UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 14-A-6 (E) (2) )
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11 ( c) or (S) 240.14a-12
Heritage 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 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:
-----------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
Heritage Bankshares, Inc.
200 East Plume Street
Norfolk, Virginia 23510
Telephone (757) 523-2600
April 20, 2001
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Heritage Bankshares, Inc. to be held on Tuesday, May 22, 2001, at 11:00 a.m.
This year the meeting will be held at the Heritage Bank & Trust, Ocean
View Branch, 735 East Ocean View Avenue, Norfolk, Virginia 23503.
The purposes of this meeting are set forth in the enclosed proxy
statement. In addition, we will present a report on the activities of the
Corporation and give you an opportunity to ask questions of your Management and
Directors.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU CAN BE SURE YOUR SHARES ARE
REPRESENTED AT THE MEETING BY PROMPTLY COMPLETING, SIGNING AND RETURNING YOUR
PROXY FORM.
Sincerely,
Robert J. Keogh Peter M. Meredith, Jr.
President Chairman of the Board
HERITAGE BANKSHARES, INC.
200 East Plume Street o Norfolk, Virginia 23510
Telephone (757) 523-2600
(Mailing Address of Principal Executive Offices)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 2001
The Annual Meeting of the Stockholders of Heritage Bankshares, Inc.,
will be held at the Heritage Bank & Trust, Ocean View Branch, 735 East Ocean
View Avenue, Norfolk, Virginia, at 11:00 a.m. local time on Tuesday, May 22,
2001, for the following purposes:
(1) To elect four directors for a term of three years: James
A. Cummings, Robert J. Keogh, Peter M. Meredith, Jr., Harvey W.
Roberts, III
(2) To ratify the appointment by the Board of Directors of
Witt, Mares & Company, PLC as independent accountants of the
Corporation for the year ending December 31, 2001;
(3) To transact such other business as may properly come
before the meeting.
Stockholders of record at the close of business on March 22, 2001, are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
Be it further advised that Stockholders are simultaneously being furnished with
a copy of the Annual Report for the year ending December 31, 2000.
By order of the Board of Directors,
Robert J. Keogh Peter M. Meredith, Jr.
President Chairman of the Board
Norfolk Virginia
April 20, 2001
IMPORTANT NOTICE:
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD. NO POSTAGE IS NECESSARY IF
MAILED IN THE UNITED STATES. ANY PERSON GIVING A PROXY HAS THE POWER TO REVOKE
IT AT ANY TIME, AND STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW
THEIR PROXIES AND VOTE IN PERSON.
HERITAGE BANKSHARES, INC.
200 East Plume Street o Norfolk, Virginia 23510
Telephone (757) 523-2600
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation
by the management of Heritage Bankshares, Inc., (hereinafter referred to as the
"Corporation"), on behalf of the Board of Directors, of proxies to be voted at
the Annual Meeting of Stockholders of the Corporation to be held May 22, 2001,
or any adjournment thereof. The cost of this solicitation will be borne by the
Corporation. Proxies may be solicited by regular employees of the corporation or
its subsidiary at a nominal cost by telephone or visit and brokers and nominees
will be reimbursed for their expenses in soliciting proxies from beneficial
owners.
All properly executed proxies in the accompanying form received by the
Corporation prior to the meeting will be voted at the meeting in accordance with
any direction noted thereon. Any proxy may be revoked at any time before it is
exercised.
As of March 22, 2001, the record date for the determination of
stockholders entitled to notice of and to vote at the meeting, there were
775,325 shares of common stock of the Corporation issued and outstanding. Each
share is entitled to one vote on all matters that may come before the meeting.
This proxy statement and the enclosed form of proxy are first being sent to
stockholders on or about April 20, 2001.
With respect to any action to be taken at the Annual Meeting, other
than the election of directors (which election will be determined by a plurality
of votes cast), the affirmative rate of a majority of those shares present and
voting on the action will be required.
