<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
PINNACLE BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 or 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 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
PINNACLE BANCSHARES, INC.
1811 SECOND AVENUE
JASPER, ALABAMA 35501
(205) 221-4111
April 30, 1999
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders (the "Annual
Meeting") of Pinnacle Bancshares, Inc. (the "Company") to be held at CHS
Activity Center, 204 19th Street East, Jasper, Alabama on Wednesday, May 26,
1999 at 11:00 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting.
As an integral part of the Annual Meeting, we will report on the
operations of the Company. Directors and officers of the Company will be present
to respond to any questions that our stockholders may have. Detailed information
concerning our activities and operating performance is contained in our Annual
Report which also is enclosed.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On
behalf of the Board of Directors, we urge you to please sign, date and return
the enclosed proxy card in the enclosed postage-prepaid envelope as soon as
possible even if you currently plan to attend the Annual Meeting. This will not
prevent you from voting in person, but will assure that your vote is counted if
you are unable to attend the Annual Meeting.
Sincerely,
/s/ AL H. SIMMONS /s/ ROBERT B. NOLEN, JR.
-------------------------- ---------------------------
Al H. Simmons Robert B. Nolen, Jr.
Chairman of the Board President and Director
<PAGE> 3
PINNACLE BANCSHARES, INC.
1811 SECOND AVENUE
JASPER, ALABAMA 35501
(205) 221-4111
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1999
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Pinnacle Bancshares, Inc. (the "Company") will be held at
CHS Activity Center, 204 19th Street East, Jasper, Alabama, on Wednesday, May
26, 1999 at 11:00 a.m., local time.
The Annual Meeting is for the following purposes, which are more
completely described in the accompanying Proxy Statement:
1. The election of three directors of the Company, each for a term of
three years, and the election of one director for a term of two years.
2. Such other matters as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors is not aware of any other business to come before
the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the
Annual Meeting or any adjournments thereof. Stockholders of record at the close
of business on April 16, 1999, are the stockholders entitled to vote at the
Annual Meeting and any adjournment thereof.
You are requested to fill in and sign the enclosed proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Annual
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ THOMAS L. SHERER
-------------------------------------
THOMAS L. SHERER
SECRETARY
Jasper, Alabama
April 30, 1999
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF A
FURTHER REQUEST FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE> 4
PROXY STATEMENT
PINNACLE BANCSHARES, INC.
1811 SECOND AVENUE
JASPER, ALABAMA 35501
(205) 221-4111
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 26, 1999
- --------------------------------------------------------------------------------
INTRODUCTION
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Pinnacle Bancshares, Inc. (the
"Company") for the Annual Meeting of Stockholders (the "Annual Meeting") to be
held at CHS Activity Center, 204 19th Street East, Jasper, Alabama on Wednesday,
May 26, 1999, at 11:00 a.m., local time. The accompanying Notice of Annual
Meeting and this Proxy Statement, together with the enclosed form of proxy, are
first being mailed to stockholders on or about April 30, 1999.
- --------------------------------------------------------------------------------
VOTING AND REVOCATION OF PROXIES
- --------------------------------------------------------------------------------
Proxies solicited by the Board of Directors of the Company will be
voted in accordance with the directions given therein. WHERE NO INSTRUCTIONS ARE
GIVEN, PROPERLY EXECUTED PROXIES WHICH HAVE NOT BEEN REVOKED WILL BE VOTED FOR
THE NOMINEES FOR DIRECTORS SET FORTH BELOW. The proxy confers discretionary
authority on the persons named therein to vote with respect to the election of
any person as a director where the nominee is unable to serve or for good cause
will not serve, and with respect to matters incident to the conduct of the
Annual Meeting. If any other matters are properly brought before the Annual
Meeting as to which proxies in the accompanying form confer discretionary
authority, proxies will be voted by those named therein in accordance with the
determination of a majority of the Board of Directors. The proxies solicited on
behalf of the Board of Directors confer discretionary authority upon the holders
thereof with respect to matters incident to the conduct of the Annual Meeting
and with respect to any other matter presented to the Annual Meeting if notice
of such matter has not been delivered to the Company in accordance with the
Certificate of Incorporation. Proxies marked as abstentions will not be counted
as votes cast. In addition, shares held in street name which have been
designated by brokers on proxy cards as not voted ("broker no votes") will not
be counted as votes cast. Proxies marked as abstentions or as broker no votes,
however, will be treated as shares present for purposes of determining whether a
quorum is present.
