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
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COLUMBIA BANCORP
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit 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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[COLUMBIA BANCORP LOGO]
COLUMBIA BANCORP
10480 LITTLE PATUXENT PARKWAY
COLUMBIA, MARYLAND 21044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 1998
Notice is hereby given that the Annual Meeting of Stockholders
of Columbia Bancorp will be held at The Columbia Inn, Wincopin Circle, Columbia,
Maryland 21044 on Monday, April 27, 1998, at 5:30 p.m. for the following
purposes:
1. To elect five directors to serve until their terms of office
expire and until their successors are duly elected and
qualified.
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
March 17, 1998 as the record date for the determination of stockholders entitled
to notice of and to vote at the meeting or any adjournments or postponements
thereof.
Your Proxy is enclosed. You are encouraged to complete, date,
sign and return promptly the Proxy in the envelope provided even though you may
plan to attend the meeting. No postage is necessary for mailing in the United
States. Returning the Proxy will not limit your right to vote in person or to
attend the Annual Meeting, but will insure your representation if you cannot
attend. If you attend the meeting, you may revoke your Proxy and vote in person.
By Order of the Board of Directors
/s/ John A. Scaldara, Jr.
_________________________
JOHN A. SCALDARA, JR.
Corporate Secretary
Columbia, Maryland
March 27, 1998
<PAGE>
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished on or about March 27, 1998 to
stockholders of Columbia Bancorp (the "Company") in connection with the
solicitation of proxies by the Company's Board of Directors to be used at the
annual meeting of stockholders described in the accompanying notice and at any
adjournments or postponements thereof. The purposes of the meeting are set forth
in the accompanying notice of annual meeting of stockholders.
PROXIES AND VOTING
The accompanying proxy is solicited by the Board of Directors of the
Company. The Board of Directors has selected John M. Bond, Jr. and Robert N.
Smelkinson, or either of them, to act as proxies with full power of
substitution. Any stockholder executing a proxy has the power to revoke the
proxy at any time before it is voted. This right of revocation is not limited or
subject to compliance with any formal procedure. Any stockholder may attend the
meeting and vote in person whether or not he or she has previously given a
proxy.
The record date for stockholders entitled to notice of and to vote at
the annual meeting was the close of business on March 17, 1998. At that date
there were outstanding and entitled to vote 2,216,186 shares of Common Stock,
par value $.01 per share, of the Company. In the election of directors each
share is entitled to one vote for each director to be elected; however,
cumulative voting is not permitted. For all matters except the election of
directors, each share is entitled to one vote.
The cost of solicitation of proxies and preparation of proxy materials
will be borne by the Company. The solicitation of proxies will generally be by
mail and by directors, officers and employees of the Company and its subsidiary,
The Columbia Bank (the "Bank"), without additional compensation to them. In some
instances solicitation may be made by telephone or telegraph, the costs of which
will be borne by the Company. The Company may also reimburse brokers,
custodians, nominees and other fiduciaries for reasonable out-of-pocket and
clerical expenses for forwarding proxy materials to principals.
The Annual Report of the Company, including financial statements for
the fiscal year ended December 31, 1997, has been mailed to all stockholders
with this Proxy Statement.
PROPOSAL 1 - ELECTION OF DIRECTORS
The charter and by-laws of the Company provide that the directors shall
be classified into three classes as equal in number as possible, with each
director serving a three year term.
Directors are elected by a plurality of the votes cast by the holders
of shares of Common Stock present in person or represented by proxy at the
meeting with a quorum present. Abstentions and broker non-votes are not
considered to be votes cast.
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NOMINEES
Unless otherwise indicated in the enclosed proxy, the persons named in
such proxy intend to nominate and vote for the election of the following five
nominees for the office of director of the Company, to serve as directors for
three years or until their respective successors have been duly elected and
qualified. All such nominees are currently serving as directors. The Board of
Directors is not aware that any nominee named herein will be unable or unwilling
to accept nomination or election. Should any nominee for the office of director
become unable to accept nomination or election, the persons named in the proxy
will vote for the election of such other persons, if any, as the Board of
Directors may recommend.
The names and ages (as of March 17, 1998) of persons nominated by the
Board of Directors, their principal occupations and business experience for the
past five years, and certain other information are set forth below. Unless
otherwise noted, each has served as a director of the Company and the Bank since
inception of the Company in 1987 and the Bank in 1988.
NAME OF NOMINEE INFORMATION REGARDING NOMINEE
- --------------- -----------------------------
Nominees for Directors to be elected at the 1998 Annual Meeting
to serve until the 2001 Annual Meeting (Class II)
Hugh F.Z. Cole, Jr. Mr. Cole is 56 years old. He is Chairman and CFO of
Brantly Development Group, Inc., a real estate
development company. Mr. Cole has served as a
director of the Company and Bank since July, 1988.
G. William Floyd Mr. Floyd is 66 years old. He is a general partner of
Venture Associates, a commercial real estate
investment firm.
