<PAGE>
FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
-----
OF 1934
For the quarterly period ended June 30, 2000
-------------
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
-----
ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-24302
COLUMBIA BANCORP
(exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Maryland 52-1545782
------------------------------------------------- --------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10480 Little Patuxent Parkway, Columbia, Maryland 21044
------------------------------------------------------------------------------------------------------------------------------------
(Address of principal executive offices)
(410) 465-4800
------------------------------------------------------------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
------------------------------------------------------------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____________
----------
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 7,156,025 shares as of August
9, 2000.
<PAGE>
COLUMBIA BANCORP
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Condition as of June 30, 2000
(unaudited) and December 31, 1999 3
Consolidated Statements of Income and Comprehensive Income for
the Three Months and Six Months Ended June 30, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2000 and 1999 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 19
Item 6. Exhibits and Reports of Form 8-K 19
</TABLE>
(2)
<PAGE>
<TABLE>
<CAPTION>
PART I ITEM 1. FINANCIAL STATEMENTS
COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
(dollars in thousands)
June 30, December 31,
2000 1999
----------- --------------
<S> <C> <C>
ASSETS
------
Cash and due from banks $ 41,787 $ 37,108
Federal funds sold 16,719 22,507
Investment securities (fair value $93,741 in 2000 and
$92,356 in 1999) 94,893 93,412
Securities available-for-sale 62,406 57,492
Residential mortgage loans originated for sale 2,127 2,707
Loans:
Commercial 171,371 141,675
Real estate development and construction 104,641 100,729
Real estate mortgage:
Residential 17,754 24,334
Commercial 71,395 68,450
Retail, principally residential equity lines of credit 127,469 111,230
Credit card 2,208 2,217
Other 3,615 3,990
----------- --------------
Total loans 498,453 452,625
Less: Unearned income, net of origination costs (369) (193)
Allowance for credit losses (6,560) (6,071)
----------- --------------
Loans, net 491,524 446,361
Other real estate owned 3,620 4,035
Property and equipment, net 11,272 10,473
Prepaid expenses and other assets 16,415 17,142
----------- --------------
Total assets $ 740,763 $ 691,237
=========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits
Noninterest-bearing demand deposits $ 120,717 $ 120,165
Interest-bearing deposits 480,524 434,402
----------- --------------
Total deposits 601,241 554,567
Short-term borrowings 53,376 51,728
Long-term borrowings 20,000 20,000
Accrued expenses and other liabilities 4,348 3,656
----------- --------------
Total liabilities 678,965 629,951
----------- --------------
Stockholders' equity
Common stock, $.01 par value per share:
authorized 10,000,000 shares; outstanding
7,156,025 and 7,150,849 shares, respectively 71 71
Additional paid-in-capital 48,454 48,424
Retained earnings 14,472 13,938
Accumulated other comprehensive income (1,199) (1,147)
----------- --------------
Total stockholders' equity 61,798 61,286
----------- --------------
Total liabilities and stockholders' equity $ 740,763 $ 691,237
=========== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
(3)
<PAGE>
COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For Six Months ended June 30, 2000 and 1999
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans and leases $ 11,475 $ 9,316 $ 22,068 $ 18,440
Investment securities 2,446 2,088 4,919 4,033
Federal funds sold 339 456 558 984
-------- -------- -------- --------
Total interest income 14,260 11,860 27,545 23,457
-------- -------- -------- --------
Interest expense:
Deposits 4,690 4,036 8,961 8,197
Borrowings 965 682 2,000 1,282
-------- -------- -------- --------
Total interest expense 5,655 4,718 10,961 9,479
-------- -------- -------- --------
Net interest income 8,605 7,142 16,584 13,978
Provision for credit losses 541 281 812 491
-------- -------- -------- --------
Net interest income after provision
for credit losses 8,064 6,861 15,772 13,487
-------- -------- -------- --------
Noninterest income:
Fees charged for services 616 563 1,160 1,087
Gains on sales of mortgage loans, net of costs 76 208 167 660
Other 214 246 494 536
-------- -------- -------- --------
Total noninterest income 906 1,017 1,821 2,283
-------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits 2,944 2,972 6,074 5,757
Occupancy, net 895 731 1,754 1,448
Equipment 504 396 965 780
Data processing 424 417 816 794
Marketing 321 144 495 292
Cash management services 119 104 215 172
Professional fees 164 98 322 189
Net expense (income) on other real estate owned (44) (53) (56) 2
Deposit insurance 42 46 84 89
Merger-related expenses 96 - 2,309 -
Other 838 879 1,617 1,690
-------- -------- -------- --------
Total noninterest expense 6,303 5,734 14,595 11,213
-------- -------- -------- --------
Income before income taxes 2,667 2,144 2,998 4,557
Income tax provision 901 717 1,176 1,574
-------- -------- -------- --------
Net income 1,766 1,427 1,822 2,983
Other comprehensive income (loss), net of tax - unrealized
gains (losses) on securities available-for-sale 405 (571) (52) (861)
-------- -------- -------- --------
Comprehensive income 2,171 856 1,770 2,122
======== ======== ======== ========
Per common share data:
Net income: Basic $ 0.25 $ 0.20 $ 0.26 $ 0.42
Diluted 0.25 0.20 0.25 0.41
Cash dividends declared 0.09 0.05 0.18 0.10
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
(4)
<PAGE>
COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended June 30, 2000 and 1999
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
2000 1999
-------- --------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,822 $ 2,983
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 408 692
Amortization of loan fee income (389) (682)
Provision for credit losses 812 491
Gains on sales of mortgage loans, net of costs (167) (660)
Proceeds from sales of mortgage loans originated for sale 22,074 64,362
Disbursements for residential mortgage loans originated for sale (21,328) (49,841)
Loan fees deferred, net of origination costs 496 993
Decrease in prepaid expenses and other assets 874 456
Increase in accrued expenses and other liabilities 454 3,650
-------- --------
Net cash provided by operating activities 5,056 22,444
-------- --------
Cash flows provided by (used in) investing activities:
Loan disbursements in excess of principal repayments (47,931) (24,516)
Loan purchases (313) (3,480)
Loan sales 2,163 2,656
Purchases of investment securities (20,500) (13,097)
Purchases of securities available-for-sale (8,302) (13,755)
Proceeds from maturities and principal repayments of
investment securities 19,018 11,684
Proceeds from maturities and principal repayments of
securities available-for-sale 3,327 9,048
Proceeds from sales of securities available-for-sale -- 482
Additions to other real estate owned (293) (340)
Sales of other real estate owned 708 1,239
Purchases of property and equipment (1,223) (850)
Purchase of life insurance -- (470)
Increase in cash surrender value of life insurance (121) (101)
-------- --------
Net cash used in investing activities (53,467) (31,500)
-------- --------
Cash flows provided by (used in) financing activities:
Net increase (decrease) in deposits 46,674 (3,512)
Increase in short-term borrowings 1,648 13,486
Cash dividends distributed on common stock (1,050) (727)
Net proceeds from stock options and common stock exchanged 30 190
Purchase of common stock -- (1,280)
-------- --------
Net cash provided by financing activities 47,302 8,157
-------- --------
Net decrease in cash and cash equivalents (1,109) (899)
Cash and cash equivalents at beginning of period 59,615 87,902
-------- --------
Cash and cash equivalents at end of period $ 58,506 $ 87,003
======== ========
Supplemental information:
Interest paid on deposits and borrowings $ 10,804 $ 9,653
Income taxes paid 775 1,468
Transfer of loans to other real estate owned -- 148
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
(5)
<PAGE>
COLUMBIA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of and for the six months
ended June 30, 2000 and 1999 is unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements for Columbia Bancorp
(the "Company") have been prepared in accordance with the instructions for Form
10-Q and, therefore, do not include all information and notes necessary for a
fair presentation of financial condition, results of operations and cash flows
in conformity with generally accepted accounting principles. The consolidated
financial statements should be read in conjunction with the audited financial
statements included in the Company's 1999 Annual Report on Form 10-K.
The consolidated financial statements include the accounts of the Company's
subsidiary, The Columbia Bank, and The Columbia Bank's wholly-owned
subsidiaries, McAlpine Enterprises, Inc., Howard I, LLP and Howard II, LLP
(collectively, the "Bank"). All significant intercompany balances and
transactions have been eliminated.
The consolidated financial statements as of June 30, 2000 and for the three
and six months ended June 30, 2000 and 1999 are unaudited but include all
adjustments, consisting only of normal recurring adjustments, which the Company
considers necessary for a fair presentation of financial position and results of
operations for those periods. The results of operations for the six months
ended June 30, 2000 are not necessarily indicative of the results that will be
achieved for the entire year. The financial data for 1999 have been restated to
reflect the effects of the merger of Suburban Bancshares, Inc. ("Suburban") with
and into Columbia Bancorp in March 2000, which was accounted for using the
pooling-of-interests method.
NOTE 2 -MERGER
On March 8, 2000, the Company completed the merger of Suburban with and into
the Company and the merger of Suburban Bank of Maryland with and into the Bank.
The Company and Suburban had entered into a definitive agreement on September
28, 1999. As a result of the merger, each share of the outstanding common stock
of Suburban was converted into .2338 shares of the Company's common stock,
resulting in the issuance of approximately 2,641,746 shares, subject to
adjustment to account for fractional shares.
Merger-related expenses of $2.3 million are included in the consolidated
statement of income for the six months ended June 30, 2000 and consist
principally of $683,000 for systems conversion costs, $499,000 for professional
fees, $481,000 for contract termination fees, $59,000 for severance payments to
terminated employees and $587,000 for other expenses.
The merger added approximately $220 million in assets, $185 million in
deposits and $20 million in stockholders' equity. In addition, the Company's
branch network increased from 15 branches to 23 branches, located in Howard,
Baltimore, Prince George's and Montgomery Counties, Maryland, and Baltimore
City, Maryland.
