<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
APPALACHIAN BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price of 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):
(4) Proposed maximum aggregate value of the transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
April 29, 1998
Dear Shareholder:
On behalf of the Board of Directors and Management of Appalachian
Bancshares, Inc., I cordially invite you to the Annual Meeting of Shareholders
to be held on Wednesday, May 27, 1998, at 2:00 p.m. at the Gilmer County Bank
Community Center, 315 Industrial Boulevard, Ellijay, Georgia.
At the Annual Meeting, shareholders will consider and vote upon the
election of nine directors to constitute the Board of Directors and the
ratification of the appointment of the Company's independent auditors.
The accompanying Proxy Statement includes a formal notice of the Annual
Meeting, information concerning the nominees to the Board of Directors and other
information concerning the Annual Meeting.
A form of proxy is enclosed, and you are urged to complete, sign and
return it to Appalachian Bancshares, Inc. as soon as possible in the enclosed,
postage prepaid envelope. If you attend the Annual Meeting in person, you may
revoke your proxy at that time simply by requesting the right to vote in person.
Your continued support of the Company is very important. I look forward
to welcoming you at the meeting.
Sincerely,
/s/ Tracy R. Newton
Tracy R. Newton
President and Chief Executive Officer
<PAGE> 3
APPALACHIAN BANCSHARES, INC.
315 INDUSTRIAL BOULEVARD
ELLIJAY, GEORGIA 30540
---------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 27, 1998
---------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Appalachian Bancshares, Inc., a Georgia corporation (the
"Company"), will be held on Wednesday, May 27, 1998, at 2:00 p.m., local time,
at the Gilmer County Bank Community Center, 315 Industrial Avenue, Ellijay,
Georgia, for the following purposes:
1. To elect nine directors to serve for a one-year term and until
their successors shall have been duly elected and qualified;
2. To ratify the appointment of Schauer, Taylor, Cox & Edwards,
P.C. as the Company's independent auditors; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 1,
1998, as the record date for determining the shareholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournments thereof. A list of such
shareholders will be available for inspection by shareholders at the Annual
Meeting.
Detailed information relating to the above matters is set forth in the
accompanying Proxy Statement dated April 29, 1998. Whether or not you expect to
attend the Annual Meeting in person, please mark, sign, date and return the
enclosed proxy card in the accompanying postage-prepaid envelope as promptly as
possible. If you do attend the Annual Meeting in person, you may, of course,
withdraw your proxy should you wish to vote in person.
By Order of the Board of Directors,
/s/ Tracy R. Newton
TRACY R. NEWTON
President and Chief Executive Officer
Ellijay, Georgia
April 29, 1998
<PAGE> 4
APPALACHIAN BANCSHARES, INC.
315 INDUSTRIAL BOULEVARD
ELLIJAY, GEORGIA 30540
(706) 276-8000
---------------------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 1998
---------------------------------------
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board of Directors") of
Appalachian Bancshares, Inc., a Georgia corporation (the "Company"), for use at
the Annual Meeting of Shareholders (the "Annual Meeting") to be held at 2:00
p.m., local time, on Wednesday, May 27, 1998, at the Gilmer County Bank
Community Center, 315 Industrial Boulevard, Ellijay, Georgia, and at any and all
adjournments thereof.
A proxy delivered pursuant to this solicitation is revocable at the
option of the person giving the same at any time before it is exercised. A proxy
may be revoked, prior to its exercise, by executing and delivering a later dated
proxy card, by delivering written notice of the revocation of the proxy to the
Company prior to the Annual Meeting, or by attending and voting at the Annual
Meeting. Attendance at the Annual Meeting, in and of itself, will not constitute
a revocation of a proxy. Unless previously revoked, the shares represented by
the enclosed proxy will be voted in accordance with the shareholder's directions
if the proxy is duly executed and returned prior to the Annual Meeting. If the
enclosed proxy is duly executed and returned prior to the Annual Meeting but no
directions are specified, the shares will be voted "FOR" the election of the
director nominees recommended by the Board of Directors, "FOR" ratification of
the appointment of Schauer, Taylor, Cox & Edwards, P.C. as the Company's
independent auditors, and in accordance with the discretion of the named proxies
on other matters properly brought before the Annual Meeting. Any written notice
revoking a proxy should be sent to: Appalachian Bancshares, Inc., 315 Industrial
Boulevard, Ellijay, Georgia 30540, Attention: Tracy R. Newton.
