<PAGE>
<PAGE>
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 September 30, 1998
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: 0-24047
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, Maryland 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 X No
--- ---
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 September 30, 1998 was 1,095,968.
<PAGE>
<PAGE>
GLEN BURNIE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
ASSETS --------- ----------
<S> <C> <C>
Cash and due from banks. . . . . . . . . . . . . . $ 8,279 $ 9,687
Federal funds sold . . . . . . . . . . . . . . . . 959 18,850
Investment securities available for sale,
at fair value. . . . . . . . . . . . . . . . . . 25,209 40,679
Investment securities held to maturity, at cost
(fair value September 30: $54,564;
December 31: $41,567). . . . . . . . . . . . . . 53,698 41,179
Loans receivable, net of allowance for credit
losses September 30: $3,130, December 31:
$4,139 . . . . . . . . . . . . . . . . . . . . . 119,834 111,545
Premises and equipment at cost, net of
accumulated depreciation . . . . . . . . . . . . 4,450 4,319
Other real estate owned. . . . . . . . . . . . . . 1,100 749
Goodwill . . . . . . . . . . . . . . . . . . . . . 381 422
Other assets . . . . . . . . . . . . . . . . . . . 4,329 4,470
-------- --------
Total assets. . . . . . . . . . . . . . $218,239 $231,900
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits . . . . . . . . . . . . . . . . . . . . . $196,289 $207,110
Short-term borrowings. . . . . . . . . . . . . . . 786 890
Other liabilities. . . . . . . . . . . . . . . . . 1,663 4,935
-------- --------
Total liabilities. . . . . . . . . . . . $196,738 $212,935
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, par value $10, authorized 5,000,000
shares; issued and outstanding: September 30:
1,098,020 shares; December 31: 1,092,768
shares . . . . . . . . . . . . . . . . . . . . . $ 10,980 $ 10,928
Surplus. . . . . . . . . . . . . . . . . . . . . . 6,646 6,575
Retained earnings. . . . . . . . . . . . . . . . . 1,657 1,237
Net unrealized appreciation on investments
available for sale, net of income taxes. . . . . 218 225
-------- --------
Total stockholders' equity . . . . . . . 19,501 18,965
-------- --------
Total liabilities and stockholders'
equity. . . . . . . . . . . . . . . . $218,239 $231,900
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
Interest income on:
Loans, including fees . . . . . . . . . $ 2,650 $ 2,639 $ 7,820 $ 8,253
U.S. Treasury and U.S. Government
agency securities . . . . . . . . . . 1,143 1,398 3,377 3,987
State and municipal securities. . . . . 11 164 202 858
Other . . . . . . . . . . . . . . . . . 182 89 513 249
---------- ---------- ---------- ----------
Total interest income. . . . . . . 3,986 4,290 11,912 13,347
---------- ---------- ---------- ----------
Interest expense on:
Deposits. . . . . . . . . . . . . . . . 1,531 1,682 4,577 5,228
Short-term borrowings . . . . . . . . . 6 15 20 60
---------- ---------- ---------- ----------
Total interest expense. . . . . . . 1,537 1,697 4,597 5,288
---------- ---------- ---------- ----------
Net interest income. . . . . . . 2,449 2,593 7,315 8,059
Provision for credit losses. . . . . . . . (500) 0 (500) 270
---------- ---------- ---------- ----------
Net interest income after
provision for credit losses. . 2,949 2,593 7,815 7,789
---------- ---------- ---------- ----------
Other income:
Service charges on deposit accounts . . 301 328 881 862
Other fees and commissions. . . . . . . 51 50 151 153
Other non-interest income . . . . . . . 28 0 1,211 78
Gains on investment securities. . . . . 165 223 416 227
---------- ---------- ---------- ----------
Total other income. . . . . . . . . 545 601 2,659 1,320
---------- ---------- ---------- ----------
Other expenses:
Salaries and employee benefits. . . . . 1,268 1,308 3,762 3,843
Occupancy . . . . . . . . . . . . . . . 351 321 1,022 956
Other expenses. . . . . . . . . . . . . 980 1,425 4,510 4,060
---------- ---------- ---------- ----------
Total other expenses. . . . . . . . 2,599 3,054 9,294 8,859
---------- ---------- ---------- ----------
Income before income taxes . . . . . . . . 895 140 1,180 250
Income tax expense (benefit) . . . . . . . 379 (53) 431 (329)
---------- ---------- ---------- ----------
Net income . . . . . . . . . . . . . . . . $ 516 $ 193 $ 749 $ 579
========== ========== ========== ==========
Net income per share of common stock . . . $ 0.47 $ 0.18 $ 0.68 $ 0.53
========== ========== ========== ==========
Weighted-average shares of common stock
outstanding. . . . . . . . . . . . . . 1,096,527 1,092,768 1,094,785 1,092,768
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
