UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**Form 10-Q**
Quarterly Report Pursuant to Section 13 or 15(d)			of the Securities Exchange Act of 1934For the quarterly period ended March 31, 2009Commission 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, including zip code)

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

Indicate by check mark whether the registrant (1) has filedall reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has been subjectto such filing requirements for the past 90 days. Yes [X] No ____

Indicate by check mark whether the registrant is a largeaccelerated filer, an accelerated filer, a non-accelerated filer, or a smallerreporting company. See the definitions of "large accelerated filer,""accelerated filer" and "smaller reporting company" in Rule 12b-2 of theExchange Act.Large accelerated filer ____                                                                                     Accelerated filer [X] Non- accelerated filer ____ (Do not check if a smallerreporting company)     Smaller reporting company ____
Indicate by check mark whether the registrant is a shellcompany (as defined in Rule 12b-2 of the Act). Yes ____ No [X] 

On April 30, 2009, 3,025,774 shares of the registrant'scommon stock were issued and outstanding.

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******Calvin B. Taylor Bankshares, Inc. and SubsidiaryForm 10-QIndex**Part I - Financial		InformationPageItem 1Consolidated		Financial StatementsConsolidated		Balance Sheets as of March 31, 2009 and December 31, 20083 Consolidated		Statements of Income for the three months ended March		31, 2009 and 20084Consolidated		Statements of Cash Flows for the three months ended March		31, 2009 and 20085-6Notes to		Consolidated Financial Statements7-8Item 2Management’s		Discussion and Analysis of Financial Conditionand Results		of Operations9-18Item 3Quantitative		and Qualitative Disclosures About Market Risks 19Item 4Controls and		Procedures19Part II - Other		InformationItem 1Legal		Proceedings20Item 1ARisk Factors20Item 2Unregistered		Sales of Equity Securities and Use of Proceeds21Item 3Defaults Upon		Senior Securities21Item 4Submission of		Matters to a Vote of Security Holders21Item 5Other		Information21Item 6Exhibits21-24Signatures25
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		Part I - Financial Information, Item 1 Financial Statements 		Calvin B. Taylor Bankshares, Inc. and Subsidiary 		Consolidated Balance Sheets  		(unaudited) 		March 31		December 31,		2009		2008		Assets		Cash and due from banks		 $             13,657,389 		 $               8,769,784 		Federal funds sold		                38,151,879 		                26,460,842 		Interest-bearing deposits		                  8,197,144 		                15,517,115 		Investment securities available for sale		                24,699,179 		                33,975,271 		Investment securities held to maturity (approximate   		  fair value of $35,179,297 and $33,523,422)		                34,556,162 		                32,621,797 		Loans, less allowance for loan losses  		  of $966,753 and $707,152		              244,595,194 		              241,430,914 		Premises and equipment		                  6,453,389 		                  6,326,312 		Accrued interest receivable		                  1,640,623 		                  1,704,260 		Computer software		                     143,857 		                     156,372 		Bank owned life insurance		                  4,957,974 		                  4,914,810 		Other assets		                     229,207 		                     725,034 		 $           377,281,997 		 $           372,602,511 		Liabilities and Stockholders' Equity		Deposits  		  Noninterest-bearing		 $             67,175,058 		 $             70,652,032 		  Interest-bearing		              229,942,221 		              221,807,181 		              297,117,279 		              292,459,213 		Securities sold under agreements to repurchase		                  5,228,497 		                  5,742,765 		Note payable		                       67,806 		                       74,046 		Accrued interest payable 		                     267,663 		                     359,673 		Deferred income taxes		                  1,342,554 		                  1,437,813 		Other liabilities		                     539,806 		                     245,507 		              304,563,605 		              300,319,017 		Stockholders' equity  		  Common stock, par value $1 per share   		   authorized 10,000,000 shares, issued and outstanding  		   3,028,958 shares at March 31, 2009, and  		   3,048,397 shares at December 31, 2008		                  3,028,958 		                  3,048,397 		  Additional paid-in capital		                  9,705,566 		                10,406,403 		  Retained earnings		                57,908,603 		                56,569,913 		                70,643,127 		                70,024,713 		  Accumulated other comprehensive income		                  2,075,265 		                  2,258,781 		                72,718,392 		                72,283,494 		 $           377,281,997 		 $           372,602,511 
See accompanying Notes to Consolidated Financial Statements

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		Calvin B. Taylor Bankshares, Inc. and Subsidiary 		Consolidated Statements of Income (unaudited)   		For the three months ended 		March 31, 		2009		2008		Interest and dividend revenue  		  Loans, including fees		 $               4,063,046 		 $               4,176,545 		  U.S. Treasury and government agency securities		                     449,164 		                     634,809 		  State and municipal securities		                       10,313 		                       11,211 		  Federal funds sold 		                       16,231 		                     251,474 		  Interest-bearing deposits		                       78,764 		                       68,126 		  Equity securities		                       26,140 		                       28,321 		          Total interest and dividend revenue		                  4,643,658 		                  5,170,486    		Interest expense  		  Deposits		                     717,546 		                  1,164,032 		  Borrowings		                         7,922 		                         7,203 		    Total interest expense		                     725,468 		                  1,171,235    		    Net interest income		                  3,918,190 		                  3,999,251     		Provision for loan losses		                     333,100 		                       71,209  		    Net interest income after provision for loan losses		                  3,585,090 		                  3,928,042    		Noninterest revenue  		  Service charges on deposit accounts		                     248,062 		                     242,971 		  ATM and debit card		                     117,679 		                     113,539 		  Bank owned life insurance		                       43,164 		                       48,462 		  Miscellaneous revenue		                       51,915 		                       63,264 		    Total noninterest revenue		                     460,820 		                     468,236    		Noninterest expenses  		  Salaries		                     895,730 		                     866,942 		  Employee benefits		                     219,203 		                     221,411 		  Occupancy		                     197,704 		                     187,848 		  Furniture and equipment		                     125,645 		                     111,350 		  Data proccessing		                       71,807 		                       69,475 		  ATM and debit card		                       78,702 		                       67,988 		  Other operating		                     374,429 		                     326,765 		    Total noninterest expenses		                  1,963,220 		                  1,851,779    		    Income before income taxes		                  2,082,690 		                  2,544,499 		Income taxes		                     744,000 		                     922,300    		Net income		 $               1,338,690 		 $               1,622,199    		Earnings per common share - basic and diluted		 $                        0.44 		 $                        0.52 
See accompanying Notes to Consolidated Financial Statements

