UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549
Form 10-K

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

For the fiscal year ended December 31, 2002

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 past 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 ]

The aggregate market value of the Common Stock held by non-
affiliates of the registrant on December 31, 2002, was
$109,044,154. This calculation is based upon estimation by the
Company's Board of Directors of fair market value of the Common
Stock of $38.00 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 28, 2003, 3,240,000 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 7, 2003, is incorporated by reference in this Form
10-K in Part III, Item 10, Item 11, Item 12, and Item 13.



   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 other 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, credit cards, 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, 2002, the Bank employed 94 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 2003 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, 2002, the Company and
the Bank were qualified as "well capitalized."  For further
discussions, see "Item 7. Management's Discussion and Analysis or
Plan 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 locations are described as follows:

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

   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 2002.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

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

   As of February 28, 2003, there were approximately 996
holders of record of the common stock and 3,240,000 shares of
Common Stock issued and outstanding. There is no established public
trading market in the stock, and there is no likelihood that a
trading market will develop in the near future.  Transactions in
the common stock are infrequent and are negotiated privately
between the persons involved in those transactions.

   All outstanding shares of common stock of the Company are
entitled to share equally in dividends from funds legally
available, when, as, and if declared by the Board of Directors.
The Company paid dividends of $1.00 per share in 2002, $.37 per
share in 2001 and $.61 per share in 2000.  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.  Per share data
for 2000 is restated to give retroactive effect to the 2000 stock
split effected in the form of a 100% stock dividend.


Item 6. Selected Financial Data
   The following table presents selected financial data for the
five years ended December 31, 2002.  Prior period per share data is
restated to reflect 100% stock dividends paid in 1998 and 2000.

<table>
<caption>
                              2002     2001     2000     1999     1998

                           <c>      <c>      <c>      <c>      <c>
                         (Dollars in thousands, except for per share data)
At Year End
Total assets              $369,243 $336,825 $289,048 $288,921 $277,463
Total deposits            $301,495 $274,149 $231,926 $238,726 $230,618
Total loans, net of
 unearned income and
 allowance for loan
 losses                   $161,825 $166,502 $168,571 $152,001 $139,737
Total stockholders' equity $60,015  $57,243  $53,085  $49,220  $46,343

For the Year
Net interest income        $13,741  $13,297  $13,580  $12,221  $11,554
Net income                  $5,754   $5,414   $5,625   $5,020   $4,697

Per share data
Book value                  $18.52   $17.67   $16.38   $15.19   $14.31
Net income                  $ 1.78   $ 1.67   $ 1.74   $ 1.55   $ 1.45
Cash dividends declared     $ 1.00   $  .37   $  .61   $  .60   $  .33
</table>

Item 7. Management's Discussion and Analysis or Plan 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 2002 net income was $5,753,916,
compared to $5,414,404 for 2001, and $5,624,558 for 2000.  The
Company had a return on average equity of 9.83% and return on
average assets of 1.65% for 2002, compared to returns on average
equity of 9.54% and 10.84%, and returns on average assets of 1.75%
and 1.94%, for 2001 and 2000, respectively.



Results of Operations

   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.

   The Company's net income of $5,414,404, or $1.67 per share,
for the year ended December 31, 2001, was a decrease of $210,154,
or 3.74%, from the net income of $5,624,558, or $1.74 per share,
for the year ended December 31, 2000. Primarily responsible for
this decrease was the decline in net interest income and increased
personnel costs.   Net interest income decreased $283,039, or
2.08%, to $13,296,966 in 2001, from $13,580,005 in 2000.  This
decrease was the result of a lower net interest spread between the
rates on interest-earning assets and interest-bearing liabilities.
 Interest expense increased $388,357 while interest income
increased by $105,318.  The yield on interest-earning assets
decreased to 6.91% in 2001, from 7.39% in 2000, while the combined
yield on interest-bearing deposits and borrowed funds increased
from 3.06% to 3.19% for the same periods.

   Noninterest income and noninterest expense increased by
33.04% and 4.40%, respectively, during 2002 compared to 2001.
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, the increase in noninterest income from 2001 to 2002
would be 12.44%.   Noninterest income and noninterest expense
increased by 17.83% and 5.45%, respectively, during 2001 compared
to 2000.

   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 $276,658, 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.

   The Company's net income of $1,165,144 or $.36 per share, for
the quarter ended December 31, 2001, was a decrease of $273,045, or
18.99%, from the net income of $1,438,189, or $.44 per share, for
the quarter ended December 31, 2000. Primarily responsible was the
decrease in quarterly net interest income from $3,532,645 in fourth
quarter 2000 to $3,253,986 in fourth quarter 2001.  Management
attributes this $278,659 or 7.89% decline in net interest income to
several factors related to the national economic environment.
Decreased yields on federal funds sold and investment securities,
coupled with the banks' loan rate reductions caused interest income
to lag by $255,829 or 5.06% behind the comparable quarter last
year. Throughout the year, the banks' lowered the rate they pay on
time deposits.  In mid-fourth quarter, they lowered rates on
interest-bearing checking and savings deposits.

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 2002 was 4.32% compared to 4.74% for 2001 and
5.21% for 2000.  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, 2002          December 31, 2001          December 31, 2000
                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          $ 57,005  $  923    1.62%  $ 41,265  $1,413   3.42%   $ 27,035  $1,716    6.35%
Interest-bearing
deposits           1,504      42    2.77%       803      46   5.77%        833      46    5.53%
Investment securities:
 U. S. Treasury  74,482   2,806     3.77%    47,478   2,577   5.43%     52,382   3,009    5.74%
 U. S. Government
  Agency         18,231     802     4.40%    18,180   1,121   6.17%     14,102     924    6.55%
 State and
  municipal       7,697     337     4.38%     8,773     493   5.62%     11,045     601    5.44%
 Other            1,508      62     4.08%     1,508      49   3.26%      1,466      35    2.38%
  Total investment
  securities    101,918   4,007     3.93%    75,939   4,240   5.58%     78,995   4,569    5.78%
Loans:
 Commercial      15,022   1,197     7.97%    15,722   1,330   8.46%     16,670   1,372    8.23%
 Mortgage       148,399  11,545     7.78%   151,521  12,398   8.18%    142,159  11,666    8.21%
 Consumer         4,054     387     9.54%     5,061     475   9.38%      5,059     491    9.72%
  Total loans   167,475  13,129     7.84%   172,304  14,203   8.24%    163,888  13,529    8.26%
Allowance for loan
 losses           2,182                       2,188                      2,091
  Total loans, net
   of allowance 165,293  13,129     7.94%   170,116  14,203   8.35%    161,797  13,529    8.36%
Total interest-
 earning assets 325,721  18,101     5.56%   288,123  19,902   6.91%    268,660  19,860    7.39%
Noninterest-bearing
cash             15,400                      13,437                     12,658
Premises and
 equipment        5,904                       5,800                      5,774
Other assets      2,171                       2,137                      2,155
   Total assets$349,195 $18,101            $309,497 $19,902           $289,247 $19,860