3<PAGE>
<PAGE>
GLEN BURNIE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
Net income . . . . . . . . . . . . . . . . $ 516 $ 193 $ 749 $ 579
Other comprehensive income (expense),
net of tax
Unrealized gains (losses) securities:
Unrealized holding gains (losses)
arising during period. . . . . . . . 133 124 251 115
Less: reclassification adjustment for
gain included in net income. . . . . (101) (137) (255) (139)
------- ------- ------- -------
Comprehensive income . . . . . . . . . . . $ 548 $ 180 $ 745 $ 555
======= ======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
4<PAGE>
<PAGE>
GLEN BURNIE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . $ 749 $ 579
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization, and accretion . . . . 177 261
Provision for credit losses . . . . . . . . . . . (500) 270
Changes in assets and liabilities:
(Increase) decrease in other assets. . . . . . 186 (580)
Decrease in other liabilities. . . . . . . . . (3,228) (1,088)
-------- --------
Net cash used by operating activities. . . . . . . . $ (2,616) $ (558)
-------- --------
Cash flows from investing activities:
Proceeds from disposals of investment
securities . . . . . . . . . . . . . . . . . . 41,789 31,848
Purchases of investment securities . . . . . . . (38,572) (29,450)
(Increase) decrease in loans, net. . . . . . . . (7,789) 14,441
Purchases of premises and equipment. . . . . . . (597) (691)
Purchases of other real estate . . . . . . . . . (359) (596)
Disposal of other real estate. . . . . . . . . . 2 407
Proceeds from sales of premises and equipment. . 18 5
-------- --------
Net cash provided (used) by investing activities . . (5,508) 15,964
-------- --------
Cash flows from financing activities:
Decrease in deposits, net. . . . . . . . . . . . (10,821) (27,743)
Increase (decrease) in short-term borrowings . . (104) 468
Dividends paid . . . . . . . . . . . . . . . . . (337) (238)
Issuance of common stock . . . . . . . . . . . . 87 --
-------- --------
Net cash used by financing activities. . . . . . . . (11,175) (27,513)
-------- --------
Decrease in cash and cash equivalents. . . . . . . . (19,299) (12,107)
Cash and cash equivalents, beginning of year . . . . 28,537 22,678
-------- --------
Cash and cash equivalents, end of period . . . . . . $ 9,238 $ 10,571
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
5<PAGE>
<PAGE>
GLEN BURNIE BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 nine months ended
September 30, 1998 and 1997.
Operating results for the three and nine-month periods
ended September 30, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31,
1998.
NOTE 2 - EARNINGS PER SHARE
------------------
Information for net income per share and weighted average
shares outstanding for prior periods have been restated to
reflect 1% stock dividends declared in June, September and
December 1997 and a 20% stock dividend paid in January 1998.
NOTE 3 - ADOPTION OF NEW FINANCIAL ACCOUNTING STANDARDS
----------------------------------------------
On January 1, 1998 the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). SFAS No. 130 establishes standards
for reporting and displaying comprehensive income and its
components (revenues, expense, gains and losses) in a full set
of general-purpose financial statements. This Statement
requires that an enterprise (a) classify items of other
comprehensive income by their nature in the financial statement
and (b) display the accumulated balance of other comprehensive
income separately from retained earnings and additional
paid-in-capital in the equity section of a statement of
financial position. In accordance with the provisions of SFAS
No. 130, comparative financial statements presented for earlier
periods have been reclassified to reflect the provisions of the
statement.
6<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 consolidated net income of $516,000 ($0.47 basic earnings
per share) for the third quarter of 1998 compared to third
quarter 1997 consolidated net income of $193,000 ($0.18 basic
earnings per share). Year-to-date consolidated net income for
the nine months ending September 30, 1998 was $749,000 ($0.68
basic earnings per share) compared to $579,000 ($0.53 basic
earnings per share) for the nine months ended September 30,
1997. The increase in third quarter consolidated net income was
primarily attributable to a recapture of loss reserves and a
reduction in other expense which offset declines in net
interestincome and other income. For the nine-month period, the
Company's earnings also benefitted from the recapture of loss
reserves as well as an increase in other income which offset
declines in net interest income and an increase in other
expense.
