<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
[ ] Definitive Additional Materials
[ ] 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 30, 1999
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 Tuesday, May 25, 1999, at 7:00 p.m. at the Gilmer County Bank
Community Center, 829 Industrial Boulevard, Ellijay, Georgia.
At the Annual Meeting, shareholders will consider and vote upon the
election of ten 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.
Additionally, you may revoke the proxy by filing a subsequent proxy with the
Secretary of Appalachian Bancshares, Inc. prior to or at the time of the Annual
Meeting.
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.
829 INDUSTRIAL BOULEVARD
ELLIJAY, GEORGIA 30540
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MAY 25, 1999
----------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Appalachian Bancshares, Inc., a Georgia corporation, will
be held on Tuesday, May 25, 1999, at 7:00 p.m., local time, at the Gilmer County
Bank Community Center, 829 Industrial Avenue, Ellijay, Georgia, for the
following purposes:
1. To elect ten 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 & Vise, 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 adjournment thereof.
The Board of Directors has fixed the close of business on April 1, 1999
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 30, 1999. 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. Additionally, you may
revoke the proxy by filing a subsequent proxy with the Secretary of Appalachian
Bancshares, Inc. prior to or at the time of the Annual Meeting.
By Order of the Board of Directors,
/s/ Tracy R. Newton
TRACY R. NEWTON
President and Chief Executive Officer
Ellijay, Georgia
April 30, 1999
<PAGE> 4
APPALACHIAN BANCSHARES, INC.
829 INDUSTRIAL BOULEVARD
ELLIJAY, GEORGIA 30540
(706) 276-8000
--------------------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 1999
--------------------------------------
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 to be held at 7:00 p.m., local time, on
Tuesday, May 25, 1999, at the Gilmer County Bank Community Center, 829
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 proxy 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 & Vise, 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.,
829 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 subsidiaries - Gilmer County Bank and
Appalachian Community Bank (the "Banks") - 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 May 3, 1999. 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 1, 1999, the Company had 1,323,188 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, 1999 (the "Record Date") will be entitled to notice of, and to vote at,
the Annual Meeting.
The following table sets forth certain information with respect to the
beneficial ownership, as of April 14, 1999, 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>
Appalachian Bancshares, Inc. Section 401(k) Profit Sharing Plan............... 67,888 (3) 5.13%
Alan S. Dover................................................................. 31,250 2.2%
Charles A. Edmondson ......................................................... 41,250 2.9%
Roger E. Futch ............................................................... 35,750 (4) 2.5%
Joseph C. Hensley ............................................................ 35,800 2.5%
Frank E. Jones ............................................................... 21,250 1.5%
J. Ronald Knight ............................................................. 51,630 (5) 3.7%
Tracy R. Newton............................................................... 47,686 3.4%
Kent W. Sanford .............................................................. 36,746 (6) 2.6%
P. Joe Sisson ................................................................ 36,250 (7) 2.6%
Kenneth D. Warren............................................................. 52,750 3.7%
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (10 PERSONS).................. 390,362 (8) 27.7%
</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 owner and each of the
individual directors and named 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
Common Stock that the individual has the right to acquire on or before
June 13, 1999 (60 days from April 14, 1999), 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 13, 1999 is as follows: (i)
Mr. Newton - 26,400 shares; (ii) Mr. Sanford - 17,600 shares; (iii) Mr.
Hensley - 8,800 shares; (iv) each of the Company's directors (with the
exception of Messrs. Newton and Hensley) - 4,400 shares; and (v) all
directors and executive officers as a group (ten persons) - 83,600
shares.
(3) The address of the Appalachian Bancshares, Inc. Section 401(k) Profit
Sharing Plan (the "401(k) Plan") is Box G, 829 Industrial Boulevard,
Ellijay, Georgia 30540. Pursuant to the Georgia Bankers' Association
Master Section
2
<PAGE> 6
401(k) Profit Sharing Plan, which governs the 401(k) Plan, shares of
Common Stock owned by the 401(k) Plan are voted by the Company as
Company Stock Trustee in accordance with the directions of the 401(k)
Plan's administrative committee. Accordingly, the power to vote or
direct the vote of shares owned by the 401(k) Plan resides with the
administrative committee, which consists of Messrs. Hensley, Newton and
Sanford. The Company Stock Trustee has sole power to dispose of the
shares owned by the 401(k) Plan.
(4) Includes 3,700 shares held by Mr. Futch's spouse, as to which Mr. Futch
disclaims beneficial ownership, and 1,000 shares held by Mr. Futch and
his spouse as custodians for this minor child granddaughter, as to
which Mr. Futch disclaims beneficial ownership.
(5) Includes 2,830 shares held by Mr. Knight's spouse, as to which Mr.
Knight disclaims beneficial ownership.
