FULTON BANCSHARES CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 29, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Donna Fisher and
Michelle Brown and each or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the
shares of Fulton Bancshares Corporation ( the "Corporation" )
that the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of the Corporation to be held in the
Fulton Theatre Building at the Main Office of The Fulton County
National Bank & Trust Company, 100 Lincoln Way East,
McConnellsburg, Pennsylvania 17233 on Tuesday, April 29, 1997, at
1:00 p.m., prevailing time, and at any adjournment or
postponement thereof as follows:
1. ELECTION OF CLASS A DIRECTORS TO SERVE FOR A THREE-YEAR TERM
Raleigh V. Barnett and Cecil B. Mellott
FOR all nominees listed above
(except as marked to the con-
trary below)
____ WITHHOLD AUTHORITY to vote for
all nominees listed above
(INSTRUCTION:TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE,WRITE NOMINEE'S NAME ON THE SPACE
BELOW.)
*****************************************************************
2. PROPOSAL TO RATIFY THE SELECTION OF SMITH ELLIOTT KEARNS &
COMPANY CERTIFIED PUBLIC ACCOUNTANTS, OF CHAMBERSBURG,
PENNSYLVANIA, AS THE AUDITORS FOR THE CORPORATION FOR YEAR
ENDING DECEMBER 31, 1997.
FOR AGAINST ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
*****************************************************************
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting
and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED ABOVE AND FOR PROPOSAL 2.
DATED: , 1997
SIGNATURE (S) SEAL
Number of Shares Held of Record on
March 17, 1997___________
SIGNATURE (S) SEAL
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE TITLE. IF MORE THAN ONE TRUSTEE,ALL SHOULD
SIGN, IF STOCK IS HELD JOINTLY, EACH OWNER MUST SIGN.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1997
TO THE SHAREHOLDERS OF FULTON BANCSHARES CORPORATION:
Notice is hereby given that the Annual Meeting of
Shareholders of FULTON BANCSHARES CORPORATION ( the
"Corporation") will be held at 1:00 p.m., prevailing time, on
Tuesday, April 29, 1997 in the Fulton Theatre Building at the
Main Office of The Fulton County National Bank & Trust Company,
100 Lincoln Way East, McConnellsburg, Pennsylvania 17233, for the
following purposes:
1. To elect two (2) Class A Directors to serve for a
three-year term and until their successors are elected
and qualified;
2. To ratify the selection of Smith, Elliott, Kearns and
Company,Certified Public Accountants,of Chambersburg,
Pennsylvania as the independent auditors of the
Corporation for the year ending December 31, 1997; and
3. To transact such other business as may properly come
before the Annual Meeting and any adjournment or
postponement thereof.
In accordance with the By-Laws of the Corporation and action
of the Board of Directors, only those shareholders of record at
the close of business on March 17, 1997, will entitled to notice
of and to vote at the Annual Meeting and any adjournment or
postponement thereof.
A copy of the Corporation's Annual Report for the fiscal
year ended December 31, 1996 is being mailed with this Notice.
Copies of the Corporation's Annual Report for the 1995 fiscal
year may be obtained at no cost by contacting DoriAnn F.
Hoffman,Treasurer, Fulton Bancshares Corporation, 100 Lincoln Way
East, McConnellsburg, Pennsylvania 17233, telephone: (717)485-
3144.
You are urged to mark, sign, date and promptly return your
Proxy in the enclosed envelope so that your shares may be voted
in accordance with your wishes and in order that the presence of
a quorum may be assured. The prompt return of your signed Proxy,
regardless of the number of shares you hold, will aid the
Corporation in reducing the expense of additional proxy
solicitation. The giving of such Proxy does not affect your right
to vote in person if you attend the meeting and give written
notice to the Secretary of the Corporation.
By Order of the Board of Directors,
John J. Kelso,Chairman of the Board
March 31, 1997
FULTON BANCSHARES CORPORATION
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 29, 1997
GENERAL
Introduction, Date, Time and Place of Annual Meeting
This Proxy Statement is being furnished in connection with
solicitation by the Board of Directors of FULTON BANCSHARES
CORPORATION (the "Corporation"), a Pennsylvania business
corporation, of proxies to be voted at the Annual Meeting of
shareholders to held on April 29, 1997 at 1:00 p.m. prevailing
time, in the Fulton Theatre Building at the Main Office of The
Fulton County National Bank & Trust Company, 100 Lincoln Way
East, McConnellsburg, Pennsylvania 17233, and at any adjournment
or postponement of the Annual Meeting.
