SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SANDY SPRING BANCORP, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
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 price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
SANDY SPRING BANCORP, INC.
17801 Georgia Avenue
Olney, Maryland 20832
(301) 774-6400
March 20, 1997
Dear Shareholder:
We invite you to attend the 1997 Annual Meeting of Shareholders of
Sandy Spring Bancorp, Inc. to be held at the Indian Spring Country Club, 13501
Layhill Road, Silver Spring, Maryland on Wednesday, April 16, 1997 at 3:00 p.m.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting. Also enclosed is the
Annual Report showing the results for 1996.
YOUR VOTE IS IMPORTANT. On behalf of the Board of Directors, we urge
you to sign, date and return the enclosed proxy as soon as possible, even if you
currently plan to attend the Annual Meeting. This will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend the Annual Meeting.
If you have any questions, please call Marjorie S. Holsinger, Corporate
Secretary, or me at (301) 774-6400.
Thank you for the cooperation and continuing support you have given
this institution.
Sincerely,
/s/ Willard H. Derrick
----------------------
Willard H. Derrick
Chairman of the Board
<PAGE>
SANDY SPRING BANCORP, INC.
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON April 16, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders
(the "Annual Meeting") of Sandy Spring Bancorp, Inc. ("Bancorp") will be held on
Wednesday, April 16, 1997, at 3:00 p.m. Eastern Time at the Indian Spring
Country Club, 13501 Layhill Road, Silver Spring, Maryland.
A Proxy and a Proxy Statement for the Annual Meeting and the 1996
Annual Report to Shareholders are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
(1) The election of four directors of Bancorp; and
(2) Such other business as may properly come before the Annual
Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Pursuant to the Bylaws, the Board of Directors has fixed the close of
business on March 10, 1997 as the record date for determination of the
shareholders entitled to vote at the Annual Meeting. Only holders of record of
Bancorp's Common Stock at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof.
In the event that there are not sufficient votes to conduct the
election of directors or to approve such other business as may properly come
before the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by Bancorp.
You are requested to fill in and sign the enclosed form of proxy, which
is solicited by the Board of Directors, 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.
By Order of the Board of Directors
/s/Marjorie S. Holsinger
Marjorie S. Holsinger
Corporate Secretary
Olney, Maryland
March 20, 1997
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE THAT IS ENCLOSED FOR
YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF THIS ENVELOPE IS MAILED IN THE
UNITED STATES.
<PAGE>
SANDY SPRING BANCORP, INC.
17801 Georgia Avenue
Olney, Maryland 20832
(301) 774-6400
--------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 16, 1997
--------------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Sandy Spring Bancorp, Inc. ("Bancorp"")
to be used at the 1997 Annual Meeting of Shareholders (the "Annual Meeting"), to
be held on Wednesday, April 16, 1997, at 3:00 p.m. Eastern Time at the Indian
Spring Country Club, 13501 Layhill Road, Silver Spring, Maryland. The
accompanying Notice of Annual Meeting and form of proxy and this Proxy Statement
are being first mailed on or about March 20, 1997 to shareholders of record as
of the close of business on March 10, 1997.
If the enclosed form of proxy is properly executed and returned to
Bancorp in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted FOR Proposal I to elect the four
nominees of Bancorp's Board of Directors as directors. Proxies marked as
abstentions and shares held in street name which have been designated by brokers
on proxies as not voted will not be counted as votes cast. Such proxies will be
counted for purposes of determining a quorum at the Annual Meeting. Except for
procedural matters incident to the conduct of the Annual Meeting, Bancorp does
not know of any other matters that are to come before the Annual Meeting. If any
other matters are properly brought before the Annual Meeting, the persons named
in the accompanying proxy will vote the shares represented by each such proxy on
such matters as determined by a majority of the Board of Directors.
The presence of a shareholder at the Annual Meeting will not
automatically revoke such shareholder's proxy. However, shareholders may revoke
a proxy at any time prior to its exercise by filing with the Corporate Secretary
of Bancorp, Marjorie S. Holsinger, a written notice of revocation, by delivering
to Bancorp a duly executed proxy bearing a later date or by attending the Annual
Meeting and voting in person.
The cost of soliciting proxies will be borne by Bancorp. In addition to
the solicitation of proxies by mail, Bancorp through its directors, officers and
regular employees, may also solicit proxies personally or by telephone or
telegraph. Bancorp also will request persons, firms, and corporations holding
shares in their names or in the name of nominees, which hold shares beneficially
owned by others, to send proxy materials to and obtain proxies from such
beneficial owners and will reimburse such holders for their reasonable expenses
in doing so.
The securities that can be voted at the Annual Meeting consist of
shares of common stock, par value $1.00 per share (the "Common Stock"), of
Bancorp. Each share entitles its owner to one vote on all matters. The close of
business on March 10, 1997 has been fixed by the Board of Directors as the
record date for determination of shareholders entitled to vote at the Annual
Meeting; there were approximately 2,360 record holders of the Common Stock as of
such date. The number of shares outstanding on March 10, 1997 was 4,911,461 The
presence, in person or by proxy, of at least a majority of the total number of
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting.
<PAGE>
A copy of the Annual Report to Shareholders for the year ended December
31, 1996 accompanies this Proxy Statement. Bancorp is required to file an Annual
Report on Form 10-K for its year ended December 31, 1996 with the Securities and
Exchange Commission ("SEC"). Shareholders may obtain, free of charge, a copy of
such Annual Report on Form 10-K by writing Marjorie S. Holsinger, Corporate
Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland
20832.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 10, 1997 with
respect to the shares of Common Stock beneficially owned by each director
continuing in office and nominee for director of Bancorp, by certain executive
officers, of Bancorp and by all directors and executive officers and the nominee
for director of Bancorp as a group. This information is based upon the most
recent report of beneficial ownership of securities filed with the Securities
and Exchange Commission. To the knowledge of management, no person owns
beneficially more than 5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Beneficial Common Stock
Name Ownership(1)(2)(3)(4) Outstanding
---- --------------------- ------------
<S> <C> <C>
John Chirtea 8,863 *
Susan D. Goff 209 *
Solomon Graham 1,881 *
Joyce R. Hawkins 16,060 *
Hunter R. Hollar 17,804 *
Thomas O. Keech 37,398 *
Charles F. Mess 4,131 *
Robert L. Mitchell 5,500 *
Robert L. Orndorff, Jr. 49,720 1.01%
David E. Rippeon 681 *
Lewis R. Schumann 3,050 *
W. Drew Stabler 17,339 *
James H. Langmead 3,372 *
Lawrence T. Lewis 6,750 *
Stanley L. Merson 11,261 *
Frank H. Small 3,478 *
All directors and executive officers
as a group 17 persons) 192,704 3.90%
</TABLE>
* Less than 1% of Bancorp's outstanding Common Stock.
