<PAGE>
<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
[x] Definitive Proxy Statement the Commission Only (as
[ ] Definitive Additional Materials permitted by Rule
[ ] Soliciting Material Pursuant 14a-6(e)(2))
to Rule 14a-11(c) or Rule 14a-12
TRI-COUNTY FINANCIAL CORPORATION
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction
applies:
------------------------------------------------------
2. Aggregate number of securities to which transaction
applies:
------------------------------------------------------
3. Per unit price or other underlying value of trans-
action 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>
April 5, 2000
Dear Stockholder:
I am pleased to invite you to attend the Annual Meeting of
the Stockholders of Tri-County Financial Corporation (the
"Corporation") to be held in the second floor Board Room at the
main office of Community Bank of Tri-County, 3035 Leonardtown
Road, Waldorf, Maryland on Friday, May 5, 2000 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
Stegman & Company 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, I 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 5, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stock-
holders (the "Meeting") of Tri-County Financial Corporation (the
"Corporation") will be held in the second floor Board Room at
the main office of Community Bank of Tri-County, 3035
Leonardtown Road, Waldorf, Maryland on Friday, May 5, 2000, 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
proposals 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 14, 2000, 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/ H. Beaman Smith
H. BEAMAN SMITH
SECRETARY
Waldorf, Maryland
April 5, 2000
________________________________________________________________
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 5, 2000
________________________________________________________________
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 in the
second floor Board Room at the main office of Community Bank of
Tri-County, 3035 Leonardtown Road, Waldorf, Maryland on Friday,
May 5, 2000 at 10:00 a.m. The accompanying notice of meeting
and this Proxy Statement are being first mailed to stockholders
on or about April 5, 2000.
________________________________________________________________
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 14, 2000 are entitled to one vote for each share then
held. As of March 14, 2000, the Corporation had 795,515 shares
of common stock par value $.01 (the "Common Stock") issued and
outstanding.
The following table sets forth, as of March 21, 2000,
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 21,
2000. All beneficial owners listed in the table have the same
address as the Corporation.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF SHARES
NAME OF BENEFICIAL AMOUNT AND NATURE OF OF COMMON STOCK
OWNERS BENEFICIAL OWNERSHIP(1) OUTSTANDING
- ------------------- ----------------------- -----------------
<S> <C> <C>
Community Bank of Tri-County 60,035 (2) 7.9%
Employee Stock Ownership Plan
("ESOP")
Michael L. Middleton 86,181 (3) 10.5%
C. Marie Brown 30,064 (4) 3.7%
Herbert N. Redmond, Jr. 11,424 (5)(6) 1.4%
Henry A. Shorter, Jr. 26,441 (5) 3.3%
Gordon A. O'Neill 39,464 (5)(6) 4.9%
W. Edelen Gough, Jr. 14,121 (5) 1.8%
H. Beaman Smith 30,301 (5) 3.8%
All Executive Officers and 269,582 (7) 30.9%
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) 8,684 of 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 28,655 shares of Common Stock which may be received
upon the exercise of stock options. Also includes 8,166
shares of Common Stock allocated to Mr. Middleton under the
ESOP.
(4) Includes 13,270 shares of Common Stock which may be received
upon the exercise of stock options and 5,197 shares of
Common Stock allocated to Ms. Brown under the ESOP.
(5) Includes 2,200, 4,205, 4,205, 4,205 and 4,205 shares that
may be received upon the exercise of options by Directors
Redmond, Shorter, O'Neill, Gough and Smith, respectively.
(6) Includes 8,684 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 60,945 shares of Common Stock which may be received
upon the exercise of stock options. Also includes 18,767
shares of Common Stock allocated to all executive officers
and directors as a group under the ESOP and 8,684 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>
________________________________________________________________
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.
2
<PAGE>
The Board of Directors has nominated for election as
directors Herbert N. Redmond, 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.
