<PAGE>
<PAGE>
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
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c) or
Subsection 240.14a-12
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
TRI-COUNTY FINANCIAL CORPORATION
- ---------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
AMERIANA BANCORP
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) 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>
<PAGE>
April 7, 1997
Dear Stockholder:
We are pleased to invite you to attend the Annual Meeting of
the Stockholders of Tri-County Financial Corporation (the
"Corporation") to be held at the Holiday Inn, 1 St. Patrick's
Drive, Waldorf, Maryland on Wednesday, May 7, 1997 at 10:00 a.m.
The attached Notice and Proxy Statement describe the formal
business to be transacted at the meeting. Directors and officers
of the Corporation as well as a representative of Deloitte &
Touche LLP will be present to respond to any questions the
stockholders may have.
Your vote is important, regardless of the number of shares
you own. On behalf of the Board of Directors, we urge you to
sign, date and return the enclosed proxy card as soon as
possible, even if you currently plan to attend the Annual
Meeting. This will not prevent you from voting in person, but
will assure that your vote is counted if you are unable to attend
the meeting.
Sincerely,
/s/ Michael L. Middleton
Michael L. Middleton
President
<PAGE>
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
3035 LEONARDTOWN ROAD
WALDORF, MARYLAND 20601
(301) 645-5601
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stock-
holders (the "Meeting") of Tri-County Financial Corporation (the
"Corporation") will be held at the Holiday Inn, 1 St. Patrick's
Drive, Waldorf, Maryland on Wednesday, May 7, 1997, at 10:00 a.m.
A Proxy Card and a Proxy Statement for the Meeting are
enclosed.
The Meeting is for the purpose of considering and acting
upon:
1. The election of two directors of the Corporation; and
2. Such other matters as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to
come before the Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Meeting on the date specified above, or on any date
or dates to which, by original or later adjournment, the Meeting
may be adjourned. The Board of Directors has fixed the close of
business on March 7, 1997, as the record date for determination
of the stockholders entitled to vote at the Meeting and any
adjournments thereof.
You are requested to fill in and sign the enclosed form of
proxy which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be used if
you attend and vote at the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Henry A. Shorter, Jr.
HENRY A. SHORTER, JR.
SECRETARY
Waldorf, Maryland
April 7, 1997
_________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
CORPORATION THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER
TO ENSURE A QUORUM. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
_________________________________________________________________<PAGE>
<PAGE>
PROXY STATEMENT
OF
TRI-COUNTY FINANCIAL CORPORATION
3035 LEONARDTOWN ROAD
WALDORF, MARYLAND 20601
(301) 645-5601
_________________________________________________________________
_________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
May 7, 1997
_________________________________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Tri-County
Financial Corporation ("Tri-County Financial" or the
"Corporation") to be used at the Annual Meeting of Stockholders
of the Corporation (the "Meeting"), which will be held at the
Holiday Inn, 1 St. Patrick's Drive, Waldorf, Maryland on
Wednesday, May 7, 1997 at 10:00 a.m. The accompanying notice of
meeting and this Proxy Statement are being first mailed to
stockholders on or about April 7, 1997.
_________________________________________________________________
REVOCATION OF PROXIES
_________________________________________________________________
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
such proxies will be voted at the Meeting and all adjournments
thereof. Proxies may be revoked by written notice delivered in
person or mailed to the Secretary of the Corporation at the
address shown above or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Meeting. A
proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors of
the Corporation will be voted in accordance with the directions
given therein. Where no instructions are indicated, proxies will
be voted for the nominees for director set forth below and in
favor of each of the other proposals set forth in this Proxy
Statement for consideration at the Meeting.
_________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
_________________________________________________________________
Stockholders of record as of the close of business on March
7, 1997 are entitled to one vote for each share then held. As of
March 7, 1997, the Corporation had 754,984 shares of common stock
par value $.01 (the "Common Stock") issued and outstanding.