(1) Under the rules of the SEC, an individual is considered to
"beneficially own" any share of Common Stock which he or she, directly
or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise, has or shares: (1) voting power, which
includes the power to vote, or to direct the voting of, such security;
and/or (2) investment power, which includes the power to dispose, or to
direct the disposition, of such security. In addition, an individual is
deemed to be the beneficial owner of any share of Common Stock of which
he or she has the right to acquire voting or investment power within 60
days of March 10, 1997. Includes 31,750 shares of Common Stock subject
to outstanding options which are exercisable within 60 days of March
10, 1997, of which Hunter R. Hollar, James H. Langmead, Lawrence T.
Lewis, Stanley L. Merson and Frank H. Small hold options to purchase
15,000 shares, 2,750 shares, 1,000 shares, 7,750 shares and 2,750
shares of Common Stock, respectively. One executive officer who is not
a Named Executive Officer holds options for 2,500 shares. Also includes
230 shares, 184 shares, 257 shares, 1,300 shares and 728 shares of
Common Stock owned by Mr. Hollar, Mr. Langmead, Mr. Lewis, Mr. Merson
and Mr. Small, respectively, and 1,873 shares of Common Stock owned by
an executive officer who is not a Named Executive Officer, as
participants in Bancorp's Cash and Deferred Profit Sharing Plan and
Trust.
(2) Includes shares owned directly by directors and executive officers of
Bancorp as well as shares held by their spouses and minor children and
trusts of which certain directors are trustees.
(3) Fractional shares resulting from participation in the dividend
reinvestment plan have been rounded to the nearest whole share.
-2-
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
Pursuant to Bancorp's Bylaws, the directors are divided into three
classes, as nearly equal in number as possible, with the number of directors as
specified in the Bylaws. In general, the term of office of only one class of
directors expires in each year, and their successors are elected for terms of
three years and until their successors are elected and qualified. At the Annual
Meeting a total of four director-nominees will be elected for three-year terms.
With respect to the election of directors, each shareholder of record on the
record date is entitled to one vote for each share of Common Stock held. A
plurality of all the votes cast at the Annual Meeting will be sufficient to
elect a nominee as a director.
Two directors who have served Bancorp for many years are retiring,
effective at the conclusion of the 1997 Annual Meeting, because they have
reached the mandatory retirement age of 70 specified in Bancorp's Bylaws. The
retiring directors are Mr. Willard H. Derrick, Chairman of the Board of Bancorp
and the Bank, and Mr. Andrew N. Adams, Jr.. Each retiring director has provided
long and valuable service to Bancorp and the Bank and will be missed by the
continuing directors and executive management.
Information as to Nominees and Continuing Directors
The following table sets forth the names of the Board of Directors'
four nominees for election as directors. Also set forth is certain other
information, some of which has been obtained from Bancorp's records and some of
which has been supplied by the nominees and continuing directors with respect to
each such person's principal occupation and employment during the past five
years, his or her age at December 31, 1996, the periods during which he or she
has served as a director and his or her positions currently held with Bancorp.
It is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as directors of the
four nominees listed below for terms of three years, unless otherwise directed
by the shareholder. The Board of Directors believes that each of the nominees
will stand for election and will serve if elected as director. If any person
nominated by the Board of Directors fails to stand for election or is unable to
accept election, the proxies will be voted for the election of such other person
or persons as the Board of Directors may recommend.
The Board of Directors recommends a vote "FOR" each of the nominees
named below as a director of Bancorp.
<TABLE>
<CAPTION>
Member Term
Position(s) Held of Board Currently
Name Age With Bancorp Since (1) Expires
- ---- --- --------------- --------- --------
DIRECTOR-NOMINEES FOR TERMS TO EXPIRE AT
THE 2000 ANNUAL MEETING
<S> <C> <C> <C> <C>
Susan D. Goff 51 Director 1994 1997
Robert L. Mitchell 60 Director 1991 1997
Robert L. Orndorff, Jr. 40 Director 1991 1997
David E. Rippeon 47 -- -- --
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Member Term
Position(s) Held of Board Currently
Name Age With Bancorp Since (1) Expires
- ---- --- --------------- --------- --------
CONTINUING DIRECTORS
<S> <C> <C> <C> <C>
Solomon Graham, Jr. 53 Director 1994 1998
Charles F. Mess 58 Director 1987 1998
Lewis R. Schumann 53 Director 1994 1998
W. Drew Stabler 59 Director 1986 1998
John Chirtea 59 Director 1990 1999
Joyce R. Hawkins 63 Director 1995 1999
Hunter R. Hollar 48 President, Chief 1990 1999
Executive Officer and
Director
Thomas O. Keech 63 Director 1995 1999
</TABLE>
- ----------
(1) The Boards of Directors of Bancorp and its principal subsidiary, Sandy
Spring National Bank (the "Bank"), are composed of the same persons.
Includes term of office as a director of the Bank prior to the
formation of Bancorp as the holding company for the Bank in January
1988.
The principal occupation(s) and business experience of each nominee and
director of Bancorp for the last five years are set forth below.
Director-Nominees:
Susan D. Goff is President of M.D. IPA, Inc., a vice president of
Optimum Choice, Inc., and a senior vice president of their parent holding
company, Mid-Atlantic Medical Services, Inc., a health maintenance organization.
Robert L. Mitchell is President and Chief Executive Officer of
C-I/Mitchell and Best Company which is engaged in homebuilding and real estate
development.
Robert L. Orndorff, Jr. is President of RLO Contractors, Inc., an
excavating contractor.
David E. Rippeon is President and Chief Executive Officer of
Gaithersburg Farmers Supply, Inc., a tractor and equipment dealership.
