<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 Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
CECIL BANCORP, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(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>
[CECIL BANCORP, INC. LETTERHEAD]
March 21, 1997
Dear Stockholder:
We invite you to attend the Annual Meeting of stockholders
of Cecil Bancorp, Inc. to be held at the Swiss Inn, Elkton,
Maryland on Wednesday, April 16, 1997 at 9:00 a.m.
The accompanying notice and proxy statement describe the
formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Company's
subsidiary, Cecil Federal Savings Bank. Directors and officers
of the Company as well as representatives of Simon, Master &
Sidlow, P.A., the Company's independent auditors, will be present
to respond to any questions the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ACCOMPANYING 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.
Your vote is important, regardless of the number of shares you
own.
Sincerely,
/s/ Bernard L. Siegel
Bernard L. Siegel
Chairman of the Board<PAGE>
<PAGE>
CECIL BANCORP, INC.
127 North Street
Elkton, Maryland 21921-5547
(410) 398-1650
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 16, 1997
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders (the "Annual Meeting") of Cecil Bancorp, Inc. (the
"Company") will be held at the Swiss Inn, Elkton, Maryland on
Wednesday, April 16, 1997 at 9:00 a.m.
A proxy statement and proxy card for the Annual Meeting
accompany this notice.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of three directors of the Company; and
2. The transaction of such other matters as may
properly come before the Annual Meeting or any
adjournments thereof.
The Board of Directors is not aware of any other business to
come before the Annual Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Annual Meeting on the date specified above or on
any date or dates to which, by original or later adjournment, the
Annual Meeting may be adjourned. Stockholders of record at the
close of business on March 3, 1997 are the stockholders entitled
to vote at the Annual Meeting and any adjournments thereof.
You are requested to fill in and sign the accompanying proxy
card which is solicited by the Board of Directors and to mail it
promptly in the accompanying envelope. The proxy card will not
be used if you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Thomas L. Foard
THOMAS L. FOARD
SECRETARY
Elkton, Maryland
March 21, 1997
_________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
INSURE A QUORUM. THE ACCOMPANYING PROXY CARD IS ACCOMPANIED BY A
SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
_________________________________________________________________<PAGE>
<PAGE>
PROXY STATEMENT
OF
CECIL BANCORP, INC.
127 North Street
Elkton, Maryland 21921-5547
ANNUAL MEETING OF STOCKHOLDERS
April 16, 1997
GENERAL
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Cecil
Bancorp, Inc. (the "Company"), the holding company of Cecil
Federal Savings Bank ("Cecil Federal" or the "Bank") to be used
at the annual meeting of stockholders (the "Annual Meeting")
which will be held at the Swiss Inn, Elkton, Maryland on
Wednesday, April 16, 1997 at 9:00 a.m. This proxy statement and
the accompanying notice and proxy card are being first mailed to
stockholders on or about March 21, 1997.
VOTING AND REVOCABILITY 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 Annual Meeting and all
adjournments thereof. Proxies may be revoked by written notice
to Thomas L. Foard, Secretary of the Company, at the address
shown above, by filing a later dated proxy prior to a vote being
taken on a particular proposal at the Annual Meeting or by
attending the Annual Meeting and voting in person.
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
THE NOMINEES FOR DIRECTORS SET FORTH BELOW. The proxy confers
discretionary authority on the persons named therein to vote with
respect to the election of any person as a director where the
nominee is unable to serve or for good cause will not serve, and
matters incident to the conduct of the Annual Meeting. If any
other business is presented at the Annual Meeting, proxies will
be voted by those named therein in accordance with the
determination of a majority of the Board of Directors. Proxies
marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated
by brokers on proxy cards as not voted will not be counted as
votes cast. Proxies marked as abstentions or as broker non-
votes, however, will be treated as shares present for purposes of
determining whether a quorum is present.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on March
3, 1997 (the "Record Date") are entitled to one vote for each
share then held. At the Record Date, the Company had 469,358
shares of common stock, par value $.01 per share (the "Common
Stock") issued and outstanding. The presence, in person or by
proxy, of at least one-third of the total number of shares of
Common Stock outstanding and entitled to vote will be necessary
to constitute a quorum at the Annual Meeting.
