UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
|_| 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 ...............................................33-62278
GLEN BURNIE BANCORP
(Exact name of registrant as specified in its charter)
Maryland 52-1782444
- ------------------------------------------ ----------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification Number
101 Crain Highway, S.E., Glen Burnie, MD 21061
- --------------------------------------- ----------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code 410-766-3300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
- ---------------------- -----------------------------------------
Securities registered pursuant to section 12(g) of the Act:
None
-----------------------------------------------------------
(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 No X
Indicate by check mark if disclosure of delinquent filers pursuant to
item 405 of Regulation S-K (ss.229.405 of this chapter) 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.|X|
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of December 31, 1995 was $30,276,658, and as of February
28, 1997 was $22,980,308.
The number of outstanding shares of the registrant's common stock as of
December 31, 1995 was 872,838, and as of February 28, 1997 was 883,858.
Page 1 of 131 Pages
Exhibit Index is on Page 56.
<PAGE>
PART I
ITEM 1. Business
Glen Burnie Bancorp (the "Company") is a bank holding company organized
in 1990 under the laws of the State of Maryland and located in Anne Arundel
County, Maryland. It presently owns all outstanding shares of capital stock of
The Bank of Glen Burnie (the "Bank"), a federally-insured commercial bank
organized in 1949 under the laws of the State of Maryland, basically serving
Anne Arundel County and surrounding areas. The Bank is engaged in the commercial
and retail banking business as authorized by the banking statutes of the State
of Maryland, including the receiving of demand and time deposits, and the making
of loans to individuals, associations, partnerships and corporations. Real
estate financing consists of residential first and second mortgage loans, home
equity lines of credit and commercial mortgage loans. Commercial lending
consists of both secured and unsecured loans.
Deposits and Loans
The Bank's deposit products include regular savings accounts
(statements), money market deposit accounts, demand deposit accounts, NOW
checking accounts, IRA accounts and certificates of deposit accounts. Variations
in service charges, terms and interest rates are used to target specific
markets.
Retail loan products including mortgage loans, personal loans, consumer
loans, overdraft protection, and loans secured by deposit accounts.
Ancillary products and services include safe deposit boxes, money
orders and travellers checks, night depositories, ACH transactions, wire
transfers, automated teller machines, telephone banking, and a customer call
center.
The Bank actively solicits loan applications from small to medium size
businesses. The Bank believes that this is a market in which a relatively small
community bank has a competitive advantage in personal service and flexibility.
The funds needed by the Bank to make loans are generated by deposit
accounts maintained at the Bank. Total deposits at the Bank were $232,745,975 as
of December 31, 1996. In addition, the Bank may borrow up to $26 million under a
line of credit from The Federal Home Loan Bank of Atlanta. As of December 31,
1996, the Bank's "Tier 1" capital (consisting of stockholders' equity, excluding
unrealized after tax net gain or loss on investment securities available for
sale) was $18,321,565. Its ratio of Tier 1 capital to risk-based assets (12.9%
as of December 31, 1996), total capital to risk-based assets (13.5% as of
2
<PAGE>
December 31, 1996) and leverage ratio of Tier 1 capital to average total assets
(6.6% as of December 31, 1996) exceed the minimum ratios required by the Federal
Deposit Insurance Corporation ("FDIC").
Memorandum of Understanding
In the Fall of 1995, the FDIC and the Maryland State Bank Commissioner
(the "Commissioner") performed a routine examination of the Bank. Following the
examination, the Bank, the FDIC and the Commissioner entered into a Memorandum
of Understanding ("M.O.U.") effective June 13, 1996. The M.O.U. required the
Bank to establish written programs to reduce classified assets and contingent
liabilities and to report to the FDIC and the Commissioner quarterly on the
status of such assets and liabilities, to collect or charge-off certain
classified loans, to maintain ratios relating to capital and to delinquent and
non-accrued loans, to provide the FDIC and the Commissioner with thirty days
notice prior to dividend payments, to develop an internal loan review and
grading system, policies for loan underwriting and administration, a strategic
plan for improving operations and budgets, and policies and monitoring systems
for liquidity and interest rate risk, to evaluate the allowance for loan and
lease losses quarterly, to engage a chief lending officer, to cease any
violations of law or regulations cited by the FDIC or the Commissioner, and to
establish a committee of three directors to monitor compliance with the M.O.U.
The Bank is in the process of finalizing the systems and policies required under
the M.O.U., is continuing with the required periodic monitoring and notice
requirements, and has completed the other requirements under the M.O.U.
Should the Bank fail to comply with the provisions of the M.O.U., the
FDIC or the Commissioner could assert greater control over the Bank's operations
and impose penalties. Enforcement actions may include the issuance of formal and
informal agreements, the imposition of civil money penalties and the issuance of
a cease-and-desist order that can be judicially enforced. Neither the FDIC nor
the Commissioner has sought to initiate any such measures.
Recent Loan Loss Experience Involving Significant Borrowers
During its 1995 fiscal year, the Bank had outstanding loans to Brian
Davis, Oceanic Ltd., Inc. ("Oceanic"), McCafferty's Restaurant ("McCafferty's")
and other entities affiliated with Mr. Davis aggregating approximately
$5,804,000 (equalling approximately 28% of the Company's and its subsidiaries'
consolidated revenues for such fiscal year). The Bank filed suit to recover
amounts due under the Oceanic loans, alleging that documents evidencing security
interests for many of the Oceanic loans were falsified by or on behalf of the
borrower. Mr. Davis, Oceanic and McCafferty's have all filed bankruptcy
3
<PAGE>
proceedings and significant recovery by the Bank is unlikely. As a result of the
foregoing, approximately $4,533,000 of these loans have been charged-off.
McCafferty's has brought a proceeding against the Bank seeking damages in
connection with loans involving McCafferty's. See "Legal Proceedings."
An equipment and automobile leasing company and its affiliates had
approximately $8,610,000 in outstanding loans and leases during the Bank's 1995
fiscal year (equalling about 42% of the Company's and its subsidiaries'
consolidated revenues for such fiscal year). The Bank has ceased approving new
loans for these customers due to concerns about the quality of certain of the
loans and leases. As of December 31, 1996 the aggregate outstanding balance of
all loans and leases to these customers was approximately $6,218,000.
The Bank does not believe that the loss of these customers has
materially adversely affected its loan generation business, although the
charge-offs in connection therewith adversely affected its 1995 net income and
earnings per share. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation."
Certain other customers hold secured commercial real estate loans. The
outstanding principal amount of some of these loans exceeds ten percent (10%) of
the consolidated revenues of the Company and its subsidiaries; however, the
required annual debt service payments under each such loan does not exceed ten
percent (10%) of the Company's consolidated revenues. The Company does not
believe that the retirement of these loans or loss of such business, should it
occur for any reason, would have a material adverse effect on the Bank's
business.
Strategic Plan
In order to enhance its business and resolve certain of the problems it
has faced as described above and pursuant to the M.O.U., the Bank has adopted a
strategic plan (the "Strategic Plan"). The objectives of the Strategic Plan are
to increase returns on average assets and average equity to set percentages
within set time frames, improve the Bank's efficiency ratio (non-interest
expense divided by the sum of net interest income and non-interest income),
decrease delinquent loans and classified assets as a percentage of total loans
within set time periods, increase the ratio of total loans to total assets
within a set time period while maintaining and improving asset quality, increase
total deposits to a set amount within a set time period, build capital to a set
percentage of assets within set time periods while continuing to make dividend
payments, maintain regulatory compliance and improve effectiveness of corporate
4
<PAGE>
structure and communications. The Strategic Plan establishes strategies and
action plans to enable the Company to meet these objectives. It is subject to
review by the FDIC and the Commissioner.
Competition
The Bank faces competition from other community banks and financial
institutions and larger intrastate and interstate banks and financial
institutions (currently, twelve financial institutions operate within two miles
of the Bank's headquarters). The Bank's interest rates, loan and deposit terms,
and offered products and services are governed, to a large extent, by such
competition. The Bank attempts to provide superior service within its community
and to know and facilitate its customers. It seeks commercial relationships with
small to medium size businesses who, it believes, would welcome personal service
and flexibility. While the Company believes it is the sixth largest deposit
holder in Anne Arundel County, Maryland, with an estimated 5.63% market share as
of June 1995 (the latest date for which the Bank has relevant data available),
it believes its greatest competition comes from smaller community banks which
offer similar personalized services.
Federal and State Regulation
The Company, as a bank holding company, is subject to regulation under
the Bank Holding Company Act and is registered with and subject to the
supervision of the Federal Reserve Board and is subject to Federal Reserve Board
regulation, examination, supervision and reporting requirements. The Company is
required to furnish to the Federal Reserve Board annual and quarterly reports of
its operations and such additional information as the Federal Reserve Board may
require, and is subject to regular inspection by Federal Reserve Board
examiners.
Under the Bank Holding Company Act, the Company may not engage in any
business other than managing or controlling banks or furnishing services to its
subsidiaries, except that it may engage in certain activities which, in the
opinion of the Federal Reserve Board, are so closely related to banking or to
managing or controlling banks as to be a proper incident thereto. The Company is
also prohibited, with certain exceptions, from acquiring direct or indirect
ownership or control of more than 5% of the voting shares of any company unless
the company is engaged in such permitted activities. The Bank Holding Company
Act also prohibits a bank holding company or any of its subsidiaries from
acquiring voting shares or substantially all the assets of any bank holding
company or bank, or from merging or consolidating with any other bank holding
company, unless such acquisition is approved by the Federal Reserve Board. Under
Maryland law, a
5
<PAGE>
bank holding company is prohibited from acquiring control of any bank if, as a
result of such acquisition, the bank holding company would control more than 30%
of the total deposits of all depository institutions in the State of Maryland
unless such limit is waived by the Commissioner.
The Federal Reserve Board has adopted guidelines regarding the capital
adequacy of bank holding companies, which require bank holding companies to
maintain specified minimum ratios of capital to total assets and capital to
risk-weighted assets. The Federal Reserve Board has also issued a policy
statement expressing its view that a bank holding company should pay cash
dividends only to the extent that the company's net income for the past year is
sufficient to cover both the cash dividends and a rate of earning retention that
is consistent with the company's capital needs, asset quality and overall
financial condition. The Federal Reserve Board has the power to prohibit a bank
holding company from paying dividends if it deems such payment to constitute an
unsafe or unsound practice.
The Company's primary source of income is the receipt of dividends from
its subsidiaries. The Bank's ability to make such payments to the Company is
subject to certain statutory and regulatory restrictions. Under Maryland law,
Maryland banks may only pay dividends from undivided profits or, with the prior
approval of the Commissioner, their surplus in excess of 100% of required
capital stock. Every Maryland bank is prohibited from declaring dividends on its
shares of common stock in excess of 90% of net earnings unless its surplus fund
equals the amount of required capital stock. In addition, the Bank is prohibited
by Federal statute from paying dividends or making other capital distributions
that would cause the Bank to fail to meet its regulatory capital requirements.
The FDIC also has the authority to prohibit the payment of dividends if it
determines such payments to constitute unsafe or unsound banking practices.
Banks are extensively regulated under both Federal and state law. The
Bank, as a Maryland state chartered bank, is subject to primary supervision,
periodic examination and regulation by the Commissioner and the FDIC. Although
the Bank is not a member of the Federal Reserve System, it is nevertheless
subject to certain regulations of the Federal Reserve Board. State and Federal
statutes and regulations relate to many aspects of the Bank's operations,
including reserves against deposits, loans, investments, transactions with
affiliates, mergers and acquisitions, borrowings, dividends and locations of
branch offices. The FDIC and the Commissioner regularly examine the operations
of the Bank, which must file quarterly and annual reports with such agencies.
Such requirements are intended for the protection of the Bank's depositors and
not its stockholders.
6
<PAGE>
The Bank is subject to various regulatory capital requirements
administered by Federal and state banking agencies. Failure to meet minimum
capital requirements can initiate certain actions by regulators that, if
undertaken, could have a direct material effect on the Bank's financial
statements. The Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain off-
balance sheet items as calculated under regulatory accounting principles. The
Bank's capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors.
As of December 31, 1996, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized the Bank must
maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios.
There are no conditions or events since that notification that the Bank believes
have changed the institution's category, although there can be no assurance that
the Bank will continue to meet the minimum ratios necessary to maintain such
categorization.
The Company believes that it and the Bank are both currently in
substantial compliance with all applicable Federal and state regulations.
Statistical Information
Set forth below is certain statistical information concerning the
performance and financial position of the Bank for the indicated period. The
information presented below should be read in conjunction with "Selected
Financial Data", "Management's Discussion And Analysis of Financial Condition
and Results of Operation" and "Financial Statements and Supplementary Data."
7
<PAGE>
The following table provides information concerning average balances
and net income, including rate and volume information, for each of the years
indicated.
<TABLE>
<CAPTION>
AVERAGE BALANCES, NET INTEREST INCOME AND RATE/VOLUME ANALYSIS
(dollars in thousands)
AVERAGE BALANCES YIELD RATE(2)
------------------------------- ----------------------------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Money market investments:
Federal funds sold 2,416 2,799 3,807 5.75% 3.61% 2.78%
Interest bearing deposits 1,526 415 171 5.57% 5.54% 2.92%
Investment securities:
U.S. Treasury securities and
obligations of U.S. gov't agencies 40,263 38,430 39,328 6.43% 6.47% 6.80%
Obligations of states and
political subdivisions 21,479 20,240 18,404 8.54% 8.81% 9.22%
All other investment securities 696 443 7.47% 6.55%
- ---------------------------------------------------------------------------------------------------------------------------
Total investments 66,380 62,327 61,710 7.08% 7.10% 7.26%
Loans, net of unearned income
Demand time and lease 28,559 29,232 31,315 8.95% 8.45% 8.25%
Mortgage and construction 94,322 90,804 82,440 9.68% 9.73% 9.91%
Installment and credit card 33,338 31,897 25,525 8.38% 8.75% 9.19%
- ---------------------------------------------------------------------------------------------------------------------------
Total gross loans(1) 156,219 151,933 139,280 9.27% 9.28% 9.40%
- ----------------------------------------------------------------------------------------------------------------------------
Allowance for credit losses 2,766 2,762 2,139
- ----------------------------------------------------------------------------------------------------------------------------
Total Net loans 153,453 149,171 137,141 9.44% 9.45% 9.55%
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EARNING ASSETS 219,833 211,498 198,851 8.73% 8.76% 8.84%
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
Savings and NOW 68,957 78,067 70,744 3.17% 3.19% 3.50%
Money market 29,081 35,301 36,251 3.19% 3.05% 3.34%
Other time deposits 70,382 54,523 55,629 5.76% 4.48% 4.65%
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INT-BEARING DEPOSITS 168,420 167,891 162,624 4.26% 3.58% 3.86%
- ----------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits 41,500 39,585 35,730
Total deposits 209,920 207,476 198,354 3.42% 2.90% 3.16%
Borrowed funds 1,549 1,573 1,010 5.75% 4.32% 2.28%
NET MARGIN ON INT-EARN ASSETS 219,833 211,498 198,850 5.42% 5.88% 5.67%
============================================================================================================================
</TABLE>
8
<PAGE>
The following table provides income and expense information for the
periods indicated.
<TABLE>
<CAPTION>
INCOME/EXPENSE 1995 VS. 1994
-------------- -------------
INCREASE CHANGE DUE TO
1995 1994 1993 DECREASE RATE VOLUME
---- ---- ---- -------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS $ $ $
Interest earning assets:
Money market investments:
Federal funds sold 139 101 106 38 52 (14)
Interest bearing
deposits 85 23 5 62 0 62
Investment securities:
U.S. Treasury securities and
obligations of U.S. gov't
agencies 2,587 2,488 2,676 99 (20) 119
Obligations of states and
political subdivisions 1,835 1,783 1,696 52 (57) 109
All other investment
securities 52 29 23 6 17
- --------------------------------------------------------------------------------------------------------
Total investments 4,698 4,424 4,483 274 (19) 293
Loans, net of unearned income
Demand time and lease 2,557 2,469 2,582 88 145 (57)
Mortgage and construction 9,135 8,834 8,168 301 (41) 342
Installment and credit card 2,795 2,791 2,347 4 (122) 126
- --------------------------------------------------------------------------------------------------------
Total gross loans(1) 14,487 14,094 13,097 393 (18) 411
- --------------------------------------------------------------------------------------------------------
TOTAL INTEREST EARNING ASSETS 19,185 18,518 17,580 667 (37) 704
- --------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
Savings and NOW 2,187 2,489 2,478 (302) (12) (290)
Money market 929 1,076 1,212 (147) 43 (190)
Other time deposits 4,057 2,444 2,587 1,613 902 711
- --------------------------------------------------------------------------------------------------------
TOTAL INT-BEARING DEPOSITS 7,173 6,009 6,277 1,164 933 231
- --------------------------------------------------------------------------------------------------------
Borrowed funds 89 68 23 21 22 (1)
NET MARGIN ON INT-EARN ASSETS 11,923 12,441 11,280 (518) (992) 474
========================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1994 VS. 1993
-------------
INCREASE CHANGE DUE TO
DECREASE RATE VOLUME
-------- ---- ------
<S> <C> <C> <C>
ASSETS $ $ $
Interest earning assets:
Money market investments:
Federal funds sold (5) 23 (28)
Interest bearing 18 11 7
deposits
Investment securities:
U.S. Treasury securities and
obligations of U.S. gov't
agencies (188) (127) (61)
Obligations of states and
political subdivisions 87 (82) 169
All other investment
securities 29 0 29
- --------------------------------------------------------------------
Total investments (59) (175) 116
Loans, net of unearned income
Demand time and lease (113) 59 (172)
Mortgage and construction 666 (163) 829
Installment and credit card 444 (142) 586
- --------------------------------------------------------------------
Total gross loans(1) 997 (246) 1,243
- --------------------------------------------------------------------
TOTAL INTEREST EARNING ASSETS 938 (421) 1,359
- --------------------------------------------------------------------
LIABILITIES
Deposits
Savings and NOW 11 (246) 257
Money market (136) (104) (32)
Other time deposits (143) (92) (51)
- --------------------------------------------------------------------
TOTAL INT-BEARING DEPOSITS (268) (442) 174
- --------------------------------------------------------------------
Borrowed funds 45 32 13
NET MARGIN ON INT-EARN ASSETS 1,161 (11) 1,172
====================================================================
</TABLE>
- -------------
(1) Non-accrual loans included
(2) Tax equivalent basis
9
<PAGE>
The following table provides yield information for the designated
periods.
<TABLE>
<CAPTION>
AVERAGE BALANCES, YIELDS AND RATES
(dollars in thousands)
For the Year Ended Dec. 31, 1995 For the Year Ended Dec. 31, 1994
-------------------------------- --------------------------------
ASSETS Avg. Bal. Inc./Exp. Yld/Rate(2) Avg. Bal. Inc./Exp. Yld/Rate(2)
--------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets
Money market investments:
Federal funds sold 2,416 139 5.75% 2,799 101 3.61%
Interest bearing deposits 1,526 85 5.57% 415 23 5.54%
Investment securities:
U.S. Treasury securities and
obligations of U.S. gov't
agencies 40,263 2,587 6.43% 38,430 2,488 6.47%
Obligations of States and
political subdivisions 21,479 1,835 8.54% 20,240 1,783 8.81%
- ------------------------------------------------------------------------------------------------------------------
All other investment securities 696 52 7.47% 443 29 6.55%
Total Investments 66,380 4,698 7.08% 62,327 4,424 7.10%
Loans, net of unearned income
Demand, time and lease 28,559 2,557 8.95% 29,232 2,469 8.45%
Mortgage and construction 94,322 9.135 9.68% 90,804 8,834 9.73%
Installment and credit card 33,338 2,795 8.38% 31,897 2,791 8.75%
- ------------------------------------------------------------------------------------------------------------------
Total gross loans (1) 156,219 14,487 9.27% 151,933 14,094 9.28%
- ------------------------------------------------------------------------------------------------------------------
Allowance for credit losses 2,766 2,762
- ------------------------------------------------------------------------------------------------------------------
Total Net loans 153,453 14,487 9.44% 149,171 14,094 9.45%
TOTAL INTEREST EARNING ASSETS 219,833 19,185 8.73% 211,498 18,518 8.76%
Cash and due from banks 7,152 9,769
Other Assets 8,471 8,817
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 235,456 19,185 8.15% 230,084 18,518 8.05%
==================================================================================================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Deposits
Savings and NOW 68,957 2,187 3.17% 78,067 2,489 3.19%
Money market 29,081 929 3.19% 35,301 1,076 3.05%
- ------------------------------------------------------------------------------------------------------------------
Other time deposits 70,382 4,057 5.76% 54,523 2,444 4.48%
- ------------------------------------------------------------------------------------------------------------------
TOTAL INT-BEARING DEPOSITS 168,420 7,173 4.26% 167,891 6,009 3.58%
- ------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits 41,500 39,585
Total deposits 209,920 7,173 3.42% 207,476 6,009 2.90%
Borrowed funds 1,549 89 5.75% 1,573 68 4.32%
Other liabilities 699 638
- ------------------------------------------------------------------------------------------------------------------
Stockholders' equity 23,288 20,395
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and equity 235,456 7,262 3.08% 230,082 6,077 2.64%
==================================================================================================================
NET MARGIN ON INT-EARN ASSETS 219,833 11,923 5.42% 211,498 12,441 5.88%
==================================================================================================================
</TABLE>
<PAGE>
ASSETS For the Year Ended Dec. 31, 1993
--------------------------------
Avg. Bal. Inc./Exp. Yld/Rate(2)
Interest earning assets
Money market investments:
Federal funds sold 3,807 106 2.78%
Interest bearing deposits 171 5 2.92%
Investment securities:
U.S. Treasury securities a
obligations of U.S. gov't
agencies 39,328 2,676 6.80%
Obligations of States and
political subdivisions 18,404 1,696 9.22%
- --------------------------------------------------------------------
All other investment securit
Total Investments 61,710 4,483 7.26%
Loans, net of unearned income
Demand, time and lease 31,315 2,582 8.25%
Mortgage and construction 82,440 8,168 9.91%
Installment and credit card 25,525 2,347 9.19%
- --------------------------------------------------------------------
Total gross loans (1) 139,280 13,097 9.40%
- --------------------------------------------------------------------
Allowance for credit loss 2,139
- --------------------------------------------------------------------
Total Net loans 137,141 13,097 9.55%
TOTAL INTEREST EARNING ASSETS 198,851 17,580 8.84%
Cash and due from banks 10,026
Other Assets 8,347
- --------------------------------------------------------------------
TOTAL ASSETS 217,224 17,580 8.09%
====================================================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Deposits
Savings and NOW 70,744 2,478 3.50%
Money market 36,251 1,212 3.34%
- --------------------------------------------------------------------
Other time deposits 55,629 2,587 4.65%
- --------------------------------------------------------------------
TOTAL INT-BEARING DEPOSITS 162,624 6,277 3.86%
- --------------------------------------------------------------------
Noninterest-bearing deposits 35,730
Total deposits 198,354 6,277 3.16%
Borrowed funds 1,010 23 2.28%
Other liabilities 645
- --------------------------------------------------------------------
Stockholders' equity 17,215
- --------------------------------------------------------------------
Total liabilities and equity 217,224 6,300 2.90%
====================================================================
NET MARGIN ON INT-EARN ASSETS 198,850 11,280 5.67%
====================================================================
- -------------
(1) Non-accrual loans included
(2) Tax equivalent basis
10
<PAGE>
Time Deposit information is as follows:
1995 Time Deposits $100,000 or more maturity schedule
(dollars in thousands)
Three months or less 2,098
Over three through six months 1,893
Over six through 12 months 1,438
Over 12 months 4,416
-----
Total 9,845
=====
A summary of the consolidated investment securities is set forth below:
Investment Securities
(book value - in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
U.S. Treasury securities 15,071 17,099 18,855
U.S. Government agencies and
mortgage-backed 30,235 22,162 20,131
Obligations of states and political
subdivisions 27,380 20,471 19,487
Other securities and stock 699 685 0
------- ------ ------
TOTAL SECURITIES 73,385 60,417 58,473
======= ====== ======
Maturities Book Value Wt. Avg. Yld.
- ---------- ---------- -------------
U.S. Treasury securities
Due within one year 3,499 5.32%
Due over one to five years 9,252 5.89%
Due over five to ten years 2,320 6.10%
Due over ten years 0 0.00%
------- -----
</TABLE>
<PAGE>
Maturities Book Value Wt. Avg. Yld.
