National Bancshares DEF 14A Definitive proxy

SCHEDULE 14A

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INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

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National Bancshares Corporation

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TABLE OF CONTENTS

NATIONAL BANCSHARES CORPORATION

112 West Market Street

Orrville, Ohio 44667

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

     NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of National Bancshares Corporation (the “Company”) will be held at the operations center of First National Bank, 1444 North Main Street, Orrville, Ohio on April 24, 2003 at 2:00 P.M. for the following purposes:

(1)  To elect three Directors in Class I for a three-year term ending in 2006;

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

     Holders of Common Shares of record at the close of business on March 7, 2003 are entitled to receive notice of and to vote at the Annual Meeting.

By Order of the Board of Directors.

Kenneth R. VanSickle

Secretary

March 21, 2003

NATIONAL BANCSHARES CORPORATION

112 West Market Street

Orrville, Ohio 44667

Mailed on or about March 21, 2003

Annual Meeting of Shareholders to be on April 24, 2003

PROXY STATEMENT

General Information

     This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of National Bancshares Corporation (the “Company”) to be used at the Annual Meeting of Shareholders of the Company to be held on April 24, 2003, and any adjournments or postponements thereof. The time, place and purposes of the Annual Meeting are stated in the Notice of Annual Meeting of Shareholders, which accompanies this Proxy Statement.

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

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

     Proxies will be solicited by mail, but this solicitation may be supplemented by using regular employees of the Company and its subsidiaries to solicit proxies personally or by telephone without additional compensation. The costs of solicitation will be borne by the Company and its subsidiary. National Bancshares Corporation will reimburse brokers, custodian banks, nominees and other fiduciaries for their reasonable out-of-pocket expenses in forwarding proxy materials to their principals. This Proxy Statement is being mailed to shareholders on or about March 21, 2003.

     The outstanding voting securities of the Company at the close of business on March 7, 2003, the record date for the meeting, consisted of 2,234,488 Common Shares, with each share having one vote on all matters coming before the meeting. The number of Common Shares owned by each Director (including the Company’s President who is included in the Executive Compensation tables below) is set forth on page 3 of this Proxy statement. The following table sets forth share ownership information, as of March 7, 2003, with respect to all Directors and executive officers of the Company as a group. The Company is not aware of any shareholders having beneficial ownership of more than five percent (5%) of the Common Stock of the Company.

	Amount
	of Beneficial
	Ownership of		Percent of
	Common Shares		Common Shares
All Directors and executive officers as a group (13 persons):		271,446		12.15	%

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

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

     Pursuant to the Company’s Regulations, all other questions and matters brought before the Annual Meeting will be, unless otherwise provided by law or by the Articles of Incorporation of the Company, decided by the vote of the holders of a majority of the outstanding shares entitled to vote thereon present in person or by proxy at the Annual Meeting. In voting for such other proposals, votes may be cast in favor, against or abstained. Abstentions will count as present for purposes of the item on which the abstention is noted and will have the effect of a vote against.

VOTING OF PROXIES

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

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

ELECTION OF DIRECTORS

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

     It is proposed that at the Annual Meeting to be held on April 24, 2003, that nominees for the directors to be elected to Class I for a three-year term expiring in 2006 are Bobbi Douglas, John Sprunger and Howard Wenger. The aggregate number of directors of the Company is eleven (11) as specified in the Company’s Regulations. Only nine (9) individuals are continuing to serve as directors of the Company and therefore, a vacancy has been created in each of Class II and Class III. These vacancies can be filled any time prior to the Annual Meeting in 2004 by a majority of the whole Board to serve the unexpired term. The two director vacancies have existed for some time. The vacancies exist because the number of directors is fixed at 11 by the regulations, but only 9 persons are currently serving as directors. From time to time the board considers potential candidates to fill director vacancies or succeed retiring directors. However, the board currently does not have any candidates under active consideration for the director vacancies. The proxies solicited hereby cannot be voted for a greater number of persons than the number of nominees named herein, of which there are only three. Shareholders have the right to make nominations to the board, including the right to nominate one or more persons to fill the director vacancies.

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

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for at least the past five years, the year in which he or she first became a director of the Company and the Company’s wholly owned subsidiary, First National Bank, and the number of Common Shares of the Company beneficially owned as of March 7, 2003.

