<PAGE>
CARROLLTON BANCORP
344 NORTH CHARLES STREET, SUITE 300
BALTIMORE, MARYLAND
------------------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1999
------------------------
To the Shareholders of Carrollton Bancorp:
The Annual Meeting of Shareholders of Carrollton Bancorp, a Maryland
corporation (the "Company"), will be held at the Company's Corporate
Headquarters at 344 North Charles Street, Baltimore, Maryland on April 27, 1999
at 10:00 a.m., prevailing local time, for the following purposes:
1. To elect four directors for a three year term ending in 2002.
2. To consider and vote upon an amendment to the Charter of the Company to
reduce the par value of the authorized shares of common stock of the
Company from $10.00 per share to $1.00 per share and to increase the
number of authorized shares of common stock of the Company from 5,000,000
to 10,000,000.
3. To act upon any other matter which may properly come before the meeting
or any adjournment thereof.
The close of business on March 11, 1999 has been fixed by the Board of
Directors as the date for determining shareholders of record entitled to receive
notice of and to vote at the Annual Meeting.
Your attention is directed to the attached Proxy Statement and to the
enclosed annual report of the Company for the fiscal year ended December 31,
1998.
Please sign, date and mail the accompanying proxy in the enclosed,
self-addressed, stamped envelope, whether or not you expect to attend the
meeting in person. You may withdraw your proxy at the meeting should you be
present and desire to vote your shares in person. Your cooperation is
respectfully requested.
By Order of the Board of Directors
D. Doreen Smith
Secretary
Baltimore, Maryland
March 15, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, PLEASE DATE, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY.
<PAGE>
CARROLLTON BANCORP
344 NORTH CHARLES STREET, SUITE 300
BALTIMORE, MARYLAND
------------------------
PROXY STATEMENT
1999 ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1999
------------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement (the "Proxy Statement") is being furnished to the
shareholders of Carrollton Bancorp (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders, and any adjournments thereof, to be held at
10:00 AM prevailing local time, on Tuesday, April 27, 1999. This Proxy Statement
is being sent to the shareholders of the Company on or about March 15, 1999.
The Board of Directors has selected Albert R. Counselman, John P. Hauswald,
and C. Edward Hoerichs, and each of them, to act as proxies with full power of
substitution. A proxy may be revoked at any time prior to its exercise by giving
written notice of revocation to the Company, by executing and delivering a
substitute proxy to the Company, or by attending the Annual Meeting and voting
in person. If no instructions are specified in the proxy, it is the intention of
the persons named therein to vote FOR the election of the nominees named herein
as directors of the Company.
Shareholders of the Company are requested to complete, date and sign the
accompanying form of proxy and return it promptly to the Company in the enclosed
envelope. If a proxy is properly executed and returned in time for voting, it
will be voted as indicated thereon.
The Company does not know of any matter to be presented at the Annual
Meeting except as described herein. If any other matters are properly brought
before the Annual Meeting, the persons named in the enclosed proxy intend to
vote the proxy according to their best judgement.
The Company will bear the costs of the solicitation of proxies, including
the reimbursement of banks, brokers and other fiduciaries for expenses in
forwarding proxy solicitation materials to beneficial owners. Such expenses are
estimated not to exceed $5,000. Solicitations may be made by mail, telegraph or
personally by directors, officers or employees of the Company, none of whom will
receive additional compensation for performing such services.
VOTING SECURITIES
On March 1, 1999, the Company had outstanding 1,412,672 shares of Common
Stock, $10.00 par value per share. Each share of Common Stock entitles the
holder thereof to one vote on each matter to be voted upon at the Annual
Meeting. Neither the Company's Charter nor its Bylaws provides for cumulative
voting rights.
The close of business on March 11, 1999 has been fixed by the Board of
Directors as the record date for determining the shareholders of the Company
entitled to receive notice of and to vote at the Annual Meeting.
1
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Each year
the directors in one class are elected to serve for a term of three years. The
Shareholders will vote at this Annual Meeting for the election of four directors
for the three year term expiring at the Annual Meeting of Shareholders in 2002.
