SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549
Form 10-KSB

(Mark One)
  x  	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000

     	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
	[NO FEE REQUIRED]

For the transition period from         to

Commission File No. 33-99762

CALVIN B. TAYLOR BANKSHARES, INC.
(Exact name of registrant as specified in its Charter)

	      Maryland              	      52-1948274
  (State or other jurisdiction	   (I.R.S. Employer
of incorporation or organization)	   Identification No.)

    P. O. Box 5, Berlin, Maryland     	          21811
(Address of principal executive offices)	       (Zip Code)

Issuer's telephone number, including area code:  (410) 641-1700

Securities registered under Section 12(b) of the Exchange Act:
	         Name of each exchange
	Title of each class                    on which
registered
		         None                                  None

Securities registered under Section 12(g) of the Exchange Act:
		             Common Stock
		           (Title of Class)

Check whether the small business issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act during the past 12 months (or for such shorter
period that the small business issuer was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days.	             Yes   x     No

Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form,
and no disclosure will be contained, to the best of the small
business issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.         [ X ]

State small business issuer's revenues for its most recent
fiscal year:  $20,543,894.

The aggregate market value of the Common Stock held by non-
affiliates of the small business issuer on December 31, 2000,
was $114,168,830.  This calculation is based upon estimation by
the Company's Board of Directors of fair market value of the
Common Stock of $39.25 per share.  There is not an active
trading market for the Common Stock and it is not possible to
identify precisely the market value of the Common Stock.

On February 28, 2001, 3,240,000 shares of the small business
issuer's common stock were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual report to Shareholders for the year ended
December 31, 2000, is incorporated by reference in this Form
10-KSB in Part II Item 5, Item 6, and Item 7.  The Company's
Proxy Statement for Annual Meeting of Shareholders to be held
on May 2, 2001, is incorporated by reference in this Form 10-
KSB in Part III, Item 9, Item 10, Item 11, and Item 12.



	This Report contains statements which constitute forward-
looking statements within the meaning of Section 27A of the
Securities Act of 1933 and the Securities Exchange Act of 1934.
These statements appear in a number of places in this Report
and include all statements regarding the intent, belief or
current expectations of the Company, its directors, or its
officers with respect to, among other things: (i) the
Company's financing plans; (ii) trends affecting the Company's
financial condition or results of operations; (iii) the
Company's growth strategy and operating strategy; and (iv) the
declaration and payment of dividends.  Investors are cautioned
that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected
in the forward-looking statements as a result of various
factors discussed herein and those factors discussed in detail
in the Company's filings with the Securities and Exchange
Commission.

PART I

Item 1. Description of Business

General

	Calvin B. Taylor Bankshares, Inc. (the "Company") was
incorporated as a Maryland corporation on October 31, 1995.
The Company owns all of the stock of two banks.  The Maryland
bank is a commercial bank incorporated under the laws of the
State
of Maryland on December 17, 1907.  This bank operates nine
banking offices in Worcester County with the Bank's main office
located in Berlin, Maryland.  It is engaged in a general
commercial and retail banking business serving individuals,
businesses, and
governmental units in Worcester County, Maryland and
neighboring counties.  The second bank was incorporated in
Delaware in
1997 but opened late in the second quarter of 1998.  This one-
branch Delaware bank offers the same services as the Maryland
bank.

	The Company's holding company structure can assist the
banks in maintaining their required capital ratios because the
Company may, subject to compliance with debt guidelines
implemented by the Board of Governors of the Federal Reserve
System
(the "Board of Governors" or the "Federal Reserve"), borrow
money and contribute the proceeds to the banks as primary
capital. The
holding company structure also permits greater flexibility in
issuing stock for cash, property, or services and in
reorganization
transactions.  Moreover, subject to certain regulatory
limitations, a holding company can purchase shares of its own
stock, which the
banks may not do without regulatory approval.  A holding
company may also engage in certain non-banking activities which
the
Board of Governors has deemed to be closely related to banking
and proper incidents to the business of a bank holding company.
These activities include making or servicing loans and certain
types of leases; performing certain data processing services;
acting as a
fiduciary or investment or financial advisor; acting as a
management consultant for other depository institutions;
providing courier,
appraisal, and consumer financial counseling services;
providing tax planning and preparation services; providing
check guaranty and
collection agency services; engaging in limited real estate
investment activities; underwriting, brokering, and selling
credit life and
disability insurance; engaging in certain other limited
insurance activities; providing discount brokerage services;
underwriting and
dealing in certain government obligations and money market
instruments and providing portfolio investment advice; acting
as a
futures commission merchant with respect to certain financial
instrument transactions; providing foreign exchange advisory
and
transactional services; making investments in certain
corporations for projects designed primarily to promote
community welfare; and
owning and operating certain healthy savings and loan
associations.  Although the Company has no present intention of
engaging in
any of these services, if circumstances should lead the
Company's management to believe that there is a need for these
services in the
banks' marketing areas and that such activities could be
profitably conducted, the management of the Company would have
the
flexibility of commencing these activities upon filing notice
thereof with the Board of Governors.

Location and Service Area

	The Company conducts general commercial banking in its
primary service areas, emphasizing the banking needs of
individuals and small- to medium-sized businesses and
professional concerns.  The Maryland bank operates from nine
branches
located throughout Worcester County, Maryland while the
Delaware bank operates from one branch located in Sussex
County,
Delaware.  The Banks draw most of their customer deposits and
conduct most of their lending transactions from within their
primary
service areas, which encompass Worcester County, Maryland,
Sussex County, Delaware and neighboring counties.

	Both Sussex County, Delaware and Worcester County,
Maryland are located along the shores of the Atlantic Ocean and
have experienced population growth in recent years.  The area
is growing as both a resort and a retirement community.

	The principal components of the economy of the counties
are tourism and agriculture.  Berlin has a strong component of
health-care related businesses.  The tourist businesses of
Ocean City, Maryland and Bethany, Delaware and the health-care
facilities
in Berlin, Maryland (including Berlin Nursing Home and Atlantic
General Hospital) are the largest employers in the counties.
The
largest industrial employers are Perdue Farms and Hudson Farms.



Banking Services

	The banks offer a full range of deposit services that are
typically available in most banks and savings and loan
associations,
including checking accounts, NOW accounts, savings accounts and
other time deposits of various types, ranging from daily money
market accounts to longer-term certificates of deposit.  The
transaction accounts and time certificates are tailored to the
banks'
principal market areas at rates competitive to those offered in
the area.  In addition, the banks offer certain retirement
account
services, such as Individual Retirements Accounts ("IRAs").
All deposits are insured by the Federal Deposit Insurance
Corporation
(the "FDIC") up to the maximum amount allowed by law
(generally, $100,000 per depositor subject to aggregation
rules).  The banks
solicit these accounts from individuals, businesses,
associations and organizations, and governmental authorities.

	The Company, through its banks, also offers a full range
of short- to medium-term commercial and personal loans.
Commercial loans include both secured and unsecured loans for
working capital (including inventory and receivables), business
expansion (including acquisition of real estate and
improvements), and purchase of equipment and machinery.
Consumer loans
include secured and unsecured loans for financing automobiles,
home improvements, education, and personal investments.  The
Company also originates mortgage loans and real estate
construction and acquisition loans.  These lending activities
are subject to a
variety of lending limits imposed by state and federal law.
Neither bank may make any loans to any director, officer, or
employee
(except for commercial loans to directors who are not officers
or employees) unless the loans are approved by the Board of
Directors
of the lending bank.  The Board of Directors must review any
such loans every six months.

	Other bank services include cash management services,
safe deposit boxes, travelers checks, direct deposit of payroll
and
social security checks, debit cards, and automatic drafts for
various accounts.  The Company is associated with the MAC
network of
automated teller machines that may be used by Bank customers
throughout Maryland, Delaware, and other regions.  The Company
also offers credit card services through a correspondent bank.

Competition

	The Company faces strong competition in all areas of its
operations.  The competition comes from entities operating in
Worcester County, Maryland and Sussex County, Delaware and
neighboring counties and includes branches of some of the
largest
banks in Maryland, Delaware, and Virginia. Its most direct
competition for deposits historically has come from other
commercial
banks, savings banks, savings and loan associations, and credit
unions operating in its service areas.  The banks compete for
deposits
with money market mutual funds and corporate and government
securities.  The banks compete for loans with the same banking
entities, as well as mortgage banking companies and other
institutional lenders.  The competition for loans varies from
time to time
depending on certain factors.  These factors include, among
others, the general availability of lendable funds and credit,
general and
local economic conditions, current interest rate levels,
conditions in the mortgage market, and other factors which are
not readily
predictable.

Employees

	As of December 31, 2000, the banks employed 99 full-time
equivalent employees.  The Company's operations are
conducted through the banks.  Consequently, the Company does
not have separate employees.  None of the employees of the
banks
are represented by any collective bargaining unit.  The banks
consider their relations with their employees to be good.

SUPERVISION AND REGULATION

	The Company and the banks are subject to state and
federal banking laws and regulations which impose specific
requirements or restrictions on, and provide for general
regulatory oversight with respect to, virtually all aspects of
operations. These
laws and regulations are generally intended to protect
depositors, not shareholders.  The following is a brief summary
of certain
statutes, rules, and regulations affecting the Company and the
banks.  To the extent that the following summary describes
statutory or
regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory
provisions. Any change in
applicable laws or regulations may have a material adverse
effect on the business and prospects of the Company.
Legislative changes
and the policies of various regulatory authorities may affect
the operations of the Company and the banks. The Company is
unable to
predict the nature or the extent of the effect on its business
and earnings that fiscal or monetary policies, economic
control, or new
federal or state legislation may have in the future.

The Company

	Because it owns the outstanding common stock of the
banks, the Company is a bank holding company within the meaning
of the federal Bank Holding Company Act of 1956 (the "BHCA").
Under the BHCA, the Company is subject to periodic
examination by the Federal Reserve and is required to file
periodic reports of its operations and such additional
information as the
Federal Reserve may require.  The Company's and the banks'
activities are limited to banking, managing or controlling
banks,
furnishing services to or performing services for its
subsidiaries, or engaging in any other activity that the
Federal Reserve determines
to be so closely related to banking or managing and controlling
banks as to be a proper incident thereto.

	Investments, Control, and Activities.  With certain
limited exceptions, the BHCA requires every bank holding
company to
obtain the prior approval of the Federal Reserve before (i)
acquiring substantially all the assets of any bank, (ii)
acquiring direct or
indirect ownership or control of any voting shares of any bank
if after such acquisition it would own or control more than 5%
of the
voting shares of such bank (unless it already owns or controls
the majority of such shares), or (iii) merging or consolidating
with
another bank holding company.

	In addition, and subject to certain exceptions, the BHCA
and the Change in Bank Control Act, together with regulations
thereunder, require Federal Reserve approval (or, depending on
the circumstances, no notice of disapproval) prior to any
person or
company acquiring "control" of a bank holding company, such as
the Company.  Control is conclusively presumed to exist if an
individual or company acquires 25% or more of any class of
voting securities of the bank holding company.  Because the
Company's
Common Stock is registered under the Securities Exchange Act of
1934, under Federal Reserve regulations, control will be
rebuttably
presumed to exist if a person acquires at least 10% of the
outstanding shares of any class of voting securities of the
Company.  The
regulations provide a procedure for challenge of the rebuttable
control presumption.

	Under the BHCA, the Company is generally prohibited from
engaging in, or acquiring direct or indirect control of more
than 5% of the voting shares of any company engaged in non-
banking activities, unless the Federal Reserve, by order or
regulation,
has found those activities to be so closely related to banking
or managing or controlling banks as to be a proper incident
thereto.
Some of the activities that the Federal Reserve has determined
by regulation to be proper incidents to the business of banking
include
making or servicing loans and certain types of leases, engaging
in certain insurance and discount brokerage activities,
performing
certain data processing services, acting in certain
circumstances as a fiduciary or investment or financial
advisor, owning savings and
loan associations, and making investments in certain
corporations or projects designed primarily to promote
community welfare.

	Source of Strength; Cross-Guarantee.  In accordance with
Federal Reserve policy, the Company is expected to act as a
source of financial strength to its banks and to commit
resources to support the banks in circumstances in which the
Company might
not otherwise do so.  Under the BHCA, the Federal Reserve may
require a bank holding company to terminate any activity or
relinquish control of a nonbank subsidiary (other than a
nonbank subsidiary of a bank) upon the Federal Reserve's
determination that
such activity or control constitutes a serious risk to the
financial soundness or stability of any subsidiary depository
institution of the
bank holding company.  Further, federal bank regulatory
authorities have additional discretion to require a bank
holding company to
divest itself of any bank or nonbank subsidiary if the agency
determines that divestiture may aid the depository
institution's financial
condition.  The banks may be required to indemnify, or cross-
guarantee, the FDIC against losses it incurs with respect to
any other
bank controlled by the Company, which in effect makes the
Company's equity investments in healthy bank subsidiaries
available to
the FDIC to assist any failing or failed bank subsidiary of the
Company.