NOMINEES TO BE ELECTED FOR THREE-YEAR TERM

EXPIRING IN 2006 — CLASS I

						Common Shares
						beneficially owned (a)
	Principal Occupation			Director				Percent
Name	or Employment	Age		Since (b)		Shares		of Shares
Bobbi E. Douglas	Executive Director STEPS at Liberty Center (F/K/A Wayne County Alcoholism Services), Every Woman’s House		44		1998		162		.01
John E. Sprunger	President Kidron Auction, Inc.		65		1987		2,302		.10
Howard J. Wenger	President Wenger Excavating, Inc., Northstar Asphalt, Inc., Lake Region Oil, Inc., Massillon Materials, Inc., Stark Materials, Inc.		60		1998		58,310		2.61
INFORMATION AS TO DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE 2003 ANNUAL MEETING
DIRECTORS WITH TERM EXPIRING IN 2004 — CLASS II
Sara Balzarini	Member of Management Committee, Contours, Ltd.		46		1989		40,852		1.83
Steve Schmid	President Smith Dairy Products		51		1989		4,974		.22
Albert W. Yeagley	Director, Corporate Quality Assurance J.M. Smucker Company		55		1997		438		.02
DIRECTORS WITH TERM EXPIRING IN 2005 — CLASS III
Charles J. Dolezal	President First National Bank & National Bancshares Corp.		50		1982		18,375		.82
John W. Kropf	Attorney-at-Law		59		1974		41,134		1.85
James F. Woolley	Chief Executive Officer R.W. Screw Products, Inc.		66		1974		101,844		4.56

(a)	The Securities and Exchange Commission has defined “beneficial owner” of a security to include any person who has or shares voting power or investment power with respect to any such security or who has the right to acquire beneficial ownership of any such security within 60 days.
(b)	Indicates the year first elected to the Board of the Company and/or sole subsidiary, First National Bank. All current Directors of the Company are also directors of First National Bank. First National Bank directors are elected to serve for one-year terms.

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

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COMMITTEES

     The Company currently conducts no business other than the ownership of its sole subsidiary, First National Bank. The Board of Directors of the Company met eight (8) times during 2002. The Company has no formal committees other than its Audit Committee. During 2002, the Audit Committee met two (2) times. All directors except Steve Schmid and Howard Wenger attended at least 75% of the aggregate of (a) the total number of meetings of the board of directors held in 2002 and (b) the total number of meetings held by all committees on which he or she served.

     The basic responsibility of the Audit Committee is a review of the annual audit with the Company’s external auditors, and the implementation of recommendations, where feasible, arising from that audit, and the continued monitoring of the internal audit program. The Committee also reviews the results of any special audit requested by the Board of Directors, either by external auditors or by internal audit personnel. Meetings of the Audit Committee are held as needed.

     The Board of Directors of First National Bank, met twelve (12) times during 2002.

     First National Bank also maintains an Executive Committee as a standing committee. The basic responsibilities of the Executive Committee are in-depth consideration of certain general policy matters for possible recommendation to the Board of Directors for its consideration; the review and approval or rejection of major personnel or other matters brought before the Committee by Management; and the determination of employee compensation. The Executive Committee also serves as the Nominating Committee. Executive Committee members are: Charles J. Dolezal, Bobbi E. Douglas, John W. Kropf, Steve Schmid and James F. Woolley. During the last fiscal year the Executive Committee held four (4) meetings.

AUDIT COMMITTEE

     The Audit Committee met two times in 2002 to review the previous fiscal year, the scope of the audit and internal accounting procedures and controls. Members of the Audit Committee are Sara Balzarini, John E. Sprunger, Howard J. Wenger and Albert W. Yeagley. These individuals also serve as the Audit Committee of First National Bank, and perform the same functions at that level. National Bancshares’ board has adopted a written charter for the Audit Committee. The Audit Committee will review and assess the adequacy of the written charter on an annual basis.

     In the opinion of National Bancshares’ board, none of Directors Balzarini, Sprunger, Wenger or Yeagley has a relationship with National Bancshares or the bank that would interfere with the exercise of independent judgment in carrying out their responsibilities as a director. None of them are or have for the past three years been employees of National Bancshares or First National Bank, and none of their immediate family members are or have for the past three years been executive officers of National Bancshares or the bank. In the opinion of National Bancshares’ board, Directors Balzarini, Sprunger, Wenger and Yeagley are “independent directors,” as that term is defined in Rule 4200(a)(15) of the rules of the National Association of Securities Dealers, Inc.

