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 14-a6 (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 transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
Heritage Bankshares, Inc.
200 East Plume Street
Norfolk, Virginia 23510
Telephone (757) 523-2600
April 21, 2003
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Heritage Bankshares, Inc. to be held on Wednesday, May 28, 2003, at 11:00 a.m.
This year the meeting will be held at the Courtyard by Marriott Hotel, 520 Plume
Street, Norfolk, Virginia 23510.
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 THE MEETING, 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
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 2003
The Annual Meeting of the Stockholders of Heritage Bankshares, Inc.,
will be held at the Courtyard by Marriott Hotel, 520 Plume Street., Norfolk,
Virginia 23510, at 11:00 a.m. local time on Wednesday, May 28, 2003, for the
following purposes:
(1) To elect four directors to the Board of Directors for three year
terms, ending in 2006;
(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, 2003; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on March 28, 2003, are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
Stockholders have been mailed a copy of our Annual Report for the year ending
December 31, 2002.
By order of the Board of Directors,
Robert J. Keogh Peter M. Meredith, Jr.
President Chairman of the Board
Norfolk Virginia
April 21, 2003
IMPORTANT NOTICE:
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL 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 BEFORE IT IS VOTED AT THE MEETING, 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 the Corporation, of
proxies to be voted at the Annual Meeting of Stockholders of the Corporation to
be held at 11:00 a.m. at the Courtyard by Marriott Hotel, 520 Plume Street,
Norfolk, Virginia 23510 on Wednesday, May 28, 2003 (the "Annual Meeting"), or
any adjournment thereof. All costs of this solicitation will be borne by the
Corporation. Proxies may be solicited by regular employees of the Corporation or
its subsidiary, Heritage Bank & Trust (sometimes hereinafter referred to as the
"Bank"), 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 Annual Meeting will be voted at the Annual Meeting in
accordance with any direction noted on the proxies. Any stockholder may revoke
its proxy at any time before it is voted at the Annual Meeting.
This proxy statement and the enclosed form of proxy are first being
sent to stockholders on or about April 21, 2003.
The Board of Directors has established March 28, 2003 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only stockholders of record as of the close of business on
March 28, 2003 are entitled to vote at the Annual Meeting, and as of that date
there were 786,025 shares of common stock of the Corporation issued and
outstanding, par value $5.00 per share. Each share is entitled to one vote on
all matters that may come before the Annual Meeting. Except for the election of
directors, the affirmative vote of a majority of those shares present and voting
(represented in person or by properly executed proxy) on the action will be
required to approve any action to be taken at the Annual Meeting. The election
of directors of the Corporation will be determined by a plurality of votes cast
(in person or by properly executed proxy). Abstentions and shares held in street
name ("Broker Shares") voted as to any matter at the Annual Meeting will be
included in determining the number of shares present or represented at the
meeting. Broker Shares that are not voted on any matter at the Annual Meeting
will not be included in determining the number of shares present or represented
at the meeting.
The Corporation will provide without charge, on the written request of
any stockholder, additional copies of its Annual Report for the fiscal year
ended December 31, 2002, on Form 10-KSB, including the financial statements and
the schedules attached thereto, which was filed with the Securities and Exchange
Commission on March 27, 2003. Stockholders of record on March 28, 2003 and
beneficial owners of such securities should submit requests for copies of the
report to Catherine P. Jackson, Chief Operating Officer, Corporate Finance, 1450
South Military Highway, Suite l, Chesapeake, Virginia 23320.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following schedule sets forth information regarding the beneficial ownership
of the Corporation's common stock as of March 24, 2003, of (i) each of the
Corporation's directors; (ii) each person known by the Corporation to be the
holder of 5% or more of the Corporation's outstanding common stock; and (iii)
all of the Corporation's directors and executive officers as a group. 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.
