<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 for the ended March 31, 1997
[ ] Transition report under Section 13 or 15(d) of the
Exchange Act for the transition period from to
----- -----
Commission file number: 000-21383
APPALACHIAN BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)
Georgia 58-2242407
(State of Incorporation (I.R.S. Employer Identification No.)
315 Industrial Blvd.
Ellijay, Georgia 30540
(Address of principal executive offices)
(706) 276-8000
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at May 12, 1997
----- ---------------------------
Common Stock, $5.00 par value 568,000
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
APPALACHIAN BANCSHARES, INC.
March 31, 1997 Form 10-QSB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet................................ 3
Consolidated Statement of Income.......................... 4
Consolidated Statement of Cash Flows...................... 5
Notes to Consolidated Financial Statements................ 6
Item 2. Management's Discussion and Analysis or Plan of Operation. 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.......................... 13
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
APPALACHIAN BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, 1997 December 31,
(Unaudited) 1996
-------------- -------------
<S> <C> <C>
ASSETS
Cash $ 750,573 $ 866,211
Due from banks 1,738,211 1,658,182
Federal funds sold 1,750,000 1,150,000
Securities available for sale 19,726,551 20,131,443
Securities held to maturity 2,749,222 2,247,479
Loans 70,459,735 64,961,742
Allowance for loan losses (733,971) (655,296)
---------- ----------
Net Loans 69,725,764 64,306,446
Premises and equipment, net 1,657,678 1,673,203
Accrued interest 921,366 806,811
Other assets 292,138 314,116
------------ ------------
Total Assets $ 99,311,503 $ 93,153,891
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing $ 3,650,770 $ 3,464,810
Interest-bearing 84,190,658 77,683,071
----------- -----------
Total Deposits 87,841,428 81,147,881
Securities sold under agreements to repurchase 4,201,444 5,283,972
Accrued interest 191,228 154,461
Long-term debt 1,000,000 700,000
Other liabilities 144,968 62,641
------------ ------------
Total Liabilities 93,379,068 87,348,955
------------ ------------
Shareholders' Equity:
Common stock ($5 par value; 20,000,000 shares authorized,
568,000 shares issued and outstanding) 2,840,000 2,840,000
Capital surplus 2,829,314 2,829,314
Retained earnings 409,565 168,593
Unrealized gains (losses) on investment securities
available for sale, net of deferred tax or tax benefit
(146,444) (32,971)
------------ ------------
Total Shareholders' Equity 5,932,435 5,804,936
------------ ------------
Total Liabilities and Shareholders' Equity $ 99,311,503 $ 93,153,891
============ ============
</TABLE>
See notes to financial statements.
3
<PAGE>
APPALACHIAN BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenue From Earning Assets:
Interest and fees on loans $ 1,784,545 $ 976,571
Interest on investment securities:
Taxable securities 319,421 213,426
Non-Taxable securities 31,978 0
Interest on federal funds sold 34,438 24,051
----------- -----------
Total Revenue From Earning Assets 2,170,382 1,214,048
Interest Expense:
Interest on deposits 1,142,388 646,144
Interest on federal funds purchased and
securities sold under agreements to repurchase 0 50,622
Interest expense-other 68,712 0
----------- -----------
Total Interest Expense 1,211,100 696,766
Net Interest Income 959,282 517,282
Provision for loan losses 140,000 90,000
----------- -----------
Net Interest Income After
Provision for Loan Losses 819,282 427,282
Noninterest Income:
Service charges on deposits 43,822 29,179
Insurance commissions 6,103 3,000
Other operating income 31,239 9,126
Investment securities gains 4,503 9,406
----------- -----------
Total Noninterest Income 85,667 50,711
Noninterest Expenses:
Salaries and employee benefits 266,969 192,395
Occupancy expense 22,733 23,596
Furniture and equipment expense 39,090 27,833
Other operating expenses 220,187 113,502
----------- -----------
Total Noninterest Expenses 548,979 357,326
Income before income taxes 355,970 120,667
Income tax (provision) (115,000) (41,027)
----------- -----------
Net Income 240,970 79,640
=========== ===========
Earnings Per Common Share -
Primary and Fully Diluted
Net income per common share .42 .14
Weighted average common shares outstanding 568,000 568,000
</TABLE>
See notes to financial statements.
