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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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, 2000
[_] 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
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
Columbia, Maryland 21044
(Address of principal executive offices) (zip code)
410-465-4800
(Registrant's telephone number, including area code)
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)
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]
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 22, 2001 $70,823,338
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 22, 2001 7,164,964
Documents Incorporated by Reference:
Portions of Annual Report to Stockholders for Fiscal Year Ended
December 31, 2000, incorporated by reference into Part II.
Portions of Definitive Proxy Statement dated April 18, 2001,
incorporated by reference into Part III.
[cover page 2]
2
TABLE OF CONTENTS
PART I
PAGE
----
Item 1 - Business..................................................................................... 4
Item 2 - Properties................................................................................... 11
Item 3 - Legal Proceedings............................................................................ 13
Item 4 - Submission of Matters to a Vote of Stockholders.............................................. 14
PART II
Item 5 - Market for Common Stock and Related Stockholder Matters...................................... 14
Item 6 - Selected Financial Data...................................................................... 14
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................................... 14
Item 7a - Quantitative and Qualitative Disclosures About Market Risk................................... 14
Item 8 - Financial Statements and Supplementary Data.................................................. 14
Columbia Bancorp and Subsidiary:
Independent Auditors' Report
Consolidated Statements of Condition as of
December 31, 2000 and 1999
Consolidated Statements of Income and Comprehensive Income
for the years ended December 31, 2000, 1999, and 1998
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 2000, 1999, and 1998
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999, and 1998
Notes to Consolidated Financial Statements
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure................................................................................... 14
PART III
Item 10 - Directors and Executive Officers of the Registrant........................................... 15
Item 11 - Executive Compensation....................................................................... 16
Item 12 - Security Ownership of Certain Beneficial Owners and Management............................... 16
Item 13 - Certain Relationships and Related Transactions............................................... 16
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................. 17
Signatures.............................................................................................. 22
3
PART I
ITEM 1. BUSINESS
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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, 2000 had a total of twenty-three branch locations in Maryland with
nine branch locations in Howard County; four branch locations in Baltimore
County; two branch locations in Baltimore City; five 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. At December 31, 2000, the
Company had total assets of $812.7 million, total loans, net of unearned income,
of $539.1 million, total deposits of $630.5 million and stockholders' equity of
$64.5 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. The Company and Suburban had entered into a
definitive agreement on September 28, 1999. 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 years ended December 31:
(Dollars in thousands) 1999 1998
---------------------------------------------------
Assets
Company $467,711 $427,335
Suburban 220,319 238,747
------- ---------
$688,030 $666,082
Loans, net of unearned income
Company $315,507 $274,413
Suburban 133,718 129,886
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$449,225 $404,299
Deposits
Company $367,498 $339,336
Suburban 183,862 207,381
--------- ---------
$551,360 $546,717
Net interest income
Company $ 21,361 $ 19,910
Suburban 8,002 7,910
----------------------
$ 29,363 $ 27,820
Net income
Company $ 5,215 $ 4,746
Suburban 670 1,426
-----------------------
$ 5,885 $ 6,172
Merger-related expenses of $2.3 million are included in the consolidated
statement of income and comprehensive income for the year ended December 31,
2000 and consist 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.
4
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.
The Bank does not now exercise general trust powers.
Lending Activities
General. At December 31, 2000, the Company's loan portfolio, net of
unearned income, totaled $539.1 million, representing approximately 66.3% of its
total assets of $812.7 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.
5
Loan Portfolio Composition. The following table sets forth the
Company's loans by major categories as of December 31, 2000:
Amount Percent
---------------------------------------
(dollars in thousands)
Commercial, including leases .................................... $172,633 32.0%
Real estate - development and construction(1).................... 129,336 24.0
Real estate - mortgage:
Residential ................................................... 18,594 3.4
Commercial .................................................... 75,325 14.0
Consumer:
Retail (2) .................................................... 139,967 26.0
Credit card ................................................... 2,572 .4
Other ........................................................... 1,035 .2
---------- --------
Total loans ..................................................... $539,462 100.0%
========== ========
- ---------------------
(1) At December 31, 2000, loans to individuals for the purchase of residential
building lots and the construction of primary personal residences
represented $19.9 million.
(2) Includes $119.2 million in retail loans secured by the borrowers'
principal residences in the form of home equity lines of credit and second
mortgages.