4
Amount Beneficially Percentage of
Name and Address of Beneficial Owner Owned Outstanding Shares
- ------------------------------------ ----- ------------------
Bank Fund V L.P. 52,039(1) 6.62%
208 S. LaSalle Street
Chicago, IL 60604
Philip W. Wyne 39,315(2) 5.00%
3456 Gamage Drive
Norfolk, VA 23518
Lisa F. Chandler 2,642(3) .34%
6127 Studeley Avenue
Norfolk, VA 23508
James A. Cummings 8,128(4) 1.03%
2073 Thomas Bishop Lane
Virginia Beach, VA 23454
F. Dudley Fulton 10,300(5) 1.31%
5306 Lakeside Avenue
Virginia Beach, VA 23454
Stephen A. Johnsen 5,618(6) 0.71%
P.O. Box 48
Pungoteague, VA 23422
Thomas G. Johnson, III 250 0.03%
1401 Old Brandon Avenue
Norfolk, VA 23507
Robert J. Keogh 53,848(7) 6.50%
6146 Sylvan Street
Norfolk, VA 23508
Peter M. Meredith, Jr. 49,376(8) 6.27%
5320 Edgewater Drive
Norfolk, VA 23508
Gerald L. Parks 7,195(9) 0.91%
27307 Evergreen Lane
Harborton, VA 23389
L. Allan Parrott, Jr. 1,834(10) 0.23%
417 Susan Constant Drive
Virginia Beach, VA 23451
Ross C. Reeves 6,142(11) .78%
1068 Algonquin Road
Norfolk, VA 23505
Harvey W. Roberts, III 31,792(12) 4.03%
7612 North Shore Road
Norfolk, VA 23508
5
All Executive Officers and
Directors as a group
(11 persons) 177,125 20.96%
1) Based on a Schedule 13G filed on February 14, 2003. Includes shares
beneficially owned by Bank Fund IV L.P. and Bank Fund VI L.P.
2) Based on a Schedule 13D filed on November 27, 2002. Includes shares
beneficially owned by Rose M. Wyne, William R. Reid and Philip Wirth
Wyne Trust.
3) Includes 2,000 shares issuable upon exercise of options to purchase
shares pursuant to the Non-Employee Director Stock Option Plan. See
"Compensation Pursuant to Plans" below.
4) Includes (a) 1,500 shares owned jointly with his wife and (b) 2,000
shares issuable upon exercise of options to purchase shares pursuant to
the Non-Employee Director Stock Option Plan. See "Compensation Pursuant
to Plans" below.
5) Includes 2,000 shares issuable upon exercise of options to purchase
shares pursuant to the Non-Employee Director Stock Option Plan. See
"Compensation Pursuant to Plans" below.
6) Includes (a) 1,650 shares owned jointly with his wife and (b) 2,000
shares issuable upon exercise of options to purchase shares pursuant to
the Non-Employee Director Stock Option Plan. See "Compensation Pursuant
to Plans" below.
7) Includes (a) 1,335 shares owned jointly with his wife and (b) 41,200
shares issuable upon exercise of options to purchase shares pursuant to
the Stock Option Plan for employees of the Company. See "Compensation
Pursuant to Plans" below.
8) Includes (a) 10,960 shares held as Meredith Realty Company, L.L.C., (b)
13,208 shares held as Pomar Holding, L.L.C. (c) 3,000 shares held as
Meredith Realty Associates and (d) 2,000 shares issuable upon exercise
of options to purchase shares pursuant to the Non-Employee Director
Stock Option Plan. See "Compensation Pursuant to Plans" below. Since
1994, Mr. Meredith has served as a director on and chairman of the
Board of Directors of Waterside Capital Corporation.
9) Includes (a) 4,614 shares owned jointly with his wife and (b) 2,000
shares issuable upon exercise of options to purchase shares pursuant to
the Non-Employee Director Stock Option Plan. See "Compensation Pursuant
to Plans" below.
10) Includes 334 shares issuable upon exercise of options to purchase
shares pursuant to the Non-Employee Director Stock Option Plan. See
"Compensation Pursuant to Plans" below.
11) Includes (a) 3,142 shares beneficially owned by Peter C. Reeves and (b)
2,000 shares issuable upon exercise of options to purchase shares
pursuant to the Non-Employee Director Stock Option Plan. See
"Compensation Pursuant to Plans" below.
12) Includes (a) 17,280 shares owned by his wife, (b) 3,000 shares owned
jointly with his wife and (c) 2,000 shares issuable upon exercise of
Options to purchase shares pursuant to the Non-Employee Director Stock
option Plan. See "Compensation Pursuant to Plans" below.
6
PROPOSAL 1: ELECTION OF DIRECTORS
The bylaws of the Corporation currently provide for fourteen directors.
