##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number 0-13507
 RURBAN FINANCIAL CORP.
  Ohio
    
    34-1395608(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 (Address of principal executive offices)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report.)
 þ o
  o o þ
 o þ
  Common Shares, without par value
    
    5,027,433 shares(class)
    
    (Outstanding at August 11, 2006)




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##### 



RURBAN FINANCIAL CORP.
 FORM 10-Q
 TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsItem 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures About Market RiskItem 4.
    
    Controls and ProceduresPART II  OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk FactorsItem 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
    
    Defaults Upon Senior SecuritiesItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    ExhibitsEX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-31.1EX-31.2EX-32.1EX-32.2
  Exhibit 2.1 
    
    Stock Purchase AgreementExhibit 10.1 
    
    First Amendment to Employment Agreement, executed May 19, 2006 and effective
as of March 1, 2006, by and between Rurban Financial Corp. and Kenneth A. JoyceExhibit 10.2 
    
    First Amendment to Supplemental Executive Retirement Plan Agreement, executed
May 16, 2006 and effective as of March 1, 2006, by and between Rurban Financial Corp.
and Kenneth A. JoyceExhibit 10.3 
    
    Schedule A to Exhibit 10.2 identifying other substantially identical First
Amendments to Supplemental Executive Retirement Plan Agreements with executive officers
of Rurban Financial Corp. and its subsidiariesExhibit 10.4 
    
    First Amendment to Change in Control Agreement, executed May 17, 2006 and
effective as of March 1, 2006, by and between Rurban Financial Corp. and Duane L. SinnExhibit 10.5 
    
    Schedule A to Exhibit 10.4 identifying other substantially identical First
Amendments to Change in Control Agreements with executive officers of Rurban Financial
Corp. and its subsidiariesExhibit 31.1 
    
    Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)Exhibit 31.2 
    
    Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)Exhibit 32.1 
    
    Section 1350 Certification (Principal Executive Officer)Exhibit 32.2 
    
    Section 1350 Certification (Principal Financial Officer)
 Signatures
 2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  3




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##### Table of Contents



Rurban Financial Corp.
Condensed Consolidated Balance Sheets
June 30, 2006 and December 31, 2005
 (Unaudited)June 30,
    
    
    December 31,2006
    
    
    2005AssetsCash and due from banks
    
    $
    11,366,725
    
    
    $
    12,650,839Federal funds sold
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    11,366,725
    
    
    
    12,650,839Interest-bearing deposits
    
    
    150,000
    
    
    
    150,000Available-for-sale securities
    
    
    129,963,320
    
    
    
    139,353,329Loans held for sale
    
    
    
    
    
    
    224,000Loans, net of unearned income
    
    
    359,853,906
    
    
    
    327,048,229Allowance for loan losses
    
    
    (4,438,139
    )
    
    
    (4,699,827
    )Premises and equipment
    
    
    13,532,028
    
    
    
    13,346,632Purchased software
    
    
    4,685,608
    
    
    
    3,916,913Federal Reserve and Federal Home Loan Bank stock
    
    
    3,692,400
    
    
    
    3,607,500Foreclosed assets held for sale, net
    
    
    25,000
    
    
    
    2,309,900Interest receivable
    
    
    3,068,283
    
    
    
    3,010,355Goodwill
    
    
    8,805,347
    
    
    
    8,917,373Core deposits and other intangibles
    
    
    3,508,813
    
    
    
    3,742,333Cash value of life insurance
    
    
    10,615,978
    
    
    
    10,443,487Other
    
    
    7,015,886
    
    
    
    6,521,213Total assets
    
    $
    551,845,155
    
    
    $
    530,542,276
 See notes to condensed consolidated financial statements (unaudited)
 Note:
    
    The balance sheet at December 31, 2005 has been derived from the audited consolidated financial statements at that date.
 4




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##### Table of Contents



Rurban Financial Corp.
Condensed Consolidated Balance Sheets (continued)
June 30, 2006 and December 31, 2005
 (Unaudited)June 30,
    
    
    December 31,2006
    
    
    2005Liabilities and Stockholders EquityLiabilitiesDepositsDemand
    
    $
    48,533,636
    
    
    $
    52,073,751Savings, interest checking and money market
    
    
    121,840,243
    
    
    
    124,206,115Time
    
    
    230,582,090
    
    
    
    208,558,046Total deposits
    
    
    400,955,969
    
    
    
    384,837,912Notes payable
    
    
    
    
    
    
    938,572Federal Home Loan Bank advances
    
    
    53,500,000
    
    
    
    45,500,000Federal funds purchased
    
    
    
    
    
    
    4,600,000Retail repurchase agreements
    
    
    17,441,076
    
    
    
    6,080,420Trust preferred securities
    
    
    20,620,000
    
    
    
    20,620,000Interest payable
    
    
    1,704,731
    
    
    
    1,373,044Deferred income taxes
    
    
    245,644
    
    
    
    1,140,001Other liabilities
    
    
    3,351,609
    
    
    
    11,001,679Total liabilities
    
    
    497,819,029
    
    
    
    476,091,628Commitments and Contingent LiabilitiesStockholders EquityCommon stock, $2.50 stated value; authorized
10,000,000 shares; issued 5,027,433; outstanding
June 30, 2006  5,027,433 and
December 31, 2005  5,027,433
    
    
    12,568,583
    
    
    
    12,568,583Additional paid-in capital
    
    
    14,846,990
    
    
    
    14,835,110Retained earnings
    
    
    29,436,142
    
    
    
    28,702,817Accumulated other comprehensive loss
    
    
    (2,825,589
    )
    
    
    (1,655,862
    )Total stockholders equity
    
    
    54,026,126
    
    
    
    54,450,648Total liabilities and stockholders equity
    
    $
    551,845,155
    
    
    $
    530,542,276
 See notes to condensed consolidated financial statements (unaudited)
 Note:
    
    The balance sheet at December 31, 2005 has been derived from the audited consolidated financial statements at that date.
 5




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##### Table of Contents



Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended
 June 30,
    
    
    June 30,2006
    
    
    2005Interest IncomeLoansTaxable
    
    $
    6,043,057
    
    
    $
    3,997,200Tax-exempt
    
    
    15,157
    
    
    
