NATIONAL BANCSHARES CORP /OH/, PRE 14A, 1995-03-10

NATIONAL BANCSHARES CORP /OH/
PRE 14A, 1995-03-10
NATIONAL COMMERCIAL BANKS

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<PAGE> 1

DRAFT OF: MARCH 10, 1995

(LOGO)THE INFORMATION CONTAINED

IN THIS DOCUMENT IS

------------------------------------------------------------
CONFIDENTIAL
------------------------------------------------------------

WE REALIZE THAT SERVICE TO OUR CLIENTS IS MOST IMPORTANT. IF AT ANYTIME DURING
YOUR PROJECT, YOU HAVE COMMENTS OR CONCERNS ABOUT OUR SERVICE, PLEASE CONTACT
YOUR SALESPERSON OR DAN METZ, VICE PRESIDENT OF OPERATIONS, AT (216) 621-8384
AND WE WILL DO WHAT IS NECESSARY TO ACT UPON YOUR CONCERNS TO PROVIDE THE
SERVICE YOU EXPECT.

THANK YOU.

- --------------------------------------------------------------------------------

CLEVELAND
(216) 621-8384

Fax (216) 621-1132
PITTSBURGH
(412) 281-3838

Fax (412) 281-4546
CINCINNATI
(513) 621-8384

Fax (513) 621-2901
COLUMBUS
(614) 221-8384

Fax (614) 221-8427

- --------------------------------------------------------------------------------
<PAGE> 2

===============================================================================

SCHEDULE 14A
(RULE 14A)
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>
/X/ Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

NATIONAL BANCSHARES CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MICHAEL D. HOFSTETTER
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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> 3

NATIONAL BANCSHARES CORPORATION
112 West Market Street
Orrville, Ohio 44667

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of National
Bancshares Corporation (the "Company") will be held at the operations center of
First National Bank, 1444 North Main Street, Orrville, Ohio on April 27, 1995 at
2:00 P.M. for the following purposes:

(1) To elect three Directors in Class II for a three-year term ending in
1998;

(2) To amend the Company's Amended Articles of Incorporation to increase
the authorized capital of the Company to 6,000,000 Common Shares;

(3) To amend the Company's Amended Articles of Incorporation to eliminate
preemptive rights of shareholders to purchase shares of the Company;

(4) To amend the Company's Amended Articles of Incorporation to clarify
provisions of Article Seventh to enumerate factors which the Board
should consider when evaluating "Business Combinations";

(5) To amend the Company's Amended Code of Regulations to raise the vote
required (from 25% to 50%) to call a special meeting of shareholders;

(6) To amend the Company's Amended Code of Regulations to provide for
supermajority (80%) vote to amend or repeal antitakeover provisions
contained therein; and

(7) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.

Holders of Common Shares of record at the close of business on March 24,
1995 are entitled to receive notice of and to vote at the Annual Meeting.

By Order of the Board of Directors.

Michael D. Hofstetter
Secretary

March 31, 1995
<PAGE> 4

NATIONAL BANCSHARES CORPORATION
112 West Market Street
Orrville, Ohio 44667

Mailed on or about March 31, 1995
Annual Meeting of Shareholders to be on April 27, 1995

PROXY STATEMENT

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of National Bancshares Corporation (the
"Company") to be used at the Annual Meeting of Shareholders of the Company to be
held on April 27, 1995, and any adjournments or postponements thereof. The time,
place and purposes of the Annual Meeting are stated in the Notice of Annual
Meeting of Shareholders which accompanies this Proxy Statement.

The enclosed form of proxy is being solicited on behalf of the Board of
Directors of the Company and will be voted in accordance with the instructions
contained thereon, if it is returned duly executed and is not revoked.

If no choice is specified on the Proxy, it will be voted FOR the election
of each of the individuals nominated by the Board of Directors and FOR the
approval and adoption of each of the other proposals listed thereon. A
shareholder may revoke a proxy at any time before it is exercised either in
person at the Annual Meeting or by delivery to the Secretary of the Company of
written notice of revocation or by a duly executed proxy bearing a later date.

Proxies will be solicited by mail, but this solicitation may be
supplemented by using regular employees of the Company and its subsidiaries to
solicit proxies personally or by telephone without additional compensation. The
costs of solicitation will be borne by the Company and its subsidiary. The
Company may pay persons holding shares for others their expenses for sending
proxy materials to their principals. This Proxy Statement is being mailed to
shareholders on or about March 31, 1995.

