<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
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Commission file number: 000-21383
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Appalachian Bancshares, Inc.
Section 401(k)
Profit Sharing Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Appalachian Bancshares, Inc.
829 Industrial Boulevard
Ellijay, Georgia 30540
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
CONTENTS
================================================================================
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 2
FINANCIAL STATEMENTS
Statements of net assets available for benefits 3
Statements of changes in net assets available for benefits 4
Notes to financial statements 5-9
SUPPLEMENTAL SCHEDULES
Schedule of assets held for investment purposes at end of year 11
Schedule of reportable transactions 12
Schedule of nonexempt transactions 13
<PAGE> 5
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Appalachian Bancshares, Inc.
Section 401(k) Profit Sharing Plan
Ellijay, Georgia
We have audited the accompanying statements of net assets available for benefits
of the Appalachian Bancshares, Inc. Section 401(k) Profit Sharing Plan (the
"Plan") as of December 31, 1999 and 1998, and the related statements of changes
in net assets available for benefits for the years then ended December 31, 1999
and 1998. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of Appalachian
Bancshares, Inc. Section 401(k) Profit Sharing Plan as of and for the year ended
December 31, 1997, were audited by Bricker & Melton, P.A., whose practice has
been combined with our Firm and whose report dated June 20, 1999, expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 1999 and 1998 financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 1999 and 1998, and the changes in net assets available
for benefits for the years ended December 31, 1999 and 1998, in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at end of year, reportable transactions, and nonexempt
transactions are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employment Retirement Income and Security Act
of 1974. The supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ BDO Seidman, LLP
Atlanta, Georgia
June 23, 2000
2
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
================================================================================
<TABLE>
<CAPTION>
December 31, 1999 1998
-------------------------------------------------- ---------- ----------
<S> <C> <C>
ASSETS
INVESTMENTS, AT FAIR MARKET VALUE
Cash and money market funds $ 19,215 $ 73,181
Common stocks:
Appalachian Bancshares, Inc. 1,474,452 1,357,760
Mutual funds 173,923 76,184
---------- ----------
Total investments 1,667,590 1,507,125
---------- ----------
Receivables:
Employer contributions 70,160 9,047
Participant contributions 9,371 5,367
Other receivables 4,169 --
---------- ----------
Total receivables 83,700 14,414
---------- ----------
TOTAL ASSETS AND NET ASSETS AVAILABLE FOR BENEFITS $1,751,290 $1,521,539
========== ==========
</TABLE>
See accompanying report of independent certified public accountants and
notes to financial statements.
3
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
================================================================================
<TABLE>
<CAPTION>
Years ended December 31, 1999 1998 1997
-------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
ADDITIONS
Net (depreciation) appreciation in fair market value of investments:
Common stocks:
Appalachian Bancshares, Inc. $ (163,824) $ 499,824 $ 158,717
Mutual funds 12,020 11,608 15,230
Interest 12,319 7,757 3,028
Contributions:
Employer 170,160 139,834 101,939
Participant 99,486 61,924 57,565
Rollover 107,894 7,466 30,690
----------- ----------- -----------
Total additions 238,055 728,413 367,169
----------- ----------- -----------
DEDUCTIONS
Benefits paid directly to participants 5,612 3,660 8,232
Management/administrative expenses 2,692 252 --
----------- ----------- -----------
Total deductions 8,304 3,912 8,232
----------- ----------- -----------
NET INCREASE 229,751 724,501 358,937
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 1,521,539 797,038 438,101
----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 1,751,290 $ 1,521,539 $ 797,038
=========== =========== ===========
</TABLE>
See accompanying report of independent certified public accountants and
notes to financial statements.
4
<PAGE> 8
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. DESCRIPTION The following brief description of the Appalachian
OF PLAN Bancshares, Inc. Section 401(k) Profit Sharing Plan
(the "Plan") provides only general information.
Participants should refer to the Plan agreement for a
more complete description of the Plan's provisions.
a. General - The Gilmer County Bank's Board of
Directors authorized the adoption of the
Georgia Bankers Association's Master Section
401(k) Profit Sharing Plan and Trust
Adoption Agreement as the Gilmer County
Bank's 401(k) plan effective January 1,
1995. The Gilmer County Bank Section 401(k)
Profit Sharing Plan was amended on April 22,
1997. Appalachian Bancshares, Inc. became
the adopting company and sponsor of the
Plan, entitled "Appalachian Bancshares, Inc.