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		Calvin B. Taylor Bankshares, Inc. and Subsidiary 		Consolidated Statements of Cash Flows (unaudited)   		For the three months ended 		March 31, 		2009		2008		Cash flows from operating activities  		  Interest and dividends received		 $                4,704,538 		 $                5,249,234 		  Fees and commissions received		                      400,203 		                      422,953 		  Interest paid		                    (817,478)		                 (1,219,400)		  Cash paid to suppliers and employees		                 (1,761,175)		                 (1,728,578)		  Income taxes paid		                        (3,728)		                        (6,215) 		                   2,522,360 		                   2,717,994 		Cash flows from investing activities  		  Certificates of deposit purchased, net of maturities		                   7,296,255 		                        93,184 		  Proceeds from maturities of investments available  		     for sale		                 14,000,000 		                 17,000,000 		  Purchase of investments available for sale		                 (4,997,075)		                                -   		  Proceeds from maturities of investments held to   		     maturity		                   6,100,000 		                   6,675,000 		  Purchase of investments held to maturity		                 (8,037,148)		                 (1,316,965)		  Loans made, net of principal collected		                 (3,506,412)		                 (2,767,011)		  Proceeds from sale of repossessed loan collateral		                        12,500  		  Purchases of premises, equipment,  		    and computer software		                    (252,835)		                      (88,546) 		                 10,615,285 		                 19,595,662  		   		   		Cash flows from financing activities  		  Net increase (decrease) in  		    Time deposits		                   3,004,895 		                 (2,410,441)		    Other deposits		                   1,653,171 		                 (6,075,992)		    Securities sold under agreements to repurchase		                    (514,268)		                    (225,455)		  Payments on note payable		                        (6,240)		                        (5,877) 		  Common shares repurchased		                    (720,276)		                    (362,641) 		                   3,417,282 		                 (9,080,406)   		Net increase in cash and cash equivalents		                 16,554,927 		                 13,233,250 		Cash and cash equivalents at beginning of period		                 35,270,664 		                 40,568,264 		Cash and cash equivalents at end of period		 $              51,825,591 		 $              53,801,514             
See accompanying Notes to Consolidated Financial Statements

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		Calvin B. Taylor Bankshares, Inc. and Subsidiary 		Consolidated Statements of Cash Flows (unaudited)   		For the three months ended 		March 31, 		2009		2008		Reconciliation of net income to net cash provided  		  by operating activities  		  Net income		 $               1,338,690 		 $               1,622,199 		  Adjustments to reconcile net income to net cash  		    provided by operating activities  		Provision for loan losses		                     333,100 		                       71,209 		    (Gain) loss on sale of repossessed loan collateral		                         1,275 		                              -   		    Amortization of premiums and accretion of  		      discount, net		                       (2,824)		                     (85,919)		    Depreciation and amortization		                     138,273 		                     142,467 		    Decrease (increase) in  		      Accrued interest receivable		                       63,637 		                     164,617 		      Cash surrender value of bank owned life insurance		                     (43,164)		                     (48,462)		      Other assets		                     491,084 		                     430,236 		    Increase (decrease) in  		      Accrued interest payable		                     (92,010)		                     (48,165)		      Accrued income taxes		                     365,032 		                     614,259 		      Other liabilities		                     (70,733)		                   (144,447) 		 $               2,522,360 		 $               2,717,994       		  Composition of cash and cash equivalents  		    Cash and due from banks		 $             13,657,389 		 $             12,858,962 		    Federal funds sold 		                38,151,879 		                40,888,849 		    Interest-bearing deposits, except for time deposits		                       16,323 		                       53,703  		 $             51,825,591 		 $             53,801,514                            
See accompanying Notes to Consolidated Financial Statements

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**Calvin B. Taylor Bankshares, Inc. and SubsidiaryNotes to Consolidated Financial Statements (unaudited)**
1. Basis of Presentation	   	The accompanying unaudited consolidated financial	statements conform with accounting principles generally accepted in the	United States of America and to the instructions to Form 10-Q. Interim	financial statements do not include all the information and footnotes	required for complete financial statements. In the opinion of management,	all adjustments considered necessary for a fair presentation of financial	position and results of operations for these interim periods have been made.	These adjustments are of a normal recurring nature. Results of operations	for the three months ended March 31, 2009 are not necessarily indicative of	the results that may be expected in any other interim period or for the year	ending December 31, 2009. For further information, refer to the audited	consolidated financial statements and related footnotes included in the	Company's Form 10-K for the year ended December 31, 2008.   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, federal funds	sold, and interest-bearing deposits except for time deposits. Federal funds	are purchased and sold for one-day periods.

Per share data       Earnings per common share are determined by dividing net	income by the weighted average number of common shares outstanding for the	period, as follows:
 		2009		2008		Three months ended March 31		                    3,039,978 		                    3,097,759 
2. Comprehensive Income        Comprehensive income consists of:
 		For the three months ended 		March 31, 		2009		2008		Net income		 $                 1,338,690 		 $                 1,622,199 		Unrealized gain (loss) on investment securities  		  available for sale, net of income taxes		                     (183,516)		                         37,239 		Comprehensive income		 $                 1,155,174 		 $                 1,659,438 
3. Loan commitments	        Loan commitments are agreements to lend to customers as	long as there is no violation of any conditions of the contracts. As of	March 31, outstanding loan commitments and letters of credit consist of:
 		March 31, 2009		December 31, 2008		Loan commitments		 $               39,126,084 		 $               37,463,901 		Standby letters of credit		 $                 1,760,372 		 $                 1,921,878 
 

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** 

Calvin B. Taylor Bankshares, Inc. and SubsidiaryNotes to Consolidated Financial Statements (unaudited) (continued)**
4. Assets Measured at Fair Value on a Recurring Basis	   	The Company values investment securities classified as	available for sale at fair value. The fair value hierarchy established in	Statement of Financial Accounting Standards No. 157, *Fair Value	Measurements,* defines three input levels for fair value measurement.	Level 1 is based on quoted market prices in active markets for identical	assets. Level 2 is based on significant observable inputs other than those	in Level 1. Level 3 is based on significant unobservable inputs. The Company	values US Treasury and government agency securities under Level 1, and	municipal debt securities and equity investments under Level 2. The Company	has no assets measured at fair value on a recurring basis that are valued	under Level 3 criteria. At March 31, 2009, values for available for sale	investment securities were established as follows:
 		Total		Level 1 Inputs		Level 2 Inputs		Investment securities available for sale		 $      24,699,179 		 $      20,452,740 		 $        4,246,439 
5. New accounting standards	   	The following accounting pronouncements have been	approved by the Financial Accounting Standards Board but have not become	effective as of December 31, 2008. These pronouncements would apply to the	Company if the Company or the Bank entered into an applicable activity.	   	In December 2007, the FASB issued SFAS 141, Revised 2007	(SFAS 141R), *Business Combinations.* SFAS 141R's objective is to	improve the relevance, representational faithfulness, and comparability of	the information that a reporting entity provides in its financial reports	about a business combination and its effects. SFAS 141R applies	prospectively to business combinations for which the acquisition date is on	or after December 31, 2008. The Company does not expect the implementation	of SFAS 141R to have a material impact on its consolidated financial	statements.	   	FASB Statement No. 160, *Noncontrolling Interests in	Consolidated Financial Statements* improves the relevance, comparability,	and transparency of the financial information that a reporting entity	provides in its consolidated financial statements by establishing accounting	and reporting standards for the noncontrolling interest in a subsidiary and	for the deconsolidation of a subsidiary.  SFAS No. 160 is effective for	fiscal years beginning on or after December 15, 2008, and interim periods	within those fiscal years.  Management does not expect SFAS No. 160 to	have a material impact on the Company’s consolidated financial statements.	   	FASB Statement No. 161, *Disclosures About Derivative	Instruments and Hedging Activities, an Amendment of FASB Statement No. 133*expands disclosure requirements to provide greater transparency about	how and why an entity uses derivative instruments, and the accounting for	those instruments and related hedge items. SFAS No. 161 is effective for	financial statements issued for fiscal years and interim periods beginning	after November 15, 2008, with early application encouraged.  	Management does not expect SFAS No. 161 to have a material impact on the	Company’s consolidated financial statements.	    In May 2008, the FASB issued SFAS 162, *The Hierarchy	of Generally Accepted Accounting Principles*. SFAS 162 identifies the	sources of accounting principles and the framework for selecting the	principles used in the preparation of financial statements of	nongovernmental entities that are presented in conformity with generally	accepted accounting principles in the United States. The implementation of	SFAS 162 did not have a material impact on the Company’s consolidated	financial statements.	    FASB Statement No. 163, *Accounting for Financial	Guarantee Insurance Contracts an interpretation of FASB Statement No. 60*	clarifies how Statement 60 applies to financial guarantee insurance	contracts, including the recognition and measurement of premium revenue and	claim liabilities. This Statement also requires expanded disclosures about	financial guarantee insurance contracts. SFAS No. 163 is effective for	financial statements issued for fiscal years beginning after December 15,	2008, and interim periods within those fiscal years. Management does not	expect SFAS No. 160 to have a material impact on the Company’s consolidated	financial statements.	    The accounting policies adopted by management are	consistent with accounting principles generally accepted in the United	States of America and are consistent with those followed by peer Banks.