The outstanding voting securities of the Company at the close of business
on March 24, 1995, the record date for the meeting, consisted of 732,156 Common
Shares, par value $10.00 per share, with each share having one vote on all
matters coming before the meeting. The number of Common Shares owned by each
Director (including the Company's President who is included in the Executive
Compensation tables below) is set forth on page 3 of this Proxy Statement. The
following table sets forth share ownership information, as of February 28, 1995,
with respect to all Directors and officers of the Company as a group. The
Company is not aware of any shareholders having beneficial ownership of more
than five percent (5%) of the Common Stock of the Company.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF PERCENT OF
COMMON SHARES (A) COMMON SHARES
----------------- -------------
<S> <C> <C>
All Directors and officers as a group (12 persons):
Sole voting power............................. 60,400 8.25%
Shared voting power........................... 6,223 .85%
</TABLE>

- ---------------

(a) See footnote (a) to the table set forth on page 3 of this Proxy Statement.

At the Annual Meeting, in accordance with the General Corporation Law of
Ohio and the Company's Code of Regulations (the "Regulations"), the inspectors
of election appointed by the Board of Directors for the Annual Meeting will
determine the presence of a quorum and will tabulate the results of shareholder
voting. As provided by the General Corporation Law of Ohio and the Regulations,
holders of shares entitling

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<PAGE> 5

them to exercise a majority of the voting power of the Company, present in
person or by proxy at the Annual Meeting, will constitute a quorum for such
meeting. The inspectors of election intend to treat properly executed proxies
marked "abstain" as "present" for these purposes. Such inspectors will also
treat as "present" shares held in "street name" by brokers that are voted on at
least one proposal to come before the Annual Meeting.

Nominees for election as directors receiving the greatest number of votes
will be elected directors. Votes that are withheld or broker non-votes in
respect of the election of directors will not be counted in determining the
outcome of the election. The General Corporation Law of Ohio provides that if
notice in writing is given by any shareholder to the President, a Vice President
or the Secretary of the Company not less than 48 hours before the time fixed for
holding the meeting that the shareholder desires the voting at the election to
be cumulative, each shareholder shall have cumulative voting rights in the
election of directors. Cumulative voting enables shareholders to give one
nominee for director as many votes as is equal to the number of directors to be
elected multiplied by the number of shares in respect of which a shareholder is
voting, or to distribute votes on the same principle among two or more nominees,
as the shareholder sees fit.

Pursuant to the Company's Regulations, all other questions and matters
brought before the Annual Meeting will be, unless otherwise provided by law or
by the Articles of Incorporation of the Company, decided by the vote of the
holders of a majority of the outstanding shares entitled to vote thereon present
in person or by proxy at the Annual Meeting. In voting for such other proposals,
votes may be cast in favor, against or abstained. Abstentions will count as
present for purposes of the item on which the abstention is noted and will have
the effect of a vote against. Broker non-votes, however, are not counted as
present for purposes of determining whether a proposal has been approved and
will have no effect on the outcome of any such proposal.

VOTING OF PROXIES

Common Shares represented by properly executed proxies in the enclosed form
received at or prior to the Annual Meeting will be voted in accordance with the
instructions contained therein and, in the absence of contrary instructions,
will be voted to elect as directors the three (3) persons named below and will
be voted for the approval and adoption of each of the other proposals listed on
the proxy.

The Board of Directors is not aware of any other matter that will be
presented for action at the Annual Meeting. If any other matter properly comes
before the Annual Meeting, it is intended that Common Shares represented by
properly executed proxies in the enclosed form will be voted in respect thereof
in accordance with the best judgment of a majority of the persons voting the
proxies.

PROPOSAL 1. ELECTION OF DIRECTORS

The Board of Directors of the Company is divided into three classes (Class
I, Class II and Class III). At each Annual Meeting of Shareholders, directors
constituting one class are elected for a three-year term. The Regulations of the
Company currently provide that the total number of directors shall be eleven.
Currently there are three Directors in Class I and four Directors in each of
Classes II and III.

It is proposed that at the Annual Meeting to be held on April 27, 1995,
that nominees for the directors to be elected to Class II for a three-year term
expiring in 1998 are Sara Balzarini, Steve Schmid, and Paul H. Smucker. The
aggregate number of directors of the Company is eleven (11) as specified in the
Company's Regulations. Only nine (9) individuals are continuing to serve as
directors of the Company and therefore, a vacancy has been created in each of
Class I and Class II. These vacancies can be filled any time prior to the Annual
Meeting in 1996 by a majority of the whole Board to serve the unexpired term.