The proxies solicited hereby, unless directed to the contrary, will be voted
FOR the election as directors of all four nominees listed in the following
tables. In order to be elected, a majority of the shares voted must be voted FOR
the election of each nominee. Each nominee has consented to serve as a director,
if elected.
Your Company's Board of Directors unanimously recommends a vote FOR the
election of each of the Nominees named below as directors of the Company.
In the event that any of the nominees should be unable to serve, the persons
named in the proxy will vote for such substitute nominee or nominees as they, in
their sole discretion, shall determine. The Board of Directors has no reason to
believe that any nominee named herein will be unable to serve.
The following material contains information concerning the nominees for
election and those directors whose terms continue beyond the date of the Annual
Meeting.
NOMINEES FOR DIRECTOR FOR TERM EXPIRING IN 2002
<TABLE>
<S> <C>
Steven K. Breeden............ Mr. Breeden, age 40, has served as a director of Carrollton
Bank, a Maryland state chartered commercial bank, and the
principal subsidiary of the Company (the "Bank") since June
1994, and of the Company since 1995. Mr. Breeden is
currently Vice President and Secretary of Security
Development Corporation, a real estate development company,
a position he has held for the past five years (2).
Thelma T. Daley.............. Dr. Daley, age 67, has served as a director of the Bank
since November 1995, and of the Company since May 1998. Dr.
Daley currently serves as Assistant Professor at Loyola
College in the Graduate School. She was formerly a
Coordinator of Guidance and Counseling for the Baltimore
County Public Schools.
Howard S. Klein.............. Mr. Klein, age 40, has been a Vice President and General
Counsel for a family-operated chain of five full serve
supermarkets and related development and operating companies
since 1987.
Leo A. O'Dea................. Mr. O'Dea, age 68, has served as a director of the Bank
since 1983 and of the Company since its inception in 1990.
Mr. O'Dea was elected Chairman of the Company in February
1994. He was President of Hamilton & Spiegel, Inc., a sheet
metal contractor, from 1979 until his retirement in 1997.
(2)
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 2000
Albert R. Counselman......... Mr. Counselman, age 50, has served as a director of the Bank
since April 1985, and of the Company since its inception in
1990. He has been President of Riggs, Counselman, Michaels &
Downes, Inc., an insurance brokerage firm, since September
1987, and served in various executive positions with that
firm from 1972 to September 1987. (1)(2)
John P. Hauswald............. Mr. Hauswald, age 76, has served as a director of the Bank
since 1964 and of the Company since its inception in 1990.
He was, until his retirement in October 1989, President of
The Hauswald Bakery. Since October 1989, he has been
President of The Hauswald Company, Inc. (1)(2)
Samuel D. Miller............. Mr. Miller, age 60, has served as a director of the Bank and
the Company since December 1992. He retired as Executive
Vice President of the Bank in February 1999 after 29 years
of service.
William C. Rogers, Jr........ Mr. Rogers, age 72, has served as a director of the Bank
since 1955 and of the Company since its inception in 1990.
He has been a partner in the law firm of Rogers, Moore and
Rogers, counsel to the Bank, since 1970. He has been
Chairman of the Board of The Security Title Guarantee
Corporation of Baltimore since 1970 and a director since
1952, and was President from 1970 until March 1989. Mr.
Rogers is President of Maryland Mortgage Company where he
has been a director since 1953. He is also President of
Moreland Memorial Park Cemetery, Inc. where he has been a
director since 1959. He is the brother of John Paul Rogers,
a director of the Bank and the Company.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Dallas R. Arthur............. Mr. Arthur, age 54, has served as a director of the Bank,
and the Company since October 1991. He has been President of
both the Company and the Bank since October 1993, and Chief
Executive Officer of both the Company and the Bank since
February 1994. Mr. Arthur was Executive Vice President of
the Bank from October 1991 until October 1993, and had
served as First Senior Vice President of the Bank from
December 1990 until October 1991. Mr. Arthur has been with
the Bank since 1964.
C. Edward Hoerichs........... Mr. Hoerichs, age 87, has served as a director of the Bank
since 1970 and of the Company since its inception in 1990.