The Corporation will provide without charge, on the written request of
any stockholder, a copy of its annual report for the fiscal year ended December
31, 2000, or Form 10-K, including the financial statements and the schedules
attached thereto, which report has been filed with the Securities and Exchange
Commission. Stockholders of record on March 22, 2001, and beneficial owners of
such securities should submit requests for this report to Catherine P. Jackson,
Chief Operating Officer, Corporate Finance, 1450 South Military Highway, Suite
l, Chesapeake, Virginia 23320.
PERSONS OWNING IN EXCESS OF FIVE PERCENT
OF OUTSTANDING COMMON STOCK
Set forth in the table below is information as of March 22, 2001, with
respect to persons known to the Company to be the beneficial owners of more than
five percent of the Corporation's issued and outstanding common stock:
Number of Shares
Of Common Stock
Name and Address Beneficially Owned Percent of Class
---------------- ------------------ ----------------
Peter M. Meredith, Jr. 46,626 6.01%
5320 Edgewater Dr.
Norfolk, Virginia 23508
(1) Includes 10,960 shares held by Meredith Realty Company, L.L.C., 13,808
shares held by Pomar Holding, L.L.C. and 3,000 shares held by Meredith Realty
Associates.
ELECTION OF DIRECTORS
The bylaws currently provide for fourteen directors. The terms of James
A. Cummings, Robert J. Keogh, Peter M. Meredith, Jr., and Harvey W. Roberts, III
expire at this meeting.
The Nominating Committee at its meeting on January 24, 2001,
recommended the hereinafter listed nominees to serve as directors of the
Corporation.
It is the intention of the persons named in the accompanying form of
proxy, unless stockholders specify otherwise by their proxies, to vote for the
election of the nominees named below. Although the Board of Directors does not
expect that any of the persons named will be unable to serve as a director,
should any of them be unable to accept nomination or election, it is intended
that shares represented by the accompanying form of proxy will be voted by the
proxy holders for such other person or persons as may be designated by the
present Board of Directors.
Certain information concerning the nominees is set forth as furnished
by them.
NOMINEES
Shares of the Corporation
Owned Beneficially,
Directly or Indirectly, on
Principal Occupation March 22, 2001(1), and %
or Employment of Outstanding Shares
During Last Five Years --------------------------
Class I (to serve until the 2004 Director Common
Name Age Annual Meeting of Stockholders) Since Stock
---- --- ------------------------------- ----- -----
James A. Cummings 58 President, 1992 6,128 (2)
2073 Thomas Bishop Lane Southern Atlantic Label Company, Inc. 0.79%
Virginia Beach, VA 23454
Robert J. Keogh 52 President and Chief Executive Officer, 1988 45,995 (3)
6146 Sylvan Street Heritage Bank & Trust 5.93%
Norfolk, VA 23508
Peter M. Meredith, Jr. 49 Chairman and Chief Executive Officer, 1992 46,626 (4)
5320 Edgewater Drive Meredith Construction Company, Inc. 6.01%
Norfolk, VA 23508
Harvey W. Roberts, III 56 Certified Public Accountant 1993 29,792 (5)
7612 North Shore Road McPhillips, Roberts & Deans, PLC 3.84%
Norfolk, VA 23508
(1) In calculating the number of shares of common stock which are beneficially
owned (and thus the percentage of common stock beneficially owned) a person is
deemed to own common stock if that person has the right to acquire beneficial
ownership of common stock within sixty (60) days through the exercise of any
option, warrant or right, or through the conversion of any security.
(2) Includes 1,500 shares owned jointly with his wife. Also includes 3,765
shares owned by Scott & Stringfellow for Mr. Cummings.
(3) Includes (a) 1,335 shares owned jointly with his wife and (b) 37,300
issuable upon exercise of options to purchase shares pursuant to the Stock
Option Plan for employees of the Company. See "Compensation Pursuant to Plans."
(4) Includes (a) 10,960 shares held as Meredith Realty Company, LLC., (b) 13,808
shares held as Pomar Holding, LLC and (c) 3,000 shares held as Meredith Realty
Associates.
(5) Includes (a) 17,280 shares owned by his wife and (b) 3,000 shares owned
jointly with his wife.