If any nominee is unable or unwilling to serve as a director on the date of
the Annual Meeting (a situation which is not contemplated by the Board of
Directors at the present time), the proxies will be voted for the election of
such substitute nominee, if any, as may be designated by the Board of Directors
and for the remaining nominees. The following tables set forth information with
respect to each of the three nominees for election as a director, and the
directors whose terms have not yet expired, including age, principal occupation

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<PAGE> 6

for at least the past five years, the year in which he or she first became a
director of the Company and the Company's wholly owned subsidiary, First
National Bank, and the number of Common Shares of the Company beneficially owned
as of February 28, 1995.

NOMINEES TO BE ELECTED FOR THREE YEAR TERM
EXPIRING IN 1998 -- CLASS II

<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY OWNED
(A)
--------------------
PRINCIPAL OCCUPATION DIRECTOR PERCENT
NAME OR EMPLOYMENT AGE SINCE (B) SHARES OF SHARES
- -------------------- ---------------------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C>
Sara Balzarini V.P. of Finance 38 1989 412 * .08%
Contours, Inc. 202 **
Steve Schmid President, Smith 43 1989 318 * .22%
Dairy Products 1,275 **
Paul H. Smucker(1) Chairman of the 77 1955 7,694 * 1.05%
Executive Committee,
J.M. Smucker Company
</TABLE>

INFORMATION AS TO DIRECTORS WHOSE TERMS OF OFFICE
WILL CONTINUE AFTER THE 1995 ANNUAL MEETING

DIRECTORS WITH TERM EXPIRING IN 1996 -- CLASS III

<TABLE>
<S> <C> <C> <C> <C> <C>
Charles J. Dolezal President 42 1982 1,804 * .37%
First National Bank & 930 **
National Bancshares Corp.
James L. Gerber Retired 66 1979 4,871 * .68%
125 **
John W. Kropf(2) Attorney-at-Law 51 1974 13,210 * 2.06%
Kropf, Wagner & Hohenberger 1,882 **
James F. Woolley Chief Executive 58 1974 31,468 * 4.41%
Officer, R.W. Screw 814 **
Products, Inc.
</TABLE>

DIRECTORS WITH TERM EXPIRING IN 1997 -- CLASS I

<TABLE>
<S> <C> <C> <C> <C> <C>
Ray D. Gill President, C.E.O. 59 1992 291 * .08%
Orrville Leather, Inc. 330 **
John E. Sprunger President, Kidron 57 1987 332 * .05%
Auction, Inc. 38 **
</TABLE>

*Sole Voting Power
**Shared Voting Power
- ---------------

(a) The Securities and Exchange Commission has defined "beneficial owner" of a
security to include any person who has or shares voting power or investment
power with respect to any such security or who has the right to acquire
beneficial ownership of any such security within 60 days. Unless otherwise
indicated, such shares are held directly by the individual as to which such
person has sole voting and investment powers.

(b) Indicates the year first elected to the Board of the Company and/or sole
subsidiary, First National Bank. All current Directors of the Company are
also directors of First National Bank.

(1) Paul H. Smucker is a Director of the J. M. Smucker Company whose securities
are registered pursuant to Section 12g of the Securities Exchange Act of
1934.

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<PAGE> 7

(2) John W. Kropf has been the bank's legal counsel for a number of years and
will be retained in the same capacity for the current fiscal year.

None of the nominees are related by blood, marriage or adoption.

COMMITTEES

The Company currently conducts no business other than the ownership of its
sole subsidiary, First National Bank. The Board of Directors of the Company met
four (4) times during 1994. Of the incumbent directors, only Paul H. Smucker
attended fewer than seventy-five percent (75%) of the meetings held. The Company
has no formal committees other than its Audit Committee.

The basic responsibility of the Audit Committee is a review of the annual
audit with the Company's external auditors, and the implementation of
recommendations, where feasible, arising from that audit, and the continued
monitoring of the internal audit program. The Committee also reviews the results
of any special audit requested by the Board of Directors, either by external
auditors or by internal audit personnel. Meetings of the Audit Committee are
held as needed. During 1994, the Audit Committee met twice. Audit Committee
members are John W. Kropf, James F. Woolley and James L. Gerber. These
individuals also serve as the Audit Committee of First National Bank, and
perform the same functions at that level.

The Board of Directors of First National Bank, met twelve (12) times during
1994. Of the incumbent directors, only Paul H. Smucker attended fewer than
seventy-five percent (75%) of the meetings held.

First National Bank also maintains an Executive Committee as a standing
committee. The basic responsibilities of the Executive Committee are in-depth
consideration of certain general policy matters for possible recommendation to
the Board of Directors for its consideration; the review and approval or
rejection of major personnel or other matters brought before the Committee by
Management; and the determination of employee compensation. The Executive
Committee also serves as the Nominating Committee. Executive Committee members
are: Sara Balzarini, Charles J. Dolezal, James L. Gerber, John W. Kropf and
James F. Woolley. During the last fiscal year the Executive Committee held six
(6) meetings.