-1-<PAGE>
<PAGE>
Persons and groups owning in excess of 5% of the Company's
Common Stock are required to file certain reports regarding such
ownership pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The following table sets forth, at
the Record Date, certain information as to the Common Stock
believed by management to be beneficially owned by persons owning
in excess of 5% of the Company's Common Stock and by all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING
- ------------------- ------------ ------------
<S> <C> <C>
Cecil Bancorp, Inc.
Employee Stock Ownership Plan ("ESOP")
127 North Street
Elkton, Maryland 21921-5547 37,688 (2) 8.03%
All directors and
executive officers
as a group (10 persons) 75,720 (3) 15.91%
<FN>
___________________
(1) In accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, a person is deemed to be the beneficial owner,
for purposes of this table, of any shares of the Common
Stock if he or she has sole or shared voting or investment
power with respect to such security, or has a right to
acquire beneficial ownership at any time within 60 days from
March 3, 1997. Except as otherwise noted, the named
individuals and each director or officer included in the
group exercise sole or shared voting and investment power
over the shares of the Common Stock.
(2) These shares are held in a suspense account for future
allocation pursuant to the terms of the Employee Stock
Ownership Plan ("ESOP"), among participating employees as
the loan used to purchase the shares is repaid. As of the
Record Date, 6,880 shares had been allocated to
participants, and 30,808 shares were unallocated. The ESOP
trustees, currently Directors Burkley, Scibinico and Siegel,
vote all allocated shares in accordance with instructions of
the participants. Unallocated shares and shares for which
no instructions have been received are voted by the ESOP
trustees in the same ratio as participants direct the voting
of allocated shares or, in the absence of such direction,
the Company's Board of Directors shall direct the voting of
such stock, or in the absence of such direction from the
Company's Board of Directors, the trustees shall direct the
voting of such stock in their discretion.
(3) Includes 2,277 shares allocated to executive officers under
the ESOP as of the Record Date. For information on the
voting of ESOP shares, see "Footnote (2)," above. Also
includes 6,494 shares which may be received by certain
directors and executive officers upon the exercise of stock
options which are exercisable within 60 days of the Record
Date.
</FN>
</TABLE>
PROPOSAL I -- ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors presently consists of eight
members. The Company's Articles of Incorporation require that
directors be divided into three classes, as nearly equal in
number as possible, with approximately one-third of the directors
elected each year. The Board of Directors has nominated Bernard
L. Siegel, Howard J. Neff and Mary B. Halsey to serve as
directors for a three-year period. Under Maryland law, directors
are elected by a plurality of all votes cast at a meeting at
which a quorum is present.
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<PAGE>
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 or the size of
the Board may be reduced to eliminate the vacancy. At this time,
the Board knows of no reason why any nominee might be unavailable
to serve.
The following table sets forth the names of the Board of
Directors' nominees for election as directors. Also set forth is
certain other information with respect to each person's age, the
year he or she first became a director of the Company's principal
subsidiary, Cecil Federal, the expiration of his or her term as a
director, and the number and percentage of shares of Common Stock
beneficially owned. Each director of the Company is also a
member of the Board of Directors of the Bank.
<TABLE>
<CAPTION>
SHARES OF
YEAR FIRST COMMON STOCK
AGE AT ELECTED AS CURRENT BENEFICIALLY
DECEMBER DIRECTOR OF TERM OWNED AT THE PERCENT
NAME 31, 1996 THE BANK TO EXPIRE RECORD DATE(1) OF CLASS
- ------------------------------------------------------------------------------------
BOARD NOMINEE FOR TERM TO EXPIRE IN 2000
<S> <C> <C> <C> <C> <C>
Bernard L. Siegel 76 1959 1997 20,577 4.38%
Howard J. Neff 68 1969 1997 5,577 1.19%
Mary B. Halsey 35 1995 1997 6,047 (2) 1.28%
DIRECTORS CONTINUING IN OFFICE
Michael J. Scibinico 83 1967 1998 8,077 1.72%
Thomas L. Foard 71 1959 1998 4,577 0.97%
William F. Burkley 66 1959 1999 10,977 2.34%
Doris P. Scott 71 1977 1999 10,577 2.25%
Howard B. Tome 73 1969 1999 5,577 1.19%
<FN>
________________
(1) For the definition of beneficial ownership, see Footnote (1)
to the table in "Voting Securities and Principal Holders
Thereof." Unless otherwise indicated, the named individual
exercises sole or shared voting or investment power over the
shares listed as beneficially owned by such person.
