SECURITIES AND EXCHANGE COMMISSION
Washington,  DC  20549

FORM 10-QSB

(Mark One)

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT 
    OF 1934 
	   For the quarter ended September 30, 1998

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND 
    EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD 
    FROM __________________ TO _________________

Commission File Number:  0001003986

CALVIN B. TAYLOR BANKSHARES, INC.
(Exact name of issuer as specified in its charter)

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

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

      (410) 641-1700     
(Issuer's telephone number)

         Not Applicable                        
              
(Former name, former address and former fiscal year, 
if changed since last report


Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act 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 ________


State the number of shares outstanding of each of the issuer's classes of 
common equity, as of the latest practicable date:

The registrant has 1,620,000 shares of common stock ($1.00 par) outstanding 
as of November 6, 1998.


Transitional Small Business Disclosure Format (check one) YES      NO    X  



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


Part I  -	Financial Information							            Page

	Item 1	Financial Statements
		Consolidated Statements of Condition	          		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		               	           7-8

Part II -	Other Information
	Item 1	Legal Proceedings				                     	9
	Item 2	Changes in Securities				                 	9
	Item 3	Defaults Upon Senior Securities			        	9
	Item 4	Submission of Matters to a Vote of 
        Security Holders	                         	9
	Item 5	Other Information					                     9
	Item 6	Exhibits and Reports on Form 8-K				       9






























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Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Part I - Financial Information
Consolidated Statements of Condition



                                  (unaudited)
                                   September 30             December 31, 
                                       1998                     1997
                 Assets

Cash and due from banks          $       10,359,153           $      9,150,979 
Federal funds sold                       30,117,138                 20,207,703 
Interest-bearing deposits                 1,228,000                  1,229,000 
Investment securities available 
   for sale                               3,093,589                  2,573,450 
Investment securities held to maturity
  (approximate fair value 
   of $83,996,825 and $63,457,503)       83,159,649                 63,249,260 
Loans, less allowance for credit losses
  of $2,089,139 and $2,080,798          143,844,823                147,190,832 
Premises and equipment                    4,819,044                  4,152,389 
Accrued interest income                   1,542,760                  1,790,423 
Intangible assets                            90,475                    107,476 
Deferred income taxes                         7,877                    104,061 
Other assets                                 97,758                    137,039 

                               $        278,360,266           $    249,892,612 


          Liabilities and Stockholders' Equity

Deposits
  Noninterest-bearing         $          37,159,124           $     33,093,588 
  Interest-bearing                      194,373,267                173,699,610 
                                        231,532,391                206,793,198 
Accrued interest payable                    484,547                    433,344 
Accrued income taxes                            -                       21,527 
Obligation under capital lease                  -                       61,720 
Other liabilities                             4,472                      5,806 
                                        232,021,410                207,315,595 
Stockholders' equity
  Common stock, par value $1 per share 
   authorized 2,000,000 shares, issued and 
   outstanding 1,620,000 shares in 1998 and
   810,000 shares in 1997                 1,620,000                    810,000 
  Capital surplus                        17,290,000                 17,290,000 
  Retained earnings                      26,890,130                 24,120,666 

                                         45,800,130                 42,220,666 
  Net unrealized gain on securities
   available for sale                       538,726                    356,351 
                                         46,338,856                 42,577,017 

                               $        278,360,266            $   249,892,612 












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




                         For the three months ended  For the nine months ended
                                   September 30              September 30
                              1998         1997          1998          1997
Interest and dividend revenue
  Loans, including fees    $ 3,090,783  $ 3,193,087  $  9,354,603  $ 9,607,249 
  U.S. Treasury securities     966,122      740,258     2,537,354    2,005,109 
  State and municipal 
     securities                139,461      115,465       344,955      386,140 
  Federal funds sold           405,231      454,173     1,010,701      909,664 
  Deposits with banks           17,265       17,345        53,605       51,735 
  Equity securities              4,046        3,322        10,756        9,878 
    Total interest and 
      dividend revenue       4,622,908    4,523,650    13,311,974   12,969,775 


