SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the Registrant [x]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[x] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SANDY SPRING 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)(4) 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:
---------------------------------------------
SANDY SPRING BANCORP, INC.
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
March 20, 1998
Dear Shareholder:
We invite you to attend the 1998 Annual Meeting of Shareholders of Sandy
Spring Bancorp, Inc. to be held at the Indian Spring Country Club, 13501 Layhill
Road, Silver Spring, Maryland on Wednesday, April 15, 1998 at 3:00 p.m.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting. Also enclosed is the
Annual Report showing the results for 1997.
YOUR VOTE IS IMPORTANT. On behalf of the Board of Directors, we urge you to
sign, date and return the enclosed proxy 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 Annual Meeting.
If you have any questions, please call Marjorie S. Holsinger, Corporate
Secretary, at (301) 774-6400.
Thank you for the cooperation and continuing support you have given this
institution.
Sincerely,
/S/ HUNTER R. HOLLAR
Hunter R. Hollar
President and Chief Executive Officer
SANDY SPRING BANCORP, INC.
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 15, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders (the
"Annual Meeting") of Sandy Spring Bancorp, Inc. ("Bancorp") will be held on
Wednesday, April 15, 1998, at 3:00 p.m. Eastern Time at the Indian Spring
Country Club, 13501 Layhill Road, Silver Spring, Maryland.
A Proxy and a Proxy Statement for the Annual Meeting and the 1997 Annual
Report to Shareholders are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
(1) The election of five directors of Bancorp; and
(2) Such other business as may properly come before the Annual Meeting or
any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Pursuant to the Bylaws, the Board of Directors has fixed the close of
business on March 9, 1998 as the record date for determination of the
shareholders entitled to vote at the Annual Meeting. Only holders of record of
Bancorp's Common Stock at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof.
In the event that there are not sufficient votes to conduct the election of
directors or to approve such other business as may properly come before the
Annual Meeting, the Annual Meeting may be adjourned in order to permit further
solicitation of proxies by Bancorp.
You are requested to fill in and sign the enclosed form of proxy, which is
solicited by the Board of Directors, and to mail it in the enclosed envelope.
The proxy will not be used if you attend and choose to vote in person at the
Annual Meeting.
By Order of the Board of Directors
/S/ MARJORIE S. HOLSINGER
Marjorie S. Holsinger
Corporate Secretary
Olney, Maryland
March 20, 1998
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE THAT IS ENCLOSED FOR
YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF THIS ENVELOPE IS MAILED IN THE
UNITED STATES.
- --------------------------------------------------------------------------------
SANDY SPRING BANCORP, INC.
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
--------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1998
--------------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sandy Spring Bancorp, Inc. ("Bancorp"") to
be used at the 1998 Annual Meeting of Shareholders (the "Annual Meeting"), to be
held on Wednesday, April 15, 1998, at 3:00 p.m. Eastern Time at the Indian
Spring Country Club, 13501 Layhill Road, Silver Spring, Maryland. The
accompanying Notice of Annual Meeting and form of proxy and this Proxy Statement
are being first mailed on or about March 20, 1998 to shareholders of record as
of the close of business on March 9, 1998.
If the enclosed form of proxy is properly executed and returned to Bancorp
in time to be voted at the Annual Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED FOR PROPOSAL I TO ELECT THE FIVE NOMINEES OF
BANCORP'S BOARD OF DIRECTORS AS DIRECTORS. Proxies marked as abstentions and
shares held in street name that have been designated by brokers on proxies as
not voted will not be counted as votes cast, but will be counted for purposes of
determining a quorum at the Annual Meeting. Bancorp does not know of any other
matters that are to come before the Annual Meeting except for incidental,
procedural matters. If any other matters are properly brought before the Annual
Meeting, the persons named in the accompanying proxy will vote the shares
represented by each such proxy on such matters as determined by a majority of
the Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke that shareholder's proxy. However, shareholders may revoke a proxy at any
time prior to its exercise by filing with the Corporate Secretary of Bancorp,
Marjorie S. Holsinger, a written notice of revocation; by delivering to Bancorp
a duly executed proxy bearing a later date; or by attending the Annual Meeting
and voting in person.
The cost of soliciting proxies will be borne by Bancorp. In addition to the
solicitation of proxies by mail, Bancorp also may solicit proxies personally or
by telephone or telegraph through its directors, officers and regular employees.
Bancorp also will request persons, firms, and corporations holding shares in
their names or in the name of nominees that are beneficially owned by others to
send proxy materials to and obtain proxies from those beneficial owners and will
reimburse the holders for their reasonable expenses in doing so.
The securities that can be voted at the Annual Meeting consist of shares of
common stock, par value $1.00 per share (the "Common Stock"), of Bancorp. Each
share entitles its owner to one vote on all matters. The close of business on
March 9, 1998 has been fixed by the Board of Directors as the record date for
determination of shareholders entitled to vote at the Annual Meeting; there were
approximately 2,310 record holders of the Common Stock as of such date. The
number of shares outstanding on March 9, 1998 was 9,659,938. The presence, in
person or by proxy, of at least a majority of the total number of outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting.
A copy of the Annual Report to Shareholders for the year ended December 31,
1997 accompanies this Proxy Statement. BANCORP IS REQUIRED TO FILE AN ANNUAL
REPORT ON FORM 10-K FOR ITS YEAR ENDED DECEMBER 31, 1997 WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"). SHAREHOLDERS MAY OBTAIN, FREE OF CHARGE, A COPY OF
THIS ANNUAL REPORT ON FORM 10-K BY WRITING MARJORIE S. HOLSINGER, CORPORATE
SECRETARY, AT SANDY SPRING BANCORP, INC., 17801 GEORGIA AVENUE, OLNEY, MARYLAND
20832.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 9, 1998 with respect
to the shares of Common Stock beneficially owned by each director continuing in
office and nominee for director of Bancorp, by certain executive officers of
Bancorp and by all directors and executive officers of Bancorp as a group. This
information is based upon the most recent report of beneficial ownership of
securities filed with the Securities and Exchange Commission. To the knowledge
of management, no person beneficially owns more than 5% of the outstanding
shares of Common Stock. Share amounts in the table have been adjusted to give
retroactive effect to a 2-for-1 stock split declared on January 28, 1998.
