SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED MARCH 31, 2002

Commission File Number:  0001003986

CALVIN B. TAYLOR BANKSHARES, INC.

I.R.S. Employer Identification No.: 52-1948274
State of incorporation: Maryland

Address of principal executive offices: 24 North Main
Street,  Berlin,  Maryland  21811
Issuer's telephone number: (410) 641-1700


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


State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date:	The registrant had 3,240,000 shares of
common stock ($1.00 par) outstanding as of April 30, 2001.


Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Form 10-Q
Index


Part I  -   Financial Information                    Page

Item 1	Consolidated Financial Statements
     Consolidated Balance Sheets                           3
     Consolidated Statements of Income                     4
     Consolidated Statements of Cash Flows                 5
     Notes to Financial Statements                         6

Item 2	Management's Discussion and Analysis of Financial
Condition and Results of Operation                         7-10

Item 3	Quantitative and Qualitative Disclosures About
Market Risks                                               10

Part II -	Other Information
Item 1	Legal Proceedings                              11
Item 2	Changes in Securities and Use of Proceeds      11
Item 3	Defaults Upon Senior Securities                11
Item 4	Submission of Matters to a Vote of Security
Holders                                                    11
Item 5	Other Information                              11
Item 6	Exhibits and Reports on Form 8-K	           11



Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Part I - Financial Information
Consolidated Balance Sheets

                                     (unaudited)
                                         March     December
                                          2002        2001
Assets
Cash and due from banks                14,773,266  18,397,266
Federal funds sold                     54,432,446  54,389,656
Interest-bearing deposits                 879,000     879,000
Investment securities available
for sale                                3,918,479   3,974,099
Investment securities held to
maturity (approximate fair value
of $88,090,100 and $85,604,080)        87,542,086  84,398,152
Loans, less allowance for loan
losses of 2,188,547 and 2,195,922     167,612,114 166,501,512
Premises and equipment                  6,040,735   5,895,275
Accrued interest income                 1,714,032   1,753,816
Deferred income taxes                     156,147     134,639
Other assets                              458,586     501,152
                                      337,526,891 336,824,567

Liabilities and Stockholders' Equity
Deposits
  Noninterest-bearing                  61,571,649  60,508,663
  Interest-bearing                    213,505,480 213,640,518
                                      275,077,129 274,149,181
Securities sold under agreements
to repurchase                           4,546,882   4,555,323
Accrued interest payable                  457,171     529,348
Note payable                              211,599     215,702
Accrued income taxes                      690,819       2,298
Other liabilities                          (1,009)    130,145
                                      280,982,591 279,581,997
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
  Additional paid in capital           17,290,000  17,290,000
  Retained earnings                    35,610,015  36,274,102
                                       56,140,015  56,804,102
  Net unrealized gain on
  securities available for sale           404,285     438,468
                                       56,544,300  57,242,570
                                      337,526,891 336,824,567



Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)

                            For the three months ended March 31,
                                          2002        2001
Interest and dividend revenue
  Loans, including fees                 3,260,478    3,576,124
  U.S. Treasury and Agency securities     874,386      896,411
  State and municipal securities           61,038       94,413
  Federal funds sold                      220,517      261,284
  Deposits with banks                      10,522       11,972
  Equity securities                        15,158       14,703
     Total interest and dividend
      revenue                           4,442,099    4,854,907

Interest expense
  Deposit interest                      1,160,399    1,513,256
  Other                                    10,382       16,043
     Total interest expense             1,170,781    1,529,299
     Net interest income                3,271,318    3,325,608

Provision for loan losses                    -            -
     Net interest income after
     provision for loan losses          3,271,318    3,325,608

Other operating revenue
  Service charges on deposit accounts     218,719      202,387
  Miscellaneous revenue                    94,458       82,513
    Total other operating revenue         313,177      284,900

Other expenses
  Salaries and employee benefits          864,189      842,147
  Occupancy                               119,316      128,032
  Furniture and equipment                 157,485      142,470
  Other operating                         472,392      412,570
     Total other expenses               1,613,382    1,525,219