(6)
<PAGE>
NOTE 3 - INVESTMENTS
The amortized cost and estimated fair values of investment securities and
securities available-for-sale at June 30, 2000 were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Investment securities:
Federal agency securities $ 91,102 $ 13 $ 1,125 $ 89,990
Mortgage-backed securities 3,791 -- 40 3,751
------------------------------------------------------------------
Total $ 94,893 $ 13 $ 1,165 $ 93,741
==================================================================
Securities available-for-sale:
U.S. Treasury securities $ 1,200 $ -- $ 1 $ 1,199
Federal agency securities 33,380 -- 1,207 32,173
Mortgage-backed securities 9,147 -- 446 8,701
Trust preferred stocks 15,883 243 494 15,632
Investment in Federal Home Loan
Bank stock 2,682 -- -- 2,682
Other 2,064 3 48 2,019
------------------------------------------------------------------
Total $ 64,356 $ 246 $ 2,196 $ 62,406
==================================================================
</TABLE>
The amortized cost and estimated fair values of investment securities and
securities available-for-sale at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Investment securities:
U.S. Treasury securities $ 14,999 $ -- $ 7 $ 14,992
Federal agency securities 74,603 -- 1,002 73,601
Mortgage-backed securities 3,810 1 48 3,763
------------------------------------------------------------------
Total $ 93,412 $ 1 $ 1,057 $ 92,356
==================================================================
Securities available-for-sale:
U.S. Treasury securities $ 1,199 $ 3 $ -- $ 1,202
Federal agency securities 32,715 6 1,198 31,523
Mortgage-backed securities 9,728 1 47 9,250
Trust preferred stocks 11,904 50 229 11,725
Investment in Federal Home Loan
Bank stock 1,939 -- -- 1,939
Other 1,880 15 42 1,853
------------------------------------------------------------------
Total $ 59,365 $ 75 $ 1,948 $ 57,492
==================================================================
</TABLE>
(7)
<PAGE>
NOTE 4 - PER SHARE DATA
Information relating to the calculations of earnings per common share
("EPS") is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------------------------------------------------------
2000 1999
----------------------------------- ----------------------------------
Basic Diluted Basic Diluted
----------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Net income $1,765,551 $1,765,551 $1,427,152 $1,427,152
Net income, before merger-related
expenses, net of tax 1,806,627 1,806,627 1,427,152 1,427,152
Weighted average shares outstanding 7,155,847 7,155,847 7,148,197 7,148,197
Dilutive securities --- 38,253 --- 70,418
----------------------------------- ----------------------------------
Adjusted weighted average shares
used in EPS computation 7,155,847 7,194,100 7,148,197 7,218,615
=================================== ==================================
Net income per common share $ 0.25 $ 0.25 $ 0.20 $ 0.20
=================================== ==================================
Net income per common share, before
merger-related expenses, net of tax $ 0.25 $ 0.25 $ 0.20 $ 0.20
=================================== ==================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------------------------------------------
2000 1999
----------------------------------- ----------------------------------
Basic Diluted Basic Diluted
----------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Net income $1,821,580 $1,821,580 $2,983,488 $2,983,488
Net income, before merger-related
expenses, net of tax 3,434,956 3,434,956 2,983,488 2,983,488
Weighted average shares outstanding 7,154,876 7,154,876 7,167,907 7,167,907
Dilutive securities --- 41,637 --- 75,727
----------------------------------- ----------------------------------
Adjusted weighted average shares
used in EPS computation 7,154,876 7,196,513 7,167,907 7,243,634
=================================== ==================================
Net income per common share $ 0.26 $ 0.25 $ 0.42 $ 0.41
=================================== ==================================
Net income per common share, before
merger-related expenses, net of tax $ 0.48 $ 0.48 $ 0.42 $ 0.41
=================================== ==================================
</TABLE>
NOTE 5 - COMMITMENTS AND CONTINGENT LIABILITIES
The Company is party to financial instruments with off-balance-sheet risk
in the normal course of business in order to meet the financing needs of
customers. These financial instruments include commitments to extend credit,
standby letters of credit and mortgage loans sold with limited recourse.
(8)
<PAGE>
The Company applies the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. A summary
of the financial instruments at June 30, 2000 whose contract amounts represent
potential credit risk is as follows:
June 30,
2000
----------------------
(dollars in thousands)
Commitments to extend credit (a) $227,064
Standby letters of credit 12,714
Limited recourse on mortgage loans sold 4,016
----------------------
(a) Includes unused lines of credit totalling $224.5 million regardless of
whether fee paid and whether adverse change clauses exist. The amount
also includes commitments to extend new credit totalling $2.6 million.
NOTE 6 - NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. It is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. Initial application of SFAS No. 133 should be as of the
beginning of an entity's fiscal quarter. On that date, hedging relationships
must be designated anew and documented pursuant to the provisions of SFAS No.
133. Earlier application is encouraged. The Company does not currently have any
hedging relationships or derivative instruments that would require
reclassification under the provisions of SFAS No. 133.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD - LOOKING STATEMENTS
In addition to historical information, this quarterly report contains
forward-looking statements, which are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected in the
forward-looking statements. Important factors that might cause such a
difference include, but are not limited to, those discussed in this section.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof. The
Company undertakes no obligation to publicly revise or update these forward-
looking statements to reflect events or circumstances that arise after the date
hereof.
THE COMPANY
Columbia Bancorp was formed November 16, 1987 and is a Maryland chartered
bank holding company. The Company holds all of the issued and outstanding shares
of common stock of the Bank. The Bank is a Maryland trust company that engages
in general commercial banking operations. The Bank provides a full range of
financial services to individuals, businesses and organizations through 23
branch banking offices, as well as mortgage and commercial loan origination
offices and 28 Automated Teller Machines. Deposits in the Bank are insured by
the Federal Deposit Insurance Corporation. The Company considers its primary
market area to be Howard, Baltimore, Montgomery and Prince George's Counties,
Maryland, with extension of business throughout the contiguous counties
comprising central Maryland.
(9)
<PAGE>
REVIEW OF FINANCIAL CONDITION
Liquidity
---------
Liquidity describes the ability of the Company to meet financial
obligations, including lending commitments and contingencies, that arise during
the normal course of business. Liquidity is primarily needed to meet the
borrowing and deposit withdrawal requirements of the customers of the Company,
as well as to meet current and planned expenditures.
The Company's major source of liquidity ("financing activities" as used in
the Consolidated Statements of Cash Flows) is its deposit base. At June 30,
2000, total deposits were $601.2 million. Core deposits, defined as all
deposits except certificates of deposit of $100,000 or more, totalled $571.8
million or 95.1% of total deposits. In addition, the Bank has established a
credit line with the Federal Home Loan Bank of Atlanta ("FHLB") as an additional
source of liquidity. The FHLB has established a credit availability for the
Bank at 14% of the Bank's total assets. Total assets are based on the most
recent quarterly financial information submitted by the Bank to the appropriate
regulatory agency. The ability to borrow funds is subject to the Bank's
continued creditworthiness, compliance with the terms and conditions of the
Advance Application and the pledging of sufficient eligible collateral to secure
advances. At June 30, 2000 the Company's approved credit limit with the FHLB
was $99.6 million and advances outstanding totaled $20.0 million. However, the
Company had collateral sufficient to borrow up to $133.7 million. Individual
advances in excess of $5 million or total advances above the approved $99.6
million limit require FHLB approval. Liquidity is also provided through the
Company's overnight investment in federal funds sold, as well as securities
available-for-sale and investment securities with maturities less than one year.