The Board of Directors is divided into three classes of directors. The terms of
directors Lisa F. Chandler, Stephen A. Johnsen, L. Allan Parrott, Jr. and Thomas
G. Johnson, III expire at the Annual Meeting.
NOMINEES
The Nominating Committee of the Board of Directors, at its meeting on
January 23, 2003, recommended the following nominees to serve as directors of
the Corporation, each of whom is now serving as a director of the Corporation.
Certain information concerning the nominees is set forth below. If elected, they
will serve for a term expiring at the 2006 annual meeting of stockholders.
It is the intention of the Board of Directors, 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 current Board of Directors.
Directors are elected by plurality of the shares of common stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting. The Board of Directors unanimously recommends that all stockholders
vote "FOR" the director nominees set forth below.
Principal Occupation or Employment During
Name Age Last Five Years Director Since
---- --- --------------- --------------
Lisa F. Chandler 48 Executive Vice President, 1998
Nancy Chandler Associates, Inc.
Stephen A. Johnsen 57 President and Chief Executive Officer, 1988
Flagship Group, Ltd.
Thomas G. Johnson, III 34 Vice President, 2002
S. L. Nusbaum Realty Company
L. Allan Parrott, Jr. 37 President, 2002
Tidewater Fleet Supply, LLC
CONTINUING DIRECTORS
The following directors will continue in office after the Annual
Meeting:
Principal Occupation or Employment During Director
Name Age Last Five Years Since Term Expires
---- --- --------------- ----- ------------
James A. Cummings 60 President 1992 2004
Southern Atlantic Label Company, Inc.
F. Dudley Fulton 54 President and Chief Executive Officer, 1991 2005
Henderson & Phillips/USI
Robert J. Keogh 54 President and Chief Executive Officer, 1988 2004
Heritage Bank & Trust
7
Peter M. Meredith, Jr. 51 Chairman and Chief Executive Officer, 1992 2004
Meredith Construction Company, Inc.
Gerald L. Parks 69 Chairman and Chief Executive Officer, 1977 2005
Capes Shipping Agencies, Inc.
Ross C. Reeves 54 Attorney, 1994 2005
Willcox & Savage, P.C.
Harvey W. Roberts, III 58 Certified Public Accountant 1993 2004
SECTON 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers, directors and persons who own more than 10% of
the Corporation's common stock to file reports of ownership and changes in
ownership (i.e., Forms 3, 4 and 5) with the Securities and Exchange Commission
(the "SEC"). Executive officers, directors and 10% stockholders are required by
SEC regulation to furnish the Corporation with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of Section 16(a) forms
furnished to the Corporation, the Corporation believes that all Section 16(a)
filing requirements applicable to our executive officers, directors and 10%
stockholders were complied with in a timely manner for the year 2002.
INFORMATION ABOUT COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held twelve meetings during the year ending
December 31, 2002. During 2002, each of the Directors attended at least 75
percent of the total number of meetings of the Board and 75 percent of the total
number of meetings held by all committees of the Board on which he served.
The Board of Directors 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 (retired), 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 to the
Board of Directors 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
Nominating Committee met twice in 2002.
The members of the Executive Committee are Peter M. Meredith, Jr.,
Chairman, Stephen A. Johnsen, Harvey W. Roberts, III, and Robert J. Keogh. The
Executive Committee met twelve times during the year ended December 31, 2002.
The Executive Committee is delegated the power, with certain exceptions, of the
Board of Directors to act in place of the full Board when the Board is not in
session.
The members of the Compensation Committee are F. Dudley Fulton,
Chairman, Peter M. Meredith, Jr., Stephen A. Johnsen, Gerald L. Parks, and
Robert J. Keogh. They met once during the year ended December 31, 2002. The
Compensation Committee makes recommendations to the Board of Directors as to,
among other things, the compensation of the Chief Executive Officer and other
compensation and benefit issues.
Audit Committee Report
The Corporation's Audit Committee currently has four members, Harvey W.