    14,823SecuritiesTaxable
    
    
    1,333,858
    
    
    
    984,949Tax-exempt
    
    
    136,570
    
    
    
    52,173Other
    
    
    14,046
    
    
    
    83,959Total interest income
    
    
    7,542,688
    
    
    
    5,133,104Interest ExpenseDeposits
    
    
    2,556,180
    
    
    
    1,293,323Other borrowings
    
    
    26,148
    
    
    
    66,929Retail repurchase agreements
    
    
    159,276
    
    
    
    18,806Federal Home Loan Bank advances
    
    
    533,845
    
    
    
    554,324Trust preferred securities
    
    
    436,776
    
    
    
    272,402Total interest expense
    
    
    3,712,225
    
    
    
    2,205,784Net Interest Income
    
    
    3,830,463
    
    
    
    2,927,320Provision for Loan Losses
    
    
    56,321
    
    
    
    352,000Net Interest Income After Provision for Loan Losses
    
    
    3,774,142
    
    
    
    2,575,320Non-interest IncomeData service fees
    
    
    3,286,586
    
    
    
    3,094,022Trust fees
    
    
    792,227
    
    
    
    779,047Customer service fees
    
    
    542,687
    
    
    
    446,286Net gains on loan sales
    
    
    71,664
    
    
    
    9,278Loan servicing fees
    
    
    117,785
    
    
    
    79,297Gains on sale of assets
    
    
    78,558
    
    
    
    56,034Other
    
    
    378,745
    
    
    
    175,981Total non-interest income
    
    
    5,268,252
    
    
    
    4,639,945
 See notes to condensed consolidated financial statements (unaudited)
 6




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Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited) (continued)
Three Months Ended
 Condensed Consolidated Statements of Operations (continued)
 June 30,
    
    
    June 30,2006
    
    
    2005Non-interest ExpenseSalaries and employee benefits
    
    $
    3,795,252
    
    
    $
    3,501,021Net occupancy expense
    
    
    425,918
    
    
    
    294,243Equipment expense
    
    
    1,347,634
    
    
    
    1,283,692Data processing fees
    
    
    119,368
    
    
    
    113,499Professional fees
    
    
    524,902
    
    
    
    710,539Marketing expense
    
    
    242,498
    
    
    
    83,254Printing and office supplies
    
    
    173,361
    
    
    
    130,591Telephone and communications
    
    
    407,648
    
    
    
    385,393Postage and delivery expense
    
    
    122,267
    
    
    
    83,975State, local and other taxes
    
    
    190,436
    
    
    
    88,825Employee expense
    
    
    260,523
    
    
    
    265,459Other
    
    
    470,068
    
    
    
    525,708Total non-interest expense
    
    
    8,079,875
    
    
    
    7,466,199Income (Loss) Before Income Tax
    
    
    962,519
    
    
    
    (250,934
    )Provision for Income Taxes
    
    
    248,996
    
    
    
    (137,232
    )Net Income (Loss)
    
    $
    713,523
    
    
    $
    (113,702
    )Basic Earnings (Loss) Per Share
    
    $
    0.14
    
    
    $
    (0.02
    )Diluted Earnings (Loss) Per Share
    
    $
    0.14
    
    
    $
    (0.02
    )Dividends Declared Per Share
    
    $
    0.05
    
    
    $
    0.05
 See notes to condensed consolidated financial statements (unaudited)
 7




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##### Table of Contents



Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited)
Six Months Ended
 June 30,
    
    
    June 30,2006
    
    
    2005Interest IncomeLoansTaxable
    
    $
    11,597,211
    
    
    $
    7,911,166Tax-exempt
    
    
    27,392
    
    
    
    30,329SecuritiesTaxable
    
    
    2,646,459
    
    
    
    2,039,407Tax-exempt
    
    
    268,403
    
    
    
    94,198Other
    
    
    50,312
    
    
    
    102,217Total interest income
    
    
    14,589,777
    
    
    
    10,177,317Interest ExpenseDeposits
    
    
    4,677,394
    
    
    
    2,396,744Other borrowings
    
    
    52,447
    
    
    
    137,204Retail repurchase agreements
    
    
    283,553
    
    
    
    36,453Federal Home Loan Bank advances
    
    
    1,016,666
    
    
    
    1,140,876Trust preferred securities
    
    
    865,198
    
    
    
    541,810Total interest expense
    
    
    6,895,258
    
    
    
    4,253,087Net Interest Income
    
    
    7,694,519
    
    
    
    5,924,230Provision for Loan Losses
    
    
    302,321
    
    
    
    352,000Net Interest Income After Provision for
Loan Losses
    
    
    7,392,198
    
    
    
    5,572,230Non-interest IncomeData service fees
    
    
    6,527,720
    
    
    
    6,269,965Trust fees
    
    
    1,607,678
    
    
    
    1,583,540Customer service fees
    
    
    1,092,754
    
    
    
    883,002Net gains on loan sales
    
    
    132,710
    
    
    
    17,348Net realized losses on sales of
available-for-sale securities
    
    
    
    
    
    
    (8,750
    )Loan servicing fees
    
    
    204,479
    
    
    
    146,140Gains on sale of assets
    
    
    59,432
    
    
    
    17,076Other
    
    
    651,778
    
    
    
    362,386Total non-interest income
    
    
    10,276,551
    
    
    
    9,270,707
 8




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##### Table of Contents



Rurban Financial Corp.
Condensed Consolidated Statements of Operations (Unaudited) (continued)
Six Months Ended
 June 30,
    
    
    June 30,2006
    
    
    2005Non-interest ExpenseSalaries and employee benefits
    
    $
    7,652,985
    
    
    $
    6,732,345Net occupancy expense
    
    
    865,867
    
    
    
    584,398Equipment expense
    
    
    2,723,461
    
    
    
    2,536,791Data processing fees
    
    
    255,958
    
    
    
    204,697Professional fees
    
    
    1,044,267
    
    
    
    1,229,070Marketing expense
    
    
    368,946
    
    
    
    163,971Printing and office supplies
    
    
    326,345
    
    
    
    281,833Telephone and communications
    
    
    810,015
    
    
    
    755,434Postage and delivery expense
    
    
    254,260
    
    
    
