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:
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
InterCounty Bancshares, Inc.
--------------------------------------------------
(Name of Registrant as Specified In Its Charter)
InterCounty Bancshares, Inc.
--------------------------------------------------
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) 0Aggregate 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:
INTERCOUNTY BANCSHARES, INC.
48 N. South Street
Wilmington, Ohio 45177
(513) 382-1441
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
InterCounty Bancshares, Inc. ("InterCounty"), will be held at 48 N. South
Street, Wilmington, Ohio, on April 21, 1998, at 9:00 a.m., Eastern Time (the
"Annual Meeting"), for the purpose of electing four directors of InterCounty
for terms expiring in 2000 and transacting such other business as may properly
come before the Annual Meeting or any adjournments thereof. Such matters are
more completely set forth in the accompanying Proxy Statement.
Only shareholders of InterCounty of record at the close of business on March
18, 1998, will be entitled to receive notice of and to vote at the Annual
Meeting and at any adjournments thereof. Whether or not you expect to attend
the Annual Meeting, we urge you to consider the accompanying Proxy Statement
carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A
QUORUM MAY BE ASSURED. The giving of a Proxy does not affect your right to
vote in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
April 3, 1998 James W. Foland, Secretary
<PAGE>
INTERCOUNTY BANCSHARES, INC.
48 N. South Street
Wilmington, Ohio 45177
(513) 382-1441
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of InterCounty
Bancshares, Inc. ("InterCounty"), an Ohio Corporation, for use at the 1998
Annual Meeting of Shareholders of InterCounty to be held at 48 N. South
Street, Wilmington, Ohio, on April 21, 1998, at 9:00 a.m., Eastern Time, and
at any adjournments thereof (the "Annual Meeting"). Without affecting any
vote previously taken, the Proxy may be revoked by a shareholder by a later
dated proxy received by InterCounty before the Proxy is exercised or by giving
notice of revocation to InterCounty in writing before the Annual Meeting or in
open meeting. Attendance at the Annual Meeting will not, of itself, revoke a
Proxy.
Each properly executed Proxy received prior to the Annual Meeting and not
revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted FOR the election of George F.
Bush, Charles L. Dehner, Georgia H. Miller and Timothy L. Smith as directors
of InterCounty for terms expiring in 2000.
Proxies may be solicited by the directors, officers and other employees of
InterCounty in person or by telephone, telecopy, telegraph or mail only for
use at the Annual Meeting, and such Proxies will not be used for any other
meeting. The cost of soliciting Proxies will be borne by InterCounty.
Only shareholders of record as of the close of business on March 18, 1998 (the
"Voting Record Date"), are eligible to vote at the Annual Meeting and will be
entitled to cast one vote for each share owned. InterCounty's records
disclose that, as of the Voting Record Date, there were 1,550,433 votes
entitled to be cast at the Annual Meeting.
VOTE REQUIRED
The four nominees receiving the greatest number of votes will be elected as
directors. The presence, in person or by proxy, of a majority of the issued
and outstanding shares entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Under Ohio law, shares held by a
nominee for a beneficial owner which are represented in person or by proxy but
which are not voted ("non-votes") are counted as present for purposes of
establishing a quorum. Shares as to which the authority to vote is withheld
and non-votes are not counted toward the election of directors or toward the
election of the individual nominees specified on the form of proxy.
This Proxy Statement is first being mailed to shareholders of InterCounty on
or about April 3, 1998.
<PAGE>
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information with respect to the only
persons known to InterCounty to own beneficially more than five percent of
InterCounty's outstanding common shares as of February 28, 1998:
<CAPTION>
Percent of
Name and Address Amount Beneficially Common Shares
of Beneficial Owner Owned(1) Outstanding
- -------------------- ------------------- -------------
<S> <C> <C>
B. Anthony Williams(2)
6172 U. S. 22 East
Wilmington, Ohio 45177 220,098 14.20%
Brooke A. Williams
148 E. 30th Street
Apartment 5D
New York, New York 10016 85,621 5.52
Dana L. Williams
General Delivery
Telluride, Colorado 81435 86,228 5.56
Lynn A. Williams
524 N. 27th Street
Richmond, Virginia 23223 85,449 5.51
Beth Ellingwood
325 West Sixth Street
Columbus, Ohio 43201 96,441 6.22
Wilmington College
Fife Avenue
Wilmington, Ohio 45177 83,632 5.39
The National Bank and Trust
Company and InterCounty
Bancshares, Inc. Employee
Stock Ownership Plan(3)
48 N. South Street
Wilmington, Ohio 45177 345,535 22.29
- -------------------------
<FN>
(1) Except as indicated for the shares held by the InterCounty Bancshares,
Inc. Employee Stock Ownership Plan (the "ESOP"), the beneficial owner has
sole voting and dispositive power.