Section 401(k) Profit Sharing Plan." The
Georgia Bankers Association administers the
trust and provides administrative services
to the Plan through third-party contracts.
The Plan is a defined contribution plan
covering all full-time employees of
Appalachian Bancshares, Inc. (the "Company")
who have one year of service and are age
twenty-one or older. It is subject to the
provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
On December 1, 1998, the Company purchased
First National Bank of Union County.
Effective with this purchase, the Company
signed a joinder agreement and amended the
Plan whereby the employees of First National
Bank of Union County became fully
participating members of the Plan, with
prior years of service being considered for
eligibility requirements. For purposes of
determining the vested percentage of the
matching and profit sharing accounts, the
date of the acquisition shall be used.
b. Contributions - Each year, participants may
contribute up to 16 percent of pretax annual
compensation, as defined in the Plan.
Participants may also contribute amounts
representing distributions from other
qualified defined benefit or defined
contribution plans. Participants direct the
investment of their contributions into
various investment options offered by the
Plan. The Plan currently offers five mutual
funds, a money market account, and Company
common stock as investment options for
participants. The Company contributes 50
percent of the first 6 percent of base
compensation that a participant contributes
to the Plan. Additional profit-sharing
amounts may be contributed at the
5
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
option of the Company's Board of Directors.
All employer contributions are invested
directly in Appalachian Bancshares, Inc.
common stock. Contributions are subject to
certain limitations.
c. Participant Accounts - Each participant's
account is credited with the participant's
contribution and allocations of (a) the
Company's contributions and (b) Plan
earnings. Allocations are based on
participant earnings, as defined. The
benefit to which a participant is entitled
is the benefit that can be provided from the
participant's vested account.
d. Vesting - Participants are immediately
vested in their contributions plus actual
earnings thereon. Vesting in the Company's
contribution portion of their accounts is
based on the following schedule:
<TABLE>
<CAPTION>
Years of
Credited Percent
Service Vested
----------- -------
<S> <C>
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
</TABLE>
e. Payment of Benefits - Upon termination of
service due to death, disability or
retirement, a participant may elect to
receive a lump-sum amount equal to the value
of the participant's vested interest in his
or her account, or annual installments over
a period elected by the participant. For
termination of service due to other reasons,
a participant may receive the value of the
vested interest in his or her account as a
lump-sum distribution.
f. Forfeitures - Forfeitures shall be allocated
to eligible participants' accounts pursuant
to the master plan.
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
2. SUMMARY OF BASIS OF ACCOUNTING
ACCOUNTING POLICIES
The financial statements of the Plan are prepared
under the accrual method of accounting.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity
with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses
during the reporting period. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair market
value. Shares of mutual funds are valued at quoted
market prices which represent the net asset value of
shares held by the Plan at year-end. The Company's
common stock is valued at its most recent market
price, as determined by a third-party valuation.
Purchases and sales of securities are recorded on a
trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the
ex-dividend date.
PAYMENTS OF BENEFITS
Benefits are recorded when paid.
NEW ACCOUNTING PROVISION
In September 1999, the American Institute of
Certified Public Accountants issued Statement of
Position ("SOP") No. 99-3, Accounting for and
Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters. This
statement established standards for simplified
disclosures for certain investments. The Plan adopted
the provisions of this statement for the Plan year
ended December 31, 1999. As a result, disclosures
made in the prior year for the separate fund
information have been eliminated in these financial
statements, to be consistent with the current year
presentation.
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
4. NONPARTICIPANT- Information about the net assets and the significant
DIRECTED components of the changes in net assets relating to
INVESTMENT the nonparticipant-directed investments is as
follows:
<TABLE>
<CAPTION>
December 31, 1999 1998
------------ ----------- -----------
<S> <C> <C>
Common stock $ 1,474,452 $ 1,357,760
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1999 1998 1997
----------------------- --------- -------- --------
<S> <C> <C> <C>
Changes in net assets:
Contributions $ 170,160 $139,834 $101,939
Net appreciation (163,824) 499,824 158,717
Net transfers 110,356 -- --
--------- -------- --------
$ 116,692 $639,658 $260,656
========= ======== ========
</TABLE>
4. INVESTMENTS The fair value of individual investments that
represent 5 percent or more of the Plan's net assets
are as follows:
<TABLE>
<CAPTION>
December 31, 1999 1998
---------------------------- ---------- ----------
<S> <C> <C>
Reliance Trust Company
Moderate Growth Fund $ 111,710 $ --
Appalachian Bancshares, Inc.