At June 30, 2000, federal funds sold totaled $16.7 million or 2.3% of total
assets, investments available-for-sale totaled $62.4 million or 8.4% of total
assets and the fair value of investment securities due in one year or less was
$13.0 million or 1.8% of total assets.
Capital Resources
-----------------
Total stockholders' equity was $61.8 million at June 30, 2000, representing
an increase of $0.5 million or 0.8% from December 31, 1999. Earnings were
mitigated by the effect of merger-related costs, net of taxes, of $1.6 million.
Retained earnings was reduced by cash dividends declared of $1,288,000 and an
increase in unrealized losses on investment securities available-for-sale of
$52,000.
Dividends for the first six months of 2000 were $.18 per share, compared to
$.10 per share in 1999.
The following table summarizes the Company's risk-based capital ratios:
<TABLE>
<CAPTION>
Columbia Bancorp Minimum
------------------------------------
June 30, December 31, Regulatory
2000 1999 Requirements
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Risk-based capital ratios:
Tier 1 capital 10.95% 12.33% 4.00%
Total capital 12.09 13.48 8.00
Tier 1 leverage ratio 8.83 9.05 4.00
</TABLE>
Market Risk and Interest Rate Sensitivity
-----------------------------------------
The Company's interest rate risk represents the level of exposure it has to
fluctuations in interest rates and is primarily measured as the change in
earnings and the theoretical market value of equity that results from changes in
interest rates. The Asset/Liability Management Committee of the Board of
Directors (the "ALCO") oversees the Company's management of interest rate risk.
The objective of the management of interest rate risk is to optimize net
interest income during periods of volatile as well as stable interest rates
while maintaining a balance between the maturity and repricing characteristics
of assets and liabilities that is consistent with the Company's liquidity, asset
and earnings growth, and capital adequacy goals. Critical to the management of
this process is the ALCO's interest rate program, designed to manage interest
rate sensitivity (gap management) and balance sheet mix and pricing (spread
management). Gap management represents those actions taken to measure and
monitor rate sensitive assets and rate sensitive liabilities. Spread management
requires managing investments, loans, and
(10)
<PAGE>
funding sources to achieve an acceptable spread between the Company's return on
its earning assets and its cost of funds.
One tool used by the Company to assess and manage its interest rate risk is
the gap analysis. The gap analysis, summarized in the following table, measures
the mismatch in repricing between interest-sensitive assets and interest-
sensitive liabilities and provides a general indication of the interest
sensitivity of the balance sheet at a specified point in time. By limiting the
size of the gap position, the Company can limit the net interest income at risk
arising from repricing imbalances. The following table summarizes the
anticipated maturities or repricing of the Company's interest-earning assets and
interest-bearing liabilities as of June 30, 2000 and the Company's interest
sensitivity gap position at that date. A negative sensitivity gap for any time
period indicates that more interest-bearing liabilities will mature or reprice
during that time period than interest-earning assets. The Company's goal is
generally to maintain a reasonably balanced cumulative interest sensitivity gap
position for the period of one year or less in order to mitigate the impact of
changes in interest rates on liquidity, interest margins and corresponding
operating results. During periods of rising interest rates, a short-term
negative interest sensitivity gap position would generally result in a decrease
in net interest income, and during periods of falling interest rates, a short-
term negative interest sensitivity gap position would generally result in an
increase in net interest income (assuming all earning assets and interest-
bearing liabilities are affected by a rate change equally and simultaneously).
<TABLE>
<CAPTION>
After One
One Year Through After
Or Less Three Years Three Years Total
-----------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Federal funds sold $ 16,719 $ --- $ --- $ 16,719
Investment securities and
securities available for sale 29,980 88,924 38,395 157,299
Loans, exclusive of nonaccrual loans 326,850 48,581 123,746 499,177
-----------------------------------------------------------------------------------
Interest-earning assets 373,549 137,505 162,141 673,195
-----------------------------------------------------------------------------------
Interest-bearing deposits 393,632 81,790 5,102 480,524
Other borrowings 53,376 --- 20,000 73,376
-----------------------------------------------------------------------------------
Interest-bearing liabilities 447,008 81,790 25,102 553,900
-----------------------------------------------------------------------------------
Interest sensitivity gap $(73,459) $ 55,715 $137,039 119,295
===================================================================================
Cumulative interest sensitivity gap $(73,459) $(17,744) $119,295
===============================================================
Cumulative interest sensitivity
gap ratio -9.92% -2.40% 16.10%
===============================================================
</TABLE>
The Company also uses a computer simulation analysis to assess and manage
its interest rate risk. The simulation analysis assumes an immediate, parallel
shift of 200 basis points in the Treasury Yield Curve. The analysis measures
the potential change in earnings and in the market value of portfolio equity
over a one-year time horizon and captures optionality factors such as call
features imbedded in investment and loan portfolio contracts. Measured based on
March 31, 2000 data, the simulation analysis provided the following profile of
the Company's interest rate risk:
<TABLE>
<CAPTION>
---------------------------------------
Immediate Rate Change
---------------------------------------
+200 BP -200 BP Policy
---------------------------------------
<S> <C> <C> <C>
Net interest income at risk: -0.6% -3.4% +/- 7.5%
Change in Economic value of equity: +8.6% -6.2% +/- 20.0%
</TABLE>
(11)
<PAGE>
Both of the above tools used to assess interest rate risk have strengths
and weaknesses. Because the gap analysis reflects a static position at a single
point in time, it is limited in quantifying the total impact of market rate
changes which do not affect all earning assets and interest-bearing liabilities
equally or simultaneously. In addition, gap reports depict the existing
structure, excluding exposure arising from new business. While the simulation
process is a powerful tool in analyzing interest rate sensitivity, many of the
assumptions used in the process are highly qualitative and subjective and are
subject to the risk that past historical activity may not generate accurate
predictions of the future. Both measurement tools, however, provide a
comprehensive evaluation of the Company's exposure to changes in interest rates,
enabling management to control the volatility of earnings.
