UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549
Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities
 Exchange Act of 1934

For the fiscal year ended December 31, 2003

Commission File No. 000-50047

Calvin B. Taylor Bankshares, Inc.
(Exact name of registrant as specified in its Charter)

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

24 North Main Street, Berlin, Maryland          21811
(Address of principal executive offices)       (Zip Code)

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

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock Par Value $1.00

Check whether the registrant has (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.	      Yes   X     No ____

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

Check if the registrant is an accelerated filer (as defined in Rule 12b-2
of the Act).     [X]


The aggregate market value of the Common Stock held by non-affiliates of
the registrant on December 31, 2003, was $104,258,822. This calculation is
based upon the last price known to the registrant at which its Common
Stock was sold as of the last business day of the registrant's most
recently completed second fiscal quarter, June 30, 2003, which is $37.00
per share.  There is not an active trading market for the Common Stock and
it is not possible to identify precisely the market value of the Common
Stock.

On February 29, 2004, 3,227,966 shares of the registrant's common stock
were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
The Company's Proxy Statement for Annual Meeting of Shareholders to be
held on May 12, 2004, is incorporated by reference in this Form 10-K in
Part III, Item 10, Item 11, Item 12, Item 13, and Item 14.



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

PART I

Item 1. Description of Business

General

     Calvin B. Taylor Bankshares, Inc. (the "Company") was incorporated as
a Maryland corporation on October 31, 1995.  The Company owns all of the
stock of Calvin B. Taylor Banking Company of Berlin, Maryland (the "Bank").
The Bank is a commercial bank incorporated under the laws of the State of
Maryland on December 17, 1907, which operates nine banking offices in
Worcester County, Maryland and one banking office in Ocean View, Delaware.
The Bank's main office is 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, Sussex
County, Delaware, and neighboring counties.

     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 without
regulatory approval.  A holding company may also engage in certain non-
banking activities which the Board of Governors has deemed to be closely
related to banking and proper incidents to the business of a bank holding
company.  These activities include making or servicing loans and certain
types of leases; performing certain data processing services; acting as a
fiduciary or investment or financial advisor; acting as a management
consultant for other depository institutions; providing courier, appraisal,
and consumer financial counseling services; providing tax planning and
preparation services; providing check guaranty and collection agency
services; engaging in limited real estate investment activities;
underwriting, brokering, and selling credit life and disability insurance;
engaging in certain other limited insurance activities; providing discount
brokerage services; underwriting and dealing in certain government
obligations and money market instruments and providing portfolio investment
advice; acting as a futures commission merchant with respect to certain
financial instrument transactions; providing foreign exchange advisory and
transactional services; making investments in certain corporations for
projects designed primarily to promote community welfare; and owning and
operating certain healthy savings and loan associations.  Although the
Company has no present intention of engaging in any of these services, if
circumstances should lead the Company's management to believe that there is a
need for these services in the bank's marketing areas and that such
activities could be profitably conducted, the management of the Company would
have the flexibility of commencing these activities upon filing notice
thereof with the Board of Governors.

Location and Service Area

     The Company conducts general commercial banking in its primary service
areas, emphasizing the banking needs of individuals and small- to medium-
sized businesses and professional concerns.  The Bank operates from nine
branches located throughout Worcester County, Maryland and one branch located
in Sussex County, Delaware.  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, Sussex County, Delaware
and neighboring counties.

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

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



Banking Services

     The Bank offers a full range of deposit services including checking,
NOW, Money Market, and savings accounts, and time deposits including
certificates of deposit.  The transaction accounts and time certificates are
tailored to the Bank's principal market areas 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 Company, through 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 Company originates
commercial and residential mortgage loans and real estate construction and
acquisition loans.  These lending activities are subject to a variety of
lending limits imposed by state and federal law.  The Bank may not make any
loans to any director or officer (except for commercial loans to directors
who are not officers or employees) unless the Board of Directors of the Bank
approves the loans.  The Board of Directors must review any such loans every
six months.

      Other bank services include cash management services, 24-hour ATM's,
debit cards, safe deposit boxes, travelers' checks, direct deposit of payroll
and social security checks, and automatic drafts for various accounts.    The
Bank offers bank-by-phone and Internet banking services, including electronic
bill-payment, to both commercial and retail customers.

Competition

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

      The Bank employs traditional marketing media including local
newspapers and radio, to attract new customers.  Bank officers, directors,
and employees are active in numerous community organizations and participate
in community-based events.  These activities and referrals of satisfied
customers result in new business.

Employees

      As of December 31, 2003, the Bank employed 93 full-time equivalent
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.  Beginning with the enactment of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)
and following with the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA), numerous additional regulatory requirements have been
placed on the banking industry, and additional changes have been proposed.
Legislative changes and the policies of various regulatory authorities may
affect the operations of the Company and the Bank and those effects may be
material.  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 controls, or new federal or state legislation may have in the
future.



Gramm-Leach-Bliley Act

     On November 12, 1999, the Gramm-Leach-Bliley Act was signed into law.
 Among other things, the Act repeals the restriction, contained in the Glass-
Steagall Act, on banks affiliating with securities firms.  The Act permits
bank holding companies to engage in a statutorily provided list of financial
activities, including insurance and securities underwriting and agency
activities, merchant banking, and insurance company portfolio investment
activities.  The Act also authorizes activities that are "complementary" to
financial activities.  	The Act is intended to grant certain powers to
community banks that larger institutions have accumulated on an ad hoc basis.
 The Act may have the result of increasing competition that the Company and
the Bank face from larger institutions and other types of companies.  In
fact, it is not possible to predict the full effect that the Act will have on
the Company and the Bank.

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 Subsidiary, or engaging in any other activity that the
Federal Reserve determines to be so closely related to banking or managing
and controlling banks as to be a proper incident thereto.

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

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

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

     Source of Strength; Cross-Guarantee.  In accordance with Federal
Reserve policy, the Company is expected to act as a source of financial
strength to 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.  It is subject to
examination by the FDIC and the state department of banking regulation for
each state in which is has a branch.  Deposits in the Bank are insured by the
FDIC up to a maximum amount (generally $100,000 per depositor, subject to
aggregation rules).  The States 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 to prepare quarterly reports on the Bank's financial condition.

     Under provisions of the FDICIA, all insured institutions must undergo
periodic on-site examination by the appropriate banking agency.  The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the 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.  The aggregate
of all covered transactions is limited in amount, as to any one affiliate, to
10% of the Bank's capital and surplus and, as to all affiliates combined, to
20% of the Bank's capital and surplus.  In addition, each covered transaction
must meet specific collateral requirements.  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 nonaffiliated 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 Maryland bank may open branches
statewide, subject to the prior approval of the State Department of Financial
Regulation and the FDIC.  Maryland law permits banking organizations in other
states to acquire Maryland banking organizations, as long as such states
grant similar privileges to banking organizations in Maryland to acquire
banking organizations in their states, by opening a de novo branch, by
acquiring an existing branch from a Maryland depository institution, or as a
result of an interstate merger with a Maryland banking organization.
Delaware law also allows branches statewide with prior approval of the Office
of the State Bank Commissioner and the FDIC.  Delaware law is more
restrictive allowing other state banking organizations to branch to Delaware
only through opening a de novo bank, or as the result of an interstate
merger.

     Community Reinvestment Act.  The Community Reinvestment Act requires
that each insured depository institution shall be evaluated by its primary
federal regulator with respect to its record in meeting the credit needs of
its local community, including low and moderate income neighborhoods,
consistent with the safe and sound operation of those institutions.  These
factors are also considered in evaluating mergers, acquisitions, and
applications to open a branch or facility.  Failure to adequately meet these
criteria would impose additional requirements and limitations on the Bank.
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 and 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
bases in extending credit, the Fair Credit Reporting Act of 1978 governing
the use and provision of information to credit reporting agencies, the Fair
Debt Collection Act governing the manner in which consumer debts may be
collected by collection agencies, and the rules and regulations of the
various federal agencies charged with the responsibility of implementing such
federal laws.  The deposit operations of the Bank are also subject to the
Right to Financial Privacy Act which imposes a duty to maintain
confidentiality of customers' financial records and prescribes procedures for
complying with administrative subpoenas of financial records, and the
Electronic Funds Transfer Act as implemented by the Federal Reserve Board's
Regulation E 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 FDIC establishes rates for the payment of premiums by federally
insured banks and thrifts for deposit insurance.  Separate insurance funds
are maintained for commercial banks (BIF) and thrifts (SAIF), with insurance
premiums from the industry used to offset losses from insurance payouts when
banks and thrifts fail.  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 depository institutions paid to BIF or SAIF
from $0.23 to $0.31 per $100 of insured deposits depending on the capital
levels and risk profile of the institution, as determined by its primary
federal regulator on a semi-annual basis.  When BIF reached its legally
mandated reserve ratio in mid-1995, the FDIC lowered premiums for well-
capitalized banks, eventually to a level of $.00 per $100 of insured
deposits, with a minimum semiannual assessment of $1,000.  In 1996, congress
enacted the Deposit Insurance Funds Act of 1996, which eliminated this
minimum assessment.  	The BIF insurance assessment rate for the first
semiannual assessment period of 2004 is proposed to remain at $.00 to $.27
per $100 in deposits.  	In addition to the amount paid for deposit insurance,
banks are assessed an additional amount to service the interest on the bond
obligations of the Financial Corporation (FICO).  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 Department of
Financial Regulation, 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
three 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.
The amount of dividends that might be declared in the future presently cannot
be estimated and it cannot be known whether such dividends would continue for
future periods.

Capital Regulations

     The federal bank regulatory authorities have adopted risk-based
capital guidelines for banks and bank holding companies that are designed to
make regulatory capital requirements more sensitive to differences in risk
profile among banks and bank holding companies, account for off-balance sheet
exposure, and minimize disincentives for holding liquid assets.  The
resulting capital ratios represent qualifying capital as a percentage of
total risk-weighted assets and off-balance sheet items.  The guidelines are
minimums, and the regulators have noted that banks and bank holding companies
contemplating significant expansion programs should not allow expansion to
diminish their capital ratios and should maintain ratios well in excess of
the minimums.

     Current guidelines require bank holding companies and federally
regulated banks to maintain a minimum ratio of total capital to risk-based
assets 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.  Total capital is the sum of Tier 1 plus Tier
2 capital.

     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.

     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, 2003, the Company and the Bank were qualified as "well
capitalized."  For further discussions, see "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operation - Capital."

Recent Legislative Developments

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


Item 2. Description of Property

     The Company has ten branch locations, all of which are owned by the
Company or the Bank.  The Bank leases the land on which the East Berlin
branch is located.  The locations are described as follows:

Office
   Location                                         Square Footage
Main Office, Maryland
   24 North Main Street, Berlin, Maryland 21811          24,229
East Berlin Office
   10524 Old Ocean City Boulevard, Berlin, Maryland 21811 1,500
20th Street Office
   100 20th Street, Ocean City, Maryland 21842            3,100
Ocean Pines Office
   11003 Cathell Road, Berlin, Maryland 21811             2,420
Mid-Ocean City Office
   9105 Coastal Highway, Ocean City, Maryland 21842       1,984
North Ocean City Office
   14200 Coastal Highway, Ocean City, Maryland 21842      2,545
West Ocean City Office
   9923 Golf Course Road, Ocean City, Maryland 21842      2,496
Pocomoke Office
   2140 Old Snow Hill Road, Pocomoke, Maryland 21851      2,624
Snow Hill Office
   108 West Market Street, Snow Hill, Maryland 21863      3,773
Ocean View, Delaware Office
   50 Atlantic Avenue, Ocean View, Delaware 19970         4,900
Office    Location
	Square Footage

      The Berlin office is the centralized location for the Company and the
Bank; that is to say that all proof and bookkeeping is performed there.  Each
branch has a manager that also serves as its loan officer, with exception of
the East Berlin office, which does not have a loan officer.  All offices
participate in normal day-to-day banking operations.  The Company operates
automated teller machines in all branches except the East Berlin office, and
at one non-branch location in a local hospital.