- --------------------------------------------------------------------------------
Total U.S. Treasury securities 15,071 5.79%
U.S. Government agencies and
mortgage-backed
Due within one year 1,751 6.93%
Due over one to five years 8,375 6.77%
Due over five to ten years 7,005 7.16%
Due over ten years 13,104 7.16%
- --------------------------------------------------------------------------------
Total U.S. Gov't agencies and
mortgage-backed 30,235 7.04%
Obligations of states and political
subdivisions
Due within one year 990 9.37%
Due over one to five years 3,762 8.79%
Due over five to ten years 6,727 7.94%
Due over ten years 15,901 7.94%
- --------------------------------------------------------------------------------
Total states and political subs 27,380 8.32%
Other securities and stock
Due within one year 699 7.47%
Due over one to five years 0 0.00%
Due over five to ten years 0 0.00%
Due over ten years 0 0.00%
- --------------------------------------------------------------------------------
Total other securities and stock 699 7.47%
- --------------------------------------------------------------------------------
TOTAL SECURITIES 73,385 7.49%
================================================================================
Concentrations of securities greater than 10% of equity
Book Value Market Value
---------- ------------
Maryland SCM's 23,209 23,900
Pennsylvania SCM's 4,171 4,185
The following table provides information on the loan portfolio for the
indicated periods.
<TABLE>
<CAPTION>
Loan Portfolio Analysis
December 31,
Dollars in thousands
1995 1994 1993 1992 1991
$ % $ % $ % $ % $ %
---- - ---- - ---- - ---- - ---- -
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage
Residential 37,269 24.17% 34,303 21.91% 33,664 23.31% 33,480 25.76% 37,040 33.98%
Commercial 46,888 30.41% 39,398 25.16% 39,277 27.20% 35,111 27.02% 28,275 25.94%
Construction and land develop 14,265 9.25% 21,014 13.42% 12,372 8.56% 9,264 7.13% 8,252 7.57%
Lease Financing 13,242 8.59% 15,598 9.96% 17,774 12.31% 19,497 15.00% 7,661 7.03%
Demand and time 13,124 8.51% 12,680 8.10% 12,841 8.89% 10,633 8.18% 8,014 7.35%
Installment 29,382 19.06% 33,585 21.45% 28,490 19.73% 21,970 16.91% 19,770 18.13%
- -----------------------------------------------------------------------------------------------------------------------------
154,170 100.00% 156,578 100.00% 144,418 100.00% 129,955 100.00% 109,012 100.00%
Allowance for credit losses 3,698 2,764 2,552 1,756 993
- -----------------------------------------------------------------------------------------------------------------------------
Loans, net 150,472 153,814 141,866 128,199 108,019
=============================================================================================================================
</TABLE>
12
<PAGE>
The maturity and rate repricing distribution of the loan portfolio are as
follows:
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Variable rate immediately 35,148 40,448 35,243 27,528 21,000
Due within one year 21,326 20,521 17,781 8,033 15,154
Due over one to five years 48,259 48,716 46,276 39,771 27,944
Due over five years 50,310 47,669 45,899 55,235 45,575
- ----------------------------------------------------------------------------
Total gross loans 155,043 157,354 145,199 130,567 109,673
Deferred origination fees 873 776 781 612 661
- ----------------------------------------------------------------------------
Total Net loans 154,170 156,578 144,418 129,955 109,012
============================================================================
Information not available by loan category
Transaction in the allowance for credit losses were as follows:
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Beginning balance 2,764 2,552 1,755 993 669
Provisions charges to operations 7,925 1,120 1,080 1,000 336
Recoveries
Real estate 33 18 1 41 10
Installment 11 20 19 16 68
Credit card & related 0 0 0 0 0
Commercial 26 29 31 3 31
Loans charged off
Real estate 1,541 425 98 193 0
Installment 270 29 41 25 35
Credit card & related 194 1 1 7 0
Commercial 5,056 520 194 73 86
- ----------------------------------------------------------------------------
Ending balance 3,698 2,764 2,552 1,755 993
============================================================================
Average loans 156,219 151,933 139,280 116,782 93,194
Net charge off to total loans 4.48% 0.60% 0.20% 0.19% 0.01%
- ----------------------------------------------------------------------------
Nonperforming And Past Due Loans
Nonaccrual Loans 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Real estate 756 556 800 925 579
Installment 165 25 15 39 48
Credit card & related 4 0 0 0 0
Commercial 1,120 74 299 43 218
- ---------------------------------------------------------------------------
Total Nonaccrual 2,045 655 1,114 1,007 845
- ---------------------------------------------------------------------------
Past Due 90 days
Real Estate 3,297 2,604 1,602 1,702 1,837
Installment 300 0 0 0 0
Credit card & related 28 5 19 0 0
Commercial 610 310 424 0 0
- ---------------------------------------------------------------------------
Total Past Due 90 Days 4,235 2,919 2,045 1,702 1,837
- ---------------------------------------------------------------------------
Interest that would have been accrued under the terms of these loans was
$191,200 for the year ended December 31, 1995.
Loans are placed on non-accrual being 90 days delinquent, however, real estate
loans were considered on a case-by-case basis subject to collateral.
The bank identified impaired loans of $407,597 as of December 31, 1995. No
specific allowance for credit losses related to impaired loans was provided.
These loans were identified as impaired near the end of 1995, and no payments
were received on these loans in 1995 after they were classified impaired.
There were no concentrations of credit not previously disclosed. The allowance
for credit losses is established through a provision for credit losses charged
to expense. Loans are charged against the allowance for credit losses when
management believes that the collectibility of the principal is unlikely.
The allowance, based on evaluations of the collectibility of loans and prior
loan loss experience, is an amount that management believes will be adequate to
absorb possible losses on existing loans that may become uncollectible.
The evaluations take into consideration such factors as changes
in the nature and volume of the loan portfolio, overall portfolio quality,
review of specific problem loans, and current economic conditions and trends
that may affect the borrowers' ability to pay.
13
<PAGE>
Other Activities
The Company also owns all outstanding shares of capital stock of GBB
Properties, Inc. ("GBB") another Maryland corporation organized in 1994 which is
engaged in the business of acquiring, holding and disposing of real property,
typically acquired in connection with foreclosure proceedings (or deed in lieu
of foreclosure) instituted by the Bank or acquired in connection with branch
expansions by the Bank. No branch expansion occurred in 1995.
Employees
The Bank currently employs 143 people. Neither the Company nor GBB
currently has any employees.
ITEM 2. Properties
The Bank owns its Banking Operations Center, its Executive Offices, its
main banking facility in Glen Burnie, and four (4) branch offices in various
communities in Anne Arundel County, Maryland, all of which are unencumbered. The
Company owns no real estate at present. GBB currently owns two parcels of real
estate obtained from foreclosures by the Bank. The book value of these
properties is $285,700. One is a residential property which can be used for
certain commercial purposes; GBB has contracted to sell it for $155,000 ($25,500
over its book value). The other consists of office condominiums. GBB also
intends to sell this property. The Bank also owns foreclosed real estate having
a book value of $143,000. It consists of residential property which the Bank is
holding for sale.
ITEM 3. Legal Proceedings
McCafferty's has commenced an adversary proceeding against the Bank
(McCafferty's , Inc. v. Bank of Glen Burnie Adversary Case, Case No.
96-5137-ESD, U.S. Bankr. Ct., D. Md.) on March 20, 1996 in McCafferty's pending
Chapter 11 bankruptcy case (In re McCafferty's, Inc., Case No. 96-5-2444-SD,
U.S. Bankr. Ct., D. Md.). McCafferty's seeks $5,000,000 in compensatory damages
and $50,000,000 in punitive damages. It alleges that the Bank acted in concert
with Brian Davis, who was McCafferty's treasurer and chief financial officer, in
an unspecified manner to defraud McCafferty's, that the Bank has accepted loan
payments from McCafferty's for loans which McCafferty's never signed nor
authorized, and that the Bank failed to make a loan it had promised to
McCafferty's. The Bank denies any liability and intends to continue contesting
the litigation vigorously. The Company does not believe that the outcome of this
litigation will have a material adverse effect on its business.
The Bank is involved in various other legal actions relating to its
business activities. These actions all involve claims for money damages which in
the aggregate do not exceed 10% of the Company's consolidated assets. The
Company does not believe that any ultimate liability or risk of loss with
respect to those actions will materially affect its consolidated financial
position.
14
<PAGE>
ITEM 4. Submission of Matters to a Vote of Security Holders.
The Company did not submit any matters to a vote of its security
holders during the fourth quarter of its 1995 fiscal year. However, at its
annual stockholders' meeting on March 9, 1995, two slates of candidates ran for
election as directors. The winners received the following votes (rounded to the
nearest share):
Shirley Boyer 448,313
John E. Demyan 448,452
Susan Demyan 448,452
Richard A. Fine 448,452
F. William Kuethe, Jr. 448,452
Frederick W. Kuethe, III 448,452
William N. Scherer, Sr. 448,452
Karen B. Thorwarth 443,315
Neil C. Williams 443,315
The candidates on the losing slate received the following votes (rounded to the
nearest share):
Theodore L. Bertier, Jr. 287,508
Jan W. Clark 248,830
John E. DeGrange, Sr. 248,830
F. Ward DeGrange, Sr. 198,044
Louis J. Doetsch 246,653
F. Paul Dorr, Jr. 246,653
Carl L. Hein, Jr. 248,830
Henry L. Hein 248,830
Earl G. Walter 248,830
Katherine P. Wellford 246,653
Mary Lou Wilcox ran as an independent candidate, losing with 45,735 votes. The
elected directors represented a change from a majority of the directors
(including the Company's chief executive officer) previously in position.
Prior to the election, the directors who ultimately lost the election
filed a lawsuit in the name of the Company against a number of the candidates
who ultimately won the election. The suit was settled shortly after the
election, with the election results accepted by all parties in interest. (The
settlement did not terminate any solicitation conducted with respect to the
election.) The Company agreed to pay all legal fees in connection with the case.
No wrongdoing was found on the part of any director or candidate.
At the March 9, 1995 annual meeting the stockholders also approved the
selection of Rowles & Company as independent accountants for the Company and its
subsidiaries for its 1995 fiscal year. All shares voting voted in favor of such
appointment.
15
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's common equity consists of one class of common stock, par
value $10.00 per share. The Company effectuated a six for five stock split on
January 3, 1996. The Company's stock is traded in the over-the-counter market
and quoted in the pink sheets. The actual range of high and low bid quotations
for the common stock, which has been adjusted to give retroactive effect to the
stock split, for each full quarterly period during 1994 and 1995, based on
actual settlements reported by Legg Mason Wood Walker, the only source of such
information available to the Company, are as follows:
================================================================
High Low
- ----------------------------------------------------------------
1st qtr 1994 $30.833 $28.033
- ----------------------------------------------------------------
2nd qtr 1994 32.292 27.083
- ----------------------------------------------------------------
3rd qtr 1994 30.000 28.750
- ----------------------------------------------------------------
4th qtr 1994 29,479 29.479
- ----------------------------------------------------------------
1st qtr 1995 32.917 28.750
- ----------------------------------------------------------------
2nd qtr 1995 32.917 31.042
- ----------------------------------------------------------------
3rd qtr 1995 32.917 32.083
- ----------------------------------------------------------------
4th qtr 1995 34.375 28.854
================================================================
As of February 3, 1997, the most recent data for which the Company has
information of actual settlements reported by Legg Mason Wood Walker, the
reported high and low were $26.00.
As of December 31, 1996, the number of record holders of the Company's
common stock was 488.
Since its inception, the Company has paid quarterly cash dividends on
its common stock, except that certain dividends have been paid in stock, rather
than cash, to stockholders who participated in the Company's Dividend
Reinvestment and Stock Purchase Plan. The per share dividends paid in cash
during 1994 and 1995, giving retroactive effect to the stock split, were as
follows:
16
<PAGE>
=======================================================================
Per Share Dividend
- -----------------------------------------------------------------------
1st qtr 1994 $.167
- -----------------------------------------------------------------------
2nd qtr 1994 .167
- -----------------------------------------------------------------------
3rd qtr 1994 .167
- -----------------------------------------------------------------------
4th qtr 1994 .167
- -----------------------------------------------------------------------
1st qtr 1995 .175
- -----------------------------------------------------------------------
2nd qtr 1995 .208
- -----------------------------------------------------------------------
3rd qtr 1995 .208
- -----------------------------------------------------------------------
4th qtr 1995 .208
=======================================================================
Pursuant to its Strategic Plan, the Company intends to pay dividends
equal to forty percent (40%) of its profits for each quarter. However, dividends
remain subject to declaration by the board of directors in its sole discretion
and there can be no assurance that the Company will be legally or financially
able to make such payments. Payment of dividends may be limited by Federal and
state regulations which impose general restrictions on a bank's and bank holding
company's right to pay dividends (and to make loans or advances to affiliates
which could be used to pay dividends). See "Business."
ITEM 6. Selected Financial Data.
The following chart presents consolidated selected financial data for
the Company and its subsidiaries for each of the fiscal years from and including
1992, during which the Company acquired the outstanding capital stock of the
Bank, and for the Bank's 1991 fiscal year. All amounts are expressed in
thousands of dollars except per share amounts. Adjustments in dividends and
earnings per share have been made to give retroactive effect to stock splits.
<TABLE>
<CAPTION>
===================================================================================================================================
For Fiscal Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Interest Income $ 11,339 $ 11,868 $ 10,736 $ 8,788 $ 7,182
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) (1,727) 3,517 3,047 2,284 2,022
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share (2.01) 4.22 3.69 2.79 2.47
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 246,165 232,935 223,422 203,573 172,120
- -----------------------------------------------------------------------------------------------------------------------------------
Long Term Obligations --- --- --- --- ---
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Dividends Declared Per .96 .80 .75 .72 .69
Common Share
- -----------------------------------------------------------------------------------------------------------------------------------
Return on Assets -0.73% 1.53% 1.40% 1.23% 1.27%
- -----------------------------------------------------------------------------------------------------------------------------------
Return on Equity -7.42% 17.24% 17.70% 15.23% 15.23%
- ----------------------------------------------------------------------------------------------------------------------------------
Dividend Payout -47.86% 19.24% 20.38% 25.89% 28.08%
- -----------------------------------------------------------------------------------------------------------------------------------
Avg. Equity to Avg. Assets 9.89% 8.86% 7.92% 8.05% 8.32%
===================================================================================================================================
</TABLE>
17
<PAGE>
ITEM 7. Management's Discussion And Analysis Of
Financial Condition And Results Of Operation.
Results Of Operation
In 1995, the Bank reported a net loss of ($1,678,941) as compared to
1994 net income of $3,516,593. The loss was primarily a result of loan losses
related to several large, uncollectible loans. Non-recurring litigation and
restructuring costs in 1995 totalled $1,407,641. Total assets grew 5.7% in 1995
with most of this growth in investment securities while gross loans declined by
1.5%. A 6% growth in deposits in 1995 accounted for the growth in assets.
The Company and its subsidiaries had a consolidated net loss of
$1,726,748 ($2.01 per share) for 1995, a significant change from their 1994
consolidated net income of $3,516,593 ($4.22 per share) and their 1993
consolidated net income of $3,047,112 ($3.69 per share). The change is primarily
due to a significant increase in the provision for loan losses of $7,925,000 for
1995 compared to $1,120,000 for 1994 and $1,080,000 for 1993. The increase
resulted from provisions being made to charge-off delinquent and non-performing
loans. The collectibility of certain loans, significant in aggregate amount,
became doubtful during 1995 and the Bank charged-off a significant amount of
such loans in 1996. The basic terms of the M.O.U. and possible sanctions should
the Bank fail to adhere to it, and certain specific problem loans, are described
under "Business."
The consolidated net interest income prior to making provision for
credit losses decreased by $528,822 (4.5%) from $11,867,959 in 1994 to
$11,339,137 in 1995. Net interest income had increased by $1,131,865 (10.5%)
from $10,736,094 in 1993. The 1995 decrease is primarily due to an increase in
interest expense on deposits which exceeded a slight increase in total interest
revenues from lending activities for such period. The movement of deposits from
lower yielding savings and money market accounts to higher yielding certificates
of deposit resulted in an increase in the Bank's cost of deposits during 1995.
In addition, the Bank wrote off approximately $220,000 in interest income during
1995 in connection with its charge-off of certain loans as described above.
Increased expenses of the Company and its subsidiaries in 1995 also
resulted from $1,407,641 in litigation costs and costs relating to the 1995
directors' election contest. The Bank has obtained insurance reimbursement for
approximately $560,000 of this amount and does not expect to have such charges
(other than routine litigation costs) in the future.
Capital Resources and Liquidity
Total deposits increased from $208,565,653 at 1994 year end to
$221,120,763 at the end of 1995, an increase of $12,555,110 (6.0%). Total
deposits increased by $5,654,923 (2.8%) during 1994 from $202,910,730 at the end
of 1993. While deposits have increased over the past two years, the Bank
believes that a general downward trend in interest rates paid on deposit
accounts has resulted in a trend away from lower yielding deposit products
toward higher yielding long term deposits.
NOW accounts have remained relatively flat increasing by $472,703 in
1994 and $17,141 in 1995 from $21,800,005 at year end 1993. Over the same
period, savings deposits after increasing slightly in 1994 from $52,764,881 in
1993 to $52,830,352 in 1994, declined to $46,752,665 at the end of 1995, a
decrease of $6,077,687 (11.5%). Meanwhile, both certificates of deposit over
$100,000 and other time deposits (made up of certificates of deposit less than
$100,000 and individual retirement accounts) increased by $2,040,197 (26.1%) and
$17,788,337 (34.4%), respectively in 1995. In 1994 certificates of deposit over
$100,000 increased by $1,274,178 (19.5%) from $6,530,466 in 1993 and other time
deposits increased by $4,250,550 (9.0%) from $47,445,457 in 1993.
The Bank's cash and cash equivalents (cash plus federal funds sold) as
of December 31, 1995 ($9,450,021) was roughly the same as at December 31, 1994
($9,606,316), which, in turn, was only 66.5% of the December 31, 1993 total of
$14,435,017. The aggregate market value of investment securities held by the
Bank as of December 31, 1995 was $74,690,073, compared to $59,024,129 as of
December 31, 1994, a $15,665,944 (26.5%) increase. The reason for the large
increase in investment securities during 1995 was the 6.0% increase in deposits
coupled with declining loan demand. The market value of the Bank's investment
securities as of December 31, 1994 had decreased by $2,436,148 (4.1%) from their
December 31, 1993 total.
18
<PAGE>
The Bank may draw on a $26,000,000 line of credit from The Federal Home
Loan Bank of Atlanta. As of December 31, 1994 $1,500,000 was outstanding under
this line. No amounts were outstanding at the end of either 1995 or 1993.
The Bank's net loans decreased by $3,342,654 (2.2%) from $153,814,422
in 1994 to $150,471,768 in 1995. The 1994 net loan total increased by
$11,948,629 (8.4%) from $141,865,793 in 1993. The variations are largely due to
an increase in construction and land development loans in 1994 followed by a
reduction in such loans in 1995. Residential and commercial mortgage loans
increased during 1995 whereas lease financings and installment loans decreased.
The Bank has determined to decrease its equipment and automobile lease based
lending because of the difficulties in monitoring the financial condition of the
clients of lease company borrowers.
ITEM 8. Financial Statements And Supplementary Data.
The response to this Item is set forth at the end of this report.
ITEM 9. Changes In And Disagreements With Accountants On
Accounting And Financial Disclosure.
On April 11, 1996 the Company's board of directors decided not to
reengage Rowles & Company to review the Company's consolidated financial
statements for its 1996 fiscal year. Such accountants report on the Company's
consolidated financial statements for each of its prior two fiscal years did not
contain an adverse opinion or a disclaimer of opinion, and was not qualified or
modified as to uncertainty, audit scope or accounting principles. There were no
disagreements between the Company and Rowles & Company. On June 27, 1996, the
Company's board of directors decided to engage Trice & Geary LLC to perform such
function and Trice & Geary LLC was so engaged on August 16, 1996.
ITEM 10. Directors And Executive Officers Of The Registrant.
Set forth below is information about the directors,
executive officers and significant employees of the Company, the
Bank and GBB. Unless indicated otherwise, the positions stated
for each individual are positions held in the Company and in each
of its subsidiaries.
NAME: AGE: DIRECTOR SINCE:
Theodore L. Bertier 68 1997
Retired since 1993. Manager of design and drafting department of
Westinghouse Electric Corp. prior to retirement.
19
<PAGE>
Shirley Boyer 60 1995
Owner/Manager of a large number of residential properties in Anne Arundel
County, Maryland. Thirteen years experience in banking (1954-1967) in positions
from Teller to Assistant Branch Manager.
Thomas Clocker 62 1995
Owner/Operator of Angel's Food Market in Pasadena, Maryland since 1960. Charter
member of and assisted in founding Pasadena Business Association. Community
involvement including local charities, schools, church, scout groups and
athletic programs.
John E. Demyan 49 1990
Chairman of the Board since 1995. Director of the Company and the Bank from 1990
through 1994. Completed Maryland Banking School in 1994. Owner/Manager of
commercial and residential properties in northern Anne Arundel County, Maryland.
Alan E. Hahn 62 1997
Retired information systems manager.
Charles L. Hein 75 1997
Retired clergyman. Purchaser and restorer of residential properties. Mortgagee
of residential properties.
F. William Kuethe, Jr. 64 1995
President and Chief Executive Officer of the Company and the Bank since 1995.
Director of the Bank from 1960 through 1989. Former President - Glen Burnie
Mutual Savings Bank. Licensed appraiser and real estate broker. Banking
experience from 1960 to present at all levels.
Frederick W. Kuethe, III 37 1995
Vice President of the Company since 1995. Director of the Bank since 1988.
Software design and systems integration - Westinghouse Electric Corporation
since 1981 to present. Chairman of Data Processing Committee for Bank. Son of
F. William Kuethe, Jr.
Eugene P. Nepa 67 1997
Retired engineer.
William N. Scherer, Sr. 74 1995
Attorney specializing in wills and estates. Formerly accountant
and tax specialist.
20
<PAGE>
Karen B. Thorwarth 40 1995
Manager, Yacht Department - Basil-Voges, Inc. of Annapolis, Maryland. Licensed
insurance agent specializing in underwriting and marketing private pleasure
yacht insurance. Member - Annapolis Yacht Club.
Mary Lou Wilcox 49 1997
Elementary school teacher.
Dorothy A. Abel 55
Secretary of the Company since 1995. Vice President and Secretary of the Bank
since 1990.
John E. Porter 43
Treasurer and Chief Financial Officer of the Company since 1995. Vice President,
Treasurer and Chief Financial Officer of the Bank since 1990.
Secretary/Treasurer of GBB since 1995.
Michael L. Derr 46
Vice President Operations of the Bank since 1992. Assistant Vice President
Operations of the Bank since 1989.
Robert J. Riedel 55
Vice President of the Bank since 1990.
Michael Livingston 43
Chief Lending Officer of the Bank since 1996. Regional Vice President and
commercial loan officer with Citizens Bank from March 1993 until April 1996.
Comptroller with Land Services Group from April 1992 through January 1993.
ITEM 11. Executive Compensation.
General
The following chart sets forth the compensation paid by the Company and
the Bank to F. William Kuethe, Jr., their chief executive officer since March 9,
1995, and to Jan W. Clark, their chief executive officer prior to Mr. Kuethe,
during the years indicated.
21
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
- -----------------------------------------------------------------------------------------------------------------
Annual Compensation Awards
-----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
- -----------------------------------------------------------------------------------------------------------------------------------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying Compen-
Name and Principal Salary ($) Bonus sation Award(s) Options/ sation
Position Year ($) ($) SARs (#) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
F. William Kuethe, Jr. 1995 $ 65,538 $ 7,500 $ 250 1 --- 250 $ 16,904 2
Chief Executive Officer 1994 1,500 --- --- --- 35,109 3
1993 1,350 250 1 --- 250 36,818 4
Jan W. Clark 1995 16,093 --- 438 5 --- --- $ 68,543 6
Former Chief Executive 1994 $109,574 $15,000 --- --- 940 29,001 7
Officer 1993 93,506 15,000 250 5 --- 833 26,386 8
===================================================================================================================================
</TABLE>
Stock Option Plans
During 1995, all employees of the Company, including its prior chief
executive officer, received the right to purchase five shares of the Company's
common stock, at a per share price at 15% below the market price for such shares
on the date of
- --------
1 F. William Kuethe, Jr.'s "Other Annual Compensation" consisted solely of
the differences between the exercise price of director stock options exercised
by him during the respective years and the fair market value of the shares at
the time of exercise as determined by information furnished by Legg Mason Wood
Walker.