Excludes 30,808 shares held by the ESOP which have not been
allocated to participating employees as of March 3, 1997 and
over which shares Directors Siegel, Scibinico and Burkley,
as members of the ESOP Committee and as ESOP Trustees,
exercise shared voting and investment power. Includes 412,
412, 2,407, 412, 412, 412, 412 and 412 shares which may be
received upon the exercise of stock options which are
exercisable within 60 days of March 3, 1997, for Directors
Siegel, Neff, Halsey, Scibinico, Foard, Burkley, Scott and
Tome, respectively.
(2) Includes 1,127 shares allocated to Ms. Halsey under the ESOP
as to which she has voting power but no investment power.
</FN>
</TABLE>
The principal occupation of the directors and executive
officers of the Company is set forth below. All directors and
nominees have held their present positions for at least five
years, and reside in Elkton, Maryland, unless otherwise stated.
BERNARD L. SIEGEL is a founding director of Cecil Federal
and was appointed Chairman of the Board in 1994. He is President
of both Colonial Jewelers in Elkton and the Bellos Diamond Center
in Harrisburg, PA. He was Chairman of the Building Fund of the
original Elkton YMCA, a recipient of the YMCA Award of Service to
Youth and serves as a Life Member of its board of directors. Mr.
Siegel has served as past President of the Elkton
-3-<PAGE>
<PAGE>
Chamber of Commerce and Treasurer of the Maryland Council of
Retail Merchants and has volunteered for the Red Cross and United
Way. Mr. Siegel currently serves on the board of the Kutz Home
for the Elderly. He resides in Wilmington, Delaware.
HOWARD J. NEFF has owned and operated Perryville Oil
Company, an oil distributor, since 1954. Mr. Neff serves as
Chairman of the Board of Trustees of the Perryville United
Methodist Church. He resides in Perryville, Maryland.
MARY B. HALSEY became President and Chief Executive Officer
of the Company and Cecil Federal in July 1995. Ms. Halsey joined
Cecil Federal in 1980 and has been employed in various capacities
since that time, including the positions of Chief Operating
Officer and Principal Financial and Accounting Officer, which she
held from 1993 until becoming President and Chief Executive
Officer in 1995. Ms. Halsey is a director and officer of the
Southeastern Conference of Community Bankers, Inc., currently
holding the position of President. Ms. Halsey has also been
appointed to several committees of the national thrift
association, America's Community Bankers. Ms. Halsey currently
serves as Chairman of the Union Hospital of Cecil County Health
Services, Inc. and has previously served as Vice President and
Director of the North East Chamber of Commerce and Director of
the YMCA of Cecil County, Maryland. She resides in Rising Sun,
Maryland.
MICHAEL J. SCIBINICO is president of Central Printing and
Office Supply, Inc. and has served as Treasurer of Cecil Federal
since 1974 and Chairman of the Board from 1969 to 1972. He also
is a member of the Elkton Kiwanis Club.
THOMAS L. FOARD, a founding director of Cecil Federal, is a
self-employed farmer and has served as Secretary of Cecil Federal
since 1969. He also has served on the board of directors and as
Vice President of Bethel Cemetery for the past 20 years. Mr.
Foard resides in Chesapeake City, Maryland.
WILLIAM F. BURKLEY is a founding director of Cecil Federal
and has served as Vice President since 1959. He is a self-
employed realtor and insurance agent. Mr. Burkley also served on
the board of directors of the Union Hospital in Elkton and is a
member of the Elkton Kiwanis Club and is a member and past
president of the Elkton Chamber of Commerce. He has previously
served as the Chairman of the Maryland Department of
Transportation and as a member of the Maryland Department of
Economic and Employment Commission. Mr. Burkley was a member of
the Maryland House of Delegates from 1954 to 1962.
DORIS P. SCOTT is an attorney in her own private practice.
Mrs. Scott also serves on the board of directors of Family
Services of Cecil County, Incorporated. Mrs. Scott is Chairman
of the Second Circuit Judicial Nominating Commission. In
addition, she is a past member of the Board of Governors of the
Maryland Bar Association and currently serves on several
committees of such Association.
HOWARD B. TOME is a retired real estate broker. He was
self-employed from 1950 to 1988. He also served as President of
the Maryland Appraisal Institute, Inc. from 1956 to 1988. Mr.
Tome is a member of the American Legion, the American Lung
Association and the Conowingo Baptist Church. He resides in
Rising Sun, Maryland.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth information regarding the
executive officers of the Company and Cecil Federal who presently
do not serve on the Board of Directors.
