SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Patapsco Valley Bancshares, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: N/A
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined): N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: N/A
- --------------------------------------------------------------------------------
(5) Total fee paid: N/A
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials: N/A
<PAGE>
|_| 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. N/A
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
PATAPSCO VALLEY BANCSHARES, INC.
8593 Baltimore National Pike
Ellicott City, Maryland 21043
(410) 465-0900
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of PATAPSCO VALLEY BANCSHARES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
Patapsco Valley Bancshares, Inc. (the "Company"), the parent company of
Commercial and Farmers Bank, will be held at Turf Valley Resort and Conference
Center, 2700 Turf Valley Road, Ellicott City, Maryland at 11:00 a.m., local
time, on Tuesday, April 20, 1999, for the following purposes:
1. To consider the election of 3 individuals to serve as
Directors until the 2002 Annual Meeting of Stockholders, and
to consider the election of 1 individual to serve as a
Director until the 2000 Annual Meeting of Stockholders, and
until their successors are duly elected and qualify.
2. 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 8, 1999, will
be entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
Those who cannot attend are urged to promptly sign, date and mail the enclosed
proxy in the envelope provided for that purpose. Whether you own a few or many
shares, your proxy is important. Returning your proxy does not deprive you of
your right to attend the meeting and to vote your shares in person.
By Order of the Board of Directors
Edwin B. McKee
Corporate Secretary
March 19, 1999
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PATAPSCO VALLEY BANCSHARES, INC.
8593 Baltimore National Pike
Ellicott City, Maryland 21043
(410) 465-0900
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation
by Patapsco Valley Bancshares, Inc. (the "Company") of proxies to be voted at
the Annual Meeting of Stockholders to be held on Tuesday, April 20, 1999, at
11:00 a.m., local time, at Turf Valley Resort and Conference Center, Ellicott
City, Maryland, and at any adjournments thereof. The Company is the parent
company of Commercial and Farmers Bank (the "Bank"). The expense of preparing,
printing, and mailing the proxies and solicitation materials will be borne by
the Company. In addition to solicitations by mail, the Company may solicit
proxies in person or by telephone, and arrange for brokerage houses and other
custodians, nominees, and fiduciaries to send proxies and proxy material to
their principals at the expense of the Company. The approximate date on which
this proxy statement and attached form of proxy will be mailed to stockholders
is March 19, 1999.
Holders of record at the close of business on March 8, 1999 (the
"Record Date") of outstanding shares of the Company's common stock, par value
$.01 per share ("Common Stock" or "Shares"), are entitled to notice of and to
vote at the meeting. As of the Record Date, the number of Shares of outstanding
Common Stock entitled to vote is 1,362,023.83 Shares. Each Share is entitled to
one vote. Shares represented by any proxy properly executed and received
pursuant to this solicitation will be voted in accordance with the directions of
the stockholder; if no direction is given, the proxy will be voted in favor of
all the nominees named in Proposal 1 and in the discretion of the proxies as to
any other matters that may properly come before the meeting.
The proxy may be revoked by a stockholder at any time prior to its use
by execution of another proxy bearing a later date, or by written notice
delivered to the Secretary at the Company's address or at the meeting.
ELECTION OF DIRECTORS (PROPOSAL 1)
By amendment to the Company's Articles of Incorporation at the 1998
Annual Meeting of Stockholders, the Company's Directors were elected into 3
classes, as nearly equal in number as possible, with respect to the time for
which the Directors may hold office. Directors are elected to hold office for
term of 3 years, and 1 class of Director expires each year. The terms of
Directors of Class I expire this year. Directors of Class II will hold office
until the 2000 Annual Meeting of Stockholders and Directors of Class III will
hold office until the 2001 Annual Meeting of Stockholders. In each case,
Directors are elected until their successors are duly elected and qualify.
The Directors of Class I are up for election at this Annual Meeting.