2 F. William Kuethe, Jr.'s "All Other Compensation" in 1995 consisted of
$1,240 in paid insurance premiums, $8,400 in directors' fees and $7,264 in
appraisal fees.
3 F. William Kuethe, Jr.'s "All Other Compensation" in 1994 consisted of
$22,655 in directors' fees, and $12,454 in appraisal fees.
4 F. William Kuethe, Jr.'s "All Other Compensation" in 1993 consisted of
$23,659 in directors' fees and $13,159 in appraisal fees.
5 Jan Clark's "Other Annual Compensation" consisted solely of the
differences between the exercise price of director stock options exercised by
him during the respective years and the fair market value of the shares at the
time of exercise as determined by information furnished by Legg Mason Wood
Walker.
6 The Company agreed to pay Jan W. Clark a severance payment of $143,345
payable in installments through March 16, 1997. $58,678 of this was paid in 1995
and is included in his "All Other Compensation" for such year. His "All Other
Compensation" in 1995 also consisted of paid insurance premiums of $984,
directors' fees of $3,750 and profit-sharing plan contributions of $5,171.
7 Jan W. Clark's "All Other Compensation" in 1994 consisted of paid
insurance premiums of $6,314, directors' fees of $14,300 and profit-sharing plan
contributions of $8,387.
8 Jan W. Clark's "All Other Compensation" in 1993 consisted of paid
insurance premiums of $5,188, directors' fees of $14,090, and profit-sharing
plan contributions of $7,078.
22
<PAGE>
grant, for every $1,000 of salary and bonus paid during the preceding year. The
rights were granted on July 1, 1995 and could be exercised at any time through
September 30, 1996. The plan was suspended in June, 1996 and no options have
been granted thereunder since 1995. Options for 583 shares were granted to Mr.
Clark in 1993 and for 690 shares in 1994 under this plan.
The Company maintains a director stock purchase plan pursuant to which
directors may purchase the Company's common stock at its fair market value on
the date an option is granted. At December 31, 1995, there were 17,700 shares of
common stock reserved for issuance under the plan. No options are currently
outstanding under this plan. Options for 3,600 shares were exercised in 1995 at
prices of $28.33 to $31.67 per share. All of the options granted to Mr. Kuethe,
and options for 250 shares granted to Mr. Clark in each of 1993 and 1994 were
granted under the directors' stock purchase plan.
The following table sets forth information concerning the award of
stock options to the individuals named in the Summary Compensation Table during
the 1995 fiscal year.
<TABLE>
<CAPTION>
====================================================================================================================================
Option/SAR Grants in Last Fiscal Year
- ------------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of total
Underlying Options/ Exercise
Options/ SARs Granted or Base Market
SARs to Employees Price Price
Name Granted (#) in Fiscal Year ($/Sh) ($/Sh) Expiration Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
F. William Kuethe, Jr. 250 9.1% $38.00 $38.00 July 1, 1996 $475.00 $950.00
- ------------------------------------------------------------------------------------------------------------------------------------
Jan W. Clark
====================================================================================================================================
</TABLE>
23
<PAGE>
The following table sets forth information concerning the exercise of
stock options by such individuals during the 1995 fiscal year:
<TABLE>
<CAPTION>
================================================================================================================================
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
- --------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
F. William Kuethe, Jr. 250 $ 254 --- ---
- --------------------------------------------------------------------------------------------------------------------------------
Jan W. Clark 690 $4,592 --- ---
250 389 --- ---
================================================================================================================================
</TABLE>
The realized value determination is based on the average of the last reported
sales prior to the exercise of the options and the first reported sales
thereafter.
Pension Plan Information
The Bank maintains a pension plan for substantially all employees
pursuant to which benefits are based on the employee's average rate of earnings
and years of service. A participant's pension is based on the average amount of
his annual earnings for his five most highly paid consecutive years during the
ten years immediately preceding his retirement. His pension is determined by
multiplying 2% of the "covered" portion of this amount and .65% of any
additional portion by the lesser of the number of his years of service or 20.
The "covered" portion is his social security taxable wage basis taken over a
period of up to 35 years. The following table shows the estimated annual
benefits payable upon retirement in specified compensation and years of service
classifications based on the assumption that the "covered" portion equals
$65,400 (the current maximum salary subject to social security tax) for all
employees receiving more than such amount and that the highest salary payable is
$100,000 per annum. Currently, no employee earns this much and the Bank does not
anticipate that any employee will in the foreseeable future.
================================================================================
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
Years of Service
- --------------------------------------------------------------------------------
Remuneration 5 10 15 20
- --------------------------------------------------------------------------------
10,000 1,000 2,000 3,000 4,000
- --------------------------------------------------------------------------------
20,000 2,000 4,000 6,000 8,000
- --------------------------------------------------------------------------------
30,000 3,000 6,000 9,000 12,000
- --------------------------------------------------------------------------------
40,000 4,000 8,000 12,000 16,000
- --------------------------------------------------------------------------------
50,000 5,000 10,000 15,000 20,000
- --------------------------------------------------------------------------------
60,000 6,000 12,000 18,000 24,000
- --------------------------------------------------------------------------------
70,000 6,690 13,379 20,069 26,758
- --------------------------------------------------------------------------------
80,000 7,015 14,029 21,044 28,058
- --------------------------------------------------------------------------------
90,000 7,340 14,679 22,019 29,358
- --------------------------------------------------------------------------------
100,000 7,665 15,329 22,994 30,658
================================================================================
24
<PAGE>
The total compensation covered by the pension plan for the year ended
December 31, 1995 was $2,617,791. 2.5% of the covered compensation represents
compensation paid to F. William Kuethe, Jr. His credited years of service is one
year. 0.6% of the covered compensation represents compensation paid to Jan W.
Clark.
Benefits under the pension plan are not subject to deduction for social
security payments or other offsets.
Directors' Fees
Each director receives a $600 fee for attending each meeting of the
board of directors or of committees of the board. During 1995, $94,625 was paid
in directors' fees.
Compensation Committee
A compensation committee of directors approved by the board sets
director compensation. The board sets the compensation of the chief executive
officer. The chief executive officer sets the compensation of the other
executive officers. Executive officers are placed at certain grade levels with
the salary range of each grade level established by the compensation committee,
subject to board approval, based on comparable salaries paid by similar
financial institutions. Within such range, an individual's salary is based on a
performance review conducted by the board or president, as indicated above.
Bonuses are discretionary and largely based on the Bank's financial performance.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The following table provides information as of December 31, 1996
concerning ownership of the Company's common stock (which constitutes its only
class of equity securities) by any individual or group known to the Company to
be the beneficial owner of more than 5% of its common stock, each of its
directors,
25
<PAGE>
each of the individuals listed in the Summary Compensation Table, included with
Item 11 above and all executive officers and directors as a group. Each person
listed has sole voting and sole investment power with respect to the shares
listed across from his name except as noted otherwise.
================================================================================
Name and Address of Account And Nature of Percent of Class
Beneficial Owner Beneficial Ownership (If 1% or more)
- --------------------------------------------------------------------------------
Ethel Webster 167,517 18.95%
104 W. Pasadena Road
Pasadena, MD
- --------------------------------------------------------------------------------
John E. Demyan 73,107 1/ 8.27% 1/
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
F. William Kuethe, Jr. 46,482 2/ 5.26% 2/
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Theodore L. Bertier 6,479 3/
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Shirley Boyer 4,212
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Thomas Clocker 371
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Alan E. Hahn 1,658
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Charles L. Hein 36,442 4/ 4.12% 4/
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Frederick W. Kuethe, III 9,735 5/ 1.10% 5/
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Eugene P. Nepa 22,877 2.59%
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
William N. Scherer, Sr. 2,432 6/
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Karen B. Thorwarth 500
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Mary Lou Wilcox 317
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Jan W. Clark 2
101 Crain Highway, S.E.
Glen Burnie, MD 21061
- --------------------------------------------------------------------------------
Cede & Co. 49,018 5.55%
- --------------------------------------------------------------------------------
All directors and executive 171,036 19.35%
officers as a group
================================================================================
- ---------------------------
1/ Includes 3,000 shares owned by John Demyan's spouse as to which he
disclaims beneficial ownership.
2/ F. William Kuethe, Jr. has shared voting and shared investment power
with respect to 20,097 of these shares.
3/ Theodore L. Bertier has shared voting and shared investment power with
respect to 679 of these shares.
4/ Charles L. Hein has shared voting and shared investment power with
respect to 23,570 of these shares.
5/ Frederick W. Kuethe, III has shared voting and shared investment power
with respect to 9,637 of these shares.
6/ William N. Scherer, Sr. has shared voting and shared investment power
with respect to 2,367 of these shares.
26
<PAGE>
ITEM 13. Certain Relationships and Related Transactions
The executive officers and directors of the Bank enter into loan
transactions with the Bank in the ordinary course of business. Loans to them are
made on the same terms, including interest rates and collateral, as those
prevailing at the time for comparable loans with unrelated borrowers and the
Bank does not believe that they involve more than the normal risk of
collectibility or present other unfavorable features. At December 31, 1995,
1994, and 1993, the amounts of such loans outstanding were $2,878,742, $685,613,
and $535,347, respectively. The election in 1995 of new directors having
outstanding loans is the main reason for the increase in 1995.
27
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8K.
Exhibit List
3.1 Articles of Incorporation
3.2 By-Laws
10.1 Glen Burnie Bancorp Stockholder Purchase Plan
10.2 Glen Burnie Bancorp Dividend Reinvestment and Stock
Purchase Plan
10.3 Glen Burnie Bancorp Director Stock Purchase Plan
10.4 Glen Burnie Bancorp Employee Stock Purchase Plan
10.5 The Bank of Glen Burnie Pension Plan
11 Statement re computation of per share earnings
16 Letter re: change in certifying public accountant
21 Subsidiaries of the registrant
27 Financial Data Schedule
The Company did not file any report on Form 8-K during the last quarter
of its 1995 fiscal year.
28
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
(Registrant): Glen Burnie Bancorp
By (Signature and Title): [F. William Kuethe, Jr.]
----------------------------------
Signature
Chief Executive Officer, President
Date: 3/27/97 F. William Kuethe, Jr.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By (Signature and Title): [John E. Porter]
----------------------------------
Signature
Chief Financial Officer
Date: 3/27/97 John E. Porter
By (Signature and Title): [Beatrice S. McQuarrie]
----------------------------------
Signature
Principal Accounting Officer
Date: 3/27/97 Beatrice S. McQuarrie
By (Signature and Title): [Alan E. Hahn]
----------------------------------
Signature
Director, Alan E. Hahn
Date: 3/27/97
By (Signature and Title): [Theodore L. Bertier, Jr.]
----------------------------------
Director, Theodore L. Bertier, Jr.
Date: 3/27/97
By (Signature and Title): [Karen Thorwarth]
----------------------------------
Director, Karen Thorwarth
Date: 3/27/97
29
<PAGE>
By (Signature and Title): [Mary L. Wilcox]
----------------------------------
Director, Mary L. Wilcox
Date: 3/27/97
By (Signature and Title): [Thomas Clocker]
----------------------------------
Director, Thomas Clocker
Date: 3/27/97
By (Signature and Title): [William N. Scherer, Sr.]
----------------------------------
Director, William N. Scherer, Sr.
Date: 3/27/97
By (Signature and Title): [Charles L. Hein]
----------------------------------
Director, Charles L. Hein
Date: 3/27/97
By (Signature and Title): [F. W. Kuethe, III]
----------------------------------
Director, F.W. Kuethe, III
Date: 3/27/97
By (Signature and Title): [Shirley E. Boyer]
----------------------------------
Director, Shirley E. Boyer
Date: 3/27/97
By (Signature and Title): [Eugene P. Nepa]
----------------------------------
Director, Eugene P. Nepa
Date: 3/27/97
30
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Table of Contents
Page
Report of independent auditors F-1
Financial statements
Consolidated balance sheets F-2
Consolidated statements of income F-3
Consolidated statements of changes in stockholders' equity F-4
Consolidated statements of cash flows F-5-6
Notes to consolidated financial statements F-7-21
<PAGE>
Report of Independent Auditors
The Board of Directors and
Stockholders
Glen Burnie Bancorp and Subsidiaries
Glen Burnie, Maryland
We have audited the accompanying consolidated balance sheets of Glen Burnie
Bancorp and Subsidiaries as of December 31, 1995, 1994, and 1993, and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for the years then ended. 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
Glen Burnie Bancorp and Subsidiaries as of December 31, 1995, 1994, and 1993,
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
As discussed in Note 11 to the financial statements, the Company changed its
method of accounting for postretirement health care benefits in 1995.
Baltimore, Maryland
March 8, 1996
F-1
<PAGE>
<TABLE>
<CAPTION>
Glen Burnie Bancorp and Subsidiaries
Consolidated Balance Sheets
- -------------------------------------------------------------------------------------------------------------------
December 31, 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 9,450,021 $ 7,806,316 $ 10,235,017
Federal funds sold - 1,800,000 4,200,000
Securities available for sale 68,597,172 3,273,076 -
Securities held to maturity (market value
of $6,092,901, $55,751,053 and $61,460,277) 6,001,675 57,128,637 58,473,048
Ground rents 269,825 269,825 269,825
Loans, less allowance for credit losses
of $3,698,271, $2,763,874, and $2,552,355 150,471,768 153,814,422 141,865,793
Bank premises and equipment 4,248,830 4,661,344 4,711,994
Other real estate owned 432,926 417,993 475,985
Accrued interest receivable 2,154,599 2,236,803 1,958,063
Prepaid income taxes 3,164,915 277,636 136,541
Deferred income taxes 263,860 778,818 829,590
Other assets 1,109,145 469,862 265,845
------------ ------------- ------------
$246,164,736 $232,934,732 $223,421,701
============ ============ ============
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 45,147,023 $ 41,081,119 $ 37,868,118
Interest-bearing 175,973,740 167,484,534 165,042,612
------------ ------------ ------------
Total deposits 221,120,763 208,565,653 202,910,730
Short-term borrowings 1,757,722 2,226,568 1,269,261
Dividend payable 218,208 169,987 157,384
Accrued interest payable 229,715 186,823 181,513
Other liabilities 2,300,942 108,668 286,236
------------ ------------ ------------
225,627,350 211,257,699 204,805,124
------------ ------------ ------------
Stockholders' equity
Common stock, par value $10.00 per share;
authorized 5,000,000 shares; issued
and outstanding 727,366 shares in 1995, 708,083
shares in 1994, and 583,402 shares in 1993 7,273,664 7,080,834 5,834,024
Stock dividend to be distributed 1,454,719 - -
Surplus 5,917,043 5,450,852 5,290,979
Retained earnings 5,146,724 9,154,546 7,491,574
Net unrealized gain (loss) on securities
available for sale, net of income taxes 745,236 (9,199) -
------------- ------------- -------------
20,537,386 21,677,033 18,616,577
------------- ------------- -------------
$246,164,736 $232,934,732 $223,421,701
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
Glen Burnie Bancorp and Subsidiaries
Consolidated Statements of Income
- -------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest revenue
Loans, including fees $14,475,876 $14,085,642 $13,091,166
U.S. Treasury securities 987,119 1,037,453 1,136,624
U.S. Government agency securities 1,599,850 1,450,536 1,539,051
State and municipal securities 1,261,886 1,218,119 1,158,832
Federal funds sold 138,678 101,537 105,947
Other 137,296 51,814 4,679
----------- ----------- -----------
Total interest revenue 18,600,705 17,945,101 17,036,299
----------- ----------- -----------
Interest expense
Deposits 7,172,845 6,008,866 6,277,686
Other 88,723 68,276 22,519
----------- ----------- -----------
Total interest expense 7,261,568 6,077,142 6,300,205
----------- ----------- -----------
Net interest income 11,339,137 11,867,959 10,736,094
Provision for credit losses 7,925,000 1,120,000 1,080,000
----------- ----------- -----------
Net interest income after
provision for credit losses 3,414,137 10,747,959 9,656,094
----------- ----------- -----------
Other operating revenue
Service charges on deposit accounts 948,021 956,643 1,002,953
Other fees and commissions 449,567 480,019 400,131
Gains on investment securities 506,695 78,169 5,406
----------- ----------- -----------
Total other revenue 1,904,283 1,514,831 1,408,490
----------- ----------- -----------
Other expenses
Salaries 2,954,742 2,831,455 2,626,476
Employee benefits 1,182,490 1,156,763 1,050,334
Occupancy 465,732 484,738 486,742
Furniture and equipment 741,602 645,707 615,222
Restructuring and litigation charges 1,407,641 - -
Other operating 1,987,405 2,020,773 1,937,610
----------- ----------- -----------
Total other expenses 8,739,612 7,139,436 6,716,384
----------- ----------- -----------
Income (loss) before income taxes and cumulative
effect of a change in accounting method (3,421,192) 5,123,354 4,348,200
Income taxes (benefit) (1,694,444) 1,606,761 1,328,919
----------- ----------- -----------
Income (loss) before cumulative effect of a change
in accounting method (1,726,748) 3,516,593 3,019,281
Cumulative effect of a change in the method
of accounting for income taxes - - 27,831
----------- ----------- -----------
Net income (loss) $(1,726,748) $ 3,516,593 $ 3,047,112
=========== =========== ===========
Earnings per share
Income (loss) before cumulative effect of a
change in accounting method $ (2.01) $ 4.22 $ 3.66
Cumulative effect of a change in the
method of accounting for income taxes - - .03
----------- ----------- -----------
Net income (loss) $ (2.01) $ 4.22 $ 3.69
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
Glen Burnie Bancorp and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Net unrealized
gain (loss) on
Common stock securities
--------------------------- Retained available
Shares Par value Surplus earnings for sale
------ --------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992 568,769 $5,687,690 $4,963,204 $5,065,481 $ -
Net income - - - 3,047,112 -
Issuance of shares for employee and
director stock purchase plans 8,068 80,680 170,726 - -
Cash dividends, $.75 per share - - - (621,019) -
Dividends reinvested 6,565 65,654 157,049 - -
------- ---------- ---------- ---------- -------
Balance, December 31, 1993 583,402 5,834,024 5,290,979 7,491,574 -
Unrealized gain on securities
available for sale at
January 1, 1994 - - - - 132,529
Net income - - - 3,516,593 -
Stock split effected in the form of
20% stock dividend 117,705 1,177,053 - (1,177,053) -
Issuance of shares for employee and
director stock purchase plans 4,605 46,050 96,247 - -
Shares retired (10,558) (105,580) (237,574) - -
Cash dividends, $.80 per share - - - (676,568) -
Dividends reinvested 12,929 129,287 301,200 - -
Change in unrealized (loss) on
securities available for sale - - - - (141,728)
------- ---------- ---------- ---------- --------
Balance, December 31, 1994 708,083 7,080,834 5,450,852 9,154,546 (9,199)
Net loss - - - (1,726,748) -
Issuance of shares for employee and
director stock purchase plans 8,488 84,880 191,174 - -
Cash dividends, $.96 per share - - - (826,355) -
Dividends reinvested 10,795 107,950 275,017 - -
Stock split effected in the form of
20% stock dividend 145,472 1,454,719 - (1,454,719) -
Change in unrealized gain on
securities available for sale - - - - 754,435
------- ---------- ---------- ---------- --------
Balance, December 31, 1995 872,838 $8,728,383 $5,917,043 $5,146,724 $745,236
======= ========== ========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Glen Burnie Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
- -------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Interest received $ 18,637,384 $ 17,654,147 $ 17,115,168
Fees and commissions received 1,397,588 1,436,662 1,403,084
Interest paid (7,218,676) (6,071,832) (6,310,764)
Cash paid to suppliers and employees (7,785,480) (6,934,724) (6,099,518)
Income taxes paid (1,152,564) (1,691,297) (1,662,725)
------------ ------------ ------------
3,878,252 4,392,956 4,445,245
------------ ------------ ------------
Cash flows from investing activities
Proceeds from disposal of securities
Maturity of securities held to maturity 10,266,038 11,405,887 8,836,375
Maturity of securities available for sale 500,000 - -
Sales of securities available for sale 20,109,830 2,530,156 -
Purchases of securities held to maturity (493,391) (12,512,137) (12,385,767)
Purchases of securities available for sale (41,033,354) (3,282,257) -
Loans made to customers, net of
principal collected (3,064,585) (12,222,908) (19,973,503)
Loans purchased (1,730,000) (4,170,190) (2,751,250)
Loans sold - 2,776,000 7,547,887
Sales of real estate 588,747 553,922 291,043
Purchases of premises, equipment, software,
and intangibles (1,144,983) (478,025) (453,415)
------------ ------------ ------------
(16,001,698) (15,399,552) (18,888,630)
------------ ------------ ------------
Cash flows from financing activities
Net increase in deposits 12,555,110 5,654,923 16,552,513
Increase (decrease) in short-term borrowings (468,846) 957,307 288,921
Dividends paid (778,134) (663,965) (611,515)
Dividends reinvested 382,967 430,487 222,703
Shares of stock issued 276,054 142,297 251,406
Shares of stock retired - (343,154) -
------------ ------------ ------------
11,967,151 6,177,895 16,704,028
------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents (156,295) (4,828,701) 2,260,643
Cash and cash equivalents at
beginning of year 9,606,316 14,435,017 12,174,374
------------ ------------ ------------
Cash and cash equivalents at end of year $ 9,450,021 $ 9,606,316 $ 14,435,017
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
Glen Burnie Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
(Continued)
- -------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation of net income to net
cash provided by operating activities
Net income (loss) $(1,726,748) $ 3,516,593 $ 3,047,112
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 583,530 536,605 515,380
Provision for credit losses 7,925,000 1,120,000 1,080,000
Provisions for other losses 136,800 123,000 10,000
Deferred income taxes 40,272 56,559 (377,805)
Losses (gains) on sale of assets, net (509,982) (139,646) 53,744
Amortization of premiums and accretion of
discounts, net (18,997) (7,131) 7,785
Decrease (increase) in
Accrued interest receivable 82,204 (278,740) (98,297)
Prepaid income taxes and other assets (2,943,020) (356,943) (59,268)
Increase (decrease) in
Accrued interest payable 42,892 5,310 (10,559)
Deferred loan origination fees (26,529) (5,083) 169,381
Other liabilities 292,830 (177,568) 107,772
----------- ----------- -----------
$ 3,878,252 $ 4,392,956 $ 4,445,245
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
The accounting and reporting policies reflected in the financial
statements conform to generally accepted accounting principles and to
general practices within the banking industry. Management makes estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosures of commitments and contingent liabilities at the date of
the financial statements and revenues and expenses during the year. Actual
results could differ from those estimates.
Principles of consolidation
The consolidated financial statements include the accounts of Glen
Burnie Bancorp (the Company) and its subsidiaries, The Bank of Glen Burnie
(the Bank) and GBB Properties, Inc. Intercompany balances and transactions
have been eliminated. The Parent Only financial statements of the Company
account for the subsidiaries using the equity method of accounting.
Business
The Bank provides credit and deposit services to individuals and
businesses located in Anne Arundel County and surrounding areas of central
Maryland.
Cash equivalents
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and federal funds sold.
Generally, federal funds are purchased and sold for one-day periods.
Investment securities
In 1994, the Bank adopted Statement No. 115 of the Financial
Accounting Standards Board (FASB), Accounting for Certain Investments in
Debt and Equity Securities. Management has reviewed its portfolio and
classified securities as held to maturity or available for sale. Securities
which management has the intent and ability to hold to maturity are
recorded at amortized cost which is cost adjusted for amortization of
premiums and accretion of discounts to maturity. Securities held to meet
liquidity needs or which may be sold before maturity are classified as
available for sale and carried at fair value with unrealized gains and
losses included in stockholders' equity on an after tax basis.
Gains and losses on disposal are determined using the
specific-identification method.
Loans
Loans are stated at the current amount of unpaid principal, less
deferred origination fees and the allowance for credit losses.
Interest on loans is accrued based on the principal amounts
outstanding. Origination fees are amortized to income over the terms of
loans. Origination costs have been measured and determined by management to
be immaterial to the financial statements. The accrual of interest is
discontinued when management believes, after considering business
conditions and collection efforts, that collection is doubtful.
Allowance for credit losses
The allowance for credit losses represents an amount which, in
management's judgment will be adequate to absorb possible losses on
existing loans and other extensions of credit that may become
uncollectible. Management's judgment in determining the adequacy of the
allowance is based on evaluations of the collectibility of loans. These
evaluations take into consideration such factors as the volume and quality
of the loan portfolio and current economic conditions that may affect the
borrowers' ability to pay. Actual loan performance may differ from
management's estimates.
