shares held in the Richard Z. Graham Revocable Trust, as to which he
exercises sole voting and investment power. Mr. Graham retired in April
2000.
(9) Includes 14,797 common shares held by the Eric C. Hench Agency Trust as
to which Mr. Hench has sole voting and investment power.
(10) Includes 4,181 common shares held jointly by Mr. VanDemark and his
wife, as to which he exercises shared voting and investment power. Also
includes 3,936 common shares held in the names of Mr. VanDemark's
children for which Mr. VanDemark is custodian.
(11) Does not include 197 common shares held in IRA for the benefit of the
wife of Dr. Walz, as to which she exercises sole voting and investment
power. Includes 20,095 common shares held in the Krouse Evans Inc.
Profit Sharing Plan, as to which Dr. Walz exercises shared voting and
investment power with Reliance Financial Services, N.A.
(12) Includes common shares jointly held by executive officers and directors
and other persons. Shares owned by the Rurban Financial Corp. Employee
Stock Ownership and Savings Plan ("ESOP") which have been allocated to
persons listed in this beneficial ownership table are also
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included in those persons' holdings. Does not include common shares
held by wives of executive officers and directors if such wives
exercise sole voting and investment powers.
To the Company's knowledge, based solely on a review of the copies of
the reports furnished to the Company and written representations that no other
reports were required during the 2000 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
---------------------
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"), five (5)
directors are to be elected; four (4) directors to serve for terms of three (3)
years each and one (1) director to serve for a term of two (2) years and until
their respective successors are elected and qualified. The five directors
standing for election as directors of the Company are Thomas A. Buis, Thomas M.
Callan, Eric C. Hench, Gary A. Koester and Steven D. VanDemark. Mr. Callan, Mr.
Hench, Mr. Koester and Mr. VanDemark have been nominated to serve three (3) year
terms and Mr. Buis has been nominated to serve a two (2) year term. Richard C.
Burrows and W. Scott Muir, whose terms as directors of the Company will expire
at the Annual Meeting, will not stand for reelection due to their retirement
from the Board of Directors. Mr. Burrows has served on the Board of Directors of
the Company since 1983 and Mr. Muir has served on the Board of Directors of the
Company since 1998. The Company is extremely grateful to these gentlemen for
their loyal service.
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 A Buis 63 Chairman of Spencer-Patterson Newly 2003
Agency Inc., Findlay, Ohio, a nominated
general insurance agency since
January 2000; President of
Spencer-Patterson Agency Inc., from
1975 to January 2000; Director of
Peoples Bank since 1990
Thomas M. Callan 58 President of Defiance Stamping Newly 2004
Company; Director of State Bank nominated
since 1996
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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
- ------- --- ------------------------------- --------------- -----------
Eric C. Hench 47 Chairman of Chief Supermarkets, 1997 2004
Inc. since June 2000; Chief
Executive Office 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
Gary A. Koester 40 President of Koester Metals Inc., a Newly 2004
quality electrical enclosures and nominated
precision sheet metal fabrication
company since January 1992;
Director of RDSI since 1997
Steven D. VanDemark 48 General Manager of Defiance 1991 2004
Publishing Company, Defiance Ohio,
a newspaper publisher; Chairman of
the Board of the Company; Chairman
of the Board of State Bank;
Director of RDSI
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 Regulations, the five 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
- ---- --- ------------------------------- --------------- -------
John R. Compo 56 Chairman of Board and President of 1987 2002
Compo Corporation, Defiance, Ohio, an
automotive parts manufacturer;
Director of State Bank and of Rurban
Life.
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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 64 President, Tire Operations, since 1996 2002
1994, Vice President from 1978 to
1994, and a Director, of Cooper Tire
& Rubber Company Findlay, Ohio, a
tire and rubber manufacturing
company; Director of Peoples Bank.
Robert A. Fawcett, Jr. 59 President, Fawcett, Lammon, Recker and 1992 2002
Associates, Inc., Ottawa, Ohio, a
general insurance agency since 1979;
Director of Ottawa.
J. Michael Walz, D.D.S. 57 General Dentist in Defiance, Ohio; 1992 2003
Director of State Bank; Director of
RFS.
Thomas C. Williams 52 President and Chief Executive Officer 1995 2003
of the Company since June, 1995;
President and Chief Executive Officer
of State Bank, June 1995 to August
1996; President of FirstMerit Bank,
FSB, Clearwater, Florida, from 1994
to June, 1995; Senior Vice President
and Managing Officer of the Northern
Region of The First National Bank of
Ohio, Cleveland, Ohio, from 1990 to
1994; Director of State Bank;
Director of RDSI; Director of Peoples
Bank; Director of Rurban Life;
Director of RFS
There are no family relationships among any of the directors, nominees
for election as directors and executive officers of the Company.
The Board of Directors of the Company held a total of 11 meetings
during the Company's 2000 fiscal year. Each incumbent director attended at least
75% or more of the aggregate of the total number of meetings held by the Board
of Directors and meetings of committees on which he or she served.