4
<PAGE>
APPALACHIAN BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Operating Activities:
Net income $ 240,970 $ 79,640
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 140,000 90,000
Provision for depreciation and amortization 38,905 29,807
Amortization of investment security premiums
and accretion of discounts 1,645 (4,465)
Deferred tax provision 0 41,027
Realized investment security gains (4,503) (9,406)
Increase in accrued interest receivable (114,555) (183,125)
Increase in accrued interest payable 36,767 2,092
Other 157,615 17,631
------------ ------------
Net Cash Provided in Operating Activities 496,844 63,201
Investing Activities:
Proceeds from sales of securities available for sale 3,155,390 2,505,313
Proceeds from principal payments and maturity of
securities available for sale 589,925 1,000,000
Purchase of securities available for sale (3,508,075) (4,751,355)
Purchase of securities held to maturity (503,162) 0
Net increase in loans to customers (5,559,318) (9,619,552)
Capital expenditures (18,232) (1,813)
------------ ------------
Net Cash Used in Investing Activities (5,843,472) (10,867,407)
Financing Activities:
Net increase in demand deposits, NOW accounts,
and savings accounts 5,223,759 3,585,741
Net increase in certificates of deposit 1,469,788 6,271,764
Net increase in securities sold under agreement to repurchase (1,082,528) 627,540
Proceeds from notes payable 300,000 0
------------ ------------
Net Cash Provided by Financing Activities 5,911,019 10,485,045
------------ ------------
Net increase (decrease) in cash and cash equivalents 564,391 (319,161)
Cash and cash equivalents at beginning of period 3,674,393 3,760,098
------------ ------------
Cash and cash equivalents at end of period $ 4,238,784 $ 3,440,937
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 1,174,333 694,674
Income taxes 0 0
</TABLE>
See notes to financial statements.
5
<PAGE>
APPALACHIAN BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
March 31, 1997
NOTE A - Basis of Presentation
The consolidated financial statements include the accounts of
Appalachian Bancshares, Inc. (the "Company") and its wholly-owned subsidiary,
Gilmer County Bank (the "Bank"). The accompanying unaudited financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB and
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 1997
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to the financial
statements for Appalachian Bancshares, Inc. for the year ended December 31,
1996, and footnotes thereto included in the Company's Form 10-KSB, filed with
the Securities and Exchange Commission on March 26, 1997.
The Company was formed in May 1996 for the purpose of acquiring all
the outstanding stock of Gilmer County Bank, a Georgia banking corporation
located in Ellijay, Georgia, and operating as a bank holding company. On August
8, 1996, Gilmer County Bank became a wholly-owned subsidiary of the Company.
Unless otherwise indicated herein, the financial results of the Company refer to
the Company and the Bank on a consolidated basis, except that all financial data
prior to August 8, 1996, is for the Bank only.
NOTE B - Income Taxes
The effective tax rate of approximately 32 percent for the three
months ended March 31, 1997 approximates the statutory rate less an adjustment
for the effect of tax exempt securities.
NOTE C - Investment Securities
Effective May 26, 1994, the Company applied the accounting and
reporting requirements of Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities ("SFAS 115").
This pronouncement requires that all investments in debt securities be
classified as either "held-to-maturity" securities, which are reported at
amortized cost; trading securities, which are reported at fair value, with
unrealized gains and losses included in earnings; or "available-for-sale"
securities, which are reported at fair value, with unrealized gains and losses
excluded from earnings and reported in a separate component of Shareholder's
equity (net of deferred tax effect).
At March 31, 1997, the Company had net unrealized losses of $221,885
in available-for-sale securities which are reflected in the presented assets and
resulted in a decrease in Shareholder's equity of $146,444, net of deferred tax
liability. There were no trading securities.
6
<PAGE>
The net decrease in Shareholder's equity as a result of the SFAS 115 adjustment
from December 31, 1996 to March 31, 1997 was $113,473.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This discussion is intended to assist in an understanding of the Company's
financial condition and results of operations. This analysis should be read in
conjunction with the financial statements and related notes appearing elsewhere
herein and Management's Discussion and Analysis of Financial Condition and
Results of Operations appearing in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996, which was filed with the Securities and
Exchange Commission on March 26, 1997.