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**Calvin B. Taylor Bankshares, Inc. and SubsidiaryPart I. Financial InformationItem 2. Management's Discussion and Analysis of Financial Condition andResults of Operations
*    This Report contains statements which constituteforward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933 and the Securities Exchange Act of 1934. These statements appear ina number of places in this Report and include all statements regarding theintent, belief or current expectations of the Company, its directors, or itsofficers with respect to, among other things: (i) the Company's financing plans;(ii) trends affecting the Company's financial condition or results ofoperations; (iii) the Company's growth strategy and operating strategy; and (iv)the declaration and payment of dividends. Investors are cautioned that any suchforward-looking statements are not guarantees of future performance and involverisks and uncertainties, and that actual results may differ materially fromthose projected in the forward-looking statements as a result of various factorsdiscussed herein and those factors discussed in detail in the Company's filingswith the Securities and Exchange Commission.*
    The following discussion of the financial condition andresults of operations of the Registrant (the Company) should be read inconjunction with the Company's financial statements and related notes and otherstatistical information included elsewhere herein.

General   Calvin B. Taylor Bankshares, Inc. (Company) was incorporatedas a Maryland corporation on October 31, 1995. The Company owns all of the stockof Calvin B. Taylor Banking Company (Bank), a commercial bank that wasestablished in 1890 and incorporated under the laws of the State of Maryland onDecember 17, 1907. The Bank operates nine banking offices in Worcester County,Maryland and one banking office in Ocean View, Delaware. The Bank'sadministrative office is located in Berlin, Maryland. The Bank is engaged in ageneral commercial and retail banking business serving individuals, businesses,and governmental units in Worcester County, Maryland, Ocean View, Delaware, andneighboring counties.    The Company currently engages in no business other thanowning and managing the Bank. The Bank employed 92 full time equivalentemployees as of March 31, 2009. The Bank hires seasonal employees during thesummer. The Company has no employees other than those hired by the Bank.

Critical Accounting Policies   The Company’s financial condition and results of operationsare sensitive to accounting measurements and estimates of inherently uncertainmatters. When applying accounting policies in areas that are subjective innature, management uses its best judgment to arrive at the carrying value ofcertain assets. One of the most critical accounting policies applied is relatedto the valuation of the loan portfolio.     The allowance for loan losses (ALLL) represents management’sbest estimate of inherent probable losses in the loan portfolio as of thebalance sheet date. It is one of the most difficult and subjective judgments.The adequacy of the allowance for loan losses is evaluated no less thanquarterly. The determination of the balance of the allowance for loan losses isbased on management’s judgments about the credit quality of the loan portfolioas of the review date. It should be sufficient to absorb losses in the loanportfolio as determined by management’s consideration of factors including ananalysis of historical losses, specific reserves for non-performing or past dueloans, delinquency trends, portfolio composition (including segment growth orshifting of balances between segments, products and processes, andconcentrations of credit, both regional and by relationship), lending staffexperience and changes, critical documentation and policy exceptions, riskrating analysis, interest rates and the competitive environment, economicconditions in the Bank’s service area, and results of independent reviews,including audits and regulatory examinations.

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Financial Condition    Total assets of the Company increased $4.7 million fromDecember 31, 2008 to March 31, 2009. Combined deposits and customer repurchaseagreements increased $4.1 million during the same period. Average total assetsand average total deposits increased $8.8 million and $10.4 million,respectively, from first quarter 2008 to first quarter 2009. Management believesthat some of the recent growth in deposit balances results from marketinstability that is part of a continuing general economic recession. Consumersoften seek the safety of conservatively run community banks when the stockmarket has a significant and prolonged downturn. The Bank would normally expectto see deposits falling during the first quarter of the year as businesscustomers in the resort area purchase inventory for the upcoming summer seasonhowever, this pattern has not prevailed this year. For further discussion ofseasonal activity, see the section titled Liquidity.

Loan Portfolio    From December 31, 2008 to March 31, 2009 the gross loanportfolio has grown $3.5 million. Growth in the loan portfolio has been fundedby increased deposit balances. Because loans earn at higher average rates thanthe cost of funds, this use of investable funds has a positive effect onearnings. There is no adverse impact on the Company’s ability to meet liquiditydemands resulting from increases in the loan portfolio.    The Company makes loans to customers located primarily in theDelmarva region. Although the loan portfolio is diversified, its performancewill be influenced by the economy of the region. 

Loan Quality and the Allowance for Loan Losses    The allowance for loan losses (ALLL) represents an amountwhich management believes to be adequate to absorb identified and inherentlosses in the loan portfolio as of the balance sheet date. Valuation of theallowance is completed no less than quarterly. The determination of theallowance is inherently subjective as it relies on estimates of potential lossrelated to specific loans, the effects of portfolio trends, and other internaland external factors.     The ALLL consists of (i) formula-based reserves comprised ofpotential losses in the balance of the loan portfolio segmented into homogeneouspools, (ii) specific reserves comprised of potential losses on loans thatmanagement has identified as impaired and (iii) unallocated reserves.Unallocated reserves are not associated with a specific portfolio segment or aspecific loan, but may be appropriate if properly supported and in accordancewith GAAP.    The Company evaluates loan portfolio risk for the purpose ofestablishing an adequate allowance for loan losses. In determining an adequatelevel for the formula-based portion of the ALLL, management considers historicalloss experience for major types of loans. Homogenous categories of loans areevaluated based on loss experience in the most recent five years, applied to thecurrent portfolio. This formulation gives weight to portfolio size and lossexperience for categories of real estate construction loans, other real estatesecured loans, other loans to commercial borrowers, and other consumer loans.However, historical data may not be an accurate predictor of loss potential inthe current loan portfolio. Management also evaluates trends in delinquencies,the composition of the portfolio, concentrations of credit, and changes inlending products, processes, or staffing. Management further considers externalfactors such as the interest rate environment, competition, current local andnational economic trends, and the results of recent independent reviews byauditors and banking regulators.     The ongoing slow-down in the real-estate market has affectedboth the price and time to market residential and commercial properties.Management closely monitors such trends and the potential effect on the Company.In recent months, borrowers whose cash flow is impaired as a result ofprevailing economic conditions have also experienced depressed real estatevalues. Management recognizes that the combination of these circumstances –reduced revenue and depressed collateral values, may increase the likelihood ofloss in the Bank’s real estate secured loan portfolio. Management closelymonitors conditions that might indicate deterioration of collateral value onsignificant loans and, when possible, obtains additional collateral as requiredto limit the Bank’s loss exposure.