The expense of preparing, printing and mailing this Proxy Statement and
soliciting the proxies sought hereby will be borne by the Company. In addition
to the use of the mails, proxies may be solicited by officers, directors and
regular employees of the Company or its subsidiary Gilmer County Bank (the
"Bank"), who will not receive additional compensation therefor, in person, or by
telephone, facsimile transmission or other electronic means. The Company also
will request brokerage firms, banks, nominees, custodians and fiduciaries to
forward proxy materials to the beneficial owners of shares of the Company's
Common Stock, $5.00 par value (the "Common Stock"), as of the record date and
will provide reimbursement for the cost of forwarding the proxy materials in
accordance with customary practice. Your cooperation in promptly signing and
returning the enclosed proxy card will help to avoid additional expense.
This Proxy Statement and the enclosed proxy card are first being mailed
to shareholders on or about April 29, 1998. A copy of the Company's Annual
Report to Shareholders accompanies this Proxy Statement.
<PAGE> 5
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The Company is authorized to issue up to twenty million (20,000,000)
shares of Common Stock. At April 7, 1998, the Company had 574,610 shares of
Common Stock issued and outstanding. Each share of Common Stock entitles the
holder to one vote. Only shareholders of record at the close of business on
April 1, 1998 (the "Record Date") will be entitled to notice of, and to vote at,
the Annual Meeting. In accordance with the Plan of Reorganization and Agreement
of Merger dated May 24, 1996, between the Company and the Bank, holders of
certificates representing shares of common stock of the Bank who have not
exchanged such certificates for certificates representing Company Common Stock
as of the Record Date will not be entitled to notice of, or to vote at, the
Annual Meeting.
The following table sets forth certain information with respect to the
beneficial ownership, as of April 7, 1998, of shares of Common Stock by (a) each
person known by the Company to be the beneficial owner of more than five percent
of the outstanding Company's Common Stock, (b) each of the Company's directors,
(c) the Company's named executive officers, as defined herein, and (d) all
directors and executive officers of the Company as a group, and the percentage
of the outstanding shares of Common Stock represented thereby. Except as noted
below, the Company believes that each of the persons listed has sole investment
and voting power with respect to the shares included in the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP (1)(2) CLASS (1)
- ------------------------ ------------------ ----------
<S> <C> <C>
Alan S. Dover................................................................. 13,425 2.3%
Charles A. Edmondson ......................................................... 18,425 3.2%
Roger E. Futch ............................................................... 17,275 (3) 3.0%
Joseph C. Hensley ............................................................ 16,925 (4) 2.9%
Frank E. Jones ............................................................... 8,425 1.5%
J. Ronald Knight ............................................................. 23,615 (5) 4.1%
Tracy R. Newton............................................................... 13,493 2.3%
Kent W. Sanford .............................................................. 13,973 (6) 2.4%
P. Joe Sisson ................................................................ 15,925 (7) 2.8%
Kenneth D. Warren............................................................. 31,775 5.5%
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (10 PERSONS).................. 173,256 (8) 28.7%
</TABLE>
(1) The information contained in this table with respect to Common Stock
ownership reflects "beneficial ownership" as determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(2) With respect to the 5% or greater beneficial owners and each of the
individual directors and executive officers listed in the table and the
aggregate number of shares held by the directors and executive officers as
a group, the number of shares indicated includes shares of the Company's
Common Stock that the individual has the right to acquire on or before June
6, 1998 (60 days from April 7, 1998), through the exercise of options
granted under the Directors' Non-Qualified Stock Option Plan or the
Employee Stock Incentive Plan approved by the Company's shareholders at the
1997 Annual Meeting of Shareholders. See "Stock Option Grants and Related
Information." The number of shares underlying options that may be exercised
as of June 6, 1998 is as follows: (i) Mr. Newton -
2
<PAGE> 6
6,600 shares; (ii) Mr. Sanford - 4,400 shares; (iii) each of the Company's
directors (with the exception of Mr. Newton) - 2,200 shares; and (iv) all
directors and executive officers as a group (ten persons) - 28,600 shares.