The Board of Directors of the Company has an Executive Committee
comprised of John R. Compo, Robert A. Fawcett, Jr., Eric C. Hench, Steven D.
VanDemark, Thomas C. Williams and J. Michael Walz, D.D.S. The function of the
Executive Committee is to act on behalf of the Board of Directors between
regularly scheduled meetings of the Board of Directors. The Executive Committee
met twice during the 2000 fiscal year.
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The Board of Directors of the Company has a Directors' Committee
comprised of Richard C. Burrows, Robert A. Fawcett, Jr., W. Scott Muir, J.
Michael Walz, D.D.S., and Thomas C. Williams. In addition, Scott Weasel, a
Director of Peoples Bank serves as an advisor to the Directors' Committee. The
function of the Directors' Committee is to identify and recommend to the Board
of Directors of the Company and the respective Boards of Directors of the
Company's subsidiaries, candidates for positions as directors of the Company and
its subsidiaries. The Directors' Committee did not meet during the 2000 fiscal
year.
The Board of Directors of the Company also has a Compensation Committee
comprised of John R. Compo, John Fahl, Eric C. Hench, Steven D. VanDemark and J.
Michael Walz, D.D.S. The function of the Compensation Committee is to review and
recommend to the Board of Directors of the Company the salary, bonus and other
cash compensation to be paid to, and the other benefits to be received by, the
President and Chief Executive Officer of the Company, Thomas C. Williams, and
the other executive officers of the Company. The Compensation Committee met 6
times during the 2000 fiscal year.
The Board of Directors of the Company also has an Insurance Risk
Management Advisory Committee ("IRMAC") comprised of W. Scott Muir, Thomas C.
Williams and Robert A. Fawcett, Jr. In addition, Thomas Buis, a Director with
Peoples Bank, Thomas Costigan, an advisory board member of State Bank's
Cleveland Loan Production Office and James Stahl, a Director with Rurban Life,
serve as advisors to the IRMAC. The IRMAC did not meet during the 2000 fiscal
year.
The Board of Directors of the Company has an Audit Committee comprised
of Richard C. Burrows, Robert A. Fawcett, Jr., and W. Scott Muir. In addition,
Todd Taylor, a Director of RDSI serves as an advisor to the Audit Committee. The
function of the Audit Committee is to review the adequacy of the Company's
system of internal controls, to investigate the scope and adequacy of the work
of the Company's independent and internal auditors and to recommend to the Board
of Directors a firm of accountants to serve as the Company's independent
auditors. The Audit Committee met 4 times during the 2000 fiscal year.
REPORT OF THE AUDIT COMMITTEE
-----------------------------
General
- -------
In accordance with the written audit committee charter adopted by the
Company's board of directors, the audit committee assists the board in
fulfilling their responsibility for oversight of the quality and integrity of
the accounting, auditing and financial reporting practices of the Company. Each
member of the audit committee qualifies as independent. The Board of Directors
of the Company adopted the charter of the Audit Committee in April 1999 and
amended the Audit Committee Charter to its current form on February 21, 2001.
The Audit Committee Charter is included at the end of the proxy statement as
Appendix A.
Review and Discussion with Independent Accountants and Auditors
- ---------------------------------------------------------------
In discharging its oversight responsibility as to the audit process,
the audit committee obtained from Crowe, Chizek and Company LLP ("Crowe") a
formal written statement describing all relationships between the Company and
Crowe that might bear on Crowe's independence consistent with Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
discussed with Crowe
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any relationships or services that may impact the objectivity and independence
of Crowe and satisfied itself as to Crowe's independence. The audit committee
also discussed with management and Crowe the adequacy and effectiveness of the
Company's internal accounting and financial controls. In addition, the audit
committee discussed and reviewed with Crowe all communications required by
auditing standards generally accepted in the United States of America, including
those described in Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended, and, with and without management present,
discussed and reviewed the results of Crowe's examination of the financial
statements.
Review with Management
- ----------------------
The audit committee reviewed and discussed the audited consolidated
financial statements of the Company as of and for the fiscal year ended December
31, 2000 with management. Management has the responsibility for the preparation
of the Company's consolidated financial statements and Crowe has the
responsibility for the audit of those statements.
Audit Fees
- ----------
The aggregate fees billed for professional services rendered by Crowe
for the audit of the Company's annual consolidated financial statements for the
2000 fiscal year and the reviews of the consolidated financial statements
included in RFC's Quarterly Reports on Form 10-Q for the 2000 fiscal year
(collectively, the "Audit Services") were $173,658.
Financial Information Systems Design and Implementation Fees
- ------------------------------------------------------------
Crowe did not render any of the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X (17 CFR 210.2-01(c)(4)(ii))
(the "Financial Information Systems Design and Implementation Services") during
the 2000 fiscal year for the Company or its subsidiaries.
All Other Fees
- --------------
The aggregate fees billed for services rendered by Crowe, other than
Audit Services and Financial Information Systems Design and Implementation
Services, for the 2000 fiscal year (the "Other Services") were $276,012.
