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 240.14a-11(c) or 240.14a-
12
HIGHLANDS BANKSHARES, INC.
(Name of Registrant as Specified In Its Charter)
N.A.
(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.
Not Applicable.
[ ] 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.
Not Applicable.
<PAGE>
HIGHLANDS BANKSHARES, INC.
340 West Main Street
Abingdon, Virginia 24210
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 13, 1998
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 13, 1998 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 11, 1998 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
Robert M. Little, Jr.
Secretary
Abingdon, Virginia
April 13, 1998
____________________________________________________________
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.
____________________________________________________________
<PAGE>1
HIGHLANDS BANKSHARES, INC.
________________
PROXY STATEMENT
________________
ANNUAL MEETING OF STOCKHOLDERS
May 13, 1998
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 13, 1998 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 13, 1998.
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., 266 West Plumb Alley, 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 11, 1998 (the "Record Date") will be entitled to vote
at the Annual Meeting. On the Record Date, there were
1,232,250 shares of Common Stock of the Corporation issued
and outstanding and 966 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>2
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 NAME AND
AGE AND AGE AND
YEAR BECAME PRINCIPAL YEAR BECAME PRINCIPAL
DIRECTOR OCCUPATION DIRECTOR OCCUPATION
__________________ ___________ _________________ _____________
</CAPTION>
<S> <C> <S> <C>
William E.Chaffin Computer Verne D. Kendrick Private
Age 48 Consultant Age 79 Investor
Director Director
since since
March, 1991 September, 1983
Clydes B.Kiser President J. Carter Lambert Private
Age 60 of Kiser Age 72 Investor
Director Furniture, Director
since a furniture since
March, 1988 retailer August, 1983
James D. Moore, Jr. Physician; James D. Morefield Attorney in
Age 52 President Age 48 private practice;
Director of the Director Chairman of the
since Corporation; since Corporation and
August, 1983 President August, 1983 the Bank
of the Bank
William J. Singleton Private
Charles P. Olinger CEO of Age 72 Investor
Age 48 Settlers Director
Director Life since
since Insurance November, 1991
March, 1988 Company
H. Ramsey White Jr. Dentist in
Age 52 private
Director practice
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
upon the persons named therein, or their substitutes, with
respect to any other matter that may promptly come before the
meeting.
<PAGE>3
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
11, 1998 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
___________________________ ___________________ _________________
</CAPTION>
<S> <C> <C>
Directors
William E. Chaffin <F1> 11,650 *
Verne D. Kendrick <F2> 72,210 5.86%
P.O. Box 310
Meadowview, VA 24361
Clydes B. Kiser <F3> 11,810 *
J. Carter Lambert <F4> 30,978 2.51%
James D. Moore, Jr.<F5> 124,283 10.09%
P.O. Box 1192
Abingdon, VA 24212
James D. Morefield <F6> 71,237 5.78%
211 High Street
Abingdon, VA 24210
Charles P. Olinger <F7> 7,022 *
William Singleton <F8> 12,622 1.02%
H. Ramsey White, Jr. <F9> 24,444 1.98%
_______ _____
Total Directors 366,256 29.72%
Named Executives
Samuel L. Neese <F10> 17,650 1.43%
_______ _____
The chief executive officer and
directors as a group
(10 persons) <F11> 383,906 31.15%
_______ _____
<FN>
_______________
*Indicated holdings amount to less than 1% of the issued and
outstanding Common Stock.
<F1> Includes 4,350 options to purchase the Corporation's
Common Stock that may be exercised immediately. Also includes
indirect ownership of 300 shares held solely in Mrs. Chaffin's
name..
<F2> Includes 1,400 options to purchase the Corporation's
Common Stock that may be exercised immediately. Also includes
indirect ownership of 29,190 shares held solely in Mrs.
Kendrick's name.
<F3> Includes 2,400 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.
<F4> 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.
<F5> Includes 5,850 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.
<PAGE>4
<F6> Includes 1,700 options to purchase the Corporation's
Common Stock that may be exercised immediately. Also includes
indirect ownership of 18,220 shares held solely in Mrs.
Morefield's name; and 7,220 shares held solely in Mr.
Morefield's daughter's name.
<F7> Includes 4,150 options to purchase the Corporation's
Common Stock that may be exercised immediately.
<F8> Includes indirect ownership of 5,411 shares held solely
in Mrs. Singletons name.
<F9> Includes 5,850 options to purchase the Corporation's
Common Stock that may be exercised immediately. Also indirect
ownership of 500 shares held by Dr. White in a custodial
relationship; 2,770 shares held by Mrs. White in a self-
directed IRA.