Interest-bearing
 deposits
 Savings and NOW$90,124 $   776     0.86%  $ 76,033 $ 1,409   1.85%   $ 82,093 $ 1,531    1.86%
 Money market    46,890     581     1.24%    35,804     864   2.41%     38,001     946    2.49%
 Other time      83,008   2,641     3.18%    79,894   3,900   4.88%     69,456   3,345    4.82%
Total interest-
 bearing
 deposits       220,022   3,997     1.82%   191,731   6,173   3.22%    189,550   5,822    3.07%
Securities sold
 under agreements
 to repurchase    4,955      28     0.57%     4,126      62   1.50%      1,610      24    1.45%
Borrowed funds      207      12     6.04%       223      13   6.03%        239      14    6.02%
Total interest-bearing
liabilities     255,184   4,038     1.79%   196,080   6,248   3.19%    191,399   5,860    3.06%
Noninterest-bearing
deposits         64,916                      55,879                     45,144
                290,100   4,038     1.39%   251,959   6,248   2.48%    236,544   5,860    2.48%
Other liabilities   536                         759                        841
Stockholders'
 equity          58,559                      56,779                     51,863
 Total liabilities
  and stockholders'
  equity       $349,195  $4,038            $309,497  $6,248           $289,247  $5,860


Net interest spread                 3.76%                     3.72%                       4.33%
Net interest income     $14.063                     $13,654                     $14,000
Net margin on interest-
earning assets                      4.32%                     4.74%                       5.21%

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

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

                Year ended December 31,    Year ended December 31,    Year ended December 31,
                2002 compared with 2001    2001 compared with 2000    2000 compared with 1999
                    variance due to            variance due to            variance due to

                Total     Rate   Volume    Total     Rate   Volume    Total     Rate   Volume

             <c>       <c>    <c>       <c>       <c>    <c>       <c>       <c>    <c>
Earning assets
Interest-bearing
 deposits         (5)     (45)        40      -         2      (2)     (14)        2     (16)
Federal funds
 sold           (490)  (1,029)       539    (303)  (1,207)    904      454       358      96
Investment
 securities:
 U. S. Treasury  229   (1,237)     1,466    (431)    (150)   (281)    (735)      209    (945)
 U. S. Government
  Agency        (319)    (322)         3     198      (69)    267      612        78     534
 State and
  municipals    (155)     (95)       (60)   (109)      15    (124)    (175)       17    (192)
 Other            12       12          -      14       13       1        9        (6)     15
Loans:
 Commercial     (133)     (74)       (59)    (43)      35     (78)      43        27      17
 Mortgage       (853)    (598)      (255)    733      (35)    768    1,367        28   1,339
 Consumer        (88)       7        (95)    (17)     (17)      -       11         8       3
  Total interest
   revenue    (1,802)  (3,381)     1,579      42   (1,413)  1,455    1,572       721     851

Interest-bearing
 liabilities
Savings and NOW (633)    (894)       261    (122)      (9)   (113)     120      (134)    254
Money market    (284)    (551)       267     (82)     (27)    (55)    (386)       76    (462)
Other time dep(1,260)  (1,412)       152     555       52     503      313       289      24
Other borrowed
 funds           (34)     (45)        11      37        1      36       34         7      27
  Total interest
   expense    (2,211)  (2,902)       691     388       17     371       81       238    (157)

Net interest income
                 409     (479)       888    (346)  (1,430)  1,084    1,491       483   1,008
</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 $165,293,144, $170,116,213,
and $161,796,946 during 2002, 2001, and 2000, respectively, which
constituted 50.75%, 59.04%, and 60.22% of average interest-earning
assets for the periods.  The Company's loan to deposit ratio was
53.67%, 60.73%, and 72.68% at December 31, 2002, 2001, and 2000,
respectively.  Average loans to average deposits were 58.01%,
68.70%, and 68.94% for the same periods.  The decrease in the loan
to deposit ratio over the periods presented is primarily
attributable to dramatic 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, 2002, 2001 and 2000,
respectively.
<table>
<caption>
                                         Composition of Loan Portfolio

                    December 31, 2002          December 31, 2001          December 31, 2000
                                 Percent                    Percent                    Percent
                    Amount       of total      Amount       of total      Amount       of total

                 <c>          <c>           <c>          <c>           <c>          <c>
Commercial          12,765,723    7.78%        15,341,122    9.09%        15,588,946    9.13%
Real estate        139,354,241   84.97%       146,258,549   86.70%       148,468,890   86.94%
Construction         8,447,354    5.15%         2,117,685    1.26%         1,540,376    0.90%
Consumer             3,438,494    2.10%         4,980,078    2.95%         5,165,742    3.03%
  Total loans      164,005,812  100.00%       168,697,434  100.00%       170,763,954  100.00%
Less allowance for
 loan losses         2,181,135                  2,195,922                  2,192,755
  Net loans        161,824,677                166,501,512                168,571,199
</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, 2002.

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

                                    December 31, 2002
                                 Over one
                    One year     Through       Over five
                    or less      five years    years        Total

                 <c>          <c>           <c>          <c>
Commercial          12,765,723         -            -       12,765,723
Real estate        139,354,241         -            -      139,354,241
Construction         8,447,354         -            -        8,447,354
Consumer               813,678    2,197,969      426,847     3,438,494
   Total           161,380,996    2,197,969      426,847   164,005,812


Fixed interest rate    813,678    2,197,969      426,847     3,438,494
Variable interest
 rate (or demand)  160,567,318         -            -      160,567,318
   Total           161,380,996    2,197,969      426,847   164,005,812
</table>

   As of December 31, 2002, $160,567,318 or 97.90%, 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, 2002, 2001,
and 2000, respectively.
<table>
                                2002        2001        2000

                             <c>         <c>         <c>
Construction loans             4,746,954   6,456,910   2,964,536
Other loan commitments        12,041,437   8,639,337   3,192,350
Standby letters of credit      1,726,127   3,243,063   1,412,552
  Total                       18,514,518  18,339,310   7,569,438
</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 a reserve for
potential losses in the loan portfolio.  The adequacy of the
allowance for loan losses is evaluated periodically based on a
review of all significant loans, with a particular emphasis on non-
accruing, past due, and other loans that management believes
require attention.  The determination of the reserve level rests
upon management's judgment about factors affecting loan quality and
assumptions about the economy.  Management considers the year-end
allowance appropriate and adequate to cover possible losses in the
loan portfolio; however, management's judgment is based upon a
number of assumptions about future events, which are believed to be
reasonable, but which may or may not prove valid.  Thus, there can
be no assurance that charge-offs in future periods will not exceed
the allowance for credit loss or that additional increases in the
credit loss allowance will not be required.  The Company has a
history of low loan charge-offs.

   For significant problem loans, management's review consists
of evaluation of the financial strengths of the borrowers and
guarantors, the related collateral, and the effects of economic
conditions.  The overall evaluation of the adequacy of the total
allowance for 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 Bank's target level for
its allowance as a percentage of gross loans is between 1.30% and
1.35%.  This allowance may be increased for reserves for specific
loans identified as substandard during management's loan review.
Generally, the Company will not require a negative provision to
reduce the allowance as a result of either net recoveries or a
decrease in loans, even though this may cause the allowance as a
percentage of gross loans to exceed the Company's target.