FINANCIAL CONDITION
March 31, 1997 compared to December 31, 1996
- --------------------------------------------
Loans
Loans comprised the largest single category of the Company's earning
assets at March 31, 1997. Loans, net of unearned income and reserve for loan
losses, were 70.2 percent of total assets at March 31, 1997. Total net loans
were $69,725,764 at March 31, 1997, representing an 8.4 percent increase from
the December 31, 1996 total of $64,306,446. This increase reflects the continued
increase in loan demand for the Bank's market area coupled with an increase in
the Bank's market share for this area.
Investment Securities and Other Earning Assets
Investment securities and federal funds sold increased $696,851 or 3.0
percent from December 31, 1996 to March 31, 1997. Investment securities at March
31, 1997 were $22,475,773 compared with $22,378,922 at December 31, 1996,
reflecting a 0.4 percent increase of $96,851. Federal funds sold were $1,750,000
at March 31, 1997 compared to the December 31, 1996 total of $1,150,000,
representing a 52.1 percent increase. The investment securities portfolio is
used to make various term investments, to provide a source of liquidity and to
serve as collateral to secure certain government deposits. Federal funds sold
are maintained as a tool in managing the daily cash needs of the Company. The
increases are the result of Management's plan to improve the Company's liquidity
position relative to the current size of the Company.
Asset Quality
Asset quality is measured by three key ratios. The ratio of loan loss
allowance to total nonperforming assets (defined as nonaccrual loans, loans past
due 90 days or greater, restructured loans, nonaccruing securities, and other
real estate) decreased from 9.94 to 6.09. The ratio of total nonperforming
assets to total assets remained at 0.001 and the ratio on nonperforming loans to
total loans increased slightly from 0.001 to 0.002 as compared to December 31,
1996. All of these ratios remain favorable as compared with industry averages,
7
<PAGE>
and management is aware of no factors which would suggest that they are prone to
erosion in future periods.
Deposits
Total deposits of $87,841,428 at March 31, 1997 increased $6,693,547
(8.2%) over total deposits of $81,147,881 at year-end 1996. Deposits are the
Company's primary source of funds with which to support its earning assets.
Noninterest-bearing deposits increased $185,960 or 5.4 percent from year-end
1996 to March 31, 1997, and interest-bearing deposits increased $6,507,587 or
8.4% during the same period. Time deposits of $100,000 or more increased
$779,060 (6.4%).
Securities Sold Under Agreements To Repurchase
Securities sold under agreements to repurchase totaled $4,201,444 at
March 31, 1997, a $1,082,528 decrease from the December 31, 1996 total of
$5,283,972. The total of securities sold under agreements to repurchase are
associated with the cash flow needs of our corporate customers that participate
in repurchase agreements. The decreased balances reflect the needs of these
customers to increase their cash balances on hand.
Shareholders' Equity
Shareholders' equity increased $127,497 from December 31, 1996 to
March 31, 1997, due to net earnings of $240,970 and the decrease in the
measurement for unrealized gains or losses on securities available for sale
totaling $113,473, net of deferred tax liability.
Liquidity Management
Liquidity is defined as the ability of a company to convert assets
into cash or cash equivalents without significant loss. Liquidity management
involves maintaining the Bank's ability to meet the day-to-day cash flow
requirements of its customers, whether they are depositors wishing to withdraw
funds or borrowers requiring funds to meet their credit needs. Without proper
liquidity management, the Bank would not be able to perform the primary function
of a financial intermediary and would, therefore, not be able to meet the
production and growth needs of the communities it serves.
The primary function of assets and liabilities management is not only
to assure adequate liquidity in order for the Bank to meet the needs of its
customer base, but to maintain an appropriate balance between interest-sensitive
assets and interest-sensitive liabilities so that the Bank can also meet the
investment requirements of its shareholders. Daily monitoring of the sources and
uses of funds is necessary to maintain an acceptable cash position that meets
both requirements. In the banking environment, both assets and liabilities are
considered sources of liquidity funding and both are, therefore, monitored on a
daily basis.
