CALVIN B. TAYLOR BANKSHARES, INC.
P. O. Box 5, 24 North Main Street, Berlin, Maryland 21811
To the Shareholders of Calvin B. Taylor Bankshares, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders
of Calvin B. Taylor Bankshares, Inc. of Berlin, Maryland (the
"Company") will be held at 24 North Main Street, Berlin, Maryland
21811, on Wednesday, May 12, 2004, at 2:00 p.m., local time, for the
following purposes:
1. To elect the Directors of the Company, who shall serve for a one-
year term, and until their respective successors are elected and have
qualified.
2. To ratify the appointment of Rowles & Company, LLP as the
independent auditors for Calvin B. Taylor Bankshares, Inc., and
Calvin B. Taylor Banking Company of Berlin, Maryland for the fiscal
year ending December 31, 2004.
3. To transact other business as may properly come before the
Meeting.
The accompanying Proxy Statement provides a detailed description
of the items to be voted on, certain financial statements of the
Company, and other matters to be considered at the Meeting.
The Board of Directors has carefully reviewed and considered the
proposals for election, and recommends the Shareholders of the
Company TO APPROVE, RATIFY AND CONFIRM the items contained in the
Proxy Statement.
Only Shareholders of the record date, at the close of business
on March 19, 2004 are entitled to notice of and to vote at the annual
meeting or any adjournment thereof. Your vote on these matters is
very important. We urge you to carefully review the enclosed
materials and return your Proxy promptly.
You are cordially invited to attend this meeting of Calvin B.
Taylor Bankshares, Inc. of Berlin, Maryland. Whether or not you plan
to attend the Meeting, please sign and promptly return the Proxy
in the enclosed postage paid envelope. If you attend the meeting,
you may vote in person if you so desire, even though you have
previously returned your Proxy.
Sincerely,
\s\ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.
Chief Executive Officer
Chairman of the Board of Directors
Berlin, Maryland
March 19, 2004
CALVIN B. TAYLOR BANKSHARES, INC.
P. O. Box 5, 24 North Main Street, Berlin, Maryland 21811
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) hereby appoints Reese F. Cropper,
Jr. and William H. Mitchell, and each of them, proxies, with the
powers that the undersigned would possess if personally present, and
with the full power of substitution ___________________________
(substitution name, if any), to vote all shares of the undersigned in
Calvin B. Taylor Bankshares, Inc. at the annual meeting of
shareholders to be held on Wednesday, May 12, 2004, at 2:00 p.m., and
at any and all adjournments and postponements thereof, upon all
subjects that may properly come before the meeting, including matters
described in the proxy statement furnished herewith, subject to any
directions indicated below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES, AND FOR
THE RATIFICATION OF AUDITORS.
1. Election of the following nominees as Directors:
James R. Bergey, Jr. George H. Bunting, Jr. John H. Burbage, Jr.
Reese F. Cropper, Jr. Reese F. Cropper, III Hale Harrison
Gerald T. Mason William H. Mitchell Joseph E. Moore
Michael L. Quillin,Sr. D. Bruce Rogers Raymond M. Thompson
To vote your shares for all Director nominees, mark the "For"
space with an "X". To vote against all nominees, mark the "Against"
space with an "X". If you do not wish your shares voted "For" a
particular nominee, mark the "For All Except" space with an "X", and
strike the name(s) above by drawing a line through the name(s) of
each Director nominee you do not wish to vote for.
________FOR ________AGAINST ________FOR ALL EXCEPT
2. Ratification of Auditors:
The Board of Directors has appointed Rowles & Company, LLP,
Certified Public Accountants, independent auditors for Calvin B.
Taylor Bankshares, Inc. and Calvin B. Taylor Banking Company of
Berlin, Maryland, for the year ending December 31, 2004. To vote
your shares in favor of the ratification of the appointment of Rowles
& Company, LLP, as independent auditors, mark the "For" space with an
"X". If you wish to vote against the ratification, mark the
"Against" space with an "X". If you wish to abstain from voting,
mark the "Abstain" space with an "X".