   The provision for loan losses is a charge to earnings in the
current period to replenish the allowance and maintain it at a
level management has determined to be adequate.  As of December 31,
2002, 2001, and 2000, the respective allowances for loan losses
were 1.33%, 1.30%, and 1.28% of outstanding loans.

   The provision for loan losses was $25,000 in 2002, an
increase of $2,015 from the $22,985 provision in 2001.  After the
current year's provision, the Bank's allowance for loan loss
remained within its target range.  The 2001 provision represented a
decrease of $151,095 from the $174,080 provision in 2000.  This
decrease is due to the stable size and delinquency status of the
loan portfolio, and the low level of net charge-offs in 2001.


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

                 <c>        <c>    <c>       <c>    <c>        <c>
Commercial            139,005   6.37%   218,414   9.95%   167,626   7.64%
Real estate, including
 construction         864,111  39.62    913,449  41.60    810,790  36.98
Consumer              112,875   5.17    174,671   7.94    174,003   7.94
General             1,065,144  48.84    889,388  40.51  1,040,336  47.44
  Total             2,181,135 100.00% 2,195,922 100.00% 2,192,755 100.00%
</table>

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

                          <c>          <c>          <c>
Balance at beginning of year 2,195,922    2,192,755    2,082,031

Loan losses:
 Commercial                      6,816        3,741       56,193
 Mortgages                        -            -            -
 Consumer                       41,954       20,983       10,907
  Total loan losses             48,770       24,724       67,100

Recoveries on loans previously
charged off
 Commercial                      1,000        4,056        2,386
 Consumer                        7,983          850        1,358
  Total loan recoveries          8,983        4,906        3,744

Net loan losses                 39,787       19,818       63,356
Provision for loan losses
 charged to expense             25,000       22,985      174,080

Provision related to
commitments                       -            -            -
Balance at end
 of year                     2,181,135    2,195,922    2,192,755

Allowance for loan losses to loans
 outstanding at end of year      1.33%        1.30%        1.28%

Net charge-offs to average loans 0.02%        0.01%        0.04%
</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 one loan with a balance of
$2,222 on which the accrual of interest had been discontinued as of
December 31, 2002.  The Company had no nonperforming loans at
December 31, 2001, or 2000.

   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, 2002, 2001, or 2000.  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, 2002, 2001, or 2000.

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 61.71% of average deposits for 2002,
compared to 53.08% and 50.93% for 2001 and 2000, respectively.

   As of December 31, 2002, $55,013,475, or 45.55% 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, 2002 were
$18,000,000. At December 31, 2001, and 2000, 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, 2002

                                  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   54,821,617        -           -           -       54,821,617
 Interest-bearing
  deposits                  -        591,518     840,687        -        1,432,205
 Investment debt
  securities          20,886,355  34,127,120  63,172,024   2,603,120   120,788,619
 Loans               160,200,410   1,180,586   2,197,969     426,847   164,005,812
Total earning assets 235,908,382  35,899,224  66,210,680   3,029,967   341,048,253

Liabilities
 Interest-bearing
  deposits
  Money market        46,942,638        -           -           -       46,942,638
  Savings and NOW    102,524,118        -           -           -      102,524,118
  Certificates
   100,000 and over    4,905,349   6,902,006   4,034,731        -       15,842,086
   Certificates under
    100,000           23,328,068  29,107,455  10,461,560        -       62,897,083
 Securities sold under
  agreements to
  repurchase           4,029,100        -           -           -        4,029,100
 Note payable              4,358      13,468      82,996      98,090       198,912
Total interest-bearing
liabilities          181,733,631  36,022,929  14,579,287      98,090   232,433,937

Period gap            54,174,751    (123,705) 51,631,393   2,931,877   108,614,316
Cumulative gap        54,174,751  54,051,046 105,682,439 108,614,316

Ratio of cumulative gap
to total earning assets   15.88%      15.85%      30.99%      31.85%
</table>

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

                      December 31, 2002    December 31, 2001    December 31, 2000
                      Amount      Percent  Amount      Percent  Amount      Percent

                   <c>         <c>      <c>         <c>      <c>         <c>
US Treasury
 One year or less     50,003,569   2.87%   31,483,510   4.81%   29,941,815   5.34%
 Over one through
  five years          40,065,506   2.58%   26,563,088   3.96%   17,480,762   6.36%
 Over ten years        2,603,120   7.28%    2,336,880   7.28%    2,428,120   7.28%
Total U.S. Treasury   92,672,195   2.87%   60,383,478   4.52%   49,850,697   5.78%

U.S. Government Agencies
 One year or less      1,000,000   4.49%    5,900,000   5.68%    8,750,177   6.35%
 Over one through
  five years          18,902,908   3.30%   13,505,013   4.84%    9,900,000   6.46%
Total U. S. Government
 Agencies             19,902,908   3.35%   19,405,013   5.09%   18,650,177   6.41%

State, county, and municipal
 One year or less      4,009,906   2.45%    4,138,392   5.54%    6,641,744   5.67%
 Over one through
  five years           4,203,610   2.34%    2,808,149   5.23%    3,559,060   6.12%
 Over five through
  ten years                 -                    -                    -
 Over ten years             -                    -                    -
Total state, county,
 and municipal         8,213,516   2.39%    6,946,541   5.43%   10,200,804   5.83%
Total debt securities
 One year or less     55,013,475   2.87%   41,521,902   5.01%   45,333,736   5.59%
 Over one through
  five years          63,172,024   2.78%   42,876,250   4.32%   30,939,822   6.36%
 Over five through
 ten years                 -                    -                    -
 Over ten years        2,603,120   7.28%    2,336,880   7.28%    2,428,120   7.28%
Total debt securities120,788,619   2.92%   86,735,032   4.73%   78,701,678   5.94%

Equity securities      1,783,680   2.51%    1,637,219   3.03%    1,624,814   2.38%

Total securities     122,572,299   2.91%   88,372,251   4.70%   80,326,492   5.87%
</table>

Deposits and Other Interest-Bearing Liabilities

   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%.

   Average interest-bearing liabilities increased $4,680,417,
or 2.45%, to  $196,079,693 in 2001, from  $191,399,276 in 2000.
Average interest-bearing deposits increased $2,180,688, or 1.15%,
to  $191,730,858 in 2001, from  $189,550,170 in 2000, while average
demand deposits increased $10,735,100, or 23,78% to $55,879,394 in
2000, from $45,144,294 in 2000.  At December 31, 2001, total
deposits were $274,149,181, compared to $231,926,192 at December
31, 2000, an increase of 18.21%.