The following table sets forth, as of March 7, 1997, certain
information as to those persons who were beneficial owners of
more than 5% of the Corporation's outstanding shares of Common
Stock and as to the shares of Common Stock beneficially owned by
each director, each officer named in the summary compensation
table and by all executive officers and directors of the
Corporation as a group. Persons and groups owning in excess of
5% of the Common Stock are required to file certain reports
regarding such ownership with the Corporation and the Securities
and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended. Based upon such reports, management knows
of no person, other than those set forth in the table below, who
owned more than 5% of the Corporation's outstanding shares of
Common Stock at March 7, 1997. All beneficial owners listed in
the table have the same address as the Corporation.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name of Beneficial Common Stock
Beneficial Owners Ownership (1) Outstanding
- ----------------- ------------- ------------
<S> <C> <C>
Tri-County Federal Savings Bank 46,498 (2) 6.2%
Employee Stock Ownership Plan
("ESOP")
Michael L. Middleton 70,032 (3) 8.9%
C. Marie Brown 21,914 (4) 2.9%
M. William Runyon 24,699 (6) 3.3%
Henry A. Shorter, Jr. 24,036 (5) 3.2%
Gordon A. O'Neill 38,293 (5)(6) 5.0%
W. Edelen Gough, Jr. 10,919 (5) 1.4%
H. Beaman Smith 25,950 (5) 3.4%
All Executive Officers and 232,017 (7) 28.1%
Directors as a Group
(9 persons)
<FN>
____________________
(1) Includes certain shares owned by spouses, or as custodian or trustee for
minor children over which shares all officers and directors as a group
effectively exercise sole or shared voting and investment power, unless
otherwise indicated.
(2) These shares are currently held in a suspense account for future
allocation and/or distribution among participants as the loan used to
purchase the shares is repaid. The ESOP trustees vote all allocated
shares in accordance with the instructions of the participating
employees. Unallocated shares and shares for which no instructions have
been received are voted by the trustees in the manner directed by the
ESOP committee.
(3) Includes 28,438 shares of Common Stock which may be received upon the
exercise of stock options. Also includes 6,008 shares of Common Stock
allocated to Mr. Middleton under the ESOP.
(4) Includes 10,551 shares of Common Stock which may be received upon the
exercise of stock options and 3,599 shares of Common Stock allocated
under the ESOP.
(5) Includes 7,196, 7,196, 1,837 and 7,196 shares that may be received upon
the exercise of options by Directors Shorter, O'Neill, Gough and Smith,
respectively.
(6) Includes 10,808 shares of Common Stock held by the ESOP which have not
been allocated to the accounts of participants; these shares are deemed
to be under the control of the Director in connection with his service as
Trustee of the ESOP.
(7) Includes 72,029 shares of Common Stock which may be received upon the
exercise of stock options. Also includes 13,135 shares of Common Stock
allocated to all executive officers and directors as a group under the
ESOP and 10,808 shares held by the ESOP that are not allocated to the
accounts of participants and are deemed to be under the control of two
Directors in connection with their service as Trustees of the ESOP.
</FN>
</TABLE>
2<PAGE>
<PAGE>
_________________________________________________________________
PROPOSAL I - ELECTION OF DIRECTORS
_________________________________________________________________
Tri-County Financial's Board of Directors currently consists
of seven members. The Corporation's Articles of Incorporation
provide that directors are to be elected for terms of three
years, approximately one-third of whom are to be elected
annually.
The Board of Directors has nominated for election as
directors Herbert N. Richmond, Jr. and Henry A. Shorter, Jr. to
serve for three year terms and until their successors are elected
and qualified. It is intended that the persons named in the
proxies solicited by the Board will vote for the election of the
named nominees. The Corporation's Articles of Incorporation
provide that stockholders may not cumulate their votes for the
election of directors.
If any nominee is unable to serve, the shares represented by
all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this
time, the Board knows of no reason why any nominee might be
unavailable to serve.
Under the Corporation's Bylaws, directors shall be elected
by a majority of those votes cast by stockholders at the Meeting.
Votes which are not cast at the Meeting, either because of
abstentions or broker non-votes, are not considered in
determining the number of votes which have been cast for or
against the election of a nominee.
The following table sets forth certain information for each
nominee and director continuing in office. Mr. Redmond was
nominated by the Board of Directors to fill a seat previously
occupied by Mr. M. William Runyon who will be retiring as of May
7, 1997.