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    Management employs a risk rating system which gives weight tocollateral status (secured vs. unsecured), and to the absence or improperexecution of critical contract or collateral documents. Unsecured loans andthose loans with critical documentation exceptions, as defined by management,are considered to have greater loss exposure. Management incorporates thesefactors in the formula-based portion of the ALLL. Additionally, consideration isgiven to those segments of the loan portfolio which management deems to pose thegreatest likelihood of loss.    Management believes that in a general economic downturn, suchas the region has experienced through 2008 and early 2009, the Bank’s greatestlikelihood of loss is in unsecured loans - commercial and consumer, and insecured consumer loans. Reserves for these segments of the portfolio areincluded in the formula-based portion of the ALLL. As of March 31, 2009,management reserved 65 bp against unsecured loans, and consumer loans secured byother than real estate. Both of these reserves were increased during the firstquarter of this year in recognition of the prolonged economic challenges toregional, national, and global economies. Additionally, management reserved10.0% against overdrawn checking accounts which are a distinct high riskcategory of unsecured loan.     Historically, the absence or improper execution of a documenthas not resulted in a loss to the Bank, however, management recognizes that theBank’s loss exposure is increased until a critical contract or collateraldocumentation exception is cured. At March 31, 2009, management reserved 10 bpagainst the outstanding balances of loans identified as having criticaldocumentation exceptions.    The provision for loan losses is a charge to earnings in thecurrent period to maintain the allowance at a level management has determined tobe appropriate. The allowance is increased by current period provisions and byrecoveries of amounts previously charged-off. The allowance is decreased whenloans are charged-off as losses, which occurs when they are deemed to beuncollectible. Adjustments made to bring the balance in the allowance to thelevel established by management may result in an increase or decrease toexpense. A provision of $333,100 was made in the first quarter of 2009. Aprovision of $71,209 was made in the comparable period in 2008. The year-to-yearincrease in the level of the ALLL and the provision for loan loss reflects theconsequences of the current economy. As the recession continues and borrowers’suffer personal and professional financial hardship, the likelihood of loss onpreviously performing loans has increased. As Management identifies loans withheightened loss potential, a provision for those losses is recorded.     Management considers the March 31, 2009 allowance appropriateand adequate to absorb identified and inherent losses in the loan portfolio. Asof March 31, 2009, management has not identified any loans which are anticipatedto be wholly charged-off within the next 12 months. However, there can be noassurance that charge-offs in future periods will not exceed the allowance forloan losses or that additional increases in the loan loss allowance will not berequired.

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    The following is a schedule of transactions in the allowancefor loan losses. The Bank experienced net charge-offs of $1,060 in the firstquarter of 2008 and $73,499 in the current year to date. Management attributesthe increased loan losses to the effects of the current economic recession onsome of the Bank’s customers and, subsequently, on the Bank.
		Allowance for Loan Losses  		For three months ended		For the year ended 		March 31		December 31 		2009		2008		2008		Balance at beginning of year		 $        707,152 		 $        195,525 		 $        195,525 		Loans charged-off:   		  Real estate - construction and land		                       - 		                       - 		                       - 		  Real estate - mortgage		                       - 		                       - 		                       - 		  Commercial		             64,226 		                       - 		             76,383 		  Consumer		             20,311 		               1,060 		             34,532 		        Total loan losses		             84,537 		               1,060 		           110,915 		Recoveries on loans previously charged off:   		  Real estate - construction		                       - 		                       - 		                       - 		  Real estate - mortgage		                       - 		                       - 		                       - 		  Commercial		             10,850 		                       - 		               3,785 		  Consumer		                  188 		                       - 		               1,231 		        Total loan recoveries		             11,038 		                       - 		               5,016     		Net loan charge-offs (recoveries)		             73,499 		               1,060 		           105,899 		Provision for loan losses charged to expense		           333,100 		             71,209 		           617,526 		Balance at end of period		 $        966,753 		 $        265,674 		 $        707,152     		Average loans outstanding during the period		 $ 245,525,433 		 $ 238,896,716 		 $ 238,873,590 		Annualized net charge-offs as a percentage of   		average loans outstanding during the period		0.12%		0.00%		0.04%    		Gross loans outstanding at the end of the period		 $ 245,561,947 		 $ 241,037,754 		 $ 242,138,066 		Allowance for loan loses to gross loans   		outstanding at the end of the period		0.39%		0.11%		0.29%
    The accrual of interest on a loan is discontinued whenprincipal or interest is ninety days past due or when the loan is determined tobe impaired, unless collateral is sufficient to discharge the debt in full andthe loan is in process of collection. When a loan is placed in nonaccruingstatus, any interest previously accrued but unpaid, is reversed from interestincome. Interest payments received on nonaccrual loans may be recorded as cashbasis income, or as a reduction of principal, depending on management’s judgmenton a loan by loan basis. Accrual of interest may be restored when all principaland interest are current and management believes that future payments will bereceived in accordance with the loan agreement.

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    Nonperforming loans are loans past due 90 or more days andstill accruing plus nonaccrual loans. Nonperforming assets are comprised ofnonperforming loans combined with real estate acquired in foreclosure and heldfor sale. There were no nonperforming assets other than nonperforming loans asof March 31, 2009 or 2008, or December 31, 2008, as shown in the followingtable.
 		March 31,		December 31, 		2009		2008		Loans 90 days or more past due and still accruing  		Real estate		 $        8,127,230 		 $        4,602,365 		Commercial		                       -   		                40,000 		Consumer		                       -   		                  5,427  		           8,127,230 		           4,647,792   		Nonaccruing loans		           1,046,952 		              199,724 		Total nonperforming loans		 $        9,174,182 		 $        4,847,516    		Interest not accrued on nonaccruing loans		 $             57,667 		 $               6,797    		Interest included in net income on nonaccruing loans,  		year-to-date		 $                    61 		 $                    -   
 