The principal executive office of the Corporation is located
at The Fulton County National Bank and Trust Company (the
"Bank"), 100 Lincoln Way East, McConnellsburg, Pennsylvania
17233. The telephone number for the Corporation is (717)485-3144.
All inquires should be directed to Clyde H. Bookheimer, President
of the Corporation. The Bank is a wholly-owned subsidiary of the
Corporation.
Solicitation and Voting of Proxies
The Proxy Statement and the enclosed form of proxy (the
"Proxy") are first being sent to shareholders of the Corporation
on or about March 31, 1997.
Shareholders represented by proxies on the accompanying
Proxy, if properly signed and returned, will be voted in
accordance with the specifications made thereon by the
shareholders. Any Proxy not specifying to the contrary will be
voted FOR the election of nominees for Class A Director named
below and FOR the ratification of the selection of Smith,
Elliott, Kearns and Company, Certified Public Accountants, of
Chambersburg, Pennsylvania, as the independent auditors of the
Corporation for the year ending December 31, 1997. Execution and
return of the enclosed Proxy will not affect a shareholder's
right to attend the Annual Meeting and vote in person, after
giving written notice to the Secretary of the Corporation. The
cost of preparing,assembling, printing, mailing and soliciting
proxies,and any additional material which the Corporation may
furnish shareholders in connection with the Annual Meeting,will
be borne by the Corporation. In addition to the use of the mails,
certain directors, officers and employees of the Corporation may
solicit proxies personally, by telephone, telegraph and
telecopier. Arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries to forward proxy
solicitation material to the beneficial owners of stock held of
record by these persons and, upon request therefor, the
Corporation will reimburse them for their reasonable forwarding
expenses.
Revocability of Proxy
A shareholder who returns a Proxy may revoke the Proxy at
any time before it is voted only: (1) by giving written notice of
revocation to Gregory A. Gordon, Secretary of Fulton Bancshares
Corporation, at 100 Lincoln Way East, McConnellsburg,
Pennsylvania 17233; (2) by executing a later-dated proxy and
giving written notice thereof to the Secretary of the
Corporation; or (3) by voting in person after giving written
notice to the Secretary of the Corporation.
Voting Securities, Record Date and Quorum
At the close of business on March 17, 1997, the Corporation
had issued and outstanding 495,000 shares of common stock, par
value $0.625 per share, the only authorized class of stock (the
"Common Stock").
Only holders of Common Stock of record at the close of
business on March 17, 1997 will be entitled to notice of and to
vote at the Annual Meeting. Cumulative voting rights do not exist
with respect to the election of directors. On all matters to come
before the Annual Meeting, each share of Common Stock is entitled
to one vote.
Under Pennsylvania law and the By-laws of the Corporation,
the presence of a quorum is required for each matter to be acted
upon at the Annual Meeting. Pursuant to Article 03, Section 3.1,
of the By-laws of the Corporation, the presence, in person or by
proxy, of shareholders entitled to cast at least a majority of
the votes which all shareholders are entitled to cast shall
constitute a quorum for the transaction of business at the Annual
Meeting. Votes withheld and abstentions will be counted in
determining the presence of a quorum for the particular matter as
to which the broker withheld authority.
Assuming the presence of a quorum, the two nominees for
director receiving the highest number of votes cast by
shareholders entitled to vote for the election of directors shall
be elected. Votes withheld from a nominee and broker non-votes
will not be cast for such nominee.
Assuming the presence of a quorum, the affirmative vote a
majority of all votes cast by shareholders is required for the
ratification of the selection of independent auditors.
Abstentions and brokers non-votes are not deemed to constitute
"votes cast" and, therefore, do not count either for nor against
such ratification. Abstentions and broker non-votes, however,
have the practical effect of reducing the number of affirmative
votes required to achieve a majority for each matter by reducing
the number of shares voted from which the required majority is
calculated.
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
Principal Owners
The following table sets forth, as of March 17, 1997, the
name and address of each person who owns of record or who is
known by the Board of Directors to be the beneficial owner of
more than 5 percent of the Corporation's outstanding Common
Stock, the number of shares beneficially owned by such person and
the percentage of the Corporation's outstanding Common Stock so
owned.
<TABLE>
<S> <C> <C>
Percent of
Shares Outstanding
Beneficially Common Stock
Owned (1) BeneficiallyOwned
Name and Address
Raleigh V. and 33,008 6.67%
Inez G. Barnett
Waterfall, Pennsylvania 16689
</TABLE>
(1)See footnote below for the definition of "beneficially owned".