<TABLE>
<CAPTION>
Age at First Year
December 31, Elected Term to
Name 31, 1996 Director(1) Expire
- ----- ------------ ----------- --------
<S> <C> <C> <C>
BOARD NOMINEES:
Herbert N. Redmond, Jr. 56 -- 2000 (2)
Henry A. Shorter, Jr. 66 1966 2000 (2)
DIRECTORS CONTINUING IN OFFICE:
Michael L. Middleton 49 1979 1998
Gordon A. O'Neill 71 1968 1998
C. Marie Brown 54 1991 1998
W. Edelen Gough, Jr. 68 1970 1999
Beaman Smith 51 1986 1999
<FN>
______________
(1) Reflects the year first elected as a director of Tri-County
Federal Savings Bank of Waldorf (the "Savings Bank"). With
the exception of Ms. Brown, who was appointed in October
1991, and Mr. Redmond, who will, if elected, be serving his
first term, each director became a director of the
Corporation on the date of its incorporation in September
1989.
(2) Assuming the individual is elected.
</FN>
</TABLE>
3<PAGE>
<PAGE>
The principal occupation of each director of Tri-County
Financial is set forth below. Unless otherwise noted, all
directors have held the position described below for at least the
past five years and reside in southern Maryland.
HERBERT N. REDMOND, JR. is the Senior Vice President and
Manager of the St. Mary's County office of the D.H. Steffens
Company, which provides civil engineering, land planning and land
surveying services. He is a member and director of the
Leonardtown Rotary, serves on the boards of Health Share of St.
Mary's County and the St. Mary's County Building Officials and
Code Administrators Appeals Board, participates in the St. Mary's
County Development Review Forum and is a member of the St. Mary's
County Historical Society.
HENRY A. SHORTER, JR. is the Secretary of the Corporation
and the Savings Bank, and has served in this capacity with the
Savings Bank since 1968. Mr. Shorter is a member of the American
Legion and is a retired restaurant owner.
MICHAEL L. MIDDLETON is President and Chief Executive
Officer of the Corporation and the Savings Bank. Mr. Middleton
joined the Savings Bank in 1973 and served in various management
positions until 1979 when he became President of the Savings
Bank. Mr. Middleton is a Certified Public Accountant and holds a
Masters of Business Administration. As President and Chief
Executive Officer of the Savings Bank, Mr. Middleton is
responsible for the overall operation of the Savings Bank
pursuant to the policies and procedures established by the Board
of Directors. Mr. Middleton is a member of the Rotary Club of
Waldorf and is a Paul Harris Fellow. In December 1995, Mr.
Middleton was appointed to the Board of Directors of the Federal
Home Loan Bank of Atlanta.
GORDON A. O'NEILL is a partner in the insurance agency of
Alger & O'Neill located in La Plata, Maryland. He is a member of
the Charles County Chamber of Commerce and the La Plata Business
Association.
C. MARIE BROWN has been associated with the Savings Bank for
21 years and serves as its Senior Vice President of Human
Resources and Data Processing. Ms. Brown is an alumnus of
Charles County Community College with an associates of arts
degree in management development. She is a supporter of the
Handicapped and Retarded Citizens of Charles County, of Zonta and
of various administrative committees of the Hughesville Baptist
Church.
W. EDELEN GOUGH, JR. retired from his position as a vice
president in charge of administration of the Corporation and the
Savings Bank in May 1994. He had served in this capacity with
the Savings Bank since 1970. He is a member of the Rotary Club
of Lexington Park, Maryland and the Optimist Club in Chaptico,
Maryland.
BEAMAN SMITH is the Treasurer of the Corporation and has
been the president of Accosystems, Inc., a computer software
company, since 1989. Prior to that time, Mr. Smith was a
majority owner of the Smith's Family Honey Company in Bryans
Road, Maryland. Mr. Smith is a Vice President of Fry Plumbing
Company of Washington, D.C., a Trustee of the Ferguson
Foundation, a member of the Bryans Road Sports Council and the
Treasurer of the Mayaone Association.
________________________________________________________________
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
_________________________________________________________________
The Board of Directors conducts its business through
meetings of the Board and through activities of its committees.