The Company's President is a member of Class III, and the Company's Executive
Vice President is a member of Class I. No director or nominee holds any
directorships in any other public company. The following nominees for Directors
of Class I, their ages as of the Record Date, their principal occupations and
business experience for the past 5 years, and certain other information are set
forth below. In the event a nominee declines or is unable to serve as a
director, which is not anticipated, the proxies will be voted for the Board's
substitute nominee.
Page 1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION
NAME AGE DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NOMINEES FOR CLASS I DIRECTORS: NEW TERM WILL EXPIRE IN 2002
John F. Feezer, III 43 Director of the Company since October, 1996,
Director of the Bank since January, 1995, and Vice
Chairman of the Bank Board since April, 1998. He
has served as Vice President of John F. Feezer
Company, a paving and excavation company, since
July, 1979.
Kevin P. Huffman 38 Director of the Company since March, 1998 and a
Director of the Bank since March, 1998; Executive
Vice President of the Company and the Bank since
March, 1998. He had served as Senior Vice
President of the Bank since June, 1994 and of the
Company since its formation in October, 1996.
Eugene W. Iager, Sr. 52 Director of the Company since October, 1996 and a
Director of the Bank since June, 1995. He has
served as President of Maple Lawn Farms, Inc.
since August, 1987.
</TABLE>
Richard H. Pettingill was elected to the Board of Directors in 1998 to
fill a vacancy created by a Director in Class II who retired from the Company's
Board of Directors. The Board of Directors has nominated Mr. Pettingill to serve
as a Director in Class II until the 2000 Annual Meeting of Stockholders. Mr.
Pettingill's age as of the Record Date, his principal occupation and business
experience for the past 5 years, and certain other information is set forth
below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION
NAME AGE DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NOMINEE FOR CLASS II DIRECTOR: TERM WILL EXPIRE IN 2000
Richard H. Pettingill 63 Director of the Company since June, 1998 and a Director
of the Bank since June, 1998. He has served as
Senior Vice President of Tishman Real
Estate Services since February, 1999, and served
as Senior Vice President of Casey & Associates/ ONCOR
International, a commercial real estate company,
from March, 1992 to February, 1999.
</TABLE>
The election of directors requires the affirmative vote of holders of a majority
of the Shares present and voting. A quorum for the Annual Meeting consists of a
majority of the issued and outstanding Shares present in person or by proxy and
entitled to vote, and directors are elected by a plurality of the votes of the
Shares present in person or by proxy and entitled to vote. Consequently,
withholding of votes,
Page 2
<PAGE>
abstentions and broker non-votes with respect to Shares otherwise present at the
Annual Meeting in person or by proxy will have no effect on the outcome of this
vote. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES.
The following table contains information regarding Directors of Class II
and Class III whose terms do not expire in 1999, including the Directors' ages
as of the Record Date, and their principal occupations and business experience
for the past 5 years.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION
NAME AGE DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCUMBENT CLASS II DIRECTORS: TERM WILL EXPIRE IN 2000
Ronald L. Eyre 53 Director of the Company since October, 1996, and a Director
of the Bank since February, 1989. He has served as
President of Eyre Bus Service, Inc. since January, 1990.
Fred T. Lewis 72 Director of the Company since October, 1996 and a Director
of the Bank since October, 1966; Doctor of Veterinary
Medicine. He has been an independent veterinarian since
1953.
INCUMBENT CLASS III DIRECTORS: TERM WILL EXPIRE IN 2001
Howard E. Harrison, III 57 Director of the Company and Chairman of the Company
Board since October, 1996 and a Director of the Bank since
June, 1991. He has served as Chairman of the Board of
Marina Development Corp. since December, 1986.
John S. Whiteside 61 Director of the Company since October, 1996, Vice
Chairman of the Company Board since April, 1998, and
Director of the Bank since January, 1978; President and CEO
of the Bank since January, 1978 and the Company since its
formation in October, 1996.