Conclusion
- ----------
Based on the reviews and discussions with management and Crowe noted
above, the audit committee recommended to the board of directors that the
Company's audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000 to be
filed with the SEC and the board approved such recommendation. The audit
committee also determined that the provision of the Other Services was
compatible with maintaining Crowe's independence.
Submitted by the Audit Committee of the Company's Board of Directors.
Robert A. Fawcett, Jr., Chairman, Richard C. Burrows and W. Scott Muir.
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TRANSACTIONS INVOLVING MANAGEMENT
---------------------------------
During the Company's 2000 fiscal year, the Company's subsidiaries
including State Bank, Peoples Bank, Ottawa, Citizens, RFS and RMC entered into
banking-related transactions, in the ordinary course of their respective
businesses, with certain executive officers and directors of the Company
(including certain executive officers of the Company's subsidiaries), members of
their immediate families and corporations or organizations with which they are
affiliated. It is expected that similar transactions will be entered into in the
future. Loans to such persons have been made on substantially the same terms,
including the interest rate charged and collateral required, as those prevailing
at the time for comparable transactions with persons not affiliated with the
Company or its subsidiaries. These loans have been, and are presently, subject
to no more than a normal risk of uncollectibility and present no other
unfavorable features. The amount of loans to directors and executive officers of
the Company (including certain executive officers of the Company's subsidiaries)
and their associates as a group at December 31, 2000, was $ 3,613,132. 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.
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
in this proxy shall not be incorporated by reference into any such filings.
Thomas C. Williams, President and Chief Executive Officer of the
Company, Robert W. Constien, Senior Executive Vice President and Chief Operating
Officer of the Company and Chief Executive Officer of RFS, and Richard C.
Warrener, Executive Vice President and Chief Financial Officer of the Company,
received compensation from the Company for services rendered during the 2000
fiscal year as executive officers of the Company.
Mark A. Soukup, President and Chief Executive Officer of State Bank,
was paid by State Bank for services rendered in his capacity as an executive
officer of State Bank during fiscal year 2000.
Kenneth A. Joyce, Chairman and Chief Executive Officer of RDSI, was
paid by RDSI for services rendered in his capacity as an executive officer of
RDSI during fiscal year 2000.
Mr. Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce
participate in the various compensation plans of the Company addressed below.
The Board of Directors has directed the Compensation Committee to
develop, implement and maintain an Executive Compensation Program that supports
the overall objectives and performance of the corporation; provides compensation
levels that enable the organization to attract, retain and reward competent
executive officers; and meets all regulatory requirements. The Compensation
Committee is
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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 2000, no compensation decisions by the
Compensation Committee were modified or rejected in any material way by the full
Board. Although Thomas C. Williams, Robert W. Constien and Richard C. Warrener
attended various meetings of the Compensation Committee at the request of the
members of that Committee during the 2000 fiscal year, they did not vote on
compensation matters brought before the Compensation Committee.
Compensation Policies Toward Executive Officers
- -----------------------------------------------
In determining the compensation of the executive officers of the
Company, the Compensation Committee has sought to create a compensation program
which is competitive with programs of a peer group of similar organizations and
that links compensation to financial performance, rewards above-average
corporate performance and recognizes individual contributions and achievements.
There are two components of the annual cash compensation program for the
executive officers of the Company: (1) a base salary component; and (2) an
incentive bonus component payable under the Rurban Financial Corp. Incentive
Compensation Plan (the "Company Bonus Plan") which directly links the bonus to
be paid to the financial performance of the Company.
The Compensation Committee utilized the services of L.R. Webber
Associates, Inc. ("Webber"), a regionally recognized independent compensation
consulting company, to review and to make recommendations regarding the
competitiveness and effectiveness of the Corporation's executive compensation
program. As part of that review, Webber was requested to review executive
compensation programs of banking organizations that shared one or more common
traits with the Corporation (such as asset size and geographic location). The
information and recommendations of Webber have been utilized by the Committee
and the Board of Directors.
Salaries
- --------
The determination of the base salaries of the executive officers of the
Company is based upon an overall evaluation of a number of factors, including a
subjective evaluation of individual performance, contributions to the Company
and its subsidiaries, experience and an analysis of how the Company's
compensation of its employees compares to compensation of individuals holding
comparable positions with bank holding companies of similar asset size and
complexity of operations. In addition, the determination of the base salary of
Mr. Joyce also took into account the compensation of individuals holding
comparable positions with bank data processing companies. Peer group
compensation was the primary factor in setting of the salary of the executive
officers of the Company.
The salary paid to Mr. Williams for services rendered in his capacities
as President and Chief Executive Officer of the Company during the 2000 fiscal
year was approved by the Compensation Committee on February 22, 1999. The
salaries paid to Mr. Williams, Mr. Constien and Mr. Warrener for services
rendered in their capacities with the Company during the 2000 fiscal year
represented no increase over the salaries paid to them with respect to the 1999
fiscal year.