Herschel L. Langenthal Mr. Langenthal is 69 years old. He is the managing
partner of Langenmyer Company, an investment company.
Mr. Langenthal is also Vice-Chairman of the Company.
Richard E. McCready Mr. McCready is 64 years old. He is Chairman and CEO
of REM Enterprises, Inc., a food brokerage company.
James R. Moxley, Jr. Mr. Moxley is 67 years old. He is President of
Security Development Corporation, a real estate
development company. Mr. Moxley is also Chairman
of the Company.
CONTINUING DIRECTORS
The following information is provided with respect to directors who
will continue to serve as directors of the Company until the expiration of their
terms at the times indicated. Unless otherwise noted, each has served as a
director of the Company and the Bank since inception of the Company in 1987 and
the Bank in 1988.
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NAME OF DIRECTOR INFORMATION REGARDING DIRECTOR
- ---------------- ------------------------------
Directors to serve until the 1999 Annual Meeting (Class III)
John M. Bond, Jr. Mr. Bond, Jr. is 54 years old and has served as a
director and President, Chief Executive Officer, and
Treasurer of the Company and the Bank since
inception.
William L. Hermann Mr. Hermann is 57 years old and is President of
William L. Hermann, Inc., a financial management
company. Mr. Hermann was also General Manager of the
Glenmore office of the Bank until December 1997. He
has served as a director of the Company and the Bank
since June 1989.
Harry L. Lundy, Jr. Mr. Lundy is 57 years old. He is President and owner
of Williamsburg Group, LLC, Williamsburg Builders,
Inc. and Hallmark Builders, Inc. He is Executive Vice
President and owner of Patriot Homes, Inc. Each of
the aforementioned companies is a residential
construction company.
Mary S. Scrivener Mrs. Scrivener is 60 years old. She is Secretary of
Calvert General Contractors, a commercial
construction company.
Theodore G. Venetoulis Mr. Venetoulis is 63 years old. He is a former
Baltimore County Executive, the County's senior
elected official, and has been publisher of the
Orioles Gazette and political analyst for WBAL-TV in
Baltimore, Maryland.
Directors to serve until the 2000 Annual Meeting (Class I)
Anand S. Bhasin Mr. Bhasin is 60 years old. He is President of Gemini
Ventures Corporation, an international trading
company. Mr. Bhasin has served as a director of the
Company since November, 1990 and the Bank since
April, 1992.
Garnett Y. Clark, Jr. Mr. Clark is 55 years old. He is President of GYC
Group Ltd., a building and development company. He is
also President of Clark & Associates Realtors, Inc.
Robert J. Gaw Mr. Gaw is 64 years old. He is the retired President
of Ryland Mortgage Company and is a founding director
of The Ryland Group, Inc., a residential home builder
and mortgage finance company.
Maurice M. Simpkins Mr. Simpkins is 52 years old. He is Vice President
for Public Affairs at The Ryland Group, Inc., a
residential home builder and mortgage finance
company, and has been with Ryland since 1971. Mr.
Simpkins has served as a director of the Company and
Bank since April, 1997.
Robert N. Smelkinson Mr. Smelkinson is 68 years old. He is the retired
Chairman of Smelkinson Sysco, a distribution company.
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DIRECTOR EMERITUS
Directors James Clark, Jr., Mary T. Gould and Patricia Rouse have been
appointed by the Boards of Directors of the Company and the Bank, in recognition
of their distinguished service to each organization, to serve in the position of
Director Emeritus for a period of two years upon their retirement effective
April 27, 1998. As a Director Emeritus, each is eligible to receive compensation
and perquisites offered to directors generally and may participate in discussion
at Board meetings of the Company and the Bank, but may not vote and may not be
counted for purposes of determining a quorum. The membership of Directors
Emeritus J. Clark, Jr., Gould and Rouse on committees of the Boards of Directors
of the Bank and the Company will cease effective with retirement.
Mr. Osborne A. Payne is currently serving as a Director Emeritus, with
a term that expires April, 1999.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held ten meetings during 1997. Directors Floyd
and McCready attended fewer than 75% of the sum of the total number of Company
meetings of the Board of Directors and of committees of the Board of Directors
on which each served during 1997.
The Board of Directors has six standing committees. The committees are
the Executive; Acquisition, Development and Construction; Audit; Asset/Liability
Management; Community Reinvestment Act ("CRA") Advisory; and Personnel,
Compensation and Stock Option committees. The Board of Directors has not
established a Nominating Committee. The functions customarily attributable to a
Nominating Committee are performed by the Board of Directors as a whole. In
addition, the Board of Directors, from time to time, establishes special
committees which have a limited duration. Directors are appointed to each
committee, except the Executive Committee, for a one-year term. Directors are
appointed to the Executive Committee on a rotational basis with terms ranging
from three months to one year. The Chairman and Vice-Chairman of the Board of
Directors are ex-officio members of all committees, with the exception of the
Audit Committee. The President is an ex-officio member of all committees except
the Audit and Personnel, Compensation and Stock Option committees.