Management classifies loans as impaired when collection of
contractual obligations, including principal and interest, is doubtful.
F-7
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
1. Summary of Significant Accounting Policies (Continued)
Ground rents
Ground rents are recorded at cost.
Bank premises and equipment
Bank premises and equipment are recorded at cost less accumulated
depreciation. Depreciation is computed over the estimated useful lives of
the assets using the straight-line and accelerated methods.
Other real estate owned
Real estate acquired through foreclosure is recorded at the lower of
cost or fair market value on the date acquired. Losses incurred at the time
of acquisition of the property are charged to the allowance for credit
losses. Subsequent reductions in the estimated carrying value of the
property and other expenses of owning the property are included in other
operating expense.
Software and intangible assets
Costs incurred in the organization of the Company are being amortized
over five years. Computer software is recorded at cost, and amortized over
three to five years. A deposit acquisition premium is recorded at cost, and
amortized over ten years. Amortization is computed using the straight-line
method.
Income taxes
The provision for income taxes includes taxes payable for the current
year and deferred income taxes. The Bank recognizes deferred tax assets and
liabilities for the expected future tax consequences of events that have
been reported differently in the financial statements and tax returns.
Under this method, deferred tax assets and liabilities are determined based
on the difference between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Per share data
Earnings per share are determined by dividing net income by the
weighted average number of shares of common stock outstanding, giving
retroactive effect to stock dividends declared. Weighted average shares
were 861,116 for 1995, 833,849 for 1994, and 826,244 for 1993. Dividends
per share are restated giving retroactive effect to stock dividends
declared.
2. Cash and Equivalents
Cash and due from banks includes money market mutual fund accounts of
$1,457,693, $1,253,540, and $173,996, at December 31, 1995, 1994, and 1993,
respectively.
The Bank normally carries balances with another bank that exceed the
federally insured limit. Average balances carried in excess of the limit
were $4,010,911 for 1995, $6,663,893 for 1994, and $7,169,579 for 1993. The
Bank sold federal funds, on a secured basis, to the same bank that averaged
$2,416,318 for 1995, $2,798,922 for 1994, and $3,807,077 for 1993.
Banks are required to carry noninterest-bearing cash reserves of
specified percentages of deposit balances. The Bank's normal balances of
cash on hand and on deposit with other banks are sufficient to satisfy the
reserve requirements.
F-8
<PAGE>
<TABLE>
<CAPTION>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
3. Investment Securities
Investment securities are summarized as follows:
Amortized Unrealized Unrealized Market
December 31, 1995 cost gains losses value
----------------------- -------------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
Available for sale
U. S. Treasury $10,067,337 $ 142,506 $ 7,845 $10,201,998
U. S. Government agency 26,187,078 287,223 3,601 26,470,700
Mortgage-backed 3,049,947 92,520 - 3,142,467
State and municipal 27,379,975 732,408 29,076 28,083,307
----------- ----------- ---------- -----------
66,684,337 1,254,657 40,522 67,898,472
Federal Home Loan Bank stock 698,700 - - 698,700
------------ -------------- --------- ------------
$67,383,037 $1,254,657 $ 40,522 $68,597,172
=========== ========== ========= ===========
Held to maturity
U. S. Treasury $ 5,003,789 $ 84,106 $ 3,750 $ 5,084,145
U. S. Government agency 997,886 10,870 - 1,008,756
----------- ----------- ---------- -----------
$ 6,001,675 $ 94,976 $ 3,750 $ 6,092,901
=========== =========== ========== ===========
December 31, 1994
-----------------
Available for sale
U. S. Treasury $ 1,494,530 $ 4,272 $ 24,102 $ 1,474,700
U. S. Government agency 500,000 - - 500,000
State and municipal 608,832 5,678 834 613,676
------------ ----------- ------------ ------------
2,603,362 9,950 24,936 2,588,376
Federal Home Loan Bank stock 684,700 - - 684,700
------------ ------------- -------------- ------------
$ 3,288,062 $ 9,950 $ 24,936 $ 3,273,076
=========== =========== =========== ===========
Held to maturity
U. S. Treasury $15,604,747 $ 18,616 $ 590,301 $15,033,062
U. S. Government agency 19,767,888 40,982 700,178 19,108,692
Mortgage-backed 1,894,261 19,336 45,941 1,867,656
State and municipal 19,861,741 414,704 534,802 19,741,643
----------- ------------ ------------ -----------
$57,128,637 $ 493,638 $ 1,871,222 $55,751,053
=========== =========== =========== ===========
December 31, 1993
-----------------
U. S. Treasury $18,855,022 $ 615,160 $ - $19,470,182
U. S. Government agency 18,476,871 642,457 10,374 19,108,954
Mortgage-backed 1,653,810 113,962 - 1,767,772
State and municipal 19,487,345 1,628,615 2,591 21,113,369
----------- ---------- ------------- -----------
$58,473,048 $3,000,194 $ 12,965 $61,460,277
=========== ========== ============ ===========
</TABLE>
In 1995, the FASB granted a one-time opportunity to reclassify
securities. The Bank reclassified a majority of its securities from held to
maturity to available for sale.
F-9
<PAGE>
<TABLE>
<CAPTION>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
3. Investment Securities (Continued)
Contractual maturities at December 31, 1995, 1994, and 1993, are
shown below. Actual maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
Available for sale Held to maturity
Amortized Market Amortized Market
December 31, 1995 cost value cost value
--------------------------- -------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
Due within one year $ 6,239,463 $ 6,272,876 $ - $ -
Due over one to five years 16,130,873 16,449,969 5,258,197 5,328,052
Due over five to ten years 15,308,097 15,747,636 743,478 764,849
Due over ten years 25,955,957 26,285,524 - -
Mortgage-backed, due in
monthly installments 3,049,947 3,142,467 - -
----------- ------------ -------------- ----------
$66,684,337 $67,898,472 $6,001,675 $6,092,901
=========== =========== ========== ==========
December 31, 1994
-----------------
Due within one year $ 499,490 $ 503,750 $ 6,598,185 $ 6,604,743
Due over one to five years 1,495,040 1,470,950 34,059,243 33,071,197
Due over five to ten years - - 9,926,296 9,730,426
Due over ten years 608,832 613,676 4,650,652 4,477,031
Mortgage-backed, due in
monthly installments - - 1,894,261 1,867,656
------------- ------------ ----------- -----------
$ 2,603,362 $ 2,588,376 $57,128,637 $55,751,053
=========== =========== =========== ===========
December 31, 1993
-----------------
Due within one year $ 7,089,159 $ 7,163,994
Due over one to five years 31,347,218 32,776,360
Due over five to ten years 13,308,887 14,252,018
Due over ten years 5,073,974 5,500,133
Mortgage-backed, due in
monthly installments 1,653,810 1,767,772
------------ ------------
$58,473,048 $61,460,277
============ ===========
</TABLE>
Proceeds from sales of investments prior to maturity were $20,338,033
during 1995 and $2,530,156 during 1994. Gains of $563,764 and losses of
$72,482, were realized on those sales for 1995. Gains of $62,385 and losses
of $18,738 were realized on those sales for 1994. There were no sales of
investments prior to maturity for 1993.
At December 31, 1995, 1994, and 1993, securities with an amortized
cost of $3,004,119, $2,500,000, and $1,600,162, were pledged as collateral
for government deposits and short-term borrowings.
The investment securities include obligations of the State of
Maryland and its subdivisions with an amortized cost of $18,839,735,
$20,217,039, and $19,233,538, at December 31, 1995, 1994, and 1993.
F-10
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
<TABLE>
<CAPTION>
4. Loans
Major categories of loans are as follows:
1995 1994 1993
--------------- --------------- ----------
<S> <C> <C> <C>
Mortgage
Residential $ 37,269,279 $ 34,302,680 $ 33,664,092
Commercial 46,888,141 39,397,909 39,276,953
Construction and land development 14,264,761 21,014,457 12,372,074
Lease financing 13,241,832 15,597,789 17,773,635
Demand and time 13,123,542 12,680,512 12,841,248
Installment 29,382,484 33,584,949 28,490,146
------------- ------------- ------------
154,170,039 156,578,296 144,418,148
Allowance for credit losses 3,698,271 2,763,874 2,552,355
------------- ------------- ------------
Loans, net $150,471,768 $153,814,422 $141,865,793
============ ============ ============
</TABLE>
The Bank makes loans to customers located primarily in Anne Arundel
County and surrounding areas of central Maryland. Although the loan
portfolio is diversified, its performance will be influenced by the economy
of the region.
The maturity and rate repricing distribution of the loan portfolio
are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- ---------
<S> <C> <C> <C>
Variable rate immediately $ 35,148,040 $ 40,448,637 $ 35,243,050
Due within one year 21,326,466 20,520,984 17,781,365
Due over one to five years 48,258,718 48,715,788 46,275,618
Due over five years 50,309,892 47,668,693 45,899,004
------------ ------------- -------------
155,043,116 157,354,102 145,199,037
Deferred fees and discount 873,077 775,806 780,889
-------------- -------------- --------------
$154,170,039 $156,578,296 $144,418,148
============ ============ ============
</TABLE>
Transactions in the allowance for credit losses were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Beginning balance $ 2,763,874 $ 2,552,355 $ 1,755,385
Provision charged to operations 7,925,000 1,120,000 1,080,000
Recoveries 70,047 67,663 50,627
------------- ------------- --------------
10,758,921 3,740,018 2,886,012
Loans charged off 7,060,650 976,144 333,657
------------- ------------- -------------
Ending balance $ 3,698,271 $ 2,763,874 $ 2,552,355
============ ============ ============
</TABLE>
Management has identified impaired loans of $407,597 as of December
31, 1995. No specific allowance for losses related to impaired loans has
been provided. These loans were identified as impaired near the end of
1995, and no payments have been received on these loans since they were
classified impaired.
F-11
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
4. Loans (Continued)
Loans on which the accrual of interest has been discontinued amounted
to $2,374,643, $654,568, and $1,113,701, at December 31, 1995, 1994, and
1993, respectively. Interest that would have been accrued under the terms
of these loans was $191,200, $38,469, and $182,495, at December 31, 1995,
1994, and 1993, respectively.
Principal balances of loans past due 90 days or more, including past
due nonaccrual loans, are as follows:
1995 1994 1993
----------- ------------- ---------
Demand and time $ 293,462 $ 199,873 $ 339,108
Mortgage 3,258,164 2,486,348 2,094,193
Installment 1,459,411 845,494 615,184
Lease financing 1,269,102 41,912 110,886
---------- ----------- -----------
$6,280,139 $3,573,627 $3,159,371
========== ========== ==========
5. Credit Commitments
Outstanding loan commitments, unused lines of credit and letters of
credit are as follows
<TABLE>
<CAPTION>
1995 1994 1993
----------- ------------ --------
<S> <C> <C> <C>
Loan commitments
Construction and land development $3,145,000 $ 2,354,000 $ 3,105,000
Other mortgage loans 703,000 1,181,900 2,141,747
Lease financing 395,000 750,000 -
----------- ------------ ----------
$4,243,000 $ 4,285,900 $ 5,246,747
========== =========== ===========
Unused lines of credit
Home-equity lines $ 2,678,990 $ 2,561,861 $ 2,579,440
Commercial lines 13,430,907 18,424,323 18,217,753
Unsecured consumer lines 2,419,052 1,886,600 1,696,982
----------- ------------ -----------
$18,528,949 $22,872,784 $22,494,175
=========== =========== ===========
Letters of credit $ 4,297,760 $ 4,467,523 $ 4,276,619
=========== =========== ===========
</TABLE>
Loan commitments and lines of credit are agreements to lend to a
customer as long as there is no violation of any condition to the contract.
Loan commitments generally have interest rates fixed at current market
amounts, fixed expiration dates, and may require payment of a fee. Lines of
credit generally have variable interest rates. Such lines do not represent
future cash requirements because it is unlikely that all customers will
draw upon their lines in full at any time. Letters of credit are
commitments issued to guarantee the performance of a customer to a third
party.
The Bank's exposure to credit loss in the event of nonperformance by
the customer is the contractual amount of the commitment. Loan commitments,
lines of credit and letters of credit are made on the same terms, including
collateral, as outstanding loans. An allowance of $108,000 has been
provided to record a possible loss on a letter of credit.
F-12
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
<TABLE>
<CAPTION>
6. Bank Premises and Equipment
A summary of bank premises and equipment is as follows:
Useful
lives 1995 1994 1993
------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
Land $ 509,803 $ 896,170 $ 896,170
Bank buildings 5-50 years 3,494,122 3,467,732 3,357,690
Construction in progress 29,019 65,024 175,771
Equipment and fixtures 5-30 years 3,430,771 3,037,146 2,890,047
---------- ----------- ----------
7,463,715 7,466,072 7,319,678
Accumulated depreciation 3,214,885 2,804,728 2,607,684
---------- ---------- ----------
$4,248,830 $4,661,344 $4,711,994
========== ========== ==========
</TABLE>
Depreciation expense was $533,197, $511,919, and $449,426, for 1995,
1994, and 1993, respectively. Amortization of software and intangible
assets was $50,332, $24,686, and $15,954 for 1995, 1994, and 1993,
respectively.
The Bank leases the South Crain Branch. Minimum obligations under the
lease are $23,460 per year until the lease expires on June 30, 2000. The
Bank is also required to pay maintenance costs. Rent expense was $11,681
for 1995.
7. Short-term borrowings
Short-term borrowings are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Notes payable - U.S. Treasury $ 282,722 $ 726,568 $1,269,261
Federal funds purchased 975,000 - -
Securities sold under repurchase agreement 500,000 - -
Federal Home Loan Bank notes - 1,500,000 -
---------- ---------- ----------
$1,757,722 $2,226,568 $1,269,261
========== =========== ==========
</TABLE>
The Bank may borrow up to $26 million under a line of credit with the
Federal Home Loan Bank. The line of credit is secured by a floating lien on
the Bank's residential mortgage loans and by investment securities with an
amortized cost of $3,004,119 at December 31, 1995.
Notes payable to the U.S. Treasury are federal treasury tax and loan
deposits accepted by the Bank from its customers to be remitted on demand
to the Federal Reserve Bank. The Bank pays interest on these balances at a
slight discount to the federal funds rate.
The Bank also has available lines of credit, less amounts currently
outstanding, of $1,000,000 in overnight federal funds and $2,000,000 in
short-term secured credit from another bank.
F-13
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
8. Deposits
Major classifications of interest-bearing deposits are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- ----------
<S> <C> <C> <C>
NOW and SuperNOW $ 22,289,849 $ 22,272,708 $ 21,800,005
Money market 27,602,041 32,880,823 36,501,803
Savings 46,752,665 52,830,352 52,764,881
Certificates of deposit, $100,000 or more 9,844,841 7,804,644 6,530,466
Other time deposits 69,484,344 51,696,007 47,445,457
------------- ------------- -------------
$175,973,740 $167,484,534 $165,042,612
============ ============ ============
</TABLE>
Certificates of deposit $100,000 or more mature as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- ---------
<S> <C> <C> <C>
Three months or less $2,097,599 $3,315,755 $2,266,140
Three through 12 months 3,331,546 3,047,900 1,970,334
Over 12 months 4,415,696 1,440,989 2,293,992
---------- ----------- -----------
$9,844,841 $7,804,644 $6,530,466
========== ========== ==========
</TABLE>
Interest expense associated with certificates of deposit of $100,000
or more was $394,092, $312,993, and $298,594, for the years ended December
31, 1995, 1994, and 1993, respectively.
9. Other Operating Expenses
Other operating expenses include the following:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ --------
<S> <C> <C> <C>
Professional services $ 329,849 $ 245,932 $ 151,751
Stationery, printing, and supplies 278,366 235,500 241,708
Postage and delivery 253,253 201,094 187,134
FDIC assessment 237,565 455,250 420,481
Directors fees and expenses 133,202 159,518 195,963
Marketing 118,948 97,671 112,089
Data processing 97,608 92,237 74,830
Correspondent bank services 78,631 53,285 44,423
Telephone 49,021 38,598 49,257
Liability insurance 45,075 48,405 51,424
Losses and expenses on real estate owned 23,733 107,553 102,323
Other 342,154 285,730 306,227
----------- ----------- -----------
$1,987,405 $2,020,773 $1,937,610
========== ========== ==========
</TABLE>
F-14
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
10. Pension and Profit Sharing Plans
The Bank has a defined benefit pension plan covering substantially
all of the employees. Benefits are based on the employee's average rate of
earnings for the five consecutive years before retirement. The Bank's
funding policy is to contribute annually the maximum amount that can be
deducted for income tax purposes, determined using the frozen entry age
actuarial cost method. Assets of the plan are held in a trust fund
principally comprised of growth and income mutual funds managed by another
bank.
The following table sets forth the financial status of the plan:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ --------
<S> <C> <C> <C>
Accumulated benefit obligation
Vested $2,183,088 $2,003,059 $1,839,440
Nonvested 63,366 98,277 59,410
----------- ----------- -----------
$2,246,454 $2,101,336 $1,898,850
========== ========== ==========
Plan assets at fair value $3,399,653 $2,767,215 $2,771,950
Projected benefit obligation 3,365,078 3,085,573 2,709,239
---------- ---------- ----------
Plan assets in excess of (less than)
projected benefit obligation 34,575 (318,358) 62,711
Unrecognized prior service cost 199,924 225,521 251,118
Unrecognized net (gain) loss (6,440) 332,303 (74,306)
Unamortized net asset from transition (73,012) (85,181) (97,350)
---------- ---------- ----------
Prepaid pension expenses included in
other assets $ 155,047 $ 154,285 $ 142,173
========== ========== ==========
Net pension expense includes the following:
Service cost $ 177,998 $ 175,424 $ 143,683
Interest cost 256,958 232,123 198,606
Actual return on assets (577,586) 96,951 (292,053)
Net amortization and deferral 364,911 (314,269) 96,846
---------- ---------- ----------
Net pension expense $ 222,281 $ 190,229 $ 147,082
========== ========== ==========
Assumptions used in the accounting for net pension
expense were:
Discount rates 8.5% 8.5% 8.5%
Rate of increase in compensation levels 6.5% 6.5% 6.5%
Long-term rate of return on assets 8.5% 8.5% 8.5%
</TABLE>
The Bank has a defined contribution retirement plan qualifying under
Section 401(k) of the Internal Revenue Code that is funded through a profit
sharing agreement and voluntary employee contributions. The Bank's
contributions to the plan are determined annually by the Board of
Directors. The plan covers substantially all employees. The Bank's
contributions to the plan, included in expenses, for 1995, 1994, and 1993
were $165,100, $154,900, and $141,700, respectively.
F-15
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
11. Postretirement Health Care Benefits
The Bank provides health care benefits to employees who retire at age
65. The plan is funded only by the Bank's monthly payments of insurance
premiums due. The following table sets forth the financial status of the
plan at December 31, 1995:
Accumulated postretirement benefit obligation
Retirees $185,057
Other active participants, not fully eligible 482,922
--------
667,979
Unrecognized transition obligation 535,126
--------
Accrued postretirement benefit cost $132,853
========
Net postretirement benefit expense for
1995 includes the following:
Service cost $ 55,885
Interest cost 56,778
Amortization of unrecognized transition obligation 33,399
--------
Net postretirement benefit expense $146,062
========
Assumptions used in the accounting for
net postretirement benefit
expense were:
Health care cost trend rate 8.0%
Discount rate 8.5%
If the assumed health care cost trend rate were increased to 9.0%,
the total of the service and interest cost components of net periodic
postretirement health care benefit cost would increase by $28,808, and the
accumulated postretirement benefit obligation would increase by $161,117.
12. Litigation and Restructuring Charges
In 1995, two opposing groups ran for election to the Board of
Directors. The Company incurred legal expenses and entered into a severance
agreement with a former executive officer in connection with this
restructuring at costs totaling $687,841. The Company also incurred losses
of $719,800 to settle the claim of a borrower who asserted damages for
discrimination. These nonrecurring charges are included in operating
expenses for 1995.
13. Contingencies
The Bank is involved in various legal actions arising from normal
business activities. Management believes that the ultimate liability or
risk of loss resulting from these actions will not materially affect the
Bank's financial position.
F-16
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
14. Income Taxes
The components of income tax expense (benefit) are as follows:
1995 1994 1993
----------- ----------- --------
Current
Federal $ (1,494,542 $1,204,547 $1,310,228
State (240,172) 345,654 368,665
------------ ---------- ----------
(1,734,714) 1,550,201 1,678,893
Deferred 40,270 56,560 (349,974)
------------ ---------- ----------
$ (1,694,444) $1,606,761 $1,328,919
============ ========== ==========
The components of the deferred tax expense (benefits) are as follows:
Depreciation $ (5,786) $ (1,155) $ 8,705
Discount accretion (7,465) 4,714 6,820
Provision for credit losses 149,670 (107,971) (301,872)
Deferred loan origination fees (16,343) 150,535 (81,619)
Deferred compensation plans (79,806) 10,437 17,992
---------- --------- ---------
$ 40,270 $ 56,560 $(349,974)
========== ========= =========
As of January 1, 1993, the Company recorded a tax credit of $27,831,
or $0.03 per share resulting from the adoption of FASB Statement No. 109.
This amount represents the net increase in the deferred tax asset as of
that date, and is included in the consolidated statements of income as the
cumulative effect of an accounting change.
The components of the net deferred tax asset (liability) are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ---------
<S> <C> <C> <C>
Deferred tax assets
Allowance for credit losses $ 837,382 $ 987,052 $ 879,081
Deferred loan origination fees 138,285 121,942 272,477
Unrealized loss on securities available for sale - 5,788 -
Deferred compensation and benefit plans 87,543 7,443 13,202
----------- ------------ -----------
1,063,210 1,122,225 1,164,760
---------- ---------- ----------
Deferred tax liabilities
Depreciation 245,201 250,987 252,142
Discount accretion 25,370 32,835 28,121
Prepaid pension contributions 59,879 59,585 54,907
Unrealized gain on securities available for sale 468,899 - -
----------- ----------- ---------
799,349 343,407 335,170
----------- ----------- -----------
Net deferred tax asset $ 263,861 $ 778,818 $ 829,590
========== ========== ==========
</TABLE>
F-17
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
14. Income Taxes (Continued)
The differences between the federal income tax computed at the
statutory rate of 34 percent and the income taxes for the Company are
reconciled as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ --------
<S> <C> <C> <C>
Income (loss) before income taxes $(3,421,192) $ 5,123,354 $ 4,348,200
=========== =========== ===========
Taxes computed at federal income tax rate $(1,163,205) $ 1,741,940 $ 1,478,388
Increase (decrease) resulting from
Tax-exempt income (384,915) (377,591) (359,031)
State income taxes, net of federal benefit (154,710) 237,724 201,452
Nondeductible expenses 8,386 4,688 8,110
------------- ------------- ------------
$(1,694,444) $ 1,606,761 $ 1,328,919
=========== =========== ===========
</TABLE>
15. Capital Standards
The Federal Reserve Board and the Federal Deposit Insurance
Corporation have adopted risk-based capital standards for banking
organizations. These standards require minimum ratios of capital to
risk-based assets of 4 percent for Tier 1 capital and 8 percent for total
capital. Tier 1 capital consists of stockholders' equity, excluding the
unrealized net gain or loss, after applicable income taxes, on investment
securities available for sale, and total capital includes a limited amount
of the allowance for credit losses. In calculating risk-weighted assets,
specified risk percentages are applied to each category of asset and
off-balance sheet items.
The Company and the Bank must also maintain minimum capital leverage
ratios of 3 to 5 percent of Tier 1 capital to average total assets. The
standard is based on a discretionary evaluation of the Bank's risk profile
by the Federal Reserve and the FDIC.
A bank is considered well capitalized if it has minimum Tier 1 and
total risk-based capital ratios of 6 percent and 10 percent, respectively,
and a minimum leverage ratio of 5 percent.
