<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Exchange Act Rule 14a-11(c) or 14a012
HERITAGE FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each part to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
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2) Aggregate number of securities to which the transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset 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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Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
[HERITAGE FINANCIAL CORPORATION LETTERHEAD]
September 27, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Heritage
Financial Corporation (the "Company"), I cordially invite you to attend the
Annual Meeting of Stockholders. The meeting will be held at 10:00 a.m. on
October 29, 1996 at the Elks Lodge located at 519 12th Street, Lawrenceville,
Illinois.
In addition to the annual stockholder vote on corporate business items,
the meeting will include management's report to you on the Company's 1996
financial and operating performance.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. This year stockholders are being asked to
vote on the election of two directors, ratification of an amendment to the
certificate of incorporation to change the name of the Company to
HBancorporation, Inc., and the ratification of the appointment of independent
auditors. The Board of Directors unanimously recommends that you vote for each
of the proposals.
I encourage you to attend the meeting in person. Whether or not you
attend the meeting, I hope that you will read the enclosed Proxy Statement and
then complete, sign and date the enclosed proxy card and return it in the
postage prepaid envelope provided. This will save Heritage Financial Corporation
additional expense in soliciting proxies and will ensure that your shares are
represented. Please note that you may vote in person at the meeting even if you
have previously returned the proxy.
Thank you for your attention to this important matter.
Sincerely,
/s/ KEVIN J. KAVANAUGH
----------------------------------------
KEVIN J. KAVANAUGH
President and Chief Executive Officer
<PAGE>
Heritage Financial Corporation
619 12th Street
Lawrenceville, Illinois 62439
(618) 943-2515
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 29, 1996
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Heritage Financial Corporation (the "Company") will be held at the
Elks Lodge located at 519 12th Street, Lawrenceville, Illinois at 10:00 a.m.,
Lawrenceville, Illinois time, on October 29, 1996.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of an amendment to the Company's Certificate of
Incorporation to change the name of the Company to HBancorporation,
Inc.; and
3. The ratification of the appointment of Kemper CPA Group, L.L.C., as
auditors of the Company for the fiscal year ending June 30, 1997;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on September 17, 1996
are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kevin J. Kavanaugh
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Kevin J. Kavanaugh
President and Chief Executive Officer
Lawrenceville, Illinois
September 27, 1996
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
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<PAGE>
PROXY STATEMENT
Heritage Financial Corporation
619 12th Street
Lawrenceville, Illinois 62439
(618) 943-2515
ANNUAL MEETING OF STOCKHOLDERS
October 29, 1996
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Heritage Financial Corporation (the
"Company"), the parent company of Heritage National Bank (the "Bank"), of
proxies to be used at the Annual Meeting of Stockholders of the Company (the
"Meeting") which will be held at the Elks Lodge located at 519 12th Street,
Lawrenceville, Illinois on October 29, 1996, at 10:00 a.m., Lawrenceville,
Illinois time, and all adjournments of the Meeting. The accompanying Notice of
Annual Meeting and this Proxy Statement are first being mailed to stockholders
on or about September 27, 1996.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the election of two directors, ratification of an amendment to the
Company's Certificate of Incorporation to change the name of the Company to
HBancorporation, Inc., and the appointment of Kemper CPA Group, L.L.C. as
auditors for the Company.
Vote Required and Proxy Information
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the director nominee and
the proposals set forth in this Proxy Statement. The Company does not know of
any matters, other than as described in the Notice of Annual Meeting, that are
to come before the Meeting. If any other matters are properly presented at the
Meeting for action, the persons named in the enclosed form of proxy and acting
thereunder will have the discretion to vote on such matters in accordance with
their best judgment.
The directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. The amendment of the Company's certificate of
incorporation and the appointment of Kemper CPA Group, L.L.C. as auditors
requires the affirmative vote of a majority of shares present in person or
represented by proxy at the Meeting and entitled to vote on the matter. Proxies
marked to abstain with respect to a proposal have the same effect as votes
against the proposal. Broker non-votes have no effect on the vote. One-third of
the shares of the Common Stock, present in person or represented by proxy, shall
constitute a quorum for purposes of the Meeting. Abstentions and broker
non-votes are counted for purposes of determining a quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Secretary,
Heritage Financial Corporation, 619 12th Street, Lawrenceville, Illinois 62439.
1
<PAGE>
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on September 17,
1996 will be entitled to one vote for each share of Common Stock then held. As
of that date, the Company had 493,320 shares of Common Stock issued and
outstanding. The following table sets forth information regarding share
ownership of those persons or entities known by management to beneficially own
more than five percent of the Common Stock and all directors and executive
officers of the Company and the Bank as a group.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Beneficial Owner Owned of Class
- -------------------------------------------------------------- ------------ --------
<S> <C> <C>
Heritage Financial Corporation Employee Stock Ownership Plan 39,465(1) 8.0%
619 12th Street
Lawrenceville, Illinois 62439
Kevin J. Kavanaugh 17,150 3.5
President and Chief Executive Officer
Heritage Financial Corporation
619 12th Street
Lawrenceville, Illinois 62439
Jeffrey S. Halis 49,000 9.9
500 Park Avenue
Fifth Floor
New York, New York 10022(3)
Santa Monica Partners, L.P. 32,350 6.6
2 Madison Avenue
Larchmont, New York 10538(4)
Directors and executive officers of the Company and the Bank, 67,150(2) 13.6
as a group (6 persons)
</TABLE>
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(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), 1,981 of which have been allocated to accounts of
participants. First Bankers Trust Company, N.A., Quincy, Illinois, the
trustee of the ESOP, may be deemed to beneficially own the shares held by
the ESOP which have not been allocated to accounts of participants.
Participants in the ESOP are entitled to instruct the trustee as to the
voting of shares allocated to their accounts under the ESOP. Unallocated
shares held in the ESOP's suspense account or allocated shares for which no
voting instructions are received are voted by the trustee in the same
proportion as allocated shares voted by participants.
(2) Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares allocated to the
ESOP accounts of the group members, held in a fiduciary capacity or by
certain family members, with respect to which shares the group members may
be deemed to have sole voting and/or investment power.
(3) As reported on Schedule 13D dated April 1, 1996.
(4) As reported on Schedule 13D dated May 10, 1996.
2
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of six members,
each of whom is also a director of the Bank. Directors of the Company are
generally elected to serve for a three-year term or until their respective
successors shall have been elected and shall qualify. Approximately one-third of
the directors are elected annually.
The following table sets forth certain information regarding the
Company's Board of Directors, including their terms of office and the nominees
for election as directors. It is intended that the proxies solicited on behalf
of the Board of Directors (other than proxies in which the vote is withheld as
to the nominees) will be voted at the Meeting for the election of the nominees
identified in the following table. If such nominees are unable to serve, the
shares represented by all such proxies will be voted for the election of such
substitutes as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why the nominees might be unable to serve, if
elected. Except as described herein, there are no arrangements or understandings
between any director or nominee and any other person pursuant to which such
director or nominee was selected.
<TABLE>
<CAPTION>
Shares of Common
Term Stock Beneficially Percent
Director to Owned at of
Name Age Position(s) Held Since(1) Expire September 17, 1996(2) Class
- --------------------------- -------------------------------- --------- -------- --------------------- -------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
--------
Robert R. Ernst 73 Director 1983 1999 5,000 1.0%
James W. Steed 66 Director 1983 1999 10,000 2.0
DIRECTORS CONTINUING IN OFFICE
------------------------------
John H. White 68 Director 1979 1997 10,000 2.0
L. Patrick Kavanaugh 61 Director 1995 1997 15,000 3.0
Kevin J. Kavanaugh 42 Chairman of the Board, President
and Chief Executive Officer 1987 1998 17,150 3.5
Mary E. Denison 74 Director 1954 1998 10,000 2.0
</TABLE>
- --------------------------
(1) Includes service as a director of the Bank.