The Executive Committee held forty-seven meetings during 1997. The
Executive Committee currently consists of Directors Bhasin, Bond, Jr., G. Clark,
J. Clark, Jr., Cole, Langenthal (Chairman), Lundy, Moxley, Smelkinson and
Venetoulis. The Committee is responsible for evaluating and approving credits
exceeding the lending authority of officers of the Bank; reviewing on a regular
basis financial information, operational statistics, loan delinquencies and
potential problem loans; and taking other actions as may be required in the
absence of the full Board of Directors.
Effective January 1, 1998, the Board of Directors established the
Acquisition, Development and Construction Committee, consisting of Directors
Bond, Jr., G. Clark, Gaw, Langenthal, Lundy, Moxley (Chairman) and Simpkins. The
Committee is responsible for monitoring business development strategies and
market trends specific to the Company's acquisition, development and
construction portfolio.
The Audit Committee held two meetings during 1997. The Audit Committee
consists of Directors Bhasin, J. Clark, Jr., Cole (Chairman), Floyd, Hermann,
Rouse and Venetoulis. The Committee is responsible for overseeing of the
Company's internal accounting controls; recommending to the Board of Directors
the selection of the Company's independent auditors; reviewing the annual audit
plan, annual report and results of the independent audit; reviewing supervisory
examination reports; and initiating other special reviews when deemed necessary.
The Asset/Liability Management Committee held four meetings during
1997. The Asset/Liability Management Committee consists of Directors Bhasin,
Bond, Jr., Floyd, Gaw (Chairman), Hermann,
4
<PAGE>
Langenthal, Moxley and Scrivener. The Committee monitors quarterly operating
results, liquidity, asset mix, loan pricing and deposit rate policies of the
Company. In addition, the Committee directs the investment strategies of the
Company and makes recommendations of such to the Board of Directors when
strategies are outside its approval authority.
The CRA Advisory Committee held six meetings during 1997. The CRA
Advisory Committee consists of Directors Bhasin, Bond, Jr., Langenthal, Moxley,
Rouse, Simpkins (Chairman) and Venetoulis and certain officers of the Bank. The
Committee provides oversight and guidance to the development of CRA programs and
affordable housing initiatives of the Company. This includes providing mortgage
financing conduits for low-to-moderate income housing, fair lending policies for
minorities, encouragement for first-time homebuyers, and education to the
community to foster affordable housing opportunities.
The Personnel, Compensation and Stock Option Committee held three
meetings during 1997. The Personnel, Compensation and Stock Option Committee
consists of Directors Gaw, Gould, Langenthal, Lundy, McCready, Moxley,
Smelkinson (Chairman), Simpkins and Venetoulis. The Committee oversees the
compensation of all employees, except the compensation of the President and
directors; reviews the compensation of the President and directors, and makes
recommendations of changes to such compensation to the Board of Directors for
approval; monitors personnel related matters of the Company; reviews and
authorizes employee related benefit plans; and administers the Company's Stock
Option Programs.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company and the Bank will receive $150
and stock options to purchase twenty-five shares of Common Stock of the Company
for each Board and committee meeting attended during 1998. Chairpersons of
committees, other than Mr. Langenthal and Mr. Moxley, will receive an additional
$25 for each committee meeting attended during 1998. Directors Moxley and
Langenthal, serving in the capacities of Chairman and Vice-Chairman of the
Company, respectively, will receive annual fees of $29,000 and $27,000,
respectively, in addition to fees paid and stock options granted for meeting
attendance. These amounts are unchanged from those received during 1997. The
Chairman and Vice-Chairman are also eligible for a bonus to be awarded at the
discretion of the Board of Directors, although no bonus was awarded for 1997. On
January 26, 1998, Directors Moxley and Langenthal were granted stock options to
purchase 5,000 and 3,000 shares of Common Stock of the Company, respectively, at
$33.75 per share, the then current market price. Total director fees paid by the
Company and the Bank for 1997 service were $119,000, inclusive of annual fees
paid the Chairman and Vice-Chairman.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Act") requires that the Company's directors and executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities,
file with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of change in ownership of Common Stock of the Company. The
same persons are also required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, and written representations that no other
reports were required during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to the Company's executive
officers, directors and greater than 10% beneficial owners were complied with,
except that Director Moxley inadvertently failed to file a report (representing
a transaction) required by Section 16(a) of the Act on a
5
<PAGE>
timely basis, and Director Simpkins failed to file a report (representing the
initial filing of ownership) required by Section 16(a) of the Act on a timely
basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has made loans to certain of its executive officers, directors
and related parties. These loans were made on substantially the same terms,
including interest rate and collateral requirements, as those prevailing at the
time for comparable transactions with unrelated customers and did not involve
more than the normal risk of collectibility or present other unfavorable
features. At December 31, 1997, these loans totaled $3.4 million, or
approximately 10.5% of the total equity capital of the Bank.