    Included in amounts past due 90 days or more and stillaccruing at both March 31, 2009 and December 31, 2008, is a loan with aprincipal balance of $4,500,000. The Bank has been notified that there is a lienon the property securing this loan that is superior to the Bank’s liens. TheBank was not aware of this lien at the time the loan was originated, and theBank’s settlement agent did not discover the lien during the title examinationprocess. The Bank has filed a claim with the title company that has insured itslien. The Bank believes the title company will indemnify the Bank for any lossesresulting from the superior lien, although there is no guarantee that this willbe the case. The Bank will review the accrual status of this loan as it learnsmore information regarding its claim. As of March 31, 2009, there is $100,788 ofaccrued interest on this loan that is included in interest income in 2009. As ofDecember 31, 2008, there was $86,103 of accrued interest on this loan that wasincluded in interest income in 2008.     Also included in amounts past due 90 days or more and stillaccruing at March 31, 2009, is a loan with a principal balance of $2,755,000.The Bank has entered into an agreement with the guarantor to make a payment of$800,000 no later than May 8, 2009. Upon receipt of this payment, interest willbe brought current and a principal reduction will occur. Management believesthis payment will be received as promised. Management is working with theborrower to restructure the remaining balance of this loan.    Loans are considered impaired when, based on currentinformation, management considers it unlikely that collection of principal andinterest payments will be made according to contractual terms. Generally, loansare not reviewed for impairment until the accrual of interest has beendiscontinued, although management may categorize a performing loan as impairedbased on knowledge of the borrower’s financial condition, devaluation ofcollateral, or other circumstances that are deemed relevant to loan collection.Impaired loans may have specific reserves, or valuation allowances, allocated tothem in the ALLL. Estimates of loss reserves on impaired loans may be determinedbased on any of the three measurement methods described in Financial AccountingStandard 114 (FAS 114): (1) the present value of future cash flows, (2) the fairvalue of collateral, if repayment of the loan is expected to be provided byunderlying collateral, or (3) the loan’s observable fair value. The Bank selectsand applies, on a loan-by-loan basis, the appropriate valuation method. Loansdetermined to be impaired, but for which no specific valuation allowance is madebecause management believes the loan is secured with adequate collateral or theBank will not take a loss on such loan, are grouped with other homogeneous loansfor evaluation under formula-based criteria described previously. 

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    Impaired loans including nonaccruing loans totaled $8,826,665and $8,888,200, at March 31, 2009, and December 31, 2008, respectively.Principal balances of impaired loans include $419,770 which is guaranteed by agovernment agency at both March 31, 2009, and December 31, 2008. 
 						March 31, 2009						December 31, 2008						Impaired loans with valuation allowances,   						including nonaccruing loans						 $            4,326,258 						 $               4,328,618 						Valuation allowances on impaired loans						 $               756,988 						 $                  605,405    						Impaired loans with no valuation allowances						 $            4,500,407 						 $               4,559,582    						Total impaired loans						 $            8,826,665 						 $               8,888,200 
 

Liquidityent funds to cover deposit withdrawals and payment of debt and operatingobligations. These funds can be obtained by converting assets to cash or byattracting new deposits. The Company’s major sources of liquidity are loanrepayments, maturities of short-term investments including federal funds sold,and increases in core deposits. Funds from seasonal deposits are generallyinvested in short-term U.S. Treasury Bills and overnight federal funds.     Due to its location in a seasonal resort area, the Banktypically experiences a decline in deposits, federal funds sold and investmentsecurities throughout the first quarter of the year when business customers areusing their deposits to meet cash flow needs. Beginning late in the secondquarter and throughout the third quarter, additional sources of liquidity becomemore readily available as business borrowers start repaying loans, and the Bankreceives deposits from seasonal business customers, summer residents andtourists.     Average liquid assets (cash and amounts due from banks,interest-bearing deposits in other banks, federal funds sold, and investmentsecurities) compared to average deposits and retail repurchase agreements were36.91% for the first quarter of 2009 compared to 37.62% for the same quarter of2008.    The Company has available lines of credit, includingovernight federal funds and reverse repurchase agreements, totaling $28,000,000as of March 31, 2009.    Average net loans to average deposits were 84.21% versus85.00% as of March 31, 2009 and 2008, respectively. Average net loans increasedby 2.54% while average deposits grew by 3.51%. Funding for loan growth wasprovided by deposit increases. Because loans earn higher average rates than theBank’s cost of funds, this results in a positive effect on earnings. Averagedeposit balance increases occurred in interest-bearing accounts, especially timedeposits. Average non-interest bearing deposit balances dropped by a modest..79%. Neither changes in deposit portfolio composition nor the increase inoutstanding loan balances has a negative impact on the Company’s ability to meetliquidity demands.

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Interest Rate Sensitivity    The primary objective of asset/liability management is toensure the steady growth of the Company's primary source of earnings, netinterest income. Net interest income can fluctuate with significant interestrate movements. To lessen the impact of these margin swings, the balance sheetshould be structured so that repricing opportunities exist for both assets andliabilities in roughly equivalent amounts at approximately the same timeintervals. Imbalances in these repricing opportunities at any point in timeconstitute interest rate sensitivity.    Interest rate sensitivity refers to the responsiveness ofinterest-bearing assets and liabilities to changes in market interest rates. Therate-sensitive position, or gap, is the difference in the volume ofrate-sensitive assets and liabilities at a given time interval. The generalobjective of gap management is to actively manage rate-sensitive assets andliabilities to reduce the impact of interest rate fluctuations on the netinterest margin. Management generally attempts to maintain a balance betweenrate-sensitive assets and liabilities as the exposure period is lengthened tominimize the overall interest rate risk to the Company.    Interest rate sensitivity may be controlled on either side ofthe balance sheet. On the asset side, management exercises some control overmaturities. Also, loans are written to provide repricing opportunities on fixedrate notes. The Company's investment portfolio, including federal funds sold,provides the most flexible and fastest control over rate sensitivity since itcan generally be restructured more quickly than the loan portfolio.    On the liability side, deposit products are structured tooffer incentives to attain the maturity distribution desired. Competitivefactors sometimes make control over deposits more difficult and, therefore, lesseffective as an interest rate sensitivity management tool.    The asset mix of the balance sheet is continually evaluatedin terms of several variables: yield, credit quality, appropriate fundingsources, and liquidity. Management of the liability mix of the balance sheetfocuses on expanding the various funding sources.    As of March 31, 2009, the Company was cumulativelyasset-sensitive for all time horizons. For asset-sensitive institutions, ifinterest rates should decrease, the net interest margins should decline. Sinceall interest rates and yields do not adjust at the same velocity, the gap isonly a general indicator of rate sensitivity.

 

Results of Operations    Net income for the three months ended March 31, 2009***,***was $1,338,690 or $.44 per share, compared to $1,622,199 or $.52 pershare for the first quarter of 2008. This represents a decrease of $283,509 or17.48% from the prior year. The key components of net income are discussed inthe following paragraphs.     For the first three months of 2009 compared to 2008, netinterest income decreased $81,061 (2.03%). The decrease in interest and dividendrevenue is primarily attributable to market rate reductions which have resultedin the dramatic downward repricing of overnight federal funds. Interest expensedecreased by $445,767 (38.06%) less than in the comparable period last year dueto lower rates on all deposits, but particularly time deposits.    The Company’s net interest income is one of the mostimportant factors in evaluating its financial performance. Management usesinterest rate sensitivity analysis to determine the effect of rate changes. Netinterest income is projected over a one-year period to determine the effect ofan increase or decrease in the prime rate of 100 basis points. If prime were todecrease one hundred basis points, and all assets and liabilities maturingwithin that period were fully adjusted for the rate change, the Company wouldexperience a decrease of approximately 5.9% in net interest income. Conversely,if prime were to increase one hundred basis points, and all assets andliabilities maturing within that period were fully adjusted for the rate change,the Company would experience an increase in net interest income of the samepercentage. The sensitivity analysis does not consider the likelihood of theserate changes nor whether management’s reaction to this rate change would be toreprice its loans or deposits or both.     The tax-equivalent quarterly yield on interest-earning assetsdecreased by 77 basis points from 6.34% for first quarter 2008 to 5.57% in 2009.The quarterly yield on interest-bearing liabilities decreased by 67 basis pointsfrom 1.66% in 2008 to .99% in 2009. In combination, these shifts contribute to adecrease in net margin on interest-earning assets of 21 basis points.

