<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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)
410-766-3300
---------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
The number of outstanding shares of the registrant's common
stock as of June 30, 1997 was 883,858.
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<PAGE>
GLEN BURNIE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ -----------
Assets
<S> <C> <C>
Cash and due from banks $10,115 $ 12,503
Federal funds sold 2,550 10,175
Investment securities available for sale,
at fair value 53,408 54,907
Investment securities held to maturity,
at cost (fair value June 30 $49,674,
December 31 $41,993) 49,504 41,667
Loans receivable, net of allowance for credit
losses June 30 $4,361; December 31 $5,061 113,349 124,672
Premises and equipment at cost, net of accumulated
depreciation 4,345 4,154
Other real estate owned 745 602
Goodwill 449 477
Other assets 5,624 5,168
-------- --------
Total assets $240,089 $254,325
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $216,360 $ 32,746
Short-term borrowings 4,043 548
Other liabilities 927 2,444
-------- --------
Total liabilities $221,330 $235,738
======== ========
STOCKHOLDERS' EQUITY:
Common stock, par value $10, authorized 5,000,000
shares; issued and outstanding: June 30 883,858
shares; December 31 883,858 shares 8,839 8,839
Surplus 6,193 6,193
Retained earnings 3,481 3,290
Net unrealized appreciation on securities
available for sale, net of income taxes 246 265
-------- --------
Total stockholders' equity 18,759 18,587
-------- --------
Total liabilities and stockholders' equity $240,089 $254,325
======== ========
</TABLE>
2<PAGE>
<PAGE>
GLEN BURNIE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income on
Loans, including fees $ 2,754 $ 3,155 $ 5,614 $ 6,867
U.S. Treasury and U.S. Government
agency securities 1,311 798 2,589 1,483
State and municipal securities 348 383 694 760
Other 56 130 160 180
-------- -------- -------- --------
Total interest income 4,469 4,466 9,057 9,290
-------- -------- -------- --------
Interest expense on
Deposits 1,720 1,910 3,546 3,858
Short-term borrowings 35 7 45 32
-------- -------- -------- --------
Total interest expense 1,755 1,917 3,591 3,890
-------- -------- -------- --------
Net interest income 2,714 2,549 5,466 5,400
Provision for credit losses 0 474 270 2,450
-------- -------- -------- --------
Net interest income after
provision for credit losses 2,714 2,075 5,196 2,950
-------- -------- -------- --------
Other income
Service charges on deposit accounts 268 308 534 594
Other fees and commissions 48 72 103 143
Other non-interest income 49 10 78 21
Gains on investment securities 1 2 4 89
-------- -------- -------- --------
Total other income 366 392 719 847
-------- -------- -------- --------
Other expenses
Salaries and employee benefits 1,300 1,195 2,535 2,328
Occupancy 312 333 635 679
Other expenses 1,723 680 2,635 1,276
-------- -------- -------- --------
Total other expenses 3,335 2,208 5,805 4,283
-------- -------- -------- --------
Income (loss) before income taxes (255) (1,342) 110 (486)
Income tax expense (benefit) (266) ( 671) (276) (452)
-------- -------- -------- --------
Net income (loss) $ 11 $ (671) $ 386 $ (34)
======== ======== ======== ========
Net income (loss) per share of
common stock $ 0.01 $ (0.76) $ 0.44 $ (0.04)
======== ======== ======== ========
Weighted-average shares of common
stock outstanding 883,858 880,816 883,858 878,621
======== ======== ======== ========
</TABLE>
3<PAGE>
<PAGE>
GLEN BURNIE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------
1997 1996
------ -------
<S> <C> <C>
Net cash provided (used) by
operating activities $ (943) $ 3,084
Cash flows from investing activities:
Proceeds from disposals of investment securities 5,549 12,715
Purchases of investment securities (11,930) (25,642)
Decrease in loans, net 11,053 7,811
Purchases of premises and equipment (476) (170)
Purchases of other real estate (417) (156)
Disposal of other real estate 222 0
Proceeds from sales of premises and equipment 5 0
--------- --------
Net cash provided (used) by investing activities 4,006 (5,442)
--------- --------
Cash flows from financing activities:
Increase (decrease) in deposits, net (16,386) 7,375
Increase (decrease) in short-term borrowings 3,495 (647)
Dividends paid (185) (481)
Issuance of common stock 0 285
--------- --------
Net cash provided (used) by financing activities (13,076) 6,532
--------- --------
Increase (decrease) in cash and cash equivalents (10,013) 4,174
Cash and cash equivalents, beginning of year 22,678 9,468
--------- --------
Cash and cash equivalents, end of period $ 12,665 $ 13,642
========= ========
</TABLE>
4<PAGE>
<PAGE>
NOTE-1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
were prepared in accordance with instructions for Form 10-Q and,
therefore, do not include all information and notes necessary for
a complete presentation of financial position, results of
operations, changes in stockholders' equity, and cash flows in
conformity with generally accepted accounting principles.