-4-
<PAGE>
Continuing Directors:
Solomon Graham is founder, President and Chief Executive Officer of
Quality Biological, Inc., a medical technology firm providing reagents to
research facilities.
Charles F. Mess, M.D. is in the practice of general orthopedics.
Lewis R. Schumann is a partner in the law firm of Miller, Miller and
Canby, Chtd.
W. Drew Stabler is a partner in Pleasant Valley Farm, a crop and
livestock operation.
John Chirtea is retired from LCOR, a national real estate development
company. In prior years, Mr. Chirtea was a partner in the Linpro Co., the
predecessor company of LCOR.
Joyce R. Hawkins is a realtor with Weichert Realtors.
Hunter R. Hollar is President and Chief Executive Officer of Bancorp
and the Bank. From 1990 through 1993, Mr. Hollar served as President of Bancorp
and President and Chief Operating Officer of the Bank.
Thomas O. Keech retired as Vice President of Bancorp and Executive Vice
President of the Bank effective December 31, 1995. Mr. Keech previously served
as Vice President and Treasurer of Bancorp and Executive Vice President and
Chief Financial Officer of the Bank.
Corporate Governance and Other Matters
During 1996, each of Bancorp's and the Bank's Boards of Directors held
twelve regular meetings and one special meeting.
The average attendance was 93% for meetings of Bancorp's and the Bank's
Boards of Directors. All incumbent directors attended 75% or more of the
aggregate of (a) the total number of meetings of the Boards of Directors and (b)
the total number of meetings held by all committees on which they served during
the period of their service during the year, except for Lewis R. Schumann whose
attendance was 71%.
Bank directors who are not employed by the Bank receive an annual retainer of
$3,000 and fees of $400 for attendance at each meeting of the Board of
Directors, $400 for each Executive Committee meeting, and $250 for other
committee meetings ($150 if held immediately before or after a meeting of the
Board of Directors or another committee). Bancorp directors who are not employed
by Bancorp do not receive any additional compensation except for fees of $400
for attendance at each meeting of the Board of Directors not held in conjunction
with a meeting of the Bank's Board of Directors and except for fees of $250 or
$150, paid on the same basis as for Bank committee meetings (i.e., $250 or
$150), for each meeting of the Nominating Committee.
Bancorp's Board of Directors has standing Audit and Nominating
Committees. The Bank has a standing Human Resources Committee that performs the
functions of a compensation committee. The functions, composition and number of
meetings for these committees in 1996 were as follows:
Audit Committee - The Audit Committee is composed of John Chirtea,
Chairman, Susan D. Goff, Solomon Graham, Joyce R. Hawkins, Charles F. Mess, and
Robert L. Mitchell. The Audit Committee, whose members are neither officers nor
employees of Bancorp or the Bank, provides general oversight of the internal
audit function, reviews the findings of external audits and examinations,
evaluates the adequacy of the Bank's insurance coverage, reviews the activities
of the Bank's Compliance Council, reviews the annual report to shareholders and
Form 10-K on behalf of the Board and monitors internal controls for financial
reporting. During 1996, four meetings were held.
-5-
<PAGE>
Nominating Committee - The Nominating Committee is composed of Willard
H. Derrick, Chairman, Andrew N. Adams, Jr., Hunter R. Hollar, W. Drew Stabler
and Charles F. Mess. The Nominating Committee makes recommendations to the Board
of Directors with respect to nominees for election as directors. While the
Nominating Committee will consider nominees recommended by shareholders, it has
not actively solicited recommendations by Bancorp's shareholders for nominees
nor has it established any procedures for this purpose other than as set forth
in the Bylaws. See "Shareholder Proposals." During 1996, one meeting was held.
Human Resources (Compensation) Committee - The Human Resources
Committee is composed of W. Drew Stabler, Chairman, John Chirtea, Charles F.
Mess, Robert L. Mitchell and Robert L. Orndorff, Jr. The Human Resources
Committee recommends salaries and other compensation for executive officers,
conducts an annual review of the salary budget, considers other compensation
plans and makes recommendations to the Board, deals with matters of personnel
policy and, with the Stock Option Committee, administers the 1992 and 1982 Stock
Option Plans. During 1996, two meetings were held.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash and noncash compensation for
each of the last three years awarded to or earned by (i) the Chief Executive
Officer, and (ii) each of the four other most highly compensated executive
officers of Bancorp whose salary and bonus earned in 1996 exceeded $100,000 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Name and Principal Annual Compensation Stock Option All Other
Position in 1996 Year Salary Bonus Grants (Shares) Compensation(1)
- ------------------ ---- -------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Hunter R. Hollar 1996 $185,223 $33,381 1,500 $9,959
President and Chief Executive 1995 167,335 15,000 1,500 7,425
Officer of Bancorp and the Bank 1994 162,000 20,000 3,000 7,500
James H. Langmead 1996 107,692 19,423 750 5,795
Vice President and Treasurer 1995 95,115 7,500 1,000 5,079
of Bancorp and Senior Vice 1994 85,000 7,500 1,500 4,500
President and Chief Financial
Officer of the Bank
Lawrence T. Lewis 1996 105,769 31,760(2) 1,500 3,838
Senior Vice President 1995 -- -- -- --
of the Bank 1994 -- -- -- --
Stanley L. Merson 1996 97,115 17,491 750 5,218
Senior Vice President 1995 86,477 7,500 1,000 4,776
of the Bank 1994 82,525 10,000 1,500 4,626
Frank H. Small 1996 92,485 16,666 750 3,315
Senior Vice President 1995 83,131 7,500 1,000 2,994
of the Bank 1994 80,500 7,500 1,500 2,817
</TABLE>
- ----------
(1) Amounts shown in this column pertain to deferred compensation under
Bancorp's Cash and Deferred Profit Sharing Plan and Trust. The amount
of indirect compensation in the form of personal benefits received in
1996 by Messrs. Hollar, Langmead, Lewis, Small and Merson did not
exceed 10% of the annual compensation paid to each such executive
officer.
(2) Includes a $15,000 bonus paid to Mr. Lewis upon the commencement of his
employment.