He is the founder of Edward Hoerichs & Sons, Inc., a
mechanical contracting firm, and was its President from 1975
to its dissolution in 1993.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Allen Quille................. Mr. Quille, age 79, has served as a director of the Bank
since 1976 and of the Company since its inception in 1990.
He has been President of Quille's Parking, Inc. since 1933.
Mr. Quille has also been Secretary of Quille-Crown Parking
of Maryland since 1983, and Secretary of The Forum Caterers
since 1983. (1)
John Paul Rogers............. Mr. Rogers, age 63, has served as a director of the Bank
since 1970 and of the Company since its inception in 1990.
Mr. Rogers has been Chairman of the Bank since February
1994. He was a partner in the law firm of Rogers, Moore and
Rogers, counsel to the Bank, from 1970 until December 1992.
Mr. Rogers was senior title officer of The Security Title
Guarantee Corporation of Baltimore from May 1991 until
December 1992, having served as President from March 1989
until May 1991, and as Executive Vice President from March
1970 until March 1989. He is a Director of Maryland Mortgage
Company and The Security Title Guarantee Corporation of
Baltimore. He is the brother of William C. Rogers, Jr., a
director of the Bank and the Company.
</TABLE>
- ------------------------
(1)--Member of the Audit Committee
(2)--Member of the Compensation Committee
The Board of Directors of the Company met 10 times and the Board of
Directors of the Bank met 24 times during the year ended December 31, 1998. The
Board of Directors of the Bank meets twice a month. No director attended fewer
than 75% of the total number of meetings of both Boards and committees to which
they were assigned during the year ended December 31, 1998.
As of the date of this Proxy Statement, the Board of Directors does not have
a standing nominating committee.
The Audit Committee held 5 meetings during 1998. Its current members are
Messrs. Counselman, Hauswald and Quille. Only nonemployee directors are eligible
to serve on the Audit Committee. The duties of the Audit Committee include
reviewing the annual financial statements of the Company and the scope of the
independent annual audit and internal audits. It also reviews the independent
accountant's letter to management concerning the effectiveness of the Company's
internal financial and accounting controls and management's response to that
letter. In addition, the Committee reviews and recommends to the Board the firm
to be engaged as the Company's independent accountants. The Committee may also
examine and consider other matters relating to the financial affairs of the
Company as it determines appropriate.
The Compensation Committee met 6 times during 1998. Its current members are
Messrs. Breeden, Counselman, Hauswald, and O'Dea. The purpose of the
Compensation Committee is to review and approve major compensation and benefit
policies of the Company and the Bank. In addition, the committee recommends to
the Board the compensation to be paid to all officers of the Bank.
Directors who are not employees of the Bank receive a monthly fee of $850
for Board meetings, and $150 per committee meeting attended. The Chairman of the
Board of the Bank receives a monthly fee of $1,050. Directors do not receive
additional fees for their service as directors of the Company. Employee
directors are not compensated for attendance at Board meetings.
4
<PAGE>
OTHER EXECUTIVE OFFICERS AND DIRECTORS OF THE BANK
Certain information regarding directors and significant employees of the
Bank other than those previously mentioned is set forth below.
<TABLE>
<S> <C>
Robert A. Altieri............ Mr. Altieri, age 37, has been Senior Vice President--Lending
of the Bank since June 1994 and previously was Vice
President-- Commercial Lending since September 1991.
Edward R. Bootey............. Mr. Bootey, age 52, has been Senior Vice
President--Automation & Technology since October, 1995, and
was Senior Vice President-- Operations of the Bank from June
1994 to October 1995. Mr. Bootey previously served as Vice
President--Operations from January 1991. He served as
Assistant Vice President--Operations from December 1987
until January 1991.
Jeffrey E. Brown............. Mr. Brown, age 57, has been Vice President--Consumer Lending
of the Bank since July 1991, and was Assistant Vice
President-- Consumer Lending from March 1990 until July
1991. He was Vice President--Consumer Lending of Sharon
Federal Savings Bank, F.S.B. from August 1988 until March
1990, and served in various management positions with the
Bank of Baltimore from March 1968 to August 1988.
David L. Costello, III....... Mr. Costello, age 47, has been Senior Vice President and
Chief Financial Officer of the Bank since June 1994. Mr.