Stockholders who execute the form of proxy enclosed herewith retain the
right to revoke such proxies at any time prior to exercise. Unless so revoked,
the shares represented by properly executed proxies will be voted at the Annual
Meeting and all adjournments thereof. Proxies may be revoked at any time prior
to exercise by written notice to the Secretary of the Company or by the filing
of a properly executed, later-dated proxy. A proxy will not be voted if a
stockholder attends the Annual Meeting and votes in person. The presence of a
stockholder at the Annual Meeting alone will not revoke such stockholder's
proxy.
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
The securities which can be voted at the Annual Meeting consist of
shares of the Company's common stock, $.01 par value per share ("Common Stock").
Stockholders of record as of the close of business on April 16, 1999 (the
"Record Date") are entitled to one vote for each share of Common Stock then held
on all matters. As of the Record Date, 1,789,586 shares of the Common Stock were
issued and outstanding. The presence, in person or by proxy, of at least
one-third of the total number of shares of Common Stock outstanding and entitled
to vote will be necessary to constitute a quorum at the Annual Meeting.
<PAGE> 5
The following table sets forth, as of the Record Date, certain
information as to the persons believed by management to be the beneficial owners
of more than 5% of the outstanding shares of Common Stock and as to the shares
of Common Stock beneficially owned by all executive officers and directors of
the Company as a group. Persons and groups owning in excess of 5% of Common
Stock are required to file certain reports regarding such ownership with the
Company and the Securities and Exchange Commission ("SEC") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
information is based on the most recent reports filed by such persons or
information provided to the Company by such persons.
<TABLE>
<CAPTION>
Percent of Shares
Name and Address of Amount and Nature of of Common Stock
Beneficial Owners Beneficial Ownership(1) Outstanding
----------------- ----------------------- -----------
<S> <C> <C>
All Executive Officers and 213,564 (2) 11.6%
Directors as a Group
(10 persons)
Jeffrey L. Gendell 176,000 (3) 9.9%
Tontine Partners, L.P.
31 West 52nd Street
New York, New York 10019
</TABLE>
- ----------
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is
considered to "beneficially own" any shares of Common Stock (a) over
which he has or shares voting or investment power, or (b) of which he
has the right to acquire beneficial ownership at any time within 60
days of the Record Date. As used herein, "voting power" is the power to
vote or direct the vote of shares, and "investment power" is the power
to dispose or direct the disposition of shares. All data prior to
October 29, 1997 has been restated to reflect a two-for-one stock split
effected in the form of a stock dividend.
(2) Includes shares owned directly by directors and officers of the Company
as well as shares held by their spouses and minor children and trusts
of which certain directors are trustees, but does not include shares
held or beneficially owned by other relatives as to which they disclaim
beneficial ownership. Also includes shares of Common Stock underlying
options granted under the Pinnacle Bancshares, Inc. 1996 Stock Option
and Incentive Plan (the "Option Plan") which are exercisable within 60
days of the Record Date.
(3) Mr. Gendell serves as the Managing Member of Tontine Management, L.L.C.
which is the general partner of Tontine Partners, L.P., a Delaware
limited partnership ("Tontine"). Mr. Gendell reported sole voting and
dispositive power of 6,000 shares and shared voting and dispositive
power with Tontine of 170,000 shares as of January 7, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than 10% stockholders
are required to furnish the Company with copies of all such reports. Based
solely on its review of copies of such reports received by it, or written
representations from certain reporting persons that no annual report of change
in beneficial ownership is required, the Company believes that, during the year
ended December 31, 1998, all such filing requirements were complied with.
