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                                                                   Exhibit 10.16

                     SUPPLEMENTAL RETIREMENT PLAN AGREEMENT

      THIS SUPPLEMENTAL RETIREMENT PLAN AGREEMENT ("Agreement") is made this
_____ day of __________, 1994, by and between TANEYTOWN BANK & TRUST COMPANY
(the "Bank") and MICHAEL K. WALSCH ("Employee").

                                   WITNESSETH

      WHEREAS,  Employee is  expected to play a key role in the future  growth
and profitability of the Bank; and

      WHEREAS, the Bank desires to establish for Employee's benefit a
performance-based supplemental retirement plan on the terms and conditions set
forth herein, in order to provide additional incentives for Employee to
strengthen the financial condition of the Bank.

      NOW THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings hereinafter set forth, and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree
as follows:

_.    1. SUPPLEMENTAL RETIREMENT PLAN AWARDS. In addition to any payments of
current compensation for his services which may be paid by the Bank to Employee
from time to time, the Bank agrees to make to, or on behalf of, Employee, the
following supplemental retirement plan awards on the terms and conditions set
forth herein.

      2. DEFINITIONS. Unless otherwise expressly stated herein, the following
words or phrases shall be defined as set forth below:


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            A. GOOD CAUSE. "Good Cause" shall be deemed to exist upon written
notice from the Board of Directors of the Bank to Employee of the occurrence of
any of the following, as determined in the sole and absolute discretion of the
Board of Directors:

                  (1) Employee's negligence or willful misconduct which is
clearly injurious to the Bank's business affairs;

                  (2) Employee's breach of any material provision of this
Agreement or any other agreement to which he and the Bank are parties;

                  (3) Employee's conviction of or guilty plea to a criminal act,
potentially punishable by imprisonment of one (1) year or more;

                  (4) Employee's failure to satisfactorily perform his duties as
an employee of the Bank;

                  (5) Employee's failure to follow directions, policies, rules
or procedures established from time to time by the Board of Directors of the
Bank; or
                  (6) Employee's suspension or other disciplinary action by any
duly constituted governmental or other authority regulating the banking
industry.

      Notwithstanding anything herein to the contrary, for purposes of
subsections (2), (4) and (5) of this Section 2.A., Good Cause shall be deemed to
exist only upon thirty (30) days prior written notice from the Bank of the
occurrence of such events and Employee's failure to cure the same to the
satisfaction of the Board of Directors within the thirty (30) day period.



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Notwithstanding the foregoing, no such prior notice shall be required to be
given where to do so would be impractical, such as where the action giving rise
to Good Cause is not reasonably capable of being cured.

            B. DISABILITY. For purposes of this Agreement, "Disability" shall be
defined as Employee's inability to perform the duties he is required to perform
as an employee of the Bank by reason of illness or incapacity, as determined by
the Board of Directors of the Bank in its sole and absolute discretion.

            C. RETIREMENT. For purposes of this Agreement, "Retirement" shall be
defined as the termination of Employee's employment with the Bank at any time
after the Restriction Period (as hereinafter defined) for any reason except due
to circumstances and for reasons related to Good Cause, or Employee's death or
Disability.

      3. DEFERRED CASH ACCOUNT.

            A. ESTABLISHMENT OF DEFERRED CASH ACCOUNT. The Bank hereby agrees to
establish, fund and maintain an account (hereinafter referred to as the
"Deferred Cash Account") to which the Bank shall allocate an annual amount equal
to 0.2275% of the pre-tax net income of the Bank for each fiscal year of the
Bank commencing with the 1994 Fiscal Year ("Annual Cash Award"); provided,
however, that the allocation of an Annual Cash Award shall be conditioned upon
the achievement by the Bank during such fiscal year of such goals, conditions
and criteria as are set by the Board of Directors pursuant to Section 5 of this
Agreement and



                                       3
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that the calculation of the amount of the Annual Cash Award to be made each year
shall be based upon such percentage of pre-tax net income as is set each year by
the Board of Directors. The pre-tax net income of the Bank for each fiscal year
shall be based upon the audited financial statements of the Bank prepared for
such fiscal year.

