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 section 240.14a-11(c) or section
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) 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>
INTERCOUNTY BANCSHARES, INC.
48 N. South Street
Wilmington, Ohio 45177
(937) 382-1441
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1999 Annual Meeting of Shareholders of
InterCounty Bancshares, Inc. ("InterCounty"), will be held at 48 N. South
Street, Wilmington, Ohio, on April 20, 1999, at 9:00 a.m., Eastern Time (the
"Annual Meeting"), for the purpose of electing five directors of InterCounty
for terms expiring in 2001 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
5, 1999, 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
/s/ James W. Foland
----------------------------------
April 1, 1999 James W. Foland, Secretary
<PAGE>
INTERCOUNTY BANCSHARES, INC.
48 N. South Street
Wilmington, Ohio 45177
(937) 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 1999
Annual Meeting of Shareholders of InterCounty to be held at 48 N. South
Street, Wilmington, Ohio, on April 20, 1999, 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 S. Craig
Beam, James W. Foland, B. Anthony Williams, Darleen M. Myers and Robert A.
Raizk as directors of InterCounty for terms expiring in 2001.
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 5, 1999 (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 3,177,242 votes
entitled to be cast at the Annual Meeting.
VOTE REQUIRED
The five 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 1, 1999.
<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, 1999:
<CAPTION>
Percent of
Name and Address Amount Beneficially Common Shares
of Beneficial Owner Owned(1) Outstanding
- ------------------- ------------------- -------------
<S> <C> <C>
B. Anthony Williams(2) 392,196 12.34%
Janet Williams
6172 U.S. 22 East
Wilmington, Ohio 45177
Brooke A. Williams 179,242 5.64
148 E. 30th Street
Apartment 5D
New York, New York 10016
Dana L. Williams 180,456 5.68
6172 U.S. 22 East
Wilmington, Ohio 45177
Lynn W. Cowan 178,898 5.63
4116 Franklin Street
Richmond, Virginia 23221
Beth Ellingwood 200,882 6.32
325 West Sixth Avenue
Columbus, Ohio 43201
Wilmington College 167,264 5.26
Fife Avenue
Wilmington, Ohio 45177
The National Bank and Trust 751,394 23.65
Company(3)
48 N. South Street
Wilmington, Ohio 45177
- ---------------------------
<FN>
-2-
<PAGE>
(1) Except as indicated for the shares held by The National Bank and Trust
Company (the "Bank"), the beneficial owner has sole voting and
dispositive power.
(2) Anthony Williams is a director of InterCounty and the Bank, and Janet
Williams is his wife. Of the 392,196 shares, 203,370 are held in the
name of Mr. Williams, and 188,826 are held in the name of Mrs. Williams.
(3) All of such shares are held by the Bank as Trustee, 661,386 of which are
held as Trustee for the InterCounty Bancshares, Inc., Employee Stock
Ownership Plan (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,
1999, 133,762 shares had not been allocated. The Trustee may dispose of
shares held in the ESOP Trust only under limited circumstances specified
in the ESOP or by law. The Bank also has sole voting and dispositive
power with respect to 73,354 shares and shared voting and dispositing
power with respect to 16,654 shares held as Trustee for various other
trusts.
</FN>
</TABLE>
<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 1998 exceeded $100,000 and by all directors and executive officers of
InterCounty as a group as of February 28, 1999:
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------
Sole Voting and Shared Voting and Percent of Common
Name Investment Power Investment Power Shares Outstanding
- ---- ---------------- ----------------- ------------------
<C> <S> <S> <S>
S. Craig Beam 1,782 7,544 .29%
George F. Bush 5,310 - .17
Charles L. Dehner 65,804(1) 31,580(2) 3.02
James W. Foland 14,210 - .45
Georgia H. Miller 1,130 652 .06
Darleen M. Myers 8,468 - .27
Robert A. Razik 13,068 - .41
Timothy L. Smith 81,530(3) 49,146(4) 4.02
B. Anthony Williams 203,370 188,826 12.34
Andrew J. McCreanor 2,252(5) 13,640(6) .50
R. James Parker 11,048(7) 8,404(8) .61
Howard T. Witherby 11,348(9) 24,384(10) 1.12
All directors and
executive officers
of InterCounty as a
group (14 persons) 422,024(11) 339,526(12) 23.01
- ------------------------
-3-
<PAGE>
<FN>
(1) Includes 48,200 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 70,008 shares that may be acquired currently upon the exercise
of options.
(4) Includes 36,814 shares allocated to Mr. Smith's ESOP account, with
respect to which Mr. Smith has voting but not investment power.
(5) Includes 1,210 shares that may be acquired currently upon the exercise
of options.
(6) Includes 13,296 shares allocated to Mr. McCreanor's ESOP account, with
respect to which Mr. McCreanor has voting but not investment power.
(7) Includes 6,200 shares that may be acquired currently upon the exercise of
options.