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, 2000, $172.6 million or 32.0% 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,
2000:
Amount Percent
-----------------------------------------
(dollars in thousands)
Residential construction(1) ............................................... $ 57,241 44.3%
Residential land development .............................................. 38,879 30.1
Commercial construction ................................................... 22,399 17.3
Residential land acquisition(2)............................................ 10,817 8.3
-------- --------
$129,336 100.0%
======== ========
- -----------
(1) Includes $15.4 million of loans to individuals for construction of primary
personal residences.
(2) Includes $2.5 million of loans to individuals for the purchase of
residential building lots.
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, 2000, loans to
individuals for the construction of primary personal residences accounted for
$15.4 million of the $57.2 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 $41.8 million of residential construction loans represented loans to
residential builders. Approximately 55% of the units under construction were for
the construction of residential homes for which a binding sales contract existed
and the prospective
6
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, 2000, totaling $38.9 million or 30.1% 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 $22.4
million, or 17.3% of the portfolio at December 31, 2000. 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. The Company's practice is to immediately sell substantially all
residential mortgage loans in the secondary market with servicing released. At
December 31, 2000, $18.6 million or 3.4% 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, 2000, $75.3 million or
14.0% 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, 2000, $142.5 million or 26.4% 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. The consumer loans offered by the Company primarily include
home equity loans and lines of credit and second mortgages.
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
7
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, 2000, other loans totaled $1.0 million,
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 include offices of most of the largest banks 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.
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. The
Company is unable to predict the ultimate impact of interstate banking
legislation on it or its competitors.
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 now 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.
8
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.
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) excess of
qualifying perpetual preferred stock (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, 2000 and 1999, the Company's total risk-based capital
ratios were 11.6% and 13.5%, respectively, and its Tier 1 risk-based capital
ratios were 10.5% and 12.3%, 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
December 31, 2000 and 1999, the Company's Tier 1 leverage ratios were 8.4% and
9.0%, respectively.
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
9
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 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 $160.9 million or 27.6% 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, 2000, the
Company's FDIC insurance premium was 1.96 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 2000 Annual
Report to Stockholders included in Exhibit 13.1 filed herewith.
Employees
At December 31, 2000, the Company and the Bank had 331 employees of whom 82
were officers, 279 were full-time employees and 52 were part-time employees. The
Company believes its employee relations are good.
10
ITEM 2. PROPERTIES
- -------------------
The Company owned the following properties at December 31, 2000, at a
book value of $5.6 million:
Location Description
-------- -----------
Ellicott City Administrative Office Administrative and lending offices;
9171 Baltimore National Pike additional space rented to third
Ellicott City, MD 21042 party producing $192,000 annual
income
Ellicott City Primary branch location, including
9151 Baltimore National Pike additional administrative offices
Ellicott City, MD 21042
Long Gate Full-service branch; subject to a
4450 Long Gate Parkway ground lease expiring 2/17, assuming
Ellicott City, MD 21043 exercise of options
Timonium Full-service branch; subject to a
67 West Aylesbury Road ground lease expiring 10/19,
Timonium, MD 21093 assuming exercise of options
Columbia Town Center Detached drive-through branch;
10480 Little Patuxent Parkway subject to a ground lease expiring
Columbia, MD 21044 5/03, assuming exercise of options
River Hill Detached drive-through branch;
6030 Daybreak Circle subject to a ground lease expiring
Clarksville, MD 21029 11/17, assuming exercise of options
Capitol Heights Full-service branch
8703 Central Avenue
Capitol Heights, MD 20743
11
The Company leased the following facilities at December 31, 2000, 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 9/07
10421 Baltimore Boulevard
Beltsville, MD 20705
Bethesda Full-service branch and 9/07
7900 Wisconsin Avenue commercial lending office
Bethesda, MD 20814
Blakehurst Limited-service branch 10/03
1055 West Joppa Road
Towson, MD 21204
Clinton Full-service branch 12/08
7600 Old Branch Avenue
Clinton, MD 20735
Columbia Town Center Full-service branch and 5/13
10480 Little Patuxent commercial lending office
Parkway Columbia,
MD 21044
Cross Keys Full-service branch 11/05
5100 Falls Road, Suite 96
Baltimore, MD 21210
Edenwald Limited-service branch 12/08
800 Southerly Road
Baltimore, MD 21286
Greenbelt Full-service branch and 5/06
7505 Greenway Center Drive commercial lending office
Greenbelt, MD 20768
Harmony Hall Limited-service branch 11/01
6336 Cedar Lane
Columbia, MD 21044
Harper's Choice Full-service branch 3/05
5485 Harper's Farm Road
Columbia, MD 21044
Heaver Plaza Full-service branch and 2/11
1301 York Road commercial lending office
Lutherville, MD 21093
---------------------------------------------------------------------------
* Expiration date, assuming all options to renew are exercised.