            B. INVESTMENT. At Employee's request, the funds in the Deferred Cash
Account shall be invested by the Bank each year in such investment vehicles as
are proposed in writing by Employee and approved by the Board of Directors.
Earnings, losses or other fluctuations in value on such investments as are made
by the Bank of the Deferred Cash Account shall be credited to or debited from
Employee's cumulative Deferred Cash Account. The Board of Directors shall not be
required to make any proposed investment and may at any time terminate its prior
approval of any investment (i) if such investment would violate any federal or
state regulatory rules or requirements applicable to the Bank or (ii) if the
Board of Directors, in its sole and absolute discretion, determines that such
investment is imprudent or otherwise inadvisable. In the event that the Bank
determines that it will not make a proposed investment or terminates its prior
approval of an investment, and so notifies Employee, Employee shall designate an
alternate investment. If at any time Employee has not requested an investment
vehicle which the Board of Directors has approved, the funds in the Deferred
Cash Account shall be increased by crediting the Deferred Cash Account with an
annual



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rate of return equal to the Bank's one (1) year certificate of deposit rate of
interest (based on the then value of the cumulative Deferred Cash Account) as of
the date hereof and adjusted as of each January 1st thereafter.

      The Board of Directors shall not be liable to Employee for the performance
of or results with respect to any investments undertaken or not approved
pursuant to the terms hereof. Employee expressly acknowledges and agrees that he
will bear any and all risk and will hold the Board of Directors harmless with
respect to the performance of any investment made by the Board of Directors at
the request of Employee pursuant to the terms of this Agreement.

            C. TIMING OF ALLOCATIONS. In the event that the goals, conditions
and criteria as set by the Board have been met for the prior fiscal year, the
Bank shall, within thirty (30) days after the availability of the information
necessary to make those determinations, make an allocation of the Annual Cash
Award to Employee's Deferred Cash Account. At the time of each such allocation,
the Bank shall provide Employee with a written statement (the "Statement")
indicating the amount that has been credited to the Deferred Cash Account, the
investments made, the results with respect to such investments and the
cumulative balance in the Deferred Cash Account. The Bank shall make investments
from funds in the Deferred Cash Account as soon as is practicable after Employee
submits a written selection of investment and the Board of Directors approves
such selection.



                                       5
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For purposes of crediting the annual rate of return, if applicable, the
allocation of funds attributable to each fiscal year shall be credited to the
Deferred Cash Account as of the first day of the succeeding fiscal year.

            D. CHANGE TO ANNUAL CASH AWARD FORMULA. The Board of Directors may,
in its sole discretion, increase or decrease at any time during any fiscal year
the current percentage of pre-tax net income upon which the Annual Cash Award
for such fiscal year is based in the event of a fundamental change in the nature
of and/or operations of the Bank, such as might result from a merger or a public
offering of stock.

      4. RESTRICTED STOCK PLAN.

            A. In addition to establishing the Deferred Cash Account, the Bank
shall cause to be issued to Employee, for each fiscal year of the Bank
commencing with the 1994 Fiscal Year, common stock of Monocacy Bancshares, Inc.
("Bank Stock"), valued at 5.75% of Employee's base salary as of the end of such
fiscal year ("Annual Stock Award"); provided, however, that the issuance of the
Annual Stock Award shall be conditioned upon the achievement by the Bank during
such fiscal year of such goals, conditions and criteria as are set by the Board
of Directors pursuant to the provisions of Section 5 of this Agreement and that
the determination of the Annual Stock Award to be made each year shall be based
upon such percentage of base salary as is set each year by the Board of
Directors.

            B. TIMING OF STOCK ISSUANCE. In the event that the



                                       6
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goals, conditions and criteria set by the Board have been met for the prior
fiscal year, the Bank shall cause to be issued to Employee, within thirty (30)
days after the availability of the information necessary to make that
determination, the appropriate number of shares of Bank Stock constituting the
Annual Stock Award. At the time of each such issuance of Bank Stock, the Bank
shall include in the Statement the number of shares of Bank Stock which are
being issued to Employee.