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL COMMON STOCK
NAME OWNERSHIP(1)(2)(3) OUTSTANDING
John Chirtea 18,159 *
Susan D. Goff 429 *
Solomon Graham 4,682 *
Gilbert L. Hardesty 2,000 *
Joyce R. Hawkins 32,903 *
Hunter R. Hollar 40,317 *
Thomas O. Keech 70,596 *
Charles F. Mess 5,341 *
Robert L. Mitchell 11,000 *
Robert L. Orndorff, Jr. 103,195 1.07%
David E. Rippeon 1,999 *
Lewis R. Schumann 6,100 *
W. Drew Stabler 34,798 *
James H. Langmead 8,520 *
Lawrence T. Lewis 19,988 *
Stanley L. Merson 24,194 *
Frank H. Small 8,492 *
All directors and executive officers
as a group (19 persons) 428,308 4.40%
- --------------
* Less than 1% of Bancorp's outstanding Common Stock.
(1) Under the rules of the SEC, an individual is considered to "beneficially
own" any share of Common Stock which he or she, directly or indirectly,
through any contract, arrangement, understanding, relationship, or
otherwise, has or shares: (1) voting power, which includes the power to
vote, or to direct the voting of, such security; and/or (2) investment
power, which includes the power to dispose, or to direct the disposition,
of such security. In addition, an individual is deemed to be the beneficial
owner of any share of Common Stock of which he or she has the right to
acquire voting or investment power within 60 days of March 9, 1998.
Includes 74,332 shares of Common Stock subject to outstanding options which
are exercisable within 60 days of March 9, 1998, of which Hunter R. Hollar,
James H. Langmead, Lawrence T. Lewis, Stanley L. Merson and Frank H. Small
("Named Executive Officers") hold options to purchase 33,000 shares, 7,000
shares, 3,500 shares, 17,000 shares and 7,000 shares of Common Stock,
respectively. Executive officers who are not Named Executive Officers hold
options for 6,832 shares. Also includes 472 shares, 623 shares, 527 shares,
2,663 shares and 1,492 shares of Common Stock owned by Mr. Hollar, Mr.
Langmead, Mr. Lewis, Mr. Merson and Mr. Small, respectively, and 6,370
shares of Common Stock owned by executive officers who are not Named
Executive Officers, as participants in Bancorp's Cash and Deferred Profit
Sharing Plan.
(Footnotes continued on following page)
2
(2) Includes shares owned directly by directors and executive officers of
Bancorp as well as shares held by their spouses and minor children and
trusts of which certain directors are trustees.
(3) Fractional shares resulting from participation in the dividend reinvestment
plan have been rounded to the nearest whole share.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors has set the total number of directors at thirteen,
in accordance with Bancorp's Articles of Incorporation and Bylaws. Bancorp's
Articles of Incorporation divide the directors into three classes, as nearly
equal in number as possible. In general, the term of office of only one class of
directors expires in each year, and their successors are elected for terms of
three years and until their successors are elected and qualified. At the Annual
Meeting a total of five director-nominees will be elected for three-year terms.
With respect to the election of directors, each shareholder of record on the
record date is entitled to one vote for each share of Common Stock held. A
plurality of all the votes cast at the Annual Meeting will be sufficient to
elect a nominee as a director.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of the Board of Directors' five
nominees for election as directors. Also set forth is certain other information,
some of which has been obtained from Bancorp's records and some of which has
been supplied by the nominees and continuing directors, with respect to their
principal occupations during the past five years, their ages at December 31,
1997, the periods during which they have served as directors, and positions they
currently hold with Bancorp. It is the intention of the persons named in the
proxy to vote the shares represented by each properly executed proxy for the
election as directors of the five nominees listed below for terms of three
years, unless otherwise directed by the shareholder. The Board of Directors
believes that each of the nominees will stand for election and will serve if
elected as director. If any person nominated by the Board of Directors fails to
stand for election or is unable to accept election, the proxies will be voted
for the election of such other person or persons as the Board of Directors may
recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED
BELOW AS A DIRECTOR OF BANCORP.
MEMBER TERM
POSITION(S) HELD OF BOARD CURRENTLY
NAME AGE WITH BANCORP SINCE (1) EXPIRES
- ---- --- --------------- --------- --------
DIRECTOR-NOMINEES FOR TERMS TO EXPIRE AT
THE 2001 ANNUAL MEETING
Solomon Graham 54 Director 1994 1998
Gilbert L. Hardesty 57 Director 1997 1998
Charles F. Mess 59 Director 1987 1998
Lewis R. Schumann 54 Director 1994 1998
W. Drew Stabler 60 Chairman of the 1986 1998
Board of Directors
3
MEMBER TERM
POSITION(S) HELD OF BOARD CURRENTLY
NAME AGE WITH BANCORP SINCE (1) EXPIRES
- ---- --- --------------- --------- --------
CONTINUING DIRECTORS
John Chirtea 60 Director 1990 1999
Joyce R. Hawkins 64 Director 1995 1999
Hunter R. Hollar 49 President, Chief 1990 1999
Executive Officer and
Director
Thomas O. Keech 64 Director 1995 1999
Susan D. Goff 52 Director 1994 2000
Robert L. Mitchell 61 Director 1991 2000
Robert L. Orndorff, Jr. 41 Director 1991 2000
David E. Rippeon 48 Director 1997 2000
- --------------
(1) The Boards of Directors of Bancorp and its principal subsidiary, Sandy
Spring National Bank (the "Bank"), are composed of the same persons.