(8) Consists of shares allocated to Mr. Parker's ESOP account, with respect
to which Mr. Parker has voting but not investment power.
(9) Includes 5,570 shares that may be acquired currently upon the exercise of
options.
(10) Consists of 24,384 shares allocated to Mr. Witherby's ESOP account, with
respect to which Mr. Witherby has voting but not investment power.
(11) Includes 2,134 shares owned with sole voting and investment power by two
executive officers of the Bank not named in this table who may be deemed
to perform policy making functions for InterCounty and 570 shares that
may be acquired currently by one of such persons upon the exercise of
options.
(12) Includes 15,350 shares allocated to the ESOP account of an executive
officer of the Bank not named in this table who may be deemed to perform
policy making functions for InterCounty. Such person has voting but not
investment power with respect to such shares.
</FN>
</TABLE>
-4-
<PAGE>
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.
The Board of Directors proposes the election of the following persons
to terms which will expire in 2001:
Director
Name Age Position(s) Held Since
---- --- ---------------- --------
S. Craig Beam 47 Director 1990
James W. Foland 77 Director and Secretary 1983
B.Anthony Williams 64 Director and Chairman 1981
of the Board
-5-
<PAGE>
Darleen M Myers 66 Director 1995
Robert A. Razik 44 Director 1995
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 Position(s) Held Since Expires
---- --- ---------------- -------- -------
George F. Bush 63 Director 1988 2000
Charles L. Dehner 51 Director and Executive 1989 2000
Vice President of
InterCounty and the
Bank and Treasurer of
InterCounty
Georgia H. Miller 59 Director 1990 2000
Timothy L. Smith 48 Director, Chief 1989 2000
Executive Officer and
President of InterCounty
and the Bank
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.
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.
-6-
<PAGE>
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.
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, 1998. Each
director, except Mr. Bush, 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, 1998.
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 once in 1998.
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. Miller. The Trust Policy Committee met 11 times
during 1998.
-7-
<PAGE>
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 1998.
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 Positions Held During Last Five Years
- ---- --- -------------------------------------
Stephen G. Klumb 49 Senior Vice President, Senior Loan Officer
since June 1998; prior to June 1998,
Executive Vice President and Chief of Staff
of American Energy Resources, Inc.
Andrew J. McCreanor 49 Senior Vice President, Customer Relations
since January 1997; from October 1992 to
January 1997, Director of Marketing and
Customer Service
R. James Parker 60 Executive Vice President, Business
Development since June 1998; from October
1991 to June 1998, Executive Vice President
and Senior Loan Officer
Walter H. Rowsey 50 Senior Vice President, Branch Administrator
since September 1993; formerly Vice
President, Loan Division Manager
Howard T. Witherby 43 Senior Vice President, Operations Division
Manager since October 1992; formerly Vice
President
-8-
<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 $100,000 during the fiscal years ended
December 31, 1998, 1997 and 1996:
<CAPTION>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Long-Term
Compensation
------------
Annual Compensation Awards
-----------------------------------------------------
Other Securities
Name and Principal Annual Underlying
Position Compen- Options/ All Other
Year Salary Bonus sation SARs(#) Compensation
($) ($) ($)(5) ($)
- ------------------------------------------------------------------------------
<C> <S> <S> <S> <S> <S> <S>
Timothy L. Smith 1998 $192,500(2) $89,455 $400 -0-/-0- $ 1,426(6)
Chief Executive 1997 183,875(3) 62,877 400 3,500/-0- 24,058(7)
Officer, President 1996 167,374(4) 67,697 400 -0-/-0- 18,500(8)
of InterCounty and
Bank
Charles L. Dehner 1998 131,292(2) 40,427 270 -0-/-0- 1,644(6)
Treasurer, 1997 125,725(3) 34,303 520 2,500/-0- 23,456(7)
Executive Vice 1996 117,459(4) 35,257 520 -0-/-0- 18,511(8)
President of
InterCounty,
Executive Vice
President of Bank
R. James Parker 1998 121,000 40,427 131 -0-/-0- 3,048(6)
Executive Vice 1997 118,225 33,015 685 2,500/-0- 25,558(7)
President 1996 110,834 35,917 685 -0-/-0- 20,093(8)
Andrew J. McCreanor 1998 84,269 16,591 496 -0-/-0- 1,600(6)
Senior Vice
President of Bank
Howard T. Witherby 1998 83,300 19,723 1,093 -0-/-0- 2,400(6)
Senior Vice
President of Bank
- ---------------------
<FN>
-9-
<PAGE>
(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, 1998,
1997 and 1996, 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 $7,500 of director's fees.
(4) Includes $6,625 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 allocations to the accounts
of the ESOP participants for 1998 had not yet been determined.
(7) Consists of premiums in the amounts of $1,426, $1,644 and $3,048 paid on
whole life insurance for the benefit of Messrs. Smith, Dehner and Parker,
respectively, and $22,632, $21,812 and $22,510 representing the aggregate
value at the date of allocation of allocations to the ESOP accounts of
Messrs. Smith, Dehner and Parker, respectively.