12
----------------------------------------------------------------------------------------
Location Description Lease Expiration Date*
-------- ----------- ----------------------
Oakland Mills Full-service branch 9/18
5880 Robert Oliver Place
Columbia, MD 21044
Oxon Hill Full-service branch 6/07
6196 Oxon Hill Road
Oxon Hill, MD 20745
River Hill Full-service branch 11/17
6030 Daybreak Circle
Clarkesville, MD 21029
Rockville Full-service branch 11/08
1903 Research Boulevard
Rockville, MD 20850
Roland Park Place Limited-service branch 1/02
830 West 40/th/ Street
Baltimore, MD 21211
Sterrett Place Administrative offices 5/03
5585 Sterrett Place, Suite 100
Columbia, MD 21044
Vantage House Limited-service branch 2/06
5400 Vantage Point Road
Columbia, MD 21044
White Flint Full-service branch 12/07
11414 Rockville Pike
Rockville, MD 20852
Wilde Lake Full-service branch 6/02
10451 Twin Rivers Road
Columbia, MD 21044
* Expiration date, assuming all options to renew are exercised.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
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, on behalf of the originators of the File
(collectively, the "Originators of the File"). The interpleader lawsuit filed by
the Bank alleges, 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. The Bank considers the
counterclaims meritless and will vigorously defend all claims brought against
it.
13
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, 2000.
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 50
and "Recent Common Stock Prices" on page 56 of the 2000 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 8 of the 2000 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 9 through 27 of the 2000 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 22 through 25 of the 2000 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 Company's Independent Public Accountants' Report thereon is incorporated by
reference to the 2000 Annual Report to Stockholders included in Exhibit 13.1,
pages 24 through 46, 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 55 of the 2000
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.
14
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 2001 Annual
Meeting of Stockholders included in Exhibit 99.1 filed herewith.
The following information is supplied with respect to Mr. Bond and to
other named 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, 2001.
Position with the
Name Age Company and the Bank
---- --- --------------------
John M. Bond, Jr. 57 President and Chief Executive Officer of the
Company and the Bank and Treasurer of the
Company.
Michael T. Galeone 52 Executive Vice President of the Bank.
Stephen A. Horvath 51 Executive Vice President of the Bank
Adelbert D. Karfonta 55 Executive Vice President of the Bank
Robert W. Locke 55 Executive Vice President of the Bank.
Scott C. Nicholson 39 Executive Vice President of the Bank
John A. Scaldara, Jr. 37 Executive Vice President, Chief Financial
Officer and Secretary of the Company and the
Bank.
Mr. Bond has over 28 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. Galeone directs the Regional Support Group of the Bank, which
includes retail banking and investment services and human resources. He has in
excess of 25 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 a member of the Board for the
Economic Development Authority for Howard County and the Howard County Chamber
of Commerce, 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,
serving as past Chairman of the Prince George's United Way Campaign and past
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.
Mr. Karfonta directs the Howard County Region of the Bank. He has over
25 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 member of the Howard County Chamber of
Commerce, Howard County Tourism Board, Educational Partnerships and is active in
various programs supporting youth mentoring. His is a graduate of the University
of Baltimore (B.A.) and attended the Robert G. Merrick School of Business.
15
Mr. Locke directs the Baltimore Region of the Bank. He has over 25
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 Chairman of the
Board of Directors of the Baltimore County Chamber of Commerce. He also serves
on the Board of Directors of the Better Business Bureau and the Baltimore
Division of the American Heart Association. 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 17 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 Rotary Club of
Columbia Town Center, 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, and transaction processing activities. 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 2001 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 2001
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 2001 Annual Meeting of
Stockholders included in Exhibit 99.1 filed herewith.
16
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. 0-24302).
(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. 0-24302).
(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).
17
(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).
(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).
18
(10.15) Form of Employment Agreement with Stephen A. Horvath,
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. 0-24302).
(10.17) Form of Employment Agreement dated March 23, 2001
with Adelbert D. Karfonta (filed herein as Exhibit
10.17).