<TABLE>
<CAPTION>
AGE AT FIRST YEAR
DECEMBER ELECTED TERM TO
NAME 31, 1999 DIRECTOR(1) EXPIRE
---- -------- ----------- -------
<S> <C> <C> <C>
BOARD NOMINEES:
Herbert N. Redmond, Jr. 59 1997 2003 (2)
Henry A. Shorter, Jr. 69 1966 2003 (2)
DIRECTORS CONTINUING IN OFFICE:
Michael L. Middleton 52 1979 2001
Gordon A. O'Neill 74 1968 2001
C. Marie Brown 57 1991 2001
W. Edelen Gough, Jr. 71 1970 2002
H. Beaman Smith 54 1986 2002
<FN>
_________
(1) Reflects the year first elected as a director of
Community Bank of Tri-County (the "Bank"). With the
exception of Ms. Brown, who was appointed in October 1991,
and Mr. Redmond, who was appointed in May 1997, 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>
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 as a director on the Health Share of
St. Mary's County and the St. Mary's County Building Officials
and Code Administrators Appeals Boards, participates in the St.
Mary's County Development Review Forum and is a member of the
St. Mary's County Historical Society.
3
<PAGE>
<PAGE>
HENRY A. SHORTER, JR. 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 Bank. Mr. Middleton joined
the Bank in 1973 and served in various management positions
until 1979 when he became President of the Bank. Mr. Middleton
is a Certified Public Accountant and holds a Masters of Business
Administration. As President and Chief Executive Officer of the
Bank, Mr. Middleton is responsible for the overall operation of
the 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. Since December
1995, Mr. Middleton has served on the Board of Directors of the
Federal Home Loan Bank of Atlanta and also serves as its Board
Representative to the Council of Federal Home Loan Banks. In
January 2000, Mr. Middleton was appointed to the National
Association of Home Builders Mortgage Roundtable.
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 Bank for 27
years and serves as its Chief Operating Officer. 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 and of Zonta and serves on various administrative
committees of the Hughesville Baptist Church and the board of
the Charles County chapter of the American Red Cross.
W. EDELEN GOUGH, JR. retired from his position as senior
vice president in charge of administration of the Corporation
and the Bank in May 1994. He had served in this capacity with
the Bank since 1970. He is a member and director of the Rotary
Club of Leonardtown, Maryland and a member and Vice President of
the Literary Council of St. Mary's County.
H. BEAMAN SMITH is the Secretary/Treasurer of the
Corporation, President of Accoware, a computer software company,
and Vice President of Fry Plumbing Company of Washington, D.C.
Mr. Smith is 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.
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 Board of Directors met
once in its capacity as audit committee during 1999.
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 1999.
4
<PAGE>
<PAGE>
________________________________________________________________
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 other
executive officers who earned in excess of $100,000 in salary
and bonus in 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND ------------------- -- SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) UNDERLYING OPTIONS COMPENSATION
- ------------------ ---- ------ -------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Michael L. Middleton 1999 $161,413 $80,145 1,807 $27,799 (2)
President 1998 141,979 93,053 5,024 28,245
1997 138,867 78,540 -- 39,196
C. Marie Brown 1999 $103,389 $41,068 926 $25,597 (3)
Senior Vice President 1998 94,085 49,331 3,945 25,074
1997 86,154 38,982 -- 30,008
Gregory C. Cockerham 1999 $ 93,861 $34,953 788 $13,632 (4)
Senior Vice President 1998 84,731 41,650 3,755 12,832
1997 76,959 32,645 -- 14,914
<FN>
______________
(1) Represents bonuses paid pursuant to the Bank's Executive
Incentive Compensation Plan (the "Incentive Plan").
Pursuant to the Incentive Plan, the 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, Ms. Brown and Mr. Cockerham for this purpose is
10%, 8% and 7.5%, respectively. For fiscal 1999, the
multiplier was the average of (i) the percentage obtained
when the Corporation's return on equity ("ROE") is divided
by 80% of the median ROE of a peer group comprised of
commercial banks in the fifth Federal Reserve district
plus (ii) the percentage obtained when the median
percentage of noncurrent to gross loans of the peer group
is divided by the percentage of the Bank's noncurrent to
gross loans; provided that the Multiplier shall not exceed
1.0.
(2) Consists of $9,800 in directors' fees, $12,367 in
contributions under the Bank's ESOP, matching
contributions under the 401(k) Plan of $4,392 and split-
dollar life insurance premiums of $1,240.
