SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
Form 10-KSB
(Mark One)
	x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934 
		[FEE REQUIRED]
For the fiscal year ended December 31, 1996
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.         [     ]
State small business issuer's revenues for its 
most recent fiscal year:  $17,611,734.
The aggregate market value of the Common Stock 
held by non-affiliates of the small business 
issuer on December 31, 1996, 
was $50,422,500.  This calculation is based upon 
an estimation by the Company's Board of Directors 
of fair market value of the Common Stock of $62.25 
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 March 4, 1997, 810,000 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, 1996, 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 7, 1997, is incorporated by reference 
in this Form 10-KSB in Part III, Item 9, Item 10, 
Item 11, and Item 12.
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 Bank is a commercial bank incorporated under 
the laws of the State of Maryland on December 17, 
1907.  The Bank operates 10 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 Company has acquired 
land for future Bank expansion but engaged in no 
other business excluding the operation of the 
Bank.
	The Company's holding company structure 
can assist the Bank in maintaining its 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 Bank 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 Bank may not do.  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 loans 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 Bank's 
marketing area 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 Bank conducts a general commercial 
banking industry in its primary service area, 
emphasizing the banking needs of individuals and 
small- to medium-sized businesses and professional 
concerns.  The Bank operates from ten branches 
located throughout Worcester County, Maryland.  
The Bank draws most of its customer deposits and 
conducts most of its lending transactions from 
within its primary service area which encompasses 
Worcester County, Maryland and neighboring 
counties.
	Worcester County is located along the 
shores of the Atlantic Ocean and has experienced 
growth in population in recent years.  The area is 
growing as both a resort and retirement community.
	The principal components of the economy of 
Worcester County are tourism and agriculture.  
Berlin has a strong 
component of health-care related businesses.  The 
tourist businesses of Ocean City, Maryland, with 
health-care facilities in Berlin, Maryland 
(including Berlin Nursing Home and Atlantic 
General Hospital) are the largest employers in the 
County.
Banking Services
The Bank offers 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 Bank's 
principal market area at rates competitive to 
those offered in the area.  In addition, the Bank 
offers 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 
Bank solicits these accounts from individuals, 
businesses, associations and organizations, and 
governmental authorities.
The Bank 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 Bank 
also originates mortgage loans 
and real 
estate construction and acquisition loans.  The 
Bank's lending activities are subject to a variety 
of lending limits imposed by state and federal 
law.  The Bank may not make any loans to any 
director, officer, or employee of the Bank (except 
for commercial loans 


to directors who are not officers or employees) 
unless the loan is approved by the Board of 
Directors of the Bank.  Any such 
loans must be reviewed every six months by the 
Board of Directors.
	Other bank services include cash 
management services, safe deposit boxes, travelers 
checks, direct deposit of payroll and social 
security checks, and automatic drafts for various 
accounts.  The Bank is associated with the MAC 
network of automated teller machines that may be 
used by Bank customers throughout Maryland and 
other regions.  The Bank also offers credit card 
services through a correspondent bank as an agent 
for the Bank.
Competition
	The Bank faces strong competition in all 
areas of its operations.  The competition comes 
from entities operating in Worcester County 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 Worcester County, 
Maryland.  The Bank competes for deposits with 
money 


market mutual funds and corporate and government 
securities.  The Bank competes with the same 
banking entities for loans, 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.
At December 31, 1996, there were eight other 
commercial banks and two savings banks operating 
in Worcester County, 
together accounting for 31 banking offices.
Employees
As of December 31, 1996, the Bank had 89 full-time 
employees and 4 part-time employees.  The 
Company's operations 
are conducted through the Bank.  Consequently, the 
Company does not have separate employees.  None of 
the employees of the 


Bank are represented by any collective bargaining 
unit.  The Bank considers its relations with its 
employees to be good.
SUPERVISION AND REGULATION
	The Company and the Bank 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 Bank.  
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.  


The banking industry is also likely to change 
significantly as a result of the passage of the 
Riegle-Neal Interstate Banking and Branching 
Efficiency Act of 1994 (the "Interstate Banking 
Act").  The operations of the Company and the Bank 
may be affected by legislative changes and the 
policies of various regulatory authorities.  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 Bank, 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 Bank's 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, nonbanking 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 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 the Bank and to 
commit resources to support the Bank 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 Bank 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 Bank
	General.  The Bank operates as a state 
nonmember banking association incorporated under 
the laws of the State of Maryland and is subject 
to examination by the FDIC and the Commissioner.  
Deposits in the Bank are insured by the FDIC up to 
a maximum amount (generally $100,000 per 
depositor, subject to aggregation rules).  The 
Commissioner and FDIC regulate or 
monitor all areas of the Bank's 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 Bank 
to maintain certain capital ratios and imposes 
limitations on the Bank's aggregate investment in 
real estate, bank premises, and furniture and 
fixtures.  The Bank is required by the FDIC and 
the Commissioner to prepare quarterly reports on 
the Bank's 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.
	Transactions With Affiliates and Insiders.  
The Bank is 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 Bank is 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 non-affiliate 
companies.  The Bank is 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 Bank 
may open branches state-wide, 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 for acquiring 
banking organizations in their states to banking 
organizations in Maryland, 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.  The Company is investigating 
opening a new Bank in the State of Delaware.  
Should this occur, the new bank will be subject to 
the laws of the State of Delaware.
	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 Bank received a 


