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:
[ ] 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 Rule 14a-11(c)
or Rule 14a-12
HIGHLANDS BANKSHARES, INC.
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(Name of Registrant as Specified in Its Charter)
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
HIGHLANDS BANKSHARES, INC.
340 West Main Street
Abingdon, Virginia 24210
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 14, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Highlands
Bankshares, Inc. (the "Corporation") will be held at the Southwest Virginia 4-H
Education Center, 25236 Hillman Highway, Abingdon, Virginia on May 14, 1997 at
7:00 p.m., for the following purposes:
(1) To elect nine directors for a term of one year or until their
respective successors are elected and qualified;
(2) To transact such other business as may properly come before the
meeting. Management is not aware of any other business, other than
procedural matters incident to the conduct of the Annual Meeting.
The Board of Directors has fixed the close of business on March 15,
1997 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert M. Little, Jr.
Robert M. Little, Jr.
Secretary
Abingdon, Virginia
April 7, 1997
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YOU ARE CORDIALLY INVITED TO ATTEND THIS MEETING. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE
PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
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<PAGE>
HIGHLANDS BANKSHARES, INC.
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
May 14, 1997
GENERAL INFORMATION
This Proxy Statement is furnished to holders of common stock, $2.50 par
value per share ("Common Stock"), of Highlands Bankshares, Inc. (the
"Corporation"), in connection with the solicitation of proxies by the Board of
Directors (the "Board") of the Corporation to be used at the Annual Meeting of
Stockholders to be held on May 14, 1997 at 7:00 p.m. at the Southwest Virginia
4-H Education Center, Inc., 25236 Hillman Highway, Abingdon, Virginia and any
adjournment thereof (the "Annual Meeting").
The principal executive offices of the Corporation are located at 340
West Main Street, Abingdon, Virginia. The approximate date on which this Proxy
Statement, the accompanying proxy card and Annual Report to Stockholders (which
is not part of the Corporation's soliciting materials) are being mailed to the
Corporation's stockholders is April 7, 1997.
Voting and Revocability of Proxy
The proxy solicited hereby, if properly signed and returned to the
Corporation and not revoked prior to its use, will be voted in accordance with
the instructions contained thereon. If no contrary instructions are given, each
proxy received will be voted "for" the proposals described herein. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing written notice thereof with the Secretary of the
Corporation (Robert M. Little, Jr., Secretary, Highlands Bankshares, Inc., 340
West Main Street, Abingdon, Virginia 24210), (ii) submitting a duly executed
proxy bearing a later date; or (iii) appearing at the Annual Meeting or at any
adjournment thereof and giving the Secretary notice of his or her intention to
vote in person. Proxies solicited hereby may be exercised only at the Annual
Meeting and any adjournment thereof and will not be used for any other meeting.
Persons Making the Solicitations
The cost of soliciting proxies will be borne by the Corporation. In
addition to solicitation by mail, officers and regular employees of the
Corporation may solicit proxies in person or by telephone.
Voting Securities
Only stockholders of record at the close of business on March 15, 1997
(the "Record Date") will be entitled to vote at the Annual Meeting. On the
Record Date, there were 1,227,838 shares of Common Stock of the Corporation
issued and outstanding and 937 record holders. Each share of Common Stock is
entitled to one vote at the Annual Meeting. The Corporation had no other class
of voting securities outstanding at the Record Date.
In the election of Directors, those nominees receiving the greatest number of
votes will be elected even if they do not receive a majority. Abstentions and
broker non-votes will not be considered a vote for, or a vote against, a
Director.
<PAGE>
ELECTION OF DIRECTORS
The Nominees
Nine (9) Directors are to be elected at the Annual Meeting to serve
until the next Annual Meeting, and until the election and qualification of their
respective successors.
The following table sets forth the names, ages and business experience
of nominees for election to the Board of Directors as well as the date each was
first elected to the Board of Directors of the Corporation or previously to the
Board of Directors of the Bank. Unless otherwise indicated, the business
experience shown for each nominee has extended five or more years.