Common Stock 1,474,452 1,357,760
========== ==========
</TABLE>
5. RELATED PARTY Certain Plan investments are shares of common stock
TRANSACTIONS of the Company. Others are mutual funds managed by
Reliance Trust Company. Reliance Trust Company is the
custodian as defined by the Plan and the Company is
the trustee as defined by the Plan and therefore,
these transactions qualify as party-in-interest.
6. PLAN TERMINATION Although it has not expressed any intent to do so,
PROVISIONS the Company has the right under the Plan to
discontinue its contributions at any time and to
terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants
become 100 percent vested in their accounts.
8
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
7. TAX STATUS The Internal Revenue Service has determined and
informed the Company by a letter dated August 27,
1996, that the Plan and related trust are designed in
accordance with applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since
receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that
the Plan is designed and is currently being operated
in compliance with the applicable requirements of the
IRC.
Subsequent to the Plan year ended December 31, 1999,
the Plan received a new determination letter dated
January 14, 2000 for all amendments made to the plan
through December 1, 1998. The Internal Revenue
Service has determined and informed the Company that
the Plan remains qualified and tax-exempt.
8. NONEXEMPT During the plan year ended December 31, 1999,
TRANSACTIONS employee withholdings for the month of January in
WITH PARTY-IN- the amount of $6,959 were not remitted within the
INTEREST appropriate time period by the Company. This
transactions constitutes a prohibited transaction as
defined by ERISA. These withholdings were not
remitted timely due to administrative matters related
to the purchase of First National Bank of Union
County, as described in Note 1 to the financial
statements. The Company is aware of the occurrence
and has taken the appropriate steps to correct the
situation, and has further implemented a procedure to
ensure all future remittances are done within the
prescribed time period.
9. SUBSEQUENT EVENT In April 2000 the Board of Directors of the Company
voted for a 2 for 1 stock split. Therefore, all share
amounts have been retroactively restated as if the
stock split occurred on January 1, 1997.
9
<PAGE> 13
SUPPLEMENTAL SCHEDULES
10
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
(e)
(b) Current
Identity of (c) (d) Fair
(a) Issuer Description of Investment Cost Value
--- ---------------------------- ------------------------------------------- -------- ----------
<S> <C> <C> <C> <C>
* Reliance Trust Company Cash and Money Market a $ 19,215
* Reliance Trust Company Reliance Trust Company Current Income Fund
a 12,074
* Reliance Trust Company Reliance Trust Company Capital Presentation
Fund a 10
* Reliance Trust Company Reliance Trust Company Moderate Growth Fund
a 111,710
* Reliance Trust Company Reliance Trust Company Wealth Building Fund
a 49,339
* Reliance Trust Company Reliance Trust Company Aggressive
Appreciation Fund a 790
* Appalachian Bancshares, Inc. 81,914 shares of Appalachian Bancshares,
Common Stock Inc. common stock 979,740 1,474,452
-------- ----------
$979,740 $1,667,590
======== ==========
</TABLE>
*Party-in-Interest
a - The cost of participant-directed investments is
not required to be disclosed.
11
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
(h) (i)
(a) (c) (d) (g) Value at Net
Identity of (b) Purchase Selling Cost of Transaction Gain
Issuer Description of Asset Price Price Asset Date or (Loss)
---------------- -------------------- -------- ---------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Appalachian Purchases of
Bancshares, Inc. Appalachian
Bancshares, Inc.
Common Stock $280,520 $ - $280,520 $280,520 $ -
======== ========== ======== ======== ==========
</TABLE>
12
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APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
(b) (i)
(a) Relationship to the Plan (c) Value at
Name of Party Employer or Other Description of the Transaction
Involved Party-In-Interest Transaction Date
---------------- ------------------------ ------------------------- -----------
<S> <C> <C> <C>
Appalachian Trustee and Plan Sponsor Remittance of employee
Bancshares, Inc. withholdings exceeded the
allowable time frame $6,959
======
</TABLE>
13
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Appalachian Bancshares, Inc.
Section 401(k)
Profit Sharing Plan
Date: July 13, 2000 By: Appalachian Bancshares, Inc., as
Trustee
By: /s/ Tracy Newton
--------------------------------
President
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EXHIBIT INDEX
Exhibit 23 Consent of BDO Seidman, LLP
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