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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-23402
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COLUMBIA BANCORP
(Exact name of registrant as specified in its charter)
Maryland 52-1545782
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10480 Little Patuxent Parkway 21044
Columbia, Maryland (zip code)
(Address of principal executive offices)
410-465-4800
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
(Title of class)
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [_].
[cover page 1 of 2 pages]
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State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within 60 days prior
to the date of this filing.
Common Stock, par value $0.01 per share:
Market value held by non-affiliates based on
the closing sales price at March 21, 2002.... $100,993,843
State the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Common Stock, par value $0.01 per share:
Shares outstanding at March 21, 2002.......... 7,097,111
Documents Incorporated by Reference:
Portions of Annual Report to Stockholders for Fiscal Year Ended December
31, 2001, incorporated by reference into Part II.
Portions of Definitive Proxy Statement dated April 17, 2002, incorporated
by reference into Part III.
[cover page 2]
2
TABLE OF CONTENTS
PART I
Page
----
Item 1--Business.................................................................................... 4
Item 2--Properties.................................................................................. 12
Item 3--Legal Proceedings........................................................................... 14
Item 4--Submission of Matters to a Vote of Stockholders............................................. 14
PART II
Item 5--Market for Common Stock and Related Stockholder Matters..................................... 15
Item 6--Selected Financial Data|.................................................................... 15
Item 7--Management's Discussion and Analysis of Financial Condition and Results of Operations....... 15
Item 7a--Quantitative and Qualitative Disclosures About Market Risk................................. 15
Item 8--Financial Statements and Supplementary Data................................................. 15
Columbia Bancorp and Subsidiary:
Independent Auditors' Report...........................................................
Consolidated Statements of Condition as of December 31, 2001 and 2000..................
Consolidated Statements of Income and Comprehensive Income for the years ended
December 31, 2001, 2000, and 1999....................................................
Consolidated Statements of Stockholders' Equity for the years ended December 31,
2001, 2000, and 1999.................................................................
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000,
and 1999.............................................................................
Notes to Consolidated Financial Statements.............................................
Item 9--Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........ 15
PART III
Item 10--Directors and Executive Officers of the Registrant......................................... 16
Item 11--Executive Compensation..................................................................... 17
Item 12--Security Ownership of Certain Beneficial Owners and Management............................. 17
Item 13--Certain Relationships and Related Transactions............................................. 17
PART IV
Item 14--Exhibits, Financial Statement Schedules and Reports on Form 8-K............................ 18
Signatures.......................................................................................... 23
3
PART I
ITEM 1. BUSINESS
General
Columbia Bancorp (the "Company"), a bank holding company, was incorporated in
November, 1987 under the laws of Maryland and registered under the Bank Holding
Company Act of 1956, as amended. The Columbia Bank (the "Bank") was organized by
the Company as a Maryland trust company and commenced operations in May, 1988.
The Bank currently accounts for substantially all of the Company's assets. The
deposits of the Bank are insured by the Federal Deposit Insurance Corporation
("FDIC"). The Bank is headquartered in Columbia, Maryland and as of December 31,
2001 had a total of twenty-two branch locations in Maryland with nine branch
locations in Howard County; four branch locations in Baltimore County; two
branch locations in Baltimore City; four branch locations in Prince George's
County; and three branch locations in Montgomery County. The Bank also has
mortgage and commercial loan origination offices in Howard, Baltimore, Prince
George's and Montgomery Counties, Maryland. Wholly-owned subsidiaries of the
Bank include McAlpine Enterprises, Inc., Howard I, LLC and Howard II, LLC, which
are used primarily to manage properties acquired through foreclosure, and
Columbia Leasing, Inc., which is a commercial leasing company. At December 31,
2001, the Company had total assets of $849.6 million, total loans, net of
unearned income, of $602.1 million, total deposits of $638.0 million and
stockholders' equity of $69.4 million.
On March 8, 2000, the Company completed the merger of Suburban Bancshares,
Inc. ("Suburban") with and into the Company and the merger of Suburban Bank of
Maryland with and into the Bank. As a result of the merger, each share of the
outstanding common stock of Suburban was converted into .2338 shares of the
Company's common stock, resulting in the issuance of 2,641,705 shares. The
merger was accounted for using the pooling-of-interests method and,
accordingly, the Company's consolidated financial statements for all periods
prior to the merger have been restated to include the accounts of Suburban. The
following chart presents selected financial data previously reported by the
Company and Suburban and the combined amounts presented in the statements of
condition as of December 31 and the statements of income and comprehensive
income for the year ended December 31, 1999.
(Dollars in thousands)
Assets
Company................... $467,711
Suburban.................. 220,319
--------
$688,030
Loans, net of unearned income
Company................... $315,507
Suburban.................. 133,718
--------
$449,225
Deposits
Company................... $367,498
Suburban.................. 183,862
--------
$551,360
Net interest income
Company................... $ 21,361
Suburban.................. 8,002
--------
$ 29,363
Net income
Company................... 5,215
Suburban.................. 670
--------
$ 5,885
4
Merger-related expenses of $2.3 million were included in the consolidated
statement of income and comprehensive income for the year ended December 31,
2000 and consisted of $664,000 for systems conversion costs, $510,000 for
professional fees, $481,000 for contract termination fees, $49,000 for
severance payments to terminated employees and $566,000 for other expenses.
The Bank is an independent, community bank that seeks to provide personal
attention and professional financial services to its customers while offering
virtually all of the banking services of larger competitors. These customers
are primarily individuals and small- and medium-sized businesses. The Bank's
business philosophy includes offering informed and courteous service, local and
timely decision-making, flexible and reasonable operating procedures and
consistently-applied credit policies.
The executive offices of the Company and the principal office of the Bank
are located at 10480 Little Patuxent Parkway, Columbia, Maryland 21044,
telephone number (410) 465-4800.
Services of the Bank
The Bank provides comprehensive and service-intensive commercial and retail
banking services to individuals and small- and medium-sized businesses. The
following types of services are offered by the Bank:
Commercial Services:
. Loans, including working capital loans and lines of credit, a wide range
of demand, term, and time loans, loans for real estate acquisition,
development and construction and equipment, inventory and accounts
receivable financing. Also, the Bank is a Preferred SBA lender.
. Lease financing.
. Cash management, including automatic overnight investment of funds.
. Certificates of deposit and other interest-bearing accounts.
. Direct deposit of payroll.
. Letters of credit.
Retail Services:
. Transaction accounts, including checking and NOW accounts.
. Savings accounts.