</TABLE>
W. William Cookson, a Class III Director, resigned from his position as
Director of the Company and of the Bank, and Chairman of the Board of Directors
of the Bank, effective February 16, 1999, to devote his services to a full-time
position as President of C&F Insurance Agency, Inc., a Bank subsidiary and
full-line insurance agency. Mr. Cookson became President of C&F Insurance
Agency, Inc. on December 1, 1998, upon its acquisition of the Ellicott City
branch of Fowler Insurance Agency, Inc. (formerly, Fowler & Seidl, Inc.). The
Bank will appoint a new Chairman of the Bank Board, and the Company and the Bank
will make such other necessary changes to membership of various committees.
Page 3
<PAGE>
Certain Relationships and Related Transactions
During the past year, the Bank, as the Company's subsidiary, has had
banking transactions in the ordinary course of its business with its directors
and officers and with their associates on substantially the same terms,
including interest rates, collateral, and repayment terms on loans, as those
prevailing at the same time for comparable transactions with others. The
extensions of credit by the Bank to these persons have not and do not currently
involve more than the normal risk of collectability or present other unfavorable
features. As of December 31, 1998, the aggregate principal amount of
indebtedness to the Bank owed by directors and executive officers of the Company
is approximately $4,544,230.
Committees of the Board of Directors
All of the members of the Company's Board of Directors also serve on
the Board of Directors of the Bank. The Company's Board of Directors and the
Bank's Board of Directors each met 12 times during 1998. The Company's Board of
Directors met for an additional 2 meetings and the Bank's Board of Directors met
for an additional 4 meetings. Mr. Harrison, as Chairman of the Company's Board
of Directors, and Mr. Whiteside, as Vice Chairman of the Company's Board of
Directors, are ex-officio members on all committees.
The Executive Committee met 4 times in 1998. The function of the
Executive Committee is to direct and transact any business which may properly
come before the Board of Directors, except for such business that the Board of
Directors only, by law, is authorized to perform. Members of the Executive
Committee in 1998 were W. William Cookson, Chairman, John F. Feezer, III, Vice
Chairman, John S. Whiteside, and two additional directors rotating on a
quarterly basis.
The Audit Committee met 3 times in 1998. The Bank's Audit Committee
reviews the audit policy and program, recommending any policy changes to the
Board of Directors, and recommends the independent certified public accountant
to the Board of Directors. The committee meets with the internal and external
auditors, reports to the Board of Directors on the findings and oversees the
internal control structure of the Bank. Members of the Audit Committee in 1998
were W. William Cookson, Chairman, Eugene W. Iager, Sr., Fred T. Lewis, and
Richard H. Pettingill.
The Strategic Planning Committee met once in 1998. The Strategic
Planning Committee meets with management to review the annual operating plans
developed by management, and to formulate, along with management, long-term
strategies and business plans designed to enhance stockholder value. Members of
the Strategic Planning Committee in 1998 were John F. Feezer, III, Chairman, W.
William Cookson, Ronald L. Eyre, Howard E. Harrison, III, Kevin P. Huffman,
Eugene W. Iager, Sr., and John S. Whiteside.
The Nominating Committee met once in 1998. The Nominating Committee
recommends candidates to serve as Directors of the Company and the Bank. The
members of the Nominating Committee in 1998 were Ronald L. Eyre, Eugene W.
Iager, Sr., and John S. Whiteside. As provided in Article I, Section 8 of the
Bylaws, the Nominating Committee considers nominations from stockholders if the
nomination is made in writing by notice delivered to the President of the
Company not fewer than 150 days nor more than 180 days before the date of the
stockholders' meeting. The notice must contain (i) for each proposed nominee,
the name, address, principal occupation, and the number of Shares owned, (ii)
for the notifying stockholder, the name, residence address, and the number of
Shares owned, (iii) a written consent of the proposed nominee as to his or her
name being placed in nomination for Director
Page 4
<PAGE>
and a statement by the nominee that he or she will serve if elected, and (iv)
all information required by Regulation 14A of the Securities Exchange Act of
1934, as amended, and Rule 14a-11, as promulgated thereunder. The nomination
must be approved for submission to the stockholders by majority vote of the
Board of Directors.