    158,027State, local and other taxes
    
    
    324,293
    
    
    
    233,353Employee expense
    
    
    509,912
    
    
    
    501,530Other
    
    
    893,597
    
    
    
    824,888Total non-interest expense
    
    
    16,029,906
    
    
    
    14,206,337Income Before Income Tax
    
    
    1,638,843
    
    
    
    636,600Provision for Income Taxes
    
    
    402,775
    
    
    
    111,838Net Income
    
    $
    1,236,068
    
    
    $
    524,762Basic Earnings Per Share
    
    $
    0.25
    
    
    $
    0.11Diluted Earnings Per Share
    
    $
    0.25
    
    
    $
    0.11Dividends Declared Per Share
    
    $
    0.10
    
    
    $
    0.10
 9




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##### Table of Contents



RURBAN FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY (UNAUDITED)
 Three Months Ended
    
    
    Six Months EndedJune 30, 2006
    
    
    June 30, 2005
    
    
    June 30, 2006
    
    
    June 30, 2005Balance at beginning of period
    
    $
    54,051,932
    
    
    $
    49,776,761
    
    
    $
    54,450,648
    
    
    $
    50,305,795Net Income
    
    
    713,523
    
    
    
    (113,702
    )
    
    
    1,236,068
    
    
    
    524,762Other comprehensive income
(loss):Net change in unrealized
gains (losses)
on securities available
for sale, net
    
    
    (493,897
    )
    
    
    1,129,671
    
    
    
    (1,169,727
    )
    
    
    189,266Total comprehensive income
    
    
    219,626
    
    
    
    1,015,969
    
    
    
    66,341
    
    
    
    714,028Cash dividend
    
    
    (251,372
    )
    
    
    (228,456
    )
    
    
    (502,741
    )
    
    
    (456,882
    )Stock options exercised
    
    
    
    
    
    
    35,262
    
    
    
    
    
    
    
    36,595Stock option expense
    
    
    5,940
    
    
    
    
    
    
    
    11,878
    
    
    
    Balance at end of period
    
    $
    54,026,126
    
    
    $
    50,599,536
    
    
    $
    54,026,126
    
    
    $
    50,599,536
 See notes to condensed consolidated financial statements (unaudited)
 10




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##### Table of Contents



Rurban Financial Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
 June 30,
    
    
    June 30,2006
    
    
    2005Operating ActivitiesNet income
    
    $
    1,236,068
    
    
    $
    524,762Adjustments to reconcile net income to net cash provided by
operating activitiesDepreciation and amortization
    
    
    1,717,743
    
    
    
    1,496,096Provision for loan losses
    
    
    302,321
    
    
    
    352,000Expense of stock option plan
    
    
    11,878
    
    
    
    Amortization of premiums and discounts on securities
    
    
    125,158
    
    
    
    63,769Amortization of intangible assets
    
    
    233,520
    
    
    
    43,088Deferred income taxes
    
    
    (613,792
    )
    
    
    (346,014
    )Gain from sale of loans
    
    
    (132,710
    )
    
    
    (17,348
    )Gain on sales of foreclosed assets
    
    
    (66,454
    )
    
    
    (7,296
    )FHLB Stock Dividends
    
    
    (84,900
    )
    
    
    (53,600
    )(Gain) loss on sales of premises and equipment
    
    
    7,022
    
    
    
    (9,780
    )Net realized losses on available-for-sale securities
    
    
    
    
    
    
    8,750Changes inProceeds from sale of loans held for sale
    
    
    6,864,003
    
    
    
    1,486,148Originations of loans held for sale
    
    
    (6,507,295
    )
    
    
    (1,706,700
    )Interest receivable
    
    
    (57,928
    )
    
    
    (81,318
    )Other assets
    
    
    (560,973
    )
    
    
    234,024Interest payable and other liabilities
    
    
    (865,297
    )
    
    
    374,229Net cash provided by operating activities
    
    
    1,608,364
    
    
    
    2,360,810Investing ActivitiesPurchases of available-for-sale securities
    
    
    (12,727,731
    )
    
    
    (11,780,508
    )Proceeds from maturities of available-for-sale securities
    
    
    5,008,771
    
    
    
    7,878,122Proceeds from the sales of available-for-sale securities
    
    
    15,562,738
    
    
    
    4,117,695Net change in loans
    
    
    (33,623,712
    )
    
    
    (4,381,054
    )Purchase of premises and equipment
    
    
    (2,702,597
    )
    
    
    (1,924,199
    )Proceeds from assumption of net liabilities in business
acquisition
    
    
    
    
    
    
    48,645,686Cash paid to shareholders of Exchange Bank Acquisition
    
    
    (6,453,084
    )
    
    
    Proceeds from sales of premises and equipment
    
    
    23,741
    
    
    
    197,706Proceeds from the sale of foreclosed assets
    
    
    2,581,996
    
    
    
    1,234,417Net cash provided by (used in) investing activities
    
    
    (32,329,878
    )
    
    
    43,987,865
 See notes to condensed consolidated financial statements (unaudited)
 11




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##### Table of Contents



Rurban Financial Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)
Six Months Ended
 June 30,
    
    
    June 30,2006
    
    
    2005Financing ActivitiesNet increase (decrease) in demand deposits, money market,
interest checking and savings accounts
    
    $
    (5,905,987
    )
    
    $
    5,051,433Net increase (decrease) in certificates of deposit
    
    
    22,024,044
    
    
    
    (4,894,426
    )Net increase in securities sold under agreements to repurchase
    
    
    11,360,656
    
    
    
    564,813Net decrease in federal funds purchased
    
    
    (4,600,000
    )
    
    
    (7,500,000
    )Proceeds from Federal Home Loan Bank advances
    
    
    23,900,000
    
    
    
    12,500,000Repayment of Federal Home Loan Bank advances
    
    
    (15,900,000
    )
    
    
    (30,500,000
    )Repayment of notes payable
    
    
    (938,572
    )
    
    
    (674,129
    )Dividends paid
    
    
    (502,741
    )
    
    
    (456,882
    )Proceeds from stock options exercised
    
    
    
    
    
    
    36,595Net cash provided by (used in) financing activities
    
    
    29,437,400
    
    
    