The Company's capital ratios, capital balances, and risk-weighted
assets at December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- ---------
<S> <C> <C> <C>
Risk-based ratios
Tier 1 capital 12.4% 14.0% 13.0%
Total risk-based capital 13.7% 15.3% 14.3%
Leverage ratio (approximated using
year-end assets) 7.8% 9.3% 8.3%
Capital balances
Tier 1 $ 19,261,115 $ 21,686,232 $ 18,616,577
Total 21,226,040 23,624,870 20,409,840
Risk-weighted assets 154,987,000 154,393,000 142,697,000
</TABLE>
F-18
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
16. Parent Company Financial Information
The balance sheets and statements of income for Glen Burnie Bancorp
(Parent Only) are presented below:
<TABLE>
<CAPTION>
Balance Sheets
- --------------------------------------------------------------------------------------------------------------
December 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash $ 264,757 $ - $ 174,463
Investment in The Bank of Glen Burnie 20,478,884 21,718,390 18,201,804
Investment in GBB Properties, Inc. - 1,899 -
Land - 384,700 384,700
Other assets 27,142 16,582 12,994
----------- ----------- -----------
Total assets $20,770,783 $22,121,571 $18,773,961
=========== =========== ===========
Liabilities and stockholders' equity
Dividend payable $ 218,208 $ 169,987 $ 157,384
Due to affiliates 15,189 274,551 -
----------- ----------- -----------
233,397 444,538 157,384
----------- ----------- -----------
Stockholders' equity
Common stock 7,273,664 7,080,834 5,834,024
Stock dividend to be distributed 1,454,719 - -
Surplus 5,917,043 5,450,852 5,290,979
Retained earnings 5,146,724 9,154,546 7,491,574
Net unrealized gain (loss) on securities
available for sale, net of income taxes 745,236 (9,199) -
----------- ----------- -----------
Total stockholders' equity 20,537,386 21,677,033 18,616,577
----------- ----------- -----------
Total liabilities and stockholders' equity $20,770,783 $22,121,571 $18,773,961
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Statements of Income
- --------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend from subsidiaries $ 315,000 $ - $ 160,000
Expenses 61,775 7,060 9,136
------------ ----------- -----------
Income before income taxes and equity in
undistributed net income of subsidiaries 253,225 (7,060) 150,864
Income tax benefit 21,056 5,970 -
Equity in undistributed net income of subsidiaries (2,001,029) 3,517,683 2,896,248
------------ ------------ -----------
Net income (loss) $ (1,726,748) $ 3,516,593 $ 3,047,112
============ =========== ===========
</TABLE>
F-19
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
17. Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments are
as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------------------ ------------------------------
Carrying Fair Carrying Fair
amount value amount value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Financial assets
Cash and due from banks $ 9,450,021 $ 9,450,021 $ 7,806,316 $ 7,806,316
Federal funds sold - - 1,800,000 1,800,000
Investment securities 74,598,847 74,690,073 60,401,713 59,024,129
Variable rate loans 35,148,040 35,148,040 40,448,637 40,448,637
Accrued interest receivable 2,154,599 2,154,599 2,236,803 2,236,803
Financial liabilities
Noninterest-bearing deposits $ 45,147,023 $ 45,147,023 $ 41,081,119 $ 41,081,119
Variable rate deposits 96,644,555 96,644,555 107,983,883 107,983,883
Short-term borrowings 1,757,722 1,757,722 2,226,568 2,226,568
Interest and dividend payable 447,923 447,923 356,810 356,810
</TABLE>
The fair values of investment securities are estimated using a matrix
that considers yield to maturity, credit quality, and marketability. This
method of valuation is permitted by the FASB, but may not be indicative of
net realizable or liquidation values.
It is not practicable to estimate the fair value of loans with fixed
maturities, deposit liabilities with fixed maturities, or outstanding
credit commitments. The Company does not presently have available resources
to estimate fair values based on quoted prices or discounted cash flows for
individual accounts or groups of accounts.
Maturities and weighted-average interest rates on loans and deposits
with fixed maturities are as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
---------------------- ---------------------
Amount Rate Amount Rate
------ ---- ------ ----
<S> <C> <C> <C> <C>
Loans
Maturing within one year $ 21,326,466 8.7% $ 20,520,984 8.7%
Maturing over one to five years 48,258,718 9.0% 48,715,788 8.8%
Maturing over five years 50,309,892 9.1% 47,668,693 9.3%
------------- ------------
$119,895,076 $116,905,465
============ ============
Deposits
Maturing within three months $ 17,035,145 5.7% $ 13,342,709 4.0%
Maturing over three to six months 16,598,147 5.8% 12,985,504 4.8%
Maturing over six months to one year 13,014,695 5.7% 12,643,752 5.0%
Maturing over one to five years 32,681,198 6.5% 20,528,686 5.8%
------------- -------------
$ 79,329,185 $ 59,500,651
============ ============
</TABLE>
F-20
<PAGE>
Glen Burnie Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Continued)
18. Related Party Transactions
The executive officers and directors of the Bank enter into loan
transactions with the Bank in the ordinary course of business. These loans
were made on the same terms, including interest rates and collateral, as
those prevailing at the time for comparable loans with unrelated borrowers.
At December 31, 1995, 1994, and 1993, the amounts of such loans outstanding
were $2,878,742, $685,613, and $535,347, respectively.
19. Stockholders' Equity
Employees who have completed one year of service are eligible to
participate in the employee stock purchase plan. The plan allows employees
to purchase stock at 85 percent of the fair market value. At December 31,
1995, there were 31,980 shares of common stock reserved for issuance under
the plan. Options for 4,555 of those shares are outstanding, at $26.92 per
share, expiring October 1, 1996. Options for 6,586 shares were exercised in
1995 at prices of $24.08 to $26.92 per share.
The director stock purchase plan allows directors to purchase stock
at the fair market value on the date an option is granted. At December 31,
1995, there were 17,700 shares of common stock reserved for issuance under
the plan. Options for 300 of those shares are outstanding at $31.67 per
share, expiring October 1, 1997. Options for 3,600 shares were exercised in
1995 at prices of $28.33 to $31.67 per share.
The dividend reinvestment and stock purchase plan allows
participating stockholders to invest their cash dividends in stock at 95
percent of the fair market value on the dividend payment date. At December
31, 1995, there were 105,190 shares of common stock reserved for issuance
under the plan.
The number of shares and prices per share have been retroactively
adjusted for stock dividends declared.
The Board of Directors may suspend or discontinue any of the plans at
its discretion.
20. Regulatory Matters
The FDIC has advised management that it will ask the Bank to agree to
a Memorandum of Understanding that management will correct violations of
law, improve loan administration and loan loss accounting methods, improve
loan collections, improve information to the board of directors, adopt a
strategic plan and budget, and maintain adequate capital.
F-21
<PAGE>
Exhibit Index
Page No.
3.1 Articles of Incorporation ___
3.2 By-Laws ___
10.1 Glen Burnie Bancorp Stockholder Purchase Plan ___
10.2 Glen Burnie Bancorp Dividend Reinvestment and ___
Stock Purchase Plan
10.3 Glen Burnie Bancorp Director Stock Purchase Plan ___
10.4 Glen Burnie Bancorp Employee Stock Purchase Plan ___
10.5 The Bank of Glen Burnie Pension Plan ___
11 Statement re computation of per share earnings ___
16 Letter re: change in certifying public accountant ___
21 Subsidiaries of the registrant ___
27 Financial Data Schedule ___
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
GLEN BURNIE BANCORP
THIS IS TO CERTIFY:
ARTICLE ONE: I, the undersigned, Henry L. Hein, whose post office
address is 101 Crain Highway, SE, Glen Burnie, Maryland 21061, being at least
eighteen (18) years of age, hereby form a corporation under and by virtue of the
General Laws of the State of Maryland.
ARTICLE TWO: The name of the Corporation which is hereinafter
called The Corporation is:
GLEN BURNIE BANCORP
ARTICLE THREE: The purposes for which the Corporation is formed
are as follows:
(a) To engage in the business of a bank holding company, as
allowed under applicable Federal Statutes and the rules and regulations of the
Federal Reserve Board.
(b) To acquire, hold, own, sell, assign, exchange, transfer or
otherwise dispose of or deal in and with any of the shares of capital stock and
other securities and interest issued or created by any banking institution or
association organized under the laws of the United States of America, any state,
other political subdivision or any foreign government, or any other firm or
corporation to the extent permitted by applicable laws or regulations.
(c) To do any acts necessary or advisable for their
preservation, protection, improvement and enhancement in value.
(d) To do anything permitted by Section 2-103 of the
Corporations and Associations Articles of the Annotated Code of Maryland as
amended from time to time.
<PAGE>
ARTICLE FOUR: The post office address of the principal office of
The Corporation in this State is:
101 Crain Highway, SE
Glen Burnie, MD 21061
The name and post office address of the resident agent of The
Corporation in this State is:
Henry L. Hein
101 Crain Highway, SE
Glen Burnie, MD 21061
ARTICLE FIVE: The total number of shares of capital stock which The
Corporation has authority to issue is five million (5,000,000) with a par value
of Ten Dollars ($10.00) per share. The total par value of the shares shall be
Fifty Million Dollars ($50,000,000.00).
ARTICLE SIX: The number of directors of the Corporation shall not be
less than five (5) nor more than thirty (30), the exact number of directors to
be fixed from time to time in the manner provided in the By-Laws.
The names of the directors who shall act until the
first annual meeting or until their successors are duly elected and
qualify are: Theodore L. Bertier, Jr., Jan W. Clark, F. Ward DeGrange,
Sr., John E. DeGrange, Sr., John E. Demyan, Louis J. Doetsch, F. Pall
Dorr, Jr., Carl. L. Hein, Jr., Henry L. Hein, Frederick W. Kuethe, III,
Murray D. O'Malley, William A. Pumphrey, Jr., Edward M. Webster,
Katherine P. Wellford.
ARTICLE SEVEN: The affirmative vote of the holders of not less than 80%
of the outstanding shares of stock of The Corporation entitled to vote shall be
required for the approval or authorization with respect to the following:
(a) The amendment of Articles of Incorporation.
- 2 -
<PAGE>
(b) The consolidation of the Corporation with one or more
corporations to form a new consolidated corporation.
(c) The merger of the Corporation with another corporation or
the merger of one or more corporations into The Corporation.
(d) The sale, lease, exchange or other transfer of all, or
substantially all, of the property and assets of The Corporation, including its
good will.
(e) The participation of The Corporation in a share-exchange
(as defined in the Corporation & Associations Article of the Annotated Code of
Maryland, the stock of which is to be acquired.
(f) The voluntary liquidation, dissolution or winding up of
The Corporation.
ARTICLE EIGHT:
(a) As used in this Article any word or words that are defined
in Section 2-418 of the Corporations and Associations Article of the Annotated
Code of Maryland, (the "indemnification section") as amended from time to time,
shall have the same meaning as provided in the "indemnification section".
(b) The Corporation shall indemnify a present or former
director or officer of the Corporation in connection with a proceeding to the
fullest extent permitted by and in accordance with the indemnification section.
(c) With respect to any corporate representative other than a
present or former director, the Corporation may indemnify such corporate
representative in connection with a proceeding to the fullest extent permitted
by and in accordance with the indemnification section; provided, however, that
to the extent a corporate representative other than a present or former director
or officer successfully defends on the
- 3 -
<PAGE>
merits or otherwise, any proceeding referred to in Subsection (b) or (c) of the
indemnification section or any claim, issue or matter raised in such proceeding,
the corporation shall not indemnify such corporate representative other than a
present or former director of officer of the indemnification section, unless
until it shall have been determined and authorized in specific case by (a) an
affirmative vote at a duly constituted meeting at a majority of the Board of
Directors who were not parties to the proceeding or (b) an affirmative vote, at
a duly constituted meeting of a majority of all the votes cast by stockholders
who were not parties to the proceedings, an indemnification of such corporate
representative other than a present or former director of officer is proper in
the circumstances.
ARTICLE NINE: The duration of the corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation
this 20th day of December, 1990.
[/s/ Barbara Elswick] [/s/ Henry L. Hein] (SEAL)
- --------------------- --------------------------
Witness HENRY L. HEIN
STATE OF MARYLAND, COUNTY OF ANNE ARUNDEL, to wit:
I HEREBY CERTIFY, that on this 20th day of December, 1990, before me,
the Subscriber, a Notary Public, in and for the State and County aforesaid,
personally appeared HENRY L. HEIN and he made oath in due form of law that the
foregoing Articles of Incorporation to be his act.
AS WITNESS my hand and Notarial Seal.
[/s/ Barbara Elswick]
----------------------------
Notary Public
My Commission Expires: 8/1/92
- 4 -
FOURTH DRAFT 2/5/93
EXHIBIT 3.2
BY-LAWS
OF
GLEN BURNIE BANCORP
ARTICLE I
OFFICES
The principal office of the corporation shall be at 101 Crain
Highway, SE, Glen Burnie, Anne Arundel County, State of Maryland. The
corporation may also have offices at such other places within the State of
Maryland as the Board of Directors may from time to time determine or the
business of the corporation may require, provided permission is obtained from
applicable regulators.
ARTICLE II
STOCKHOLDERS
1. Place of Meetings
Meetings of stockholders shall be held at the
principal office of the corporation or at such place within the State of
Maryland as the Board of Directors shall authorize.
2. Annual Meeting
The Annual Meeting of the Stockholders shall be held
on the second Thursday of March at 2:00 p.m. in each year if not a legal
holiday, and, if a legal holiday, then on the next business day following at the
same hour, when the stockholders shall elect a board and transact such other
business as may
1
<PAGE>
properly come before the meeting. In the event of extremely inclement weather,
an act of God, or other emergency situations, the meeting may be postponed from
day to day until said situation is alleviated.
3. Special Meetings
A special meeting of the stockholders may be called
at any time by the Chairman of the Board of Directors, the President, a majority
of the Board of Directors then serving or at the request in writing
by.stockholders entitled to cast at least twenty five percent (25%) of all the
votes entitled to be cast at the meeting. Such request shall state the purpose
or purposes of the proposed meeting. Business transacted at a special meeting
shall be confined to the purposes stated in the notice. Notice of special
meetings shall be given by the Secretary not less than ten (10) nor more then
ninety (90) days before the date of such meeting in writing to each stockholder
entitled to vote at the meeting.
4. Fixing Record Date
For the purpose of making any proper determination
with respect to stockholders including which stockholders are
entitled to: a) notice of a meeting; b) vote at a meeting; c)
receipt of a dividend; d) be alloted other rights, the stock
transfer books of the corporation may be closed for a period-not
to exceed twenty (20) days. The record date shall not be more
than ninety (90) days before the date on which the action
requiring the determination will be taken or less than ten (10)
2
<PAGE>
days before the date of the meeting. The Board of Directors may choose the
record date, however if no record date is fixed, it shall be determined in
accordance with the provisions of the Corporations & Associations Article of the
Annotated Code of Maryland as it may be amended from time to time.
5. Notice of Meeting of Stockholders
Written notice of each meeting of stockholders shall
state the purpose of purposes for which the meeting is called, the place, date
and hour of the meeting and unless it is the annual meeting, 'shall indicate
that it is being issued by or at the direction of the person or persons calling
the meeting. Notice shall be given either personally or by mail to each
stockholder entitled to vote at such meeting, not less than ten (10) nor more
than thirty (30) days before the date of the meeting. If action is proposed to
be taken that might entitle stockholders to payment for their shares, the notice
shall include a statement of that purpose and to that effect. If mailed,'the
notice is given when deposited in the United States mail, with postage thereon
prepaid, directed to the stockholder at the stockholder's address as it appears
on the record of stockholders, or, if the stockholder has filed.with the
Secretary a written request that any notices be mailed to some other address,
then directed to such other address.
6. Waivers
Notice of any meeting need not be given to any
stockholder who signs a waiver of notice, in person or by proxy,
3
<PAGE>
whether before or after the meeting. The attendance of any stockholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by the stockholder.
7. Quorum of Stockholders
Unless the Articles of Incorporation provides
otherwise, the holders of a majority of the shares entitled to vote thereat
shall constitute a quorum at a meeting of stockholders for the transaction of
any business.
When a quorum is once present to organize a meeting,
it is not broken by the subsequent withdrawal of any
stockholders.
The stockholders present may adjourn the meeting
despite the absence of a quorum.
8. Proxies
Every stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent without a meeting may authorize
another person or persons to act for that stockholder by proxy.
Every proxy must be signed by the stockholder or the
stockholder's attorney-in-fact. Proxies shall not be valid after the meeting for
which they are granted or continuation thereof and the purposes therein
contained. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except .,as otherwise provided by law.
4
<PAGE>
9. Qualification of Voters
Every stockholder of record shall be entitled at
every meeting of stockholders to one (1) vote for every share standing in that
stockholders name on the record of stockholders.
10. Vote of Stockholders
Except as otherwise required by statute or by the
Articles of Incorporation:
a) Directors shall be elected by a plurality of the
votes cast at a meeting of stockholders by the holders of shares
entitled to vote in the election;
b) The affirmative vote of the holders of not less
than 80% of the outstanding shares of stock of the corporation entitled to vote
shall be required for the approval or authorization with respect to the
following:
1) The amendment of Articles of Incorporation.
2) The consolidation of the corporation with
one or more corporations to form a new consolidated corporation.
3) The merger of the corporation with another
corporation or the merger of one or more corporations into the
corporation.
4) The sale, lease, exchange or other transfer
of all, or substantially all, of the property and assets of the
corporation, including its goodwill.
5) The participation of the corporation in a
share-exchange (as defined in the Corporations & Associations
5
<PAGE>
Article of the Annotated Code of Maryland) the stock of which is to be acquired.
6) The voluntary liquidation, dissolution or
winding up of the corporation.
c) All other corporate action shall be authorized
by a majority of the votes cast.
11. Written Consent of Stockholders.
Any action that may be taken by vote may be taken
without a meeting on written consent, setting forth the action so taken, signed
by the holders of all the outstanding shares entitled to vote thereon or signed
by such lessor number of holders as may be provided for in the Articles of
Incorporation.
ARTICLE III
DIRECTORS
1. Board of Directors
Subject to any provision-in the Articles of
Incorporation, the business of the corporation shall be managed by its Board of
Directors, each of whom shall be a citizen of the United States and the State of
Maryland and be at least the age of majority-and be stockholders with sufficient
shares to qualify under the provisions Section 3-403 of the Financial
Institutions Article of the Annotated Code of Maryland as it may be amended from
time to time.
Former Directors may be elected by the Board of
Directors to an honorary position of Director Emeritus, however
6
<PAGE>
such Directors will not have a vote and will not be required to attend regular
Board of Directors meetings. The Directors Emeritus will receive such
compensation as the Board of Directors may determine.
2. Number of Directors
The property, business and affairs of this
corporation shall be managed by a Board of not less than nine (9) Directors, nor
more than sixteen (16), who shall hold office for one (1) year or until their
successors are elected and qualify. However, two (2) of the directorships may be
left vacant to be filled at the discretion of the Board of Directors. Directors
appointed under this provision shall hold office until the next Annual Meeting
where they will be subject to election by the stockholders for another term, if
the stockholders wish to fill all directorships. The number of directors to
serve each year shall be determined at the Annual Meeting of the Stockholders of
the corporation.
3. Election and Term of Directors
At each Annual Meeting of Stockholders, the
stockholders shall elect Directors to hold office until the next Annual Meeting.
Each Director shall hold office until the expiration of the term for which he or
she is elected and until his or her successor has been elected and qualified or
until his or her prior resignation or removal.
7
<PAGE>
4. Vacancies
Any vacancy on the Board of Directors may be filled
by the Board of Directors. A Director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his or her predecessor.
5. Removal of Directors
The stockholders may remove the entire Board of
Directors or any individual Director from office by an affirmative vote of
eighty.percent (80%) of all votes entitled to be cast at an election of
Directors. In case the Board or any one or more Directors be so removed, new
Directors may be elected at the same meeting.
The Board of Directors may remove a Director for cause or physical
disability of long duration by a vote of eighty percent (80%) of the members
then serving on the Board of Directors.
6. Resignation
A Director may resign at any time by giving written
notice to the Board, the President, the Treasurer or Secretary of the
corporation. Unless-otherwise specified in the notice, the resignation shall
take effect upon receipt thereof by the Board or such officer and the acceptance
of the resignation shall not be necessary to make it effective.
7. Quorum of Directors
At all meetings of the Board of Directors, a
majority of the Directors serving shall be necessary and
8
<PAGE>
sufficient to constitute a quorum for the transaction of business, and every act
of the majority of the Directors present at a meeting at which a quorum is
present, shall be regarded as the act of the Board of Directors, unless a
greater number is required by law or under the provisions of these By-Laws. In
absence of a quorum, a majority of the Directors present may adjourn from day to
day until the time fixed for the next regular meeting of the Board of Directors
or until a quorum shall attend.
8. Action of the Board of Directors
Unless otherwise required by law, the vote of a
majority of the Directors present at-the time of the vote, if a quorum is
present at such time, shall be the act of the.Board of Directors. Each Director
present shall have one vote regardless of the number of shares that Director may
hold.
9. Place and Time of Board Meetings
The Board of Directors may hold its meetings at the
office of the corporation or at such other place, within the State of Maryland,
as it may from time to time determine.
10. Regular Annual Meeting
A regular Annual Meeting of-the Board of Directors
shall be held immediately following the Annual Meeting of the Stockholders at
the place of such Annual Meeting of Stockholders.
11. Notice of Meetings of the Board, Adjournment
Regular meetings of the Board of Directors may be
held without written notice at such time and place as it shall
from time to time determine. Special meetings of the Board of
9
<PAGE>
Directors shall be held upon notice to the Directors and may be called by the
President upon three (3) days notice to each Director either personally or by
mail, or by wire. Special meetings shall be called by the President or by the
Secretary, and/or the Treasurer in a like manner on written request of two (2)
Directors. Notice of a meeting need not be given to any Director who submits a
waiver of notice, whether before or after the meeting, or who attends the
meeting without protesting prior thereto or at its commencement, the lack of
notice.
12. Chairman
The Chairman of the Board of Directors shall preside
at all meetings of the Board of Directors and the stockholders of the
corporation. The Chairman shall be an ex officio member of all standing
committees. The Chairman's main duties shall consist of relations between the
Board of Directors and the Officers and the Board of Directors and the
stockholders.: Also, the Chairman may exercise such other and further authority
as the Board of Directors may, from time to time, delegate to the Chairman.
13. Compensation
The Board of Directors shall provide for
compensation to be paid to Directors, Committee members and the Secretary
attending meetings of the Board and any Committees.
10
<PAGE>
ARTICLE IV
OFFICERS
1. Offices, Election, Term,
The officers of the corporation shall consist of:
President (who may also be Chairman of the Board of Directors), Vice Presidents,
Secretary and Treasurer. All of said officers shall be elected by the Board of
Directors. New Officer positions may be created and filled by the Board of
Directors at any regular or special Board meeting.
2. President
The President shall be the Chief Executive Officer
of the corporation. The President shall carry into.effect all legal directions
of the Executive Committee and the Board of Directors and shall at all times
exercise general supervision over the interests, affairs, and operations of the
corporation and perform all duties with reference thereto or incident t o office
of President. Also, the President may perform such duties as the Board of
Directors may designate from time to time. The President shall be an ex officio
member of all standing Committees.
3. Vice President
During the absence or disability of the President,
the Vice President shall have all the duties and powers and
functions of the President.
11
<PAGE>
The Vice President shall perform such duties as may
be prescribed by the Board of Directors from time to time.
4. Assistant Vice President
The Board of Directors may appoint an Assistant Vice
President or more than one Assistant Vice President. Each Assistant Vice
President shall have power to perform all duties of the Vice President in the
absence or disability of the Vice President and shall have such other powers and
shall perform such other duties as may be assigned by the Board of Directors or
the President.
5. Treasurer
The Treasurer shall have custody of all the funds
and securities of the corporation, and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. The Treasurer
shall deposit all monies and other valuables in the name and to the credit of
the corporation in such depository or depositories as may be designated by the
Board of Directors.
The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements. The Treasurer shall render to the President and the
Broad of Directors, whenever either of them so request, an account of all
transactions as Treasurer and of the financial condition of the corporation.
12
<PAGE>
The Treasurer shall perform all the duties generally incident to the office of
Treasurer, subject to the control of the Board of Directors and the President.
During the absence or disability of the Treasurer,
the Board of Directors may select an Acting Treasurer to serve, who shall have
all the powers and functions of the Treasurer. The Acting Treasurer would serve
until, in the judgment of the Board of Directors, the Treasurer could return to
duty.
6. Secretary
The Secretary shall have the custody of the seal of
the corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors' or the President and attest the same. In
general, the Secretary shall perform all duties generally incident to the office
of Secretary, subject to the control of the Board of Directors and the
President.
During the absence or disability of the Secretary,
the Board of Directors may elect an Acting Secretary to serve, who shall have
all the powers and duties of the Secretary. The Acting Secretary will serve
until, in the judgment of the Board of Directors, the Secretary could return to
duty.
7. Counsel
The Board of Directors shall have the power to
appoint a Counsel. The Counsel of this corporation shall have such powers and
perform such duties as the Board of Directors shall prescribe.