Includes term of office as a director of the Bank prior to the formation of
Bancorp as the holding company for the Bank in January 1988.
The principal occupation(s) and business experience of each nominee and
director of Bancorp for the last five years are set forth below.
DIRECTOR-NOMINEES:
SOLOMON GRAHAM is founder, President and Chief Executive Officer of Quality
Biological, Inc., a medical technology firm providing reagents to research
facilities.
GILBERT L. HARDESTY is a retired bank executive, having served as
President of Crestar Bank - Annapolis from June 1994 to June 1997 and as
President of Annapolis Federal Savings Bank from April 1986 to June 1994. Mr.
Hardesty was elected by the Board to fill a newly created director position on
November 19, 1997.
CHARLES F. MESS, M.D. is in the practice of general orthopedics.
LEWIS R. SCHUMANN is a partner in the law firm of Miller, Miller and Canby,
Chtd.
W. DREW STABLER is a partner in Pleasant Valley Farm, a crop and livestock
operation.
4
CONTINUING DIRECTORS:
JOHN CHIRTEA is retired from LCOR, a national real estate development
company. In prior years, Mr. Chirtea was a partner in the Linpro Co., the
predecessor company of LCOR.
JOYCE R. HAWKINS is a realtor with Weichert Realtors.
HUNTER R. HOLLAR is President and Chief Executive Officer of Bancorp and
the Bank. From 1990 through 1993, Mr. Hollar served as President of Bancorp and
President and Chief Operating Officer of the Bank.
THOMAS O. KEECH retired as Vice President of Bancorp and Executive Vice
President of the Bank effective December 31, 1995. Mr. Keech previously served
as Vice President and Treasurer of Bancorp and Executive Vice President and
Chief Financial Officer of the Bank.
SUSAN D. GOFF is President of M.D. IPA, Inc., a vice president of Optimum
Choice, Inc., and a senior vice president of their parent holding company,
Mid-Atlantic Medical Services, Inc., a health maintenance organization.
ROBERT L. MITCHELL is President and Chief Executive Officer of C-I/Mitchell
and Best Company which is engaged in homebuilding and real estate development.
ROBERT L. ORNDORFF, JR. is President of RLO Contractors, Inc., an
excavating contractor.
DAVID E. RIPPEON is President and Chief Executive Officer of Gaithersburg
Farmers Supply, Inc., a tractor and equipment dealership.
CORPORATE GOVERNANCE AND OTHER MATTERS
During 1997, each of Bancorp's and the Bank's Boards of Directors held 12
regular meetings.
The average attendance was 95% for meetings of Bancorp's and the Bank's
Boards of Directors. All incumbent directors attended 75% or more of the
aggregate of (a) the total number of meetings of the Boards of Directors and (b)
the total number of meetings held by all committees on which they served during
the period of their service during the year.
Bank directors who are not employed by the Bank receive an annual retainer
of $4,000 and fees of $400 ($500 for the Chairman) for attendance at each
meeting of the Board of Directors, $400 for each Executive Committee meeting,
and $300 for other committee meetings. Bancorp directors who are not employed by
Bancorp do not receive any additional compensation except for fees of $400 ($500
in the case of the Chairman) for attendance at each meeting of the Board of
Directors not held in conjunction with a meeting of the Bank's Board of
Directors and except for fees of $300 for each meeting of the Audit and
Nominating Committees. Directors of Sandy Spring Mortgage Corporation who are
not employed by Bancorp or any of its subsidiaries receive fees of $300 for each
meeting of its Board.
Directors of the Bank are eligible to defer all or a portion of their fees
under Director Fee Deferral Agreements between the Bank and individual
directors. Amounts deferred accrue interest at the prime rate. Except in the
case of death or financial emergency, deferred fees and accrued interest are
payable only following termination of a director's service on the board. The
Director Fee Deferral Agreements also provide for benefits that may exceed
deferred fees and accrued interest in the event a party dies while a director of
the Bank, but only to the extent the Bank owns an insurance policy in effect on
the director's life at the time of death that pays a greater amount than the
total of deferred fees and accrued interest.
5
Bancorp's Board of Directors has standing Audit and Nominating Committees.
The Bank has a standing Human Resources Committee that performs the functions of
a compensation committee. The functions, composition and number of meetings for
these committees in 1997 were as follows:
AUDIT COMMITTEE - The Audit Committee is composed of John Chirtea,
Chairman, Solomon Graham, Gilbert L. Hardesty, Joyce R. Hawkins, Thomas O.
Keech, and David E. Rippeon. The Audit Committee, whose members are neither
officers nor employees of Bancorp or the Bank, provides general oversight of the
internal audit function, reviews the findings of external audits and
examinations, evaluates the adequacy of the Bank's insurance coverage, reviews
the activities of the Bank's Compliance Council, reviews the annual report to
shareholders and Form 10-K on behalf of the Board and monitors internal controls
for financial reporting. During 1997, five meetings were held.
NOMINATING COMMITTEE - The Nominating Committee is composed of W. Drew
Stabler, Chairman, Hunter R. Hollar, John Chirtea, Solomon Graham, and Charles
F. Mess. The Nominating Committee makes recommendations to the Board of
Directors with respect to nominees for election as directors. While the
Nominating Committee will consider nominees recommended by shareholders, it has
not actively solicited recommendations by Bancorp's shareholders for nominees
nor has it established any procedures for this purpose other than as set forth
in the Bylaws. See "Shareholder Proposals." During 1997, two meetings were held.
HUMAN RESOURCES (COMPENSATION) COMMITTEE - The Human Resources Committee is
composed of Robert L. Orndorff, Jr., Chairman, John Chirtea, Susan D. Goff,
Charles F. Mess, Robert L. Mitcell and W. Drew Stabler. The Human Resources
Committee recommends salaries and other compensation for executive officers,
conducts an annual review of the salary budget, considers other compensation
plans and makes recommendations to the Board, deals with matters of personnel
policy and, with the Stock Option Committee, administers the 1992 and 1982 Stock
Option Plans. During 1997, two meetings were held.