<TABLE>
<CAPTION>
Age at
Name December 31, 1996 Title
- ---- ----------------- -----
<S> <C> <C>
Brian J. Hale 37 Senior Vice President/Chief
Operating Officer
Sandra D. Feltman 47 Vice President/Director of
Lending
</TABLE>
-4-<PAGE>
<PAGE>
BRIAN J. HALE is Senior Vice President/Chief Operating
Officer of Cecil Federal. Before joining Cecil Federal, Mr. Hale
was employed at County Banking and Trust Company, Elkton,
Maryland for 16 years in various capacities, finally as Assistant
Vice President in charge of loan operations. Since joining Cecil
Federal in 1995, Mr. Hale's responsibilities as Chief Operating
Officer include the administration of all lending, savings, and
operational activities of Cecil Federal. Mr. Hale is currently a
Director of the United Way of Cecil County.
SANDRA D. FELTMAN is Vice President/Director of Lending of
Cecil Federal. Ms. Feltman has previously served in various
capacities since joining Cecil Federal in 1972 and has served in
her present capacity as Director of Lending since 1982. Her
responsibilities include carrying out Cecil Federal's lending
policies and acting as the Community Reinvestment Act Officer.
Ms. Feltman has previously served as the President and Director
of the Greater Elkton Chamber of Commerce as well as a member in
the committee to select a new Elkton Police Chief and the Teacher
Recruitment/Retention Committee. She also participates in
various activities for the Business and Education Partnership
Advisory Council. Ms. Feltman is currently the Chairman of the
Finance Committee of the Cecil County Board of Realtors.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company holds regular bi-
monthly meetings and special meetings as needed. During the year
ended December 31, 1996, the Board of Directors met 28 times. No
director attended fewer than 75% of the total number of meetings
of the Board of Directors of the Company held during fiscal 1996
and the total number of meetings held by all committees on which
the director served during such year.
The Loan Committee meets as loan demand necessitates to
conduct business between the Company's regular Board meetings.
This committee, which currently includes President Halsey, Chief
Operating Officer Hale, Vice President Feltman, two Board Members
and the Chairman of the Appraisal Committee, met 32 times during
fiscal 1996.
The Audit Committee, composed of Directors Neff, Siegel, and
Scibinico meets with the Company's independent auditors in
connection with the Company's annual audit and reviews the
Company's accounting and financial reporting policies and
practices. The Audit Committee met two times during fiscal 1996.
The Personnel Committee, which also serves as the Incentive
Compensation Committee and the ESOP Committee, is composed of
Directors, Burkley, Scibinico, and Siegel, reviews personnel and
compensation matters. The Personnel Committee met three times
during fiscal 1996.
The entire Board of Directors serves as the Nominating
Committee. This committee met two times during fiscal 1996.
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash
compensation for each of the last three fiscal years awarded to
or earned by Mary B. Halsey, Chief Executive Officer of the
Company. No other executive officer received salary and bonus in
excess of $100,000 during the fiscal year ended December 31,
1996.
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------------
Awards Payouts
Annual Compensation ----------------------- -------
Name and -------------------------------- Restricted Securities
Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus Compensation Award(s) Options Payouts Compensation(1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mary B. Halsey 1996 $85,000 $17,621 (2) $ -- $14,445 (3) $ -- $ -- $13,378
President, Chief 1995 75,000 10,132 -- -- -- -- 8,305
Executive Officer 1994 52,000 12,050 -- -- -- -- 5,914
<FN>
____________
(1) For 1996 -- includes an automobile allowance of $750 and a
pension plan contribution of 12,626; for 1995 -- includes an
automobile allowance of $750 and a pension plan contribution
of $7,555; for 1994 -- includes an automobile allowance of
$375 and a pension plan contribution of $5,539.
(2) Represents $17,621 paid pursuant to the Company's Incentive
Compensation Plan.
(3) Represents 963 shares of restricted stock under the
Management Recognition Plan, with a market value of $15.00
per share on the date of vesting.
</FN>
</TABLE>
-5-<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
No options were exercised during the year ended December 31,
1996 by Mary B. Halsey, Chief Executive Officer of the Company.