<TABLE>
<CAPTION>
NAME AND AGE NAME AND AGE
AND YEAR AND YEAR
BECAME PRINCIPAL BECAME PRINCIPAL
DIRECTOR OCCUPATION DIRECTOR OCCUPATION
-------- ---------- -------- ----------
<S> <C> <C> <C>
William E. Chaffin Computer Verne D. Kendrick Private Investor
Age 47 Consultant Age 76
Director since Director since
March, 1991 September, 1983
Clydes B. Kiser President of Kiser J. Carter Lambert Private Investor
Age 59 Furniture, a furniture Age 71
Director since retailer Director since
March, 1988 August, 1983
James D. Moore, Jr. Physician; President James D. Morefield Attorney in private
Age 51 of the Corporation; Age 47 practice; Chairman
Director since President of the Bank Director since of the Corporation
August, 1983 August, 1983 and the Bank
Charles P. Olinger CEO of Settlers Life William J. Singleton Private Investor
Age 47 Insurance Company Age 71
Director since Director since
March, 1988 November, 1991
H. Ramsey White Jr. Dentist in private
Age 51 practice
Director since July,
1983
</TABLE>
Election of Directors
Unless authority is withheld in the proxy, each proxy executed and
returned by a stockholder will be voted for the election of the nominees listed
above. Proxies distributed in conjunction herewith may not be voted for persons
other than the nominees listed above. If any person named as nominee should be
unable or unwilling to stand for election at the time of the Annual Meeting, the
proxy holders will nominate and vote for a replacement nominee or nominees
recommended by the Board of Directors. All of the nominees listed above have
consented to be nominated and to serve if elected, and at this time, the Board
of Directors knows no reason why any of the nominees listed above may not be
able to serve as a director if elected. The proxy also confers discretionary
authority
<PAGE>
upon the persons named therein, or their substitutes, with respect to any other
matter that may promptly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE NOMINEES BE ELECTED AS DIRECTORS
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 15, 1997
regarding the beneficial ownership of the Corporation's Common Stock by (i)
beneficial owners of more than 5% of the outstanding shares of the Corporation's
Common Stock (all of whom are Directors of the Corporation), (ii) all Directors
and nominees, (iii) its Chief Executive Officer, and (iv) all Directors and
executive officers as a group. For the purposes of this table, beneficial
ownership has been determined in accordance with the provisions of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
under which, in general, a person is deemed to be a beneficial owner of a
security if he has or shares the power to vote or direct the voting of the
security or the power to dispose or direct the disposition of the security, or
if he has the right to acquire beneficial ownership of the security within 60
days.
<TABLE>
<CAPTION>
Common Stock
Name Beneficially Owned Percent of Class
- ---- ------------------ ----------------
<S> <C> <C>
Directors
William E. Chaffin (1) 10,850 *
Verne D. Kendrick (2) 76,330 6.22%
P.O. Box 310
Meadowview, VA 24361
Clydes B. Kiser (3) 11,310 *
J. Carter Lambert (4) 30,978 2.52%
James D. Moore, Jr. (5) 121,783 9.92%
P.O. Box 1192
Abingdon, VA 24212
James D. Morefield (6) 85,237 6.94%
211 High Street
Abingdon, VA 24210
Charles P. Olinger (7) 6,522 *
William Singleton (8) 14,876 1.21%
H. Ramsey White, Jr. (9) 23,944 1.95%
Total Directors 381,830 28.76%
Named Executives
Samuel L. Neese (10) 17,150 1.40%
The chief executive officer and directors as a
group (10 persons) (11) 398,980 32.49%
</TABLE>
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*Indicated holdings amount to less than 1% of the issued and outstanding Common
Stock.
(1) Includes 3,850 options to purchase the Corporation's Common Stock that
may be exercised immediately. All shares are held directly by Mr. Chaffin.
(2) Includes 900 options to purchase the Corporation's Common Stock that may be
exercised immediately. Also includes indirect ownership of 31,500 shares
held solely in Mrs. Kendrick's name.
(3) Includes 1,900 options to purchase the Corporation's Common Stock that may
be exercised immediately. Also includes indirect ownership of 3,790 shares
held solely in Mrs. Kiser's name.
(4) Includes 900 options to purchase the Corporation's Common Stock that may be
exercised immediately. Also includes 1,060 shares held by Mrs. Lambert in a
custodial relationship.
<PAGE>
(5) Includes 8,350 options to purchase the Corporation's Common Stock that may
be exercised immediately. Also includes 63,940 shares held by Glover and
Moore Profit Sharing Plan for which Dr. Moore is trustee; indirect
ownership of 15,332 shares held by Dr. Moore in a custodial relationship;
indirect ownership of 450 shares held solely in Dr. Moore's children's
names; and indirect ownership of 7,666 shares held solely in Mrs. Moore's
name.
(6) Includes 1,700 options to purchase the Corporation's Common Stock that may
be exercised immediately. Also includes indirect ownership of 8,022 shares
held by Mrs. Morefield in a custodial relationship; 14,907 shares held
solely in Mrs. Morefield's name; and 7,220 shares held solely in Mr.