The salary paid to Mr. Joyce for services rendered in his capacities as
Chairman and Chief Executive Officer of RDSI and to Mr. Soukup for services
rendered in his capacity as President and Chief
10
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Executive Officer of State Bank during the 2000 fiscal year represented no
increase over the salaries paid to Mr. Joyce and Mr. Soukup with respect to the
1999 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 new plan is designed to better match incentive compensation to shareholder
value. It is the Compensation Committee's philosophy, over time, to increase the
"at-risk" portion of executive officer total compensation by directly linking a
greater percentage of executive officers' total compensation to the Company's
return on equity and thereby to shareholder value.
Under the 1999 Incentive Compensation Plan, the year-end bonus was
determined under a sliding scale based on the Company's return on equity
("ROE"). The determination of the amounts of bonuses to be paid and the payment
of such bonuses is made during the first quarter of the following fiscal year.
Under this bonus plan, Mr. Williams, Mr. Constien, Mr. Warrener and Mr. Joyce
received bonuses equal to 30% of their respective base salaries for the 2000
fiscal year and 35% of their respective base salaries for the 1999 fiscal year.
Mr. Soukup received a bonus equal to 11.25% of his base salary for the 2000
fiscal year and 35% of his base salary for the 1999 fiscal year. Mr. Williams,
Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce received no bonuses under
the Company Bonus Plan with respect to the 1998 fiscal year as a result of the
Company's financial performance.
Other employees of the Company and subsidiaries are eligible to receive
bonuses under the Company Incentive Compensation Plan.
Stock Option Plan
- -----------------
On March 12, 1997, the Board of Directors of the Company adopted, the
Rurban Financial Corp. Stock Option Plan (the "Stock Option Plan") for directors
and officers of the Company and its subsidiaries (the "Key Employees"). The
Stock Option Plan was approved by the Company's shareholders at the April 28,
1997 Annual Meeting. The Stock Option Plan authorizes the granting of (i)
incentive stock options ("ISOs") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) non-qualified stock options
("NQSOs") and (iii) stock appreciation rights ("SARs") (ISOs and NQSOs are
sometimes referred to collectively herein as "Options"). The purpose of the
Stock Option Plan is to encourage Key Employees to acquire or increase and
retain a financial interest in the Company, to remain in the service of the
Company, and to put forth maximum efforts for the success of the Company, and to
enable the Company and its subsidiaries to compete effectively for the services
of potential employees and directors by furnishing an additional incentive to
join the service of the Company and its subsidiaries. The Stock Option Plan also
provides an incentive to Key Employees of the Company and its subsidiaries to
put forth a maximum effort to increase the value of the Company's common shares,
because, under the Stock Option Plan, the exercise price of the Options cannot
be less than the fair market value of the common shares on the date the Options
are granted.
Options for approximately 91,250 of the Company's common shares were
granted to directors, officers and employees of the Company and/or its
subsidiaries during 2000.
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Additional Compensation Plans
- -----------------------------
To enhance the long-term commitment of the officers and employees of
the Company and its subsidiaries, the Company adopted the Employee Stock
Ownership Plan ("ESOP") in 1985, and The Rurban Financial Corp. Savings Plan and
Trust (the "Savings Plan") in 1988. Mr. Williams, Mr. Constien, Mr. Warrener,
Mr. Soukup and Mr. Joyce as well as all officers and employees of the Company
and its subsidiaries who meet applicable eligibility criteria, may participate
in the ESOP and the Savings Plan.
Each year, the Company and each of its subsidiaries may contribute an
amount in cash and/or common shares of the Company to the ESOP which does not
exceed the amount of the annual net profits of the corporation making the
contribution. Pro rata allocations of amounts contributed by the Company or one
of its subsidiaries are made to the accounts of the participants in the ESOP.
The Company and its subsidiaries contributed an aggregate amount of $708,000 to
the ESOP with respect to the 2000 fiscal year. As of the date of this Proxy
Statement, no determination has been made as to the amount to be allocated to
the account of Mr. Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr.
Joyce under the ESOP with respect to the 2000 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 2000, the amount of the matching contributions to be made on behalf of
each participant in the Savings Plan would be 50% of the amount of such
participant's pre-tax elective deferral contributions, but only upon that
portion of his or her pre-tax elective deferral contributions which did not
exceed 6% of his or her annual compensation. Matching contributions in the
amount of $5,250, $4,936, $5,249, $4,523 and $2,938 were made on behalf of Mr.
Williams, Mr. Constien, Mr. Warrener, Mr. Soukup and Mr. Joyce, respectively, to
match their respective 2000 pre-tax elective deferral contributions made to the
Savings Plan.