________FOR ________AGAINST ________ABSTAIN
3. At their discretion, to vote upon such matters as may properly
come before the Annual Meeting.
_______________________________________Date__________
Shareholder sign on above line and date
_______________________________________Date__________
Co-shareholder sign on above line and date
CALVIN B. TAYLOR BANKSHARES, INC.
P. O. Box 5, 24 North Main Street, Berlin, Maryland 21811
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 2004
This proxy statement is furnished to the shareholders of Calvin
B. Taylor Bankshares, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company, to
be voted at the Annual Meeting of Shareholders. The Annual Meeting
of Shareholders will held on Wednesday, May 12, 2004 at 2:00 p.m. and
at any adjournment or postponement thereof, for the purposes set
forth in this Proxy Statement. The principal Executive Office of the
Company is 24 North Main Street, Berlin, Maryland 21811. The Proxy
Statement and the accompanying Form of Proxy were first mailed to the
shareholders on or about April 1, 2004.
VOTING AND REVOCABILITY OF PROXY APPOINTMENTS
The Company has fixed March 19, 2004, as the record date (the
"Record Date") for determining the shareholders entitled to notice
of and to vote at the meeting. The Company's only stock is its
Common Stock, par value $1.00 per share (the "Common Stock"). At
the close of business on the Record Date, there were outstanding and
entitled to vote 3,226,498 shares of Common Stock of the Company,
with each share being entitled to one vote. There are no cumulative
voting rights. A majority of the outstanding shares of Common Stock
represented at the Meeting, in person or by proxy, will constitute a
quorum.
All proxies will be voted in accordance with the instructions
contained in the proxies. If no choice is specified, proxies will be
voted "FOR" the re-election of the Board of Directors of all
nominees listed below under "ELECTION OF DIRECTORS," "FOR" the
ratification of the appointment of Rowles and Company, LLP, as
independent auditors for the Company for the fiscal year ending
December 31, 2004, and at the proxy holder's discretion, on any other
matter that may properly come before the Meeting. Any shareholder
may revoke a proxy given pursuant to this solicitation prior to the
Meeting by delivering an instrument revoking it, or by delivering a
duly executed proxy bearing a later date, to the Secretary of the
Company. A shareholder may elect to attend the meeting and vote in
person even if he or she has a proxy outstanding.
Management of the Company is not aware of any other matter to be
presented for action at the meeting other than those mentioned in the
Notice of Annual Meeting of Shareholders and referred to in this
Proxy Statement. If any other matters come before the meeting, it is
the intention of the persons named in the enclosed Proxy to vote on
such matters in accordance with their judgment.
SOLICITATION
The costs associated with preparing, assembling, and mailing the
proxy materials and of reimbursing those aforementioned for the out-
of-pocket and clerical expenses of transmitting copies of the proxy
materials to the beneficial owners of shares held of record will be
borne by the Company.
ELECTION OF DIRECTORS
Article II of the Company's Articles of Incorporation, and
Section 2.03 of the Company's Bylaws, as amended, provide that the
Company's Board of Directors, each thereof, shall serve a one-year
term. Furthermore, the aforementioned shall be elected at the Annual
Meeting of Shareholders.
It is the intention of the persons named as proxies in the
accompanying proxy to vote FOR the election of the nominees
identified below to serve for a one-year term, expiring at the 2005
Annual Meeting of Shareholders. Should any nominee be unable or fail
to accept nomination or election (which is not anticipated), the
persons named as proxies in the proxy, unless otherwise specifically
instructed in the proxy, will vote for the election in his stead for
any such other person as the Company's existing Board of Directors
may recommend.
Directors shall be elected by a plurality of the votes cast at
the meeting. Abstentions will not be considered to be either
affirmative or negative votes.
The table below sets forth certain information about the
nominees and officers, including age, position with the Company, and
position with Calvin B. Taylor Banking Company (the "Bank"). All
of the nominees are incumbent Directors of the Company and the Bank.
