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.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:<PAGE>
March 20, 1998
Dear Shareholders:
You are cordially invited to attend our annual meeting of the
shareholders of Highlands Bankshares, Inc. on Tuesday, April 14, 1998,
at 3:00 p.m., at The Grant County Bank, 1 North Main Street (the "Old
Bank Building"), Petersburg, West Virginia.
Enclosed in this mailing you will find formal notice of the meeting, a
proxy and a Proxy Statement detailing the matters upon which the
shareholders will act at the annual meeting. Our Company's Annual Report
for 1997 is also enclosed.
We urge you to complete, date and sign the proxy, and return it as soon
as possible in the enclosed postage prepaid envelope, even if you intend
to attend the meeting. You may revoke your proxy at any time prior to
its exercise.
Sincerely,
John G. VanMeter
Chairman of the Board<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Highlands Bankshares, Inc.
The annual meeting of shareholders of Highlands Bankshares, Inc. will
be held on Tuesday, April 14, 1998, at 3:00 p.m., at The Grant County
Bank, 1 North Main Street (the "Old Bank Building"), Petersburg, West
Virginia, for the following purposes:
1. Election of eight directors, with one-third to serve until the
annual meeting of shareholders in each of 1999, 2000 and 2001.
2. Ratification of the appointment of S. B. Hoover and Company,
L.L.P. as independent auditors for 1998.
3. Transaction of other business as may properly come before the
meeting.
Only shareholders of record at the close of business on March 2, 1998
are entitled to notice of and to vote at the annual meeting or any
adjournments thereof.
To assure that your shares are represented at the annual meeting,
please complete, date and sign the enclosed proxy, and return it as soon
as possible in the enclosed postage prepaid envelope. You may revoke
your proxy at any time prior to its exercise.
By Order of the Board of Directors
Clarence E. Porter
Corporate Secretary
March 20, 1998
<PAGE>
HIGHLANDS BANKSHARES INC.
P.O. Box 929
Petersburg, West Virginia 26847
(304) 257-4111
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies for use at the annual meeting of shareholders of
Highlands Bankshares, Inc. (Highlands or the Company) to be held Tuesday,
April 14, 1998, at 3:00 p.m., at The Grant County Bank, 1 North Main
Street (the "Old Bank Building"), Petersburg, West Virginia, and at any
adjournments thereof (Annual Meeting). The accompanying proxy is
solicited by the Board of Directors of the Company (the Board). The
principal executive offices of the Company are located at 3 North Main
Street, Petersburg, West Virginia 26847. The approximate mailing date
of the Proxy Statement and the accompanying proxy is March 20, 1998.
The cost of the solicitation of proxies will be borne by the
Company. Solicitations will be made only by the use of the mail, except
that, if necessary, officers, directors and regular employees of the
Company, or its affiliates, may make solicitations of proxies by
telephone, telegraph or by personal calls. Brokerage houses and nominees
may be requested to forward the proxy solicitation material to the
beneficial owners of the stock held of record by such persons, and the
Company may reimburse them for their charges and expenses in this regard.
All properly executed proxies delivered pursuant to this
solicitation will be voted at the Annual Meeting in accordance with any
instructions thereon. Any person signing and mailing the enclosed proxy
may, nevertheless, revoke the proxy at any time prior to the actual
voting thereof.
A 1997 Annual Report to shareholders, including current financial
statements, is being mailed to the Company's shareholders concurrently
with this Proxy Statement but should not be considered proxy solicitation
material.
Interested shareholders may obtain without charge a copy of the
Company's Form 10-KSB, as filed with the Securities and Exchange
Commission, upon written request to Clarence E. Porter, Corporate
Secretary, Highlands Bankshares, Inc., P.O. Box 929, Petersburg, West
Virginia 26847.
OUTSTANDING SHARES AND VOTING RIGHTS
Only shareholders of record at the close of business on March 2,
1998, will be entitled to vote at the Annual Meeting. As of such date,
the Company had outstanding 501,898 shares of its common stock, $5 par
value (Common Stock), each of which is entitled to one vote at the Annual
Meeting. Cumulative voting rights are available for the election of
directors, as further described in this Proxy Statement.
Any number of shareholders holding together a majority of the stock
outstanding, who are either present in person or represented by proxy at
the Annual Meeting, shall constitute a quorum. If a share is represented
for any purpose at the Annual Meeting, it is deemed to be present for
purposes of establishing a quorum. Abstentions and shares held of record
by a broker or its nominee (Broker Shares) which are voted on any matter
are included in determining the number of votes present or represented
at the Annual Meeting. Conversely, Broker Shares that are not voted on
any matter will not be included in determining whether a quorum is
present.