OTHER DIRECTORS
Shares of the Corporation
Owned Beneficially,
Directly or Indirectly, on
March 22, 2001, and %
of Outstanding Shares
Principal Occupation --------------------------
or Employment Director Common
Name Age During Last Five Years Since Stock
- ---- --- ---------------------- ----- -----
Lisa F. Chandler 46 Executive Vice President, 1998 642
6127 Studeley Avenue Nancy Chandler Associates, Inc. 0.08%
Norfolk, VA 23508
F. Dudley Fulton 52 President and Chief Executive Officer, 1991 5,300
5306 Lakeside Avenue Henderson & Phillips/USI 0.68%
Virginia Beach, VA 23451
Henry U. Harris, III 49 President, 1992 31,305 (1)
1503 North Shore Road Virginia Investment Counselors, Inc. 4.04%
Norfolk, VA 23505
Stephen A. Johnsen 55 President and Chief Executive Officer, 1988 3,618 (2)
P.O. Box 48 Flagship Group, Ltd. 0.47%
Pungoteague, VA 23422
Gerald L. Parks 67 Chairman and Chief Executive Officer, 1987 5,195 (3)
27307 Evergreen Lane Capes Shipping Agencies, Inc. 0.67%
Harborton, VA 23389
Ross C. Reeves 52 Attorney, 1994 4,142 (4)
1068 Algonquin Road Willcox & Savage, P.C. 0.53%
Norfolk, VA 23505
(1) Includes (a) 3,555 shares owned jointly with his wife. Also included (b)
4,249 shares held as custodian for others.
(2) Includes 1,650 owned jointly with his wife.
(3) Includes 4,614 shares owned jointly with his wife.
(4) Includes 3,142 shares held as custodian for others.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Corporation has standing Executive, Compensation and Audit
Committees and a specially appointed Nominating Committee. The members of the
Nominating Committee are Henry U. Harris, III, Chairman, Ross C. Reeves, Harvey
W. Roberts, III, Peter M. Meredith, Jr., and Robert J. Keogh. The Executive
Committee of the Corporation periodically performs certain duties that the
Nominating Committee would perform. The Nominating Committee will receive and
consider nominations recommended by the Stockholders provided: (a) the
nominations are made in writing, (b) the nominee is notified in advance of such
recommended nomination, and (c) the nominee agrees in advance to serve if
elected.
The Board of Directors held twelve meetings during the year ending
December 31, 2000. During such year each of the Directors attended at least 75
percent of the aggregate of the total number of meetings of the Board and the
total number of meetings held by all committees of the Board on which he served.
Compensation of Directors. Directors of the Corporation and Directors
of Heritage Bank & Trust receive $400 for each Board of Directors meeting
attended and $100 for each committee meeting attended.
The members of the Executive Committee appointed in 2000 and still
serving in that capacity are Peter M. Meredith, Jr., Chairman, Henry U. Harris,
III, Stephen A. Johnsen, Harvey W. Roberts, III, and Robert J. Keogh. The
Executive Committee met one or more times during the year ended December 31,
2000. The 2000 Compensation Committee members were F. Dudley Fulton, Chairman,
Peter M. Meredith, Jr., Stephen A. Johnsen, Gerald L. Parks, and Robert J.
Keogh. They met one or more times during the year ended December 31, 2000.
Audit Committee Report
The Company's Audit Committee currently has three members, Harvey W.
Roberts, III, Chairman, Ross C. Reeves and Henry U. Harris, III. Each of the
members of the Audit Committee is an "independent director" under the rules of
the national Association of Securities Dealers. The Audit Committee met three
times in the year ended December 31, 2000. The Audit Committee's
responsibilities are described in a written policy statement and charter that
was adopted by the Company's Board of Directors and is attached to this Proxy
Statement as an Appendix.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2000 with the
company's management. The Audit committee has discussed with Goodman & Company,
LLP, the Company's independent accountants, the matters required to be discussed
by SAS 61, Communication With Audit Committees. The Audit Committee has received
the written disclosures and the letter from Goodman & Company, LLP required by
Independence Standards Board Standard No.1, Independence Discussions with Audit
Committees, and has discussed with Goodman & Company, LLP the independence of
Goodman & Company, LLP. Based on the review and discussions described in this
paragraph, the Audit Committee recommended to the Company's Board of Directors
that the Company's audited financial statements for the year ended December 31,
2000 be included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 for filing with Securities and Exchange Commission.