    (25,872,596
    )(Decrease) Increase in Cash and Cash Equivalents
    
    
    (1,284,114
    )
    
    
    20,476,079Cash and Cash Equivalents, Beginning of Year
    
    
    12,650,839
    
    
    
    10,617,766Cash and Cash Equivalents, End of Period
    
    $
    11,366,725
    
    
    $
    31,093,845Supplemental Cash Flows InformationInterest paid
    
    $
    6,563,571
    
    
    $
    4,131,843Transfer of loans to foreclosed assets
    
    $
    336,833
    
    
    $
    2,881,547
 See notes to condensed consolidated financial statements (unaudited)
 12




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##### Table of Contents



RURBAN FINANCIAL CORP.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE ABASIS OF PRESENTATION
    Reclassifications
  Stock Based Compensation
  Accounting for Stock Issued to Employees,
  13




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##### Table of Contents



Three Months Ended June 30, 2006Using Previous
    
    
    SFAS 123(R)
    
    
    AsAccounting
    
    
    Adjustment
    
    
    ReportedIncome before tax expense
    
    $
    968,459
    
    
    $
    (5,940
    )
    
    $
    962,519Income taxes
    
    
    248,996
    
    
    
    
    
    
    
    248,996Net income
    
    $
    719,463
    
    
    $
    (5,940
    )
    
    $
    713,523Earnings per share:Basic
    
    $
    0.14
    
    
    
    
    
    
    $
    0.14Diluted
    
    $
    0.14
    
    
    
    
    
    
    $
    0.14Six Months Ended June 30, 2006Using Previous
    
    
    SFAS 123(R)
    
    
    AsAccounting
    
    
    Adjustment
    
    
    ReportedIncome before tax expense
    
    $
    1,650,721
    
    
    $
    (11,878
    )
    
    $
    1,638,843Income taxes
    
    
    402,775
    
    
    
    
    
    
    
    402,775Net income
    
    $
    1,247,946
    
    
    $
    (11,878
    )
    
    $
    1,236,068Earnings per share:Basic
    
    $
    0.25
    
    
    
    
    
    
    $
    0.25Diluted
    
    $
    0.25
    
    
    
    
    
    
    $
    0.25Three Months Ended June 30, 2005SFAS 123(R)As Reported
    
    
    Adjustment
    
    
    ProformaNet loss before tax expense
    
    $
    (250,934
    )
    
    $
    (2,970
    )
    
    $
    (253,904
    )Income taxes
    
    
    (137,232
    )
    
    
    
    
    
    
    (137,232
    )Net loss
    
    $
    (113,702
    )
    
    $
    (2,970
    )
    
    $
    (116,672
    )Loss per share:Basic
    
    $
    (0.02
    )
    
    
    
    
    
    $
    (0.03
    )Diluted
    
    $
    (0.02
    )
    
    
    
    
    
    $
    (0.03
    )Six Months Ended June 30, 2005SFAS 123(R)As Reported
    
    
    Adjustment
    
    
    ProformaIncome before tax expense
    
    $
    636,600
    
    
    $
    (637,795
    )
    
    $
    (1,195
    )Income taxes
    
    
    111,838
    
    
    
    
    
    
    
    111,838Net income
    
    $
    524,762
    
    
    $
    (637,795
    )
    
    $
    (113,033
    )Earnings per share:Basic
    
    $
    0.11
    
    
    
    
    
    
    $
    (0.02
    )Diluted
    
    $
    0.11
    
    
    
    
    
    
    $
    (0.02
    )
 14




---



##### Table of Contents



NOTE B
 EARNINGS PER SHARE
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Basic earnings per share
    
    
    5,027,433
    
    
    
    4,569,316
    
    
    
    5,027,433
    
    
    
    4,568,860Diluted earnings per share
    
    
    5,028,397
    
    
    
    4,569,316
    
    
    
    5,029,338
    
    
    
    4,578,981
 NOTE C  LOANS, RISK ELEMENTS AND ALLOWANCE FOR LOAN LOSSES
  June 30,
    
    
    December 31,2006
    
    
    2005Commercial
    
    $
    85,202,279
    
    
    $
    79,359,126Commercial real estate
    
    
    86,444,691
    
    
    
    68,071,738Agricultural
    
    
    45,013,246
    
    
    
    40,236,664Residential real estate
    
    
    91,288,884
    
    
    
    89,086,024Consumer
    
    
    50,672,660
    
    
    
    48,876,788Lease financing
    
    
    1,528,206
    
    
    
    1,661,126Total loans
    
    
    360,149,965
    
    
    
    327,291,466LessNet deferred loan fees, premiums and discounts
    
    
    (296,060
    )
    
    
    (243,237
    )Loans, net of unearned income
    
    $
    359,853,906
    
    
    $
    327,048,229Allowance for loan losses
    
    $
    (4,438,139
    )
    
    $
    (4,699,827
    )
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Balance, beginning of period
    
    $
    4,348,541
    
    
    $
    4,800,293
    
    
    $
    4,699,827
    
    
    $
    4,899,063Provision charged to expense
    
    
    56,321
    
    
    
    352,000
    
    
    
    302,321
    
    
    
    352,000Recoveries
    
    
    154,342
    
    
    
    931,882
    
    
    
    297,643
    
    
    
    1,115,462Loans charged off
    
    
    (121,065
    )
    
    
    (873,711
    )
    
    
    (861,652
    )
    
    
    (1,156,061
    )Balance, end of period
    
    $
    4,438,139
    
    
    $
    5,210,464
    
    
    $
    4,438,139
    
    
    $
    5,210,464
 15




---



##### Table of Contents



June 30,
    
    
    December 31,2006
    
    
    2005Non-accrual loans
    
    $
    5,473,000
    
    
    $
    6,270,000Accruing loans which are contractually
past due 90 days or more as to interest or
principal payments
    
    
    5,600
    
    
    
    5,200Total non-performing loans
    
    $
    5,478,600
    
    
    $
    6,275,200
  June 30,
    
    
    December 31,2006
    
    
    2005Loans with no allowance for loan losses allocated
    
    $
    827,000
    
    
    $
    1,676,000Loans with allowance for loan losses allocated
    
    
    3,161,000
    
    
    