PRINCIPAL BENEFICIAL OWNERS OF THE COMPANY'S COMMON STOCK
CERTAIN BENEFICIAL OWNERS
No persons were known by the Company to own beneficially, directly or
indirectly, more than 5% of the Company's Common Stock outstanding on December
31, 1997.
BENEFICIAL OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES
The following table lists the number of shares of Common Stock of the
Company beneficially owned by directors and named Executive Officers of the
Company and the Bank, directly or indirectly, as of March 17, 1998.
Shares of Stock Options % of
Common Stock and Warrants (1) Class
------------ ---------------- -----
Directors:
Anand S. Bhasin (2) 23,349 639 1.08
John M. Bond, Jr. (3)(4) 86,155 13,790 4.49
Garnett Y. Clark, Jr 18,296 5,064 1.05
James Clark, Jr 16,589 678 *
Hugh F.Z. Cole, Jr. (5) 21,476 1,522 1.04
G. William Floyd 14,098 -- *
Robert J. Gaw 27,587 1,706 1.32
Mary T. Gould (6)(7) 90,705 7,204 4.41
William L. Hermann (8) 26,980 -- 1.22
Herschel L. Langenthal (9) 59,508 6,054 2.95
Harry L. Lundy, Jr. (10) 55,741 4,574 2.72
Richard E. McCready 19,459 4,438 1.08
James R. Moxley, Jr 20,533 9,587 1.36
Patricia T. Rouse 28,982 4,308 1.50
Mary S. Scrivener 18,082 8,159 1.18
Maurice M. Simpkins 5,587 -- *
Robert N. Smelkinson 55,533 5,198 2.74
Theodore G. Venetoulis (11) 12,983 4,351 *
Executive Officers:
Michael T. Galeone 1,856 8,500 *
Charles C. Holman (12) 4,570 6,750 *
Robert W. Locke (13) 13,232 3,000 *
John A. Scaldara, Jr. (14)(15) 33,156 7,750 1.84
====== ====== ====
6
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BENEFICIAL OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES, (continued)
Shares of Stock Options % of
Common Stock and Warrants (1) Class
------------ ---------------- -----
All directors and executive
officers (22 persons) (16) 622,721 103,272 31.3%
======= ======= ====
Company totals 2,212,845 137,020
========= =======
* Less than 1%
(1) Represents number of shares of Common Stock subject to stock options
and warrants currently exercisable.
(2) Includes 2,044 shares of Common Stock owned by Mr. Bhasin's children.
(3) Includes 19,106 shares of Common Stock, 3,300 warrants and 1,690 stock
options for which Mr. Bond, Jr. is a co-trustee and remainder
beneficiary.
(4) Includes 31,736 shares of Common Stock held by the Company's 401(k)
Plan and Trust on December 31, 1997 for which Mr. Bond, Jr. and Mr.
Scaldara serve as trustees. Beneficial ownership of such shares is
expressly disclaimed, except as to approximately 8,745 shares held for
the account of Mr. Bond, Jr.
(5) Includes 2,121 shares of Common Stock for which Mr. Cole is a trustee.
(6) Includes 31,237 shares of Common Stock owned by a partnership of which
Mrs. Gould is a 5% general partner; the beneficial ownership of such
shares is expressly disclaimed.
(7) Includes 27,434 shares of Common Stock and 6,600 warrants owned by
spouse; the beneficial ownership of such shares is expressly
disclaimed.
(8) Includes 2,364 shares of Common Stock owned by a corporation of which
Mr. Hermann owns an interest.
(9) Includes 24,603 shares of Common Stock for which Mr. Langenthal is a
trustee and 20,695 shares of Common Stock owned by two partnerships and
a corporation of which Mr. Langenthal owns an interest.
(10) Includes 29,246 shares of Common Stock owned by a corporation and a
limited partnership of which Mr. Lundy owns interests.
(11) Includes 12,912 shares of Common Stock held by a trust; the beneficial
ownership of such shares is expressly disclaimed.
(12) Includes approximately 829 shares of Common Stock held for the account
of Mr. Holman in the Company's 401(k) Plan and Trust.
(13) Includes approximately 1,176 shares of Common Stock held for the
account of Mr. Locke in the Company's 401(k) Plan and Trust.
(14) Includes 154 shares of Common Stock for which Mr. Scaldara is trustee.
(15) Includes 31,736 shares of Common Stock held by the Company's 401(k)
Plan and Trust on December 31, 1997 for which Mr. Bond, Jr. and Mr.
Scaldara are trustees. Beneficial ownership of such shares is expressly
disclaimed, except as to approximately 3,907 shares held for the
account of Mr. Scaldara.