NET INTEREST INCOME. The Company's consolidated net
interest income prior to provisions for credit losses for the
three and nine months ended September 30, 1998 was $2,449,000
and $7,315,000, respectively, compared to $2,593,000 and
$8,059,000, respectively, for the same periods in 1997, a
decrease of $144,000, or 5% for the three-month period and a
decrease of $744,000 or 9% for the nine-month period. The
decreases in net interest income for the three and nine month
periods were primarily attributable to declining interest income
which outstripped declining interest expense. Interest income
declined $304,000 (7%) for the three months ended September 30,
1998 and declined $1,435,000 (11%) for the nine months ended
September 30, 1998, compared to the same periods in 1997. The
declines in interest income were attributable to decreases in
yields on investment securities due to calls of higher yielding
securities and lower yields on loans due to declining rates and
increased competition. Interest expense declined $160,000 (9%)
for the three months ended September 30, 1998 and declined
$691,000 (13%) for the nine months ended September 30, 1998,
compared to the same periods in 1997. The tax-equivalent net
interest margins for the three and nine months ended September
30, 1998 were 4.82% and 4.84%, respectively, compared to 4.94%
and 5.13% for the three and nine months ended September 30,
1997, respectively. The narrowing in net interest margins for
the three and nine months ended September 30, 1998 were
primarily due to declining yields on interest-earning assets.
PROVISION FOR CREDIT LOSSES. For the three and nine
months ended September 30, 1998, the Company had a provision of
$(500,000) due to the recapture of loss allowances during the
third quarter. During the three months ended September 30,
1997, the Company had no provisions and during the nine months
ended September 30, 1997 had $270,000 in provisions. The
recapture of reserves reflects improved asset quality and lower
charge-off activity during the 1998 periods. As of September
30, 1998, the allowance for credit losses equaled 159.78% of
non-accrual and past due loans compared to 118.73% at December
31, 1997 and 100.00% at September 30, 1997. During the three
months ended September 30, 1998, the Company recorded net
charge-offs of $65,000 and for the nine-month period recorded
net charge-offs of $509,000 compared to $85,000 in net
recoveries during the three months ended September 30, 1997 and
$1,055,000 in net charge-offs during the nine months ended
September 30, 1997.
OTHER INCOME. Other income decreased $56,000 (9%) and
increased $1,339,000 (101%), respectively, during the three and
nine months ended September 30, 1998 compared to the prior year
periods. The decrease in other income during the three months
ended September 30, 1998 was attributable to decreased gains on
sales of investment securities. The Company's gains on sales
are primarily attributable to maturities and issuer calls of
securities in portfolio which declined during the quarter.
Other income for the nine-month period increased due primarily
to an insurance settlement during the first quarter reflected in
other non-interest income.
OTHER EXPENSE. Other expense decreased by $455,000 or
15%, for the quarter and increased by $435,000, or 5%, for the
nine-month period compared to the same periods in 1997. The
increase in other expense during the nine month period reflects
the establishment of a $1.1 million litigation reserve during
the first quarter of 1998. Other expense declined in the third
quarter as the result of reductions in other expense and
salaries and employee benefits. Included in other expense for
the third quarter was approximately $450,000 related to the
settlement of McCafferty's,
7<PAGE>
<PAGE>
Inc. v. Bank of Glen Burnie Adversary Case. The settlement
remains subject to the approval of the Bankruptcy Court. This
settlement expense was partially offset by the recapture of
$325,000 in unused reserves previously set aside for the
settlement of other litigation.
INCOME TAXES. During the three and nine months ended
September 30, 1998, the Company recorded income tax expense of
$379,000 and $431,000, respectively, compared to tax benefits of
$53,000 and $329,000, respectively, during the three and nine
months ended September 30, 1997. During the 1997 periods, the
Company recorded tax losses due primarily to its holdings of
tax-exempt state, county and municipal securities. The Company
has recently reduced its holdings of tax-exempt state, county
and municipal securities and reinvested the proceeds in U.S.
Government agency securities, the income on which is not exempt
from federal taxation. Accordingly, the Company reported
taxable income during the 1998 periods.
FINANCIAL CONDITION
The Company's assets decreased to $218,239,000 at
September 30, 1998 from $231,900,000 at December 31, 1997
primarily due to a reduction in securities and federal funds.