satisfactory rating in its most recent evaluation.
	Other Regulations.  Interest and certain 
other charges collected or contracted for by the 
Bank are subject to state usury laws and certain 
federal laws concerning interest rates.  The 
Bank's 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 factors 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 Bank 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.  Due to the 
high rate of failures in recent years, the fees 
that commercial banks and thrifts pay to BIF and 
SAIF have increased.  Since 1993, insured 
depository institutions like the Bank have paid 
for deposit insurance under a risk-based premium 
system.  Under this system, until mid-1995 a 
depository institution paid to BIF or SAIF from 
$.23 to $.31 per $100 of insured deposits 
depending on its capital levels and risk profile, 
as determined by its primary federal regulator on 
a semi-annual basis.  Once the BIF reached its 
legally mandated reserve ratio in mid1995, the 
FDIC lowered premiums for well-capitalized banks 
to $.04 per $100.  Subsequently, the FDIC revised 
the range of 
premiums from $.00 to $.31 per $100.
	The assessment rate for the Bank is 
currently $1,000 for each six-month period.  This 
assessment is subject to change.  Any increase in 
deposit insurance premiums for the Bank will 
increase the Bank's cost of funds, and there can 
be no assurance that such costs can be passed on 
to the Bank's customers.
Dividends
The principal source of the Company's cash 
revenues comes from dividends received from the 
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 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 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.  If dividends should be declared in 
the future, the amount of such dividends 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 riskbased 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, 1996, the Company and the Bank were qualified 
as "well 
capitalized."  See "Item 6. Management's 
Discussion and Analysis or Plan of Operation - 
Capital."
Item 2. Description of Property
	The Company has a main office and nine 
branch locations, all of which are owned by the 
Company. The locations are 
described as follows:
OFFICE		LOCATION                                        
Square Footage
Main Office	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
Downtown Pocomoke Office	144 Market Street, 
Pocomoke, Maryland 21851      3,240
South Pocomoke Office	121 Ames Plaza 
Pocomoke, Maryland 21851          1,715


Snow Hill Office	        108 West 
Market Street, Snow Hill, Maryland 21863  3,773
	The Main Office is the centralized 
location for all nine branches; that is to say 
that all proof and bookkeeping is performed there. 
	Each branch has a manager that also serves 
as its loan officer as well, with the exception of 
the East Berlin Office which does not have a loan 
officer. All ten offices participate in normal 
day-to-day banking operations.
Five offices offer Automated Teller Machines; 
these being the 20th Street, Ocean Pines, Mid-
Ocean City, West 
Ocean City, and South Pocomoke Offices.
Item 3. Legal Proceedings
	There are no material pending legal 
proceedings to which the Company or the Bank 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 1996.
PART II
Item 5. Market for Common Equity and Related 
Stockholder Matters
	In response to this Item, the information 
included on page 15 of the Company's Annual Report 
to Shareholders for the year ended December 31, 
1996 is incorporated herein by reference.
Item 6. Management's Discussion and Analysis or 
Plan of Operation
In response to this Item, the information included 
on pages 2 through 14 of the Company's Annual 
Report to 
Shareholders for the year ended December 31, 1996 
is incorporated herein by reference.
Item 7. Financial Statements
In response to this Item, the information included 
on pages 16 through 39 of the Company's Annual 
Report to 
Shareholders for the year ended December 31, 1996 
is incorporated herein by reference.
Item 8. Changes in and Disagreements with 
Accountants on Accounting and Financial 
Disclosures
	Not applicable.
PART III
Item 9. Directors and Executive Officers; 
Compliance with Section 16(a) of the Exchange Act
	Section 16(a) of the Securities Exchange 
Act of 1934 requires (i) the Company's Directors 
and Executive Officers and (ii) persons who own 
more than 10% of a registered class of the 
Company's equity securities to file with the 
Securities and Exchange Commission (the "SEC"), 
within certain specified time periods, reports of 
ownership and changes in ownership. 
Such Officers, Directors, and Shareholders are 
required by the SEC regulations to furnish the 
Company with copies of all such reports that they 
file.
Item 10. Executive Compensation 
	The table below presents a summary of the 
compensation for the last three fiscal years of  
Mr. Reese F. Cropper, Jr., Chief Executive Officer 
and President of the Company and Bank, and Mr. 
James R. Bergey, Sr., Senior Vice President and 
Secretary of the Company and Bank.  No other 
executive officers of the Company and Bank 
received an annual salary and 


bonus which exceeded $100,000 during any of the 
past three fiscal years.
Annual Compensation
			All Other Name and Principal Position	Year       Salary               Bonus
	Compensation(1)
Reese F. Cropper, Jr. - President       1996    
$142,509                $5,720   $3,153
and Chief Executive Officer     
		1995      115,623               
$4,818	  2,299


		1994      104,832                 
4,368	  1,485
James R. Bergey, Sr., Senior
Vice President and Secretary	1996    $102,959                
$4,136	$1,411
		1995        93,640                
3,760	  1,432
		1994        87,730                
3,520	  1,257
(1) Represents benefits paid by the bank in 
connection with the use of an automobile.