. Certificates of deposit.
. Individual retirement accounts.
. 24-hour automated teller machines with access to major network systems.
. 24-hour telephone banking.
. PC-Banking.
. Internet Banking.
. Installment and home equity loans and lines of credit.
. Residential construction and first mortgage loans.
. VISA(R) credit and debit cards.
. Travelers checks, money orders and safe deposit boxes.
. Investment services.
5
The Bank does not now exercise general trust powers.
Lending Activities
General. At December 31, 2001, the Company's loan portfolio, net of
unearned income, totaled $602.1 million, representing approximately 70.9% of
its total assets of $849.6 million. The categories of loans in the Company's
portfolio are commercial, including lease receivables, real estate development
and construction, residential real estate mortgage, commercial real estate
mortgage and consumer.
Loan Portfolio Composition. The following table sets forth the Company's
loans by major categories as of December 31, 2001:
Amount Percent
-------- -------
(dollars in thousands)
Commercial, including leases................ $153,782 25.5%
Real estate--development and construction(1) 174,091 28.9
Real estate--mortgage:
Residential.............................. 15,648 2.6
Commercial............................... 109,975 18.2
Consumer:
Retail(2)................................ 146,379 24.3
Credit card.............................. 2,389 .4
Other....................................... 463 .1
-------- -----
Total....................................... $602,727 100.0%
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(1) At December 31, 2001, loans to individuals for the purchase of residential
building lots and the construction of primary personal residences
represented $26.7 million.
(2) Includes $129.4 million in retail loans secured by the borrowers' principal
residences in the form of second mortgages and home equity lines of credit.
Commercial Loans and Lease Receivables. The Company originates secured and
unsecured loans and leases for business purposes. Commercial business loans are
made to provide working capital to businesses generally in the form of lines of
credit which may be secured by real estate, accounts receivable, inventory,
equipment or other assets. At December 31, 2001, $153.8 million or 25.5% of the
Company's total loan portfolio consisted of commercial business loans. The
financial condition and cash flow of commercial borrowers are closely monitored
by the submission of corporate financial statements, personal financial
statements and income tax returns. The frequency of submissions of required
information depends upon the size and complexity of the credit and the
collateral that secures the loan. It is also the Company's general policy to
obtain personal guarantees from the principals of the commercial loan borrowers.
Real Estate Development and Construction Loans. Real estate development and
construction loans consisted of the following at December 31, 2001:
Amount Percent
-------- -------
(dollars in thousands)
Residential construction(1). $ 60,836 35.0%
Residential land development 60,465 34.7
Commercial construction..... 29,602 17.0
Land acquisition(2)......... 23,188 13.3
-------- -----
$174,091 100.0%
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- --------
(1) Includes $22.9 million of loans to individuals for construction of primary
personal residences.
6
(2) Includes $3.9 million of loans to individuals for the purchase of
residential building lots, $8.0 million of loans for the acquisition of
property zoned for residential development, and $11.3 million of loans for
the acquisition of property zoned for commercial development.
The Company makes residential real estate development and construction loans
generally to provide interim financing on property during the development and
construction period. Borrowers include builders, developers and persons who
will ultimately occupy the single-family dwelling. Residential real estate
development and construction loan funds are disbursed periodically as
pre-specified stages of completion are attained based upon site inspections.
Interest rates on these loans are usually adjustable.
Residential construction loans constitute the largest component of the real
estate development and construction loan portfolio, representing primarily
loans for the construction of single family dwellings. At December 31, 2001,
loans to individuals for the construction of primary personal residences
accounted for $22.9 million of the $60.8 million residential construction
portfolio. These loans are typically secured by the property under
construction, frequently include additional collateral (such as a second
mortgage on the borrower's present home), and commonly have maturities of six
to twelve months. The remaining $41.9 million of residential construction loans
represented loans to residential builders. Approximately 68% of the units under
construction were for the construction of residential homes for which a binding
sales contract existed and the prospective buyers had been pre-qualified for
permanent mortgage financing by either third-party lenders (mortgage companies
or other financial institutions) or the Company. To date, permanent mortgage
loan financing has primarily been provided by third-party lenders. The Company
attempts to obtain the permanent mortgage loan under terms, conditions and
documentation standards that permit the sale of the mortgage loan in the
secondary mortgage loan market. The Company's practice is to immediately sell
substantially all residential mortgage loans in the secondary market with
servicing released.
Loans for the development of residential land represented the second largest
component of the real estate development and construction loan portfolio at
December 31, 2001, totaling $60.5 million or 34.7% of the portfolio. Generally,
development loans are extended when evidence is provided that the lots under
development will be or have been sold to builders satisfactory to the Company.
These loans are generally extended for a period of time sufficient to allow for
the clearing and grading of the land and the installation of water, sewer and
roads, typically a minimum of eighteen months to three years. In addition,
residential land development loans generally carry a loan to value ratio not to
exceed 75% of the value of the project as completed.
The Company also makes commercial construction loans which totaled $29.6
million, or 17.0% of the portfolio at December 31, 2001. These loans are
generally extended to borrowers who are experienced in the field and who
possess adequate financial resources in relation to their commitments and
obligations. The underwriting process is designed to confirm that the project
will be economically feasible and financially viable; it is generally evaluated
as though the Company will provide permanent financing. The Company's portfolio
growth objectives do not include speculative commercial construction projects
or projects lacking reasonable proportionate sharing of risk.
The Company has limited loan losses in this area of lending through
monitoring of development and construction loans with on-site inspections and
control of disbursements on loans in process. Development and construction
loans are secured by the properties under development or construction and
personal guarantees are typically obtained. Further, to assure that reliance is
not placed solely upon the value of the underlying collateral, the Company
considers the financial condition and reputation of the borrower and any
guarantors, the amount of the borrower's equity in the project, independent
appraisals, cost estimates and pre-construction sales information.
Residential Real Estate Mortgage Loans. The Company originates adjustable
and fixed-rate residential mortgage loans in order to provide a full range of
products to its customers. Such mortgage loans are generally originated under
terms, conditions and documentation that permit their sale in the secondary
mortgage market.
7
The Company's practice is to immediately sell substantially all residential
mortgage loans in the secondary market with servicing released. At December 31,
2001, $15.6 million or 2.6% of the Company's total loan portfolio consisted of
residential mortgage loans.