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three years awarded to or earned by (i) the Chief Executive Officer,
and (ii) each of the four other most highly compensated executive officers of
Bancorp whose salary and bonus earned in 1997 exceeded $100,000 (the "Named
Executive Officers").
Long-Term
Compensation
Annual Compensation ------------
Name and Principal ------------------- Stock Option All Other
Position in 1997 Year Salary Bonus Grants (Shares)(1) Compensation(2)
- ------------------ ---- -------- ------- ------------------ ---------------
Hunter R. Hollar 1997 $203,885 $31,658 6,000 $6,896
President and Chief Executive 1996 185,223 33,381 3,000 9,959
Officer of Bancorp and the Bank 1995 167,335 15,000 3,000 7,425
James H. Langmead 1997 119,473 17,443 3,000 5,149
Vice President and Treasurer 1996 107,692 19,423 1,500 5,795
of Bancorp and Executive Vice 1995 95,115 7,500 2,000 5,079
President and Chief Financial
Officer of the Bank
Lawrence T. Lewis 1997 118,000 17,227 3,000 5,086
Executive Vice President 1996 105,769 31,760(3) 3,000 3,838
of the Bank 1995 -- -- -- --
Stanley L. Merson 1997 111,254 16,244 3,000 4,795
Senior Vice President 1996 97,115 17,491 1,500 5,218
of the Bank and 1995 86,477 7,500 2,000 4,776
President, Sandy Spring
Mortgage Corporation
Frank H. Small 1997 105,342 15,380 3,000 3,027
Executive Vice President 1996 92,485 16,666 1,500 3,315
of the Bank 1995 83,131 7,500 2,000 2,994
- ----------
(1) Share amounts adjusted to give retroactive effect to a 2-for-1 stock split
declared on January 28, 1998. (2) Amounts shown in this column pertain to
deferred compensation under Bancorp's Cash and Deferred
(2) Profit Sharing Plan. The amount of indirect compensation in the form of
personal benefits received in 1997 by Messrs. Hollar, Langmead, Lewis,
Merson and Small did not exceed 10% of the annual compensation paid to each
such executive officer.
(3) Includes a $15,000 bonus paid to Mr. Lewis upon the commencement of his
employment.
7
STOCK OPTION PLANS. Bancorp maintains two stock option plans, the purposes
of which are to attract, retain and motivate key officers of Bancorp and the
Bank by providing key officers with a stake in the success of Bancorp as
measured by the value of its shares. The following information has been adjusted
to give retroactive effect to a 2-for-1 stock split declared on January 28,
1998.
The 1992 Stock Option Plan (the "1992 Option Plan"), which was approved by
the shareholders at the 1992 Annual Meeting of Shareholders, authorizes the
issuance of up to 540,000 shares of Common Stock, subject to certain adjustments
for changes in Bancorp's capital structure. The 1992 Option Plan has a term of
10 years from its effective date (January 1, 1992) after which date no stock
options may be granted. As of March 9, 1998, options for 102,500 shares were
outstanding under the 1992 Option Plan. In 1996, Bancorp also assumed certain
options (the "ABI Options") outstanding under the Incentive Stock Option Plan of
Annapolis Bancshares, Inc. (the "ABI Plan"), in connection with the acquisition
of that company by merger. The 1982 Stock Option Plan (the "1982 Option Plan")
and the ABI Plan have been terminated, except with respect to options which were
outstanding on each plan's termination date. As of March 9, 1998, options for
12,000 shares were outstanding under the 1982 Option Plan and ABI Options for
1,502 shares of the Common stock were outstanding. The 1992 Option Plan and the
1982 Option Plan are referred to collectively as the "Option Plans."
The Option Plans provide for the grant of "incentive options" as defined in
Section 422 of the Code. The 1992 Option Plan also provides for the grant of
"non-incentive options" to officers and other employees on terms and conditions
established by the Stock Option Committee, which administers the Option Plans.
The Stock Option Committee is comprised of all disinterested (outside) directors
(i.e., all directors other than Mr. Hollar).
Options have been granted under the Option Plans and may continue to be
granted under the 1992 Option Plan only to key employees of Bancorp and its
subsidiaries. Under the Option Plans, the maximum option term is 10 years from
the date of grant. Options granted under the Option Plans prior to 1996 were
immediately exercisable upon grant. Options granted in 1996 and 1997 under the
1992 Plan were first exercisable as follows: one-third upon the date of grant,
one-third upon the first anniversary of the date of grant, and one-third upon
the second anniversary of the date of grant. The exercise price of a stock
option may not be less than 100% of the fair market value of the Common Stock on
the date of grant. The exercise price of stock options must be paid for in full
in cash or shares of Common Stock, or a combination of both. The Stock Option
Committee has the discretion when making a grant of stock options under the 1992
Option Plan to impose restrictions on the shares to be purchased in exercise of
such options.
The Committee also has the authority to cancel stock options outstanding
under the 1992 Option Plan with the consent of the optionee and to grant new
options at a lower exercise price in the event that the fair market value of the
Common Stock at any time prior to the exercise of the outstanding stock options
falls below the exercise price of such option. Consistent with Bancorp policy,
however, the Committee does not intend to use this authority to cancel and
reissue stock options at a lower exercise price, whether or not any decline in
the market price of Bancorp's shares is the result of general economic
conditions.
8
OPTION GRANTS IN 1997
---------------------
The following table contains information concerning the grant of stock
options under the Option Plans to the Chief Executive Officer and each of the
other Named Executive Officers. The Option Plans do not provide for the grant of
stock appreciation rights. Share amounts and prices in the table have been
adjusted to give retroactive effect to a 2-for-1 stock split declared on January
28, 1998.