(6) Includes 2,420 shares held by Mr. Sanford's spouse, as to which Mr.
Sanford disclaims beneficial ownership, and 72 shares held by Mr.
Sanford as custodian for his minor children.
(7) Includes 3,950 shares held by Mr. Sisson's spouse as to which Mr.
Sisson disclaims beneficial ownership.
(8) Includes an aggregate of 83,600 shares which the directors and
executive officers have the right to acquire as of June 13, 1999
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 that
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, 1998.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of ten
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 ten, which is an increase of
one director from the present Board of Directors.
If a proxy is executed in such manner as not to withhold authority to
vote for the election of a particular director, the persons named in the
enclosed proxy form will vote such proxy for the election of each 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.
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 Banks,
and principal employment for the past five years. With the
3
<PAGE> 7
exception of Mr. Sanford, each of the director nominees has been a director of
Gilmer County Bank since its inception in 1994 and a director of the Company
since 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Alan S. Dover.................. 42 Director
Charles A. Edmondson........... 51 Director
Roger E. Futch................. 53 Director
Joseph C. Hensley.............. 41 Director, Assistant Secretary
Frank E. Jones................. 46 Chairman of the Board
J. Ronald Knight............... 51 Director
Tracy R. Newton................ 43 President, Chief Executive Officer,
Treasurer, Director
Kent W. Sanford................ 37 Executive Vice President, Chief
Financial Officer and Chief
Operating Officer
P. Joe Sisson.................. 63 Director, Secretary
Kenneth D. Warren.............. 48 Director
</TABLE>
Alan S. Dover has been a director of the Company since 1996 and a
director of Gilmer County Bank since 1994. Mr. 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 a director of the Company since 1996, a
director of Gilmer County Bank since 1994 and a director of Appalachian
Community Bank since March 1999. Mr. 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 a director of the Company since 1996 and a
director of Gilmer County Bank since 1994. Mr. 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 has served as Assistant Secretary and a director of
the Company since 1996 and as Assistant Secretary and a director of Gilmer
County Bank since 1994. Mr. Hensley is a senior partner in Hensley, Land &
Associates, P.C., a certified public accounting firm in Ellijay.
4
<PAGE> 8
Frank E. Jones has been Chairman of the Board of the Company since 1996
and Chairman of the Board of Gilmer County Bank since 1994. Mr. 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 has been a director of the Company since 1996 and a
director of Gilmer County Bank since 1994. Mr. 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 Company since 1996 and President, Chief Executive Officer and a
director of Gilmer County Bank since its 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.
Kent W. Sanford has served as Executive Vice President, Chief Financial
Officer and Chief Operating Officer of the Company and Gilmer County Bank since
1996 and 1994, respectively, and has served as a director of Gilmer County Bank
since February 1999. Mr. Sanford also serves as the President, Chief Executive
Officer and a director of Appalachian Community Bank, and has served in such
capacities since the acquisition of Appalachian Community Bank by the Company in
November 1998. Prior to Mr. Sanford's employment with Gilmer County 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.
P. Joe Sisson has served as Secretary and a director of the Company
since 1996 and as Secretary and a director of Gilmer County Bank since 1994. Mr.
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 has been a director of the Company since 1996 and a
director of Gilmer County Bank since 1994. Mr. 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 TEN NOMINEES DESCRIBED
ABOVE AS DIRECTORS OF THE COMPANY.
5
<PAGE> 9
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held seven meetings during the
fiscal year ended December 31, 1998. The Board of Directors of Gilmer County
Bank held thirteen meetings during the 1998 fiscal year and the Board of
Directors of First National Bank of Union County (the predecessor to Appalachian
Community Bank) held two meetings from its acquisition by the Company on
November 30, 1998 through December 31, 1998. All directors of the Company and
the Banks 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 Alan Dover attended 72% of the
meetings of the Board of Directors of the Company.
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 Gilmer County 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.
Gilmer County 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 1998 fiscal year, Gilmer County Bank's Personnel
Committee met three times.
The primary functions of Gilmer County 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 1998 fiscal
year, the Audit Committee met one time.
Neither the Company nor Gilmer County Bank has a standing nominating
committee. Appalachian Community Bank has not yet established any committees.
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 Gilmer County Bank in the
ordinary course of business during fiscal year 1998, 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, 1998. Total loans outstanding
to all directors and executive officers of the Company and the Banks, 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 $5,463,030 at December 31, 1998.