2
<PAGE> 6
- --------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Certificate of Incorporation requires that directors be
divided into three classes, as nearly equal in number as possible, the members
of each class to serve for a term of three years and until their successors are
elected and qualified. The Board of Directors currently consists of nine
members. The Board of Directors has nominated O.H. Brown, Sam W. Murphy and Al
H. Simmons to serve for three-year terms or until their successors are elected
and qualified and James T. Waggoner to serve for a two-year term or until his
successor is elected and qualified. Mr. Waggoner has been nominated for a
two-year term in order to equalize the classes. Delaware law provides that
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors.
It is intended that the persons named in the proxies solicited by the
Board of Directors will vote for the election of the named nominees.
Stockholders are not entitled to cumulate their votes for the election of
directors. If any nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute director as the
Board of Directors may recommend or the Board of Directors may reduce the number
of directors to eliminate the vacancy.
The following table sets forth for each nominee and for each director
continuing in office, including the named executive officer, such person's name,
age, the year he first became a director and the number of shares and percentage
of Common Stock beneficially owned.
3
<PAGE> 7
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED BELOW
AS DIRECTORS OF THE COMPANY.
<TABLE>
<CAPTION>
PRESENT SHARES OF
YEAR FIRST TERM COMMON STOCK PERCENT
ELECTED TO BENEFICIALLY OF
NAME AGE(1) DIRECTOR (2) EXPIRE OWNED (3) CLASS
---- ------ ------------ ------ -------------- -----
<S> <C> <C> <C> <C> <C>
BOARD NOMINEE FOR TERM TO EXPIRE IN 2001
J. T. Waggoner 61 1996 1999 4,200 *
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
O. H. Brown 54 1989 1999 9,200 *
Sam W. Murphy 51 1981 1999 24,460 1.3%
Al H. Simmons 51 1979 1999 85,712 4.8%
DIRECTORS CONTINUING IN OFFICE
James W. Cannon 55 1990 2000 20,498 1.1%
Robert B. Nolen, Jr. 40 1994 2000 21,668 1.2%
Max W. Perdue 65 1991 2000 10,906 *
Greg Batchelor 43 1983 2001 23,620 1.3%
Melvin R. Kacharos 72 1989 2001 9,300 *
</TABLE>
- ----------
* Less than 1% of shares outstanding.
(1) At December 31, 1998.
(2) Includes term of office as director of Pinnacle Bank (the "Bank") prior
to formation of the Company as the holding company for the Bank in
January 1997. Each director of the Company is also a director of the
Bank.
(3) At the Record Date. In accordance with Rule 13d-3 under the Exchange
Act, a person is considered to "beneficially own" any shares of Common
Stock (a) over which he has or shares voting or investment power, or
(b) as to which he has the right to acquire beneficial ownership at any
time within 60 days of the Record Date. As used herein, "voting power"
is the power to vote or direct the vote of shares, and "investment
power" is the power to dispose or direct the disposition of shares.
Includes shares owned directly by the named individuals as well as
shares held by their spouses and minor children and trusts of which
certain of such persons are trustees, but does not include shares held
or beneficially owned by other relatives as to which they disclaim
beneficial ownership. Also includes shares of Common Stock underlying
options granted under the Option Plan which are exercisable within 60
days of the Record Date. See "Voting Securities and Principal Holders
Thereof."
4
<PAGE> 8
Listed below is certain information about the principal occupations of
the Board nominees and the other directors of the Company. Unless otherwise
noted, all such persons have held these positions for at least five years.
JAMES. T. WAGGONER is Vice President, Community and Public Affairs,
HealthSouth Corporation, Birmingham, Alabama. He also serves as an Alabama State
Senator.
O. H. BROWN, is a certified public accountant, presently with the
accounting firm of Lapidus, Tuck, Raymond & Fowler, P.C., Jasper, Alabama. From
1976 to June 1991, Mr. Brown had his own accounting practice, also in Jasper,
Alabama.
SAM W. MURPHY is Chairman of the Board, Chief Executive Officer and
Sales Manager of Murphy Furniture Manufacturing Co., Inc., a furniture
manufacturer located in Jasper, Alabama.
AL H. SIMMONS joined the Company in 1973 and served as President of the
Company from 1979 until 1994. In October 1989, Mr. Simmons was elected Chairman
of the Board of Directors. Mr. Simmons is the son of Chairman of the Board
Emeritus A. R. Simmons. Mr. Simmons is an insurance agent with Pittman &
Associates, Inc., Birmingham, Alabama.