Submitted by the Compensation Committee of the Company's Board of Directors:
John R. Compo, Eric C. Hench, Steven D. VanDemark, J. Michael Walz, D.D.S. &
John Fahl, Chairman
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary of Cash and Certain Other Compensation
- ----------------------------------------------
The following table shows, for the last three years, the cash
compensation paid by the Company and its subsidiaries, as well as certain other
compensation paid or earned for those years, to Thomas C. Williams, the
Company's President and Chief Executive Officer, Robert W. Constien, Senior
Executive Vice President and Chief Operating Officer of the Company and Chief
Executive Officer of RFS, Richard C. Warrener, Executive Vice President and
Chief Financial Officer of the Company, Henry R. Thiemann, Senior Vice President
of the Company and Kenneth A. Joyce, Chairman and Chief Executive officer of
RDSI.
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SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
------
Name and Securities Underlying All Other
Principal Position Year Salary($)(1) Bonus($) Options(#) Compensation ($)
- ------------------ ---- ------------ -------- ---------- ----------------
Thomas C. Williams, 2000 $225,000 $67,500 9,000 $24,634(2)
President and Chief 1999 $225,000 $78,750 0 $34,803(2)
Executive Officer of the 1998 $210,125 $ 0 3,750 $43,194(2)
Company
Robert W. Constien, Senior 2000 $145,000 $43,500 5,000 $ 7,143(3)
Executive Vice President 1999 $145,000 $50,750 0 $21,562(3)
and Chief Operating Officer 1998 $130,000 $ 0 1,500 $33,916(3)
of the Company and CEO of
RFS
Richard C. Warrener, 2000 $125,000 $37,500 5,000 $12,498(4)
Executive Vice President 1999 $125,000 $43,750 0 $19,251(4)
and Chief Financial Officer 1998 $110,000 $ 0 1,500 $25,128(4)
of the Company
Mark A. Soukup, President 2000 $145,000 $16,313 5,000 $ 8,024(5)
and Chief Executive Officer 1999 $145,000 $50,750 0 $16,693(5)
of State Bank 1998 $138,500 $ 0 1,500 $22,092(5)
Kenneth A. Joyce, Chairman 2000 $145,000 $43,500 5,000 $ 6,516(6)
and Chief Executive Officer 1999 $145,000 $50,750 0 $10,949(6)
of RDSI 1998 $132,000 $ 0 1,500 $15,076(6)
(1) "Salary" includes (a) for Mr. Williams, fees received during 1998 as a
director of the Company and its subsidiaries in the amounts of $45,125,
(b) for Mr. Constien, fees received during 1998 as a director of State
Bank and RFS in the amounts of $15,000, and (c) for Mr. Joyce fees
received during 1998 as a director of RMC and RDSI in the amounts of
$12,000. In 1999, base salaries were adjusted and the payment of
director fees to executive officers was discontinued.
(2) "All Other Compensation" for fiscal years 2000, 1999 and 1998 includes:
(i) a contribution of $5,250, $5,977 and $5,000, respectively, to the
Savings Plan on behalf of Mr. Williams to match 2000, 1999 and 1998
pre-tax elective deferral contributions (included under "Salary") made
by him to the Savings Plan, (ii) payments of $13,755, $12,797 and
$12,658, respectively, during
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fiscal years 2000, 1999 and 1998 representing the grossed-up premiums
for a life insurance policy which Mr. Williams personally owns and
(iii) for fiscal years 2000, 1999 and 1998, payments of $690, $1,704
and $1,613, respectively, which represent the premiums paid on Mr.
Williams' behalf for a group term life insurance policy which has a
death benefit equal to 200% of Mr. Williams' annual salary less
$50,000. The amounts allocated to the account of Mr. Williams under the
ESOP for 1999 and 1998 were $9,902 and $11,380, respectively. The
amount to be allocated to the account of Mr. Williams under the ESOP
with respect to fiscal year 2000 has not been determined as of the date
of this Proxy Statement.
(3) "All Other Compensation" for 2000, 1999 and 1998 includes (i)
contributions of $4,936, $4,572 and $4,877, respectively, to the
Savings Plan on behalf of Mr. Constien to match 2000, 1999 and 1998
pre-tax elective deferral contributions (included under "Salary") made
by him to the Savings Plan and (ii) payments of $134, $182 and $128
which represent the premiums which were paid on behalf of Mr. Constien
in 2000, 1999 and 1998 and, respectively, under a group term life
insurance policy which has a death benefit payable thereunder equal to
approximately 200% of Mr. Constien's annual salary less $50,000. The
amounts allocated to the account of Mr. Constien under the ESOP for
1999 and 1998 were $9,416 and $11,346, respectively. The amount to be
allocated to the account of Mr. Constien under the ESOP with respect to
fiscal year 2000 has not been determined as of the date of this Proxy
Statement.
(4) "All Other Compensation" for 2000, 1999 and 1998 includes (i) in 2000,
1999 and 1998, a contribution of $5,249, $3,928 and $4,617 to the
Savings Plan on behalf of Mr. Warrener to match pre-tax elective
deferral contributions (included under "Salary") made by him to the
Savings Plan and (ii) in 2000, 1999 and 1998, $1,032, $1,416 and $864,
respectively, 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 amount
allocated to the account of Mr. Warrener under the ESOP for 1999 and
1998 was $7,958 and $10,755 respectively. The amount to be allocated to
the account of Mr. Warrener under the ESOP with respect to fiscal year
2000 has not been determined as of the date of this Proxy Statement.