(2) B. Anthony Williams is a director of InterCounty and The National Bank
and Trust Company (the "Bank").
(3) Such shares are held by the Bank as Trustee for the ESOP. Pursuant to the
ESOP, the Bank, as Trustee, has the power to vote in its sole discretion
all ESOP shares that have not been allocated to the accounts of
participants. At February 28, 1998, 66,881 shares had not been allocated.
The Trustee may dispose of shares held in the ESOP Trust only under
limited circumstances specified in the ESOP.
</FN>
</TABLE> -2-
<PAGE>
<TABLE>
The following table sets forth certain information with respect to the number
of common shares of InterCounty beneficially owned by each director of
InterCounty and each executive officer of InterCounty whose cash compensation
during 1997 exceeded $100,000 and by all directors and executive officers of
InterCounty as a group as of February 28, 1998:
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------
Sole Voting and Shared Voting and Percent of Common
Name Investment Power Investment Power Shares Outstanding
- ---- ---------------- ----------------- ------------------
<S> <C> <C> <C>
S. Craig Beam 891 3,772 0.30%
George F. Bush 2,655 - 0.17
Charles L. Dehner 31,702(1) 14,676(2) 2.95
James W. Foland 7,105 - 0.46
Georgia H. Miller 891 - 0.06
Darleen M. Myers 4,234 - 0.27
Robert A. Raizk 2,560 - 0.17
Timothy L. Smith 38,140(3) 23,340(4) 3.88
B. Anthony Williams 220,098 - 14.20
R. James Parker 7,824(5) 3,517(6) 0.73
All directors and
executive officers
of InterCounty as
a group (13 persons) 328,737(7) 70,301(8) 24.62
- ----------------------
<FN>
(1) Includes 22,900 shares that may be acquired currently upon the exercise of
options.
(2) Consists of shares allocated to Mr. Dehner's ESOP account, with respect to
which Mr. Dehner has voting but not investment power.
(3) Includes 32,653 shares that may be acquired currently upon the exercise of
options.
(4) Includes 17,174 shares allocated to Mr. Smith's ESOP account, with respect
to which Mr. Smith has voting but not investment power.
(5) Includes 5,400 shares that may be acquired currently upon the exercise of
options.
(6) Consists of shares allocated to Mr. Parker's ESOP account, with respect to
which Mr. Parker has voting but not investment power.
(7) Includes 3,217 shares owned with sole voting and investment power by three
executive officers of the Bank who may be deemed to perform policy making
functions for InterCounty and 9,420 shares that may be acquired currently
by such persons upon the exercise of options.
(Footnotes continued on next page)
-3-
<PAGE>
(8) Includes 310 shares owned with voting and investment power by three
executive officers of the Bank who may be deemed to perform policy making
functions for InterCounty and 24,686 shares allocated to the ESOP accounts
of such persons, with respect to which such persons have voting power.
</FN>
</TABLE>
BOARD OF DIRECTORS
Election of Directors
The Articles of Incorporation of InterCounty provide for a Board of Directors
consisting of not less than seven nor more than eleven directors, such number
to be fixed or changed by the Board of Directors or the shareholders. The
Board of Directors currently consists of nine directors divided into two
classes. Each class serves for a two-year period. Each of the directors of
InterCounty is also a director of the Bank.