<F10> Includes 11,600 options to purchase the
Corporation's Common Stock that may be exercised immediately
<F11> All shares, except as noted above, are individually
held or held jointly with spouses or children, or in an
Individual Retirement Account
</FN>
</TABLE>
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, 1997. No
director attended fewer than 75 percent of the total number of
meetings of the Board of Directors. There were three committee
meetings of the Corporation for 1997.
The Board of Directors of the Bank met 12 times during
1997. 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, 1997.
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.
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
<PAGE>5
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 47) 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 44) 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. All filings
were made in a timely matter.
REMUNERATION
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended
December 31, 1997, 1996 and 1995, 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 receives compensation
from the Corporation in the form of stock options which may be
purchased and converted, on a share to share basis, to the
Corporation's commons stock.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
____________________________Compensation
____________
Securities All Other
Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options ($)<F1>
___________________________ ____ _________ ________ ________ ____________
</CAPTION>
<S> <C> <C> <C> <C> <C>
Samuel L. Neese, Executive 1997 92,312 8,250 500 2,310
Vice President and Chief 1996 90,000 3,000 800 6,127
Executive Officer 1995 81,800 4,650 200 6,364
<FN>
_______________
<F1> Consists of annual amounts funded by the Bank for the
benefit of Mr. Neese under its qualifying 401-K plan for the
year ended 1997 and annual amounts funded by the Bank for the
benefit of Mr. Neese under its non-integrated profit sharing
plan for 1996 and 1995.
</FN>
</TABLE>
<PAGE>6
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE> Potential
<CAPTION> Realizable
Individual Grants <F1> Value at
_____________________________________________ Assumed
Number of Annual Rates
Securities Percent of of Stock Price
Underlying Total Options/ Appreciation
Options/ SARs Granted Exercise for Option Term
SARS to Employee in Price Expiration ________________
Name Granted(#) Fiscal Year<F2> ($/Share) Date 5%($) 10%($)
____ __________ _______________ _________ ______ _____ ______
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Samuel L. Neese,
Exec. Vice Pres.
and Chief Exec.
Officer 500 4.67% $23.00 01/31/2007 $18,732 $29,828
<FN>
___________________
<F1> Stock options were awarded at $23.00 per share and may be
exercised immediately.
<F2> Options to purchase 500 shares of Common Stock were
granted to the chief executive officer of the Corporation
during the fiscal year ended December 31, 1997.
</FN>
</TABLE>
Option Exercises and Holdings
All options held by the Chief Executive Officer at
December 31, 1997 can be exercised immediately. The following
table sets forth information with respect to exercised and
unexercised options held by such officer as of the end of the
fiscal year:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUE
<TABLE>
<CAPTION> Number of Securities
Underlying Value of Unexercised
Shares Unexercised in-the-Money
Acquired on Value Options/SARs at Fiscal Options/SARs at Fiscal
Name Exercise(#) Realized($) Year End (#) Year End ($)<F1>
____ ___________ ___________ ____________ _______________
</CAPTION>
<S> <C> <C> <C> <C>
Samuel L. Neese,
Executive Vice
President and
Chief Executive
Officer - N/A 11,600 $206,553
<FN>
____________________
<F1> 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, 1997, $27.00 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.
</FN>
</TABLE>
<PAGE>7
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 $5,175.00 each for their services for
the year ended December 31, 1997.
During 1997, Directors of the Corporation, excluding
Chairman Morefield and Vice-Chairman Lambert who did not
receive any options during 1997, received 500 options each for
the Corporation's Common Stock for their services. These
options were granted at the current market value of $23.00 per
share.
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, 1997 was non-
accruing, past due or restructured. At December 31, 1997, the
aggregate amounts of loans outstanding to all directors and
officers of the Corporation and members of their immediate
families were approximately $5,766,231, representing 34.3% 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.
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, 1997.
Brown, Edwards & Company, LLP has acted as the Corporation's
auditors for 1997 and as the Bank's auditors for the past
twelve 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 12, 1999, 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, 1998. 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.
<PAGE>8
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Bank's Annual Report to Stockholders for
the year ended December 31, 1997 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,
1997 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., 266 WEST
PLUMB ALLEY, 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>9
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, James D. Moore, Jr. and J. Carter Lambert 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 11, 1998 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 13,
1998, at 7:00 p.m., or any adjournment thereof, for the following purposes:
1. Election of Directors ___ FOR all nominees listed below
(except as marked to the contrary)
___ WITHHOLD AUTHORITY to vote for all nominees
(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.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED 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.
<PAGE>10
___________________________
Signature
___________________________
Date
___________________________
Signature
___________________________
Date
I plan________________, do not
plan___________________, to
attend the 1998 Annual Meeting.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY
SHEET PROMPTLY.
<PAGE>11