(5) "All Other Compensation" for 2000, 1999 and 1998 includes (i) a
contribution of $4,523, $4,447 and $3,738 to the Savings Plan on behalf
of Mr. Soukup to match 2000 pre-tax elective deferral contributions
(included under "Salary") made by him to the Savings Plan and (ii)
payments of $361, $324 and $347 which represent the premiums which were
paid on Mr. Soukup's behalf in 2000, 1999 and 1998, respectively, under
a group term life insurance policy which has a death benefit payable
thereunder equal to approximately 200% of Mr. Soukup's annual salary
less $50,000. The amounts allocated to the account of Mr. Soukup under
the ESOP for 1999 and 1998 were $8,678 and $10,445, respectively. The
amount to be allocated to the account of Mr. Soukup under the ESOP with
respect to fiscal year 2000 has not been determined as of the date of
this Proxy Statement.
(6) "All Other Compensation" for 2000, 1999 and 1998 includes (i) a
contribution of $2,938, $2,787 and $2,048, respectively to the Savings
Plan on behalf of Mr. Joyce to match 2000, 1999 and 1998 pre-tax
elective deferral contributions (included under "Salary") made by him
to the Savings Plan and (ii) a payment of $795, $1,022 and $1,094 which
represents the premium paid on Mr. Joyce's behalf in 2000, 1999 and
1998, respectively, under a group term life insurance policy which has
a death benefit payable thereunder equal to approximately 200% of Mr.
Joyce's annual salary less $50,000. The amount allocated to the account
of Mr. Joyce under the ESOP
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for 1999 and 1998 was $8,646 and $4,448, respectively. The amount to be
allocated to the account of Mr. Joyce under the ESOP with respect to
fiscal year 2000 has not been determined as of the date of this Proxy
Statement.
Grants of Options
- -----------------
The following table sets forth information concerning individual grants
of Options made during the 2000 fiscal year to each of the executive officers
named in the Summary Compensation Table. No stock appreciation rights have been
granted.
OPTION GRANTS IN LAST FISCAL YEAR
% of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees in Price Expiration for Option Term(2)
Name Granted(#)(1) Fiscal Year ($/Share) Date 5%($) 10%($)
---- ------------- ----------- --------- ---- ------------------
Thomas C. Williams 9,000 9.9% $11.625 11/20/10 $65,798 $166,739
Richard C. Warrener 5,000 5.5% $11.625 11/20/10 $36,555 $ 92,633
Robert W. Constien 5,000 5.5% $11.625 11/20/10 $36,555 $ 92,633
Mark A. Soukup 5,000 5.5% $11.625 11/20/10 $36,555 $ 92,633
Kenneth A. Joyce 5,000 5.5% $11.625 11/20/10 $36,555 $ 92,633
(1) These Options were granted under the Rurban Financial Corp. Stock
Option Plan (the "Plan"). Options may be exercised in accordance with the terms
of the Plan after the Options have vested. The Options vest over a five-year
period from the date of grant with 20% of the total number of Options granted
vesting each year. Upon the earlier of (i) an optionee/officer's 65th birthday,
(ii) the occurrence of a change of control transaction involving the Company or
(iii) the death or total disability of the optionee/officer, all Options
immediately vest and become exercisable in accordance with the Plan. In the
event of termination of employment of a named executive officer by reason of
normal retirement, his Options may thereafter be exercised in full for a period
of three months, subject to the stated term of the Option. In the event of
termination of employment of a named executive officer by reason of death or
total disability, his Options may thereafter be exercised in full for a period
of one year, subject to the stated term of the Options. If a named executive
officer's employment is terminated for any other reason, his Options are
forfeited.
(2) The amounts reflected in this table represent certain assumed rates
of appreciation only over the 10 year term of the Options and have been rounded
to the nearest whole dollar. Actual realized values, if any, on Option exercises
will be dependent on the actual appreciation of the common shares of the Company
over the terms of the Options. There can be no assurances that the Potential
Realizable Values reflected in this table will be achieved.
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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 2000 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
Shares Acquired on Value Underlying Unexercised In-the-Money
Name Exercise Realized($) Options at FY-End (#) Options at FY-End($)(1)
---- -------- ----------- ------------------------- -----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Thomas C. Williams 0 $0 11,025 17,663 $0 $0
Robert W. Constien 0 $0 4,410 8,465 $0 $0
Richard C. Warrener 0 $0 4,410 8,465 $0 $0
Mark A. Soukup 0 $0 4,410 8,465 $0 $0
Kenneth A. Joyce 0 $0 4,410 8,465 $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, 2000
($11.625) less the exercise price of the options at the end of the 2000 fiscal
year.