   The following table sets forth the deposits of the Company by
category as of December 31, 2002, 2001, and 2000,
respectively.
<table>
<caption>
                                            December 31,
                             2002                 2001                 2000
                                 Percent of            Percent of            Percent of
                      Amount     deposits   Amount     deposits   Amount     deposits

                  <c>         <c>       <c>         <c>       <c>         <c>
Demand deposits       73,289,541  24.31%    60,508,663  22.07%    49,674,943  21.42%
NOW accounts          57,009,892  18.91%    45,639,869  16.65%    39,910,464  17.21%
Money market          46,942,638  15.57%    40,739,491  14.86%    34,896,077  15.04%
Savings accounts      45,514,226  15.10%    38,306,292  13.97%    34,057,361  14.68%
Time deposits less
 than $100,000        62,897,083  20.86%    68,212,949  24.88%    58,206,911  25.10%
Time deposits of
 $100,000 or more     15,842,086   5.25%    20,741,917   7.57%    15,180,436   6.55%
  Total deposits     301,495,466 100.00%   274,149,181 100.00%   231,926,192 100.00%
</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 $32,246,166 and $36,661,508
during 2002 and 2001, 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, 2002, is shown in the following
table.

<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    4,905,349     2,020,648      4,881,358   4,034,731   15,842,086
</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 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.
Noninterest income for 2001 increased $196,777, or 17.83% over the
previous year.  Of this, a $128,262 increase in service charges on
deposit accounts resulted from the growth of deposit accounts.
VISA Check Card fees increased by $29,761 due to increased use.

   The following table presents the principal components of
noninterest income for the years ended December 31, 2002, 2001, and
2000, respectively.
<table>
<caption>
                                         Noninterest Income
                                     2002       2001       2000

                                <c>        <c>       <c>
Service charges on deposit accounts  993,302    853,107    724,845
Other noninterest revenue            469,160    447,528    379,013
Gain on sale of real estate          267,844   ____-___   ____-___
 Total noninterest income          1,730,306  1,300,635  1,103,858

Noninterest income as a
 percentage of average
 total assets                          0.50%     0.42%    0.38%
</table>

Noninterest Expense

   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 for software maintenance costs.

   Noninterest expense increased by $321,781, or 5.45%, from
2000 to 2001.  Increased personnel costs of $297,806 were due to
annual raises, increased 401(k) expense, and increased costs of
group insurance.  Occupancy expense decreased due to the bank's
adoption of accrual basis accounting for real property taxes, which
were previously recorded on the cash basis.  Of the $53,987
increase in other operating expense, $30,891 was attributable to
increased fees related to ATM operation.

   The following table presents the principal components of
noninterest expense for the years ended December 31, 2002, 2001 and
2000, respectively.
<table>
<caption>
                                            Noninterest Expense
                                         2002       2001       2000

                                     <c>        <c>        <c>
Compensation and related expenses       3,622,841  3,536,660  3,238,854
Occupancy expense                         455,651    392,499    425,767
Furniture and equipment expense           578,779    674,296    671,040
Advertising                               154,382    144,983    132,784
Business and product development           64,448     60,189     57,055
Computer software amortization            115,453     68,503     62,005
Computer software maintenance              91,141       -          -
Courier service                            96,120     96,726     99,466
Deposit insurance                          47,800     43,413     35,157
Director fees                              80,600     83,025     72,575
Dues, donations, and subscriptions         81,171     80,024    107,114
Freight                                    62,294     57,806     62,411
Liability insurance                        60,042     44,608     61,649
Postage                                   181,567    155,002    145,325
Professional fees                          72,399     52,400     62,660
Stationery and supplies                   158,965    252,686    261,733
Telephone                                 130,172    100,455     82,256
Teller machine fees                       182,487    154,289    123,398
Miscellaneous                             263,868    228,423    202,957
 Total noninterest expense              6,500,180  6,225,987  5,904,206

Noninterest expense as a percentage
 of average total assets                    1.86%      2.01%      2.04%
</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, 2002, the Company and the Bank exceeded
their regulatory capital ratios, as set forth in the following
table.
<table>
<caption>
                                  Analysis of Capital
                               Required    Consolidated
                                                         Maryland   Delaware
                               Minimums    Company       Bank       Bank

                             <c>         <c>           <c>       <c>
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%

2000
Total risk-based capital ratio  8.0%        36.6%         34.5%       53.0%
Tier I risk-based capital ratio 4.0%        35.4%         33.3%       52.0%
Tier I leverage ratio           3.0%        18.2%         16.6%       29.6%
</table>

Accounting Rule Changes

   FASB Statement No. 143, Accounting for Asset Retirement
Obligations applies to legal obligations associated with retirement
of a tangible long-lived asset.  The statement requires that
management recognize the fair value of an asset retirement
obligation in the period incurred, adding capitalization of this
cost to the cost of the asset.  Annually the asset, including the
capitalized cost, should be reviewed for impairment.  The effective
date of the Statement is for years beginning after June 15, 2002.

   FASB Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets addresses financial accounting and
reporting for the impairment or disposal of long-lived assets.  The
statement amends various earlier pronouncements addressing
accounting for impairment of long-lived assets or disposal of long-
lived assets or a business segment.  It clarifies that a business
segment treated as a discontinued operation should be evaluated for
recognition of an impairment loss.  The statement also amends
Accounting Research Bulletin No. 51, Consolidated Financial
Statements, to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary.  The
provisions of this Statement were effective for years beginning
after December 15, 2001.

   FASB Statement No. 145, Rescission of FASB Statements Nos.
4, 44, and 64, Amendment of FASB Statement No. 13 and Technical
Corrections rescinds the pronouncements referred to in the title
and amends FASB Statement No. 13,  Accounting for Leases, to
eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain
lease modifications that have economic effects that are similar to
sale-leaseback transactions.  The Statement also amends other
existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability
under changed conditions.  The provisions of this statement have
various effective dates but the latest effective date is for fiscal
years beginning after May 15, 2002.

   FASB Statement No. 146, Accounting for Costs Associated with
Exit or Disposal Activities addresses financial accounting and
reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs incurred
in a Restructuring)."  This Statement requires that a liability
for a cost associated with an exit or disposal activity be
recognized and measured initially at fair value only when a
liability is incurred, recognizing that a company's commitment to
an exit plan may not create a liability.  The provisions of this
statement are effective for exit or disposal activities initiated
after December 31, 2002.

   FASB Statement No. 147, Acquisitions of Certain Financial
Institutions addresses guidance on accounting for the acquisition
of a financial institution and applies to all acquisitions except
those between two or more mutual enterprises.  The Statement
requires that the excess of fair value of liabilities assumed over
the fair value of tangible and identifiable intangible assets
acquired in a business combination represents goodwill that should
be accounted for under FASB Statement No. 142, Goodwill and Other
Intangible Assets.  The effective date for the provisions of this
statement is October 1, 2002.

   FASB Statement No. 148, Accounting for Stock-based Compensation
- Transition and Disclosure amends FASB Statement No. 123,
Accounting for Stock-based Compensation, to provide alternative
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation.
In addition, this Statement amends the disclosure requirements
of Statement 123 to require prominent disclosure in both annual
and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method
used on reported results.  The effective dates of parts of the
Statement are for years ending after December 15, 2002 and
parts for years beginning after December 15, 2002.