The Bank also has four subcommittees: the Branching Subcommittee (which
met 4 times in 1998); the Compensation Subcommittee (which met 4 times in 1998);
the Global Matters Subcommittee and the Ad Hoc Building Subcommittee (which did
not meet in 1998).
No Director during the last full fiscal year attended fewer than 75% of
the aggregate of (1) the total number of meetings of the Board of Directors
(held during the period for which that person has been Director) and (2) the
total number of meetings held by all committees of the Board on which that
person served (during the period served).
Director Compensation
No fees are paid for service on the Company's Board of Directors. The
Chairman of the Board of the Company receives $200 for each Bank Board of
Directors meeting. The Chairman of the Board of the Bank receives $685 for each
Bank Board of Directors meeting. All other Directors receive $485 for each Bank
Board of Directors meeting. Directors receive a fee of $150 for each committee
meeting attended. Directors may elect to receive compensation for their services
to the Company and the Bank in Shares or cash. No Directors elected to receive
Shares in lieu of cash in 1998. In addition, Mr. Cookson received a fee of $500
per month, beginning on June 1, 1998, and ending on January 31, 1999, for his
services in locating a prospective insurance agency for purchase by the Bank or
its subsidiary.
In April, 1998, the Company granted options to its 7 outside directors
for the purchase of 2,000 Shares each of Common Stock pursuant to the Director's
Stock Option Plan, at a fair market value exercise price of $19.00 (as restated
to give retroactive effect to stock dividends declared in 1998). The options
must be exercised within 10 years from the date the options were granted, and an
option expires on the 10th anniversary of the date the option is granted. In the
event of termination as a Director for any cause, other than death or mandatory
retirement because of age, each option granted to the optionee terminates
immediately prior to termination. Each option granted to an optionee terminates
12 months from the date of the optionee's death, provided the optionee at the
time of his death was a Director of the Company.
Page 5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation for each of the
3 preceding fiscal years paid to or accrued for the Company's most highly
compensated executive officers whose cash compensation exceeds $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
======================================================================================================================
Name and Principal Fiscal Long Term
Position Year Annual Compensation Compensation
-------------------------------------------------------------------------------
Other Annual Securities
Salary Bonus* Compensation Underlying
Options
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John S. Whiteside 1998 $145,628 $25,000 $2,899 4,000
President/CEO 1997 $140,823 $61,480 $3,072 ----
1996 $137,120 ---- $3,821 ----
- ----------------------------------------------------------------------------------------------------------------------
Kevin P. Huffman 1998 $83,441 $10,000 ---- 1,500
Exec. Vice Pres./COO 1997 $70,952 $41,480 ---- ----
1996 $75,952 ---- ---- ----
======================================================================================================================
</TABLE>
*Part of the 1998 Bonus was paid as a result of a Senior Management Bonus
Program, which ties payments to senior management to a level of net income above
Company projections. The bonuses under the program accrued in 1998 and were paid
in 1999.
Executive Officers
The following is a list of the executive officers of the Company as of
December 31, 1998. There are no family relationships between any Directors and
Officers of the Company.
<TABLE>
<CAPTION>
<S> <C> <C>
John S. Whiteside 61 Director of the Company since October, 1996, Vice Chairman
of the Company Board since April, 1998, and Director of the
Bank since January, 1978; President and CEO of the Bank
since January, 1978 and the Company since its formation in
October, 1996.
Kevin P. Huffman 38 Director of the Company since March, 1998 and a Director of
the Bank since March, 1998; Executive Vice President of the
Company and the Bank since March, 1998. He had served as
Senior Vice President of the Bank since June, 1994 and of the
Company since its formation in October, 1996.