Item 11. Security Ownership of Certain Beneficial 
Owners and Management
In response to this item, the information included 
on pages X through X of the Company's Proxy 
Statement for the 
Annual Meeting of Shareholders to be held May 7, 
1997 is incorporated herein by reference.
The following table sets forth the number and 
percentage of outstanding shares of the Company's 
Common Stock beneficially owned at the record date 
by (a) each Executive Officer of the Company, (b) 
each Director of the Company, (c) all Directors 
and Executive Officers of the Company as a group, 
and (d) each person or entity known to the Company 
to own more than five percent of the outstanding 
Common Stock.
		Shares of Common 
Stock Beneficially Owned by Directors
Name and Address	Relationship to 
Company Number          Percent(1)
James R. Bergey, Jr.		Director	1800            .2%
6213 South Point Road


Berlin, Maryland 21811
James R. Bergey, Sr.	Director, Vice 
President 
100 20th Street	       and 
Secretary	7360            .9%
Ocean City, Maryland 21842
Name and Address	Relationship to 
Company Number          Percent(1)
Richard L. Bunting		Director	  100           .01%
1911 Buck Harbor Road


Pocomoke, Maryland 21851
John H. Burbage, Jr.		Director	11,230          1.38%
7 Main Street
Berlin, Maryland 21811
Reese F. Cropper, Jr.	Director, President 
and
9620 Ocean View Lane	Chief Executive 
Officer	24,856          3.06%
Ocean City, Maryland 21842
Hale Harrison		Director	10,834          1.33%
1552 Teal Drive
Ocean City, Maryland 21842
Gerald T. Mason	Director                  
100	        .01%
Scotty Road
Pocomoke, Maryland 21851
Joseph E. Moore	Director                  
856	        .10%
319 South Main Street
Berlin, Maryland 21811
Horace D. Quillin, Sr.		Director	22,854          2.82%
100 Quillin Drive


Berlin, Maryland 21811
Michael L. Quillin, Sr.		Director	 8,000          .98%
P.O. Box 2
Ocean City, Maryland 21842
Hugh F. Wilde, Sr.		Director	46,752          5.77%
P.O. Box 540
Ocean City, Maryland 21842
	Shares of Common Stock Beneficially Owned 
by Executive Officers and Major Shareholders


Name and Address                Relationship to 
Company Number          Percent(1)
William H. Mitchell                     Treasurer                 
228           .02% 8230 Donaway Road


Whaleyville, Maryland 21872
Stamp & Co.		                       None                    
64,676          7.98%
c/o NationsBank Trust Co.
Income Collections, P.O. Box 96572
Washington, D.C.    20090
Mary E. Humphreys                       None                    
49,086          6.06%
6 Baker Street
Berlin, Maryland   21811
______________________
(1)	Based on 810,000 shares of Common Stock 
outstanding.
Item 12. Certain Relationships and Related 
Transactions
	In response to this item, the information 
included on page 7 of the Company's Proxy 
Statement for the Annual Meeting of Shareholders 
to be held May 7, 1997 is incorporated herein by 
reference.
	The Bank is legally represented by and 
engages Williams, Hammond, Moore, Shockley, and 
Harrison, P.A., of which Director of the Company, 
Joseph E. Moore, is a Partner. The total amount of 
legal fees for both the Company and Bank in 1996, 
as engaged by Mr. Moore, and/or his legal firm, 
was $2,183.
Management believes that the terms of all of the 
above-described transactions are at least as 
favorable to the 
Company and the Bank as could have been obtained 
in negotiating transactions with independent third 
parties.
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, 1996.
	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, 
1996.



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.


			Executive Vice President
Date:				By:                                                            
			Richard L. Bunting
			Director
Date:				By:                                                            
			John H. Burbage, Jr.
			Director
Date:				By:                                                            
			Reese F. Cropper, Jr.
			President and Chief 
Executive Officer
Date:				By:                                                            
			Hale Harrison
			Director
Date:				By:                                                            
			Gerald T. Mason
			Director
Date:				By:                                                            
			Joseph E. Moore
			Director
Date:				By:                                                            
			Horace D. Quillin, Sr.
			Director

Date:	        By:                                                            
	Michael L. Quillin
	Director
Date:	        By:                                                            
	Hugh F. Wilde, Sr.
	Director
EXHIBIT 13
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 1996



Calvin B. Taylor Bankshares, Inc.
1996 Annual Report
Calvin B. Taylor Banking Company
BUSINESS OF THE COMPANY
	Calvin B. Taylor Bankshares, Inc. (the 
"Company") was incorporated as a Maryland 
corporation on October 31, 1995, to become a one-
bank holding company by acquiring all of the 
capital stock of Calvin B. Taylor Banking Company 
(the "Bank").  The Bank was incorporated under the 
laws of the State of Maryland on December 17, 
1907. The Bank was organized as a nonmember state 
bank under the laws of the State of Maryland. The 
Bank is engaged in a general commercial banking 
business, emphasizing in its marketing the Bank's 
local management and ownership, from its main 
office location in its primary service area of 
Worcester County and its neighboring counties.  
The Bank offers 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 Bank offers certain 
retirement account services, such as Individual 
Retirement Accounts.  The Bank also offers a full 
range of short- to medium-term commercial and 
personal loans.  The Bank also originates and 
holds or sells into the secondary market fixed and 
variable rate mortgage loans and real estate 
construction and acquisition loans.  Other bank 
services include cash management services, safe 
deposit boxes, travelers checks, direct deposit of 
payroll and social security checks, 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 Bank.  
The 1996 net income was $4,535,641, compared to 
$4,119,915 for 1995.  The Company continued its 
history of above average earnings with a return on 
equity of 11.67% and return on assets of 1.87% for 
1996 compared to returns of 12.75% and 1.80% for 
1995.
Results of Operations
	The Company reported net income of 
$4,535,641, or $5.60 per share, for the year ended 
December 31, 1996, which was 
an increase of $415,726, or 10.09%, over the net 
income of $4,119,915 or $5.09 per share, for the 
year ended December 31, 1995.  The primary reason 
for the change in profitability is the increase in 
net interest income.
	Net interest income increased $572,470, or 
5.64%, to $10,727,018 in 1996 from $10,154,548 in 
1995.  This increase in net interest income was 
the result of an $885,869 increase in interest 
revenue and a $313,399 increase in interest 
expense.  The yield on interest-earning assets 
decreased from 7.54%  in 1995 to 7.53% in 1996 
while the combined yield on deposits and borrowed 
funds increased to 3.01% from 3.00% for the same 
period.  Net interest income increased primarily 
because the 