Material Changes in Financial Condition
---------------------------------------
Cash and Due from Banks:
Cash and due from banks represents cash on hand, cash on deposit with other
banks and cash items in the process of collection. As a result of the Company's
cash management services provided to large, sophisticated corporate customers
(which includes cash concentration activities and processing coin and currency
transactions), the Company's cash balances may fluctuate more widely on a daily
basis and may be higher than industry averages for banks of a similar asset
size.
Residential Mortgage Loans Originated for Sale:
Mortgage loans originated for sale decreased $580,000 or 21.4% from
December 31, 1999 to June 30, 2000 due primarily to less first mortgage
refinancing activity, influenced heavily by the interest rate environment.
Loans and Nonperforming Assets:
At June 30, 2000, the Company's loan portfolio, net of unearned income,
totalled $498.1 million, or 67.2% of its total assets of $740.8 million. The
categories of loans in the Company's portfolio are commercial, real estate
development and construction, residential and commercial mortgages and consumer.
Since December 31, 1999, total loans increased $45.7 million, or 10.1%.
Commercial loans and retail loans, principally residential equity lines of
credit, accounted for substantially all of the increase in total loans
outstanding, increasing by $29.7 million and $16.2 million, respectively, since
December 31, 1999. The increase in commercial loans reflected sustained business
development efforts, particularly in the Baltimore County region, and the
implementation of expanded product lines. The growth in retail loans is the
result of general business expansion as well as less mortgage refinancing
activity. These increases, however, were partially offset by a decrease of $6.6
million in residential mortgage loans.
Commercial loans constitute the largest portion of the Company's loan
portfolio. Commercial business loans are made to provide working capital to
businesses in the form of lines of credit which may by secured by real estate,
accounts receivable, inventory, equipment or other assets. Commercial mortgages
are typically secured by office condominiums, retail buildings, warehouse and
general purpose space, and generally have maturities of five years or less. At
June 30, 2000, commercial loans totaled $242.7 million, or 48.7% of total loans,
including $71.4 million in commercial mortgages. The financial condition and
cash flow of commercial borrowers are closely monitored by the submission of
corporate financial statements, personal financial statements and income tax
returns. The frequency of submissions of required information depends upon the
size and complexity of the credit and the collateral that secures the loan. It
is also the Company's general policy to obtain personal guarantees from the
principals of the commercial loan borrowers.
Retail loans, principally residential equity lines of credit, represent the
second largest component of the Company's loan portfolio, totaling $127.5
million, or 25.6% of the Company's loan portfolio, at June 30, 2000. Of this
amount, $110.1 million was comprised of home equity loans and lines of credit.
Such loans are typically originated for up to 90% of the appraised value of the
property, less the amount of any prior liens on the property. Home equity loans
have maximum terms of fifteen to thirty years and the interest rates are
generally adjustable. The Company secures these loans with mortgages on the
homes (typically a second mortgage). The second mortgage loans originated by
the Company have maximum terms ranging from ten to thirty years. They generally
carry a fixed rate of interest for the first five years, repricing every five
years thereafter at a predetermined spread to the prime rate of interest.
(12)
<PAGE>
Real estate development and construction loans continue to constitute a
significant portion of the Company's lending activities, totaling $104.6 million
at June 30, 2000. A breakdown by type follows:
Amount Percent
--------------------------------------------------------------
(dollars in thousands)
Residential construction (a) $ 51,249 49.0 %
Residential land development 34,612 33.1 %
Residential land acquisition (b) 8,854 8.4 %
Commercial construction 9,926 9.5 %
---------- ------------
$104,641 100.0 %
========== ============
___________________
(a) Includes $15.0 million of loans to individuals for construction of primary
personal residences.
(b) Includes $3.2 million of loans to individuals for the purchase of
residential building lots.
The Company makes residential real estate development and construction
loans generally to provide interim financing on property during the development
and construction period. Borrowers include builders, developers and persons who
will ultimately occupy the single-family dwellings. Residential real estate
development and construction loan funds are disbursed periodically as pre-
specified stages of completion are attained based upon site inspections.
Interest rates on these loans are usually adjustable. The Company has limited
loan losses in this area of lending through monitoring of development and
construction loans with on-site inspections and control of disbursements on
loans in process. Development and construction loans are secured by the
properties under development or construction and personal guarantees are
typically obtained. Further, to assure that reliance is not placed solely upon
the value of the underlying collateral, the Company considers the financial
condition and reputation of the borrower and any guarantors, the amount of the
borrower's equity in the project, independent appraisals, cost estimates and
pre-construction sales information.
The following table provides information concerning nonperforming assets
and past-due loans:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
2000 1999 1999
---------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans (a) $1,403 $2,284 $2,164
Other real estate owned 3,620 4,035 3,826
---------------------------------
Total nonperforming assets $5,023 $6,319 $5,990
=================================
Loans past-due 90 days or more $ 395 $ 5 $ 373
=================================
</TABLE>
______________________________
(a) Loans are placed in nonaccrual status when they are past-due 90 days
as to either principal or interest or when, in the opinion of
management, the collection of all interest and/or principal is in
doubt. Management may grant a waiver from nonaccrual status for a 90-
day past-due loan that is both well secured and in the process of
collection. A loan remains in nonaccrual status until the loan is
current as to payment of both principal and interest and the borrower
demonstrates the ability to pay and remain current.