     The Audit Committee has submitted the following report for inclusion in this proxy statement:

     The Audit Committee has reviewed the audited financial statements for the year ended December 31, 2002 and has discussed the audited financial statements with management. The Audit Committee has also discussed with Crowe, Chizek and Company LLP, National Bancshares’ independent accountants, the matters required to be discussed by Statement on Auditing Standards No. 61 “Communications with Audit Committees”. The Audit Committee has received the written disclosures and the letter from Crowe, Chizek and Company LLP required by Independence Standards Board Standard No. 1 (having to do with matters that could affect the auditor’s independence), and has discussed with Crowe, Chizek and Company LLP the independent accountants’ independence. Based on this, the Audit Committee recommended to the board that the audited financial statements be included in National Bancshares’

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Annual Report on Form 10-K for the fiscal year ended December 31, 2002 for filing with the Securities and Exchange Commission.

Submitted by the Audit Committee,

Sara Balzarini — John E. Sprunger — Howard J. Wenger — Albert W. Yeagley

DIRECTOR COMPENSATION

     Directors of the Company currently receive no compensation for their service in that capacity. All current directors of the Company are directors of First National Bank and receive $600 per meeting of the Board of First National Bank. If a director is absent for three meetings in a given year, the director will not receive the $600 per meeting fee for any other months in which the director is absent from a meeting during that year. In addition, Executive Committee members receive a fee of $500 for each Executive Committee meeting that they attend, with the exception of Charles J. Dolezal. Audit Committee members receive $500 per meeting attended.

     First National Bank has implemented a director retirement benefit and death benefit plan for the benefit of all members of the Board of Directors of First National Bank. The plan is called the Director Defined Benefit Plan and is designed to provide an annual retirement benefit to be paid to each director upon retirement from the Board and attaining age 70. The retirement benefit provided to each director is an annual benefit equal to $1,000 for each year of service on the Board from and after August 1994.

     The annual retirement benefit is payable for the lifetime of the director, but in no event for less than 15 years. Should a director die prior to having received 15 annual payments, the balance of the payments is paid to the director’s designated beneficiary (ies). In the event the director dies while serving on the bank’s board, the bank pays the director’s designated beneficiary(ies) 15 successive annual benefit payments, each equal to $1,000 for each year of service from and after August 1994 through the date of death. In the event the director dies prior to age 70 while not serving on the board, the bank is required to pay the former director’s designated beneficiary(ies) an annual benefit for 15 years equal to $1,000 for each year of board service from and after August 1994 through the director’s termination of board service.

     In addition, the Director Defined Benefit Plan gives each director the option of deferring any portion or all of his or her director’s fees to a maximum of $1,000 per month until retirement. The bank credits interest to a director’s deferred compensation on December 31 of each year at an interest rate equal to two times the one year treasury rate as of the crediting date, subject to a minimum of 8%.

     First National Bank purchased insurance policies on the lives of the directors as an informal financing mechanism for the bank’s post retirement obligations to the directors. Although First National Bank expects the policies on the directors’ lives to serve as a source of funds for the director retirement benefits payable under the bank’s Directors Defined Benefit Plan Agreements, the directors’ contractual entitlements under the Directors Defined Benefit Plan Agreements are not funded and remain contractual liabilities of the bank payable upon each director’s termination of service and attaining age 70.

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

     The following table provides certain summary information concerning compensation paid or accrued by the Company and its subsidiaries to or on behalf of the Company’s Chief Executive Officer and Sr. Vice President, Secretary for the fiscal years ended December 31, 2000, 2001 and 2002.

Name and							Other Annual		All Other
Principal Position	Year		Salary		Bonus (1)		Compensation (2)		Compensation (3)
Charles J. Dolezal		2002	$	194,200	$	30,320	$	6,800	$	12,339
Chairman of the Board,		2001		185,200		24,830		6,900		11,084
President and Chief		2000		178,000		23,960		5,600		12,185
Executive Officer,
National Bancshares
Corporation and First
National Bank
Kenneth R. VanSickle		2002		98,000		18,000		–0–		4,170
Sr. Vice President &		2001		94,500		14,000		–0–		4,255
Secretary, National		2000		90,000		12,102		–0–		4,509
Bancshares
Corporation and Sr.
Vice President &
Chief Loan Officer,
First National Bank