The following table sets forth information concerning the value
of options held at the end of the fiscal year. No options were
granted during fiscal 1996, and no SARs have been granted.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Year-End at Year-End (1)
---------------------- --------------------
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise Realized Unexercisable) Unexercisable)
- ---- --------------- -------- ---------------------- -------------------
<S> <C> <C> <C> <C>
Mary B. Halsey -- $ -- 2,407/-- $11,433/--
<FN>
__________________
(1) Represents market price per share at end of fiscal year 1996
($15.75 on December 31, 1996) less option exercise price per
share ($11.00).
</FN>
</TABLE>
DIRECTOR COMPENSATION
During the fiscal year ended December 31, 1996, each non-
employee member of the Company's Board of Directors was paid an
annual retainer of $7,000 plus a fee of $100 per board meeting
attended. Directors who are full-time employees do not receive
additional fees for serving as directors. Non-employee
directors also receive a fee of $50 per committee meeting
attended. Each non-employee member of the Board of Directors
received a $1,928 bonus during fiscal 1996 pursuant to the
Company's Incentive Compensation Plan. See "Incentive
Compensation Plan."
INCENTIVE COMPENSATION PLAN
Effective January 1, 1994, the Company's Board of Directors
adopted the Cecil Bancorp, Inc. Incentive Compensation Plan (the
"Incentive Compensation Plan"). The Incentive Compensation Plan
is administered by a committee (the "Incentive Compensation
Committee") consisting of Directors Burkley, Scibinico, and
Siegel. The Incentive Compensation Plan authorizes the Incentive
Compensation Committee to select key employees who will be
eligible to receive annual cash bonuses ("Bonuses"). Directors
of the Company who are not employees automatically participate in
the Incentive Compensation Plan.
The mathematical formula set forth in the Incentive
Compensation Plan and summarized below determines the amount of
incentive compensation that participants may receive in bonuses.
Nevertheless, the Incentive Compensation Committee may in its
discretion determine, by resolution adopted before the first day
of any calendar year, to reduce the amounts payable to employees
in the form of Bonuses. Absent such action with respect to
employees, for each calendar year in which the Incentive
Compensation Plan is in effect, each non-employee director and
each key employee selected for participation will receive a Bonus
in an amount equal to 7% of the participant's base annual
compensation, times a "Multiplier" calculated as the sum of: (i)
the percentage by which the Company's and the Bank's return-on-
assets ("ROA") exceeds .50, and (ii) one half of the percentage
by which 1.1% exceeds the Company's and the Bank's nonperforming
loans (loans over 90 days delinquent and real estate owned) as a
percentage of total assets ("NPA"). In no event will the
Multiplier be less than zero. The Multiplier will be increased
by .4 for any year in which the Bank receives an OTS Safety and
Soundness CAMEL Rating of 1 or 2, and will be increased by an
additional .4 for any year in which the Company's and the Bank
receives an OTS Safety and Soundness CAMEL Rating of 1. The
Incentive Compensation Committee may adjust the Company's ROA or
NPA to take into account extraordinary financial events. The
aggregate amount of Bonuses payable for any calendar year will be
proportionately reduced (to zero, if necessary) to the extent
that the payment would cause the Company's
-6-<PAGE>
<PAGE>
and the Bank to cease to be a "well-capitalized" institution for
the year. Bonuses are payable from the Company's general assets.
For the fiscal year ended December 31, 1996, Ms. Halsey
received a bonus of $17,621, and each non-employee director
received a bonus of $1,928 pursuant to the Incentive Compensation
Plan.
The Incentive Compensation Plan has an indefinite term. The
Company has the right at any time to terminate or amend the
Incentive Compensation Plan in any manner and for any reason;
provided, that no amendment or termination shall, without the
consent of the participant or, if applicable, the participant's
beneficiary, adversely affect such participant's or beneficiary's
rights with respect to benefits accrued as of the date of such
amendment or termination.
EMPLOYMENT AGREEMENTS
The Company and Cecil Federal, together, have entered into
separate employment agreements (the "Employment Agreements") with
Ms. Mary B. Halsey (the "Employee"), who is President and Chief
Executive Officer of the Company and Cecil Federal. In her
capacity as President and Chief Executive Officer, the Employee
is responsible for overseeing all operations of Cecil Federal and
the Company, and for implementing the policies adopted by Cecil
Federal and the Company's Boards of Directors.