(16) Includes 31,736 shares of Common Stock held by the Company's 401(k)
Plan and Trust for which Mr. Bond, Jr. and Mr. Scaldara are trustees.
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EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report is submitted by the Personnel, Compensation and
Stock Option Committee of the Board of Directors (the "Committee"). The report
addresses the executive compensation policies of the Bank and the Company
(collectively, the "Company") for 1997.
The Committee establishes the compensation of senior officers of the
Company with the exception of Mr. Bond, Jr., the President and Chief Executive
Officer. Mr. Bond, Jr.'s compensation is established by the Board of Directors
of the Company based upon data provided by and recommendations of the Committee.
The Board of Directors also establishes the compensation of the Chairman and
Vice Chairman of the Board of Directors based on the recommendations of the
Committee. In addition, the Committee generally reviews all personnel related
issues, including salary administration related to all other employees, and
administers the Company's 1987 Stock Option Plan, as amended, 1997 Stock Option
Plan, 1990 Director Stock Option Plan, 401(k) Plan and Trust, and Deferred
Compensation Plan. The overall goal of the Committee is the establishment and
administration of compensation policies directly related to attainment of
corporate operational and financial goals which provide the ability to attract,
motivate, reward and retain qualified senior officers.
In 1993, the Company commissioned an independent consultant to assist
in establishing a company-wide salary administration plan, which included senior
officer positions. Development of the plan included creating job descriptions
for all positions; rating the overall responsibility of each position based on
characteristics including, job knowledge, problem-solving, accountability, human
relations, communications, supervision of others and marketing; assigning each
position to a salary grade based on level of overall responsibility; and,
developing salary ranges for each salary grade based on market information
available for similar positions at financial institutions both in the
communities where the Company does business and outside the Company's market
area. These results are updated annually by the Company's human resources staff
using current market data which reflects marketplace changes, inflation, and, if
applicable, corporate performance. This information is considered by the
Committee.
The individual components of the Company's compensation program
include:
(a) BASE SALARY. Base salary levels are established for senior officers
primarily based upon evaluation of the historical performance, degree
of responsibility, level of experience and number of years with the
Company. In addition, the Committee considers compensation data
available through various surveys, including the Sheshunoff Bank
Executive and Director Compensation Survey, SNL Executive Compensation
Review, Bank Administration Institute Bank Cash Compensation and Key
Executive Compensation Surveys, Chesapeake Human Resources Association
Annual Benefits and Compensation Survey, and Starkey & Beall Regional
Financial Industry Salary Survey.
With respect to the base salary of $215,000 granted to Mr. Bond, Jr.
for the year 1997, the Committee took into account the Company's
performance during 1996 and survey information referred to above.
Particular emphasis was placed on Mr. Bond, Jr.'s individual
performance, including his leadership role through a period of
continued aggressive growth.
(b) ANNUAL INCENTIVES/BONUSES. Bonuses are generally granted senior
officers based on the extent to which the Company achieves annual
performance objectives, as established by the Board of Directors. Such
performance objectives include net income, earnings per share and
return on equity goals. Bonuses may also be awarded to other officers
and employees based on recommendations by supervisors.
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While the Company achieved many operational goals in 1997, financial
performance did not meet internal expectations. As such, no bonuses
were awarded senior officers.
(c) STOCK OPTION AWARDS. The Committee believes that the granting of stock
options is the most appropriate form of long term compensation for
senior officers, since awards of equity encourage ownership in the
success of the Company. Stock option grants are discretionary and are
limited by the terms and conditions of the Company's 1987 Stock Option
Plan, as amended, and the 1997 Stock Option Plan. In February 1997, Mr.
Scaldara was granted an incentive stock option for the purchase of
3,000 shares of the Company's common stock. The grant was reflective of
performance during 1996.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
provides with certain exceptions, for an annual $1,000,000 limitation on the
deduction that an employer may claim for compensation of certain executives. In
light of the current level of compensation for the Company's named executive
officers, the Committee has not adopted a policy with respect to the foregoing
deductibility limit, but will adopt such a policy should it become relevant.
R. Smelkinson, Chairman R. McCready
R. Gaw J. Moxley
M. Gould M. Simpkins
H. Langenthal T. Venetoulis
H. Lundy
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The table below provides the aggregate balance at December 31, 1997 of
loans in excess of $60,000 issued by the Bank to members of the Compensation
Committee. These loans were made in the ordinary course of business, made on
substantially the same terms, including interest rate and collateral
requirements, as those prevailing at the time for comparable transactions with
unrelated customers and did not involve more than a normal risk of
collectibility or present other unfavorable features.
Aggregate Loan
Balance at December 31, 1997
----------------------------
Richard E. McCready $ 88,790
James R. Moxley, Jr. 1,404,615
SUMMARY COMPENSATION TABLE
The table below presents a summary of compensation for the last three
fiscal years of the chief executive officer of the Company and the other most
highly paid executive officers of the Company and the Bank whose total annual
salary and bonus exceeded $100,000 during the year ended December 31, 1997.