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 the fiscal year for which this report is
filed.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

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

      As of February 29, 2004 there were approximately 1,013 holders of
record of the common stock and 3,227,966 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.  Transactions in the common stock are infrequent and are
negotiated privately between the persons involved in those transactions.
In 2003, the Board of Directors of the Company approved a plan to purchase
up to 10% of the Company's common stock.  Common shares repurchased under
this plan are retired.  As of December 31, 2003, 12,034 shares had been
repurchased and retired at an average cost of $35.98 per share.

	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 $.60
per share in 2003, $1.00 per share in 2002, and $.37 per share in 2001.
Included are special cash dividends of  $.60 per share in 2002, and $.25
per share in 2000, which are not expected to be an annual event.


Item 6. Selected Financial Data
	The following table presents selected financial data for the five
years ended December 31, 2003.  Prior period per share data is restated to
reflect the 100% stock dividend paid in 2000.

<table>
<caption>
                                  2003     2002     2001     2000     1999

                               <c>      <c>      <c>      <c>      <c>
                            (Dollars in thousands, except for per share data)
At Year End
Total assets                  $386,486 $369,243 $336,825 $289,048 $288,921
Total deposits                $317,946 $301,495 $274,149 $231,926 $238,726
Total loans, net of unearned
 income and allowance for
 loan losses                  $162,243 $161,825 $166,502 $168,571 $152,001
Total stockholders' equity     $63,636  $60,015  $57,243  $53,085  $49,220

For the Year
Net interest income            $13,647  $13,741  $13,297  $13,580  $12,221
Net income                      $5,540   $5,754   $5,414   $5,625   $5,020

Per share data
Book value                      $19.71   $18.52   $17.67   $16.38   $15.19
Net income                      $ 1.71   $ 1.78   $ 1.67   $ 1.74   $ 1.55
Cash dividends declared         $  .60   $ 1.00   $  .37   $  .61   $  .60
</table>

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation

BUSINESS OF THE COMPANY

     Calvin B. Taylor Bankshares, Inc. (the "Company") is a bank holding
company that was incorporated in the State of Maryland on October 31,
1995.  Calvin B. Taylor Banking Company (the " Bank"), which commenced
operation in 1890, was incorporated under the laws of the State of
Maryland on December 17, 1907, and is a state nonmember bank under the
laws of the State of Maryland.  The Bank is engaged in a general
commercial banking business, emphasizing in its marketing the Company's
local management and ownership, from its main office and branches located
in its primary service area of Worcester County, Maryland and Sussex
County, Delaware, and neighboring counties. The Bank offers a full range
of deposit services, including checking accounts, NOW, Money Market, and
savings accounts and other time deposits, including 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 originates fixed rate mortgage loans and real estate construction and
acquisition loans.  These loans generally have a demand feature.  Other
bank services include cash management services, safe deposit boxes,
travelers' checks, direct deposit of payroll and social security checks,
debit cards, and automatic drafts for various accounts.  The Bank also
offers bank-by-phone and Internet banking services, including electronic
bill payment.


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

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

Overview

     Consolidated income of the Company is derived primarily from
operations of the banks.  The 2003 net income was $5,540,214 compared to
$5,753,916 for 2002, and $5,414,404 for 2001.  The Company had a return on
average equity of 9.22% and return on average assets of 1.46% for 2003,
compared to returns on average equity of 9.83% and 9.54%, and returns on
average assets of 1.65% and 1.75%, for 2002 and 2001, respectively.


Results of Operations

     The Company's net income of $5,540,214, or $1.71 per share, for the
year ended December 31, 2003, was a decrease of $213,702, or 3.71%, from
the net income of $5,753,916, or $1.78 per share, for the year ended
December 31, 2002. Primarily responsible for this decrease was the
$267,844 gain on the sale of unimproved real estate in Ocean View,
Delaware which contributed $164,403 net of tax, to 2002 net income.

     The Company reported net income of $5,753,916, or $1.78 per share,
for the year ended December 31, 2002, which was an increase of $339,512,
or 6.27%, from the net income of $5,414,404, or $1.67 per share, for the
year ended December 31, 2001.  Primarily responsible for this increase was
the increase in net interest income and a gain on sale of real estate.
Net interest income increased $444,322, or 3.34%, to $13,741,288 in 2002,
from $13,296,966 in 2001.  This increase was the result of a decrease in
interest revenue of $1,766,469, which was exceeded, by the decrease in
interest expense of $2,210,791.  Average interest-earning assets of
$325,721,244 yielded 5.56%, while average interest-bearing liabilities of
$225,183,449 paid 1.79% for an overall net interest spread of 3.76%.  A
$267,844 gain on the sale of unimproved real estate in Ocean View,
Delaware contributed $164,403 net of tax, to net income.

     Noninterest income decreased by 9.62% during 2003 compared to 2002,
while noninterest expense increased by 1.87% during the same period.
Included in noninterest income for 2002 is a $267,844 gain on the sale of
an unimproved property in Ocean View, Delaware.  Without that gain,
noninterest income would increase from 2002 to 2003 by 6.93%.  Noninterest
income and noninterest expense increased by 33.04% and 4.40%,
respectively, during 2002 compared to 2001.  Eliminating the gain on the
Ocean View property, noninterest income would have increased 12.44%.

     The Company's net income of $1,308,544 or $.40 per share, for the
quarter ended December 31, 2003, was a decrease of $133,285, or 9.25%,
from the net income of $1,441,829, or $.45 per share, for the quarter
ended December 31, 2002.  Eliminating the fourth quarter 2002 net gain of
$164,403 on the Ocean View property, net income would have increased
$31,118 or 2.15%.

     The Company reported net income of $1,441,829 or $.45 per share, for
the quarter ended December 31, 2002, which was an increase of $276,685, or
23.75%, from the net income of $1,165,144, or $.36 per share, for the
quarter ended December 31, 2001.  Primarily responsible was the increase
in quarterly net interest income to $3,392,428 in fourth quarter 2002 from
$3,253,986 in fourth quarter 2001.  Management attributes this $138,442 or
4.25% increase in net interest income to the Company's focus on
maintaining a profitable net interest spread.  Throughout 2002, Management
responded to market conditions by lowering deposit rates, while attempting
to control rate reductions in the loan portfolio.  Increased volume of
federal funds sold and investment securities also contributed to the
increase in net income.  Also, a $267,844 gain on the sale of unimproved
real estate in Ocean View, Delaware contributed $164,403 net of tax,
to net income in fourth quarter 2002.

Net Interest Income

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

     The key performance measure for net interest income is the "net
margin on interest-earning assets," or net interest income divided by
average interest-earning assets.  The Company's net interest margin for
2003 was 3.96% compared to 4.32% for 2002 and 4.74% for 2001.  Because
most of the Bank's loans 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.


<table>
<caption>
                                     Average Balances, Interest, and Yields
                                          (Dollars stated in thousands)

                       For the Year Ended         For the Year Ended         For the Year Ended
                       December 31, 2003          December 31, 2002          December 31, 2001
                       Average                    Average                    Average
                       Balance   Interest Yield   Balance   Interest Yield   Balance   Interest  Yield

                    <c>       <c>      <c>     <c>       <c>      <c>     <c>       <c>      <c>
Assets
 Federal funds sold    $ 53,715  $  541    1.01%  $ 57,005  $  923   1.62%   $ 41,265  $1,413    3.42%
 Interest-bearing
  deposits                1,706      42    2.48%     1,504      42   2.77%        803      46    5.77%
 Investment securities
  U. S. Treasury         99,711   2,411    2.42%    74,482   2,806   3.77%     47,478   2,577    5.43%
  U. S. Government
   Agency                18,172     531    2.92%    18,231     802   4.40%     18,180   1,121    6.17%
  State and municipal    12,119     332    2.74%     7,697     337   4.38%      8,773     493    5.62%
  Other                   1,600      70    4.40%     1,508      62   4.08%      1,508      49    3.26%
Total investment
  securities            131,602   3,344    2.54%   101,918   4,007   3.93%     75,939   4,240    5.58%
Loans:
  Commercial             13,780     987    7.16%    15,022   1,197   7.97%     15,722   1,330    8.46%
  Mortgage              150,491  10,879    7.23%   148,399  11,545   7.78%    151,521  12,398    8.18%
  Consumer                3,108     284    9.15%     4,054     387   9.54%      5,061     475    9.38%
Total loans             167,379  12,150    7.26%   167,475  13,129   7.84%    172,304  14,203    8.24%
Allowance for loan
 losses                   2,185                      2,182                      2,188
Total loans, net of
 allowance              165,194  12,150    7.36%   165,293  13,129   7.94%    170,116  14,203    8.35%
Total interest-earning
 assets                 352,217  16,077    4.56%   325,720  18,101   5.56%    288,123  19,902    6.91%
Noninterest-bearing
 cash                    17,404      -              15,400      -              13,437      -
Premises and equipment    6,567      -               5,904      -               5,800      -
Other assets              3,219      -               2,171      -               2,137      -
Total assets           $379,407 $16,077           $349,195 $18,101           $309,497  $19,902



Interest-bearing
deposits
 Savings and NOW       $110,638    $422    0.38%   $90,124    $776   0.86%    $76,033   $1,409  1.85%
 Money market            50,141     305    0.61%    46,890     581   1.24%     35,804      864  2.41%
 Other time              77,668   1,384    1.78%    83,008   2,641   3.18%     79,894    3,900  4.88%
Total interest-bearing
deposits                238,447   2,111    0.89%   220,022   3,998   1.82%    191,731    6,173  3.22%
Securities sold under
 agreements to
 repurchase               4,135      10    0.24%     4,955      28   0.57%      4,126       62  1.50%
Borrowed funds              189      11    6.05%       207      12   6.04%        223       13  6.03%
Total interest-bearing
 liabilities            242,771   2,132    0.88%   255,184   4,038   1.79%    196,080    6,248  3.19%
Noninterest-bearing
 deposits                75,898      -              64,916      -              55,879       -
                        318,669   2,132    0.67%   290,100   4,038   1.39%    251,959    6,248  2.48%
Other liabilities           651      -                 536      -                 759       -
Stockholders' equity     60,087      -              58,559      -              56,779       -
Total liabilities and
 stockholders' equity  $379,407  $2,132           $349,195  $4,038           $309,497   $6,248


Net interest spread                        3.69%                     3.76%                      3.72%
Net interest income             $13,945                    $14,063                     $13,654
Net margin on interest-
earning assets                             3.96%                     4.32%                      4.74%