(3) Includes 1,850 shares held by Mr. Futch's spouse, as to which Mr. Futch
disclaims beneficial ownership.
(4) Includes 13,975 held by Mr. Hensley jointly with his spouse, and 750
shares owned by Mr. Hensley's spouse as to which Mr. Hensley disclaims
beneficial ownership.
(5) Includes 1,415 shares held by Mr. Knight's spouse, as to which Mr. Knight
disclaims beneficial ownership.
(6) Includes 1,210 shares held by Mr. Sanford's spouse, as to which Mr.
Sanford disclaims beneficial ownership, and 36 shares held by Mr.
Sanford as custodian for his minor children.
(7) Includes 8,800 shares which Mr. Sisson owns jointly with his spouse, and
1,975 shares held by Mr. Sisson's spouse as to which Mr. Sisson disclaims
beneficial ownership.
(8) Includes an aggregate of 28,600 shares which the directors and executive
officers have the right to acquire as of June 6, 1998 through the exercise
of options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than 10% of any class
of the Company's equity securities, to file with the Securities and Exchange
Commission (the "Commission") initial reports of beneficial ownership and
reports of changes in beneficial ownership of the Common Stock. Such persons are
required to furnish the Company with copies of all Section 16(a) reports they
file with the Commission. To the Company's knowledge, based solely on a review
of copies of such reports furnished to the Company and written representations
that no other reports were required, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with for the year ended December 31, 1997 with the following
exceptions: due to an inadvertent error, each of the directors and executive
officers reported a purchase of shares from a former director of the Company on
Form 4, each of which was received by the Commission one day late.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of nine
directors, each of whom will serve for a one-year term and until their
successors shall have been duly elected and qualified.
The Company's bylaws provide that the Board shall consist of not less
than four nor more than twenty-five directors, with the exact number to be fixed
by resolution of the Board of Directors from time to time. The Company's Board
of Directors has fixed the number of directors at nine.
If a proxy is executed in such manner as not to withhold authority to
vote for election of directors, the persons named in the enclosed proxy form
will vote such proxy for the election of the nominees listed below, reserving,
however, full discretion to cast votes for other persons if any nominee is
unable or unwilling to serve. Each person nominated for election has agreed to
serve if elected, and management has no reason to believe that any nominee will
be unavailable to serve if elected.
3
<PAGE> 7
NOMINEES FOR THE BOARD OF DIRECTORS
The table and text below set forth certain information about the
nominees, including such nominee's age, position with the Company and the Bank,
and principal employment for the past five years. Each of the director nominees
has been a director of the Bank since its inception in 1994 and a director of
the Company since 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY POSITION WITH THE BANK
---- --- ------------------------- ----------------------
<S> <C> <C> <C>
Alan S. Dover.................. 41 Director Director
Charles A. Edmondson........... 50 Director Director
Roger E. Futch................. 52 Director Director
Joseph C. Hensley.............. 40 Director, Assistant Director, Assistant
Secretary Secretary
Frank E. Jones................. 45 Chairman of the Board Chairman of the Board
J. Ronald Knight............... 55 Director Director
Tracy R. Newton................ 42 President, Chief Executive President, Chief
Officer, Treasurer, Director Executive Officer,
Director
P. Joe Sisson.................. 63 Director, Secretary Director, Secretary
Kenneth D. Warren.............. 48 Director Director
</TABLE>
Alan S. Dover is the chief executive officer and owner of A.S. Dover
Concrete, Inc., a curbing and excavating business. He also is owner of A.S.
Dover Properties, Inc., a commercial real estate development firm, and A.S.
Dover Construction Company.
Charles A. Edmondson has been with State Farm Insurance as an agent and
agency manager in Ellijay since 1978 and is currently an agent in Blue Ridge,
Georgia. He served as agency manager with State Farm from 1983 to 1995.
Roger E. Futch has been employed by the Ellijay Telephone Company since
1968 and currently serves as a network manager. He also owns a wholesale and
retail apple orchard with his wife and son.
Joseph C. Hensley is a senior partner in Hensley, Land & Associates,
P.C., a certified public accounting firm in Ellijay. He also owns a one-third
interest in an electronic tax-filing service in Blue Ridge, Georgia.