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<TABLE>
<CAPTION>
Annual Compensation (a) Shares of Common
Name and -------------------------- Stock Underlying All
Principal Position Year Salary Bonus Options Awarded Compensation(b)
- ------------------ ---- ------ ----- --------------- ---------------
<S><C>
John M. Bond, Jr. 1997 $215,000 $ - - $16,857
President and CEO 1996 200,000 - - 19,464
1995 175,000 60,000 - 4,821
Michael T. Galeone 1997 $154,000 $ - - $ 8,368
Executive Vice President 1996 148,000 - - 4,213
1995 143,000 40,000 - 2,754
Charles C. Holman 1997 $152,000 $ - - $12,138
Executive Vice President 1996 144,000 - - 10,801
1995 139,000 50,000 - 4,821
Robert W. Locke 1997 $109,000 $ - - $ 8,967
Senior Vice President 1996 106,000 - - 9,071
1995 103,000 15,000 - 4,821
John A. Scaldara, Jr. 1997 $120,000 $ - 3,000 $ 9,722
Executive Vice President, 1996 100,000 - - 9,361
Chief Financial Officer 1995 90,000 25,000 - 4,821
and Corporate Secretary
</TABLE>
(a) No officer named above received any perquisites and other personal
benefits the aggregate amount of which exceeded the lesser of $50,000
or 10% of the total annual salary and bonus reported for 1997 for such
officer in the Summary Compensation Table.
(b) Represents discretionary matching contributions made by the Company and
allocated forfeitures resulting from employee terminations as
determined under terms of the Company's 401(k) Plan and Trust. All
employees participating in the Company's 401(k) Plan and Trust receive
matching contributions and forfeitures on equivalent terms. Also
includes discretionary matching contributions made by the Bank as
determined under terms of the Bank's Deferred Compensation Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The table below provides analysis of all individual grants of stock options made
during the year ended December 31, 1997 to the named Executive Officers:
<TABLE>
<CAPTION>
Percent of
Number of Total Options
Securities Granted to
Underlying Employees in Exercise or Grant Date
Name Options Granted Fiscal Year Base Price Expiration Date Value (a)
- ---- --------------- ----------- ---------- --------------- ---------
<S><C>
John A. Scaldara, Jr. 3,000 18.3% $22.00 February 24, 2007 $30,114
</TABLE>
(a) Estimated using the Black-Scholes option pricing model and the
following assumptions:
Dividend yield 1.75%
Expected volatility 36.79%
Risk free interest rate 5.49%
Expected life 10 years
10
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table below provides an analysis of aggregated stock options
exercised during 1997 and outstanding stock options as of December 31, 1997 for
the named Executive Officers. There were no adjustments or amendments to the
exercise price of stock options previously awarded to any named Executive
Officer during 1997.
<TABLE>
<CAPTION>
Shares of
Common Stock Underlying Value of Unexercised
Unexercised Options In-The-Money
Shares of Common at Fiscal Year-End Options at Fiscal Year-End
Stock Acquired Value ---------------------------- ----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S><C>
John M. Bond, Jr. 49,500 $1,004,779 5,500 - $133,925 -
Michael T. Galeone 5,500 80,630 8,500 - 204,434 -
Charles C. Holman - - 6,750 - 167,443 -
Robert W. Locke 7,750 230,063 6,250 - 150,235 -
John A. Scaldara, Jr. - - 7,000 3,000 170,188 36,000
</TABLE>
RETIREMENT PLANS AND SUPPLEMENTAL COMPENSATION ARRANGEMENTS
Named Executive Officers, like other employees of the Company, or its
subsidiaries, are eligible to participate in the Columbia Bancorp 401(k) Plan
and Trust adopted January 1, 1989 (the "401(k) Plan"). Under terms of the 401(k)
Plan, eligible employees may defer a portion of their total compensation on a
pretax basis. In order to be eligible to participate in the 401(k) Plan, an
employee must have completed one year of service in which 1,000 hours were
worked. The maximum percentage of total compensation eligible for deferral and
the voluntary matching employer contribution are established annually by the
Board of Directors of the Company and are currently 15% and 50%, respectively.
An employee is vested in the matching employer contribution as follows: (i) 20%
after three years of service, (ii) 40% after four years of service, (iii) 60%
after five years of service, (iv) 80% after six years of service and (v) 100%
after seven years of service. Employees can direct the investment of their
contribution and the matching employer contribution into any one or more of
seven investment options which include a Bank money market account, five mutual
funds managed by Fidelity Investments, or Common Stock of the Company.
The vested portion of matching employer contributions made to the
401(k) Plan during 1997 for the named Executive Officers was follows: Mr. Bond,
Jr., $4,750; Mr. Galeone, $4,750; Mr. Holman, $4,750; Mr. Scaldara, Jr., $4,750;
and Mr. Locke, $4,750.