In accordance with Section 8.04 of the Articles of Incorporation of
InterCounty, nominees for election as directors may be proposed only by the
directors or by any shareholder entitled to vote for directors if such
shareholder makes a timely notice to the Secretary of InterCounty. To be
timely, a shareholder's notice must be delivered to or mailed and received at
the principal executive offices of InterCounty not less than sixty days nor
more than ninety days prior to the meeting; provided, however, that in the
event that less than thirty-five days' notice or prior public disclosure of
the date of the meeting is given or made to shareholders of an annual meeting
held on a date other than the date fixed by the Code of Regulations of
InterCounty, notice by the shareholder must be received not later than the
close of business on the seventh day following the earlier of the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made. Such shareholder's notice shall set forth (a) as to each person who
is not an incumbent director whom a shareholder proposes to nominate for
election as a director (i) the name, age, business address and residence
address of such person; (ii) the principal occupation or employment of such
person; (iii) the class and number of shares of InterCounty which are
beneficially owned by such person; and (iv) any other information relating to
such person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended; and (b) as to the shareholder giving the notice, (i)
the name and record address of such shareholder and (ii) the class and number
of shares of InterCounty which are beneficially owned by such shareholder.
Such notice shall be accompanied by the written consent of each proposed
nominee to serve as a director of InterCounty, if elected.
-4-
<PAGE>
The Board of Directors proposes the election of the following persons to terms
which will expire in 2000:
Position(s) Director
Name Age(1) Held Since
---- --- ---------- --------
George F. Bush 62 Director 1988
Charles L. Dehner 50 Director and Executive
Vice President of
InterCounty and the Bank
and Treasurer of InterCounty 1989
Georgia H. Miller 58 Director 1990
Timothy L. Smith 47 Director, Chief Executive
Officer and President of
InterCounty and the Bank 1989
- ------------------------
[FN]
(1) As of February 28, 1998.
</FN>
If any nominee is unable to stand for election, the Proxies will be voted for
such substitute as the Board of Directors recommends.
The following directors will continue to serve after the Annual Meeting for
the terms indicated:
Director Term
Name Age(1) Position(s) Held Since Expires
---- --- ---------------- -------- -------
S. Craig Beam 46 Director 1990 1999
James W. Foland 76 Director and
Secretary 1983 1999
B. Anthony Williams 63 Director and
Chairman of the
Board 1981 1999
Darleen M. Myers 65 Director 1995 1999
Robert A. Raizk 43 Director 1995 1999
- ----------------------
[FN]
(1) As of February 28, 1998.
</FN>
-5-
<PAGE>
George F. Bush has been the President and owner of Bush Auto Place, Inc.,
since 1970 and Bush Leasing, Inc., since 1971. Mr. Bush is also a member of
the Clinton Memorial Hospital Board of Directors.
Charles L. Dehner has been the Executive Vice President of InterCounty since
1993, Treasurer of InterCounty since 1984 and Executive Vice President of the
Bank since 1991. Mr. Dehner was Senior Vice President and Controller of the
Bank from 1988 to 1991.
Georgia H. Miller, formerly Manager of Volunteer Services and Patient
Representative for Clinton Memorial Hospital, retired in 1993. Ms. Miller
serves as a volunteer for Clinton Memorial Hospital and Auxiliary and is a
guardian ad litem for the Juvenile Court of Clinton County. Ms. Miller is
also a member of the Board of Habitat for Humanity.
Timothy L. Smith has been the President and Chief Executive Officer of
InterCounty and the Bank since 1989. From July 1988 until October 1989, Mr.
Smith was a Senior Vice President and Senior Loan Officer of the Bank. He is
also Chairperson of Chatfield College.
S. Craig Beam has been the President of Melvin Stone Company since 1989 and
served as General Manager before being elected President. Mr. Beam is also
the President of MC Trucking and a Trustee of Wilmington College.
James W. Foland, the Secretary of InterCounty, was employed by the Bank from
1956 until his retirement as Senior Vice President in 1983.
B. Anthony Williams has been Chairman of the Board of InterCounty since 1986.
Mr. Williams is also self-employed in agribusiness.
Darleen M. Myers is a Clinton County Commissioner. From 1993 to 1994, Ms.
Myers served as the Director of the Rainbow Village Child Day Care Center, and
from 1976 to 1993, she was an Extension Agent for The Ohio Cooperative
Extension Services.