(8) 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 $17,045 representing the
aggregate value at the date of allocation of allocations to the ESOP
accounts of Messrs. Smith, Dehner and Parker, respectively.
</FN>
</TABLE>
-10-
<PAGE>
<TABLE>
The following table sets forth information regarding the number and value of
unexercised options held at December 31, 1998, by Messrs. Smith, Dehner
Parker, McCreanor and Witherby:
Aggregated Option/SAR Exercises In the Last Fiscal Year
and 12/31/98 Option/SAR Values
--------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at 12/31/98(#) at 12/31/98(1)
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
(#) ($)
- ---- ----------- -------- ------------- -------------
<C> <S> <S> <S> <S>
Timothy L. Smith -0- -0- 68,608/10,898 $1,419,773/$160,143
Charles L. Dehner -0- -0- 47,200/ 6,800 990,750/ 97,180
R. James Parker 3,500 $111,580 5,200/ 6,800 77,670/ 97,180
Andrew J. McCreanor 3,780 106,651 400/ 4,040 6,100/ 56,329
Howard T. Witherby 600 20,928 5,160/ 2,440 97,334/ 34,537
- ---------------------
<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, 1998, of $27.25 per share. No established market for
InterCounty's common shares existed at December 31, 1998, 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>
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.
-11-
<PAGE>
Compensation Committee Report
InterCounty is a bank holding company which directly owns all of the
outstanding capital stock of the Bank. InterCounty's business consists
primarily of the business of the Bank. The financial results of InterCounty
depend primarily upon the Bank's financial results.
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 InterCounty. 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.
-12-
<PAGE>
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.
Section 162(m) of the Internal Revenue Code. Section 162(m) of the
Internal Revenue Code of 1986, as amended, prohibits a publicly-held
corporation, such as InterCounty, from claiming a deduction on its federal
income tax return for compensation in excess of $1 million paid for a given
fiscal year to the chief executive officer and the four most highly
compensated officers of the corporation other than the chief executive officer
at the close of the corporation's fiscal year. The $1 million compensation
deduction limitation does not apply to "performance-based compensation."
Although none of the officers of InterCounty or the Bank currently receive
annual cash compensation near $1 million, the difference between the fair
market value of the shares acquired upon the exercise of a non-qualified
option and the exercise price is considered compensation in the year of
exercise. An option award must meet several requirements to qualify as
"performance-based compensation." InterCounty has determined that the options
to purchase InterCounty currently outstanding will not qualify for exemption
from the $1 million limit. Neither InterCounty nor the Bank has a policy
requiring that all compensation payable in 1999 and thereafter to the covered
officers be deductible under Section 162(m). The Board of Directors of both
companies will, however, continue to consider carefully the after-tax cost and
value to InterCounty and the Bank of all compensation.
CEO Compensation. Timothy L. Smith has been the President and the Chief
Executive Officer ("CEO") of InterCounty 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.
-13-
<PAGE>
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
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.
<TABLE>
<CAPTION>
[Performance Graph Represented by the Following Chart]
Period Ending
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
------- -------- -------- -------- -------- --------
<C> <S> <S> <S> <S> <S> <S>
Intercounty $100.00 $123.62 $129.58 $148.72 $219.21 $307.93
Bancshares, Inc.
NASDAQ - Total US 100.00 97.75 138.26 170.01 208.58 293.21
SNL $250m to 100.00 107.90 145.61 189.07 327.00 292.84
$500m Bank Index
</TABLE>
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<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 1998 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. During 1998, each of Messrs. Parker,
Raizk, Smith and Witherby filed a Form 4 reporting one transaction late.
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 2000 Annual Meeting of Shareholders should be sent to
InterCounty by certified mail and must be received by InterCounty not later
than December 3, 1999. In addition, if a shareholder intends to present a
proposal at the 2000 Annual Meeting without including the proposal in the
proxy materials related to that meeting, and if the proposal is not received
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<PAGE>
by February 16, 2000, then the proxies designated by the Board of Directors of
InterCounty for the 2000 Annual Meeting of Shareholders of InterCounty may
vote in their discretion on any such proposal any shares for which they have
been appointed proxies without mention of such matter in the proxy statement
or on the proxy card for such meeting.
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.
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
/s/ James W. Foland
--------------------------------
March 22, 1999 James W. Foland, Secretary
-16-
<PAGE>
REVOCABLE PROXY
INTERCOUNTY BANCSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 20, 1999
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 George F. Bush, Charles
L. Dehner, Georgia H. Miller and Timothy L. Smith, 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 20, 1999, 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 five (5) 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).*
S. Craig Beam
James W. Foland
B. Anthony Williams
Darleen M. Myers
Robert A. Raizk
*(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.
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<PAGE>
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 20, 1999,
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: , 1999
-----------------
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. ____
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