The Banks

	General.  The banks operate as state nonmember banking
associations incorporated under the laws of the State of
Maryland
and the State of Delaware.  They are subject to examination by
the FDIC and the State Bank Commissioners.  Deposits in the
banks
are insured by the FDIC up to a maximum amount (generally
$100,000 per depositor, subject to aggregation rules).  The
Commissioners and FDIC regulate or monitor all areas of the
banks' operations, including security devices and procedures,
adequacy
of capitalization and loss reserves, loans, investments,
borrowings, deposits, mergers, issuances of securities, payment
of dividends,
interest rates payable on deposits, interest rates or fees
chargeable on loans, establishment of branches, corporate
reorganizations,
maintenance of books and records, and adequacy of staff
training to carry on safe lending and deposit gathering
practices.  The FDIC
requires the banks to maintain certain capital ratios and
imposes limitations on each of the banks' aggregate investment
in real estate,
bank premises, and furniture and fixtures.  The banks are
required by the FDIC and the Commissioners to prepare quarterly
reports
on the banks' financial condition.

	Under FDICIA, all insured institutions must undergo
periodic on-site examination by their appropriate banking
agency.
The cost of examinations of insured depository institutions and
any affiliates may be assessed by the appropriate agency
against each
institution or affiliate as it deems necessary or appropriate.
Insured institutions are required to submit annual reports to
the FDIC and
the appropriate agency (and state supervisor when applicable).
FDICIA also directs the FDIC to develop with other appropriate
agencies a method for insured depository institutions to
provide supplemental disclosure of the estimated fair market
value of assets
and liabilities, to the extent feasible and practicable, in any
balance sheet, financial statement, report of condition, or
other report of
any insured depository institution.  FDICIA also requires the
federal banking regulatory agencies to prescribe, by
regulation,
standards for all insured depository institutions and
depository institution holding companies relating, among other
things, to: (i)
internal controls, information systems, and audit systems; (ii)
loan documentation; (iii) credit underwriting; (iv) interest
rate risk
exposure; and (v) asset quality.

	State nonmember banks chartered within the past two
years, and state nonmember banks and their holding companies
which have undergone a change in control within the past two
years or which have been deemed by the FDIC to be troubled
institutions, must give 30 days notice to the FDIC or the Board
of Governors before appointment of any executive officer or
director.
 During the 30 days, the FDIC or Board of Governors may
disapprove any such appointment.

	Transactions With Affiliates and Insiders.  The banks are
subject to Section 23A of the Federal Reserve Act, which places
limits on the amount of loans or extensions of credit to, or
investment in, or certain other transactions with, affiliates
and on the
amount of advances to third parties collateralized by the
securities or obligations of affiliates.  In addition, most of
these loans and
certain other transactions must be secured in prescribed
amounts.  The banks are also subject to Section 23B of the
Federal Reserve
Act which, among other things, prohibits an institution from
engaging in certain transactions with certain affiliates unless
the
transactions are on terms substantially the same, or at least
as favorable to such institution or its subsidiaries, as those
prevailing at the
time for comparable transactions with nonaffiliated companies.
The banks are subject to certain restrictions on extensions of
credit to
executive officers, directors, certain principal shareholders,
and their related interests.  Such extensions of credit (i)
must be made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with
third parties, and (ii) must not involve more than the normal
risk of repayment or present other unfavorable features.

	Branching.  Under Maryland law, the Maryland bank may
open branches statewide, subject to the prior approval of the
Commissioner and the FDIC.  Maryland law permits banking
organizations in other states to acquire Maryland banking
organizations, as long as such states grant similar privileges
to banking organizations in Maryland to acquire banking
organizations in
their states, by opening a de novo branch, by acquiring an
existing branch from a Maryland depository institution, or as a
result of an
interstate merger with a Maryland banking organization.
Delaware law also allows branches statewide with prior approval
of the
Commissioner and the FDIC.  Delaware law is more restrictive
allowing other state banking organizations to branch to
Delaware only
through opening a de novo bank, or as the result of an
interstate merger.

	Community Reinvestment Act.  The Community Reinvestment
Act requires that each insured depository institution shall be
evaluated by its primary federal regulator with respect to its
record in meeting the credit needs of its local community,
including low
and moderate income neighborhoods, consistent with the safe and
sound operation of those institutions.  These factors are also
considered in evaluating mergers, acquisitions, and
applications to open a branch or facility.  The banks received
satisfactory ratings
in their most recent evaluations.

	Other Regulations.  Interest and certain other charges
collected or contracted for by the banks are subject to state
usury
laws and certain federal laws concerning interest rates.  Loan
operations are also subject to certain federal laws applicable
to credit
transactions, such as the federal Truth-In-Lending Act
governing disclosures of credit terms to consumer borrowers,
the Home
Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to
determine whether a financial institution is fulfilling its
obligation to help meet the housing needs of the community it
serves, the
Equal Credit Opportunity Act prohibiting discrimination on the
basis of race, creed, or other prohibited bases in extending
credit, the
Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies, the Fair
Debt
Collection Act governing the manner in which consumer debts may
be collected by collection agencies, and the rules and
regulations
of the various federal agencies charged with the responsibility
of implementing such federal laws.  The deposit operations of
the Bank
are also subject to the Right to Financial Privacy Act, which
imposes a duty to maintain confidentiality of consumer
financial records
and prescribes procedures for complying with administrative
subpoenas of financial records, and the Electronic Funds
Transfer Act
and Regulation E issued by the Federal Reserve Board to
implement that act, which governs automatic deposits to and
withdrawals
from deposit accounts and customers' rights and liabilities
arising from the use of automated teller machines and other
electronic
banking services.

Deposit Insurance

	The deposits of the banks are currently insured to a
maximum of $100,000 per depositor, subject to certain
aggregation
rules.  The FDIC establishes rates for the payment of premiums
by federally insured banks and thrifts for deposit insurance.
Separate
insurance funds (BIF and SAIF) are maintained for commercial
banks and thrifts, with insurance premiums from the industry
used to
offset losses from insurance payouts when banks and thrifts
fail.

	The BIF insurance assessment rate for the first
semiannual assessment period of 2001 is proposed to remain at
$.00 to $.27
per $100 in deposits.  In addition to the FDIC assessment,
banks are assessed an additional amount to service the interest
on the bond
obligations of the Financial Corporation.  Any increase in
deposit insurance premiums for the banks will increase the
banks' cost of
funds, and there can be no assurance that such costs can be
passed on to the banks' customers.

Dividends

	The principal source of the Company's cash revenues comes
from dividends received from the Maryland bank.  The
amount of dividends that may be paid by the bank to the Company
depends on the bank's earnings and capital position and is
limited
by federal and state laws, regulations, and policies.  The
Federal Reserve has stated that bank holding companies should
refrain from
or limit dividend increases or reduce or eliminate dividends
under circumstances in which the bank holding company fails to
meet
minimum capital requirements or in which earnings are impaired.

	The Company's ability to pay any cash dividends to its
shareholders in the future will depend primarily on the
Maryland
bank's ability to pay dividends to the Company.  In order to
pay dividends to the Company, the bank must comply with the
requirements of all applicable laws and regulations.  Under
Maryland law, the bank must pay a cash dividend only from the
following, after providing for due or accrued expenses, losses,
interest, and taxes:  (i) its undivided profits, or (ii) with
the prior
approval of the Commissioner, its surplus in excess of 100% of
its required capital stock.  Under FDICIA, the bank may not pay
a
dividend if, after paying the dividend, the bank would be
undercapitalized.  See "Capital Regulations" below.  See Item 5
for a
discussion of dividends paid by the bank in the past two years.

	In addition to the availability of funds from the
Maryland bank, the future dividend policy of the Company is
subject to the
discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, financial
condition, cash
needs, and general business conditions.  The amount of
dividends that might be declared in the future presently cannot
be estimated
and it cannot be known whether such dividends would continue
for future periods.

Capital Regulations

	The federal bank regulatory authorities have adopted
risk-based capital guidelines for banks and bank holding
companies
that are designed to make regulatory capital requirements more
sensitive to differences in risk profile among banks and bank
holding
companies, account for off-balance sheet exposure, and minimize
disincentives for holding liquid assets.  The resulting capital
ratios
represent qualifying capital as a percentage of total risk-
weighted assets and off-balance sheet items.  The guidelines
are minimums,
and the regulators have noted that banks and bank holding
companies contemplating significant expansion programs should
not allow
expansion to diminish their capital ratios and should maintain
ratios well in excess of the minimums.  The current guidelines
require
all bank holding companies and federally regulated banks to
maintain a minimum risk-based total capital ratio equal to 8%,
of which
at least 4% must be Tier 1 capital.  Tier 1 capital includes
common shareholders' equity before the unrealized gains and
losses on
securities available for sale, qualifying perpetual preferred
stock, and minority interests in equity accounts of
consolidated
subsidiaries, but excludes goodwill and most other intangibles,
and excludes the allowance for loan and lease losses.  Tier 2
capital
includes the excess of any preferred stock not included in Tier
1 capital, mandatory convertible securities, hybrid capital
instruments,
subordinated debt and intermediate term-preferred stock, and
general reserves for loan and lease losses up to 1.25% of risk-
weighted
assets.

	Under the guidelines, banks' and bank holding companies'
assets are given risk-weights of 0%, 20%, 50%, and 100%.  In
addition, certain off-balance sheet items are given credit
conversion factors to convert them to asset equivalent amounts
to which an
appropriate risk-weight will apply.  These computations result
in the total risk-weighted assets.  Most loans are assigned to
the 100%
risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances,
residential
construction loans, both of which carry a 50% rating.  Most
investment securities are assigned to the 20% category, except
for
municipal or state revenue bonds, which have a 50% rating, and
direct obligations of or obligations guaranteed by the United
States
Treasury or United States Government agencies, which have a 0%
rating.

	The federal bank regulatory authorities have also
implemented a leverage ratio, which is Tier 1 capital as a
percentage of
average total assets less intangibles, to be used as a
supplement to the risk-based guidelines.  The principal
objective of the leverage
ratio is to place a constraint on the maximum degree to which a
bank holding company may leverage its equity capital base.  The
minimum required leverage ratio for top-rated institutions is
3%, but most institutions are required to maintain an
additional cushion
of at least 100 to 200 basis points.

	FDICIA established a new capital-based regulatory scheme
designed to promote early intervention for troubled banks and
requires the FDIC to choose the least expensive resolution of
bank failures.  The new capital-based regulatory framework
contains
five categories for compliance with regulatory capital
requirements, including "well capitalized," "adequately
capitalized,"
"undercapitalized," "significantly undercapitalized," and
"critically undercapitalized."  To qualify as a "well
capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1
risk-based ratio of no less than 6%, and a total risk-based
capital ratio of
no less than 10%, and the bank must not be under any order or
directive from the appropriate regulatory agency to meet and
maintain
a specific capital level.  As of December 31, 2000, the Company
and its banks were qualified as "well capitalized."  See "Item
6.
Management's Discussion and Analysis or Plan of Operation -
Capital."

	Under the FDICIA regulations, the applicable agency can
treat an institution as if it were in the next lower category
if the
agency determines (after notice and an opportunity for hearing)
that the institution is in an unsafe or unsound condition or is
engaging
in an unsafe or unsound practice.  The degree of the regulatory
scrutiny of a financial institution will increase, and the
permissible
activities of the institution will decrease as it moves
downward through the capital categories.  Bank holding
companies controlling
financial institutions can be called upon to boost the
institutions' capital and to partially guarantee the
institutions' performance under
their capital restoration plans.

	These capital guidelines can affect the Company in
several ways.  If a bank begins to grow at a rapid pace,
capital infusion
may be needed to boost capital.  This could impact the
Company's ability to pay dividends.  The capital levels of the
Company and
its banks are more than adequate.  Rapid growth, deterioration
of the loan portfolio performance, poor earnings or a
combination of
these factors could change the current capital positions.

	Effective January 1, 1997, the FDIC amended the risk-
based capital guidelines to incorporate a measure for market
risk to
cover all positions located in an institution's trading account
and foreign exchange or commodity positions.  Banks and holding
companies with significant exposure to market risk are required
to measure the risk and hold capital commensurate with that
risk.
These guidelines have no effect on the banks or the holding
company since the banks do not engage in, or plan to engage in,
the
activities of trading accounts, foreign exchange or commodity
positions.

Recent Legislative Developments

	Periodically, the federal and state legislatures consider
bills with respect to the regulation of financial institutions.
Some of
these proposals could significantly change the regulation of
banks and the financial services industry.  The Company cannot
predict if
such proposals will be adopted or the affect to the Company.

Item 2. Description of Property

	The Company has ten branch locations, all of which are
owned by the Company.  The locations are described as follows:

OFFICE			LOCATION		Square Footage
Main Office, Maryland	24 North Main Street, Berlin, Maryland
21811			6,500
East Berlin Office	10524 Old Ocean City Boulevard, Berlin,
Maryland 21811		1,500
20th Street Office	100 20th Street, Ocean City, Maryland
21842		3,100
Ocean Pines Office	11003 Cathell Road, Berlin, Maryland
21811		2,420
Mid-Ocean City Office	9105 Coastal Highway, Ocean City,
Maryland 21842		1,984
North Ocean City Office	14200 Coastal Highway, Ocean City,
Maryland 21842		2,545
West Ocean City Office	9923 Golf Course Road, Ocean City,
Maryland 21842		2,496
Pocomoke Office	2140 Old Snow Hill Road, Pocomoke, Maryland
21851		2,624
Snow Hill Office	108 West Market Street, Snow Hill, Maryland
21863		3,773
Main Office, Delaware	50 Atlantic Avenue, Ocean View,
Delaware 19970		4,900

	The Berlin office is the centralized location for the
Company and for all the Maryland branches; that is to say that
all proof
and bookkeeping is performed there.  The Delaware office has
its own proof and bookkeeping functions.

	Each branch has a manager that also serves as its loan
officer, with exception of the East Berlin office which does
not have
a loan officer.  All offices participate in normal day-to-day
banking operations.