Frank E. Jones is the minister of the Ellijay Church of Christ, where
he has served for 18 years. Mr. Jones also serves on the board of directors of
Limestone Valley Resource Conservation District and is a member of the Georgia
Policy Council for Children and Families and the Welfare Reform Policy Council
for the State of Georgia.
J. Ronald Knight is president and part owner of Twin City Motors, Inc.,
an automobile dealership in Ellijay. He is also secretary and part owner of
Ellijay Mini Storage, Inc.
Tracy R. Newton has served as President, Chief Executive Officer and a
director of the Bank since the Bank's inception in 1994. Prior to Mr. Newton's
employment with the Bank, he served as executive vice president of the Bank of
Ellijay, until he resigned in September 1993 to pursue the formation of the
Bank. His responsibilities at the Bank of Ellijay included the development and
implementation of bank policy and lending. He has had 22 years experience in
community banking, particularly in commercial, agricultural, and consumer
lending and in bank operations.
4
<PAGE> 8
P. Joe Sisson is president and chief executive officer of the Sisson
Corporation, a real estate development firm, and he serves as president of Blue
Ridge Mountain Properties. He also owns interests in Cashes Valley Properties,
Sisson, Dupont and Carder, Inc., Sisson Co., Sisson Brothers, Sisson Properties,
and Sisson Company Contractors. He is a former advisory director of NationsBank.
Kenneth D. Warren is the president and part owner of Warren's Auto
Sales, Inc., a used car dealership.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NINE NOMINEES
DESCRIBED ABOVE AS DIRECTORS OF THE COMPANY.
EXECUTIVE OFFICERS
In addition to Mr. Newton, the other executive officer of the Company
and the Bank is as follows:
Kent W. Sanford (age 36) is Executive Vice President, Chief Financial
Officer and Chief Operating Officer of the Company and the Bank. Prior to Mr.
Sanford's employment with the Bank in August 1994, he served for ten years as
vice president for the Bank of Ellijay where he supervised all operations areas
and acted as a loan officer and branch manager.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held 11 meetings during the
fiscal year ended December 31, 1997. The Board of Directors of the Bank held 18
meetings during the 1997 fiscal year. All directors of the Company and the Bank
attended at least 75% of the total number of meetings held by the Board of
Directors of the Company and the Bank and the committees on which such director
served during that period, except that each of Messrs. Edmondson and Hensley
attended 13 meetings of the Bank's Board of Directors and Mr. Dover attended 11
of the meetings of the Bank's Board of Directors.
The Company's Board of Directors has one standing committee, the
Personnel Committee, which consists of Roger E. Futch, Joseph C. Hensley, Ronald
J. Knight, Tracy R. Newton and Kenneth D. Warren. The primary functions of the
Company's Personnel Committee is to review compensation, bonus and incentive
plans, to make recommendations to the full Board of Directors in respect of any
changes to such plans, to administer such plans as directed by the Board of
Directors, and to approve new management.
The Board of Directors of the Bank has established certain committees,
including the Personnel Committee, Audit Committee, Loan Committee, Community
Reinvestment Act Committee and the Investment and Asset/Liability Management
Committee. The principal functions and the names of the directors currently
serving as members of certain of those committees are set forth below.
The Bank's Personnel Committee consists of the same directors and
performs the same functions as those set forth above for the Company's Personnel
Committee. During the 1997 fiscal year, the Bank's Personnel Committee met five
times.
The primary functions of the Bank's Audit Committee include reviewing
internal and independent audit, compliance and loan reports, reviewing
management's response to such reports and reporting to the Board of Directors
the committee's findings and recommendations. The Audit Committee is composed of
Charles A. Edmondson, Roger E. Futch and P. Joe Sisson. During the 1997 fiscal
year, the Audit Committee met three times.
Neither the Company nor the Bank has a standing nominating committee.
5
<PAGE> 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the directors and executive officers of the Company, members
of their families and companies or firms with which they are associated, were
customers of and had banking transactions with the Bank in the ordinary course
of business during 1997, and such transactions are expected to continue in the
future. All loans and commitments to loan included in such transactions were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons
and, in the opinion of management, did not involve more than a normal risk of
collectibility or present other unfavorable features. None of such loans
outstanding to directors or officers of the Company, members of their families
or companies or firms with which they are associated were non-performing as of
December 31, 1997. Total loans outstanding to all directors and executive
officers of the Company and the Bank, or affiliates of such persons (including
members of the immediate families of such persons or companies in which such
persons had a 10% or more beneficial interest), amounted to an aggregate of
$4,404,556 at March 26, 1998.