Individual Grants Potential Realizable
------------------------------------------ Value at Assumed
% of Total Annual Rates of Stock
Options Options Exercise Price Appreciation
Granted Granted to or for Option Term
(Number Employees Base Price Expiration ---------------------
Name of Shares)(1) in Year ($ per Share) Date 5% 10%
- ---- ------------- ----------- ------------- ---------- ------- ------
Hunter R. Hollar 6,000 (2) 13.6% $24.63 12/17/2007 $92,919 $235,475
James H. Langmead 3,000 (2) 6.8 24.63 12/17/2007 46,460 117,738
Lawrence T. Lewis 3,000 (2) 6.8 24.63 12/17/2007 46,460 117,738
Stanley L. Merson 3,000 (2) 6.8 24.63 12/17/2007 46,460 117,738
Frank H. Small 3,000 (2) 6.8 24.63 12/17/2007 46,460 117,738
- -----------
(1) In each case, the exercise price was equal to the fair market value of the
Common Stock on the date of grant.
(2) Options granted during 1997 that were exercisable as follows: one-third
upon the date of grant, one-third upon the first anniversary of the date of
grant, and one-third upon the second anniversary of the date of grant.
AGGREGATED OPTION EXERCISES IN
1997 AND YEAR END OPTION VALUES
The following table sets forth information concerning the value of options
held by the Chief Executive Officer and the other Named Executive Officers at
December 31, 1997. Such persons exercised no options during 1997. Share amounts
in the table have been adjusted to give retroactive effect to a 2-for-1 stock
split declared on January 28, 1998.
Number of Value of
Unexercised Unexercised
Options In-the-Money
at Year End Options
----------- at Year End(1)
Exercisable/ ---------------
Unexercisable Exercisable/
Name (Number of Shares) Unexercisable
---- ------------------ ---------------
Hunter R. Hollar 33,000/5,000 $423,555/$9,875
James H. Langmead 7,000/2,500 59,990/4,938
Lawrence T. Lewis 3,500/2,500 43,505/4,938
Stanley L. Merson 17,000/2,500 214,965/4,938
Frank H. Small 7,000/2,500 59,990/4,938
- -----------
(1) The difference between the fair market value of the underlying securities
at year-end and the exercise or base price.
9
PENSION PLAN TABLE
------------------
The table below shows estimated annual benefits payable upon retirement to
persons in the specified remuneration and years-of-service categories if such
retirement had occurred on December 31, 1997. The benefits listed are provided
on a 10 year certain-and-life basis and are not subject to deduction for Social
Security or other offset amounts.
Years of Credited Service at Retirement
Highest 5-Year ---------------------------------------------------------------------------------
Average Earnings 15 20 25 30 35 40 and above
- ---------------- -------- -------- -------- -------- -------- ------------
$ 25,000 $ 5,625 $ 7,500 $ 9,375 $ 11,250 $ 13,125 $ 15,000
75,000 16,875 22,500 28,125 33,750 39,275 45,000
125,000 28,125 37,500 46,875 56,250 65,625 75,000
150,000 33,750 45,000 56,250 67,500 78,750 90,000
160,000 and more 36,000 48,000 60,000 72,000 84,000 96,000
Earnings covered by the Pension Plan are total wages, including elective
pre-tax contributions under Section 401(k) of the Code, overtime pay, bonuses,
and other cash compensation which for the named executives correspond, in
general, to the total of the amounts in the "Salary" and "Bonus" columns in the
Summary Compensation Table, up to a total of $160,000. Benefits are computed on
a monthly basis at the rate of 1.5% of highest five-year average monthly
earnings multiplied by years of service up to 40 years for eligible persons
retiring at age 65. Early retirement is also permitted by the Pension Plan at
age 55 after at least 10 years of service. As of February 26, 1998, Bancorp's
executive officers shown in the compensation table had accumulated the following
years of credited service toward retirement: Mr. Hollar - 7 years, Mr. Langmead
- - 6 years, Mr. Lewis - 2 years, Mr. Merson 15 years, and Mr. Small - 7 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENTS. In May 1997, the Bank, upon
the recommendation of the Human Resources Committee, entered into individual
Supplemental Executive Retirement Agreements ("SERA's") with certain executives
of the Bank, including Mr. Hollar and each of the Named Executive Officers. Mr.
Hollar's participation in the Supplemental Executive Retirement Plan, first
adopted by the Bank in 1990 for key executives, was terminated upon his entering
into a SERA and that plan was terminated. The SERAs are designed to provide
certain post-retirement benefits to enable a targeted level of covered
retirement income to be met and to provide certain pre-retirement death and
disability benefits should the executive die or become disabled prior to
retirement age. The annual post-retirement deferred compensation benefit is
designed to replace between 65% and 70% of the executive's projected final
average pay at retirement date in conjunction with the Bank's Pension Plan and
Deferred Profit Sharing Plan, Social Security retirement benefits, and any
benefits payable to the executive under a prior employer's pension plan. Normal
retirement benefits are payable in equal monthly payments over 15 years or until
the death of the executive, whichever is longer. Using a 70% income replacement
target for Mr. Hollar, an annual amount of $90,000 per year has been projected
to be paid over a 15-year period at age 65. Executives who reach age sixty with
ten years of service are eligible for reduced benefits upon early retirement,
payable over 15 years. Reduced benefits also are available in the event of
disability, voluntary termination, or termination by the Bank without just
cause. Benefits payable by the reason death of the executive are based upon
accrued retirement benefits or, if greater, the approximate value of payments
received by the Bank under insurance coverage obtained by the Bank on the
executive's life, and are payable over 15 years.
Change-in-Control Benefits. If within six months prior to, or two years
after, a change-in-control, the Bank terminates the employment of an executive
who is a party to a SERA without just cause, or the executive voluntarily
terminates employment for good reason, the executive is eligible for normal
retirement or early retirement benefits, at his or her election. These benefits
are payable beginning at the retirement (or early retirement) age if the change
in control has been approved by a majority of the directors of the Bank who were
directors prior to the change in control, or otherwise beginning in the month
following the executive's termination.