The current term of all of the incumbent directors expires in May
2004 upon election of their successors.
Title or Position Title or Position
Name Age with the Company with the Bank
James R. Bergey, Jr. 49 Director, Director,
first elected 10/31/95 first elected 02/04/94
Senator George H. Bunting, Jr.
59 Director, Director,
first elected 05/03/00 first elected 05/03/00
John H. Burbage, Jr. 61 Director, Director,
first elected 10/31/95 first elected 02/04/87
Reese F. Cropper, Jr. 62 Director Director
first elected 10/31/95 first elected 03/06/74
Chairman of the Board Chairman of the Board
Chief Exec. Officer Chief Exec. Officer
Reese F. Cropper, III 43 Director, Director,
first elected 05/03/00 first elected 05/03/00
Hale Harrison 56 Director, Director,
first elected 10/31/95 first elected 01/08/75
Gerald T. Mason 56 Director, Director,
first elected 10/31/95 first elected 02/02/94
William H. Mitchell 54 Director, Director,
first elected 05/05/99 first elected 05/05/99
Vice President Sr. Vice President, Cashier,
Chief Financial Officer
Joseph E. Moore 61 Director, Director,
first elected 10/31/95 first elected 11/03/76
Michael L. Quillin, Sr.64 Director, Director,
first elected 10/31/95 first elected 12/06/78
D. Bruce Rogers 47 Director, Director,
first elected 05/03/00 first elected 05/03/00
Raymond M. Thompson 41 Director, Director,
first elected 05/08/02 first elected 05/08/02
President President
Mr. James R. Bergey, Jr. is a Certified Public Accountant and a
Principal in Bergey & Co., P.A., in Berlin, Maryland. He is a member
of the Board of Directors of the Community Foundation of the Eastern
Shore. Mr. Bergey serves on the Finance Committee of Atlantic
General Hospital in Berlin, Maryland and is past Chairman of that
Board.
Senator George H. Bunting, Jr. was elected State Senator of the
20th Senatorial District in November 1996. His district covers
Delaware's southeastern corner and includes much of Delaware's ocean
coast from Rehoboth southward to the Maryland State Line at Fenwick
Island, inland to Selbyville and north of Millsboro. Senator Bunting
currently serves on the Natural Resources Committee, Budget Committee,
and is Chairman of the Agricultural Committee and Veterans' Affairs
Committee.
Mr. John H. Burbage, Jr. is an owner of Mystic Harbour
Development Co., Mystic Harbour Utility Co., Bethany Land Co.,
Bayside Realty, Burbage Marina Properties, and Blue Water Development
Company. He is also a partner in Holiday House, LLC, Bethany Beach,
Delaware.
Mr. Reese F. Cropper, Jr. has been employed by the Bank since
May 1962 and was elected President in January 1974. He became
President and Chief Executive Officer of the Company on October 31,
1995. In May 2002, Mr. Cropper was elected Chairman of the Board of
Directors of the Bank and the Company. Also, in May 2002, he
resigned from the presidency of the Bank and Company, remaining Chief
Executive Officer. Mr. Cropper serves on the Executive Committee of
the Bank. Mr. Cropper is a past President of the Maryland Bankers
Association and he served a six-year term as a member of the Banking
Board of the State of Maryland from 1983 to 1989. He is also a
"Corporation Member" of Atlantic General Hospital and a Director of
Ocean City Golf and Yacht Club, partner in the Atlantic Hotel,
Berlin, Maryland and Holiday House, LLC, Bethany Beach, Delaware, and
owns several rental properties in the Berlin-Ocean City area.
Mr. Reese F. Cropper, III is owner of the Ocean City division of
ISG International, Inc., an insurance agency. He serves on the Board
of Trustees of Worcester Preparatory School, Berlin, Maryland.