Impact of Inflation

    Unlike most industrial companies, the assets and liabilities
of financial institutions such as the Company and 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

    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, 2002, is incorporated herein by reference.

PART III

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

    Not applicable.

Item 10. Directors and Executive Officers; Compliance with Section
16(a) of the Exchange Act

    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 7, 2003, 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 7, 2003, 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 7, 2003, 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 7, 2003, is incorporated herein by reference.

Item 14. 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.


PART IV

Item 15. Exhibits and Reports on Form 8-K

(a)    Exhibits
    3.1  Articles of Incorporation of the Company, incorporated by
reference to Exhibit 3.1 of Registration Statement Form S-4,
File No. 33-99762.
    3.2   Bylaws of the Company, incorporated by reference to Exhibit
3.2 of Registration Statement Form S-4, File No. 33-99762.
    13    Annual Report to Shareholders for the year ended December
31, 2002.

(b)	Reports on Form 8-K
    No reports on Form 8-K were filed during the fourth quarter
of the year ended December 31, 2002.




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

CALVIN B. TAYLOR BANKSHARES, INC.
(Registrant)

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

Date:                   By:/s/ Jennifer G. Hawkins
                           Jennifer G. Hawkins
                           Treasurer

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

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

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

Date:                   By:/s/ George H. Bunting, Jr.
                        George H. Bunting, Jr., Director

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

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

Date:                   By:/s/ Reese F. Cropper, III
                        Reese F. Cropper, III, Director

Date:                   By:/s/ Hale Harrison
                        Hale Harrison, Director

Date:                   By:/s/ Gerald T. Mason
                        Gerald T. Mason, Director

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

Date:                   By:/s/ Joseph E. Moore
                        Joseph E. Moore, Director

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

Date:                   By:/s/ D. Bruce Rogers
                        D. Bruce Rogers, Director

Date:                   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, 2002 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.
(Registrant)

Date:                   By:/s/ Reese F. Cropper, Jr.
                           Reese F. Cropper, Jr.
                           Chief Executive Officer
                           Chairman of the Board of Directors
                           (Principal Executive Officer)

Date:	                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.
(Registrant)

Date:                   By:/s/ Reese F. Cropper, Jr.
                           Reese F. Cropper, Jr.
                           Chief Executive Officer
                           Chairman of the Board of Directors
                           (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.
(Registrant)

Date:	                By:/s/ Jennifer G. Hawkins
                           Jennifer G. Hawkins
                           Treasurer
                           (Principal Financial Officer)








                         EXHIBIT 13

                ANNUAL REPORT TO SHAREHOLDERS
            FOR THE YEAR ENDED DECEMBER 31, 2002













              Calvin B. Taylor Bankshares, Inc.
                      and Subsidiary

                   Financial Statements

                    December 31, 2002












            Calvin B. Taylor Bankshares, Inc.
                     and Subsidiary

                    Table of Contents




                                                Page

Report of Independent Auditor                     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, 2002, 2001, and 2000, 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, 2002, 2001, and 2000, 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 16, 2003

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

                                                 December 31,
                                     2002            2001            2000
              Assets

                               <c>             <c>             <c>
Cash and due from banks            21,051,412      18,397,266      13,332,279
Federal funds sold                 54,821,617      54,389,656      18,167,527
Interest-bearing deposits           1,432,205         879,000         784,000
Investment securities available
 for sale                           8,390,550       3,974,099       4,052,934
Investment securities held to
 maturity (approximate market
 value of $115,470,092,
 $85,604,080, and $76,610,933)    114,181,749      84,398,152      76,273,558
Loans, less allowance for loan
 losses of $2,181,135, $2,195,922,
 and $2,192,755                   161,824,677     166,501,512     168,571,199
Premises and equipment              5,745,842       5,895,275       5,620,478
Accrued interest income             1,405,587       1,753,816       1,948,199
Computer software                     283,303         355,549          99,574
Deferred income taxes                    -            134,639         107,227
Other assets                          106,004         145,603          91,036
                                  369,242,946     336,824,567     289,048,011


              Liabilities and Stockholders' Equity

Deposits
 Noninterest-bearing               73,289,541      60,508,663      49,674,943
 Interest-bearing                 228,205,925     213,640,518     182,251,249
                                  301,495,466     274,149,181     231,926,192
Securities sold under agreements
 to repurchase                      4,029,100       4,555,323       3,113,671
Pending purchases of investment
 securities                         2,990,830            -               -
Accrued interest payable              243,468         529,348         503,519
Accrued income taxes                  106,514           2,298         103,818
Note payable                          198,912         215,702         231,517
Deferred income taxes                  70,156            -               -
Other liabilities                      93,214         130,145          84,085
                                  309,227,660     279,581,997     235,962,802

Stockholders' equity
 Common stock, par value $1 per
  share; authorized 10,000,000
  shares; issued and outstanding
  3,240,000 shares                  3,240,000       3,240,000       3,240,000
 Additional paid-in capital        17,290,000      17,290,000      17,290,000
 Retained earnings                 38,778,018      36,274,102      32,058,498
                                   59,318,018      56,804,102      52,588,498
 Accumulated other comprehensive
  income                              697,268         438,468         496,711
                                   60,015,286      57,242,570      53,085,209
                                  369,242,946     336,824,567     289,048,011
</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,
                                     2002            2001            2000

                               <c>             <c>             <c>
Interest and dividend revenue
 Loans, including fees             13,095,218      14,179,181      13,480,035
 U. S. Treasury and government
  agency securities                 3,456,932       3,540,767       3,761,021
 State and municipal securities       224,662         332,035         410,891
 Federal funds sold                   922,620       1,412,927       1,716,303
 Time certificates of deposit          41,661          46,354          46,110
 Equity securities                     37,792          34,090          25,676
  Total interest and dividend
   revenue                         17,778,885      19,545,354      19,440,036

Interest expense
 Deposit interest                   3,996,749       6,173,101       5,822,224
 Other                                 40,848          75,287          37,807
  Total interest expense            4,037,597       6,248,388       5,860,031
  Net interest income              13,741,288      13,296,966      13,580,005
Provision for loan losses              25,000          22,985         174,080
  Net interest income after
   provision for loan losses       13,716,288      13,273,981      13,405,925
Other operating revenue
 Service charges on deposit
  accounts                            993,302         853,107         724,845
 Other noninterest revenue            469,160         447,528         379,013
 Gain on sale of real estate          267,844            -               -
  Total other operating revenue     1,730,306       1,300,635       1,103,858
Other expenses
 Salaries                           2,994,325       2,943,241       2,723,713
 Employee benefits                    628,516         593,419         515,141
 Occupancy                            455,651         392,499         425,767
 Furniture and equipment              578,779         674,296         671,040
 Other operating                    1,842,909       1,622,532       1,568,545
  Total other expenses              6,500,180       6,225,987       5,904,206

Income before income taxes          8,946,414       8,348,629       8,605,577
Income taxes                        3,192,498       2,934,225       2,981,019
Net income                          5,753,916       5,414,404       5,624,558