Dividends and interest on tax-exempt securities and loans are reported on fully
taxable equivalent basis.
Tax equivalent adjustment included in:
   Investment income               $263                       $288                        $333
   Loan income                     $ 35                       $ 34                        $ 24
</table>

<table>
<caption>
                                      Analysis of Changes in Net Interest Income
                                            (Dollars stated in thousands)

                           Year ended December 31,    Year ended December 31,
                            2003 compared with 2002    2002 compared with 2001
                                variance due to            variance due to

                            Total     Rate   Volume    Total     Rate   Volume

                         <c>       <c>    <c>       <c>       <c>    <c>
Earning assets
Federal funds sold          (382)    (329)       (53)  (490)   (1,029)    539
Interest-bearing deposits      1       (5)         6     (5)      (45)     40
Investment
 securities:
 U. S. Treasury             (396)  (1,347)       951    229    (1,237)  1,466
 U. S. Government Agency    (273)    (270)        (3)  (319)     (322)      3
 State and municipals         (5)    (199)       194   (155)      (95)    (60)
 Other                         9        5          4     12        12       -
Loans:
 Commercial                 (210)    (111)       (99)  (133)      (74)    (59)
 Mortgage                   (666)    (829)       163   (853)     (598)   (255)
 Consumer                   (102)     (12)       (90)   (88)        7     (95)
Total interest revenue    (2,024)  (3,097)     1,073 (1,802)   (3,381)  1,579

Interest-bearing liabilities
 Savings and NOW            (354)    (531)      177    (633)     (894)    261
 Money market               (276)    (316)       40    (284)     (551)    267
 Other time deposits      (1,257)  (1,087)     (170) (1,260)   (1,412)    152
 Other borrowed funds        (19)     (13)       (6)    (34)      (45)     11
Total interest expense    (1,906)  (1,947)       41  (2,211)   (2,902)    691

Net interest income         (118)  (1,150)    1,032     409      (479)    888
</table>

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

Composition of Loan Portfolio

     Because loans are expected to produce higher yields than investment
securities and other interest-earning assets (assuming that loan losses
are not excessive), the absolute volume of loans and the volume as a
percentage of total earning assets is an important determinant of net
interest margin.  Average loans, net of the allowance for loan losses,
were $165,194,000, $165,293,144, and $170,116,213 during 2003, 2002, and
2001, respectively, which constituted 46.90%, 50.75%, and 59.04% of
average interest-earning assets for the periods.  The Company's loan to
deposit ratio was 51.03%, 53.67%, and 60.73% at December 31, 2003, 2002,
and 2001, respectively.  Average loans to average deposits were 52.55%,
58.01%, and 68.70% for the same periods.  The decrease in the loan to
deposit ratio over the periods presented is primarily attributable to
continued increases in deposit volume.

     The Company extends loans primarily to customers located in and near
Worcester County, Maryland and Sussex County, Delaware.  There are no
industry concentrations in the Company's loan portfolio.  The Company
does, however, have a substantial portion of its loans in real estate and
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, 2003, 2002, and 2001, respectively.
<table>
<caption>
                                         Composition of Loan Portfolio

                    December 31, 2003          December 31, 2002          December 31, 2001
                                 Percent                    Percent                    Percent
                    Amount       of total      Amount       of total      Amount       of total

                 <c>          <c>           <c>          <c>           <c>          <c>

Commercial        $ 13,199,879    8.03%      $ 12,765,723    7.78%      $ 15,341,122    9.09%
Real estate        127,722,747   77.67%       139,354,241   84.97%       146,258,549   86.70%
Construction        20,877,036   12.70%         8,447,354    5.15%         2,117,685    1.26%
Consumer             2,630,623    1.60%         3,438,494    2.10%         4,980,078    2.95%
  Total loans      164,430,285  100.00%       164,005,812  100.00%       168,697,434  100.00%
Less allowance for
 loan losses         2,187,277                  2,181,135                  2,195,922
Net loans         $162,243,008               $161,824,677               $166,501,512
</table>

     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, 2003.

<table>
<caption>
                            Loan Maturity Schedule and Sensitivity
                                 to Changes in Interest Rates

                                       December 31, 2003
                                    Over one
                       One year     Through       Over five
                       or less      five years    years        Total

                    <c>          <c>           <c>          <c>
Commercial           $ 13,199,879  $      -       $    -     $ 13,199,879
Real estate           127,722,747         -            -      127,722,747
Construction           20,877,036         -            -       20,877,036
Consumer                  336,440   2,031,134      263,049      2,630,623
  Total              $162,136,102  $2,031,134     $263,049   $164,430,285


Fixed interest rate  $    336,440  $2,031,134     $263,049   $  2,630,623
Variable interest
 rate (or demand)     161,799,662         -            -      161,779,662
  Total              $162,136,102  $2,031,134     $263,049   $164,430,285
</table>

     As of December 31, 2003, $161,799,662 or 98.40%, 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, 2003, 2002, and 2001,
respectively.
<table>
                              2003          2002          2001

                         <c>           <c>            <c>
Construction loans         $ 10,495,735  $ 10,557,644  $  6,456,910
Other loan commitments       15,036,346    11,876,437     8,639,337
Standby letters of credit     2,957,508     1,726,127     3,243,063
  Total                    $ 28,489,589  $ 24,160,208  $ 18,339,310
</table>

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

Loan Quality

     The allowance for loan losses represents an allowance 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 allowance 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.  The Company has a history of low loan charge-offs.

     For significant problem loans, management's review consists of
evaluation of the financial strengths of the borrowers and guarantors, the
related collateral, and the effects of economic conditions.  The overall
evaluation of the adequacy of the total allowance for 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.  It is the
Company's policy to evaluate loan portfolio risk for the purpose of
establishing an adequate allowance.  The allowance may be increased for
reserves for specific loans identified as substandard during management's
loan review.  Generally, the Company will not require a negative provision
to reduce the allowance as a result of either net recoveries or a decrease
in loans, even though this may cause the allowance as a percentage of
gross loans to exceed the Company's target.

     The provision for loan losses is a charge to earnings in the current
period to replenish the allowance and maintain it at a level management
has determined to be adequate.  As of December 31, 2003, 2002, and 2001,
the respective allowances for loan losses were 1.33%, 1.33%, and 1.30% of
outstanding loans.

     No provision for loan losses was made in 2003 due to the low level
of delinquencies and the year's net recoveries of previously charged-off
loans.  The provision for loan losses was $25,000 in 2002, an increase of
$2,015 from the $22,985 provision in 2001.

<table>
<caption>
                              Allocation of Allowance for Loan Losses
                            2002               2001               2000

                    <c>        <c>     <c>       <c>     <c>        <c>
Commercial             $ 163,059   7.46%  $ 139,005   6.37%  $ 218,414   9.95%
Real estate, including
 construction            868,828  39.72     864,111  39.62     913,449  41.60
Consumer                  81,845   3.74     112,875   5.17     174,671   7.94
General                1,073,545  49.08   1,065,144  48.84     889,388  40.51
  Total              $ 2,187,277 100.00% $2,181,135 100.00% $2,195,922 100.00%
</table>

<table>
<caption>
                                    Allowance for Loan Losses
                                  2003         2002         2001

                              <c>          <c>          <c>
Balance at beginning of year    $2,181,135   $2,195,922   $2,192,755
Loan losses:
 Commercial                            -          6,816        3,741
 Mortgages                             -            -            -
 Consumer                            3,423       41,954       20,983
  Total loan losses                  3,423       48,770       24,724
Recoveries on loans previously
charged off:
 Commercial                            533        1,000        4,056
 Consumer                            9,032        7,983          850
  Total loan recoveries              9,565        8,983        4,906

Net loan losses                     (6,142)      39,787       19,818
Provision for loan losses charged
 to expense                            -         25,000       22,985
Balance at end of year          $2,187,277   $2,181,135   $2,195,922


Allowance for loan losses to loans
 outstanding at end of year           1.33%        1.33%        1.30%

Net charge-offs to average loans      0.00%        0.02%        0.01%
</table>

     As a result of management's ongoing review of the loan portfolio,
loans are classified as nonaccrual when it is not reasonable to expect
collection of interest under the original terms.  These loans are
classified as nonaccrual even though the presence of collateral or the
borrower's financial strength may be sufficient to provide for ultimate
repayment.  Interest on nonaccrual loans is recognized only when received.
A delinquent loan is generally placed in nonaccrual status when it becomes
90 days or more past due.  When a loan is placed in nonaccrual status, all
interest that has been accrued on the loan but remains unpaid is reversed
and deducted from earnings as a reduction of reported interest income.  No
additional interest is accrued on the loan balance until the collection of
both principal and interest becomes reasonably certain.  The Company had
no nonperforming loans at December 31, 2003, or 2001.  The Company had one
loan with a balance of $2,222 on which the accrual of interest had been
discontinued as of December 31, 2002.

     Where real estate acquired by foreclosure and held for sale is
included with nonperforming loans, the result comprises nonperforming
assets.  There were no nonperforming assets at December 31, 2003, 2002, or
2001.  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, 2003,
2002, or 2001.

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 65.03% of average deposits for 2003, compared to 61.71%
and 53.08% for 2002 and 2001, respectively.

     As of December 31, 2003, $76,892,594, or 49.21% of the investment
debt securities mature in one year or less.  Funds invested in federal
funds sold provide liquidity so the banks do not need a large portfolio of
securities classified as "available-for-sale." Other sources of liquidity
include letters of credit, overnight federal funds, and reverse repurchase
agreements available from correspondent banks.  The total lines of credit
available from correspondent banks at December 31, 2003, and 2002 were
$18,000,000. At December 31, 2001, they were $19,000,000.

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

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

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

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

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

<table>
<caption>
                           Interest Sensitivity Analysis
                               December 31, 2003

                                  After three
                      Within      but within   After one
                      Three       twelve       but within  After
                      Months      months       five years  five years   Total

                  <c>          <c>          <c>         <c>          <c>
Assets
Earning assets
 Federal funds sold  $29,525,781  $       -    $       -    $       -    $ 29,525,781
 Interest-bearing
  deposits               350,132    1,541,687      389,518          -       2,281,337
 Investment debt
  securities          25,031,814   51,860,780   76,795,464    2,559,062   156,247,120
 Loans               161,092,488    1,043,615    2,031,134      263,048   164,430,285
Total earning assets$216,000,215  $54,446,082  $79,216,116  $ 2,822,110  $352,484,523

Liabilities
Interest-bearing deposits
 Money market       $ 50,318,633          -            -             -   $ 50,318,633
 Savings and NOW     114,896,131          -            -             -    114,896,131
 Certificates
  $100,000 and over    6,430,433    8,640,956    4,966,374           -     20,037,763
 Certificates under
  $100,000            20,401,576   27,191,807    9,648,815           -     57,242,198
Securities sold under
 agreements
 to repurchase         4,113,154          -            -             -      4,113,154
Note payable               4,626       14,300       88,115        74,045      181,086
Total interest-bearing
 liabilities        $196,164,553  $35,847,063  $14,703,304  $     74,045 $246,788,965

Period gap          $ 19,835,662  $18,599,019  $ 64,512,812 $  2,748,065 $105,695,558
Cumulative gap      $ 19,835,662  $38,434,681  $102,947,493 $105,695,558

Ratio of cumulative gap
to total earning assets    5.63%       10.90%        29.21%       29.99%
</table>

<table>
<caption>
                         Investment Securities Maturity Distribution and Yields