For any loans retained by the Company, title insurance insuring the priority
of its mortgage lien, as well as fire and extended coverage casualty insurance
protecting the properties securing the loans are required. Borrowers may be
required to advance funds, with each monthly payment of principal and interest,
to a loan escrow account from which the Company makes disbursements for items
such as real estate taxes, hazard insurance premiums and mortgage insurance
premiums. Appraisers approved by the Company appraise the properties securing
all of the Company's residential mortgage loans.
Commercial Real Estate Mortgage Loans. The Company also originates mortgage
loans secured by commercial real estate. At December 31, 2001, $110.0 million
or 18.2% of the Company's total loan portfolio consisted of commercial mortgage
loans. Such loans are primarily secured by office condominiums, retail
buildings, warehouse and general-purpose business space. Although terms and
amortization periods vary, the Company's commercial mortgages generally have
maturities or repricing opportunities of five years or less.
The Company seeks to reduce the risks associated with commercial mortgage
lending by generally lending in its market area, using conservative
loan-to-value ratios and obtaining periodic financial statements and tax
returns from borrowers to perform annual loan reviews. It is also the Company's
general policy to obtain personal guarantees from the principals of the
borrowers and to underwrite the business entity from a cash flow perspective.
Consumer Loans. At December 31, 2001, $148.8 million or 24.7% of the
Company's total loan portfolio consisted of consumer loans. The Company offers
a variety of consumer loans in order to provide a full range of financial
services to its customers; however, outstanding balances are primarily
concentrated in second mortgage and home equity loans, which totaled $70.5
million and $58.9 million, respectively, at December 31, 2001.
Home equity loans and lines of credit are originated by the Company for
typically up to 90% of the appraised value, less the amount of any existing
prior liens on the property. Home equity loans have maximum terms of fifteen to
thirty years and the interest rates are generally adjustable. The Company
secures these loans with mortgages on the homes (typically a second mortgage).
The second mortgage loans originated by the Company have maximum terms ranging
from ten to thirty years. They generally carry a fixed rate of interest for the
entire term or a fixed rate of interest for the first five years, repricing
every five years thereafter at a predetermined spread to the prime rate of
interest.
Other Loans. At December 31, 2001, other loans totaled $463,000, consisting
of unscheduled overdrafts of the Company's retail and commercial customers.
Competition
While promotional activities emphasize the many advantages of dealing with a
locally-run institution closely attuned to the needs of its community, the
Company faces strong competition in all areas of its operations. This
competition comes from entities operating in the Baltimore/Washington
metropolitan area, which includes offices of most banks operating in Maryland.
Its most direct competition for deposits comes from other commercial banks,
savings banks, savings and loan associations and credit unions operating in the
Baltimore/Washington marketplace. The Company also competes for deposits with
money market mutual funds and with larger banks for cash management customers.
The Company competes with banking entities, mortgage banking companies, and
other institutional lenders for loans. The competition for loans varies from
time to time depending on certain factors. These factors include, among others,
the general availability of lendable funds and credit, general and local
economic conditions, current interest rate levels, conditions in the mortgage
market and other factors that are not readily predictable.
8
Interstate Banking
Adequately capitalized bank holding companies, such as the Company, may
acquire control of banks in any state, although states may limit the
eligibility of banks to be acquired to those in existence for a period of time
but no longer than five years. No bank holding company may acquire more than
10% of the nationwide insured deposits or more than 30% of deposits in any
state; however, states may waive the 30% limit. In addition, since June 1,
1997, banks have been permitted to branch across state lines either by merging
with banks in other states or by establishing new branches in other states. The
date relating to interstate branching through mergers may be accelerated by any
state, and such mergers may be prohibited by any state. The provision relating
to establishing new branches in another state requires a state's specific
approval. Maryland law permits interstate branching both by mergers and
establishing new branches.
Supervision and Regulation
Bank Holding Company Regulations. Bank holding companies and banks are
extensively regulated under both federal and state law. These laws and
regulations are intended primarily to protect depositors and not stockholders.
To the extent that the following information describes statutory and regulatory
provisions, it is qualified in its entirety by reference to the particular
statutory and regulatory provisions. Any change in the applicable law or
regulation may have a material effect on the business and prospects of the
Company and the Bank.
The Company is a registered bank holding company subject to regulation and
examination by the Federal Reserve Board under the Bank Holding Company Act of
1956, as amended (the "Act"). The Company is required to file with the Federal
Reserve Board quarterly and annual reports and any additional information that
may be required under the Act. The Act also requires every bank holding company
to obtain the prior approval of the Federal Reserve Board before (i) acquiring
all or substantially all of the assets of, or direct or indirect ownership or
control of, more than 5% of the outstanding voting stock of any bank which is
not already majority owned, or (ii) acquiring, or, merging or consolidating
with, any other bank holding company. The Federal Reserve Board will not
approve any acquisition, merger, or consolidation that would have a
substantially anti-competitive effect, unless the anti-competitive impact of
the proposed transaction is clearly outweighed by a greater public interest in
meeting the convenience and needs of the community to be served. The Federal
Reserve Board also considers capital adequacy and other financial and
managerial resources and future prospects of the companies and the banks
concerned, together with the convenience and needs of the community to be
served, when reviewing acquisitions, mergers or consolidations. The Act further
provides that the Federal Reserve Board shall not approve any such acquisition
of control of any bank operating outside the bank holding company's principal
state of operations, unless such action is specifically authorized by the
statutes of the state in which the bank to be acquired is located.
Additionally, the Act prohibits a bank holding company, with certain limited
exceptions, from (i) acquiring or retaining direct or indirect ownership or
control of more than 5% of the outstanding voting stock of any company which is
not a bank or bank holding company, or (ii) engaging directly or indirectly in
activities other than those of banking, managing or controlling banks, or
performing services for its subsidiaries unless such non-banking business is
determined by the Federal Reserve Board to be so closely related to banking or
managing or controlling banks as to be properly incident thereto. In making
such determination, the Federal Reserve Board is required to weigh the expected
benefits to the public, such as greater convenience, increased competition or
gains in efficiency, against the possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of
interest, or unsound banking practices.
The Federal Reserve Board has adopted risk-based capital guidelines for bank
holding companies, designed to make regulatory capital requirements more
sensitive to differences in risk profile among banks and bank holding
companies, to account for off-balance-sheet exposure and to minimize
disincentives for holding liquid assets. Under these guidelines, assets and
off-balance-sheet items are assigned to broad risk categories. Failure to meet
the capital guidelines could subject a banking institution to a variety of
enforcement remedies available to federal regulatory authorities.