The Bank's net loans totaled $119,834,000 at September 30, 1998,
compared to $111,545,000 on December 31, 1997, an increase of
$8,289,000 (7%). The increase in loans was primarily
attributable to the Bank's recently introduced indirect
automobile lending program. At September 30, 1998, indirect
loans totaled $17,461,707 compared to none at December 31, 1997.
The Bank's other loan portfolios have held steady or declined
during the year.
The Company's total investment securities portfolio
(including both investment securities available for sale and
investment securities held to maturity) totaled $78,907,000 at
September 30, 1998, a $2,951,000 or 4% decrease from $81,858,000
at December 31, 1997. The Bank's cash and cash equivalents
(cash due from banks, interest-bearing deposits in other
financial institutions, and federal funds sold), as of September
30, 1998, totaled $9,238,000 a decrease of $19,299,000 (68%)
from the December 31, 1997 total of $28,537,000. The aggregate
market value of investment securities held by the Bank as of
September 30, 1998 was $79,773,000 compared to $82,245,000 as of
December 31, 1997, a $2,472,000 (3%) decrease.
Deposits as of September 30, 1998 totaled $196,289,000 a
decrease of $10,821,000 (5%) for the year to date. Demand
deposits as of September 30, 1998 totaled $40,943,000 which is a
decrease of $6,708,000 (14%) from $47,651,000 at December 31,
1997. NOW accounts as of September 30, 1998 totaled $19,139,000
which is a decrease of $1,443,000 (7%) from $20,582,000 at
December 31, 1997. Money market accounts increased $316,000
(2%) for the year to date to total $20,193,000 on September 30,
1998. Savings deposits decreased by $1,073,000, or 2%, for the
year to date. Meanwhile, certificates of deposit over $100,000
totaled $10,929,000 on September 30, 1998, an increase of
$858,000 (9%) from December 31, 1997. Other time deposits (made
up of certificates of deposit less than $100,000 and individual
retirement accounts) totaled $62,923,000 on September 30, 1998,
a $2,945,000 (4%) decrease from December 31, 1997.
8<PAGE>
<PAGE>
ASSET QUALITY. The following table sets forth the amount
of the Bank's restructured loans, non-accrual loans and
accruing loans 90 days or more past due at the dates indicated.
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, DECEMBER 31,
1998 1997
--------- -----------
(Dollars in thousands)
<S> <C> <C>
Restructured Loans . . . . . . . . . . . . . . $ 105 $ 344
====== ======
Non-accrual Loans:
Real estate -- mortgage:
Residential . . . . . . . . . . . . . . . $ 342 $1,078
Commercial. . . . . . . . . . . . . . . . 514 761
Real estate -- construction . . . . . . . . 316 608
Installment . . . . . . . . . . . . . . . . 500 665
Credit card & related . . . . . . . . . . . -- --
Commercial. . . . . . . . . . . . . . . . . 280 369
------ ------
Total nonaccrual loans. . . . . . . . . 1,952 3,481
Accruing Loans Past Due 90 Days or More:
Real estate -- mortgage:
Residential . . . . . . . . . . . . . . . 7 5
Commercial. . . . . . . . . . . . . . . . -- --
Real estate -- construction . . . . . . . . -- --
Installment . . . . . . . . . . . . . . . . -- --
Credit card & related . . . . . . . . . . . -- --
Commercial. . . . . . . . . . . . . . . . . -- --
------ ------
Total accruing loans past due
90 days or more . . . . . . . . . . . 7 5
------ ------
Total non-accrual and past due loans. . $1,957 $3,486
====== ======
Non-accrual and past due loans to
gross loans. . . . . . . . . . . . . . . . . 1.63% 3.13%
====== ======
Allowance for credit losses to non-accrual
and past due loans . . . . . . . . . . . . . 159.78% 118.73%
====== ======
</TABLE>
At September 30, 1998, there were $328,000 in loans
outstanding not reflected in the above table as to which known
information about possible credit problems of borrowers caused
management to have serious doubts as to the ability of such
borrowers to comply with present loan repayment terms. Such
loans consist of loans which were not 90 days or more past due
but where the borrower is in bankruptcy or has a history of
delinquency or the loan to value ratio is considered excessive
due to deterioration of the collateral or other factors.
ALLOWANCE FOR CREDIT LOSSES. 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.