The largest component of nonperforming assets at June 30, 2000 was the
Company's portfolio of other real estate owned totaling $3.6 million. At June
30, 2000, other real estate owned consisted primarily of a residential
development project with 2 single family and 145 townhouse building lots
remaining, at a carrying value of $3.0 million, net of participations. The
Company has entered into a contract with an independent third-party contractor
to manage the completion of development work. As of June 30, 2000, 78 single
family and 37 townhouse lots had been delivered. All remaining single family and
townhouse lots are under option contract of sale with two residential builders
and a takedown schedule that runs through June 2003.
Nonaccrual loans totaled $1,403,000 at June 30, 2000 and included nine
commercial loans totaling $1,003,000, two real estate development and
construction loans totaling $116,000, eight home equity loans totaling $235,000
and five consumer loans totaling $49,000.
Impaired loans at June 30, 2000 totaled $927,000 and consisted of nine
commercial and residential development and construction loans on nonaccrual
status, net of government guarantees. All
(13)
<PAGE>
impaired loans were collateral dependent loans, which are measured based on the
fair value of the collateral. There were no impaired loans at June 30, 2000 with
an allocated valuation allowance. An impaired loan is charged-off when the loan,
or a portion thereof, is considered uncollectible.
Allowance for Credit Losses:
The Company provides for credit losses through the establishment of an
allowance for credit losses (the "Allowance") by provisions charged against
earnings. Based upon management's monthly evaluation, provisions are made to
maintain the Allowance at a level adequate to absorb potential losses within the
loan portfolio. The factors used by management in determining the adequacy of
the Allowance include the historical relationships among loans outstanding;
credit loss experience and the current level of the Allowance; a continuing
evaluation of nonperforming loans and loans classified by management as having
potential for future deterioration taking into consideration collateral value
and the financial strength of the borrower and guarantors; and a continuing
evaluation of the economic environment. Regular review of the quality of the
loan portfolio is conducted by the Company's staff. In addition, bank
supervisory authorities and independent consultants and accountants periodically
review the loan portfolio. At June 30, 2000, the Allowance was 1.32% of total
loans, net of unearned income. The Allowance at June 30, 2000 is considered by
management to be sufficient to address the credit risk in the current loan
portfolio.
The changes in the Allowance are presented in the following table.
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
2000 1999
------------------------
(dollars in thousands)
<S> <C> <C>
Allowance for credit losses -
beginning of period $ 6,071 $ 5,490
Provision for credit losses 812 491
Charge-offs (427) (175)
Recoveries 104 150
------------------------
Allowance for credit losses -
end of period $ 6,560 $ 5,956
========================
Allowance as a percentage of loans
receivable, net of unearned income 1.32% 1.36%
Allowance as a percentage of nonperforming
loans and loans past-due 90 days or more 364.85% 234.77%
========================
</TABLE>
__________________________________
(a) There is no direct relationship between the size of the Allowance (and
the related provision for credit losses) and nonperforming and past-
due loans. Accordingly, the ratio of Allowance to nonperforming and
past-due loans may tend to fluctuate significantly.
RESULTS OF OPERATIONS
The Company reported net income of $1.82 million for the six months ended
June 30, 2000, compared to $2.98 million for the same period in 1999. However,
net income before specific one-time merger-related costs, net of tax ("core
earnings") was $3.43 million for the first six months of 2000, an increase of
15.1% over the corresponding period in 1999. Net income per diluted share,
exclusive of merger-related costs, was $0.48 per share for the six months ended
June 30, 2000, compared to $0.42 for the same period in 1999.
For the three months ended June 30, 2000, the company reported net income
of $1.77 million, a 23.8% increase from net income reported for the second
quarter of 1999. Core earnings for the second quarter 2000 were $1.81 million,
before merger-related expenses, net of taxes, of $41,000. Exclusive of merger-
related costs, diluted net income per share was $0.25 for the three months ended
June 30, 2000, compared to $0.20 for the second quarter in 1999.
(14)
<PAGE>
Return on average assets and return on average equity are key measures of a
bank's performance. Return on average assets, the product of net income divided
by total average assets, measures how effectively the Company utilizes its
assets to produce income. Excluding merger-related expenses, the Company's
return on average assets for the six months ended June 30, 2000 was 0.97%,
compared to 0.92% for the corresponding period in 1999. Return on average
equity, the product of net income divided by average equity, measures how
effectively the Company invests its capital to produce income. Excluding merger-
related expenses, return on average equity for the six months ended June 30,
2000 was 11.31%, compared to 9.64% for the corresponding period in 1999.
Net Interest Income
-------------------
Net interest income totaled $16.6 million for the six months ended June 30,
2000, compared to $14.0 million for the same period in 1999. Net interest
income increased $2.6 million in 2000 as compared to 1999 due to increases in
average interest-earning assets and the rates earned on those assets, offset
somewhat by increases in average balances of interest-bearing liabilities and
the rates paid on those liabilities. Specifically, average interest-earning
assets increased $52.6 million or 8.8% during the six months ended June 30,
2000, compared to the same period in 1999, primarily as a result of loan growth.
Correspondingly, the average taxable equivalent yield on interest-earning
assets increased from 7.89% for the six months ended June 30, 1999 to 8.49% for
the same period in 2000. The increase in the yield was due largely to increases
in the prime rate of interest of 25 basis points in July 1999, August 1999,
November 1999, February, and March 2000 and 50 basis points in May 2000.