The Company employs the accounting firm of Hensley, Land & Associates,
P.C. to provide accounting and internal auditing services to the Company and the
Bank. Mr. Hensley, a director and officer of the Company and the Bank, is a
senior partner in the accounting firm. The Company believes that the services
obtained from the accounting firm are on terms as favorable to the Company as
could have been obtained from unaffiliated parties.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Schauer, Taylor, Cox & Edwards, P.C. served as the Company's
independent public accountants for the fiscal year ended December 31, 1997, and
has been reappointed by the Board of Directors to serve in that capacity for the
1998 fiscal year. The Company has been advised that no member of Schauer,
Taylor, Cox & Edwards, P.C. or any of its associates has any financial interest
in the Company or the Bank. A representative of Schauer, Taylor, Cox & Edwards,
P.C. will not be available at the Annual Meeting to respond to questions or make
a statement on behalf of the independent public accountants.
Although not formally required, the appointment of the independent
auditors of the Company has been directed by the Board of Directors to be
submitted to the shareholders for ratification as a matter of sound corporate
practice. If the shareholders do not ratify the appointment of Schauer, Taylor,
Cox & Edwards, P.C., the appointment of the independent auditors will be
reconsidered by the Board of Directors. If the shareholders ratify the
appointment, the Board of Directors, in its sole discretion, may still direct
the appointment of new independent auditors at any time during the 1998 fiscal
year if the Board of Directors believes that such a change would be in the best
interests of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF SCHAUER, TAYLOR, COX & EDWARDS, P.C. AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information with respect to all
compensation, including bonuses, stock option awards and other payments, paid or
accrued for each of the last three fiscal years for Tracy R. Newton, the
Company's President and Chief Executive Officer, and for the 1997 fiscal year
for Kent W. Sanford, the Company's Executive Vice President, Chief Financial
Officer and Chief Operating Officer (these individuals are referred to
collectively as the "named executive officers"). No other executive officer of
the Company or the Bank was paid $100,000 or more in salary, bonus and
directors' fees during the year ended December 31, 1997.
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (1) AWARDS
-------------------------------------------- ------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (2) BONUS COMPENSATION OPTIONS (#) COMPENSATION
------------------------------- ------- ------------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Tracy R. Newton............... 1997 $ 90,942 $ 34,852 $ 7,200 (3) 6,600 $ 18,855(4)
President, Chief Executive 1996 78,142 14,887 1,800 (3) 0 8,151(4)
Officer and Treasurer 1995 70,000 0 0 0 2,760(4)
Kent W. Sanford............... 1997 77,081(5) 24,494 0 4,400 15,370(6)
Executive Vice President,
Chief Financial Officer and
Chief Operating Officer
</TABLE>
(1) Information regarding certain perquisites and other personal benefits has
been omitted because the aggregate value of such items do not meet the
minimum amount required for disclosure under the rules and regulations of
the Commission.
(2) Includes deferred contributions made at the individual's election pursuant
to the Company's 401(k) Plan.
(3) Directors' fees paid for service on the Board of Directors of the Company
and the Bank.
(4) Includes (i) contributions by the Bank of $3,569 in 1996 and $12,321 in
1997 under the 401(k) Plan, (ii) matching contributions by the Bank of
$1,822 in 1996 and $3,774 in 1997 pursuant to the 401(k) Plan, and (iii)
health insurance premiums paid by the Bank in each of 1995, 1996 and 1997
in the amount of $2,760.
(5) Includes $3,600 for services as secretary to the Board of Directors of the
Company and the Bank.
(6) Includes (i) contributions by the Bank of $9,671 under the 401(k) Plan,
(ii) matching contributions by the Bank of $2,939 pursuant to the 401(k)
Plan, and (iii) health insurance premiums paid by the Bank in the amount of
$2,760.