Morefield's daughter's name.
(7) Includes 3,650 options to purchase the Corporation's Common Stock that may
be exercised immediately.
(8) Includes 900 options to purchase the Corporation's Common Stock that may be
exercised immediately.
(9) Includes 8,350 options to purchase the Corporation's Common Stock that may
be exercised immediately. Also indirect ownership of 600 shares held by Dr.
White in a custodial relationship; 2,670 shares held by Mrs. White in a
self-directed IRA.
(10) Includes 11,100 options to purchase the Corporation's Common Stock that may
be exercised immediately
(11) All shares, except as noted above, are individually held or held jointly
with spouses or children, or in an Individual Retirement Account
THE BOARD OF DIRECTORS AND IT'S COMMITTEES
Meetings of the Board of Directors of the Corporation are held
regularly each month, and there is also an organizational meeting following the
conclusion of the Annual Meeting of Stockholders. The Board of Directors of the
Corporation held twelve meetings in the year ended December 31, 1996. No
director attended fewer than 75 percent of the total number of meetings of the
Board of Directors. There were no committee meetings of the Corporation for
1996.
The Board of Directors of the Bank met 12 times during 1996. No
director attended fewer than 75 percent of the total number of meetings of the
Board of Directors and of the total number of meetings held by all committees of
the Board of Directors on which he served.
The Board of Directors of the Corporation has an Audit Committee and a
Compensation Committee, but does not have a nominating committee. These
committees were previously committees of the Board of Directors of the Bank and
have the same members and the same functions as when they were committees of the
Board of Directors of the Bank.
The Audit Committee consists of Messrs. Kendrick, Lambert, Olinger,
White, Chaffin, and Singleton. The Audit Committee is responsible for the
selection and recommendation of the independent accounting firm for the annual
audit and for the establishment, and the assurance of the adherence to, a system
of internal controls. It reviews and accepts the reports of the Corporation's
independent auditors and federal and state examiners. The Audit Committee of the
Board of Directors of the Bank met 3 times during the year ended December 31,
1996.
The Compensation Committee consists of Messrs. Kiser, Lambert,
Morefield, Olinger, and White. The Committee is responsible for the oversight of
the compensation paid to employees and officers of the Bank. It reviews and
recommends salary adjustments for the Bank. The Compensation Committee meets
semi-annually.
Under the Corporation's Bylaws, notice of a proposed nomination meeting
certain specified requirements must be received by the Corporation not less than
60 nor more than 90 days prior to any meeting of stockholders called for the
election of directors, provided in each case that if fewer than 70 days' notice
of the meeting is given to stockholders, such written notice shall be received
not later than the close of the tenth day following the day on which notice of
the meeting was mailed to stockholders.
<PAGE>
The Bylaws of the Corporation require that the stockholder's notice set
forth as to each nominee (i) the name, age, business address and residence
address of such nominee, (ii) the principal occupation or employment of such
nominee, (iii) the class and number of shares of the Corporation which are
beneficially owned by such nominee, and (iv) any other information relating to
such nominee that is required under federal securities laws to be disclosed in
solicitations of proxies for the election of directors, or is otherwise required
(including, without limitation, such nominee's written consent to being named in
a proxy statement as nominee and to serving as a director if elected). The
Bylaws of the Corporation further require that the stockholder's notice set
forth as to the stockholder giving the notice (i) the name and address of such
stockholder and (ii) the class and amount of such stockholder's beneficial
ownership of the Corporation's capital stock. If the information supplied by
stockholder is deficient in any material aspect or if the foregoing procedure is
not followed, the chairman of the Annual Meeting may determine that such
stockholder's nomination should not be brought before the Annual Meeting and
that such nominee shall not be eligible for election as a director of the
Corporation..
Executive Officers Who Are Not Directors
Samuel L. Neese (Age 46) was appointed Executive Vice President and
Chief Executive Officer of the Corporation in 1995 and Executive Vice President
and Chief Executive Officer of the Bank in 1991. He was first appointed as a
bank officer to the position of Vice President and Senior Loan Officer in
January, 1988. Prior to January, 1988, he was associated with a Washington
County bank for fifteen years.
James T. Riffe (Age 43) was appointed Executive Vice President and
Cashier of the Corporation in 1995 and Executive Vice President and Cashier of
the Bank in 1991. His first officer position with the Bank was as Vice President
and Cashier, to which he was appointed in 1986. He has been associated with
various banks since 1975, including serving as vice president of a bank in
Botetourt County, Virginia from 1981 to 1986.
