<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OHIO STATE BANCSHARES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: ...........................................................
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<PAGE> 2
OHIO STATE BANCSHARES, INC.
111 S. Main Street
Marion, OH 43302
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
April 10, 1997
TO THE SHAREHOLDERS OF OHIO STATE BANCSHARES, INC.:
You are hereby notified that an Annual Meeting of the shareholders of Ohio
State Bancshares, Inc. (the "Company") will be held on April 10, 1997 at 5:00
p.m. (local time), at the main office of Ohio State Bancshares, Inc., 111 S.
Main Street, Marion, Ohio 43302, for the purpose of considering and acting upon
the following:
1. To elect four members of Class III (term to expire in 2000) to the
Board of Directors.
2. To ratify the appointment of the Company's independent auditors.
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
The Board of Directors has fixed February 15, 1997 as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting.
By order of the Board of Directors
Gary E. Pendleton, President
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE YOUR EXECUTED PROXY AT ANY TIME BEFORE IT IS EXERCISED
AT THE ANNUAL MEETING OF SHAREHOLDERS BY NOTIFYING THE CHAIRMAN OF THE MEETING
AT, OR PRIOR TO THE MEETING, OF YOUR INTENTION. IF YOUR STOCK IS HELD IN MORE
THAN ONE (1) NAME, ALL PARTIES MUST SIGN THE PROXY FORM.
1
<PAGE> 3
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Ohio State
Bancshares, Inc. ("Company") in connection with the solicitation of proxies to
be used in voting at the Meeting of shareholders to be held on April 10, 1997,
at the main office of the Company located at 111 S. Main Street, Marion, Ohio,
43302, at 5:00 p.m. ("Meeting"). The enclosed proxy is solicited by the Board
of Directors of the Company. This Proxy Statement and the enclosed form of
proxy are first sent or delivered to the Company's shareholders on March 20,
1997.
All shareholders who execute proxies retain the right to revoke them at
any time. Unless so revoked, the shares represented by such proxies will be
voted at the Meeting and all adjournments thereof. Proxies may be revoked at
any time before they are exercised at the Meeting by filing a written notice
with the Secretary of the Company or by delivering to the Secretary of the
Company subsequently dated proxies prior to the commencement of the meeting. A
written notice of revocation of a proxy should be sent to the Secretary of Ohio
State Bancshares, Inc., 111 South Main Street, Marion, Ohio 43302. A previously
submitted proxy will also be revoked if a shareholder attends the Meeting and
votes in person. In the event a shareholder attends the Meeting and does not
wish to have his proxy used, he/she should notify the Secretary of the Company
prior to the start of the business meeting. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, proxies will be voted for the
nominees for director set forth below and in favor of each other proposal set
forth in this Proxy Statement for consideration at the Meeting.
VOTING SECURITIES
Shareholders of record as of the close of business on February 15, 1997,
are entitled to one vote for each share then held. As of February 15, 1997, the
Company had 121,200 shares of common stock issued, outstanding and entitled to
vote. Shareholders are entitled to one vote for each share of common stock
owned as of the record date and have the right, subject to the requirements of
advance notice to the Company as provided by law, to vote cumulatively in the
election of directors. Cumulative voting permits a shareholder to multiply the
number of shares held by the number of directors to be elected, and cast those
votes for one candidate or spread those votes among several candidates as he or
she deems appropriate. With respect to the election of directors, nominees
receiving the highest number of votes, at a duly called and held meeting, will
be elected to the Board of Directors.
Management of the Company is not aware of any person who owns,
beneficially or of record, more than five percent (5%) of the Company's
outstanding common stock. Management is not aware of any changes in control of
the Company which have occurred or of any arrangement which may, at a
subsequent date, result in a change in control of the Company.
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<PAGE> 4
PROPOSAL I
ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of 11 members,
approximately one-third of whom stand for election each year. The nominees for
election will stand for election to a three-year term expiring at the Annual
Shareholder's meeting in 2000. It is intended that the persons named in the
proxies solicited by the Board of Directors will vote for the election of the
nominees.
