<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(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
[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, 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
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 20, 1998
Dear Stockholder:
We invite you to attend the Annual Meeting of stockholders
of Cecil Bancorp, Inc. to be held at Swiss Inn, Elkton, Maryland
on Wednesday, April 15, 1998 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 15, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders (the "Annual Meeting") of Cecil Bancorp, Inc. (the
"Company") will be held at Swiss Inn, Elkton, Maryland on
Wednesday, April 15, 1998 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 two 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
proposals 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 13, 1998 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 20, 1998
________________________________________________________________
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 15, 1998
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 Swiss Inn, Elkton, Maryland on Wednesday,
April 15, 1998 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 20, 1998.
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 13, 1998 (the "Record Date") are entitled to one vote for
each share then held. At the Record Date, the Company had
470,182 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) 8.02%
Anchar, a Maryland General Partnership
Builder's Choice Inc. Profit Sharing
Retirement Trust ("Trust")
Anthony F. Sposato
Charles Sposato
80 Molitor Road
Elkton, Maryland 21921-37521 46,835 (3) 9.96%
All directors and executive officers
as a group (10 persons) 83,154 (4) 17.69%
<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 13, 1998. 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, 10,730
shares had been allocated to participants, and 26,958 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) Under Section 13(d)3 of the Securities Exchange Act of 1934, the
above listed individuals may be deemed to constitute a "group."
Includes 36,835 shares beneficially owned by Charles Sposato;
26,735 shares beneficially owned by Anchar, a Maryland general
partnership of which Charles Sposato and Anthony Sposato are each
a 50% general partner; 10,000 shares beneficially owned by the
Trust, to which Charles Sposato serves as the sole trustee; and
36,735 shares beneficially owned by Anthony F. Sposato, Charles
Sposato's brother. Charles Sposato disclaims beneficial ownership
of those shares of Common Stock held by the Trust other than for
his benefit.
(4) Includes 3,784 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 12,170 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>
-2-<PAGE>
<PAGE>
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 Michael J.
Scibinico and Thomas L. Foard 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.
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, 1997 THE BANK TO EXPIRE RECORD DATE(1) OF CLASS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2001
Michael J. Scibinico 84 1967 1998 9,654 2.05%
Thomas L. Foard 72 1959 1998 4,989 1.06%
DIRECTORS CONTINUING IN OFFICE
William F. Burkley 67 1959 1999 5,704 1.21%
Doris P. Scott 72 1977 1999 12,154 2.58%
Howard B. Tome 74 1959 1999 6,154 1.31%
Bernard L. Siegel 77 1959 2000 21,154 4.50%
Howard J. Neff 69 1969 2000 6,154 1.31%
Mary B. Halsey 36 1995 2000 11,152 (2) 2.37%
<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 26,958 shares held by the ESOP which have not been
allocated to participating employees as of March 13, 1998 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 824, 824, 4,813, 824, 824, 0 and 824 shares which may be
received upon the exercise of stock options which are exercisable within 60
days of March 13, 1998, for Directors Siegel, Neff, Halsey, Scibinico,
Foard, Burkley, Scott and Tome, respectively.
(2) Includes 1,863 shares allocated to Ms. Halsey under the ESOP as to which
she has voting power but no investment power.
</FN>
</TABLE>
-3-<PAGE>
<PAGE>
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.
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, a founding director of Cecil Federal, 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.
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 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 is
a director of the Maryland Bankers Association. In 1997, Ms.
Halsey was appointed to the Maryland Governor's Task Force to
study bank charter modernization, a position that she will hold
for 2 years. 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.
-4-<PAGE>
<PAGE>
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, 1997 Title
- ---- ----------------- -----
<S> <C> <C>
Brian J. Hale 38 Senior Vice President/Chief
Operating Officer
Sandra D. Feltman 48 Vice President/Director of Lending
</TABLE>
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. Ms.
Feltman is also a director of the Cecil County Home Builders
Association.
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, 1997, the Board of Directors met 25
times. No director attended fewer than 75% of the total number
of meetings of the Board of Directors of the Company held during
fiscal 1997 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 once
during fiscal 1997.
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 once during fiscal 1997.
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
once during fiscal 1997.
The entire Board of Directors serves as the Nominating
Committee. This committee met once during fiscal 1997.
-5-<PAGE>
<PAGE>
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,
1997.
<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 1997 $95,000 $19,885 (2) $ -- $16,371 (3) $ -- $ -- $15,868
President, Chief 1996 85,000 17,621 -- 14,445 -- -- 13,378
Executive Officer 1995 75,000 10,132 -- -- -- -- 8,305
<FN>
___________
(1) For 1997 -- includes an automobile allowance of $750 and a pension plan
contribution of $15,118; 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.
(2) Represents $19,885 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 $17.00 per share on the date of
vesting.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
No options were exercised during the year ended December
31, 1997 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 1997, 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 -- $ -- 4,813 / 0 $43,317 / $0
<FN>
_____________
(1) Represents market price per share at end of fiscal year 1997 ($20.00 on
December 31, 1997) less option exercise price per share ($11.00).
</FN>
</TABLE>
DIRECTOR COMPENSATION
During the fiscal year ended December 31, 1997, 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 $1,946 bonus during fiscal 1997 pursuant to the
Company's Incentive Compensation Plan. See "Incentive
Compensation Plan."
-6-<PAGE>
<PAGE>
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 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, 1997, Ms. Halsey
received a bonus of $19,885, and each non-employee director
received a bonus of $1,946 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 $95,000. 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
-7-<PAGE>
<PAGE>
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 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, 1997 would have been approximately $284,050.
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.
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<PAGE>
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
$3,183,000) 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 1997, 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 1997 fiscal year, has been
retained by the Board of Directors to be the Corporation's
independent auditors for the 1998 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 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 1997 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.
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<PAGE>
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 23, 1998.
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 20, 1998
FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1997 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 15, 1998
The undersigned hereby appoints Mary B. Halsey, Bernard
L.Siegel and Howard J. Neff 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
Swiss Inn, Elkton, Maryland on Wednesday, April 15, 1998 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:
Michael J. Scibinico
Thomas L. Foard
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 20, 1998 and an annual report to
stockholders.
Dated: ______________, 1998
__________________________ __________________________
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.