                      December 31, 2003    December 31, 2002    December 31, 2001
                      Amount      Percent  Amount      Percent  Amount      Percent

                   <c>         <c>      <c>         <c>      <c>         <c>
US Treasury
 One year or less     68,496,088   0.97%   50,003,569   2.87%   31,483,510   4.81%
 Over one through
  five years          51,965,421   1.74%   40,065,506   2.58%   26,563,088   3.96%
 Over ten years        2,559,062   7.28%    2,603,120   7.28%    2,336,880   7.28%
Total U.S. Treasury
 securities          123,020,571   1.43%   92,672,195   2.87%   60,383,478   4.52%


U.S. Government Agencies
 One year or less      2,000,810   4.65%    1,000,000   4.49%    5,900,000   5.68%
 Over one through
  five years          15,000,000   2.31%   18,902,908   3.30%   13,505,013   4.84%
Total U. S. Government
 Agencies             17,000,810   2.59%   19,902,908   3.35%   19,405,013   5.09%

State, county, and municipal
 One year or less      6,395,697   1.72%    4,009,906   2.45%    4,138,392   5.54%
 Over one through
  five years           9,830,041   1.35%    4,203,610   2.34%    2,808,149   5.23%
Total state, county,
 and municipal        16,225,738   1.49%    8,213,516   2.39%    6,946,541   5.43%



Total debt securities
 One year or less     76,892,595   1.13%   55,013,475   2.87%   41,521,902   5.01%
 Over one through
  five years          76,795,462   1.80%   63,172,024   2.78%   42,876,250   4.32%
 Over ten years        2,559,062   7.28%    2,603,120   7.28%    2,336,880   7.28%
Total debt securities156,247,119   1.56%  120,788,619   2.92%   86,735,032   4.73%

Equity securities      2,685,158   2.70%    1,783,680   2.51%    1,637,219   3.03%

Total securities     158,932,277   1.58%  122,572,299   2.91%   88,372,251   4.70%
</table>

Deposits and Other Interest-Bearing Liabilities

     Average interest-bearing liabilities increased $17,588,168, or
7.81%, to  $242,771,617 in 2003, from  $225,183,449 in 2002. Average
interest-bearing deposits increased $18,425,292, or 8.37%, to
$238,447,362 in 2003, from  $220,022,070 in 2002, while average non-
interest bearing demand deposits increased $10,982,926, or 16.92% to
$75,898,439 in 2003, from $64,915,513 in 2002.  At December 31, 2003,
total deposits were $317,946,053, compared to $301,495,466 at December 31,
s2002, an increase of 5.46%.

     Average interest-bearing liabilities increased $29,103,756, or
14.84%, from $196,079,693 in 2001, to $225,183,449 in 2002. Average
interest-bearing deposits increased $28,291,212, or 14.76%, from
$191,730,858 in 2001, to $220,022,070 in 2002, while average demand
deposits increased $9,036,119, or 16.17% from $55,879,394 in 2001, to
$64,915,513 in 2002.  At December 31, 2002, total deposits were
$301,495,466, compared to $274,149,181 at December 31, 2001, an increase
of 9.97%.

     The following table sets forth the deposits of the Company by category as
of December 31, 2003, 2002, and 2001,
respectively.

<table>
<caption>
                                            December 31,
                             2003                  2002                  2001
                                 Percent of            Percent of            Percent of
                      Amount     deposits   Amount     deposits   Amount     deposits

                  <c>         <c>       <c>         <c>       <c>         <c>
Demand deposits     $ 75,601,460  23.78%  $ 73,289,541  24.31%  $ 60,508,663  22.07%
NOW accounts          63,400,879  19.94%    57,009,892  18.91%    45,639,869  16.65%
Money market          50,168,501  15.78%    46,942,638  15.57%    40,739,491  14.86%
Savings accounts      51,495,252  16.20%    45,514,226  15.10%    38,306,292  13.97%
Time deposits less than
$100,000              57,242,198  18.00%    62,897,083  20.86%    68,212,949  24.88%
Time deposits of $100,000 or
more                  20,037,763   6.30%    15,842,086   5.25%    20,741,917   7.57%
 Total deposits     $317,946,053 100.00%  $301,495,466 100.00%  $274,149,181 100.00%
</table>

     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 increased
$12,254,910 and $32,246,116 during 2003 and 2002, respectively.
Management believes that this increase is largely attributable to a
migration of funds from the stock market into insured deposits. 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, 2003, is shown in the following table.

                             Maturities of Certificates of Deposit
                          and Other Time Deposits of $100,000 or More
<table>
<caption>
                                                    After six
                                     After three     through
                       Within three    through       Twelve     After twelve
                          months     six months      months        months     Total

                   <c>            <c>            <c>         <c>         <c>
Certificates of deposit
of $100,000 or more  $ 6,430,433   $ 2,134,033    $ 6,506,923 $ 4,966,374  $20,037,763
</table>

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


Noninterest Income

     Noninterest income for 2003 decreased $166,469, or 9.62% from the
previous year.  This includes a decrease of $267,844 related to a 2002
gain on the sale of property in Ocean View, Delaware.   Service charges on
deposit accounts increased $35,004 primarily due to increased deposit
balances.  Other non-interest income increase $66,371, of which $54,035
was the increase in cash surrender value of bank owned life insurance
policies with a face value of $4,000,000 which were purchased in August
2003.

     Noninterest income for 2002 increased $429,671, or 33.04% over the
previous year.  Of this, $267,844 was the gain on the sale of unimproved
real estate in Ocean View, Delaware.  Service charges on deposit accounts
contributed $140,195 of the increase due to fee increases implemented in
May and the growth of deposits.


     The following table presents the principal components of noninterest
income for the years ended December 31, 2003, 2002, and 2001,
respectively.

<table>
<caption>
                                              Noninterest Income
                                         2003        2002        2001

                                     <c>         <c>         <c>
Service charges on deposit accounts   $ 1,028,306 $   993,302 $   853,107
Other noninterest revenue                 535,531     469,160     447,528
Gain on sale of real estate              ____-___     267,844    ____-___
 Total noninterest income             $ 1,563,837 $ 1,730,306 $ 1,300,635

Noninterest income as a percentage
 of average total assets                    0.41%       0.50%       0.42%
</table>

Noninterest Expense

     Noninterest expense increased $121,481, or 1.87%, from 2002 to 2003.
Increased personnel costs of $204,573 were due to annual raises,
increased 401(k) expense, and increased cost of group insurance.
Occupancy expense increased due increase depreciation related to recent
building construction and renovation, as well as increased maintenance
costs incurred to improve and maintain the grounds surrounding branches.
Furniture and equipment expense decreased $36,346 mainly due to decreases
in service contract costs, and improved classification of certain
maintenance expenses.  Of the $127,364 decrease in other operating
expense, approximately $62,000 was directly attributable to the Ocean View
branch location, which previously operated as Calvin B. Taylor Bank of
Delaware, and its merger into the Calvin B. Taylor Bank of Berlin,
Maryland.

     Noninterest expense increased by $274,193, or 4.40%, from 2001 to
2002.  Increased personnel costs of $86,181 were due to annual raises,
increased 401(k) expense, and increased costs of group insurance.
Occupancy expense increased by $63,152 due to the Bank's adoption in 2001
of accrual basis accounting for real property taxes, which were previously
recorded on the cash basis.  Furniture and equipment expense decreased
$95,517 largely due to improved accounting classification of software
maintenance costs.  Of the $220,377 increase in other operating expense,
$138,091 was attributable to increased amortization expense resulting from
the Bank's 2001 data processing system upgrades, and improved accounting
classification of software maintenance costs.

     The following table presents the principal components of noninterest
expense for the years ended December 31, 2003, 2002, and 2001,
respectively.

<table>
<caption>
                                              Noninterest Expense
                                         2003        2002        2001

                                     <c>         <c>         <c>
Compensation and related expenses     $ 3,827,414 $ 3,622,841 $ 3,536,660
Occupancy expense                         536,269     455,651     392,499
Furniture and equipment expense           542,433     578,779     674,296
Advertising                               152,358     154,382     144,983
Business and product development           66,480      64,448      60,189
Computer software amortization             91,736     115,453      68,503
Computer software maintenance              97,570      91,141         -
Courier service                            93,457      96,120      96,726
Deposit insurance                          46,975      47,800      43,413
Director fees                              84,240      80,600      83,025
Dues, donations, and subscriptions         80,842      81,171      80,024
Freight                                    67,517      62,294      57,806
Liability insurance                        47,160      60,042      44,608
Postage                                   168,083     181,567     155,002
Professional fees                          37,551      72,399      52,400
Stationery and supplies                   125,593     158,965     252,686
Telephone                                 117,602     130,172     100,455
ATM fees                                  182,168     182,487     154,289
Miscellaneous                             256,213     263,868     228,423
 Total noninterest
   expense                            $ 6,621,661 $ 6,500,180 $ 6,225,987

Noninterest expense as a percentage
 of average total assets                    1.75%       1.86%       2.01%

</table>

Capital

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

     At December 31, 2003, the Company and the Bank exceeded the minimum
regulatory capital ratios, as set forth in the following table.

Analysis of Capital
<table>
<caption>
                                  Analysis of Capital
                               Required    Consolidated  Maryland   Delaware
                               Minimums    Company       Bank       Bank

                             <c>         <c>           <c>       <c>
2003
Total risk-based capital ratio  8.0%        39.1%         37.1%
Tier I risk-based capital ratio 4.0%        37.6%         35.9%
Tier I leverage ratio           3.0%        16.0%         14.9%

2002
Total risk-based capital ratio  8.0%        40.7%         38.9%
Tier I risk-based capital ratio 4.0%        39.4%         37.7%
Tier I leverage ratio           3.0%        15.9%         15.1%

2001
Total risk-based capital ratio  8.0%        36.8%         33.2%      60.9%
Tier I risk-based capital ratio 4.0%        35.6%         31.9%      59.7%
Tier I leverage ratio           3.0%        17.1%         15.5%      22.4%
</table>

Accounting Rule Changes

     The following recent accounting pronouncements would apply to the Company
if the Company or the Bank entered into an applicable activity.

     FASB Statement No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities, improves financial reporting by requiring
that contracts with comparable characteristics be accounted for similarly.  In
particular, this statement (1) clarifies under what circumstances a contract
with an initial net investment meets the characteristic of a derivative
discussed in paragraph 6(b) of Statement No. 133, (2) clarifies when a
derivative contains a financing component, and (3) amends certain other
pronouncements.  This Statement is effective for contacts and hedging
relationships entered into or modified after September 30, 2003.

     FASB Statement No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity, requires that an issuer
classify a financial instrument that is within its scope as a liability.
This Statement is effective for financial instruments entered into or modified
after May 31, 2003.

     FASB Interpretation No. 46, Consolidation of Variable Interest Entities,
An Interpretation of ARB No. 51, requires consolidation of variable interest
entities by the primary beneficiary.  This Interpretation is effective for the
first interim period or fiscal year beginning after June 15, 2003, for
variable interest entities created before February 1, 2003.  For entities
created after January 31, 2003, the effective date was immediate.

     SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired in a
Transfer, prohibits the "carrying over" of valuation allowances in loans and
securities acquired in a transfer.  At transfer, the assets are to be recorded
at the total of cash flows expected to be collected.  The SOP is effective for
loans acquired in fiscal years beginning after December 31, 2004.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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.