The following table sets forth for each of the nominees and for each
director continuing in office, name, age (as of February 15, 1997), principal
occupation(s) during the past five years, the year they first became a
director, year of expiration of the proposed or current term as a director, and
the number of shares of the Company beneficially owned by such person.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE NOMINEES FOR THE POSITION OF DIRECTOR.
Class III
Nominees
(Term to Expire 2000)
<TABLE>
<CAPTION>
Shares of
Company Stock
Beneficially
Owned as of
Name Age Occupation Director Since 2-15-97 % of Class
---- --- ---------- -------------- ------- ----------
<S> <C> <C> <C> <C> <C>
Theodore L. Graham 51 Managing Partner, Graham Investment Co. 1991 4,342(4) 3.58%
(Warehousing and Real Estate Development)
Lois J. Fisher 48 Owner of Harding Motor Lodge,
Marion, Ohio (Motel) 1994 550(5) .45%
Thurman Mathews 68 Owner, Mathews, Kennedy Ford L-M Marion 1994 5,915(6) 4.88%
Fred K. White 63 Division Manager, Ohio Edison 1994 150(7) .12%
(electric utility company)
</TABLE>
3
<PAGE> 5
Class I
Continuing Directors (Term to Expire 1998)
<TABLE>
<CAPTION>
Shares of
Company Stock
Beneficially
Owned as of
Name Age Occupation Director Since 2-15-97 % of Class
---- --- ---------- -------------- ------- ----------
<S> <C> <C> <C> <C> <C>
Samuel J. Birnbaum 80 Director of Real Estate Lodge Keeper, Inc. 1988 600 .50%
(Hotel Management)
F. Winton Lackey 63 Owner, Mid Ohio Packaging Co. 1995 800(1) .66%
Lloyd L. Johnston 64 President, Johnston Supply Co.
(Wholesale Plumbing Supplies) 1989 1,550(2) 1.28%
John Owens 66 Retired Owner, Owens Electric 1994 400(3) .33%
</TABLE>
Class II
Continuing Directors (Term to Expire 1999)
<TABLE>
<CAPTION>
Shares of
Company Stock
Beneficially
Owned as of
Name Age Occupation Director Since 2-15-97 % of Class
---- --- ---------- -------------- ------- ----------
<S> <C> <C> <C> <C> <C>
John E. Baldauf 66 President, Baldauf Construction Co., Inc. 1993 400(8) .33%
William H. Harris 56 Banker, Ohio State Bancshares, Inc.* 1995 70(9) .04%
Gary E. Pendleton 52 Banker, Ohio State Bancshares, Inc. 1990 550 .45%
</TABLE>
*Prior to joining Ohio State Bancshares, Inc. in December of 1994, Mr. Harris
was an Assistant Vice President for Star Bank from May of 1992 until he joined
Ohio State Bancshares, Inc.. Prior to his position with Star Bank Mr. Harris
was a mortgage originator for Republic Bank.
<TABLE>
<S> <C> <C>
Principal Officers
and Directors as a
Group (11 Persons) 15,327 12.65%
</TABLE>
(1) Includes 800 shares owned jointly with spouse.
(2) Includes 1,150 shares owned by a controlled company.
(3) Includes 200 shares owned by spouse.
(4) Includes 4,142 shares owned by partnership of which Mr. Graham is a general
partner.
(5) Includes 500 shares held in a trust of which Ms. Fisher is the Trustee.
(6) Includes 5,475 shares owned by spouse.
(7) Includes 100 shares owned jointly with spouse.
(8) Includes 300 shares held jointly with spouse.
(9) Includes 20 shares jointly owned by spouse.
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<PAGE> 6
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's sole business activity is the operation of its subsidiary
banking operation The Marion Bank hereinafter referred sometimes individually
as "Bank" or collectively with the Company as "Company." The Boards of
Directors of the Bank and the Company are comprised of the same persons at the
present time. Disclosure of information regarding committees is therefore
presented for both the Company and the Bank.
