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Carrollton Bancorp And Jefferson Bancorp, Inc. Agree To Merger

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.

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