The asset portion of the balance sheet provides liquidity primarily
through loan principal repayments or sales of investment and trading account
securities. Outstanding loans that mature in one year or less, excluding
outstanding credit card debt equaled approximately $47.4 million
8
<PAGE>
at March 31, 1997. Investment securities maturing in one year or less equaled
$1.17 million. Other sources of liquidity include short-term investments such as
federal funds sold and maturing interest-bearing deposits with other banks.
The liability portion of the balance sheet provides liquidity through
various customers' interest-bearing and noninterest-bearing deposit accounts. At
the end of first quarter 1997, funds were also available through the purchase of
federal funds from correspondent commercial banks. Purchases can be made from
available lines of up to an aggregate of $2,000,000. Liquidity management
involves the daily monitoring of the sources and uses of funds to maintain an
acceptable cash position.
In an effort to maintain and improve the liquidity position of the
Bank, management made application for membership with the Federal Home Loan Bank
of Atlanta. As a member of the Federal Home Loan Bank, the Bank would improve
its ability to manage liquidity and reduce interest rate risk by having a
funding source to match longer term loans. The application received approval on
April 17, 1997. As of May 12, 1997 no draws have been made from available credit
at the Federal Home Loan Bank.
Capital Resources
A strong capital position is vital to continued profitability because
it promotes depositor and investor confidence and provides a solid foundation
for future growth of the organization. A majority of the Bank's capital
requirements have been provided from proceeds of the Bank's initial stock
offering in 1994, through draws by the Company on a $1 million line of credit
with Hardwick Bank & Trust Company (discussed below) and through the retention
of earnings.
Line of Credit. In November 1996, the Company obtained a $1 million
unsecured line of credit with Hardwick Bank & Trust Company. At December 31,
1996 the balance on the line of credit was $700,000. The Company subsequently
drew down the remaining amount in January 1997. Interest on the outstanding
amounts under the line of credit is payable on a quarterly basis at the prime
rate (as defined in the Credit Agreement with Hardwick) less 3/4 of a percentage
point. The Company began making interest payments on April 1, 1997. Principal is
due in five equal annual installments beginning January 1, 1999 with the last
payment due January 1, 2003. The Credit Agreement contains certain restrictive
covenants, including but not limited to certain restrictions on (i) additional
indebtedness; (ii) creating or allowing liens on the capital stock of the Bank;
(iii) guaranteeing certain obligations of other persons; (iv) merging,
consolidating or exchanging shares with, or acquiring the stock or assets of,
any Person (as defined in the Credit Agreement); (v) payment of dividends; and
(vi) disposing of the stock of the Bank. The Company also covenanted to cause
its depository institution subsidiaries (presently only the Bank ) at all times
to be classified as "well capitalized" under FDICIA capital ratios, maintain
nonperforming assets below a specified level, and maintain a minimum ratio of
consolidated loan loss reserves to total loans. The Credit Agreement also
contains certain customary affirmative covenants.
Federal Capital Standards. Regulatory authorities in the banking
industry are placing increased emphasis on the maintenance of adequate capital.
In 1990, new risk-based capital requirements became effective. The guidelines
take into consideration risk factors, as defined by regulators, associated with
various categories of assets, both on and off the balance sheet. Under the
guidelines, capital strength is measured in two tiers which are used in
conjunction with risk-adjusted assets to determine the risk-based capital
ratios. Tier 1 capital, which consists of common equity less goodwill, amounted
to $7.03 million at March 31, 1997. Tier 2 capital
9
<PAGE>
components include supplemental capital components such as qualifying allowance
for loan losses and qualifying subordinated debt. Tier 1 capital plus the Tier 2
capital components is referred to as Total Risk-Based capital and was $7.76
million at March 31, 1997. The percentage ratios as calculated under FDICIA
guidelines were 9.66 percent and 10.67 percent for Tier 1 and Total Risk-based
capital, respectively, for the three months ended March 31, 1997. Both levels
exceeded the minimum ratios of four percent and eight percent, respectively.
The Company's current capital positions exceed the new guidelines.
Management has reviewed and will continue to monitor the Company's asset mix and
product pricing, and the loan loss allowance, which are the areas determined to
be most affected by these new requirements.