(3) Consists of $9,800 in directors' fees, $10,285 in
contributions under the Bank's ESOP, matching
contributions under the 401(k) Plan of $4,582 and split-
dollar life insurance premiums of $930.
(4) Consists of $9,072 in contributions under the Bank's ESOP,
matching contributions under the 401(k) Plan of $4,065 and
split-dollar life insurance premiums of $495.
</FN>
</TABLE>
5
<PAGE>
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1999
The following table contains information concerning the
grant of stock options during the year ended December 31, 1999
to the executive officers named in the Summary Compensation
Table set forth above.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF TOTAL ANNUAL RATES OF
UNDERLYING OPTIONS GRANTED STOCK PRICE
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION APPRECIATION FOR
NAME GRANTED IN FISCAL YEAR PRICE DATE OPTION TERM (1)
- ---- --------- --------------- -------- ----------- -------------------
5% 10%
---- ------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Middleton 1,807 31.43% $26.60 December 31, 2009 $71,557 $113,931
C. Marie Brown 926 16.11 26.60 December 31, 2009 36,670 58,384
Gregory C. Cockerham 788 13.71 26.60 December 31, 2009 31,205 49,683
<FN>
_________________
(1) Represents the difference between the aggregate exercise price of the options and the aggregate value of the
underlying Common Stock at the expiration date assuming the indicated annual rate of appreciation in the
value of the Common Stock as of the date of grant, December 31, 1999.
</FN>
</TABLE>
AGGREGATED OPTION/SAA EXERCISES IN 1999 AND YEAR-END OPTION/SAA
VALUES
The following table sets forth information concerning
exercises of stock options by the named executive officers
during the year ended December 31, 1999, as well as the value of
options held by such persons at the end of the fiscal year.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED VALUE (ALL IMMEDIATELY (ALL IMMEDIATELY
NAME ON EXERCISE REALIZED EXERCISABLE) EXERCISABLE)
---- ----------- -------- ---------------- ----------------
<S> <C> <C> <C> <C>
Michael L. Middleton 2,550 $50,694 31,155 $408,473
C. Marie Brown 1,000 $16,100 14,270 $162,426
Gregory C. Cockerham 1,459 $29,326 11,138 $116,229
</TABLE>
EMPLOYMENT AGREEMENTS
The Bank maintains an employment agreement with Michael L.
Middleton which currently provides for an annual salary of
$164,160. The agreement provides for Mr. Middleton's employment
for a period of five years, subject to annual one-year
extensions. The agreement provides for termination for cause or
upon certain events specified in the agreement. The agreement
is also terminable by the Bank without cause, in which case Mr.
Middleton would be entitled to compensation as in effect on the
date of termination up to the expiration date of the agreement
payable in a lump sum or in periodic payments (at the option of
Mr. Middleton), plus full life, health, disability and other
benefits as in effect on the date of termination up to the
expiration date of the agreement. If, following a change in
control of
6
<PAGE>
<PAGE>
the Corporation or the Bank, the Bank terminates Mr. Middleton's
employment for any reason other than (i) just cause, as defined
in the agreement or (ii) if the 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 Bank and includable in Mr.
Middleton's gross income for the most recent five taxable
years. Control refers to certain enumerated events, including
the ownership of 25% or more of the 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 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 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 $109,000 and a change in
control payment equal to 2.00 times Ms. Brown's five-year
average annual compensation.
The Bank maintains a similar employment agreement with
Gregory C. Cockerham, Senior Vice President of Lending. Mr.
Cockerham's agreement has a three year term and provides for a
current annual salary of $100,000 and a change in control
payment equal to 2.00 times Mr. Cockerham's five-year average
annual compensation.
The aggregate payment that would be made to Mr. Middleton,
Ms. Brown and Mr. Cockerham assuming the termination of their
employment under the foregoing circumstances at December 31,
1999 would be approximately $443,122, $190,451 and $171,599,
respectively.
________________________________________________________________
DIRECTORS' COMPENSATION
________________________________________________________________
BOARD FEES
Directors of the Corporation receive fees of $300 per
meeting attended. Members of the Bank's Board of Directors
currently receive fees of $400 per meeting attended and an
annual retainer of $3,500. Members of the Bank's executive
committee receive a fee of $400 per meeting attended. Members
of the Bank's audit committee receive fees of $400 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. In October, 1998, the
Board of Directors approved an amendment to the plan to reserve
an additional 11,000 shares under the plan. Options to
purchase all of these 11,000 shares were granted to directors
during 1998.