Auditor Fee Information
Audit Fees. The aggregate fees billed by Goodman & Company, LLP for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2000 and the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that fiscal year was $41,350.00.
Financial Information Systems Design and Implementation Fees/All Other
Fees. There were no fees billed by Goodman & Company, LLP for professional
services related to financial information systems design and implementation for
the Company or any other fees for the fiscal year ended December 31, 2000.
The Audit Committee of the Board of Directors has considered whether
the provision of the services covered by "Financial Information Systems Design
and Implementation Fees" and "All Other Fees" is compatible with maintaining the
independence of Goodman & Company, LLP.
COMPENSATION OF EXECUTIVE OFFICER
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and ------------------- Other Stock
Principal Annual Options
Position Year Salary Bonus Compensation(1) Granted
- -------- ---- ------ ----- --------------- -------
Robert J. Keogh 2000 $125,000 $31,000 $4,800 1,950
President, Chief 1999 $97,190 $29,800 $4,800 3,900
Executive Officer 1998 $97,190 $34,800 $4,800 -
(1) Represents director's fees
In addition, the Company provides Mr. Keogh with an automobile.
OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES
Value of Unexercised
Shares Number of Unexercised Options In-the-money Options
Acquired at Year-End (1) at Year-End (1)
On Value --------------- ---------------
Name Exercise Realized Exercised Unexercisable Exercisable Unexercisable
- ---- -------- -------- --------- ------------- ----------- -------------
Robert J. Keogh 3,900 $21,567 37,300 4,550 $111,624 ($5,908.50)
(1) The values shown in the table are based on the $11.38 per share closing
price of the Company's Common Stock on December 31, 2000, less the exercise
price of the options.
OPTIONS GRANTED IN 2000
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base
Name Granted Fiscal Year Price ($/Sh) Expiration Date
---- ------- ----------- ------------ ---------------
Robert J. Keogh 4,500 13.60% $14.50 9/01/09
COMPENSATION PURSUANT TO PLANS
EMPLOYEE STOCK OPTION PLAN. As of December 31, 2000, stock options for
99,950 shares are outstanding and, of these shares, 79,800 are exercisable.
Options are granted and are exercisable at option prices ranging from $4.60 to
$14.50 per share.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. As of December 31, 2000, stock
options for 18,000 shares are outstanding and, of these, none are exercisable.
Options are exercisable at $12.30 per share.
DEFERRED COMPENSATION PLAN. In 1985, the Bank entered into a deferred
compensation and retirement arrangement with seven directors and one officer.
Each participant is fully vested. The Corporation's policy is to accrue the
estimated amounts to be paid under the contracts over the expected period of
active employment. The Bank has purchased life insurance contracts in order to
fund the expected liabilities under the contracts.
Upon reaching age 70, each participant will receive a retirement
benefit ranging from $391 to $3,355 per month for each of the next 120 months.
If the participant dies prior to reaching age 70, his beneficiary will begin
receiving the monthly retirement benefits. The bank has purchased life insurance
contracts in order to fund the expected liabilities under the deferred
compensation arrangements. As of December 31, 2000. Heritage Bank & Trust had
accrued $133,736 to reflect the anticipated liability.
In 1990, Robert J. Keogh, President of Heritage Bank & Trust, became a
participant in the Heritage Bank & Trust Executive Security Plan. In the event
Mr. Keogh dies before he is 65 years old, his beneficiary will receive monthly
payments of $4,167 for each of the next 180 months. Upon Mr. Keogh's retirement,
he will receive $4,167 per month for each of the next 180 months or until his
death, and thereafter, his beneficiary will receive such retirement benefits.
The Corporation intends to fund this obligation through insurance. As of
December 31, 2000, $97,470 was accrued to reflect the anticipated liabilities
under the contract.