DBF Capital Requirement. In addition to the capital standards imposed
by federal banking regulators, the Georgia Department of Banking and Finance
(the "DBF") imposed an 8% primary capital ratio as a condition to the approval
of the Bank's charter. This standard, which exceeds the FDIC capital standards,
is calculated as the ratio of total equity to total assets, each as adjusted for
unrealized gains and losses on securities and allowance for loan losses. This
heightened requirement will continue through the first three years of the Bank's
operation, at which time the Bank will be subject to a 6% capital ratio. The
Bank reports its capital ratio to the DBF on a monthly basis. At March 31, 1996,
the capital ratio as calculated under the DBF standard was 7.8%. As of April 30,
1997 the Bank was in compliance with the 8% requirement. At May 13, 1997, the
Bank's primary capital ratio was 7.88%.
Management closely monitors the Bank's capital ratios for day-to-day
fluctuations, which may be affected by increases in deposits or other assets. To
offset daily fluctuations in assets (primarily deposits), which may cause the
capital ratio to fall below the 8% level imposed by the DBF, the Bank's 401(k)
plan has been amended to allow for the purchase of Company stock by the plan.
This amendment will allow for additional capital to be injected into the Bank to
further the ability of the Bank to maintain an adequate capital ratio. Other
plans proposed, but not yet implemented include (1) the issuance of subordinated
debt securities and (2) the implementation of a controlled growth plan to
enhance profitability relative to the Bank's asset growth.
RESULTS OF OPERATIONS
Three months ended March 31, 1997
- ---------------------------------
Summary
Net earnings for the three months ended March 31, 1997 were $240,970
compared to net earnings of $79,640 for the same period in 1996. The Company has
reported net income for each quarter since the fourth quarter of 1995. Net
interest income increased $442,000 (85%) during the first three months of 1997,
as compared to the same period in 1996; noninterest expenses increased $191,653
(53.6%) during the same period, while noninterest income increased by $34,956
(68.9%).
10
<PAGE>
Net Interest Income
Net interest income, the difference between interest earned on assets
and the cost of interest-bearing liabilities, is the largest component of the
Company's net income. Revenue from earning assets of the Company during the
three months ended March 31, 1997 increased $956,334 (78.8%) from the same
period in 1996. This increase was due to the continued growth of earning assets
which averaged $91.6 million for the three month period ended March 31, 1997.
Interest expense for the three months ended March 31, 1997 increased $514,334 or
(73.8%) compared to the same period of 1996.
Provision for Loan Losses
The provision for loan losses represents the charge against current
earnings necessary to maintain the reserve for loan losses at a level which
management considers appropriate. This level is determined based upon
management's assessment of current economic condition, the composition of the
loan portfolio and the levels of nonaccruing and past due loans. The provision
for loan losses was $140,000 for the three months ended March 31, 1997 compared
to $90,000 for the same period of 1996. Charge-offs exceeded recoveries by
$61,326 for the three months ended March 31, 1997. The reserve for loan losses
as a percent of outstanding loans, net of unearned income, was 1.04 percent at
March 31, 1997 compared to 1.01 percent at year-end 1996.
Noninterest Income
Noninterest income for the three months ended March 31, 1997 was
$85,667, compared to $50,711 for the same period of 1996. This increase was
primarily due to an increase in service charges on deposit accounts of $14,643
in 1997 as compared to the same period of 1996, and increases in other operating
income of $22,113. Significant components of noninterest income changed as
follows: Service charges on deposit increased $14,643 (50.1%), insurance
commissions increased $3,103 (103.49%), investment securities decreased $4,903
(0.52%), and other operating income increased $22,113 (242.3%) to $31,239.
Increased credit card fees provided $18,741 of the increase in other operating
income, rising from $3,668 for the three months ended March 31, 1996 to $22,409
for the same period of 1997.
Noninterest Expenses
Noninterest expenses for the three months ended March 31, 1997 were
$548,979, reflecting a 53.6 percent increase over the same period of 1996. The
primary components of noninterest expenses are salaries and employee benefits,
which increased to $266,969 for the three months ended March 31, 1997, 38.8
percent higher than in the same period of 1996. The increase in salaries and
employee benefits are due to increased staffing for the unusually high level of
growth which has been experienced since the Bank's opening on March 3, 1995.
Occupancy costs decreased $863 (3.7%), and furniture and equipment expenses rose
by $11,257. Other operating expenses rose by 94.0 percent to $106,685. The
increase in other operating expenses are largely the result of an increase in
professional and regulatory fees and expenses associated with compliance with
regulatory and reporting requirements under the federal securities laws.