Earnings per common share               $1.78           $1.67           $1.74
</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, 1999
                     1,620,000   1,620,000  17,290,000    30,030,340  279,994
Net income                -           -           -        5,624,558     -          5,624,558
Stock split effected
 in the form of a
 100% stock dividend 1,620,000   1,620,000        -       (1,620,000)    -
Unrealized gain on
 investment securities
 available for sale
 net of income taxes      -           -           -             -     216,717         216,717
Comprehensive income                                                                5,841,275
Cash dividend,
 $.61 per share           -           -           -       (1,976,400)    -

Balance, December 31, 2000
                    3,240,000    3,240,000  17,290,000    32,058,498  496,711
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
</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,
                                     2002            2001            2000

                               <c>             <c>             <c>
Cash flows from operating activities
 Interest received                17,961,046       19,541,166      19,291,291
 Fees and commissions received     1,462,551        1,361,593       1,080,633
 Interest paid                    (4,323,477)      (6,222,559)     (5,780,554)
 Cash paid to suppliers and
  employees                       (5,909,413)      (5,731,055)     (5,371,499)
 Income taxes paid                (2,997,807)      (3,075,025)     (2,954,290)
                                   6,192,900        5,874,120       6,265,581

Cash flows from investing activities
 Certificates of deposits purchased,
  net of maturities                 (553,205)         (95,000)        199,000
 Purchase of investments
  available for sale              (3,994,520)            -               -
 Proceeds from maturities of
  investments held to maturity    91,445,000       57,857,000      49,458,000
 Purchase of investments held
  to maturity                   (118,071,995)     (65,799,078)    (35,978,105)
 Loans made, net of principal
  collected                        4,651,835        2,046,702     (16,744,775)
 Proceeds from sale of premises
  and equipment                      503,160           17,000             423
 Purchases of and deposits on
  premises, equipment, and
  computer software                 (650,339)      (1,063,655)       (443,405)
                                 (26,670,064)      (7,037,031)     (3,508,862)

Cash flows from financing activities
 Net increase (decrease) in
  Time deposits                  (10,215,697)      15,567,519       3,256,887
  Other deposits                  37,561,982       26,655,470     (10,056,547)
  Securities sold under
   agreements to repurchase         (526,223)       1,441,652       3,113,671
 Payments on note payable            (16,791)         (15,814)        (18,483)
 Dividends paid                   (3,240,000)      (1,198,800)     (1,976,400)
                                  23,563,271       42,450,027      (5,680,872)

Net increase (decrease) in cash
 and cash equivalents              3,086,107       41,287,116      (2,924,153)

Cash and cash equivalents
 at beginning of year             72,786,922       31,499,806      34,423,959
Cash and cash equivalents
 at end of year                   75,873,029       72,786,922      31,499,806
</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,
                                     2002            2001           2000

                               <c>             <c>             <c>
Reconciliation of net income to net
 cash provided by operating
 activities
 Net income                        5,753,916       5,414,404      5,624,558

 Adjustments to reconcile net
  income to net cash provided
  by operating activities
   Depreciation and amortization     629,738        528,247         498,612
   Provision for loan losses          25,000         22,985         174,080
   Deferred income taxes              41,961          9,234         (20,599)
   Amortization of premiums and
    accretion of discounts, net     (166,068)      (198,571)       (129,281)
   (Gain) loss on disposition
    of assets                       (260,880)       (12,365)          1,564
   Decrease (increase) in
    Accrued interest receivable      348,229        194,383         (19,464)
    Other assets                      (8,914)       (54,566)        (73,960)
   Increase (decrease) in
    Accrued interest payable        (285,880)        25,829          79,477
    Accrued income taxes             152,730       (101,520)         47,328
    Other liabilities                (36,932)        46,060          83,266
                                   6,192,900      5,874,120       6,265,581
</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

      The accounting and reporting policies reflected in the
financial statements conform to generally accepted accounting
principles and to general practices within the banking
industry.

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

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

Principles of consolidation
     The consolidated financial statements of Calvin B. Taylor
Bankshares, Inc. include the accounts of its wholly owned
subsidiary, Calvin B. Taylor Banking Company.  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.

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

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






                                   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
     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, 2002, the
allowance included approximately $1,065,144 that was not
allocated to specific loans.  Management has historically
maintained the allowance at a level of approximately 1.30% to
1.35% of gross loans.

     If the current economy or real estate market were to
suffer a severe downturn, the estimate for uncollectible
accounts would need to be increased.  Loans 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.

Advertising
     Advertising costs are expensed as incurred.

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

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

2.   Cash and Due From Banks

     The Company normally carries balances with other banks
that exceed the federally insured limit.  The average
balances carried in excess of the limit, including unsecured
federal funds sold to the same banks, were $59,942,898 for
2002, $53,138,449 for 2001, and $27,192,359 for 2000.

     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, 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       342,839      -      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

December 31, 2000
Available for sale
  U.S. Treasury            1,993,753       434,367      -      2,428,120
  Equity                   1,249,941       374,873      -      1,624,814
                           3,243,694       809,240      -      4,052,934
Held to maturity
  U.S. Treasury           47,422,577       285,916    37,823  47,670,670
  U.S. Government agency  18,650,177        97,563     1,412  18,746,328
  State and municipal     10,200,804        16,051    22,920  10,193,935
                          76,273,558       399,530    62,155  76,610,933
</table>
                                   9
<page>

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


 3.   Investment Securities (Continued)

     The amortized cost and estimated market value of debt
securities, by contractual maturity and the amount of pledged
securities, follow.  Actual maturities may differ from
contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or
prepayment penalties.
<table>
<caption>
                       December 31, 2002       December 31, 2001       December 31, 2000
                      Amortized   Market        Amortized  Market       Amortized  Market
                         cost      value          cost     value          cost     value

                  <c>         <c>          <c>        <c>          <c>        <c>
Available for sale due
 After one year
  through five years  3,994,528   4,003,750         -          -            -          -
 After ten years      1,994,330   2,603,120    1,994,041  2,336,880    1,993,753  2,428,120
                      5,988,858   6,606,870    1,994,041  2,336,880    1,993,753  2,428,120
Held to maturity due
 In one year         55,013,475  55,394,968   41,521,902 42,125,457   45,333,736 45,313,048
 After one year
  through five years 59,168,274  60,075,124   42,876,250 43,478,623   30,939,822 31,297,885
                    114,181,749 115,470,092   84,398,152 85,604,080   76,273,558 76,610,933

Pledged securities   20,868,000  21,248,011   21,058,134 21,517,135   19,985,861 20,097,350
</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.

 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,
2002, and $19,000,000 as of December 31, 2001, and 2000.

