Carrollton Bancorp and Jefferson Bancorp, Inc. Agree to Merger

  Carrollton Bancorp and Jefferson Bancorp, Inc. Agree to Merger

Business Wire

LUTHERVILLE, Md. & COLUMBIA, Md. -- April 09, 2012

Jefferson Bancorp, Inc., parent company for Bay Bank, FSB and Carrollton
Bancorp (Nasdaq: CRRB), parent company for Carrollton Bank, today announced
the execution of a definitive agreement for merger of Jefferson Bancorp, Inc
(“Jefferson”) and Carrollton Bancorp (“Carrollton”). The subsidiary banks, Bay
Bank, FSB and Carrollton Bank will also merge, with Bay Bank, FSB being the
surviving entity. The transaction is currently valued at approximately $25
million in stock and cash, representing $15.4 million in consideration to
Carrollton shareholders and repayment of $9.1 million in TARP funding to the
US Treasury. The transaction will combine the strengths of the two
organizations in the Maryland market with a combined 12 bank branches in the
Baltimore/Washington market.

“The Board is very excited about this transaction. It represents the execution
of our stated strategy to be opportunistic in our growth through mergers with
like minded Maryland community banks,” said Kevin Byrnes, Chairman of Bay
Bank. “We believe that our access to capital when coupled with our highly
experienced management team will allow us to grow to the scale necessary to
meet the needs of our customers on a full service basis.”

Carrollton will be the surviving holding company in the merger and the
transaction is structured as a tax-free reorganization. In exchange for 100%
of the outstanding shares of Jefferson, Financial Services Partners Fund I
(“FSPF”) and the other shareholders of Jefferson, after an $11 million
incremental investment by FSPF in Jefferson prior to the merger, will receive
newly issued shares of Carrollton common stock representing approximately
85.92% of the total outstanding shares of Carrollton as of the closing of the
merger, assuming the current Carrollton shareholders elect to exchange for
cash fully 50% of the current outstanding shares of common stock of
Carrollton. This represents a fixed exchange ratio of 2.2217 Carrollton shares
for each Jefferson share and values Carrollton shares at $6.20 per share. In
connection with the merger, the current Carrollton shareholders will be
entitled to elect to exchange for $6.20 per share up to 50% of the currently
outstanding shares of Carrollton common stock in the aggregate.

“We have been very pleased with the performance of our initial investment in
Jefferson and are delighted to be contributing additional equity to facilitate
the formation of a strengthened franchise in the Baltimore-Washington market
with scale, talent and resources required to provide excellence in community
banking services in the future,” said Joseph J. Thomas, Managing Director of
Hovde Private Equity Advisors LLC and Chairman of Jefferson Bancorp, Inc.

On a pro forma consolidated basis, the new Carrollton will have approximately
$472.3 million in total assets, $382.8 million in gross loans, and $412.9
million in total deposits, after purchase accounting adjustments. The combined
bank will have tangible common equity in excess of 10% and reduced levels of
non-performing assets relative to capital as compared to Carrollton on a
stand-alone basis. Furthermore, the revenue synergies and cost savings in the
transaction are expected to demonstrably improve profitability and return on
capital as compared to Carrollton on a stand-alone basis. The new Carrollton
Board of Directors will consist of six existing Jefferson directors and three
directors from the legacy Carrollton Board.

“Carrollton Bank has done a wonderful job of serving the Baltimore market for
over 100 years with a strong commitment to the community. Carrollton has a
solid retail branch network, a successful mortgage operation, and an
innovative mix of fee-based products. We look forward to combining the
strengths of the two organizations to better serve the market with high
quality people and a superior customer service experience,” said Kevin B.
Cashen, President and Chief Executive Officer of Jefferson, who will serve as
President and Chief Executive Officer of Carrollton after the merger. “We are
very happy that, with this merger, we will be well positioned to become the
bank of choice for those consumers and businesses looking for a strong, local
bank with deep roots in the community.”

Carrollton Bank’s President and CEO, Robert Altieri, will join the management
team of Bay Bank as an Executive Vice President, managing several of the
bank’s core businesses. Mr. Altieri will also be an integral part of the
efforts to effectively integrate the two banks. “Bob has been a long-term
banker in this market and has a tremendous reputation. We are very excited to
have him with us on the executive management team to help grow our franchise
and expand our business lines,” said Cashen.

“Bay Bank has made a strong push into the Maryland banking market over the
past two years and we are very excited to join forces to further expand our
market share. We believe that each organization brings unique strengths to the
combined bank and that we will be well positioned to become a dominant
community bank in the market,” said Robert Altieri.

The transaction, which has been approved by both Carrollton’s and Jefferson’s
boards of directors, is expected to close in the third quarter of 2012. The
transaction is subject to certain customary conditions, including the approval
by Carrollton’s shareholders and regulatory approvals.