Beneficial Ownership by Officers, Directors and Nominees
The following table sets forth as of March 17, 1997, the
amount and percentage of the Common Stock of the Corporation
beneficially owned by each director, each nominee and all
officers and directors of the Corporation as a group.
<TABLE>
<S> <C> <C>
Name of Individual Amount and Nature
Percent
or Identity of Group Beneficial Ownership (1) (2) of
Class
Raleigh V. Barnett (3) 33,008(6) 6.67%
Clyde H. Bookheimer(4) 1,397(7) 0.28%
John J. Kelso(5) 10,521(8) 2.13%
Cecil B. Mellott(3) 15,538(9) 3.14%
David L. Seiders(5) 1,000 0.20%
Robert C. Snyder(4) 7,000 1.41%
Ellis L. Yingling(4) 7,810(10) 1.58%
All Officers and Directors as 77,035 15.56%
a Group (11 persons)
</TABLE>
(1) The securities "beneficially owned" by an individual are
determined in accordance with the definitions of "beneficial
ownership" set forth in the General Rules and Regulations of the
Securities and Exchange Commission and may include securities
owned by or for the individual's spouse and minor children and
any other relative who has the same home, as well as securities
to which the individual has, or shares, voting or investment
power or has the right to acquire beneficial ownership within 60
days after March 17,1997. Beneficial ownership may be disclaimed
as to certain of the securities.
(2) Information furnished by the directors and the Corporation.
(3) A nominee for Class A Director whose term of office expires
in 2000 and a current Class A Director whose term of office
expires in 1997.
(4) A Class B Director whose term of office expires in 1998.
(5) Class C Director whose term of office expires in 1999.
(6) Includes 2,200 shares of Common Stock held individually by
Mr. Barnett, 28,850 shares of Common Stock held jointly with
his spouse, and 1,958 shares of Common Stock held
individually by his spouse.
(7) Includes 754 shares of Common Stock held individually by Mr.
Bookheimer, 50 shares of Common Stock held jointly with
his spouse and 560 shares of Common Stock held individually
by his spouse.
(8) Includes 1,936 shares of Common Stock held individually by
Mr. Kelso and 8,585 shares of Common Stock held jointly with
his spouse.
(9) Includes 1,760 shares of Common Stock held individually by
Mr. Mellott and 13,778 shares of Common Stock held jointly
with his spouse.
(10) Includes 1,936 shares of Common Stock held individually by
Mr. Yingling and 5,874 shares of Common Stock held jointly
with his spouse.
ELECTION OF DIRECTORS
The By-Laws of the Corporation provide that the
Corporation's business shall be managed by its Board of
Directors. Section 10.2 of the By-Laws provides that the number
of directors that shall constitute the whole Board of Directors
shall be not less than five no more than twenty-five. The By-Laws
provide that the Board of Directors shall be classified into
three classes, each class to be elected for a term of three
years. The terms of the respective classes shall expire in
successive years. Within the foregoing limits, the Board of
Directors may from time to time fix the number of directors and
their respective classifications.
No person elected or appointed a director shall serve in
that capacity after reaching the age of seventy-five (75) years.
Each director shall also own, in his or her own right, shares of
Common Stock that have a book value in the aggregate of not less
than Ten Thousand Dollars ($10,000). The Board of Directors has
fixed the number of Board members at seven. Pursuant to Section
11.1 of the By-Laws, vacancies on the Board of Directors,
including vacancies resulting from an increase in the number of
directors, shall be filled by a majority of the remaining members
of the Board of Directors, though less than a quorum, and each
person so appointed shall be a director until the expiration of
the term of office of the class of directors to which he was
appointed.
In accordance with Section 10.3 of the By-Laws, at the 1997
Annual Meeting of Shareholders, two (2) Class A Directors shall
be elected to serve for a three year term and until their
successors are elected and qualified. Therefore , the By-Laws
provide for a classified Board of Directors with a staggered
three-year term of office.
Unless otherwise instructed, the Proxyholders will vote the
Proxies received by them for the election of the two (2) Class A
nominees named below. If any nominee should become unavailable
for any reason, proxies will be voted in favor of a substitute
nominee as the Board of Directors of the Corporation shall
determine. The Board of Directors has no reason to believe that
the nominees named will be unable to serve if elected.