9<PAGE>
<PAGE>
Transactions in the allowance for credit losses for the
nine months ended September 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1998 1997
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Beginning balance. . . . . . . . . . . . $ 4,139 $ 5,061
-------- --------
Charge-offs. . . . . . . . . . . . . . . 766 1,441
Recoveries . . . . . . . . . . . . . . . 257 386
-------- --------
Net charge-offs. . . . . . . . . . . . . 509 1,055
Provisions charged to operations . . . . (500) 270
-------- --------
Ending balance . . . . . . . . . . . . . $ 3,130 $ 4,276
======== ========
Average loans. . . . . . . . . . . . . . $116,014 $121,358
Net charge-offs to average loans . . . . 0.44% 0.87%
</TABLE>
Net charge-offs during the nine months ended September 30,
1998 declined to $509,000 from $1,055,000 during the comparable
period in 1997. The Company attributes the reduction in
charge-off activity to an improvement in asset quality as the
Company has reduced nonperforming assets both in dollar volume
and as a percentage of the loan portfolio.
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's cash and
cash equivalents (cash due from banks, interest-bearing deposits
in other financial institutions, and federal funds sold), as of
September 30, 1998, totaled $9,238,000 a decrease of $19,219,000
(68%) from the December 31, 1997 total of $28,537,000.
The Bank may draw on a $26.0 million 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 September 30, 1998, however, no amounts were
outstanding under this line. The Bank also has a secured $5.0
million of credit from another commercial bank on which
$500,000 was outstanding on September 30, 1998.
The Company's stockholders' equity increased $536,000 or
3%, during the nine months ended September 30, 1998, as earnings
offset decreases in the equity account attributable to dividends
accrued and a decrease in net unrealized appreciation on
securities available for sale. Net unrealized appreciation on
securities available for sale decreased $7,000 to $218,000 at
September 30, 1998 from $225,000 at December 31, 1997 as a
result of calls and sales of available-for-sale securities.
Retained earnings, however, increased by only $420,000 as the
result of the accrual of
10<PAGE>
<PAGE>
$73,000 for cash dividends to be paid after the end of the
quarter. In addition, $36,000 was transferred to stockholders'
equity in consideration for shares to be issued under the
Company's dividend reinvestment plan in lieu of cash dividends.
The Federal Reserve Board and the FDIC have established
guidelines with respect to the maintenance of appropriate levels
of capital by bank holding companies and state non-member banks,
respectively. The regulations impose two sets of capital
adequacy requirements: minimum leverage rules, which require
bank holding companies and banks to maintain a specified minimum
ratio of capital to total assets, and risk-based capital rules,
which require the maintenance of specified minimum ratios of
capital to "risk-weighted" assets. At September 30, 1998, the
Bank was in full compliance with these guidelines with a Tier 1
leverage ratio of 8.35%, a Tier 1 risk-based capital ratio of
13.9% and a total risk-based capital ratio of 15.17%.
YEAR 2000 PLANNING
As the year 2000 approaches, an important business issue
has emerged regarding how existing application software programs
and operating systems can accommodate this date value. For many
years, software applications routinely conserved magnetic
storage space by using only two digits to record calendar years;
for example, the year 1999 is stored as "99". On January 1,
2000, the calendars in many software applications will change
from "99" to "00". Many of these software applications, in
their current form, will produce erroneous results or will fail
to run at all since their logic cannot deal with this
transaction.
The Company's mainframe computer hardware and systems
software are Year 2000 compliant. The Company primarily
utilizes third-party vendor application software for all
computer applications. The third-party vendors for the
Company's banking applications are in the process of modifying,
upgrading or replacing their computer applications to insure
Year 2000 compliance. In addition, the Company has instituted a
Year 2000 compliance program whereby the Company is reviewing
the Year 2000 compliance issues that may be faced by its third-
party vendors. Under such program, the Company will examine the
need for modifications or replacement of all non-Year 2000
compliant pieces of software. The Company does not currently
expect that the cost of its Year 2000 compliance program will be
material to its financial conditions and believes that it will
satisfy such compliance program by the end of 1998 without
material disruption of its operations. In the event that the
Company's significant suppliers do not successfully and timely
achieve Year 2000 compliance, the Company's business of
operations could be adversely affected.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
Not applicable.
11<PAGE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On August 24, 1998, the Bank agreed to a settlement of
McCafferty's Inc. v. Bank of Glen Burnie Adversary Case, Case
No. 96-5137-ED (U.S. Bankr. Ct. D. Md. filed March 20, 1998).
Pursuant to this agreement, the Bank would pay $450,000 to
settle all claims by plaintiff. The settlement is subject to
the approval of the Bankruptcy Court.