Net interest income for the three months ended June 30, 2000 was $8.6
million, a $1.5 million, or 20.5% increase from $7.1 million in 1999, the result
of increases in average interest-earning assets and the yield on these assets,
offset somewhat by increases in interest bearing liabilities.
The increases in interest income were mitigated by increases in average
interest-bearing liabilities from $477.8 million and $482.2 million,
respectively, for the three months and six months ended June 30, 1999 to $511.4
million and $522.5 million, respectively, for the same periods in 2000. In
addition, the rate paid on interest bearing liabilities increased from 3.89% and
3.96%, respectively, for the three months and six months ended June 30, 1999 to
4.28% and 4.22%, respectively, for the same periods in 2000.
Net interest income for the three months and six months ended June 30, 2000
was also affected by a change in the mix of interest-earning assets as loans,
the Company's highest yielding asset, on average increased as a percentage of
interest-earning assets from 70.1% at June 30, 1999 to 72.9% at June 30, 2000.
The increase in net interest income was mitigated by an increase in average
interest-bearing liabilities from $482.2 million for the six months ended June
30, 1999 to $522.5 million for the same period in 2000. In addition, the rate
paid on interest-bearing liabilities increased from 3.96% for the six months
ended June 30, 1999 to 4.22% for the same period in 2000.
The result of increases in interest-earning assets, interest-bearing
liabilities, yields and rates and the changes in the mix of interest-earning
assets was an increase in the net interest margin on a taxable equivalent basis
from 4.70% during the six months ended June 30, 1999 to 5.11% during the same
period of 2000.
The following table sets forth, for the periods indicated, information
regarding the average balances of interest-earning assets and interest-bearing
liabilities, the amount of interest income and interest expense and the
resulting yields on average interest-earning assets and rates paid on average
interest-bearing liabilities. Average balances are also provided for
noninterest-earning assets and noninterest-bearing liabilities.
(15)
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
---------------------------------------------------------------
Average Average
Balances (a) Interest Rate Balances (a) Interest Rate
---------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans, net of unearned income (b) (c) $475,833 $22,084 9.33% $ 420,680 $18,458 8.85%
Investment securities and securities
Available-for-sale (c) 158,218 4,919 6.25% 138,342 4,033 5.88%
Federal funds sold 18,596 558 6.03% 41,061 984 4.83%
------------------------- -----------------------
Total interest-earning assets 652,647 27,561 8.49% 600,083 23,475 7.88%
-------- --------
Noninterest-earning assets:
Cash and due from banks 30,614 25,688
Property and equipment, net 10,957 10,155
Other assets 20,399 20,060
Less: allowance for credit losses (6,272) (5,675)
-------------- ------------
Total assets $708,345 $650,311
============== ============
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
NOW accounts $ 56,738 $ 341 1.21% $ 53,765 $ 355 1.33%
Savings accounts 72,621 1,079 2.99% 74,874 1,197 3.22%
Money market accounts 102,420 1,901 3.73% 97,471 1,658 3.43%
Certificates of deposit 216,961 5,640 5.23% 198,878 4,986 5.06%
Short-term borrowings 49,377 1,339 5.46% 37,167 754 4.09%
Long-term borrowings 24,400 661 5.45% 20,000 529 5.34%
------------------------- -----------------------
Total interest-bearing liabilities 522,517 10,961 4.22% 482,155 9,479 3.96%
-------- --------
Noninterest-bearing liabilities:
Noninterest-bearing deposits 117,222 98,870
Other liabilities 7,535 6,747
Stockholders' equity 61,071 62,539
-------------- ------------
Total liabilities and
Stockholders' equity $708,345 $650,311
============== ============
Net interest income $16,600 $13,996
======== ========
Net interest spread 4.27% 3.93%
====== =====
Net interest margin 5.11% 4.70%
====== =====
</TABLE>
(a) Average balances are calculated as the daily average balances.
(b) Average loan balances include first mortgage loans originated for sale
and nonaccrual loans. Interest income on loans includes amortized loan
fees, net of costs, of $501,000 and $420,000 for the six months ended
June 30, 2000 and 1999, respectively.
(c) Interest on tax-exempt loans and securities is presented on a taxable
equivalent basis, adjusted for items exempt from federal tax.
(16)
<PAGE>
The following table provides further analysis of the increase in net
interest income.
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000
Compared to the Six Months Ended
June 30, 1999
-----------------------------------------------------
Increase/(Decrease)
Increase Due to (a)
-----------------------------------
(Decrease) Rate Volume
-----------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Interest income:
Loans (b)(c) $3,626 $1,110 $2,516
Investment securities and securities
available-for-sale 886 280 606
Federal funds sold (426) 205 (631)
-----------------------------------------------------
Total interest income 4,086 1,595 2,491
-----------------------------------------------------
Interest expense:
Deposits 765 229 536
Borrowings 717 329 388
-----------------------------------------------------
Total interest expense 1,482 558 924
-----------------------------------------------------
Net interest income $2,604 $1,037 $1,567
=====================================================
</TABLE>
________________________________________________________________
(a) The change in interest income and interest expense due to both rate
and volume has been allocated to rate and volume changes in proportion
to the absolute dollar amounts of the change in each.
(b) Includes interest on loans originated for sale.
(c) Interest on tax-exempt loans is presented on a taxable equivalent
basis, adjusted for items exempt from federal tax.
Noninterest Income
------------------
Noninterest income totaled $1,821,000 million for the six months ended June
30, 2000, as compared to $2,283,000 million for the corresponding period in
1999. The $462,000 decline in noninterest income during the first six months of
2000 as compared to the same period of 1999 was due to a decrease in gains on
sales of mortgage loans, net of costs, of $493,000. Net gains on the sales of
mortgage loans decreased due to a $42.2 million or 65.7% decrease in the volume
of loans sold.