Income before income taxes              1,971,113    2,085,289
Income taxes                              691,200      728,433

Net income                              1,279,913    1,356,856

Basic earnings per share                     0.40         0.42



Calvin B. Taylor Bankshares, Inc. and
Subsidiaries
Consolidated Statements of Cash Flows (unaudited)

                            For the three months ended March 31,
                                          2002        2001

Cash flows from operating activities
  Interest received                     4,454,002   5,087,621
  Fees and commissions received           313,169     319,770
  Interest paid                        (1,242,958) (1,522,212)
  Cash paid to suppliers / employees   (1,556,159) (1,522,349)
  Income taxes paid                        (2,679)   (103,593)
                                        1,965,375   2,259,237

Cash flows from investing activities
  Proceeds from maturities of
  investment securities                17,365,000  20,465,000
  Purchase of investment securities
   held to maturity                   (20,481,124) (4,014,548)
  Certificates of deposit purchased,
   net of redemptions                        -           -
  Purchases of premises, equipment,
   and intangibles                       (291,262)   (253,395)
  Loans made, net of principal
   collected                           (1,110,602) (4,671,433)
  Proceeds from sales of equipment           -         17,000
                                       (4,517,988) 11,542,624

Cash flows from financing activities
  Net change in time deposits         186,122,263     501,653
  Net change in other deposits       (185,194,315) (4,174,155)
  Net change in repurchase agreements      (8,441)   (120,363)
  Payment on mortgage obligation           (4,104)     (3,865)
  Dividend paid                        (1,944,000)       -
                                       (1,028,597) (3,796,730)

Net increase (decrease) in cash        (3,581,210) 10,005,131
Cash and equivalents at beginning of
  period                               72,786,922  31,499,806
Cash and equivalents at end of period  69,205,712  41,504,937


Reconciliation of net income to net
  cash provided from operating activities

  Net income                            1,279,913   1,356,856
  Adjustments
    Depreciation and amortization         153,964     116,872
    Deferred income tax                      -           -
    Provision for loan losses                -           -
    Security discount accretion, net
      of premium amortization             (27,881)    (33,419)
    Loss on disposition of assets           8,343        -
    Decrease in accrued interest
      receivable and other assets          65,844     261,748
    Increase in accrued interest
      payable and other liabilities       485,192     557,180
                                        1,965,375   2,259,237


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


1.	Basis of Presentation

     The accompanying unaudited consolidated financial
statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form
10-Q.  Accordingly, they do not include all the
information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments considered
necessary for a fair presentation of financial position
and results of operations have been made.  These
adjustments are of a normal recurring nature.  Results of
operations for the three months ended March 31, 2002 are
not necessarily indicative of the results that may be
expected for the year ending December 31, 2002.  For
further information, refer to the audited consolidated
financial statements and related footnotes for the
Registrant's fiscal period ended December 31, 2001.

		Consolidation has resulted in the elimination of all
significant intercompany accounts and transactions.

	Cash Flows

     For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, amounts due from banks
and overnight investments in federal funds sold.

	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.	Comprehensive Income

     Comprehensive income consists of:

                                     Three months ended March 31,
                                     2002        2001

Net income                         1,279,913   1,356,856
Unrealized gain (loss) on
investment securities available
for sale, net of income taxes        (34,183)      2,645
Comprehensive income               1,245,730   1,359,501





Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Part I.   Financial Information
Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations

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

General

     Calvin B. Taylor Bankshares, Inc. (the "Company") was
incorporated as a Maryland corporation on October 31, 1995.
The Company owns all of the stock of two banks.  The Maryland
bank is a commercial bank incorporated under the laws of the
State of Maryland on December 17, 1907.  This bank operates
nine banking offices in Worcester County with the Bank's main
office located in Berlin, Maryland.  It is engaged in a
general commercial and retail banking business serving
individuals, businesses, and governmental units in Worcester
County, Maryland and neighboring counties.  The second bank
was incorporated in Delaware in 1997 and opened late in the
second quarter of 1998.  This one-branch Delaware bank offers
the same services as the Maryland bank.  The Company
currently engages in no business other than owning and
managing the Banks.