Effective September 27, 1996, the Bank also established a nonqualified
deferred compensation arrangement (the "Deferred Compensation Plan") for
selected senior officers, including the named Executive Officers, of the Bank
and the Company or subsidiaries thereof (the "Senior Officers"). The Deferred
Compensation Plan provides supplemental retirement benefits for the Senior
Officers restricted from receiving further benefits under the 401(k) Plan as a
result of the limitations on pretax contributions imposed by the Internal
Revenue Code. Under the Deferred Compensation Plan, Senior Officers can continue
to make pretax contributions in excess of the IRS limits imposed on the 401(k)
Plan and receive matching employer contributions identical to what they would
have received in the 401(k) Plan if there were no IRS limitations. The maximum
amount that a Senior Officer may defer under the Deferred Compensation Plan,
when added to that deferred under the 401(k) Plan cannot exceed the maximum
percentage compensation deferral (currently 15%) as established by the Board of
Directors. Senior Officers may direct earnings on their contributions. The
matching employer contributions may be calculated based on (i) the Bank's prime
rate of interest in effect as of December 15 of the preceding year,
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<PAGE>
(ii) the performance of the Company's Common Stock, as if contributions and
matching employer contributions were used to purchase shares of the Company's
Common Stock and dividends were reinvested, or (iii) a combination of (i) and
(ii).
The vested portion of the matching employer contributions made to the
Deferred Compensation Plan during 1997 for named Executive Officers were as
follows: Mr. Bond, Jr., $11,345; Mr. Holman, $6,626; Mr. Scaldara, Jr., $4,210;
Mr. Galeone, $2,942; and Mr. Locke, $3,455.
The Deferred Compensation Plan may also provide for payment of a death
benefit in the event that a Senior Officer dies while in active service. At
January 1, 1998, the death benefit for each of the named Executive Officers was
as follows: Mr. Bond, Jr., $953,000; Mr. Holman, $62,000; Mr. Scaldara, Jr.,
$692,000; Mr. Galeone, $688,000; and Mr. Locke, $314,000.
In order to partially offset the costs associated with the Deferred
Compensation Plan, the Bank has purchased life insurance contracts on the lives
of the participating Senior Officers, with the Bank as beneficiary.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
The Company and the Bank (collectively, the "Companies") entered into
an employment agreement dated February 26, 1996 with John M. Bond, Jr. (the
"Agreement"). The Agreement supersedes the prior employment agreement. The terms
of the Agreement continue until the earlier of (i) the close of business on the
date which is three years after the date on which either party provides written
notice of termination, other than for "cause", as defined in the Agreement, but
no later than the close of business on the sixty-fifth birthday of Mr. Bond,
Jr., or (ii) the date on which Mr. Bond, Jr.'s employment is otherwise
terminated pursuant to the provisions of the Agreement. Under terms of the
Agreement, Mr. Bond, Jr. serves as President and Chief Executive Officer of the
Companies with a minimum annual base compensation of $225,000, which is subject
to normal periodic review, at least annually, for increases based on the salary
policies of the Companies and Mr. Bond, Jr.'s contributions to the Companies.
Mr. Bond, Jr. is also entitled to participate in all incentive and benefit
programs offered by the Companies. If Mr. Bond, Jr.'s employment is terminated,
other than for "cause", the Companies are required to continue to provide
benefits to him and pay his salary for a predetermined period plus, under
certain circumstances, pay an annual bonus as determined in accordance with the
terms of the Agreement. The Agreement also contains a non-competition provision
which prohibits Mr. Bond, Jr., during his employment with the Companies, or for
a period of three years following voluntary resignation or termination for
"cause", from directly or indirectly engaging in activities competitive with the
business of the Companies.
The Agreement also provides that in the event of (i) termination, other
than for "cause", (ii) resignation due to a significant change in the nature or
scope of authority and duties, or (iii) resignation as a result of not having
been offered a new employment agreement with similar terms, 90 days prior to, or
within one year after, any "change in control" (as defined in the Agreement) of
the Companies, Mr. Bond, Jr., within 15 days of termination, will be paid a lump
sum payment equal to three times the sum of his annual base compensation and the
average of the bonuses paid to him over the past three years. In the event of
voluntary resignation 90 days prior to, or within one year after, any "change in
control" of the Companies, Mr. Bond, Jr., within 15 days of resignation, will be
paid a lump sum payment equal to the sum of his annual base salary and the
average of the bonuses paid to him over the past three years. Any payments made
in connection with a "change in control" of the Companies after Mr. Bond, Jr.
reaches 62 years of age will be pro-rated to age 65.