            C. VALUATION. Each share of Bank Stock issued to Employee pursuant
to this Agreement shall be valued as of the date of the issuance of such Bank
Stock to Employee at that value for Bank Stock established pursuant to a
dividend reinvestment plan adopted for Bank Stock by the Board of Directors of
Monocacy Bancshares, Inc. In the event that no value has been established for
Bank Stock pursuant to a dividend reinvestment plan, Bank Stock issued to
Employee pursuant to this Agreement shall be valued at one and one-half (1.5)
times the book value of such shares as of the end of the fiscal year for which
the Annual Stock Award is issued.

            D. RESTRICTIONS ON TRANSFER. Employee shall not, until such time
that Employee's interest in the Bank Stock acquired by Employee under this
Agreement has fully vested as set forth in Section 6.A., sell, hypothecate,
pledge, assign, or otherwise transfer, with or without consideration, any or all
of such Bank Stock to any person, corporation, partnership, association, trust
or any other entity whatsoever, except pursuant



                                       7
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to the terms of this Agreement. Any attempt at transfer made in contravention of
this Agreement shall be null and void and of no force and effect.

            E. VOTING AND DIVIDEND RIGHTS. Employee shall have the right to vote
all shares of Bank Stock which he receives pursuant to this Agreement. In the
event that a dividend reinvestment plan has been established by the Board of
Directors of Monocacy Bancshares, Inc., Employee shall participate in such
dividend reinvestment plan with respect to all shares of Bank Stock received
pursuant to this Agreement and all shares of Bank Stock received pursuant
thereto shall be subject to the restrictions imposed on the underlying Bank
Stock awarded pursuant to this Agreement. In the event that no dividend
reinvestment plan has been established, Employee will receive and retain any
cash dividends (free of restrictions) declared and paid with respect to shares
of Bank Stock awarded pursuant to this Agreement. In the event of a stock
dividend, stock split, issuance of additional stock or recapitalization,
Employee shall receive the additional Bank Stock subject to the same
restrictions imposed on the underlying Bank Stock awarded pursuant to this
Agreement.

            F. PREPAYMENT RIGHTS. The Board of Directors may, in its sole
discretion, cause the prepayment to Employee of any number of shares of Bank
Stock to be applied toward future Annual Stock Awards to which Employee may
become entitled. All shares of Bank Stock that are prepaid to Employee shall be
subject to the



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same restrictions imposed on the shares distributed with respect to the Annual
Stock Awards.

      5. GOALS FOR ALLOCATION OF ANNUAL CASH AWARDS AND ISSUANCE OF ANNUAL STOCK
AWARDS. Prior to the beginning of each fiscal year, the Board of Directors shall
adopt a budget and such other financial goals as it deems advisable. The Board
shall then provide Employee with a written description of those certain goals,
conditions and criteria within the budget and financial goals which must be met
in order for him to earn the Annual Cash Award and Annual Stock Award,
respectively. The Board of Directors shall have absolute discretion to (i)
identify and determine the goals, conditions and criteria which must be met,
(ii) change the goals, conditions and criteria from year to year, and (iii) set
different goals, conditions and criteria to be met to earn the Annual Cash Award
and the Annual Stock Award, respectively. In addition, the Board of Directors
shall be the sole and final arbiter in connection with any dispute as to whether
the goals, conditions and criteria set by the Board have been met. In the event
that the Board of Directors does not establish any goals, conditions and
criteria for purposes of the Annual Cash Award and/or the Annual Stock Award in
any year, the Bank shall not make an Annual Cash Award and/or an Annual Stock
Award, as appropriate, for any such year.

      6. VESTING.

            A. GENERAL RULE. For each full year that Employee is employed by the
Bank after the end of the Restriction Period (as



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hereinafter defined), Employee shall become conditionally vested with respect to
an amount equal to ten percent (10%) of (i) the Deferred Cash Account and (ii)
the aggregate of the Annual Stock Awards.

