SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 2000 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _______________ to ________________.

                         COMMISSION FILE NUMBER: 0-24047

                               GLEN BURNIE BANCORP
             (Exact name of registrant as specified in its charter)

              MARYLAND                                      52-1782444
  ----------------------------------                   ----------------------
     (State or other jurisdiction                        (I.R.S. Employer
   of incorporation or organization)                     Identification No.)

101 CRAIN HIGHWAY, S.E., GLEN BURNIE, MARYLAND                 21061
----------------------------------------------         ----------------------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code         (410) 766-3300

           Securities registered pursuant to Section 12(b) of the Act:

Title of Class                        Name of Each Exchange on Which Registered
      None                                             None
----------------                              ------------------------

           Securities registered pursuant to Section 12(g) of the Act:

                                 TITLE OF CLASS
                                 --------------
                          COMMON STOCK, $1.00 PAR VALUE
                          COMMON STOCK PURCHASE RIGHTS

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 13, 2001 was $12,284,680.

The number of shares of common stock outstanding as of March 13, 2001 was
1,102,049.

                       DOCUMENTS INCORPORATED BY REFERENCE

To the extent specified, Part III of this Form 10-K incorporates information by
reference to the Registrant's definitive proxy statement for its 2001 Annual
Meeting of Shareholders (to be filed).


<PAGE>


                               GLEN BURNIE BANCORP
                         2001 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>

                                     PART I

<S>                                                                                                        <C>
Item 1.    Business                                                                                         3
Item 2.    Properties                                                                                      17
Item 3.    Legal Proceedings                                                                               18
Item 4.    Submission of Matters to a Vote of Security-Holders                                             18
           Executive Officers of the Registrant                                                            18


                                     PART II

Item 5.    Market for Registrant's Common Equity and Related
                Stockholder Matters                                                                        19
Item 6.    Selected Financial Data                                                                         20
Item 7.    Management's Discussion and Analysis of Financial
                Conditions and Results of Operations                                                       21
Item 7A.   Quantitative And Qualitative Disclosures About Market Risk                                      27
Item 8.    Financial Statements and Supplementary Data                                                     27
Item 9.    Changes in and Disagreements with Accountants
                on Accounting and Financial Disclosures                                                    27


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant                                              28
Item 11.   Executive Compensation                                                                          28
Item 12.   Security Ownership of Certain Beneficial Owners
                and Management                                                                             28
Item 13.   Certain Relationships and Related Transactions                                                  28

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports                                             29
             on Form 8-K
</TABLE>



<PAGE>



                                     PART I

ITEM 1.    BUSINESS

GENERAL

           Glen Burnie Bancorp (the "Company") is a bank holding company
organized in 1990 under the laws of the State of Maryland. It presently owns all
the outstanding shares of capital stock of The Bank of Glen Burnie (the "Bank"),
a commercial bank organized in 1949 under the laws of the State of Maryland,
serving northern Anne Arundel County and surrounding areas from its main office
in Glen Burnie, Maryland and branch offices in Odenton, Riviera Beach,
Crownsville, Severn, Ferndale and Severna Park, Maryland. The Bank also
maintains three remote Automated Teller Machine ("ATM") locations in Gambrills,
Jessup and Pasadena, Maryland. The Bank maintains a website at
www.thebankofglenburnie.com. The Bank is the oldest independent commercial bank
in Anne Arundel County. The Bank is engaged in the commercial and retail banking
business as authorized by the banking statutes of the State of Maryland,
including the acceptance of demand and time deposits, and the origination of
loans to individuals, associations, partnerships and corporations. The Bank's
real estate financing consists of residential first and second mortgage loans,
home equity lines of credit and commercial mortgage loans. Commercial lending
consists of both secured and unsecured loans. During the past several years, the
Bank has been a very active originator of automobile loans which it originates
through arrangements with local automobile dealers. The Bank's deposits are
insured up to applicable limits by the Federal Deposit Insurance Corporation
("FDIC").

           The Company's principal executive office is located at 101 Crain
Highway, S.E., Glen Burnie, Maryland 21061. Its telephone number at such office
is (410) 766-3300.

MARKET AREA

           The Bank considers its principal market area for lending and deposit
products to consist of Northern Anne Arundel County, Maryland, which consists of
those portions of the county north of U.S. Route 50. Northern Anne Arundel
County includes mature suburbs of the City of Baltimore, which in recent years
have experienced modest population growth and are characterized by an aging
population. Management believes that the majority of the working population in
its market area either commutes to Baltimore or is employed at the nearby
Baltimore Washington International Airport. Anne Arundel County is generally
considered to have more affordable housing than other suburban Baltimore areas
and has begun to attract younger persons and minorities on this basis. This
inflow, however, has not been sufficient to affect current population trends.

FINANCIAL MODERNIZATION LEGISLATION

           On November 12, 1999, President Clinton signed legislation which
could have a far-reaching impact on the financial services industry. The
Gramm-Leach-Bliley ("G-L-B") Act authorizes affiliations between banking,
securities and insurance firms and authorizes bank holding companies and
national banks to engage in a variety of new financial activities. Under the
G-L-B Act, any bank holding company whose depository institution subsidiaries
have satisfactory Community Reinvestment Act ("CRA") records may elect to become
a financial holding company if it certifies to the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") that all of its depository
institution subsidiaries are well-capitalized and well-managed. Financial
holding companies may engage in any activity that the Federal Reserve Board,
after consultation with the Secretary of the Treasury, determines to be
financial in nature or incidental to a financial activity. Financial holding
companies may also engage in activities that are complementary to financial
activities and do not pose a substantial risk to the safety and soundness of
their depository institution subsidiaries or the financial system generally. The
G-L-B Act specifies that activities that are financial in nature include lending
and investing activities, insurance and annuity underwriting and brokerage,
financial, investment and economic advice, selling interests in pooled
investment vehicles, securities underwriting, engaging in activities currently
permitted to bank holding companies (including activities in which bank holding
companies may currently engage outside the United States) and merchant banking
through a securities or insurance underwriting affiliate. The Federal Reserve
Board, in consultation with the Department of Treasury, may approve additional
financial activities.

                                      -3-
<PAGE>

           The G-L-B Act permits well capitalized and well managed national
banks with satisfactory CRA records to invest in financial subsidiaries that
engage in activities that are financial in nature (or incidental thereto) on an
agency basis. National banks that are among the 50 largest insured banks and
have at least one issue of investment grade debt outstanding may invest in
financial subsidiaries that engage in activities as principal other than
insurance underwriting, real estate development or merchant banking. All
national banks are given the authority to underwrite municipal revenue bonds.
The aggregate total consolidated assets of a national bank's financial
subsidiaries may not exceed the lesser of 45% of the bank's total consolidated
assets or $50 billion. A national bank would be required to deduct its
investments in financial subsidiaries from its regulatory capital. National
banks must also adopt procedures for protecting the bank against risks
associated with the financial subsidiary and to preserve the separate corporate
identity of the financial subsidiary. Financial subsidiaries of state and
national banks (which include any subsidiary engaged in an activity not
permitted to a national bank directly) would be treated as affiliates for
purposes of the limitations on aggregate transactions with affiliates in
Sections 23A and 23B of the Federal Reserve Act and for purposes of the
anti-tying restrictions of the Bank Holding Company Act. State-chartered banks
would be prohibited from investing in financial subsidiaries unless they would
be well capitalized after deducting the amount of their investment from capital
and observe the other safeguards applicable to national banks.

           The G-L-B Act imposes functional regulation on bank securities and
insurance activities. Banks will only be exempt from SEC regulation as
securities brokers if they limit their activities to those described in the
G-L-B Act. Banks that advise mutual funds will be subject to the same SEC
regulation as other investment advisors. Bank common trust funds will be
regulated as mutual funds if they are advertised or offered for sale to the
general public. National banks and their subsidiaries will be prohibited from
underwriting insurance products other than those which they were lawfully
underwriting as of January 1, 1999 and are prohibited from underwriting title
insurance or tax-free annuities. National banks may only sell title insurance in
states in which state-chartered banks are authorized to sell title insurance.
The G-L-B Act directs the federal banking agencies to promulgate regulations
governing sales practices in connection with permissible bank sales of
insurance.

           The G-L-B Act imposes new requirements on financial institutions with
respect to customer privacy. The G-L-B Act generally prohibits disclosure of
customer information to non-affiliated third parties unless the customer has
been given the opportunity to object and has not objected to such disclosure.
Financial institutions are further required to disclose their privacy policies
to customers annually. Financial institutions, however, will be required to
comply with state law if it is more protective of customer privacy than the
G-L-B Act. The G-L-B Act directs the federal banking agencies, the National
Credit Union Administration, the Secretary of the Treasury, the Securities and
Exchange Commission and the Federal Trade Commission, after consultation with
the National Association of Insurance Commissioners, to promulgate implementing
regulations within six months of enactment. The privacy provisions will become
effective six months thereafter.

           The G-L-B Act contains significant revisions to the Federal Home Loan
Bank System. The G-L-B Act imposes new capital requirements on the Federal Home
Loan Banks and authorizes them to issue two classes of stock with differing
dividend rates and redemption requirements. The G-L-B Act deletes the current
requirement that the Federal Home Loan Banks annually contribute $300 million to
pay interest on certain government obligations in favor of a 20% of net earnings
formula. The G-L-B Act expands the permissible uses of Federal Home Loan Bank
advances by community financial institutions (under $500 million in assets) to
include funding loans to small businesses, small farms and small
agri-businesses. The G-L-B Act makes membership in the Federal Home Loan Bank
system voluntary for federal savings associations.

           The G-L-B Act contains a variety of other provisions including a
prohibition against ATM surcharges unless the customer has first been provided
notice of the imposition and amount of the fee. The G-L-B Act reduces the
frequency of CRA examinations for smaller institutions and imposes certain
reporting requirements on depository institutions that make payments to
non-governmental entities in connection with the CRA.

LENDING ACTIVITIES

         The Bank offers a full range of consumer and commercial loans. The
Bank's lending activities include residential and commercial real estate loans,
construction loans, land acquisition and development loans, equipment and
automobile lease financing, commercial loans and consumer installment lending
including indirect automobile lending. Substantially all of the Bank's loan
customers are residents of Anne Arundel County and surrounding areas

                                      -4-
<PAGE>

of Central Maryland. The Bank solicits loan applications for commercial loans
from small to medium sized businesses located in its market area. The Bank
believes that this is a market in which a relatively small community bank, like
the Bank, has a competitive advantage in personal service and flexibility. The
Bank's consumer lending currently consists primarily of automobile loans
originated through local dealers. The Bank has expanded its indirect automobile
loans by entering into arrangements with individual automobile dealers. The
Bank's lease financing portfolio consists of loans purchased from third party
originators.

           After several years of portfolio run-off, the Company's loan
portfolio increased during the past two fiscal years, as the result of the
introduction of an indirect automobile lending program in 1998. The Bank's
loan portfolio had decreased in size in prior years primarily due to declines
in the size of its construction loan portfolio and in its installment and
commercial loan portfolios. The declines in the construction portfolio
reflected the significant increase in such lending in fiscal year 1994 which
was not sustained in subsequent years. The run-off in the commercial
portfolio reflected the Bank's decision to decrease its equipment and
automobile lease-based lending because of the difficulties encountered in
monitoring the financial condition of borrowers on purchased leases. The
declines in the installment and commercial loan portfolios also reflected in
part the substantial charge-offs which the Bank took during fiscal years 1996
and 1995.

           The following table provides information on the composition of the
loan portfolio at the indicated dates.

<TABLE>
<CAPTION>
                                                                         AT DECEMBER 31,

                                   2000                1999                  1998                   1997                  1996
                           -------------------- -------------------- ----------------------  -------------------  -----------------
(DOLLARS IN THOUSANDS)           $         %         $         %           $          %          $        %          $        %
                              ------    ------    ------    ------      ------    ------     ------    ------     ------   ------
<S>                        <C>          <C>     <C>          <C>      <C>          <C>     <C>          <C>     <C>         <C>
Mortgage:
  Residential........      $  36,187    21.74%  $ 34,099     22.03%   $ 33,931     26.28%  $ 38,048     32.68%  $ 36,505    27.95%
  Commercial.........         40,169    24.13     42,342     27.36      43,915     34.02     43,276     37.17     47,757    36.57
  Construction and land
    Development......          5,257     3.16      6,095      3.94       2,383      1.85      4,888      4.20      5,515     4.22

Consumer:
  Installment........         19,119    11.49     16,203     10.47      17,119     13.26     18,862     16.20     22,281    17.06
  Credit card........            281     0.16      1,348      0.88       1,398      1.08      1,397      1.20      1,434     1.10
  Indirect automobile         61,725    37.08     50,967     32.93      24,630     19.08         --        --         --       --
Commercial...........          3,726     2.24      3,701      2.39       5,714      4.43      9,964      8.56     17,095    13.09
                              ------   ------     ------    ------      ------    ------     ------    ------     ------   ------
      Gross loans....        166,464   100.00%   154,755    100.00%    129,090    100.00%   116,435    100.00%   130,587   100.00%
                                       =======              =======               ======               ======              ======
Unearned income on loans        (705)               (727)                 (748)                (751)                (854)
                              ------              ------                ------               ------               ------
      Gross loans net
       of Unearned income    165,759             154,028               128,342              115,684              129,733
Allowance for credit
  Losses.............         (3,385)             (2,922)               (2,841)              (4,139)              (5,061)
                             -------             -------               -------              -------              -------
Loans, net...........       $162,374            $151,106              $125,501             $111,545             $124,672
                            ========            ========              ========             ========             ========
</TABLE>

           The following table sets forth the maturities for various categories
of the loan portfolio at December 31, 2000. Demand loans and loans, which have
no stated maturity, are treated as due in one year or less. At December 31,
2000, the Bank had $7,951,011 in loans due after one year with variable rates
and $124,663,638 in such loans with fixed rates. The Bank's long-term real
estate loans allow the Bank to call the loan after three years in order to
adjust the interest rate if necessary. The Bank has generally not exercised its
call option and the following table assumes no exercise of the Bank's call
option.
<TABLE>
<CAPTION>

                                       DUE WITHIN            DUE OVER ONE              DUE OVER
                                        ONE YEAR                TO FIVE               FIVE YEARS                 TOTAL
                                                                 YEARS
                                                             (IN THOUSANDS)


<S>                                       <C>                    <C>                   <C>                     <C>
Real Estate - mortgage:
  Residential................             $2,437                 $1,655                $32,095                 $36,187
  Commercial.................              5,667                  6,380                 28,122                  40,169
Real Estate -- construction..                425                  1,048                  3,784                   5,257
Installment..................              2,024                  6,952                 10,143                  19,119
Credit Card..................                206                     28                     47                     281
Indirect automobile..........                131                 60,310                  1,284                  61,725
Commercial...................              1,128                    482                  2,116                   3,726
                                            ----                  -----                -------                   -----
                                         $12,018                $76,855                $77,591                $166,464
                                         =======                =======                =======                ========
</TABLE>
                                      -5-
<PAGE>


           REAL ESTATE LENDING. The Bank offers long-term mortgage financing for
residential and commercial real estate as well as shorter term construction and
land development loans. Residential mortgage and residential construction loans
are originated with fixed rates while commercial mortgages may be originated on
either a fixed or variable rate basis. Commercial construction loans are
generally originated on a variable rate basis. The Bank's long-term, fixed-rate
mortgages include a provision allowing the Bank to call the loan after three
years in order to adjust the interest rate. The Bank, however, has never
exercised this right. Substantially all of the Bank's real estate loans are
secured by properties in northern Anne Arundel County, Maryland. Under the
Bank's loan policies, the maximum permissible loan-to-value ratio for
owner-occupied residential mortgages is 80% of the lesser of the purchase price
or appraised value. The Bank, however, will make loans secured by owner-occupied
residential real estate with loan-to-value ratios up to 95% provided the
borrower obtains private mortgage insurance for the portion of the loan in
excess of 80%. For residential investment properties, the maximum loan-to-value
ratio is 75%. The maximum permissible loan-to-value ratio for residential and
commercial construction loans is 80%. The maximum loan-to-value ratio for
permanent commercial mortgages is 75%. The maximum loan-to-value ratio for land
development loans is 70% and for unimproved land is 65%. The Bank also offers
home equity loans secured by the borrower's primary residence provided that the
aggregate indebtedness on the property does not exceed 80% of its value.

           COMMERCIAL LENDING. The Bank's commercial loan portfolio consists
principally of demand and time loans for commercial purposes and purchased lease
financings. The Bank's business demand and time lending includes various working
capital loans, lines of credit and letters of credit for commercial customers.
Demand loans require the payment of interest until called while time loans
require a single payment of principal and interest at maturity. Such loans may
be made on a secured or an unsecured basis. All such loans are underwritten on
the basis of the borrower's creditworthiness rather than the value of the
collateral. The Bank's lease financing portfolio includes leases on various
types of commercial equipment that have been purchased from various vendors.
Because of the difficulties encountered in monitoring the financial condition of
borrowers on purchased leases, the Bank is no longer purchasing equipment leases
and is allowing this portfolio to run off.