	Eight Maryland offices offer automated teller machines;
all locations except the East Berlin office.  The Delaware bank
has
an automated teller machine on-premise. The Company operates
one automated teller machine which is located at a local
hospital.

Item 3. Legal Proceedings

	There are no material pending legal proceedings to which
the Company or the banks or any of their properties are
subject.

Item 4. Submission of Matters to a Vote of Security  Holders

	There were no matters submitted to a vote of the
shareholders of the Company during the fourth quarter of 2000.

PART II

Item 5. Market for Common Equity and Related Stockholder
Matters

	The Company's Articles of Incorporation, as amended,
authorize it to issue up to 10,000,000 shares of common stock.

	As of February 28, 2001, there were approximately 825
holders of record of the common stock and 3,240,000 shares of
Common Stock issued and outstanding. There is no established
public trading market in the stock, and there is no likelihood
that
a trading market will develop in the near future.  The
development of a trading market may be inhibited because a
large portion of
the Company's shares is held by insiders.  Transactions in the
common stock are infrequent and are negotiated privately
between
the persons involved in those transactions.



	All outstanding shares of common stock of the Company are
entitled to share equally in dividends from funds legally
available, when, as, and if declared by the Board of Directors.
The Company paid dividends of $.61 per share in 2000 and $.60
per share in 1999, after giving retroactive effect to the 2000
stock split effected in  the form of a 100% stock dividend.
During
both 2000 and 1999, the Company paid special cash dividends of
$.25 per share, after giving retroactive effect to the 2000
stock
split, which are not expected to be an annual event.

Item 6. Management's Discussion and Analysis or Plan of
Operation

BUSINESS OF THE COMPANY

	Calvin B. Taylor Bankshares, Inc. (the "Company") was
incorporated as a Maryland corporation on October 31, 1995,
to become a bank holding company by acquiring all of the
capital stock of Calvin B. Taylor Banking Company (the
"Maryland
Bank").  The Maryland Bank was incorporated under the laws of
the State of Maryland on December 17, 1907. The Maryland
Bank was organized as a nonmember state bank under the laws of
the State of Maryland. Calvin B. Taylor Bank of Delaware (the
"DE Bank") was incorporated under the laws of the State of
Delaware on September 18, 1997.  The DE Bank was organized as a
nonmember state bank under the laws of the State of Delaware.
Calvin B. Taylor Bankshares, Inc. acquired all of the capital
stock of Calvin B. Taylor Bank of Delaware also.  Both banks
are engaged in a general commercial banking business,
emphasizing in their marketing the Company's local management
and ownership, from their main offices located in their primary
service areas of Worcester County, Maryland and Sussex County,
Delaware, and their neighboring counties. The banks offer a
full range of deposit services that are typically available in
most banks and savings and loan associations, including
checking
accounts, NOW accounts, savings accounts and other time
deposits of various types, ranging from daily money market
accounts
to longer-term certificates of deposit.  In addition, the banks
offer certain retirement account services, such as Individual
Retirement Accounts.  The banks also offer a full range of
short- to medium-term commercial and personal loans.  The banks
originate fixed rate mortgage loans and real estate
construction and acquisition loans.  These loans generally have
a demand
feature.  Other bank services include cash management services,
safe deposit boxes, travelers' checks, direct deposit of
payroll
and social security checks, debit cards, and automatic drafts
for various accounts.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	The following discussion of the Company's financial
condition and results of operations should be read in
conjunction
with the Company's financial statements and related notes and
other statistical information included elsewhere herein.

Overview

	Consolidated income of the Company is derived primarily
from operations of the banks.  The 2000 net income was
$5,624,558, compared to $5,019,660 for 1999.  The Company
continued its history of above average earnings with a return
on
average equity of 10.84% and return on average assets of 1.94%
for 2000, compared to returns of 10.47% and 1.78%,
respectively for 1999.

Results of Operations

	The Company reported net income of $5,624,558, or $1.74
per share, for the year ended December 31, 2000, which was
an increase of $604,898, or 12.05%, over the net income of
$5,019,660, or $1.55 per share for the year ended December 31,
1999.  Per share data for 1999 is restated for the effect of
the 100% stock dividend distributed 2000.  Primarily
responsible for
this increase was the growth in net interest income.

	Net interest income increased $1,359,187, or 11.12%, to
$13,580,005 in 2000, from $12,220,818 in 1999.  This increase
in net interest income was the result of an increase in
interest revenue of $1,440,460 while interest expense increased
by $81,273.
 Net interest income increased primarily due to growth of
$18,090,114 in the mortgage loan portfolio funded largely by a
decrease of $13,648,377 in the amortized cost of investment
securities held to maturity.  Decreasing deposit balances
offset
increased rates, resulting in an increase of $47,198 of deposit
interest expense.  Interest expense on retail repurchase
agreements,
which were first offered by the Bank in 2000, was $23,427.  The
yield on interest-earning assets increased to 7.33% in 2000,
from
6.97% in 1999, while the combined yield on deposits and
borrowed funds increased to 2.48% from 2.47% for the same
periods.

	Noninterest income and noninterest expense increased by
5.60% and 4.54%, respectively, during 2000 compared to
1999.

Net Interest Income

	The primary source of income for the Company is net
interest income, which is the difference between revenue on
interest-earning assets, such as investment securities and
loans, and interest incurred on interest-bearing sources of
funds, such as
deposits and borrowings.  The level of net interest income is
determined primarily by the average balance of interest-earning
assets and funding sources and the various rate spreads between
the interest-earning assets and the Company's funding sources.
Changes in net interest income from period to period result
from increases or decreases in the volume of interest-earning
assets
and interest-bearing liabilities, and increases or decreases in
the average rates earned and paid on such assets and
liabilities.  The
volume of interest-earning assets and interest-bearing
liabilities is affected by the ability to manage the earning-
asset portfolio,
which includes loans, and the availability of particular
sources of funds, such as noninterest bearing deposits.

	The key performance measure for net interest income is
the "net margin on interest-earning assets," or net interest
income divided by average interest-earning assets.  The
Company's net interest margin for 2000 was 5.15% compared to
4.77%
for 1999.  Because most of the loans of the banks are written
with a demand feature, the income of the banks should not
change
dramatically as interest rates change.  Management of the
Company expects to maintain the net margin on interest-earning
assets.
The net margin may decline, however, if competition increases,
loan demand decreases, or the cost of funds rises faster than
the
return on loans and securities.  Although such expectations are
based on management's judgment, actual results will depend on a
number of factors that cannot be predicted with certainty, and
fulfillment of management's expectations cannot be assured.



Average Balances, Interest, and Yields


For the Year Ended
For the Year Ended

December 31, 2000
December 31, 1999

Average


Average



Balance
Interest
Yield
balance
Interest
Yield
Assets






Federal funds sold
    27,035,284
    1,716,303
6.35%
    25,119,944
     1,261,883
5.02%
Interest-bearing deposits
         833,669
          46,110
5.53%
      1,135,879
          59,892
5.27%
Investment securities:






  U. S. Treasury
    52,381,568
    2,877,623
5.49%
    70,035,826
     3,744,040
5.35%
  U. S. Government Agency
    14,102,254
        883,398
6.26%
      5,202,345
        311,991
6.00%
  State and municipal
   11,044,697
        601,367
5.44%
    14,684,452
        775,402
5.28%
  Other
      1,466,086
          34,935
2.38%
         936,104
          26,211
2.80%
   Total investment securities
    78,994,605
     4,397,323
5.57%
    90,858,727
     4,857,644
5.35%
Loans:






  Commercial
    16,670,170
     1,372,165
8.23%
    16,466,323
     1,328,643
8.07%
  Mortgage
  142,159,452
   11,665,502
8.21%
  125,807,308
   10,299,329
8.19%
  Consumer
      5,058,592
        491,445
9.72%
      5,029,127
        480,141
9.55%
   Total loans
  163,888,214
   13,529,112
8.26%
  147,302,758
   12,108,113
8.22%
Allowance for loan losses
      2,091,268


      2,083,668


   Total loans, net of allowance
  161,796,946
   13,529,112
8.36%
  145,219,090
   12,108,113
8.34%
Total interest-earning assets
  268,660,504
   19,688,848
7.33%
  262,333,640
   18,287,532
6.97%
Noninterest-bearing cash
    12,657,560
-

    12,929,195
-

Premises and equipment
      5,774,271
-

      5,537,756
          -

Other assets
      2,155,343
-

      1,898,309
          -

        Total assets
  289,247,678
   19,688,848

  282,698,900
  18,287,532








Interest-bearing Deposits






  Savings and NOW
    82,093,427
     1,530,693
1.86%
    69,549,683
    1,410,850
2.03%
  Money market and supernow
    38,001,007
        946,368
2.49%
    58,167,683
     1,331,935
2.29%
  Other time
    69,455,736
     3,345,163
4.82%
    68,899,821
     3,032,241
4.40%
Total interest-bearing deposits
189,550,170
5,822,224
3.07%
196,617,187
5,775,026
2.94%
Securities sold under agreements to
   repurchase
1,610,141
23,427
1.45%

  -
-

Borrowed funds
         238,965
          14,380
6.02%
         122,984
            3,732
3.03%
Total interest-bearing liabilities
191,399,276
5,860,031
3.06%
196,740,171
5,778,758
2.94%
Noninterest-bearing deposits
    45,144,294
-

    37,290,913
-


  236,543,570
     5,860,031
2.48%
  234,031,084
     5,778,758
2.47%
Other liabilities
         840,761
-

         746,991
-

Stockholders' equity
    51,863,347
          -

    47,920,825
-

        Total liabilities and






        stockholders' equity
  289,247,678
    5,860,031

  282,698,900
    5,778,758








Net interest spread


4.27%


4.03%
Net interest income

  13,828,817


  12,508,774

Net margin on interest-earning assets


5.15%


4.77%

Dividends and interest on tax-exempt securities and loans are
reported on fully taxable equivalent
basis.




Analysis of Changes in Net Interest Income


Year ended December 31,
Year ended December 31,

2000 compared with 1999
1999 compared with 1998

variance due to
variance due to

Total
Rate
Volume
Total
Rate
Volume
Earning assets






  Interest-bearing deposits
        (13,782)
          2,144
        (15,926)
        (10,865)
       (4,505)
       (6,360)
  Federal funds sold
       454,420
      358,270
         96,150
      (149,935)
     (83,480)
     (66,455)
  Investment securities:






    U. S. Treasury
      (866,417)
       78,086
      (944,503)
     275,529
   (294,797)
     570,326
    U. S. Government Agency
       571,407
       37,412
         533,995
     297,068
       27,411
     269,657
    State, county, and municipals
      (174,035)
       18,144
      (192,179)
       65,144
     (68,909)
     134,053
    Other
            8,724
       (6,115)
           14,839
         2,135
     (37,988)
       40,123
  Loans:






    Commercial
          43,522
       27,072
           16,450
       29,832
   (104,936)
     134,768
    Mortgage
     1,366,173
       26,932
      1,339,241
   (286,167)
   (162,378)
   (123,789)
    Consumer
          11,304
         8,490
             2,814
     (32,571)
     (33,552)
            981
        Total interest revenue
     1,401,316
     550,435
         850,881
     190,170
   (763,134)
     953,304







Interest-bearing liabilities






  Savings and NOW deposits
        119,843
   (134,795)
         254,638
     (82,744)
   (305,159)
     222,415
  Money market and supernow
      (385,567)
       76,250
      (461,817)
   (198,522)
   (205,532)
         7,010
  Other time deposits
        312,922
     288,462
           24,460
   (245,172)
   (440,706)
     195,534
  Other borrowed funds
          34,075
         7,134
           26,941
         3,732
         3,732
            -
        Total interest expense
          81,273
     237,051
      (155,778)
   (522,706)
   (947,665)
     424,959







Net interest income
 $ 1,320,043
 $ 313,384
 $  1,006,659
 $ 712,876
 $ 184,531
 $ 528,345

Dividends and interest on tax-exempt securities and loans are
reported on fully taxable equivalent basis.  The variance that
is
both rate/volume related is reported with the rate variance.

Composition of Loan Portfolio

	Because loans are expected to produce higher yields than
investment securities and other interest-earning assets
(assuming that loan losses are not excessive), the absolute
volume of loans and the volume as a percentage of total earning
assets
is an important determinant of net interest margin.  Average
loans, net of the allowance for credit losses, were
$161,796,946 and
$145,219,090 during 2000 and 1999, respectively, which
constituted 60.22% and 55.36% of average interest-earning
assets for
the periods.  At December 31, 2000, the Company's loan to
deposit ratio was 72.68% compared to 63.67% at December 31,
1999, while the 2000 average loans to average deposits were
68.94%.  The Company extends loans primarily to customers
located in and near Worcester County, Maryland and Sussex
County, Delaware.  There are no industry concentrations in the
Company's loan portfolio.  The Company does, however, have a
substantial portion of its loans in real estate and its
performance
will be influenced by the real estate market in the region.



	The following table sets forth the composition of the
Company's loan portfolio as of December 31, 2000 and 1999,
respectively.

Composition of Loan Portfolio






                                      December 31,
2000      1999







Percent

Percent

Amount
of total
Amount
of total
Commercial
       15,588,946
9.13%
       17,825,019
11.57%
Real estate
     148,468,890
86.94%
     130,378,776
84.62%
Construction
         1,540,376
0.90%
            824,071
0.53%
Consumer
         5,165,742
3.03%
         5,054,669
3.28%
      Total loans
     170,763,954
100.00%
     154,082,535
100.00%
Less allowance for credit losses
         2,192,755

         2,082,031

      Net loans
     168,571,199

     152,000,504







	The following table sets forth the maturity distribution,
classified according to sensitivity to changes in interest
rates, for
selected components of the Company's loan portfolio as of
December 31, 2000.