If a quorum is established, directors will be elected by a plurality
of the votes cast by shareholders in person or by proxy at the Annual
Meeting; and Proposal Two will be approved by a majority of the votes
cast by shareholders in person or by proxy at the Annual Meeting. Votes
that are withheld and Broker Shares that are not voted will not be
included in determining the number of votes cast.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the name and address of, and number
and percentage of shares of Common Stock held as of March 2, 1998 by,
each of the Company's directors and executive officers and all of the
Company's directors and executive officers as a group. To the best of
the Company's knowledge, no person is the beneficial owner of more than
5% of the Company's common stock.
Amount Beneficially Percent of
Name of Owner
Owned Class
- ------------- ------------------- -----------
Leslie A. Barr, Director and President 1,838<F1> *
Thomas B. McNeil, Sr., Director 5,341<F2> 1.1%
George B. Moomau, Director 7,740<F3> 1.5%
Clarence E. Porter,
Director and Secretary/Treasurer 112<F4> *
Courtney R. Tusing, Director 816<F5> *
John G. VanMeter, Director 21,100<F6> 4.2%
Jack H. Walters, Director 3,608<F7> *
L. Keith Wolfe, Director 2,860<F8> *
All of the eight directors and each of 43,415 8.7%
the two executive officers of the
Company, as a group
* Denotes less than 1% of class
________________________
[FN]
<F1> Includes 940 shares owned directly and 898 shares owned
jointly with his wife.
<F2> Includes 3,072 shares owned directly, and 2,269 shares held by
his wife over which he holds no voting or dispositive powers.
<F3> Includes 100 shares owned directly and 7,640 shares held by
his wife over which he holds no voting or dispositive powers.
<F4> Includes 100 shares owned directly and 12 shares held by his
wife over which he holds no voting or dispositive powers.
<F5> Includes 816 shares owned directly.
<F6> Includes 11,000 shares owned directly and 10,000 shares owned
by his wife over which he holds no voting or dispositive
powers.
<F7> Includes 3,508 shares owned directly and 50 shares held as co-
guardian for each of his two minor children.
<F8> Includes 2,610 shares owned directly, 100 shares held jointly
with each of his two minor children, and 50 shares held by his
wife over which he holds no voting or dispositive powers.
PROPOSAL ONE ELECTION OF DIRECTORS
There are currently eight directors of the Board, all of whom were
elected by the shareholders of the Company at its 1997 Annual Meeting.
At the 1997 Annual Meeting, the Company's shareholders approved an
amendment to the Company's Articles of Incorporation providing for a
classified Board of Directors with staggered terms. Consequently, at the
1998 Annual Meeting, approximately one-third of the directors will be
classified as Class A directors who will serve until the 1999 Annual
Meeting, approximately one-third will be classified as Class B directors,
who will serve until the 2000 Annual Meeting, and the remaining directors
will be classified as Class C directors, and will serve until the 2001
Annual Meeting.
In the election of directors for each class, the Company's
shareholders shall have as many votes as the number of shares they own,
multiplied by the number of directors to be elected in such class. When
voting by proxy or in person at the Annual Meeting, shareholders may do
one of the following:
1. A shareholder may vote FOR all of the director nominees. If
the shareholder wishes to withhold authority as to certain nominees,
however, he may do so by writing the name of the person or persons for
whom he does not want to vote in a space provided on the proxy.
2. A shareholder may WITHHOLD AUTHORITY to vote for all of the
director nominees, in which case none of the nominees receives any of the
shareholder's vote.
3. A shareholder may CUMULATE all of his votes for one director
nominee in a class or distribute them among as many nominees for such
class as he chooses. For example, the election of three directors in a
class entitles a shareholder who owns 100 shares of stock to 300 votes.
The shareholder may vote all 300 votes for one director nominee in a
class, or may allocate his votes among two or more of the nominees in the
class. Shareholders wishing to cumulate their vote on the enclosed proxy
should direct that their votes be cumulated on behalf of the directors
for whom they vote by writing the name of the director or directors in
the space provided on the proxy and indicating the number of votes to be
cast for each such director.
It is the intention of the persons named as proxies in the
accompanying form of proxy, unless instructed otherwise, to vote for the
election of all of the nominees for directors set forth below. If any
nominee should become unavailable to serve, the proxy may be voted for
the election of a substitute nominee designated by the Board. The Board
has no reason to believe any of the nominees will be unable to serve if
elected.
The Board recommends for election each of the nominees set forth below.
INFORMATION CONCERNING NOMINEES
The following information, including the principal occupation during
the past five years, is given with respect to the nominees for election
to the Board at the Annual Meeting.