Interest expense
  Deposit interest           1,660,900    1,534,663     4,676,870    4,424,169 
  Other                             -            -             -         1,829 
    Total interest expense   1,660,900    1,534,663     4,676,870    4,425,998 


    Net interest income      2,962,008    2,988,987     8,635,104    8,543,777 

Provision for credit losses      1,175           -          1,175       25,000 
   Net interest income after
   provision for credit 
   losses                    2,960,833    2,988,987     8,633,929    8,518,777 


Other operating revenue
  Service charges on deposit 
  accounts                     186,292      155,407       508,661      452,771 
  Miscellaneous revenue        102,392       73,630       262,237      210,725 
Total other operating revenue  288,684      229,037       770,898      663,496 


Other expenses
  Salaries and employee 
  benefits                     703,773      638,798     2,180,312    2,039,343 
  Occupancy                    175,148      156,851       382,821      370,152 
  Furniture and equipment       78,954       64,770       297,477      279,563 
  Other operating              328,244      301,488     1,074,734      809,046 
    Total other expenses     1,286,119    1,161,907     3,935,344    3,498,104 

Income before income taxes   1,963,398    2,056,117     5,469,483    5,684,169 
Income taxes                   671,083      704,023     1,890,019    2,031,365 

Net income            $      1,292,315  $ 1,352,094  $  3,579,464  $ 3,652,804 

Basic earnings per share   $      1.60  $      1.67  $       4.42  $      4.51 





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




                                             For the nine months ended
                                                   September 30
                                                1998              1997
Cash flows from operating activities
  Interest received                $           13,353,423  $       12,803,403 
  Other revenue received                          711,584             613,425 
  Cash paid for operating expenses             (3,652,745)         (3,243,010)
  Interest paid                                (4,625,667)         (4,424,840)
  Taxes paid                                   (1,810,687)         (2,026,802)
                                                3,975,908           3,722,176 
Cash flows from investing activities
  Cash paid for premises, equipment, 
    intangibles,and construction in progress     (935,851)           (917,244)
    Net customer loans repaid (advanced)        3,344,834           2,410,583 
    Redemption of matured securities           36,770,000          27,672,000 
    Investment in securities                  (56,715,755)        (31,734,780)
    Redemption of certificates, net of   
    purchases                                       1,000             194,000 

                                              (17,535,772)         (2,375,441)
Cash flows from financing activities
  Net change in time deposits                   6,705,272            (250,414)
  Net change in other deposits                 18,033,921           9,086,007 
  Payment on capital lease                        (61,720)            (64,891)
  Dividends paid                                      -              (810,000)
                                               24,677,473           7,960,702 


Net increase (decrease) in cash                11,117,609           9,307,437 
Cash and equivalents at beginning of period    29,358,682          23,802,923 
Cash and equivalents at end of period   $      40,476,291      $   33,110,360 


Reconciliation of net income to net cash provided
  from operating activities
  Net income                             $      3,579,464      $    3,652,804 
  Adjustments 
    Depreciation and amortization                 286,196             256,307 
    Deferred tax provision                             -              (14,004)
    Provision for loan losse                        1,175              25,000 
    Security discount accretion, net of 
    Premium amortization                         (206,214)           (297,782)
    Decrease (increase) in accrued interest
      receivable and other assets                 286,945              83,079 
    Increase (decrease) in accrued interest
      payable and other liabilities                28,342              16,772 

                                  $             3,975,908  $        3,722,176 


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


1.	Basis of Presentation

		The accompanying unaudited condensed financial statements have been prepared 
in accordance with generally accepted accounting principles for the interim 
financial information and with the instructions to Form 10-QSB and Regulation
 S-X of the Securities and Exchange Commission.  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 (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating results of the
nine months ended September 30, 1998 and 1997 are not necessarily indicative of
the results that may be expected for the years ending December 31, 1998 and
1997.  For further information, refer to the financial statements and 
footnotes thereto for the Registrant's fiscal period ended December 31, 1997.