Messrs. Galeone, Holman and Scaldara also have employment agreements
specifying minimum annual base compensation of $160,000, $157,000 and $130,000,
respectively. The other terms of these agreements are similar to those of the
Agreement, except that the duration is a two-year continuous period and the lump
sum payment payable in the event of (i) termination other than for "cause", (ii)
resignation
12
<PAGE>
due to a significant change in the nature and scope of authorities and duties,
or (iii) resignation as a result of not having been offered a new employment
agreement with similar terms, 90 days prior to, or within one year after, any
"change in control" of the Companies is equal to two times the sum of the
applicable officer's base annual compensation and the average of such officer's
bonuses for the past three years. In addition, any payments made in connection
with a "change in control" of the Companies after reaching 63 years of age will
be pro-rated to age 65.
The Companies entered into a change in control agreement dated February
26, 1996 with Mr. Locke. The change in control agreement provides that in the
event of (i) termination, other than for "cause", or (ii) resignation due to a
significant change in the nature or scope of authority and duties, 90 days prior
to, or within one year after, any "change in control" of the Companies, Mr.
Locke, within 15 days of termination, will be paid a lump sum payment equal to
two times the sum of his annual base compensation and the average of the bonuses
paid to him over the past three years. In the event of voluntary resignation 90
days prior to, or within one year after, any "change in control" of the
Companies, Mr. Locke, within 15 days of resignation, will be paid a lump sum
payment equal to the sum of his annual base salary and the average of the
bonuses paid to him over the past three years. Any payments made in connection
with a "change in control" after Mr. Locke reaches 63 years of age will be
pro-rated to age 65.
The Company's 1987 Stock Option Plan, as amended, 1990 Stock Option
Plan, 1997 Stock Option Plan, 401(k) Plan, and the Bank's Deferred Compensation
Plan, all provide that in the event of a "change in control" (as defined by each
of the plans), all amounts not fully vested become immediately 100% vested.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the cumulative total return on the
Company's Common Stock during the five years ended December 31, 1997 with that
of a broad market index (Nasdaq, U.S. Companies) and an industry peer group
index (all publicly traded banks in Maryland, Pennsylvania, Virginia and the
District of Columbia with total assets of less than $1 billion). The graph
assumes $100 was invested on December 31, 1992 in the Company's Common Stock and
in each of the indices and assumes reinvestment of dividends.
Five Year Cumulative Total Return
[GRAPH APPEARS HERE--SEE PLOT POINTS BELOW]
Index Data:
1992 1993 1994 1995 1996 1997
---- ------ ------ ------ ------ ------
Columbia Bancorp 100 135.63 200.11 259.65 326.95 532.91
Nasdaq, US Companies 100 114.80 112.21 158.70 195.19 239.53
Peer Group 100 133.03 146.21 184.48 220.59 370.51
13
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected KPMG Peat Marwick
LLP, independent public accountants, to audit the Company's financial statements
for the year ending December 31, 1998. KPMG Peat Marwick LLP has performed the
annual audits of the Company since its inception. Representatives of KPMG Peat
Marwick LLP plan to attend the Annual Meeting and will be available to answer
appropriate questions. The representatives will have the opportunity to make a
statement at the meeting if they so desire.
OTHER MATTERS
The Board of Directors of the Company knows of no matters to be
presented for action at the Annual Meeting other than those mentioned above;
however, if any other matters properly come before the Annual Meeting, it is
intended that the persons named in the accompanying proxy will vote on such
other matters in accordance with their judgment of the best interests of the
Company. Other than the election of directors, each matter to be submitted to
the stockholders requires the affirmative vote of a majority of all the shares
voted at the meeting or a majority of all the shares outstanding and entitled to
be voted. Abstentions and broker non-votes are treated as shares not voted.
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company not later than November
26, 1998 for inclusion in the Company's proxy statement and proxy relating to
that meeting.
REPORT ON FORM 10-K
The Annual Report on Form 10-K and applicable exhibits are available to
stockholders free of charge upon written request. Requests should be sent to
Columbia Bancorp, 10480 Little Patuxent Parkway, Columbia, Maryland 21044,
Attention: John A. Scaldara, Jr. (E-mail: [email protected])
By Order of the Board of Directors
/s/ John A. Scaldara, Jr.
_________________________
John A. Scaldara, Jr.
Corporate Secretary
March 27, 1998
14
<PAGE>
REVOCABLE PROXY
COLUMBIA BANCORP
[ ]PLEASE MARK VOTES
AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Columbia Bancorp hereby appoints John M. Bond,
Jr. and Robert N. Smelkinson, or either of them, the lawful attorneys and
proxies of the undersigned, with several powers of substitution, to vote all
shares of Common Stock of Columbia Bancorp which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held April 27, 1998, and at any
and all adjournments and postponements thereof. Any and all proxies heretofore
given are hereby revoked.
Please be sure to sign and date this Proxy in the box below.
For Withhold For All
Except
1. Election of Directors [ ] [ ] [ ]
H. Cole, W. Floyd, H. Langenthal, R. McCready, J. Moxley
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. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 AND IN THE BEST JUDGMENT OF THE PROXY HOLDERS ON ALL OTHER
MATTERS.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
15