Salary Continuation Agreements
- ------------------------------
The Company has entered into Executive Salary Continuation
Agreements (the "Agreements") with Thomas C. Williams, President and Chief
Executive Officer of the Company, on October 11, 1995, Robert W. Constien,
Senior Executive Vice President and Chief Operating Officer of the Company and
Chief Executive Officer of RFS, on October 16, 1995, Richard C. Warrener, the
Executive Vice President and Chief Financial Officer of the Company, on January
1, 1998, Mark E. Rowland, Senior Vice President and Senior Lender of the
Company, on January 1, 1998 and Edward L. Yoder, Executive Vice President of
State Bank, on October 16, 1995. Under the Agreements, if the executive officer
remains in the continuous employment of the Company until the first December
31st after his 65th birthday (unless by action of the Board of Directors of the
Company, his period of active employment with the Company for purposes of the
Agreement is shortened or extended), he is to retire as of that date. Upon such
retirement, such executive officer (and, upon his death, his designated
beneficiary) will be entitled to receive an annual benefit equal to 15% of his
annual base salary as in effect immediately prior to his retirement in equal
monthly installments (of 1/12th of the annual benefit) for a period of 180
months. If the executive officer dies while actively employed by the Company
prior to his retirement, the Company will pay an annual benefit equal to 15% of
his annual base salary as in effect immediately prior to his death in equal
monthly installments (of 1/12th of the annual benefit) for a period of 180
months to his designated beneficiary. In the event that the executive officer's
employment is terminated as a result of his voluntary action, the Agreement will
terminate immediately on the date of such termination of employment and the
Company will pay to such executive officer as severance compensation monthly for
fifteen years an amount of money on an annual basis equal to: (a) 5% of such
16
19
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.
On August 30, 1996, State Bank entered into an Executive Salary
Continuation Agreement with Mark A. Soukup and on January 1, 1998, RMC entered
into an Executive Salary Continuation Agreement with Kenneth A. Joyce, both of
which Agreements have terms substantially the same as the terms of the
Agreements described above between the Company and Mr. Williams, Mr. Warrener,
Mr. Constien, Mr. Rowland and Mr. Yoder. In 2000, Mr. Joyce's agreement was
transferred to the Company.
Directors' Compensation
- -----------------------
During the 2000 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 2000 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.
17
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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, 2000.
NASDAQ
STOCK MARKET
RURBAN NASDAQ BANK (U.S.
YEAR FINANCIAL CORP STOCKS COMPANIES)
- ---- -------------- ----------- ------------
1995 100.00 100.00 100.00
1996 105.78 132.04 123.04
1997 104.51 221.06 150.69
1998 121.65 219.64 212.51
1999 99.87 211.15 394.94
2000 99.93 241.10 237.68
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SHAREHOLDER PROPOSALS FOR
2002 ANNUAL MEETING
-------------------
Any qualified shareholder who desires to present a proposal for
consideration at the 2002 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 26, 2001, 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 2002 Annual Meeting of
Shareholders. If a shareholder intends to present a proposal at the 2002 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
13, 2002, or the Company's management proxies for the 2002 Annual Meeting will
be entitled to use their discretionary voting authority should such proposal
then be raised, without any discussion of the matter in the Company's proxy
materials.
NOTIFICATION REGARDING
INDEPENDENT AUDITORS
--------------------
Crowe, Chizek and Company LLP ("Crowe") has served as independent
auditors from 1988 through 2000. The Board of Directors of the Company has not
made a decision regarding the appointment of a firm to serve as the independent
auditor for the 2001 fiscal year. The Board of Directors has determined that it
is in the best interests of the Company to consider proposals from other
independent auditors as well as Crowe in regard to the independent audit for
fiscal 2001. The board of directors expects that representatives of Crowe,
Chizek and Company LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
OTHER MATTERS
-------------
As of the date of this Proxy Statement, the Board of Directors knows of
no other business to be presented for action by the shareholders at the 2001
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 23, 2001 By Order of the Board of Directors,
/s/ Thomas C. Williams
Thomas C. Williams, President
and Chief Executive Officer
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APPENDIX A
----------
AUDIT COMMITTEE CHARTER
-----------------------
Purpose/Function:
The primary function of the audit committee is to assist the board of directors
in fulfilling its oversight responsibilities by reviewing all audit processes,
financial reporting and the systems of internal control established by
management and the board of directors.
Membership:
Three or more independent outside directors.
Frequency of Meetings:
Generally, once per quarter on a regularly scheduled basis and at such other
times as requested by a committee member, management, the internal audit
coordinator or the independent accountant.
Duties/Responsibilities:
GENERAL RESPONSIBILITIES
- ------------------------
1. To provide avenues of communication among the internal audit
coordinator(s), the internal audit outsourcing firm, the independent
accountant and the board of directors.
2. To report committee actions to the full board of directors and make
appropriate recommendations.
3. To conduct or authorize investigations into matters within the
committee's scope of responsibilities. The committee is authorized to
retain independent counsel, accountants or others needed to assist in
an investigation.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS AND APPOINTING THE
- ------------------------------------------------------------------------
INTERNAL AUDITOR OR INTERNAL AUDIT COORDINATOR(S)
- -------------------------------------------------
1. To select the independent accountants for company audits. The
committee's selection is subject to approval by the full board of
directors. The audit committee also will review and approve audit
related fees paid to the independent accountants and review and approve
a change in the independent accountants.