-6-
<PAGE>
Stock Option Plans. Bancorp maintains two stock option plans, the
purposes of which are to attract, retain and motivate key officers of Bancorp
and the Bank by providing key officers with a stake in the success of Bancorp as
measured by the value of its shares.
The 1992 Stock Option Plan (the "1992 Option Plan"), which was
approved by the shareholders at the 1992 Annual Meeting of Shareholders,
authorizes the issuance of up to 270,000 shares of Common Stock, subject to
certain adjustments for changes in Bancorp's capital structure. The 1992 Option
Plan has a term of 10 years from its effective date (January 1, 1992) after
which date no stock options may be granted. As of March 10, 1997, options for
29,250 shares were outstanding under the 1992 Option Plan. In 1996, Bancorp also
assumed certain options (the "ABI Options") outstanding under the Incentive
Stock Option Plan of Annapolis Bancshares, Inc. (the "ABI Plan"), in connection
with the acquisition of that company by merger. The 1982 Stock Option Plan (the
"1982 Option Plan") and the ABI Plan have been terminated, except with respect
to options which were outstanding on each plan's termination date. As of March
10, 1997, options for 6,000 shares were outstanding under the 1982 Option Plan
and ABI Options for 751 shares of the Common stock were outstanding. The 1992
Option Plan and the 1982 Option Plan are referred to collectively as the "Option
Plans."
The Option Plans provide for the grant of "incentive options" as
defined in Section 422 of the Code. The 1992 Option Plan also provides for the
grant of "non-incentive options" to officers and other employees on terms and
conditions consistent with the 1992 Option Plan as the Stock Option Committee,
which administers the Option Plans, may determine. The Stock Option Committee is
comprised of all disinterested (outside) directors (i.e., all directors other
than Mr. Hollar).
Options have been granted under the Option Plans and may continue to be
granted under the 1992 Option Plan only to key employees of Bancorp and its
subsidiaries. Under the Option Plans, the maximum option term is 10 years from
the date of grant. Options granted under the Option Plans prior to 1996 were
immediately exercisable upon grant. Options granted in 1996 under the 1992 Plan
were first exercisable as follows: one-third upon the date of grant, one-third
upon the first anniversary of the date of grant, and one-third upon the second
anniversary of the date of grant. The exercise price of a stock option may not
be less than 100% of the fair market value of the Common Stock on the date of
grant. The exercise price of stock options must be paid for in full in cash or
shares of Common Stock, or a combination of both. The Stock Option Committee has
the discretion when making a grant of stock options under the 1992 Option Plan
to impose restrictions on the shares to be purchased in exercise of such
options.
The Committee also has the authority to cancel stock options
outstanding under the 1992 Option Plan with the consent of the optionee and to
grant new options at a lower exercise price in the event that the fair market
value of the Common Stock at any time prior to the exercise of the outstanding
stock options falls below the exercise price of such option. Consistent with
Bancorp policy, however, the Committee does not intend to use this authority to
cancel and reissue stock options at a lower exercise price, whether or not any
decline in the market price of Bancorp's shares is the result of general
economic conditions.
-7-
<PAGE>
Option Grants in 1996
The following table contains information concerning the grant of stock
options under the Option Plans to the Chief Executive Officer and each of the
other Named Executive Officers. The Option Plans do not provide for the grant of
stock appreciation rights.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------- Potential Realizable
% of Total Value at Assumed
Options Options Exercise Annual Rates of Stock
Granted Granted to or Price Appreciation
(Number Employees Base Price Expiration for Option Term
Name of Shares)(1) in Year ($ per Share) Date 5% 10%
- ---- ------------- ----------- ------------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Hunter R. Hollar 1,500 (2) 25.0% $33.25 12/18/2006 $31,365 $79,485
James H. Langmead 750 (2) 12.5 33.25 12/18/2006 15,682 39,742
Lawrence T. Lewis 750 (3) 12.5 36.50 1/22/2006 17,213 43,628
750 (2) 12.5 33.25 12/18/2006 15,682 39,742
Stanley L. Merson 750 (2) 12.5 33.25 12/18/2006 15,682 39,742
Frank H. Small 750 (2) 12.5 33.25 12/18/2006 15,682 39,742
</TABLE>
- ----------
(1) In each case, the exercise price was equal to the fair market value of
the Common Stock on the date of grant.
(2) Options granted during 1996 that were exercisable as follows: one-third
upon the date of grant, one-third upon the first anniversary of the
date of grant, and one-third upon the second anniversary of the date of
grant.
(3) Options granted during 1996 that were exercisable immediately.
Aggregated Option Exercises in
1996 and Year End Option Values
The following table sets forth information concerning the value of
options held by the Chief Executive Officer and the other Named Executive
Officers at December 31, 1996. Such persons exercised no options during 1996.
Number of Value of
Unexercised Unexercised
Options In-the-Money
at Year End Options
----------- at Year End(1)
Exercisable/ --------------
Unexercisable Exercisable/
Name (Number of Shares) Unexercisable
---- ------------------ --------------
Hunter R. Hollar 15,000/1,000 $152,490/*
James H. Langmead 2,750/500 11,250/*
Lawrence T. Lewis 1,000/500 */*
Stanley L. Merson 7,750/500 76,245/*
Frank H. Small 2,750/500 11,250/*
(1) The difference between the fair market value of the underlying
securities at year-end and the exercise or base price.
* Exercisable options held by Mr. Lewis were not in the money at year
end. No unexercisable options held by the indicated persons were in the
money at year end.
-8-
<PAGE>
Pension Plan Table
The table below shows estimated annual benefits payable upon retirement
to persons in the specified remuneration and years-of-service categories if such
retirement had occurred on December 31, 1996. The benefits listed are provided
on a 10 year certain-and-life basis and are not subject to deduction for Social
Security or other offset amounts.