            B. VESTING IN THE EVENT OF PREPAYMENT. In the event of a prepayment
of Bank Stock as described in Section 4.F., above, Employee shall become vested
in the Bank Stock not based upon the amount of any prepayment, but based upon
the aggregate of the Annual Stock Awards that Employee has earned pursuant to
the terms of this Agreement. For example, assume that the Bank causes the
prepayment to Employee of $250,000 in Bank Stock. If thereafter Employee earns
$20,000 in Bank Stock each year for ten (10) years, Employee shall, at the end
of year ten (10), have earned a total of $200,000. His rights vest twenty
percent (10%) per year in each of years eight (8), nine (9), and ten (10), so
that at the end of year ten (10) Employee will be thirty percent (30%) vested.
At that time, however, Employee will be thirty percent (30%) vested in the
$200,000 that Employee has earned, not the $250,000 that was prepaid.

            C. VESTING IN THE EVENT OF CHANGE OF CONTROL. In the event that the
controlling interest in Monocacy Bancshares, Inc. is transferred in a merger,
consolidation, corporate takeover or similar transaction or related series of
transactions, notwithstanding any other provision of this Agreement to the
contrary, the employee shall become conditionally vested with respect to an
amount equal to 100% of (i) the Deferred Cash



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Account and (ii) the aggregate of the Annual Stock Awards. Thereafter, for
purposes of Section 7, below, any termination of Employee's employment shall be
deemed to have occurred after the Restriction Period.

      7. TERMINATION.

            A. TERMINATION DURING RESTRICTION PERIOD. If, during the period
ending on December 31, 2001 (the "Restriction Period"), Employee's employment is
terminated for any reason except death or Disability, whether by Employee or the
Bank, and whether for Good Cause or without Good Cause, Employee shall forfeit
all rights to the Deferred Cash Account and shall sell, and the Bank shall cause
to be purchased, upon the terms hereinafter set forth, all Bank Stock awarded to
Employee pursuant to this Agreement.

            B. TERMINATION FOR GOOD CAUSE AFTER RESTRICTION PERIOD. If after the
Restriction Period, Employee's employment with the Bank is terminated for Good
Cause, Employee shall forfeit all rights to the Deferred Cash Account and shall
sell, and the Bank shall cause to be purchased, upon the terms hereinafter set
forth, all Bank Stock awarded to Employee pursuant to this Agreement.

            C. RETIREMENT. In the event Employee's Retirement occurs after the
Restriction Period but prior to such time that Employee has become fully vested,
Employee shall forfeit his rights to that portion of the Deferred Cash Account
in which he is not vested and shall sell, and the Bank shall cause to be
purchased, upon to the terms hereinafter set forth, that amount of



                                       11
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Bank Stock awarded to him in which he is not vested. In the event Employee's
Retirement occurs after Employee has become fully vested, Employee shall retain
all rights to the amount accrued in the Deferred Cash Account and to all Bank
Stock awarded to Employee pursuant to this Agreement as of the date of his
Retirement.

            D. DEATH OR DISABILITY. Notwithstanding anything to the contrary
contained herein, in the event Employee's employment with the Bank terminates by
reason of Employee's death or Disability at any time, Employee or his estate, as
the case may be, shall retain all rights to the amount accrued in the Deferred
Cash Account and to all Bank Stock awarded to Employee pursuant to this
Agreement as of the date of his death or Disability.

            E. NO AWARDS AFTER TERMINATION. Allocations to the Deferred Cash
Account and issuances of the Annual Stock Awards shall continue (provided the
requisite conditions are met) until the date of the termination of Employee's
employment. No awards shall be made to or for the benefit of Employee on or
after the termination of his employment with the Bank for any reason, including
with respect to any part of a fiscal year preceding such termination.



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<PAGE>

      8. PAYMENT TERMS.

            A. DISTRIBUTION OF DEFERRED CASH ACCOUNT. Upon Employee's death or
Disability, the amount in the Deferred Cash Account shall be paid in full, to
Employee or his estate, as appropriate, within sixty (60) days after the date of
death or Disability unless the Bank and Employee (or his estate) mutually agree
otherwise. Upon Employee's Retirement, the vested portion of the Deferred Cash
Account shall be paid in full, to Employee within sixty (60) days after the date
of Employee's Retirement unless the Bank and Employee mutually agree otherwise.
The Bank may, in its sole and absolute discretion, make the payments described
in this Section 8.A to Employee in cash or by transferring the assets in which
the Deferred Cash Account is invested. Employee shall have no right, title or
interest in or to any of the investment assets purchased by the Board of
Directors with funds from the Deferred Cash Account.