STOCK OPTION GRANTS AND RELATED INFORMATION
The following table sets forth information concerning stock option
grants during the fiscal year ended December 31, 1997 to the named executive
officers.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#)(1) IN 1997 ($/SH) (2) DATE
- ---------------------------------------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Tracy R. Newton............................... 33,000 60% $16.00 6/1/07
Kent W. Sanford............................... 22,000 40% $16.00 6/1/07
</TABLE>
- -----------------
(1) The options vest and become exercisable in five equal annual installments
beginning on the first anniversary of the date of grant. Upon the
occurrence of certain events resulting in a change of control of the
Company or certain major corporate transactions, the options become fully
vested and exercisable, subject to certain
7
<PAGE> 11
exceptions and limitations. See "Employment Contracts, Termination of
Employment and Change-in-Control Arrangements."
(2) The exercise price is the fair market value per share of the Company's
Common Stock on the date of grant as determined by the Board of Directors.
The following table sets forth information with respect to the named
executive officers concerning unexercised options held as of the end of the
fiscal year. No options were exercised by the named executive officers in 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END (1)
---------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Tracy R. Newton............................. 0 33,000 $ 0 $ 214,500
Kent W. Sanford ............................ 0 22,000 $ 0 $ 143,000
</TABLE>
- -----------------
(1) The fair market value of the Common Stock at the close of business on
December 31, 1997, was $22.50 per share based on an appraisal obtained by
the Company from an independent bank consulting firm.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Pursuant to the terms of the 1997 Employee Stock Incentive Plan (the
"Plan"), the Board of Directors may provide in any option agreement that
outstanding options covered by such agreement will become fully vested and
exercisable, subject to certain exceptions and limitations, in the event of a
change in control or certain other corporate transactions. "Change in control"
and "corporate transactions" are defined in the Plan to include, among other
things, the acquisition by another person of more than fifty percent of the
total combined voting power of the Company's outstanding Common Stock; a change
in the composition of a majority of the Board of Directors within a specified
period of time; a merger or consolidation in which the Company is not the
surviving entity; the sale, transfer or other disposition of substantially all
of the Company's assets in connection with a liquidation of the Company; and
certain other transactions. The option agreements pursuant to which Messrs.
Newton and Sanford were granted options contain the foregoing acceleration
provisions. See "Stock Option Grants and Related Information."
DIRECTOR COMPENSATION
The same individuals who served as directors of the Bank also served as
directors of the Company during the fiscal year ended December 31, 1997. In
1997, the Chairman of the Company's Board of Directors was paid an aggregate of
$15,253, Mr. Newton was paid an aggregate of $7,200, and each of the other
members of the Board of Directors was paid an aggregate of $13,003 for their
service on the Board. In addition, the Company reimbursed directors for travel
and expenses incurred by them in connection with their service on the Board.
Directors of the Company and the Bank were not compensated for their services
8
<PAGE> 12
as directors or for serving on any committees of the respective boards of
directors prior to October 1996. In April 1997, the shareholders of the Company
approved and adopted the 1997 Directors' Non-Qualified Stock Option Plan. On
June 1, 1997, the Company granted to each of the eligible directors options to
purchase 11,000 shares of the Company's Common Stock at an exercise price equal
to the fair market value of the Company's Common Stock, which was $16.00 per
share at the time of the grant as determined by the Board of Directors.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if any other matters are properly brought before
the Annual Meeting, it is the intention of the named proxies in the accompanying
proxy to vote in accordance with their judgment on such matters.
VOTING REQUIREMENTS
Under Georgia law and pursuant to the bylaws of the Company, the
presence, in person or by proxy, of the holders of more than fifty percent (50%)
of the outstanding Common Stock entitled to vote is necessary to constitute a
quorum for purposes of shareholder action. For these purposes, shares which are
present or represented by proxy at the Annual Meeting will be counted in
determining whether a quorum has been constituted, regardless of whether the
holder of the shares or the proxy abstains from voting on any particular matter
or whether a broker with discretionary authority fails to exercise its
discretionary voting authority.
With regard to Proposal No. 1, the election of directors, votes may be
cast for or votes may be withheld from each nominee. Directors will be elected
by a plurality of votes cast by the shares voting at the meeting. Abstentions
and broker non-votes will be treated as not having been voted and will have no
effect on the outcome of the election of directors. With regard to Proposal No.
2, the ratification of independent public accountants, votes may be cast for or
against the matter, or shareholders may abstain from voting on the matter.