10
EMPLOYMENT AGREEMENTS. In December 1990, Bancorp and the Bank
(collectively, the "Company") entered into an Employment Agreement (the "1990
Agreement") with Hunter R. Hollar (the "Executive"). The Agreement provided for
automatic one-year extensions on each January 1 after its initial term ended on
December 31, 1993, provided that neither the Company nor Mr. Hollar had given
written notice at least 90 days prior to a renewal date of intention not to
renew the Agreement. The 1990 Agreement, as renewed, was in effect throughout
1996. Effective January 30, 1997, the 1990 Agreement was replaced with a new
employment agreement (the "Current Agreement").
The Boards of Directors of Bancorp and the Bank believe that the Current
Agreement assures fair treatment of the Executive in relation to his career with
the Company by assuring him of some financial security. The Current Agreement
also protects the shareholders by encouraging the Executive to continue his
attention to his duties without distraction in a potential merger or takeover
circumstance and by helping to maintain the Executive's objectivity in
considering any proposals to acquire the Company.
The Current Agreement has an initial term of three years, and is subject to
automatic one-year extensions of such term on each January 30, provided that
neither the Company nor Mr. Hollar has given written notice at least 60 days
prior to the renewal date of its intention not to renew. The Current Agreement
provides for the payment of cash and other benefits to the Executive, including
a fixed salary, reviewed annually and subject to increase or decrease at the
Board of Directors' discretion, provided that the salary may not be less than
$190,000. The Executive also is entitled to participate in bonus and fringe
benefit, incentive compensation, life insurance, medical, profit sharing and
retirement plans, and to continued participation in a supplemental retirement
plan or arrangement. As under the 1990 Agreement, the Executive is entitled to
reimbursement of reasonable business expenses, the use of an automobile (with
reimbursement for expenses), and membership dues at a country club located in
the Olney, Maryland area. With minor exceptions, the Current Agreement
terminates, and there are no additional payments due under it, upon termination
based upon death, retirement, or just cause (as defined) by the Company, or upon
voluntary termination by the Executive without good reason (as defined). Upon
termination for disability, the Executive is entitled to receive his salary
through the term of the Current Agreement, reduced by payments under any
disability plan maintained by the Company, plus regular employee benefits. Upon
termination of the Executive without just cause by the Company, or with good
reason by the Executive, the Executive is entitled to salary and bonuses for the
remaining term of the Current Agreement, payable in a lump sum based upon prior
year compensation levels. The Executive is prohibited from conflicts of
interest, and must maintain the confidentiality of nonpublic information
regarding the Company and its customers. The Executive also is bound by a
covenant not to compete and not to interfere with other employees of the Company
if the Executive is terminated for just cause, disability, or retirement or
resigns without good reason.
Change in Control Benefits. In the event of a change-in-control of the
Company, the Executive is entitled to payment of certain benefits. If within six
months prior to, or two years after, a change-in-control, the Company terminates
the Executive's employment without good cause, or the Executive voluntarily
terminates employment for good reason (as defined in the Current Agreement),
then the Company, or its successor, is required to make a lump-sum cash payment
to the Executive equal to 2.99 times the sum of the Executive's annual salary at
the highest rate in effect during the preceding twelve months and bonuses for
the preceding calendar year. The Executive also is entitled to continued
participation for a three-year period in certain Company-sponsored health and
welfare plans. These payments and benefits, are limited, however, so as not to
exceed the amount allowable as a deduction under Section 280G of the Internal
Revenue Code. As of December 31, 1997, if a change-in-control had occurred and
the Executive had terminated employment with good reason or had been terminated
from employment without just cause, then $598,963 would have been payable to the
Executive under the change-in-control provisions of the Current Agreement, after
application of the limitations of Section 280G of the Code. Bancorp does not
believe that payment of this amount would have a material adverse affect on the
financial or operating condition of Bancorp or the Bank.
11
Agreements with Other Named Executive Officers. The other Named Executive
Officers also entered into employment agreements with the Company effective
January 30, 1997. The material terms and conditions of each of these agreements
are similar to those of the Current Agreement entered by Mr. Hollar, except that
(a) each of them is for an initial term of two years, subject to annual renewal,
and (b) the compensation and duties, and provisions relating to them, are
different in each agreement. Under the agreements, the other Named Executive
Officers are not entitled to club memberships or use of an automobile. The
agreements call for the employment of Mr. Langmead, Mr. Lewis, Mr. Merson, and
Mr. Small at Bancorp, the Bank and, with respect to Mr. Merson, Sandy Spring
Mortgage Corporation, at minimum base salaries of $110,000, $110,000, $100,000,
and $95,000, respectively.
REPORT OF THE HUMAN RESOURCES COMMITTEE
As members of the Human Resources Committee, it is our duty to review
compensation policies applicable to executive officers; to consider the
relationship of corporate performance to that compensation; to recommend salary
and bonus levels and stock option grants for executive officers for
consideration by the Boards of Directors of Bancorp and the Bank or their
committees, as appropriate; and to administer various incentive plans of Bancorp
and the Bank.
Under the compensation policy of Bancorp, which is endorsed by the Human
Resources Committee, compensation is paid based both on the executive officer's
performance and the performance of the entire company. In assessing the
performance of Bancorp and the Bank for purposes of compensation decisions, the
Human Resources Committee considers a number of factors, including profits of
Bancorp and the Bank during the past year relative to their profit plans,
changes in the value of Bancorp's stock, reports of federal regulatory
examinations of Bancorp and the Bank, growth, business plans for future periods,
and regulatory capital levels. The Human Resources Committee assesses individual
executive performance based upon the executive's responsibilities and the
Committee's determination of the executive's contributions to the performance of
Bancorp and the accomplishment of Bancorp's strategic goals. In assessing
performance for purposes of establishing base salaries, the members of the
Committee do not make use of a mechanical formula, but instead weigh the factors
described above as they deem appropriate in the circumstances. The 1997 salary
levels of Bancorp's executive officers were established consistent with this
compensation policy.