Bernard G. Malinowski 60 Senior Vice President of the Company since October, 1996
and the Bank since March, 1993. He had served as CFO of
the Company until September, 1998, and Executive Vice
President/CFO of the Bank from February, 1976 to March,
1993.
</TABLE>
Page 6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Edwin B. McKee 48 Senior Vice President of the Company and the Bank since
March, 1998. He has served as Vice President of the
Company since its formation in October, 1996 and the Bank
since March, 1986.
Dennis W. Miller 33 Senior Vice President of the Company and the Bank since
March, 1998. He has served as Vice President of the
Company since its formation in October, 1996 and the Bank
since May, 1993.
Barbara M. Broczkowski 42 Vice President and Chief Financial Officer of the Company
and the Bank since September, 1998. Prior to her current
position, Ms. Broczkowski served as a Partner of Anderson
Associates LLP, since January, 1996, and as an Audit Manager
for the same firm since December, 1986.
</TABLE>
Defined Benefit Plan and Contributory Thrift Plan
The Bank has a defined benefit pension plan covering substantially all
of the employees. Benefits are based on years of service and the employee's
highest average rate of earnings for the 5 consecutive years during the last 10
years before retirement. The Bank makes contributions to the plan in amounts
sufficient to satisfy minimum funding standards determined using the frozen
entry age actuarial method. Assets of the plan are held in trust and invested in
listed stocks and bonds. The Bank also has a contributory thrift plan qualifying
under Section 401(k) of the Internal Revenue Code of 1986, as amended. All
employees who are at least 21 years old with 1 year of service are eligible for
participation in the plan.
Employment Contract
The Bank and John S. Whiteside, Bank President and CEO, entered into an
employment contract ("Agreement") dated June 11, 1987 that becomes effective on
the date on which a "Change in Control," as defined in the Agreement, of the
Bank occurs. Under the Agreement, Mr. Whiteside will remain as President of the
Bank for a term of either 5 years from a Change in Control or the date of his
65th birthday, whichever occurs first. During the term of the Agreement, Mr.
Whiteside will receive an annual salary that is at least equal to the annual
salary he received immediately prior to the effective date of the Agreement. The
Agreement provides further that, after a Change in Control, if the Bank
terminates Mr. Whiteside for a reason other than for cause or because of death,
disability, or physical or mental incapacity, or if Mr. Whiteside resigns due to
the Bank's breach of the Agreement, he will, for the remainder of the contract
term, receive his benefits and be paid, monthly, his then-current salary,
including estimated bonuses or incentives to which he would have been entitled
had no termination or resignation occurred, or, at Mr. Whiteside's election, a
severance of 2 years' salary, including a pro rata amount of any estimated
bonus, and the value of benefits and stock options that would have been payable
for the next 2 years. Mr. Whiteside may resign and receive such termination or
severance payments if he reasonably believes that the Change in Control, coupled
with a material change in circumstances, significantly affects his capacity to
perform his duties as President of the Bank.
Page 7
<PAGE>
Stock Option Plans
General. The Company administers 3 stock plans, which include the
Company's Incentive Stock Option Plan (the "Incentive Plan"), Director's Stock
Option Plan (the "Director's Plan"), and the Employee Stock Purchase Plan (the
"Employee Plan"). The plans were approved by the Company's Board of Directors on
February 25, 1998, and by its stockholders on April 21, 1998, and will continue
in effect for no more than 10 years. The number of Shares reserved for issuance
under each plan, and discussions related to the these Shares, have been restated
to give retroactive effect to stock dividends declared in 1998. Up to 120,000
Shares are reserved for issuance under the 3 plans. The number of Shares are
reserved for the grant of options and the number of Shares that are subject to
outstanding options under the plans are subject to adjustment in the event of a
merger, consolidation, reorganization, recapitalization, reclassification of
stock, stock dividend, split-up, or other change in the corporate structure or
capitalization of the Company affecting the Shares.