Loan Maturity Schedule and Sensitivity to Changes in Interest
Rates


December 31, 2000


Over one



One year
through
Over five


or less
five years
years
Total





Commercial
       15,588,946
                   -
                       -
       15,588,946
Real estate
     148,468,890
                   -
                       -
     148,468,890
Construction
         1,540,376
                   -
                       -
         1,540,376
Consumer
            361,180
     4,206,122
            598,440
         5,165,742
      Total
     165,959,392
     4,206,122
            598,440
     170,763,954





Fixed interest rate
            398,948
     4,206,122
            598,440
         5,194,510
Variable interest rate (or demand)
     165,569,444
                   -
                       -
     165,569,444
      Total
     165,959,392
     4,206,122
            598,440
     170,763,954





	As of December 31, 2000, $165,596,808 or 96.96%, of the
total loans were either variable rate loans or loans written on
demand.



	The Company has the following commitments, lines of
credit, and letters of credit outstanding as of December 31,
2000
and 1999, respectively.




2000
1999





       Construction loans


 $      2,964,536
 $      9,486,899
       Other loan commitments


         3,192,350
         4,843,120
       Standby letters of credit


         1,412,552
         1,504,241
                Total


 $      7,569,438
 $    15,834,260
	Loan commitments are agreements to lend to a customer as
long as there is no violation of any condition to the contract.
Loan commitments may have interest fixed at current rates,
fixed expiration dates, and may require the payment of a fee.
Letters
of credit are commitments issued to guarantee the performance
of a customer to a third party.  Loan commitments and letters
of
credit are made on the same terms, including collateral, as
outstanding loans.  The Company's exposure to credit loss in
the event
of nonperformance by the borrower is represented by the
contract amount of the commitment.

Loan Quality

	The allowance for credit losses represents a reserve for
potential losses in the loan portfolio.  The adequacy of the
allowance for credit losses is evaluated periodically based on
a review of all significant loans, with a particular emphasis
on non-
accruing, past due, and other loans that management believes
require attention.  The determination of the reserve level
rests upon
management's judgment about factors affecting loan quality and
assumptions about the economy.  Management considers the
year-end allowance appropriate and adequate to cover possible
losses in the loan portfolio; however, management's judgment is
based upon a number of assumptions about future events, which
are believed to be reasonable, but which may or may not prove
valid.  Thus, there can be no assurance that charge-offs in
future periods will not exceed the allowance for credit loss or
that
additional increases in the credit loss allowance will not be
required.  The Company has a history of low loan charge-offs.

	For significant problem loans, management's review
consists of evaluation of the financial strengths of the
borrowers and
guarantors, the related collateral, and the effects of economic
conditions.  The overall evaluation of the adequacy of the
total
allowance for credit losses is based on an analysis of
historical loan loss ratios, loan charge-offs, delinquency
trends, and previous
collection experience, along with an assessment of the effects
of external economic conditions.  It is the Company's policy to
have each bank evaluate loan portfolio risk for the purpose of
establishing an adequate allowance.  The banks' target levels
for
their allowances as a percentage of gross loans range from
approximately 1.00% to 1.35%.  This allowance may be increased
for
reserves for specific loans identified as substandard during
management's loan review.  Generally, the Company will not
require a
negative provision to reduce the allowance as a result of
either net recoveries or a decrease in loans, even though this
may cause
the allowance as a percentage of gross loans to exceed the
Company's target.

	The provision for loan losses is a charge to earnings in
the current period to replenish the allowance and maintain it
at a
level management has determined to be adequate.  As of December
31, 2000 and 1999, the respective allowances for credit losses
were 1.28% and 1.35% of outstanding loans.

	The provision for loan losses was $174,080 in 2000, an
increase of $168,335 from the $5,745 provision in 1999.  The
increased provision is the result of a $56,295 increase in net
charge-offs for 2000, which totaled $63,356.  Outstanding loans
increased 10.83% during the same period.

Allocation of Allowance for Loan Losses








2000

1999

Commercial
 $       167,626
      7.64
%
 $       213,549
    10.26
%
Real estate
          810,790
    36.98

          651,894
    31.31

Construction

          -

               4,120
      0.20

Consumer
          174,003
      7.93

          152,313
      7.31

Commitments
                     -
          -

                     -
        -

General
       1,040,336
    47.45

       1,060,155
    50.92

                Total
 $    2,192,755
  100.00
%
 $    2,082,031
  100.00
%




Allowance for Loan Losses







2000
1999






Balance at beginning of year

 $  2,082,031
 $      2,080,358






Loan losses:




  Commercial

          56,193
               13,628

  Mortgages

                   -
                       -

  Consumer

          10,907
                 8,256

                Total loan losses

          67,100
               21,884






Recoveries on loans previously charged off



  Commercial

             2,386
                 6,504

  Consumer

             1,358
                 8,319

                Total loan recoveries

             3,744
               14,823






Net loan losses

          63,356
                 7,061

Provision for loan losses charged to expense
        174,080
                 5,745

Provision related to commitments

                   -
                 2,989

Balance at end of year

 $  2,192,755
 $       2,082,031






Allowance for loan losses to loans outstanding



 at end of year

1.28%
1.35%






Net charge-offs to average loans

0.04%
0.00%


		As a result of management's ongoing review of the
loan portfolio, loans are classified as nonaccrual when it is
not
reasonable to expect collection of interest under the original
terms.  These loans are classified as nonaccrual even though
the
presence of collateral or the borrower's financial strength may
be sufficient to provide for ultimate repayment.  Interest on
nonaccrual loans is recognized only when received. A delinquent
loan is generally placed in nonaccrual status when it becomes
90 days or more past due.  When a loan is placed in nonaccrual
status, all interest that has been accrued on the loan but
remains
unpaid is reversed and deducted from earnings as a reduction of
reported interest income.  No additional interest is accrued on
the
loan balance until the collection of both principal and
interest becomes reasonably certain.  The Company had no
nonperforming
loans at December 31, 2000 or 1999.

		Where real estate acquired by foreclosure and held
for sale is included with nonperforming loans, the result
comprises
nonperforming assets.  There were no nonperforming assets at
December 31, 2000 or 1999.  Loans are classified as impaired
when the collection of contractual obligations, including
principal and interest, is doubtful.  Management has identified
no
significant impaired loans as of December 31, 2000 or 1999.

Liquidity and Interest Rate Sensitivity

	The primary objective of asset/liability management is to
ensure the steady growth of the Company's primary source of
earnings, net interest income.  Net interest income can
fluctuate with significant interest rate movements.  To lessen
the impact of
these margin swings, the balance sheet should be structured so
that repricing opportunities exist for both assets and
liabilities in
roughly equivalent amounts at approximately the same time
intervals.  Imbalances in these repricing opportunities at any
point in
time constitute interest rate sensitivity.

		Liquidity represents the ability to provide steady
sources of funds for loan commitments and investment
activities, as well
as to provide sufficient funds to cover deposit withdrawals and
payment of debt and operating obligations.  These funds can be
obtained by converting assets to cash or by attracting new
deposits.

		Average liquid assets (cash and amounts due from
banks, interest bearing deposits in other banks, federal funds
sold, and
investment securities) were 50.93% of average deposits for
2000, compared to 55.60% for 1999.


	As of December 31, 2000, $45,333,736, or 57.60% of the
investment debt securities mature in one year or less.  The
funds invested in federal funds sold provide liquidity so the
banks do not need a large portfolio of securities classified as
"available-for-sale." Other sources of liquidity include
letters of credit, overnight federal funds, and reverse
repurchase
agreements available from correspondent banks.  The total lines
of credit available from correspondent banks at December 31,
2000, were $19,000,000.

		Interest rate sensitivity refers to the
responsiveness of interest-bearing assets and liabilities to
changes in market interest
rates.  The rate-sensitive position, or gap, is the difference
in the volume of rate-sensitive assets and liabilities at a
given time
interval.  The general objective of gap management is to
actively manage rate-sensitive assets and liabilities to reduce
the impact
of interest rate fluctuations on the net interest margin.
Management generally attempts to maintain a balance between
rate-
sensitive assets and liabilities as the exposure period is
lengthened to minimize the overall interest rate risk to the
Company.

		Interest rate sensitivity may be controlled on
either side of the balance sheet.  On the asset side,
management exercises
some control over maturities.  Also, loans are written to
provide repricing opportunities on fixed rate notes.  The
Company's
investment portfolio, including federal funds sold, provides
the most flexible and fastest control over rate sensitivity
since it can
generally be restructured more quickly than the loan portfolio.

		On the liability side, deposit products are
structured to offer incentives to attain the maturity
distribution desired.
Competitive factors sometimes make control over deposits more
difficult and, therefore, less effective as an interest rate
sensitivity management tool.

		The asset mix of the balance sheet is continually
evaluated in terms of several variables; yield, credit quality,
appropriate
funding sources, and liquidity.  Management of the liability
mix of the balance sheet focuses on expanding the various
funding
sources.

		The Company was asset-sensitive for all time
horizons. For asset-sensitive institutions, if interest rates
should decrease, the
net interest margins should decline.  Since all interest rates
and yields do not adjust at the same velocity, the gap is only
a general
indicator of rate sensitivity.

Interest Sensitivity Analysis







December 31, 2000


After three




Within
but within
After one



Three
twelve
but within
After


Months
months
five years
five years
Total
Assets





Earning assets





  Federal funds sold
 $    18,167,527
 $                   -
 $                   -
 $                    -
 $    18,167,527
  Interest-bearing deposits
                       -
            487,000
           297,000
                       -
            784,000
  Investment securities
       18,432,798
       26,900,938
      30,939,822
         4,052,934
       80,326,492
  Loans
     165,596,807
            362,585
        4,206,122
            598,440
     170,763,954
Total earning assets
 $  202,197,132
 $    27,750,523
 $   35,442,944
 $      4,651,374
 $  270,041,973






Liabilities





Interest-bearing liabilities





  Money market
 $    34,896,077
                       -
                      -
                       -
 $    34,896,077
   Savings and NOW deposits
       73,967,825
                       -
                      -
                       -
       73,967,825
   Certificates $100,000 and over
         4,423,581
        6,795,644
        3,961,211

       15,180,436
   Certificates under $100,000
       16,640,329
      28,982,081
      12,584,501

       58,206,911
Securities sold under agreements





   to repurchase
         3,113,671
                       -
                      -
                       -
         3,113,671
Note payable
                3,865
             11,950
             73,633
            142,069
            231,517
Total interest-bearing liabilities
 $  133,045,348
 $   35,789,675
 $   16,619,345

 $         142,069
 $  185,596,437






Period gap
 $    69,151,784
 $   (8,039,152)
 $   18,823,599
 $      4,509,305
 $    84,445,536
Cumulative gap
 $    69,151,784
 $   61,112,632
 $   79,936,231
 $    84,445,536
 $    84,445,536
Ratio of cumulative gap to





   total earning assets
               25.61%
               22.63%
              29.60%
               31.27%
              31.27%



		The table "Investment Securities Maturity
Distribution and Yields" shows that as of December 31, 2000,
$45,333,735, or
57.60% of the investment debt securities mature in one year or
less.  The funds invested in federal funds sold provide
liquidity so
the banks do not need a large portfolio of securities
classified as "available-for-sale." Other sources of liquidity
include letters of
credit, overnight federal funds, and reverse repurchase
agreements available from correspondent banks.  The total lines
of credit
available from correspondent banks at December 31, 2000, were
$19,000,000.


Investment Securities Maturity Distribution and Yields




December 31, 2000


December 31, 1999


Amount
    Percent


Amount
    Percent

U. S. Treasury securities







  One year or less
    29,941,815
         5.34
 %

    43,479,940
          5.29
 %
  Over one through five years
    17,480,762
         6.36
 %

    22,986,692
          5.11
 %
  Over ten years
      2,428,120
         7.28
 %

      2,108,760
          7.29
 %
Total U.S. Treasury securities
    49,850,697
         5.78
 %

    68,575,392
          5.29
 %








U.S. Government Agencies







  One year or less
      8,750,177
         6.35
 %




  Over one through five years
      9,900,000
         6.46
 %

    10,649,787
          6.08
 %
Total U. S. Government Agencies
    18,650,177
         6.41
 %

    10,649,787
          6.08
 %

State, county, and municipal securities







  One year or less
      6,641,744
         5.67
 %

      5,267,528
          3.56
 %
  Over one through five years
      3,559,060
         6.12
 %

      7,064,654
          3.61
 %
  Over five through ten years
                 -

 %

         100,671
          3.71
 %
  Over ten years
                 -   .