6
<PAGE> 10
The Company employs the accounting firm of Hensley, Land & Associates,
P.C. to provide accounting and internal auditing services to the Company and the
Banks. Mr. Hensley, a director and officer of the Company and Gilmer County
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 & Vise, P.C. served as the Company's independent
public accountants for the fiscal year ended December 31, 1998, and has been
reappointed by the Board of Directors to serve in that capacity for the 1999
fiscal year. The Company has been advised that no member of Schauer, Taylor, Cox
& Vise, P.C. or any of its associates has any financial interest in the Company
or the Banks. A representative of Schauer, Taylor, Cox & Vise, 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 & Vise, 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 1999 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 & VISE, P.C. AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
7
<PAGE> 11
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 1998 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, 1998.
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............... 1998 $97,195 $45,851 $7,200 (3) 0 $24,893(4)
President, Chief Executive 1997 90,942 34,852 7,200 (3) 66,000 18,855(4)
Officer and Treasurer 1996 78,142 14,887 1,800 (3) 0 8,151(4)
Kent W. Sanford............... 1998 80,331(5) 31,827 0 0 19,652(6)
Executive Vice President, 1997 77,081(5) 24,494 0 44,000 15,370(6)
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 Gilmer County Bank. (4) Includes (i) contributions by Gilmer County
Bank of $3,569 in 1996, $12,321 in 1997 and $17,416 in 1998 under the
401(k) Plan, (ii) matching contributions by Gilmer County Bank of $1,822
in 1996, $3,774 in 1997 and $4,441 pursuant to the 401(k) Plan, and (iii)
health insurance premiums paid by Gilmer County Bank in each of 1996 and
1997 in the amount of $2,760, and in 1998 in the amount of $3.036.
(5) Includes $3,600 for services as secretary to the Board of Directors of the
Company and Gilmer County Bank.
(6) Includes (i) contributions by Gilmer County Bank of $9,671 in 1997 and
$13,359 in 1998 under the 401(k) Plan, (ii) matching contributions Gilmer
County Bank of $2,939 in 1997 and $3,257 in 1998 pursuant to the 401(k)
Plan, and (iii) health insurance premiums paid by Gilmer County Bank in
the amount of $2,760 in 1997 and $3,036 in 1998.
8
<PAGE> 12
STOCK OPTION GRANTS AND RELATED INFORMATION
There were no stock option grants during the fiscal year ended December
31, 1998. 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 1998.
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 (#) (1) FISCAL YEAR-END (2)
---------------------------- -----------------------------
<S> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Tracy R. Newton............................. 13,200 52,800 $ 158,400 $ 633,600
Kent W. Sanford ............................ 8,800 35,200 $ 105,600 $ 422,400
</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 exceptions and limitations. See
"Employment Contracts, Termination of Employment and Change-in-Control
Arrangements."
(2) The options have an exercise price of $8.00 per share and the fair market
value of the Common Stock at the close of business on December 31, 1998,
was $20.00 per share based on the price of the last trade of which
management is aware as of such date.
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 Company also served
as directors of Gilmer County Bank during the fiscal year ended December 31,
1998. In 1998, the Chairman of the Company's Board of Directors was paid an
aggregate of $17,736, 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 $13,736 for
their service on
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the Board. In addition, the Company reimbursed directors for travel and expenses
incurred by them in connection with their service on the Board.
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 & Vise, 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 2000 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, 1999. Any such proposal must comply in all respects with the
rules and regulations of the Commission.
For any proposal that is not submitted for inclusion in next year's
Proxy Statement, but is instead sought to be presented directly at the Company's
Year 2000 Annual Meeting of Shareholders, management will be able to vote
proxies in its discretion if the Company: (i) receives notice of the proposal
before the close of business on March 15, 2000, and advises shareholders in the
Year 2000 Proxy Statement about the nature of the matter and how management
intends to vote on such matter; or
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(ii) does not receive notice of the proposal prior to the close of business on
February 22, 2000. Notices of intention to present proposals at the Year 2000
Annual Meeting should be addressed to P. Joe Sisson, Secretary, Appalachian
Bancshares, Inc., 829 Industrial Boulevard, Ellijay, Georgia 30540.
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, 1999, 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., 829 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, 1999, 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
/s/ Tracy R. Newton
TRACY R. NEWTON
President and Chief Executive Officer
Ellijay, Georgia
April 30, 1999
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APPENDIX
APPALACHIAN BANCSHARES, INC.
829 INDUSTRIAL BOULEVARD
ELLIJAY, GEORGIA 30540
COMMON STOCK PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 25, 1999
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 30, 1999,
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 25, 1999 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.
<TABLE>
<S> <C>
Alan S. Dover J. Ronald Knight
Charles A. Edmondson Tracy R. Newton
Roger E. Futch Kent W. Sanford
Joseph C. Hensley P. Joe Sisson
Frank E. Jones Kenneth D. Warren
</TABLE>
2. PROPOSAL TO RATIFY the appointment of Schauer, Taylor, Cox &
Vise, P.C. as the Company's and the Banks' Independent Auditors for the fiscal
year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on back)
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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: ____________, 1999 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.
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