           INSTALLMENT LENDING. The Bank makes consumer and commercial
installment loans for the purchase of automobiles, boats, other consumer durable
goods, capital goods and equipment. Such loans provide for repayment in regular
installments and are secured by the goods financed. Also included in installment
loans are overdraft loans and other credit repayable in installments. As of
December 31, 2000, approximately 13.8% of the installment loans in the Bank's
portfolio had been originated for commercial purposes and 86.2% had been
originated for consumer purposes.

           INDIRECT AUTOMOBILE LENDING. The Bank commenced its indirect
automobile lending program in January 1998. The Bank finances new and used
automobiles for terms of up to 60 months. Used vehicles must be no more than
five years old and the maximum loan term is reduced for higher mileage vehicles.
The Bank does not lend more than the invoice price on new vehicles and on used
vehicles will not lend more than the fair market value as published in a
nationally recognized used vehicle pricing guide. The Bank requires all
borrowers to obtain vendor's single interest coverage protecting the Bank
against loss. The Bank originates indirect loans through a network of 14 dealers
which are primarily new car dealers located in Anne Arundel County.
Participating dealers take loan applications from their customers and transmit
them to the Bank for approval. If the loan is approved, the Bank will
immediately fund the principal of the loan and credit the dealer's reserve
account for the premium due to the dealer. Funds are disbursed from the dealer
reserve account on a monthly basis net of any unpaid interest resulting from
borrower prepayments or defaults on other loans purchased from the dealer. The
Bank does not offer dealer floor plan financing.

           CREDIT CARD AND RELATED LOANS. Credit card and related loans consist
of outstanding balances on credit cards and overdraft lines of credit. The Bank
offered no annual fee VISA(R) and MasterCard(R) credit cards to qualified
customers. Credit card billing and payment processing was done for the Bank by
an unaffiliated third party which received a fee for such services. In February,
2000, however, the Bank sold its portfolio of credit card loans. The Bank's
overdraft protection line of credit is offered as a convenience to qualified
customers.

           Although the risk of non-payment for any reason exists with respect
to all loans, certain other specific risks are associated with each type of
loan. The primary risks associated with commercial loans, including commercial

                                      -6-
<PAGE>

real estate loans, are the quality of the borrower's management and a number of
economic and other factors which induce business failures and depreciate the
value of business assets pledged to secure the loan, including competition,
insufficient capital, product obsolescence, changes in the cost of production,
environmental hazards, weather, changes in laws and regulations and general
changes in the marketplace. Primary risks associated with residential real
estate loans include fluctuating land and property values and rising interest
rates with respect to fixed-rate, long-term loans. Residential construction
lending exposes the Company to risks related to builder performance. Consumer
loans, including indirect automobile loans, are affected primarily by domestic
instability and a variety of factors that may lead to the borrower's
unemployment, including deteriorating economic conditions in one or more
segments of a local or broader economy. Because the Bank deals with borrowers
through an intermediary on indirect automobile loans, this form of lending
potentially carries greater risks of defects in the application process for
which claims may be made against the Bank. Indirect automobile lending may also
involve the Bank in consumer disputes under state "lemon" or other laws. The
Bank seeks to control these risks by following strict underwriting and
documentation guidelines and by only dealing with well-established dealerships
who are contractually obligated to indemnify the Bank for such losses.

           The Bank's lending activities are conducted pursuant to written
policies approved by the Board of Directors intended to ensure proper management
of credit risk. Loans are subject to a well defined credit process that includes
credit evaluation of borrowers, establishment of lending limits and application
of lending procedures, including the holding of adequate collateral and the
maintenance of compensating balances, as well as procedures for on-going
identification and management of credit deterioration. Regular portfolio reviews
are performed by the Senior Credit Officer to identify potential underperforming
credits, estimate loss exposure and to ascertain compliance with the Bank's
policies. On a quarterly basis, the internal auditor performs an independent
loan review in accordance with the Bank's loan review policy. For significant
problem loans, management review consists of evaluation of the financial
strengths of the borrower and the guarantor, the related collateral, and the
effects of economic conditions.

           The Bank's loan approval policy provides for various levels of
individual lending authority. The maximum lending authority granted by the Bank
to any one individual is $500,000. A combination of approvals from certain
officers may be used to lend up to an aggregate of $750,000. The Bank's
Executive Committee is authorized to approve loans up to $1.0 million. Larger
loans must be approved by the full Board of Directors.

         Under Maryland law, the maximum amount which the Bank is permitted to
lend to any one borrower and their related interests may generally not exceed
10% of the Bank's unimpaired capital and surplus which is defined to include the
Bank's capital, surplus, retained earnings and 50% of its reserve for possible
loan losses. Under this authority, the Bank would have been permitted to lend up
to $1.87 million to any one borrower at December 31, 2000. By interpretive
ruling of the Commissioner of Financial Regulation, Maryland banks have the
option of lending up to the amount that would be permissible for a national bank
which is generally 15% of unimpaired capital and surplus (defined to include a
bank's total capital for regulatory capital purposes plus any loan loss
allowances not included in regulatory capital). Under this formula, the Bank
would have been permitted to lend up to $3.1 million to any one borrower at
December 31, 2000. It is currently the Bank's policy to limit its exposure to
any one borrower to no more than $1.3 million in the aggregate unless the loan
is approved by a 75% vote of the Board of Directors with respect to new
borrowings. At December 31, 2000, the largest amount outstanding to any one
borrower and their related interests was $2,396,000 which was within the Bank's
lending limit at the time when made.

NON-PERFORMING LOANS

           It is the current policy of the Bank to discontinue the accrual of
interest when a loan becomes 120 days or more delinquent and circumstances
indicate that collection is doubtful. For years prior to 1997, the Bank's policy
was to consider real estate loans on a case-by-case basis subject to collateral.

           The Bank seeks to control delinquencies through diligent collection
procedures. For consumer loans, the Bank sends out payment reminders on the
seventh and twelfth days after a payment is due. If a consumer loan becomes 15
days past due, the account is transferred to the Bank's collections department
which will contact the borrower by telephone and letter before the account
becomes 30 days past due. If a consumer loan becomes more than 30 days past due,
the Bank will continue its collection efforts and will move to repossession or
foreclosure by the 45th day if the Bank has reason to believe that the
collateral may be in jeopardy or the borrower has failed to

                                      -7-
<PAGE>

respond to prior communications. The Bank will move to repossess or foreclose in
all instances in which a consumer loan becomes more than 60 days delinquent.
After repossession of a motor vehicle, the borrower has a 15-day statutory right
to redeem the vehicle and is entitled to 10 days' notice before the sale of a
repossessed vehicle. The Bank sells the vehicle as promptly as feasible after
the expiration of these periods. If the amount realized from the sale of the
vehicle is less than the loan amount, the Bank will seek a deficiency judgment
against the borrower. The Bank follows similar collection procedures with
respect to commercial loans.

           The following table sets forth the amount of the Bank's restructured
loans, non-accrual loans and accruing loans 90 days or more past due at the
dates indicated
<TABLE>
<CAPTION>

                                                                                 AT DECEMBER 31,
                                                   -------------------------------------------------------------------------
                                                         2000          1999           1998           1997           1996
                                                         ----          ----           ----           ----           ----
                                                                            (DOLLARS IN THOUSANDS)
<S>                                                     <C>           <C>            <C>             <C>            <C>
Restructured Loans..........................            $ 370         $ 243          $ 137           $344           $ --
                                                        =====         =====          =====           ====           ====
Non-accrual loans:
  Real estate - mortgage:
  Residential...............................            $ 120         $ 237          $ 336         $1,078         $2,065
  Commercial................................               77           135            505            761          1,935
  Real estate - construction................                0           280            316            608              0
  Installment...............................               72           315            463            665            168
  Credit card & related.....................                0             0              0              0              0
  Commercial................................              101            45            105            369            378
                                                          ---         -----            ---            ---            ---
       Total non-accrual loans..............              370         1,012          1,725          3,481          4,546

Accruing loans past due 90 days or more
  Real estate - mortgage:
  Residential...............................               34            43              0              5             87
  Commercial................................                0             0              0              0              0
  Real estate - construction................                0             0              0              0              0
  Installment...............................                0             0              0              0              0
  Credit card & related.....................                0             0             18              0              0
  Commercial................................                0             0              0              5              0
       Total accruing loans past due
          90 days or more...................               34            43             18              5             87
                                                        -----        ------         ------         ------         ------
       Total non-accrual and past due loans.            $ 404        $1,055         $1,743         $3,486         $4,633
                                                        =====        ======         ======         ======         ======
       Non-accrual and past due loans to
          gross loans.......................             0.24%         0.68%          1.36%          2.99%          3.55%
                                                        =====         =====          =====          =====          =====
       Allowance for credit losses to
        non-accrual and past due loans.....            837.87%       276.97%        162.99%        118.73%        109.24%
                                                       =======       =======        =======        =======        =======
</TABLE>

         For the year ended December 31, 2000, interest of approximately
$48,484, would have been accrued on non-accrual loans if such loans had been
current in accordance with their original terms. During such period there was no
interest on such loans included in income. During the year ended December 31,
2000, the Bank would have recorded $9,129 in interest on restructured loans if
such loans were performing in accordance with their original terms. During 2000,
the Bank recognized $93,653 in interest income on restructured loans.

         Approximately $355,421, or 96%, of the Bank's non-accrual loans at
December 31, 2000 were attributable to 10 borrowers. Charge-offs of $0 have
previously been taken on these loans. Three (3) of these borrowers with loans
totaling $81,040 were in bankruptcy at that date. Because of the legal
protections afforded to borrowers in bankruptcy, collections on such loans are
difficult and the Bank anticipates that such loans may remain delinquent for an
extended period of time. Each of these loans is secured by collateral with a
value well in excess of the current active balance of the Bank's loan.

         At December 31, 2000, there were no loans outstanding not reflected in
the above table as to which known information about possible credit problems of
borrowers caused management to have serious doubts as to the ability of such
borrowers to comply with present loan repayment terms. Such loans consist of
loans which were not 120

                                      -8-
<PAGE>

days or more past due but where the borrower is in bankruptcy or has a history
of delinquency or the loan to value ratio is considered excessive due to
deterioration of the collateral or other factors.

           At December 31, 2000, the Company had $484,148 in real estate
acquired in partial or total satisfaction of debt compared to $558,827 and
$1,099,326 in such properties at December 31, 1999 and 1998, respectively. All
such properties are recorded at the lower of cost or fair value at the date
acquired and carried on the balance sheet as other real estate owned. Losses
arising at the date of acquisition are charged against the allowance for credit
losses. Subsequent write-downs that may be required and expense of operation are
included in non-interest expense. Gains and losses realized from the sale of
other real estate owned are included in non-interest income or expense. For a
description of the properties comprising other real estate owned at December 31,
2000, see "Item 2. -- Properties."

ALLOWANCE FOR CREDIT LOSSES

           The allowance for credit losses is established through a provision
for credit losses charged to expense. Loans are charged against the allowance
for credit losses when management believes that the collectibility of the
principal is unlikely. The allowance, based on evaluations of the collectibility
of loans and prior loan loss experience, is an amount that management believes
will be adequate to absorb possible losses on existing loans that may become
uncollectible. The evaluations take into consideration such factors as changes
in the nature and volume of the loan portfolio, overall portfolio quality,
review of specific problem loans, and current economic conditions and trends
that may affect the borrower's ability to pay.

Transactions in the allowance for credit losses during the last five fiscal
years were as follows:
<TABLE>
<CAPTION>

                                                                           YEAR ENDED DECEMBER 31,
                                                   -------------------------------------------------------------------------
                                                         2000          1999           1998           1997           1996
                                                         ----          ----           ----           ----           ----
                                                                              (DOLLARS IN THOUSANDS)

<S>                                                   <C>           <C>            <C>            <C>            <C>
Beginning Balance...........................          $ 2,922       $ 2,841        $ 4,139        $ 5,061        $ 3,698

Loans charged off
  Real estate - mortgage:
     Residential............................               19             0             51            270            250
     Commercial.............................                4            50              0              0            797
  Real estate - construction................                0           (27)           189            435              0
  Installment...............................              470           477            473            171            786
  Credit card & related.....................              101            92              0             45            182
  Commercial................................              167            81            382            697          3,453
                                                         ----         -----          -----          -----          -----
       Total................................              761           673          1,095          1,618          5,468
                                                         ----         -----          -----          -----          -----
Recoveries
  Real estate - mortgage:
     Residential............................               52            32             51             25             22
     Commercial.............................                0            16             26             17             81
  Real estate - construction................              470            36              1              0              0
  Installment...............................              111           259            116             89             57
  Credit card & related.....................               41             4              4              5              2
  Commercial................................              550           107             99            290             73
                                                         ----         -----          -----          -----          -----
       Total................................            1,224           454            297            426            235
                                                         ----         -----          -----          -----          -----
Net charge offs/(recoveries)................             (463)          219            798          1,192          5,233
Provisions charged to operations............                0           300           (500)           270          6,596
                                                         ----         -----          -----          -----          -----
Ending balance..............................          $ 3,385       $ 2,922        $ 2,841        $ 4,139        $ 5,061
                                                      =======       =======        =======        =======        =======
Average loans...............................         $159,810      $142,077       $118,372       $119,161       $146,922
Net charge-offs to average loans............             (.28)%        0.15%          0.67%          1.00%          3.56%
</TABLE>


The Bank's high level of loan charge-offs during fiscal year 1996 was primarily
attributable to its lending relationships with Mr. Brian Davis and various
affiliated entities. Such loans primarily consisted of loans for purchases of
trucks and other non-real estate secured loans which are categorized under
commercial loans in the

                                      -9-
<PAGE>

above table. In addition, during fiscal year 1996, the Bank began charging off
all non-real estate secured loans upon 90 days delinquency which contributed to
a continued high level of charge-offs.

The following table shows the allowance for credit losses broken down by loan
category as of December 31, 2000, 1999, 1998, 1997, and 1996 .
<TABLE>
<CAPTION>

                                                                         AT DECEMBER 31,
                                   ----------------------------------------------------------------------------------------------
                                                            2000                                        1999
                                                       -------------                              --------------
                                                            Percentage Of Loans                            Percentage Of Loans
Portfolio                              Allowance For        In Each Category To        Allowance For       In Each Category To
---------                              Each Category           Total Loans             Each Category           Total Loans
                                       -------------           -----------             -------------           -----------
                                                                      (Dollars In Thousands)

<S>                                          <C>                      <C>                   <C>                      <C>
Real Estate - mortgage:
  Residential................                $ 199                    21.96%                $ 200                    22.03%
  Commercial.................                  506                    24.38                   613                    27.36
Real Estate -- construction..                  292                     3.19                   296                     3.94
Installment..................                  221                    10.61                   177                    10.47
Credit Card..................                    0                       --                    92                     0.88
Indirect automobile..........                1,486                    37.63                   793                    32.93
Commercial...................                  288                     2.23                   526                     2.39
Unallocated..................                  393                       --                   225                       --
                                              ----                     ----                  ----                     ----
    Total....................               $3,385                   100.00%               $2,922                   100.00%
                                            ======                   =======               ======                   =======
</TABLE>

<TABLE>
<CAPTION>

                                                                           AT DECEMBER 31,
                              ---------------------------------------------------------------------------------------------------
                                             1998                               1997                            1996
                                          ----------                        -----------                      ----------

                                                Percentage Of                    Percentage Of                   Percentage Of
                                                Loans In Each                    Loans In Each                   Loans In Each
                              Allowance For      Category To     Allowance For    Category To    Allowance For    Category To
Porfolio                     Each Category      Total Loans     Each Category    Total Loans    Each Category    Total Loans
---------                     -------------      -----------     -------------    -----------    -------------    -----------
                                                                       (Dollars In Thousands)

<S>                              <C>                   <C>        <C>               <C>             <C>              <C>
Real Estate - mortgage:
  Residential................    $273                  26.28%       389               32.68%          432              27.96%
  Commercial.................     311                  34.02        987               37.17           987              36.57
Real Estate -- construction..     335                   1.85        390                4.20           690               4.22
Installment..................     143                  13.26        159               16.20           448              17.06
Credit Card..................      60                   1.08         47                1.20            49               1.10
Indirect automobile..........     312                  19.08         --                  --            --                 --
Commercial...................     966                   4.43      1,186                8.56          2455              13.09
Unallocated..................     441                     --        981                  --            --                 --
                                 ----                  -----      -----               -----         -----              -----
    Total....................  $2,841                 100.00%    $4,139              100.00%       $5,061             100.00%
                               ======                 ======     ======              ======        ======             ======
</TABLE>

INVESTMENT SECURITIES

           The Bank maintains a substantial portfolio of investment securities
to provide liquidity as well as a source of earnings. The Bank's investment
securities portfolio consists primarily of U.S. Treasury securities, securities
issued by U.S. Government agencies including mortgage-backed securities, as well
as securities issued by certain states and their political subdivisions. This
last portfolio has recently been increased due to a change in the Company's
deferred tax position allowing the Company to use the full tax advantage of this
portfolio.