Incentive Plan. The total number of Shares that may be issued under the
Incentive Plan cannot exceed 36,900 Shares. An incentive stock option to
purchase 3,900 Shares will be granted to the President during each year of the
first 3 years of the Incentive Plan. Incentive stock options to purchase the
remaining 25,200 Shares may be granted only to other officers or key employees
and must, if granted, be granted during the first 3 years of the Incentive Plan.
An option may not be exercised unless the optionee remains employed with the
Company for 36 months from the date the option was granted, except in certain
circumstances upon the death or retirement of the optionee. Options granted
under the Incentive Plan expire on the 10th anniversary of the date the option
was granted. In December, 1998, 26 employees received options to purchase an
aggregate of 12,275 Shares.
Director's Plan. The total number of Shares that may be issued under
the Director's Plan cannot exceed 42,000 Shares. Non-qualified stock options to
purchase 14,000 Shares at not less than 100% of the fair market value of the
stock will be granted each year during the first 3 years of the Director's Plan,
and may be exercised at any time. In April, 1998, 7 outside directors who serve
on the Company and Bank Board of Directors each received options to purchase
2,000 Shares.
Employee Plan. The total number of Shares that may be issued under the
Employee Plan may not exceed 41,100 Shares, and the options, if granted, must be
granted during the first 3 years of the Employee Plan. Options to purchase
Shares will be granted to each Employee at the rate of 2 Shares per $1,000 of
the employee's total compensation. The purchase price of the Shares under each
option granted pursuant to the Employee Plan will be 85% of the fair market
value of the stock on the date the option is granted. An option may not be
exercised unless the optionee is employed for 12 months from the date the option
was granted and the optionee is an employee of the Company at the time of
exercise, except under certain circumstances upon the death or retirement of the
optionee. In December, 1998, 142 employees received options to purchase an
aggregate of 6,980 Shares.
Each option granted under the Employee Plan expires 27 months from the
date the option was granted. In the event of termination of employment of the
optionee for any cause, other than death, disability resulting in coverage under
the long-term disability plan of the Company, or retirement of the optionee,
whether by reason of resignation or discharge, an option granted the optionee
terminates immediately prior to termination. Each option granted an optionee
terminates 12 months from the date of the optionee's death, provided the
optionee at the time of his death was an employee of the Company.
Page 8
<PAGE>
The following table sets forth certain information relating to the number and
value of underlying unexercised stock options held by the named executives as of
December 31, 1998.
<TABLE>
<CAPTION>
=====================================================================================================================
Option Grants in Fiscal Year 1998
- ---------------------------------------------------------------------------------------------------------------------
Individual Grants
Percent of Total
Number of Securities Options Granted Exercise
Underlying Options to Employees in or Base Expiration
Name Granted (1) Fiscal Year Price ($/Sh) Date
- ---- -------------------------------------------------------------- ---------
<S> <C> <C> <C> <C>
John S. Whiteside 3,900 20.3% $23.00 12-17-08
100 .5% $19.55 03-18-01
Kevin P. Huffman 1,400 7.3% $23.00 12-17-08
100 .5% $19.55 03-18-01
NOTES:
</TABLE>
(1) Options under the Incentive Stock Option Plan and Employee Stock Purchase
Plan were granted on December 18, 1998. Options granted under the Incentive
Stock Option Plan, at $23.00 per Share, are exercisable beginning on December
19, 2001, and options under the Employee Stock Option Plan, at $19.55 per Share,
are exercisable beginning on December 19, 1999.
<TABLE>
<CAPTION>
=====================================================================================================================
No options were exercised in 1998 by either of the named executives. The
following table sets forth information regarding the number and value of
underlying unexercised stock options held by the named executives as of December
31, 1998:
=====================================================================================================================
Aggregated Option Exercises in 1998 and 1998 Year End Option Values
- ---------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year-End In-the-Money Options at
(#) Fiscal Year-End ($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
John S. Whiteside 0 4,000 $0 $345
Kevin P. Huffman 0 1,500 $0 $345
(1) Represents the total gain which would be realized if all in-the-money
options held at December 31, 1998 were exercised, determined by multiplying the
number of Shares underlying the options by the difference between the per share
option exercise price and the fair market value of the Shares at December 31,
1998 of $23.00 per share.