Robert A. Raizk has been the President and Chief Executive Officer of The
Wilmington Iron & Metal Co., Inc., since August 1990. From 1985 to 1990, Mr.
Raizk was a commercial real estate broker with The Tipton Group, Inc.
Meetings of Directors
The Board of Directors of InterCounty met 12 times for regularly scheduled and
special meetings during the fiscal year ended December 31, 1997. Each
director attended at least 75% of such meetings of the Board of Directors.
Each director of InterCounty is also a director of the Bank. The Board of
Directors of the Bank met 12 times for regularly scheduled and special
meetings during the fiscal year ended December 31, 1997.
-6-
<PAGE>
Committees of Directors
The Board of Directors of InterCounty has no committees. The Board of
Directors of the Bank has an Audit Committee, a Trust Policy Committee and a
Compensation Committee, but no nominating committee.
The Audit Committee is responsible for an annual examination of the Bank to
determine whether the Bank is in a sound condition and whether adequate
internal controls and procedures are being maintained and for reporting the
results of the examination and recommendations for changes to the Board
of Directors. The Committee may make such examination or cause the
examination to be made by an auditor. The members of the Audit Committee are
Messrs. Beam, Foland and Raizk and Ms. Miller. The Audit Committee met twice
in 1997.
The Trust Policy Committee is responsible for the review of the
administration, policies, investment holdings, investment performance,
operating results, earnings, conduct and reports of examinations and audits of
the Trust Department. The members of such committee are Messrs. Bush, Dehner,
Smith and Williams and Ms. Myers. The Trust Policy Committee met 11 times
during 1997.
The Compensation Committee recommends annually to the full Board of Directors
the compensation for the Bank's executive officers. The members of the
Compensation Committee are Messrs. Beam, Bush, Foland and Raizk and Mmes.
Miller and Myers. The Compensation Committee met twice in 1997.
EXECUTIVE OFFICERS
The only executive officers of InterCounty are Messrs. Dehner, Foland, Smith
and Williams.
In addition to Mr. Smith and Mr. Dehner, the following persons are executive
officers of the Bank and may be deemed to participate in policy making for
InterCounty:
Name Age(1) Positions Held During Last Five Years
- ---- --- -------------------------------------
Andrew J. McCreanor 48 Senior Vice President, Customer Relations;
formerly Director of Marketing and Customer
Service
R. James Parker 59 Executive Vice President, Senior Loan
Officer; prior to October 1991, Executive
Vice President of Bank One of Cincinnati
Walter H. Rowsey 49 Senior Vice President, Branch
Administrator; formerly Vice President,
Loan Division Manager
Howard T. Witherby 42 Senior Vice President, Operations Division
Manager; formerly Vice President
- ------------------------
[FN]
(1) As of February 28, 1998.
</FN>
-7-
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
<TABLE>
The following table presents certain information regarding the cash
compensation received by each executive officer of InterCounty or the Bank
whose cash compensation exceeded $100,000 during the fiscal years ended
December 31, 1997, 1996 and 1995:
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation(1)
-----------------------------------------------------
Name and Principal Other Annual
Position Year Salary($) Bonus($) Compensation($)(5)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Timothy L. Smith 1997 $183,875(2) $62,877 $400
Chief Executive 1996 167,374(3) 67,697 400
Officer, President 1995 156,000(4) 43,036 401
of InterCounty and
Bank
Charles L. Dehner 1997 125,725(2) 34,303 520
Treasurer, Executive 1996 117,459(3) 35,257 520
Vice President of 1995 109,795(9) 27,513 521
InterCounty,
Executive Vice
President of Bank
R. James Parker 1997 118,225 33,015 685
Executive Vice 1996 110,834 35,917 685
President, Senior 1995 105,545 28,081 685
Loan Officer of
Bank
-8-
<PAGE>
Long Term,
Compensation
------------
Awards
------------
Securities
Underlying All Other
Options/SARs(#) Compensation($)
- -----------------------------------------------------------------------------
Timothy L. Smith 3,500/-0- $ 1,426(6)
Chief Executive -0-/-0- 18,500(7)
Officer, President 5,000/-0- 27,148(8)
of InterCounty and
Bank
Charles L. Dehner 2,500/-0- 1,644(6)
Treasurer, Executive -0-/-0- 18,511(7)
Vice President of 3,500/-0- 24,387(8)
InterCounty,
Executive Vice
President of Bank
R. James Parker 2,500/-0- 3,048(6)
Executive Vice -0-/-0- 20,093(7)
President, Senior 3,500/-0- 21,322(8)
Loan Officer of
Bank
- ----------------------------
<FN>
(1) Cash compensation does not include amounts attributable to other
miscellaneous benefits received by executive officers. The cost to
InterCounty and the Bank of providing such benefits to each of the
executive officers listed above during the years ended December 31, 1997,
1996 and 1995, was less than 10% of the officer's cash compensation, and
such cost for all executive officers as a group was less than 10% of the
group's aggregate cash compensation.