The Board of Directors of the Company conducts its business through
meetings of the Board. During the fiscal year ended December 31, 1996, the
Board of Directors of the Company held a total of thirteen (13) regular and
special meetings. Each director of the Company attended at least 75 percent of
the total meetings of the Board and committees on which such Board member
served during this period, with the exception Winton Lackey and Peck Johnston
both of whom attended 46% of such meetings.
The following table describes the standing committees of the Board of
Directors and identifies the directors serving on each committee as of December
31, 1996. The chairman of each committee is designated by an asterisk (*).
<TABLE>
<CAPTION>
Number of
Meetings
Board Committee Function Held-1996 Directors Serving
--------------- -------- --------- -----------------
<S> <C> <C> <C> <C>
Executive (1) Has all powers of full board except as delegated to other 13 Mathews Graham
committees. Subjects reviewed include: compensation, corporate Johnston White
decisions, planning, nominating decisions, EDP review. Pendleton *
Loan Approves new commercial, consumer, and real estate loans up 11 Baldauf Birnbaum
to $200,000. Fisher Owens
Lackey Pendleton*
Harris
Loan Review Monitors loan portfolio quality by reviewing and grading 4 Birnbaum Graham
existing loans and establishing loan loss reserves. Mathews Johnston *
Recommends revisions to Loan Policy. Pendleton White
Audit Superintends the yearly Directors Examination and Audit of 3 Baldauf Fisher
the Company and monitors follow-through on any corrective Mathews Owens
measures deemed necessary. All serving must be outside White*
directors.
Housing Advises and Oversees any physical expansion or renovation 3 Baldauf White*
of banking facility. Committee will be activated by Pendleton Harris
Executive Committee on an as needed basis. Fisher Owens
</TABLE>
(1) The Nominating Committee is made up of the Executive Committee members.
While the Board of Directors will consider nominees recommended by
shareholders, it has not actively solicited recommendations from the Company's
shareholders for nominees nor established any procedures for this purpose. The
Executive Committee acting in its capacity as the Nominating Committee held one
meeting during fiscal 1996.
5
<PAGE> 7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Company is required to provide certain summary information concerning
compensation paid or accrued by the Company, to or on behalf of the Company's
Chief Executive Officer and the four highest paid executive officers whose base
salary and bonus exceeded $100,000, for the fiscal years ended December 31,
1996, 1995, and 1994. As applied to the Company the Company's Chief Executive
Officer's compensation is required to be disclosed as follows:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($)(1)(2)
- --------------------------- ---- --------- -------- ---------------------
<S> <C> <C> <C> <C>
GARY E. PENDLETON, President 1996 73,990 21,500 24,696
Ohio State Bancshares, Inc. 1995 65,283 21,200 18,767
1994 58,494 0 2,941
</TABLE>
(1) The Company has provided and plans to continue to provide certain of its
executive officers with memberships in various clubs, which are also used
primarily for Company business, as well as certain specified life and medical
insurance benefits. Portions of the fees and premiums attributable to personal
use did not exceed 10 percent of the cash compensation of the Chief Executive
Officer.
(2) Includes compensation for attendance at Board meetings while serving as
Directors and the Company's 401(k) plan matching amount.
CHANGE OF CONTROL AGREEMENT
Although the Company has no formal written employment contracts, Mr.
Pendleton, President and Chief Executive Officer has entered into a "Severance
Agreement Due to Change of Control of Ohio State Bancshares, Inc." (the "Change
of Control Agreement") with the Company dated August 7, 1991 and amended
February 5, 1993. The Change of Control Agreement provides for a payment to Mr.
Pendleton of an amount equal to two (2) times his average annual salary during
the last five years upon the occurrence of a "Change of Control of the Company."
In addition, like payments would be made in the case of an executive's
voluntary termination for "good cause" as defined in the Change of Control
Agreements including a change in the executive's status, title, position,
salary, relocation of the Company's principal executive offices outside a 35
mile radius of Marion or failure to provide comparable benefits to those
currently provided. The Change of Control Agreement also
6
<PAGE> 8
provides for the payment of any legal fees by the executive in order to enforce
such Change of Control Agreement. Notwithstanding other provisions of the
Change of Control Agreement, a termination of the employee "for cause" as
defined in the Change of Control Agreement, would not result in the triggering
of the severance or termination benefits under the Change of Control Agreement.