The following table presents at amortized cost the composition of the investment
portfolio by major category at the dates indicated.
<TABLE>
<CAPTION>

                                                                               AT DECEMBER 31,
                                                         ------------------------------------------------------------
                                                                2000                1999                 1998
                                                                ----                ----                 ----
                                                                               (IN THOUSANDS)

<S>                                                             <C>                  <C>                 <C>
U.S. Treasury securities...........................             $1,746               $2,739              $5,082
U.S. Government agencies and mortgage
     backed securities ............................             39,057               40,833              59,008
Obligations of states and political subdivisions...              8,721                   --                  --
Other securities and stock.........................              3,574                  652                 936
                                                                 -----                -----               -----
    Total investment securities....................            $53,098              $44,224             $65,026
                                                               =======              =======             =======
</TABLE>

                                      -10-
<PAGE>


           The following table sets forth the scheduled maturities, book values
and weighted average yields for the Company's investment securities portfolio at
December 31, 2000.
<TABLE>
<CAPTION>

                              ONE YEAR OR LESS      ONE TO FIVE YEARS      FIVE TO TEN YEARS      MORE THAN TEN YEARS

                                         WEIGHTED               WEIGHTED               WEIGHTED               WEIGHTED
                               BOOK      AVERAGE     BOOK       AVERAGE     BOOK        AVERAGE    BOOK        AVERAGE
                               VALUE      YIELD      VALUE      YIELD       VALUE       YIELD      VALUE       YIELD
                               -----      -----      -----      -----       ------      -----      -----       -----

<S>                             <C>        <C>      <C>        <C>           <C>       <C>         <C>       <C>
U.S. Treasury securities..      $500       5.50%    $1,247     6.13%         $  --        --%       $  --        --%
U.S. Government agencies
 and mortgage backed
 securities...............        --         --      9,361     5.91%         8,697     6.59%       20,999      6.29%
Obligations of states
 and political subdivisions        -          -          -        -            180     4.82%        8,541      5.34%

Other securities and stock       652       7.75%       100     5.85%             -        -         2,822      8.27%
                               -----      -----      -----    -----         ------    -----         -----     -----
 Total investment securities  $1,152       6.78%   $10,708     5.92%        $8,877     6.56%      $32,362      6.30%
                              ======               =======                  ======                 ======

<CAPTION>

                                    TOTAL

                                             WEIGHTED
                                   BOOK      AVERAGE
                                   VALUE      YIELD
                                   -----      -----

<S>                              <C>          <C>
U.S. Treasury securities..       $1,746        5.95%
U.S. Government agencies
 and mortgage backed
 securities...............       39,057        6.26%
Obligations of states
 and political subdivisions       8,721        5.33%

Other securities and stock        3,574        8.09%
                                  -----        -----
 Total investment securities    $53,098        6.20%
                                 ======
</TABLE>

           At December 31, 2000, the Bank had no investments in securities of a
single issuer (other than the U.S. Government securities and securities of
federal agencies and government-sponsored enterprises) which aggregated more
than 10% of stockholders' equity.

DEPOSITS AND OTHER SOURCES OF FUNDS

           The funds needed by the Bank to make loans are primarily generated by
deposit accounts solicited from the communities surrounding its main office and
seven branches in northern Anne Arundel County. Consolidated total deposits were
$205,968,000 as of December 31, 2000. The Bank uses borrowings from the Federal
Home Loan Bank ("FHLB") of Atlanta to supplement funding from deposits. The Bank
was permitted to borrow up to $28.7 million under a line of credit from the FHLB
of Atlanta as of December 31, 2000.

           DEPOSITS. The Bank's deposit products include regular savings
accounts (statements), money market deposit accounts, demand deposit accounts,
NOW checking accounts, IRA and SEP accounts, Christmas Club accounts and
certificates of deposit. Variations in service charges, terms and interest rates
are used to target specific markets. Ancillary products and services for deposit
customers include safe deposit boxes, money orders and travelers checks, night
depositories, automated clearinghouse transactions, wire transfers, ATMs,
telephone banking, and a customer call center. The Bank is a member of the
Cirrus(R) and Star(R) ATM networks.

           The Bank obtains deposits principally through its network of eight
offices. The Bank does not solicit brokered deposits. At December 31, 2000, the
Bank had approximately $15.2 million in certificates of deposit and other time
deposits of $100,000 or more including IRA accounts. The following table
provides information as to the maturity of all time deposits of $100,000 or more
at December 31, 2000.
<TABLE>

                                                                                  AMOUNT
                                                                              (IN THOUSANDS)
                                                                              --------------
<S>                                                                                <C>
                Three months or less...................................            $3,835
                Over three through six months..........................             4,406
                Over six through 12 months.............................             5,725
                Over 12 months.........................................             1,238
                                                                                    -----
                Total                                                             $15,204
                                                                                  =======
</TABLE>

           BORROWINGS. In addition to deposits, the Bank from time to time
obtains advances from the FHLB of Atlanta of which it is a member. FHLB of
Atlanta advances may be used to provide funds for residential housing
finance, for small business lending, and to meet specific and anticipated
needs. The Bank may draw on a $28.7 million line of credit from the FHLB of
Atlanta, which is secured by a floating lien on the Bank's residential first
mortgage loans and various federal and agency securities. There was $7.0
million in a long-term convertible advance under this credit arrangement at
December 31, 2000. The advance matures in September 2010 and bears a 5.84%
rate of interest. On September 7, 2000, the Company issued $5,155,000 of its
10.6% Junior Subordinated Deferrable Interest Debentures to Glen Burnie
Statutory Trust I, a Connecticut statutory trust wholly owned by the

                                      -11-
<PAGE>

Company. The Trust, in turn, issued $5,000,000 of its 10.6% capital
securities to institutional investors. The debentures are scheduled to mature
on September 7, 2030, unless called by the Company not earlier than September
7, 2010. The Bank also has a secured line of credit in the amount of $5.0
million from another commercial bank but has not drawn on this line. The Bank
has a mortgage note on the 103 Crain Highway address of $296,523, as of
December 31, 2000. This note is payable monthly through October 2010 and has
a 7% interest rate.

COMPETITION

           The Bank faces competition from other community banks and financial
institutions and larger intra- and inter- state banks and financial institutions
which compete vigorously (currently, sixteen FDIC-insured depository
institutions operate within two miles of the Bank's headquarters). Former
directors of the Bank, including a former Chief Executive Officer, have
established a new bank with a main office in Glen Burnie close to the Bank's
headquarters which has solicited business from many Bank customers. With respect
to indirect lending, the Bank faces competition from other banks and the
financing arms of automobile manufacturers. The Bank competes in this area by
offering competitive rates and responsive service to dealers.

           The Bank's interest rates, loan and deposit terms, and offered
products and services are governed, to a large extent, by such competition. The
Bank attempts to provide superior service within its community and to know and
facilitate services to its customers. It seeks commercial relationships with
small to medium size businesses which, it believes, would welcome personal
service and flexibility. While it believes it is the seventh largest deposit
holder in Anne Arundel County, Maryland, with an estimated 4.84% market share as
of June 30, 1999 (the latest date for which relevant data is available from the
FDIC), it believes its greatest competition comes from smaller community banks
which offer similar personalized services.

OTHER ACTIVITIES

           The Company also owns all outstanding shares of capital stock of GBB
Properties, Inc. ("GBB"), another Maryland corporation which was organized in
1994 and which is engaged in the business of acquiring, holding and disposing of
real property, typically acquired in connection with foreclosure proceedings (or
deeds in lieu of foreclosure) instituted by the Bank or acquired in connection
with branch expansions by the Bank.

EMPLOYEES

           At December 31, 2000, the Bank had 131 full-time equivalent
employees. Neither the Company nor GBB currently has any employees.

REGULATION OF THE COMPANY

           GENERAL. The Company is a bank holding company within the meaning of
the Bank Holding Company Act of 1956 (the "BHCA"). As such, the Company is
registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") and subject to Federal Reserve Board regulation,
examination, supervision and reporting requirements. As a bank holding company,
the Company is required to furnish to the Federal Reserve Board annual and
quarterly reports of its operations at the end of each period and to furnish
such additional information as the Federal Reserve Board may require pursuant to
the BHCA. The Company is also subject to regular inspection by Federal Reserve
Board examiners.

           Under the BHCA, a bank holding company must obtain the prior approval
of the Federal Reserve Board before: (1) acquiring direct or indirect ownership
or control of any voting shares of any bank or bank holding company if, after
such acquisition, the bank holding company would directly or indirectly own or
control more than 5% of such shares; (2) acquiring all or substantially all of
the assets of another bank or bank holding company; or (3) merging or
consolidating with another bank holding company.

           Effective September 29, 1995, the Riegle-Neal Interstate Banking
and Branching Efficiency of 1994 (the "Riegle-Neal Act") authorized the
Federal Reserve Board to approve an application of an adequately capitalized
and adequately managed bank holding company to acquire control of, or acquire
all or substantially all of the assets of, a

                                      -12-
<PAGE>

bank located in a state other than such holding company's home state, without
regard to whether the transaction is prohibited by the laws of any state. The
Federal Reserve Board may not approve the acquisition of a bank that has not
been in existence for the minimum time period (not exceeding five years)
specified by the statutory law of the host state. The Riegle-Neal Act also
prohibits the Federal Reserve Board from approving such an application if the
applicant (and its depository institution affiliates) controls or would
control more than 10% of the insured deposits in the United States or 30% or
more of the deposits in the target bank's home state or in any state in which
the target bank maintains a branch. The Riegle-Neal Act does not affect the
authority of states to limit the percentage of total insured deposits in the
state which may be held or controlled by a bank or bank holding company to
the extent such limitation does not discriminate against out-of-state banks
or bank holding companies. Individual states may also waive the 30%
state-wide concentration limit contained in the Riegle-Neal Act. Under
Maryland law, a bank holding company is prohibited from acquiring control of
any bank if the bank holding company would control more than 30% of the total
deposits of all depository institutions in the State of Maryland unless
waived by the Commissioner of Financial Regulation.

           Additionally, the federal banking agencies are authorized to approve
interstate merger transactions without regard to whether such transaction is
prohibited by the law of any state, unless the home state of one of the banks
opted out of the Riegle-Neal Act by adopting a law after the date of enactment
of the Riegle-Neal Act and prior to June 1, 1997 which applies equally to all
out-of-state banks and expressly prohibits merger transactions involving
out-of-state banks. The State of Maryland did not pass such a law during this
period. Interstate acquisitions of branches will be permitted only if the law of
the state in which the branch is located permits such acquisitions. Interstate
mergers and branch acquisitions will also be subject to the nationwide and
statewide insured deposit concentration amounts described above.

           The BHCA also prohibits, with certain exceptions, a bank holding
company from acquiring direct or indirect ownership or control of more than 5%
of the voting shares of a company that is not a bank or a bank holding company,
or from engaging directly or indirectly in activities other than those of
banking, managing or controlling banks, or providing services for its
subsidiaries. The principal exceptions to these prohibitions involve certain
non-bank activities which, by statute or by Federal Reserve Board regulation or
order, have been identified as activities closely related to the business of
banking or managing or controlling banks. The activities of the Company are
subject to these legal and regulatory limitations under the BHCA and the Federal
Reserve Board's regulations thereunder. Notwithstanding the Federal Reserve
Board's prior approval of specific nonbanking activities, the Federal Reserve
Board has the power to order a holding company or its subsidiaries to terminate
any activity, or to terminate its ownership or control of any subsidiary, when
it has reasonable cause to believe that the continuation of such activity or
such ownership or control constitutes a serious risk to the financial safety,
soundness or stability of any bank subsidiary of that holding company.

           Effective with the enactment of the G-L-B Act on November 12, 1999,
bank holding companies whose financial institution subsidiaries are well
capitalized and well managed and have satisfactory Community Reinvestment Act
records can elect to become "financial holding companies" which will be
permitted to engage in a broader range of financial activities than are
currently permitted to bank holding companies. Financial holding companies are
authorized to engage in, directly or indirectly, financial activities. A
financial activity is an activity that is: (i) financial in nature; (ii)
incidental to an activity that is financial in nature; or (iii) complementary to
a financial activity and that does not pose a safety and soundness risk. The
G-L-B Act includes a list of activities that are deemed to be financial in
nature. Other activities also may be decided by the Federal Reserve Board to be
financial in nature or incidental thereto if they meet specified criteria. A
financial holding company that intends to engage in a new activity to acquire a
company to engage in such an activity is required to give prior notice to the
Federal Reserve Board. If the activity is not either specified in the G-L-B Act
as being a financial activity or one that the Federal Reserve Board has
determined by rule or regulation to be financial in nature, the prior approval
of the Federal Reserve Board is required.

         The Maryland Financial Institutions Code prohibits a bank holding
company from acquiring more than 5% of any class of voting stock of a bank or
bank holding company without the approval of the Commissioner of Financial
Regulation except as otherwise expressly permitted by federal law or in
certain other limited situations. The Maryland Financial Institutions Code
additionally prohibits any person from acquiring voting stock in a bank or
bank holding company without 60 days' prior notice to the Commissioner if
such acquisition will give the person control of 25% or more of the voting
stock of the bank or bank holding company or will affect the power to direct
or

                                      -13-
<PAGE>

to cause the direction of the policy or management of the bank or bank
holding company. Any doubt whether the stock acquisition will affect the
power to direct or cause the direction of policy or management shall be
resolved in favor of reporting to the Commissioner. The Commissioner may deny
approval of the acquisition if the Commissioner determines it to be
anti-competitive or to threaten the safety or soundness of a banking
institution. Voting stock acquired in violation of this statute may not be
voted for five years.

           CAPITAL ADEQUACY. The Federal Reserve Board has adopted guidelines
regarding the capital adequacy of bank holding companies, which require bank
holding companies to maintain specified minimum ratios of capital to total
assets and capital to risk-weighted assets. See "Regulation of the Bank --
Capital Adequacy."

           DIVIDENDS AND DISTRIBUTIONS. The Federal Reserve Board has the power
to prohibit dividends by bank holding companies if their actions constitute
unsafe or unsound practices. The Federal Reserve Board has issued a policy
statement on the payment of cash dividends by bank holding companies, which
expresses the Federal Reserve Board's view that a bank holding company should
pay cash dividends only to the extent that the company's net income for the past
year is sufficient to cover both the cash dividends and a rate of earning
retention that is consistent with the company's capital needs, asset quality,
and overall financial condition.

           Bank holding companies are required to give the Federal Reserve Board
notice of any purchase or redemption of their outstanding equity securities if
the gross consideration for the purchase or redemption, when combined with the
net consideration paid for all such purchases or redemptions during the
preceding 12 months, is equal to 10% or more of the bank holding company's
consolidated net worth. The Federal Reserve Board may disapprove such a purchase
or redemption if it determines that the proposal would violate any law,
regulation, Federal Reserve Board order, directive, or any condition imposed by,
or written agreement with, the Federal Reserve Board. Bank holding companies
whose capital ratios exceed the thresholds for "well capitalized" banks on a
consolidated basis are exempt from the foregoing requirement if they were rated
composite 1 or 2 in their most recent inspection and are not the subject of any
unresolved supervisory issues.

REGULATION OF THE BANK

           GENERAL. As a state-chartered bank with deposits insured by the FDIC
but which is not a member of the Federal Reserve System (a "state non-member
bank"), the Bank is subject to the supervision of the Commissioner of Financial
Regulation and the FDIC. The Commissioner and FDIC regularly examine the
operations of the Bank, including but not limited to capital adequacy, reserves,
loans, investments and management practices. These examinations are for the
protection of the Bank's depositors and not its stockholders. In addition, the
Bank is required to furnish quarterly and annual call reports to the
Commissioner and FDIC. The FDIC's enforcement authority includes the power to
remove officers and directors and the authority to issue cease-and-desist orders
to prevent a bank from engaging in unsafe or unsound practices or violating laws
or regulations governing its business.

           The Bank's deposits are insured by the FDIC to the legal maximum of
$100,000 for each insured depositor. Some of the aspects of the lending and
deposit business of the Bank that are subject to regulation by the Federal
Reserve Board and the FDIC include reserve requirements and disclosure
requirements in connection with personal and mortgage loans and savings deposit
accounts. In addition, the Bank is subject to numerous federal and state laws
and regulations which set forth specific restrictions and procedural
requirements with respect to the establishment of branches, investments,
interest rates on loans, credit practices, the disclosure of credit terms and
discrimination in credit transactions.

           CAPITAL ADEQUACY. The Federal Reserve Board and the FDIC have
established guidelines with respect to the maintenance of appropriate levels of
capital by bank holding companies and state non-member banks, respectively. The
regulations impose two sets of capital adequacy requirements: minimum leverage
rules, which require bank holding companies and banks to maintain a specified
minimum ratio of capital to total assets, and risk-based capital rules, which
require the maintenance of specified minimum ratios of capital to
"risk-weighted" assets.