balance of interest-earning assets grew faster 
than the balance of deposits and borrowed funds.
	The provision for loan losses was $193,000 
in 1996, a decrease of $133,000 from the $60,000 
provision in 1995.  The increased provision is the 
result of net charge-offs for 1996 and a 
$12,921,506 growth in outstanding loans.   During 
1996, the Company had net charge-offs of $11,516 
which was .01% of average loans while during 1995 
there were net recoveries of $306.
	Both noninterest income and noninterest 
expense changed by less than 5.00% during 1996 
compared to 1995.  
Discussion of these items is presented later under 
their respective headings.
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.  The table "Average Balances, 
Income and Expenses, and Rates" which follows 
shows the Company's 
average volume of interest-earning assets and 
interest-bearing liabilities for 1996 and 1995 and 
related income/expense and yields.  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 table "Analysis of Changes 
in Net Interest Income" shows the amount of net 
interest income change from rate changes and from 
activity changes.
The key performance measure for net interest 
income is the "net margin on interest-bearing 
assets," or net interest 
income divided by average interest-earning assets.  
The Company's net interest margin for both 1996 
and 1995 was 4.84%.  Because  most of the loans of 
the Bank are written with a demand feature, the 
income of the Bank 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.



Analysis of Changes 
in Net Interest 
Income
Year Ended December 
31,
1996 Compared with 
1995
Variance Due To          
Year Ended December 
31,
1995 Compared with 
1994
Variance Due To          
		Total     
		Rate	 
 Volume  
		Total     
		Rate	 
 Volume  
Earning Assets
	Interest-bearing 
deposits
$(19,813)
$	   4,324  
$	(24,137)
$	 20,815  
$	  18,601  


$	    2,214  
	Federal funds 
sold
142,948  
(86,922)
229,870  
(52,714)
319,661  
(372,375)
	Investment 
Securities:
		U.S. Treasury
(51,095)
61,263  
(112,358)
404,522  
312,868  
91,654  
		State and 
municipal
157,715  
(1,466)
159,181  
125,639  
50,811  
74,828  
		Other
4,905  
3,683  
1,222  
286  
(721)
1,007  
	Loans:
		Demand and 
time
198,482
3,412  
195,070  
(42,139)
(15,801)
(26,338)
		Mortgage
528,199  
(10,752)
538,951  
574,490  
2,367  
572,123  
			Installment
 (18,433)
				4,753  
		(23,186)
					5,240  
		(24,529)
			29,769  
Total interest 
revenue
 942,908  
	(21,705)
		964,613  
 1,036,139  
			663,257  
	372,882  
Interest-Bearing 
Liabilities
	Savings and NOW 
deposits
(62,047)
(105,360)
43,313  
1,881  
8,537  
(6,656)
	Money market 
and supernow
(99,684)
(65,391)
(34,293)
(154,308)
(6,505)
(147,803)
	Other time 
deposits
477,137  
125,456  
351,681  
824,249  
766,208  
58,041  
	Other borrowed 
funds
		(2,007)
				(162)
		(1,845)
			(2,038)
						(173)
			(1,865)
				Total 
interest expense
 313,399  
 (45,457)
 358,856  
	669,784  
			768,067  
	(98,283)
Net interest 
income
$629,509  
$ 23,752  
$605,757  
$ 366,355  
$(104,810)
$ 471,165  


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 
loan losses, were $143,386,008 and $135,008,463 
during 1996 and 1995, respectively, which 
constituted 63.19% and 63.07% of average interest-
earning assets for the periods.  At December 31, 
1996, the Company's loan to deposit ratio was 
72.96% compared to 67.21% at December 31, 1995, 
while the 1996 average loans to average deposits 
were 70.78%.  The Bank extends loans primarily to 
customers located in and near Worcester County.  
There are no industry concentrations in the Bank's 
loan portfolio.  The Bank 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, 1996 and 1995, respectively.
Composition of Loan Portfolio
			December 31,	                  
							1996	                           1995                      
					Percent		     Percent  
				Amount		       of 
Total	          Amount     of  Total
Commercial	$  16,481,935   10.91%  $  
13,701,63    1       9.92%


Real estate	127,381,520     84.30%          
118,210,875     85.55%
Construction    2,277,132		1.51%	       
1,018,052       0.74%
Consumer			4,959,548	   3.28%	          5,248,071      3.79%
		Total Loans	151,100,135     100.00%	     138,178,629     100.00%
Less allowance for credit losses		    
2,040,475	                  1,858,991
		Net Loans	$149,059,660	               
$136,319,638
	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, 1996.
Loan Maturity Schedule and Sensitivity to Changes 
in Interest Rates
								December 31, 1996                            
					Over one
			One Year	    through 
Over five
						or less          
five years         years                Total
Commercial	$  16,481,935   $               
-       $            -  $  16,481,935
Real estate	127,381,520     -       -       
127,381,520