There is no cumulative voting for the election of directors.
Each share of Common Stock is entitled to cast only one vote for
each nominee. For example, if a shareholder owns ten shares of
Common Stock, he or she may cast up to ten votes for each of the
directors in the class to be elected.
INFORMATION AS TO NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table contains certain information with
respect to the executive officers, nominees for Class A Director
whose term of office expires in 2000 and the current Class A
Directors whose term of office expires in 1997 and the Class B
Directors and Class C Directors whose term of office expires in
1998 and 1999, respectively:
<TABLE>
<S> <C> <C> <C>
Principal Occupation
for Past Five Years
Age and Position Held
As of with the Corporation Director
March 17, Since
Name 1997 and the Bank Corporation/Bank
NOMINEES FOR
CLASS A DIRECTORS
WHOSE TERM EXPIRES IN 2000 AND
CURRENT CLASS A DIRECTORS
WHOSE TERM EXPIRES IN 1997
Raleigh V. Barnett 73 Retired President 1989/1986
(1) (2) (4) (6) L & B Coal Co., Inc.
Cecil B. Mellott 60 President,MellottWood 1989/1986
(1) (2) (4)(5) Preserving, Inc.
President, Melco Lumber
Company, Inc.
CLASS B DIRECTORS
WHOSE TERM EXPIRES IN 1998
Clyde H. Bookheimer 57 President and Chief 1991/1991
Executive Officer of the
Corporation and Bank
Robert C. Snyder 65 Insurance Agent, 1989/1969
(1) (2) (3) (5) Robert C. Snyder
Insurance Agency
Ellis L. Yingling 64 Retired Service 1989/1974
(1) (3) (4) (6) Station Operator
CLASS C DIRECTOR
WHOSE TERM EXPIRES IN 1999
John J. Kelso 72 Funeral Director; 1989/1964
Chairman of the Corporation
and Bank
David L. Seiders 57 Farmer 1996/1996
(1) (3) (5) (6)
</TABLE>
(1) Member of the Appraisal Committee. This committee's function
is to evaluated properties for the Bank pursuant to
potential mortgage applications. This committee met forty-
two (42) times 1996.
(2) Member of the Building and Property Committee. This
committee's function is to review Bank facilities for needed
maintenance and to advise the Board as to any construction
projects for the Bank and its facilities.This committee met
(4) times in 1996.
(3) Member of the Asset/Liability Management Committee. The
functions of this committee are to make recommendations to
the Board of Directors concerning the investment of bank
funds,to monitor asset/liability management policies,to
manage earnings,liquidity and interest rate risk,and to
advise the Board of Directors concerning trends and related
risks. This committee met eleven (11) times in 1996.
(4) Member of the Personnel and Salaries Committee. This
committee makes recommendations to the Board of Directors
concerning the salaries and other benefits of directors,
officers and employees of the Bank.This committee met three
(3) times 1996.
(5) Member of the Audit Committee. The Audit Committee's
function is to make recommendations to the Board of
Directors concerning the audit of the entire Bank's
operations.The Audit Committee met three(3)times in 1996.
(6) Member of the Trust Committee. This committee provides
general supervision over all trust accounts held
in the Bank's Trust Department and reviews all new and
closed trust accounts.This committee met eleven(11) times in
1996.
During 1996, the Board of Directors of the Bank held forty-
five (45) meetings. Directors received an annual fee of
$8,000. Directors do not receive additional remuneration for
attendance at committee meetings. In the aggregate, the Board
of Directors of the Bank received $34,333 and deferred
$34,020 in 1996 for all services rendered as Directors.
During 1996, the Board of Directors of the Corporation held
seven (7) meetings. Directors do not receive additional
remuneration for their service on the Board of Directors of
the
Corporation. Each of the Directors attended at least 75
percent of the combined total number of meetings of the
Corporation's and Bank's Boards of Directors and the committees
of which he is a member.