           The regulations of the Federal Reserve Board and the FDIC require
bank holding companies and state non-member banks, respectively, to maintain
a minimum leverage ratio of "Tier 1 capital" (as defined in the risk-based
capital guidelines discussed in the following paragraphs) to total assets of
3.0%. Although setting a minimum 3.0% leverage ratio, the capital regulations
state that only the strongest bank holding companies and banks, with


                                      -14-
<PAGE>

composite examination ratings of 1 under the rating system used by the
federal bank regulators, would be permitted to operate at or near such
minimum level of capital. All other bank holding companies and banks are
expected to maintain a leverage ratio of at least 1% to 2% above the minimum
ratio, depending on the assessment of an individual organization's capital
adequacy by its primary regulator. Any bank or bank holding company
experiencing or anticipating significant growth would be expected to maintain
capital well above the minimum levels. In addition, the Federal Reserve Board
has indicated that whenever appropriate, and in particular when a bank
holding company is undertaking expansion, seeking to engage in new activities
or otherwise facing unusual or abnormal risks, it will consider, on a
case-by-case basis, the level of an organization's ratio of tangible Tier 1
capital (after deducting all intangibles) to total assets in making an
overall assessment of capital.

           The risk-based capital rules of the Federal Reserve Board and the
FDIC require bank holding companies and state non-member banks, respectively, to
maintain minimum regulatory capital levels based upon a weighting of their
assets and off-balance sheet obligations according to risk. Risk-based capital
is composed of two elements: Tier 1 capital and Tier 2 capital. Tier 1 capital
consists primarily of common stockholders' equity, certain perpetual preferred
stock (which must be noncumulative in the case of banks), and minority interests
in the equity accounts of consolidated subsidiaries; less all intangible assets,
except for certain purchased mortgage servicing rights and credit card
relationships. Tier 2 capital elements include, subject to certain limitations,
the allowance for losses on loans and leases; perpetual preferred stock that
does not qualify as Tier 1 capital and long-term preferred stock with an
original maturity of at least 20 years from issuance; hybrid capital
instruments, including perpetual debt and mandatory convertible securities; and
subordinated debt and intermediate-term preferred stock.

           The risk-based capital regulations assign balance sheet assets and
credit equivalent amounts of off-balance sheet obligations to one of four broad
risk categories based principally on the degree of credit risk associated with
the obligor. The assets and off-balance sheet items in the four risk categories
are weighted at 0%, 20%, 50% and 100%. These computations result in the total
risk-weighted assets. The risk-based capital regulations require all banks and
bank holding companies to maintain a minimum ratio of total capital (Tier 1
capital plus Tier 2 capital) to total risk-weighted assets of 8%, with at least
4% as Tier 1 capital. For the purpose of calculating these ratios: (i) Tier 2
capital is limited to no more than 100% of Tier 1 capital; and (ii) the
aggregate amount of certain types of Tier 2 capital is limited. In addition, the
risk-based capital regulations limit the allowance for loan losses includable as
capital to 1.25% of total risk-weighted assets.

           FDIC regulations and guidelines additionally specify that state
non-member banks with significant exposure to declines in the economic value of
their capital due to changes in interest rates may be required to maintain
higher risk-based capital ratios. The federal banking agencies, including the
FDIC, have proposed a system for measuring and assessing the exposure of a
bank's net economic value to changes in interest rates. The federal banking
agencies, including the FDIC, have stated their intention to propose a rule
establishing an explicit capital charge for interest rate risk based upon the
level of a bank's measured interest rate risk exposure after more experience has
been gained with the proposed measurement process. Federal Reserve Board
regulations do not specifically take into account interest rate risk in
measuring the capital adequacy of bank holding companies.

           The FDIC has issued regulations which classify state non-member banks
by capital levels and which authorize the FDIC to take various prompt corrective
actions to resolve the problems of any bank that fails to satisfy the capital
standards. Under such regulations, a well-capitalized bank is one that is not
subject to any regulatory order or directive to meet any specific capital level
and that has or exceeds the following capital levels: a total risk-based capital
ratio of 10%, a Tier 1 risk-based capital ratio of 6%, and a leverage ratio of
5%. An adequately capitalized bank is one that does not qualify as
well-capitalized but meets or exceeds the following capital requirements: a
total risk-based capital ratio of 8%, a Tier 1 risk-based capital ratio of 4%,
and a leverage ratio of either (i) 4% or (ii) 3% if the bank has the highest
composite examination rating. A bank not meeting these criteria is treated as
undercapitalized, significantly undercapitalized, or critically undercapitalized
depending on the extent to which the bank's capital levels are below these
standards. A state non-member bank that falls within any of the three
undercapitalized categories established by the prompt corrective action
regulation will be subject to severe regulatory sanctions. As of December 31,
2000, the Bank was well capitalized as defined by the FDIC's regulations.

           BRANCHING. Maryland law provides that, with the approval of the
Commissioner, Maryland banks may establish branches within the State of
Maryland without geographic restriction and may establish branches in other
states by any means permitted by the laws of such state or by federal law.
The Riegle-Neal Act authorizes the FDIC

                                      -15-
<PAGE>

to approve interstate branching de novo by state banks, only in states which
specifically allow for such branching. The Riegle-Neal Act also requires the
appropriate federal banking agencies to prescribe regulations by June 1, 1997
which prohibit any out-of-state bank from using the interstate branching
authority primarily for the purpose of deposit production. These regulations
must include guidelines to ensure that interstate branches operated by an
out-of-state bank in a host state are reasonably helping to meet the credit
needs of the communities which they serve.

           DIVIDEND LIMITATIONS. Pursuant to the Maryland Financial Institutions
Code, Maryland banks may only pay dividends from undivided profits or, with the
prior approval of the Commissioner, their surplus in excess of 100% of required
capital stock. The Maryland Financial Institutions Code further restricts the
payment of dividends by prohibiting a Maryland bank from declaring a dividend on
its shares of common stock until its surplus fund equals the amount of required
capital stock or, if the surplus fund does not equal the amount of capital
stock, in an amount in excess of 90% of net earnings. In addition, the Bank is
prohibited by federal statute from paying dividends or making any other capital
distribution that would cause the Bank to fail to meet its regulatory capital
requirements. Further, the FDIC also has authority to prohibit the payment of
dividends by a state non-member bank when it determines such payment to be an
unsafe and unsound banking practice.

           DEPOSIT INSURANCE. The Bank is required to pay semi-annual
assessments based on a percentage of its insured deposits to the FDIC for
insurance of its deposits by the Bank Insurance Fund ("BIF"). Under the Federal
Deposit Insurance Act, the FDIC is required to set semi-annual assessments for
BIF-insured institutions to maintain the designated reserve ratio of the BIF at
1.25% of estimated insured deposits or at a higher percentage of estimated
insured deposits that the FDIC determines to be justified for that year by
circumstances raising a significant risk of substantial future losses to the
BIF.

           Under the risk-based deposit insurance assessment system adopted by
the FDIC, the assessment rate for an insured depository institution depends on
the assessment risk classification assigned to the institution by the FDIC,
which is determined by the institution's capital level and supervisory
evaluations. Based on the data reported to regulators for the date closest to
the last day of the seventh month preceding the semi-annual assessment period,
institutions are assigned to one of three capital groups -- "well capitalized,
adequately capitalized or undercapitalized." Within each capital group,
institutions are assigned to one of three subgroups on the basis of supervisory
evaluations by the institution's primary supervisory authority and such other
information as the FDIC determines to be relevant to the institution's financial
condition and the risk posed to the deposit insurance fund. Under the current
assessment schedule, well-capitalized banks with the best supervisory ratings
are not required to pay any premium for deposit insurance. All BIF-insured
banks, however, will be required to begin paying an assessment to the FDIC in an
amount equal to 2.12 basis points times their assessable deposits to help fund
interest payments on certain bonds issued by the Financing Corporation, an
agency established by the federal government to finance takeovers of insolvent
thrifts.

           TRANSACTIONS WITH AFFILIATES. A state non-member bank or its
subsidiaries may not engage in "covered transactions" with any one affiliate in
an amount greater than 10% of such bank's capital stock and surplus, and for all
such transactions with all affiliates a state non-member bank is limited to an
amount equal to 20% of capital stock and surplus. All such transactions must
also be on terms substantially the same, or at least as favorable, to the bank
or subsidiary as those provided to a non-affiliate. The term "covered
transaction" includes the making of loans, purchase of assets, issuance of a
guarantee and similar other types of transactions. An affiliate of a state
non-member bank is any company or entity which controls or is under common
control with the state non-member bank and, for purposes of the aggregate limit
on transactions with affiliates, any subsidiary that would be deemed a financial
subsidiary of a national bank. In a holding company context, the parent holding
company of a state non-member bank (such as the Company) and any companies which
are controlled by such parent holding company are affiliates of the state
non-member bank. The BHCA further prohibits a depository institution from
extending credit to or offering any other services, or fixing or varying the
consideration for such extension of credit or service, on the condition that the
customer obtain some additional service from the institution or certain of its
affiliates or not obtain services of a competitor of the institution, subject to
certain limited exceptions.

           LOANS TO DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS.
Loans to directors, executive officers and principal stockholders of a state
non-member bank must be made on substantially the same terms as those
prevailing for comparable transactions with persons who are not executive
officers, directors, principal stockholders or employees of the Bank unless
the loan is made pursuant to a compensation or benefit plan that is

                                      -16-
<PAGE>

widely available to employees and does not favor insiders. Loans to any
executive officer, director and principal stockholder together with all other
outstanding loans to such person and affiliated interests generally may not
exceed 15% of the bank's unimpaired capital and surplus and all loans to such
persons may not exceed the institution's unimpaired capital and unimpaired
surplus. Loans to directors, executive officers and principal stockholders,
and their respective affiliates, in excess of the greater of $25,000 or 5% of
capital and surplus (up to $500,000) must be approved in advance by a
majority of the board of directors of the bank with any "interested" director
not participating in the voting. State non-member banks are prohibited from
paying the overdrafts of any of their executive officers or directors. In
addition, loans to executive officers may not be made on terms more favorable
than those afforded other borrowers and are restricted as to type, amount and
terms of credit.

ITEM 2.   PROPERTIES

           The following table sets forth certain information with respect to
the Bank's offices:
<TABLE>
<CAPTION>

                                        YEAR           OWNED/                            APPROXIMATE
                                       OPENED          LEASED          BOOK VALUE       SQUARE FOOTAGE      DEPOSITS
                                       ------       ----------     ---------------      --------------      --------

<S>                                      <C>          <C>            <C>                    <C>            <C>
MAIN OFFICE:
------------
101 Crain Highway, S.E.                  1953         Owned          $1,185,293             10,000         $72,437,291
Glen Burnie, MD  21061

BRANCHES:
--------
Odenton                                  1969         Owned             137,635              6,000          32,520,723
1405 Annapolis Road
Odenton, MD  21113

Riviera Beach                            1973         Owned             151,988              2,500          23,837,590
8707 Ft. Smallwood Road
Pasadena, MD  21122

Crownsville                              1979         Owned             394,688              3,000          37,337,022
1221 Generals Highway
Crownsville, MD  21032

Severn                                   1984         Owned             309,332              2,500          19,657,078
811 Reece Road
Severn, MD  21144

South Crain                              1995         Leased            130,024              2,600          14,672,555
7984 Crain Highway
Glen Burnie, MD  21061

Ferndale                                 1998         Leased             82,294              2,100           3,459,394
7173 Balto & Annapolis Blvd.
Glen Burnie, MD  21061

Severna Park                             1999         Leased            140,697              1,250           2,366,291
790 Ritchie Highway
Severna Park, MD  21146

OPERATIONS CENTERS:
------------------
106 Padfield Blvd.                       1991         Owned           1,341,701             16,200                 N/A
Glen Burnie, MD  21061

103 Crain Highway, S.E.                  2000         Owned             311,976              3,727                 N/A
Glen Burnie, MD 21061
</TABLE>

           In December 2000, the Board of Directors of the Bank determined
to close the Ferndale Shopping Center branch, effective upon final approval
from all Federal and state regulatory agencies. Management determined that
certain leasehold improvements made to the Ferndale branch were impaired as
prescribed by SFAS No. 121 and have no net realizable value. These leasehold
improvements had a book value of $184,535 at December 31, 2000

                                      -17-
<PAGE>

and will be reflected as an asset impairment loss from continuing operations.
The Bank has also accrued approximately $96,000 relating to the estimated
cost of closing the Ferndale branch. These costs are included in other
operating expenses.

           GBB Properties, Inc. sold a foreclosed property for $145,000, of
which they financed 100%. At December 31, 2000, the loan receivable balance was
$139,821. GBB has also purchased land for a future branch site with a book value
of $82,774. In April 2000, the Bank sold a foreclosed property for a net gain of
$454,040. At December 31, 2000, the Bank owned one foreclosed real estate
property with a book value of $344,327. The Bank is holding this commercial
property for sale.

ITEM 3.  LEGAL PROCEEDINGS.

           From time to time, the Company and the Bank are involved in various
legal actions relating to their business activities. At December 31, 2000, there
were no actions to which the Company or the Bank was a party which involved
claims for money damages exceeding 10% of the Company's consolidated current
assets in any one case or in any group of proceedings presenting in large degree
the same legal and factual issues.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY-HOLDERS.

           No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 2000.

EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below is information about the Company's executive officers.
<TABLE>
<CAPTION>

                         NAME                 AGE                           POSITIONS
                         ----                 ---                           ---------

              <S>                             <C>     <C>
              F. William Kuethe, Jr.          68      President and Chief Executive Officer
              John I. Young                   63      Executive Vice President and Chief Operating Officer
              Michael G. Livingston           47      Senior Vice President and Chief Lending Officer
              John E. Porter                  47      Senior Vice President and Chief Financial Officer
</TABLE>

           F. WILLIAM KUETHE, JR. has been President and Chief Executive Officer
of the Company and the Bank since 1995. He also was director of the Bank from
1963 through 1989. He was President of Glen Burnie Mutual Savings Bank from 1960
through 1995. Mr. Kuethe is a former licensed appraiser and real estate broker
with banking experience from 1960 to present, at all levels. He is the father of
Frederick W. Kuethe, III, a director of the Company.

           JOHN I. YOUNG was appointed Executive Vice President and Chief
Operating Officer of the Bank in December 1999 after joining the Bank as Senior
Vice President in March 1999. Prior to joining the Bank, he had been president
of Young-Harris, Inc., a financial industry consulting company since 1980. Mr.
Young was president of American Bank Services Corp. from January 1977 to 1980
and was Senior Vice President of Operations of Equitable Trust Bank from 1958
until December 1976. Mr. Young is a member of the Independent Bankers
Association of America, the Maryland Bankers Association and an associate member
of the Robert Morris Association. He is also the incoming President of the St.
Andrew's Society of Baltimore.

         MICHAEL G. LIVINGSTON was appointed Senior Vice President in January
1998 and has been Chief Lending Officer of the Bank since 1996. He was Regional
Vice President and commercial loan officer with Citizens Bank from March 1993
until April 1996.

           JOHN E. PORTER was appointed Senior Vice President in January
1998. He has been Treasurer and Chief Financial Officer of the Company since
1995 and Vice President, Treasurer and Chief Financial Officer of the Bank
since 1990. He has been Secretary/Treasurer of GBB since 1995.

                                      -18-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

     The Company's common stock, par value $1.00 per share (the "Common Stock"),
is traded in the over-the-counter market and quoted on the OTC Bulletin Board
under the symbol "GLBZ." There is not currently an active trading market for the
Common Stock. As of March 1, 2001, there were 491 record holders of the Common
Stock. The closing price for the Common Stock on that date was $15.00.

     The following table sets forth the high and low sales prices for the Common
Stock for each full quarterly period during 2000 and 1999, based on trades
reported on the OTC Bulletin Board or by Legg Mason Wood Walker, Inc., the
principal market maker for the Company's stock. The quotations represent prices
between dealers and do not reflect the retailer markups, markdowns or
commissions, and may not represent actual transactions. There have been no
dividends declared. Also shown are dividends declared per share for these
periods. Data has been adjusted to give retroactive effect to a six-for-five
stock split effected through a stock dividend paid on January 11, 2000.

<TABLE>
<CAPTION>

                                     2000                                                  1999
                  ----------------------------------------------      ----------------------------------------------
Quarter Ended           High             Low        Dividends                  High           Low         Dividends
-------------           ----             ---        ---------                  ----           ---         ---------

<S>                 <C>             <C>            <C>                     <C>            <C>           <C>
March 31,             $19.25          $12.50         $ 0.125                 $21.146        $18.542       $ 0.083
June 30,               16.00           13.25           0.150                  19.375         19.167         0.083
September 30           16.875          15.00           0.150                  19.167         17.917         0.125
December 31            15.250          12.00           0.250                  19.167         16.771         0.125
</TABLE>

     A dividend of $0.15 was declared for stockholders' of record on December
27, 2000 and was payable on January 3, 2001. A special $0.10 dividend was also
declared, using the same record date, and was payable on January 10, 2001.

     The Company intends to pay dividends equal to forty percent (40%) of its
profits for each quarter. However, dividends remain subject to declaration by
the Board of Directors in its sole discretion and there can be no assurance that
the Company will be legally or financially able to make such payments. Payment
of dividends may be limited by federal and state regulations which impose
general restrictions on a bank's and bank holding company's right to pay
dividends (or to make loans or advances to affiliates which could be used to pay
dividends). Generally, dividend payments are prohibited unless a bank or bank
holding company has sufficient net (or retained) earnings and capital as
determined by its regulators. See "ITEM 1. BUSINESS - Supervision and Regulation
- Regulation of the Company - Dividends and Distributions" and "ITEM 1. BUSINESS
-- Supervision and Regulation - Regulation of the Bank - Dividend Limitations."
The Company does not believe that those restrictions will materially limit its
ability to pay dividends.