Mr. Hollar became Chief Executive Officer of Bancorp and the Bank effective
January 1, 1994. During 1997, the level of Mr. Hollar's annual salary was
subject to the terms of employment agreements with Bancorp and the Bank,
including the Agreement (the "Current Agreement") effective January 30, 1997.
Under these agreements, Mr. Hollar's annual salary is reviewed annually and is
subject to increase at the discretion of the Board of Directors.
The Committee conducted a review of executive officer base compensation in
March 1997. Changes in base compensation for 1997 were effective on April 1. In
its review, the Committee determined that the performance of Mr. Hollar was
excellent, based upon the 1996 financial performance of Bancorp, including the
growth in assets, income, and capitalization during 1996; the financial
performance trends for 1996 and the preceding four years, which include growth
in assets, net operating income, and stockholders equity in each year; the
results of confidential regulatory examinations; Bancorp's planned levels of
financial performance for 1997; Mr. Hollar's continued involvement in community
affairs in the communities served by Bancorp; and a general level of
satisfaction with the management of Bancorp and its subsidiaries. As a result of
this review, which included a comparison of Mr. Hollar's compensation with
compensation paid to officers of comparable institutions, Mr. Hollar's salary
was increased by $19,000 to $209,000.
Executive officers of Bancorp and the Bank have been granted incentive
stock options under Bancorp's Stock Option Plans. The purposes of the Stock
Option Plans are to attract, retain and motivate key officers of Bancorp and the
Bank by providing them with a stake in the success of Bancorp as measured by the
value of its shares. Options are granted at exercise prices equal to the fair
market value of the shares on the dates of grant. The Stock Option Committee,
which consists of the disinterested directors of Bancorp, has general
responsibility for
12
granting stock options to key employees and administering the plans. The Human
Resources Committee recommends to the Stock Option Committee the recipients and
the amounts and other terms of options to be granted. During 1997, incentive
stock options for 44,000 shares were granted at an exercise price of $24.63 per
share, including options for 6,000 shares granted to Mr. Hollar and 3,000 shares
each granted to Mr. Langmead, Mr. Lewis, Mr. Merson and Mr. Small. (Numbers of
shares of the exercise price have been adjusted to reflect the 2-for-1 stock
split declared on January 28, 1998.)
The Human Resources Committee recommends to the Board of Directors the
amount to be contributed each year to the Bank's Cash and Deferred Profit
Sharing Plan. Under this Plan, each participant receives an allocation based
upon the participant's compensation for the year. Each executive officer of
Bancorp participates in the Plan. In 1995, the Human Resources Committee adopted
a formula to establish the amount of aggregate contribution to the profit
sharing plan. This formula uses measures of loan and deposit growth,
profitability, asset quality, and productivity ratios compared with those
measures for the prior year and target levels established for the Bank. For
1997, the Human Resources Committee recommended, and the Board of Directors of
the Bank approved, an aggregate contribution of approximately $502,000 or 4.31%
of annual compensation of eligible participants, which was based upon the
results of the formula.
The Bank also awards quarterly cash bonuses to participants, including
executive officers, based upon the performance of the Bank or business units,
and annual bonuses for executive officers based solely on Bank performance, in
each case using the formula described above. Performance bonuses of $31,658,
$17,443, $17,227, $16,244 and $15,380 were awarded to Mr. Hollar, Mr. Langmead,
Mr. Lewis, Mr. Merson and Mr. Small, respectively, in 1997.
No member of the Human Resources Committee is a former or current officer
or employee of Bancorp or the Bank.
March 6, 1998 HUMAN RESOURCES COMMITTEE
Robert L. Orndorff, Jr., Chairman
John Chirtea
Susan D. Goff
Charles F. Mess
Robert L. Mitchell
W. Drew Stabler
13
STOCK PERFORMANCE COMPARISONS
The following graph and table show the cumulative total return on the
Common Stock of Bancorp over the last five years, compared with the cumulative
total return of the NASDAQ Stock Market Index (U.S. Companies) and the NASDAQ
Bank Stock Index of banks and bank holding companies over the same period.
Cumulative total return on the stock or the index equals the total increase in
value since December 31, 1992, assuming reinvestment of all dividends paid into
the stock or the index, respectively. The graph and table were prepared assuming
that $100 was invested on December 31, 1992 in the Common Stock and the
securities included in the indexes.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
DECEMBER 31, 1992 THROUGH DECEMBER 31, 1997
[PERFORMANCE GRAPH]
- ----------------------------------------------------------------------------------- ----------
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 1992 through December 31, 1997
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ -----
Bancorp $100.0 $123.8 $134.8 $196.6 $183.7 $294.0
NASDAQ Stock Market Index 100.0 114.8 112.2 158.7 195.2 239.5
(U.S. Companies)
NASDAQ Bank Stock Index 100.0 114.0 113.6 169.2 223.6 337.4
- -------------------------------- --------- --------- -------- ---------- ---------- ----------
14
TRANSACTIONS AND RELATIONSHIPS WITH MANAGEMENT
Bancorp and the Bank have had in the past, and expect to have in the
future, banking transactions with directors and executive officers in the
ordinary course of business on substantially the same terms, including interest
rates and collateral on loans, as those prevailing at the same time for
comparable transactions with other persons. In the opinion of management, these
transactions do not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
Director Susan D. Goff is President of M.D. IPA, one of three health
insurance providers that employees of the Bank and Bancorp were able to select
under the Company's health insurance plan prior to January 1, 1998.
Director Lewis R. Schumann is a partner in the law firm of Miller, Miller
and Canby, Chtd., which Bancorp and the Bank have retained during 1997 and
expect to retain during the current year as corporate counsel. The law firm
provides legal services on matters such as routine litigation, personnel
policies and practices, customer account forms and issues and Bank properties.