The Board of Directors of the Corporation has at present no
standing committees. The Corporation does not have a nominating
committee.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation for
services in all capacities paid by the Bank during 1996 (1) to
each of the five most highly compensated executive officers to
the extent such person's aggregate cash compensation exceeded
$60,000; (2) to the five most highly compensated executive
officers as a group; and (3) to all officers and directors of the
Corporation and the Bank as a group:
<TABLE>
<S> <C> <C>
CASH COMPENSATION TABLE
(A) (B) (C)
Name of Individual or Capacities in CashCompensation
Number in Group which Served (2) (3)
Clyde H. Bookheimer President and Chief $91,551
Executive Officer of the
Corporation and Bank
Five Most Highly Executive Officers $225,613
Compensated Executive
Officers as a Group (1)
All Officers and Directors and Executive $259,946
Directors as a Group Officers
(11 persons)
</TABLE>
(1) These five officers are Clyde H. Bookheimer, President and
Chief Executive Officer of the Corporation and the Bank;
Gregory A. Gordon, Vice President,Secretary of the
Corporation and Senior Vice President, Secretary and Cashier
of the Bank; DoriAnn F. Hoffman, Vice President and
Treasurer of the Corporation and Vice President and
Assistant Secretary of the Bank; Alice G. Clark, Vice
President,Assistant Secretary and Assistant Treasurer of the
Corporation, Vice President and Assistant Secretary of
the Bank and Neil L. Berkstresser, Vice President of the
Bank.
(2) Includes salaries, deferred compensation, bonuses and
all fees to directors.
(3) No director or officers received in the aggregate more
than $5,000 in personal benefits.
DEFERRED COMPENSATION AND OTHER
BENEFIT PROGRAMS
The Corporation has adopted several benefit programs, some of
which result in the deferral of payments for services rendered:
(1) The CEO Salary Continuation Plan - This Plan is funded
by single premium life insurance on the CEO, with the
Bank as beneficiary. Actual payments to the CEO will
not begin until 2005.
(2) The Director Emeritus Program - This plan, funded by
life insurance, will allow the Bank to reward its
directors for longevity of service to the Board.
Directors who qualify would be eligible at age 75 to
receive $4,000 annually for up to 10 years under this
program.
(3) The Director Deferred Compensation Plan - This plan,
also funded by life insurance, will allow directors to
defer up to 100% of directors fees annually. The
amounts deferred will be paid out over a period of up
to 10 years beginning when the director reaches the age
of 75.
(4) The Officer Supplemental Life Insurance Plan provides
for officer life insurance coverage of double their
current salary level, and is also funded by single premium
life insurance.
CERTAIN TRANSACTIONS
There have been no material transactions between the
Corporation and the Bank, nor any material transactions proposed,
with any director or executive officer of the Corporation and the
Bank, or any associate of the foregoing persons. The Corporation
and the Bank have had and intend to continue to have banking and
financial transactions in the ordinary course of business with
directors and officers of the Corporation and the Bank their
associates on comparable terms and with similar interest rates as
those prevailing from time to time for other customers of the
Corporation and the Bank. Total loans outstanding from the
Corporation and the Bank at December 31, 1996 to the
Corporation's and the Bank's officers and directors as a group
and to members of their immediate families and companies in which
they had and ownership interest of 10 percent or more was
$639,266 or approximately 26 percent of the total equity capital
of the Bank. Such loans to such persons were made in the ordinary
course of business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons, and do
not involve more than the normal risk of collectible or present
other unfavorable features. The aggregate amount of indebtedness
outstanding as of the latest practicable date, February 28, 1997,
to the above described group was approximately $673,715.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table set forth selected information about the
principal of the Corporation, each of whom is elected by the
Board of Directors and each of whom holds office at the
discretion of the Board of Directors:
<TABLE>
<S> <C> <C> <C> <C>
Bank Number of Ages as of
Held Employee Shares Bene- March 17,
Name and Position Since Since ficially Owned 1997
John J. Kelso 1996 (1) 10,521 72
Chairman
Robert C. Snyder 1996 (1) 7,000 65
Vice Chairman
Ellis L. Yingling 1996 (1) 7,810 64
Vice Chairman
Clyde H. Bookheimer 1989 1962 1,379 57
President and Chief
Executive Officer
Gregory A. Gordon 1989 1983 425(2) 45
Vice President and
Secretary
Dori Ann F. Hoffman 1996 1990 55(3) 40
Vice President and
Treasurer
Alice G. Clark 1996 1980 17(4) 35
Vice President,
Assistant Secretary
and Assistant Treasurer
</TABLE>
(1) Mr. Kelso, Mr. Snyder and Mr. Yingling are not employees of
the Bank.
(2) These shares of Common Stock are held jointly by Mr. Gordon
and his spouse.
(3) These shares of Common Stock are held jointly by Mrs.
Hoffman and her spouse.
(4) Includes 5 shares of Common Stock held individually by Mrs.
Clark and twelve (12) shares of Common Stock are held
jointly by Mrs.Clark and her spouse.