No director of the Corporation attended fewer than 75% of the
total meetings of the Board of Directors and committees on which
such Board member served during this period.
4<PAGE>
<PAGE>
The Corporation's audit committee, consisting of the full
Board of Directors of the Corporation, meets with the
Corporation's independent auditors in connection with its annual
audit and to review the Corporation's accounting and financial
reporting policies and practices. The audit committee met once
during 1996.
The Corporation's full Board of Directors acts as a
nominating committee for the annual selection of its nominees for
election as directors. While the Board of Directors will
consider nominees recommended by stockholders, it has not
actively solicited recommendations from the Corporation's
stockholders for nominees nor established any procedures for this
purpose. The Board of Directors met once in its capacity as
nominating committee during 1996.
________________________________________________________________
EXECUTIVE COMPENSATION
________________________________________________________________
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash
compensation awarded to or earned in the last three years by the
chief executive officer of the Corporation and the only other
executive officer who earned in excess of $100,000 in salary and
bonus in 1996.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Name and ------------------- Awards All Other
Principal Position Year Salary Bonus(1) Option/SAAs(2) Compensation
- ----------------- ---- ------ -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Michael L. Middleton 1996 $134,588 $79,945 -- $25,328 (3)
President 1995 130,600 90,627 3,077/7,693 (4) 16,985
1994 126,249 63,246 2,197/5,494 (4)(5) 18,695
C. Marie Brown 1996 $ 83,500 $39,679 -- $22,202 (6)
Senior Vice President 1995 80,000 44,411 1,508/3,770 (4) 14,447
1994 75,000 28,181 979/2,448 (4)(5) 13,249
<FN>
___________
(1) Represents bonuses paid pursuant to the Savings Bank's Executive
Incentive Compensation Plan (the "Incentive Plan"), adopted by the Board
of Directors in February 1992. Pursuant to the Incentive Plan, the
Savings Bank, for each year in which the Incentive Plan is in effect,
pays each participant a year-end bonus equal to a percentage of his
compensation times the "Multiplier," as defined below. The percentage of
compensation taken into account for Mr. Middleton and Ms. Brown for this
purpose is 10% and 8%, respectively. The Multiplier equals (i) the
percentage by which the Corporation's return on equity ("ROE") exceeds
the median ROE of other members of a peer group comprised of all other
savings associations headquartered in the State of Maryland, plus (ii)
the percentage by which the Savings Bank's nonperforming loans (loans
over 90 days delinquent and real estate owned) as a percentage of total
assets ("NPL") betters the median NPL of other members of the peer group.
(2) Consists of awards under the Incentive Plan.
(3) Consists of $8,500 in directors' fees, $9,894 in contributions under the
ESOP, matching contributions under the 401(k) Plan of $3,350 and split-
dollar life insurance premiums of $3,584.
(4) At December 31, 1996, Mr. Middleton and Ms. Brown waived the right to
receive payments related to 1996 appreciation and all future payments
related to outstanding previously issued SAAs.
(5) In December 1995, the Board of Directors determined that certain option
and stock appreciation awards made under the Incentive Plan had been made
using an incorrect fair market value of the Common Stock. To correct
this error, the Board rescinded the awards previously made in 1992, 1993
and 1994 and issued new options at the current fair market value. The
figures presented herein for 1994 reflect the corrected award amounts as
if they had been granted in the respective periods.
(6) Consists of $8,500 in directors' fees, $8,556 in contributions under the
Savings Bank's ESOP, matching contributions under the 401(k) Plan of
$3,115 and split-dollar life insurance premiums of $2,031.
</FN>
</TABLE>
5<PAGE>
<PAGE>
AGGREGATED OPTION/SAA EXERCISES IN 1996 AND YEAR-END OPTION/SAA
VALUES
The following table sets forth information concerning
exercises of options/SAAs by the named executive officers during
the year ended December 31, 1996, as well as the value of
options/SAAs held by such persons at the end of the fiscal year.