9
Bank holding companies currently are required to maintain a minimum ratio of
total capital to risk-weighted assets (including certain off-balance-sheet
activities, such as standby letters of credit) of 8.0%. At least half of the
total capital is required to be "Tier 1 capital," consisting of common equity,
retained earnings and a limited amount of perpetual preferred stock, after
subtracting goodwill and certain other intangible assets and making various
other adjustments. The remainder ("Tier 2 capital") may consist of (a) the
allowance for loan losses of up to 1.25% of risk-weighted assets, (b)
qualifying perpetual preferred stock that does not qualify as Tier 1 capital
(c) hybrid capital instruments, (d) perpetual debt, (e) mandatory convertible
debt securities, and (f) a limited amount of subordinated debt and
intermediate-term preferred stock up to 50% of Tier 1 capital. The maximum
amount of supplementary capital elements that qualifies as Tier 2 capital is
limited to 100% of Tier 1 capital net of goodwill and certain other intangible
assets. Total capital is the sum of Tier 1 and Tier 2 capital less reciprocal
holdings of other banking organizations' capital instruments, investments in
unconsolidated subsidiaries and any other deductions as determined by the
Federal Reserve Board (determined on a case by case basis or as a matter of
policy after formal rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50% and 100%.
In addition, certain off-balance-sheet items are given similar credit
conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets. Most loans will be assigned to the 100% risk category,
except for performing first mortgage loans fully secured by certain residential
property, which carry a 50% risk rating. Most investment securities (including,
primarily, general obligation claims on states or other political subdivisions
of the United States) will be assigned to the 20% category, except for
municipal or state revenue bonds, which have a 50% risk-weight, and direct
obligations of the U.S. Treasury or obligations backed by the full faith and
credit of the U.S. Government, which have a 0% risk-weight. In converting
off-balance-sheet items, direct credit substitutes including general guarantees
and standby letters of credit backing financial obligations, are given a 100%
conversion factor. Transaction related contingencies such as bid bonds, standby
letters of credit backing non-financial obligations and commitments (including
commercial credit lines) with an initial maturity of more than one year have a
50% conversion factor. Short-term commercial letters of credit are converted at
20% and certain short-term or unconditionally cancelable commitments have a 0%
factor.
As of December 31, 2001 and 2000, the Company's total risk-based capital
ratios were 11.1% and 11.6%, respectively, and its Tier 1 risk-based capital
ratios were 9.9% and 10.5%, respectively. In addition to the risk-based capital
guidelines, the Federal Reserve Board has adopted a minimum Tier 1 leverage
ratio, under which a bank holding company that has the highest regulatory
examination rating and is not contemplating significant growth or expansion
must maintain a minimum level of Tier 1 capital to average total consolidated
assets of at least 4.0%. All other bank holding companies are expected to
maintain a Tier 1 leverage ratio of at least 1.0% to 2.0% above the stated
minimum. The Tier 1 leverage ratio assists in the assessment of the capital
adequacy of bank holding companies. Its principal objective is to place a
constraint on the maximum degree to which a banking organization can leverage
its equity capital base, even if it invests primarily in assets with low
risk-weights. As of both December 31, 2001 and 2000, the Company's Tier 1
leverage ratio was 8.4%.
The capital adequacy guidelines explicitly include a bank's exposure to
declines in the economic value of its capital due to changes in interest rates
as a factor that the banking agencies will consider in evaluating a bank's
capital adequacy. While the capital guidelines do not codify a measurement
framework for assessing the level of a bank's interest rate exposure, the
measurement of interest rate exposure using either a supervisory model,
developed by the federal bank agencies, or the bank's own internal model is a
quantitative factor, among other quantitative and qualitative factors,
available for use by examiners in determining the adequacy of an individual
bank's capital for interest rate risk. Other quantitative factors include the
bank's historical financial performance and its earnings exposure to interest
rate movements. Qualitative factors include the adequacy of the bank's internal
interest rate management. Establishment of an explicit supervisory threshold,
defining a "normal" level of interest rate risk exposure is expected at some
future date.
Bank Regulations. The Bank is a state-chartered bank subject to
supervision, regulation and examination by the Maryland Commissioner of
Financial Regulation and by the FDIC under the Federal Deposit Insurance Act.
Deposits, reserves, investments, loans, consumer law compliance, issuance of
securities, payment of
10
dividends, establishment and closing of branches, mergers and consolidations,
changes in control, electronic funds transfer, community reinvestment,
management practices and other aspects of operations are subject to regulation
by the appropriate federal and state regulatory agencies. The Bank is also
subject to various regulatory requirements of the Federal Reserve Board
applicable to FDIC-insured banks, including disclosure requirements in
connection with personal and mortgage loans, interest on deposits and reserve
requirements. In addition, the Bank is subject to numerous federal, state and
local laws and regulations which set forth specific restrictions and procedural
requirements with respect to the extension of credit, credit practices, the
disclosure of credit terms and discrimination in credit transactions. Federal
regulatory agencies have broad powers to take prompt corrective action to
resolve problems at banking institutions, including (in certain cases) the
appointment of a conservator or receiver. The extent of these powers is
generally influenced by the level of capital at the institution.
The Bank is assessed by the FDIC with respect to its deposit insurance. As a
result of the acquisition of Fairview Federal Savings and Loan Association
("Fairview") in June 1992, approximately $166.5 million or 27.5% of the Bank's
average assessable deposit base is insured by the Savings Association Insurance
Fund (the "SAIF"). The remainder of the Bank's average assessable deposit base
is insured by the Bank Insurance Fund (the "BIF"). As of December 31, 2001, the
Company's FDIC insurance premium was 1.82 cents per $100 of both BIF and SAIF
deposits.
In the liquidation or other resolution by any receiver of a bank insured by
the FDIC, the claims of depositors have priority over the general claims of
other creditors. Hence, in the event of the liquidation or other resolution of
a banking subsidiary of the Company, the general claims of the Company as
creditor of such banking subsidiary would be subordinate to the claims of the
depositors of such banking subsidiary, even if the claims of the Company were
not by their terms so subordinated.
As a consequence of the extensive regulation of the commercial banking
business in the United States, the business of the Company and the Bank are
particularly susceptible to changes in federal and state legislation and
regulations which may increase the cost of doing business.