13
<PAGE>
ARTICLE V
CERTIFICATES FOR SHARES
1. Certificates
The shares of the corporation shall-be represented
by certificates unless represented by book entries (Statement of Account). They
shall be numbered and entered in the books of the corporation as they are
issued. They shall exhibit the holder's name and the number of shares and shall
be signed by the officers designated in these By-Laws, and shall bear the
corporate seal. The President and Secretary, shall sign all certificates of
stock and shall have power to make any and all transfers of the stock of this
corporation which may be authorized. In the absence of the President the Vice
President shall perform the duties and in the absence of the Secretary the
Assistant Secretary shall perform these duties in reference to said
certificates.
2. Lost or Destroyed Certificates
The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by corporation alleged to have been lost or destroyed upon
the making of an affidavit of that fact by the person claiming the certificate
to be lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as
14
<PAGE>
it shall require and/or give the corporation a bond in such sum and with such
surety or sureties as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost or destroyed.
3. Transfer of Shares
a. Upon surrender to the corporation or the
transfer agent of the corporation.of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person or persons entitled thereto, and cancel the old certificate. Every
such transfer shall be entered on the transfer book of the corporation which
shall be kept at its principal office. No,transfer shall be-made within twenty
(20) days next preceding the Annual Meeting of the Stockholders.
b. The corporation shall be entitled to treat the
holder of record of any share as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person whether or not it shall have express
or other notice thereof, except as expressly provided by the laws of the State
of Maryland.
4. Transfer Books
The Board of Directors may prescribe a period hot
exceeding twenty (20) days prior to any-meeting of the
15
<PAGE>
stockholders, during which time no transfer of stock on the books
of the corporation may be made.
ARTICLE VI
DIVIDENDS
The Board of Directors, at their discretion, may, when the surplus
profits justify, declare dividends (or distribution of surplus profits) to the
holders of shares of capital stock.
ARTICLE VII
INVESTMENTS, LOANS AND EXPENDITURES
The funds of this corporation may be invested, loaned or expended in
such manner and oft such terms as the Board of Directors or Executive Committee
may determine, subject to applicable State and Federal laws and regulations.
To acquire, hold, own, sell, assign, exchange,
transfer or otherwise dispose of or deal in and with any of the shares of
capital stock and other securities and interest issued or created by any banking
institution or association organized under the laws of the United States of
America, any state, other political subdivision,or any foreign government, or
any other firm or corporation to the extent Permitted by applicable laws or
regulations.
16
<PAGE>
ARTICLE VIII
CORPORATE SEAL
The seal of the corporation shall be circular in form and bear the
name of the corporation, the year of its organization and the words "Corporate
Seal - Maryland." The seal may be used by causing it to be impressed directly on
the instrument or writing to be sealed or upon adhesive substance affixed
thereto. The seal on the certificates for shares or on any corporate obligation
for the payment of money may be a facsimile, engraved, or printed.
ARTICLE IX
EXECUTION OF INSTRUMENTS
All corporate instruments and document, except stock certificates,
shall be signed or countersigned, executed, verified or acknowledged by such
officer or officers or other person or persons as the Board of Directors may
from time to time designate.
ARTICLE X
FISCAL YEAR
The fiscal year shall begin the first day of January in each year and
end on the following 31st day of December in each year.
17
<PAGE>
ARTICLE XI
REFERENCES TO CERTIFICATE OF INCORPORATION
AND
ARTICLES OF INCORPORATION
Reference to the Certificate of Incorporation and the Articles of
Incorporation in these By-Laws shall include all amendments thereto or changes
thereof unless specifically exempted.
ARTICLE XII
BY-LAW CHANGES
1. Amendment, Reveal, Adoption, Election of Directors
Except as otherwise provided in the Articles of
Incorporation, the By-Laws may be amended by the stockholders of the corporation
by an affirmative vote of eighty (80%) of all the votes entitled to be cast on
the matter. The By-Laws may be amended or repealed at any Special Meeting called
for that purpose or at any regular Annual Meeting, provided however that notice,
as required, is given to all stockholders entitled to said notice.
ARTICLE XIII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As used in this Article XIII, any word or words defined in Section
2-418 of the Corporations & Associations Article,of the Annotated Code of
Maryland, as amended from time to time, (the
18
<PAGE>
Indemnification Section) shall have the same meaning as provided in the
Indemnification Section.
The corporation may indemnify and advance expenses to a Director,
officer, employee, Committee member of the Corporation in connection with a
proceeding to the fullest extent permitted by and in accordance with the
Indemnification Section.
ARTICLE XIV
PUBLICATION OF NOTICE TO STOCKHOLDERS
Notice of the time, place and purpose of such meeting shall be given
by publication in at least one (1) newspaper published. in Anne Arundel County,
Maryland, not less than ten (10) days prior to the meeting, in which said notice
shall set forth the time and place of said meeting and also the fact that the
meeting is an Annual Meeting and that the annual election of directors will then
be held.
ARTICLE XV
ANNUAL REPORT OF THE PRESIDENT
At every Annual Meeting of the Stockholders, the President shall
submit full reports of the financial condition of the corporation and the
results of its operations during the preceding year.
19
<PAGE>
ARTICLE XVI
INSPECTORS OF ELECTION
At the meeting, the Chairman of the meeting shall appoint two (2) or
more persons to act as inspectors of election. However, the failure to appoint
such inspectors shall not in any way affect the validity of the election or
other proceedings, taken at the meeting.
20
EXHIBIT 10.1
GLEN BURNIE BANCORP
STOCKHOLDER PURCHASE PLAN
1. Purposes:
The purposes of this Plan are:
(a) To encourage eligible stockholders to acquire additional
shares of common stock in the Corporation.
(b) To furnish existing stockholders with incentive to increase
their investment in the Corporation.
(c) To provide additional capital for the growth and stability
of the Corporation.
2. Definitions:
The following words or terms used herein have the following meaning:
(a) The word "Corporation" means Glen Burnie Bancorp, a Maryland
chartered bank holding company.
(b) The "Plan" shall mean this Glen Burnie Bancorp Stockholders
Purchase Plan.
(c) "Board" shall mean the Board of Directors of Glen Burnie
Bancorp.
(d) "Shares," "Stock" or,"Common Stock" shall mean shares of
$10.00 par value common stock of Glen Burnie Bancorp.
(e) The "Committee' shall mean the committee appointed by the
Board to administer the Plan.
(f) "Option" shall mean the right of a Stockholder to purchase
Common Stock under the Plan.
(g) "Date of Grant" shall mean, in respect of any Option, the date
on which the Board grants the Option under the Plan.
(h) "Date of Exercise" shall mean the date upon which the
Stockholder completes the payment requirement of the Option
and is entitled to delivery of the Shares so purchased, which
date shall in no event be later than three (3) months after
the Date of Grant.
(i) "Option Period" shall mean the period commencing upon the Date
of Grant and ending on the earlier of the date of exercise or
the expiration of the option.
(j) "Purchase Price" shall mean fair market value, as determined
by the latest trade through Legg Mason Wood Walker.
(k) "Stockholder" shall mean any Stockholder eligible under this
Plan as hereinafter defined in paragraph three.
3. Eligibility:
Any Stockholder of The Bank of Glen Burnie who wishes to participate
may do so under the the terms of this Plan.
<PAGE>
4. Stocks:
The Stock subject to the Options shall be shares of Glen Burnie Bancorp
authorized but unissued ($10.00 par value per share). The aggregate
number of shares on which Options may be issued shall not exceed One
Hundred Thousand (100,000) shares of Common Stock at any one time.
Shares optioned and not exercised shall continue to be available for
inclusion in any subsequent Options that may be granted under the Plan.
In no event may any Stockholder be granted Options for more than stock
of a value of $3,000.00 per quarter or less than a minimum of $50.00 in
stock The number of shares represented by this Plan will be adjusted
for stock splits and stock dividends subsequent to the date the Plan is
adopted.
5. Administration:
The Stockholders Purchase Plan shall be administrated by a Committee
including at least three members, namely, Chairman of the Board of
Directors, the Chief Executive Officer of the Corporation and one
member of the Board of Directors other than the above named, who is
elected annually by the Board of Directors at the organizational
meeting. A majority of the Committee shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its
members.
Subject to the express provisions of the Plan, the Committee shall also
have the power and authority to construe and interpret the Plan and the
respective option agreements entered into thereunder, and to make all
other determinations necessary or advisable for administering the Plan.
6. Procedure for Grant and Acceptance of Options:
An Eligible Stockholder shall be notified, in writing, by Glen Burnie
Bancorp of the Grant of any Option or Options. If any eligible
Stockholder elects to exercise the Option within the option period, he
may invest no less than $50.00 nor more than $3,000.00 in the purchase
of additional shares of stock. If there is not sufficient stock
remaining in the Plan to meet the demand of all eligible Stockholders,
the remaining stock will be prorated among the Stockholders in
proportion to the amount that they requested. For the purposes of this
Plan all persons listed on a Certificate of Stock shall be counted as
one Stockholder.
7. Option Price:
The purchase price of the shares, under any Option granted pursuant to
this Plan, shall be The Fair Market Value of the stock on the date upon
which such Option is granted.
<PAGE>
8. Method of Payment:
The option Price shall be paid in full at the time an Option is
exercised under the Plan. Promptly after the exercise of an Option and
the full payment of the Option Price, the Participant shall be entitled
to the issuance of a stock certificate evidencing ownership of such
Stock. A participant shall have none of the rights of a Stockholder
with respect to shares under option as provided in the Plan until
shares are issued, and no adjustment will be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
9. Options to Purchase Shares not Transferable:
Options granted to an Eligible Stockholder under the Plan are
exercisable during such Eligible Stockholders' lifetime, up to the
limitation in paragraph 6, only by the Stockholder, such Options may
not be sold, transferred (other than by will or the laws of descent and
distribution), pledged, or otherwise disposed or encumbered with the
exceptions to the provisions in paragraph 11 of this Plan.
10. Amendment and Termination:
The Board of Directors may terminate, amend, or revise the Plan with
respect to any shares on which Options have been granted. Neither the
Board nor the Committee may, without the consent of the holder of an
Option, alter or impair any Option previously granted under the Plan,
except as authorized herein. No such revision or amendment shall change
the number of shares subject to the Plan or permit granting of Options
under the Plan to persons other than the Stockholders of Glen Burnie
Bancorp.
11. Death:
If an Eligible Stockholder dies without having fully exercised his
Options under this Plan, the executors or administrators, or legatees
or heirs of the estate shall have the right to exercise such Options to
the extent that such deceased Stockholder was entitled to exercise the
Options on the date of death.
12. Commencement of Plan:
The Plan shall not take effect until approved by the Board of Directors
in accordance with the approval given at the March 14, 1996 Annual
meeting of Stockholders.
13. Governmental Approvals or Consents:
The Plan and any Options granted thereunder are subject to any
governmental approvals or consent that may be or become applicable in
connection therewith. The Board may make such
<PAGE>
changes in the Plan and include such terms in any Option granted under
the Plan as may be necessary or desirable, in the opinion of counsel of
Glen Burnie Bancorp, to comply with the rules or regulations of any
governmental authority, or to be eligible for tax benefits under the
Internal Revenue Code or laws of any State.
14. Preemptive Rights:
Glen Burnie Bancorp stock has preemptive rights that allow Shareholders
to maintain an existing percentage of ownership in the Corporation. The
adoption of this Plan affects the Shareholders of the Corporation
because there is some dilution of their percentage of ownership.
Therefore, this Plan would be an exception to normal preemptive rights.
EXHIBIT 10.2
GLEN BURNIE BANCORP
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The stockholders of Glen Burnie Bancorp, hereinafter referred to as
"the Corporation," have approved this Dividend Reinvestment and Stock Purchase
Plan. The Plan relates to 100,000 authorized but unissued shares of common stock
of the Corporation. The Plan is intended to provide holders of stock who
participate with a convenient and economical method of increasing their equity
ownership in the Corporation by purchasing additional shares of stock without
payment of any brokerage commission, service charges or any fees. The approved
Plan is as follows:
1. NATURE OF THE PLAN
The purpose of this Plan is to provide stockholders with a convenient
and economical method of increasing their equity ownership in the Corporation.
The Plan allows the stockholders to elect and become participants in the Plan
and thereafter receive their dividends, if and when declared by the Board of
Directors, in the form of stock in lieu of cash distributions. The holders of
stock who do not participate will continue to receive cash dividends in the
usual manner, if and when declared.
2. ELIGIBILITY
All record holders of common stock are eligible to participate in the
Plan. The right to participate in the Plan is not transferrable. Stockholders
who reside in jurisdictions in which it is unlawful for the Corporation to
permit their participation are not eligible to participate in the Plan. The
Corporation also reserves the right to exclude a stockholder who resides in a
foreign country or in a jurisdiction which requires registration or
qualification of the stock or of the Corporation's directors, officers or other
employees as agents in connection with sales pursuant to Plan.
An eligible stockholder may join the Plan by signing the election form
and returning it to the Plan Administrator. Stockholders may become participants
at any time. Any stockholder who does not elect to participate in the Plan will
continue to receive any dividends declared by the Board of Directors in cash (or
in stock if the Board of Directors declares a stock dividend for all
stockholders). A stockholder already participating in the Plan will continue to
participate until such stockholder gives notice to the Corporation in the manner
prescribed herein that he wishes to withdraw from the Plan.
3. CREDITING OF ACCOUNTS
If the Stockholder Authorization Form signed by a stockholder entitled
to a dividend is received by the Corporation before the Declaration Date for the
next dividend payment, the participant shall receive his next dividend payment
in the form of stock under the Plan. The participant shall thereafter continue
to receive any dividends on his common stock as stock under the Plan until he
withdraws from participation in the Plan or the shares are transferred of record
to a new owner. The participant's account
<PAGE>
GLEN BURNIE BANCORP
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Page 2
shall be credited with such stock on the payable date, which shall be the date
cash dividends are actually paid to stockholders as of the Record Date.
Nothing in this Section shall be construed as providing any assurance
that dividends will be declared by the Corporation in the future.
4. ADMINISTRATION OF THE PLAN
The Glen Burnie Bancorp administers the Plan for participants, keeps
records, sends statements of accounts to participants and performs other duties
relating to the Plan. All correspondence relating to the Plan should be directed
to:
President
Glen Burnie Bancorp
107 Crain Highway, S.E.
Glen Burnie, Maryland 21061
The Plan Administrator receives the participants' dividend payments and
invests such amounts in additional shares of common stock, maintains continuing
records of each participant's account, and advises participants as to all
transactions in and the status of their accounts. The Plan Administrator acts in
the capacity of agent for the participants.
All notices from the Plan Administrator to a participant will be
addressed to the participant at the last address of record with the Plan
Administrator. The mailing of a notice to a participant's last address of record
will satisfy the Plan Administrator's duty of giving notice to such participant.
Therefore, participants must promptly notify the Plan Administrator of any
change of address.
Neither the Plan Administrator, the participants' nominee or nominees,
nor Glen Burnie Bancorp shall have any responsibility beyond the exercise of
ordinary care for any reasonable and prudent actions taken or omitted pursuant
to the Plan including, without limitation, any claim for liability arising out
of failure to terminate a participant's account upon such participant's death or
adjudicated incompetency prior to receipt of notice in writing of such death or
adjudicated incompetency, nor shall they have any duties, responsibilities or
liabilities except such as are expressly set forth in the Plan.
All transactions in connection with the Plan shall be governed by the
laws of the State of Maryland, and by any applicable federal tax or security
laws.
5. STATEMENT OF ACCOUNTS OF PARTICIPANTS AND OTHER DISCLOSURE OF
INFORMATION
As soon as practicable after each payment date, each participant will
receive a statement of his account.
<PAGE>
GLEN BURNIE BANCORP
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Page 3
These statements of a participant's account should be retained by the
participant as an ongoing statement of his account under the Plan and for income
tax purposes.
In addition to such statements of account, each participant will
receive all disclosure statements, otherwise sent to stockholders, including the
annual report, notices of stockholder meetings, and proxy statements of the
Corporation.
6. EXPENSES OF ADMINISTRATION
Participants will not be charged brokerage or commission fees or
service charges in connection with purchases of shares of common stock under the
Plan. All administrative expenses of the Plan will be paid by the Corporation.
7. DIVIDENDS OF STOCK CREDITED UNDER THE PLAN
Any portion of the dividends which have been credited to a
participant's account will be paid as stock under the provisions of this Plan.
8. CERTIFICATES FOR STOCK
Certificates will be issued to a participant for whole shares of common
stock in the participant's account (1) Upon the participant's written request to
the Corporation at its principal office, (2) if the participant withdraws from
the Plan, or (3) if the Corporation terminates the Plan. Requests will be
handled by the Corporation without charge. Any remaining whole or fractional
shares will continue to be held in the participant's account. No certificate for
a fractional share will be issued; under the Plan, dividends on a fractional
share will be credited to a participant's account. Withdrawal of shares in the
form of a certificate in no way affects dividend reinvestment.
9. WITHDRAWAL FROM THE PLAN
Participation in the Plan is entirely voluntary, and a participant may
request to withdraw from the Plan at any time by notifying the Corporation in
writing in its Principal Office.
Upon withdrawal from the Plan, the participant will receive
certificates for full shares of common stock then held in his account. Any
fractional shares in the participant's account shall be redeemed by the
Corporation for cash in an amount equal to the fraction of a whole share times
the "fair market value" of the common stock as determined under the provisions
of the Plan at the last Declaration Date prior to the date of withdrawal.
<PAGE>
GLEN BURNIE BANCORP
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Page 4
If the request to withdraw is received on or after the Declaration Date
for a dividend payment and the withdrawing participant has previously elected to
receive dividend payments in the form of stock, any dividend paid on the
corresponding payable date will be credited to the withdrawing participant's
account as stock in accordance with the provisions of the Plan. The request to
withdraw will then be processed promptly following such payable date.
Thereafter, all dividends will be paid in cash (or in stock dividends if so
declared by the Board of Directors on all common stock) to the stockholder who
withdraws from the Plan. A stockholder may elect again to become a participant
at any time subsequent to withdrawal from the Plan.
If a participant disposes of any or all of his shares of common stock
registered in his name other than shares credited to the participant's account
under the Plan, the shares of common stock credited under the Plan shall
continue to be administered under the provisions of the Plan unless the
participant notifies the Corporation of his withdrawal from the Plan.
10. PURCHASE PRICE OF SHARES
The "Purchase Price" shall mean fair market value, the amount equal to
the latest trade by Legg Mason Wood Walker, but in no event less than One
Hundred Twenty percent (120%) of book value at the end of the most recent fiscal
year unless the Board of Directors in its discretion determines otherwise.
11. FEDERAL TAX INFORMATION
A participant who has cash dividends reinvested in additional shares of
common stock under the provisions of the Plan will be treated for federal income
tax purposes (under the Code) as having received a cash dividend in an amount
equal to the "fair market value" (determined under the Plan) of all full and
fractional shares credited to the participant's account. The participant's tax
basis (under the Code) in the shares credited under the Plan will be an amount
equal to such shares 'fair market value' as determined under this Plan.
A participant will also realize gains or loss upon receipt, following
termination of participation in the Plan, of a cash payment for any fractional
share interests credited to the Participant's account. The amount of any such
gain or loss will be the difference between the amount that the participant
received for the shares or fractional share interests and the tax basis thereof.
To the extent distributions by Glen Burnie Bancorp to its stockholders
are treated as made from the Corporation's earnings and profits, the
distribution under the Plan will be taxable as a dividend.
The tax basis of any shares acquired through the Plan will be the fair
market value as of the Dividend Payable Date. The holding period for shares
acquired through the Plan will begin on the day after the Dividend Payable Date.
<PAGE>
GLEN BURNIE BANCORP
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Page 5
The tax consequences as set forth above are for informational purposes
only and should not be relied upon as a legal or accounting opinion in regard to
a particular participant's circumstances. Each stockholder considering
participating in the Plan is urged to consult his own tax and financial advisors
as to federal, state and other tax consequences of participating in the Plan
based upon his particular facts and circumstances.
12. TERMINATION BY THE CORPORATION
Although the Corporation intends to continue the Plan in the future,
the Board of Directors reserves the right to amend, suspend or modify the Plan
at any time. However, the Plan can not be permanently terminated unless the
stockholders at a regular or special meeting vote to terminate said Plan.
Written notice of any such amendment, suspension, modification or termination
will be sent to the participants within thirty (30) days following any such
action. The Corporation also may adopt reasonable procedures for administration
of the Plan.
13. PREEMPTIVE RIGHTS
The existing stockholders of the Corporation have the right to maintain
their existing percentage of ownership. The existing stockholder has a right to
purchase new stock in the proportion that the number of shares held by him bears
to the whole number, before the increase. Existing stockholders who do not
participate in the Plan will have some dilution of their percentage ownership.
Therefore, the adoption of the Plan by the stockholders is an exception to the
normal preemptive rights.
14. USE OF PROCEEDS
The net proceeds from the sale of the common stock offered pursuant to
the Plan will be used for general corporate purposes including investments or
extensions of credit.
15. SECURITIES AND EXCHANGE COMMISSION INFORMATION
The securities referred to in the Plan have not been approved or
disapproved by the Securities and Exchange Commission nor has the Commission
passed upon the accuracy or adequacy of any prospectus. The securities offered
hereby are not deposits or savings accounts and are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency or
instrumentality.
This Plan will not take effect until all necessary regulatory approvals
are obtained.
EXHIBIT 10.3
GLEN BURNIE BANCORP
DIRECTOR STOCK PURCHASE PLAN
1.Purposes:
The purposes of this Plan are:
(a) To encourage eligible Directors of Glen Burnie Bancorp to acquire
ownership of common stock. The Corporation wishes to encourage the
sense of proprietorship on the part of the Directors, who will be
largely responsible for the continued growth of the Corporation.
(b) To recognize past valuable services of the Directors.
(c) To furnish such Director with further incentive to develop and
promote the business and financial success of the Corporation.
(d) To induce each Director to continue in the service of the
Corporation by providing a means whereby such Director may be given
an opportunity to purchase additional stock in the Corporation.
(e) To provide additional capital for the growth and stability of the
bank.
2. Definitions:
The following words or terms used herein have the following meaning:
(a) The word "Corporation" means Glen Burnie Bancorp, a Maryland
chartered bank holding company.
(b) The "Plan" shall mean this Glen Burnie Bancorp Director Stock
Purchase Plan.
(c) "Board" shall mean the Board of Directors of Glen Burnie Bancorp.
(d) "Shares", "Stock" or "Common Stock" shall mean shares of $10.00 par
value common stock of Glen Burnie Bancorp.
(e) The "Committee" shall mean the committee appointed by the Board to
administer the Plan.
(f) "Option" shall mean the right of a Director to purchase Common
Stock under the Plan.
(g) "Date of Grant" shall mean, in respect of any Option, the date on
which the Board grants the Option under the Plan.
(h) "Date of Exercise" shall mean the date upon which the Director
completes the payment requirement of the Option and is entitled to
delivery of the Shares so purchased, which date shall in no event
be later than twelve (12) months after the Date of Grant.
(i) "Option Period" shall mean the period commencing upon the Date of
Grant and ending on the earlier of the date of exercise or the
expiration of the option.
(j) "Purchase Price" shall mean fair market value, as determined by the
latest trade through Legg Mason Wood Walker.
(k) "Director" shall mean any Director eligible under this Plan as
hereinafter defined in paragraph three.
<PAGE>
GLEN BURNIE BANCORP
DIRECTOR STOCK PURCHASE PLAN
Page 2
3. Eligibility:
Any Director, Advisory Director or Director Emeritus in good
standing currently serving on the Board of Directors as of the date of
grant shall be eligible to participate in the Director Stock Purchase
Plan.
4. Stock:
The Stock subject to the Options shall be shares of Glen Burnie
Bancorp authorized but unissued ($10.00 par value per share). The
aggregate number of shares on which Options may be issued shall not exceed
twenty thousand (20,000) shares of Common Stock at any one time. Shares
optioned and not exercised shall continue to be available for inclusion in
any subsequent Options that may be granted under the Plan. In no event may
any one Director be granted Options for more than two hundred and fifty
(250) shares of Stock in any single grant. The number of shares
represented by this Plan will be adjusted for stock splits and stock
dividends subsequent to the date the Plan is adopted.
5. Administration:
The Stock Purchase Plan shall be administered by the Employee
Compensation and Benefits Committee including at least three members,
namely, the Chairman of the Board of Directors, the Chief Executive
Officer of the Corporation, and an active Director other than the above
named, who is elected annually by the Board of Directors at the
organizational meeting. A majority of the Committee shall constitute a
quorum. All determinations of the Committee shall be made by a majority of
its members.