2. To review and approve the appointment, replacement, reassignment or
dismissal of the internal auditor and/or internal audit coordinator(s)
and the internal audit outsourcing firm. To review and approve audit
related fees paid to the internal audit outsourcing firm.
3. To assure the independence of the internal auditor or internal audit
coordinator(s) and the independent accountant, including a review of
management consulting services provided by the independent accountant
and the fees paid for such consulting services.
RESPONSIBILITIES FOR REVIEWING THE ANNUAL EXTERNAL AUDIT AND THE ANNUAL
- -----------------------------------------------------------------------
FINANCIAL STATEMENTS, INTERNAL AUDITS AND REGULATORY EXAMINATIONS.
- ------------------------------------------------------------------
1. To assure that the independent accountant views the board of directors
as its client, that it will be available to the full board of directors
and that it will provide the committee with a timely analysis of
significant financial reporting issues.
2. To question management, the internal auditor or internal audit
coordinator(s) and the independent accountant about significant risks
and exposures and to assess management's steps to minimize them.
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3. To consider, in consultation with the independent accountant and the
internal auditor or internal audit coordinator(s), the audit scope and
procedural plans for the internal audit and the independent audit and
to assure effective coordination of internal and external audits.
4. To review the following with the independent accountant and the
internal auditor or internal audit coordinator(s):
a. The adequacy of the company's internal controls, including
computerized information system controls and security.
b. Any significant findings and recommendations made by the
independent accountant or the internal auditing function, together with
management's responses to them.
5. Shortly after the annual independent audit is completed, to review the
following with management and the independent accountant:
a. The company's annual financial statements and related
footnotes.
b. The independent accountant's audit of and report on the
financial statements.
c. The independent accountant's qualitative judgements regarding
the appropriateness of accounting principles and financial
disclosures and their evaluation of the degree of
aggressiveness/conservatism of the accounting principles and
underlying estimates.
d. Any serious difficulties or disputes with management
encountered during the course of the audit.
e. The independent accountant's "management letter" regarding:
1. Recommendations for improvements in internal control and
its operation.
2. An update on new accounting pronouncements.
f. The independent accountant's "SAS 61 Letter" regarding
required communications with the Audit Committee.
6. To consider and review with management and the internal auditor or
internal audit coordinator(s):
a. Any significant internal audit findings and recommendations
during the year and management's responses to them.
b. Any difficulties encountered in the internal auditing process,
including any restrictions on the scope of work or access to
required information.
c. Any changes to the planned scope of management's internal
audit plan that the committee thinks advisable.
d. The internal auditing department's budget and staffing.
7. To consider and review with management regulatory agency examination
reports and management's responses, including:
a. Safety and Soundness examinations
b. Compliance and CRA examinations
PERIODIC RESPONSIBILITIES
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1. To review and update, if necessary, the committee's charter annually.
2. To review legal and regulatory matters that may have a material effect
on the organization's financial statements, compliance policies and
programs and reports from regulators.
21
24
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X PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE RURBAN FINANCIAL CORP.
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For
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS 1. To elect Thomas C. Callan, Eric C. With- All
TO BE HELD ON APRIL 23, 2001 Hench, Gary A. Koester and Steven D. For hold Except
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS VanDemark to serve for a term of three ------- ------- -------
(3) years each and to elect Thomas A. ------- ------- -------
Buis to serve a term of two (2) years.
The undersigned holder(s) of common shares of Rurban INSTRUCTION: To withhold authority to veto for any individual
Financial Corp. (the "Company") hereby constitutes and nominee, mark "For All Except" and write that nominee's name
appoints Thomas C. Williams and Richard C. Warrener, or either in the space provided below.
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 Monday, April 23, 2001, in the banquet room at the Serrick 2. In their discretion, the Proxies are authorized to vote
Center located at The Defiance College, 701 N. Clinton St., upon such other matters as may properly come before the Annual
Defiance, Ohio at 10:00 A.M., local time, and any Meeting or any adjournment(s) thereof.
adjournment(s) thereof, and to vote all of the common shares
of the Company which the undersigned is entitled to vote at WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED
such Annual Meeting or at any adjournment(s) thereof: 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.
Please be sure to sign and date ------------------- ALL PROXIES PREVIOUSLY GIVEN OR EXECUTED BY THE UNDERSIGNED
this Proxy in the box below. Date ARE HEREBY REVOKED. The undersigned acknowledges receipt of
the accompanying Notice of Annual Meeting to shareholders and
------------------- Proxy Statement for the April 23, 2001 and the Annual Report to
Shareholders for the fiscal year ended December 31, 2000.
- --------------------------------------------------------------- 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
---Shareholder sign above---Co-holder (if any) sign above)--- 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.
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HAS YOUR ADDRESS CHANGED?
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