                                       19
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA.

     The following table presents consolidated selected financial data for the
Company and its subsidiaries for each of the periods indicated. Dividends and
earnings per share have been adjusted to give retroactive effect to stock splits
and stock dividends accounted for as stock splits.

<TABLE>
<CAPTION>

                                                                                   YEAR ENDED DECEMBER 31,
                                                    --------------------------------------------------------------------------------
                                                      2000            1999            1998              1997            1996
                                                      ----            ----            ----              ----            ----
                                                                     (DOLLARS IN THOUSAND EXCEPT PER SHARE DATA)
<S>                                                  <C>            <C>             <C>               <C>             <C>
OPERATIONS DATA:
Net Interest Income............................     $10,801         $  9,925        $  9,794          $ 10,567        $ 10,884
Provision for Credit Losses....................           0              300            (500)              270           6,596
Other Income...................................       3,658            2,828           3,122             1,728           2,230
Other Expense..................................      10,746            9,822          11,776            11,593           9,019
Net Income (Loss) .............................       2,275            1,455             833               747          (1,020)

SHARE DATA:
Basic Net Income (Loss) Per Share..............       $2.07            $1.33           $0.66             $0.59          $(0.80)
Diluted Net Income (Loss) Per Share............        2.07             1.33            0.66              0.59           (0.80)
Cash Dividends Declared Per Common Share.......
                                                      0.675             0.42            0.42              0.25            0.64
Weighted Average Common Shares Outstanding:
      Basic....................................   1,100,804        1,085,078       1,253,275         1,275,017       1,271,744
      Diluted..................................   1,100,804        1,085,078       1,253,637         1,275,017       1,271,744

FINANCIAL CONDITION DATA:
Total Assets...................................    $239,211         $213,439        $217,571          $231,900        $254,325
Loans Receivable, Net..........................     162,373          151,107         125,501           111,545         124,672
Total Deposits.................................     205,968          194,090         199,611           207,110         232,746
Long Term Borrowings...........................       7,000                0               0                 0               0
Junior Subordinated Debentures.................       5,155                0               0                 0               0
Total Stockholders' Equity.....................      17,181           15,102          14,169            18,965          18,586

PERFORMANCE RATIOS:
Return on Average Assets.......................        1.02%            0.66%           0.38%             0.32%          (0.41)%
Return on Average Equity.......................       12.94             9.97            4.54              3.95           (5.29)
Net Interest Margin (1) .......................        5.27             4.96            4.94              5.09            5.04
Dividend Payout Ratio..........................       32.61            43.48           75.75             50.85             *

CAPITAL RATIOS:
Average Equity to Average Assets...............        7.87%            6.67%           8.40%             8.01%           7.82%
Leverage Ratio.................................        9.30             6.87            5.96              7.60            7.20
Total Risk-Based Capital Ratio.................       13.99            10.80           10.50             16.00           14.00

ASSET QUALITY RATIOS:
Allowance for Credit Losses to
  Gross Loans..................................        2.04%            1.89%           2.21%             3.55%           3.88%
Non-accrual and Past Due Loans to
  Gross Loans..................................         .24             0.68            1.36              2.99            3.55
Allowance for Credit Losses to Non-
  Accrual and Past Due Loans...................      837.87           276.97          162.99            118.73          109.24
Net Loan Charge-offs  (Recoveries)
  to Average Loans.......                              (.28)            0.15            0.67              1.00            3.56
</TABLE>

----------

*  Not Meaningful

(1) Presented on a tax-equivalent basis


                                       20
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

     The year 2000 marked the Company's fourth straight year of higher earnings
as many favorable operating trends continued. Most notably, 2000 saw significant
growth in both the Bank's deposits and loan portfolio. Loan portfolio growth was
due primarily to the Bank's indirect automobile lending which was begun in 1998
and has grown to a $61.7 million portfolio by the end of 2000. The Bank's net
interest income improved due to a combination of continued loan growth and a
continued moderation in deposit costs. Asset quality continued to improve as
non-performing loans declined both in dollar terms and as a percentage of the
portfolio. Loan recoveries on charge-offs increased as a result of the Bank's
improved collections procedures. Earnings for 2000 also benefited from a
one-time gain of approximately $590,000 (after applicable income and excise
taxes and net of a 25% safe harbor contribution) resulting from the settlement
of the Bank's defined benefit pension plan.

FORWARD-LOOKING STATEMENTS

     When used in this discussion and elsewhere in this Annual Report on Form
10-K, the words or phrases "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project" or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company cautions readers
not to place undue reliance on any such forward-looking statements, which speak
only as of the date made, and readers are advised that various factors,
including regional and national economic conditions, unfavorable judicial
decisions, substantial changes in levels of market interest rates, credit and
other risks of lending and investment activities and competitive and regulatory
factors could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from those
anticipated or projected.

     The Company does not undertake and specifically disclaims any obligation to
update any forward-looking statements to reflect occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999
AND 1998

     GENERAL. For the year ended December 31, 2000, the Company reported
consolidated net income of $2,274,866 ($2.07 basic and diluted earnings per
share) compared to a consolidated income of $1,445,350 ($1.33 basic and diluted
earnings per share) for the year ended December 31, 1999 and a consolidated net
profit of $833,192 ($0.66 basic and diluted earnings per share) for the year
ended December 31, 1998.

     NET INTEREST INCOME. The primary component of the Company's net income is
its net interest income, which is the difference between income earned on assets
and interest paid on the deposits and borrowings used to fund them. Net interest
income is determined by the spread between the yields earned on the Company's
interest-earning assets and the rates paid on interest-bearing liabilities as
well as the relative amounts of such assets and liabilities. Net interest
income, divided by average interest-earning assets, represents the Company's net
interest margin.

     Consolidated net interest income for the year ended December 31, 2000 was
$10,801,098 compared to $9,925,203 for the year ended December 31, 1999 and
$9,793,550 for the year ended December 31, 1998. The $875,895 increase for the
most recent year was due to an increase in loan income, federal funds sold and
other interest income, partially offset by an increase in other interest expense
for long-term borrowing and junior subordinated debt interest expense. The
$131,653 increase in net interest income for 1999 over 1998 was due to a
reduction of $545,200 in interest expense on deposit accounts from $6,048,828 in
1998 to $5,503,628 in 1999 due to a decrease in deposit balances, partially
offset by a reduction in interest income of $340,464. Interest income from loans
increased by $1,225,706 from $10,590,864 in 1998 to $11,816,570 in 1999 due to a
$23,705,000, or 20.0%, increase in the average balance of loans outstanding
during 1999. During 1998, the Bank instituted an automobile indirect lending
program which accounted for the bulk of the 1999 increase in loans.




                                       21
<PAGE>

     Interest expense increased from $5,623,174 in 1999 to $5,901,617 in 2000, a
$278,443, or 4.95% increase, primarily due to increased deposit volume. Interest
expense decreased from $6,095,291 in 1998 to $5,623,174 in 1999, a $472,117 or
7.75% decrease, primarily due to a decrease in deposit expense (due to a
decrease in interest earning deposit balances). Net interest margin for the year
ended December 31, 2000 was 5.27% compared to 4.96% and 4.94% for the years
ended December 31, 1999 and 1998, respectively.

     The following table allocates changes in income and expense attributable to
the Company's interest-earning assets and interest-bearing liabilities for the
periods indicated between changes due to changes in rate and changes in volume.
Changes due to rate/volume are allocated to changes due to volume.
<TABLE>
<CAPTION>

                                                                        YEAR ENDED DECEMBER 31,
                                                  2000             VS.            1999             1999            VS.        1998
                                             --------------------------------------------------------------------------------------
                                                                  CHANGE DUE TO:                          CHANGE DUE TO:
                                                                 ----------------                      --------------------
                                                   INCREASE/                            INCREASE/
                                                   DECREASE       RATE     VOLUME       DECREASE       RATE          VOLUME
                                                  ----------     -----     ------       --------       ----          ------
                                                                              (IN THOUSANDS)
<S>                                                  <C>           <C>      <C>        <C>           <C>             <C>
ASSETS
Interest-earning assets:
  Federal funds sold.......................          $   85        $  43    $  42      $   (146)     $   (22)        $   (124)
                                                     ------      -------    -----     ---------     --------        ---------
  Interest-bearing deposits................             (28)         (28)      --          (251)           4             (255)
                                                     -------     -------   ------     ---------     ---------       ---------

Investment securities:
  U.S. Treasury securities, obligations
  of U.S. government agencies and
  mortgage-backed securities...............
                                                       (797)        (135)    (662)         (945)          (42)           (903)
Obligations of states and political
  subdivisions(1) ....                                  159          --       159          (326)           --            (326)

All other investment securities............              86            3       83           (14)            1             (15)
                                                    -------      -------      -------   -------         ------         ------
      Total investment securities..........            (552)        (132)    (420)       (1,285)          (41)         (1,244)

Loans, net of unearned income:
  Demand, time and lease...................              24          115      (91)         (360)          (23)           (337)
  Mortgage and construction................             133           65       68          (284)         (248)            (36)
  Installment and credit card..............           1,491           89    1,402         1,868          (509)          2,377
                                                      -----           --    -----        -------         -----         ------
      Total gross loans(2) ................           1,648          269    1,379         1,224          (780)          2,004
                                                      -----          --     -----        -------         -----         ------
  Allowance for credit losses..............              --          --        --           --            --              --
                                                  ---------      -------  -------        -------        ------        -------
      Total net loans......................           1,648          269    1,379         1,224          (780)          2,004
                                                  ---------      -------  -------       --------       -------         ------
Total interest-earning assets..............        $  1,153        $ 152    1,001       $  (458)       $ (839)        $   381
                                                   ========      =======  ========      ========       =======        =======

LIABILITIES:
Interest-bearing deposits:
  Savings and NOW..........................           $  10          $ 6    $   4       $  (279)       $ (280)      $       1
  Money market.............................             (78)          (7)     (71)          (19)          (19)              0
  Other time deposits......................             127           66       61          (248)         (221)            (27)
                                                     ------        -----   -------       -------       -------       --------
      Total interest-bearing deposits......              59           65       (6)         (546)         (520)            (26)
Non-interest-bearing deposits..............              --           --       --            --            --              --
Borrowed funds.............................             220          (19)     239            72             1              71
                                                    -------         ----- -------     -----------     --------       --------
Total interest-bearing liabilities.........          $  279         $ 46   $  233       $  (474)       $ (519)       $     45
                                                     ======         =====  ======       ========       =======       ========

</TABLE>

----------

(1) Tax equivalent basis.
(2) Non-accrual loans included in average balances.



                                       22
<PAGE>


The following table provides information for the designated periods with respect
to the average balances, income and expense and annualized yields and costs
associated with various categories of interest-earning assets and
interest-bearing liabilities.
<TABLE>
<CAPTION>

                                                        YEAR ENDED DECEMBER 31,
                                                       ------------------------
                                                                2000
                                                       ------------------------
                                                AVERAGE                          YIELD/
                                                BALANCE       INTEREST            COST
                                               ---------      ---------         --------

                                                         (DOLLARS IN THOUSANDS)

<S>                                            <C>           <C>                <C>
ASSETS:
Interest-earning assets:
  Federal funds sold .....................     $  3,185      $    201             6.31%
  Interest-bearing deposits ..............          472            22             4.66
                                               ---------      ---------         --------

Investment securities:
  U.S. Treasury securities, obligations of
     U.S. government agencies and
     mortgage-backed securities ..........       42,098         2,738             6.50
Obligations of states and political
     subdivisions(1) .....................        2,766           159             5.74
All other investment securities ..........        1,587           118             7.43
                                               ---------      ---------         --------
      Total investment securities ........       46,451         3,015             6.49
                                               ---------      ---------         --------

Loans, net of unearned income:
  Demand, time and lease .................        3,894           465            11.94
  Mortgage and construction ..............       81,427         7,161             8.79
  Installment and credit card ............       74,489         5,839             7.83
                                               ---------      ---------         --------
      Total gross loans(2) ...............      159,810        13,465             8.42
      Allowance for credit losses ........        3,260
                                               ---------
      Total net loans ....................      156,550        13,465             8.60
                                                              ---------         --------
Total interest-earning assets ............      206,658        16,703             8.08
                                                              ---------         --------
Cash and due from banks ..................        6,734
Other assets .............................        9,962
                                               ---------
          Total assets ...................     $223,354
                                               ========


LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
  Savings and NOW ........................     $ 62,257      $  1,188             1.90%
  Money market ...........................       16,919           450             2.65
  Other time deposits ....................       73,292         3,924             5.35
                                               ---------      ---------         --------
      Total interest-bearing deposits ....      152,468         5,562             3.64
Borrowed funds ...........................        1,880           339             4.81
                                               ---------      ---------         --------
      Total interest-bearing liabilities .      154,348         5,902             3.82
                                               ---------      ---------

Non-interest-bearing deposits ............       48,071
Other liabilities  .......................        3,348
Stockholders' equity .....................       17,587
                                               --------
Total liabilities and equity .............     $223,354
                                               ========
Net interest income ......................                   $ 10,801
                                                              ========
Net interest spread ......................                                       4.26%
                                                                                  ====
Net interest margin ......................                                        5.27%
                                                                                  ====

<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                       ------------------------
                                                                1999
                                                       ------------------------
                                                AVERAGE                          YIELD/
                                                BALANCE       INTEREST            COST
                                               ---------      ---------         --------
<S>                                           <C>          <C>                 <C>
ASSETS:
Interest-earning assets:
  Federal funds sold .....................     $  2,330      $   116              4.97%
  Interest-bearing deposits ..............          440           26              5.91
                                               ---------      ---------           --------

Investment securities:
  U.S. Treasury securities, obligations of
     U.S. government agencies and
     mortgage-backed securities ..........       57,347        3,542              6.18
Obligations of states and political
     subdivisions(1) .....................         --           --                --
All other investment securities ..........          737           56              7.60
                                               ---------      ---------           --------
      Total investment securities ........       58,084        3,598              6.19
                                               ---------      ---------         --------

Loans, net of unearned income:
  Demand, time and lease .................        4,353          391              8.98
  Mortgage and construction ..............       80,814        7,041              8.71
  Installment and credit card ............       56,910        4,385              7.71
                                               ---------      ---------          --------
      Total gross loans(2) ...............      142,077       11,817              8.32
      Allowance for credit losses ........        2,800
                                               ---------
      Total net loans ....................      139,277       11,817              8.48
                                               ---------      ---------          --------
Total interest-earning assets ............      200,131       15,557              7.77
                                               ---------      ---------          --------
Cash and due from banks ..................        7,288
Other assets .............................        9,890
                                               ---------
          Total assets ...................     $217,309
                                               ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:

  Savings and NOW ........................     $ 61,902       $1,169              1.89%
  Money market ...........................       19,581          527              2.69
  Other time deposits ....................       72,320        3,807              5.26
                                               ---------      ---------          --------
      Total interest-bearing deposits ....      153,803        5,503              3.58
Borrowed funds ...........................        2,043          119              5.82
                                               ---------      ---------          --------
      Total interest-bearing liabilities .      155,846        5,622              3.61
                                               ---------      ---------

Non-interest-bearing deposits ............       44,270
Other liabilities  .......................        2,695
Stockholders' equity .....................       14,498
                                               --------
Total liabilities and equity .............     $217,309
                                               ========
Net interest income ......................                   $ 9,935
                                                              ========
Net interest spread ......................                                        4.16%
                                                                                  ====
Net interest margin ......................                                        4.96%
                                                                                  ====

<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                       ------------------------
                                                               1998
                                                       ------------------------
                                                AVERAGE                          YIELD/
                                                BALANCE       INTEREST            COST
                                               ---------      ---------          --------
<S>                                           <C>          <C>                 <C>

ASSETS:
Interest-earning assets:
  Federal funds sold .....................     $  4,414      $   262              5.94%
  Interest-bearing deposits ..............        5,433          277              5.10
                                               ---------      ---------          --------

Investment securities:
  U.S. Treasury securities, obligations of
     U.S. government agencies and
     mortgage-backed securities ..........       71,774        4,303              6.24
Obligations of states and political
     subdivisions(1) .....................        3,550          326              9.18
All other investment securities ..........          936          254              6.70
                                               ---------      ---------          --------
      Total investment securities ........       76,260        4,883              6.40
                                               ---------      ---------          --------

Loans, net of unearned income:
  Demand, time and lease .................        7,909          751              9.50
  Mortgage and construction ..............       81,212        7,325              9.02
  Installment and credit card ............       29,251        2,517              8.60
                                               ---------      ---------          --------
      Total gross loans(2) ...............      118,372       10,593              8.95
      Allowance for credit losses ........        3,668
                                               ---------
      Total net loans ....................      114,704       10,593              9.24
                                               ---------      ---------          --------
Total interest-earning assets ............      200,811       16,015              7.98
Cash and due from banks ..................        6,406       ---------          --------
Other assets .............................       11,207
                                               ---------
          Total assets ...................    $ 218,424
                                               =========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
  Savings and NOW ........................     $ 61,752      $ 1,448              2.34
  Money market ...........................       19,575          546              2.79
  Other time deposits ....................       72,834        4,055              5.57
                                               ---------      ---------          --------
      Total interest-bearing deposits ....      154,161        6,049              3.92
Borrowed funds ...........................          811           47              5.80
                                               ---------      ---------          --------
      Total interest-bearing liabilities .      154,972        6,096              3.93
                                               ---------      ---------

Non-interest-bearing deposits ............      42,095
Other liabilities  .......................       3,014
Stockholders' equity .....................       18,343
                                               ---------
Total liabilities and equity .............     $218,424
                                               ========
Net interest income ......................                   $ 9,919
                                                              ========
Net interest spread ......................                                        4.04%
                                                                                  ====
Net interest margin ......................                                        4.94%
                                                                                  ====
</TABLE>
----------

1  Tax equivalent basis.  The incremental tax rate applied was 38.62% for 1999
   and 1998.
2  Non-accrual loans included in average balance.