Monocacy Financial Advisors, LLC acted as financial advisor to Carrollton and
K&L Gates is acting as Carrollton’s legal counsel. Arnold & Porter LLP is
acting as legal counsel to Jefferson.

About Jefferson Bancorp, Inc. /Bay Bank, FSB

Jefferson Bancorp, Inc was formed in July 2010 to acquire certain assets and
assume certain liabilities of Bay National Bank from the Federal Deposit
Insurance Corporation. Substantially all of the Jefferson Bancorp’s
outstanding common shares are owned by Financial Services Partners Fund I LLC
(“FSPF”). FSPF is a Delaware limited liability company established on July 1,
2005, to pursue equity investments in banks, thrifts, insurance and specialty
finance institutions. Jefferson Bancorp, Inc. is a savings & loan holding
company for Bay Bank, FSB. Bay Bank, FSB is headquartered in Lutherville,
Maryland, and is focused on providing superior customer service to small and
medium-sized businesses, their owners and professionals located throughout the
region. Its core products are commercial loans, real estate loans, commercial
and consumer deposit services, cash management services and consumer loans. As
of December 31, 2011, Bay Bank had total assets of approximately $130 million
and two branch locations. Please visit Bay Bank’s website at
for additional information.

About Carrollton Bancorp/Carrollton Bank

Carrollton Bank is a wholly-owned subsidiary of Carrollton Bancorp, a publicly
traded bank holding company (NASDAQ: CRRB) headquartered in Columbia,
Maryland. Carrollton Bank has been committed to providing outstanding
financial service to the central Maryland region for more than 100 years.
Carrollton Bank provides a wide range of financial services for personal and
business banking customers, including a variety of checking accounts,
competitive rates on certificates of deposit and savings accounts, commercial
lending, free nationwide ATMs with the MoneyPass® symbol, mortgages,
investment services* and 24-hour internet and telephone banking. As of
December 31, 2011, Carrollton Bank had approximately $365 million in total
assets and ten (10) branch locations in the region. Please visit Carrollton
Bank’s website at for additional information.

Additional Information about the Merger and Where to Find It

In connection with the proposed merger transaction, Carrollton Bancorp will
file with the Securities and Exchange Commission a Proxy Statement as well as
other relevant documents concerning the proposed transaction. Shareholders are
urged to read the Proxy Statement regarding the merger when it becomes
available and any other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, because they will contain
important information.

A free copy of the Proxy Statement, as well as other filings containing
information about Carrollton Bancorp may be obtained at the SEC's website at You will also be able to obtain these documents, free of
charge, from Carrollton Bancorp at under the tab
"Investor Relations".

Jefferson Bancorp and Carrollton Bancorp and certain of their directors and
executive officers may be deemed to be participants in the solicitation of
proxies from the shareholders of Carrollton Bancorp in connection with the
proposed merger. Information about the directors and executive officers of
Carrollton Bancorp is set forth on the Carrollton Bancorp website in the
“Investor Relations” tab. Information about the directors and executive
officers of Jefferson Bancorp/Bay Bank is set forth on the Bay Bank website in
the “About Bay Bank” tab. Additional information regarding the interests of
those participants and other persons who may be deemed participants in the
transaction may be obtained by reading the Proxy Statement regarding the
proposed merger when it becomes available. Free copies of this document may be
obtained as described in the preceding paragraph.

* Investment products offered through Carrollton Financial Services, Inc. are
not deposits or other obligations of Carrollton Bank or any affiliate; are not
insured by the Federal Deposit Insurance Corporation (FDIC) or any other
agency of the United States Government, Carrollton Bancorp or any affiliate;
and in case of a product that is subject to investment risk, there is possible
loss of value.

Forward-Looking Statement:

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 concerning Carrollton and
Jefferson and the financial condition and projected expenses of Carrollton,
Jefferson and the combined company. These forward-looking statements about
future expectations, plans and prospects of Carrollton, Jefferson and the
combined company involve significant risks, uncertainties and assumptions,
including risks that can be found in the "Risk Factors" section of the
Carrollton Annual Report on Form 10-K on file with the Securities and Exchange
Commission and the other reports that Carrollton periodically files with the
Securities and Exchange Commission. Actual results may differ materially from
those Carrollton contemplated by these forward-looking statements. These
forward looking statements reflect management's current views and Carrollton
does not undertake to update any of these forward-looking statements to
reflect a change in its views or events or circumstances that occur after the
date of this release.


Jefferson Bancorp/Bay Bank
Kevin B. Cashen, 410-427-3707
President and CEO
Carrollton Bancorp
Robert A. Altieri, 410-536-7392
President & CEO
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