JAMES W. CANNON is Senior Vice President - Operations of Burton Golf,
Inc., a manufacturer of golf bags headquartered in Fort Walton Beach, Florida.
ROBERT B. NOLEN, JR. joined the Company in 1987 as First Vice
President, Chief Financial Officer and Treasurer. In 1990, Mr. Nolen was
appointed Executive Vice President of the Company, and in 1994, Mr. Nolen was
appointed President and Chief Executive Officer of the Company.
MAX W. PERDUE retired in 1991 as Jasper, Alabama District Manager of
the Alabama Power Company, having served with the company for thirty years in
various engineering and management positions. Mr. Perdue is past-president of
the Jasper Area Chamber of Commerce and resides in Jasper, Alabama.
GREG BATCHELOR has been President of Dependable True Value Hardware,
Inc. in Russellville, Alabama since 1992. Prior to that, he was Manager.
MELVIN R. KACHAROS was Executive Vice President of Vulcan Asphalt,
Inc., Cordova, Alabama, from which position he retired in 1988. Mr. Kacharos is
a Lieutenant Colonel, Retired, of the U.S. Army Reserve and resides in Cordova,
Alabama.
OTHER EXECUTIVE OFFICER
MARY JO GUNTER, age 45, is Vice President of the Company and Senior
Vice President -- Banking Services of the Bank. Ms. Gunter joined the Bank in
1974 and has served in various lending related positions within the Bank. She is
responsible for branch operations, personnel, loan servicing and other customer
service areas.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held six meetings during the year
ended December 31, 1998. The members of the Company's Board of Directors are
also members of the Bank's Board of Directors, which held 12 meetings during the
year ended December 31, 1998. All incumbent directors attended 75% or more of
the total number of Board meetings held during the year ended December 31, 1998
and the total number of meetings held by committees on which such directors
served during such period.
The Board of Directors of the Company serves as a nominating committee
for selecting the management nominees for election as directors. While the Board
of Directors will consider nominees recommended by stockholders, it has not
actively solicited recommendations from stockholders for nominees, nor has it
established
5
<PAGE> 9
any procedures for this purpose. The Board of Directors held one meeting in its
capacity as a nominating committee.
There are no standing committees of the Board of Directors of the
Company. The Board of Directors of the Bank carries out many of its duties
through committees.
The Executive Committee, currently composed of directors Perdue,
Kacharos, Murphy, Brown, Simmons and Nolen, meets when deemed necessary by the
President of the Bank to discuss and approve any business coming before the
Board between monthly Board meetings. During the year ended December 31, 1998,
the Executive Committee held no meetings.
The Audit Committee, composed of directors Kacharos, Murphy and Brown,
is responsible for the review and evaluation of the Bank's annual audit reports
with the Bank's independent auditors and reports all findings and
recommendations to the Board of Directors. The audit committee also directs the
activities of the Bank's internal auditor. During the year ended December 31,
1998, the Audit Committee held four meetings.
The Compensation Committee, currently composed of directors Perdue,
Cannon and Murphy, meets annually or at the direction of the Bank's President to
review and adjust employee salaries. During the year ended December 31, 1998,
the Compensation Committee held two meetings.
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation for
the years ended December 31, 1998, 1997 and 1996, respectively, awarded to or
earned by the Chief Executive Officer. No other executive officer earned in
excess of $100,000 in salary and bonus.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------------------- ----------------------- -------
Restricted Securities All Other
Name and Other Annual Stock Underlying LTIP Compen-
Principal Position Year Salary Bonus Compensation(1) Award(s) Options Payouts sation(2)
- ------------------ ---- ------ ----- --------------- -------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert B. Nolen, Jr. 1998 $114,935 $15,000 -- -- -- -- $2,772
President and Chief 1997 $102,500 $30,000 -- -- 20,000(3) -- $2,562
Executive Officer of 1996 $ 93,750 $25,000 -- -- -- -- $4,223
the Company and the Bank
</TABLE>
- -------------
(1) Executive officers of the Company receive indirect compensation in the
form of certain perquisites and other personal benefits. The amount of
such benefits in the fiscal year by the named executive officer did not
exceed 10% of the executive's annual salary and bonus.