(2) Includes shares held directly, as well as, shares held in retirement
accounts, shares allocated to the ESOP accounts of certain of the named
persons, held by certain members of the named individuals' families, or held
by trusts of which the named individual is a trustee or substantial
beneficiary, with respect to which shares the named individuals may be
deemed to have sole voting and/or investment power.
The business experience of each director and director nominee is set
forth below. All directors have held their present positions for at least the
past five years, except as otherwise indicated.
Robert R. Ernst. Mr. Ernst is currently retired. From 1941 to his
retirement, Mr. Ernst was employed by Marathon Pipeline and Marathon Oil
Company. At the time of his retirement, Mr. Ernst was the general foreman of the
Tri-State Region of Marathon Pipeline.
James W. Steed. Mr. Steed is currently retired. From 1956 to his
retirement, Mr. Steed was a marketing representative for LPG Gas Division of
Texaco, Inc.
John H. White. Mr. White is currently retired. From 1942 to his
retirement, Mr. White was owner of White Construction Company, Lawrenceville,
Illinois.
L. Patrick Kavanaugh. Mr. Kavanaugh is Chairman and Vice President of
Emulsion, Inc., a position he has held since 1951. Mr. Kavanaugh is the uncle of
Kevin J. Kavanaugh.
3
<PAGE>
Kevin J. Kavanaugh. Mr. Kavanaugh is President and Chief Executive
Officer of the Company and the Bank. He has held his positions with the Company
since its formation in 1995 and with the Bank since 1983. Mr. Kavanaugh is the
nephew of L. Patrick Kavanaugh.
Mary E. Denison. Ms. Denison is currently retired. From 1957 to her
retirement in 1983, Ms. Denison served as the Managing Officer of the Bank.
There are no executive officers of the Bank that are not also directors
of the Bank.
Board of Directors' Meetings and Committees
Board and Committee Meetings of the Company. Meetings of the Company's
Board of Directors are generally held on a monthly basis. The Board of Directors
of the Company held four meetings during the year ended June 30, 1996. No
incumbent director attended fewer than 75% of the total number of meetings held
by the Board of Directors and by all committees of the Board of Directors on
which he served during the year.
The Board of Directors of the Company has standing Audit of Finance and
Compensation Committees.
The Audit of Finance Committee is composed of outside Directors Ernst,
Denison, Steed, White and L.P. Kavanaugh to review the Bank's annual audit
report prepared by the Bank's independent auditors. The review includes a
detailed discussion with the auditors before and after the issuance of the
annual audit report, and a recommendation to the full board concerning any
action to be taken with respect to the audit.
The Compensation Committee establishes the Company's compensation
policies and reviews compensation matters. The current members of this Committee
are Directors Steed, Denison and L.P. Kavanaugh. The committee held one meeting
during fiscal 1996.
The entire Board of Directors acts as the Nominating Committee to
select candidates for membership in the Company's Board.
Board and Committee Meetings of the Bank. The Bank's Board of Directors
meets at least monthly. During the fiscal year ended June 30, 1996, the Board of
Directors held 13 meetings. No director attended fewer than 75% of the total
meetings of the Board of Directors and committees on which such Board member
served during this period.
The Bank has standing Appraisal and Executive, Investment, Advertising,
Purchasing and Audit of Finance Committees.
The Appraisal and Executive Committee, composed of Directors White,
Steed and K. Kavanaugh reviews appraisal policies and procedures, and meets as
needed to act on matters which require attention between meetings of the Board
of Directors and possesses the powers of the full Board of Directors between
meetings of the Board. This committee met 12 times during fiscal 1996.
The Investment Committee, composed of Directors K. Kavanaugh, White,
Ernst and Denison reviews investment policies and procedures. This committee met
12 times during fiscal 1996.