 %

         372,663
          3.45
 %
Total state, county, and municipal securities
    10,200,804
         5.83
 %

    12,805,516
          3.59
 %








Total debt securities







  One year or less
    45,333,736
         5.59
 %

    48,747,468
          5.10
 %
  Over one through five years
    30,939,822
         6.36
 %

    40,701,133
          5.10
 %
  Over five through ten years
                 -
            -
 %

        100,671
          3.71
 %
  Over ten years
      2,428,120
         7.28
 %

      2,481,423
          6.71
 %
Total debt securities
    78,701,678
         5.94
 %

    92,030,695
          5.15
 %








Equity securities
      1,624,814
         2.38
 %

      1,293,336
          3.72
 %








Total securities
    80,326,492
         5.87
 %

    93,324,031
          5.13
 %

Deposits and Other Interest-Bearing Liabilities

	Average interest-bearing liabilities decreased
$5,340,895, or 2.71%, to  $191,399,276 in 2000, from
$196,740,171 in
1999. Average interest-bearing deposits decreased $7,067,017,
or 3.59%, to  $189,550,170 in 2000, from  $196,617,187 in 1999,
while average demand deposits increased $7,853,381, or 21.06%
to $45,144,294 in 2000, from $37,290,913 in 1999.  At
December 31, 2000, total deposits were $231,926,192, compared
to $238,725,852 at December 31, 1999, a decrease of 2.85%.



	The following table sets forth the deposits of the
Company by category as of December 31, 2000 and 1999,
respectively.


December 31,


2000
1999



Amount
Percent of
deposits

Amount
Percent of
deposits







Demand deposit accounts

 $   49,674,943
21.42%
 $    39,151,702
16.40%
NOW accounts

      39,910,464
17.21%
       41,203,474
17.26%
Money market and Supernow accounts
      34,896,077
15.04%
       52,985,409
22.19%

Savings accounts

      34,057,361
14.68%
       35,254,807
14.77%
Time deposits less than $100,000

      58,206,911
25.10%
       57,312,394
24.01%
Time deposits of $100,000 or more

      15,180,436
  6.55%
       12,818,066
   5.37%
           Total deposits

 $ 231,926,192
100.00%
 $ 238,725,852
100.00%

	Core deposits, which exclude certificates of deposit of
$100,000 or more, provide a relatively stable funding source
for
the Company's loan portfolio and other earning assets.  The
Company's core deposits decreased $9,162,030 during 2000.  This
decrease is partially attributable to a migration of funds from
insured deposits to the Banks' business sweep account product
implemented as retail repurchase agreements.  Retail repurchase
agreements were first offered in 2000 and had a balance of
$3,113,671 at December 31, 2000.  Additional decreases in
deposit balances may have occurred due to the Company's
practice
of protecting profitability in an increasing rate environment
by increasing rates on deposits less rapidly than some local
competitors.  Deposits, and particularly core deposits, have
been the Company's primary source of funding and have enabled
the
Company to meet both its short-term and long-term liquidity
needs.  Management anticipates that such deposits will continue
to
be the Company's primary source of funding in the future.  The
maturity distribution of the Company's time deposits over
$100,000 at December 31, 2000, is shown in the following table.

Maturities of Certificates of Deposit
and Other Time Deposits of $100,000 or More







December 31, 2000



After six




After three
through



Within three
through
Twelve
After twelve


months
six months
months
months
Total
Certificates of deposit of $100,000





  or more
 $      4,423,581
 $     1,519,836
 $     5,275,808
 $      3,961,211
 $    15,180,436

	Large certificate of deposit customers tend to be
extremely sensitive to interest rate levels, making these
deposits less
reliable sources of funding for liquidity planning purposes
than core deposits.  Some financial institutions partially fund
their
balance sheets using large certificates of deposit obtained
through brokers.  These brokered deposits are generally
expensive and
are unreliable as long-term funding sources.  Accordingly, the
Company does not accept brokered deposits.




Noninterest Income

	Noninterest income for 2000 was $1,103,858, compared to
noninterest income in 1999 of $1,045,327, an increase of
$58,531, or 5.60%.  Additional revenues from Credit Card and
VISA Check Card fees contributed $49,710 of this increase.

	The following table presents the principal components of
noninterest income for the years ended December 31, 2000 and
1999, respectively.
Noninterest Income




2000
1999






Service charges on deposit accounts


$     724,845
$     724,067
Other noninterest revenue



379,013
321,260
  Total noninterest income



$  1,103,858
$  1,045,327






Noninterest income as a percentage of average total assets

0.38%
0.37%

Noninterest Expense

	Noninterest expense increased by $256,594, or 4.54%, from
$5,647,612 in 1999 to $5,904,206 in 2000.  Increased
personnel costs of $162,545 were due to annual raises and the
addition of a fulltime audit position.  Furniture and equipment
expense increased $160,003 of which approximately $110,000 was
attributable to costs associated with the Check Imaging
system installed in 1999.  Included in noninterest expense in
1999 was property with a book value of $128,806, which was
donated to a Worcester County municipality.  In 1999, costs of
stationery and supplies were above normal due to a branch
relocation and costs associated with potential year 2000
computer problems; in 2000, stationery and supplies costs
decreased
$47,994, returning to a pre-1999 level.

	The following table presents the principal components of
noninterest expense for the years ended December 31, 2000 and
1999, respectively.

Noninterest Expense










2000
1999






Compensation and related expenses



$  3,238,854
$  3,076,309
Occupancy expense



425,767
413,073
Furniture and equipment expense



671,040
511,037
Amortization of intangible assets



62,005
19,721
Advertising



132,784
146,341
Business and product development



57,055
57,649
Courier service



99,466
93,968
Deposit insurance



35,157
37,917
Director fees



72,575
64,120
Dues, donations, and subscriptions



107,114
83,105
Donated real property



   -
128,806
Freight



62,411
57,879
Liability insurance



61,649
64,686
Postage



145,325
155,092
Professional fees



62,660
61,538
Stationery and supplies



261,733
309,727
Telephone



82,256
82,466
Teller machine fees



123,398
110,791
Miscellaneous



202,957
173,387
  Total noninterest expense



$  5,904,206
$  5,647,612






Noninterest expense as a percentage of average total assets

2.04%
2.00%



Capital

	Under the capital guidelines of the Federal Reserve Board
and the FDIC, the Company and its banks are currently
required to maintain a minimum risk-based total capital ratio
of 8%, with at least 4% being Tier 1 capital.  Tier 1 capital
consists
of common shareholders' equity, qualifying perpetual preferred
stock, and minority interests in equity accounts of
consolidated
subsidiaries, less certain intangibles.  In addition, the
Company and the banks must maintain a minimum Tier 1 leverage
ratio
(Tier 1 capital to total assets) of at least 3%, but this
minimum ratio is increased by 100 to 200 basis points for other
than the
highest-rated institutions.

	At December 31, 2000, the Company and the banks exceeded
their regulatory capital ratios, as set forth in the
following table.

Analysis of Capital



2000

1999

Required
Consolidated
Maryland
Delaware

Consolidated
Maryland
Delaware

Minimums
Company
Bank
Bank

Company
Bank
Bank
Total risk-based capital ratio
8.0%
36.6%
34.5%
 53.0%

38.4%
35.0%
 99.6%
Tier I risk-based capital ratio
4.0%
35.4%
33.3%
 52.0%

37.1%
33.8%
 99.3%
Tier I leverage ratio
3.0%
18.2%
16.6%
 29.6%

17.5%
15.4%
 30.8%

Accounting Rule Changes

FASB Statement No. 137, Accounting for Derivative Instruments
and Hedging Activities Deferral of the Effective
Date of FASB Statement No. 133, delays the effective date of
FASB Statement No. 133 for one year, to fiscal years beginning
after June 15, 2000.  The Company's security portfolio has no
derivative instruments.  The implementation of this statement
is
expected to have minimal impact on the Company's financial
statements.

	FASB Statement No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, is an
amendment of FASB Statement No. 133.  This statement addresses
a limited number of issues causing implementation
difficulties for entities that apply Statement No. 133.
Specifically, it expands the normal sales and normal purchase
exception, redefines the specific risks that can be identified
as a hedge risk, revises foreign-currency-denominated assets
and
liabilities, and discusses intercompany derivatives.  The
effective date of the Statement is the first fiscal quarter of
fiscal years
beginning after June 15, 2000.

	FASB Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities, is a replacement of Statement No. 125.  This
statement is intended to develop standards to aid in resolving
existing
financial accounting and reporting issues when transfers of
financial assets occur.  Specifically, the statement addresses
issues
where the transferor has a continuing involvement with the
transferred asset or with the transferee, as in transfers with
recourse, servicing rights, agreements to reacquire, options
written or withheld, or pledges of collateral.  The effective
date of
the Statement is for transfers and servicing of financial
assets and extinguishments of liabilities occurring after March
31,
2001.

FASB Interpretation No. 44, Accounting for Certain Transactions
involving Stock Compensation, clarifies the
application of APB Opinion No. 25.  The statement addresses
issues such as the definition of an employee, the criteria for
determining if a plan qualifies as a noncompensatory plan, the
consequence of modifications to the terms of a fixed stock
option or award, and the accounting for an exchange of stock
compensation awards in a business combination.  The
interpretation is effective July 1, 2000.


Impact of Inflation

	Unlike most industrial companies, the assets and
liabilities of financial institutions such as the Company and
the banks
are primarily monetary in nature.  Therefore, interest rates
have a more significant effect on the Company's performance
than do
the effects of changes in the general rate of inflation and
change in prices.  In addition, interest rates do not
necessarily move in
the same direction or in the same magnitude as the prices of
goods and services.  As discussed previously, management seeks
to
manage the relationships between interest sensitive assets and
liabilities in order to protect against wide interest rate
fluctuations,
including those resulting from inflation.   See "Liquidity and
Interest Rate Sensitivity" above.

Item 7. Financial Statements

	In response to this Item, the information included on
pages 1 through 22 of the Company's Annual Report to
Shareholders for the year ended December 31, 2000, is
incorporated herein by reference.

PART III

Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures

	Not applicable.

Item 9. Directors and Executive Officers; Compliance with
Section 16(a) of the Exchange Act

	In response to this item, the information included on
pages 2 through 3 of the Company's Proxy Statement for Annual
Meeting of Shareholders To Be Held on May 2, 2001, is
incorporated herein by reference.

Item 10. Executive Compensation

	In response to this item, the information included on
page 4 of the Company's Proxy Statement for Annual Meeting of
Shareholders To Be Held on May 2, 2001, is incorporated herein
by reference.

Item 11. Security Ownership of Certain Beneficial Owners and
Management

	In response to this item, the information included on
pages 4 through 5 of the Company's Proxy Statement for  Annual
Meeting of Shareholders to be held May 2, 2001, is incorporated
herein by reference.

Item 12. Certain Relationships and Related Transactions

	In response to this item, the information included on
page 6 of the Company's Proxy Statement for Annual Meeting of
Shareholders to be held May 2, 2001, is incorporated herein by
reference.

Item 13. Exhibits and Reports on Form 8-K

(a)	Exhibits

	3.1	Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of Registration
Statement Form
		 S-4, File No. 33-99762).

	3.2	Bylaws of the Company (incorporated by reference to
Exhibit 3.2 of Registration Statement Form S-4, File No.
		33-99762).

	13	Annual Report to Shareholders for the year ended
December 31, 2000.

	21	Subsidiaries of the Company.

(b)	Reports on Form 8-K

		No reports on Form 8-K were filed during the fourth
quarter of the year ended December 31, 2000.






SIGNATURES
	In accordance with 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.

		CALVIN B. TAYLOR BANKSHARES, INC.
		(Registrant)

Date:	                          	By:

	Reese F. Cropper, Jr.
			President and Chief Executive Officer

	In accordance with 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.

Date:	                      	By:

			James R. Bergey, Jr.
			Director

Date:	                      	By:

	James R. Bergey, Sr.
			Director

Date:	                      	By:

	George H. Bunting, Jr.
			Director

Date:	                      	By:

			John H. Burbage, Jr.
			Director

Date:	                      	By:

			Reese F. Cropper, Jr.
			President, Chief Executive Officer and
Director

Date:	                      	By:

			Reese F. Cropper, III
			Director

Date:	                      	By:

			Hale Harrison
			Director

Date:	                      	By:

			Gerald T. Mason
			Director

Date:	                      	By:

			William H. Mitchell
			Vice President and Director

Date:	                      	By:

			Joseph E. Moore
			Director

Date:	                      	By:

			Michael L. Quillin, Sr.
			Director

Date:	                      	By:

			D. Bruce Rogers
			Director







EXHIBIT 13

ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 2000

































































Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Financial Statements

December 31, 2000














































Calvin B. Taylor Bankshares, Inc.
and subsidiaries

Table of Contents




			 Page

Report of independent auditors
			   1

Consolidated financial statements

  Consolidated balance sheets
			   2

  Consolidated statements of income
			   3

  Consolidated statements of changes in stockholders' equity
				   4

  Consolidated statements of cash flows
			 5-6

  Notes to consolidated financial statements
				 7-23











Report of Independent Auditors
The Board of Directors and Stockholders
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Berlin, Maryland


	We have audited the accompanying consolidated balance
sheets of Calvin B. Taylor Bankshares,
Inc. and Subsidiaries as of December 31, 2000, 1999, and 1998,
and the related consolidated statements
of income, changes in stockholders' equity, and cash flows for
the years then ended.  These consolidated
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 financial position of Calvin B. Taylor
Bankshares, Inc. and Subsidiaries as of December 31,
2000, 1999, and 1998, and the results of their operations and
their cash flows for the years then ended in
conformity with generally accepted accounting principles.