=====================================================================================================================
</TABLE>
Page 9
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information regarding the beneficial
ownership of the Common Stock (rounded to the nearest whole share) as of March
1, 1999 by directors and executive officers and by each person who, to the best
of the Company's knowledge, beneficially owns more than 5% of the Company's
outstanding Common Stock. Except as otherwise indicated and except for Shares
held by members of an individual's family or in trust, all Common Stock is held
with sole dispositive and voting power. Except as noted below, the address of
each person listed below is the address of the Company. The term "beneficial
ownership" includes Common Stock that may be acquired within 60 days upon the
exercise of options, warrants and other rights. Shares are rounded to the
nearest whole Share. Because of rounding, group total may not be equal to the
total number of Shares for each beneficial owner.
Percent
Number of Shares of Class
Beneficially Beneficially
Owned Owned
----- -----
Ronald L. Eyre (1) 4,794.75 .35%
John F. Feezer, III (2) 36,892.10 2.66%
Howard E. Harrison, III (3) 10,891.67 .79%
Kevin P. Huffman 324.41 .02%
Eugene William Iager, Sr. (4) 68,117.46 4.92%
Fred T. Lewis (5) 19,012.33 1.37%
Richard H. Pettingill (6) 2,101.14 .15%
John S. Whiteside 37,401.33 2.69%
Total Directors 179,535.19 12.96%
All Directors and Executive Officers as
a Group (12 persons) 193,633.74 13.98%
5% Beneficial Owners
John F. Feezer, Jr. & Beulah Feezer 89,575.22 6.47%
Carrollton Bancorp 74,832.03 5.40%
15 Charles Plaza, Suite 200
Baltimore, MD 21201
- --------------------------------------------------------------------------------
(1) Includes 4,000 options granted to Mr. Eyre under the Director's Stock
Option Plan.
(2) Includes 4,000 options granted to Mr. Feezer under the Director's Stock
Option Plan; 1,925.48 Shares held as custodian for two children; 2,769.55
Shares held through a corporation as Trustee to a Profit Sharing Plan;
19,039.42 Shares held by a limited partnership; and 6,794.29 Shares held
through a corporation affiliated with Mr. Feezer.
(3) Includes 4,000 options granted to Mr. Harrison under the Director's Stock
Option Plan.
(4) Includes 4,000 options granted to Mr. Iager under the Director's Stock
Option Plan; and 18,440.18 Shares held as custodian for his four children.
(5) Includes 4,000 options granted to Dr. Lewis under the Director's Stock
Option Plan.
(6) Includes 2,000 options granted to Mr. Pettingill under the Director's Stock
Option Plan.
Page 10
<PAGE>
Dividend Reinvestment Plan
The Company has a Dividend Reinvestment Plan that permits stockholders
to choose whether to receive their entire dividend in stock or cash.
Stockholders who elect to receive their dividends in stock receive the number of
Shares equal to the amount of the dividend, divided by the value of the market
value of the Shares based on the price at which the Company's Shares were last
traded in bona fide sales in the previous year. A stockholder's election not to
participate in the plan results in a dilution of the percentage of Shares held
by the non-participating stockholder.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company's directors and executive officers and persons who own
more than 10% of the Common Stock file with the Securities and Exchange
Commission an initial report of beneficial ownership and subsequent reports of
changes in beneficial ownership of the Common Stock. To the Company's knowledge,
all reports required to be so filed by such persons have been timely filed
during the fiscal year ended December 31, 1998.
INDEPENDENT AUDITORS
The Board of Directors has engaged Rowles & Company, LLP, to audit the
books and accounts of the Company for the fiscal year ending December 31, 1999.