Compliance With Filing Requirements Under the Securities Exchange Act of 1934
The Exchange Act requires the Corporation's Directors and executive
officers, and any persons owning more than 10% of a class of the Corporation's
stock, to file certain reports of ownership and changes in ownership with the
SEC. The reporting requirements are complex, and the following filings were made
late: On May 24, 1996, J.D. Morefield sold to Samuel L. Neese 2,000 shares and
James T. Riffe 1,000 shares. The sale should have been reported on or before
June 10, 1996 by J.D. Morefield, Samuel L. Neese, and James T. Riffe. The sale
was reported in a timely manner by J.D. Morefield and filed late on December 23,
1996 by Samuel L. Neese and James T. Riffe.
REMUNERATION
Summary of Cash and Certain Other Compensation
The following table show, for the fiscal years ended December 31, 1996,
1995 and 1994, the cash compensation paid by the Bank, as well as certain other
compensation paid or accrued for those years, to the Chief Executive Officer of
the Corporation in all capacities in which he served. The Chief Executive
Officer of the Corporation does not receive any compensation from the
Corporation:
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Compensation
Securities All Other
Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options ($) (a)
- --------------------------- ---- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Samuel L. Neese, Executive 1996 90,000 3,000 800 6,127
Vice President and Chief 1995 81,800 4,650 200 6,364
Executive Officer 1994 72,800 4,867 650 6,719
</TABLE>
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(a) Consists of annual amounts funded by the Bank for the benefit of Mr.
Neese under its non-integrated profit sharing plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants (a)
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Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options/ Annual Rates of Stock
Underlying SARs Price Appreciation for
Options/ Granted to Exercise Option Term
SARS Employee in Price Expiration
Name Granted (#) Fiscal Year(b) ($/Share) Date 5%($) 10%($)
---- ----------- -------------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Samuel L. Neese, Exec. 800 6.20% $15.00 01/31/2005 $15,376 $31,576
Vice Pres. and
Chief Exec. Officer
</TABLE>
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(a) Stock options were awarded at $15.00 per share and may be exercised
immediately.
(b) Options to purchase 800 shares of Common Stock were granted to the chief
executive officer of the Corporation during the fiscal year ended December
31, 1996.
Option Exercises and Holdings
All options held by the Chief Executive Officer at December 31, 1996
can be exercised immediately. The following table sets forth information with
respect to exercised and unexercised options held by such officer as of the end
of the fiscal year:
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUE
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Shares Unexercised in-the-Money
Acquired on Value Options/SARs at Options/SARs at
Name Exercise(#) Realized($) Fiscal Year End(#) Fiscal Year End ($)(a)
- ---- ----------- ----------- ------------------ ----------------------
<S> <C> <C> <C> <C>
Samuel L. Neese, -0- N/A 9,600 $140,953
Executive Vice
President and Chief
Executive Officer
</TABLE>
(a) The value of unexercised in-the-money options at fiscal year end was
calculated by determining the difference between the fair market value of
the Common Stock of the Corporation underlying the options on December 31,
1996, $21.00 per share, and the exercise price of the options. The
Corporation's Common Stock is not actively traded, and thus fair market
value reflects the good faith determination by management based on
information received from purchasers and sellers of such stock.
Director's Compensation
Directors of the Corporation receive options to purchase the
Corporation's Common Stock, as determined by the Board of Directors, for their
services. Directors of the Corporation also received fees of $2,600.00 each for
their services for the year ended December 31, 1996.
During 1996, Directors of the Corporation and directors of the Bank,
excluding Chairman Morefield who did not receive any options during 1996,
received 900 options each for the Corporation's Common Stock for their services.
CERTAIN TRANSACTIONS
Some of the Directors and officers of the Corporation and some of the
corporations and firms with which these individuals are associated are also
customers of the Corporation in the ordinary course of business, or are indebted
to the Corporation with respect to loans, and it is anticipated that some of the
persons, corporations and firms will continue to be customers of, and indebted
to, the Corporation on a similar basis in the future. All loans extended to such
persons, corporations and firms were made in the ordinary course of business,
did not involve more than normal collection risk or present other unfavorable
features, and were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the same time for comparable
Corporation transactions with unaffiliated persons. No such loan as of December
31, 1996 was non-accruing, past due or restructured. At December 31, 1996, the
aggregate amounts of loans outstanding to all directors and officers of the
Corporation and members of their immediate families were approximately
$5,540,790, representing 37.9% of the total equity of the Corporation.