Costello has served as Treasurer of the Company since
October 1993.
Gary M. Jewell............... Mr. Jewell, age 52, has been Senior Vice President and
Retail Delivery Group Manager since July 1998. He was
previously Senior Vice President Electronic Banking from
March 1996 to July 1998. Prior to joining Carrollton Bank,
Mr. Jewell was Director of Product Management and Point of
Sale Services for the MOST EFT network in Reston, Virginia
from March 1995 to March 1996 and prior to that
Director/Manager of Merchant Services for the Farmers and
Mechanics National Bank from 1993 to March 1995.
</TABLE>
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1998, certain information
concerning shares of the Common Stock of the Company beneficially owned by (i)
the chief executive officer of the Company; (ii) all directors and nominees for
directors of the Company and the Bank; (iii) all directors and officers of the
Company and the Bank as a group; and (iv) other significant shareholders.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER (11) OWNERSHIP(1) CLASS(1)
- --------------------------------------------- ------------------------- -----------
<S> <C> <C>
DIRECTORS:
Dallas R. Arthur............................. 1,652(2) *
Steven K. Breeden............................ 1,910 *
Albert R. Counselman......................... 13,183 *
Thelma T. Daley.............................. 55 *
Samuel M. Dell, Jr........................... 7,441 *
John P. Hauswald............................. 5,901(3) *
C. Edward Hoerichs........................... 2,233 *
Samuel D. Miller............................. 702(4) *
Leo A. O'Dea................................. 5,603(5) *
Allen Quille................................. 1,945 *
John Paul Rogers............................. 97,704(6)(8) 6.91%
William C. Rogers, Jr........................ 128,686(7)(8)(9) 9.10%
All Directors and Executive Officers of the 267,015
Company as a group (17 persons)............ 18.90%
OTHER SIGNIFICANT SHAREHOLDER:
Edward Q. Rogers............................. 71,470(10) 5.05%
</TABLE>
- ------------------------
* Less than 1%
(1) Unless otherwise indicated, the named person has sole voting and investment
power with respect to all shares.
(2) Includes 839 shares owned jointly by Mr. Arthur and his wife. Excludes 488
shares owned by Mr. Arthur's wife.
(3) Includes 5,745 shares owned jointly by Mr. Hauswald and his wife. Excludes
5,269 shares owned by Mr. Hauswald's wife.
(4) Includes 574 shares owned jointly by Mr. Miller and his wife. Excludes 203
shares owned by Mr. Miller's wife.
(5) Excludes 7,867 shares owned by Mr. O'Dea's wife.
(6) Includes 988 shares owned by a trust for the benefit of Elizabeth B.
Seuferling, for which Mr. Rogers serves as trustee.
(7) Includes 3,247 shares owned by the Moreland Memorial Park Cemetery, Inc.
5,875 shares owned by the Moreland Memorial Park Cemetery, Inc. Perpetual
Care Fund, 1,613 shares owned by the Moreland Memorial Park, Inc. Bronze
Perpetual Care Fund, and 16,207 shares owned by the Moreland Memorial Park,
Inc. Perpetual Care Trust Agreement for which William C. Rogers, Jr. serves
as a trustee.
6
<PAGE>
(8) Includes 31,952 shares owned by The Security Title Guarantee Corporation of
Baltimore and 4,753 shares owned by Maryland Mortgage Company, of which John
Paul Rogers is a director, and of which William C. Rogers, Jr. is Chairman
and President, respectively, as well as a director.
(9) Includes 64,299 shares owned jointly by Mr. Rogers and his wife. Excludes
5,713 shares owned by Mr. Roger's wife.
(10) Includes 32,937 shares owned jointly by Mr. Rogers and his wife. Also
includes 31,952 shares owned by The Security Title Guarantee Corporation of
Baltimore and 4,337 shares owned by Maryland Mortgage Company, of which Mr.
Rogers is a principal shareholder. Excludes 42,411 shares owned by Mr.
Roger's wife which, if included, would result in Mr. Rogers beneficially
owning a total of 112,053 shares or 7.92% of shares outstanding.