(2) Represents contributions under the Company's 401(k) plan.
(3) Represents options granted under the Option Plan.
DIRECTORS' COMPENSATION
The members of the Board of Directors of the Company currently do not
receive fees in their capacity as such.
Directors of the Bank currently each receive a monthly fee of $400,
plus an additional $600 for each Board meeting attended. In addition, directors
receive a fee of $300 for each Loan Committee attended and $200 for each other
committee meeting attended. Officers of the Bank do not receive fees for
committee or advisory board meetings attended.
6
<PAGE> 10
YEAR END OPTION VALUES
To date, no options have been exercised under the Option Plan by the
named executive officer. No options were granted to the named executive officer
in 1998. The following table sets forth information concerning the value of
options held by the named executive officer at December 31, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year Ended Fiscal Year End (1)
Exercisable/Unexercisable Exercisable/
Name (Number of Shares) Unexercisable
- ---- ------------------ -------------
<S> <C> <C>
Robert B. Nolen, Jr. 20,000/-- $58,750/$--
</TABLE>
- -----------
(1) Difference between fair market value of underlying Common Stock at
December 31, 1998 ($11.75 per share, based on the closing sales price)
and the exercise price ($8.8125 per share). Options are in-the-money if
the fair market value of the underlying securities exceeds the exercise
price of the option.
EMPLOYMENT AGREEMENT
On April 22, 1998, the Company and the Bank entered into an employment
agreement with Robert B. Nolen, Jr., which supersedes Mr. Nolen's prior
employment agreement with the Bank. The agreement provides for Mr. Nolen to
serve as President and Chief Executive Officer of each of the Company and the
Bank for a term of three years and receive a base salary of $100,000 per annum,
subject to annual adjustments; provided, however, that any reduction of Mr.
Nolen's salary shall be commensurate with a general reduction in the salaries of
the Bank's senior officers. The agreement provides for a salary review by the
Board of Directors not less often than annually, as well as for an extension for
an additional one-year period beyond then expiration date. In the event of his
voluntary termination of employment under the agreement, Mr. Nolen has agreed
that for a period of one year after the effective date of such termination, he
will not within Walker and Jefferson Counties, Alabama, compete with the Company
or the Bank or recruit or solicit for employment any current or future employee
of the Company or the Bank. In the event of a termination of Mr. Nolen's
employment without just cause (as defined in the agreement), Mr. Nolen will be
entitled to his salary for an additional 12-month period and continued health,
life, disability and other benefits. In the event (i) Mr. Nolen voluntarily
terminates his employment as a result of a constructive discharge (e.g., a
material reduction without reasonable cause in his base compensation or a
material diminution or reduction in his responsibilities or authority), (ii) Mr.
Nolen is terminated following a change in control (as defined in the agreement),
(iii) Mr. Nolen voluntarily terminates his employment within 24 months after a
change in control and a constructive discharge, or (iv) Mr. Nolen voluntarily
terminates his employment after 24 months but within 36 months following a
change in control, Mr. Nolen shall be entitled to payments equal to the amount
of 2.99 times the average annual compensation to Mr. Nolen during the five years
immediately prior to the termination. Based on Mr. Nolen's annual compensation
as of December 31, 1998, if any of such provisions were to be effective, it
would result in a payment to Mr. Nolen of approximately $336,000. In addition,
if Mr. Nolen terminates his employment within 12 months following a change in
control, he will be entitled to receive his salary for an additional 12-month
period and, if he terminates his employment after 12 months but within 24 months
following a change in control, he will be entitled to receive such salary for an
additional 24-month period. The agreement also provides for the inclusion of Mr.
Nolen in any present or future employee benefit plans or programs of the Company
and the Bank for which executives are or will become eligible, customary fringe
benefits, vacation and sick leave.