Item 8. Financial Statements and Supplementary Data

     In response to this Item, the information included on pages 1 through
21 of the Company's Annual Report to Shareholders for the year ended
December 31, 2003, is incorporated herein by reference.

PART III

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

     There have been no changes in or disagreements with accountants on
accounting or financial disclosure during the fiscal year covered by this
report.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures
     Within the ninety days prior to the date of this report, the Company's
management performed an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures and its
internal controls and procedures for financial reporting.  Disclosure
Controls are procedures that are designed to ensure that information
required to be disclosed in the Company's publicly filed reports is
reported in a timely manner.  As part of these controls, Management
reviews information gathered through systems developed for that purpose to
determine the nature of required disclosure.

     Internal controls are procedures designed to provide management with
reasonable assurance that assets are safeguarded, and that transactions
are properly authorized, executed, and recorded to permit the preparation
of financial statements in accordance with generally accepted accounting
principles.  Because of inherent limitations in any internal controls,
errors or irregularities may occur and not be detected.  The projection of
an evaluation of controls to future periods is subject to the risk that
procedures may become inadequate due to changes in conditions including
the degree of compliance with procedures.

     The Chief Executive Officer and the Treasurer of the Company have
concluded, based on the evaluation of disclosure controls and internal
controls that the financial information and disclosures included in
periodic SEC filings and the Company's financial statements are fairly
presented in conformity with generally accepted accounting principles.

Changes in Internal Controls
     There were no significant changes in the company's internal controls
or in other factors that could significantly affect internal controls,
including corrective actions with regard to significant deficiencies and
material weaknesses.

Audit Committee and Financial Expert
	The Board of Directors has adopted a written Audit Policy, which
serves as a charter for the Audit Committee.  The Audit Committee is
comprised of seven independent directors, including Chairman James R.
Bergey, Jr. who serves as the financial expert.

Item 10. Directors and Executive Officers

     In response to this item, the information included on page 4 of the
Company's Proxy Statement for Annual Meeting of Shareholders To Be Held on
May 12, 2004, is incorporated herein by reference.

Item 11. Executive Compensation

     In response to this item, the information included on page 4 of the
Company's Proxy Statement for Annual Meeting of Shareholders To Be Held on
May 12, 2004, is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     In response to this item, the information included on page 5 of the
Company's Proxy Statement for  Annual Meeting of Shareholders to be held
May 12, 2004, is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

     In response to this item, the information included on page 4 of the
Company's Proxy Statement for Annual Meeting of Shareholders to be held
May 12, 2004, is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

     In response to this item, the information included on page 6 of the
Company's Proxy Statement for Annual Meeting of Shareholders to be held
May 12, 2004, is incorporated herein by reference.


PART IV

Item 15. Exhibits, Financial Statement Schedules, 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, 2003.

(b)  Reports on Form 8-K
           No reports on Form 8-K were filed during the fourth quarter of the
           year ended December 31, 2003.

SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                CALVIN B. TAYLOR BANKSHARES, INC.
                (Registrant)

Date:   March 10, 2004	By: /s/ Reese F. Cropper, Jr.
                        Reese F. Cropper, Jr.
                        Chief Executive Officer
                        Chairman of the Board of Directors

Date:   March 10, 2004	By: /s/ Jennifer G. Hawkins
                        Jennifer G. Hawkins
                        Treasurer

     Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

Date:   March 10, 2004	By: /s/ James R. Bergey, Jr.
                        James R. Bergey, Jr., Director

Date:   March 10, 2004	By: /s/ James R. Bergey, Sr.
                        James R. Bergey, Sr., Director

Date:   ______________	By:
                        George H. Bunting, Jr., Director

Date:   March 10, 2004	By: /s/ John H. Burbage, Jr.
                        John H. Burbage, Jr., Director

Date:   March 10, 2004	By: /s/ Reese F. Cropper, Jr.
                        Reese F. Cropper, Jr.
                        Chief Executive Officer
                        Chairman of the Board of Directors

Date:   ______________	By:
                        Reese F. Cropper, III, Director

Date:   ______________	By:
                        Hale Harrison, Director

Date:   March 10, 2004	By: /s/ Gerald T. Mason
                        Gerald T. Mason, Director

Date:   March 10, 2004	By: /s/ William H. Mitchell
                        William H. Mitchell,
                        Vice President and Director

Date:   March 10, 2004	By: /s/ Joseph E. Moore
                        Joseph E. Moore, Director

Date:	March 10, 2004	By: /s/ Michael L. Quillin
                        Michael L. Quillin, Sr., Director

Date:	March 10, 2004	By: /s/ D. Bruce Rogers
                        D. Bruce Rogers, Director

Date:	March 10, 2004	By: /s/ Raymond M. Thompson
                        Raymond M. Thompson,
                        President and Director


Certification of Principal Executive Officer and Principal Financial Officer
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)

We, the undersigned, certify that to the best of our knowledge, based upon
a review of the Annual Report on Form 10-K for the period ended December
31, 2003 of the Registrant (the "Report"):

(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Registrant.

                 Calvin B. Taylor Bankshares, Inc.


Date: March 10, 2004 By: /s/  Reese F. Cropper, Jr.
                     Reese F. Cropper, Jr.
                     Chairman & Chief Executive Officer
                     (Principal Executive Officer)


Date: March 10, 2004 By: /s/  Jennifer G. Hawkins
                     Jennifer G. Hawkins
                     Treasurer
                     (Principal Financial Officer)



Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Reese F. Cropper, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Calvin B. Taylor
Bankshares, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
quarterly period in which this annual report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of the annual report (the "Evaluation Date");
and
a. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
the annual report whether or not there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

                Calvin B. Taylor Bankshares, Inc.


Date: March 10, 2004 By: /s/  Reese F. Cropper, Jr.
                     Reese F. Cropper, Jr.
                     Chairman & Chief Executive Officer
                     (Principal Executive Officer)


Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jennifer G. Hawkins, certify that:

1. I have reviewed this annual report on Form 10-K of Calvin B.
Taylor Bankshares, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
quarterly period in which this annual report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of the annual report (the "Evaluation Date");
and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
the annual report whether or not there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

                Calvin B. Taylor Bankshares, Inc.


Date: March 10, 2004 By: /s/  Jennifer G. Hawkins
                     Jennifer G. Hawkins
                     Treasurer
                     (Principal Financial Officer)








                     EXHIBIT 13

            ANNUAL REPORT TO SHAREHOLDERS
        FOR THE YEAR ENDED DECEMBER 31, 2003


























                              Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary

                                     Financial Statements

                                      December 31, 2003































                              Calvin B. Taylor Bankshares, Inc.
                                       and Subsidiary

                                      Table of Contents



                                                               Page

Report of Independent Auditors                                  1

Consolidated Financial Statements

  Consolidated Balance Sheets                                   2

  Consolidated Statements of Income                             3

  Consolidated Statements of Changes in Stockholders' Equity    4

  Consolidated Statements of Cash Flows                         5-6

  Notes to Consolidated Financial Statements                    7-21











             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, 2003,
2002, and 2001, and the related consolidated statements of income,
changes in stockholders' equity, and cash flows for the years then ended.
These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

	We conducted our audits in accordance with auditing standards
generally accepted in the United States of America.  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, 2003,
2002, and 2001, and the results of their operations and their cash flows
for the years then ended in conformity with accounting principles
generally accepted in the United States of America.




                                                /s/ Rowles & Company, LLP


Salisbury, Maryland
January 15, 2004



<page>
<table>
<caption>
                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                                  Consolidated Balance Sheets

                                                 December 31,
                                     2003            2002            2001
              Assets

                               <c>             <c>             <c>
Cash and due from banks          $ 20,482,866    $ 21,051,412    $ 18,397,266
Federal funds sold                 29,525,781      54,821,617      54,389,656
Interest-bearing deposits           2,281,337       1,432,205         879,000
Investment securities
 available for sale                 9,265,471       8,390,550       3,974,099
Investment securities held
 to maturity (approximate market
  value of $150,075,211,
  $115,470,092, and $85,604,080)  149,666,806     114,181,749      84,398,152
Loans, less allowance for loan
 losses of $2,187,277,
 $2,181,135, and $2,195,922       162,243,008     161,824,677     166,501,512
Premises and equipment              7,064,970       5,745,842       5,895,275
Accrued interest income             1,344,613       1,405,587       1,753,816
Computer software                     265,961         283,303         355,549
Deferred income taxes                     -               -           134,639
Bank owned life insurance           4,054,035             -               -
Other assets                          291,553         106,004         145,603
                                 $386,486,401    $369,242,946    $336,824,567

              Liabilities and Stockholders' Equity
Deposits
 Noninterest-bearing             $ 75,601,460    $ 73,289,541    $ 60,508,663
 Interest-bearing                 242,344,593     228,205,925     213,640,518
                                  317,946,053     301,495,466     274,149,181
Securities sold under
 agreements to repurchase           4,113,154       4,029,100       4,555,323
Pending purchases of investment
 securities                               -         2,990,830             -
Accrued interest payable              145,044         243,468         529,348
Note payable                          181,087         198,912         215,702
Deferred income taxes                 355,632          70,156             -
Other liabilities                     109,399         199,728         132,443
                                  322,850,369     309,227,660     279,581,997
              Stockholders' equity
 Common stock, par value $1 per
  share; authorized 10,000,000
  shares; issued and outstanding
  3,227,966 shares at December 31,
  2003 and 3,240,000 shares at
  December 31, 2002 and 2001        3,227,966       3,240,000       3,240,000
  Additional paid-in capital       16,869,085      17,290,000      17,290,000
  Retained earnings                42,391,363      38,788,018      36,274,102
                                   62,488,414      59,318,018      56,804,102
  Accumulated other
   comprehensive income             1,147,618         697,268         438,468
                                   63,636,032      60,015,286      57,242,570
                                 $386,486,401    $369,242,946    $336,824,567
</table>

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

                                          2
<page>
<table>
<caption>

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

                                           Years Ended December 31,
                                     2003            2002            2001

                               <c>             <c>             <c>
0Interest and dividend revenue
 Loans, including fees           $ 12,115,447    $ 13,095,218    $ 14,179,181
 U. S. Treasury and government
  agency securities                 2,817,600       3,456,932       3,540,767
 State and municipal securities       219,806         224,662         332,035
 Federal funds sold                   540,804         922,620       1,412,927
 Time certificates of deposit          42,363          41,661          46,354
 Equity securities                     43,227          37,792          34,090
Total interest and dividend
  revenue                          15,779,247      17,778,885      19,545,354

Interest expense
 Deposit interest                   2,110,465       3,996,749       6,173,101
 Other                                 21,493          40,848          75,287
   Total interest expense           2,131,958       4,037,597       6,248,388
   Net interest income             13,647,289      13,741,288      13,296,966

Provision for loan losses                 -            25,000          22,985
   Net interest income after
    provision for loan losses      13,647,289       13,716,288      13,273,981

Other operating revenue
 Service charges on deposit
   accounts                        1,028,306          993,302         853,107
 Other noninterest revenue           535,530          469,160         447,528
 Gain on sale of real estate             -            267,844             -
   Total other operating revenue   1,563,836        1,730,306       1,300,635

