25 West Fayette Street
Baltimore, Maryland 21201
To Our Shareholders:
On behalf of our Board of Directors, we cordially invite you to attend the 2013 Annual Meeting of Shareholders of Harbor Bankshares Corporation to be held at the Corporation’s main office at 25 West Fayette Street, Baltimore, Maryland 21201 on Wednesday, May 22, 2013, at 9:00 A.M. Eastern Time. The formal Notice of Annual Meeting appears on the next page.
At the Annual Meeting, you will be asked to reelect John Paterakis, James Scott, Jr., Edward St. John, and George F. Vaeth, Jr., as Class III Directors for three-year terms. The Board of Directors recommends that shareholders vote FOR reelection of the four Class III Directors.
The enclosed proxy statement gives you detailed information about the Annual Meeting and related matters.
It is important that your views be represented whether or not you attend the Annual Meeting. Your vote is important, whether you own a few shares or many. We urge you to vote your shares either in person at the Annual Meeting or by returning your proxy as soon as possible.
Sincerely,
/s/Joseph Haskins, Jr.
Chairman and Chief Executive Officer
HARBOR BANKSHARES CORPORATION
25 West Fayette Street
Baltimore, Maryland 21201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 22, 2013
To Our Shareholders:
The Annual Meeting of Shareholders of Harbor Bankshares Corporation will be held at the Corporation’s main office at 25 West Fayette Street, Baltimore, Maryland 21201 on Wednesday, May 22, 2013, at 9:00 A.M. Eastern Time, for the following purposes:
- To elect four Class III Directors, each to serve for a three-year term; and
- To act upon such other matters as may properly come before the Annual Meeting or any adjournments or postponements thereof.
Note: The Board of Directors is not aware of any other business to come before the Annual Meeting.
The Board of Directors has fixed the close of business on April 1, 2013, as the record date for determination of shareholders entitled to vote at the Annual Meeting. The Harbor Bankshares Corporation Board of Directors unanimously recommends that you vote FOR the election of the four Class III Directors.
Only shareholders of record of Harbor Bankshares Corporation voting common stock at the close of business on the record date will be entitled to notice of, and to vote at the Annual Meeting or any adjournment thereof. To grant a proxy to vote your shares, you may complete and return the enclosed proxy card. You also may vote in person at the Annual Meeting. Please vote promptly whether or not you expect to attend the Annual Meeting.
You are requested to fill in and sign the enclosed Form of Proxy and to mail it in the enclosed envelope. The Proxy will not be used if you attend and choose to vote in person at the Annual Meeting. Executed but unmarked proxies will be voted FOR the election of the four Class III Directors.
Harbor Bankshares Corporation’s only class of voting stock is its common stock, par value $0.01 per share. A complete list of shareholders entitled to vote at the Annual Meeting will be available for inspection by any shareholder at the offices of Harbor Bankshares Corporation during ordinary business hours for a period of at least ten days prior to the Annual Meeting.
By Order of the Board of Directors,
/s/George F. Vaeth, Jr.
Corporate Secretary
Baltimore, Maryland
April 18, 2013
Your Vote Is Important. Please promptly sign, date, and return the enclosed proxy card. If you attend the Annual Meeting and decide that you wish to vote in person or for any other reason desire to revoke your proxy, you can do so at any time prior to its use.
HARBOR BANKSHARES CORPORATION
25 West Fayette Street
Baltimore, Maryland 21201
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 22, 2013
This Proxy Statement is being sent to holders of the common stock, $0.01 par value, of Harbor Bankshares Corporation, a Maryland corporation (“Harbor” or the “Company”), in connection with the solicitation of proxies by the Board of Directors of Harbor for use at the 2013 Annual Meeting of Shareholders to be held at Harbor’s main office at 25 West Fayette Street, Baltimore, Maryland 21201 on Wednesday, May 22, 2013, at 9:00 A.M. Eastern Time, and at any adjournment or postponement of the meeting, for the following purposes:
- To elect four Class III Directors, each to serve for a three-year term; and
- To act upon such other matters as may properly come before the Annual Meeting or any adjournments or postponements thereof.