<TABLE>
<CAPTION>
Highest 5-Year Years of Credited Service at Retirement
---------------------------------------------------------------------------------
Average Earnings 15 20 25 30 35 40 and above
- ---------------- -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000 $ 5,625 $ 7,500 $ 9,375 $ 11,250 $ 13,125 $ 15,000
75,000 16,875 22,500 28,125 33,750 39,275 45,000
125,000 28,125 37,500 46,875 56,250 65,625 75,000
150,000 33,750 45,000 56,250 67,500 78,750 90,000
160,000 and more 36,000 48,000 60,000 72,000 84,000 96,000
</TABLE>
Earnings covered by the Pension Plan are total wages, including
elective pre-tax contributions under Section 401(k) of the Code, overtime pay,
bonuses, and other cash compensation which for the named executives correspond,
in general, to the total of the amounts in the "Salary" and "Bonus" columns in
the Summary Compensation Table, up to a total of $160,000. Benefits are computed
on a monthly basis at the rate of 1.5% of highest five-year average monthly
earnings multiplied by years of service up to 40 years for eligible persons
retiring at age 65. Early retirement is also permitted by the Pension Plan at
age 55 after at least 10 years of service. As of February 26, 1997, Bancorp's
executive officers shown in the compensation table had accumulated the following
years of credited service toward retirement: Mr. Hollar - 6 years, Mr. Langmead
- - 5 years, Mr. Lewis - 0 years, Mr. Merson -14 years, and Mr. Small - 6 years.
Supplemental Executive Retirement Plan. In December 1990, the Board of
Directors of the Bank, upon the recommendation of the Compensation Committee,
approved the adoption of a Supplemental Executive Retirement Plan ("SERP") for
certain selected executives of the Bank. In February 1992, Bancorp agreed to
become a party to the SERP. The SERP is designed to provide certain
post-retirement benefits to enable a targeted level of retirement income to be
met and to provide certain pre-retirement death benefits should the covered
executive die prior to retirement age.
Benefits. The SERP provides two forms of benefits to participating
executives. An annual pre-retirement death benefit equal to a specified
percentage of the participating executive's date of death annual salary is
provided. The annual pre-retirement death benefit is payable for a 10-year
period commencing in the year of the executive's death. An annual
post-retirement deferred compensation benefit is also provided. The amount of
the post-retirement benefit is calculated to replace a specified percentage of
the participating executive's final average income. The post-retirement benefit
is payable over a 10-year period commencing at the executive's age 65 (or later
retirement date).
Requirement for Benefits. The SERP requires that an individual
contractual agreement be entered into between each participating executive and
the Bank. The amount of benefits payable to the participating executive (or his
beneficiary upon his death) will depend on a number of factors. The executive's
post-retirement deferred compensation benefits vest over a 15-year period, with
such vesting period commencing from the executive's initial date of employment
with Bancorp or the Bank. Payment of the executive's post-retirement deferred
compensation benefit commences at age 65 or the executive's later retirement
date. With approval of the Board of Directors of the Bank, the participating
executive may retire early (on or after age 55) and receive (at age 65) payment
of the vested portion of his post-retirement deferred compensation benefit. With
no approval of the Board of Directors, the executive may retire early and
receive (at age 65) payment of his vested accrued benefit (which is the portion
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<PAGE>
of such participant's future deferred compensation benefit which has been
currently accrued and expensed for financial accounting purposes). The Bank has
the option to begin payment of benefits on or after the executive's early
retirement or termination from service. If the payments begin on or after the
early retirement date (and prior to age 65), then the executive's benefit will
be discounted from that at the normal retirement date by an interest factor
equal to the Pension Benefit Guaranty Corporation's interest rate used to value
deferred and immediate annuities in effect at the date payments are to commence.
Termination of Employment. Upon a voluntary termination of employment
(prior to early retirement), the participating executive will receive an amount
equal to his vested accrued benefit, payable as a monthly annuity over a 10-year
period commencing at age 65. Upon a "just cause" termination of employment by
Bancorp or the Bank, the executive will lose all rights to benefits under the
SERP. Upon a termination of employment without just cause, the executive will
automatically become 100% vested in the full post-retirement deferred
compensation benefit, and will begin to receive such benefit (payable over a
10-year period) at age 65. A just cause termination of a participating executive
is a termination for reasons of theft, fraud, embezzlement, willful misconduct
(causing significant property damage or personal injury), or willful malfeasance
or gross negligence on the part of the executive.
Change-in-Control. Upon a change-in-control of Bancorp, if the
participating executive is terminated without just cause or terminates
voluntarily for good cause within three years after the change-in-control, then
the executive becomes 100% vested in his post-retirement deferred compensation
benefit. If the change-in-control has not been approved by the Board of
Directors, a lump-sum payment will be made within 30 days after termination of
employment; otherwise, payments begin when the participating executive reaches
normal retirement age. A change-in-control of Bancorp is defined as (a) the
acquisition of 20% or more of Bancorp's stock, (other than through a
Bank-sponsored tax-qualified retirement plan), (b) a change in a majority of
directors as a result of a merger or, (c) a sale of substantially all of the
assets of Bancorp.
Amendment or Termination. The Bank may amend or terminate the SERP at
any time. However, the participating executive's vested accrued benefit at the
date of termination of the SERP cannot be revoked or caused to be forfeited.
Loss of Benefits. If the participating executive competes, directly or
indirectly, with Bancorp or the Bank while covered under the SERP, all rights
the executive (or his beneficiary) may have in benefits under the SERP shall
terminate.
Participants. Mr. Hollar was the only executive officer who
participated in the SERP during 1996. Mr. Derrick and Mr. Keech retired on
December 31, 1995, and in 1996 received lump-sum payments of $132,233 and
$166,741, respectively, in lieu of future payouts under the SERP. The annual
post-retirement deferred compensation benefit is designed, in conjunction with
the Bank's pension plan and Social Security retirement benefits, to replace
between 65% and 70% of such participating executive's projected final average
income at retirement date. Using a 70% income replacement target for Mr. Hollar,
an annual amount of $88,050 per year has been projected to be paid over a
10-year period at age 65.
Employment Agreements. In December 1990, Bancorp and the Bank
(collectively, the "Company") entered into an Employment Agreement (the "1990
Agreement") with Hunter R. Hollar (the "Executive"). The Agreement provided for
automatic one-year extensions on each January 1 after its initial term ended on
December 31, 1993, provided that neither the Company nor Mr. Hollar had given
written notice at least 90 days prior to a renewal date of its intention not to
renew the Agreement. The 1990 Agreement, as renewed, was in effect throughout
1996. Effective January 30, 1997, the 1990 Agreement was replaced with a new
employment agreement (the "Current Agreement").