DIRECTOR COMPENSATION

Directors of the Company currently receive no compensation for their
service in that capacity. All current directors of the Company are directors of
First National Bank and receive $300 per meeting of the Board of First National
Bank which they attend. In addition, Executive Committee members receive a fee
of $225 for each Executive Committee meeting which they attend, with the
exception of Charles J. Dolezal. Audit Committee members receive $225 per
meeting attended.

First National Bank has implemented a director retirement benefit and death
benefit plan for the benefit of all members of the Board of Directors of First
National Bank. The plan is called the Director Defined Benefit Plan and is
designed to provide an annual retirement benefit, to be paid to each director
upon retirement from the Board. The retirement benefit provided to each director
is an annual benefit equal to $1,000 for each year of service on the Board from
and after August 24, 1994. In addition, each director shall have the option of
deferring any portion or all of his or her director's fees to a maximum of
$1,000 per month until retirement.

PROPOSAL 2. AMENDMENT TO THE COMPANY'S AMENDED ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED CAPITAL OF THE COMPANY

A. INTRODUCTION.

The total authorized capital of the Company as set forth in Article Fourth
of the Company's Amended Articles of Incorporation (the "Articles") consists of
750,720 shares, all of which are Common Shares, par value $10.00 per share (the
"Common Shares"). Under proposal 2, the Company would amend Article Fourth of
the Articles to increase the authorized capital of the Company to 6,000,000
shares, all of which shall

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<PAGE> 8

be Common Shares. A copy of the proposed amendment to Article Fourth is set
forth as Exhibit A attached to this Proxy Statement.

B. REASONS FOR THE AMENDMENT.

Presently, the Company has issued 732,156 Common Shares of the 750,720
authorized Common Shares. One of the principal reasons for increasing the
authorized capital of the Company to 6,000,000 Common Shares is the Company's
present intention of adopting a Dividend Reinvestment Plan (the "Plan") for its
shareholders. The Plan is intended to allow shareholders of the Company to
increase their ownership of Common Shares of the Company through the automatic
reinvestment of cash dividends presently being paid. Although the Plan is not
yet finalized, it is clear to the management of the Company that in order to
implement such a Plan an increase in the authorized capital is necessary. In
addition, the increase will make available additional Common Shares for possible
stock splits and dividends, acquisitions and other corporate purposes. Other
than through the issuance of Common Shares under the Plan, the Company has no
present intention of issuing additional Common Shares.

C. RECOMMENDATION.

FOR THE REASONS STATED ABOVE, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 2. The affirmative vote of the holders of a majority of the outstanding
Common Shares entitled to vote thereon present in person or by proxy at the
Annual Meeting is required for approval.

PROPOSAL 3. AMENDMENT TO THE COMPANY'S ARTICLES TO ELIMINATE
PREEMPTIVE RIGHTS OF SHAREHOLDERS TO PURCHASE SHARES
OF THE COMPANY

A. INTRODUCTION.

Presently, holders of the Company's Common Shares have the preemptive right
to purchase or subscribe for shares of the Company in the event that the Company
determines to issue or sell its shares. As a result, were the Company to sell
Common Shares in a public or private offering, issue shares in connection with
an acquisition of another bank or bank holding company or issue shares in
connection with employee benefit plans, it would first be required to offer and
sell its Common Shares to its present shareholders on similar terms so that a
present shareholder, after the issuance, would maintain his or her percentage
ownership in the Company. Under Proposal 3, the Company would add a new Article
Eleventh to the Articles to expressly deny shareholders of the Company the
preemptive right to purchase capital stock of the Company. A copy of the
proposed addition of a new Article Eleventh to the Articles is set forth as
Exhibit B attached to this Proxy Statement.

B. REASONS FOR THE AMENDMENT.

In order to implement the Plan to issue Common Shares upon the automatic
reinvestment of cash dividends, proposed Article Eleventh must also be adopted
to deny shareholders preemptive rights to purchase capital stock of the Company.
Otherwise, each issuance under the Plan would give rise to preemptive rights and
would complicate the administration of the Plan.

In addition, the Company has grown and broadened its shareholder base over
the years. As a result, were the Company to determine to raise capital by
selling Common Shares (either publicly or privately), make a strategic
acquisition using Common Shares or implement share-based employee benefit plans,
the Company would be required to solicit each of its shareholders to determine
if they wish to exercise preemptive rights. In the opinion of the Company and
the Board, this could delay and/or deter important corporate opportunities. As a
result, the Company has proposed the addition of Article Eleventh to the
Articles.