Other expenses
 Salaries                          3,092,919        2,994,325       2,943,241
 Employee benefits                   734,495          628,516         593,419
 Occupancy                           536,269          455,651         392,499
 Furniture and equipment             542,433          578,779         674,296
 Other operating                   1,715,545        1,842,909       1,622,532
   Total other expenses            6,621,661        6,500,180       6,225,987

Income before income taxes         8,589,464        8,946,414       8,348,629

Income taxes                       3,049,250        3,192,498       2,934,225

Net income                        $5,540,214       $5,753,916      $5,414,404

Earnings per common share               $1.71            $1.78           $1.67
</table>










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

                                          3
<page>
<table>
<caption>

                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                   Consolidated Statements of Changes in Stockholders' Equity


                                                                       Accumulated
                                                                         other
                            Common stock      Additional  Retained   comprehensive  Comprehensive
                        Shares   Par value Paid-in capitalearnings      income         income

                  <c>         <c>        <c>           <c>          <c>          <c>
Balance, December 31, 2000
                     3,240,000  $3,240,000 $17,290,000   $32,058,498   $496,711
Net income                 -           -           -       5,414,404       -         $5,414,404
Unrealized loss on
 investment securities
 available for sale
 net of income taxes       -           -           -             -     (58,243)         (58,243)
Comprehensive income                                                                 $5,356,161
Cash dividend,
 $.37 per share            -           -           -      (1,198,800)       -
Balance, December 31, 2001
                     3,240,000   3,240,000  17,290,000    36,274,102    438,468
Net income                 -           -           -       5,753,916        -        $5,753,916
Unrealized gain on
 investment securities
 available for sale
 net of income taxes       -           -           -             -      258,800         258,800
Comprehensive income                                                                 $6,012,716
Cash dividend,
 $1.00 per share           -           -           -      (3,240,000)       -
Balance, December 31, 2002
                     3,240,000   3,240,000  17,290,000    38,788,018    697,268

Net income                 -           -           -       5,540,214         -        $5,540,214
Unrealized gain on investment
 securities available for sale
 net of income taxes       -           -           -             -      450,350         450,350
Comprehensive income                                                                 $5,990,564
Common shares retired  (12,034)    (12,034)   (420,915)          -          -
Cash dividend,
 $.60 per share            -           -           -      (1,936,869)       -


Balance, December 31, 2003
                     3,227,966 $ 3,227,966 $16,869,085   $42,391,363 $1,147,618
</table>









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

                                          4
<page>
<table>
<caption>

                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                              Consolidated Statements of Cash Flows


                                           Years Ended December 31,
                                     2003            2002            2001

                               <c>             <c>             <c>
Cash flows from operating activities
 Interest received              $ 15,761,248     $ 17,961,046    $ 19,541,166
 Fees and commissions received     1,507,872        1,462,551       1,361,593
 Interest paid                    (2,230,381)      (4,323,477)     (6,222,559)
 Cash paid to suppliers
  and employees                   (6,026,828)      (5,909,413)     (5,731,055)
  Income taxes paid               (3,232,338)      (2,997,807)     (3,075,025)
                                   5,779,573        6,192,900       5,874,120

Cash flows from investing activities
 Certificates of deposits
  purchased, net of maturities      (699,000)        (553,205)        (95,000)
 Purchase of investments
  available for sale                (182,500)      (3,994,520)            -
 Proceeds from maturities of
  investments held to maturity   107,310,000       91,445,000      57,857,000
 Purchase of investments held
  to maturity                   (145,709,919)    (118,071,995)    (65,799,078)
 Loans made, net of principal
  collected                         (418,331)       4,651,835       2,046,702
 Proceeds from sale of premises
  and equipment                          -            503,160          17,000
 Purchases of and deposits on
  premises,equipment,and
  computer software               (1,941,071)        (650,339)     (1,063,655)
 Purchase of bank owned
  life insurance                  (4,000,000)             -                -
                                 (45,640,821)      (26,670,064)    (7,037,031)


Cash flows from financing activities
 Net increase (decrease) in
   Time deposits                  (1,459,208)      (10,215,697)    15,567,519
   Other deposits                 17,909,795        37,561,982     26,655,470
   Securities sold under
     agreements to repurchase         84,054          (526,223)     1,441,652
 Payments on note payable            (17,825)          (16,791)       (15,814)
 Purchases and retirement of
  common shares                     (432,949)              -              -
 Dividends paid                   (1,936,869)       (3,240,000)    (1,198,800)
                                  14,146,998        23,563,271     42,450,027


Net increase (decrease) in cash
 and cash equivalents            (25,714,250)        3,086,107     41,287,116

Cash and cash equivalents
 at beginning of year             75,873,029        72,786,922     31,499,806
Cash and cash equivalents
 at end of year                  $50,158,779       $75,873,029    $72,786,922
</table>



The accompanying notes are an integral part of these financial statements.
                                          5
<page>
<table>
<caption>

                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                              Consolidated Statements of Cash Flows
                                           (Continued)

                                           Years Ended December 31,
                                     2003            2002            2001

                               <c>             <c>             <c>
Reconciliation of net income to net
 cash provided by operating
 activities
 Net income                     $  5,540,214    $  5,753,916   $  5,414,404

 Adjustments to reconcile net
  income to net cash provided
  by operating activities
   Depreciation and amortization     633,383         629,738        528,247
   Provision for loan losses             -            25,000         22,985
   Deferred income taxes              46,409          41,961          9,234
   Amortization of premiums and
    accretion of discounts, net      (78,972)       (166,068)      (198,571)
   (Gain) loss on disposition of
    assets                             5,902        (260,880)       (12,365)
   Decrease (increase) in
     Accrued interest receivable      60,974         348,229        194,383
     Cash surrender value of bank
      owned life insurance           (54,035)            -              -
     Other assets                   (185,549)         (8,914)       (54,566)
   Increase (decrease) in
     Accrued interest payable        (98,424)       (285,880)        25,829
     Accrued income taxes                -           152,730       (101,520)
     Other liabilities               (90,329)        (36,932)        46,060
                                $  5,779,573    $  6,192,900   $  5,874,120



Composition of cash and cash equivalents
   Cash and due from banks      $ 20,482,866    $ 21,051,412   $ 18,397,266
   Federal funds sold             29,525,781      54,821,617     54,389,656
   Interest-bearing deposits,
     except for time deposits        150,132             -              -
                                $ 50,158,779    $ 75,873,029   $ 72,786,922
</table>





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

                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                           Notes to Consolidated Financial Statements


1.  Summary of Significant Accounting Policies

     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, Maryland and Sussex County,
Delaware.  The accounting and reporting policies reflected in the
financial statements conform to generally accepted accounting principles
and to general practices within the banking industry.  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.  All significant intercompany balances and transactions have
been eliminated in consolidation.

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

Investment securities
     As securities are purchased, management determines if the securities
should be classified as held to maturity or available for sale.  Securities
which management has the intent and ability to hold to maturity are recorded
at amortized cost which is cost adjusted for amortization of premiums and
accretion of discounts to maturity.  Securities classified as available-for-
sale are recorded at fair value.
     Gains and losses on disposal are determined using the specific-
identification method.

Loans and allowance for loan losses
     Loans are stated at face value less the allowance for loan losses.
Interest on loans is credited to income based on the principal amounts
outstanding.  The accrual of interest is discontinued when any portion of
the principal or interest is ninety days past due and collateral is
insufficient to discharge the debt in full.
     The allowance for loan losses is maintained at a level deemed appropriate
by management to provide adequately for known and inherent risks in the loan
portfolio.  The minimum range of the allowance for loan losses is calculated
by applying risk-weighted percentages to loans based on their delinquency
and underlying collateral.  The portion of the allowance that is a result of
geographic and industry concentrations and current economic conditions is not
allocated to specific loans.  At December 31, 2003, the allowance included
approximately $1,073,546 that was not allocated to specific loans.  Management
has historically maintained the allowance at a level of approximately 1.30%
to 1.35% of gross loans.


                                          7
<page>

                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                           Notes to Consolidated Financial Statements


1.   Summary of Significant Accounting Policies (Continued)

Loans and allowance for loan losses (continued)

     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 that are deemed to be uncollectible are charged off and deducted from
the allowance.  The provision for loan losses and recoveries on loans
previously charged off are added to the allowance.
     Loans are considered impaired when, based on current information,
management considers it unlikely that collection of principal and interest
payments will be made according to contractual terms.  Generally, loans are
not reviewed for impairment until the accrual of interest has been discontinued.

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

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

Bank owned life insurance
     The Company records increases in cash surrender value of bank owned
life insurance as current period income based on projections provided by the
underwriting company.

Advertising
     Advertising costs are expensed as incurred.

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

Per share data
     Earnings per common share are determined by dividing net income by the
weighted average of shares outstanding for the period.  The weighted average
of common shares outstanding was 3,235,767, 3,240,000, and 3,240,000 shares
outstanding, for the years ended December 31, 2003, 2002, and 2001,
respectively.

2.   Cash and Due From Banks

     The Company normally carries balances with other banks that exceed the
federally insured limit.  The average balances carried in excess of the
limit, including unsecured federal funds sold to the same banks, were
$53,869,724 for 2003, $59,942,898 for 2002, and $53,138,449 for 2001.
     Banks are required to carry noninterest-bearing cash reserves at specified
percentages of deposit balances. The Company's normal amount of cash on hand
and on deposit with other banks is sufficient to satisfy the reserve
requirements.


                                          8
<page>

                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                           Notes to Consolidated Financial Statements


3.   Investment Securities

     Included in investment securities are purchase commitments
entered into before December 31, 2002, for settlement after December 31,
2002.  The obligation for these commitments is recorded as pending
purchases of investment securities.  Investment securities are summarized
as follows:
<table>
<caption>
                           Amortized    Unrealized    Unrealized   Market
                             cost          gains        losses      value

                     <c>             <c>            <c>     <c>
December 31, 2003
Available for sale
  U.S. Treasury         $  5,991,862    $  588,451   $    -    $  6,580,313
  Equity                   1,448,208     1,236,950        -       2,685,158
                        $  7,440,070    $1,825,401   $    -    $  9,265,471
Held to maturity
  U.S. Treasury         $116,440,258    $  416,411   $ 34,334  $116,822,335
  U.S. Government agency  17,000,810        69,385     60,879    17,009,316
  State and municipal     16,225,738        34,016     16,195    16,243,559
                        $149,666,806    $  519,812   $111,408  $150,075,210

December 31, 2002
Available for sale
  U.S. Treasury         $  5,988,858    $  618,012   $    -    $  6,606,870
  Equity                   1,265,708       552,416     34,444     1,783,680
                        $  7,254,566    $1,170,428   $ 34,444  $  8,390,550
Held to maturity
  U.S. Treasury         $ 86,065,325    $  992,655   $    -    $ 87,057,980
  U.S. Government agency  19,902,908       211,063        -      20,113,971
  State and municipal      8,213,516        85,275        650     8,298,141
                        $114,181,749    $1,288,993   $    650  $115,470,092


December 31, 2001
Available for sale
  U.S. Treasury         $  1,994,041    $   42,839   $    -    $  2,336,880
  Equity                   1,265,708       455,713     84,202     1,637,219
                        $  3,259,749    $  798,552   $ 84,202  $  3,974,099

Held to maturity
  U.S. Treasury         $ 58,046,598    $  920,257   $  5,952  $ 58,960,903
  U.S. Government agency  19,405,013       230,276     12,389    19,622,900
  State and municipal      6,946,541        73,832         96     7,020,277
                        $ 84,398,152    $1,224,365   $ 18,437  $ 85,604,080
</table>
                                          9
<page>

                                Calvin B. Taylor Bankshares, Inc.
                                         and Subsidiary
                           Notes to Consolidated Financial Statements


3.   Investment Securities (Continued)

     All investment securities with unrealized losses have been in a
continuous loss position for less than twelve months.  The table
below summarizes investment securities with unrealized losses as of
December 31, 2003.