(2) Includes $7,500 of director's fees.
(3) Includes $6,625 of director's fees.
(4) Includes $4,500 of director's fees.
(5) Consists of amounts reimbursed to such executive officers for taxes paid
on whole life insurance premiums paid for the benefit of such executive
officers.
(6) Consists of premiums paid on whole life insurance for the benefit of the
officer. At the latest practicable date, the number of shares to be
allocated to the accounts of the ESOP participants for 1997 had not yet
been determined.
(Footnotes continued on next page)
-9-
<PAGE>
(7) Consists of premiums paid in the amount of $1,426, $1,644 and $3,048 paid
on whole life insurance for the benefit of Messrs. Smith, Dehner and
Parker, respectively, and $17,074, $16,867, and $17,045 representing the
aggregate value at the date of allocation of 578, 571 and 577 shares
allocated to the ESOP accounts of Messrs. Smith, Dehner and Parker,
respectively.
(8) Consists of premiums in the amount of $1,426, $1,644 and $3,048 paid on
whole life insurance for the benefit of Messrs. Smith, Dehner and Parker,
respectively, and $25,722, $22,743 and $18,274 representing the aggregate
value at the date of allocation of 967, 855 and 687 shares, respectively,
allocated to the ESOP accounts of Messrs. Smith, Dehner and Parker,
respectively.
(9) Includes $4,250 of director's fees.
</FN>
</TABLE>
<TABLE>
The following table sets forth information regarding all grants of options to
purchase InterCounty common shares made to Messrs. Smith, Dehner and Parker
during 1997. Each of such options, which are not intended to qualify as
incentive stock options under the Internal Revenue Code of 1986, has a term of
10 years and becomes exercisable one-fifth per year over a five-year period.
Aggregated Option/SAR Grants in Last Fiscal Year
- ------------------------------------------------------------------------------
Individual Grants
- ------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/share) Date
- ---- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Timothy L. Smith 3,500 25.64% $27.25 1/1/07
Charles L. Dehner 2,500 18.32 27.25 1/1/07
R. James Parker 2,500 18.32 27.25 1/1/07
Alternative to (f) and (g)
Grant Date Value (#)(1)
--------------------------
Grant Date
Present Value
-------------
Timothy L. Smith $31,150
Charles L. Dehner 22,250
R. James Parker 22,250
- -----------------------------
(Footnotes on next page)
-10-
<PAGE>
<FN>
(1) The grant date present value was determined using a Black-Scholes option
pricing model and does not necessarily reflect the value that may be
realized upon the exercise of the options.
</FN>
</TABLE>
<TABLE>
The following table sets forth information regarding the number and value of
unexercised options held at December31, 1997, by Messrs. Smith, Dehner and
Parker:
<CAPTION>
Aggregated Option/SAR Exercises In Last Fiscal Year
and 12/31/97 Option/SAR Values
---------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at 12/31/97(#) at 12/31/97(1)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
- ---- ----------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Timothy L. Smith -0- -0- 31,953/7,800 $852,132/111,800
Charles L. Dehner -0- -0- 22,400/4,600 $608,670/ 60,875
R. James Parker -0- -0- 4,200/5,300 $ 93,464/ 78,991
- -------------------
<FN>
(1) An option is "in-the-money" if the fair market value of the underlying
stock exceeds the exercise price of the option. The figure represents the
value of such options, determined by multiplying the number of shares
subject to unexercised options by the difference between the exercise
price and the fair market value of InterCounty's common shares on
December 31, 1997, of $39.00 per share. No established market for
InterCounty's common shares existed at December 31, 1997, InterCounty's
common shares are not traded on any securities exchange and the prices at
which its shares are traded are not quoted by a national quotation
service.