Financial Condition, Liquidity and Sources of Capital

     Total assets of the Company increased $702 thousand from
December 31, 2001 to March 31, 2002.  An increase in asset
size is unusual for the banks during this quarter.
Management attributes the increase to depositors' lack of
confidence in the stock market and a resultant flight to the
safety of insured deposits.  During the first quarter of the
year, the banks typically experience a decline in deposits
since business customers are using their deposits to meet
cash flow needs.  Generally, this situation reverses late in
the second quarter of the year as the banks receive loan
repayments from seasonal business customers, and deposits
from summer residents and tourists.

     During the first quarter of 2002, the banks' loan
portfolios increased $1.1 million.  Funding for these loans
was provided primarily by growth in deposits.

     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 relies on management's judgment about factors affecting
loan quality and anticipated changes in the composition and
size of the portfolio, as well as assumptions about the
economy.  Historically, the Company has low loan charge-offs.
     The banks' target levels for their allowances as a
percentage of gross loans range from approximately 1.00% to
1.35%.   Based on review of the consolidated loan portfolio,
the Company determined than an allowance of 1.29% of gross
loans was adequate as of March 31, 2002.  At December 31,
2001, the allowance was 1.30% of gross loans.  At March 31,
2002, non-accruing loans totaled $25,265 or .01% of the
portfolio and loans delinquent ninety days or more, excluding
non-accruing loans, totaled $191,948 or .11% of the
portfolio.






Financial Condition, Liquidity and Sources of Capital
(continued)

     The company's major sources of liquidity are loan
repayments, and maturities of short-term investments
including federal funds sold, and increases in core deposits.
Throughout the first quarter of the year, when the banks
typically experience a decline in deposits, federal funds
sold and investment securities are primary sources of
liquidity.  During the second quarter of the year, additional
sources of liquidity become more readily available as
business borrowers start repaying loans, and the banks
receive seasonal deposits.  Throughout the second and third
quarters the banks maintain a high liquidity level.  Funds
from seasonal deposits are generally invested in short-term
U.S. Treasury Bills and overnight federal funds.  Average
liquid assets (cash and amounts due from banks, interest
bearing deposits in other banks, federal funds sold, and
investment securities) compared to average deposits were
58.36% for the first quarter of 2002, compared to 46.21% for
the first quarter of 2001.

     At March 31, 2002, the Company's interest rate
sensitivity, as measured by gap analysis, showed the Company
was asset-sensitive with a one-year cumulative gap of 19.06%,
as a percentage of interest-earning assets.  Generally asset-
sensitivity indicates that assets reprice more quickly than
liabilities and in a rising rate environment net interest
income typically increases.  Conversely, if interest rates
decrease, net interest income would decline.  Both banks have
classified their demand mortgage and commercial loans as
immediately repriceable.  Unlike loans tied to prime, these
rates do not necessarily change as prime changes since the
decision to call the loans and change the rates rests with
management.

     Tier one risk-based capital ratios of the Company as of
March 31, 2002 and 2001 were 34.60% and 35.05%, respectively.
Both are substantially in excess of regulatory minimum
requirements.


Results of Operations

     The following discussion contains certain forward-
looking statements within the meaning of and made pursuant to
the safe harbor provisions of the Private Litigation
Securities Reform Act of 1995.

     Net income for the three months ended March 31, 2002,
was $1,279,913 or $.40 per
share, compared to $1,356,856 or $.42 per share for the first
quarter of 2001.  This represents a decrease of $76,943.  The
primary reasons for the decrease in net income are lower net
interest income and increased other operating costs.  Net
interest income decreased $54,290 in the first quarter of
2002 as compared to the first quarter of 2001 due to lower
interest rates on higher balances of both interest-earning
assets and interest-bearing liabilities.   The banks reduced
loan and deposit rates in response to overall market
conditions.  Market rate reductions have also diminished
rates of return on federal funds sold and investment
securities.