(1)	First National Bank has an Employee Stock Purchase Incentive Plan for substantially all employees. Under the Plan each employee is entitled to receive a cash payment from First National Bank equal to 20% of the purchase price of the Company’s Common Shares acquired by the employee on the open market up to a maximum of 100 shares per calendar year. Cash payment received by the Chief Executive Officer equaled $320, $330 and $460 for the years ending 2002, 2001, and 2000, respectively. Cash payment received by the Sr. Vice President, Secretary equaled $0, $0 and $102 for the years ending 2002, 2001, and 2000, respectively. The cash payments are included in the bonus figures presented in the table.
(2)	Director Fees Received
(3)	401(k) Pension Plan employer contributions.

     The Bank maintains a 401(k) plan, which covers substantially all employees. The plan allows employees to contribute up to a predetermined amount, subject to certain limitations, with the Bank matching 50% of contributions up to 6% of an employee’s pay. Discretionary contributions may also be made to the plan by the Bank.

     Group life, disability, hospitalization, and medical insurance plans are offered to officers of the Company and its subsidiary on the same basis as all other salaried personnel. Directors are offered hospitalization and medical insurance plans on the same basis as all salaried personnel. The Chief Executive Officer has use of an automobile for his use in conducting the Company’s business, and for personal use on a limited basis, which the Company considers to be insignificant. No individual received personal benefits in excess of the lesser of either $50,000 or 10% of the total of their annual salary and bonus.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Executive Committee of First National Bank administers the executive compensation program for the Company and its subsidiary. In that connection, it makes and establishes policy and practices for compensation and makes recommendations to the full board or acts on the behalf of the full board with respect to specific compensation for the president and other executive officers.

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

     On the 27th day of November 2001, the Committee met to review compensation for all employees of the bank. Charles J. Dolezal, President and Chief Executive Officer, attended the meeting to suggest to the Committee his recommendations regarding senior management, other salaried and hourly employees. Mr. Dolezal was excused from the meeting during the time that his compensation was discussed by the Committee.

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

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

     The Committee has reviewed the qualifying compensation regulations issued by the Internal Revenue Service under Internal Revenue Code Section 162(m), which provide that no deduction is allowed for applicable employee remuneration paid by a publicly held corporation to a covered employee if the remuneration exceeds $1.0 million for the applicable taxable year, unless certain conditions are met. Currently, remuneration will not exceed the $1.0 million base for any employee. Therefore, executive compensation will not be affected by the qualifying compensation regulations.

Charles J. Dolezal — Bobbi E. Douglas — John W. Kropf — Steve Schmid — James F. Woolley

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

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

     Director John W. Kropf is an attorney in private practice with the law firm Kropf, Wagner, Hohenberger & Lutz, L.L.P., which performs legal services from time to time for National Bancshares Corporation and its banking subsidiary, First National Bank. In addition, payments amounting to $150,835 for various title services were made in 2002 to First Kropf Title, L.L.C. by mortgage loan borrowers of First National Bank. All or substantially all of First Kropf Title, L.L.C.’s customers are mortgage loan borrowers referred by First National Bank. Kropf, Wagner, Hohenberger & Lutz, L.L.P. owns 51% of First Kropf Title, L.L.C.’s equity interests and First National Bank owns the remainder. Through his interest in the law firm, Director John W. Kropf may be deemed to have an approximately 14% indirect interest in First Kropf Title, L.L.C.

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PERFORMANCE GRAPH

     The following represents a comparison of return on an investment in the Corporation, Standard and Poor’s 500 Stock Index and Standard and Poor’s 500 Bank Index.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG NATIONAL

BANCSHARES CORPORATION, S&P 500 STOCK INDEX AND S&P 500 BANK INDEX

	1997		1998		1999		2000		2001		2002
National Bancshares Corp	$	100.00		123.96		106.77		68.64		69.90		104.97
S&P 500 Stock Index	$	100.00		128.58		155.63		141.46		124.65		97.10
S&P 500 Bank Index	$	100.00		106.04		91.41		108.83		108.85		107.74

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

*Note:  National Bancshares Corporation is not included in the S&P 500 Stock Index or the S&P 500 Bank Index.

SPECIAL SEPARATION AGREEMENT

     During 2000, the Board of Directors of the Company adopted and entered into a Special Separation Agreement with certain executive officers of the Bank, namely Charles J. Dolezal, Kenneth R. VanSickle and two executive officers not named in the Executive Compensation table. The terms of the Agreement are the same for each executive officer except as outlined below.