PRINCIPAL OFFICERS OF THE BANK
The following table sets forth selected information about
the principal officers of the Bank, each of whom is elected by
the Board of Directors and each of whom holds office at the
discretion of the Board of Directors:
<TABLE>
<S> <C> <C> <C> <C> <C>
Office and Bank Bank Number of Ages as of
Position Held Employee Shares Bene- March 17,
Name with the Bank Since Since ficially Owned 1997
John J. Chairman 1996 (1) 10,521 72
Kelso
Robert C. Vice Chairman 1996 (1) 7,000 65
Snyder
Ellis L. Vice Chairman 1996 (1) 7,810 64
Yingling
Clyde H. President and 1991 1962 1,379 57
Bookheimer Chief Executive 1985
Officer
Gregory A. Vice President, 1989 1983 425 45
Gordon Secretary and Cashier
DoriAnn F. Vice President 1994 1990 55 40
Hoffman and Assistant
Secretary
Alice G. Vice President 1996 1980` 17 35
Clark Assistant and
Secretary
Neil L. Vice President 1994 1982 40 60
Berkstresser
</TABLE>
(1) Mr. Kelso, Mr. Snyder and Mr. Yingling are not employees of
the Bank.
LEGAL
PROCEEDINGS
In the opinion of the management of the Corporation and the
Bank, there are no proceedings pending to which the Corporation
of the Bank is a party or to which their property is subject,
which, if determined adversely to the Corporation and the Bank's
undivided profits or financial condition. There are no
proceedings pending other than ordinary routine litigation
incident to the business of the Corporation and the Bank. In
addition, no material proceedings are pending or are known to be
threatened or contemplated against the Corporation and the Bank
by government authorities.
Unless instructed to the contrary, it is intended that votes
will be cast pursuant to the Proxy for the ratification of the
selection of Smith, Elliott, Kearns and Company, Certified Public
Accountants, of Chambersburg, Pennsylvania, as the Corporation's
independent auditors for the year ending December 31, 1997. The
Corporation has been advised by Smith, Elliott, Kearns and
Company, that none of its members has any financial interest in
the Corporation. Ratification of Smith, Elliott, Kearns and
Company will require the affirmative vote of a majority of the
shares of Common Stock represented in person or by Proxy at the
Annual Meeting. Smith, Elliott, Kearns and company served as the
Corporation's independent public accountants for the 1996 fiscal
year, assisted the Corporation and the Bank with the preparation
of their federal and state tax returns, and provided assistance
in connection with regulatory matters, charging the Bank for such
services at the customary hourly rates. These non-audit services
were approved by the Corporation's and the Bank's Board of
Directors after due consideration of the effect of the
performance thereof on the independence of the accountants and
after the conclusions of the Board of Directors of the
Corporation and the Bank that there was no effect on the
independence of the accountants. In the event that the
Shareholders do not ratify the selection of Smith, Elliott,
Kearns and Company as the Corporation's independent auditors for
the year ending December 31, 1997, another accounting firm may be
chosen to provide independent public accountant audit services
for the 1997 fiscal year. The Board of Directors recommends that
the shareholders vote for the ratification of the selection of
Smith, Elliott, Kearns and Company as the independent auditors
for the Corporation for the year ending December 31, 1997.
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year
ended December 31, 1996 is enclosed with this Proxy Statement. A
representative of the Corporation will be available to respond to
any appropriate questions concerning the Annual Report presented
by shareholders at the Annual Meeting.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the
provisions of the proxy rules of the Securities and Exchange
Commission, wishes to submit a proposal for inclusion in the
Corporation's Proxy Statement for its 1998 Annual Meeting of
Shareholders must deliver such proposal in writing to the
President of The Fulton Bancshares Corporation at its principal
executive offices, 100 Lincoln Way East, McConnellsburg,
Pennsylvania 17233, not later than
Tuesday, December 2, 1997.
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented for consideration other than the matters described in
the accompanying Notice of Annual Meeting of Shareholders, but if
any matters are properly presented, it is the intention of the
persons named in the accompanying Proxy to vote on such matters
in accordance with their best judgment.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE
CORPORATION'S REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED
DECEMBER 31, 1996, INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, MAY BE OBTAINED, WITHOUT
CHARGE, FROM DORIANN F. HOFFMAN, TREASURER, FULTON BANCSHARES
CORPORATION, 100 LINCOLN WAY EAST, McCONNELLSBURG, PENNSYLVANIA
17233.