Results of Operations (continued)

     Net interest income of the company is one of the most
important factors in evaluating the financial performance of
the Company.  The Company uses interest sensitivity analysis
to determine the effect of rate changes.  Net interest income
is projected over a one-year period to determine the effect
of an increase or decrease in the prime rate of 100 basis
points.  If prime were to decrease one hundred basis points,
and all assets and liabilities maturing within that period
were fully adjusted for the rate change, the Company would
experience a decrease of less than five percent in net
interest income.  The sensitivity analysis does not consider
the likelihood of these rate changes nor whether management's
reaction to this rate change would be to reprice its loans or
deposits.

     No provision for loan losses was made in the first
quarters of 2002 or 2001.  Loans charged-off during the
first quarter of 2002 totaled $7,775.  There were no loans
charged-off during the first three months of 2001.

     The banks employed 97 full time equivalent employees as
of March 31, 2002, a decrease of ten employees from March
31, 2001.  The Maryland bank hires seasonal employees during
the summer.  The Company has no employees other than those
hired by the banks.

     During the fourth quarter of 2001, the Company  replaced
its core processing system.  Related equipment depreciation,
software amortization, and maintenance costs for both
equipment and software increased with this replacement.
Prior to the installation of the new processing system,
upgrades to the company's data storage, networking and
Internet banking systems were installed.  These, too, caused
an increase in related costs.

    Other expense increased $88 thousand in the first
quarter of 2002 as compared to the first quarter of 2001.
Significant components of this increase include a $22
thousand increase in telephone costs due to network and
Internet usage, and additional correspondent bank fees of $29
thousand.  Additionally, increased amortization and software
maintenance costs related to recent upgrades and enhancements
to the company's data processing capabilities are record in
other operating expense.

Plans of Operation

     The banks conduct general commercial banking businesses
in their service areas, of Worcester County, Maryland and
Sussex County, Delaware, while also emphasizing the banking
needs of individuals and small- to medium-sized businesses
and professional concerns.  The banks offer a full range of
federally insured deposit services that are typically
available in most banks and savings and loan associations,
including checking accounts, NOW accounts, savings accounts
and time deposits of various types ranging from daily money
market accounts to longer-term certificates of deposit.

     The Company, through its banks, offers a full range of
short- to medium-term commercial and personal loans, and
originates mortgage loans, including real estate construction
and acquisition loans.  The banks have the intent and the
ability to hold loans that their portfolios.



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

Capital Resources and Adequacy

     Total stockholders' equity decreased $698,270 from
December 31, 2001 to March 31, 2002.  This change is
attributable to the comprehensive income of $1,245,730
recorded during the period, as detailed in Note 2 of the
Notes to Financial Statements, reduced by the payment cash
dividend of $1,944,000.

    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.

Item 3.  Quantitative and Qualitative Disclosures About
Market Risk

     The Company's principal market risk exposure relates to
interest rates on interest-earning assets and interest-
bearing liabilities.  Unlike most industrial companies, the
assets and liabilities of financial institutions such as the
Company and the banks are primarily monetary in nature.
Therefore, interest rates have a more significant effect on
the Company's performance than do the effects of changes in
the general rate of inflation and change in prices.  In
addition, interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and
services.  As discussed previously, management monitors and
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.





Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Part II. Other Information


Item 1	Legal Proceedings
	Not applicable

Item 2	Changes in Securities and Use of Proceeds
	Not applicable

Item 3	Defaults Upon Senior Securities
	Not applicable

Item 4	Submission of Matters to a Vote of Security
Holders
	Not applicable

Item 5	Other information
	Not applicable.

Item 6	Exhibits and Reports on Form 8-K
        a)    Exhibits
        2.    Proxy Statement dated March 15, 2002, is
              incorporated by reference.

        b)    Reports on Form 8-K
              There were no reports on Form 8-K filed for the
              quarter ended March 31, 2002.








SIGNATURES

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



		Calvin B. Taylor Bankshares, Inc.




Date:                           By: /s/Reese F.Cropper,Jr.
                                 Reese F. Cropper, Jr.
                                 President and
                                 Chief Executive Officer



Date:                           By: /s/ William H. Mitchell
                                 William H. Mitchell
                                 Senior Vice President and
                                 Chief Financial Officer