									/s/
Rowles & Company, LLP


Salisbury, Maryland
January 8, 2001



Calvin B. Taylor Bankshares, Inc.
and subsidiaries
Consolidated Balance Sheets





December 31,

      2000
      1999
      1998
Assets







Cash and due from banks
 $  13,332,279
 $  18,546,576
 $  12,157,944
Federal funds sold
     18,167,527
     15,877,383
     33,337,435
Interest-bearing deposits
          784,000
          983,000
       1,228,000
Investment securities available for sale
       4,052,934
       3,402,096
       2,997,137
Investment securities held to maturity (approximate market



   value of $76,610,933, $89,352,513, and $80,848,955)
     76,273,558
     89,921,935
     80,275,711
Loans, less allowance for credit losses of $2,192,755,



  $2,082,031, and $2,080,358
   168,571,199
   152,000,504
   139,757,463
Premises and equipment
       5,620,478
       5,858,928
       5,530,566
Accrued interest income
       1,948,199
       1,928,735
       1,869,686
Intangible assets
            99,574
          161,579
            10,603
Deferred income taxes
          107,227
          222,986
            67,354
Other assets
            91,036
            17,076
          231,351

 $289,048,011
 $288,920,798
 $277,463,250




Liabilities and Stockholders' Equity




Deposits



  Noninterest-bearing
 $  49,674,943
 $  39,151,702
 $  36,648,979
  Interest-bearing
   182,251,249
   199,574,150
   193,968,706

   231,926,192
   238,725,852
   230,617,685
Securities sold under agreements to repurchase
       3,113,671
                  -
                  -
Accrued interest payable
          503,519
          424,042
          456,133
Accrued income taxes
          103,818
            56,490
                  -
Mortgage obligation
          231,517
          246,413
                  -
Other liabilities
            84,085
          247,667
            46,233

   235,962,802
   239,700,464
   231,120,051
Stockholders' equity



  Common stock, par value $1 per share; authorized



    10,000,000 shares; issued and outstanding 3,240,000 shares



     in 2000, 1,620,000 shares in 1999 and 1998
       3,240,000
       1,620,000
       1,620,000
  Additional paid in capital
     17,290,000
     17,290,000
     17,290,000
  Retained earnings
     32,058,498
     30,030,340
     26,954,680

     52,588,498
     48,940,340
     45,864,680
  Accumulated other comprehensive income
          496,711
          279,994
          478,519

     53,085,209
     49,220,334
     46,343,199

 $289,048,011
 $288,920,798
 $277,463,250








The accompanying notes are an integral part of these financial
statements.

2



Calvin B. Taylor Bankshares, Inc.
and subsidiaries
Consolidated Statements of Income





               Years Ended December 31,

      2000
      1999
      1998




Interest and dividend revenue



  Loans, including fees
 $13,480,035
 $12,070,649
 $12,383,846
  U. S. Treasury and government agency securities
     3,761,021
     4,056,031
     3,483,434
  State and municipal securities
        410,891
        531,857
        489,430
  Federal funds sold
     1,716,303
     1,261,883
     1,411,818
  Time certificates of deposit
          46,110
          59,892
          70,757
  Equity securities
          25,676
          19,264
          15,890
          Total interest and dividend revenue
   19,440,036
   17,999,576
   17,855,175
Interest expense



  Deposit interest
     5,822,224
     5,775,026
     6,301,464
  Other
          37,807
           3,732
                -
          Total interest expense
     5,860,031
     5,778,758
     6,301,464
          Net interest income
   13,580,005
   12,220,818
   11,553,711
Provision for credit losses
        174,080
           5,745
           1,175
          Net interest income after provision for credit losses
   13,405,925
   12,215,073
   11,552,536
Other operating revenue



  Service charges on deposit accounts
        724,845
        724,067
        691,945
  Other noninterest revenue
        379,013
        321,260
        304,243
          Total other operating revenue
     1,103,858
     1,045,327
        996,188
Other expenses



  Salaries
     2,723,713
     2,554,963
     2,468,954
  Employee benefits
        515,141
        521,346
        583,582
  Occupancy
        425,767
        413,073
        351,601
  Furniture and equipment
        671,040
        511,037
        483,506
  Other operating
     1,568,545
     1,647,193
     1,431,860
          Total other expenses
     5,904,206
     5,647,612
     5,319,503
Income before income taxes and cumulative effect of a change



   in accounting method
     8,605,577
     7,612,788
     7,229,221
Income taxes
     2,981,019
     2,593,128
     2,472,274
Income before cumulative effect of a change in accounting
method
     5,624,558
     5,019,660
     4,756,947
Cumulative effect of a change in the method of accounting for



   organization costs, net of taxes of $30,875
                -
                -
       (59,933)
Net income
 $  5,624,558
 $  5,019,660
 $  4,697,014




Earnings per common share



  Income before cumulative effect of a change in accounting
method
 $1.74
 $1.55
 $1.47
  Cumulative effect of a change in the method of accounting for



    organization costs, net of taxes
             -
                -
           (0.02)
  Net income
 $1.74
 $1.55
 $1.45










The accompanying notes are an integral part of these financial
statements.
3



Calvin B. Taylor Bankshares, Inc.
AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity
















Accumulated








other




Common stock

Undivided
comprehensive
 Comprehensive

Shares
Par value
    Surplus
profits
income
 income











Balance, December 31, 1997
     810,000
 $   810,000
 $17,290,000
 $24,120,666

 $356,351















Net income
              -
               -
                -
     4,697,014

            -


 $4,697,014

Stock split effected in the form









  of a 100% stock dividend
     810,000
      810,000
                -
      (810,000)

            -




Unrealized gain on investment










  securities available for sale










  net of income taxes
              -
               -
                -
                -

   122,168


      122,168

Comprehensive income








 $4,819,182

Cash dividend, $.33 per share
              -
               -
                -
   (1,053,000)

            -















Balance, December 31, 1998
   1,620,000
   1,620,000
   17,290,000
   26,954,680

   478,519















Net income
              -
               -
                -
     5,019,660

            -


 $5,019,660

Unrealized gain on investment










  securities available for sale










  net of income taxes
              -
               -
                -
                -

  (198,525)


    (198,525)

Comprehensive income








 $4,821,135

Cash dividend, $.60 per share
              -
               -
                -
   (1,944,000)

            -















Balance, December 31, 1999
   1,620,000
   1,620,000
   17,290,000
   30,030,340

   279,994















Net income
              -
               -
                -
     5,624,558

            -


 $5,624,558

Stock split effected in the form









  of a 100% stock dividend
   1,620,000
   1,620,000
                -
   (1,620,000)

            -




Unrealized gain on investment










  securities available for sale










  net of income taxes
              -
               -
                -
                -

   216,717


      216,717

Comprehensive income








 $5,841,275

Cash dividend, $.61 per share
              -
               -
                -
   (1,976,400)

            -















Balance, December 31, 2000
   3,240,000
 $ 3,240,000
 $17,290,000
 $32,058,498

 $496,711







































































































The accompanying notes are an integral part of these financial
statements.




4



Calvin B. Taylor Bankshares, Inc.
and Subsidiaries




Consolidated Statements of Cash Flows









Years Ended December 31,

      2000
      1999
      1998




Cash flows from operating activities



  Interest received
 $19,291,291
 $17,649,136
 $17,484,837
  Fees and commissions received
     1,080,633
     1,029,416
        996,155
  Interest paid
   (5,780,554)
   (5,810,849)
   (6,312,142)
  Cash paid to suppliers and employees
   (5,371,499)
   (4,864,057)
   (4,932,100)
  Income taxes paid
   (2,954,290)
   (2,413,486)
   (2,556,102)

     6,265,581
     5,590,160
     4,680,648




Cash flows from investing activities



  Proceeds from maturities of investment securities
   49,458,000
   39,025,000
   45,815,000
  Purchase of investment securities held to maturity
  (35,978,105)
  (49,108,227)

(62,741,560)
  Certificates of deposits purchased, net of maturities
        199,000
        245,000
           1,000
  Loans made, net of principal collected
  (16,744,775)
  (12,248,786)
     7,435,183
  Sale (purchase) of foreclosed real estate
                -
         39,000
        (39,000)
  Purchases of and deposits on premises, equipment,



    software, and other intangibles
      (443,405)
      (776,547)
   (1,724,341)
  Proceeds from sale of equipment
              423
           2,400
                -

   (3,508,862)
  (22,822,160)

(11,253,718)




Cash flows from financing activities



  Net increase (decrease) in



     Time deposits
     3,256,887
        452,474
     6,675,598
     Other deposits
  (10,056,547)
     7,655,693
   17,148,889
     Securities sold under agreements to repurchase
     3,113,671
                -
                -
  Payments on capital lease and mortgage obligations
        (18,483)
          (3,587)
        (61,720)
  Dividends paid
   (1,976,400)
   (1,944,000)
   (1,053,000)

   (5,680,872)
     6,160,580
   22,709,767




Net increase (decrease) in cash and cash equivalents
   (2,924,153)
  (11,071,420)
   16,136,697




Cash and cash equivalents at beginning of year
   34,423,959
   45,495,379
   29,358,682
Cash and cash equivalents at end of year
 $31,499,806
 $34,423,959
 $45,495,379
























The accompanying notes are an integral part of these financial
statements.
5



Calvin B. Taylor Bankshares, Inc.
and Subsidiaries




Consolidated Statements of Cash Flows
(Continued)





Years Ended December 31,

      2000
      1999
      1998




Reconciliation of net income to net cash provided by



   operating activities



    Net income
 $  5,624,558
 $  5,019,660
 $  4,697,014




   Adjustments to reconcile net income to net cash



      provided by operating activities



        Depreciation and amortization
        498,612
        418,403
        437,177
        Provision for credit losses
        174,080
           5,745
           1,175
        Deferred income taxes
        (20,599)
        (30,721)
        (40,160)
        Amortization of premiums and accretion of discounts,
net
      (129,281)
      (291,392)
      (324,542)
        Charitable donation of property
                -
        128,806
                -
        (Gain) loss on disposition of assets
           1,564
          (2,400)
           5,860
        Decrease (increase) in



           Accrued interest receivable
        (19,464)
        (19,464)
        (79,263)
           Other assets
        (73,960)
        135,690
        (55,313)
        Increase (decrease) in



           Accrued interest payable
         79,477
        (32,091)
         22,789
           Accrued income taxes
         47,328
         56,490
        (21,527)
           Other liabilities
         83,266
        201,434
         37,438

 $  6,265,581
 $  5,590,160
 $  4,680,648
























Noncash Activity



        Property acquired by issuance of debt
 $             -
 $     250,000
 $             -












































The accompanying notes are an integral part of these financial
statements.
6


Calvin B. Taylor Bankshares, Inc.
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.

		Calvin B. Taylor Bankshares, Inc. is a bank holding
company.  Its principal subsidiary, Calvin B. Taylor Banking
Company, is a financial institution operating primarily in
Worcester County, Maryland. The other subsidiary, Calvin B.
Taylor Bank of Delaware, is a financial institution operating
primarily in Sussex County, Delaware.  The Banks offer
deposit services and loans to individuals, small businesses,
associations and government entities.  Other services
include direct deposit of payroll and social security checks,
automatic drafts from accounts, automated teller machine
services, safe deposit boxes, money orders and travelers
cheques.  The Banks also offer credit card services and
discount brokerage services through correspondents.

		The preparation of financial statements in
conformity with generally accepted accounting principles
requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the
financial statements.  These estimates and assumptions may
affect
the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from these
estimates.

	Principles of consolidation
		The consolidated financial statements of Calvin B.
Taylor Bankshares, Inc. include the accounts of its wholly
owned subsidiaries, Calvin B. Taylor Banking Company and Calvin
B. Taylor Bank of Delaware.  All significant
intercompany balances and transactions have been eliminated in
consolidation.

	Cash equivalents
		For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, amounts due from banks
and federal funds sold.  Federal funds are purchased and sold
for one-day periods.

	Investment securities
		As securities are purchased, management determines
if the securities should be classified 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 classified as
available-for-sale are recorded at fair value.

		Gains and losses on disposal are determined using
the specific-identification method.

	Premises and equipment
		Premises and equipment are recorded at cost less
accumulated depreciation.  Depreciation is computed under both
straight-line and accelerated methods over the estimated useful
lives of the assets.

	Intangible assets
		In 1998, the Company adopted Statement of Position
98-5 of the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants,
Reporting on the Costs of Start-up Activities, which requires
that start-up costs and organization costs be expensed as
incurred.  During 1998, the Company wrote off organization
costs, all of which were incurred prior to 1998.  Prior to
1998, organization costs were amortized over five years.

		The Company amortizes software costs over their
useful lives using the straight-line method.







7


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


1.	Summary of Significant Accounting Policies (Continued)

	Loans and allowance for credit losses
		Loans are stated at face value less the allowance
for credit losses.  Interest on loans is credited to income
based on
the principal amounts outstanding.  The accrual of interest is
discontinued when any portion of the principal or interest
is ninety days past due and collateral is insufficient to
discharge the debt in full.

		The allowance for credit losses is maintained at a
level deemed appropriate by management to provide adequately
for known and inherent risks in the loan portfolio.  The
minimum range of the allowance for loan losses is calculated by
applying risk-weighted percentages to loans based on their
delinquency and underlying collateral.  The portion of the
allowance that is a result of geographic and industry
concentrations and current economic conditions is not allocated
to
specific loans.  At December 31, 2000, the allowance included
approximately $1,040,000 that was not allocated to
specific loans.  Management has historically maintained the
allowance at a level of approximately 1.30% to 1.35% of
gross loans.

		If the current economy or real estate market were
to suffer a severe downturn, the estimate for uncollectible
accounts would need to be increased.  Loans which are deemed to
be uncollectible are charged off and deducted from
the allowance.  The provision for credit losses and recoveries
on loans previously charged off are added to the
allowance.