This Proxy Statement and the accompanying form of proxy are being sent to Harbor shareholders on or about April 18, 2013.
Only shareholders of record of voting common stock at the close of business on April 1, 2013, the record date, are entitled to notice of and to vote at the annual meeting and any adjournment or postponement of the meeting. As of April 1, 2013, there were 867,565 shares of Harbor common stock, par value $0.01 per share, outstanding, consisting of 833,770 shares of voting common stock and 33,795 shares of nonvoting common stock.
The cost of soliciting proxies will be borne by Harbor. In addition to the solicitation of proxies by mail, Harbor also may solicit proxies personally or by telephone or other means through its directors, officers, and regular employees. Harbor also will request persons, firms, and corporations holding shares in their names or in the name of nominees that are beneficially owned by others to send proxy materials to and obtain proxies from those beneficial owners and will reimburse the holders for their reasonable expenses in doing so.
PROPOSAL I—ELECTION OF DIRECTORS
The Charter and By-laws of the Corporation provide that the directors shall be classified into three classes as equal in number as possible, with each director serving a three-year term. Currently, the Board of Directors of the Corporation and The Harbor Bank of Maryland ("Bank") is composed of eleven members with Class I and III consisting of four members, and Class II consisting of three members. The terms of the Class III Directors are scheduled to expire at the 2013 annual meeting or until their respective successors have been duly elected and qualified.
Directors are elected by a plurality of the votes cast by the holders of shares of common stock present in person or represented by proxy.
Directors to be elected at the 2013 Annual Meeting to serve until the 2016 Annual Meeting (Class III)
John Paterakis Mr. Paterakis has served as a director of the Corporation since its formation in 1992 and of the Bank since 1982. He is President and Chief Executive Officer of H&S Bakery, Inc., and Northeast Foods, Inc.
James Scott, Jr. Mr. Scott has served as a director of the Corporation and the Bank since November 2000. He is a principal of Penan & Scott P.C., an accounting firm. Mr. Scott is a certified public accountant.
Edward St. John Mr. St. John has served as a director of the Corporation since its formation in 1992 and of the Bank since 1990. He is President and Chief Executive Officer of St. John Properties, a real estate development company.
George F. Vaeth, Jr. Mr. Vaeth has served as a director of the Corporation since its formation in 1992 and of the Bank since 1981. He has served as Secretary of the Corporation since its formation and of the Bank since 1986. He is a retired architect.
The following information is provided with respect to directors who will continue to serve as directors of the Corporation until the expiration of their terms at the times indicated.
Directors continuing to serve until 2014 Annual Meeting (Class I)
James H. DeGraffenreidt Mr. DeGraffenreidt has served as a director of the Corporation and of the Bank since 1996. He is retired Chairman and Chief Executive Officer of WGL Holdings, Inc., distributors of natural gas.
Louis J. Grasmick Mr. Grasmick has served as a director of the Corporation since its formation in 1992 and of the Bank since 1982. He is Chief Executive Officer of Louis J. Grasmick Lumber Company, Inc.
Joseph Haskins, Jr. Mr. Haskins has served as a director of the Corporation since its formation in 1992 and of the Bank since 1980. He has served as Chief Executive Officer of the Corporation since its formation in 1992, Chairman of the Board of the Corporation and the Bank since 1995 and Chief Executive Officer of the Bank since 1987.
Kevin M. Johnson Mr. Johnson has served as a director of the Corporation and the Bank since June 8, 2011. He is President of Commercial Interiors, Inc., a construction company.
Directors continuing to serve until the 2015 Annual Meeting (Class II)
Delores G. Kelley Dr. Kelley has served as a director of the Corporation since its formation in 1992 and of the Bank since 1980. She is a retired educator and Senator in the Maryland State Senate.
Erich W. March Mr. March has served as a director of the Corporation since its formation in 1992 and of the Bank since 1981. He is Vice President of March Funeral Homes, Inc.