Governmental Monetary Policies and Economic Controls
The Company is affected by monetary policies of regulatory agencies,
including the Federal Reserve Board, which regulates the national money supply
in order to mitigate recessionary and inflationary pressures. Among the
techniques available to the Federal Reserve Board are engaging in open market
transactions in the United States Government securities, changing the discount
rate on bank borrowings, changing reserve requirements against bank deposits,
prohibiting the payment of interest on demand deposits, and imposing conditions
on time and savings deposits. These techniques are used in varying combinations
to influence the overall growth of bank loans, investments and deposits. Their
use may also affect interest rates charged on loans or paid on deposits. The
effect of governmental policies on the earnings of the Company cannot be
predicted. However, the Company's earnings will be impacted by movement in
interest rates, as discussed in "Management's Discussion and Analysis--Market
Risk and Interest Rate Sensitivity" on pages 19 through 22 of the 2001 Annual
Report to Stockholders included in Exhibit 13.1 filed herewith.
Employees
At December 31, 2001, the Company and the Bank had 321 employees of whom 75
were officers, 265 were full-time employees and 56 were part-time employees.
The Company believes its employee relations are good.
11
ITEM 2. PROPERTIES
The Company owned the following properties at December 31, 2001, at a book
value of $5.9 million:
Location Description
-------- -----------
Ellicott City Administrative and
Administrative lending offices;
Office additional space
9171 Baltimore rented to third
National Pike parties
Ellicott City, producing $200,000
MD 21042 annual income.
Ellicott City Primary branch
9151 Baltimore location, including
National Pike additional
Ellicott City, administrative
MD 21042 offices.
Long Gate Full-service
4450 Long Gate branch; subject to
Parkway a
Ellicott City, ground lease
MD 21043 expiring February
2037,
assuming exercise
of options.
Timonium Full-service
67 West branch; subject to
Aylesbury Road a
Timonium, MD ground lease
21093 expiring October
2029,
assuming exercise
of options.
Columbia Town Detached
Center drive-through
10480 Little branch;
Patuxent subject to a
Parkway ground lease
Columbia, MD expiring May
21044 2013, assuming
exercise of
options.
River Hill Detached
6030 Daybreak drive-through
Circle branch;
Clarksville, MD subject to a
21029 ground lease
expiring
November 2017,
assuming exercise
of options.
Capitol Heights Full-service
8703 Central branch.
Avenue
Capitol
Heights, MD
20743
12
The Company leased the following facilities at December 31, 2001, at an
aggregate annual rental of $1.8 million, net of income from the Company's
sublease of a portion of the Columbia Town Center location:
Location Description Lease Expiration Date*
-------- ----------- ----------------------
Beltsville Full-service branch May 2021
10421Baltimore Boulevard
Beltsville,MD 20705
Bethesda Full-service branch and September 2006
7900 Wisconsin Avenue commercial lending office
Bethesda, MD 20814
Blakehurst Limited-service branch October 2003
1055 West Joppa Road
Towson, MD 21204
Clinton Full-service branch December 2008
7600 Old Branch Avenue
Clinton, MD 20735
Columbia Town Center Full-service branch and May 2013
10480 Little Patuxent Parkway commercial lending office
Columbia, MD 21044
Cross Keys Full-service branch November 2005
5100 Falls Road, Suite 96
Baltimore, MD 21210
Edenwald Limited-service branch December 2008
800 Southerly Road
Baltimore, MD 21286
Greenbelt Full-service branch and May 2006
7505 Greenway Center Drive commercial lending office
Greenbelt, MD 20768
Harmony Hall Limited-service branch November 2002
6336 Cedar Lane
Columbia, MD 21044
Harper's Choice Full-service branch March 2005
5485 Harper's Farm Road
Columbia, MD 21044
Heaver Plaza Full-service branch and February 2011
1301 York Road commercial lending office
Lutherville, MD 21093
Oakland Mills Full-service branch September 2023
5880 Robert Oliver Place
Columbia, MD 21045
River Hill Full-service branch November 2017
6030 Daybreak Circle
Clarkesville, MD 21029
Rockville Full-service branch November 2008
1903 Research Boulevard
Rockville, MD 20850
13
Location Description Lease Expiration Date*
-------- ----------- ----------------------
Roland Park Place Limited-service branch January 2007
830 West 40th Street
Baltimore, MD 21211
Sterrett Place Administrative offices May 2003
5585 Sterrett Place, Suite 100
Columbia, MD 21044
Vantage House Limited-service branch February 2006
5400 Vantage Point Road
Columbia, MD 21044
White Flint Full-service branch December 2007
11414 Rockville Pike
Rockville, MD 20852
Wilde Lake Full-service branch June 2012
10451 Twin Rivers Road
Columbia, MD 21044
- --------
* Expiration date, assuming all options to renew are exercised.
ITEM 3. LEGAL PROCEEDINGS
As reported in the Form 10-Q dated March 31, 2000, on April 7, 2000, the
Bank filed a class action interpleader lawsuit (The Columbia Bank vs. Network 1
Financial Corporation, et.al., Civil Action No. WMN-00-CV1002) in the United
States District Court for the District of Maryland, Northern Division (the
"Court") and deposited with the Court approximately $6.0 million (the "Fund").
The Fund was on deposit with the Bank as the result of a computer file (the
"File") sent through a computerized debit and credit system, known as the
Automated Clearing House (the "ACH"), on behalf of the originators of the File
(collectively, the "Originators of the File"). The interpleader lawsuit filed
by the Bank alleged, among other things, that the Originators of the File did
not have the authorization of the accountholders whose accounts were debited by
the File in accordance with the rules governing the ACH network and that the
Originators of the File were negligent in that they originated and processed an
unauthorized ACH file. The interpleader lawsuit seeks the Court's assistance in
determining the rights of the parties to the Fund, recovery of legal costs
incurred by the Bank and discharge of the Bank from any liability that may
arise from the File. The Originators of the File have filed counterclaims with
the Court under various theories including breach of contract and tortious
interference with contract and with prospective business relations. The
Originators of the File seek monetary damages ranging from $225,000 to $100
million in various counts under these theories.
As of this date, the parties to the interpleader lawsuit have entered into a
binding settlement agreement to settle the lawsuit. Under the agreement, the
Originators of the File will dismiss their claims, with prejudice, against the
Bank. The Bank will receive full reimbursement for refunds that it has paid to
persons who had their accounts debited and partial reimbursement for its
attorneys' fees and expenses. The agreement is contingent upon the completion
of a class action law suit in the Circuit Court of Baldwin County, Alabama,
which will serve as the mechanism to distribute the Fund to account holders
whose accounts were debited.
The Company is also party to legal actions which are routine and incidental
to its business. In management's opinion, the outcome of these matters,
individually or in the aggregate, will not have a material adverse impact on
the results of operations or financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
There were no matters submitted to a vote of the stockholders during the
quarter ended December 31, 2001.