SHAREHOLDER PROPOSALS
From time to time, individual shareholders may wish to submit proposals
which they believe should be voted upon by the shareholders. The Securities and
Exchange Commission has adopted regulations that govern the inclusion of such
proposals in Bancorp's annual proxy materials. Shareholder proposals intended to
be presented at the 1999 Annual Meeting of Shareholders must be received by
Bancorp at its executive offices not later than November 22, 1998, in order to
be eligible for inclusion in Bancorp's proxy materials for that Annual Meeting.
In addition, Bancorp's Bylaws require that to be properly brought before an
annual meeting, shareholder proposals for new business must be delivered to or
mailed and received by Bancorp not less than 30 nor more than 90 days prior to
the date of the meeting; provided, however, that if less than 45 days notice of
the date of the meeting is given to shareholders, such notice by a shareholder
must be received not later than the 15th day following the date on which notice
of the date of the meeting was mailed to shareholders or two days before the
date of the meeting, whichever is earlier. Each such notice given by a
shareholder must set forth certain information specified in the Bylaws
concerning the shareholder and the business proposed to be brought before the
meeting.
Shareholders may also nominate candidates for director, provided that such
nominations are made in writing and received by Bancorp at its executive offices
not later than December 22, 1998. The nomination should be sent to the attention
of Bancorp's Corporate Secretary and must include, concerning the director
nominee, the following information: full name, age, date of birth, educational
background and business experience, including positions held for at least the
preceding five years, home and office addresses and telephone numbers, and
signed a representation to timely provide all information requested by Bancorp
for preparation of its disclosures regarding the solicitation of proxies for
election of directors. The name of each such candidate for director must be
placed in nomination at the Annual Meeting by a shareholder present in person.
The nominee must also be present in person at the Annual Meeting. A vote for a
person who has not been duly nominated pursuant to these requirements will be
deemed to be void.
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp's
executive officers and directors, and persons who own more than ten percent of a
registered class of Bancorp's equity securities, to file reports of ownership
and changes in ownership on Forms 3, 4, and 5 with the Securities and Exchange
Commission. Executive officers, directors and greater than ten percent
stockholders are required by applicable regulations to furnish Bancorp with
copies of all Forms 3, 4, and 5 they file.
15
Based solely on Bancorp's review of the copies of such forms it has
received and written representations from certain reporting persons, Bancorp
believes that all its executive officers and directors complied with all filing
requirements applicable to them with respect to transactions during 1997 other
than as stated below, and that there are no stockholders that own beneficially
more than 10% of the shares of Bancorp's Common Stock. Charles F. Mess, MD, a
director of Bancorp, did not file a Form 4 to report one transaction within the
prescribed time. This transaction was effected by others in Bancorp stock held
by a retirement plan in which this director has a beneficial interest. Dr. Mess
was not aware that this transaction had occurred until after the date for filing
had passed.
INDEPENDENT AUDITORS
The Board of Directors anticipates the selection of Stegman & Company,
certified public accountants, to audit the books and accounts of Bancorp for the
year ending December 31, 1998. Stegman & Company has served as independent
auditors for Bancorp and its subsidiary and predecessor, Sandy Spring National
Bank of Maryland, without interruption for many years. Stegman & Company has
advised Bancorp that neither the accounting firm nor any of its members or
associates has any direct financial interest in or any connection with Bancorp
and its subsidiaries other than as independent public auditors. A representative
of Stegman & Company will be present at the Annual Meeting, will have the
opportunity to make a statement, and will also be available to respond to
appropriate questions.
ACTION WITH RESPECT TO REPORTS
Action taken at the Annual Meeting to approve the minutes of the 1997
Annual Meeting of Shareholders does not constitute approval or disapproval of
any of the matters referred to in those minutes.
By order of the Board of Directors
/S/ MARJORIE S. HOLSINGER
Marjorie S. Holsinger
Corporate Secretary
Dated: March 20, 1998
16
REVOCABLE PROXY
SANDY SPRING BANCORP, INC.
- --------------------------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1998
- --------------------------------------------------------------------------------
The undersigned hereby constitutes and appoints John Chirtea and Thomas O.
Keech and each of them the proxies of the undersigned, with full power of
substitution, to attend the annual meeting of shareholders (the "Annual
Meeting") of Sandy Spring Bancorp, Inc. ("Bancorp") to be held at the Indian
Spring Country Club, 13501 Layhill Road, Silver Spring, Maryland on Wednesday,
April 15, 1998 at 3:00 p.m. Eastern Time, or at any adjournment thereof, and to
vote all the shares of stock of Bancorp which the undersigned may be entitled to
vote, upon the following matters:
FOR WITHHOLD
I. The election as directors of all nominees
listed below (except as marked to the +-+ +-+
contrary below). +-+ +-+
Solomon Graham
Gilbert L. Hardesty
Charles F. Mess
Lewis R. Schumann
W. Drew Stabler
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, PRINT THE NOMINEE'S NAME ON THE LINE BELOW.
II. The transaction of such other business as may properly come before the
Annual Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL DIRECTOR
NOMINEES AS SHOWN IN ITEM I.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN. IF
NO INSTRUCTIONS TO THE CONTRARY ARE MARKED HEREIN, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF DIRECTORS AND AS DETERMINED BY A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder hereby acknowledges receipt of a copy of the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement and
hereby revokes any proxy or proxies previously given. This proxy may be revoked
at any time prior to its exercise.
---------------------------------------------
Signature Date
---------------------------------------------
Signature Date
---------------------------------------------
Signature Date
Please sign exactly as your name appears above. When signing as attorney,
executor, administrator, trustee or guardian, etc., please give your full title.
If the shareholder is a corporation, please provide the full name of the
corporation and the name and title of the signing, duly appointed officer. If
shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.