CERTAIN TRANSACTIONS
The Bank makes available loans to directors, officers and other
employees, including mortgage loans for the purchase or refinancing of their
residences. It is the belief of management that these loans neither involve more
than normal risk of collectability nor present other unfavorable features. Such
loans have been made in the ordinary
7
<PAGE> 11
course of business on substantially the same terms, including interest rates,
collateral and repayment terms, as those prevailing for comparable transactions
with non-affiliated persons. Management believes that all loans made by the Bank
to directors, officers and other employees were in compliance with federal
regulations in effect at the time the loans were made.
The Bank's former main office building is owned by the Bank and is
situated on land leased from entities associated with the Simmons family and of
which Chairman Emeritus A. R. Simmons is a partner or trustee. Under the terms
of the lease for this office, a monthly payment of $1,050 is made for the
grounds and 36 parking spaces. The lease was renewed in December 1996 for five
years with an option to renew for three additional terms of five years. The Bank
has been granted a right of first refusal to purchase the land. The Jasper Mall
Branch building is also owned by the Bank and is situated on land leased from an
entity associated with the Simmons family. The lease for the land on which the
Jasper Mall Branch is located currently provides annual rental of $21,902 to the
entity associated with the Simmons family. The lease runs through 2017.
The Bank leases its Haleyville Branch Office facilities from Cecil
Batchelor, the father of director Greg Batchelor. The lease currently provides
for an annual rental of $25,035.
In 1986, the Bank entered into an employment agreement with Al H.
Simmons. The agreement, as subsequently amended, provided for Mr. Simmons to
serve as President and Chief Executive Officer of the Bank for a term of three
years ending in 1996 and receive a base salary of $109,080 per annum, subject to
annual adjustments. In May 1994, the Bank and Mr. Simmons entered into a
termination agreement whereby the parties agreed to terminate Mr. Simmons'
employment agreement and to provide for a lump sum payment to Mr. Simmons of
certain severance benefits in satisfaction of Mr. Simmons' rights under the
employment agreement. In connection therewith, Mr. Simmons agreed to resign as
President and Chief Executive Officer of the Bank effective July 1, 1994, and
the Bank agreed to pay to Mr. Simmons a benefit having a present value equal to
$362,447. Such benefit is being paid in 60 payments of $7,000 per month that
began in July 1994. In the event of a "change of control," as defined in the
agreement, Mr. Simmons may direct the Bank to contribute to an irrevocable trust
assets having a present value equal to the total amount payable to Mr. Simmons
during the remaining term of the agreement. Under such circumstances, payments
due Mr. Simmons under the agreement would be made from the trust; provided,
however, that if the assets of the trust are insufficient to satisfy the Bank's
obligations under the agreement, the Bank would remain obligated to make such
payments directly to Mr. Simmons.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Arthur Andersen LLP served as the Company's independent auditors for
the year ended December 31, 1998. The Board of Directors has appointed Arthur
Andersen LLP to serve as the Company's independent auditors for the fiscal year
ending December 31, 1999. A representative of Arthur Andersen LLP is expected to
be present at the Annual Meeting to respond to appropriate questions and will
have the opportunity to make a statement if he so desires.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement
and matters incident to the conduct of the Annual Meeting. Properly executed
proxies in the accompanying form that have not been revoked confer discretionary
authority on the persons named therein with respect to matters incident to the
conduct of the Annual Meeting and with respect to any other matter presented to
the Annual Meeting if notice of such matter has not been delivered to the
Company in accordance with the Certificate of Incorporation.
The Certificate of Incorporation of the Company provides an advance
notice procedure for certain business to be brought before an annual meeting of
stockholders. In order for a stockholder to properly bring business before an
annual meeting, the stockholder must give written notice to the Secretary of the
Company not less than 30 nor more than 60 days prior to the date of such
meeting; provided, however, that if less than 40 days' notice of the
8
<PAGE> 12
meeting is given to stockholders, written notice by the stockholder to be timely
must be delivered or mailed to the Secretary of the Company not later than the
close of business on the tenth day following the day on which notice of the
meeting was mailed to stockholders.
With respect to the Annual Meeting, notice of a stockholder proposal,
which the stockholder had not previously sought to include in the Company's
proxy statement, was required to have been received by April 26, 1999.