-10-
<PAGE>
The Boards of Directors of Bancorp and the Bank believe that the
Current Agreement assures fair treatment of the Executive in relation to his
career with the Company by assuring him of some financial security. The Current
Agreement also protects the shareholders by encouraging the Executive to
continue his attention to his duties without distraction in a potential merger
or takeover circumstance and by helping to maintain the Executive's objectivity
in considering any proposals to acquire the Company.
Following are summaries of the terms and conditions of the 1990
Agreement and the Current Agreement.
The 1990 Agreement. The 1990 Agreement provided for the payment of cash
and other benefits to the Executive, including a fixed salary, reviewed
annually, and, at the discretion of the Board of Directors, subject to increase
and the award of additional or special compensation based on the Executive's
performance. In addition, the 1990 Agreement provided for the reimbursement of
reasonable business expenses, the use of an automobile (with reimbursement for
expenses), and membership dues at a country club located in the Olney, Maryland
area. The 1990 Agreement also provided for special separation payments in the
event of termination of the Executive's employment under certain circumstances,
including permanent disability. If the Executive's employment with the Company
had been terminated (a) by reason of voluntary termination prior to age 65
retirement age, (b) by reason of retirement on or after age 65 retirement age,
(c) by reason of the Executive's death, or (d) for cause (as defined in the 1990
Agreement), then all obligations of the Company under the 1990 Agreement were to
automatically terminate. If termination of employment occurred for any reason
other than those indicated, the Executive was entitled to severance pay equal to
the Executive's then fixed salary for a six-month period. In the event of a
change-in-control of the Company, the Executive also was entitled to payment of
certain benefits. If within two years after a change-in-control, the Company had
terminated the Executive's employment without good cause, or the Executive
voluntarily terminated employment for good reason (as defined in the 1990
Agreement), then the Company, or its successor, was required to make a lump-sum
cash payment to the Executive equal to 2.99 times the Executive's then
12-month's annual salary at the greater of the Executive's salary rate in effect
on the date of the change-in-control or the Executive's salary rate in effect on
the date his employment terminated. The Executive also was entitled to continued
participation for a three-year period in certain Company-sponsored health and
welfare plans. Such payments and benefits, were limited, however, so as not to
exceed the amount allowable as a deduction under Section 280G of the Internal
Revenue Code.
The Current Agreement. The Current Agreement has an initial term of
three years, and is subject to automatic one-year extensions of such term on
each January 30, provided that neither the Company nor Mr. Hollar has given
written notice at least 60 days prior to the renewal date of its intention not
to renew. The Current Agreement provides for the payment of cash and other
benefits to the Executive, including a fixed salary, reviewed annually and
subject to increase or decrease at the Board of Directors' discretion, provided
that the salary may not be less than $190,000. The Executive also is entitled to
participate in bonus and fringe benefit, incentive compensation, life insurance,
medical, profit sharing and retirement plans, and to continued participation in
a supplemental retirement plan or arrangement. As under the 1990 Agreement, the
Executive is entitled to reimbursement of reasonable business expenses, the use
of an automobile (with reimbursement for expenses), and membership dues at a
country club located in the Olney, Maryland area. With minor exceptions, the
Current Agreement terminates, and there are no additional payments due under it,
upon termination based upon death, retirement, or just cause ( as defined) by
the Company, or upon voluntary termination by the Executive without good reason
(as defined). Upon termination for disability, the Executive is entitled to
receive his salary through the term of the Current Agreement, reduced by
payments under any disability plan maintained by the Company, plus regular
employee benefits. Upon termination of the Executive without just cause by the
Company, or with good reason by the Executive, the Executive is entitled to
salary and bonuses for the remaining term of the Current Agreement, payable in a
lump sum based upon prior year compensation levels. The Executive is prohibited
from conflicts of interest, and must maintain the confidentiality of nonpublic
information regarding the Company and its customers. The Executive also is bound
by a covenant not to compete and not to interfere with other employees of the
Company if the Executive is terminated for just cause, disability, or retirement
or resigns without good reason.
-11-
<PAGE>
Change in Control Benefits. In the event of a change-in-control of the
Company, the Executive is entitled to payment of certain benefits. If within six
months prior to, or two years after, a change-in-control, the Company terminates
the Executive's employment without good cause, or the Executive voluntarily
terminates employment for good reason (as defined in the Current Agreement),
then the Company, or its successor, is required to make a lump-sum cash payment
to the Executive equal to 2.99 times the sum of the Executive's annual salary at
the highest rate in effect during the preceding twelve months and bonuses for
the preceding calendar year. The Executive also is entitled to continued
participation for a three-year period in certain Company-sponsored health and
welfare plans. These payments and benefits, are limited, however, so as not to
exceed the amount allowable as a deduction under Section 280G of the Internal
Revenue Code. As of December 31, 1996, if a change-in-control had occurred and
the Executive had terminated employment with good reason or had been terminated
from employment without just cause, then $545,757 would have been payable to the
Executive under the change-in-control provisions of the 1990 Agreement, after
application of the limitations of Section 280G of the Code. A similar amount
would have been payable under the Current Agreement, if it had then been in
effect. Bancorp does not believe that payment of this amount would have a
material adverse affect on the financial or operating condition of Bancorp or
the Bank.
Agreements with Other Named Executive Officers. The other Named
Executive Officers also entered into employment agreements with the Company
effective January 30, 1997. The material terms and conditions of each of these
agreements are similar to those of the Current Agreement entered by Mr. Hollar,
except that (a) each of them is for an initial term of two years, subject to
annual renewal, and (b) the compensation and duties, and provisions relating to
them, are different in each agreement. Under the agreements, the other Named
Executive Officers are not entitled to club memberships or use of an automobile.
The agreements call for the employment of Mr. Langmead as Vice President and
Treasurer of Bancorp and Senior Vice President and Chief Financial Officer of
the Bank, and of Mr. Lewis, Mr. Merson, and Mr. Small as Senior Vice Presidents
of the Bank, at minimum base salaries of $110,000, $110,000, $100,000, and
$95,000, respectively.
REPORT OF THE HUMAN RESOURCES COMMITTEE
As members of the Human Resources Committee, it is our duty to review
compensation policies applicable to executive officers; to consider the
relationship of corporate performance to that compensation; to recommend salary
and bonus levels and stock option grants for executive officers for
consideration by the Boards of Directors of Bancorp and the Bank or their
committees, as appropriate; and to administer various incentive plans of Bancorp
and the Bank.