In the event Proposal 3 is adopted, present shareholders' ownership as a
percentage could be diluted by future Common Share issuances. Such issuances
would be on such terms as determined by the Board of Directors in its lawfully
exercised discretion.

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<PAGE> 9

C. RECOMMENDATION.

FOR THE REASONS STATED ABOVE, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 3. The affirmative vote of the holders of a majority of the outstanding
Common Shares entitled to vote thereon present in person or by proxy at the
Annual Meeting is required for approval.

INTRODUCTION TO PROPOSALS 4 THROUGH 6

The Articles and Regulations contain provisions which are intended to
prevent coercive takeover tactics. These provisions are designed to enable the
Board of Directors to respond to unsolicited takeover bids in a more careful and
deliberate manner, to encourage an acquiring party to negotiate directly with
the Board and to increase the Board's relative bargaining position on behalf of
the Company and its shareholders. A description of these provisions is set forth
below.

First, Article Seventh ("Article Seventh") of the Articles of Incorporation
requires that 80% of the Company's Common Shares (as opposed to a statutorily
permitted majority) be voted in favor of a merger, consolidation or acquisition
with a person (a "Bidder") who has previously acquired more than 10% of the
Company's Common Shares if the Board has not approved the transaction or the
Bidder does not offer the shareholders the highest price the Bidder paid for the
shares prior to becoming a 10% shareholder. Article Seventh is designed to
enable the Company to avoid the takeover of the Company by a Bidder who acquires
a bare majority of the Common Shares through a tender offer or otherwise and
then tries to effect a second-step "business combination" wherein the
non-tendering shareholders receive a lesser consideration than that paid to the
tendering shareholders.

Second, the Regulations provide that the Board is fixed at 11 members and
the Board is classified into three classes, each serving a three-year term, and
the terms of each class are staggered. The foregoing provision has the effect of
requiring a shareholder who owns or acquires a significant percentage of the
outstanding Common Shares to go through two successive shareholders' meetings to
gain control of the Board of Directors. In the opinion of the Board, this
provides the time and opportunity for the consideration of the alternatives open
to the Company.

In order to maintain the effectiveness of the foregoing provisions and to
augment their usefulness, the Board is proposing the amendments to its Articles
and Regulations set forth as Proposals 4 through 6.

PROPOSAL 4. AMENDMENT OF AMENDED ARTICLES OF INCORPORATION TO CLARIFY
PROVISIONS OF ARTICLE SEVENTH

A. INTRODUCTION AND REASONS FOR THE AMENDMENT.

Section 1701.59(E) of the Ohio Revised Code provides directors with broad
discretion in determining what they reasonably believe to be in the best
interests of an Ohio Corporation. Specifically, in addition to considering the
interests of the Company's shareholders, directors may consider, among other
factors, the interests of the Company's employees, suppliers, creditors and
customers, the economy of the state and nation; community and societal
considerations; and the long-term as well as short-term interests of the Company
and its shareholders. In order to clarify that these statutory considerations
should apply when the Board evaluates "business combinations" as contemplated
under Article Seventh. Proposal 4 would amend Article Seventh to enumerate these
statutory considerations. The amendment to Article Seventh of the Articles of
Incorporation is set forth as Exhibit C attached to this Proxy Statement.

B. RECOMMENDATION.

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 4. The affirmative
vote of the holders of a majority of the outstanding Common Shares entitled to
vote thereon present in person or by proxy at the Annual Meeting is required for
approval.

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<PAGE> 10

PROPOSAL 5. AMENDMENT OF REGULATIONS TO RAISE THE VOTE REQUIRED TO CALL A
SPECIAL MEETING OF SHAREHOLDERS

A. INTRODUCTION AND REASONS FOR THE AMENDMENT.

Section 4 of Article II of the Regulations provides that meetings of
shareholders may be called by the president, a vice president or a majority of
the Directors of the Company, or by persons who hold 25% of all the shares
outstanding and entitled to vote thereat. Proposal 5 would amend Section 4 of
Article II of the Regulations to increase from 25% to 50%, as permitted by Ohio
law, the vote required to call a meeting of shareholders and to require a
shareholder calling a meeting to provide the Company with a notice of the
meeting and the business purposes to be addressed at the meeting. By adopting
this amendment to the Regulations, it would be more difficult for a person
holding a significant amount of Common Shares, but less than a majority of the
Common Shares, to call a meeting of shareholders. In the case of a hostile
takeover situation this could also have the effect of encouraging an acquiring
party to negotiate directly with the Board. Similarly, the amendment could have
the effect of limiting a significant shareholder from being able to effect in a
timely manner corporate matters which may otherwise be beneficial to
shareholders. The amendment to Section 4 of Article II of the Regulations is set
forth as Exhibit D attached to this Proxy Statement.