</FN>
</TABLE>
Defined Benefit Plan
Until 1997, InterCounty sponsored a defined benefit plan (the "Pension Plan")
covering all employees age 21 or older who had completed at least one year of
service to InterCounty. The Pension Plan was terminated in 1997.
-11-
<PAGE>
The retirement benefit payable upon retirement at or after age 65 depended
upon whether the employee had credited service with InterCounty or the Bank
before September 30, 1989. If the employee had no credited service before
September 30, 1989, the annual retirement benefit would have been equal to (1)
1.25% of annual compensation for each plan year in which the employee was a
participant in the Pension Plan and was credited with a year of service, plus
for each plan year in which the participant was credited with a year of
service, 0.55% of that portion of the employee's annual compensation that was
above the employee's "Social Security Covered Compensation," which was based
upon the Social Security Taxable Wage Base published by the federal government
and which is changed annually.
If the employee had credited service before September 30, 1989, the annual
retirement benefit would have been equal to (1) an amount determined by
applying the above formula for years of service after September 30, 1989; plus
(2) the greater of (a) 60% of the employee's average monthly compensation for
the five calendar years in which the employee's compensation was its highest
preceding the employee's 65th birthday or September 30, 1989 (whichever is
earlier), less 50% of the employee's primary Social Security benefits payable
under Title II of the Federal Social Security Act, the difference of which is
reduced proportionately for the number of years less than 30 that the employee
worked; or (b) 1.5% of the employee's average monthly compensation for the
three calendar years in which the employee's compensation was its highest
preceding the employee's 65th birthday or September 30, 1989 (whichever is
earlier); provided, however, that in making such computation in this clause
(b), the employee's compensation for any calendar year after 1980 would not
exceed the employee's 1980 calendar year compensation.
Under either formula, the credited years of service was limited to 30. In
addition, for plan years beginning in 1987 through 1993, the term
"compensation" meant all compensation paid or accrued up to $200,000 per year,
as adjusted for cost of living increases, and for years after 1993,
"compensation" included all compensation paid or accrued up to $150,000, as
adjusted annually for cost of living increases.
Upon termination of the Pension Plan, Messrs. Smith, Dehner and Parker
received payments of their accrued benefits in the amounts of $67,757, $68,982
and $81,571, respectively.
Director Compensation
InterCounty does not pay director's fees. Each director of InterCounty who is
not a full-time employee of the Bank currently receives for services as a
director of the Bank a fee of $6,000 per year and $500 for each meeting of the
Board of Directors attended. Directors of the Bank who are full-time
employees of the Bank receive $3,000 per year and $375 for each meeting of the
Board of Directors attended.
Compensation Committee Report
InterCounty Bancshares, Inc. (the "Company"), is a bank holding company which
directly owns all of the outstanding capital stock of The National Bank and
Trust Company (the "Bank"). The Company's business consists primarily of the
business of the Bank. The financial results of the Company depend primarily
upon the Bank's financial results.
-12-
<PAGE>
The Compensation Committee of the Board of Directors of the Bank (the
"Committee") is composed exclusively of non-employee directors. The
Committee's philosophy is to tie executive compensation to the achievement of
the Bank's goals and the resulting performance of the Company. The Committee
reviews executive performance and compensation and makes recommendations to
the full Board of Directors of the Bank for approval.
The Committee's goal is to accomplish the following specific objectives
through the use of base salary and incentive plans:
(1) Motivate personnel to perform and succeed according to the goals
outlined in the Bank's annual business plan;
(2) Retain key personnel critical to the long-term success of the Bank;
and
(3) Utilize incentive plans, such as stock options, that reward
executives for corporate success and align the interests of
management with those of the shareholders;
Base Salary. Base Salary is the foundation of the Bank's compensation
program, providing income on which the executive can rely, but which is not so
large as to eliminate the executive's motivation to work hard to increase
shareholder value. An executive's base salary is directly related to his or
her position, job responsibilities, performance and contribution to the Bank's
success. The Committee reviews peer group information with respect to
compensation and company performance on a regional and national basis to
ensure salaries are competitive and in line with the industry.