2.	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.


3.      Comprehensive Income

   Effective January 1, 1998, the Company adopted Statement of Financial 
Accounting Standards No. 130, Reporting Comprehensive Income, which requires 
the reporting of comprehensive income.  Comprehensive income includes 
unrealized gains and losses, including the unrealized gains and losses on 
available-for-sale securities that have been reported as a separate component
 of stockholders' equity, not recognized in net income. The adoption of this 
statement had no impact on the Company's net income or stockholders' equity.
	For the nine months ended September 30, 1998 and 1997, total comprehensive 
income, net of taxes, was $3,761,839 and $3,680,217, respectively.

3. Other Accounting Pronouncements

	In June, 1997, the Financial Accounting Standards Board (FASB) issued 
Statement of Financial Accounting Standards No. 131, Disclosures about 
Segments of an Enterprise and Related Information,  which requires 
disclosures about reportable operating segments.  Although this statement 
is effective for periods beginning after December 15, 1997, it is not 
required to be applied for interim periods during 1998.  This statement will 
require additional disclosures in the Company's 1998 annual report.

	In June, 1998, the the Financial Accounting Standards Board (FASB) issued 
Statement of Financial Accounting Standards No. 133, Accounting for 
Derivative Instruments and Hedging Activities.  The Company currently has no 
derivative instruments or hedging activities so no effect is expected.
	







-6-

Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Part I Financial Information
Item 2.  Management's Discussion and Analysis or Plan of Operation.

	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

	The Company was incorporated in Maryland on October 31, 1995, as a bank 
holding company.  Stock of a Maryland state bank with the name Calvin B. 
Taylor Banking Company was exchanged in February, 1996 for the outstanding 
stock of the Company.  A second bank was chartered as a Delaware state bank 
with the name Calvin B. Taylor Bank of Delaware.

	The Maryland bank was established in 1890 and incorporated in 1907 while 
the Delaware bank. was chartered in 1997, opening late during the second 
quarter of 1998.  The Company currently engages in no business other than 
owning and managing the Banks.  

Financial Condition, Liquidity and Sources of Capital

	The major sources of liquidity of the Company arise from loan repayments, 
short-term investments, including federal funds sold, and an increase in 
core deposits.  During the first quarter of the year, the Bank typically 
experiences a decline in deposits since these businesses are using their 
deposits to meet their cash flow needs.  Generally, this situation reverses 
during the second quarter of the year as the businesses start repaying loans,
 and the Banks receive seasonal deposits from tourists and summer
residents. Througout the second and
third quarters the Banks maintain a high liquidity level.  Funds from 
seasonal deposits are invested in short-term U.S. Treasury Bills and Federal 
Funds.  Because of decreased loan demand, the Maryland bank has shifted 
funds to more liquid investments causing the 1998 liquidity ratios to be 
higher than normal for the period.  The new Delaware bank has opened deposit 
accounts totaling approximately $947,000 while extending loans totaling 
approximately $87,000.  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 55.17% for the 
third quarter of 1998 compared to 46.49% for the second quarter of 1998 and 
39.76% third quarter of 1997.

	At September 30, 1998, the Company's interest rate sensitivity, as measured 
by gap analysis, showed the Company was asset-sensitive with a one-year 
cumulative gap, as a percentage of interest-earning assets, of 9.70%.  
Generally asset-sensitivity indicates that assets reprice quicker 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 its demand mortgage and commercial
loans as immediately repriceable.  Unlike loans tied to prime, these rates
rests with management.  The cumulative gap declined primarily due to shift
from demand loans to investment securities with longer terms 
while money market accounts, now accounts, and savings accounts, which are 
considered immediately repriceable, have increased.

	Tier one risk-based capital ratios of the Company as of September 30, 1998 
and 1997 were 36.73% and 35.05%, respectively.  Both are substantially in 
excess of regulatory minimum requirements. 