(11) All directors, executive officers and other significant shareholders may be
contacted at the Company's corporate offices by addressing correspondence to
the appropriate person, care of Carrollton Bancorp, 344 North Charles
Street, Suite 300, Baltimore, Maryland 21201.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information with respect to the ownership of
shares of Common Stock of the Company by the only persons believed by management
to be the beneficial owners of more than five percent of the Company's
outstanding Common Stock. The information is based on the most recent Schedule
13G filed by such person with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ----------------------------------------------------------- ------------------ ---------------
<S> <C> <C>
John Paul Rogers........................................... 97,704(a) 6.91%
46 C Queen Anne Way
Chester, MD 21619
William C. Rogers, Jr...................................... 128,686(b) 9.10%
6 South Calvert Street
Baltimore, MD 21201
Edward Q. Rogers........................................... 71,470(c) 5.05%
P.O. Box 246
Gibson Island, MD 21056
</TABLE>
- ------------------------
(a) A Schedule 13G dated February 11, 1999 states that John Paul Rogers has sole
voting and dispositive power over 60,001 shares, and shared voting and
dispositive power over 37,703 shares.
(b) A Schedule 13G dated February 11, 1999 states that William C. Rogers, Jr.
has sole voting and dispositive power over 740 shares, and shared voting and
dispositive power over 127,946 shares.
(c) A Schedule 13G dated February 11, 1999 states that Edward Q. Rogers has sole
voting and dispositive power over 1,828 shares, and shared voting and
dispositive power over 69,624 shares.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or allocated for
services rendered to the Company in all capacities during the years ended
December 31, 1996, 1997 and 1998 to the chief executive officer of the Company.
The compensation of other members of executive management is not required to be
provided because the base compensation of each of such individuals does not
exceed $100,000.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
INCENTIVE PLAN
STOCK OPTION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) GRANTS (SHARES) BONUS ($)
- ------------------------------------------------------------------- --------- ---------- --------------- -------------
<S> <C> <C> <C> <C>
Dallas R. Arthur,.................................................. 1998 $ 126,757 8,000 -0-
President and Chief Executive Officer 1997 $119,911 -0- -0-
1996 $109,140 -0- -0-
</TABLE>
The Company has no employment agreements, termination of employment, or
change-in-control agreements or understandings with any of its directors,
executive officers or any other party whatsoever, except that the President of
Carrollton Mortgage Services, Inc., a new subsidiary of the Bank, has an
employment contract that provides for a termination settlement of $50,000 if
terminated by the Bank.
LONG-TERM INCENTIVE PLAN
The 1998 Long-Term Incentive Plan which was approved at the 1998 Annual
meeting of Shareholders, authorizes the granting of Awards in the form of
Options, Stock Appreciation Rights, Restricted Stock, Performance Awards,
Phantom Shares, Bonus Shares or Cash Awards. Any executive or other employee of
the Company, its subsidiaries, affiliated entities and Non-employee Directors of
the Company shall be eligible to receive Awards under the Plan. Non-employee
Directors of subsidiaries or affiliated entities of the Company will not be
eligible to participate in the Plan.
The Plan provides for 100,000 shares of the Company's Common Stock to be
issued as Awards under the Plan, either directly or upon exercise of an option.
The Plan provides for appropriate adjustments in the number of Shares subject to
the Plan in the event of a stock dividend, stock split, reverse stock split or
other similar changes in the Company's Common Stock or in the event of a merger,
consolidation or certain other types of recapitalizations affecting the Company.
OPTION GRANTS IN 1998
The following table contains information concerning the grant of stock
options under the Long-Term Incentive Plan to the Chief Executive Officer.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
OPTIONS % OF TOTAL APPRECIATE FOR OPTION
GRANTED OPTIONS GRANTED EXERCISE TERM
(NUMBER OF TO EMPLOYEES IN OR BASE EXPIRATION ----------------------
NAME SHARES) YEAR PRICE DATE 5% 10%
- ------------------------------------ ------------- --------------------- ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dallas R. Arthur.................... 8,000 27% $ 37.36 2008 $ 166,028 $ 420,748
</TABLE>
A total of 35,200 incentive stock options were granted in 1998 under the
1998 Long-Term Incentive Plan to directors and employees. Of the total, 5,700
incentive stock options were granted to directors at an exercise price ranging
from $35.06 to $38.00. The options granted to directors vest over a three year
period and expire if not exercised in 2008. There were no grants in 1998 for
restricted stock, stock appreciation rights, performance grants, phantom shares,
bonus shares or cash awards.