DIRECTOR RETIREMENT PLAN
The Bank's Board of Directors has adopted a retirement
plan for members of the Board of Directors of the Bank (the
"Directors' Plan"), effective January 1, 1995. Under the
Directors' Plan, each non-employee director of the Bank will
receive an annual retirement benefit for ten years following his
termination of service on the 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 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 was 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
7
<PAGE>
<PAGE>
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
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 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 Bank. Under the Directors' Plan, directors of the 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 Bank pays on certificates of
deposit, regardless of their term, and (b) a deemed matching
contribution by the 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 the average of (i) the percentage obtained
when the Corporation's return on equity ("ROE") is divided by
80% of the median ROE of a peer group comprised of commercial
banks in the fifth Federal Reserve district plus (ii) the
percentage obtained when the median percentage of noncurrent to
gross loans of the peer group is divided by the percentage of
the Bank's noncurrent to gross loans; provided that the
Multiplier shall not exceed 1.0. Participants may determine the
time and form of 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.
________________________________________________________________
TRANSACTIONS WITH THE CORPORATION AND THE BANK
________________________________________________________________
The 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.
________________________________________________________________
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 1999, 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.
________________________________________________________________
RELATIONSHIP WITH INDEPENDENT AUDITORS
________________________________________________________________
The Board of Directors presently intends to renew the
Company's arrangements with Stegman & Company to be its
independent auditors for the fiscal year ending December 31,
2000. A representative of Stegman & Company is expected to be
present at the Meeting to respond to appropriate questions and
to make a statement, if so desired.
8
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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
properly 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, 2000.
Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934,
as amended.
Stockholder proposals, other than those submitted pursuant
to the Exchange Act, must be submitted in writing, delivered or
mailed by first class United States mail, postage prepaid, to
the secretary of the Corporation not fewer than 30 days nor more
than 60 days prior to any such meeting; provided, however, that
if notice or public disclosure of the meeting is given fewer
than 40 days before the meeting, such written notice shall be
delivered or mailed to the secretary of the Corporation not
later than the close of the 10th day following the day on which
notice of the meeting was mailed to shareholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ H. Beaman Smith
H. BEAMAN SMITH
SECRETARY
Waldorf, Maryland
April 5, 2000
________________________________________________________________
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 14, 2000, UPON WRITTEN
REQUEST TO THE SECRETARY, TRI-COUNTY FINANCIAL CORPORATION, 3035
LEONARDTOWN ROAD, WALDORF, MARYLAND 20601
________________________________________________________________
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REVOCABLE PROXY
TRI-COUNTY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MAY 5, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael L. Middleton and H.
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 in the
second floor Board Room at the main office of Community Bank of
Tri-County, 3035 Leonardtown Road, Waldorf, Maryland on Friday,
May 5, 2000 at 10:00 a.m. and at any and all adjournments
thereof, as follows:
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.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
PROPOSITIONS 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 2000 ANNUAL MEETING.
Continued, and to be signed and dated, on reverse side.
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Detach Proxy Card Here
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<CAPTION>
<S> <C> <C>
1.ELECTION OF DIRECTORS FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS [ ]
listed below for all nominees
listed below.
</TABLE>
Nominees: Henry A. Shorter, Jr. and Herbert N. Redmond, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's name
in the space provided below.)
Exceptions_________________________________________________________
The Board of Directors recommends a vote "FOR" the listed
proposition.
The undersigned acknowledges
receipt from the Corporation
prior to the execution of this
proxy of notice of the Meeting,
a proxy statement dated April
5, 2000, and an annual report.
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.
Dated: _____________, 2000
__________________________
Print Name of Stockholder
__________________________
Signature of Stockholder
__________________________
Signature if held jointly
Please Complete, Date, Sign and Mail this Proxy Promptly in the
Enclosed Postage Prepaid Envelope.
Votes must be indicated X
(x) in Black or Blue ink.
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Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning It in the Enclosed Envelope