Results and Plan of Operation

	Net income for the three months ended September 30, 1998, was $1,292,315 or 
$1.60 per share, compared to $1,353,297 or $1.67 per share for the third 
quarter of 1997.   The Company experienced decreased earnings of $74,543, 
through the third quarter from prior year earnings.  The primary reason net 
income decreased is due to an increase in other operating expense.  

- 7 -
Results and Plan of Operation (continued)

	Increases in net interest income and other operating income were offset by 
increased other operating expenses. The third quarter other operating 
expenses were higher in 1998 compared to 1997 as the result of the opening 
of the Delaware Bank.  Typically new Banks do not break even until their 
fourth or fifth year of operation.  The Maryland Bank has also incurred 
first year costs of its new club product in excess of revenues totaling 
approximately $51,000.
 
	The Company reviewed its consolidated loan portfolio and determined the 
allowance, at 1.43% of gross loans, was adequate as of September 30, 1998.  
At December 31, 1997, the allowance was 1.41% of gross loans.  Because the 
Maryland bank has experienced both net recoveries and a decline in gross 
loans, the only loan loss provision recorded was $1,175 for the Delaware 
bank.   At September 30, 1998, there were no nonaccruing loans and only .05% 
of the portfolio was delinquent ninety days or more.

	The year 2000 (Y2k) poses many potential problems for businesses and 
individuals.  In an effort to conserve hard drive space, in the past 
programmers wrote programs that would not recognize the year 2000 correctly. 
This can cause system failures for computers and other electronic equipment 
that has chip components.  Management has a Y2k committee, which reports to 
the Board, responsible for assessing progress in the Company's plans to 
minimize the effects of the Y2k problem.  Management has upgraded the hardware
and software it has identified as needing replacement to be Y2K compliant.
As of September 30, 1998, the Company thinks its systems are Y2k compliant.  
Testing of these systems will begin during the middle of the fourth quarter 
of 1998.  Management has also sent surveys or met with its vendors and large 
customers.  The Y2k committee and loan officers are in the process of 
following up with large customers who have not satisfactorily communicated 
their Y2k preparedness to the Company.  

	The Company believes most of the costs to address the Y2k issues have 
occurred.  The remaining incremental costs should be the cost of 
communicating with the customers not yet Y2k compliant.  Management thinks 
these costs will have no significant impact on its earnings.

	Management believes its greatest Y2k issues are external issues, including 
whether borrowers are actually Y2k compliant.   If borrowers are not 
prepared, their ability to continue in business and repay their debt could 
become doubtful.

	Management is in the process of evaluating alternatives to replace its 
current in-house computer system which is almost five years old.  The Company
 expects this replacement to occur in 1999 or 2000.  During the fourth 
quarter of 1998, management will replace the reader/sorter which is integral 
to the computer system, but older than most components.  The cost of the new 
reader/sorter is $522,939.  Management also plans to upgrade its optical 
system and replace its older personal computers late in 1998 at a total cost
of $52,000. Any new computer system will have to be year 2000
 compliant and be able to interface with these new fourth quarter purchases.

	The Banks employed one hundred and one full time equivalent employees as of 
September 30, 1998.  The Maryland bank hires seasonal employees during the 
summer.  The Company employs no employees outside those hired by the Banks.

	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, the Company would 
experience a decrease of net interest income of 3.79% if all assets and 
liabilities maturing within that period were adjusted for the rate change.  
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 and deposits.  This paragraph 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.

	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 
deposit services that are typically available in most banks and savings 
and loan associations, including checking accounts, NOW accounts, savings 
accounts and other time deposits of various types ranging from daily money
market accounts to longer-term certificates of deposit.