Stanley W. Tucker Mr. Tucker has served as a director of the Corporation and of the Bank since 1996. He is President of Meridian Management Company, Inc., which is the managing general partner of MMG Ventures, L.P., an investment management company
Security Ownership of Certain Beneficial Owners and Management
There were 867,565 shares of the Common Stock issued and outstanding on April 1, 2013, of which 833,770 were shares of voting common stock. The following table shows the beneficial ownership of the voting common stock as of this date by: (1) each of Harbor's current named executive officers and directors and (2) all of Harbor's current directors and executive officers as a group.
Number of Shares
Beneficially Percentage of Shares
Name of Beneficial Owner(1)(2) Owned(3) Beneficially Owned
Joseph Haskins, Jr. (4) ............ 73,975 8.70%
Darius L. Davis (5) ................. 5,868 *
James H. DeGraffenreidt, Jr. .. 10,992 1.29%
Louis J. Grasmick (6) .............. 38,142 4.49%
Delores G. Kelley (7) ............... 9,208 1.08%
Erich W. March (8) .................. 17,520 2.06%
John Paterakis (9) ..................... 131,493 15.47%
James Scott, Jr. (10) .................. 8,972 1.06%
Edward St. John ......................... 46,821 5.51%
Stanley W. Tucker (11) .............. 13,264 1.56%
George F. Vaeth, Jr. .................... 14,416 1.70%
Kevin M. Johnson………….…... 10,833 1.27%
All Directors and executive officers
as a group (12 persons) (12) 381,504 44.89%
* Less Than 1%
(1) Unless otherwise specified, the address of these persons is c/o Harbor Bankshares Corporation, 25 West Fayette
Street, Baltimore, Maryland 21201.
(2) Persons named in this table have sole or shared voting and/or investment power over the shares shown. Numbers of shares also include shares underlying options currently exercisable.
(3) Unless otherwise specified, the number of shares shown represents shares of Common Stock.
(4) Represents 57,309 shares of Common Stock, 600 shares of Common Stock held beneficially owned by child, 4,400 shares of Common Stock held by an IRA account maintained by T. Rowe Price, and 11,666 shares of Common Stock issuable upon the exercise of options.
(5) Represents 4,234 shares of Common Stock issuable upon the exercise of options and 1,634 shares of Common Stock held by Merrill Lynch.
(6) Represents 38,142 shares of Common Stock (including 3,848 shares jointly owned with Mr. Grasmick and his son and 21,461 shares jointly owned by Mr. Grasmick and his wife and 12,833 shares under a trust controlled by Mr. Grasmick).
(7) Represents 9,208 shares of Common Stock (including 2,183 shares jointly owned by Dr. Kelley and her husband).
(8) Represents 17,520 shares of Common Stock (including 15,453 shares owned by a corporation over which Mr. March has the power to vote).
(9) Includes 91,811 shares of Common Stock owned by four corporations controlled by Mr. Paterakis (Bond Street Holdings – 30,752 shares; H & S Bakery, Inc. – 6,164 shares; Northeast Food, Inc. – 10,273 shares; J & B Associates – 44,622 shares) and 39,382 shares of Common Stock owned by Paterakis Limited Partnership, LLP.
(10) Includes 6,655 shares of Common Stock jointly owned by Mr. Scott and his wife.
(11) Includes 13,234 shares of Common Stock owned by MMG ventures L.P. over which Mr. Tucker has authority to vote.
(12) Represents 365,204 shares of Common Stock and 15,900 shares of Common Stock issuable upon the exercise of options.
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation’s Audit Committee has retained Stegman & Company as independent public accountants to audit the Corporation's 2012 consolidated financial statements. Stegman & Company also audited the Corporation's consolidated financial statements for 2010 and 2011. A representative of Stegman & Company is expected to be present at the Annual Meeting, with the opportunity to make a statement if he or she decides, and will respond to appropriate questions.
This proxy statement is furnished to shareholders of Harbor in connection with the solicitation of proxies by Harbor’s Board of Directors for use at the Annual Meeting.