However, all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary for
a fair presentation of the unaudited consolidated financial
statements have been included in the results of operations for
the three and six months ended June 30, 1997 and 1996.
Operating results for the three and six-month periods ended
June 30, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997.
5<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Glen Burnie Bancorp, a Maryland corporation (the "Company"),
and its subsidiaries, The Bank of Glen Burnie (the "Bank") and
GBB Properties, Inc., both Maryland corporations, had a
consolidated net income of $11,000 ($0.01 per share) for the
second quarter of 1997 compared to a second quarter 1996
consolidated net loss of $671,000 ($0.76 per share). Year to
date consolidated net income for the six months ending June 30,
1997 was $386,000 ($0.44 per share) compared to a net loss of
$34,000 ($0.04 per share) for the same period in 1996. The
increases in net income were primarily attributable to lower
provisions for credit losses in the 1997 periods.
NET INTEREST INCOME. The Company's consolidated net
interest income prior to provisions for credit losses
was $2,714,000 for the second quarter of 1997 compared to
$2,549,000 for the same period in 1996, an increase of
$165,000 or 6.5%. Consolidated net interest income for the six
months ended June 30, 1997 was $5,466,000 compared to $5,400,000
for the six months ended June 30, 1996. The increases in net
interest income for the three and six month periods were
primarily attributable to lower interest expense in each period.
Interest expense fell $162,000 (8.5%) for the three months ended
June 30, 1997 and fell $299,000 (7.7%) for the six-month period.
The decline in interest expense was attributable to the decision
to lower interest rates on deposit liabilities. Interest income
was essentially flat for the three-month period and declined
$233,000, or 2.5%, for the six months ended June 30, 1997. The
Company's earnings performance continues to be impacted by a
decline in earning assets and a shift in the asset mix from loans
to lower yielding investment securities. Net interest margins
for the three and six months ended June 30, 1997 were 5.11%
and 5.03% compared to 4.49% and 4.89% for the three and six
months ended June 30, 1996. The increase in the net interest
margin for the second quarter of 1997 was primarily due to the
loss of accrued interest on loans charged off during the quarter
in 1996.
PROVISION FOR CREDIT LOSSES. During the three months ended
June 30, 1997, the Company made no provision for credit losses
and for the six month period provided $270,000 compared to
$2,075,000 and $2,450,000 in provisions during the three and six
months ended June 30, 1996. The decreases in provisions reflect
a decline in charge-off activity and a reduction in classified
loans. During the three months ended June 30, 1997, the Company
recorded a net recovery of $76,000 and for the six month period
recorded a net charge-off of $970,000 compared to $3,034,000 and
$3,203,000 in net charge-offs during the three and six months
ended June 30, 1996.
OTHER INCOME. Other income decreased $26,000 (6.6%) and
$128,000 (15.1%), respectively, during the three and six months
ended June 30, 1997 compared to the prior year periods. The
decrease reflects declines in income from service charges on
deposit accounts reflecting the decline in average deposits and
reduced income from other fees and commissions. For the
six-month period, other income was also affected by reduced gains
on investment securities reflecting lower sales activity during
the 1997 period.
OTHER EXPENSE. Other expense increased by $1,127,000, or
51.0%, for the quarter and by $1,522,000, or 35.54%, for the six
month period primarily due to a $700,000 expense incurred in
connection with the settlement of certain litigation during the
second quarter. In addition, the Company experienced increases
in other expenses due to professional fees incurred in connection
with other litigation in which the Company is involved.
INCOME TAXES. During the three and six months ended June
30, 1997, the Company recorded income tax benefits of $266,000
and $276,000, respectively, compared to tax benefits of $671,000
and $452,000, respectively, during the three and six months ended
June 30, 1996. The Company's tax benefits relate primarily to
its holdings of tax-exempt state, county and municipal securities
and U.S. government agency securities which are not taxed by the
State of Maryland.
6<PAGE>
<PAGE>
FINANCIAL CONDITION
The Company's assets declined to $240,089,000 at June 30,
1997 from $254,325,000 at December 31, 1996 primarily due to a
reduction in the loan portfolio. The Bank's net loans totaled
$113,349,000 at June 30, 1996, compared to $124,672,000 on
December 31, 1996, a decrease of $11,323,000 (9.1%). The decline
was largely due to a decrease in commercial and industrial loans
during the period. Commercial mortgage loans increased during
the period while residential mortgages decreased slightly and
lease financing and installment loans also decreased. The Bank
has decided 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.
The Bank's cash and cash equivalents (cash due from banks,
interest-bearing deposits in other financial institutions, and
federal funds sold), as of June 30, 1997, totaled $12,665,000, a
decrease of $10,013,000 (44.2%) from the December 31, 1996 total
of $22,678,000. The aggregate market value of investment
securities held by the Bank as of June 30, 1997 was $103,082,000
compared to $96,900,000 as of December 31, 1996, a $6,182,000
(6.4%) increase. The fluctuations in the investment securities
were a result of changes in deposits combined with declines in
loan demand.