B. RECOMMENDATION.

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 5. The affirmative
vote of the holders of a majority of the outstanding Common Shares entitled to
vote thereon present in person or by proxy at the Annual Meeting is required for
approval.

PROPOSAL 6. AMENDMENT OF REGULATIONS TO PROVIDE FOR SUPERMAJORITY VOTE TO AMEND
OR REPEAL ANTITAKEOVER PROVISIONS

A. INTRODUCTION AND REASONS FOR THE AMENDMENT.

Presently, Section 1 of Article VIII of the Regulations provides that the
Regulations may be amended by the affirmative vote of the holders of shares
entitling them to exercise a majority of the voting power on such proposal at a
meeting or by the written consent of the holders of shares entitling them to
exercise a majority of the voting power. It is the Company's intention to make
sure that the protections of the antitakeover devices of the Regulations set
forth in Sections 1 and 2 of Article II (number of directors fixed at 11 and a
staggered Board of Directors be maintained in their proposed form), and that the
provisions of Section 4 of Article II (relating to the calling of meetings of
shareholders set forth under Proposal 5) be maintained in the proposed form. To
that end, Proposal 6 would add a new Section 2 to Article VIII of the
Regulations which would require the affirmative vote of at least 80% of the
voting power of the Company in order to amend the above-referenced provisions of
the Regulations (whether at a meeting or by written consent) unless such
amendment is proposed by the Company's Board of Directors.

B. RECOMMENDATION.

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 6. The affirmative
vote of the holders of a majority of the outstanding Common Shares entitled to
vote thereon present in person or by proxy at the Annual Meeting is required for
approval.

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<PAGE> 11
<TABLE>

EXECUTIVE COMPENSATION AND OTHER INFORMATION

The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer for the fiscal years ended December 31,
1992, 1993 and 1994. Pursuant to Securities and Exchange Commission rules,
summary information concerning other officers of the Company is not required to
be set forth in the following table.

<CAPTION>
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2)
- ------------------------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
Charles J. Dolezal 1994 $121,000 $14,810 $ 3,600
Chairman of the Board, President and 1993 115,000 13,740 3,500
Chief Executive Officer, National 1992 107,000 13,740 3,200
Bancshares Corporation and First National
Bank
<FN>
- ---------------

(1) First National Bank has an Employee Stock Purchase Incentive Plan for all
full-time employees. Under the Plan each employee is entitled to receive a
cash payment from First National Bank equal to 20% of the purchase price of
the Company's Common Shares acquired by the employee on the open market up
to a maximum of 100 shares per calendar year. Cash payment received by the
Chief Executive Officer equaled $810, $740 and $740 for the years ending
1994, 1993 and 1992, respectively.

(2) Director Fees Received.
</TABLE>

<TABLE>
The following table sets forth estimated annual retirement benefits payable
by the Company or its subsidiary, pursuant to the Defined Benefit Retirement
Plan, assuming retirement at age 65 to persons in specified remuneration and
years of service classifications:

<CAPTION>
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE
YEARS OF CREDITED SERVICE AT NORMAL RETIREMENT
AVERAGE DATE
ANNUAL -------------------------------------------------
COMPENSATION 5 10 15
- ------------- ------------- ------------- -------------
<S> <C> <C> <C>
$100,000 $11,700 $23,300 $35,000
125,000 14,600 29,200 43,750
150,000 17,500 35,000 52,500
</TABLE>

Under the Defined Benefit Retirement Plan, the number of years of credited
service for Mr. Charles J. Dolezal is 18 years.

Group life, disability, hospitalization, and medical insurance plans are
offered to officers of the Company and its subsidiary on the same basis as all
other salaried personnel. Directors are offered hospitalization and medical
insurance plans on the same basis as all salaried personnel. The Chief Executive
Officer has use of an automobile for his use in conducting the Company's
business, and for personal use on a limited basis, which the Company considers
to be insignificant. No individual received personal benefits in excess of
$5,000.00.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Securities and Exchange Commission rules require the Company to supply
information regarding compensation and benefits provided to selected officers of
the Company and specifically the Chairman, President and Chief Executive
Officer. Disclosure requirements as applied to this Company include only the
Company's Chairman, President and Chief Executive Officer. The Executive
Committee of First National Bank administers the executive compensation program
for the Company and its subsidiaries. In that connection, it makes and
establishes policy and practices for compensation and makes recommendations to
the full board with respect to specific compensation for the president and other
executive officers.