<TABLE>
<CAPTION>
Value of
Unexercised
Number of In-the-Money
Unexercised Options/SAAs
Options/SAAs at at Fiscal
Fiscal Year-End Year-End
Shares Acquired Value (All Immediately (All Immediately
Name on Exercise Realized Exercisable) Exercisable)
- ---- --------------- --------- ----------- --------------
<S> <C> <C> <C> <C>
Michael L. Middleton 16,220 $288,878 28,438 $355,103
C. Marie Brown 3,316 45,451 11,888 $141,015
</TABLE>
EMPLOYMENT AGREEMENTS
As of June 1, 1986, the Savings Bank entered into an
employment agreement with Michael L. Middleton which currently
provides for an annual salary of $139,038. The agreement
provides for Mr. Middleton's employment for a period of five
years, subject to an automatic annual one-year extension. The
agreement provides for termination for cause or upon certain
events specified by regulations administered by the Office of
Thrift Supervision. The agreement is also terminable by the
Savings Bank without cause, in which case Mr. Middleton would be
entitled to one full year's compensation as in effect on the date
of termination payable in a lump sum, plus full hospitalization
as in effect on the date of termination for a period of six
months. If, following a change in control of the Corporation or
the Savings Bank, the Savings Bank terminates Mr. Middleton's
employment for any reason other than (i) cause, as defined in the
agreement or (ii) retirement at or after the normal retirement
age under a qualified pension plan maintained by the Savings
Bank, or if the Savings Bank otherwise changes the capacity or
circumstances in which Mr. Middleton is employed or causes a
reduction in his responsibilities, authority, compensation or
other benefits provided under the agreement without Mr.
Middleton's consent, then Mr. Middleton shall be entitled to
receive an amount equal to 2.99 times the average annual
compensation payable by the Savings Bank and includable in Mr.
Middleton's gross income for the most recent five taxable years.
Control refers to the ownership of 25% or more of the Savings
Bank's or Corporation's Common Stock by any person or group. The
agreement provides, among other things, for annual review of
compensation, for participation in an equitable manner in any
stock option plan or incentive plan to the extent authorized by
the Savings Bank's Board of Directors for its key management
employees and for participation in pension, group life insurance,
medical coverage and in other employee benefits applicable to
executive personnel.
The Savings Bank maintains a similar employment agreement
with C. Marie Brown, Senior Vice President of Human Resources and
Data Processing. Ms. Brown's agreement has a three-year term and
provides for a current annual salary of $86,260 and a change in
control payment equal to 2.00 times Ms. Brown's five-year average
annual compensation.
The aggregate payment that would be made to Mr. Middleton
and Ms. Brown assuming the termination of their employment under
the foregoing circumstances at December 31, 1996 would be
approximately $390,000 and $170,000, respectively.
6<PAGE>
<PAGE>
_________________________________________________________________
DIRECTORS' COMPENSATION
_________________________________________________________________
BOARD FEES
Directors of the Corporation receive fees of $300 per
meeting attended. Members of the Savings Bank's Board of
Directors currently receive fees of $350 per meeting attended and
an annual retainer of $3,500. Members of the Savings Bank's
executive committee receive a fee of $350 per meeting attended.
Members of the Savings Bank's audit committee receive fees of
$350 per meeting attended.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Corporation maintains a stock option plan for non-
employee directors, adopted by the Board of Directors in December
1995. Under that plan, the Corporation granted to non-employee
directors options to purchase an aggregate of 8,750 shares of the
Common Stock during 1995.
DIRECTOR RETIREMENT PLAN
The Savings Bank's Board of Directors has adopted a
retirement plan for members of the Board of Directors of the
Savings Bank (the "Directors' Plan"), effective January 1, 1995.
Under the Directors' Plan, each non-employee Directors of the
Savings Bank will receive an annual retirement benefit for ten
years following his termination of service on the Savings Bank's
Board in an amount equal to the product of his "Benefit
Percentage," his "Vested Percentage," and $3,500. A
participant's "Benefit Percentage" is based on his overall years
of service as a non-employee director of the Savings Bank, and
increases in increments of 33-1/3% from 0% for less than five
years of service, to 33-1/3% for five to nine years of service,
to 66-2/3% for 10 to 14 years of service, and to 100% for 15 or
more years of service. A participant's "Vested Percentage"
equals 33-1/3% if the participant is serving on the Board on
January 1, 1995 (the "Effective Date"), increases to 66-2/3% if
the participant completes one year of service after the Effective
Date, and becomes 100% if the participant completes a second year
of service after the Effective Date. However, in the event a
participant retires from service on the Board due to "disability"
(as determined by the Board of Directors of the Savings Bank) or
for any reason after attaining age 65, the participant's Vested
Percentage will become 100% regardless of his years of service.