            B. REPURCHASE OF BANK STOCK. The purchase price payable to Employee
upon a purchase and sale of Bank Stock pursuant to the terms of Sections 7.A.,
7.B., and 7.C., above, shall be one cent ($.01) per share for each share of Bank
Stock being purchased, which amount shall be payable to Employee within sixty
(60) days after the date of Employee's termination of employment. The effective
date of the purchase of the Bank Stock shall be the date of payment ("Effective
Date") and all rights of Employee as a stockholder of Monocacy Bancshares, Inc.
with respect to the shares of Bank Stock being transferred shall



                                       13
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terminate at such time. Employee hereby agrees to transfer, convey and assign
the shares of Bank Stock immediately on the Effective Date and hereby appoints
any officer of the Bank as his attorney-in-fact for the purpose of executing an
assignment of the shares of Bank Stock in the event Employee fails to do so
immediately upon the request of the Bank and in accordance with this Agreement.

      9. THE BANK'S OBLIGATIONS TO BE UNSECURED. It is understood and agreed
that the Bank's obligations with respect to the Deferred Cash Account shall not
be secured in any manner. No asset of the Bank shall be placed in trust or in
escrow or otherwise physically or legally segregated for the benefit of
Employee, and the eventual payment of the Deferred Cash Account described in
this Agreement to Employee shall not be secured to him by the issuance of any
negotiable instrument of the Bank. Employee shall not be deemed to have any
property interest, legal or equitable, in any specific asset of the Bank and, to
the extent that any person acquires any right to receive Deferred Cash Account
payments under the provisions of this Agreement, such right shall be no greater
than, nor shall it have any preference or priority over, the right of any
unsecured general creditor of the Bank.

      10. ALIENATION OR ENCUMBRANCE. No payments, benefits or rights under this
Agreement shall be subject in any manner to anticipation, sale, transfer,
assignment, mortgage, pledge, encumbrance, charge or alienation by Employee. If
any person



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entitled to any payments under this Agreement has become insolvent, bankrupt, or
has attempted to anticipate, sell, transfer, assign, mortgage, pledge, encumber,
charge or otherwise in any manner alienate any amount payable to him under this
Agreement or there is any danger of any levy, attachment or other court process
or encumbrance on the part of any creditor of such person entitled to payments
hereunder, against any benefit or other amounts payable to such person, the Bank
may, in its discretion, at any time, withhold any or all such payments or
benefits and apply the same for the benefit of such person, in such manner and
in such proportion as the Bank may deem proper.

      11. NON-GUARANTEE OF EMPLOYMENT. The parties hereto expressly acknowledge
that Employee is employed by the Bank as an employee at-will. Nothing contained
in this Agreement shall be construed as a contract of employment between the
Bank and Employee, or as a right of Employee to be continued in the employment
of the Bank or as a limitation of the right of the Bank to discharge Employee,
with or without cause.

      12. NOTICES. All communications or notices required or permitted by this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date when actually delivered to an individual party or to an
executive officer of a corporate party or when deposited in the United States
mail, certified or registered mail, postage prepaid, return receipt requested,
and addressed as follows, unless and until any of such parties notifies the
others in accordance with this Section 12 of



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a change of address:

      If to the Bank:   Donald Hull, Chairman of the Board
                              Taneytown Bank & Trust Company
                              c/o Hull Company Accountants, Inc.
                              526 Baltimore Boulevard
                              Westminster, Maryland 21157

                              Eric E. Glass, Vice Chairman of the Board
                              Taneytown Bank & Trust Company
                              c/o The Taney Corporation
                              5130 Allendale Lane
                              Taneytown, Maryland 21787