Mr. Hale Harrison owns and operates Harrison Group Resort Hotels
in Ocean City, Maryland. Mr. Harrison is a former councilman and
secretary for the Town of Ocean City and former Chairman of the Ocean
City Planning and Zoning Commission. He is past Chairman of the
Board of Directors and a member of the Finance Committee of Atlantic
General Hospital.
Mr. Gerald T. Mason is the Chief Administrative Officer for
Worcester County Government.
Mr. William H. Mitchell has been employed by the Bank since June
1970 and was named as its Cashier on February 5, 1986. He became
Senior Vice President and Chief Financial Officer of the Bank on
January 6, 1999. He became Vice President of the Company on February
3, 1999. Mr. Mitchell is a member of the Berlin Lions Club and
serves as a Trustee and the Treasurer of the Humphreys Foundation,
Inc.
Joseph E. Moore, Esq. is a partner in the law firm of Williams,
Moore, Shockley & Harrison, LLP with offices in Ocean City and Ocean
Pines. He is a member of the Board of Directors of Atlantic General
Hospital, and a member of the Board of Trustees of the Worcester
Preparatory School. He is the Chairman of the Board of Zoning Appeals
for the Town of Berlin. Mr. Moore is also a member of the Board of
Directors for the Nabb Research Center for Delmarva History & Culture
at Salisbury University, and a fellow in the American College of Trial
Lawyers.
Mr. Michael L. Quillin, Sr. is retired from the motel business
in Ocean City, Maryland. He owns and operates Michael L. Quillin
Enterprises, Inc., a property management and construction business.
Mr. Quillin is a Director and Treasurer of the Quillin Foundation.
He is a member of the Ocean City Chamber of Commerce, and President
of the Ocean City Golf and Yacht Club.
Mr. D. Bruce Rogers is the owner of Sherwood Ford Lincoln
Mercury of Salisbury, Maryland, Sherwood's Holly Kia in
Selbyville, Delaware. Mr. Rogers serves as a Director of the
Maryland Auto Trade Association and also on the boards of the Community
Foundation of the Eastern Shore and the Perdue School of Business,
Salisbury, Maryland. In the past he has served on the Advisory Board
of the Ford Dealer Advertising Group, the Board of Ford Washington
Dealer Counsel, and on the Board of Life Crisis.
Mr. Raymond M. Thompson was employed by the Bank in October 1997
as an Assistant Vice President and Loan Officer. He was promoted to
Vice President of the Bank on January 6, 1999, and became Treasurer
of the Company on February 2, 2000. Mr. Thompson was elected
President of the Bank and the Company in May 2002. Mr. Thompson
serves on the boards of the Southern Eastern Shore Revolving Loan
Fund and the Maryland Financial Bank (in organization). He is also
a "Corporation Member" of Atlantic General Hospital, and a member
and past-Treasurer of the Berlin Lions Club.
There are two sets of Directors that have a family relationship.
James R. Bergey, Sr., who retires from the board of directors in May
2004, is the father of James R. Bergey, Jr.; and Reese F. Cropper, Jr.
is the father of Reese F. Cropper, III and Joseph E. Moore is a cousin
to the Croppers.
None of the directors or officers of the Company or the Bank
have been involved in any administrative proceedings or convicted of
any crime.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTIONS
OF THE NOMINEES NAMED ABOVE.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Officer Compensation
The table below presents a summary of the compensation for the
last three fiscal years of executive officers of the Company and
Bank who received an annual salary and bonus that exceeded
$100,000 during that period.
Other
Name and Principal Position Year Salary Bonus Compensation (1)
Reese F. Cropper, Jr.
Chief Executive Officer and
Chairman of the Board 2003 $216,000 $ 23,640 $ 3,969
2002 $210,000 $ 8,400 $ 3,600
President and Chief
Executive Officer 2001 $210,000 $ 8,400 $ 4,566
Raymond M. Thompson
President 2003 $100,000 $ 4,000 $ 2,675
(1) Represents benefits paid by the bank in connection with the use
of an automobile.