 5.   Loans and Allowance for Loan losses

     Major classifications of loans are as follows:
<table>
<caption>
                                     2002            2001            2000

                              <c>             <c>             <c>
Commercial                        12,765,723      15,341,122      15,588,946
Mortgage                         139,354,241     146,258,549     148,468,890
Construction                       8,447,354       2,117,685       1,540,376
Consumer                           3,438,494       4,980,078       5,165,742
                                 164,005,812     168,697,434     170,763,954
Allowance for loan losses          2,181,135       2,195,922       2,192,755
Loans, net                       161,824,677     166,501,512     168,571,199
</table>
                             10
<page>

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


 5.   Loans and Allowance for Loan losses (Continued)

     The rate repricing distribution of the loan portfolio
follows:
<table>
                                     2002            2001            2000

                              <c>             <c>             <c>
Immediately                      160,567,318     164,098,147     165,596,389
Within one year                      813,678       1,728,296         425,689
Over one to five years             2,197,969       2,648,073       4,114,779
Over five years                      426,847         222,918         627,097
                                 164,005,812     168,697,434     170,763,954
</table>

     Outstanding loan commitments, lines of credit, and letters of
credit are as follows:
<table>
                                     2002            2001            2000

                              <c>             <c>             <c>
Loan commitments and lines of credit
 Construction and land development10,557,644       6,456,910       2,964,536
 Other                            11,876,437       8,639,337       3,192,350
                                  22,434,081      15,096,247       6,156,886

Standby letters of credit
                                   1,726,127       3,243,063       1,412,552
</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.

     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.





                             11
<page>

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


 5.   Loans and Allowance for Loan losses (Continued)

     Transactions in the allowance for loan losses were as
follows:
<table>
<caption>
                                     2002            2001            2000

                               <c>             <c>             <c>
Beginning balance                  2,195,922       2,192,755       2,082,031
Provision charged to operations       25,000          22,985         174,080
Recoveries                             8,983           4,906           3,744
                                   2,229,905       2,220,646       2,259,855
Loans charged off                     48,770          24,724          67,100
Ending balance                     2,181,135       2,195,922       2,192,755
</table>

     Amounts past due 90 days or more, and still accruing
interest, are as follows:
<table>
<caption>
                                                  December 31,
                                     2002            2001            2000

                                  <c>             <c>             <c>
Commercial                            17,370         122,420          39,576
Mortgage                             250,206         343,136         263,237
Consumer                              15,280          50,883          18,296
                                     282,856         516,439         321,109
</table>

     Management has identified no impaired loans at December
31, 2002, 2001, and 2000.  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, 2001 and
2000.

 6.   Premises and Equipment

     A summary of premises and equipment and the related
depreciation is as follows:
<table>
<caption>
             Estimated useful life   2002            2001            2000

                               <c>             <c>             <c>
Land                               1,659,793       1,891,950       1,891,950
Premises         5 - 50 years      5,028,225       4,826,954       4,645,138
Furniture and
  equipment      5 - 40 years      3,326,082       3,652,244       3,742,681
Construction in progress             210,583            -               -
                                  10,224,683      10,371,148      10,279,769
Accumulated depreciation           4,478,841       4,475,873       4,659,291
Net premises and equipment         5,745,842       5,895,275       5,620,478

Depreciation expense                 514,285         459,744         436,608
</table>

     Calvin B. Taylor Banking Company has entered into a
contract to construct a building expansion at its Berlin office.
The amount of the contract is $1,473,877.



                             12
<page>

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


 7.   Deposits

     Major classifications of interest-bearing deposits are as
follows:
<table>
                                     2002            2001            2000

                              <c>             <c>             <c>
Money market                      46,942,638      40,739,491      34,896,077
Savings and NOW                  102,524,118      83,946,161      73,967,825
Other time                        78,739,169      88,954,866      73,387,347
                                 228,205,925     213,640,518     182,251,249
</table>

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

                              <c>             <c>             <c>
Three months or less              28,235,099      28,071,706      21,063,581
Over three through twelve months  36,006,763      48,240,152      35,778,555
Over one through two years        14,497,307      12,643,008      16,545,211
                                  78,739,169      88,954,866      73,387,347
</table>

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

                              <c>             <c>             <c>
Amount outstanding                15,842,086      20,741,917      15,180,436
Interest expense                     597,603         987,329         680,474
</table>

 8.   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>
                                     2002            2001            2000

                              <c>             <c>             <c>
Maximum month-end amount
 outstanding                       6,531,215       5,383,038       4,557,860
Average amount outstanding         4,957,151       4,125,782       1,610,688
Average rate paid during the year       .57%           1.50%           1.45%
Investment securities underlying
 the agreements at year end
  Carrying value                  15,994,905      13,991,479      13,988,545
  Estimated fair value            16,306,570      14,327,220      14,105,150
</table>
                             13
<page>

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


9.   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:

                                  2003          17,826
                                  2004          18,925
                                  2005          20,092
                                  2006          21,332
                                  2007          22,647
                       Remaining years          98,090
                                               198,912

10.	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 2002, 2001,
and 2000, were $146,568, $140,620, and $119,307, respectively.

11.	Other Operating Expenses

		The components of other operating expenses follow:
<table>
                                     2002            2001            2000

                                <c>             <c>             <c>
Advertising                          154,382         144,983         132,784
Business and product development      64,448          60,189          57,055
Computer software amortization       115,453          68,503          62,005
Computer software maintenance
 contracts                            91,141            -               -
Courier service                       96,120          96,726          99,466
Deposit insurance                     47,800          43,413          35,157
Director fees                         80,600          83,025          72,575
Dues, donations, and subscriptions    81,171          80,024         107,114
Freight                               62,294          57,806          62,411
Liability insurance                   60,042          44,608          61,649
Postage                              181,567         155,002         145,325
Professional fees                     72,399          52,400          62,660
Stationery and supplies              158,965         252,686         261,733
Telephone                            130,172         100,455          82,256
ATM fees                             182,487         154,289         123,398
Miscellaneous                        263,868         228,423         202,957
                                   1,842,909       1,622,532       1,568,545
</table>







                             14
<page>

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


12.   Income Taxes

     The components of income tax expense, including taxes
related to the change in accounting method for organization
costs, are as follows:
<table>
                                     2002            2001            2000

                               <c>             <c>             <c>
Current
 Federal                           2,772,796       2,598,069       2,674,450
 State                               377,740         326,922         327,168
                                   3,150,536       2,924,991       3,001,618
Deferred                              41,962           9,234         (20,599)
                                   3,192,498       2,934,225       2,981,019
</table>

     The components of the deferred tax (benefit) are as follows:
<table>
                                     2002            2001            2000

                                  <c>             <c>             <c>
Provision for loan losses              2,656            (754)        (40,495)
Non-accrual loan interest                (43)           -               -
Depreciation                          32,334           5,317          13,987
Discount accretion                     3,191             412          (1,656)
Health insurance premium deposits       -               -                 27
Organization costs                     3,824           4,259           7,538
                                      41,962           9,234         (20,599)
</table>

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

                                  <c>             <c>             <c>
Deferred tax asset
 Allowance for loan losses           601,123         603,779         603,025
 Non-accrual loan interest                43            -               -
 Organization costs                    1,517           5,341           9,600
                                     602,683         609,120         612,625

Deferred tax liabilities
 Depreciation                        220,601         188,267         182,950
 Discount accretion                   13,523          10,332           9,920
 Unrealized gain on securities
  available for sale                 438,715         275,882         312,528
                                     672,839         474,481         505,398

  Net deferred tax asset (liability) (70,156)        134,639         107,227
</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                     (1.1)           (1.5)           (1.9)
  State income taxes net of federal
   income tax benefit                    2.8             2.6             2.5
                                        35.7%           35.1%           34.6%
</table>
                             15
<page>

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


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>
                                     2002            2001            2000

                              <c>             <c>             <c>
Beginning balance                 11,079,167      12,293,244       9,231,028
Advances                           6,034,153       4,833,136       5,356,617
Other increases                         -               -          1,272,750
                                  17,113,320      17,126,380      15,860,395
Repayments                         5,884,153       5,911,658       3,567,151
Other decreases                       95,208         135,555            -
Ending balance                    11,133,959      11,079,165      12,293,244
</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, 2002,
the individual deposits in excess of $100,000 of executive
officers, directors and their related interests represented
less than 2.5% 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
$1,235, $2,003, and $1,805 during the years ended December
31, 2002, 2001 and 2000.