Construction    2,277,132	 -	-       
2,277,132
Consumer		  487,457         
3,911,648        560,443            4,959,548
	Total	           $146,628,044	$3,911,648      
$560,443        $151,100,135
Fixed interest rate     $	487,457  $3,911,648      
$560,443        $    4,959,548


Variable interest rate (or demand)	  
146,140,587                   -                    
-  146,140,587
			Total      $146,628,044	$3,911,648      
$560,443        $151,100,135
		As of December 31, 1996, $146,140,587, or 
96.72%, 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, 1996 and 1995, respectively.
				1996	               
1995      
Construction loans	 $  6,948,259    
$4,344,065


Other loan commitments	 4,500,515       
2,190,300
Standby letters of credit		    
1,162,117        457,755 
	Total	           $12,610,891	$6,992,120
		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.  Management 
is not aware of any accounting loss the Company 
will incur by the funding of these commitments.
Loan Quality
		The allowance for loan losses represents a 
reserve for potential losses in the loan 
portfolio.  The adequacy of the allowance for loan 
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 loan 
loss or that additional increases in the loan loss 
allowance will not be required.
		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 loan 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. Although 
the Bank 


has a history of low loan charge-offs, its current 
policy is to maintain an allowance of 
approximately 1.35% of gross loans unless 
management's evaluation of the risk associated 
with each loan indicates that allowance should be 
higher.  This allowance may be increased for 
reserves for specific loans identified as 
substandard during management's loan review.
The table "Allocation of Allowance for Loan 
Losses" which follows shows the specific allowance 
applied by loan 
type and also the general allowance included in 
the December 31, 1996 and 1995, allowance for loan 
losses.


				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, 
1996 and 1995, the allowance for loan losses was 
1.35% of outstanding loans.
Allocation of Allowance for Loan Losses
										1996                                                
1995                 
								Percent of Loan                 
Percent of Loan
							Amount		to Total 
Loans          Amount          to Total Loans
Commercial	$    191,819		10.91%  $    
142,575    9.92%
Real estate	665,194		84.30%  726,172 
85.55%


Construction	9,109		
	1.51%	4,072   0.74%
Consumer	159,296	
	3.28%	166,330 3.79%
Commitments	57,244	
	N/A	32,672  N/A   


General      957,813			   N/A		         
787,170          N/A   
			Total	$2,040,475		100.00% 
$1,858,991      100.00%
Allowance for Loan Losses
						1996			  1995     
Balance at beginning of year	$1,858,991      
$1,798,685
Loan losses:
	Commercial	196		-


	Mortgage	4,694   -
	Consumer			18,105         
25,680
		Total loan losses			22,995		   25,680
Recoveries on loans previously 
charged off Commercial	425		14,101


	Consumer		 11,054	       11,885
		Total loan recoveries	       11,479          
25,986
Net loan losses 11,516  (306)
Provision for loan losses charged to expense         
193,000           60,000 Balance at end of year  
$2,040,475	$1,858,991


Allowance for loan losses to loans outstanding
	at end of year        1.35%                   
1.35%
Net charge-offs to average loans        0.01%                   
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 which 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 nonperforming loans totaling 
$67,194 and $107,042 as of December 31, 1996 and 
1995, respectively.  
Where real estate acquired by foreclosure and held 
for sale is included with nonperforming loans, the 
result comprises nonperforming assets.  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, 
1996.
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 46.19% of 
average deposits for 1996, compared to 46.08% for 
1995.
		Interest rate sensitivity may be 
controlled on either side of the balance sheet.  
On the asset side, management can 
exercise some control on maturities.  Also, loans 
may be structured with rate floors and ceilings on 
variable rate notes and by providing for 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 
can be restructured so as to offer incentives to 
attain the maturity distribution desired.  
Competitive factors sometimes make control over 
deposits more difficult and less effective.
		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.
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 interest rate sensitivity position at 
December 31, 1996, is presented in the table 
"Interest Sensitivity Analysis." 


The difference between rate-sensitive assets and 
rate-sensitive liabilities, or the interest rate 
sensitivity gap, is shown at the bottom of the 
table.  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
					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	$  14,000,000	$                
-	$                 - $                - $  
14,000,000
	Investment securities 10,410,914	19,407,388      
33,027,340      2,125,000 64,970,642


	Loans   122,585,954	  24,042,090	    
3,911,648         560,443     151,100,135
Total earning assets	$146,996,868	$43,449,478     
$36,938,988     $ 2,685,443 $230,070,777
Liabilities
Interest-bearing liabilities:
	Money market and NOW  $   76,342,918  $                
-	$                - $                - $  
76,342,918
	Savings deposits	31,441,290	-       -       
-	31,441,290
	Certificates $100,000 
			and over	2,244,402       6,110,871       
1,049,940	-       9,405,213
	Certificates under 
			$100,000	    16,849,395    29,158,635        
9,262,885	                  -     55,270,915
Total interest-bearing 
			liabilities	$126,878,005	$35,269,506     
$10,312,825     $                - $172,460,336
Period gap	$  20,118,863   $  8,179,972    
$26,626,163	$  2,685,443    $  57,610,441
Cumulative gap  $  20,118,863   $28,298,835     
$54,924,998	$57,610,441     $  57,610,441
Ratio of cumulative gap to 
		total earning assets         8.74%	12.30%  
23.87%  25.04%  25.04%
					The table "Investment Securities 
Maturity Distribution and Yields" shows that as of 
December 31, 1996, $29,582,902 of the investment 
portfolio matures in one year or less.  The 
balance of the debt securities mature within five 
years except for the only debt security classified 
as "available-for-sale. The funds invested in 
Federal funds sold provide liquidity so that only 
debt securities with an original maturity in 
excess of ten years have 


been 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, 1996, was 
$15,000,000.