EMPLOYEE STOCK OWNERSHIP PLAN. Effective January 1, 1998, the Board of
Directors adopted an Employees' Stock Bonus Plan (the "ESOP"). The ESOP covered
substantially all employees, whereby funds contributed were used to purchase
outstanding common stock of the Company. Contributions are allocated to the
participants based on employee/participant's annual compensation. Employee
participants in the ESOP include all employees who have completed six months of
service beginning with the effective date of the ESOP. Benefits are with respect
to the benefits under the ESOP in three years and the vested percentage
increases annually, reaching 100% after seven years. Participants are
automatically 100% vested in the ESOP upon reaching age 65, death or disability.
Participants vote all shares allocated to their respective accounts and the
trustees of the ESOP vote any unallocated shares. The Board of Directors of the
Company has the right to amend or terminate the ESOP at any time. The Company
expensed $18,000 for plan contributions for the years ended December 31, 2000
and 1999.
401K RETIREMENT PROGRAM. Effective January l, 1993, the Board of
Directors adopted a Retirement Program (the "401K"). The Corporation may
contribute cash to the 401K annually, as determined each year by the Board of
Directors. Contributions to the 401K are allocated to its participants based on
the employee/participants' contributions to the plan. Eligible participants in
the 401K include all employees who have completed six months of service (500
hours) beginning with the effective date of the 401K. Benefits will be payable
upon separation from service or upon retirement, disability or death. Employees
are 20% vested with respect to the benefits under the 401K in two years and the
vested percentage is increased annually, reaching 100% after six years.
Participants are automatically 100% vested in the 401K upon reaching age 65,
death or disability. The Corporation has the right to amend or terminate the
401K. The Corporation accrued $65,000 for a contribution to the plan as of
December 31, 200. The accrued contribution as of December 31, 1999 was $56,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Many directors of the Corporation and Heritage Bank & Trust and their
associates, including firms and corporations of which they are officers or
directors; or in which they and their immediate families have a substantial
interest, are customers of Heritage Bank & Trust. As such, they have had
transactions with the bank, including loans made in the ordinary course of
business on substantially the same terms, including interest rates, collateral
and repayment terms, as those prevailing at the time for comparable loans to
other parties. Such loans have not involved more than the normal risk of
collectibility or other unfavorable features. See related party loan and deposit
disclosures in Note 13 of the Consolidated Financial Statements.
Heritage Bank & Trust occupies 7,581 square feet of a building located
at 1450 South Military Highway in Chesapeake, Virginia. The building is owned by
IBV Partners, L.P., a Virginia limited partnership, which has as its sole
general partner IBV Real Estate Holdings, Inc., a wholly-owned subsidiary of the
Corporation. Former and current directors of Heritage Bankshares, Inc. and
Heritage Bank & Trust own an aggregate of approximately 34% of the partnership
interests. IBV Partners, L.P. and Heritage Bank & Trust entered into a lease in
December 1986, which was modified in December 1998. See disclosures regarding
the lease commitment in Note 12 of the Consolidated Financial Statements.
The Corporation and Heritage Bank & Trust purchase various types of
business insurance through the Flagship Group, LTD, of which Stephen A. Johnsen
is President. Mr. Johnsen is a director and Secretary of the Corporation.
Insurance premiums paid to the Flagship Group LTD as agent for commercial
insurance providers was $27,654 during 2000. The Bank has also sold securities
to the Flagship Group LTD under agreements to repurchase, which constitute
approximately 59% of the securities sold under agreements to repurchase at
December 31, 2000. See Note 9 of the Consolidated Financial Statements for
additional information.
Heritage Bank & Trust has retained the law firm of Willcox & Savage,
P.C. in connection with certain legal representations and expects to continue to
do so in the future. Ross C. Reeves, a director of the Corporation is an
attorney in the law firm. Fees paid to Willcox & Savage, P.C. by Heritage Bank &
Trust were $9,028 in 2000.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to ratification, the Board of Directors upon recommendation of
the Audit Committee, has appointed the firm of Witt, Mares & Company PLC,
Certified Public Accountants, One Columbus Center, Virginia Beach, Virginia
23462, as independent auditors to make an examination of the accounts of the
Corporation for the year 2001. A representative of the firm will be present at
the annual meeting and will be available to respond to appropriate questions.