Directors of the Company received a fee of $585 for each board
meeting attended and $585 for each of the Bank's Executive Committee
meetings attended. Director James R. Bergey, Sr. was paid a
consulting fee of $19,024, rather than a director's fee for 2003.
Total fees paid by the Company to Directors, excluding Mr. Bergey,
Sr., Mr. Cropper, Jr., Mr. Mitchell, and Mr. Thompson were $84,240
during 2003.
COMPLIANCE WITH BENEFICIAL OWNERSHIP RULES
Section 16(a) of the Securities Exchange Act of 1934 requires
(i) the Company's directors and executive officers and (ii) persons
who own more than 10% of a registered class of the Company's equity
securities to file with the Securities Exchange Commission (the
"SEC"), within certain specified time periods, reports of ownership
and changes in ownership. Such directors, officers, and shareholders
are required by the SEC regulations to furnish the Company with
copies of all such reports that they file.
To the Company's knowledge, based solely upon a review of such
copies of such reports furnished to the Company and representations
that no other reports were required with respect to the year ended
December 31, 2003, all persons subject to the reporting requirements
of Section 16(a) filed the required reports on a timely basis with
respect to 2003.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The bank is legally represented by and engages Williams,
Moore, Shockley, and Harrison, LLP, of which Director of the Company,
Joseph E. Moore, is a partner. The total amount of legal fees for both
the Company and Bank in 2003, as engaged by Mr. Moore, and/or his legal
firm, was $3,690.
Management believes that the terms of all of the above-described
transactions are at least as favorable to the Company and the Banks
as could have been obtained in negotiating transactions with independent
third parties.
PRINCIPAL BENEFICIAL OWNERS OF THE COMPANY'S COMMON STOCK
The following table sets forth the number and percentage of
outstanding shares of the Company's Common Stock beneficially owned by
(a) each executive officer of the Company, (b) each director of the
Company, (c) all directors and executive officers of the Company as a
group, and (d) each person or entity known to the Company to own more
than five percent of the outstanding Common Stock.
The percentage of outstanding shares owned is based on 3,227,966
shares of common Stock outstanding as of December 31, 2003.
Shares of Common Stock
Beneficially Owned
Name Relationship to Company Number Percent(1)
James R. Bergey, Jr. Director 8,288 .26%
James R. Bergey, Sr. Director 30,000 .93%
George H. Bunting, Jr. Director 700 .02%
John H. Burbage, Jr. Director 89,559 2.77%
Reese F. Cropper, Jr. Director, Chairman 170,218 5.27%
Chief Executive Officer
Reese F. Cropper, III Director 3,294 .10%
Hale Harrison Director 49,968 1.55%
Gerald T. Mason Director 400 .01%
William H. Mitchell Director, 2,076 .06%
Vice President
Joseph E. Moore Director 3,451 .11%
Michael L. Quillin, Sr.Director 32,938 1.02%
D. Bruce Rogers Director 10,073 .31%
Raymond M. Thompson President 8,480 .26%
Mary E. Humphreys None 196,344 6.08%
CEDE & Co. None 276,075 8.55%
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS AND OTHER
AUDIT DISCLOSURES
Subject to ratification by the shareholders, the Board of Directors
has appointed Rowles & Company, LLP (Rowles) as independent auditors to
audit the financial statements of the Company for the 2004 fiscal year.
Rowles has served as independent auditors for the Company since its formation
in 1995. Fees paid to Rowles for the last two fiscal year's annual audits
and other services are detailed in the table below. Audit Fees include
services rendered for the audit of the Company's annual financial statements
and review of financial statements included in the Company's quarterly
public filings.
Audit-Related All Other
Year Audit Fees Fees Tax Fees Fees
2003 $ 25,100 $ - $ 4,278 $ -
2002 $ 26,435 $ - $ 3,670 $ 810 STAR PIN audit
2002(continued) $ 1,575 Advisory services
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
ROWLES & COMPANY, LLP, AS INDEPENDENT AUDITORS.