A participant's vested percentage will also become 100% in the
event of a "change in control" (as defined in the Directors'
Plan). This provision may have the effect of deferring a hostile
change in control by increasing the costs of acquiring control.
If a participant terminates service on the Board due to
disability, the Savings Bank will pay the participant each year
for ten years an amount equal to the product of his Benefit
Percentage and $3,500. The Directors' Plan also provides death
benefits to a participant's surviving spouse under certain
conditions.
The Directors' Plan also establishes a deferred compensation
program for members of the Board of Directors of the Savings
Bank. Under the Directors' Plan, directors of the Savings Bank
may elect to defer all or any portion of the fees and/or salary
otherwise payable to him or her in cash for any calendar year in
which the Directors' Plan is in effect. Deferred amounts will be
credited to a bookkeeping account in the participant's name,
which will also be credited annually with: (a) the investment
return which would have resulted if such deferred amounts had
been invested in savings accounts having a return equal to the
highest interest rate which the Savings Bank pays on certificates
of deposit, regardless of their term, and (b) a deemed matching
contribution by the Savings Bank in an amount equal to the
product of the "Multiplier" (as defined below) for the calendar
year, and 1.5% of the participant's aggregate fee deferrals for
the year. The Multiplier equals (i) the percentage by which the
Corporation's return on equity ("ROE") exceeds the median ROE of
other members of a peer group comprised of all other savings
associations headquartered in the State of Maryland, plus (ii)
the percentage by which the Savings Bank's nonperforming loans
(loans over 90 days delinquent and real estate owned) as a
percentage of total assets ("NPL") betters the median NPL of
other members of the peer group. Participants may determine the
time and form of
7<PAGE>
<PAGE>
benefit payments and may cease future deferrals any time.
Changes in participant elections generally become effective only
as of the following January 1st, except that (i) elections
designating a beneficiary or ceasing future contributions will be
given immediate effect, and (ii) participants may change
elections as to the timing or form of distributions only with
respect to subsequently deferred compensation.
_________________________________________________________________
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
_________________________________________________________________
Pursuant to regulations promulgated under the Securities
Exchange Act of 1934, the Corporation's officers, directors and
persons who own more than 10% of the outstanding Common Stock are
required to file reports detailing their ownership and changes of
ownership in such Common Stock, and to furnish the Corporation
with copies of all such reports. Based solely on its review of
the copies of such reports received during the past fiscal year
or with respect to the last fiscal year, the Corporation believes
that during 1996, all of its officers, directors and all of its
stockholders owning in excess of 10% of the outstanding Common
Stock have complied with the reporting requirements except for
Director Runyon and Officer Ramos who each inadvertently failed
to timely file one report governing one transaction.
_________________________________________________________________
TRANSACTIONS WITH THE CORPORATION AND THE SAVINGS BANK
_________________________________________________________________
The Savings Bank has followed a policy of offering loans to
its officers, directors and employees for the financing and
improvement of their personal residences as well as consumer
loans. These loans are made in the ordinary course of business
and upon substantially the same terms, including collateral,
interest rate and origination fees, as those prevailing at the
time for comparable transactions, and do not involve more than
the normal risk of collectibility or present any unfavorable
features.
_________________________________________________________________
RELATIONSHIP WITH INDEPENDENT AUDITORS
_________________________________________________________________
Effective on October 4, 1995, the Corporation's Audit
Committee voted to replace the Corporation's former independent
auditors, Councilor, Buchanan & Mitchell, P.C., with the
Corporation's current independent auditors, Deloitte & Touche
LLP. The authority to change independent auditors was duly
delegated to the Audit Committee by the Board of Directors. In
connection with their audit of the fiscal year ended December 31,
1994 and through the date of their dismissal, there were no
disagreements with Councilor, Buchanan & Mitchell, P.C. on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure which, if not resolved
to the satisfaction of Councilor, Buchanan & Mitchell, P.C.,
would have caused them to make reference to the subject of such
disagreement in connection with their reports. In addition,
during this period there was no adverse opinion or disclaimer of
opinion or any opinion qualified or modified as to uncertainty,
audit scope or accounting principles.