    4,460,000Total impaired loans
    
    $
    3,988,000
    
    
    $
    6,136,000Amount of allowance allocated
    
    $
    756,000
    
    
    $
    1,993,000
 NOTE D  REGULATORY MATTERS
    16




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##### Table of Contents



To Be Well Capitalized UnderMinimum Required For
    
    Prompt Corrective ActionActual
    
    Capital Adequacy Purposes
    
    ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of June 30, 2006Total Capital
(to Risk-Weighted Assets)Consolidated
    
    $
    69.0
    
    
    
    18.1
    %
    
    $
    30.4
    
    
    
    8.0
    %
    
    $
    
    
    
    
    N/AState Bank
    
    
    37.9
    
    
    
    12.1
    
    
    
    25.0
    
    
    
    8.0
    
    
    
    31.3
    
    
    
    10.0Exchange Bank
    
    
    7.7
    
    
    
    12.9
    
    
    
    4.8
    
    
    
    8.0
    
    
    
    6.0
    
    
    
    10.0Tier I Capital
(to Risk-Weighted Assets)Consolidated
    
    
    63.5
    
    
    
    16.7
    
    
    
    15.2
    
    
    
    4.0
    
    
    
    
    
    
    
    N/AState Bank
    
    
    34.5
    
    
    
    11.0
    
    
    
    12.5
    
    
    
    4.0
    
    
    
    18.8
    
    
    
    6.0Exchange Bank
    
    
    7.0
    
    
    
    11.7
    
    
    
    2.4
    
    
    
    4.0
    
    
    
    3.6
    
    
    
    6.0Tier I Capital
(to Average Assets)Consolidated
    
    
    63.5
    
    
    
    11.9
    
    
    
    21.3
    
    
    
    4.0
    
    
    
    
    
    
    
    N/AState Bank
    
    
    34.5
    
    
    
    7.9
    
    
    
    17.6
    
    
    
    4.0
    
    
    
    22.0
    
    
    
    5.0Exchange Bank
    
    
    7.0
    
    
    
    8.7
    
    
    
    3.2
    
    
    
    4.0
    
    
    
    4.0
    
    
    
    5.0As of December 31, 2005Total Capital
(to Risk-Weighted Assets)Consolidated
    
    $
    67.8
    
    
    
    19.3
    %
    
    $
    28.1
    
    
    
    8.0
    %
    
    $
    
    
    
    
    N/AState Bank
    
    
    36.6
    
    
    
    13.0
    
    
    
    22.6
    
    
    
    8.0
    
    
    
    28.2
    
    
    
    10.0Exchange Bank
    
    
    7.5
    
    
    
    13.8
    
    
    
    4.4
    
    
    
    8.0
    
    
    
    5.5
    
    
    
    10.0Tier I Capital
(to Risk-Weighted Assets)Consolidated
    
    
    62.1
    
    
    
    17.7
    
    
    
    14.0
    
    
    
    4.0
    
    
    
    
    
    
    
    N/AState Bank
    
    
    33.5
    
    
    
    11.9
    
    
    
    11.3
    
    
    
    4.0
    
    
    
    16.9
    
    
    
    6.0Exchange Bank
    
    
    6.9
    
    
    
    12.6
    
    
    
    2.2
    
    
    
    4.0
    
    
    
    3.3
    
    
    
    6.0Tier I Capital
(to Average Assets)Consolidated
    
    
    62.1
    
    
    
    14.4
    
    
    
    17.2
    
    
    
    4.0
    
    
    
    
    
    
    
    N/AState Bank
    
    
    33.5
    
    
    
    8.0
    
    
    
    16.7
    
    
    
    4.0
    
    
    
    20.8
    
    
    
    5.0Exchange Bank
    
    
    6.9
    
    
    
    8.5
    
    
    
    3.2
    
    
    
    4.0
    
    
    
    4.1
    
    
    
    5.0
 NOTE E
 CONTINGENT LIABILITIES
  17




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##### Table of Contents



NOTE F  NEW ACCOUNTING PRONOUNCEMENTS
 Accounting for Servicing of Financial Assets Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities,
 NOTE G
 COMMITMENTS AND CREDIT RISK
  NOTE H
 SEGMENT INFORMATION
  18




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##### Table of Contents



Data
    
    
    
    
    
    
    Total
    
    
    Intersegment
    
    
    ConsolidatedIncome statement information:
    
    Banking
    
    
    Processing
    
    
    Other
    
    
    Segments
    
    
    Elimination
    
    
    TotalsNet interest income (expense)
    
    $
    8,633,604
    
    
    $
    (97,590
    )
    
    $
    (841,495
    )
    
    $
    7,694,519
    
    
    
    
    
    
    $
    7,694,519Non-interest income  external
customers
    
    
    2,098,973
    
    
    
    6,527,720
    
    
    
    1,649,858
    
    
    
    10,276,551
    
    
    
    
    
    
    
    10,276,551Non-interest income  other segments
    
    
    
    
    
    
    840,001
    
    
    
    2,141,430
    
    
    
    2,981,431
    
    
    
    (2,981,431
    )
    
    
    Total revenue
    
    
    10,732,577
    
    
    
    7,270,131
    
    
    
    2,949,793
    
    
    
    20,952,501
    
    
    
    (2,981,431
    )
    
    
    17,971,070Non-interest expense
    
    
    10,918,170
    
    
    
    5,755,990
    
    
    
    2,337,177
    
    
    
    19,011,337
    
    
    
    (2,981,431
    )
    
    
    16,029,906Significant non-cash items:Depreciation and
amortization
    
    
    410,277
    
    
    
    1,186,084
    
    
    
    121,382
    
    
    
    1,717,743
    
    
    
    
    
    
    
    1,717,743Provision for loan losses
    
    
    302,321
    
    
    
    
    
    
    
    
    
    
    
    302,321
    
    
    
    
    
    
    
    302,321Income tax expense (benefit)
    
    
    231,974
    
    
    
    514,808
    
    
    
    (344,007
    )
    
    
    402,775
    
    
    
    
    
    
    
    402,775Segment profit (loss)
    
    $
    884,590
    
    
    $
    999,332
    
    
    $
    (647,854
    )
    
    $
    1,236,068
    
    
    $
    
    
    