     The Agreement becomes effective only upon a change of control of the Company as defined in the Agreement. The Company has determined that it is desirable to provide certain executive officers with severance benefits under certain circumstances after a change in control has occurred in order that the executive officer may more fully focus his current efforts on expanding the Company’s business and profits without concern for his personal security in the event of a change in control. The Agreement provides that upon termination of employment within three years following a change in control (two years for the two executive officers not named in the Executive Compensation table), unless the executive is terminated for

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good cause as defined in the Agreement, or the executive voluntarily terminates his employment other than for good reason as defined in the Agreement, the executive shall be entitled to three years’ severance compensation (two years for the two executive officers not named in the Executive Compensation table). The severance compensation shall be paid monthly based on the executive’s base salary in effect at the date of his termination. Severance benefits could be reduced as a result of Internal Revenue Code 280G, which (a) imposes an excise tax on a recipient’s change-in-control benefits that exceed three times the executive’s W-2 reported compensation (Box 1) averaged over the preceding five years and (b) disallows a compensation expense deduction to the employer for those so-called “excess parachute payments.” In addition, during the severance period, the executive will receive normal fringe benefits and perquisites including but not limited to life insurance, health care benefits coverage, annual bonus, and Company matching and discretionary 401 (k) contributions in the same amounts and at the same cost to the executive as was applicable prior to the change in control.

     The Company will pay the costs of outplacement services actually used by the executive; provided, however, that the total fee paid for such services will be limited to an amount equal to ten percent of the executive’s annual base salary as of the effective date of their termination of employment.

     Under the terms of the Agreement, the executive agrees to certain provisions with respect to non-disclosure, non-interference and non-competition. The Agreement shall be administered by Outside Committee members, which is defined in the Agreement as members of the Executive Committee of the Company’s Board of Directors who are not employees of the Company. Any disputes arising under this agreement may be appealed to the Outside Committee members by the executive. In the event that the executive brings an action in a court of law to enforce any provision of this Agreement and prevails in such action in any respect, the Company shall reimburse the executive for his attorney fees and expenses and any other fees and expenses incurred by the executive in connection with such cause of action or in connection with the enforcement of the Agreement against the Company.

TRANSACTIONS WITH DIRECTORS AND OFFICERS

     Certain Directors, Officers and principal shareholders and their associates were customers of and had various transactions with the Company’s subsidiary, First National Bank, in the ordinary course of business in 2002 and similar additional transactions may be expected to take place in the future. All loans and loan commitments involving Directors, Officers and their associates by the Company’s subsidiary Bank were made on substantially the same terms, including interest rates and collateral, as those prevailing at that time for comparable transactions with other persons, and do not involve more than the normal risk of collectibility, or present other unfavorable features.

     Director John W. Kropf is an attorney in private practice with the law firm Kropf, Wagner, Hohenberger & Lutz, L.L.P., which performs legal services for National Bancshares Corporation and First National Bank from time to time. Director Kropf may also be deemed to have an approximately 14% indirect interest in First Kropf Title, L.L.C., a limited liability company to which some of First National Bank’s mortgage borrowers have made payments for title services. See “Compensation Committee Interlocks and Insider Participation.”

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires National Bancshares’ directors and executive officers, as well as any person who owns more than 10% of a registered class of National Bancshares’ equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of National Bancshares’ stock. During the fiscal year ended December 31, 2002, no director, officer, or other person required to file such reports failed to file reports required by Section 16(a) of the Exchange Act or failed to file such reports in a timely manner.

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PROPOSALS OF SECURITY HOLDERS

     Proposals of security holders which are intended by such holders to be presented at the next Annual Meeting of Shareholders of the Company must be received by the Company not later than November 20, 2003, for inclusion in the Company’s Proxy Statement and form of proxy relating to that Annual Meeting. Proposals should be sent to Charles J. Dolezal, President, National Bancshares Corporation, 112 West Market Street, PO Box 57, Orrville, Ohio 44667.