<TABLE>
<CAPTION>
Name and Position Director Principal Occupation
with the Company Age Since During the Last Five Years
- ---------------- --- ------- --------------------------
CLASS A DIRECTORS
(to serve until the 1999 annual meeting of shareholders)
<S> <C> <C> <C>
John G. VanMeter 60 5/85 Attorney at Law; Partner, VanMeter & VanMeter
Chairman of the Board
Courtney R. Tusing 72 8/95 Retired; President and Chairman of the Board
of First United National Bank & Trust and
First United Corp.
CLASS B DIRECTORS
(to serve until the 2000 annual meeting of shareholders)
Thomas B. McNeil, Sr. 71 4/97 Chairman of the Board of Capon Valley Bank
since July 1995; Retired Insurance Agent
L. Keith Wolfe 71 5/85 Owner of Petersburg Motor Company
Clarence E. Porter 49 4/92 President and Chief Executive Officer of The
Secretary/Treasurer Grant County Bank since August 1991; Vice
President of The Grant County Bank from
August 1988 until August 1991
CLASS C DIRECTORS
(to serve until the 2001 annual meeting of shareholders)
Jack H. Walters 50 7/87 Attorney at Law; Partner, Walters & Krauskopf
Leslie A. Barr 60 7/87 President and Chief Executive Officer of
President Capon Valley Bank since August 1985
George B. Moomau 77 5/85 Chairman of the Board of The Grant County
Bank since October 1988; prior thereto,
President of The Grant County Bank
</TABLE>
Board Meetings and Compensation
The Board met 12 times during 1997. Each director attended at least
75% of the aggregate of (i) the total number of meetings held by the
Board and (ii) the total number of meetings held by the committee on
which the director served. Directors received $250.00 for attending
Board meetings, and $100.00 for attending committee meetings not held in
conjunction with Board meetings. For 1997, the Company had a
Compensation Committee which consisted of John G. VanMeter, Jack H.
Walters, L. Keith Wolfe, and Courtney R. Tusing, and which met one time
during 1997. The Compensation Committee reviews and recommends to the
Board salaries for the executive officers of the subsidiary banks for the
upcoming year. The Company did not have a standing audit or nominating
committee.
Certain Related Transactions
Loans made by the Grant County Bank and Capon Valley Bank to
director nominees and their affiliates were made in the ordinary course
of business, were made on substantially the same terms, including
interest rates and collateral as those prevailing at the time for
comparable transactions with other persons, and did not involve more than
the normal risk of collectibility or present other unfavorable features.
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth the compensation of
the Chief Executive Officer of The Grant County Bank and Capon Valley
Bank, the Company's two wholly-owned bank subsidiaries, for the last
three years.
<TABLE>
Summary Compensation Table
<CAPTION>
Other
Name and Annual Compensation Compensation<F2>
------------------- ------------
Principal Position Year Salary($)<F1> Bonus($) ($)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Clarence E. Porter
Secretary/Treasurer of Company; 1997 $93,425 $ 0 $ 0
President and Chief Executive 1996 88,833 0 5,328
Officer of The Grant County Bank 1995 82,719 0 2,444
Leslie A. Barr
President of Company; 1997 $92,025 $ 0 $12,655
President and Chief Executive 1996 79,706 6,467 12,040
Officer of Capon Valley Bank 1995 73,925 6,050 7,265
</TABLE>
________________________
[FN]
<F1> Includes base salary and director fees. For the last fiscal
year, Mr. Porter received a base salary of $83,000 from Grant
County Bank, and Mr. Barr received $83,000 from Capon Valley
Bank. Mr. Porter earned director fees of $2,250 from the
Company and $8,175 from Grant County Bank; Mr. Barr earned
director fees of $2,250 from the Company and $6,775 from Capon
Valley Bank.
<F2> Includes Capon Valley Bank's contribution to the Capon Valley
Bank Profit Sharing 401(k) Plan on behalf of Mr. Barr of
$12,655.
PROPOSAL TWO APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
S. B. Hoover and Company, L.L.P. of Harrisonburg, Virginia, were
auditors for 1997 and are being recommended to the Company's shareholders
for appointment as auditors for 1998. A representative of S. B. Hoover
and Company is expected to attend the Annual Meeting with the opportunity
to make a statement or to respond to appropriate questions from
shareholders.
The Board recommends that shareholders vote "FOR" Proposal Two.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's
1999 Annual Meeting must be received by the Secretary of the Company, at
its principal executive offices, 3 North Main Street, Petersburg, West
Virginia 26847, for inclusion in its Proxy Statement relating to the
meeting, by November 20, 1998.
By Order of the Board of Directors
Clarence E. Porter
Corporate Secretary
March 20, 1998