"Change of Control of the Company" is defined in the Change of Control Agreement
to mean: (i) the acquisition by a person or persons acting in concert with the
power to vote 33 percent or more of a class of the Company's voting securities;
or (ii) during any period of two (2) consecutive years during the term of the
Change of Control Agreements individuals who, at the beginning of such period,
constituted the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board, if in the instance mentioned in
subparagraphs (i) or (ii), the employment of one of the executives is
terminated involuntarily within one year of such change of control.
SUPPLEMENTAL RETIREMENT PLAN
During 1996, the Corporation entered into Executive Indexed Salary
Continuation Plan (Supplemental Plan) with Mr. Pendleton. The purpose of the
Supplemental Plan is to supplement Mr. Pendleton's retirement income. Pursuant
to the terms of the Supplemental Plan, annually the Company will accrue a
nonqualified pension benefit for the benefit of Mr. Pendleton in an amount
equal to the excess return earned on a Company owned insurance product (the
"Policy") over the Bank's average after tax cost of funds expense as reported
for the third quarter of each year. At Mr. Pendleton's retirement he will be
entitled to receive the accrued deferred benefits in a lump sum cash payment or
on an annuity basis. It is impossible to predict the future value of such
deferred compensation due to the uncertainty of the future Policy yield. The
Policy is currently valued at $84,838 upon which a guaranteed rate of 4% is
called for under its terms. For 1996 the Company accrued no expense under the
terms of this plan for the benefit of Mr. Pendleton. The benefits accrued under
the Supplemental Plan are subject to a vesting schedule except in the case of
death, disability or a change of control of the Company.
In addition, contemporaneously with the adoption of the Supplemental Plan,
the Corporation and Mr. Pendleton entered into a Split Dollar Life Insurance
Agreement which provides for the payment, to Mr. Pendleton's beneficiaries, of
80% of the net-at-risk insurance portion of an insurance policy purchased by
the Corporation in connection with the establishment of the Supplemental Plan.
As of December 31, 1996, this Split Dollar Life Insurance Agreement would have
provided a death benefit of $924,098 to Mr. Pendleton's beneficiaries. The
Corporation purchased life insurance for the purpose of funding its obligations
under the Supplemental Plan in the event of Mr. Pendleton's death and as an
investment vehicle designed to fund the payments to Mr. Pendleton at retirement.
DIRECTORS' COMPENSATION
Directors are paid $200 per month. The Chairman of the Board receives $250
per month.
7
<PAGE> 9
CERTAIN TRANSACTIONS
Some of the directors of the Company, as well as the companies with which
such directors are associated, are customers of, and have had transactions with
the Company (through The Marion Bank) in the ordinary course of the Company's
business in 1996. These transactions consisted of extensions of credit in the
ordinary course of business and were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with non-affiliated persons. In the opinion of
management of the company an its subsidiaries, these transactions do not
involve more than normal risk of collectibility or present other unfavorable
features.
The Company, through is subsidiary, expects to have in the future, banking
transactions, in the ordinary course of its business with directors, officers,
principal shareholders, and their associates, on substantially the same terms,
including interest rates and collateral on loans, as those prevailing at the
same time for comparable transactions with others and which do not involve more
than the normal risk of collectibility or present other unfavorable features.
PROPOSAL II
RATIFICATION OF THE SELECTION OF AUDITORS
The Board of Directors has selected the firm of Crowe, Chizek and Company
LLP, independent public accountants, to serve as auditors for the current
fiscal year, subject to ratification of shareholders.
During fiscal year 1996, Crowe, Chizek and Company LLP provided outside
audit and accounting services as well as tax preparation services. All fees
were preapproved in the fiscal budget process by the Audit Committee and the
Board of Directors. In the opinion of management, the nonaudit services
performed by Crowe, Chizek and Company LLP in fiscal 1996 had no effect on the
independence of audit services provided.