The Board of Directors presently intends to renew the
Company's arrangements with Deloitte & Touche LLP to be its
independent auditors for the fiscal year ending December 31,
1997. A representative of Deloitte & Touche LLP is expected to
be present at the Meeting to respond to appropriate questions and
to make a statement, if so desired.
8<PAGE>
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_________________________________________________________________
OTHER MATTERS
_________________________________________________________________
The Board of Directors is not aware of any business to come
before the Meeting other than those matters described above in
this Proxy Statement. However, if any other matters should pro-
perly come before the Meeting, it is intended that proxies in the
accompanying form will be voted in respect thereof by the person
or persons voting the proxies as directed by the Board of
Directors.
_________________________________________________________________
MISCELLANEOUS
_________________________________________________________________
The cost of solicitation of proxies will be borne by the
Corporation. In addition to conducting solicitations by mail,
directors, officers, and regular employees of the Corporation may
solicit proxies personally or by telegraph or telephone without
additional compensation.
The Corporation's Annual Report to Stockholders, including
financial statements, accompanies this proxy statement. Such
Annual Report is not to be treated as a part of the proxy
solicitation material nor as having been incorporated herein by
reference.
_________________________________________________________________
STOCKHOLDER PROPOSALS
_________________________________________________________________
To be eligible for inclusion in the Corporation's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Corporation's main office at 3035 Leonardtown
Road, Waldorf, Maryland 20601 no later than December 7, 1997.
Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934, as
amended.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Henry A. Shorter, Jr.
HENRY A. SHORTER, JR.
SECRETARY
Waldorf, Maryland
April 7, 1997
_________________________________________________________________
FORM 10-K
_________________________________________________________________
A COPY OF THE CORPORATION'S FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT
CHARGE TO STOCKHOLDERS AS OF MARCH 7, 1997, UPON WRITTEN REQUEST
TO THE SECRETARY, TRI-COUNTY FINANCIAL CORPORATION, 3035
LEONARDTOWN ROAD, WALDORF, MARYLAND 20601
_________________________________________________________________
9<PAGE>
<PAGE>
REVOCABLE PROXY
TRI-COUNTY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
May 7, 1997
The undersigned hereby appoints Michael L. Middleton and
Beaman Smith, with full powers of substitution, to act as
attorneys and proxies for the undersigned to vote all shares of
Common Stock of Tri-County Financial Corporation (the
"Corporation") that the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Meeting") to be held at the
Holiday Inn, 1 St. Patrick's Drive, Waldorf, Maryland on
Wednesday, May 7, 1997 at 10:00 a.m. and at any and all adjourn-
ments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
The election as directors of both nominees
listed below (except as marked to the
contrary). [ ] [ ]
Herbert N. Redmond, Jr.
Henry A. Shorter, Jr.
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR EITHER
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE BELOW.
_______________________________________________
The Board of Directors recommends a vote "FOR" the listed
proposition.
_________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITION STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY AS DIRECTED BY THE
BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS
PROXY ALSO CONFERS DISCRETIONARY AUTHORITY ON THE PROXY HOLDERS
TO VOTE WITH RESPECT TO APPROVAL OF THE MINUTES OF THE PRIOR
MEETING OF STOCKHOLDERS, THE ELECTION OF ANY PERSON AS DIRECTOR
WHERE THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT
SERVE, AND MATTERS INCIDENT TO THE CONDUCT OF THE 1997 ANNUAL
MEETING.
_________________________________________________________________
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof and after notification to
the Secretary of the Corporation at the Meeting of the
stockholder's decision to terminate this proxy, then the power of
said attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from the Corporation
prior to the execution of this proxy of notice of the Meeting, a
proxy statement dated April 7, 1997, and an annual report.
Dated: _______________________, 1997
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
_________________________________________________________________
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
_________________________________________________________________