<table>
<caption>
                             Amortized    Unrealized   Market
                               cost         losses      value

                       <c>             <c>          <c>
December 31, 2003
Held to maturity
   U.S. Treasury          $ 14,988,119    $ 34,334     $ 14,953,785
   U.S. Government Agency    8,750,000      60,879        8,689,121
   State and municipal       5,778,066      16,195        5,761,871
                          $ 29,516,185    $111,408     $ 29,404,777
</table>

     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.

<table>
<caption>
                       December 31, 2003        December 31, 2002       December 31, 2001
                      Amortized   Market         Amortized  Market       Amortized  Market
                         cost      value           cost     value          cost     value

                  <c>          <c>           <c>         <c>          <c>         <c>
Available for sale due
 In one year         $3,997,243   $4,021,251   $      -     $       -    $      -    $      -
 After one year
  through five years       -             -      3,994,528     4,003,750         -           -
 After ten years      1,994,619    2,559,062    1,994,330     2,603,120   1,994,041   2,336,880
                     $5,991,862   $6,580,313   $5,988,858   $6,606,870   $1,994,041  $2,336,880

Held to maturity due
 In one year        $72,871,344  $73,184,592  $55,013,475  $55,394,968  $41,521,902 $42,125,457
 After one year
  through five years 76,795,462   76,890,618   59,168,274   60,075,124   42,876,250  43,478,623
                   $149,666,806 $150,075,210 $114,181,749 $115,470,092  $84,398,152 $85,604,080

Pledged securities
                    $21,790,367  $21,870,641  $20,868,000  $21,248,011  $21,058,134 $21,517,135
</table>

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


                                         10
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements


4.   Lines of Credit

     The Company has available lines of credit, including overnight federal
funds, reverse repurchase agreements and letters of credit, totaling
$18,000,000 as of December 31, 2003 and December 31, 2002, and $19,000,000
as of December 31, 2001.

5.   Loans and Allowance for Loan losses

     Major classifications of loans are as follows:
<table>
<caption>
                                     2003            2002            2001

                              <c>             <c>             <c>
Commercial                      $ 13,199,879    $ 12,765,723    $ 15,341,122
Real estate                      127,722,747     139,354,241     146,258,549
Construction                      20,877,036       8,447,354       2,117,685
Consumer                           2,630,623       3,438,494       4,980,078
                                 164,430,285     164,005,812     168,697,434
Allowance for loan losses          2,187,277       2,181,135       2,195,922
Loans, net                      $162,243,008    $161,824,677    $166,501,512
</table>
     The rate repricing distribution of the loan portfolio follows:
<table>

                             <c>             <c>             <c>
Immediately                     $160,730,764    $160,567,318    $164,098,147
Within one year                    1,405,338         813,678       1,728,296
Over one to five years             2,031,134       2,197,969       2,648,073
Over five years                      263,049         426,847         222,918
                                $164,430,285    $164,005,812    $168,697,434
</table>

     Outstanding loan commitments, lines of credit, and letters of credit
are as follows:
<table>

				 <c>            <c>              <c>
Loan commitments and lines
  of credit
 Construction and land
  development                   $ 10,495,735    $ 10,557,644    $  6,456,910
 Other                            15,036,346      11,876,437       8,639,337
                                $ 25,532,081    $ 22,434,081    $ 15,096,247

Standby letters of credit       $  2,957,508    $  1,726,127    $  3,243,063
</table>

     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.


                                         11
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements


5.   Loans and Allowance for Loan losses (Continued)

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

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

     Transactions in the allowance for loan losses were as follows:
<table>
<caption>
                                     2003            2002            2001

                              <c>             <c>             <c>
Beginning balance               $  2,181,135    $  2,195,922    $  2,192,755
Provision charged to operations          -            25,000          22,985
Recoveries                             9,565           8,983           4,906
                                   2,190,700       2,229,905       2,220,646
Loans charged off                      3,423          48,770          24,724
Ending balance                  $  2,187,277    $  2,181,135     $ 2,195,922
</table>

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

                                  <c>             <c>             <c>
Commercial                      $     55,795    $     17,370     $   122,420
Real estate                          251,658         250,206         343,136
Consumer                               7,942          15,280          50,883
                                $    315,395    $    282,856     $   516,439
</table>

     Management has identified no impaired loans at December 31, 2003,
2002, and 2001.  Accrual of interest had been discontinued on one loan
with a balance of $2,222 at December 31, 2002.  There were no non-
accruing loans at December 31, 2003 and 2001.

6.   Lease Commitments

     The Company leases the land on which the Route 50 branch in East
Berlin is located.  The lease obligation, which expires August 31,
2009, requires payments as follows:

                                                  Minimum
                     Period                       rentals

                      2004                        15,000
                      2005                        15,000
                      2006                        15,000
                      2007                        15,000
                      2008                        15,000
                      2009                        10,000
                                               $  85,000



                                         12
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements


7.   Premises and Equipment

     A summary of premises and equipment and the related depreciation
is as follows:
<table>
<caption>
                         Estimated
                         useful life      2003            2002            2001

                                   <c>             <c>             <c>
Land                                  $ 1,893,946     $ 1,659,793     $ 1,891,950
Premises                 5 - 50 years   6,423,636       5,028,225       4,826,954
Furniture and equipment  5 - 40 years   3,446,813       3,326,082       3,652,244
Construction in progress                      -           210,583             -
                                       11,764,395      10,224,683      10,371,148
Accumulated depreciation                4,699,425       4,478,841       4,475,873
Net premises and equipment            $ 7,064,970     $ 5,745,842     $ 5,895,275

Depreciation expense                  $   541,647     $   514,285     $   459,744

</table>

8.   Deposits

     Major classifications of interest-bearing deposits are as follows:
<table>
                                          2003            2002            2001

                               <c>             <c>             <c>
Money market                      $ 50,168,501    $ 46,942,638    $ 40,739,491
Savings and NOW                    114,896,131     102,524,118      83,946,161
Other time                          77,279,961      78,739,169      88,954,866
                                  $242,344,593    $228,205,925    $213,640,518
</table>

     The rate repricing distribution of other time deposits follows:
<table>

                                <c>             <c>             <c>
Three months or less              $ 26,832,009    $ 28,235,099    $ 28,071,706
Over three through twelve months    35,832,764      36,006,763      48,240,152
Over one through two years          14,615,188      14,497,307      12,643,008
                                  $ 77,279,961    $ 78,739,169    $ 88,954,866
</table>

     Included in other time deposits are certificates of deposit of
$100,000 or more as follows:
<table>

                                <c>             <c>             <c>
Amount outstanding                $ 20,037,763    $ 15,842,086    $ 20,741,917
Interest expense                  $    324,822    $    597,603    $    987,329
</table>

                                         13
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements


9.   Securities Sold Under Agreements to Repurchase

     Securities sold under agreements to repurchase represent overnight
borrowings from customers.  The government agency securities that
collateralize these agreements are owned by the Company but maintained in
the custody of an unaffiliated bank designated by the Company.  Additional
information follows.
<table>
                                          2003            2002            2001

                                  <c>            <c>             <c>
Maximum month-end amount outstanding$ 6,542,540     $ 6,531,215     $ 5,383,038
Average amount outstanding            4,134,892       4,957,151       4,125,782
Average rate paid during the year          .24%            .57%           1.50%
Investment securities underlying the
agreements at year end
  Carrying value                     16,993,472      15,994,905      13,991,479
  Estimated fair value               17,050,781      16,306,570      14,327,220
</table>

10.  Note Payable

     The Company purchased real estate, financing 100% of the purchase
price.  The 6% unsecured note has a final maturity of September, 2011.
Maturities of this note are as follows:

                    2004                    $  18,925
                    2005                       20,092
                    2006                       21,332
                    2007                       22,647
                    2008                       24,044
               Remaining years                 74,047
                                             $181,087

11.   Profit Sharing Plan

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

The total cost of the profit sharing plan for 2003, 2002, and 2001,
were $170,395, $146,568, and $140,620, respectively.


                                         14
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements

12.  Other Operating Expenses

     The components of other operating expenses follow:
<table>
                                           2003           2002           2001

                                  <c>            <c>            <c>
Advertising                          $  152,358    $   154,382    $   144,983
Business and product development         66,480         64,448         60,189
Computer software amortization           91,736        115,453         68,503
Computer software maintenance contracts  97,570         91,141            -
Courier service                          93,457         96,120         96,726
Deposit insurance                        46,975         47,800         43,413
Director fees                            84,240         80,600         83,025
Dues, donations, and subscriptions       80,842         81,171         80,024
Freight                                  67,517         62,294         57,806
Liability insurance                      47,160         60,042         44,608
Postage                                 168,083        181,567        155,002
Professional fees                        37,551         72,399         52,400
Stationery and supplies                 125,593        158,965        252,686
Telephone                               117,602        130,172        100,455
ATM fees                                182,168        182,487        154,289
Miscellaneous                           256,213        263,868        228,423
                                     $1,715,545     $1,842,909     $1,622,532
</table>

13.  Related Party Transactions

     The executive officers and directors of the Company enter into
loan transactions with the Banks in the ordinary course of business.
 The terms of these transactions are similar to the terms provided to
other borrowers entering into similar loan transactions.
<table>
                                          2003            2002           2001

                                <c>             <c>            <c>
Beginning balance                 $ 11,133,959    $ 11,079,167   $ 12,293,244
Advances                             8,550,318       6,034,153      4,833,136
Other increases                            -               -              -
                                    19,684,277      17,113,320     17,126,380
Repayments                           9,729,587       5,884,153      5,911,658
Other decreases                            -            95,208        135,555
Ending balance                    $  9,954,690    $ 11,133,959   $ 11,079,167
</table>

     Officers, directors, and employees are depositors of the Bank.  They
receive the same deposit rates and terms as other customers with similar
deposits.  As of December 31, 2003, the individual deposits in excess of
$100,000 of executive officers, directors, and their related interests
represented less than 3.0% of total deposits.

     The Company obtains legal services from a law firm in which one of the
principal attorneys is also a member of the Board of Directors.  Fees charged
for these services are at similar rates charged by unrelated law firms for
similar legal work.  Amounts paid to this related party totaled $3,490,
$1,235, and $2,003 during the years ended December 31, 2003, 2002, and 2001.