Investment Securities Maturity Distribution and 
Yields
						1996				             1995                   
					Year-end			               
Year-end
					tax equivalent		               
tax equivalent
				Book value    yields  
Book value      yields
U.S. Treasury securities
	One year or less      $21,739,065	5.56%
	$33,351,544	5.77%
	Over one through five years	25,452,039
	6.12%   8,486,937	6.24%
	Over ten years	 2,125,000	7.29%		  
3,307,016	7.18%
Total U.S. Treasury securities   49,316,104
	5.92%    45,145,497	5.96%
State, county, and municipal securities
	One year or less      7,843,837	5.75%
	3,628,733	5.90%
	Over one through five years	7,575,301
	6.14%   6,590,626	6.14%
		Over five through ten years				-	-%	    108,518 6.49%


Total state, county, and municipal securities	
	15,419,138	5.94%	10,327,877 6.06%
Total investment securities
	One year or less      29,582,902	5.61%
	36,980,277	5.79%
	Over one through five years	33,027,340
	6.12%   15,077,563	6.20%
	Over five through ten years	-       -%
	108,518 6.49%
		Over ten years	 2,125,000	7.29%		  
3,307,016	7.18%


Total debt securities    64,735,242	5.92%		55,473,374	5.98%
Equity securities	    235,400	8.33%		     251,900	7.58%
Total securities        $64,970,642	5.93%	$55,725,274	5.99%
Deposits and Other Interest-Bearing 
Liabilities


			Average interest-bearing 
liabilities increased $7,462,079, or 4.61%, to 
$169,210,284 in 1996, from $161,748,205 in 1995.  
Average interest-bearing deposits increased 
$7,525,474, or 4.66%, to $169,074,400 in 1996, 
from $161,548,926 in 1995 while average demand 
deposits increased $2,809,820, or 9.16% from 
$30,689,319 in 1995 to $33,499,139 in 1996. At 
December 31, 1996, the Bank saw a shift in 
deposits from noninterest-bearing demand deposits 
to all categories of interest-bearing deposits. At 
December 31, 1996, total deposits were 
$204,297,806, compared to $202,840,088 at December 
31, 1995, an increase of  0.72% while demand 
deposits decreased 22.23% from $40,938,084 to 
$31,837,470 during the same period.



		The following table sets forth the 
deposits of the Company by category as of December 
31, 1996 and 1995, respectively.
					Deposits
		December 31,    
				1996          
				1995          
			Amount      
Percent of
Deposits
	Amount	  
Percent of
 Deposits
Demand deposit accounts
$ 31,837,470
15.58%
$ 40,938,084
20.18%
NOW accounts 
36,397,429
17.82%
32,336,192
15.94%
Money market accounts
39,945,489
19.55%
38,628,950
19.05%
Savings accounts


31,441,290
15.39%
28,993,432
14.29%
Time deposits less than
	$100,000
55,270,915
27.06%
54,339,720
26.79%
Time deposits of $100,000
	or over
		9,405,213
	4.60%
		7,603,710
	3.75%
			Total deposits
$204,297,806
100.00%
$202,840,088
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 $343,785 during 
1996.  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, 1996, is shown in the 
following table.


				Maturities of Certificates of Deposit and Other Time Deposits of $100,000 or
More
December 31, 1996
Within
Three
Months
After Three
Through
Six Months
After Six
Through


Twelve 
Months
After
Twelve
Months
Total
Certificates of 
deposit of 
$100,000 or more
$2,244,402
$2,737,905
$3,372,966
$1,049,940
$9,405,213


		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.
Borrowed funds consist of an obligation under 
capital lease which is paying down over the five 
year lease term 
which expires in 1998.
Noninterest Income
Noninterest income for 1996 was $791,305, compared 
to noninterest income in 1995 of $757,235, an 
increase of 
$34,070, or 4.50%.  Service charges on deposits 
have grown with the growth in deposits.  
The following table presents the principal 
components of noninterest income for the years 
ended   December 31, 
1996 and 1995, respectively.
Noninterest Income
			1996                    
1995      
Service charges on deposit accounts             
$567,154        $540,182


Other noninterest revenue	           
224,151         217,053
	Total noninterest income	         
$791,305        $757,235



Noninterest income as a percentage of average 
total assets              0.33%   0.33%
Noninterest Expense
		Noninterest expense decreased by $40,331, 
or 0.93%, from $4,355,081 in 1995 to $4,314,750 in 
1996.  Increased personnel costs and other 
increases were offset primarily by the decrease in 
FDIC insurance which decreased $223,546 from 
$225,546 in 1995 to $2,000 in 1996.
		The Company has plans to open a second 
bank in Delaware during the last quarter of 1997.  
The opening of this office is expected to increase 
noninterest expense.
		The following table presents the principal 
components of noninterest expense for the years 
ended December 31, 1996 and 1995, respectively.
Noninterest Expense
			1996	               
1995      
Compensation and related expenses	        
$2,573,228      $2,416,435
Occupancy expense		363,175 354,992


Furniture and equipment expense		417,582 426,095
Amortization of intangible assets	        18,368  8,413
Advertising             124,635 
129,578


Courier service         66,910  
64,814
Deposit insurance	
	2,000	225,546
Director fees           61,200  
61,125
Dues, donations, subscriptions			41,384  37,636
Freight                 28,604  
81,320