Roberts, III, Chairman, James A. Cummings, Lisa F. Chandler and L. Allan
Parrott, Jr. Each of the members of the Audit Committee is an "independent
director" under the rules of the National Association of Securities Dealers
listing standards, as the standards may be amended or modified. The Audit
Committee met five times in the year ended December 31, 2002. The Audit
Committee's responsibilities are described in a written policy statement and
charter that was adopted by the Corporation's Board of Directors and included as
an appendix to the proxy statement for the Corporation's 2001 annual meeting of
stockholders.
8
The Audit Committee has reviewed and discussed the Corporation's
audited financial statements for the fiscal year ended December 31, 2002 with
the Corporation's management. The Audit Committee has discussed with Witt, Mares
& Company, PLC, the Corporation'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 Witt, Mares &
Company, PLC required by Independence Standards Board Standard No.1,
"Independence Discussions with Audit Committees", and has discussed with Witt,
Mares & Company, PLC its independence from the Corporation. Based on the review
and discussions described in this paragraph, the Audit Committee recommended to
the Corporation's Board of Directors that the Corporation's audited financial
statements for the year ended December 31, 2002 be included in the Corporation's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002 for
filing with Securities and Exchange Commission.
Members of the Audit Committee:
Harvey W. Roberts, III, Chairman
James A. Cummings
Lisa F. Chandler
L. Allan Parrott, Jr.
Auditor Fee Information
Audit Fees. The aggregate fees billed by Witt, Mares & Company, PLC for
professional services rendered for the audit of the Corporation's annual
financial statements for the fiscal year ended December 31, 2002 and the reviews
of the financial statements included in the Corporation's Quarterly Reports on
Forms 10-QSB for 2002 were $47,100.
Network Intrusion Testing Services /All Other Fees. Fees billed by
Witt, Mares & Company, PLC for professional services for network intrusion
testing service and other fees for the fiscal year ended December 31, 2002 were
$7,772.
The Audit Committee of the Board of Directors has considered whether
the provision of the services covered by "Network Intrusion Testing Services"
and "All Other Fees" is compatible with maintaining the independence of Witt,
Mares & Company, PLC.
DIRECTOR COMPENSATION
Directors of the Corporation and Directors of Heritage Bank & Trust
receive $500 for each Board of Directors meeting attended and $150 for each
committee meeting attended. Committee Chairs receive $200 for each committee
meeting chaired.
EXECUTIVE COMPENSATION
The table below sets forth a summary of the compensation the Corporation paid
for the last three years to the Chief Executive Officer, who was the only
executive officer of the Corporation whose salary and bonus compensation during
2002 exceeded $100,000
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SUMMARY COMPENSATION TABLE (1)
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Principal Position Other Annual Securities
--------------------------- ------------ ----------
Year Salary Bonus Compensation(2) Underlying Options
---- ------ ----- --------------- ------------------
Robert J. Keogh 2002 $150,000 $22,500 $4,800 -
President, Chief 2001 $135,000 $18,000 $4,800 -
Executive Officer 2000 $125,000 $31,000 $4,800 1,950
(1) In addition, the Corporation provides Mr. Keogh with an automobile. Also see "Compensation Pursuant to
Plans" below.
(2) Consists of director's fees.
In 2002, there were no grants of stock options to or exercises of stock options
by the Chief Executive Officer, who was the only executive officer of the
Corporation whose salary and bonus compensation during 2002 exceeded $100,000.
FISCAL YEAR-END OPTION VALUES
Number of Unexercised Options at Year-End
Value of Unexercised
In-the-Money Options at Fiscal
Name Exercisable Unexercisable Year-End
---- ----------- ------------- --------
Robert J. Keogh 41,200 650 $466,463
COMPENSATION PURSUANT TO PLANS
EQUITY COMPENSATION PLAN INFORMATION
Number of Securities
Remaining Available for
Number of Securities to be Weighted-Average Exercise Future Issuance Under
Issued Upon Exercise of Price of Outstanding Options Equity Compensation Plans
------------------------ ---------------------------- -------------------------
Plan Category Outstanding Options
Equity Compensation Plans Approved 121,825 $10.82 38,950
------- ------ ------
by Security Holders
Equity Compensation Plans Not N/A N/A N/A
--- --- ---
Approved by Security Holders
Employee Stock Option Plan. As of December 31, 2002 stock options for
103,825 shares of the Corporation's common stock are outstanding and, of these
options, 95,325 are exercisable. Options are granted and are exercisable at
option prices ranging from $6.50 to $15.00 per share.