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MISCELLANEOUS
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The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company and the Bank may
solicit proxies personally, by telegraph or telephone without additional
compensation.
The Annual Report to Stockholders for the year ended December 31, 1998,
including financial statements, is being mailed to all stockholders of record as
of the close of business on the Record Date. Any stockholder who has not
received a copy of such Annual Report may obtain a copy by writing to the
Secretary of the Company. Such Annual Report is not to be treated as part of the
proxy solicitation material nor as having been incorporated herein by reference.
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STOCKHOLDER PROPOSALS
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In order to be eligible for inclusion in the proxy statement and proxy
relating to the 2000 annual meeting of stockholders of the Company, which will
be held on or about May 24, 2000, any stockholder proposal to take action at
such meeting must be received by the Secretary of the Company at 1811 Second
Avenue, P.O. Box 1388, Jasper, Alabama no later than January 3, 2000. With
respect to the 2000 annual meeting of stockholders of the Company, if notice of
a stockholder proposal, which the stockholder has not previously sought to
include in the Company's proxy statement, is not received by April 24, 2000,
management proxies will be allowed to use their discretionary authority to vote
on such proposal without any discussion of the matter in the proxy statement.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and proxy relating to the 2000 annual meeting, or to
consider and vote upon at such meeting, any stockholder proposal which does not
meet all of the requirements established by the SEC or the Company's Certificate
of Incorporation or Bylaws in effect at the time such proposal is received.
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ANNUAL REPORT ON FORM 10-KSB
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 1998, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO MARIE GUTHRIE,
PINNACLE BANCSHARES, INC., P.O. BOX 1388, JASPER, ALABAMA 35502-1388.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ THOMAS L. SHERER
------------------------------------------
THOMAS L. SHERER
SECRETARY
Jasper, Alabama
April 30, 1999
9
<PAGE> 13
REVOCABLE PROXY
PINNACLE BANCSHARES, INC.
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ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 1999
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The undersigned stockholder of Pinnacle Bancshares, Inc. (the "Company")
hereby appoints Max Perdue and Melvin R. Kacharos, or either of them, with full
powers of substitution, as attorneys and proxies for the undersigned, to vote
all shares of Common Stock of the Company which the undersigned is entitled to
vote at the Annual Meeting of Stockholders, to be held at CHS Activity Center,
204 19th Street East, Jasper, Alabama on Wednesday, May 26, 1999 at 11:00 a.m.,
local time, and at any and all adjournments thereof, as indicated below and as
determined by a majority of the Board of Directors with respect to such other
matters as may come before the Annual Meeting and as to which this proxy confers
discretionary authority.
<TABLE>
<CAPTION>
VOTE
FOR WITHHELD
--- --------
<S> <C> <C> <C>
I. Election as directors of all nominees listed below (except
as marked to the contrary). [ ] [ ]
J.T. Waggoner O.H. Brown Sam W. Murphy Al H. Simmons
(Two-year term) (Three-year term) (Three-year term) (Three-year term)
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY NOMINEE(S), WRITE
THAT NOMINEE'S NAME ON THE LINE BELOW.
------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
II. Such other matters as may properly come before the Annual
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSITIONS.
</TABLE>
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT THE ANNUAL MEETING AS TO WHICH THIS PROXY CONFERS DISCRETIONARY
AUTHORITY, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY AS DETERMINED
BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting or
at any adjournment thereof and after notification to the Secretary of the
Company at the Annual Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. The undersigned hereby revokes any and all
proxies heretofore given with respect to shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting.
The undersigned stockholder acknowledges receipt from the Company, prior to
the execution of this proxy, of Notice of the Annual Meeting, a Proxy Statement,
and the Annual Report to Stockholders.
Dated: , 1999
------------
----------------------------------
PRINT NAME OF STOCKHOLDER
----------------------------------
SIGNATURE OF STOCKHOLDER
----------------------------------
PRINT NAME OF STOCKHOLDER
----------------------------------
SIGNATURE OF STOCKHOLDER
Please sign exactly as your name
appears on the envelope in which
this card was mailed. When signing
as attorney, executor,
administrator, trustee or
guardian, please give your full
title. If shares are held jointly,
each holder should sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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