    $
    1,236,068Balance sheet information:Total assets
    
    $
    545,364,406
    
    
    $
    13,882,700
    
    
    $
    12,842,321
    
    
    $
    572,089,427
    
    
    $
    (20,244,272
    )
    
    $
    551,845,155Goodwill and intangibles
    
    
    12,314,160
    
    
    
    
    
    
    
    
    
    
    
    12,314,160
    
    
    
    
    
    
    
    12,314,160Premises and equipment expenditures
    
    
    382,879
    
    
    
    2,216,279
    
    
    
    103,439
    
    
    
    2,702,597
    
    
    
    
    
    
    
    2,702,597
 19




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##### Table of Contents



Data
    
    
    
    
    
    
    Total
    
    
    Intersegment
    
    
    ConsolidatedIncome statement information:
    
    Banking
    
    
    Processing
    
    
    Other
    
    
    Segments
    
    
    Elimination
    
    
    TotalsNet interest income (expense)
    
    $
    6,608,055
    
    
    $
    (124,305
    )
    
    $
    (559,520
    )
    
    $
    5,924,230
    
    
    
    
    
    
    $
    5,924,230Non-interest income  external
customers
    
    
    1,389,625
    
    
    
    6,269,965
    
    
    
    1,611,117
    
    
    
    9,270,707
    
    
    
    
    
    
    
    9,270,707Non-interest income  other segments
    
    
    
    
    
    
    649,367
    
    
    
    910,243
    
    
    
    1,559,610
    
    
    
    (1,559,610
    )
    
    
    Total revenue
    
    
    7,997,680
    
    
    
    6,795,027
    
    
    
    1,961,840
    
    
    
    16,754,547
    
    
    
    (1,559,610
    )
    
    
    15,194,937Non-interest expense
    
    
    7,821,786
    
    
    
    5,511,937
    
    
    
    2,432,224
    
    
    
    15,765,947
    
    
    
    (1,559,610
    )
    
    
    14,206,337Significant non-cash items:Depreciation and
amortization
    
    
    299,611
    
    
    
    1,142,852
    
    
    
    53,633
    
    
    
    1,496,096
    
    
    
    
    
    
    
    1,496,096Provision for loan losses
    
    
    352,000
    
    
    
    
    
    
    
    
    
    
    
    352,000
    
    
    
    
    
    
    
    352,000Income tax expense (benefit)
    
    
    (16,695
    )
    
    
    434,208
    
    
    
    (305,675
    )
    
    
    111,838
    
    
    
    
    
    
    
    111,838Segment profit (loss)
    
    $
    259,617
    
    
    $
    848,883
    
    
    $
    (583,738
    )
    
    $
    524,762
    
    
    $
    
    
    
    $
    524,762Balance sheet information:Total assets
    
    $
    444,561,492
    
    
    $
    10,872,652
    
    
    $
    5,470,394
    
    
    $
    460,904,538
    
    
    $
    (9,856,645
    )
    
    $
    451,047,893Goodwill and intangibles
    
    
    7,575,210
    
    
    
    
    
    
    
    
    
    
    
    7,575,210
    
    
    
    
    
    
    
    7,575,210Premises and equipment expenditures
    
    
    334,005
    
    
    
    1,542,925
    
    
    
    47,269
    
    
    
    1,924,199
    
    
    
    
    
    
    
    1,924,199
 20




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##### Table of Contents



Data
    
    
    
    
    
    
    Total
    
    
    Intersegment
    
    
    ConsolidatedIncome statement information:
    
    Banking
    
    
    Processing
    
    
    Other
    
    
    Segments
    
    
    Elimination
    
    
    TotalsNet interest income (expense)
    
    $
    4,305,462
    
    
    $
    (51,663
    )
    
    $
    (423,336
    )
    
    $
    3,830,463
    
    
    
    
    
    
    $
    3,830,463Non-interest income  external
customers
    
    
    1,167,388
    
    
    
    3,286,587
    
    
    
    814,277
    
    
    
    5,268,252
    
    
    
    
    
    
    
    5,268,252Non-interest income  other segments
    
    
    
    
    
    
    397,833
    
    
    
    949,344
    
    
    
    1,347,177
    
    
    
    (1,347,177
    )
    
    
    Total revenue
    
    
    5,472,850
    
    
    
    3,632,757
    
    
    
    1,340,285
    
    
    
    10,445,891
    
    
    
    (1,347,177
    )
    
    
    9,098,715Non-interest expense
    
    
    5,328,403
    
    
    
    2,948,796
    
    
    
    1,149,853
    
    
    
    9,427,052
    
    
    
    (1,347,177
    )
    
    
    8,079,875Significant non-cash items:Depreciation and
amortization
    
    
    208,459
    
    
    
    591,565
    
    
    
    69,976
    
    
    
    870,000
    
    
    
    
    
    
    
    870,000Provision for loan losses
    
    
    56,321
    
    
    
    
    
    
    
    
    
    
    
    56,321
    
    
    
    
    
    
    
    56,321Income tax expense (benefit)
    
    
    191,710
    
    
    
    232,546
    
    
    
    (175,260
    )
    
    
    248,996
    
    
    
    
    
    
    
    248,996Segment profit (loss)
    
    $
    592,303
    
    
    $
    451,413
    
    
    $
    (330,193
    )
    
    $
    713,523
    
    
    $
    
    
    
    $
    713,523Balance sheet information:Total assets
    
    $
    545,364,406
    
    
    $
    13,882,700
    
    
    $
    12,842,321
    
    
    $
    572,089,427
    
    
    $
    (20,244,272
    )
    
    $
    551,845,155Goodwill and intangibles
    
    
    12,314,160
    
    
    
    
    
    
    
    
    
    
    
    12,314,160
    
    
    
    
    
    
    
    12,314,160Premises and equipment expenditures
    
    
    88,702
    
    
    
    405,022
    
    
    
    71,832
    
    
    
    565,556
    
    
    
    
    
    
    
    565,556
 21




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##### Table of Contents



Data
    
    
    
    
    
    
    Total
    
    
    Intersegment
    
    
    ConsolidatedIncome statement information:
    