	The Banks also offer a full range of short- to medium-term commercial and 
personal loans.  The Banks originate demand mortgage loans and real estate 
construction and acquisition loans.  Loans originated to date are anticipated
to be held in the portfolios of the originating Banks.  Other bank services 
include cash management services, safe deposit boxes, travelers checks, 
direct deposit of payroll and social security checks, and automatic drafts 
for various accounts.  The Company is associated with the MAC network of 
automated teller machines that may be used by Bank customers throughout
Maryland and other regions.  The Banks offer MasterCard and VISA credit card 
services through a correspondent bank as an agent for the Banks.
































-9-

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


Item 1	Legal Proceedings
	Not applicable

Item 2	Changes in Securities
	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 April 22, 1998, is incorporated by reference.

	b)	Reports on Form 8-K
      		There were no reports on Form 8-K filed for the quarter ended 
	      	September 30, 1998.



























-10-

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 CEO



Date: _________________	            By:     /s/ William H. Mitchell    
		                                          William H. Mitchell
                                          		Chief Financial Officer







Calvin B. Taylor Bankshares, Inc.
Financial Data Schedule



Item                                                     September 30,
Number                                                       1998

9-03(1)     Cash and due from banks                       10,359,153
9-03(2)     Interest-bearing deposits                      1,228,000
9-03(3)     Federal Funds sold                            30,117,138
9-03(4)     Trading account assets  
9-03(6)     Investment and mortgage-backed securities
                held for sale                              3,093,589
9-03(6)     Investment and mortgage-backed securities
                held to maturity - carrying value         83,159,649
9-03(6)     Investment and mortgage-backed securities
                held to maturity - market value           83,996,825
9-03(7)     Loans                                        145,933,962
9-03(7)(2)  Allowance for losses                           2,089,139
9-03(11)    Total assets                                 278,360,266
9-03(12)    Deposits                                     231,532,391
9-03(13)    Short-term borrowings                               -
9-03(15)    Other liabilities                                489,019
9-03(16)    Long-term debt
9-03(19)    Preferred stock - mandatory redemption
9-03(20)    Preferred stock - no mandatory redemption    
9-03(21)    Common stock                                   1,620,000
9-03(22)    Other stockholders' equity                    44,718,856
9-03(23)    Total liabilities and stockholders' equity   278,360,266



Calvin B. Taylor Bankshares, Inc.
Financial Data Schedule
(continued)


                                                      Six Months Ended
Guide                                                  September 30, 
Number                                                    1998

9-04(1)    Interest and fees on loans                   9,354,603
9-04(2)    Interest and dividends on investments        2,893,065
9-04(4)    Other interest income                        1,064,306
9-04(5)    Total interest income                       13,311,974
9-04(6)    Interest on deposits                         4,676,870
9-04(9)    Total interest expense                       4,676,870
9-04(10)   Net interest income                          8,635,104
9-04(11)   Provision for loan losses                        1,175
9-04(13)(b)Investment securities gains/(losses)                -
9-04(14)   Other expenses                               3,935,344
9-04(15)   Income/loss before income tax                5,469,483
9-04(17)   Income/loss before extraordinary items       5,469,483
9-04(18)   Extraordinary items, less tax                      -
9-04(19)   Cumulative change in accounting principles         -
9-04(20)   Net income or loss                           3,579,464
9-04(21)   Earnings per share - basic                        4.42
9-04(21)   Earnings per share - diluted                      4.42
I.B.5      Net yield on interest earning assets              5.19 %
III.C.1(a) Loans on nonaccrual                                 -
III.C.1(b) Accruing loans past due 90 days or more         73,040
III.C.1(c) Troubled debt restructuring                         -
III.C.2    Potential problem loans                             -
IV.A.1     Allowance for loan loss-beginning of period  2,080,798
IV.A.2     Total chargeoffs                                 7,172
IV.A.3     Total recoveries                                14,338
IV.A.4     Allowance for loan loss-end of period        2,089,139
IV.B.1     Loan loss allowance allocated to domestic
           loans                                        2,089,139
IV.B.2     Loan loss allowance allocated to foreign
           loans                                              -
IV.B.3     Loan loss allowance - unallocated                  -

















-11-