The compensation for the Company's executives is designed to reward
performance and to reflect compensation paid to other executives of comparably
sized financial institutions in this geographic area. This analysis is based
upon the subjective judgment of the Committee members and is not determined by
specific formulas.

8
<PAGE> 12

On the 23th day of November, 1993, the Committee met to review compensation
for all employees of the bank. Charles J. Dolezal, President and Chief Executive
Officer, attended the meeting to suggest to the Committee his recommendations
regarding senior management, other salaried and hourly employees. Mr. Dolezal
was excused from the meeting during the time that his compensation was discussed
by the Committee.

In addition to base salaries, cash bonuses are paid to executive officers
based on the same criteria that is used to establish base salaries with
additional emphasis placed on the previous year's performance.

Additional benefits received by Mr. Dolezal (other than his
Company-provided automobile) and other executive officers is equivalent to
benefits received by all other full-time employees.

Sara Balzarini -- Charles J. Dolezal
James L. Gerber -- John W. Kropf -- James F. Woolley

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As described above, Mr. Dolezal is a member of the Executive Committee
which oversees the Company's executive compensation programs. As previously
noted, however, Mr. Dolezal is excused from meetings of the Executive Committee
at which time his compensation is discussed.

PERFORMANCE GRAPH

The following represents a comparison of return on an investment in the
Corporation, Standard and Poor's 500 and a peer group composed of major regional
banks and bank holding companies.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG NATIONAL BANCSHARES
CORPORATION, S&P 500 INDEX AND S&P MAJOR REGIONAL BANK INDEX

<TABLE>
<CAPTION>
NATIONAL S&P MAJOR
MEASUREMENT PERIOD BANCSHARES S&P 500 STOCK REGIONAL BANK
(FISCAL YEAR COVERED) CORP INDEX INDEX
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 97.99 96.90 71.22
1991 98.71 126.42 127.61
1992 119.42 136.05 162.50
1993 146.27 149.76 172.28
1994 168.82 151.74 163.06

<FN>
*Assumes a reinvestment of dividends and a $100 initial investment.

</TABLE>

9
<PAGE> 13

TRANSACTIONS WITH DIRECTORS AND OFFICERS

Certain Directors, Officers and principal shareholders and their associates
were customers of and had various transactions with the Company's subsidiary,
First National Bank, in the ordinary course of business in 1994 and similar
additional transactions may be expected to take place in the future. All loans
and loan commitments involving Directors, Officers and their associates by the
Company's subsidiary Bank were made on substantially the same terms, including
interest rates and collateral, as those prevailing at that time for comparable
transactions with other persons, and do not involve more than the normal risk of
collectibility, or present other unfavorable features.

PROPOSALS OF SECURITY HOLDERS

Proposals of security holders which are intended by such holders to be
presented at the next Annual Meeting of Shareholders of the Company must be
received by the Company not later than December 1, 1995, for inclusion in the
Company's Proxy Statement and form of proxy relating to that Annual Meeting.
Proposals should be sent to Charles J. Dolezal, President, National Bancshares
Corporation, 112 West Market Street, PO Box 57, Orrville, Ohio 44667.

AUDIT MATTERS

The Board of Directors has selected Deloitte & Touche as the independent
auditors. The accounting firm of Deloitte & Touche has served the Company in
that capacity since 1979. It is anticipated that one or more representatives of
that firm will attend the Annual Meeting, will have an opportunity to make a
statement if they desire to do so, and will be available to answer appropriate
questions. In addition, the books, records and accounts of the Company's sole
banking subsidiary, First National Bank, are subject to periodic examination by
regulatory authorities and are examined by the Company's internal audit staff.
Reports concerning the examinations are reviewed by the Board of Directors of
the Company's banking subsidiary, as well as by the management of the Company.
The Board of Directors of the Company has selected Deloitte & Touche as auditors
for 1995.

FORM 10-K ANNUAL REPORT

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR 1994 WILL BE FURNISHED WITHOUT
CHARGE, ON OR AFTER APRIL 1, 1995. UPON WRITTEN REQUEST DIRECTED TO MICHAEL D.
HOFSTETTER, SECRETARY, NATIONAL BANCSHARES CORPORATION, 112 WEST MARKET STREET,
PO BOX 57, ORRVILLE, OHIO 44667.

This Proxy Statement and the accompanying notice are sent by order of the
Board of Directors.

Michael D. Hofstetter
Secretary

March 31, 1995

10
<PAGE> 14

EXHIBIT A

Article Fourth of the Company's Articles of Incorporation is proposed to be
deleted in its entirety and replaced as follows:

"FOURTH. The authorized number of shares of the corporation is Six Million
(6,000,000) all of which shall be with a par value of Ten Dollars ($10.00)
each."