Date, Place and Time of Annual Meeting
The Annual Meeting of Harbor’s shareholders will be held at Harbor’s main office at 25 West Fayette Street, Baltimore, Maryland 21201 on Wednesday, May 22, 2013, at 9:00 A.M. Eastern Time.
Shares Entitled to Vote; Quorum and Vote Required
The holders of record of the outstanding shares of Harbor voting common stock at the close of business on April 1, 2013 will be entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement of the Annual Meeting. At the close of business on that date, there were 833,770 shares of Harbor common stock issued and outstanding and entitled to vote at the Annual Meeting.
At the Annual Meeting Harbor shareholders will be entitled to one vote for each share of Harbor common stock owned of record on the record date. The holders of a majority of the Harbor common stock must be present, either in person or by proxy, to constitute a quorum at the meeting. Shares of Harbor common stock present in person or represented by proxy, including shares whose holders abstain or do not vote and shares held of record by a broker or nominee that are voted on any matter, will be counted for purposes of determining whether a quorum exists at the Annual Meeting.
On the record date, the directors and executive officers of Harbor and the Bank (12 persons) were entitled to vote, in the aggregate, 381,504 shares of Harbor common stock (including 16,100 shares of common stock issuable upon the exercise of options), or approximately 44.89% of the outstanding shares of Harbor voting common stock and issuable common stock options.
A list of shareholders will be available for examination by holders of the Harbor common stock for any purpose related to the Annual Meeting at the Annual Meeting and during the 10 days prior to the Annual Meeting at our offices at 25 West Fayette Street, Baltimore, MD 21201.
Voting Procedures and Revocation of Proxies
Proxies, in the form enclosed, that are properly executed by the shareholders and returned to Harbor and not subsequently revoked, will be voted in accordance with the instructions indicated on the proxies. Any properly executed proxy on which voting instructions are not specified will be voted FOR the election of the four nominated Class III Directors. The proxy also grants authority to the shareholders designated in the proxy to vote in accordance with their own judgment if an unscheduled matter is properly brought before the meeting.
If you are the record holder of your shares, you may revoke any proxy given pursuant to this solicitation by the Harbor Board of Directors at any time before it is voted at the Annual Meeting by:
- Giving written notice to the Secretary of Harbor;
- Executing a proxy bearing a later date filed with the Secretary of Harbor at or before the meeting; or
- Attending and voting in person at the meeting. Attendance without voting at the Annual Meeting will not in and of itself constitute revocation of a proxy.
All written notices of revocation and other communications with respect to revocation or proxies should be sent to: Harbor Bankshares Corporation, 25 West Fayette Street, Baltimore, MD 21201 Attention: Sara M. Dopkin, Vice President and Treasurer. If you hold your shares in street name with a bank or broker, you must contact the bank or broker if you wish to revoke your proxy.
All of our shareholders are invited to attend the Annual Meeting. If you are a beneficial owner of Harbor common stock held by a broker, bank or other nominee (i.e., in “street name”), you will need proof of ownership to be admitted to the Annual Meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of Harbor common stock held in street name in person at the Annual Meeting, you will have to get a written proxy in your name from the broker, bank, or other nominee who holds your shares.
Our Annual Report to Shareholders for the fiscal year ended December 31, 2012 is being mailed to you with this proxy statement.
Solicitation of Proxies and Expenses
This proxy solicitation is made by the Board of Directors of Harbor. Harbor is responsible for its expenses incurred in preparing, assembling, printing, and mailing this proxy statement. Proxies will be solicited through the mail. Additionally, directors, officers and other employees of Harbor or its subsidiaries may solicit proxies in person, by telephone or other means of communications. None of these people will receive any special compensation for solicitation activities. Harbor will reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding the proxy materials to beneficial owners.
Management of Harbor knows of no other business to be presented at the Annual Meeting, other than procedural matters relating to the conduct of the Annual Meeting, but if other matters do properly come before the Annual Meeting, unless otherwise instructed, it is intended that the persons named in the proxy card will vote shares according to their best judgment.
By Order of the Board of Directors
/s/Joseph Haskins, Jr.
Chairman and Chief Executive
Officer
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