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past year the Bank has had banking transactions in the ordinary
course of its business with: (i) its directors and nominees for directors; (ii)
its executive officers; (iii) its 5% or greater shareholders; (iv) members of
the immediate family of its directors, nominees for directors or executive
officers and 5% shareholders; and (v) the associates of such persons on
substantially the same terms, including interest rates, collateral, and
repayment terms on loans, as those prevailing at the same time for comparable
transactions with others. The extensions of credit by the Bank to these persons
have not and do not currently involve more than the normal risk of
collectibility or present other unfavorable features. At December 31, 1998, the
balance of loans outstanding to directors, executive officers, owners of 5% or
more of the outstanding Common Stock, and their associates, including loans
guaranteed by such persons, aggregated $2,533,672, which represented
approximately 8.2% of the Company's equity capital accounts.
William C. Rogers, Jr., a director of both the Company and the Bank, is a
partner of the law firm of Rogers, Moore and Rogers which performs legal
services for the Company and its subsidiaries. Management believes that the
terms of these transactions were at least as favorable to the Company as could
have been obtained elsewhere.
Albert R. Counselman, a director of both the Company and the Bank, is
President of Riggs, Counselman, Michaels & Downes, Inc., an insurance brokerage
firm through which the Company and the Bank place various insurance policies.
The Company and the Bank paid total premiums for insurance policies placed by
Riggs, Counselman, Michaels & Downes, Inc in 1998 of $110,528. Management
believes that the terms of these transactions were at least as favorable to the
Company as could have been obtained elsewhere.
9
<PAGE>
PROPOSAL TO AMEND THE CHARTER OF THE COMPANY TO REDUCE THE PAR VALUE OF THE
AUTHORIZED SHARES OF COMMON STOCK OF THE COMPANY FROM $10.00 PER SHARE TO $1.00
PER SHARE AND TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF THE
COMPANY FROM 5,000,000 TO 10,000,000.
The Board of Directors of the Company has adopted a resolution declaring it
advisable to amend the Charter of the Company to reduce the par value of the
authorized shares of common stock of the Company from $10.00 per share to $1.00
per share and to increase the number of authorized shares of common stock of the
Company from 5,000,000 to 10,000,000. This proposed amendment, which is set
forth in the Articles of Amendment attached hereto as Exhibit A, requires
approval by the shareholders of the Company.
The Company is currently authorized to issue 5,000,000 shares of common
stock with the par value of $10.00 per share. As of March 1, 1999, 1,412,672
shares of common stock were issued and outstanding and an additional 100,000
shares of common stock have been reserved and authorized for issuance upon the
exercise of warrants or as direct stock awards under the Carrollton Bancorp 1998
Long-Term Incentive Plan.
The Board of Directors of the Company believes that it is advisable and in
the best interests of the Company to reduce the par value of the authorized
shares of common stock of the Company and to increase the number of authorized
shares in order to, among other things, provide the Company with additional
flexibility in declaring stock dividends on issued and outstanding shares of
common stock and in otherwise taking action to increase the number of shares of
common stock of the Company which are issued and outstanding. Under the Maryland
General Corporation Law (the "MGCL"), if a stock dividend of a Maryland
corporation is payable in the stock of the corporation with par value, the
shares constituting the stock dividend will be issued at par value and at the
time the stock dividend is paid, the corporation will be required to transfer
from retained earnings to stated capital an amount at least equal to the
aggregate par value of the shares to be issued. In the case of the Company, a
stock dividend payable in shares of the Company's own common stock, with a
current par value of $10.00 per share, would require the Company to transfer
from retained earnings to stated capital, an amount at least equal to $10.00 per
share for each share to be issued as a stock dividend. If the par value of the
Company's common stock is reduced to $1.00 per share, then a stock dividend
payable in shares of the Company's own common stock would require the Company to
transfer from retained earnings to stated capital only an amount equal to $1.00
per share for each share to be issued as a stock dividend. The reduction of the
par value of the Company's common stock from $10.00 per share to $1.00 per share
will also increase the amount of the Company's retained earnings by the
aggregate amount of the reduction in par value of the Company's issued and
outstanding shares. Since the number of shares which the Company can issue as a
stock dividend will be limited by the amount of retained earnings which is
available to be transferred to stated capital, the reduction of the par value of
the authorized shares of common stock of the Company will permit a larger number
of shares to be issued as a stock dividend.