Subject to the express provisions of the Plan, the Committee shall
also have the power and authority to construe and interpret the Plan and
the respective option agreements entered into thereunder, and to make all
other determinations necessary or advisable for administering the Plan.
6. Procedure for Grant and Acceptance of Option:
An Eligible Director shall be notified, in writing, by Glen Burnie
Bancorp of the Grant of any Option or Options. If any eligible Director
elects to exercise the Option within the option period, he may purchase
the number of Shares specified in the Option, or a lesser number, but in
no event less than fifty (50) shares.
<PAGE>
GLEN BURNIE BANCORP
DIRECTOR STOCK PURCHASE PLAN
Page 3
7. Option Price:
The purchase price of the shares, under any Option granted
pursuant to this Plan, shall be the Fair Market Value of the stock on
the date upon which such Option is granted.
8. Method of Payment:
The Option Price shall be paid in full at the time an Option is
exercised under the Plan. Promptly after the exercise of an Option and
the full payment of the Option Price, the Participant shall be entitled
to the issuance of a stock certificate evidencing ownership of such
Stock. A participant shall have none of the rights of a shareholder with
respect to shares under option as provided in the Plan until shares are
issued, and no adjustment will be made for dividends or other rights for
which the record date is prior to the date such stock certificate is
issued.
9. Options to Purchase Shares not Transferable:
Options granted to an Eligible Director under the Plan are
exercisable during such Eligible Directors' lifetime, up to the
limitation in paragraph 6, only by the Director; such Options may not be
sold, transferred (other than by will or the laws of descent and
distribution), pledged, or otherwise disposed or encumbered.
10. Amendment and Termination:
The Board of Directors may terminate, amend, or revise the Plan
with respect to any shares, on which Options have not been granted.
Neither the Board nor the Committee may, without the consent of the
holder of an Option, alter or impair any Option previously granted under
the Plan, except as authorized herein. No such revision or amendment
shall change the number of shares subject to the Plan or permit granting
of Options under the Plan to persons other than the Directors of Glen
Burnie Bancorp.
11. Death:
If a Director dies during the term of office, or after having
retired, and without having fully exercised open Options, the executors
or administrators, or legatees or heirs, of the estate shall have the
right to exercise such Options to the extent that such deceased Director
was entitled to exercise the Options on the date of death; provided,
however, that in no event shall the Options be exercisable more than
twelve (12) months from the date they were granted, or within nine (9)
months after Letters of Administration are issued.
<PAGE>
GLEN BURNIE BANCORP
DIRECTOR STOCK PURCHASE PLAN
Page 4
12. Commencement of Plan:
The Plan shall not take effect until approved by the Board of
Directors in accordance with the approval given at the March 11, 1993
stockholders' meeting.
13. Governmental Approvals or Consents:
The Plan and any Options granted thereunder are subject to any
governmental approvals or consent that may be or become applicable in
connection therewith. The Board may make such changes in the Plan and
include such terms in any Option granted under the Plan as may be
necessary or desirable, in the opinion of counsel of Glen Burnie
Bancorp, to comply with the rules or regulations of any governmental
authority, or to be eligible for tax benefits under the Internal Revenue
Code or laws of any State.
14. Preemptive Rights:
Glen Burnie Bancorp stock has preemptive rights that allow
shareholders to maintain an existing percentage of ownership in the
Corporation. The adoption of this plan affects the shareholders of the
Corporation because there is some dilution of their percentage of
ownership. Therefore, this plan would be an exception to normal
preemptive rights.
EXHIBIT 10.4
THE BANK OF GLEN BURNIE
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSES
The purpose of this Plan is to encourage eligible employees of The Bank
of Glen Burnie and its subsidiaries to acquire ownership of Common
Stock. This Plan is intended to constitute an "Employee Stock Purchase
Plan" within the meaning of Section 423 of the Internal Revenue Code.
2. DEFINITIONS
The following words or terms used herein have the following meaning:
(a) The "Plan" shall mean this Employee Stock Purchase Plan.
(b) "Board" shall mean the Board of Directors of The Bank of Glen
Burnie.
(c) "Shares" "Stock" or "Common Stock" shall mean shares of $10.00
par value common stock of The Bank of Glen Burnie.
(d) The "Committee" shall mean the committee appointed by the
Board to administer the Plan.
(e) "Employee" shall mean any employee of The Bank of Glen Burnie
whose.
(f) "Option" shall mean the right of an Employee to purchase
Common Stock under the Plan.
(g) "Date of Grant" shall mean, in respect of any Option, the date
on which the Board grants the Option under the Plan.
(h) "Date of Exercise" shall mean the date upon which the Employee
completes the payment requirement of the Option and is
entitled to delivery of the Shares so purchased, which date
shall in no event be later than 27 months after the Date of
Grant.
(i) "Option Period" shall mean the period commencing upon the Date
of Grant and ending on the Date of Exercise.
(j) "Fair Market Value" shall mean a figure equivalent to the
but in no event less than % of year-end book value.
(k) "Annual Pay" shall mean the Employee's annual compensation for
the year immediately preceding the Date of Grant as determined
from payroll records.
3. ELIGIBILITY
Eligible Employee shall mean any Employee as that term is defined in
Section 2(e) above who has completed one year or more of employment
with The Bank of Glen Burnie on the initial Date of Grant of any
Options under the Plan. Each employee who completes one year of
employment after the initial Date of Grant shall become an Eligible
Employee with respect to any subsequent Grant of Options on the date on
which he completes such one year of employment.
<PAGE>
THE BANK OF GLEN BURNIE
EMPLOYEE STOCK PURCHASE PLAN
(Continued)
4. STOCK
The Stock subject to the Options shall be shares of The Bank of Glen
Burnie authorized but unissued ($10.00 par value per share). The
aggregate number of Shares which may be issued under Options shall not
exceed shares of such Common Stock; (except for adjustments under
Section 5). Shares optioned and not accepted, or if accepted, not
purchased, shall continue to be available for inclusion in any
subsequent Options that may be granted under the Plan.
5. GRANT OF OPTIONS
The Board shall grant to Eligible Employees Options to purchase such
numbers of Shares and at such time or times as it shall determine,
subject to the limitations of Section 3 and 4 and subject to the
following additional limitations.
(a) All Eligible Employees shall enjoy equal rights and privileges
under the plan, and the number of shares granted under Option
shall bear a uniform relationship to compensation.
(b) No Eligible Employee shall be granted an option if,
immediately after such Option were granted, such Eligible
Employee would own Stock possessing 5% or more of the total
combined voting power or value of all classes of stock of The
Bank of Glen Burnie. In determining whether the Stock
ownership of an Eligible Employee exceeds this 5% limit, the
rules of Section 425(d) of the Internal Revenue Code (relating
to attribution of stock ownership) shall apply, and Stock
which the Eligible Employee may purchase under outstanding
Options (whether or not such Options qualify for the special
tax treatment of Section 421(a) for the Internal Revenue Code)
shall be treated as Stock owned by the Eligible Employee.
(c) No Eligible Employee shall be granted an Option which permits
his right to purchase Stock under all such plans of The Bank
of Glen Burnie to accrue at a rate which exceeds in any one
calendar year $25,000 of the Fair Market Value of the Stock
determined as of the date the Option is granted.
With respect to any Option, the Board will specify the number of Shares
to be made available, the Date of Grant, the terms of the Option, and
such terms and conditions not inconsistent with this Plan as may be
necessary or appropriate, provided that in no event shall the terms of
the Option extend more than 27 months from the Date of Grant.
In the event of a recapitalization or reclassification affecting Common
Stock, the number of Shares which may thereafter be issued under the
Plan, the number of Shares under Option at such time, and the Option
price will be appropriately adjusted as determined by the Board.
<PAGE>
THE BANK OF GLEN BURNIE
EMPLOYEE STOCK PURCHASE PLAN
(Continued)
6. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee, which shall consist of
not less than three members of the Board who are not eligible to
participate in the Plan, one of whom shall be designated as Chairman.
The Committee is vested with full authority to make, administer, and
interpret such equitable rules and regulations regarding the Plan as it
may deem advisable, subject to the terms of the Plan. Its
determinations as to the interpretation and operation of the Plan shall
be final and conclusive.
The Committee may act by a majority vote at a regular or special
meeting or by decision reduced to writing and signed by a majority of
the Committee without a meeting.
Members of the Committee shall be named by the Board. Vacancies shall
be filled by the Board.
7. PROCEDURE FOR GRANT AND ACCEPTANCE OF OPTION
An Eligible Employee shall be notified by The Bank of Glen Burnie of
the Grant of any Option or Options to him. In order to participate in
the Plan, the Eligible Employee must sign an Acceptance of Option on a
form provided by The Bank of Glen Burnie showing the number of Shares
that he elects to purchase, and must deliver it within 30 days after
the date appearing on the form to the Secretary or other officer
designated in the Option. If an eligible employee elects to accept the
option, he must accept an Option to purchase the number of Shares
specified in his Option, or a lesser number of shares but in no event
less than shares.
Shares optioned and not accepted, or if accepted, not purchased, shall
continue to be available for inclusion in any subsequent Options that
may be granted under the Plan.
8. PURCHASE PRICE
The purchase price per Share will be an amount equal to the lesser of %
of the Fair Market Value of such Share on the Date of Grant or % of the
Fair Market Value of such Share on the Date of Exercise; provided,
however, and subject to the foregoing, in no event shall the purchase
price be less than book value per Share unless the Board in its
discretion so determines.
9. METHOD OF PAYMENT
Payment for Shares under Options accepted pursuant to the Plan shall be
made in a lump sum payment within the term specified by the committee
which in no case will be longer than 27 months.
<PAGE>
THE BANK OF GLEN BURNIE
EMPLOYEE STOCK PURCHASE PLAN
(Continued)
9. METHOD OF PAYMENT (Continued)
The Date of Exercise for options accepted under this Plan shall be the
date of the lump sum payment.
Notwithstanding anything to the contrary herein set forth, an Eligible
Employee who has accepted an option may at any time prior to the
expiration of 30 days after his termination of employment with The Bank
of Glen Burnie but in no event after the expiration of a period of 27
months from the Date of Grant, prepay the outstanding amount due.
For purposes of this Section, an Eligible Employee shall not be deemed
to have terminated his employment while he is on military leave, sick
leave, furlough, lay-off, or other bona fide leave of absence
(including but not limited to temporary employment by the Government)
if the period of such leave of absence does not exceed 90 days, or if
longer, so long as his right to reemployment with The Bank of Glen
Burnie is guaranteed by law or by contract. Where the period of leave
exceeds 90 days and where the Eligible Employee's right to reemployment
not guaranteed either by law or by contract, such Eligible Employee
will be deemed to have terminated his employment on the 91st day of
such leave.
Notwithstanding anything to the contrary herein set forth, no Options
granted under the Plan may be exercised prior to such date as may be
fixed by the Board of Directors.
10. RIGHTS AS STOCKHOLDER
An Eligible Employee will become a stockholder with respect to Shares
for which payment has been completed at the Date of Exercise. An
Eligible Employee will not have any rights as a stockholder with
respect to Shares under Option as provided in the Plan until he has
become a stockholder as provided in the Plan. A certificate for the
Shares purchased will be issued as soon as practicable after an
Eligible Employee becomes a stockholder.
11. OPTIONS TO PURCHASE SHARES NOT TRANSFERABLE
Options granted to an Eligible Employee under the plan are exercisable,
during such Eligible Employee's lifetime, only by him; such Options may
not be sold, transferred (other than by will or the laws of descent and
distribution), pledged, or otherwise disposed of or encumbered.
<PAGE>
THE BANK OF GLEN BURNIE
EMPLOYEE STOCK PURCHASE PLAN
(Continued)
12. CANCELLATION OF ACCEPTANCE OF OPTION
At any time prior to, but in no event following, his Date of Exercise,
an Eligible Employee who has elected to purchase Shares may cancel his
Acceptance of Option as to any or all of such Shares by written notice
of cancellation delivered to the officer designated to receive his
Acceptance of Option. If an Eligible Employee cancels his Acceptance of
option as to only a part of the Shares, he shall make the required
payment as provided in Section 9 above with respect to the number of
Shares for which his Acceptance of Option is not cancelled.
13. EFFECT OF FAILURE TO MAKE PAYMENTS WHEN DUE
Subject to other provisions of the Plan permitting postponement, The
Bank of Glen Burnie may treat the failure by an Eligible Employee to
make any payment as a cancellation of his Acceptance of Option. In that
event, the Eligible Employee will be notified of such cancellation by
mailing notice to him at his last known business or home address.
14. RETIREMENT
If the employment of an Eligible Employee is terminated by retirement
prior to the end of the Option Period, and such Eligible Employee may
elect to pay for his Shares within months of his termination of
employment by retirement, but in no event later than 27 months after
the Date of Grant. The Date of Exercise with respect to his Option
shall be the date of such lump sum payment.
15. DEATH
If the employment of an Eligible Employee is terminated by death prior
to the end of the Option Period, the executors or administrators of
such deceased Eligible Employee or any person or persons who shall have
acquired the Option directly from such deceased Eligible Employee by
bequest or inheritance may elect, at any time within months after such
Eligible Employee's death, but in no event after the expiration of a
period of 27 months after the Date of Grant (1) to pay the amount due,
or (2) to cancel the Eligible Employee's Acceptance of Option in
accordance with the provisions of Section 12. In the event an election
is made to pay the amount due, the Date of Exercise, with respect to
the deceased Eligible Employee's Option, shall be the date on which
such payment is made.
<PAGE>
THEN BANK OF GLEN BURNIE
EMPLOYEE STOCK PURCHASE PLAN
(Continued)
16. APPLICATION OF FUNDS
All funds received by The Bank of Glen Burnie in payment for Shares
purchased under the Plan may be used for any valid corporate purpose.
17. NOTICE OF DISPOSITION BY ELIGIBLE EMPLOYEE
Any Eligible Employee who shall dispose of any Shares received under
the Plan within the later of two years from Date of Grant or one year
from Date of Exercise shall notify the Cashier of The Bank of Glen
Burnie as to the date of disposition, the sale price (if any), and
number of Shares involved.
18. COMMENCEMENT OF PLAN
The Plan shall not take effect until approved by the holders of the
majority of the Shares of the Common Stock of The Bank of Glen Burnie
present, in person or by proxy, and entitled to vote at a duly held
stockholders' meeting, which approval must occur within the period
beginning twelve months before and ending twelve months after the date
the Plan is adopted by the Board.
19. GOVERNMENTAL APPROVALS OR CONSENTS
The Plan and any Options granted thereunder are subject to any
governmental approvals or consent that may be or become applicable in
connection therewith. The Board may make such changes in the Plan and
include such terms in any Option granted under the Plan as may be
necessary or desirable, in the opinion of counsel of The Bank of Glen
Burnie to comply with the rules or regulations of any governmental
authority, or to be eligible for tax benefits under the Internal
Revenue Code or the laws of any state.
20. AUTHORITY TO AMEND, SUSPEND, OR TERMINATE PLAN
The Board may, insofar as permitted by law, from time to time, with
respect to any Shares at any time not subject to Options, suspend or
discontinue the Plan or revise or amend it in any respect whatsoever
except that, without the approval of the holders of the majority of the
outstanding Shares of Common stock of The Bank of Glen Burnie no such
revision or amendment shall change the number of Shares subject to the
Plan or permit granting of Options under the Plan to persons other than
the employees of The Bank of Glen Burnie. Furthermore, the Plan may
not, without the approval of the holders of the majority of the
outstanding Shares of the Common Stock of The Bank of Glen Burnie be
amended in any manner that will cause Options issued under it to fail
to meet the requirements of an Employee Stock Purchase Plan as defined
in Section 423 of the Internal Revenue Code.
21. EMPLOYMENT RIGHTS NOT CONFERRED BY PLAN
Neither the establishment nor any continuance of the Plan, nor the
granting of Options thereunder, shall be construed as conferring any
legal rights upon any Eligible Employee or other employee for a
continuation of employment, nor shall such establishment, continuance
or granting of Options interfere with the rights of The Bank of Glen
Burnie to discharge any Eligible Employee or other employee.
<PAGE>
THE BANK OF GLEN BURNIE
EMPLOYEE STOCK PURCHASE PLAN
(Continued)
20. AUTHORITY TO AMEND, SUSPEND, OR TERMINATE PLAN
The Board may, insofar as permitted by law, from Lime to time, with
respect to any Shares at any time not subject to Options, suspend or
discontinue the Plan or revise or amend it in any respect whatsoever
except that, without the approval of the holders of the majority of the
outstanding Shares of Common stock of The Bank of Glen Burnie no such
revision or amendment shall change the number of Shares subject to the
Plan or permit granting of options under the Plan to persons other than
the employees of The Bank of Glen Burnie. Furthermore, the Plan may
not, without the approval of the holders of the majority of the
outstanding Shares of the Common Stock of The Bank of Glen Burnie be
amended in any manner that will cause Options issued under it to fail
to meet the requirements of an Employee Stock Purchase Plan as defined
in Section 423 of the Internal Revenue Code.
21. EMPLOYMENT RIGHTS NOT CONFERRED BY PLAN
Neither the establishment nor any continuance of the Plan, nor the
granting of Options thereunder, shall be construed as conferring any
legal rights upon any Eligible Employee or other employee for a
continuation of employment, nor shall such establishment, continuance
or granting of Options interfere with the rights of The Bank of Glen
Burnie to discharge any Eligible Employee or other employee.
EXHIBIT 10.5
ANNUAL REVIEW AND
ACTUARIAL VALUATION
THE BANK OF GLEN BURNIE
PENSION PLAN
as of
January 1, 1996
<PAGE>
TABLE OF CONTENTS
INTRODUCTION AND HIGHLIGHTS PAGE
COVER LETTER..........................................................1-2
EXECUTIVE SUMMARY.....................................................3-4
ASSET INFORMATION
INVESTMENT FUND STATEMENT AND
SUMMARY OF ASSETS................................................... 5-6
VALUATION RESULTS
CALCULATION OF THE UNFUNDED
ACTUARIAL LIABILITY AND NORMAL COST.............................. 7
SCHEDULE OF REQUIRED AMORTIZATIONS FOR
FUNDING STANDARD ACCOUNT......................................... 8
SCHEDULE OF 10 YEAR AMORTIZATION BASES.............................. 9
CALCULATION OF THE FULL FUNDING LIMITATION.......................... 10-11
DEVELOPMENT OF THE CONTRIBUTION RANGE
FOR FUNDING PURPOSES............................................. 12
DEVELOPMENT OF QUARTERLY CONTRIBUTION............................... 13
FUNDING STANDARD ACCOUNT............................................ 14
ACCOUNTING INFORMATION
INFORMATION REQUIRED UNDER FASB #35................................. 15
INFORMATION REQUIRED UNDER FASB #87................................. 16-17
BASIS OF VALUATION
ACTUARIAL BASIS..................................................... 18-19
SUMMARY OF PLAN PROVISIONS.......................................... 20-25
SUMMARY OF EMPLOYEE DATA............................................
<PAGE>
February 29, 1996
Retirement Plan Committee
The Bank of Glen Burnie
P.O. Box 70
Glen Burnie, Maryland 21060-0070
Re: The Bank of Glen Burnie Pension Plan -
Annual Review and Actuarial Valuation
Dear Committee Members:
This report presents the results of the annual review and actuarial valuation of
The Bank of Glen Burnie Pension Plan prepared for the 1996 Plan Year and sets
forth the contribution required for the plan year ending December 31, 1996.
The valuation was performed on the basis of employee census data submitted by
The Bank of Glen Burnie and upon investment fund data submitted by the Trustee,
First National Bank of Maryland.
Turner Pension Consultants, LLC has been retained by The Bank of Glen Burnie to
perform this valuation on behalf of plan participants. The report has been
prepared in accordance with generally accepted actuarial principles and
practices. The actuarial assumptions that have been used are reasonably related
to the experience of the plan and to reasonable expectations and represent the
enrolled actuary's best estimate of anticipated experience under the plan.
This report reflects the following:
- The minimum funding requirement for 1996 increased from
$113,263 (4.7% of prior year's compensation) to $120,824 (4.6%
of prior year's compensation).
- No quarterly contributions are required for the 1996 plan
year.
- The maximum deductible contribution for fiscal year ending
December 31, 1996 is $233,910 (8.9% of prior year's
compensation) compared to $223,043 (9.2% of prior year's
compensation) for the previous year. To be deductible, the
contribution must be deposited prior to the due date of the
Bank's federal tax return.
- As was the case in the past, the Bank of Glen Burnie Pension
Plan is not "top-heavy" for plan year beginning January 1,
1996.
1
<PAGE>
- On September 18, 1995, the Bank of Glen Burnie purchased a
branch of First Union Bank. The employees of this branch
(Eberhardt, Fitzpatrick, Knopp, Sutton and Youngbar) have
received credit for benefit accrual from September 18, 1995.
They have received eligibility and vesting credit from their
date of hire with First Union.
After you have had an opportunity to review this report, please call if you have
any questions or wish to review and discuss the valuation.
Respectfully Submitted,
TURNER PENSION CONSULTANTS, LLC
Deborah G. Turner
Director
Pension Consulting Services
Richard M. Skidmore
Senior Plan Administrator
2
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
<TABLE>
<CAPTION>
EXECUTIVE SUMMARY
January 1, 1995 January 1, 1996 % Change
--------------- --------------- --------
<S> <C> <C> <C>
Participant Information
Number of Participants:
Active 102 112
Retired 15 16
Terminated Vested 13 10
--- ---
Total 130 138 6.2%
Annual Compensation of Active
Participants (Prior Year) 2,411,791 2,617,791 8.5%
Average Annual Compensation of
Active Participants (Prior Year) 23,645 23,373 (1.2%)
Asset Information
Market Value 2,767,215 3,399,653 22.9%
Actuarial Asset Value 2,810,109 3,271,643 16.4%
Cost Value 2,853,002 3,143,634 10.2%
Funding Information
Normal Cost 173,634 183,696 5.8%
Funding Standard Account
Credit Balance 107,196 110,257 2.9%
Contribution Range for Payment at the
End of the Plan Year:
Maximum Deductible Deposit 223,043 233,910 4.9%
As a % of Proper Year's Compensation 9.2% 8.9%
Minimum Funding Requirement 113,263 120,824 6.7%
As a % of Proper Year's Compensation 4.7% 4.6%
Accounting Information
</TABLE>
3
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
<TABLE>
<CAPTION>
EXECUTIVE SUMMARY
(continued)
January 1, 1995 January 1, 1996 % Change
--------------- --------------- --------
<S> <C> <C> <C>
Accounting Information
FASB #35 Value of Accumulated Plan
Benefits:
Vested 2,167,522 2,364,935 9.1%
Non-Vested 54,938 68,766 25.2%
Total 2,222,460 2,433,701 9.5%
Interest Rate 8.0% 8.0%
FASB #87 Pension Expense 222,281 225,728 1.6%
Fiscal Year Ending 12/31/95 12/31/96
Discount Rate 8.5% 8.5%
Long Term Rate 8.5% 8.5%
</TABLE>
4
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
<TABLE>
<CAPTION>
INVESTMENT FUND STATEMENT
AS OF DECEMBER 31, 1995
<S> <C> <C> <C>
Market Value of Fund as of January 1, 1995 $2,767,214.90*
Receipts
Employer Contribution for 1995 Plan $223,043.00
Year
Reimbursement of Trustees Fees 0.00
Rebate of Investment Advisory Fee 15,251.00
Interest and Dividends 219,142.87
Realized Gain/(Loss) 7,477.57
Unrealized Gain/(Loss) 341,806.86
Receipts from MONY 2,461.68
--------
Total Receipts $809,182.98
Benefit Payments (including Federal $170,653.30
tax withheld)
Trustee Fees 6,091.38
--------
Total Disbursement $176,744.68
Excess of Receipts over $ 632,438.30
Disbursements
Market Value of Fund as of $3,399,653.20*
December 31, 1995
</TABLE>
* Asset value non-inclusive of Mutual Of New York contract value.
5
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
<TABLE>
<CAPTION>
SUMMARY OF ASSETS
AS OF DECEMBER 31, 1995
Cost Value Market Value
---------- ------------
<S> <C> <C> <C> <C>
Cash Equivalents $ 97,918.75 3.11%$ 97,918.75 2.88%
Accrued Income 26,557.57 0.84% 26,557.57 0.78%
Contribution Receivable 0.00 0.00% 0.00 0.00%
Equity Investments 2,836,679.72 90.24% 3,074,018.96 90.42%
Fixed Income Investments 182,477.57 5.81% 201,157.92 5.92%
------------- -------------
Total Assets $3,143,633.61 100.00% $3,399,653.20 100.00%
------------- -------------
Actuarial Value of Assets
(Average of Costs and
Market Values) $3,271.643
----------
Asset value non-inclusive of MONY contract value.