                                         15
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements


14.  Income Taxes

     The components of income tax expense are as follows:
<table>

                                          2003            2002            2001

                                 <c>             <c>             <c>
Current
 Federal                            $2,613,587      $2,772,796      $2,598,069
 State                                 389,254         377,740         326,922
                                     3,002,841       3,150,536       2,924,991
Deferred                                46,409          41,962           9,234
                                    $3,049,250      $3,192,498      $2,934,225
</table>

     The components of the deferred tax (benefit) are as follows:
<table>

                                    <c>             <c>              <c>
Provision for loan losses           $    (2372)     $    2,656      $     (754)
Non-accrual loan interest                   43             (43)            -
Depreciation                            47,512          32,334           5,317
Discount accretion                        (128)          3,191             412
Net operating loss carryforward
 for state income tax                     (163)            -               -
Organization costs                       1,517           3,824           4,259
                                    $   46,409      $   41,962      $    9,234
</table>

     The components of the net deferred tax asset (liability) are as follows:
<table>

                                    <c>             <c>             <c>
Deferred tax asset
 Allowance for loan losses          $  603,495      $  601,123      $  603,779
 Non-accrual loan interest                 -                43             -
 Net operating loss
  carryforward for state
  income tax                               163             -               -
 Organization costs                                      1,517           5,341
                                       603,658         602,683         609,120

Deferred tax liabilities
 Depreciation                          268,112         220,601         188,267
 Discount accretion                     13,395          13,523          10,332
 Unrealized gain on securities
  available for sale                   677,783         438,715         275,882
                                       959,290         672,839         474,481

  Net deferred tax asset (liability)$ (355,632)     $  (70,156)      $ 134,639
</table>

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

                                     <c>             <c>            <c>
Statutory federal income tax rate        34.0  %         34.0  %        34.0  %
Increase (decrease) in tax rate
 resulting from
  Tax-exempt income                      (1.5)           (1.1)          (1.5)
  State income taxes net of federal
   income tax benefit                     3.0             2.8            2.6
                                         35.5  %         35.7  %        35.1  %
</table>

                                         16
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements


15.   Fair Value of Financial Instruments

     The estimated fair values of the Company's financial instruments are
summarized below.  The fair values of a significant portion of these
financial instruments are estimates derived using present value techniques
prescribed by the Financial Accounting Standards Board 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
financial instruments equals the carrying value of the instruments except
as follows.

<table>
<caption>
                       December 31, 2003        December 31, 2002        December 31, 2001
                       Carrying      Fair        Carrying      Fair        Carrying      Fair
                        amount       value        amount       value        amount       value

                 <c>          <c>         <c>          <c>          <c>          <c>
Financial assets
 Cash and due from
  banks             $20,482,866  $20,632,954  $21,051,412  $21,163,525  $18,397,266  $18,510,175
 Interest-bearing
  deposits            2,281,337    2,305,344    1,432,205    1,469,452      879,000      906,928
 Investment
  securities        158,932,277  159,340,681  122,572,299  123,860,642   88,372,251   89,578,179
 Loans, net         162,243,008
Financial
liabilities
 Interest-bearing
  deposits         $242,344,593 $242,471,838 $228,205,925 $228,558,735 $213,640,518 $214,497,142
 Note payable           181,087      176,288      198,912      193,045      215,702      206,453
</table>

     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.

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

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

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



                                         17
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                          Notes to Consolidated Financial Statements


16.  Capital Standards

     The Federal Reserve Board and the Federal Deposit Insurance
Corporation have adopted risk-based capital standards for banking
organizations.  These standards require ratios of capital to assets
for minimum capital adequacy and to be classified as well
capitalized under prompt corrective action provisions.  The capital
ratios and minimum capital requirements of the Company are as
follows:
<table>
<caption>
                                                  Minimum       To be well
(in thousands)                    Actual      capital adequacy  capitalized
                               Amount  Ratio   Amount  Ratio   Amount  Ratio

                            <c>     <c>     <c>     <c>     <c>     <c>
December 31, 2003
Total capital
 (to risk weighted assets)     $65,082 39.1%   $13,299 8.0%    $16,624 10.0%
Tier 1 capital
 (to risk-weighted assets)     $62,488 37.6%   $ 6,650 4.0%    $ 9,974  6.0%
Tier 1 capital
 (to average fourth quarter
  assets)                      $62,488 16.0%   $15,636 4.0%    $19,545  5.0%

December 31, 2002
Total capital
 (to risk weighted assets)     $61,255 40.7%   $12,032 8.0%    $15,040 10.0%
Tier 1 capital
 (to risk-weighted assets)     $59,318 35.6%   $ 6,016 4.0%    $ 9,024  6.0%
Tier 1 capital
 (to average fourth quarter
  assets)                      $59,318 15.9%   $14,902 4.0%    $18,628  5.0%

December 31, 2001
Total capital
 (to risk weighted assets)     $58,800 36.8%   $12,791 8.0%    $15,989 10.0%
Tier 1 capital
 (to risk-weighted assets)     $56,804 35.6%   $ 6,396 4.0%    $ 9,593  6.0%
Tier 1 capital
 (to average fourth quarter
  assets)                      $56,804 17.1%   $13,329 4.0%    $16,661  5.0%
</table>

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

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

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

                                         18
<page>

                               Calvin B. Taylor Bankshares, Inc.
                                        and Subsidiary
                              Notes to Consolidated Financial Statements

17.  Parent Company Financial Information

<table>
<caption>
                                                    December 31,
Balance Sheets                             2003             2002            2001
                         Assets

                                     <c>             <c>              <c>
Cash and due from banks               $     52,244     $    353,604    $     57,513
Interest-bearing deposits                  650,132              -         1,512,125
Investment securities available for sale 2,685,158        1,783,680       1,637,219
Investment securities held to maturity     499,692          499,230             -
Investment in subsidiary bank           58,798,328       56,226,822      52,445,405
Premises and equipment                   1,342,696        1,375,315       1,640,946
Other assets                               163,001            3,630          55,688
    Total assets                      $ 64,191,251     $ 60,242,281    $ 57,348,896

Liabilities and Stockholders' Equity

Liabilities
 Deferred income taxes                $    393,950     $    118,136    $      61,492
 Other liabilities                         161,269          108,859           44,834
                                           555,219          226,995          106,326
Stockholders' equity
 Common stock                            3,227,966        3,240,000        3,240,000
 Additional paid-in capital             16,869,085       17,290,000       17,290,000
 Retained earnings                      42,391,363       38,788,018       36,274,102
 Accumulated other comprehensive income  1,147,618          697,268          438,468
    Total stockholders' equity          63,636,032       60,015,286       57,242,570
    Total liabilities and stockholders' equity
                                      $ 64,191,251     $ 60,242,281     $ 57,348,896


                                              Years Ended December 31,
Statements of Income                      2003              2002            2001

Interest revenue                      $     12,678     $      37,066    $     25,816
Dividend revenue                            43,227            37,792          34,090
Dividends from subsidiary                2,936,869         1,944,000       2,698,800
Equity in undistributed income
  of subsidiary                          2,562,464         3,612,515       2,695,465
Gain on sale of real estate                    -             267,844             -
Rental income and other fees                 2,028             2,748           2,700
                                         5,557,266         5,901,965       5,456,871

Expenses
 Occupancy                                   3,777            15,831           6,115
 Furniture and equipment                     1,167             2,014           1,968
 Other                                      20,272            21,263          36,044
                                            25,216            39,108          44,127
Income before income taxes               5,532,050         5,862,857       5,412,744
Income taxes (benefit)                      (8,164)          108,941          (1,660)
Net income                            $  5,540,214     $   5,753,916    $  5,414,404
</table>
                                         19
<page>

                        Calvin B. Taylor Bankshares, Inc.
                                 and Subsidiary
                   Notes to Consolidated Financial Statements

17.	Parent Company Financial Information (Continued)

<table>
<caption>
                                               Years Ended December 31,
                                          2003              2002            2001

                                     <c>               <c>             <c>
Statements of Cash Flows
Cash flows from operating activities
  Interest and dividends received     $  2,992,141      $  2,012,520    $  2,749,579
  Rental payments received                  35,629            24,348          35,700
  Cash paid for operating expenses         (26,197)          (27,234)        (44,008)
  Income taxes refunded                   (100,483)            1,727          22,445
                                         2,901,090         2,011,361       2,763,716

Cash flows from investing activities
  Certificates of deposit purchased,
   net of maturities                      (500,000)        1,500,000      (1,500,000)
  Purchase of investments available
   for sale                               (182,500)              -           (15,767)
  Proceeds from maturities of
   investments held to maturity                -           1,500,000             -
  Purchase of investments held to maturity     -          (1,987,395)            -
  Proceeds from sale of premises
   and equipment                               -             500,000             -
  Purchase of premises and equipment           -                -            (64,126)
                                          (682,500)        1,512,605      (1,579,893)

Cash flows from financing activities
  Purchases and retirement of
   common shares                          (432,949)              -               -
  Dividends paid                        (1,936,869)       (3,240,000)     (1,198,800)
Net increase (decrease) in cash           (151,228)          283,966         (14,977)

Cash at beginning of year                  353,604            69,638          84,615
Cash at end of year                  $     202,376     $     353,604   $      69,638


Reconciliation of net income to net cash
 provided by operating activities
   Net income                        $   5,540,214      $  5,753,916    $  5,414,404
   Adjustments to reconcile net income
    to net cash used in operating
    activities
   Undistributed net income of
    subsidiary                          (2,562,464)       (3,612,515)     (2,695,465)
     Accretion of discount on
      debt securities                         (462)          (11,835)            -
     Depreciation                           32,619            33,475          33,120
     Gain on sale of assets                    -            (267,844)            -
     Increase (decrease) in deferred
      income taxes and other liabilities    50,554            64,106          44,900
     Decrease (increase) in other assets  (159,371)           52,058         (33,243)
                                      $  2,901,090      $  2,011,361    $  2,763,716
</table>




                                         20
<page>

                        Calvin B. Taylor Bankshares, Inc.
                                 and Subsidiary
                   Notes to Consolidated Financial Statements


18.	Quarterly Results of Operations (Unaudited)

<table>
<caption>
                                                 Three months ended
                       December 31,     September 30,    June 30,         March 31,

                    <c>              <c>              <c>              <c>
2003
Interest revenue       $3,826,749       $3,934,534       $4,024,543       $3,993,421
Interest expense          435,526          473,779          559,096          663,557
Net interest income     3,391,223        3,460,755        3,465,447        3,329,864
Provision for loan losses     -                -                -                -
Net income              1,308,544        1,429,125        1,450,040        1,352,505
Comprehensive income    1,372,451        1,288,388        1,994,551        1,335,174
Earnings per share          $0.40            $0.44            $0.45            $0.42

2002
Interest revenue       $4,227,559       $4,553,255       $4,555,972       $4,442,099
Interest expense          835,131          995,620        1,036,065        1,170,781
Net interest income     3,392,428        3,557,635        3,519,907        3,271,318
Provision for loan losses  25,000              -                -                -
Net income              1,441,829        1,491,997        1,540,177        1,279,913
Comprehensive income    1,500,543        1,658,031        1,608,412        1,245,730
Earnings per share          $0.45            $0.46            $0.47            $0.40

2001
Interest revenue       $4,804,117       $5,003,872       $4,882,457       $4,854,908
Interest expense        1,550,131        1,626,675        1,542,283        1,529,299
Net interest income     3,253,986        3,377,197        3,340,174        3,325,609
Provision for loan losses  22,985              -                -                -
Net income              1,165,144        1,400,912        1,491,492        1,356,856
Comprehensive income    1,126,589        1,416,605        1,453,466        1,359,501
Earnings per share          $0.36            $0.43            $0.46            $0.42
</table>











                                         21