Rowles & Company, LLP served as the Company's independent auditor for 1998.
Rowles & Company, LLP has advised the Company that neither the accounting firm
nor any of its members or associates has any direct financial interest in or any
connection with the Company other than as independent public auditors. A
representative of Rowles & Company, LLP will be present at this year's Annual
Meeting and will be available to respond to appropriate questions.
FINANCIAL STATEMENTS
A copy of the Company's annual report containing audited financial
statements for the year ended December 31, 1998, accompanies the Proxy
Statement. A copy of form 10-K, as filed with the Securities and Exchange
Commission, may be obtained, without charge, upon written request to Barbara
Broczkowski, Patapsco Valley Bancshares, Inc., 8593 Baltimore National Pike,
Ellicott City,
Maryland 21043.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders' proposals for the 2000 Annual Meeting of Stockholders
pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 must be received
at the Company's principal office not later than November 22, 1999 (120 days
before the date of mailing based on this year's proxy statement date) and meet
all other requirements for inclusion in the proxy statement. The procedures for
nominations of Directors is set forth in Article I, Section 8 of the Bylaws and
are described above under the heading "Election of Directors." Pursuant to
Article I, Section 9 of the Bylaws, all other stockholder proposals must be
received by the Company at its principal office after December 22, 1999 but
before January 22, 2000.
Page 11
<PAGE>
OTHER BUSINESS
As of the date of this proxy statement, management does not know of any
other matters that will be brought before the meeting requiring action of the
stockholders. However, if any other matters requiring the vote of the
stockholders properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the proxies in accordance
with the discretion of management. The persons designated as proxies will also
have the right to approve any and all adjournments of the meeting for any
reason, including, if necessary, to permit further solicitation of proxies in
the event that there are not sufficient votes at the time of the meeting to
approve any of the proposals.
By Order of the Board of Directors
Edwin B. McKee
Corporate Secretary
March 19, 1999
Page 12
<PAGE>
Number of Shares _______
REVOCABLE PROXY
PATAPSCO VALLEY BANCSHARES, INC.
Proxy Solicited on Behalf of the Board of Directors
---------------------------------------------------
That the undersigned stockholder of Patapsco Valley Bancshares, Inc.
(the "Company") does hereby constitute and appoint Howard E. Harrison, III and
John S. Whiteside, my Attorneys and Proxies, each with the full power of
substitution, for and in my name and with all the powers I would possess if
personally present, to vote in the manner designated below that number of shares
of common stock of the Company specified above at the Annual Meeting of the
Stockholders of the Company to be held at 11 a.m., Tuesday, April 20, 1999 and
at any and all adjournments thereof.
1. Proposal to elect 3 individuals to serve as Directors until the 2002
Annual Meeting of Stockholders, and to elect 1 individual to serve as a
Director until the 2000 Annual Meeting of Stockholders, and until their
successors are duly elected and qualify:
CLASS I NOMINEES (Term Expires 2002):
JOHN F. FEEZER, III
KEVIN P. HUFFMAN
EUGENE WILLIAM IAGER, SR. FOR AGAINST FOR ALL EXCEPT
|_| |_| |_|
CLASS II NOMINEE (Term Expires 2000):
RICHARD H. PETTINGILL
FOR AGAINST FOR ALL EXCEPT
|_| |_| |_|
Instruction: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------
2. Proposal to transact such other business as may properly come before
the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed hereby
by the undersigned stockholder(s). If no direction is made, this proxy will be
voted for Proposal 1 and in the proxies' discretion for other business that may
properly come before the meeting. Please sign your name exactly as it appears on
your stock certificate. All owners must sign. Return this Proxy in the envelope
provided.
DATE: _____________________________ _____________________________(SEAL)
DATE: _____________________________ _____________________________(SEAL)
DATE: _____________________________ _____________________________(SEAL)
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE 1999 ANNUAL MEETING OF STOCKHOLDERS:
|_|
<PAGE>