14
PART II
ITEM 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required by this Item is set forth by reference to the
information appearing under the captions "Dividends and Common Stock" on page
45 and "Recent Common Stock Prices" on page 51 of the 2001 Annual Report to
Stockholders included in Exhibit 13.1 filed herewith.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item as to the Company is incorporated by
reference to the information appearing under the caption "Selected Financial
Highlights" on page 7 of the 2001 Annual Report to Stockholders included in
Exhibit 13.1 filed herewith.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item as to the Company is incorporated by
reference to the information appearing under the caption "Management's
Discussion and Analysis" on pages 8 through 24 of the 2001 Annual Report to
Stockholders included in Exhibit 13.1 filed herewith.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information regarding the market risk of the Company's financial
instruments, see "Management's Discussion and Analysis--Market Risk and
Interest Rate Sensitivity" on pages 19 through 22 of the 2001 Annual Report to
Stockholders included in Exhibit 13.1 filed herewith.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item as to the Company and the
Independent Auditors' Report thereon is incorporated by reference to the 2001
Annual Report to Stockholders included in Exhibit 13.1, pages 26 through 49,
filed herewith. The supplementary data required by this Item as to the Company
is incorporated by reference to the information appearing under the caption
"Selected Quarterly Financial Data" on page 50 of the 2001 Annual Report to
Stockholders included in Exhibit 13.1 filed herewith.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been neither changes in nor disagreements with accountants on
accounting and financial disclosure.
15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information with respect to Directors of the Company is incorporated by
reference to the Company's Proxy Statement for the 2002 Annual Meeting of
Stockholders included in Exhibit 99.1 filed herewith.
The following information is supplied with respect to Mr. Bond and to the
other executive officers of the Company and the Bank who do not serve on
the Board of Directors. Each such officer serves at the pleasure of the Board
and is appointed annually. Each person's principal occupation for at least the
past five years has been to serve as an officer of the Company and/or the Bank.
"Age" is that as of March 15, 2002.
Position with the
Name Age Company and the Bank
---- --- --------------------
John M. Bond, Jr..... 58 President and Chief Executive Officer of the
Company and the Bank and Treasurer of
the Company
Michael T. Galeone... 53 Executive Vice President of the Bank.
Stephen A. Horvath... 52 Executive Vice President of the Bank
Adelbert D. Karfonta. 56 Executive Vice President of the Bank
Robert W. Locke...... 56 Executive Vice President of the Bank.
Scott C. Nicholson... 40 Executive Vice President of the Bank
John A. Scaldara, Jr. 38 Executive Vice President, Chief Financial
Officer and Secretary of the Company and
the Bank.
Mr. Bond has over 29 years of experience in the banking industry, holding
senior positions with the Bank, Chase Bank of Maryland and The First National
Bank of Maryland. Prior to returning to Maryland in 1978, Mr. Bond was a Vice
President with Citibank, N.A. in New York and a consultant with McKinsey &
Company. Mr. Bond is an active volunteer in his community, working with various
organizations involved in education, health and community development in both
Howard County and Baltimore. Mr. Bond is a graduate of Harvard College (A.B.)
and Columbia University (M.B.A. and J.D.). He has been admitted to the New York
State Bar. Mr. Bond has served as Chairman of the Maryland Bankers' Association
during 2001-2002.
Mr. Galeone directs the Retail Banking Group of the Bank, which includes
branch operations, consumer lending, investment services, cash management and
marketing. He has in excess of 26 years of experience in the consumer finance
industry with the Bank and Household International Corporation. Mr. Galeone is
actively involved in civic and professional affairs. He is currently Chairman
of the Board of the Howard County Chamber of Commerce and is a member of the
Board for the Economic Development Authority for Howard County, as well as
several other organizations involved in education and community welfare. Mr.
Galeone attended Temple University, Institute of Technology.
Mr. Horvath directs the Washington Suburban Region of the Bank. Prior to the
merger with Suburban, Mr. Horvath served as Director, President and Chief
Operating Officer of Suburban and Suburban Bank. He has also held positions
with Crestar and First Union National Bank. Mr. Horvath is active in civic
affairs. Currently he is a member of the County Executive's Advisory Council of
Montgomery County and Chairman of the Business Loan Fund of Montgomery County.
Previously he served as Chairman of the Prince George's United Way Campaign and
Chairman of the Finance Committee of the Prince George's Chamber of Commerce.
He is a graduate of Denison University (B.A.), Baldwin-Wallace College (M.B.A.)
and the Stonier Graduate School of Banking.
16
Mr. Karfonta directs branch operations in the Baltimore and Howard County
Regions of the Bank, as well as investment services and marketing. He has over
26 years of experience in the financial services industry. He has held several
executive positions with Household International Corporation in both the
banking division and the finance division. Mr. Karfonta is actively involved in
the Howard County community, serving as a Director of the Roland Park
Retirement Community and as a member of the Howard County Chamber of Commerce,
Howard County Tourism Board, and Educational Partnerships. He is also active in
various programs supporting youth mentoring. He is a graduate of the University
of Baltimore (B.A.) and attended the Robert G. Merrick School of Business.
Mr. Locke directs the Baltimore Region of the Bank. He has over 26 years of
experience in the commercial lending area with the Bank and the former Maryland
National Bank and The National Bank of Washington. Mr. Locke is actively
involved in civic and professional affairs, serving as past Chairman of the
Board of Directors of the Baltimore County Chamber of Commerce. He also serves
on the Board of Directors of the Baltimore Chamber Orchestra and the Baltimore
County Small Business Resource Center. He is a graduate of Colgate University
(B.A.) and City College of New York (M.S.Ed).
Mr. Nicholson directs the acquisition, development and construction loan
activities of the Bank. He has 18 years of experience in real estate lending
with the Bank, First American Metro Corporation, Equitable Federal Savings
Bank, First Texas Savings Association and Lumbermen's Investment Corporation.
Mr. Nicholson is actively involved in civic and professional affairs, serving
with various organizations including the Soccer Association of Columbia/Howard
County and as Director of Development Guaranty Group of Montgomery County,
Inc., a subsidiary of Maryland National Capital Building Industry Association.
Mr. Nicholson attended The University of Texas at Austin and St. Edwards
University.