      With a copy to:   David M. Abramson, Esquire
                              Levan, Schimel, Belman & Abramson, P.A.
                              Woodmere I, Suite 400
                              9881 Broken Land Parkway
                              Columbia, Maryland  21046-1153

      If to Employee:   Michael K. Walsch
                              ---------------------
                              ---------------------  -----

      13. STOCK CERTIFICATES. All Bank Stock acquired by Employee under the
terms of this Agreement shall conspicuously bear the following legend:

            The shares of stock represented by this certificate are restricted
            as to transfer by the terms, conditions and covenants of a
            Supplemental Retirement Plan Agreement between the stockholder and
            Taneytown Bank & Trust Company dated the     day of           1994, 
            a copy of which is on file with the Corporation. The Corporation 
            will gratuitously furnish a copy of said Agreement to any party 
            having a valid interest therein. Any attempted transfer of stock 
            other than in accordance with said Agreement shall be absolutely 
            null and void.

      14. CHOICE OF LAW AND VENUE. This Agreement shall be subject to and
governed by the laws of the State of Maryland.

      15. PARTIES TO BE BOUND. All the provisions hereof shall be binding upon,
and shall inure to the benefit of, the parties themselves and their respective
heirs, personal representatives,



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successors and assigns. In addition, the obligation of the Bank shall become the
obligation of any other entity which constitutes the transferee of a substantial
portion of the assets and/or business of the Bank or any other entity which is a
successor to the Bank in a merger of or consolidation of the Bank with or into
such other entity.

      16. INTEGRATION. This Agreement sets forth (and is intended to be an
integration of) all the promises, agreements, conditions, understandings,
warranties and representations among the parties hereto with respect to the
terms of Employee's supplemental retirement plan, and there are no promises,
agreements, conditions, understandings, warranties or representations, oral or
written, express or implied, among them other than as set forth herein.

      17. ALTERATION, AMENDMENT, OR TERMINATION. No change or modification of
this Agreement shall be valid unless the same is in writing and signed by all
the parties hereto. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the person against whom it is sought to be
enforced. The failure of any party at any time to insist upon strict performance
of any condition, promise, agreement or understanding set forth herein shall not
be construed as a waiver or relinquishment of the right to insist upon strict
performance of the same condition, promise, agreement or understanding at a
future time.

      18. ARBITRATION. Except as otherwise set forth herein, any



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question or controversy arising under this Agreement shall be settled by
arbitration under the then existing rules of the American Arbitration
Association, and the decision of the arbitrator shall be final and binding upon
the parties (including an award of costs of the arbitration which shall be paid
by the non-prevailing party, as determined by the arbitrator). The arbitration
shall be conducted by a single arbitrator in Carroll County, Maryland.

      19. CONSTRUCTION. Any titles, captions or paragraph headings contained
herein are inserted for purposes of convenience and reference only, and shall
not operate to define or modify the portions of the text to which they relate.

      20. SEVERABILITY. In case any provision of this Agreement shall be held
illegal, invalid or void, such illegality or invalidity shall not affect the
remaining provisions of this Agreement, but shall be fully severable, and the
Agreement shall be construed and enforced as if said illegal or invalid
provisions had never been inserted herein.

      21. FURTHER ASSURANCES. At any time and from time to time after the date
hereof, Employee shall be obligated to take all reasonable steps and execute and
deliver such consents, documents and instruments which may be reasonably
necessary or desirable to effectuate or evidence the assumption of obligations
hereunder or to perform the agreement contemplated hereby. Without limiting the
generality of the foregoing, Employee shall execute and deliver such consents or
other documents as may be necessary to



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register shares of Bank Stock under a dividend reinvestment plan established by
Monocacy Bancshares, Inc.

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written. WITNESS/ATTEST: TANEYTOWN
BANK & TRUST COMPANY



                                 By:                        (SEAL)
-------------------------------     ------------------------
                                     Donald R. Hull
                                           Chairman of the Board



                                 By:                        (SEAL)
-------------------------------     ------------------------
                                     Eric E. Glass
                                           Vice-Chairman of the Board


WITNESS:


                                                            (SEAL)
-------------------------------     ------------------------
                                     Michael K. Walsch


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