Under the compensation policy of Bancorp, which is endorsed by the
Human Resources Committee, compensation is paid based both on the executive
officer's performance and the performance of the entire company. In assessing
the performance of Bancorp and the Bank for purposes of compensation decisions,
the Human Resources Committee considers a number of factors, including profits
of Bancorp and the Bank during the past year relative to their profit plans,
changes in the value of Bancorp's stock, reports of federal regulatory
examinations of Bancorp and the Bank, growth, business plans for future periods,
and regulatory capital levels. The Human Resources Committee assesses individual
executive performance based upon the executive's responsibilities and the
Committee's determination of the executive's contributions to the performance of
Bancorp and the accomplishment of Bancorp's strategic goals. In assessing
performance for purposes of establishing base salaries, the members of the
Committee do not make use of a mechanical formula, but instead weigh the factors
described above as they deem appropriate in the circumstances. The 1996 salary
levels of Bancorp's executive officers were established consistent with this
compensation policy.
Mr. Hollar became Chief Executive Officer of Bancorp and the Bank
effective January 1, 1994. During 1996, the level of Mr. Hollar's annual salary
was subject to the terms of an Agreement with Bancorp and the Bank entered in
1990 (the "1990 Agreement"). The 1990 Agreement was renewed effective January 1,
1996 for an additional one-year term. It was replaced, effective January 30,
1997, with a new Agreement (the "Current
-12-
<PAGE>
Agreement"). Under the 1990 Agreement and the Current Agreement, Mr. Hollar's
annual salary is reviewed annually and is subject to increase at the discretion
of the Board of Directors.
The Committee conducted a review of executive officer base compensation
in March 1996. Changes in base compensation for 1996 were effective on April 1.
In its review, the Committee determined that the performance of Mr. Hollar was
excellent, based upon the 1995 financial performance of Bancorp, including the
growth in assets, income, and capitalization during 1995; the financial
performance trends for 1995 and the preceding four years, which include growth
in assets, net operating income, and stockholders equity in each year; the
results of confidential regulatory examinations; Bancorp's planned levels of
financial performance for 1996; Mr. Hollar's continued involvement in community
affairs in the communities served by Bancorp; and a general level of
satisfaction with the management of Bancorp and its subsidiaries. As a result of
this review, which included a comparison of Mr. Hollar's compensation with
compensation paid to officers of comparable institutions, Mr. Hollar's salary
was increased by 12.2% to $190,000.
Executive officers of Bancorp and the Bank have been granted incentive
stock options under Bancorp's Stock Option Plans. The purposes of the Stock
Option Plans are to attract, retain and motivate key officers of Bancorp and the
Bank by providing them with a stake in the success of Bancorp as measured by the
value of its shares. Options are granted at exercise prices equal to the fair
market value of the shares on the dates of grant. The Stock Option Committee,
which consists of the disinterested directors of Bancorp, has general
responsibility for granting stock options to key employees and administering the
plans. The Human Resources Committee recommends to the Stock Option Committee
the recipients and the amounts and other terms of options to be granted. During
1996, incentive stock options for 5,250 shares were granted at an exercise price
of $33.25 per share, including options for 1,500 shares granted to Mr. Hollar
and 750 shares each granted to Mr. Langmead, Mr. Lewis, Mr. Merson and Mr.
Small. In addition, incentive stock options for 750 shares were granted to Mr.
Lewis at an exercise price of $36.50 upon the commencement his employment in
January 1996.
The Human Resources Committee recommends to the Board of Directors the
amount to be contributed each year to the Bank's Cash and Deferred Profit
Sharing Plan and Trust. Under this Plan, each participant receives an allocation
based upon the participant's compensation for the year. Each executive officer
of Bancorp participates in the Plan. In 1995, the Human Resources Committee
adopted a formula to establish the amount of aggregate contribution to the
profit sharing plan. This formula uses measures of loan and deposit growth,
profitability, asset quality, and productivity ratios compared with those
measures for the prior year and target levels established for the Bank. For
1996, the Human Resources Committee recommended, and the Board of Directors of
the Bank approved, an aggregate contribution of approximately $468,000 or 5.4%
of annual compensation of eligible participants, which was based upon the
results of the formula.
The Bank also awards quarterly cash bonuses to participants, including
executive officers, based upon the performance of the Bank or business units,
and annual bonuses for executive officers based solely on Bank performance, in
each case using the formula described above. Performance bonuses of $33,381,
$19,423, $16,760, $17,491 and $16,666 were awarded to Mr. Hollar, Mr. Langmead,
Mr. Lewis, Mr. Merson and Mr. Small, respectively, in 1996. Mr. Lewis also
received a bonus payment of $15,000 upon the commencement of his employment.
No member of the Human Resources Committee is a former or current
officer or employee of Bancorp or the Bank.
March 13, 1997 HUMAN RESOURCES COMMITTEE
W. Drew Stabler, Chairman
John Chirtea
Charles F. Mess
Robert L. Mitchell
Robert L. Orndorff, Jr.
-13-
<PAGE>
STOCK PERFORMANCE COMPARISONS
The following graph and table show the cumulative total return on the
Common Stock of Bancorp over the last five years, compared with the cumulative
total return of the NASDAQ Stock Market Index (U.S. Companies) and the NASDAQ
Bank Stock Index of banks and bank holding companies over the same period.
Cumulative total return on the stock or the index equals the total increase in
value since December 31, 1991, assuming reinvestment of all dividends paid into
the stock or the index, respectively. The graph and table were prepared assuming
that $100 was invested on December 31, 1991 in the Common Stock and the
securities included in the indexes.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 1991 through December 31, 1996
[GRAPHIC OMMITTED}
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 1991 through December 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Bancorp $100.0 $121.7 $150.7 $164.1 $239.3 $223.6
NASDAQ Stock Market Index 100.0 116.4 133.6 130.6 184.7 227.2
(U.S. Companies)
NASDAQ Bank Stock Index 100.0 145.6 166.0 165.4 246.3 325.6
- --------------------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE>
TRANSACTIONS AND RELATIONSHIPS WITH MANAGEMENT
Bancorp and the Bank have had in the past, and expect to have in the
future, banking transactions in the ordinary course of business with directors
and executive officers on substantially the same terms, including interest rates
and collateral on loans, as those prevailing at the same time for comparable
transactions with other persons, and, in the opinion of management, these
transactions do not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
Director Susan D. Goff is President of M.D. IPA, one of three health
insurance providers which employees of the Bank and Bancorp may select under the
Company's health insurance plan.