Mr. Scaldara directs the Corporate Services Group of the Bank and the
Company, including accounting, finance, investor relations, information
technology, loan administration, transaction processing activities and human
resources. He has been a Certified Public Accountant since 1985. Prior to
joining the Company, Mr. Scaldara held various staff accounting and consulting
positions with KPMG LLP in Baltimore. He is a graduate of Loyola College (B.A.)
and is actively involved in civic organizations, serving as past Chairman of
the Howard Hospital Foundation. Mr. Scaldara has served as Secretary of the
Company and the Bank since January 14, 1991.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
information appearing under the caption "Executive Compensation" in the
Company's Proxy Statement for the 2002 Annual Meeting of Stockholders included
in Exhibit 99.1 filed herewith.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
information appearing under the caption "Beneficial Ownership of Executive
Officers, Directors and Nominees" in the Company's Proxy Statement for the 2002
Annual Meeting of Stockholders included in Exhibit 99.1 filed herewith.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
information appearing under the caption "Certain Relationships and Related
Transactions" in the Company's Proxy Statement for the 2002 Annual Meeting of
Stockholders included in Exhibit 99.1 filed herewith.
17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a. Exhibits
(2.1) Plan and Agreement to Merge, dated September 28, 1999, among Columbia Bancorp and Suburban
Bancshares, Inc., previously filed with the Commission as an Exhibit to, and incorporated herein by
reference from, the Form 8-K filed by the Company on October 4, 1999 (File No. 0-23402).
(2.2) First Amendment to Plan and Agreement to Merge, dated November 24, 1999, among Columbia
Bancorp and Suburban Bancshares, Inc., previously filed with the Commission as an Exhibit to, and
incorporated herein by reference from, Amendment No. 1 to the Company's Registration Statement
on Form S-4 filed by the Company on December 29, 1999 (Reg. No. 333-91887).
(3.1) Form of Restated Articles of Incorporation of the Company, restated as of December 31, 1995,
previously filed with the Commission as an Exhibit to, and incorporated herein by reference from,
the Company's Annual Report on Form 10-KSB for fiscal year ended December 31, 1995 (File No.
0-23402).
(3.1a) Articles Supplementary dated September 27, 1999, previously filed with the Commission as an
Exhibit to and incorporated herein by reference from, the Company's Annual Report on Form 10-K
for fiscal year ended December 31, 1999 (File No. 0-23402).
(3.2) Form of Amended and Restated By-laws of the Company, restated as of March 8, 2000, previously
filed with the Commission as an Exhibit to and incorporated herein by reference from, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
(File No. 0-23402).
(10.1) Form of the Company's 1987 Stock Option Plan, as amended April 17, 1990, December 18, 1995,
and February 24, 1997, previously filed with the Commission as an Exhibit to, and incorporated
herein by reference from, the Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1996 (File No. 0-23402).
(10.1a) Amendment dated September 28, 1998 to the Company's 1987 Stock Option Plan, previously filed
with the Commission as an Exhibit to, and incorporated herein by reference from, the Company's
Annual Report on Form 10-K for fiscal year ended December 31, 1998 (File No. 0-23402).
(10.2) Form of Incentive Stock Option Agreement for use under the 1987 Stock Option Plan, as amended,
previously filed with the Commission as an Exhibit to, and incorporated herein by reference from,
the Company's Registration Statement on Form S-8 filed August 15, 1996 (Reg. No. 333-10231).
(10.3) Form of Non-Qualified Stock Option Agreement for use under the 1987 Stock Option Plan, as
amended, previously filed with the Commission as an Exhibit to, and incorporated herein by
reference from, the Company's Registration Statement on Form S-8 filed August 15, 1996 (Reg. No.
333-10231).
(10.4) Form of the Company's 1990 Director Stock Option Plan, as amended July 29, 1996 and February
24, 1997, previously filed with the Commission as an Exhibit to, and incorporated herein by
reference from, the Company's Annual Report on Form 10-K for fiscal year ended December 31,
1996 (File No. 0-23402).
(10.5) Suburban Bancshares, Inc. 1997 Stock Option Plan, previously filed with the Commission as an
Exhibit to, and incorporated herein by reference from, the Company's Registration Statement on
Form S-8 filed March 21, 2000 (Reg. No. 333-32912).
18
(10.6) Form of the Company's Incentive Stock Option Agreement for use under the 1997 Suburban
Bancshares, Inc. 1997 Stock Option Plan, previously filed with the Commission as an Exhibit to,
and incorporated herein by reference from, the Company's Registration Statement on Form S-8
filed March 21, 2000 (Reg. No. 333-32912).
(10.7) Form of Employment Agreement dated February 26, 1996 with John M. Bond, Jr., previously filed
with the Commission as an Exhibit to, and incorporated herein by reference from, the Company's
Annual Report on Form 10-KSB for fiscal year ended December 31, 1995 (File No. 0-23402).
(10.7a) Amendment dated December 18, 1997 to the employment agreement dated February 26, 1996 with
John M. Bond, Jr., previously filed with the Commission as an Exhibit to, and incorporated herein
by reference from, the Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1997 (File No. 0-23402).
(10.8) Form of Employment Agreement dated February 26, 1996 with Michael T. Galeone, previously
filed with the Commission as an Exhibit to, and incorporated herein by reference from, the
Company's Annual Report on Form 10-KSB for fiscal year ended December 31, 1995
(File No. 0-23402).
(10.8a) Amendment dated December 16, 1997 to the employment agreement dated February 26, 1996 with
Michael T. Galeone, previously filed with the Commission as an Exhibit to, and incorporated herein
by reference from, the Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1997 (File No. 0-23402).
(10.9) Form of Employment Agreement dated February 26, 1996 with John A. Scaldara, Jr., previously
filed with the Commission as an Exhibit to, and incorporated herein by reference from, the
Company's Annual Report on Form 10-KSB for fiscal year ended December 31, 1995
(File No. 0-23402).
(10.9a) Amendment dated December 16, 1997 to the employment agreement dated February 26, 1996 with
John A. Scaldara, Jr., previously filed with the Commission as an Exhibit to, and incorporated
herein by reference from, the Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1997 (File No. 0-23402).
(10.10) Form of Employment Agreement dated February 26, 1999 with Robert W. Locke, previously filed
with the Commission as an Exhibit to, and incorporated herein by reference from, the Company's
Annual Report on Form 10-K for fiscal year ended December 31, 1998 (File No. 0-23402).
(10.11) Deferred Compensation Plan dated September 27, 1996, as amended December 30, 1996, and
February 24, 1997, including addendums thereto, previously filed with the Commission as an
Exhibit to, and incorporated herein by reference from, the Company's Annual Report on Form 10-K
for fiscal year ended December 31, 1996 (File No. 0-23402).