            PROVISION FOR CREDIT LOSSES. During the year ended December 31,
2000, the Company made no provision for credit losses compared to $300,000 and
$(500,000) in provisions during the years ended December 31, 1999 and 1998,
respectively. The level of the provision for 1999 reflects the loan growth
during the year. The recapture of loss reserves during 1998 reflects improved
asset quality and lower charge-off activity during 1998. At December 31, 2000,
the allowance for loan losses equaled 837.87% of non-accrual and past due loans
compared to 276.97% and 162.99% at December 31, 1999 and 1998, respectively.
During the year ended December 31, 2000, the



                                       23
<PAGE>

Company recorded net recoveries of 4$63,184 compared to $219,429 and $798,336
in net charge-offs during the years ended December 31, 1999 and 1998.

            OTHER INCOME. Other income increased from $2,827,881 in 1999 to
$3,657,878 in 2000, a $829,997, or 29.35% increase. The increase was largely due
to other fees and commissions (primarily Bank customer user fees and gain on the
sale of foreclosed property) increasing by $536,316. Also included in other
income for 2000 was a settlement gain of $1,600,126 on the pension plan
termination, compared to a non-recurring curtailment gain in 1999 of $1,311,997
upon termination of the Bank's pension plan.. Other income decreased from
$3,122,369 in 1998 to $2,827,881 in 1999, a $294,488, or 9.43% decrease. This
decrease is attributable primarily to a combination of (i) net losses of $63,968
on sales of investment securities during 1999 as compared to net gains of
$527,320 in 1998, (ii) the $1,311,997 non-recurring curtailment gain mentioned
above, and (iii) a nonrecurring gain of $1,126,077 in 1998 upon the settlement
of certain insurance matters (including $1,125,000 received from the Bank's
fidelity bond company in settlement of claims related to the activities of a
former employee).

            OTHER EXPENSES. Other expenses increased from $9,821,690 in 1999 to
$10,746,049 in 2000, a $924,359 or 9.41% increase, due to an increase in
employee benefits and the closing of the Bank's Ferndale branch. Other expenses
decreased from $11,776,480 in 1998 to $9,821,690 in 1999, a $1,954,790 or 16.60%
decrease. This decrease was primarily due to the absence in 1999 of the
$1,225,003 litigation charges incurred in 1998 and $1,448,519 in professional
service fees relating primarily to litigation in 1998. This was partially offset
by increases in salaries, wages and employee benefits. Other noninterest
expenses also decreased significantly from $4,112,919 in 1998 to $2,850,745 in
1999 due to a $1,448,519 or 66.95% reduction in other professional fees,
partially offset by increases in 1999 in other expense items. The 1998
litigation charges related to the settlement of claims against the Bank in
connection with payment of checks over fraudulent endorsements.

            INCOME TAXES. During the year ended December 31, 2000, the Company
recorded income tax expense of $1,438,061. Part of this was due to nonrecurring
income realized in 2000 and was offset, in part, by the tax benefits from the
Company's investments in state and municipal securities. During the year ended
December 31, 1999, the Company recorded income tax expense of $1,186,044
compared to tax expense of $806,247 during the year ended December 31, 1998. The
increased tax level was due to the higher level of pre-tax income in 1999. The
Company's income tax expense for 1998 also included $351,738 in disallowed
claims for refunds of prior years' state taxes.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2000, 1999 AND 1998

            The Company's total assets increased to $239,211,180 at December 31,
2000 after declining to $213,439,456 at December 31, 1999 from $217,571,063 at
December 31, 1998. The increase in assets during the year ended December 31,
2000 is a result primarily of an increase in loans and investment securities.

            The Company's loan portfolio grew to $162,373,731 at December 31,
2000 compared to $151,106,560 at December 31, 1999 and $125,501,252 at December
31, 1998. The growth in the loan portfolio is attributable almost entirely to
the Bank's indirect automobile lending program, which was introduced in January
1998 and grew to $61,725,204 at December 31, 2000.

            The Company's total investment securities portfolio (including both
investment securities available for sale and investment securities held to
maturity) totaled $53,247,198 at December 31, 2000, a $9,272,703 or 21.08%
increase from $43,974,495 at December 31, 1999. The funds from this increase are
attributable to the FHLB of Atlanta borrowing and the Subordinated Deferrable
Interest Debenture issuance discussed in "Liquidity and Capital Resources",
below. During the year ended December 31, 1999, investment securities totaling
$32,524,280 either matured or were sold with the funds primarily reinvested in
loans rather than additional investment securities. Proceeds were also used to
fund, in part, net deposit outflows of $5,521,120. During 1999, total investment
securities portfolio (including both investment securities available for sale
and investment securities held to maturity) totaled $43,974,495, a $21,511,332
or 32.8%, decrease from $65,485,827 at December 31, 1998.

            Deposits as of December 31, 2000 totaled $205,968,337, an increase
of $11,878,342, or 6.12%, for the year. Demand deposits as of December 31, 2000
totaled $52,962,491, a $7,818,198 or 17.32% increase from $45,144,293 at
December 31, 1999. NOW and Super NOW accounts as of December 31, 2000 increased
by $1,082,107 or 5.82% to $19,644,885. Money market accounts decreased by
$862,275, or 4.89%, to total


                                       24
<PAGE>

$16,766,390 on December 31, 2000. Savings deposits decreased by $429,137, or
1.04%. Time deposits over $100,000 totaled $11,995,756 on December 31, 2000,
an increase of $5,650,577 from December 31, 1999. Other time deposits (made
up of certificates of deposit less than $100,000 and individual retirement
accounts) totaled $63,911,176 on December 31, 2000, a $1,381,128 or a 2.1%,
decrease from December 31, 1999.

            The Company experienced a $2,078,298, or 13.76% increase in total
stockholders' equity for the year ended December 31, 2000. The increase was
attributed to an increase of $306,309 in the unrealized gain in securities
available for sale and an increase of $1,531,134 in retained earnings. The
Company experienced a $933,776, or 6.59% increase in total stockholders' equity
for the year ended December 31, 1999.

ASSET/LIABILITY MANAGEMENT

            Net interest income, the primary component of the Company's net
income, arises from the difference between the yield on interest-earning assets
and the cost of interest-bearing liabilities and the relative amounts of such
assets and liabilities. The Company manages its assets and liabilities by
coordinating the levels of and gap between interest-rate sensitive assets and
liabilities to minimize changes in net interest income and in the economic value
of its equity despite changes in market interest rates. The Bank's
Asset/Liability and Risk Management Committee meets on a monthly basis to
monitor compliance with the Board's objectives. Among other tools used by the
Asset/Liability and Risk Management Committee to monitor interest rate risk is a
"gap" report which measures the dollar difference between the amount of
interest-earning assets and interest-bearing liabilities subject to repricing
within a given time period. Generally, during a period of rising interest rates,
a negative gap position would adversely affect net interest income, while a
positive gap would result in an increase in net interest income, while,
conversely, during a period of falling interest rates, a negative gap would
result in an increase in net interest income and a positive gap would adversely
affect net interest income.

            During recent periods, the Company has maintained a negative gap
position that has benefited earnings as interest rates have fallen. In order to
reduce its negative gap position, the Company has recently begun investing in
mortgage-backed and other government securities which have rates that adjust to
market rates. The Company also maintains a significant portfolio of
available-for-sale securities that can be quickly converted to more liquid
assets if needed.

The following table sets forth the Bank's interest-rate sensitivity at December
31, 2000.
<TABLE>
<CAPTION>

                                                                       OVER 3 TO         OVER 1               OVER 5
                                                     0-3 MONTHS        12 MONTHS     THROUGH  5 YEARS          YEARS       TOTAL
                                                     ----------        ---------     ----------------          -----       -----
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                    <C>            <C>              <C>                 <C>           <C>
ASSETS:

  Cash and due from banks.....................             $  --            $  --            $  --             $  --      $ 9,559
  Federal funds and overnight deposits........             5,950               --               --                --        5,950
  Securities..................................               652              500           13,012            39,183       53,347
  Loans.......................................             7,939            3,824           82,278            71,718      165,759
  Fixed Assets................................                --               --               --                --        4,269
  Other Assets................................                --               --               --                --          327
                                                       ---------       -----------     -----------         ----------    ---------

      Total assets............................           $14,541           $4,324          $95,290          $110,901     $239,211
                                                         =======           ======          =======          ========     ========

LIABILITIES:
  Demand deposit accounts.....................             $  --            $  --            $  --             $  --     $ 52,962
  NOW accounts................................            19,645               --               --                --       19,645
  Money market deposit accounts...............            16,766               --               --                --       16,766
  Savings accounts............................            40,688               --               --                --       40,688
  IRA accounts................................             3,233            5,628            8,502             1,487       18,850
  Certificates of deposit.....................            15,164           24,575           13,268             4,050       57,057
  Other liabilities...........................                --               --               --                --       10,907
  Junior Subordinated Debenture...............                --               --               --                --        5,155
      Stockholders' equity....................                --               --               --                --       17,181
                                                       ----------     -----------      -----------         ----------    ---------

      Total liabilities and
        Stockholders' equity..................           $95,496          $30,203          $21,770            $5,537     $239,211
                                                         =======          =======          =======            ======     ========

GAP...........................................         $ (80,995)      $ (25,879)          $73,520          $105,364
Cumulative GAP................................           (80,995)       (106,874)          (33,354)           72,010
Cumulative GAP as a % of
  total assets................................             (33.8)%         (44.7)%           (13.9)%            30.1%

</TABLE>
                                       25
<PAGE>


            The foregoing analysis assumes that the Bank's assets and
liabilities move with rates at their earliest repricing opportunities based on
final maturity. Mortgage-backed securities are assumed to mature during the
period in which they are estimated to prepay and it is assumed that loans and
other securities are not called prior to maturity. Certificates of deposit and
IRA accounts are presumed to reprice at maturity. NOW savings accounts are
assumed to reprice within three months although it is the Company's experience
that such accounts may be less sensitive to changes in market rates.

LIQUIDITY AND CAPITAL RESOURCES

            The Company currently has no business other than that of the Bank
and does not currently have any material funding commitments. The Company's
principal sources of liquidity are cash on hand and dividends received from the
Bank. The Bank is subject to various regulatory restrictions on the payment of
dividends.

            The Bank's principal sources of funds for investments and operations
are net income, deposits from its primary market area, principal and interest
payments on loans, interest received on investment securities and proceeds from
maturing investment securities. Its principal funding commitments are for the
origination or purchase of loans and the payment of maturing deposits. Deposits
are considered the primary source of funds supporting the Bank's lending and
investment activities. The Bank also uses borrowings from the FHLB of Atlanta to
supplement deposits, residential and small business lending, and to meet
specific and anticipated needs.

            The Bank's most liquid assets are cash and cash equivalents, which
are cash on hand, amounts due from financial institutions, federal funds sold
and money market mutual funds. The levels of such assets are dependent on the
Bank's operating financing and investment activities at any given time. The
variations in levels of cash and cash equivalents are influenced by deposit
flows and anticipated future deposit flows.

            Cash and cash equivalents (cash due from banks, interest-bearing
deposits in other financial institutions, and federal funds sold), as of
December 31, 2000, totaled $15,509,139, an increase of $6,625,817 or 74.58%,
from the December 31, 1999 total of $8,883,322. Most of this increase was due to
the Federal Funds sold balance, which totaled $5,899,000 at December 31, 2000
compared to $555,627 at the end of 1999.

            As of December 31, 2000, the Bank was permitted to draw on a
$28,705,000 line of credit from the FHLB of Atlanta. Borrowings under the line
are secured by a floating lien on the Bank's residential mortgage loans and its
portfolio of U.S. Government and Agency Securities. As of December 31, 2000, a
$7.0 million long-term convertible advance was outstanding under this line. In
addition the Bank has a secured line of credit in the amount of $5.0 million
from another commercial bank on which it has not drawn. Furthermore, on
September 7, 2000, the Company issued $5,155,000 of its 10.6% Junior
Subordinated Deferrable Interest Debentures to Glen Burnie Statutory Trust I, a
Connecticut statutory trust wholly owned by the Company. The Trust, in turn,
issued $5,000,000 of its 10.6% capital securities to institutional investors.
The debentures are scheduled to mature on September 7, 2030, unless called by
the Company not earlier than September 7, 2010. As of December 31, 2000, the
full $5,155,000 was outstanding.

            Federal banking regulations require the Company and the Bank to
maintain specified levels of capital. At December 31, 2000, the Company was in
compliance with these requirements with a leverage ratio of 9.31%, a Tier 1
risk-based capital ratio of 12.74% and total risk-based capital ratio of 13.99%.
At December 31, 2000, the Bank met the criteria for designation as a well
capitalized depository institution under FDIC regulations.

IMPACT OF INFLATION AND CHANGING PRICES

            The consolidated financial statements and notes thereto presented
herein have been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and operating
results in terms of historical dollars without considering the changes in the
relative purchasing power of money over time due to inflation. Unlike most
industrial companies, nearly all of the Company's assets and liabilities are
monetary in mature. As a result, interest rates have a greater impact on the
Company's performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or to the same
extent as the prices of goods and services.



                                       26
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            The financial statements and supplementary data required by this
Item 8 are included in the Company's Consolidated Financial Statements and set
forth in the pages indicated in Item 14(a) of this Annual Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

Not applicable.




                                       27
<PAGE>



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

            The information with respect to the identity and business experience
of the directors of the Company and their remuneration set forth in the section
captioned "Proposal I -- Election of Directors" in the Company's definitive
Proxy Statement to be filed pursuant to Regulation 14A and issued in conjunction
with the 2001 Annual Meeting of Stockholders (the "Proxy Statement") is
incorporated herein by reference. The information with respect to the identity
and business experience of executive officers of the Company is set forth in
Part I of this Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

            The information required by this item is incorporated herein by
reference to the sections captioned "Director Compensation" and "Executive
Compensation" in the Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

            The information required by this item is incorporated herein by
reference to the sections captioned "Voting Securities and Principal Holders
Thereof" and "Securities Ownership of Management" in the Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            The information required by this item is incorporated herein by
reference to the section captioned "Transactions with Management" in the Proxy
Statement.

                                       28
<PAGE>



                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.


(A)  1. FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----
<S>                                                                             <C>
Independent Auditors' Report                                                        F-1
Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998                  F-2
Consolidated Statements of Income for the Years Ended December 31, 2000, 1999
  and 1998                                                                          F-3
Consolidated Statements of Comprehensive Income for the Years Ended December 31,
  2000,1999 and 1998                                                                F-4
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
  December 31, 2000, 1999 and 1998                                                  F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000,
  1999 and 1998                                                                     F-6
Notes to Consolidated Financial Statements                                          F-8

</TABLE>

(a)  2. FINANCIAL STATEMENT SCHEDULES.

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are omitted because of the
absence of conditions under which they are required or because the required
information is included in the consolidated financial statements and related
notes thereto.

(a)  3. EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF REGULATION S-K.

Exhibit No.

3.1     Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
        Amendment No. 1 to the Registrant's Form 8-A filed December 27, 1999,
        File No. 0-24047)

3.2     By-Laws (incorporated by reference to Exhibit 3.2 to the Registrant's
        Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1998,
        File No. 0-24047)

3.3     Articles Supplementary, dated November 16, 1999 (incorporated by
        reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K
        filed December 8, 1999, File No. 0-24047)

4.1     Rights Agreement, dated as of February 13, 1998, between Glen Burnie
        Bancorp and The Bank of Glen Burnie, as Rights Agent, as amended and
        restated as of December 27, 1999 (incorporated by reference to Exhibit
        4.1 to Amendment No. 1 to the Registrant's Form 8-A filed December 27,
        1999, File No. 0-24047)

10.1    Glen Burnie Bancorp Director Stock Purchase Plan (incorporated by
        reference to Exhibit 99.1 to Post-Effective Amendment No. 1 to the
        Registrant's Registration Statement on Form S-8, File No.33-62280)

10.2    The Bank of Glen Burnie Employee Stock Purchase Plan (incorporated by
        reference to Exhibit 99.1 to Post-Effective Amendment No. 1 to the
        Registrant's Registration Statement on Form S-8, File No. 333-46943)

10.3    Change-in-Control Severance Plan (incorporated by reference to Exhibit
        10.7 to the Registrant's Annual Report on Form 10-K for the Fiscal Year
        Ended December 31, 1997, File No. 0-24047)

10.4    The Bank of Glen Burnie Executive and Director Deferred Compensation
        Plan (incorporated by reference to Exhibit 10.4 to the Registrant's
        Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1999,
        File No. 0-24047)

21      Subsidiaries of the Registrant (incorporated by reference to Exhibit 21
        to the Registrant's Registration Statement on Form S-1, File No.
        333-37073)

23      Consent of Trice Geary & Myers LLC

(b)     REPORTS ON FORM 8-K.