    Banking
    
    
    Processing
    
    
    Other
    
    
    Segments
    
    
    Elimination
    
    
    TotalsNet interest income (expense)
    
    $
    3,267,861
    
    
    $
    (60,537
    )
    
    $
    (280,004
    )
    
    $
    2,927,320
    
    
    
    
    
    
    $
    2,927,320Non-interest income  external
customers
    
    
    753,058
    
    
    
    3,094,022
    
    
    
    792,865
    
    
    
    4,639,945
    
    
    
    
    
    
    
    4,639,945Non-interest income  other segments
    
    
    
    
    
    
    319,517
    
    
    
    458,968
    
    
    
    778,485
    
    
    
    (778,485
    )
    
    
    Total revenue
    
    
    4,020,919
    
    
    
    3,353,002
    
    
    
    971,829
    
    
    
    8,345,750
    
    
    
    (778,485
    )
    
    
    7,567,265Non-interest expense
    
    
    4,108,501
    
    
    
    2,804,310
    
    
    
    1,331,873
    
    
    
    8,244,684
    
    
    
    (778,485
    )
    
    
    7,466,199Significant non-cash items:Depreciation and
amortization
    
    
    (1,162,788
    )
    
    
    578,634
    
    
    
    27,100
    
    
    
    759,106
    
    
    
    
    
    
    
    759,106Provision for loan losses
    
    
    352,000
    
    
    
    
    
    
    
    
    
    
    
    352,000
    
    
    
    
    
    
    
    352,000Income tax expense (benefit)
    
    
    (142,530
    )
    
    
    192,003
    
    
    
    (186,705
    )
    
    
    (137,232
    )
    
    
    
    
    
    
    (137,232
    )Segment profit (loss)
    
    $
    (111,331
    )
    
    $
    356,689
    
    
    $
    (359,061
    )
    
    $
    (113,702
    )
    
    $
    
    
    
    $
    (113,702
    )Balance sheet information:Total assets
    
    $
    444,561,492
    
    
    $
    10,872,652
    
    
    $
    5,470,394
    
    
    $
    460,904,538
    
    
    $
    (9,856,645
    )
    
    $
    451,047,893Goodwill and intangibles
    
    
    7,575,210
    
    
    
    
    
    
    
    
    
    
    
    7,575,210
    
    
    
    
    
    
    
    7,575,210Premises and equipment expenditures
    
    
    169,210
    
    
    
    836,914
    
    
    
    26,566
    
    
    
    1,032,690
    
    
    
    
    
    
    
    1,811,088
 22




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##### Table of Contents



NOTE I
 ACQUISITIONS
   23




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cautionary Statement Regarding Forward-Looking Information
  Overview of Rurban
    24




---



##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses 
  25




---



##### Table of Contents



Goodwill and Other Intangibles 
 Impact of Accounting Changes
 Accounting for Servicing of Financial Assets Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities,
 Three Months Ended June 30, 2006 compared to Three Months Ended June 30, 2005
 Net Income:
 26




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##### Table of Contents



Net Interest Income:
 Provision for Loan Losses:
 Non-interest Income:
 Non-interest Expense:
 Six Months Ended June 30, 2006 compared to Six Months Ended June 30, 2005
 Net Income:
 27




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Net Interest Income:
 Provision for Loan Losses:
 June 30,
    
    December
    
    June 30,(dollars in ,000)
    
    2006
    
    31, 2005
    
    2005Non-performing loans
    
    $
    5,479
    
    
    $
    6,270
    
    
    $
    13,453OREO
    
    $
    430
    
    
    $
    2,608
    
    
    $
    2,639Non-performing assets
    
    $
    5,909
    
    
    $
    8,878
    
    
    $
    16,092Non-performing assets / Total assets
    
    
    1.07
    %
    
    
    1.67
    %
    
    
    3.57
    %Allowance for loan losses / Total loans
    
    
    1.23
    %
    
    
    1.44
    %
    
    
    1.92
    %Allowance for loan
losses/Non-performing assets
    
    
    75.1
    %
    
    
    52.9
    %
    
    
    32.4
    %
 Non-interest Income
 Non-interest Expense
 28




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##### Table of Contents



Changes in Financial Condition
 June 30, 2006 vs. December 31, 2005
    Capital Resources
  Minimum RequiredMinimum Required
    
    To Be Well CapitalizedFor Capital
    
    Under Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action RegulationsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital (to risk
weighted assets)Consolidated
    
    $
    69.0
    
    
    
    18.1
    %
    
    $
    30.4
    
    
    
    8.0
    %
    
    $
    
    
    
    
    N/AState Bank
    
    
    37.9
    
    
    
    12.1
    
    
    
    25.0
    
    
    
    8.0
    
    
    
    31.3
    
    
    
    10.0Exchange Bank
    
    
    7.7
    
    
    
    12.9
    
    
    
    4.8
    
    
    
    8.0
    
    
    
    6.0
    
    
    
    10.0
  29




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##### Table of Contents



LIQUIDITY
       Off-Balance-Sheet Borrowing Arrangements:
   30




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##### Table of Contents



TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
June 30, 2006
 Payment Due by PeriodLess
    
    
    
    
    
    
    
    
    
    Morethan 1
    
    1  3
    
    3  5
    
    than 5Contractual Obligations
    
    Total
    
    year
    
    years
    
    years
    
    yearsLong-Term Debt Obligations
    
    $
    53,500,000
    
    
    $
    20,500,000
    
    
    $
    10,000,000
    
    
    $
    20,000,000
    
    
    $
    3,000,000Other Debt Obligations
    
    
    20,620,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    20,620,000Capital Lease Obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operating Lease Obligations
    
    
    2,785,944
    
    
    
    316,600
    
    
    
    643,200
    
    
    
    643,200
    
    
    
    1,182,944Purchase Obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Other
Long-Term Liabilities Reflected on
the Registrants Balance Sheet under GAAP
    
    
    230,582,090
    
    
    
    170,956,861
    
    
    
    55,650,184
    
    
    
    3,208,315
    
    
    
    766,730Total
    
    $
    307,488,034
    
    
    $
    191,773,461
    
    
    $
    66,293,384
    
    
    $
    23,851,515
    
    
    $
    25,569,674
  ASSET LIABILITY MANAGEMENT
  31




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32




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Principal/Notional Amount Maturing or Assumed to Withdraw In:
(Dollars in Thousands)
 First
    