Goodman & Company, L.L.P. served as the Corporation's independent
accountants and auditors from March 6, 1986 and March 28, 2001.
The Board of Directors, recommends that the shareholders vote "FOR"
such a ratification and your proxy will be so voted unless you specify
otherwise. If the shareholders do not ratify this appointment, the Board upon
recommendation of the Audit Committee will appoint other certified public
accountants.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next annual
meeting must be received by the Secretary of the Corporation no later than
December 21, 2001, in order to be included in the proxy materials for the next
annual meeting.
OTHER BUSINESS
If any other matters come before the meeting, not referred to in the
enclosed Proxy, including matters incident to the conduct of the meeting, the
Proxies will vote the shares represented by the Proxies in accordance with their
best judgment. Management is not aware of any other business to come before the
meeting as of the date of the preparation of this Proxy Statement.
By Order of the Board of Directors,
Robert J. Keogh Peter M. Meredith, Jr.
President Chairman of the Board
Norfolk, Virginia
April 20, 2001
APPENDIX
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and
its divisions and subsidiaries.
o Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the
current year and the audit procedures to be utilized, and at the
conclusion thereof review such audit, including any comments or
recommendations of the independent auditors.
o Review with the independent auditors, the company's internal
auditor, and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the
corporation, and elicit any recommendations for the improvement of
such internal control procedures or particular areas where new or
more detailed controls or procedures are desirable. Particular
emphasis should be given to the adequacy of such internal controls
to expose any payments, transactions, or procedures that might be
deemed illegal or otherwise improper. Further, the committee
periodically should review company policy statements to determine
their adherence to the code of conduct.
o Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the
proposed audit plans for the coming year, and the coordination of
such plans with the independent auditors.
o Receive prior to each meeting a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented
to the shareholders. Any changes in accounting principles should be
reviewed.
o Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the audit committee without
members of management present. Among the items to be discussed in
these meetings are the independent auditors' evaluation of the
corporation's financial, accounting, and auditing personnel, and the
cooperation that the independent auditors received during the course
of the audit.
o Submit the minutes of all meetings of the audit committee to or
discuss the matters discussed at each committee meeting with the
board of directors.
o Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this
purpose if in its judgment, that is appropriate.
PLEASE VOTE - YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting, please fill in, sign and mail the
proxy. It is Important that you return your Proxy as soon as possible to assure
that your proxy will be voted and to avoid the additional expense of further
solicitation.
HERITAGE BANKSHARES, INC.
- --------------------------------------------------------------------------------
HERITAGE BANKSHARES, INC.
Norfolk, Virginia 23510
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 2001
The undersigned hereby appoints F. Dudley Fulton, Chairman and James A.
Cummings, and each of them as proxies (and if the undersigned is a proxy, as
substitute proxies), each with the power to appoint his substitute and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of common stock of HERITAGE BANKSHARES, INC., held of record by the undersigned
on March 22, 2001, at the Annual Meeting of Stockholders to be held on May 22,
2001, or at any adjournment thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
1. ELECTION OF DIRECTORS FOR THE TERMS SPECIFIED IN THE PROXY STATEMENT
[ ] For all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
James A. Cummings, Robert J. Keogh, Peter M. Meredith, Jr., Harvey W.
Roberts, III
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below.)
------------------------------------------------------------------------
2. RATIFICATION of selection of Witt, Mares & Company, PLC as independent
accountants, as proposed in the Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business, and matters incident to the conduct of the meeting, as may
properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted for Proposal 1 and 2
PLEASE SIGN exactly as your name appears hereon. When shares are held by joint
tenants, only one of such persons need sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Please mark, sign, date and return proxy card promptly.
Date_____________________________________________, 2001
-------------------------------------------------------
Signature
-------------------------------------------------------
Signature
[ ] Will attend meeting. [ ] Will NOT attend meeting