       None.



                                       29
<PAGE>



                                   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.

                                 GLEN BURNIE BANCORP


March 26, 2001                   By:/s/ F. WILLIAM KUETHE, JR.
                                    ------------------------------
                                         F. William Kuethe, Jr.
                                         President and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

SIGNATURE                                              TITLE                                            DATE

<S>                                             <C>                                                 <C>
 /s/ F. WILLIAM KUETHE, JR.                     President, Chief Executive Officer                  March 26, 2001
 --------------------------
      F. William Kuethe, Jr.                           and Director


/s/ JOHN I. YOUNG                               Executive Vice President, Chief                     March 26, 2001
--------------------------------------
     John I. Young                              Operating Officer and Director


/s/ JOHN E. PORTER                              Senior Vice President and Chief                     March 26, 2001
------------------------------------
     John E. Porter                             Financial Officer


/s/ JOHN E. DEMYAN                              Chairman of the Board and Director                  March 26, 2001
------------------------
     John E. Demyan

/s/ THEODORE L. BERTIER, JR.                    Director                                            March 26, 2001
------------------------------------
      Theodore L. Bertier, Jr
      .

/s/ SHIRLEY E. BOYER                            Director                                            March 26, 2001
------------------------
     Shirley E. Boyer

                                                Director                                            March   , 2001
------------------------------
     Thomas Clocker

/s/ ALAN E. HAHN                                Director                                            March 26, 2001
--------------------------------------
     Alan E. Hahn

                                                Director                                            March   , 2001
------------------------------
     Charles L. Hein

/s/ F. W. KUETHE, III                           Director                                            March 26, 2001
-------------------------
     F. W. Kuethe, III


                                       30
<PAGE>


 /s/ WILLIAM N. SCHERER, SR.                    Director                                            March 26, 2001
 ----------------------------
      William N. Scherer, Sr.


/s/ KAREN B. THORWARTH                          Director                                            March 26, 2001
------------------------
     Karen B. Thorwarth

                                                Director                                            March   , 2001
---------------------------
     Mary Lou Wilcox

</TABLE>

                                       31
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


The Board of Directors
Glen Burnie Bancorp and Subsidiaries
Glen Burnie, Maryland

We have audited the accompanying consolidated balance sheets of Glen Burnie
Bancorp and subsidiaries as of December 31, 2000, 1999, and 1998, and the
related consolidated statements of income, comprehensive income, changes in
stockholders' equity, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Glen
Burnie Bancorp and subsidiaries as of December 31, 2000, 1999, and 1998, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ Trice Geary & Myers LLC

Salisbury, Maryland
February 1, 2001


                                      F - 1
<PAGE>


                      GLEN BURNIE BANCORP AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------
December 31,                                          2000            1999           1998
---------------------------------------------------------------------------------------------

                                         ASSETS

<S>                                               <C>            <C>            <C>
Cash and due from banks                            $  9,559,329   $  8,317,450   $  8,197,344
Interest bearing deposits in other
   financial institutions                                50,947         10,245      4,958,337
Federal funds sold                                    5,898,863        555,627      2,863,635
                                                   ------------   ------------   ------------
   Cash and cash equivalents                         15,509,139      8,883,322     16,019,316
Certificates of deposit in other
   financial institutions                               100,000           --             --
Investment securities available for
   sale, at fair value                               21,308,961     14,664,953     31,988,139
Investment securities held to maturity
   (fair value 2000 $31,019,121;
   1999 $27,041,751; 1998 $32,539,731)               31,285,937     28,657,242     32,561,288
Federal Home Loan Bank stock, at cost                   652,300        652,300        936,400
Common stock in the Glen Burnie
   Statutory Trust I                                    155,000           --             --
Ground rents, at cost                                   249,900        254,025        257,025
Loans, less allowance for credit losses
   2000 $3,384,815; 1999 $2,921,631; 1998
   $2,841,060                                       162,373,731    151,106,560    125,501,252
Premises and equipment, at cost, less
   accumulated depreciation                           4,268,403      4,253,324      4,420,382
Accrued interest receivable on loans and
   investment securities                              1,681,219      1,279,067      1,401,660
Deferred income tax benefits                            126,933         49,137        892,912
Other real estate owned                                 484,148        558,827      1,099,326
Other assets                                          1,015,509      3,080,699      2,493,363
                                                   ------------   ------------   ------------

            TOTAL ASSETS                           $239,211,180   $213,439,456   $217,571,063
                                                   ============   ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Deposits:
   Noninterest-bearing demand                      $ 52,962,491   $ 45,144,293   $ 45,360,776
   Interest-bearing                                 153,005,846    148,945,702    154,250,339
                                                   ------------   ------------   ------------
            Total deposits                          205,968,337    194,089,995    199,611,115
Short-term borrowings                                   487,978      2,464,936      1,143,904
Long-term borrowings                                  7,296,523           --             --
Dividends payable                                       213,345        136,666        123,039
Accrued interest payable on deposits                    195,166        152,555        160,597
Accrued interest payable on junior
   subordinated debentures                              166,986           --             --
Other liabilities                                     2,547,098      1,492,855      2,363,735
                                                   ------------   ------------   ------------
            TOTAL LIABILITIES                       216,875,433    198,337,007    203,402,390
                                                   ------------   ------------   ------------

COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENT

Guaranteed preferred beneficial
   interests in Glen Burnie
   Bancorp junior subordinated debentures             5,155,000            --              --
                                                   ------------   -------------    ------------

Stockholders' equity:
Common stock, par value $1, authorized
   15,000,000 shares; issued and outstanding
   2000 1,110,049 shares; 1999 1,093,496
   shares; 1998 894,938 shares                        1,110,049       1,093,496         894,938
Surplus                                              10,373,549      10,149,247       9,788,889
Retained earnings                                     5,544,305       4,013,171       3,202,488
Accumulated other comprehensive income (loss)           152,844        (153,465)        282,358
                                                   ------------   -------------    ------------
            TOTAL STOCKHOLDERS' EQUITY               17,180,747      15,102,449      14,168,673
                                                   ------------   -------------    ------------

            TOTAL LIABILITIES AND
            STOCKHOLDERS' EQUITY                   $239,211,180   $ 213,439,456    $217,571,063
                                                   ============   =============    ============
</TABLE>

            The Notes to Consolidated Financial Statements are an integral part
            of these consolidated financial statements.


                                     F - 2
<PAGE>

                      GLEN BURNIE BANCORP AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------
Years Ended December 31,                       2000            1999             1998
----------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>
INTEREST INCOME ON:
   Loans, including fees                  $ 13,464,699    $ 11,816,570    $ 10,590,864
   U.S. Treasury securities                    129,283         279,412         461,808
   U.S. Government agency securities         2,608,332       3,254,811       4,024,712
   State and municipal securities              159,053            --           202,052
   Federal funds sold                          200,978         115,613         261,880
   Other                                       140,370          81,971         347,525
                                            ----------      ----------      ----------
         Total interest income              16,702,715      15,548,377      15,888,841
                                            ----------      ----------      ----------

INTEREST EXPENSE ON:
   Deposits                                  5,562,428       5,503,628       6,048,828
   Short-term borrowings                        66,513         119,546          46,463
   Long-term borrowings                        105,690            --              --
   Junior subordinated debentures              166,986            --              --
                                            ----------      ----------      ----------
         Total interest expense              5,901,617       5,623,174       6,095,291
                                            ----------      ----------      ----------

         NET INTEREST INCOME                10,801,098       9,925,203       9,793,550

PROVISION FOR CREDIT LOSSES                       --           300,000        (500,000)
                                            ----------      ----------      ----------
         NET INTEREST INCOME AFTER
          PROVISION FOR CREDIT LOSSES       10,801,098       9,625,203      10,293,550
                                            ----------      ----------      ----------

OTHER INCOME:
   Service charges on deposit accounts         859,734         891,913         908,733
   Other fees and commissions                1,224,255         687,939         560,239
   Gains (losses) on investment securities     (26,237)        (63,968)        527,320
   Curtailment gain on pension plan
    termination                                   --         1,311,997            --
   Settlement gain on pension plan
    termination                              1,600,126            --              --
   Proceeds from insurance settlements            --              --         1,126,077
                                            ----------      ----------      ----------
         Total other income                  3,657,878       2,827,881       3,122,369
                                            ----------      ----------      ----------

OTHER EXPENSES:
   Salaries and wages                        4,085,541       3,925,075       3,742,152
   Employee benefits                         2,131,481       1,596,044       1,309,591
   Occupancy                                   615,201         573,052         502,216
   Furniture and equipment                     871,655         876,774         884,599
   Litigation charges                             --              --         1,225,003
   Other expenses                            3,042,171       2,850,745       4,112,919
                                            ----------      ----------      ----------
         Total other expenses               10,746,049       9,821,690      11,776,480
                                            ----------      ----------      ----------

INCOME BEFORE INCOME TAXES                   3,712,927       2,631,394       1,639,439

FEDERAL AND STATE INCOME TAX EXPENSE         1,438,061       1,186,044         806,247
                                            ----------      ----------      ----------

NET INCOME                                $  2,274,866    $  1,445,350    $    833,192
                                          ============    ============    ============

BASIC AND DILUTED EARNINGS PER SHARE OF
 COMMON STOCK                             $       2.07    $       1.33    $       0.66
                                          ============    ============    ============
</TABLE>

            The Notes to Consolidated Financial Statements are an integral part
            of these consolidated financial statements.


                                     F - 3
<PAGE>

                      GLEN BURNIE BANCORP AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
Years Ended December 31,                                               2000           1999         1998
-------------------------------------------------------------------------------------------------------------------

<S>                                                                 <C>          <C>            <C>
NET INCOME                                                          $2,274,866   $ 1,445,350    $ 833,192
                                                                    ----------   -----------    ---------

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
   Reclassification relating to adoption
      of SFAS No. 133 at October 1, 1998                                  --            --        270,038
   Unrealized holding gains (losses) arising during the
      period (net of deferred taxes (benefits) 2000 $182,437;
      1999 ($296,905); 1998 ($6,043))                                  290,199      (472,279)      (9,644)
   Reclassification adjustment for (gains) losses included in net
      income (net of deferred taxes (benefits) 2000 ($10,128);
      1999 ($22,919); 1998 $127,598)                                    16,110        36,456     (202,968)
                                                                    ----------   -----------    ---------
      Total other comprehensive income (loss)                          306,309      (435,823)      57,426
                                                                    ----------   -----------    ---------
COMPREHENSIVE INCOME                                                $2,581,175   $ 1,009,527    $ 890,618
                                                                    ==========   ===========    =========
</TABLE>


            The Notes to Consolidated Financial Statements are an integral part
            of these consolidated financial statements.


                                     F - 4
<PAGE>



                      GLEN BURNIE BANCORP AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
<TABLE>
<CAPTION>



                                        Common Stock
                                  Shares          Par Value       Surplus
                                  ----------      ----------      ---------

<S>                               <C>            <C>             <C>
Balances, December 31, 1997       $ 1,092,768    $ 1,092,768     $14,770,821

Net income                               --             --             --
Shares issued under employee
   stock purchase plan                    935            935         18,934
Shares issued under stockholder
   stock purchase plan                  7,388          7,388        185,623
Shares repurchased and retired       (213,168)      (213,168)    (5,367,596)
Cash dividends, $.42 per share           --             --             --
Dividends reinvested under
   dividend reinvestment plan           7,015          7,015        159,500
Vested stock options                     --             --           21,607
Other comprehensive income,
   net of tax                            --             --             --
                                      -------        -------      ---------

Balances, December 31, 1998           894,938        894,938      9,788,889
                                      -------        -------      ---------

Net income                               --             --             --
Shares issued under employee
   stock purchase plan                  2,015          2,015         39,351
Shares issued under stockholder
   stock purchase plan                  9,470          9,470        219,730
Shares repurchased and retired             (8)            (8)          (130)
Cash dividends, $.42 per share           --             --             --
Dividends reinvested under
   dividend reinvestment plan           4,832          4,832        101,317
Stock split effected in
   form of 20% stock dividend         182,249        182,249           --
Expired stock options                    --             --          (14,201)
Vested stock options                     --             --           14,291
Other comprehensive loss,
   net of tax                            --             --             --
                                      -------        -------      ---------

BALANCES, DECEMBER 31, 1999         1,093,496      1,093,496     10,149,247
                                    ---------      ---------     ----------

NET INCOME                               --             --             --
SHARES ISSUED UNDER STOCKHOLDER
   STOCK PURCHASE PLAN                  2,659          2,659         47,330
CASH DIVIDENDS, $.675 PER SHARE          --             --             --
DIVIDENDS REINVESTED UNDER
   DIVIDEND REINVESTMENT PLAN          13,894         13,894        187,861
EXPIRED STOCK OPTIONS                    --             --          (10,889)
OTHER COMPREHENSIVE INCOME,
   NET OF TAX                            --             --             --
                                      -------        -------      ---------

BALANCES, DECEMBER 31, 2000         1,110,049    $ 1,110,049    $10,373,549
                                    =========    ===========    ===========

<CAPTION>

                                                  Accumulated
                                                     Other        Total
                                   Retained      Comprehensive  Stockholders'
                                   Earnings      Income (Loss)    Equity
                                  ----------     -------------  ------------

<S>                               <C>            <C>          <C>
Balances, December 31, 1997        $2,876,069     $  224,932   $18,964,590

Net income                            833,192         --           833,192
Shares issued under employee
   stock purchase plan                  --            --            19,869
Shares issued under stockholder
   stock purchase plan                  --            --           193,011
Shares repurchased and retired          --            --        (5,580,764)
Cash dividends, $.42 per share       (506,773)        --          (506,773)
Dividends reinvested under
   dividend reinvestment plan           --            --           166,515
Vested stock options                    --            --            21,607
Other comprehensive income,
   net of tax                           --            57,426        57,426
                                      -------        -------      ---------

Balances, December 31, 1998         3,202,488        282,358    14,168,673
                                    ---------        -------    -----------

Net income                          1,445,350         --         1,445,350
Shares issued under employee
   stock purchase plan                  --            --            41,366
Shares issued under stockholder
   stock purchase plan                  --            --           229,200
Shares repurchased and retired          --            --              (138)
Cash dividends, $.42 per share       (452,418)        --          (452,418)
Dividends reinvested under
   dividend reinvestment plan           --            --           106,149
Stock split effected in
   form of 20% stock dividend        (182,249)        --              --
Expired stock options                   --            --           (14,201)
Vested stock options                    --            --            14,291
Other comprehensive loss,
   net of tax                           --          (435,823)     (435,823)
                                      -------        -------      ---------

BALANCES, DECEMBER 31, 1999         4,013,171       (153,465)   15,102,449
                                    ---------        -------    -----------

NET INCOME                          2,274,866         --         2,274,866
SHARES ISSUED UNDER STOCKHOLDER
   STOCK PURCHASE PLAN                  --            --            49,989
CASH DIVIDENDS, $.675 PER SHARE      (743,732)        --          (743,732)
DIVIDENDS REINVESTED UNDER
   DIVIDEND REINVESTMENT PLAN           --            --           201,755
EXPIRED STOCK OPTIONS                   --            --           (10,889)
OTHER COMPREHENSIVE INCOME,
   NET OF TAX                           --         306,309         306,309
                                      -------      -------       ---------

BALANCES, DECEMBER 31, 2000        $5,544,305    $ 152,844     $17,180,747
                                   ==========    =========     ===========
</TABLE>


            The Notes to Consolidated Financial Statements are an integral part
            of these consolidated financial statements.