Deposits as of June 30, 1997 totaled $216,360,000, a
decrease of $16,386,000 (7.04%) for the year to date. NOW
accounts as of June 30, 1997 totaled $25,791,000, a decrease of
$2,999,000 (13.2%) for the year to date. Money market accounts
declined by $5,333,000 (20.3%) for the year to date to total
$20,878,000 on June 30, 1997. Savings deposits increased by
$1,817,000, or 3.8%, year to date. Meanwhile, certificates of
deposit over $100,000 totaled $8,297,000 on June 30, 1997, a
decrease of $323,000 (3.7%) from year end. Other time deposits
(made up of certificates of deposit less than $100,000 and
individual retirement accounts) totaled $71,319,000 on June 30,
1997, a $6,198,000 (8.0%) increase from December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently has no business other than that of the
Bank and does not currently have any material funding
commitments. The Company's principal sources of liquidity are
cash on hand and dividends received from the Bank. The Bank is
subject to various regulatory restrictions on the payment of
dividends.
The Bank's principal sources of funds for investments and
operations are net income, deposits from its primary market area,
principal and interest payments on loans, interest received on
investment securities and proceeds from maturing investment
securities. Its principal funding commitments are for the
origination or purchase of loans and the payment of maturing
deposits. Deposits are considered a primary source of funds
supporting the Bank's lending and investment activities.
The Bank's most liquid assets are cash and cash equivalents,
which are cash on hand, amounts due from financial institutions,
federal funds sold, certificates of deposit with other financial
institutions that have an original maturity of three months or
less and money market mutual funds. The levels of such assets
are dependent on the Bank's operating financing and investment
activities at any given time. The variations in levels of cash
and cash equivalents are influenced by deposit flows and
anticipated future deposit flows.
The Bank may draw on a $26,000,000 line of credit from The
Federal Home Loan Bank of Atlanta. Borrowings under the line are
secured by a lien on the Bank's residential mortgage loans. As
of June 30, 1997, however, no amounts were outstanding under this
line.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
Not applicable.
7<PAGE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On July 10, 1997, the Bank's Board of Directors executed a
revised Memorandum of Understanding (the "Revised M.O.U.") which
supersedes the Memorandum of Understanding previously entered
into with the FDIC and the Maryland Commissioner of Banking.
Under the Revised M.O.U., the Bank may not declare or pay any
dividends to the Company without the prior written consent of the
FDIC and the Commissioner if the ratio of the Bank's Tier 1
capital to assets would be less than 6.0%. Dividends to the
Company may not exceed 50% of net operating income after
taxes for the period declared without the prior written consent
of the FDIC and the Commissioner. Within 360 days of the
Effective Date of the Revised M.O.U., the Bank is required to
reduce its classified assets to 25% of Tier 1 Capital plus its
Allowance for Loan and Lease Losses and to reduce its ratio of
non-accrual loans and loans 30 days or more past due to no more
than 3.5% of gross loans. Additionally, the Bank will adopt and
implement an internal loan review and grading system meeting
certain criteria and make certain changes in existing policies
and in its strategic plan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - The following exhibits are filed with this
report.
27 Financial Data Schedule (EDGAR Only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter for which this report is filed.
8<PAGE>
<PAGE>
Signatures
----------
Pursuant to the requirements 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.
GLEN BURNIE BANCORP
-------------------
(Registrant):
Date: August 14, 1997 By:/s/ John E. Porter
----------------------------
John E. Porter
Chief Financial Officer
(Duly authorized officer and
principal financial officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extracted
from the Condensed Consolidated Financial Statements of Glen
Burnie Bancorp and its subsidiaries for the six months ending
June 30, 1997 and is qualified in its entirety by reference to
such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 10,115
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,550
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 53,408
<INVESTMENTS-CARRYING> 49,504
<INVESTMENTS-MARKET> 49,674
<LOANS> 113,399
<ALLOWANCE> 4,361
<TOTAL-ASSETS> 240,089
<DEPOSITS> 216,360
<SHORT-TERM> 4,043
<LIABILITIES-OTHER> 927
<LONG-TERM> 0
<COMMON> 8,839
0
0
<OTHER-SE> 9,920
<TOTAL-LIABILITIES-AND-EQUITY> 240,089
<INTEREST-LOAN> 5,614
<INTEREST-INVEST> 3,283
<INTEREST-OTHER> 160
<INTEREST-TOTAL> 9,057
<INTEREST-DEPOSIT> 3,546
<INTEREST-EXPENSE> 3,591
<INTEREST-INCOME-NET> 5,466
<LOAN-LOSSES> 270
<SECURITIES-GAINS> 4
<EXPENSE-OTHER> 5,805
<INCOME-PRETAX> 110
<INCOME-PRE-EXTRAORDINARY> 110
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 386
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<YIELD-ACTUAL> 5.03
<LOANS-NON> 3,981
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,061
<CHARGE-OFFS> 1,339
<RECOVERIES> 369
<ALLOWANCE-CLOSE> 4,361
<ALLOWANCE-DOMESTIC> 4,361
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