A stock dividend will have the effect of increasing the number of issued and
outstanding shares of the Company, and, correspondingly, reducing the price per
share to reflect the additional number of shares outstanding. An increase in the
number of issued and outstanding shares of stock of the Company and/or a
reduction in the price per share, may make the shares of stock of the Company
more attractive to investors.
Although the Company may, in the future, determine that the declaration and
payment of a stock dividend or the taking of other action to increase the number
of shares of common stock which are issued and outstanding is appropriate, no
stock dividend has been declared by the Company, and no other action to increase
the number of shares of common stock which are issued and outstanding has been
taken by the Company, as of the date hereof.
10
<PAGE>
The proposal to amend the Charter of the Company to reduce the par value of
the authorized shares of common stock of the Company from $10.00 per share to
$1.00 per share and to increase the number of authorized shares of common stock
of the Company from 5,000,000 to 10,000,000 requires approval by the
stockholders of the Company by the affirmative vote of two-thirds of all votes
entitled to be cast by the stockholders on the matter.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote "FOR" the proposal to amend the
Charter of the Company to reduce the par value of the authorized shares of
common stock of the Company from $10.00 per share to $1.00 per share and to
increase the number of authorized shares of common stock of the Company from
5,000,000 to 10,000,000.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of the
Company's Common Stock ("a Section 16 Insider") to file monthly and annual
reports with both the Securities and Exchange Commission and the National
Association of Securities Dealers. Based on a review of the reports submitted to
the Company, the Company believes that all Section 16(a) reporting requirements
applicable to the Company's directors, officers and 10% shareholders were
satisfied on a timely basis.
VOTING PROCEDURES
Each proposal submitted to the Company shareholders for a vote is deemed
approved if a majority of the shares of Common Stock of the Company present in
person or by proxy at a meeting at which a quorum is present votes in favor of
the proposal. The presence in person or by proxy of shareholders entitled to
cast a majority of all the votes entitled to be cast at the meeting constitutes
a quorum. A shareholder is entitled to one vote for each share owned.
Shareholder votes are tabulated by the Company's Registrar and Transfer
Agent. Proxies received by the Company, if such proxy is properly executed and
delivered, will be voted in accordance with the voting specifications made on
such Proxy. Proxies received by the Company on which no voting specification has
been made by the shareholder will be voted for all items discussed in the Proxy
Statement, in the manner stated on the proxy card. Shareholders who execute and
deliver proxies retain the right to revoke them by notice in writing delivered
to the Company Secretary at any time before such proxies are voted.
Under applicable Maryland corporate law and the Charter and By-Laws of the
Company, proxies received by the Company specifying an abstention as to any
proposal will cause the shares so represented to be counted toward a quorum, but
are not counted as favorable votes and, therefore, have the same effect as a
vote against the proposal. To the extent holders or brokers having the right to
vote shares do not attend the meeting or return a proxy, such shares will not
count toward a quorum and, if a quorum is otherwise achieved, will have no
effect on the vote of the proposals considered at the meeting.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters submitted to a vote of the Company's security
holders since its 1998 Annual Shareholder's Meeting held on April 28, 1998.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented at the 2000 Annual Meeting of the
Company must be received prior to November 17, 1999 in order to be included in
the proxy statement for such meeting. In
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order to curtail controversy as to compliance with this requirement,
shareholders are urged to submit proposals to the Secretary of the Company by
Certified Mail--Return Receipt Requested.
INDEPENDENT PUBLIC ACCOUNTANT
The Company's Board of Directors has selected the firm of Rowles & Company,
certified public accountants, as independent auditors for the Company for the
fiscal year 1999. Rowles & Company has served as independent auditors for the
Company since 1955. No qualified opinions have been issued during such
engagement. A representative of Rowles & Company will be present at the 1999
Annual Shareholders' Meeting, but has not been invited to make a statement or be
available to respond to questions.