The continued growth of the Bank and the Company continues to
necessitate increased expenditures for data processing and other support
activities and personnel.
11
<PAGE>
Income Taxes
The Company attempts to maximize its net income through active tax
planning. Management is attempting to reduce its tax burden by purchasing tax
exempt securities. The provision for income taxes of $115,000 for the three
months ended March 31, 1997 increased $73,973 compared to the same period of
1996. This increase is primarily due to lack of additional loss carryforwards
which were used in the year ended December 31, 1996.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Report:
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
-------------- ----------------------
<S> <C>
3.1 Articles of Incorporation of the Company (included
as Exhibit 3.1 to the Company's Registration
Statement on Form 8-A, dated September 16, 1996,
previously filed with the Commission and
incorporated herein by reference).
3.2 Bylaws of the Company (included as Exhibit 3.2 to
the Company's Registration Statement on Form 8-A,
dated September 16, 1996, previously filed with
the Commission and incorporated herein by
reference).
10.1 Appalachian Bancshares, Inc. 1997 Directors' Non-
Qualified Stock Option Plan (included as Exhibit
10.1 to the Company's Annual Report on Form 10-
KSB, previously filed with the Commission and
incorporated herein by reference).
10.2 Appalachian Bancshares, Inc. 1997 Employee
Incentive Stock Incentive Plan (included as
Exhibit 10.2 to the Company's Annual Report on
Form 10-KSB, previously filed with the Commission
and incorporated herein by reference).
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
(b) No reports on Form 8-K were filed by the Company during the
period covered by this Report.
13
<PAGE>
SIGNATURES
Under the requirements of the Securities Exchange Act of 1934, the Company
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: May 14, 1997
APPALACHIAN BANCSHARES, INC.
/s/ Tracy R. Newton
-----------------------------------------
Tracy R. Newton
President and CEO
(Duly authorized officer)
/s/ Kent W. Sanford
-----------------------------------------
Kent W. Sanford
Executive Vice President
(Principal financial officer)
14
<PAGE>
EXHIBIT 11
APPALACHIAN BANCSHARES, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
The following tabulation presents the calculation of primary and fully diluted
earnings per common share for the three month periods ended March 31, 1997 and
1996.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Reported net income $240,970 $ 79,640
Earnings on common shares $240,970 $ 79,640
======== ========
Weighted average common shares outstanding 568,000 568,000
======== ========
Earnings per common share - primary and fully
diluted Income from continuing operations $ .42 $ .14
======== ========
Net income $ .42 $ .14
======== ========
</TABLE>
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,488,784
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,750,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,726,551
<INVESTMENTS-CARRYING> 2,749,222
<INVESTMENTS-MARKET> 2,755,705
<LOANS> 70,459,735
<ALLOWANCE> (733,971)
<TOTAL-ASSETS> 99,311,503
<DEPOSITS> 87,841,428
<SHORT-TERM> 4,201,444
<LIABILITIES-OTHER> 336,196
<LONG-TERM> 1,000,000
0
0
<COMMON> 2,840,000
<OTHER-SE> 3,092,435
<TOTAL-LIABILITIES-AND-EQUITY> 99,311,503
<INTEREST-LOAN> 1,784,545
<INTEREST-INVEST> 351,399
<INTEREST-OTHER> 34,438
<INTEREST-TOTAL> 2,170,382
<INTEREST-DEPOSIT> 1,142,388
<INTEREST-EXPENSE> 1,211,100
<INTEREST-INCOME-NET> 959,282
<LOAN-LOSSES> 140,000
<SECURITIES-GAINS> 4,503
<EXPENSE-OTHER> 220,187
<INCOME-PRETAX> 355,970
<INCOME-PRE-EXTRAORDINARY> 355,970
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 240,970
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
<YIELD-ACTUAL> 8.46
<LOANS-NON> 120,592
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 131,000
<ALLOWANCE-OPEN> 655,296
<CHARGE-OFFS> 62,220
<RECOVERIES> 895
<ALLOWANCE-CLOSE> 733,971
<ALLOWANCE-DOMESTIC> 733,971
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