For the three months ended June 30, noninterest income declined $111,000,
from $1,017,000 in 1999 to $906,000 in 2000, also primarily the result of a
decrease in gains on sales of mortgage loans.
Noninterest Expense
-------------------
Noninterest expense, exclusive of merger-related expenses totaling
$2,309,000 million, increased $1,073,000 or 9.6% for the six months ended June
30, 2000, as compared to the same period in 1999. A significant portion of the
increase in noninterest expense was due to increases in salaries and benefits of
$317,000 for the six months ended June 30, 2000 as compared to the same period
in 1999. Salaries and benefits increased primarily as a result of an increase in
the number of full time equivalent employees due to general business expansion
efforts, general merit and performance increases and increased costs associated
with a more competitive labor market.
Occupancy costs increased $306,000 or 21.1% during the six months ended
June 30, 2000 as compared to the same period in 1999 as a result of continued
expansion of the branch network, with the opening of two full-service branches
in Timonium and Beltsville, Maryland and the relocation of a third branch since
June 30, 1999.
Noninterest expense increased $569,000, or 9.9%, for the three months ended
June 30, 2000 as compared to the same period in 1999. Merger-related costs were
$96,000 in 2000. Other increases during the period were primarily related to
costs of expansion of the branch network, as discussed above, and expanded
marketing efforts.
(17)
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information regarding the market risk of the Company's financial
instruments, see "Market Risk and Interest Rate Sensitivity" in Management's
Discussion and Analysis of Financial Condition and Results of Operations.
PART II
ITEM 1. LEGAL PROCEEDINGS
On April 7, 2000, the Bank filed a class action interpleader lawsuit (The
Columbia Bank vs. Network 1 Financial Corporation, et. al., Civil Action No.WMN-
00-CV1002) in the United States District Court for the District of Maryland,
Northern Division (the "Court") and deposited with the Court approximately $6.0
million (the "Fund"). The Fund was on deposit with the Bank as the result of a
computer file (the "File") sent through a computerized debit and credit system,
known as the Automated Clearing House, on behalf of the originators of the File
(collectively, the "Originators of the File"). The interpleader lawsuit filed
by the Bank alleges, among other things, that the Originators of the File did
not have the authorization of the accountholders whose accounts were debited by
the file in accordance with the rules governing the ACH Network and that the
Originators of the File were negligent in that they originated and processed an
unauthorized ACH file. The interpleader lawsuit seeks the Court's assistance in
determining the rights of the parties to the Fund, recovery of legal costs
incurred by the Bank and discharge for the Bank from any liability that may
arise from the File. The Originators of the File have filed counterclaims with
the Court under various theories including breach of contract, conversion and
tortious interference with contract and with prospective business relations.
The Originators of the File seek monetary damages ranging from $225,000 to $100
million in various counts under these theories.
Since previously reported, the Bank has filed with the Court motions to
dismiss various of the counterclaims filed by the Originators of the File. As of
this date, the motions remain pending with the Court. In addition, the Court,
at the request of the parties, appointed a Magistrate Judge to assist in
settlement negotiations scheduled for the fourth quarter of 2000.
The Bank continues to consider the counterclaims meritless and will
vigorously defend all claims brought against it.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held May 16, 2000, the
following directors were elected based upon the identified voting statistics to
serve a three-year term expiring upon the date of the Company's 2003 Annual
Meeting or until their respective successors are duly elected and qualified.
<TABLE>
<CAPTION>
Votes Casts
-----------------------------------------
For Withheld Total
--- -------- --------
<S> <C> <C> <C>
Anand S. Bhasin 5,824,066 73,338 5,897,404
Robert R. Bowie, Jr. 5,822,811 74,593 5,897,404
Garnett Y. Clark, Jr. 5,827,399 70,005 5,897,404
Kenneth H. Michael 5,777,556 119,848 5,897,404
Maurice M. Simpkins 5,828,100 69,304 5,897,404
Robert M. Smelkinson 5,823,175 74,229 5,897,404
</TABLE>
(18)
<PAGE>
The following are those directors of the Company who will continue to serve
as directors until the expiration of their terms upon the date of the Company's
annual meeting in their respective class years or until their respective
successors are duly elected and qualified.
Class of 2001 Class of 2002
------------- -------------
Hugh F.Z. Cole, Jr. John M. Bond, Jr.
G. William Floyd William L. Hermann
Herschel L. Langenthal Charles C. Holman
Richard E. McCready Winfield M. Kelly, Jr.
James R. Moxley, Jr. Harry L. Lundy, Jr.
Vincent D. Palumbo James R. Moxley, III
Lawrence A. Shulman Mary S. Scrivener
Albert W. Turner
Theodore G. Venetoulis
Albert W. Turner, Class of 2002, resigned effective June 26, 2000 for
personal reasons. At their meeting on that date, the Board of Directors elected
Raymond C. LaPlaca to serve until the Company's annual meeting in 2001, or until
his successor is duly elected and qualified.
ITEM 5. OTHER INFORMATION
On June 27, 2000, the Board of Directors of the Company declared a $.09 per
share cash dividend to common stockholders of record on July 14, 2000, payable
July 26, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K are set forth
below.
Exhibit No. Reference
----------- ---------
27.0 Financial Data Schedule Page 21
(b) Reports on Form 8-K
None.
(19)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLUMBIA BANCORP
PRINCIPAL EXECUTIVE OFFICER:
August 10, 2000
----------------------- ------------------------------
Date John M. Bond, Jr.
President and
Chief Executive Officer
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
August 10, 2000
----------------------- ------------------------------
Date John A. Scaldara, Jr.
Executive Vice President,
Corporate Secretary and
Chief Financial Officer
(20)