AUDIT COMMITTEE MATTERS
The Audit Committee (the Committee) of the Board of Directors is
comprised of seven independent directors. The Board of Directors has
adopted a written Audit Policy, which serves as a charter for the Committee.
A copy of the Audit Policy is enclosed as an Attachment.
The Committee has discussed with Rowles the compatibility of non-audit
services with the auditors' independence and has received related disclosures
from Rowles. All services provided by Rowles are pre-approved by the
Committee.
The Committee has reviewed and discussed the audited financial statements
with the Company's management. The Committee has discussed with Rowles the
scope and results of the audit. Based on these discussions, the Committee
recommends that the audited financial statements be included in the Company's
Annual Report and Form 10-K, which is filed with the Securities and Exchange
Commission.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING OF SHAREHOLDERS
Shareholders' proposals, intended to be presented at the 2005 Meeting
of Shareholders, must be received by the Company no later than December 8,
2004, to be presented at the 2005 Annual Meeting of Shareholders or
considered for inclusion in the Company's Proxy statement for that meeting.
ANNUAL REPORTS
COPIES OF THE COMPANY'S ANNUAL REPORT ARE BEING MAILED TOGETHER WITH THIS
PROXY STATEMENT. THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO ANY
SHAREHOLDER OF RECORD AS OF MARCH 19, 2004, WHO SO REQUESTS IN WRITING A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) FOR
THE YEAR ENDED DECEMBER 31, 2003, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. ANY SUCH REQUESTS SHOULD BE DIRECTED TO WILLIAM H. MITCHELL,
VICE PRESIDENT, CALVIN B. TAYLOR BANKSHARES, INC., P.O. BOX 5, BERLIN,
MARYLAND 21811-0005.
Attachment to Proxy Statement
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Audit Policy
Purpose
The Board of Directors (Board) adopts this policy which is designed
to provide sufficient audit coverage to prevent unnecessary losses that may
result from inadequate controls or inappropriate procedures and to assure
that disclosure and reporting controls are adequate to assure that the
financial reports of the Company are fairly stated. Further, it is the
purpose of this policy to provide authority and direction to the Audit
Committee (Committee) of the Board.
Audit Committee
The Board authorizes the Audit Committee to oversee the audit functions
of the Company and its subsidiaries. The Committee is responsible for
selecting qualified external and internal auditors to provide sufficient
audit coverage in all major risk areas, to assess the adequacy of internal
controls, to test compliance with policies, procedures, generally accepted
accounting principles and applicable laws and regulations. The Committee
may, at its discretion, retain counsel or other advisors as necessary to
fulfill their duties.
The Committee is comprised of all independent Board members and meets
no less than quarterly. During each meeting, the Committee will meet
absent Directors who are employees of the Company or subsidiaries.
External audit
The Committee will select an external audit firm to perform an audit
in accordance with generally accepted auditing standards. At least once
in every three years, the Committee will obtain, review and sign a letter
from the external audit firm stating a mutual understanding of the engagement.
Annually, the external auditor will meet with the Board to review their
findings and recommendations, and to discuss the independence of the auditor.
This meeting will generally occur within the first quarter of the year.
Internal audit
The Committee will select a qualified internal auditor who will remain
independent of operational functions when performing audits and who will
report directly to the Committee. Internal Audit will assess the adequacy
of the Bank's policies, procedures and internal control structure and test
compliance with those policies and procedures, as well as applicable laws
and regulations and generally accepted accounting principles.
A risk-based Internal Audit Program, approved by the Committee, will
be maintained by the internal auditor. The schedule will be flexible
allowing the auditor to use judgment in applying additional or reduced
procedures as deemed necessary.
Internal Audit will maintain documentation of audit procedures
supporting all conclusions in working papers which will be available to
auditors and examiners on request. It is the intent of the Bank that this
cooperation should facilitate the work of auditors and examiners to
minimize duplication of effort and cost to the Bank.