Liability insurance		52,068  47,835
Postage         153,123 
138,344
Professional fees		53,864  49,914
Stationery and supplies		139,428 115,814
Telephone               
65,388  55,030


Teller machine fees		53,197  45,525
Miscellaneous                
100,596	       96,665


	Total noninterest expense			$4,314,750      
$4,355,081
		Noninterest expense as a percentage of 
average total assets             1.78% 1.91%
Capital
		Under the capital guidelines of the 
Federal Reserve Board and the FDIC, the Company 
and the Bank 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 Bank 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, 1996, the Company and the Bank 
exceeded their regulatory capital ratios, as set 
forth in the 
following table.
Analysis of Capital
Company
Bank


	Required 
		Minimums
Tier 1 risk-based capital ratio
32.3%
31.5%
4.0%
Total risk-based capital ratio
33.5%
32.8%
8.0%
Tier 1 leverage ratio
15.8%
15.4%
3.0%
Accounting Rule Changes
		During 1996 the FASB issued SFAS 125, 
Accounting for Transfers and Servicing of 
Financial Assets and Extinguishments of 
Liabilities.  Many of its provisions become 
effective in 1997.  SFAS 125 defines when assets 
are 
transferred or debt is extinguished.  Generally, 
transfers are recognized when the transferee no 
longer has control over the assets.  The Company 
adopted SFAS 125 as of January 1, 1997.  
Management does not expect the adoption of SFAS 
125 


to have a material adverse impact on the Company's 
financial position or results of operations.
Impact of Inflation
		Unlike most industrial companies, the 
assets and liabilities of financial institutions 
such as the Company and the Bank 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. 
Industry Developments


	Certain recently enacted and proposed 
legislation could have an effect on both the costs 
of doing business and 
the competitive factors facing the financial 
institution industry.  The Company is unable at 
this time to assess the impact of this legislation 
on its financial condition or results of 
operations.  
MARKET FOR COMPANY'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Articles of Incorporation authorize 
it to issue up to 2,000,000 shares of the Common 
Stock.
As of March 4, 1997, there were approximately 522 
holders of record of the Common Stock and 810,000 
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 $1.00 per share in 
1995, and $2.10 per share in 1996.  The 1996 
dividend included a special dividend of $1.00 per 
share that is not expected to be an annual event.



Calvin B. Taylor Bankshares, Inc.
and Subsidiary
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 subsidiary, Calvin 
B. Taylor Banking Company, is a financial 
institution operating primarily in Worcester 
County. The Bank offers 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 Bank also offers 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 
subsidiary, Calvin B. Taylor Banking Company.  
Intercompany accounts and transactions have 
been eliminated.  Capital accounts for 1994 and 
1995 have been restated to conform with 1996 
presentation, 
showing the capitalization of the holding company.
	Cash equivalents
		For purposes of reporting cash 
flows, cash and cash equivalents include cash on 
hand, amounts due from banks, federal funds sold, 
and overnight securities purchased under 
agreements to resell.  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.  During 1995, 
the Financial Accounting Standards Board (FASB) 
provided a one-time opportunity to 
transfer securities between classifications.  All 
securities classified as available-for-sale were 
transferred from 
the held-to-maturity classification.
		Gains and losses on disposal are 
determined using the specific-identification 
method.
	Premises and equipment
		Bank 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.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
 1.	Summary of Significant Accounting Policies 
(Continued)
	Intangible assets
		Intangible assets are amortized 
over their useful lives using the straight-line 
method.
	Loans and allowance for credit losses
		Interest on loans is credited to 
income based on the principal amounts outstanding.  
The accrual of interest is discontinued when 
circumstances indicate that collection is 
questionable. Loan origination costs have been 
measured by management and determined to be 
immaterial.
		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 
allowance is based upon a continuing review 


of past loan loss experience, current economic 
conditions which may affect the borrowers' ability 
to pay, and the underlying collateral value of the 
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.
		Management classifies loans as 
impaired when the collection of contractual 
obligations, including principal and interest, is 
doubtful.
	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.
	Per share data
		Earnings per common share and 
dividends per common share are determined by 
dividing net income and dividends by the 810,000 
shares outstanding after giving retroactive effect 
to stock dividends.
2.	Cash and Equivalents
		The Bank 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 
$24,057,839 for 1996, $17,812,744 for 1995, and 
$28,971,863 for 1994.
		Banks are required to carry 
noninterest-bearing cash reserves at specified 
percentages of deposit balances.  The Bank's 
normal amount of cash on hand and on deposit with 
other banks is sufficient to satisfy the 
reserve requirements.
3.	Lines of Credit


	The Bank has available lines of 
credit, including overnight federal funds, reverse 
repurchase agreements and letters of credit, 
totaling $15,000,000, as of December 31, 1996, 
1995, and 1994.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
 4.     Investment Securities
	Investment securities are 
summarized as follows:
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
 4.     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.
	Investments are pledged to secure 
deposits of federal and local governments.
	Securities with an amortized cost 
of $50,000 were sold from the held-to-maturity 
portfolio during 1995 because they did not conform 
to the Bank's investment policy.
 5.	Loans and Allowance for Credit 
Losses
		Major classifications of 
loans are as follows:
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
 5.     Loans and Allowance for Credit Losses 
(Continued)
	The rate repricing distribution of 
the loan portfolio follows: 