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    The following table presents information including averagebalances of interest-earning assets and interest-bearing liabilities, the amountof related interest income and interest expense, and the resulting yields bycategory of interest-earning asset and interest-bearing liability. In thistable, dividends and interest on tax-exempt securities and loans are reported ona fully taxable equivalent basis, which is a non-GAAP measure as defined in SECRegulation G and Item 10 of SEC Regulation S-K. Management believes that thesemeasures provide better yield comparability as a tool for managing net interestincome.
		Average Balances, Interest, and Yields		For the quarter ended		For the quarter ended		March 31, 2009		March 31, 2008		Average  		Average  		balance		Interest		Yield		balance		Interest		Yield      		Assets      		  Federal funds sold		 $   27,175,261 		 $        16,231 		0.24%		 $   32,520,690 		 $      251,474 		3.11%		  Interest-bearing deposits		      13,461,275 		           78,764 		2.37%		        5,841,321 		           68,126 		4.69%		  Investment securities		      58,917,714 		         529,043  				3.64%		      56,921,218 		         729,329 		5.15%		  Loans, net of allowance		    244,771,789 		      4,107,055  				6.80%		    238,698,045 		      4,213,366 		7.10%		    Total interest-earning assets		    344,326,039 		      4,731,093 		5.57%		    333,981,274 		      5,262,295 		6.34%		Noninterest-bearing cash		        9,795,677   		      11,634,698   		Other assets		      13,581,611   		      13,280,891   		        Total assets		 $ 367,703,327   		 $ 358,896,863         		Liabilities and Stockholders' Equity      		Interest-bearing deposits      		  NOW 		 $   47,094,101 		           27,298 		0.24%		 $   49,362,429 		           44,355 		0.36%		  Money market		      32,873,887 		           55,338 		0.68%		      31,802,240 		           75,158 		0.95%		  Savings		      42,965,104 		           52,487 		0.50%		      41,491,666 		           76,887 		0.75%		  Other time		    100,387,945 		         582,423 		2.35%		      90,277,278 		         967,632 		4.31%		    Total interest-bearing deposits		    223,321,037 		         717,546  				1.30%		    212,933,613 		      1,164,032 		2.20%		Securities sold under agreements to repurchase & federal funds purchased		        5,584,752 		             6,843 		0.50%		        3,433,506 		             5,761 		0.67%		Borrowed funds		             69,962 		             1,079 		6.25%		             94,243 		             1,442 		6.15%		    Total interest-bearing liabilities		    228,975,751 		         725,468  				1.28%		    216,461,362 		      1,171,235 		2.18%		Noninterest-bearing deposits		      67,334,614   		      67,872,472   		    296,310,365 		         725,468 		0.99%		    284,333,834 		      1,171,235 		1.66%		Other liabilities		           675,759   		        1,081,449   		Stockholders' equity		      70,717,203   		      73,481,580   		        Total liabilities and      		        stockholders' equity		 $ 367,703,327   		 $ 358,896,863   		Net interest spread  		4.29%  		4.16%		Net interest income 		 $   4,005,625   		 $   4,091,060  		Net margin on interest-earning assets  		4.72%  		4.93%      		Tax equivalent adjustment in:      		    Investment income 		 $        43,425   		 $        54,988  		    Loan income 		 $        44,010   		 $        36,821  
 

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    Provisions for loan losses of $333,100 and $71,209 wererecorded during the three months ended March 31, 2009 and 2008, respectively.Net loans charged-off were $73,499 and $1,060 during the first quarters of 2009and 2008, respectively. Management attributes the increased loan losses to thegenerally poor state of the economy which has had an adverse effect on certainborrowing customers. See Loan Quality and the Allowance for Loan Losses for adiscussion of the provision for loan losses.    Noninterest revenue for the first quarter of 2009 is $7,416(1.58%) lower than the comparable period last year. Increased service charges ondeposit accounts and miscellaneous fees such as wire transfer fees reflect feeincreases as well as increased volume. Increased ATM and VISA debit cardrevenues are volume related. These increases are offset by the reduced rate ofgrowth in cash surrender value of bank owned life insurance, and by reducedmiscellaneous revenues from various sources such as check cashing fees, andmerchant credit card processing rebates.    Noninterest expense for the first quarter of 2009 is $111,441(6.02%), more than last year. Increased salaries are consistent with annualincreases in compensation levels. The increase in occupancy expense is caused byhigher property tax and insurance costs, coupled with the loss of rental revenueon two bank-owned properties adjacent to branches. Furniture and equipmentexpense includes higher equipment maintenance contract costs due to contracts onadditional equipment and the timing of other contract billings. ATM and debitcard expenses are higher due to the cost of a fraud monitoring service which theBank engaged mid-year in 2008. Other operating expenses include increasedcorrespondent bank fees that result from carrying lower reserve balances, andincreased legal fees related to loan collections. Management expects significantincreases in FDIC insurance premiums in future quarters of this year due toincreased rates and assessable balances, the expiration of the one-timeinsurance premium credit, and a probable special assessment to restore thedeposit insurance fund to target levels.    Income taxes for the quarter ended March 31, 2009 are$178,300 lower than the same period last year, on a pre-tax income decrease of$461,809. This is consistent with the Company’s effective tax rate ofapproximately 36.0%. 

Plans of Operation    The Bank offers a full range of deposit services includingchecking, NOW, Money Market, and savings accounts, and time deposits includingcertificates of deposit. The transaction, savings, and certificate of depositaccounts are tailored to the Bank’s principal market areas at rates competitiveto those offered in the area. The Bank also offers Individual RetirementAccounts (IRA), Health Savings Accounts, and Education Savings Accounts. Alldeposits are insured by the Federal Deposit Insurance Corporation (FDIC) up tothe maximum amount allowed by law. The Bank solicits these accounts fromindividuals, businesses, associations and organizations, and governmentalauthorities. The Bank offers individual customers up to $50 million in FDICinsured deposits through the Certificate of Deposit Account Registry Services®network.     Effective October 3, 2008, FDIC deposit insurance wastemporarily increased from $100,000 to $250,000 per depositor through December31, 2009.    The Bank also offers a full range of short- to medium-termcommercial and personal loans. Commercial loans include both secured andunsecured loans for working capital (including inventory and receivables),business expansion (including acquisition of real estate and improvements), andpurchase of equipment and machinery. Consumer loans include secured andunsecured loans for financing automobiles, home improvements, education, andpersonal investments. The Bank originates commercial and residential mortgageloans and real estate construction and acquisition loans. These lendingactivities are subject to a variety of lending limits imposed by state andfederal law. The Bank lends to directors and officers of the Company and theBank under terms comparable to those offered to other borrowers entering intosimilar loan transactions. The Board of Directors approves all loans to officersand directors and reviews these loans every six months.    Other bank services include cash management services, 24-hourATM’s, debit cards, safe deposit boxes, travelers’ checks, direct deposit ofpayroll and social security funds, and automatic drafts for various accounts.The Bank offers bank-by-phone and Internet banking services, includingelectronic bill-payment, to both commercial and retail customers. The Bankoffers a remote capture service that enables commercial customers toelectronically capture check images and make on-line deposits. The Bank alsooffers non-deposit products including retail repurchase agreements and discountbrokerage services through a correspondent bank. 