The Advertising Committee, composed of Directors Denison, L. P.
Kavanaugh, K. Kavanaugh and Ernst reviews the Bank's advertising budget. This
committee met 12 times during fiscal 1996.
The Purchasing Committee, composed of Directors Steed, White, Denison,
L. P. Kavanaugh and K. Kavanaugh reviews and approves major purchases by the
Bank. This Committee met 12 times during fiscal 1996.
The entire Board of Directors acts as the Nominating Committee to
select candidates for membership in the Bank's Board of Directors.
4
<PAGE>
Director Compensation
The Board of Directors of the Company are not paid for their service in
such capacity. Compensation of the Bank's directors is described below.
Each director of the Bank is currently paid a fee of $300 for each
regular or special meeting attended. Directors do not receive compensation for
committee participation.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of businesses other than the Bank.
The following table sets forth information concerning the compensation
paid or accrued by the Bank for services rendered by the Bank's Chief Executive
Officer. No executive officer of the Bank had aggregate compensation (salary
plus bonus) in excess of $100,000 in fiscal 1996.
<TABLE>
<CAPTION>
=======================================================================================================================
Summary Compensation Table
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Long-Term Compensation
Annual Compensation Awards
- -----------------------------------------------------------------------------------------------------------------------
Other Annual Restricted All Other
Fiscal Salary Bonus Compensation Stock Options/ Compensation
Name and Principal Position Year ($)(1) ($) ($) Award ($) SARs (#) ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kevin J. Kavanaugh, 1996 $75,924 $7,051 $ --- --- --- $14,285(2)
President and Chief 1995 $74,591 $8,280 $ --- --- --- $14,210(3)
Executive Officer 1994 $69,972 $9,269 $ --- --- --- $13,804(4)
=======================================================================================================================
</TABLE>
(1) Includes $3,600 in fees received as a director in fiscal years 1996 and 1995
and $3,000 in fees as a director in fiscal year 1994.
(2) Includes $2,319 of life, health and disability premiums paid by the Bank and
$11,891 paid by the Bank in discretionary contributions pursuant to the
Bank's Simplified Employee Pension.
(3) Includes $2,379 of life, health and disability premiums paid by the Bank and
$11,906 paid by the Bank in discretionary contributions pursuant to the
Bank's Simplified Employee Pension.
(4) Includes $2,368 of life, health and disability premiums paid by the Bank and
$11,436 paid by the Bank in discretionary contributions pursuant to the
Bank's Simplified Employee Pension.
Employment Agreement
The Bank has entered into an employment agreement with President
Kavanaugh. The employment agreement is designed to assist the Bank in
maintaining a stable and competent management team. The continued success of the
Bank depends to a significant degree on the skills and competence of its
officers. The employment agreement provides for an annual base salary in an
amount not less than the employee's current salary and an initial term of three
years. The agreement provides for extensions of one year, in addition to the
then-remaining term under the agreement, on each anniversary of the effective
date of the agreement, subject to a formal performance evaluation performed by
disinterested members of the Board of Directors of the Bank. The agreement
provides for termination upon the employee's death, for cause or in certain
events specified by the agreement. The employment agreement is terminable by the
employee upon 90 days' notice to the Bank.
5
<PAGE>
The employment agreement provides for continued health benefits for the
remaining term of the agreement and payment to the employee of 299% of the
employee's base amount of compensation in the event there is a "change in
control" of the Bank where employment terminates involuntarily in connection
with such change in control or within 12 months thereafter. This termination
payment is subject to reduction in order to avoid certain adverse tax
consequences. For the purposes of the employment agreement, a "change in
control" is defined as including any event which would require the filing of an
application for acquisition of control or notice of change in control pursuant
to federal law or regulation. Such events are generally triggered prior to the
acquisition or control of 10% of the Common Stock. The agreement guarantees
participation in an equitable manner in employee benefits applicable to
executive personnel.