(13.1) 2000 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 Maryland Columbia 100%
Bank Bancorp
McAlpine Maryland The Columbia 100%
Enterprises, Inc. Bank
Howard I, LLC Maryland The Columbia 100%
Bank
Howard II, LLC Maryland The Columbia 100%
Bank
Columbia Leasing, Inc. Maryland The Columbia 100%
Bank
(23.1) Consents of Independent Auditors (filed herein as
Exhibit 23.1).
(99.1) Notice of the 2001 Annual Meeting of Stockholders,
Proxy Statement for the 2001 Annual Meeting of
Stockholders and the 2001 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,
2000.
c. Financial Statement Schedules
Report of a Predecessor Accountant (filed herein as Schedule 1).
19
SCHEDULE I
FINANCIAL STATEMENT SCHEDULE
Report of a Predecessor Accountant
20
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Suburban Bancshares, Inc.
We have audited the consolidated balance sheet of Suburban Bancshares,
Inc. and Subsidiary as of December 31, 1999, and the related consolidated
statements of operations, changes in shareholders' equity, and cash flows for
each of the two years in the period 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Suburban Bancshares, Inc. and Subsidiary as of December 31, 1999, and the
results of their operations and cash flows for each of the two years in the
period ended December 31, 1999, in conformity with generally accepted accounting
principles.
/s/ Stegman & Company
Baltimore, Maryland
January 10, 2000
21
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, 2001 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 3/26/01
- -----------------------------------
Winfield M. Kelly, Jr. Board
/s/ James R. Moxley, Jr. Vice Chairman 3/26/01
- -----------------------------------
James R. Moxley, Jr. of the Board
/s/ Herschel L. Langenthal Chairman of the 3/26/01
- -----------------------------------
Herschel L. Langenthal Executive Committee
/s/ John M. Bond, Jr. President, Chief 3/26/01
- -----------------------------------
John M. Bond, Jr. Executive Officer and
Treasurer
/s/ John A. Scaldara, Jr. Secretary 3/26/01
- -----------------------------------
John A. Scaldara, Jr. and Chief Financial
Officer
/s/ Anand S. Bhasin Director 3/26/01
- -----------------------------------
Anand S. Bhasin
22
Signature Title Date
- --------- ----- ----
/s/ Robert R. Bowie, Jr. Director 3/26/01
- -----------------------------------
Robert R. Bowie, Jr.
/s/ Garnett Y. Clark, Jr. Director 3/26/01
- -----------------------------------
Garnett Y. Clark, Jr.
/s/ Hugh F.Z. Cole, Jr. Director 3/26/01
- -----------------------------------
Hugh F.Z. Cole, Jr.
Director 3/ /01
- -----------------------------------
G. William Floyd
/s/ William L. Hermann Director 3/26/01
- -----------------------------------
William L. Hermann
/s/ Charles C. Holman Director 3/26/01
- -----------------------------------
Charles C. Holman
/s/ Raymond G. LaPlaca Director 3/26/01
- -----------------------------------
Raymond G. LaPlaca
/s/ Harry L. Lundy, Jr. Director 3/26/01
- -----------------------------------
Harry L. Lundy, Jr.
/s/ Richard E. McCready Director 3/26/01
- -----------------------------------
Richard E. McCready
/s/ Kenneth H. Michael Director 3/26/01
- -----------------------------------
Kenneth H. Michael
/s/ James R. Moxley, III Director 3/26/01
- -----------------------------------
James R. Moxley, III
Director 3/ /01
- -----------------------------------
Vincent D. Palumbo
Director 3/ /01
- -----------------------------------
Mary S. Scrivener
23
Signature Title Date
- --------- ----- ----
/s/ Lawrence A. Shulman Director 3/26/01
- -----------------------------------
Lawrence A. Shulman
/s/ Maurice M. Simpkins Director 3/26/01
- -----------------------------------
Maurice M. Simpkins
/s/ Robert N. Smelkinson Director 3/26/01
- -----------------------------------
Robert N. Smelkinson
/s/ Theodore G. Venetoulis Director 3/26/01
- -----------------------------------
Theodore G. Venetoulis
24
INDEX TO EXHIBITS
Exhibit No. Title of Exhibit
---------- ----------------
10.17 Form of Employment Agreement dated March 23,
2001 with Adelbert D. Karfonta.
13.1 Annual Report to Stockholders for the year
ended December 31, 2000.
23.1 Consents of Independent Auditors.
99.1 Notice of the 2001 Annual Meeting of
Stockholders, Proxy Statement for the 2001
Annual Meeting of Stockholders and the 2001
Form of Proxy.
25