    
    YearsYear
    
    

2  5
    
    
    Thereafter
    
    
    TotalComparison of 2006 to 2005:Total rate-sensitive assets:At June 30, 2006
    
    $
    206,411
    
    
    $
    168,887
    
    
    $
    118,658
    
    
    $
    493,956At December 31, 2005
    
    
    215,721
    
    
    
    162,891
    
    
    
    92,014
    
    
    
    470,626Increase (decrease)
    
    $
    (9,311
    )
    
    $
    5,997
    
    
    $
    26,643
    
    
    $
    23,330Total rate-sensitive liabilities:At June 30, 2006
    
    $
    240,327
    
    
    $
    205,558
    
    
    $
    46,632
    
    
    $
    492,517At December 31, 2005
    
    
    200,846
    
    
    
    221,267
    
    
    
    40,464
    
    
    
    462,577Increase (decrease)
    
    $
    39,481
    
    
    $
    (15,709
    )
    
    $
    6,168
    
    
    $
    29,940
   33




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  
    
    information required to be disclosed by the Company in this Quarterly
Report on Form 10-Q and other reports which the Company files or submits under the
Exchange Act would be accumulated and communicated to the Companys management,
including its principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure;
    
    information required to be disclosed by the Company in this Quarterly
Report on Form 10-Q and other reports which the Company files or submits under the
Exchange Act would be recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms; and
    
    the Companys disclosure controls and procedures are effective as of the
end of the quarterly period covered by this Quarterly Report on Form 10-Q to ensure
that material information relating to the Company and its consolidated subsidiaries is
made known to them, particularly during the period in which this Quarterly Report on
Form 10-Q is being prepared.
 Changes in Internal Control Over Financial Reporting
  34




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 a.
    
    Not applicableb.
    
    Not applicablec.
    
    The following table provides information regarding
repurchases of the Companys common shares during the six months ended June 30, 2006:
 Maximum Number(or ApproximateTotal Number of
    
    Dollar Value) ofShares Purchased as
    
    Shares that May YetPart of Publicly
    
    Be Purchased UnderTotal Number of
    
    Average Price
    
    Announced Plans or
    
    the Plans orPeriod
    
    Shares Purchased (1)
    
    Paid per Share
    
    Programs
    
    ProgramsApril 1 through
April 30, 2006
    
    
    2,603
    
    
    $
    12.33
    
    
    
    
    
    
    
    May 1 through
May 31, 2006
    
    
    4,047
    
    
    $
    12.10
    
    
    
    
    
    
    
    June 1 through
June 30, 2006
    
    
    3,464
    
    
    $
    11.45
    
    
    
    
    
    
    
    
 
 (1)
    
    All of the repurchased shares were purchased by Reliance Financial Services, N.A., an
indirect subsidiary of the Company, in its capacity as the administrator of the Companys
Employee Stock Ownership and Savings Plan. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  35




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##### Table of Contents



Item 5. Other Information
    
    
    The definition of Annual Direct Salary in the SERP Agreements and the Change in
Control Agreements is revised to mean the executive officers annualized base salary
based on the highest base salary in effect for any period during the
36-consecutive-calendar-month period preceding his termination. The prior definition
of Annual Direct Salary was based on the executive officers highest base salary for
any calendar month during the preceding 36-month period, multiplied by 12, and the
revision was made to reflect that the Company currently has 26 annual pay periods.
    
    The definition of Good Reason in the Employment Agreement and the Change in
Control Agreements is revised to include a reassignment which requires the executive
officer to move his office more than fifty (50) miles from the location of the
executive officers principal place of business. The prior definition of Good Reason
included a reassignment element but was tied to a reassignment that required the
executive officer to move his office more than fifty (50) miles from the location of
the Companys principal office in Defiance, Ohio.
    
    A new section is added to the SERP Agreements, the Employment Agreement and the
Change in Control Agreements which expressly provides that any payments made to the
executive officers pursuant to the terms of those agreements, or otherwise, are subject
to and conditioned upon compliance with the prohibitions and limitations on golden
parachute payments under the 12 U.S.C. 1828(k) and Part 359 of the FDICs regulations
 36




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##### Table of Contents



Item 6. Exhibits
  2.1
    
    
    
    Stock Purchase Agreement, dated as of May 19, 2006, by and among
Rurbanc Data Services, Inc., Lance Thompson and Robert Church (Incorporated by
reference to Exhibit 2.1 to the Companys Current Report on Form 8-K dated May 24, 2006
(File No. 0-13507))10.1
    
    
    
    First Amendment to Employment Agreement, executed May 19, 2006 and
effective as of March 1, 2006, by and between Rurban Financial Corp. and Kenneth A.
Joyce10.2
    
    
    
    First Amendment to Supplemental Executive Retirement Plan Agreement,
executed May 16, 2006 and effective as of March 1, 2006, by and between Rurban
Financial Corp. and Kenneth A. Joyce10.3
    
    
    
    Schedule A to Exhibit 10.2 identifying other substantially identical First
Amendments to Supplemental Executive Retirement Plan Agreements with executive officers
of Rurban Financial Corp. and its subsidiaries10.4
    
    
    
    First Amendment to Change in Control Agreement, executed May 17, 2006 and
effective as of March 1, 2006, by and between Rurban Financial Corp. and Duane L. Sinn10.5
    
    
    
    Schedule A to Exhibit 10.4 identifying other substantially identical First
Amendments to Change in Control Agreements with executive officers of Rurban Financial
Corp. and its subsidiaries31.1
    
    
    
    Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)31.2
    
    
    
    Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)32.1
    
    
    
    Section 1350 Certification (Principal Executive Officer)32.2
    
    
    
    Section 1350 Certification (Principal Financial Officer)
 37




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##### Table of Contents



SIGNATURES
  RURBAN FINANCIAL CORP.Date: August 11, 2006
    
    By
    
    /s/ Kenneth A. Joyce

Kenneth A. JoycePresident & Chief Executive Officer
 By
    
    /s/ Duane L. Sinn

Duane L. SinnExecutive Vice President &Chief Financial Officer
 38