Approval of such matter requires the affirmative vote of at least a majority of
the shares of Common Stock present or represented by proxy at the meeting and
entitled to vote. Therefore, abstentions and broker non-votes will have the
effect of votes against the approval of such matter.
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the named proxies
FOR the election of the director nominees recommended by the Board of Directors,
FOR the ratification of the appointment of Schauer, Taylor, Cox & Edwards, P.C.
as the Company's independent public accountants, and in accordance with the
discretion of the named proxies on other matters properly brought before the
Annual Meeting.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 1999 Annual
Meeting of Shareholders and to be included in the Company's proxy statement and
form of proxy relating to such meeting must be received by the Company no later
than December 30, 1998. Any such proposal must comply in all respects with the
rules and regulations of the Commission.
9
<PAGE> 13
ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report to Shareholders accompanies this
Proxy Statement. Upon the written request of any record holder or beneficial
owner of the Common Stock as of April 1, 1998, the Company will provide, without
charge, a copy of its annual report on Form 10-KSB, including financial
statements and any financial statement schedules, as filed with the Commission.
Copies of exhibits to the Form 10-KSB are also available upon specific request
and payment of a reasonable charge for reproduction. Such request should be
directed to Appalachian Bancshares, Inc., 315 Industrial Boulevard, Ellijay,
Georgia 30540, Attention: Kent W. Sanford. If the person requesting the Form
10-KSB was not a shareholder of record on April 1, 1998, the request must
include a representation that such person was the beneficial owner of the Common
Stock on that date.
By Order of the Board of Directors
TRACY R. NEWTON
President and Chief Executive Officer
Ellijay, Georgia
April 29, 1998
10
<PAGE> 14
APPENDIX
APPALACHIAN BANCSHARES, INC.
315 INDUSTRIAL BOULEVARD
ELLIJAY, GEORGIA 30540
COMMON STOCK PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 27, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED, AND NOT REVOKED, THE
SHARES IT REPRESENTS WILL BE VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH THE
CHOICES SPECIFIED BELOW, AND IF NO CHOICE IS SPECIFIED, IT WILL BE VOTED FOR
EACH OF THE PROPOSALS SET FORTH BELOW.
The Board of Directors recommends a vote "FOR" the listed proposals
which are more fully described in the proxy statement dated April 29, 1998,
which was sent to shareholders in connection with the listed proposals (the
"Proxy Statement").
The undersigned shareholder of Appalachian Bancshares, Inc., a Georgia
corporation (the "Company"), hereby appoints Joseph C. Hensley, Tracy R. Newton
and P. Joe Sisson, or any of them, as Proxy, with full power of substitution, to
act for and in the name of the undersigned to vote, as designated below, the
shares of the undersigned at the Annual Meeting of Shareholders of the Company
to be held on May 27, 1998 and at any adjournment or postponement thereof:
1. PROPOSAL TO APPROVE the election of all nominees as directors of the
Company.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD authority for all
(except as marked to the contrary below) nominees listed below
</TABLE>
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Alan S. Dover Joseph C. Hensley Tracy R. Newton
Charles A. Edmondson Frank E. Jones P. Joe Sisson
Roger E. Futch J. Ronald Knight Kenneth D. Warren
2. PROPOSAL TO RATIFY the appointment of Schauer, Taylor, Cox & Edwards,
P.C. as the Company's and the Bank's Independent Auditors for the fiscal year
ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on back)
<PAGE> 15
IN ACCORDANCE WITH THEIR BEST JUDGMENT with respect to any other
matters which may properly come before the meeting or any adjournment thereof.
PLEASE MARK, DATE AND SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: __________________, 1998 PLEASE SIGN NAME EXACTLY AS
LISTED ON THE MAILING LABEL.
-----------------------------------------
Signature
-----------------------------------------
Print Name as listed on the mailing label
-----------------------------------------
Signature (if held jointly)
NOTE: If stock is held in the name of two or more persons, all must sign. When
signing as attorney, trustee, administrator, executor or guardian, please give
your full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer.
SPECIAL NOTICE TO SHAREHOLDERS
Due to recent changes in the postal
addresses in Gilmer County and the
surrounding area, all shareholders are
requested to provide their new mailing
address in the space provided below to
facilitate communications to shareholders
by the Company.
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(Number and Street)
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(City, Zip Code)