Incentive Plan. The Bank also has an incentive compensation plan pursuant to
which awards are based on the Bank's achievement of predetermined goals
relating to return on average equity and return on average assets, and on the
participant's achievement of goals relating to his or her individual
contributions to the Bank. Threshold, target and maximum goals for corporate
performance are generally established at the beginning of each fiscal year.
All awards are established as a percentage of each participant's base salary.
Awards differ due to the contribution of the individual to the Bank's success.
Participants (except the Chief Executive Officer) earn awards by achieving
individual goals and assisting in achieving the Bank's goals. The more
control and influence a participant has on either individual goals or Bank
goals, the greater the participant's weighting on that particular factor. The
Chief Executive Officer's incentive plan awards are based solely on the
achievement of the Bank's goals.
If individual goals are achieved but the Bank fails to achieve its goals, no
incentive award will be made to any participant.
Stock Options. The Committee annually reviews the appropriateness of granting
stock options to senior management. The purposes of this long-term incentive
compensation are to provide an incentive to officers and key employees to
promote the success of the business and thereby increase shareholder value,
and to attract and retain the best available personnel. The Committee grants
options based on an individual's performance and contribution to the Bank's
success. All options granted to date have a term of 10 years and may be first
exercised to the extent of one-fifth each year for the first five years after
the date of grant.
-13-
<PAGE>
CEO Compensation. Timothy L. Smith has been the President and the Chief
Executive Officer ("CEO") of the Company since October 1989. The Committee
used the executive compensation policy described above to determine Mr.Smith's
compensation.
In setting the base salary, cash incentive award and amount of stock options,
the Committee made an overall assessment of Mr. Smith's leadership in
achieving the Bank's long-term strategic and business goals. The Bank
achieved its corporate goals, including those related to return on equity and
return on assets, and Mr. Smith was determined to have contributed
substantially to the Bank's success.
Compensation Committee
S. Craig Beam Georgia H. Miller
George F. Bush Darleen M. Myers
James W. Foland Robert A. Raizk
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Bank has a Compensation Committee whose
members are Messrs. Beam, Bush, Foland and Raizk and Mmes. Myers and Miller.
None of such persons are employees of the Bank or InterCounty.
Performance Graph
<TABLE>
The following line graph compares the yearly percentage change in
InterCounty's cumulative total shareholder return against the cumulative
return of a broad index of The Nasdaq National Market and an index of banks
with total assets of $250 million to $500 million. The graph assumes the
investment of $100 on November 30, 1993. Cumulative total shareholder return
is measured by dividing (i) the sum of (A) the cumulative amount of dividends
for the measurement period, assuming dividend reinvestment, and (B) the
difference between the price of InterCounty's common shares at the end and at
the beginning of the measurement period; by (ii) the price of InterCounty's
common shares at the beginning of the measurement period.
<CAPTION>
[Performance Graph Represented by the Following Chart]
Period Ending
11/30/93 12/31/93 12/31/94
-------- -------- --------
<S> <C> <C> <C>
InterCounty Bancshares, Inc. 100.00 100.00 123.63
NASDAQ - Total US 100.00 102.79 100.47
SNL $250m to $500m Bank Index 100.00 101.06 109.04
-14-
<PAGE>
[Performance Graph Represented by the Following Chart]
Period Ending
11/30/95 12/31/96 12/31/97
-------- -------- --------
<S> <C> <C> <C>
InterCounty Bancshares, Inc. 129.59 148.49 218.51
NASDAQ - Total US 142.08 174.76 214.47
SNL $250m to $500m Bank Index 147.16 191.08 330.48
</TABLE>
-15-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank occasionally makes loans of various types to directors, officers and
employees of the Bank. Any of such loans to non-employee directors
outstanding during the last year were made in the ordinary course of business,
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other Bank
customers and did not involve more than the normal risk of collectibility or
present other unfavorable features. Loans are offered to all employees of the
Bank, including executive officers, at an interest rate that is 25 basis
points less than the rate offered on similar loans to others. All loans
outstanding to executive officers during 1997 were made in the ordinary course
of business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other Bank customers and did not involve more than the normal risk of
collectibility or present other unfavorable features.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, InterCounty's directors and executive
officers and persons holding more than ten percent of the common shares of
InterCounty are required to report their ownership of common shares and
changes in such ownership to the Securities and Exchange Commission (the
"SEC") and InterCounty. The SEC has established specific due dates for such
reports. Based upon a review of such reports, InterCounty must disclose any
failures to file such reports timely in Proxy Statements used in connection
with annual meetings of shareholders. In February 1997 the ESOP filed a Form
5 reporting its initial ownership and two transactions that should have been
reported earlier on a Form 3 and two Forms 4 or 5.