		Loans are considered impaired when, based on
current information, management considers it unlikely that
collection of principal and interest payments will be made
according to contractual terms.  Generally, loans are not
reviewed for impairment until the accrual of interest has been
discontinued.

	Advertising
		Advertising costs are expensed as incurred.

	Income taxes
		The provision for income taxes includes taxes
payable for the current year and deferred income taxes.
Deferred
income taxes are provided for the temporary differences between
financial and taxable income.  Tax expense and tax
benefits are allocated to the banks and company based on their
proportional share of taxable income.

	Per share data
		Earnings per common share and dividends per common
share are determined by dividing net income and
dividends by the 3,240,000 shares outstanding, giving
retroactive effect to the stock dividends distributed.

2.	Cash and Due From Banks

		The Company normally carries balances with other
banks that exceed the federally insured limit.  The average
balances carried in excess of the limit, including unsecured
federal funds sold to the same banks, were  $27,192,359 for
2000, $25,041,212 for 1999, and $26,371,278 for 1998.

		Banks are required to carry noninterest-bearing
cash reserves at specified percentages of deposit balances. The
Company's normal amount of cash on hand and on deposit with
other banks is sufficient to satisfy the reserve
requirements.









8


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


 3.	Investment Securities

		Investment securities are summarized as follows:



Amortized
Unrealized
Unrealized
Market


       cost
      gains
    losses
     value

December 31, 2000





Available for sale





  U.S. Treasury
 $  1,993,753
 $434,367
 $         -
 $  2,428,120

  Equity
     1,249,941
   374,873
            -
     1,624,814


 $  3,243,694
 $809,240
 $         -
 $  4,052,934







Held to maturity





  U.S. Treasury
 $47,422,577
 $285,916
 $  37,823
 $47,670,670

  U.S. Government agency
   18,650,177
     97,563
       1,412
   18,746,328

  State and municipal
   10,200,804
     16,051
     22,920
   10,193,935


 $76,273,558
 $399,530
 $  62,155
 $76,610,933







December 31, 1999





Available for sale





  U.S. Treasury
 $  1,993,463
 $115,297
 $         -
 $  2,108,760

  Equity
        952,467
   346,869
       6,000
     1,293,336


 $  2,945,930
 $462,166
 $    6,000
 $  3,402,096

Held to maturity





  U.S. Treasury
 $66,466,632
 $    7,153
 $386,382
 $66,087,403

  U.S. Government agency
   10,649,787
            -
   119,085
   10,530,702

  State and municipal
   12,805,516
          785
     71,893
   12,734,408


 $89,921,935
 $    7,938
 $577,360
 $89,352,513













December 31, 1998





Available for sale





  U.S. Treasury
 $  1,993,174
 $487,625
 $         -
 $  2,480,799

  Equity
        224,363
   291,975
           -
       516,338


 $  2,217,537
 $779,600
 $         -
 $  2,997,137

Held to maturity





  U.S. Treasury
 $ 64,826,398
 $504,666
 $  14,311
 $65,316,753

  U.S. Government agency
     1,000,000
          157
         469
       999,688

  State and municipal
   14,449,313
     87,156
      3,955
   14,532,514


 $ 80,275,711
 $591,979
 $  18,735
 $80,848,955

9


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


 3.	Investment Securities (Continued)

		The amortized cost and estimated market value of
debt securities, by contractual maturity and the amount of
pledged securities, follow.  Actual maturities may differ from
contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or
prepayment penalties.











     December 31, 2000
     December 31, 1999
     December 31, 1998


Amortized
Market
Amortized
Market
Amortized
Market


      cost
   value
      cost
   value
      cost
   value









Available for sale due







  After ten years
   1,993,753
   2,428,120
   1,993,463
   2,108,760
   1,993,174
   2,480,799









Held to maturity due







  In one year or less
45,333,736
45,313,048
49,004,373
48,908,330
33,406,599
33,531,104

  After one year







    through five years
  30,939,822
  31,297,885
  40,917,562
  40,444,183
  46,869,112
  47,317,851


76,273,558
76,610,933
89,921,935
89,352,513
80,275,711
80,848,955









Pledged securities
19,985,861
20,097,350
   4,592,597
   4,562,493
   5,094,242
   5,150,876

		Investments are pledged to secure deposits of
federal and local governments.  Pledged securities also serve
as
collateral for securities sold under agreements to repurchase.

 4.	Lines of Credit

		The Company has available lines of credit,
including overnight federal funds, reverse repurchase
agreements and
letters of credit, totaling $19,000,000 as of December 31,
2000, $19,000,000 as of December 31, 1999, and
$15,000,000 as of December 31, 1998.

 5.	Loans and Allowance for Credit Losses

		Major classifications of loans are as follows:



      2000
      1999
      1998






Demand and time
 $ 15,588,946
 $ 17,825,019
 $ 16,253,621

Mortgage
  148,468,890
  130,378,776
  118,837,336

Construction
      1,540,376
         824,071
      1,795,952

Installment
      5,165,742
      5,054,669
      4,950,912


  170,763,954
  154,082,535
  141,837,821

Allowance for credit losses
      2,192,755
      2,082,031
      2,080,358

Loans, net
 $168,571,199
 $152,000,504
 $139,757,463




10


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


 5.	Loans and Allowance for Credit Losses (Continued)

	The rate repricing distribution of the loan portfolio
follows:



      2000
      1999
      1998






Immediately
 $ 165,596,389
 $ 149,036,842
 $ 136,750,569

Within one year
           425,689
           302,886
           522,434

Over one to five years
        4,114,779
        4,258,632
        4,223,521

Over five years
           627,097
           484,175
           341,297


  $170,763,954
  $154,082,535
  $141,837,821

	Outstanding loan commitments and letters of credit are as
follows:


Loan commitments




  Construction and land development
 $   2,964,536
 $   9,486,899
 $   1,470,375

  Other
      3,192,350
      4,843,120
      6,012,019


 $   6,156,886
 $ 14,330,019
 $   7,482,394






Standby letters of credit




  Secured by deposits
 $   1,229,669
 $   1,380,593
 $   1,200,650

  Other
         182,883
         123,648
         187,215


 $   1,412,552
 $   1,504,241
 $   1,387,865

		Loan commitments are agreements to lend to
customers as long as there is no violation of any conditions of
the
contracts.  Loan commitments generally have interest at current
market rates, fixed expiration dates, and may require
payment of a fee.

		Letters of credit are commitments issued to
guarantee the performance of a customer to a third party.

		Loan commitments and letters of credit are made on
the same terms, including collateral, as outstanding loans.
The Company's exposure to credit loss in the event of
nonperformance by the borrower is represented by the contract
amount of the commitment.

		The Company makes loans to customers located
primarily in the Delmarva region.  Although the loan portfolio
is
diversified, its performance will be influenced by the economy
of the region.













11


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


 5.	Loans and Allowance for Credit Losses (Continued)

		Transactions in the allowance for credit losses
were as follows:



      2000
      1999
      1998






Beginning balance
 $ 2,082,031
 $ 2,080,358
 $ 2,080,798

Provision charged to operations
      174,080
          5,745
          1,175

Recoveries
          3,744
        14,823
        14,479


    2,259,855
    2,100,926
    2,096,452

Loans charged off
        67,100
        21,884
        13,105


    2,192,755
    2,079,042
    2,083,347

Change in allowance related to loan commitments
               -
         (2,989)
          2,989


 $ 2,192,755
 $ 2,082,031
 $ 2,080,358

Ending balance




		Amounts past due 90 days or more, and still
accruing interest, are as follows:



December 31,


2000
1999
1998






Demand and time
 $     39,576
 $     50,371
 $    303,500

Mortgage
      263,237
               -
      194,622

Installment
        18,296
          1,346
          6,887


 $    321,109
 $     51,717
 $    505,009

		Management has identified no impaired or nonaccrual
loans at December 31, 2000, 1999, and 1998.

 6.	Premises and Equipment

		A summary of premises and equipment and the related
depreciation is as follows:



Estimated useful life
      2000
      1999
      1998







Land

 $1,891,950
 $1,891,950
 $2,506,475

Premises
5 - 50 years
   4,645,138
   4,602,879
   4,253,722

Furniture and equipment
5 - 40 years
   3,742,681
   3,678,167
   2,875,819



 10,279,769
 10,172,996
   9,636,016

Accumulated depreciation

   4,659,291
   4,314,068
   4,105,450

Net premises and equipment

 $5,620,478
 $5,858,928
 $5,530,566







Depreciation expense

 $   436,608
 $   398,682
 $   340,304

		Real estate with an original cost of $250,000 is
pledged to secure a note payable with balances of $231,517 and
$246,413 as of December 31, 2000 and 1999, respectively.


12


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


 7.	Lease Commitments

		The Company leases the land on which the Route 50
branch is located and the branch office in South Pocomoke.
Lease obligations will require payments as follows:





Minimum


   Period

  rentals







2001

 $  28,162


2002

     28,162


2003

     15,000


2004

     15,000


2005

     15,000


Remaining years

     55,000




 $156,324

			The Route 50 lease expires August 31, 2009.

		The South Pocomoke lease provides for an increase
in rent every five years based on the consumer price index.
The lease expires January 1, 2003.  The leased branch office in
South Pocomoke has been consolidated into another
Pocomoke branch.  The current leased facilities are being used
as storage until more suitable storage is found.  All costs
associated with the properties, including real estate taxes,
are obligations of the Company.

 8.	Deposits

		Major classifications of interest-bearing deposits
are as follows:



       2000
       1999
       1998






Money market
 $  34,896,077
 $  52,985,409
 $  57,683,937

Savings and NOW
    73,967,825
    76,458,281
    66,606,783

Other time
    73,387,347
    70,130,460
    69,677,986


 $182,251,249
 $199,574,150
 $193,968,706

		Included in other time deposits are certificates of
deposit of $100,000 or more with the following maturities:



Three months or less
 $   4,423,581
 $   1,394,088
 $   3,962,747

Over three through twelve months
      6,795,644
      9,356,422
      9,453,247

Over one through five years
      3,961,211
      2,067,556
      1,181,142


 $  15,180,436
 $  12,818,066
 $  14,597,136






Interest expense
 $      680,474
 $      550,206
 $      646,110






13


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


 9.	Mortgage Obligation

		The Company purchased real estate, financing 100%
of the purchase price.  The 6% mortgage has a final maturity
of September, 2011.

		Maturities of this mortgage are as follows:




2001


 $  15,815


2002


     16,790


2003


     17,826


2004


     18,925


2005


     20,092


Remaining years


   142,069





 $231,517


10.	Securities Sold Under Agreements to Repurchase

	The Bank has repurchase agreements that are
collateralized by government agency securities owned by the
Bank.
During the year ended December 31, 2000, the following applied
to these repurchase agreements:




 $  4,557,860

Maximum month-end amount outstanding

    1,610,688

Average amount outstanding

1.45%

Average rate paid during the year



Investment securities underlying the agreements at year end

   13,988,545

  Carrying value

   14,105,150

  Estimated fair value



11.	Profit Sharing and Pension Plans

		In 1999, the Company adopted a defined contribution
profit sharing plan under Section 401(k) of the Internal
Revenue Code.  The plan covers substantially all of the
employees and allows discretionary Company contributions.
The Board of Directors approved contributions of 3% of employee
salaries and an additional matching of 50% of
employee contributions to a maximum of 6% of the employee
wages.

		The Company terminated its defined benefit pension
plan during 1999.  The plan covered substantially
	all of the employees.  Benefits were based on years of
service and the employee's average rate of earnings for the
final
five full years before retirement.  The total cost of the
pension and profit sharing plans for 2000, 1999, and 1998, were
$119,307, $155,869, and $115,840, respectively.












14


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


12.	Other Operating Expenses

		The components of other operating expenses follow:


      2000
      1999
      1998






Amortization of intangible assets
 $    62,005
 $    19,721
 $      6,064

Advertising
     132,784
     146,341
     141,736

Business and product development
       57,055
       57,649
     118,252

Courier service
       99,466
       93,968
       78,900

Deposit insurance
       35,157
       37,917
       19,499

Director fees
       72,575
       64,120
       71,170

Dues, donations, and subscriptions
     107,114
       83,105
       64,451

Donated real property
              -
     128,806
              -

Freight
       62,411
       57,879
       60,697

Liability insurance
       61,649
       64,686
       68,460

Postage
     145,325
     155,092
     154,295

Professional fees
       62,660
       61,538
       82,128

Stationery and supplies
     261,733
     309,727
     266,527

Telephone
       82,256
       82,466
       72,682

ATM fees
     123,398
     110,791
       84,720

Miscellaneous
     202,957
     173,387
     142,279


 $1,568,545
 $1,647,193
 $1,431,860

13.	Income Taxes

		The components of income tax expense, including
taxes related to the change in accounting method for
organization costs, are as follows:


      2000
      1999
      1998

Current




  Federal
 $2,674,450
 $2,369,389
 $2,218,578

  State
      327,168
      254,460
      262,981


   3,001,618
   2,623,849
   2,481,559

Deferred
      (20,599)
      (30,721)
      (40,160)


 $2,981,019
 $2,593,128
 $2,441,399

		The components of the deferred tax benefit are as
follows:


    2000
    1999
    1998






Provision for credit losses
 $   (40,495)
 $         243
 $        (400)

Pension expense
              -
      (13,973)
              -

Depreciation
        13,987
      (35,808)
        (7,511)

Discount accretion
        (1,656)
         2,795
      (12,412)

Health insurance premium deposits
              27
         8,486
         4,837

Organization costs
         7,538
         7,536
      (24,674)


 $   (20,599)
 $   (30,721)
 $   (40,160)
15


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


13.	Income Taxes (Continued)

		The components of the net deferred tax assets are
as follows:



2000
1999
1998






Deferred tax asset




  Allowance for credit losses
 $603,025
 $562,530
 $562,773

  Health insurance premium deposits
            -
           27
       8,513

  Organization costs
       9,600
     17,138
     24,674


   612,625
   579,695
   595,960






Deferred tax liabilities




  Depreciation
   182,950
   168,963
   204,771

  Pension
            -
            -
     13,973

  Discount accretion
       9,920
     11,576
       8,781

  Unrealized gain on securities available for sale
   312,528
   176,170
   301,081


   505,398
   356,709
   528,606


 $107,227
 $222,986
 $  67,354

		A reconciliation of the provision for taxes on
income from the statutory federal income tax rates to the
effective
income tax rates follows:


Statutory federal income tax rate
 34.0
%

 34.0
%

 34.0
 %

Increase (decrease) in tax rate resulting from









  Tax-exempt income
 (1.9)


 (2.0)


 (2.2)


  State income taxes net of federal income tax benefit
   2.5


   2.1


   2.4



 34.6
%

 34.1
%

 34.2
 %




















16


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


14.	Fair Value of Financial Instruments

		The estimated fair values of the Company's
financial instruments are summarized below.  The fair values of
a
significant portion of these financial instruments are
estimates derived using present value techniques prescribed by
the
FASB and may not be indicative of the net realizable or
liquidation values.  The calculation of estimated fair values
is
based on market conditions at a specific point in time and may
not reflect current or future fair values.