Director Lewis R. Schumann is a partner in the law firm of Miller,
Miller and Canby, Chtd., which Bancorp and the Bank have retained during 1996
and expect to retain during the current year as corporate counsel. The law firm
provides legal services on matters such as routine litigation, personnel
policies and practices, customer account forms and issues and Bank properties.
SHAREHOLDER PROPOSALS
From time to time, individual shareholders may wish to submit proposals
which they believe should be voted upon by the shareholders. The Securities and
Exchange Commission has adopted regulations which govern the inclusion of such
proposals in Bancorp's annual proxy materials. Shareholder proposals intended to
be presented at the 1998 Annual Meeting of Shareholders must be received by
Bancorp at its executive offices not later than November 20, 1997 in order to be
eligible for inclusion in Bancorp's proxy materials for that Annual Meeting.
In addition, Bancorp's Bylaws require that to be properly brought
before an annual meeting, shareholder proposals for new business must be
delivered to or mailed and received by Bancorp not less than 30 nor more than 90
days prior to the date of the meeting; provided, however, that if less than 45
days notice of the date of the meeting is given to shareholders, such notice by
a shareholder must be received not later than the 15th day following the date on
which notice of the date of the meeting was mailed to shareholders or two days
before the date of the meeting, whichever is earlier. Each such notice given by
a shareholder must set forth certain information specified in the Bylaws
concerning the shareholder and the business proposed to be brought before the
meeting.
Shareholders may also nominate candidates for director, provided that
such nominations are made in writing and received by Bancorp at its executive
offices not later than December 22, 1997. The nomination should be sent to the
attention of Bancorp's Corporate Secretary and must include, concerning the
director nominee, the following information: full name, age, date of birth,
educational background and business experience, including positions held for at
least the preceding five years. The nomination must also include home and office
addresses and telephone numbers and include a signed representation by the
nominee to timely provide all information requested by Bancorp as part of its
disclosure in regard to the solicitation of proxies for election of directors.
The name of each such candidate for director must be placed in nomination at the
Annual Meeting by a shareholder present in person. The nominee must also be
present in person at the Annual Meeting. A vote for a person who has not been
duly nominated pursuant to these requirements will be deemed to be void.
COMPLIANCE WITH SECTION 16(a) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp's
executive officers and directors, and persons who own more than ten percent of a
registered class of Bancorp's equity securities, to file reports of ownership
and changes in ownership on Forms 3, 4, and 5 with the Securities and Exchange
Commission. Executive officers, directors and greater than ten percent
stockholders are required by applicable regulations to furnish Bancorp with
copies of all Forms 3, 4, and 5 they file.
-15-
<PAGE>
Based solely on Bancorp's review of the copies of such forms it has
received and written representations from certain reporting persons, Bancorp
believes that all its executive officers and directors complied with all filing
requirements applicable to them with respect to transactions during 1996, and
that there are no stockholders that own beneficially more than 10% of the shares
of Bancorp's Common Stock.
INDEPENDENT AUDITORS
The Board of Directors anticipates the selection of Stegman & Company,
certified public accountants, to audit the books and accounts of Bancorp for the
year ending December 31, 1997. Stegman & Company has served as independent
auditors for Bancorp and its subsidiary and predecessor, Sandy Spring National
Bank of Maryland, without interruption for many years. Stegman & Company has
advised Bancorp that neither the accounting firm nor any of its members or
associates has any direct financial interest in or any connection with Bancorp
and its subsidiaries other than as independent public auditors. A representative
of Stegman & Company will be present at the Annual Meeting, will have the
opportunity to make a statement, and will also be available to respond to
appropriate questions.
ACTION WITH RESPECT TO REPORTS
Action taken at the Annual Meeting to approve the minutes of the 1996
Annual Meeting of Shareholders does not constitute approval or disapproval of
any of the matters referred to in such minutes.
By order of the Board of Directors
/s/ Majorie S. Holsinger
-----------------------
Marjorie S. Holsinger
Corporate Secretary
Dated: March 20, 1997
<PAGE>
REVOCABLE PROXY
SANDY SPRING BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1997
The undersigned hereby constitutes and appoints Solomon Graham and
Lewis R. Schumann and each of them, the proxies of the undersigned, with full
power of substitution, to attend the annual meeting of shareholders (the "Annual
Meeting") of Sandy Spring Bancorp, Inc. ("Bancorp") to be held at the Indian
Spring Country Club, 13501 Layhill Road, Silver Spring, Maryland on Wednesday,
April 16, 1997 at 3:00 p.m. Eastern Time, or at any adjournment thereof, and to
vote all the shares of stock of Bancorp which the undersigned may be entitled to
vote, upon the following matters:
FOR WITHHOLD
I. The election as directors of all nominees [ ] [ ]
listed below (except as marked to the
contrary below).
Susan D. Goff
Robert L. Mitchell
Robert L. Orndorff, Jr.
David E. Rippeon
INSTRUCTION: To withhold authority to vote for any individual
nominee, print the nominee's name on the line below.
---------------------------------------------------------------------------
II. The transaction of such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" the election of all director
nominees as shown in Item I.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN. IF
NO INSTRUCTIONS TO THE CONTRARY ARE MARKED HEREIN, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF DIRECTORS AND AS DETERMINED BY A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder hereby acknowledges receipt of a copy of
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
and hereby revokes any proxy or proxies heretofore given. This proxy may be
revoked at any time prior to its exercise.
Signature
-----------------------------
Date
Signature
-----------------------------
Date
Signature
-----------------------------
Date
Please sign exactly as your name appears above.
- --------------------------------------------------------------------------------
When signing as attorney, executor, administrator, trustee or guardian, etc.,
please give your full title. If the signer is a corporation, please sign the
full name by duly appointed officer. If shares are held jointly, each holder
should sign.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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