14.   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

                                  2003          15,000
                                  2004          15,000
                                  2005          15,000
                                  2006          15,000
                                  2007          15,000
                       Remaining years          25,000
                                               100,000


                             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 FASB and may not be indicative of the net realizable
or liquidation values.  The calculation of estimated fair
values is based on market conditions at a specific point in
time and may not reflect current or future fair values.  The
fair value of financial instruments equals the carrying value
of the instruments except as follows.

<table>
<caption>
                       December 31, 2002       December 31, 2001       December 31, 2000
                       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              21,051,412  21,163,525  18,397,266  18,510,175  13,332,279  13,479,427
 Interest-bearing
  deposits            1,432,205   1,469,452     879,000     906,928     784,000     784,116
 Investment
  securities        122,572,299 123,860,642  88,372,251  89,578,179  80,326,492  80,663,867
 Loans, net         161,824,677 161,892,242 166,501,512 166,595,116 168,571,199 168,610,107

Financial liabilities
 Interest-bearing
  deposits          228,205,925 228,558,735 213,640,518 214,497,142 182,251,249 182,263,290
 Note payable           198,912     193,045     215,702     206,453     231,517     210,648
</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, 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%

December 31, 2000
Total capital
 (to risk weighted assets)     54,451  36.6%   11,897   8.0%   14,871  10.0%

Tier 1 capital
 (to risk-weighted assets)     52,588  35.4%    5,948   4.0%    8,923   6.0%

Tier 1 capital
 (to average fourth quarter
  assets)                      52,588  18.2%   11,806   4.0%   14,757   5.0%
</table>

     Tier 1 capital consists of capital stock, additional paid
in capital, and retained earnings.  Total 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                       2002            2001            2000

                                <c>             <c>             <c>
Assets
Cash and due from banks               353,604          57,513           9,110
Interest-bearing deposits                -          1,512,125          75,505
Investment securities
 available for sale                 1,783,680       1,637,219       1,624,814
Investment securities
 held to maturity                     499,230            -               -
Investment in subsidiary bank      56,226,822      52,445,405      49,806,120
Premises and equipment              1,375,315       1,640,946       1,609,939
Other assets                            3,630          55,688          22,445
   Total assets                    60,242,281      57,348,896      53,147,933

Liabilities and Stockholders' Equity
Liabilities
 Deferred income taxes                118,136          61,492          62,724
 Other liabilities                    108,859          44,834            -
                                      226,995         106,326          62,724

Stockholders' equity
 Common stock                       3,240,000       3,240,000       3,240,000
 Additional paid-in capital        17,290,000      17,290,000      17,290,000
 Retained earnings                 38,788,018      36,274,102      32,058,498
 Accumulated other comprehensive
  income                              697,268         438,468         496,711
   Total stockholders' equity      60,015,286      57,242,570      53,085,209

   Total liabilities and
    stockholders' equity           60,242,281      57,348,896      53,147,933

                                            Years Ended December 31,
Statements of Income                 2002            2001            2000

Interest revenue                       37,066          25,816           3,690
Dividend revenue                       37,792          34,090          25,676
Dividends from subsidiary           1,944,000       2,698,800       2,076,400
Equity in undistributed income
 of subsidiary                      3,612,515       2,695,465       3,548,585
Gain on sale of real estate           267,844            -               -
Rental income and other fees            2,748           2,700           2,700
                                    5,901,965       5,456,871       5,657,051

Expenses
 Occupancy                             15,831           6,115          24,898
 Furniture and equipment                2,014           1,968           1,904
 Other                                 21,263          36,044          15,168
                                       39,108          44,127          41,970

Income before income taxes          5,862,857       5,412,744       5,615,081
Income taxes (benefit)                108,941          (1,660)         (9,477)

Net income                          5,753,916       5,414,404       5,624,558
</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,
                                     2002            2001            2000

                                <c>             <c>             <c>
Statements of Cash Flows

Cash flows from operating activities
 Interest and dividends received    2,012,520       2,749,579       2,105,906
 Rental payments received              24,348          35,700           2,700
 Cash paid for operating expenses     (27,234)        (44,008)        (19,969)
 Income taxes refunded                  1,727          22,445          18,101
                                    2,011,361       2,763,716       2,106,738

Cash flows from investing activities
 Certificates of deposit purchased,
  net of maturities                 1,500,000      (1,500,000)        100,000
 Purchase of investments available
  for sale                               -            (15,767)       (297,474)
 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)           -
                                    1,512,605      (1,579,893)       (197,474)

Cash flows from financing activities
 Dividends paid                    (3,240,000)     (1,198,800)     (1,976,400)
Net increase (decrease) in cash       283,966         (14,977)        (67,136)

Cash at beginning of year              69,638          85,615         151,751
Cash at end of year                   353,604          69,638          84,615


Reconciliation of net income
 to net cash provided by operating
 activities
  Net income                        5,753,916       5,414,404       5,624,558
  Adjustments to reconcile
   net income to net cash used
   in operating activities
   Undistributed net income
    of subsidiary                  (3,612,515)     (2,695,465)     (3,548,585)
   Accretion of discount on
    debt securities                   (11,835)           -               -
   Depreciation                        33,475          33,120          29,200
   Gain on sale of assets            (267,844)           -               -
   Increase (decrease) in
    deferred income taxes and
    other liabilities                  64,106          44,900           5,769
   Decrease (increase) in
    other assets                       52,058         (33,243)         (4,204)
                                    2,011,361        2,763,716      2,106,738
</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>
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

2000
Interest revenue     5,059,947      5,056,443       4,678,198       4,645,448
Interest expense     1,527,302      1,498,739       1,400,906       1,433,084
Net interest income  3,532,645      3,557,704       3,277,292       3,212,364
Provision for loan
 losses                 68,000         23,000          41,000          42,080
Net income           1,438,189      1,583,917       1,306,325       1,296,127
Comprehensive income 1,502,283      1,665,605       1,308,822       1,364,565
Earnings per share       $0.44          $0.49           $0.40           $0.40
</table>











                                 21