EXHIBIT B

A new Article Eleventh to the Company's Articles of Incorporation is
proposed to be added as follows:

"ELEVENTH. No holder of shares of the corporation of any class, as such, shall
have any preemptive right to purchase or subscribe for shares of the
corporation, of any class, or other securities of the corporation, of any class,
whether now or hereafter authorized."

EXHIBIT C

A new subparagraph (vii) of Article Seventh of the Company's Articles of
Incorporation if proposed to be added as follows:

"SEVENTH. EVALUATION OF BUSINESS COMBINATIONS.

(vii) For purposes of this Article Seventh, a director, in determining
what he or she reasonably believes to be in the best interests of the
Corporation, shall consider the interests of the Corporation's shareholders
and in his or her discretion, may consider any of the following:

(1) The interest of the Corporation's employees, suppliers,
creditors, and customers;

(2) The economy of the state and nation;

(3) Community and societal considerations;

(4) The long-term as well as short-term interests of the
Corporation and its shareholders, including the possibility that these
interests may be best served by the continued independence of the
Corporation."

EXHIBIT D

Section 4 of Article II of the Company's Code of Regulations is proposed to
be deleted in its entirety and replaced as follows:

"Section 4. Meetings of the shareholders may be called by the
president or a vice president, or the directors by action at a meeting, or
a majority of the directors acting without a meeting or by the secretary of
the corporation upon the order of the board of directors, or by the persons
who hold fifty percent of all the shares outstanding and entitle to vote
thereat. Upon the request in writing delivered either in person or by
registered mail to the president or secretary by any persons entitled to
call a meeting of the shareholders, such officer shall forthwith cause
notice to be given to the shareholders entitled thereto. If such request be
refused, then the persons making such request may call a meeting by giving
notice in the manner provided in these regulations. In the event a meeting
is called by persons who hold fifty percent of all the shares outstanding
and entitled to vote thereat, such persons shall provide the corporation
with written notice of such meeting and the nature of the business to be
addressed at such meeting (at least 10 days prior to the meeting)."

11
<PAGE> 15

EXHIBIT E

A new Section 2 of Article VIII of the Company's Code of Regulations is
proposed to be added as follows:

"Section 2. Notwithstanding Section 1 of Article VII hereof, Sections
1, 2 and 4 of Article II of these regulations may be amended or new
regulations in their place may be adopted by the affirmative vote of the
holders of shares entitling them to exercise eighty percent (80%) of the
voting power on such proposal, at any regular meeting of the shareholders,
or at any special meeting of the shareholders if notice of the proposal to
amend or replace be contained in the notice of the meeting, or, without a
meeting, by the written consent of the holders of record of shares
entitling them to exercise eighty percent (80%) of the voting power, unless
such amendment or new regulations are proposed by the corporation's board
of directors."

12
<PAGE> 16
PROXY FOR ANNUAL MEETING OF 112 West Market Street
SHAREHOLDERS TO BE HELD Orrville, OH 44667
APRIL 27, 1995

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please sign and return immediately

KNOW ALL PERSONS BY THESE PRESENT: That I/We, the undersigned Shareholder or
Shareholders of National Bancshares Corporation, Orrville, Ohio, do hereby
nominate, constitute and appoint John W. Kropf, James F. Woolley and James L.
Gerber, or any one of them, (with substitution, for my or our stock and in my
or our name, place and stead) to vote all the common stock of said Company,
standing in my or our name, on its books on March 24, 1995, at the Annual
Meeting of Shareholders to be held at the OPERATIONS CENTER OF FIRST NATIONAL
BANK, 1444 NORTH MAIN STREET, ORRVILLE, OHIO, on April 27, 1995 at 2:00 o'clock
p.m., or at any adjournment thereof with all the powers the undersigned would
possess if personally present. The shares will be voted in accordance
with my specifications, as follows:

1. ELECT THREE (3) DIRECTORS TO SERVE A THREE (3) YEAR TERM AS DIRECTORS
OF THE COMPANY UNTIL EXPIRATION OF THEIR TERM IN 1998:

THREE YEAR TERM EXPIRING IN 1998
Sara Balzarini
Steve Schmid
Paul H. Smucker

/ / FOR / / WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES

For, except vote withheld from the following nominee(s):

_____________________________________

_____________________________________
(specifically name nominees for whom you wish authority to vote withheld)

2. APPROVAL AND ADOPTION OF AMENDMENT TO THE COMPANY'S AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED CAPITAL OF THE COMPANY TO
6,000,000 COMMON SHARES