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Capital Resources and Adequacy    Total stockholders’ equity increased $434,898 from December31, 2008 to March 31, 2009. This increase is attributable to comprehensiveincome recorded during the period, as detailed in Note 2 of the Notes toFinancial Statements, reduced by $720,276 used to repurchase and retire 19,439shares of common stock.     Under the capital guidelines of the Federal Reserve Board andthe FDIC, the Company and Bank are currently required to maintain a minimumrisk-based total capital ratio of 8%, with at least 4% being Tier 1 capital.Tier 1 capital consists of stockholders' equity less accumulated othercomprehensive income. In addition, the Company and the Bank must maintain aminimum Tier 1 leverage ratio (Tier 1 capital to total assets) of at least 4%,but this minimum ratio is increased by 100 to 200 basis points for other thanthe highest-rated institutions.    Tier one risk-based capital ratios of the Company as of March31, 2009 and December 31, 2008 were 31.3% and 31.8%, respectively. Both aresubstantially in excess of regulatory minimum requirements.    The Company and the Bank did not seek assistance under thefederally funded Troubled Asset Relief Program (TARP)developed in the last quarter of 2008. Neither the Company nor the Bank willbenefit directly from TARP funds. The Bank has not engaged in subprimemortgage lending, and has no investments in mortgage backed securities.   Late in 2008, the Company and the Bank elected to participatein the Temporary Liquidity Guarantee Program (TLG), which, in combination withtemporary deposit insurance limit increases, provide the security of additionalinsurance to depositors. These actions have contributed to an increase indeposits in the Bank as investors seek the safety of insured deposits incommunity banks. Deposit insurance premiums will increase as a result of thehigher deposit balances, the higher insurance limits, participation in TLG, andhigher insurance rates. Management does not expect to pass all of the additionalinsurance premium costs on to customers.   In the most stable economic times, the Company cannotreliably predict the effect of changing government policies on earnings, or loanand deposit levels. Management expects 2009 to bring lower interest revenues andhigher fees associated with loan collection. The full impact of the dramaticdevelopments of 2008 on future results of operation of the Company and the Bank,are uncertain. 

Website Access to SEC Reports    The Bank maintains an Internet website at www.taylorbank.com. The Company’s periodic SEC reports, includingannual reports on Form 10-K, quarterly reports on Form 10-Q, and current reportson Form 8-K, are accessible through this website. Access to these filings isfree of charge. The reports are available as soon as practicable after they arefiled electronically with the SEC. 
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** 

Item 3. Quantitative and Qualitative Disclosures AboutMarket Risk    The Company’s principal market risk exposure relates tointerest rates on interest-earning assets and interest-bearing liabilities.Unlike most industrial companies, the assets and liabilities of financialinstitutions such as the Company and the Bank are primarily monetary in nature.Therefore, interest rates have a more significant effect on the Company'sperformance than do the effects of changes in the general rate of inflation andchange in prices. In addition, interest rates do not necessarily move in thesame direction or in the same magnitude as the prices of goods and services. Asdiscussed previously, management monitors and seeks to manage the relationshipsbetween interest sensitive assets and liabilities in order to protect againstwide interest rate fluctuations, including those resulting from inflation.     At March 31, 2009, the Company’s interest rate sensitivity,as measured by gap analysis, showed the Company was asset-sensitive with aone-year cumulative gap of 23.89%, as a percentage of interest-earning assets.Generally asset-sensitivity indicates that assets reprice more quickly thanliabilities and in a rising rate environment net interest income typicallyincreases. Conversely, if interest rates decrease, net interest income woulddecline. The Bank has classified its demand mortgage and commercial loans asimmediately repriceable. Unlike loans tied to prime, these rates do notnecessarily change as prime changes since the decision to call the loans andchange the rates rests with management. 
**Item 4. Controls and procedures**   **Disclosure controls and procedures are designed andmaintained by the Company to ensure that information required to be disclosed inthe Company’s publicly filed reports is recorded, processed, summarized andreported in a timely manner. Such information must be available to management,including the Chief Executive Officer (CEO) and Treasurer, to allow them to maketimely decisions about required disclosures. Even a well-designed and maintainedcontrol system can provide only reasonable, not absolute, assurance that itsobjectives are achieved. Inherent limitations in any system of controls includeflawed judgment, errors, omissions, or intentional circumvention of controls.   The Company’s management, including the CEO and Treasurer,performed an evaluation of the effectiveness of the design and operation of theCompany’s disclosure controls and procedures as of March 31, 2009. Based on thatevaluation, the Company’s management, including the CEO and Treasurer, hasconcluded that the Company’s disclosure controls and procedures are effective.The projection of an evaluation of controls to future periods is subject to therisk that procedures may become inadequate due to changes in conditionsincluding the degree of compliance with procedures.
**Changes in Internal ControlsDuring the quarter ended on the date of this report, therewere no significant changes in the Company’s internal control over financialreporting that have had or are reasonably likely to have a material effect onthe Company’s internal control over financial reporting. As of March 31, 2009,the Company’s management, including the CEO and Treasurer, has concluded thatthe Company’s internal controls over financial reporting are effective. 

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**Calvin B. Taylor Bankshares, Inc. and SubsidiaryPart II. Other Information**
Item 1 Legal Proceedings           Not applicable