On August 24, 1998, the Maryland Court of Appeals upheld
the judgement of $284,000 previously rendered in favor of
plaintiffs in Elkridge National Bank v. the Bank of Glen Burnie.
On September 4, 1998, Beal GMC v. The Bank of Glen
Burnie,Case No. C96-32383OC (Md. Cir Ct. Anne Arundel City filed
October 2, 1996) was dismissed pursuant to a settlement
agreement. The settlement agreement did not require any
payments by the Bank.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS. The following exhibits are filed with this
-------- report.
27.1 Financial Data Schedule (EDGAR Only).
27.2 Restated Financial Data Schedule (EDGAR Only).
(b) REPORTS ON FORM 8-K. None.
-------------------
12<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: November 13, 1998 By: /s/ John E. Porter
------------------
John E. Porter
Chief Financial Officer
(Duly Authorized Representative
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 nine months ending
September 30, 1998 and is qualified in its entirety by reference
to such financial statements.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 7,981
<INT-BEARING-DEPOSITS> 298
<FED-FUNDS-SOLD> 959
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25,209
<INVESTMENTS-CARRYING> 53,698
<INVESTMENTS-MARKET> 54,564
<LOANS> 122,964
<ALLOWANCE> 3,130
<TOTAL-ASSETS> 218,239
<DEPOSITS> 196,289
<SHORT-TERM> 786
<LIABILITIES-OTHER> 1,663
<LONG-TERM> 0
<COMMON> 10,980
0
0
<OTHER-SE> 8,521
<TOTAL-LIABILITIES-AND-EQUITY> 218,239
<INTEREST-LOAN> 7,820
<INTEREST-INVEST> 3,579
<INTEREST-OTHER> 513
<INTEREST-TOTAL> 11,912
<INTEREST-DEPOSIT> 4,577
<INTEREST-EXPENSE> 4,597
<INTEREST-INCOME-NET> 7,315
<LOAN-LOSSES> (500)
<SECURITIES-GAINS> 416
<EXPENSE-OTHER> 9,294
<INCOME-PRETAX> 1,180
<INCOME-PRE-EXTRAORDINARY> 749
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 749
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.68
<YIELD-ACTUAL> 4.84
<LOANS-NON> 1,952
<LOANS-PAST> 7
<LOANS-TROUBLED> 105
<LOANS-PROBLEM> 328
<ALLOWANCE-OPEN> 4,139
<CHARGE-OFFS> 766
<RECOVERIES> 257
<ALLOWANCE-CLOSE> 3,130
<ALLOWANCE-DOMESTIC> 3,130
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<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 nine months ending
September 30, 1997 and is qualified in its entirety by reference
to such financial statements.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,421
<INT-BEARING-DEPOSITS> 46
<FED-FUNDS-SOLD> 1,150
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 45,952
<INVESTMENTS-CARRYING> 48,327
<INVESTMENTS-MARKET> 47,993
<LOANS> 114,237
<ALLOWANCE> 4,276
<TOTAL-ASSETS> 226,242
<DEPOSITS> 205,003
<SHORT-TERM> 1,016
<LIABILITIES-OTHER> 1,366
<LONG-TERM> 0
<COMMON> 9,016
0
0
<OTHER-SE> 9,841
<TOTAL-LIABILITIES-AND-EQUITY> 226,242
<INTEREST-LOAN> 8,253
<INTEREST-INVEST> 4,845
<INTEREST-OTHER> 249
<INTEREST-TOTAL> 13,347
<INTEREST-DEPOSIT> 5,228
<INTEREST-EXPENSE> 5,288
<INTEREST-INCOME-NET> 8,059
<LOAN-LOSSES> 270
<SECURITIES-GAINS> 227
<EXPENSE-OTHER> 8,859
<INCOME-PRETAX> 250
<INCOME-PRE-EXTRAORDINARY> 579
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 579
<EPS-PRIMARY> 0.53 <F1>
<EPS-DILUTED> 0.53 <F1>
<YIELD-ACTUAL> 5.13
<LOANS-NON> 4,276
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 936
<ALLOWANCE-OPEN> 5,061
<CHARGE-OFFS> 1,441
<RECOVERIES> 386
<ALLOWANCE-CLOSE> 4,276
<ALLOWANCE-DOMESTIC> 3,323
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 936
<FN>
<F1> The above numbers have been restated for the adoption of
SFAS 128 and a two-for-one stock split effected through
the payment of a 100% stock dividend on January 10, 1998.
</FN>
</TABLE>