AUDITORS
The Board of Directors has selected J.D. Cloud & Co. as the auditors of
InterCounty for the current fiscal year. J.D. Cloud & Co. has audited the
books of InterCounty since 1982. Management expects that a representative of
J.D. Cloud & Co. will be present at the Annual Meeting, will have the
opportunity to make a statement if he or she so desires and will be available
to respond to appropriate questions.
PROPOSALS OF SECURITY HOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in InterCounty's proxy
statement for the 1999 Annual Meeting of Shareholders should be sent to
InterCounty by certified mail and must be received by InterCounty not later
than December 7, 1998.
Management knows of no other business which may be brought before the Annual
Meeting. It is the intention of the persons named in the enclosed Proxy to
vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
-16-
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND RETURN THE
PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
April 3, 1998 James W. Foland, Secretary
-17-
<PAGE>
REVOCABLE PROXY
INTERCOUNTY BANCSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of common shares of InterCounty Bancshares, Inc.
(the "Company"), hereby constitutes and appoints S. Craig Beam, James W.
Foland, B. Anthony Williams, Darleen M. Myers and Robert A. Raizk, or any of
them, the Proxy or Proxies of the undersigned, with full power of substitution
and resubstitution, to attend the Annual Meeting of Shareholders of the
Company to be held on April 21, 1998, at 48 N. South Street, Wilmington, Ohio,
at 9:00 a.m., Eastern Time, and at any adjournment or adjournments thereof,
and to vote all of the common shares of the Company which the undersigned is
entitled to vote at such Annual Meeting or at any adjournment or adjournments
thereof on each of the following proposals, which are described in the
accompanying Proxy Statement:
1. The election of four (4) directors to serve for a term of two (2) years
each.
[ ] FOR election as directors [ ] WITHHOLD AUTHORITY
of the Company of all the to vote for all nominees
nominees listed below listed below.
(except as marked to the
contrary below).*
George F. Bush
Charles L. Dehner
Georgia H. Miller
Timothy L. Smith
*(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list above).
2. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournment or adjournments thereof.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED OR NOT VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
LISTED IN ITEM NO. 1 AS DIRECTORS OF THE COMPANY AND IN THE DISCRETION OF THE
PROXIES ON ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR
ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
All proxies previously given by the undersigned are hereby revoked. The
undersigned acknowledges receipt of the accompanying Notice of Annual Meeting
of Shareholders and Proxy Statement for the April 21, 1998, meeting.
Please sign exactly as your name appears
hereon. When shares are registered in two
names, both shareholders should sign.
When signing as executor, administrator,
trustee, guardian, attorney or agent,
please give full title as such. If the
shareholder is a corporation, please sign
in full corporate name by President or
other authorized officer. If the
shareholder is a partnership, please sign
in partnership name by authorized person.
(Please note any change of address on this
proxy.)
-----------------------------------------
Signature of Shareholder(s)
-----------------------------------------
Signature of Shareholder(s)
Dated: _______________________, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INTERCOUNTY
BANCSHARES, INC. PLEASE FILL IN, DATE, SIGN AND RETURN IT PROMPTLY USING THE
ENCLOSED ENVELOPE.
If you plan to attend the Annual Meeting, please check here. ____