Non-Employee Director Stock Option Plan. As of December 31, 2002, stock
options for 20,000 shares of the Corporation's common stock are outstanding and,
of these options, 12,006 are exercisable. Options are exercisable at prices
ranging from $12.30 to $24.06 per share.
10
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. Our 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 succeeding 120 months. If the participant dies prior to reaching age 70, his
or her beneficiary will receive 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, 2002, Heritage
Bank & Trust had accrued $316,224 to reflect the anticipated liability.
In 1989, Robert J. Keogh, President of Heritage Bank & Trust (and Chief
Executive Officer of the Corporation), 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 succeeding 180 months. Upon Mr. Keogh's retirement, he will receive $4,167
per month for each of the succeeding 180 months or until his death, and,
thereafter, his beneficiary will receive such retirement benefits. The
Corporation intends to fund this obligation through insurance proceeds. As of
December 31, 2002, $125,761 was accrued to reflect the anticipated liabilities
under the Executive Security Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Many directors of the Corporation and Heritage Bank & Trust and their
associates, including business concerns in which they are officers or directors
or in which they and/or 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 included in the Corporation's
Annual Report.
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 the Corporation and Heritage
Bank & Trust own an aggregate of approximately 34% of the limited partnership
interests. IBV Partners, L.P. and Heritage Bank & Trust entered into a lease in
December 1986, which was modified in December 2001. See disclosures regarding
the lease commitment in Note 12 of the Consolidated Financial Statements
included in the Corporation's Annual Report.
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 $37,000 during 2002. The Bank has also sold securities
to the Flagship Group, LTD under agreements to repurchase, which constitute
approximately 52% of the securities sold by the Bank under agreements to
repurchase at December 31, 2002. See Note 9 of the Consolidated Financial
Statements included in the Corporation's Annual Report for additional
information.
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of its Audit Committee,
has appointed Witt, Mares & Company, PLC, 150 West Main Street, Suite 1150,
Norfolk, Virginia 23510 as the independent accountants for the Corporation for
the 2002 fiscal year. Witt, Mares & Company, PLC has served as the Corporation's
independent accountants and auditors since March 29, 2001. The Corporation is
seeking the ratification of the appointment of Witt, Mares & Company, PLC as our
independent auditors for the fiscal year 2003.
A representative of Witt, Mares & Company, PLC is expected to be
present at the Annual Meeting. They will have an opportunity to make a statement
if they desire to do so, and are expected to be available to respond to
appropriate questions.
11
Ratification by the stockholders of Witt, Mares & Company, PLC as the
Corporation's independent accountants requires the affirmative vote of a
majority of the votes cast in person or by proxy at the Annual Meeting. The
Board of Directors unanimously recommends that the stockholders vote "FOR" the
ratification of Witt, Mares & Company, PLC.
STOCKHOLDER PROPOSALS
Under the regulations of the SEC as currently in effect, proposals of
stockholders intended to be presented at the Corporation's 2003 annual meeting
must be received by the Secretary of the Corporation, at its principal executive
offices at 200 East Plume Street, Norfolk, Virginia 23510, no later than
December 23, 2003, in order to be included in the proxy materials for the 2004
meeting. Any proposal that is received by the Corporation after December 23,
2003 will be considered untimely for consideration in the 2004 annual meeting.
OTHER BUSINESS
The Board of Directors is not aware of any other business to come
before the Annual Meeting as of the date of this proxy statement other than
those matters addressed in this proxy statement. If, however, any other matters
not referred to in the enclosed proxy come before the Annual Meeting, including
matters incident to the conduct of the meeting, the holders of the proxies will
vote the shares represented by the proxies in their discretion.
By Order of the Board of Directors,
Robert J. Keogh Peter M. Meredith, Jr.
President Chairman of the Board
Norfolk, Virginia
April 21, 2003
12
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 28, 2003
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 28, 2003, at the Annual Meeting of Stockholders to be held on May 28,
2003, 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.
Lisa F. Chandler, Stephen A. Johnsen, Thomas G. Johnson, III , L. Allan
Parrott, Jr.
(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_____________________________________________, 2003
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Signature
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Signature
[ ] Will attend meeting. [ ] Will NOT attend meeting