(10.12) Data Processing agreements by and between the Bank and M&I Data Services, Inc., including
addendums thereto, previously filed with the Commission as an Exhibit to, and incorporated herein
by reference from, the Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1996 (File No. 0-23402).
(10.13) Form of the Company's 1997 Stock Option Plan, previously filed with the Commission as an
Exhibit to, and incorporated herein by reference from, the Company's Registration Statement on
Form S-8 filed July 29, 1997 (Reg. No. 333-10231).
(10.13a) Amendment dated September 26, 1998 to the Company's 1997 Stock Option Plan, previously filed
with the Commission as an Exhibit to, and incorporated herein by reference from, the Company's
Annual Report on Form 10-K for fiscal year ended December 31, 1998 (File No. 0-23402).
19
(10.14) Form of Board Chairman's Services Agreement with Winfield M. Kelly, Jr., previously filed with
the Commission as an Exhibit to, and incorporated herein by reference from, the Company's
Registration Statement on Form S-4 filed by the Company on December 1, 1999
(Reg. No. 333-91887).
(10.15) Form of Employment Agreement with Stephen A. Horvath dated September 28, 1999, previously
filed with the Commission as an Exhibit to, and incorporated herein by reference from, the
Company's Registration Statement on Form S-4 filed December 1, 1999 (Reg. No. 333-91887).
(10.16) Form of Employment Agreement dated November 2, 1999 with Scott C. Nicholson, previously filed
with the Commission as an Exhibit to and incorporated herein by reference from, the Company's
Annual Report on Form 10-K for fiscal year ended December 31, 1999 (File No. 0-23402).
(10.17) Form of Employment Agreement dated March 23, 2001 with Adelbert D. Karfonta, previously filed
with the Commission as an Exhibit to and incorporated herein by reference from, the Company's
Annual Report on Form 10-K for fiscal year ended December 31, 2000 (File No. 0-23402).
(13.1) 2001 Annual Report to Stockholders (filed herein as Exhibit 13.1).
(21.1) List of Subsidiaries of the Company
State of Percentage
Name Incorporation Owned by Ownership
- ---- ------------- -------- ---------
The Columbia Bank Maryland Columbia Bancorp 100%
McAlpine Enterprises, Inc. Maryland TheColumbia Bank 100%
Howard I, LLC Maryland TheColumbia Bank 100%
Howard II, LLC Maryland TheColumbia Bank 100%
Columbia Leasing, Inc. Maryland The Columbia Bank 100%
(23.1) Consents of Independent Auditors (filed herein as Exhibit 23.1).
(99.1) Notice of the 2002 Annual Meeting of Stockholders, Proxy Statement for the 2002 Annual Meeting of
Stockholders and the 2002 Form of Proxy (filed herein as Exhibit 99.1).
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
2001.
c. Financial Statement Schedules
Report of a Predecessor Accountant (filed herein as Schedule 1).
20
SCHEDULE I
FINANCIAL STATEMENT SCHEDULE
Report of a Predecessor Accountant
21
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Suburban Bancshares, Inc.
We have audited the consolidated statements of operations, changes in
stockholders' equity and cash flows of Suburban Bancshares, Inc. and Subsidiary
for the year ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Suburban Bancshares, Inc. and Subsidiary for the year ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States of America.
/s/ STEGMAN & COMPANY
Baltimore, Maryland
January 10, 2000
22
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
COLUMBIA BANCORP
(Registrant)
March 26, 2002 By: /s/ John M. Bond, Jr.
----------------------------------
John M. Bond, Jr.
President, Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Company and in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Winfield M. Kelly, Jr. Chairman of the Board 3/26/02
- -----------------------------
Winfield M. Kelly, Jr.
/s/ James R. Moxley, Jr. Vice Chairman of the Board 3/26/02
- -----------------------------
James R. Moxley, Jr.
- ----------------------------- Chairman of Executive 3/26/02
Herschel L. Langenthal Committee
/s/ John M. Bond, Jr. President, Chief Executive 3/26/02
- ----------------------------- Officer and Treasurer
John M. Bond, Jr.
/s/ John A. Scaldara, Jr. Secretary and Chief 3/26/02
- ----------------------------- Financial Officer
John A. Scaldara, Jr.
/s/ Anand S. Bhasin Director 3/26/02
- -----------------------------
Anand S. Bhasin
/s/ Robert R. Bowie, Jr. Director 3/26/02
- -----------------------------
Robert R. Bowie, Jr.
/s/ Garnett Y. Clark, Jr. Director 3/26/02
- -----------------------------
Garnett Y. Clark, Jr.
/s/ Hugh F.Z. Cole, Jr. Director 3/26/02
- -----------------------------
Hugh F.Z. Cole, Jr.
- ----------------------------- Director 3/26/02
G. William Floyd
/s/ William L. Hermann Director 3/26/02
- -----------------------------
William L. Hermann
23
Signature Title Date
--------- ----- ----
/s/ Charles C. Holman Director 3/26/02
- -----------------------------
Charles C. Holman
- ----------------------------- Director 3/26/02
Raymond G. LaPlaca
/s/ Harry L. Lundy, Jr. Director 3/26/02
- -----------------------------
Harry L. Lundy, Jr.
- ----------------------------- Director 3/26/02
Richard E. McCready
/s/ Kenneth H. Michael Director 3/26/02
- -----------------------------
Kenneth H. Michael
/s/ James R. Moxley, III Director 3/26/02
- -----------------------------
James R. Moxley, III
/s/ Vincent D. Palumbo Director 3/26/02
- -----------------------------
Vincent D. Palumbo
/s/ Mary S. Scrivener Director 3/26/02
- -----------------------------
Mary S. Scrivener
- ----------------------------- Director 3/26/02
Lawrence A. Shulman
/s/ Maurice M. Simpkins Director 3/26/02
- -----------------------------
Maurice M. Simpkins
/s/ Robert N. Smelkinson Director 3/26/02
- -----------------------------
Robert N. Smelkinson
/s/ Theodore G. Venetoulis Director 3/26/02
- -----------------------------
Theodore G. Venetoulis
24
INDEX TO EXHIBITS
Exhibit No. Title of Exhibit
- ----------- ----------------
13.1.... Annual Report to Stockholders for the year ended December 31, 2001.
23.1.... Consents of Independent Auditors.
99.1.... Notice of the 2002 Annual Meeting of Stockholders, Proxy Statement for the 2002 Annual
Meeting of Stockholders and the 2002 Form of Proxy.
25