		Outstanding loan commitments and 
letters of credit are as follows:
		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 Bank's 
exposure to credit loss in the event of 
nonperformance by the borrower is represented by 
the contract amount of the commitment.  Management 
is not aware of any accounting loss the Bank will 
incur by the 


funding of these commitments.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
 5.	Loans and Allowance for Credit Losses 
(Continued)
	The Bank 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.
		Transactions in the allowance for 
credit losses were as follows:
		Amounts past due 90 days or more, 
and still accruing interest, and nonaccrual loans 
are as follows:
	Management has identified no impaired 
loans at December 31, 1996 and 1995.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary


Notes to Consolidated Financial Statements
 6.     Intangibles
	A summary of intangible assets and 
the related amortization is as follows:
 7.     Premises and Equipment
	A summary of premises and equipment 
and the related depreciation is as follows:
	The Bank leases data processing 
equipment under a capital lease expiring in 1998.  
The assets under the lease are recorded at the 
present value of the minimum lease payments at 
inception less accumulated 
depreciation. The liability is the present value 
of remaining payments.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
7.      Premises and Equipment (Continued)
	Minimum future lease payments as of 
December 31, 1996, including maintenance, under 
the capital lease are as follows:
	The interest rate on the capital 
lease was imputed based on the Bank's incremental 
borrowing rate at the inception of the lease.


 8.     Deposits
	Major classifications of interest-
bearing deposits are as follows:
	Included in other time deposits are 
certificates of deposit of $100,000 or more with 
the following maturities:
	No certificates of deposit have 
remaining maturities in excess of five years.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary



Notes to Consolidated Financial Statements
 9.     Other Operating Expenses
	The components of other operating 
expenses follow:
10.     Income Taxes
	The components of income tax 
expense are as follows:
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
10.     Income Taxes (Continued)
	The components of the deferred tax 
benefit are as follows:
	The components of the net deferred 
tax assets are as follows:
	A reconciliation of the provision 
for taxes on income from the statutory federal 
income tax rates to the effective income tax rates 
follows:
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
11.     Lease Commitments
	The Bank 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:
	The Route 50 lease provides for an 
increase in rent every 12.5 years based on the 
consumer price index.  The lease also provides an 
option to renew for a twenty-five year period 
subject to the same terms at the 
expiration of the initial term, August 31, 1999.



	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.  All costs associated with the 
properties, including real estate taxes, are 
obligations of the Bank.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
12.     Pension Plan
	The Bank has a defined benefit 
pension plan covering substantially all of the 
employees.  Benefits are based on years of service 
and the employee's average rate of earnings for 
the final five full years before retirement. The 
Bank's funding policy is to contribute annually an 
amount that can be deducted for income tax 
purposes, determined using the projected unit 
credit cost method.  Assets of the plan are held 
in deposit accounts and mortgage loans.  The 
following table sets forth the financial status of 
the plan:
	Net pension expense includes the 
following components:
	Assumptions used in the accounting 
for net pension expense were:
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
13.     Fair Value of Financial Instruments


	The estimated fair values of the 
Bank'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.



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.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
13.     Fair Value of Financial Instruments 
(Continued)
	During 1996 and 1995, 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.  During 
1996 and 1995, the fair value of fixed-rate time 
deposits is estimated based on interest 
rates currently offered for deposits of similar 
remaining maturities.
	In 1994, the Bank did not have the 
resources to calculate the fair value of fixed-
rate loans or fixed-rate time deposits.
	It is not practicable to estimate 
the fair value of outstanding loan commitments, 
unused lines, and letters of credit.
14.     Related Party Transactions
	The executive officers and 
directors of the Bank enter into loan transactions 
with the Bank 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.  A summary of the 
activity of these loans follows:
At December 31, 1995 and 1994, the total amount of 
such loans outstanding was $7,178,848 and 
$7,379,207, respectively.
	The Bank obtains legal services 
from a law firm in which one of the principal 
attorneys is also a member 
of the Bank's 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 $2,183 during the year 
ended December 31, 1996.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
15.     Capital Standards
	The Federal Reserve Board and the 
Federal Deposit Insurance Corporation have adopted 
risk-based capital standards for banking 
organizations.  These standards require ratios of 
capital to assets for minimum capital adequacy and 
to be classified as well capitalized under prompt 
corrective action provisions.  As of December 31, 
1996, the capital ratios and minimum capital 
requirements of the Bank are as follows:


	Tier 1 capital consists of capital 
stock, surplus, and undivided profits and total 
capital includes a limited amount of the allowance 
for credit losses.  In calculating risk-weighted 
assets, specified risk percentages are 
applied to each category of asset and off-balance 
sheet items.
	Failure to meet the capital 
requirements could affect the Bank's ability to 
pay dividends and accept deposits and may 
significantly affect the operations of the Bank.
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


16.     Parent Company Financial Information
	Balance sheet, statements of income 
and cash flows for Calvin B. Taylor Bankshares, 
Inc:
Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
16.     Parent Company Financial Information 
(Continued)



Calvin B. Taylor Bankshares, Inc.
and Subsidiary
Notes to Consolidated Financial Statements
17.	Quarterly Results of Operations 
(Unaudited)
Report of Independent Auditors
The Board of Directors and Stockholders
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Berlin, Maryland
We have audited the accompanying consolidated 
balance sheets of Calvin B. Taylor Bankshares, 
Inc. and 
Subsidiary as of December 31, 1996, 1995, and 
1994, and the related 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 Subsidiary 
as of December 31, 1996, 1995, and 1994, and 
the results of their operations and their cash 
flows for the years then ended in conformity with 
generally accepted accounting principles.
Salisbury, Maryland
January 3, 1997
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Calvin B. Taylor Banking Company, a state bank 
organized under the laws of the State of Maryland.