ANNUAL REPORT
The Annual Report of the Company for the year 1998 is included herewith.
Copies of the report will also be available at the Annual Meeting on April 27,
1999.
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-KSB FOR THE PERIOD ENDED DECEMBER 31, 1998, INCLUDING FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO WILL BE FURNISHED BY MANAGEMENT TO ANY
BENEFICIAL OWNER OF ITS SECURITIES WITHOUT CHARGE UPON RECEIPT OF A WRITTEN
REQUEST FROM SUCH PERSON. REQUESTS IN WRITING SHOULD BE DIRECTED TO DAVID L.
COSTELLO, III, TREASURER, CARROLLTON BANCORP, 344 NORTH CHARLES STREET, SUITE
300, BALTIMORE, MARYLAND 21201-4301. EACH REQUEST MUST SET FORTH A GOOD FAITH
REPRESENTATION THAT, AS OF MARCH 11, 1999, THE RECORD DATE FOR THE ANNUAL
MEETING, THE PERSON MAKING THE REQUEST WAS A BENEFICIAL OWNER OF SECURITIES
ENTITLED TO VOTE AT SUCH MEETING.
OTHER MATTERS
The management of the Company knows of no matters to be presented for action
at the meeting other than those mentioned above; however, if any other matters
properly come before the meeting, it is intended that the persons named in the
accompanying proxy will vote on such other matters in accordance with their
judgement of the best interest of the Company.
By Order of the Board of Directors
D. Doreen Smith
Secretary
Baltimore, Maryland
March 15, 1999
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EXHIBIT A
ARTICLES OF AMENDMENT
CARROLLTON BANCORP, a Maryland corporation (hereinafter referred to as the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "Department") that:
FIRST: The Corporation hereby amends its Charter as currently in effect,
consisting of Articles of Incorporation filed with the Department on January 11,
1990, by deleting therefrom in its entirety, Article FIFTH and inserting in lieu
thereof the following:
FIFTH: The total number of shares of capital stock which the Corporation
has authority to issue is Ten Million (10,000,000) shares of Common Stock,
with a par value of One Dollar ($1.00) per share. The aggregate par value of
all shares of capital stock is Ten Million Dollars ($10,000,000.00).
SECOND: These Articles of Amendment were duly advised by the Board of
Directors of the Corporation and were duly approved by the stockholders of the
Corporation, in accordance with the Charter and Bylaws of the Corporation and
applicable law.
THIRD: (a) Immediately before the amendment to the Charter of the
Corporation set forth in these Articles of Amendment, the total number of shares
of stock of all classes which the corporation had authority to issue was Five
Million (5,000,000) shares of Common Stock, with a par value of Ten Dollars
($10.00) per share, and the aggregate par value of all shares of capital stock
which the Corporation had authority to issue was Fifty Million Dollars
($50,000,000).
(b) After giving effect to the amendment to the Charter of the
Corporation set forth in these Articles of Amendment, the par value of the
issued and unissued Common Stock of the Corporation is reduced from Ten Dollars
($10.00) per share to One Dollar ($1.00) per share, the total number of shares
of stock of all classes which the Corporation has authority to issue is Ten
Million (10,000,000) shares of Common Stock, with a par value of One Dollar
($1.00) per share, and the aggregate par value of all shares of capital stock
which the Corporation has authority to issue is Ten Million Dollars
($10,000,000.00).
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be signed in its name and on its behalf by its President and attested to by
its Secretary as of this ___ day of _________ 1999, and its President
acknowledges that these Articles of Amendment are the corporate act and deed of
the Corporation and, as to all matters and facts required to be verified under
oath, acknowledges that to the best of his knowledge, information and belief
these matters and fact are true in all material respects and that this statement
is made under penalties of perjury.
<TABLE>
<S> <C>
ATTEST: CARROLLTON BANCORP
- -------------------------------------------- By: ----------------------------------------
D. Doreen Smith Dallas R. Arthur
President
</TABLE>
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