The Employment Agreements became effective on the date of
completion of the conversion of Cecil Federal from mutual to
stock form and provide for a term of three years, with an annual
base salary being payable to the Employee by Cecil Federal, which
is currently in the amount of $85,000. In lieu of paying the
Employee additional salary, the Company is agreeing to be jointly
and severally liable for Cecil Federal's obligations under its
Employment Agreement. On each anniversary date from the date of
commencement of the Employment Agreement, the term of the
agreement may be extended for an additional one-year period
beyond the then effective expiration date, upon a determination
by Cecil Federal's Board of Directors that the performance of the
Employee has met the required performance standards and that the
Employment Agreement may be extended. The Employment Agreements
provide the Employee with a salary review by the Board of
Directors not less often than annually, as well as with inclusion
in any discretionary bonus plans, retirement, and medical plans,
customary fringe benefits and vacation and sick leave. The
Employment Agreements will terminate upon the Employee's death or
disability, and is terminable by Cecil Federal or the Company for
"just cause" as defined in the Employment Agreements. In the
event of termination for just cause, no severance benefits are
available. If Cecil Federal or the Company terminates an
Employee without just cause, the Employee will be entitled to a
continuation of her salary and benefits from the date of
termination through the remaining term of the Employment
Agreement. If an Employment Agreement is terminated due to the
Employee's "disability" (as defined in the Employment
Agreements), the Employee will not be entitled to a continuation
of her salary and benefits following such termination. In the
event of the Employee's death during the term of an Employment
Agreement, her estate will be entitled to receive her salary
through the last day of the month in which death occurs. The
Employees is able to voluntarily terminate their Employment
Agreements by providing 60 days written notice to the Boards of
Directors of Cecil Federal and the Company, in which case an
Employee is entitled to receive only her compensation, vested
rights, and benefits up to the date of termination.
The Employment Agreements contain provisions stating that in
the event of the Employee's involuntary termination of employment
in connection with, or within one year after, any change in
control (as defined in Cecil Federal's Retirement Plan for Non-
Employee Directors), other than for "just cause," the Employee
will be paid within 10 days of such termination an amount equal
to the difference between (i) 2.99 times his "base amount," as
defined in Section 280G(b)(3) of the Internal Revenue Code, and
(ii) the sum of any other parachute payments, as defined under
Section 280G(b)(2) of the Internal Revenue Code, that the
Employee receives on account of the change in control. The
Employment Agreements provide for a lump sum payment to be made
in the event of the Employee's voluntary termination of
employment within one year following a change in control, upon
the occurrence, or within 90 days thereafter, of certain
specified events following the change in control, which have not
been consented to in
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writing by the Employee, including (i) the requirement that the
Employee perform her principal executive functions more than 35
miles from Cecil Federal's current primary office, (ii) a
reduction in the Employee's base compensation as then in effect,
(iii) the failure of Cecil Federal to maintain existing or
substantially similar employee benefit plans, including material
vacation, fringe benefits, stock option, and retirement plans,
(iv) the assignment to the Employee of duties and
responsibilities which are other than those normally associated
with her position with Cecil Federal, (v) a material reduction in
the Employee's authority and responsibility, and (vi) the failure
to re-elect the Employee to Cecil Federal's Board of Directors,
provided that the Employee is serving on such Board on the date
of the change in control. The aggregate payments that would be
made to Ms. Halsey assuming her termination of employment under
the foregoing circumstances at December 31, 1996 would have been
approximately $254,150. These provisions may have an anti-
takeover effect by making it more expensive for a potential
acquiror to obtain control of Cecil Federal. In the event that
the Employee prevails over Cecil Federal or the Company in a
legal dispute as to an Employment Agreement, she will be
reimbursed for legal and other expenses.
The Employment Agreements include the following definitions:
(i) "Disability" means a physical or mental infirmity which
impairs the Employee's ability to substantially perform her
duties under the Agreement and which results in the Employee
becoming eligible for long-term disability benefits under the
Company's long-term disability plan (or, if Cecil Federal has no
such plan in effect, which impairs the Employee's ability to
substantially perform her duties under the Agreement for a period
of one hundred eighty (180) consecutive days); (ii) termination
for "Just Cause" means termination because of, in the good faith
determination of the Board, the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-
desist order, or material breach of any provision of the
Agreement; and (iii) "change in control" has the same meaning as
in effect under Cecil Federal's Retirement Plan for Non-Employee
Directors.