     If a shareholder intends to present a proposal at the 2004 Annual Meeting of Shareholders without seeking to include the proposal in National Bancshares’ proxy materials for that meeting, the shareholder must give advance notice to National Bancshares. The shareholder must give notice at least 45 days before the date in 2004 corresponding to the mailing date of this proxy statement for the 2003 Annual Meeting of Shareholders. This proxy statement is being mailed to shareholders on or about March 21, 2003. The date that is 45 days before the corresponding mailing date in 2004 is therefore February 4, 2004. Accordingly, a shareholder who desires to present a proposal at the 2004 Annual Meeting of Shareholders without seeking to include the proposal in National Bancshares’ proxy materials for that meeting should provide notice of the proposal to National Bancshares no later than February 4, 2004. If the shareholder fails to do so, National Bancshares’ management proxies for the 2004 Annual Meeting of Shareholders will be entitled to use their discretionary voting authority on that proposal, without any discussion of the matter in National Bancshares’ proxy materials.

AUDIT MATTERS

     The Board of Directors selected Crowe, Chizek and Company LLP (Crowe Chizek) as independent auditors for 2002. It is anticipated that one or more representatives of that firm will attend the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to answer appropriate questions. In addition, the books, records and accounts of the Company’s sole banking subsidiary, First National Bank, are subject to periodic examination by regulatory authorities and are examined by the Company’s internal audit staff. Reports concerning the examinations are reviewed by the Board of Directors of the Company’s banking subsidiary, as well as by the management of the Company. The Board of Directors of the Company has selected Crowe Chizek as independent auditors for 2003.

     Crowe Chizek’s fees for the audit of the December 31, 2002 financial statements and the required quarterly reviews for 2002 amounted to $47,300. Crowe Chizek’s fees for other services, including tax fees and consulting services related to the acquisition of Peoples Financial Corporation, amounted to $55,480 for 2002. The Audit Committee believes that the other services performed, including tax services, are compatible with maintaining Crowe Chizek’s independence.

FORM 10-K ANNUAL REPORT

     A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR 2002 WILL BE FURNISHED WITHOUT CHARGE, ON OR AFTER APRIL 1, 2003 UPON WRITTEN REQUEST DIRECTED TO KENNETH R. VANSICKLE, SECRETARY, NATIONAL BANCSHARES CORPORATION, 112 WEST MARKET STREET, PO BOX 57, ORRVILLE, OHIO 44667.

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x PLEASE MARK VOTES AS IN THIS SAMPLE

REVOCABLE PROXY

NATIONAL BANCSHARES CORPORATION

		For	With- hold	For All Except
Annual Meeting of Shareholders to be Held on April 24, 2003 This Proxy is Solicited on Behalf of the Board of Directors	Elect Three (3) Directors to Serve a Three (3) Year Term as Directors of the Company Until Expiration of Their Term in 2006: (except as marked to the contrary below):	o	o	o

KNOW ALL PERSONS BY THESE PRESENT; That I/We, the undersigned Shareholder or Shareholders of National Bancshares Corporation, Orrville, Ohio, do hereby nominate, constitute and appoint John W. Kropf, James F. Woolley and John E. Sprunger, or any one of them, (with substitution, for my or our stock and in my or our name, place and stead) to vote all the common stock of said Company, standing in my or our name, on its books on March 7, 2003, at the Annual Meeting of Shareholders to be held at theOPERATIONS CENTER OF FIRST NATIONAL BANK, 1444 NORTH MAIN STREET, ORRVILLE, OHIO,on April 24, 2003 at 2:00 o’clock p.m., or at any adjournment thereof with all the powers the undersigned would possess if personally present. The shares will be voted in accordance with my specifications.		Bobbi E. Douglas, John E.Sprunger and Howard J. Wenger INSTRUCTION: To withhold authority to vote for any individual nominee, mark “For All Except” and write that nominee’s name in the space provided below.     Please specify your choice by marking the appropriate boxes above. This Proxy confers authority to vote “FOR” the proposition listed above unless “WITHHOLD” or “FOR ALL EXCEPT” is indicated. The agents named hereon cannot vote your shares unless you sign and return this proxy card. (IF ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.)     The Board of Directors recommends a vote “FOR” the listed proposition. (THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE.)
Please be sure to sign and date this Proxy in the box below.
Date
	Shareholder sign above        Co-holder (if any) sign above

*  Detach above card, sign, date and mail in postage paid envelope provided.  *

NATIONAL CITY BANCSHARES CORPORATION

INSTRUCTIONS: When signing as attorney, executor, administrator, trustee or guardian,

please give full title. If more than one trustee, all should sign.

ALL JOINT OWNERS MUST SIGN.

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