Item 1A Risk Factors           		The Company and the Bank are subject to various types		of risk during the normal conduct of business. There has been no		material increase in any level of risk incurred by the Company or the		Bank during the quarter covered by this report. Following are		descriptions of the significant categories of risk most relevant to the		Company.
           Credit risk is the risk to the Company’s		earnings or capital from the potential of an obligor failing to fulfill		its contractual commitment to the Company. Credit risk is most closely		associated with the Company’s lending activities.           Interest rate risk is the risk to earnings or		capital from the potential movement in interest rates. It is the		sensitivity of the Company’s future earnings to interest rate changes.           Liquidity risk is the risk to earnings or		capital from the Company’s inability to meet its obligations when they		come due without incurring unacceptable losses or costs.           Market risk is the risk to earnings or capital		from changes in the value of portfolios of financial instruments. For		the Company, market risk is the risk of a decline in market value of its		securities portfolio.           Transaction risk is the risk to earnings or		capital arising from problems with service or product delivery.		Transaction risk is the risk of a failure in the Company’s operating		processes, such as automation, employee integrity, or internal controls.           Compliance risk is the risk to earnings or		capital from noncompliance with laws, rules, and regulations. Compliance		risk is one of the greatest risks the Company faces.           Reputation risk is the risk to earnings or		capital from negative public opinion. Customer and public relations are		critical to the Company’s success. Accordingly, the Company’s reputation		is extremely important and anything that would impair that reputation is		a significant risk.           Strategic risk is the risk to earnings or		capital arising from adverse business decisions or improper		implementation of those decisions.
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Item 2Unregistered Sales of Equity Securities and Use ofProceeds
            ( c ) The following table presents information about		the Company’s repurchase of its equity securities during the calendar		quarter ended on the date of this report.
    				(c) Total number				(d) Maximum number  				(a) Total				(b) Average		of Shares Purchased		of Shares that may 				Number				Price Paid				as Part of a Publicly				yet be Purchased				Period				of Shares				per Share				Announced Program				Under the Program				January				               1,000 				               38.00 				                                1,000 				220,747				February				             10,643 				               37.19 				                              10,643 				210,104 				March				               7,796 				               36.75 				                                7,796 				202,308				Totals				             19,439 				               37.44 				                              19,439  
    The Company publicly announced on August 14, 2003,		that it would repurchase up to 10% of its outstanding equity stock at		that time, which equated to a total of 324,000 common shares available		for repurchase. As of January 1, 2005, and again on May 18, 2007, this		plan was renewed by public announcement, making up to 10% of the		Company’s outstanding equity stock available for repurchase at the time		of each renewal. This equated to a total of 314,072 common shares		available for repurchase as of May 18, 2007. 		   		There is no expiration date for this program. No		other stock repurchase plan or program existed or exists simultaneously,		nor has any other plan or program expired during the period covered by		this table. Common shares repurchased under this plan are retired. 

Item 3 Defaults Upon Senior Securities           Not applicable

Item 4 Submission of Matters to a Vote of Security Holders		           		There have been no matters submitted to a vote of		security holders during the period covered by this report.

Item 5 Other information		           		There is no information required to be disclosed in a		report on Form 8-K during the period covered by this report, which has		not been reported.

Item 6 Exhibits and Reports on Form 8-K           		a) Exhibits					               					31. Certifications of Principal Executive					Officer and Principal Financial Officer pursuant to Section					302 of the Sarbanes-Oxley Act of 2002.					               					32. Certification of Principal Executive					Officer and Principal Financial Officer pursuant to Section					906 of the Sarbanes-Oxley Act of 2002.

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Exhibit 31.1Certification - Pursuant to Section 302 of the Sarbanes-OxleyAct of 2002

I, Raymond M. Thompson, certify that:

I have reviewed this quarterly report on Form 10-Q of Calvin B. TaylorBankshares, Inc.;

1. Based on my knowledge, this 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 report;

2. Based on my knowledge, the financial statements, and other financial	information included in this 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 report;

3. 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-15(e) and 15d-15(e)) and internal control over	financial reporting (as defined in Exchange Act Rules 13a-15(f) and	15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused			such disclosure controls and procedures to be designed under our			supervision, to ensure that material information relating to the			registrant, including its consolidated subsidiary, is made known to			us by others within those entities, particularly during the period			in which this report is being prepared;

b) designed such internal control over financial reporting, or			caused such internal control over financial reporting to be designed			under our supervision, to provide reasonable assurance regarding the			reliability of financial reporting and the preparation of financial			statements for external purposes in accordance with generally			accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure			controls and procedures and presented in this report our conclusions			about the effectiveness of the disclosure controls and procedures,			as of the end of the period covered by this report based on such			evaluation; and

d) disclosed in this report any change in the registrant’s			internal control over financial reporting that occurred during the			most recent fiscal quarter that has or is reasonably likely to			materially affect the registrant’s internal control over financial			reporting; and

4. The registrant’s other certifying officers and I have disclosed, based	on our most recent evaluation of internal control over financial reporting,	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 and material weaknesses in the			design or operation of internal control over financial reporting			which are reasonably likely to adversely affect the registrant’s			ability to record, process, summarize and report financial			information; and

b) any fraud, whether or not material, that involves management			or other employees who have a significant role in the registrant’s			internal control over financial reporting.
  **Calvin B. Taylor Bankshares, Inc.   
Date: May 5, 2009_______
By:
/s/ Raymond M. Thompson  
Raymond M. Thompson  
Chief Executive Officer
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Exhibit 31.2Certification - Pursuant to Section 302 of the Sarbanes-OxleyAct of 2002

I, Jennifer G. Hawkins, certify that:

I have reviewed this quarterly report on Form 10-Q of Calvin B. TaylorBankshares, Inc.;

1. Based on my knowledge, this 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 report;

2. Based on my knowledge, the financial statements, and other financial	information included in this 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 report;

3. 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-15(e) and 15d-15(e)) and internal control over	financial reporting (as defined in Exchange Act Rules 13a-15(f) and	15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused			such disclosure controls and procedures to be designed under our			supervision, to ensure that material information relating to the			registrant, including its consolidated subsidiary, is made known to			us by others within those entities, particularly during the period			in which this report is being prepared;

b) designed such internal control over financial reporting, or			caused such internal control over financial reporting to be designed			under our supervision, to provide reasonable assurance regarding the			reliability of financial reporting and the preparation of financial			statements for external purposes in accordance with generally			accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure			controls and procedures and presented in this report our conclusions			about the effectiveness of the disclosure controls and procedures,			as of the end of the period covered by this report based on such			evaluation; and

d) disclosed in this report any change in the registrant’s			internal control over financial reporting that occurred during the			most recent fiscal quarter that has or is reasonably likely to			materially affect the registrant’s internal control over financial			reporting; and

4. The registrant’s other certifying officers and I have disclosed, based	on our most recent evaluation of internal control over financial reporting,	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 and material weaknesses in the			design or operation of internal control over financial reporting			which are reasonably likely to adversely affect the registrant’s			ability to record, process, summarize and report financial			information; and

b) any fraud, whether or not material, that involves management			or other employees who have a significant role in the registrant’s			internal control over financial reporting.
  **Calvin B. Taylor Bankshares, Inc.   
Date: May 5, 2009_______
By:
/s/ Jennifer G. Hawkins  
Jennifer G. Hawkins  
Treasurer (Principal Financial Officer)
- 23 -

Exhibit 32Certification - 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 areview of the Quarterly Report on Form 10-Q for the period ended September 30,2008 of the Registrant (the "Report"):

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

(2) The information contained in the Report fairly presents, in			all material respects, the financial condition and results of			operations of the Registrant.
  **Calvin B. Taylor Bankshares, Inc.      
Date: May 5, 2009_______
By:
/s/ Raymond M. Thompson  
Raymond M. Thompson  
Chief Executive Officer      
Date: May 5, 2009_______
By:
/s/ Jennifer G. Hawkins  
Jennifer G. Hawkins  
Treasurer (Principal Financial Officer)
- 24 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 
  **Calvin B. Taylor Bankshares, Inc.      
Date: May 5, 2009_______
By:
/s/ Raymond M. Thompson  
Raymond M. Thompson  
Chief Executive Officer      
Date: May 5, 2009_______
By:
/s/ Jennifer G. Hawkins  
Jennifer G. Hawkins  
Treasurer (Principal Financial Officer)
- 25 -****************