Based on his current salary, if Mr. Kavanaugh's employment had been
terminated as of June 30, 1996, under circumstances entitling him to severance
pay as described above, he would have been entitled to receive a lump sum cash
payment of approximately $240,000.
Certain Transactions
The Bank has followed a policy of granting loans to officers, directors
and employees. Loans to directors and executive officers are made in the
ordinary course of business and on the same terms and conditions as those of
comparable transactions with the general public prevailing at the time, in
accordance with the Bank's underwriting guidelines, and do not involve more than
the normal risk of collectibility or present other unfavorable features.
All loans by the Bank to its directors and executive officers are
subject to OCC regulations restricting loan and other transactions with
affiliated persons of the Bank. Federal law currently requires that all loans to
directors and executive officers be made on terms and conditions comparable to
those for similar transactions with non-affiliates. Loans to all directors,
executive officers, employees and their associates totaled $195,481 at June 30,
1996, which was 3.4% of the Bank's equity capital at that date. There were no
loans outstanding to any director, executive officer or their affiliates at
preferential rates or terms which in the aggregate exceeded $60,000 during the
three years ended June 30, 1996. All loans to directors and officers were
performing in accordance with their terms at June 30, 1996.
PROPOSAL II - AMENDMENT TO CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has approved, subject to
stockholder ratification, an amendment to the First Section of the Company's
certificate of incorporation to change the name of the Company to
HBancorporation, Inc. The amendment will not effect any other provisions of the
certificate of incorporation. The Board of Directors believes that the new name
will better reflect the Company's status as a bank holding company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
CHANGE THE NAME OF THE COMPANY TO HBANCORPORATION, INC.
PROPOSAL III - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Kemper CPA Group,
L.L.C., independent accountants, to be the Company's auditors for the fiscal
year ending June 30, 1997. Representatives of Kemper CPA Group, L.L.C., are
expected to attend the Meeting to respond to appropriate questions and to make a
statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KEMPER CPA GROUP, L.L.C., AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1997.
6
<PAGE>
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next annual meeting of stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's office located at 619
12th Street, Lawrenceville, Illinois 62439, no later than May 31, 1997. Any such
proposal shall be subject to the requirements of the proxy rules adopted under
the Exchange Act.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
Lawrenceville, Illinois
September 27, 1996
7
<PAGE>
REVOCABLE PROXY
HERITAGE FINANCIAL CORPORATION
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
October 29, 1996
The undersigned hereby appoints the Board of Directors of Heritage
Financial Corporation (the "Company"), with full powers of substitution, to act
as attorneys and proxies for the undersigned to vote all shares of capital stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting") to be held at the Elks Lodge located at 519 12th
Street, Lawrenceville, Illinois, on October 29, 1996 at 10:00 a.m. and at any
and all adjournments and postponements thereof.
----------------------------------
Please be sure to sign and date Date
this Proxy in the box below
- -------------------------------------------------------------------------------
- -----Stockholder sign above------------------Co-holder (if any) sign above-----
Vote
For Withheld
I. The election as directors of all nominees / / / /
listed below (except as marked to the
contrary)
INSTRUCTION: To withhold your vote for
any individual nominee, strike a line
in that nominee's name below.
ROBERT R. ERNST AND JAMES W. STEED
II. The ratification of the amendment of the For Against Abstain
Certificate of Incorporation of the Company / / / / / /
to change its name to HBancorporation, Inc.
III. The ratification of the appointment of / / / / / /
Kemper CPA Group, L.L.C. as auditors of
the Company for the fiscal year ending
June 30, 1997.
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS AND THE NOMINEE
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" each of the proposals
and the election of the nominee listed above.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Please sign exactly as your name(s) Appear(s) to the left. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
<PAGE>
Detach above card, sign, date and mail in postage paid envelope provided.
Should the undersigned be present and choose to vote at the Meeting or
at any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
- --------------------------------------------------------------------------------