Representatives of Crowe, Chizek and Company LLP will be present at the
Meeting with the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
The ratification of the auditors must be approved by a majority of the
votes cast by the shareholders of the Company at the Meeting.
8
<PAGE> 10
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF CROWE, CHIZEK AND COMPANY LLP FOR AUDITORS.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Federal Deposit Insurance
Corporation. Officers, Directors and greater than ten percent shareholders are
required by FDIC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company or written representations that no Form 5s, (Annual Statement of
Beneficial Ownership of Securities) were required, the Company believes that
during 1996 all Section 16(a) filing requirements applicable to its officers
and Directors were complied with. The Company has no shareholders who are ten
percent beneficial owners.
SHAREHOLDER PROPOSALS
Any proposals to be considered for inclusion in the proxy material to be
provided to shareholders of the Company for its next Meeting, to be held in
1997, must be made by a qualified shareholder and must be received by the
Company no later than November 20, 1997.
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other
matters that may come before the meeting. However, the enclosed Proxy will
confer discretionary authority with respect to matters which are not known to
the Board of Directors at the time of printing hereof and which may properly
come before the meeting. A copy of the Corporation's 1996 report filed with the
Securities and Exchange Commission, on Form 10-KSB, is available without charge
to shareholders. Address all requests, in writing, for this document to Mr.
Gary Pendleton, President, Ohio State Bancshares, Inc., 111 S. Main Street,
Marion, Ohio 43302.
By Order of the Board of Directors of
Ohio State Bancshares, Inc.
Gary Pendleton, President
9
<PAGE> 11
PROXY FOR ANNUAL MEETING OF
OHIO STATE BANCSHARES, INC., MARION, OHIO
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned shareholder of
Ohio State Bancshares, Inc., Marion, Ohio, do hereby nominate, constitute, and
appoint John D. Owens, John E. Baldauf, Samuel J. Birnbaum, and William H.
Harris or any one of them (with full power of substitution for me and in my
name, place and stead) to vote all the common stock of said Corporation,
including the right to vote cumulatively, standing in my name on its books on
February 15, 1997, at the Annual Meeting of its shareholders to be held at the
main office of Ohio State Bancshares, Inc., 111 S. Main Street, Marion, Ohio
43302, on April 10, 1997 at 5:00 p.m. (local time), or any adjournments thereof
with all the powers the undersigned would possess if personally present as
follows:
1. To elect four (4) members of Class III (term to expire in 2000) to the Board
of Directors.
Theodore L. Graham
Lois J. Fisher
Thurman Mathews
Fred K. White
<TABLE>
<S> <C> <C>
For All Nominees Withhold Authority (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
(Except as marked to To Vote For FOR ANY INDIVIDUAL DIRECTOR(S), STRIKE A LINE
the contrary) All Nominees THROUGH THE NOMINEE'S NAME.
</TABLE>
2. To ratify the appointment of Crowe Chizek and Company LLP as the Bank's
independent auditors.
For Against Abstain
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" THE ABOVE NOMINEES UNLESS OTHERWISE
MARKED AND "FOR" THE PROPOSITIONS LISTED ABOVE UNLESS "AGAINST" OR "ABSTAIN" IS
INDICATED. IF ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THIS PROXY SHALL
BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT. ALL SHARES
REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED.
<PAGE> 12
The Board of Directors recommends a vote "FOR" the propositions. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and may be revoked prior to its
exercise by either written notice or personally at the meeting or by a
subsequently dated proxy.
INSERT LABEL
Date:
-------------------------------
____________________________________
(STOCKHOLDER SIGNATURE)
____________________________________
(STOCKHOLDER SIGNATURE)
Please Print Name
----------------------------------------------------
Please Print Number of Shares
----------------------------------------
(WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, PLEASE
GIVE FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. ALL JOINT OWNERS
MUST SIGN.)
PLEASE SIGN AND RETURN IMMEDIATELY