</TABLE>
6
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
CALCULATION OF THE UNFUNDED
ACTUARIAL LIABILITY
AS OF JANUARY 1, 1996
(1) Unfunded Actuarial Liability as of 01/01/95 $179,750
(2) Plus: Normal Cost 173,634
(3) Plus: Interest on (1) and (2) at 8% 28,269
(4) Less: Contributions Paid or Accrued 223,043
(5) Less: Interest on Contributions Paid 477
-------
(6) Unfunded Actuarial Liability as of 01/01/96 158,133
CALCULATION OF THE NORMAL COST
AS OF JANUARY 1, 1996
(1) Actuarial Present Value of Future Benefits: $5,431,333
(2) Less: Actuarial Value of Assets 3,271,643
(3) Less: Unfunded Actuarial Liability 158,133
(4) Actuarial Present Value of Future Normal Costs 2,001,557
[(1) - (2) - (3)]
(5) Actuarial Present Value of Future Compensation 31,401,300
(6) Normal Cost Accrual Rate [(4)/(5)]
(% of Projected Annual Compensation) 6.37%
(7) Projected Annual Compensation of Active Participants 2,883,769
----------
(8) Normal Cost [(6) x (7)] $ 183,696
7
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
SCHEDULE OF REQUIRED AMORTIZATIONS FOR
FUNDING STANDARD ACCOUNT
AS OF JANUARY 1, 1996
<TABLE>
<CAPTION>
Plan Year
Date Payment Last Initial Scheduled Years
Charges Established Period Payment Amount Balance Remaining Payment
- ------- ----------- ------ ------- ------ ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Unfunded Accrued Liability 01/01/77 30 2006 $111,232 $ 68,903 11 $ 8,937
Change in Actuarial Assumptions
and Plan Amendment 01/01/84 30 2013 9,057 7,579 18 749
Plan Amendment 01/01/85 30 2014 3,487 2,994 19 288
Plan Amendment 01/01/88 30 2117 45,369 41,285 22 3,748
Change in Actuarial Assumptions 01/01/88 10 1997 16,318 4,375 2 2,273
Plan Amendment 01/01/89 30 2018 3,259 3,015 23 269
Plan Amendment 01/01/91 30 2020 94,061 89,330 25 7,749
Plan Amendment 01/01/93 30 2021 383 370 26 31
Change in Actuarial Assumptions 01/01/93 10 2002 139,094 107,922 7 19,194
-------- -------- ---- --------
Total Charges $422,260 $325,773 $ 43,238
======== ======== ========
Credits
Plan Amendment 01/01/94 30 2023 $ 58,391 $ 57,318 28 $ 4,803
-------- -------- --------
Total Credits $ 58,391 $ 57,318 $ 4,803
======== ======== ========
Net Amortization Payment on January 1, 1996 $ 38,435
========
</TABLE>
8
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
10-YEAR AMORTIZATION BASES FOR THE TAXABLE YEAR
ENDING DECEMBER 31, 1996
<TABLE>
<CAPTION>
Date Initial Prior 01/01/96 Limited
Charges Established Amount Payment Balance Adjustment
- ------- ----------- ------ ------- ------- ----------
<S> <C> <C> <C> <C> <C>
Change in Actuarial Assumptions and
Plan Amendment 01/01/84 $ 9,057 $ 0 $ 0 $ 0
Plan Amendment 01/01/85 3,487 0 0 0
Plan Amendment 01/01/88 45,369 6,913 16,805 6,316
Change in Actuarial Assumptions 01/01/88 16,318 2,455 6,130 2,243
Plan Amendment 01/01/89 3,259 483 1,553 441
Plan Amendment 01/01/91 94,061 13,898 64,138 12,698
Plan Amendment 01/01/92 383 57 297 52
Change in Actuarial Assumptions 01/01/93 139,094 21,008 119,100 19,194
-------- -------- -------- --------
Total Charges $311,028 $ 44,814 $208,023 $ 40,944
======== ======== ======== ========
Credits
Plan Amendment 01/01/94 $ 58,391 $ 8,819 $ 49,890 $ 8,057
-------- -------- -------- --------
Total Credits $ 58,391 $ 8,819 $ 49,890 $ 8,057
======== ======== ======== ========
Net Amortization Payment on January 1 $ 35,995 $158,133 $ 32,887
Interest to December 31 $ 2,631
Net Amortization Payment on December 31 $ 35,518
</TABLE>
9
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
CALCULATION OF THE FULL FUNDING LIMITATION
FOR THE PLAN YEAR ENDING DECEMBER 31, 1996
The maximum deductible contribution permitted under a defined benefit
plan is subject to two special "full funding limitation" tests which measure the
funded status of the plan.
The first test limits the deductible contribution to an amount needed
to fully fund the expected accrued liability by the end of the year. The accrued
liability projected to the end of the year is a function of the actuarial cost
method being used to determine plan contributions and is computed using the
valuation interest rate of 8%. It will usually exceed the true liability for
benefits accrued under the plan since it reflects any pre-funding of benefits
which the actuarial cost method may generate. One such example of pre-funding is
the recognition of expected future salary increases in determining current
contribution levels. The application of this test is as follows:
(1) Actuarial Accrued Liability as of 1/1/96 $3,424,053
(2) Entry Age Normal Cost for 1996 219,684
(3) Interest on (1) and (2) at 8% 291,499
(4) Expected Pension Payments during 1996 132,800
(5) Interest on (4) at 8% 5,755
--------
(6) Expected Accrued Liability on 12/31/96 3,796,861
(1)+(2)+(3)-(4)-(5)
(7) Lesser of Actuarial Asset Value or Market
Value of Assets as of 1/1/96 3,271,643
(8) Expected Earnings from (7) at 8% 261,731
(9) Expected Distributions during 1996 132,800
(10) Expected Earnings on (9) at 8% 5,755
(11) Expected Assets on 12/31/96
(7)+(8)-(9)-(10) 3,394,819
(12) Full Funding Limitation (6)-(11) $ 402,042
10
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
CALCULATION OF THE FULL FUNDING LIMITATION
FOR THE PLAN YEAR ENDING DECEMBER 31, 1996
(continued)
The second test limits the deductible contribution to an amount needed
to increase plan assets to 150% of the "current liability". The "current
liability" is the actual value of benefits accumulated as of the valuation date.
The interest rate used to compute the "current liability" must also fall within
an allowable range which is based on a weighted average of the rates of interest
on 30 year Treasury securities over the preceding four years. The rate selected
for the current year was 7.5 %. This test is shown below:
(13) Current Liability as of 1/1/96
(including benefits accruing during year) $2,803,455
(14) Interest on (13) at 7.5% 210,259
(15) Expected Pension Payments during 1996 132,800
(16) Interest on (15) at 7.5% 5,395
(17) Expected Current Liability on 12/31/96
(13)+(14)-(15)-(16) $2,875,519
(18) 150% Expected Current Liability 4,313,279
(19) Expected Assets on 12/31/96 from (11) 3,394,819
(20) 150% Full Funding Limitation (18)-(19) $918,460
The combined result of these two tests is as follows:
(21) Full Funding Limitation as of 12/31/96
Lesser of (12) or (20) $402,042
11
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
DEVELOPMENT OF THE CONTRIBUTION RANGE
FOR FUNDING PURPOSES
Minimum Funding Requirement
for the Plan Year Beginning January 1, 1996
(a) Normal Cost $ 183,696
(b) Net Amortization Charges to the
Funding Standard Account 38,435
(c) Funding Standard Account Credit Balance 110,257
(d) Full Funding Limitation 402,042
(e) Minimum Required Contribution Payable at
the End of the Plan Year = [(a)+(b)-(c)]
x 1.08, not to exceed (d) 120,824
Maximum Deductible Contribution
for the Employer Fiscal Year Ending December 31, 1996
(a) Normal Cost $ 183,696
(b) Net Amortization Charges for Maximum
Deduction Purposes with Interest to the
end of the Fiscal Year 35,518
(c) Interest on Normal Cost to the end
of the Fiscal Year (a) x 8% 14,696
(d) Maximum Amortization Contribution =
(a)+(b)+(c) 233,910
(e) Full Funding Limitation 402,042
(f) Minimum Required Contribution Payable
at the End of the Plan Year 120,824
(g) Maximum Deductible Contribution = lesser of
(d) or (e), but not less than (f) 233,910
12
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
DEVELOPMENT OF QUARTERLY CONTRIBUTION REQUIREMENT
(a) Current Liability as of 1/1/95 $2,371,131
(b) Actuarial Value of Assets
as of 1/1/95 2,810,109
(c) Funded Current Liability
Percentage as of 1/1/95
(b)/(a) 119%
Since (c) is at least 100%, no quarterly contributions are required for 1996.
13
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
FUNDING STANDARD ACCOUNT
FOR THE PLAN YEAR ENDED
DECEMBER 31, 1995
ERISA requires that each defined benefit pension plan meet or exceed
certain minimum funding standards in order to enhance the security of each
employee's benefits. The device by which it is determined whether the standards
are met is the "funding standard account".
Any excess of credits over charges is a credit balance which is carried
forward and may be used to reduce future funding requirements. Any excess of
charges over credits is a funding deficiency which is subject to the excise tax
penalties prescribed by ERISA.
The operation of the funding standard account for the plan year ended
December 31, 1995 is shown below:
Charges
Prior Year Funding Deficiency $ 0
Normal Cost 173,634
Amortization Charges (Balance
beginning of year $344,881) 43,238
Interest 17,350
Interest on Late Quarterly
Contributions 0
--------
Total Charges $234,222
Credits
Prior Year Credit Balance 107,196
Employer Contribution 223,043
Amortization Credits (Balance
beginning of year $57,875) 4,803
Interest 9,437
-------
Total Credits $344,479
Credit Balance $110,257
14
<PAGE>
INFORMATION REQUIRED UNDER FASB #35
ACCOUNTING AND REPORTING
FOR DEFINED BENEFIT PLANS
<TABLE>
<CAPTION>
<S> <C> <C>
1. The most recent valuation was performed as of January 1, 1996.
2. The actuarial present value of accumulated plan benefits as of 12/31/95
is shown below:
Vested Benefits
Participants currently receiving payments $1,180,021
Other participants 1,184,914
Total vested benefits 2,364,935
Nonvested Benefits 68,766
----------
Total actuarial present value of accumulated
plan benefits $2,433,701
3. The plan had net assets available for benefits as of 12/31/95
(excluding MONY contracts) of $3,399,653.
4. An interest rate of 8% was used to determine the actuarial present
value of accumulated plan benefits as of December 31, 1994 and December
31, 1995.
5. Changes in the actuarial present value of accumulated plan benefits
during the past year are shown below:
Actuarial present value of accumulated
plan benefits as of 12/31/94 $2,222,460
Increase/(decrease) during the year attributable to:
Benefits accumulated (including gains and losses) $ 208,925
Interest 170,508
Benefits paid (168,192)
Net increase/(decrease) 211,241
----------
Actuarial present value of accumulated
plan benefits as of 12/31/95 $2,433,701
</TABLE>
15
<PAGE>
INFORMATION REQUIRED UNDER FASB #87
EMPLOYERS' ACCOUNTING FOR PENSION PLANS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. The pension expense for employer fiscal year ending
December 31, 1996 is as follows:
Service Cost $208,566
Interest Cost 286,590
Expected return on assets (282,856)
Net amortization and deferral 13,428
-------
Net periodic pension cost $225,728
Note: The net periodic pension cost shown above may
change if a significant event occurs prior to
the end of the period, such as a plan amendment,
which would require an additional measurement.
2. The components of the net amortization and deferral charge are as follows:
Amortization of unrecognized net obligation/
(asset) at transition $(12,169)
Amortization of unrecognized prior service cost 25,597
Amortization of unrecognized net (gain)/loss 0
--------
Net amortization and deferral $13,428
3. A reconciliation of the Plan's funded position is as follows:
12/31/95 1/1/96
-------- ------
Actuarial present value of benefit obligations:
Vested benefit obligation $2,183,088 $2,222,897
---------- ----------
Accumulated benefit obligation 2,246,454 2,286,079
---------- ----------
Projected benefit obligation 3,365,078 3,443,582
Plan assets at fair value 3,399,653 3,399,653
---------- ----------
Projected benefit obligation (in excess of)
or lesser than Plan assets 34,575 (43,929)
Unrecognized net (gain) or loss (6,440) 72,064
Unrecognized prior service cost 199,924 199,924
Unrecognized net obligation or (asset) (73,012) (73,012)
at transition ------ ------
Prepaid or (accrued) pension cost $155,047 $155,047
------- -------
</TABLE>
16
<PAGE>
INFORMATION REQUIRED UNDER FASB #87
EMPLOYERS' ACCOUNTING FOR PENSION PLANS
(continued)
4. The significant assumptions used to determine the net pension expense
for the current period are as follows:
Discount Rate 8.5%
Long Term Rate 8.5%
Salary Growth Rate 6.5%
5. The initial obligation or (asset) at transition is being amortized over
a period of 13 years from January 1, 1989 which represents the average
future service of employees expected to receive benefits under the plan
computed as of that date.
6. Unrecognized (gains) or losses which exceed 10% of the greater of plan
assets at fair value or the projected benefit obligation are amortized
over the average future service of employees expected to receive
benefits under the plan computed as of the applicable measurement date.
7. The unrecognized prior service cost arising January 1, 1991 is being
amortized over 12.810683 years. This is the average future years of
service for employees expected to receive benefits as of that date.
8. The measurement date used to determine pension expense and disclosure
information is December 31.
17
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
ACTUARIAL BASIS
Valuation of Liabilities
A. Description of Actuarial Cost Method
This valuation was performed using the frozen entry age actuarial cost
method (frozen initial liability method). Under this method, the
contribution equals the sum of the amount necessary to amortize the
frozen actuarial liabilities over a period of years and the normal cost
of the plan.
The frozen actuarial liability as of January 1, 1977 was equal to the
actuarial accrued liability on that date as determined under the entry
age normal actuarial cost method. Additional liability bases were
created since then due to changes in assumptions and plan amendments.
In the absence of any further changes in plan benefits or actuarial
assumptions, these frozen actuarial liabilities will remain unchanged
in future valuations. However in the future, as contributions are made
to amortize the frozen actuarial liabilities, the unfunded frozen
actuarial liabilities will decrease until they reach zero.
The normal cost is calculated in the aggregate (i.e. the actuarial
present values of projected benefits and future compensation are
totaled for all participants before the normal cost is calculated).
The normal cost accrual rate for the current group of participants
should remain approximately level from year to year. Changes in the
characteristics of the group due to new entrants, differences between
actuarial assumptions and actual experience, changes in actuarial
assumptions, and changes in plan provisions will lead to changes in the
normal cost accrual rate.
B. Actuarial Assumptions
Interest
For Funding Purposes 8% compounded annually. The current
liability used to determine the full funding
limitation was based on a 7.5% rate.
For Purposes of FASB #35 8% compounded annually.
For Purposes of FASB #87 8.5% discount rate
8.5% long term rate
18
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
Salary Increases 6.5% per year. The ratio of a
participant's salary at normal
retirement date to his salary at
selected ages is as follows:
Age 25 40 55
Ratio 12.42 4.83 1.88
Social Security Projected in accordance with the
escalator provisions of the 1977
Social Security Amendments:
Wage Base and Earnings Indexing
Increment 5.50%
Consumer Price Index Incremen 4.50%
Mortality 1983 Group Annuity Mortality Table.
Withdrawal Table T-5 of the Actuary's Pension
Handbook with a 5-year setback for
female rate; representative rates
are:
Age 25 40 55
Male 7.72% 5.15% .94%
Female 7.94% 6.28% 2.56%
Retirement Age All participants are assumed to
retire on their normal retirement
date.
New Entrants None assumed.
Excluded Employees No participants are excluded from
the valuation.
Rehire of Terminated
Employees No rehire of terminated employees
assumed.
Expenses Plan administrative expenses are
assumed to be paid by the employer
outside the trust.
Asset Valuation Average of cost and market values.
In no event will the actuarial value
of assets be less than 80% nor more
than 120% of market value.
The assumptions have not changed since the previous valuation.
19
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
SUMMARY OF PLAN PROVISIONS
GENERAL
TYPE OF PLAN Defined Benefit Pension Plan
PLAN SPONSOR The Bank of Glen Burnie
PLAN ADMINISTRATOR Retirement Plan Committee
TRUSTEE First National Bank of MD.
IDENTIFICATION NUMBERS
EMPLOYER 52-0575023
ADMINISTRATOR 52-1078472
TRUST 52-0057503
PLAN 001
EFFECTIVE DATE OF PLAN October 15, 1959.
EFFECTIVE DATE OF MOST
RECENT AMENDMENT January 1, 1994.
ENTRY DATE January 1.
VALUATION DATE January 1.
PLAN YEAR January 1 through December 31.
FISCAL YEAR December 31.
20
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
DEFINITIONS
COMPENSATION Total compensation paid or
accrued for the plan year
exclusive of overtime or
bonuses. Amounts in excess
of $150,000 not considered
for years prior to 1994.
Beginning in 1995, the
maximum compensation limit
will increase by a
cost-of-living adjustment.
AVERAGE COMPENSATION Average of highest five consecutive
years of compensation out of the
last ten years.
COVERED COMPENSATION The 35-year average of the Social
Security Taxable Wage Bases ending
with the year in which the
participant reaches Social Security
Normal Retirement Age.
SOCIAL SECURITY NORMAL Year of Birth Age
RETIREMENT AGE ------------- ---
Prior to 1/1/38 65
1/1/38 - 12/31/54 66
On or after 1/1/55 67
YEAR OF SERVICE Plan year during which an employee
completes at least 1,000 hours of
service.
ELIGIBILITY AND PARTICIPATION
ELIGIBILITY REQUIREMENTS Minimum age: 20-1/2;
Maximum age: none;
Service requirement: Six months;
Must be nonunion.
RE-HIRES Enter immediately if prior
participant except if not
vested and pre-break
service is less than the
length of break in which
case, treated as new
employee. If not prior
participant, must meet
eligibility requirements,
for which purpose,
pre-termination service
counted.
21
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
FUNDING OF PLAN
CONTRIBUTIONS Company contributions: Amount
required to meet annual funding
standards of IRS, as determined by
plan actuary.
Participant contributions: None
required but allowed, up to 10% of
annual compensation to all plans for
all years in plan (subject to
non-discrimination test for highly
compensated employees).
PLAN BENEFITS
LOAN PROVISIONS None.
ROLLOVER CONTRIBUTIONS Not Permitted.
FORFEITURES Used to reduce employer
contributions.
NORMAL RETIREMENT Eligibility at
termination of employment BENEFIT
after age 65.
Formula: 2% of average compensation
plus .65% of average compensation in
excess of covered compensation, all
multiplied by years of service up to
20 years.
Benefit computed as life annuity.
Benefit reduced by MONY paid up
annuity.
22
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
EARLY RETIREMENT BENEFITS Eligibility after participant
completes ten years of service and
reaches age 55.
Formula: Normal retirement benefit
computed using years of service and
average compensation at termination
of employment. Actuarial reduction
for early payment. Benefit is
reduced by 1/144th for each month
during the first five years, and
1/288th for each month during the
next five years, with actuarial
reduction thereafter, for early
payment.
DEFERRED RETIREMENT Benefits deferred to actual
BENEFITS retirement and increased for
deferred payment beyond age 65.
Increase for later payment equal to
the greater of the benefit
calculated at normal retirement date
and actuarially increased to actual
retirement, or benefit calculated at
actual retirement date with
continued credit for salary
increases and service beyond age 65.
DISABILITY BENEFITS Eligibility upon total and permanent
disability.
Commencement of benefits at
cessation of long term disability
benefits.
Formula: Benefits computed in same
manner as early retirement benefits.
TERMINATION OF
EMPLOYMENT BENEFITS Vesting Schedule:
Percent
Years of Service Vested
---------------- ------
Less than 5 years 0%
5 or more years 100%
23
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
TERMINATION OF Service prior to break in service is
EMPLOYMENT BENEFITS (cont.) excluded where participant is
re-employed after a break in service
exceeding the length of prior
service (but only where not vested).
Benefit commencement date: Normal
retirement date, unless the value of
the benefit is less than $10,000 in
which case, a lump sum is paid;
however, participant approval
required for deferral past age 55 if
ten years of service completed at
termination of employment.
DEATH BENEFITS If death occurs after becoming
vested, surviving spouse entitled to
50% of amount payable to participant
under joint and 50% survivor option
determined as of date of death.
If death occurs after normal
retirement date but before benefit
commenced, surviving spouse or other
named beneficiary entitled to full
value of accrued benefit determined
as of date of death.
PAYMENT OF BENEFITS
JOINT AND SURVIVOR BENEFITS Normal form of benefit unless
participant elects otherwise.
Benefit is the actuarial equivalent
of the normal form of benefit (life
only). Applies to all married
participants at benefit commencement
date.
OTHER OPTIONS Range of options are available: lump
sum (if value is under $10,000),
installment payments, and annuity
options.
Benefit option payments based on
UP84 at 8%.
24
<PAGE>
THE BANK OF GLEN BURNIE
PENSION PLAN
TOP HEAVY PROVISIONS
(Apply only if Plan becomes top-heavy)
NORMAL RETIREMENT Minimum Benefit: 2% of compensation
BENEFITS multiplied by top-heavy years of service to a
maximum of 10 years.
TERMINATION OF EMPLOYMENT Vesting Schedule:
Percent
Years of Service Vested
---------------- ------
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years or more 100%
25
EXHIBIT 11
Statement Re: Computation Of Per Share Earnings
Per share earnings have been computed by dividing net income by the
weighted average of shares outstanding. Shares issued or retired during a period
are weighted by the fraction of the period in which they were outstanding. The
weighted number of these shares is added to or deducted from the number of
shares outstanding at the beginning of the period to obtain the weighted average
number of shares outstanding during the period.
EXHIBIT 16
ROWLES
& Company LLC
Certified Public Accountants
Securities and Exchange Commission
Washington, D.C. 20545
On April 11, 1996, our appointment as auditors for Glen Burnie Bancorp
was terminated. We have read the statement concerning changes in registrant's
certifying accountant contained in its Form 10-K, item 9, for the year ended
December 31, 1995, and we agree with such statement.
Rowles & Company, LLP
March 24, 1997
101 E. Chesapeake Avenue, Suite 300, Baltimore, Maryland 21286
410-583-6990 FAX 410-583-7061
EXHIBIT 21
Subsidiaries of Glen Burnie Bancorp
The Bank of Glen Burnie, a Maryland corporation
GBB Properties, Inc., a Maryland corporation
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
1995 Audited Consolidated Financial Statements of Glen Burnie Bancorp and its
subsidiaries and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 9,450
<INT-BEARING-DEPOSITS> 1,458
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,597
<INVESTMENTS-CARRYING> 6,002
<INVESTMENTS-MARKET> 6,093
<LOANS> 154,170
<ALLOWANCE> 3,698
<TOTAL-ASSETS> 246,165
<DEPOSITS> 221,121
<SHORT-TERM> 1,758
<LIABILITIES-OTHER> 2,749
<LONG-TERM> 0
0
0
<COMMON> 7,274
<OTHER-SE> 13,263
<TOTAL-LIABILITIES-AND-EQUITY> 246,165
<INTEREST-LOAN> 14,476
<INTEREST-INVEST> 4,125
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 18,601
<INTEREST-DEPOSIT> 7,163
<INTEREST-EXPENSE> 7,262
<INTEREST-INCOME-NET> 11,339
<LOAN-LOSSES> 7,925
<SECURITIES-GAINS> 507
<EXPENSE-OTHER> 8,740
<INCOME-PRETAX> (3,421)
<INCOME-PRE-EXTRAORDINARY> (1,727)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,727)
<EPS-PRIMARY> (2.01)
<EPS-DILUTED> (2.01)
<YIELD-ACTUAL> 8.73
<LOANS-NON> 2,375
<LOANS-PAST> 3,905
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 408
<ALLOWANCE-OPEN> 2,764
<CHARGE-OFFS> 7,061
<RECOVERIES> 70
<ALLOWANCE-CLOSE> 3,698
<ALLOWANCE-DOMESTIC> 3,698
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