      December 31, 2000
        December 31, 1999
        December 31, 1998


Carrying
Fair
Carrying
Fair
Carrying
Fair


     amount
     value
     amount
     value
     amount
     value









Financial assets







  Cash and due from







   banks
 $ 13,332,279
 $ 13,479,427
 $ 18,546,576
 $ 18,660,884
 $ 12,157,944
 $ 12,284,957

  Federal funds sold
    18,167,527
    18,167,527
    15,877,383
    15,877,383
    33,337,435
    33,337,435

  Interest-bearing







   deposits
         784,000
         784,116
         983,000
         979,200
      1,228,000
      1,236,676

  Investment







   securities
    80,326,492
    80,663,867
    93,324,031
    92,754,609
    83,272,848
    83,846,092

  Loans, net
  168,571,199
  168,610,107
  152,000,504
  151,961,767
  139,757,463
  139,771,766

  Accrued interest







   receivable
      1,948,199
      1,948,199
      1,928,735
      1,928,735
      1,869,686
      1,869,686









Financial liabilities







  Noninterest-bearing







   deposits
 $ 49,674,943
 $ 49,674,943
 $ 39,151,702
 $ 39,151,702
 $ 36,648,979
 $ 36,648,979

  Interest-bearing







   deposits
  182,251,249
  182,263,290
  199,574,150
  199,607,450
  193,968,706
  194,296,343

  Mortgage obligation
         231,517
         210,648
         246,413
         246,413
                 -
                 -

  Accrued interest







   payable
         503,519
         503,519
         424,042
         424,042
         456,133
         456,133

		The fair value of silver coin included with cash is
determined based on quoted market prices.

		The fair value of interest-bearing deposits with
other financial institutions is estimated based on quoted
interest
rates for certificates of deposit with similar remaining terms.

		The fair values of equity securities are determined
using market quotations.  The fair values of debt securities
are
estimated using a matrix that considers yield to maturity,
credit quality, and marketability.






17


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


14.	Fair Value of Financial Instruments (Continued)

		The fair value of fixed-rate loans is estimated to
be the present value of scheduled payments discounted using
interest rates currently in effect for loans of the same class
and term.  The fair value of variable-rate loans, including
loans with a demand feature, is estimated to equal the carrying
amount.  The valuation of loans is adjusted for possible
loan losses.

		The fair value of interest-bearing checking,
savings, and money market deposit accounts is equal to the
carrying
amount.  The fair value of fixed-rate time deposits is
estimated based on interest rates currently offered for
deposits of
similar remaining maturities.

		It is not practicable to estimate the fair value of
outstanding loan commitments, unused lines, and letters of
credit.

15.	Related Party Transactions

		The executive officers and directors of the Company
enter into loan transactions with the Banks in the ordinary
course of business.  The terms of these transactions are
similar to the terms provided to other borrowers entering into
similar loan transactions.




    2000
    1999
    1998






Beginning balance
 $  9,231,028
 $8,641,536
 $9,466,973

Advances
     5,356,617
   3,095,000
   3,034,421


   14,587,645
 11,736,536
 12,501,394

Repayments
     3,567,151
   1,624,714
   3,836,363

Other changes
   (1,272,750)
      880,794
        23,495

Ending balance
 $12,293,244
 $9,231,028
 $8,641,536






		The Company obtains legal services from a law firm
in which one of the principal attorneys is also a member of
the Board of Directors.  Fees charged for these services are at
similar rates charged by unrelated law firms for similar
legal work.  Amounts paid to this related party totaled $1,805
and $3,746 during the years ended December 31, 2000
and 1999.

















18


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


16.	Capital Standards

		The Federal Reserve Board and the Federal Deposit
Insurance Corporation have adopted risk-based capital
standards for banking organizations.  These standards require
ratios of capital to assets for minimum capital adequacy
and to be classified as well capitalized under prompt
corrective action provisions.  The capital ratios and minimum
capital requirements of the Company are as follows:






Minimum

To be well




Actual

capital adequacy

capitalized



(in thousands)
Amount
Ratio

Amount
Ratio

Amount
Ratio















           December 31, 2000











Total capital











  (to risk weighted assets)
 $ 54,451
36.6%

 $ 11,897
8.0%

 $ 14,871
10.0%



Tier 1 capital











  (to risk-weighted assets)
 $ 52,588
35.4%

 $   5,948
4.0%

 $   8,923
6.0%



Tier 1 capital











  (to average fourth quarter assets)
 $ 52,588
18.2%

 $ 11,806
4.0%

 $ 14,757
5.0%















           December 31, 1999











Total capital











  (to risk weighted assets)
 $ 50,589
38.4%

 $ 10,520
8.0%

 $ 13,150
10.0%



Tier 1 capital











  (to risk-weighted assets)
 $ 48,940
37.1%

 $   5,260
4.0%

 $   7,890
6.0%



Tier 1 capital











  (to average fourth quarter assets)
 $ 48,940
17.5%

 $ 11,691
4.0%

 $ 14,614
5.0%















           December 31, 1998











Total capital











  (to risk weighted assets)
 $ 47,413
38.4%

 $   9,873
8.0%

 $ 12,342
10.0%



Tier 1 capital











  (to risk-weighted assets)
 $ 45,864
37.2%

 $   4,937
4.0%

 $   7,405
6.0%



Tier 1 capital











  (to average fourth quarter assets)
 $ 45,864
17.5%

 $ 10,513
4.0%

 $ 13,142
5.0%



		Tier 1 capital consists of capital stock,
additional paid in capital, and retained earnings.  Total
capital includes a
limited amount of the allowance for credit losses.  In
calculating risk-weighted assets, specific risk percentages are
applied to each category of asset and off-balance sheet items.

		Failure to meet the capital requirements could
affect the Company's ability to pay dividends and accept
deposits,
and may significantly affect the operations of the Company.

		In the most recent regulatory report, the Company
was determined to be well capitalized.  Management has no
plans which should change the classification of the capital
adequacy.
19


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements

17.	Parent Company Financial Information


December 31,

Balance Sheets
      2000
      1999
      1998

Assets

Cash and due from banks
 $         9,110
 $     151,751
 $       57,056

Interest-bearing deposits
          75,505
        100,000
        500,000

Securities available for sale
     1,624,814
     1,293,336
        516,338

Investment in subsidiary banks
   49,806,120
   46,061,690
   43,609,263

Premises and equipment
     1,609,939
     1,639,139
     1,668,338

Other assets
          22,445
          18,241
            8,721

          Total assets
 $ 53,147,933
 $ 49,264,157
 $ 46,359,716






Liabilities and Stockholders' Equity

Liabilities




  Deferred income taxes
 $       62,724
 $       43,823
 $       16,517

Stockholders' equity




  Common stock
     3,240,000
     1,620,000
     1,620,000

  Additional paid-in capital
   17,290,000
   17,290,000
   17,290,000

  Retained earnings
   32,058,498
   30,030,340
   26,954,680

  Accumulated other comprehensive income
        496,711
        279,994
        478,519

          Total stockholders' equity
   53,085,209
   49,220,334
   46,343,199

          Total liabilities and stockholders' equity
 $ 53,147,933
 $ 49,264,157
 $ 46,359,716







Years Ended December 31,

Statements of Income
      2000
      1999
      1998






Interest revenue
 $         3,690
 $       10,240
 $       33,467

Dividend revenue
          25,676
          19,264
          15,890

Dividends from subsidiaries
     2,076,400
     2,344,000
     1,803,000

Equity in undistributed income of subsidiaries
     3,548,585
     2,680,964
     2,906,079

Rental income
            2,700
            2,925
            2,700


     5,657,051
     5,057,393
     4,761,136

Expenses




  Occupancy
          24,898
          31,570
            8,027

  Furniture and equipment
            1,904
            3,423
            2,280

  Other
          15,168
          12,418
          65,760


          41,970
          47,411
          76,067

Income before income taxes
     5,615,081
     5,009,982
     4,685,069

Income taxes (benefit)
          (9,477)
          (9,678)
        (11,945)

Net income
 $  5,624,558
 $  5,019,660
 $  4,697,014
20


Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements

17.	Parent Company Financial Information (Continued)



Years Ended December 31,


      2000
      1999
      1998

Statements of Cash Flows




Cash flows from operating activities




  Interest and dividends received
 $  2,105,906
 $  2,375,011
 $  1,852,499

  Rental payments received
           2,700
           2,925
           2,700

  Cash paid for operating expenses
        (19,969)
        (18,211)
        (35,660)

  Income taxes refunded
          18,101
           7,074
              808


     2,106,738
     2,366,799
     1,820,347

Cash flows from investing activities




  Organization costs reimbursed
                -
                -
          58,912

  Purchase of premises and equipment
                -
                -
      (800,637)

  Purchase of equity securities
      (297,474)
      (728,104)
      (224,363)

  Redemption of certificate of deposit
        100,000
        400,000
                -


      (197,474)
      (328,104)
      (966,088)

Cash flows from financing activities




  Dividends paid
    (1,976,400)
    (1,944,000)
    (1,053,000)

Net increase (decrease) in cash
        (67,136)
          94,695
      (198,741)






Cash at beginning of year
        151,751
          57,056
        255,797

Cash at end of year
 $       84,615
 $     151,751
 $       57,056











Reconciliation of net income to net cash




   provided by operating activities




    Net income
 $  5,624,558
 $  5,019,660
 $  4,697,014

    Adjustments to reconcile net income to net




       cash used in operating activities




        Undistributed net income of subsidiary
    (3,548,585)
    (2,680,964)
    (2,906,079)

        Amortization and depreciation
          29,200
          29,200
          38,320

        Increase (decrease) in deferred income taxes




          and other liabilities
           5,769
           8,423
          (2,784)

        Decrease (increase) in other assets
          (4,204)
          (9,520)
          (6,124)


 $  2,106,738
 $  2,366,799
 $  1,820,347









21
Calvin B. Taylor Bankshares, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements


18.	Quarterly Results of Operations (Unaudited)

















Three months ended



December 31,

September 30,

June 30,


March 31,














2000












Interest revenue

 $5,059,947


 $5,056,443


 $4,678,198


 $4,645,448

Interest expense

  1,527,302


  1,498,739


  1,400,906


  1,433,084

Net interest income

  3,532,645


  3,557,704


  3,277,292


  3,212,364

Provision for credit losses

       68,000


       23,000


       41,000


       42,080

Net income

  1,438,189


  1,583,917


  1,306,325


  1,296,127

Comprehensive income

  1,502,283


  1,665,605


  1,308,822


  1,364,565

Earnings per share

 $0.44


 $0.49


 $0.40


 $0.40



























1999












Interest revenue

 $4,607,224


 $4,669,910


 $4,410,901


 $4,311,541

Interest expense

  1,439,769


  1,439,279


  1,407,424


  1,492,286

Net interest income

  3,167,455


  3,230,631


  3,003,477


  2,819,255

Provision for credit losses

       (7,980)


         8,670


         4,355


            700

Net income

  1,273,784


  1,402,034


  1,299,830


  1,044,012

Comprehensive income

  1,611,696


  1,200,713


  1,111,686


     897,040

Earnings per share

 $0.39


 $0.43


 $0.40


 $0.32



























1998












Interest revenue

 $4,543,201


 $4,622,908


 $4,371,535


 $4,317,531

Interest expense

  1,624,594


  1,660,900


  1,520,731


  1,495,239

Net interest income

  2,918,607


  2,962,008


  2,850,804


  2,822,292

Provision for credit losses

              -


         1,175


              -


              -

Net income

  1,117,550


  1,292,315


  1,133,473


  1,153,676

Comprehensive income

  1,057,343


  1,424,048


  1,187,829


  1,149,962

Earnings per share

 $0.34


 $0.40


 $0.35


 $0.36












22


























































This statement has not been reviewed, or confirmed for accuracy
or relevance,
by the Federal Deposit Insurance Corporation.

23







21