TRANSACTIONS WITH MANAGEMENT
Prior to the enactment of FIRREA in August 1989, Cecil
Federal had a policy of offering real estate loans to directors,
officers and employees on a "cost-of-funds" basis and loans which
had a loan-to-value ratio of greater than 80% were made without
the requirement for private mortgage insurance. Under FIRREA,
loans to directors and executive officers must be made on
substantially the same terms, including interest rates, as those
prevailing for comparable transactions and must not involve more
than the normal risk of repayment or present other unfavorable
features. Furthermore, loans above the greater of $25,000 or 5%
of Cecil Federal's capital and surplus (up to $351,525) to such
persons must be approved in advance by a disinterested majority
of the Board of Directors. As a result of FIRREA, Cecil Federal
makes real estate loans to directors, officers and employees on
substantially the same terms and rates as those which are
available to the general public. Further, private mortgage
insurance is required for all loans when the loan-to-value ratio
is over 80%. During fiscal 1996, no executive officer, director
or associate of such person had a loan outstanding with a balance
in excess of $60,000, which loan had preferential terms.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Simon, Master & Sidlow, P.A., which was the Company's
independent auditing firm for the 1996 fiscal year, has been
retained by the Board of Directors to be the Corporation's
independent auditors for the 1997 fiscal year. A representative
of Simon, Master & Sidlow, P.A. is expected to be present at the
Annual Meeting to respond to stockholders' questions and will
have the opportunity to make a statement if he or she so desires.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Exchange Act,
the Company's officers and directors and all persons who own more
than 10% of the Common Stock ("Reporting Persons") are required
to file reports detailing their ownership and changes of
ownership in the Common Stock and to furnish the Company with
copies of all such ownership reports that are filed. Based
solely on the Company's review of copies of such ownership
reports which
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it has received in the past fiscal year or with respect to the
past fiscal year, or written representations from the Reporting
Persons that no annual report of changes in beneficial ownership
were required, the Company believes that during fiscal year 1996
all Reporting Persons have complied with these reporting
requirements.
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this proxy statement. However, if any other matters
should properly come before the Annual Meeting, it is intended
that proxies in the accompanying form will be voted in respect
thereof in accordance with the determination of a majority of the
Board of Directors.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of Common
Stock. In addition to solicitations by mail, directors, officers
and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional
compensation therefor.
The Company's annual report to stockholders, including
financial statements, is being mailed to all stockholders of
record as of the close of business on the Record Date. Any
stockholder who has not received a copy of such annual report may
obtain a copy by writing to the Secretary of the Company. Such
annual report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by
reference.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company'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 Company's main office at 127 North Street,
Elkton, Maryland 21922-5547, no later than November 21, 1997.
Any such proposal shall be subject to the requirements of the
proxy rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Thomas L. Foard
THOMAS L. FOARD
SECRETARY
Elkton, Maryland
March 21, 1997
FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1996 AS FILED WITH THE SEC WILL BE
FURNISHED WITHOUT CHARGE TO EACH STOCKHOLDER AS OF THE RECORD
DATE UPON WRITTEN REQUEST TO THE SECRETARY, CECIL BANCORP, INC.,
P.O. BOX 568, 127 NORTH STREET, ELKTON, MARYLAND 21922-5547.
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<PAGE>
REVOCABLE PROXY
CECIL BANCORP, INC.
Elkton, Maryland
ANNUAL MEETING OF STOCKHOLDERS
April 16, 1997
The undersigned hereby appoints William F. Burkley, Michael
Scibinico and Thomas L. Foard with full powers of substitution,
to act as proxies for the undersigned, to vote all shares of
Common Stock of Cecil Bancorp, Inc. which the undersigned is
entitled to vote at the annual meeting of stockholders, to be
held at the Swiss Inn, Elkton, Maryland on Wednesday, April 16,
1997 at 9:00 a.m. (the "Annual Meeting"), and at any and all
adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1 The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
For three year terms:
Bernard L. Siegel
Howard J. Neff
Mary B. Halsey
INSTRUCTION: To withhold your vote for any individual
nominee, insert that nominee's name on the line provided
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 THE ANNUAL MEETING, THIS
PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE
WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS.
AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING. THIS PROXY
CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE
WITH RESPECT TO 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 ANNUAL MEETING.<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
annual meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Annual 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 Company prior
to the execution of this proxy of notice of the Annual Meeting, a
proxy statement dated March 21, 1997 and an annual report to
stockholders.
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 envelope in
which this card was mailed. 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 ACCOMPANYING POSTAGE-PREPAID ENVELOPE.