Management is not aware of any arrangements which may at a subsequent
date result in a change in control of the Corporation.
Management of the Corporation is not aware of any material proceedings
to which any Director, officer or affiliate of the Corporation, any owner of
record or beneficial owner of more than five percent of the Corporation's Common
Stock, or any associate of any such Director, officer affiliate of the
Corporation, or stockholder is a party adverse to the Corporation or has a
material interest adverse to the Corporation.
<PAGE>
AUDITORS
The Board of Directors has appointed Brown, Edwards & Company, LLP to
perform the audit of the Corporation's financial statements for the year ending
December 31, 1996. Brown, Edwards & Company, LLP has acted as the Corporation's
auditors for 1996 and as the Bank's auditors for the past eleven years and has
reported on financial statements during those periods. Representatives from
Brown, Edwards & Company, LLP will be present at the Annual Meeting and will be
given the opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have presented at the next
Annual Meeting of Stockholders, to be held on or about May 13, 1998, must be
received by the Corporation no later than 60 days before such date. Any proposal
which a stockholder wishes to have included in the Proxy Statement and form of
proxy relating to the next Annual Meeting of Stockholders must be received by
the Corporation no later than November 28, 1997. If such proposal complies with
all of the requirements of Rule 14a-8 of the Exchange Act, it will be included
in the Proxy Statement and set forth in the form of proxy issued for the next
Annual Meeting of Stockholders. It is urged that any such proposals be sent the
Secretary of the Corporation by certified mail, return receipt requested.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Bank's Annual Report to Stockholders for the year ended
December 31, 1996 accompanies this Proxy Statement. Additional copies may be
obtained by written request to the Secretary of the Corporation at the address
indicated below. Such Annual Report is not part of the proxy solicitation
materials.
UPON RECEIPT OF A WRITTEN REQUEST OF ANY PERSON WHO , ON THE RECORD
DATE, WAS RECORD OWNER OF THE CORPORATION'S COMMON STOCK OR WHO REPRESENTS IN
GOOD FAITH THAT HE OR SHE WAS ON SUCH DATE THE BENEFICIAL OWNER OF SUCH STOCK
ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS, THE CORPORATION WILL
FURNISH TO SUCH PERSON, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 AND THE EXHIIBITS THERETO REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE EXCHANGE ACT.
ANY SUCH REQUEST SHOULD BE MADE IN WRITING TO ROBERT M. LITTLE, JR., SECRETARY,
HIGHLANDS BANKSHARES, INC., 340 WEST MAIN STREET, ABINGDON, VIRGINIA 24210. THE
FORM 10-K IS NOT PART OF THE PROXY SOLITICATION MATERIALS.
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other
matters that may come before the Annual Meeting. However, the proxies may be
voted with discretionary authority with respect to any other matters that may
properly come before the Annual Meeting.
<PAGE>
HIGHLANDS BANKSHARES, INC.
340 West Main Street, Abingdon, Virginia 24210
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. The undersigned
hereby constitutes J.D. Morefield, William E. Chaffin and Clydes B. Kiser or any
of them, attorneys and proxies, with power of substitution in each, to act for
the undersigned with respect to all shares of Common Stock of Highlands
Bankshares, Inc. (the "Corporation") held of record by the undersigned on March
15, 1997, at the Annual Meeting of Stockholders to be held at the Southwest
Virginia 4-H Education Center, Inc. at 25236 Hillman Highway, Abingdon, Virginia
on May 14, 1997, at 7:00 p.m., or any adjournment thereof, for the following
purposes:
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Directors [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary) all nominees
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
such nominee's name on the line below)
William E. Chaffin V.D. Kendrick Clydes B. Kiser
J. Carter Lambert James D. Moore, Jr. J.D. Morefield
Charles P. Olinger William J. Singleton H. Ramsey White, Jr.
- --------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote on such other
business as may properly come before the meeting.
(Continued and to be signed and dated on the reverse
side and returned promptly in the enclosed envelope.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES FOR ELECTION OF DIRECTORS LISTED IN ITEM 1.
Please sign name exactly as it appears on the stock certificate. All
owners should sign. Fiduciaries should give full title.
--------------------------------------------
Signature
--------------------------------------------
Date
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Signature
--------------------------------------------
Date
I plan_________, do not plan____________, to
attend the 1997 Annual Meeting.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY SHEET PROMPTLY.