                                     F - 5
<PAGE>

                      GLEN BURNIE BANCORP AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
Years Ended December 31,                                                  2000            1999             1998
------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                          $  2,274,866    $  1,445,350    $    833,192
  Adjustments to reconcile net income to net
   cash provided by operating activities
      Depreciation, amortization, and accretion                            744,678         831,034         953,579
      Compensation (benefit) expense from vested stock options, net        (10,889)             90          21,607
      Provision for credit losses                                             --           300,000        (500,000)
      Losses on other real estate owned                                     27,679            --             6,000
      Deferred income taxes (benefits)                                     (73,725)        921,194         456,350
      (Gains) losses on disposals of assets, net                          (255,803)         43,273        (478,839)
      Changes in assets and liabilities:
       (Increase) decrease in accrued interest receivable                 (402,152)        122,593         155,311
       (Increase) decrease in other assets                               2,020,004        (741,174)       (732,269)
       Increase (decrease) in accrued interest payable                     209,597          (8,042)        (17,325)
       Increase (decrease) in other liabilities                            834,018        (674,080)      1,209,969
                                                                      ------------      ----------      ----------

         Net cash provided by operating activities                       5,368,273       2,240,238       1,907,575
                                                                      ------------      ----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Maturities of held to maturity mortgage-backed securities              1,521,930       2,490,926         674,870
  Maturities of other held to maturity investment securities               500,000       7,754,438      20,485,350
  Maturities of available for sale mortgage-backed securities            1,621,643       5,018,593       6,749,884
  Maturities of other available for sale investment securities             500,000       1,991,087       1,525,000
  Sales of debt securities                                               4,540,643      14,985,136      25,899,152
  Purchases of held to maturity investment securities                   (1,652,173)     (6,357,408)    (27,992,219)
  Purchases of held to maturity mortgage-backed securities              (2,990,625)           --        (9,521,417)
  Purchases of other available for sale investment securities          (12,836,928)     (5,498,437)     (4,527,891)
  Redemption of FHLB stock                                                    --           284,100            --
  Purchase of certificate of deposit                                      (100,000)           --              --
  Purchase of common stock in the Glen Burnie Statutory Trust I           (155,000)           --              --
  Increase in loans, net                                               (11,267,171)    (25,729,005)    (13,453,506)
  Proceeds from sales of other real estate                                 537,000         402,693            --
  Purchases of other real estate                                              --           (59,523)       (359,579)
  Proceeds from sales of premises and equipment                               --            42,920            --
  Purchases of premises and equipment                                     (599,373)       (439,450)       (993,614)
                                                                      ------------      ----------      ----------

         Net cash used by investing activities                         (20,380,054)     (5,113,930)     (1,513,970)
                                                                      ------------      ----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (decrease) in noninterest-bearing deposits, NOW
        accounts, money market accounts, and savings accounts, net       7,608,893      (4,524,635)     (4,194,857)
  Increase (decrease) in time deposits, net                              4,269,449        (996,485)     (3,304,300)
  Increase (decrease) in short-term borrowings                          (1,976,958)      1,321,032         254,506
  Proceeds from long-term borrowings                                     7,000,000            --              --
  Repayments of long-term borrowings                                        (3,477)           --              --
  Cash dividends paid                                                     (667,053)       (438,791)       (464,880)
  Common stock dividends reinvested                                        201,755         106,149         166,515
  Repurchase and retirement of common stock                                   --              (138)     (5,580,764)
  Issuance of guaranteed preferred beneficial interests in
        Glen Burnie Bancorp junior subordinated debentures               5,155,000            --              --
  Issuance of common stock                                                  49,989         270,566         212,880
                                                                      ------------      ----------      ----------

         Net cash provided (used) by financing activities               21,637,598      (4,262,302)    (12,910,900)
                                                                      ------------      ----------      ----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         6,625,817      (7,135,994)    (12,517,295)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                             8,883,322      16,019,316      28,536,611
                                                                      ------------      ----------      ----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                $ 15,509,139    $  8,883,322     $16,019,316
                                                                      ============    ============     ===========
</TABLE>

            The Notes to Consolidated Financial Statements are an integral part
            of these consolidated financial statements.


                                     F - 6
<PAGE>

                      GLEN BURNIE BANCORP AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Years Ended December 31,                                  2000          1999          1998
------------------------------------------------------------------------------------------------
<S>                                                       <C>          <C>            <C>
SUPPLEMENTARY CASH FLOW INFORMATION:
   Interest paid                                          $5,692,020   $ 5,631,216    $6,112,616
   Income taxes paid                                         205,000          --            --
   Total increase (decrease) in unrealized appreciation
     (depreciation) on securities available for sale         499,038      (710,042)       93,559
------------------------------------------------------------------------------------------------
</TABLE>

            The Notes to Consolidated Financial Statements are an integral part
            of these consolidated financial statements.

                                     F - 7


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The Bank of Glen Burnie (the "Bank") provides financial services to
         individuals and corporate customers located in Anne Arundel County and
         surrounding areas of Central Maryland, and is subject to competition
         from other financial institutions. The Bank is also subject to the
         regulations of certain Federal and State of Maryland (the "State")
         agencies and undergoes periodic examinations by those regulatory
         authorities. The accounting policies of the Bank conform to generally
         accepted accounting principles and to general practices within the
         banking industry.

         Significant accounting policies not disclosed elsewhere in the
         consolidated financial statements are as follows:

         Principles of Consolidation:

         The consolidated financial statements include the accounts of Glen
         Burnie Bancorp (the "Company") and its subsidiaries, The Bank of Glen
         Burnie and GBB Properties, Inc., a company engaged in the acquisition
         and disposition of other real estate. Intercompany balances and
         transactions have been eliminated. The Parent Only financial statements
         (see Note 22) of the Company account for the subsidiaries using the
         equity method of accounting.

         Use of Estimates:

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

         Securities Held to Maturity:

         Bonds, notes, and debentures for which the Bank has the positive intent
         and ability to hold to maturity are reported at cost, adjusted for
         premiums and discounts that are recognized in interest income using the
         effective interest rate method over the period to maturity. Securities
         transferred into held to maturity from the available for sale portfolio
         are recorded at fair value at time of transfer with unrealized gains or
         losses reflected in equity and amortized over the remaining life of the
         security.

         Securities Available for Sale:

         Marketable debt securities not classified as held to maturity are
         classified as available for sale. Securities available for sale may be
         sold in response to changes in interest rates, loan demand, changes in
         prepayment risk, and other factors. Changes in unrealized appreciation
         (depreciation) on securities available for sale are reported in other
         comprehensive income. Realized gains (losses) on securities available
         for sale are included in other income (expense) and, when applicable,
         are reported as a reclassification adjustment, net of tax, in other
         comprehensive income. The gains and losses on securities sold are
         determined by the specific identification method. Premiums and
         discounts are recognized in interest income using the effective
         interest rate method over the period to maturity. Additionally,
         declines in the fair value of individual investment securities below
         their cost that are other than temporary are reflected as realized
         losses in the consolidated statements of income.


                                     F - 8
<PAGE>

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Other Securities:

         Federal Home Loan Bank ("FHLB") stock is an equity interest in the
         FHLB, which does not have a readily determinable fair value for
         purposes of Statement of Financial Accounting Standards ("SFAS") No
         115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES,
         because its ownership is restricted and it lacks a market. FHLB stock
         can be sold back only at its par value of $100 per share and only to
         the FHLB or another member institution.

         Loans and Allowance for Credit Losses:

         Loans are generally carried at the amount of unpaid principal, adjusted
         for deferred loan fees, which are amortized over the term of the loan
         using the effective interest rate method. Interest on loans is accrued
         based on the principal amounts outstanding. It is the Bank's policy to
         discontinue the accrual of interest when a loan is specifically
         determined to be impaired or when principal or interest is delinquent
         for 120 days or more. When a loan is placed on nonaccrual status all
         interest previously accrued but not collected is reversed against
         current period interest income. Interest income generally is not
         recognized on specific impaired loans unless the likelihood of further
         loss is remote. Cash collections on such loans are applied as
         reductions of the loan principal balance and no interest income is
         recognized on those loans until the principal balance has been
         collected. Interest income on other nonaccrual loans is recognized only
         to the extent of interest payments received. The carrying value of
         impaired loans is based on the present value of the loan's expected
         future cash flows or, alternatively, the observable market price of the
         loan or the fair value of the collateral.

         The allowance for credit losses is established through a provision for
         credit losses charged to expense. Loans are charged against the
         allowance for credit losses when management believes that the
         collectibility of the principal is unlikely. The allowance, based on
         evaluations of the collectibility of loans and prior loan loss
         experience, is an amount that management believes will be adequate to
         absorb possible losses on existing loans that may become uncollectible.
         The evaluations take into consideration such factors as changes in the
         nature and volume of the loan portfolio, overall portfolio quality,
         review of specific problem loans, and current economic conditions and
         trends that may affect the borrower's ability to pay.

         While management believes it has established the allowance for credit
         losses in accordance with generally accepted accounting principles and
         has taken into account the views of its regulators and the current
         economic environment, there can be no assurance that in the future the
         Bank's regulators or its economic environment will not require further
         increases in the allowance.

         Other Real Estate Owned ("OREO"):

         OREO comprises properties acquired in partial or total satisfaction of
         problem loans. The properties are recorded at the lower of cost or fair
         value (appraised value) at the date acquired. Losses arising at the
         time of acquisition of such properties are charged against the
         allowance for credit losses. Subsequent write-downs that may be
         required and expenses of operation are included in other income or
         expenses. Gains and losses realized from the sale of OREO are included
         in other income or expenses. Loans converted to OREO through
         foreclosure proceedings totaled $59,523 and $359,579 for the years
         ended December 31, 1999 and 1998, respectively. No sales of OREO were
         financed by the Bank for 2000, 1999, or 1998, however, sales of OREO
         were financed by GBB Properties, Inc. totaling $145,000 for 2000.

         In April 2000, the Bank sold a foreclosed property for a gain of
         $490,000, which is included in other fees and commissions.

                                     F - 9
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Bank Premises and Equipment:

         Bank premises and equipment are stated at cost less accumulated
         depreciation. The provision for depreciation is computed using the
         straight-line method over the estimated useful lives of the assets.
         Leasehold improvements are depreciated over the lesser of the terms of
         the leases or their estimated useful lives. Expenditures for
         improvements which extend the life of an asset are capitalized and
         depreciated over the asset's remaining useful life. Gains or losses
         realized on the disposition of premises and equipment are reflected in
         the consolidated statements of income. Expenditures for repairs and
         maintenance are charged to other expenses as incurred. Computer
         software is recorded at cost and amortized over three to five years.

         Intangible Assets:

         Cost incurred related to goodwill represents the excess of the cost of
         a branch acquired over the fair value of the net assets at date of
         acquisition. Goodwill of $544,652 is being amortized on the
         straight-line method over 10 years. Accumulated amortization was
         $285,942, $231,477, and $177,012 at December 31, 2000, 1999, and 1998,
         respectively. Amortization expense totaled $54,465 for each of the
         years ended December 2000, 1999, and 1998.

         Long-Lived Assets:

         The carrying value of long-lived assets and certain identifiable
         intangibles, including goodwill, is reviewed by the Bank for impairment
         whenever events or changes in circumstances indicate that the carrying
         amount of an asset may not be recoverable, as prescribed in SFAS No.
         121, ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
         ASSETS TO BE DISPOSED OF.

         Income Taxes:

         The provision for Federal and State income taxes is based upon the
         results of operations, adjusted for tax-exempt income. Deferred income
         taxes are provided by applying enacted statutory tax rates to temporary
         differences between financial and taxable bases.

         Temporary differences which give rise to deferred tax assets relate
         principally to the allowance for credit losses, unearned income on
         loans, other real estate owned, accrued compensation and pension
         benefits, unused expense deductions, operating losses, and tax credit
         carryovers.

         Temporary differences which give rise to deferred tax liabilities
         relate principally to accumulated depreciation, accretion of discount
         on investment securities, and prepaid pension expense.

         Credit Risk:

         The Bank has deposits in other financial institutions in excess of
         amounts insured by the Federal Deposit Insurance Corporation ("FDIC").
         The Bank had deposits and Federal funds sold of approximately $712,000,
         $330,000, and $11,055,000 with three separate financial institutions as
         of December 31, 2000.

         Cash and Cash Equivalents:

         The Bank has included cash and due from banks, interest bearing
         deposits in other financial institutions, and Federal funds sold as
         cash and cash equivalents for the purpose of reporting cash flows.


                                     F - 10
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Earnings per share:

         Basic earnings per common share are determined by dividing net income
         by the weighted average number of shares of common stock outstanding.
         Diluted earnings per share is calculated including the average dilutive
         common stock equivalents outstanding during the period. Dilutive common
         equivalent shares consist of stock options, calculated using the
         treasury stock method.

         Financial Statement Presentation:

         Certain amounts in the prior years' financial statements have been
         reclassified to conform to the current year's presentation.

NOTE 2. RESTRICTIONS ON CASH AND DUE FROM BANKS

         The Federal Reserve requires the Bank to maintain noninterest-bearing
         cash reserves against certain categories of average deposit
         liabilities. Such reserves averaged approximately $3,039,000,
         $2,477,000, and $2,094,000 during the years ended December 31, 2000,
         1999, and 1998, respectively.

NOTE 3. INVESTMENT SECURITIES

         Investment securities are summarized as follows:

<TABLE>
<CAPTION>

                                                                                   Gross         Gross
                                                       Amortized                Unrealized    Unrealized        Fair
         DECEMBER 31, 2000                             Cost                        Gains         Losses         Value
         -----------------                             ----                        -----         ------         -----
         <S>                                          <C>                      <C>            <C>            <C>
         AVAILABLE FOR SALE:
         U.S. TREASURY                                   $ 497,871                $ 9,638         $ -           $  507,509
         U.S. GOVERNMENT AGENCY                          6,975,277                 45,107        38,008          6,982,376
         STATE AND MUNICIPAL                             8,038,349                254,201       -                8,292,550
         CORPORATE TRUST PREFERRED                       2,821,428                 -              1,481          2,819,947
         MORTGAGE-BACKED                                 2,727,023                 -             20,444          2,706,579
                                                         ---------                -------        ------          ---------

                                                       $21,059,948              $ 308,946      $ 59,933        $21,308,961
                                                       ===========              =========      ========        ===========


         HELD TO MATURITY:

         U.S. TREASURY                                 $ 1,248,529              $  14,446      $    620        $ 1,262,355
         U.S. GOVERNMENT AGENCY                         17,834,666                 83,636       311,617         17,606,685
         STATE AND MUNICIPAL                               682,431                 27,437        -                 709,868
         MORTGAGE-BACKED                                11,520,311                 51,804       131,902         11,440,213
                                                       -----------                 ------       -------         ----------

                                                       $31,285,937              $ 177,323     $ 444,139        $31,019,121
                                                       ===========              =========      =========       ===========

</TABLE>


                                     F - 11
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. INVESTMENT SECURITIES (continued)

<TABLE>
<CAPTION>

                                                                                         Gross        Gross
                                                                Amortized            Unrealized    Unrealized        Fair
         December 31, 1999                                      Cost                     Gains        Losses         Value
         -----------------                                      ----                     -----        ------         -----
         <S>                                                    <C>                  <C>        <C>            <C>
         AVAILABLE FOR SALE:
         U.S. Treasury                                            $ 991,895          $   -         $  9,378       $  982,517
         U.S. Government agency                                   5,491,665              -          209,145        5,282,520
         Mortgage-backed                                          8,431,417             24,870       56,371        8,399,916
                                                                  ---------             ------       ------        ---------

                                                                $14,914,977         $   24,870    $ 274,894      $14,664,953
                                                                ===========          ==========   =========      ===========


         HELD TO MATURITY:
         U.S. Treasury                                          $1,747,488           $   4,241     $  5,081      $ 1,746,648
         U.S. Government agency                                 16,851,527               -        1,139,994       15,711,533
         Mortgage-backed                                        10,058,227               -          474,657        9,583,570
                                                                ----------           ---------      -------        ---------

                                                                $28,657,242          $   4,241   $1,619,732      $27,041,751
                                                                ===========          =========   ==========      ===========

</TABLE>

<TABLE>
<CAPTION>

                                                                                         Gross        Gross
                                                                Amortized            Unrealized    Unrealized        Fair
         December 31, 1998                                      Cost                     Gains        Losses         Value
         -----------------                                      ----                     -----        ------         -----
         <S>                                                   <C>                   <C>          <C>            <C>
         AVAILABLE FOR SALE:
         U.S. Treasury                                           $ 2,584,565          $ 129,844      $  -         $   2,714,409
         U.S. Government agency                                   16,430,674            249,927        8,340         16,672,261
         Mortgage-backed                                          12,512,882             90,225        1,638         12,601,469
                                                                  ----------             ------        -----         ----------

                                                                 $31,528,121          $ 469,996      $ 9,978        $31,988,139
                                                                 ===========          =========      =======        ===========


         HELD TO MATURITY:
         U.S. Treasury                                          $ 2,497,627           $  54,164    $  -            $  2,551,791
         U.S. Government agency                                  15,486,672              41,176       92,043         15,435,805
         Mortgage-backed                                         14,576,989              19,248       44,102         14,552,135
                                                                 ----------              ------       ------         ----------

                                                                $32,561,288           $  114,588   $ 136,145        $32,539,731
                                                                ===========           ==========   =========        ===========

</TABLE>

         Effective October 1, 1998, the Bank adopted the provisions of SFAS
         No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES,
         which provides for a special opportunity to reclassify held to maturity
         securities to available for sale. In connection therewith, the Bank
         reclassified held to maturity securities with amortized cost
         approximating $20,300,000 as available for sale, resulting in an
         increase in accumulated other comprehensive income of approximately
         $270,000, net of deferred taxes of approximately $170,000.

         Contractual maturities of investment securities at December 31, 2000,
         1999, and 1998 are shown below. Actual maturities may differ from
         contractual maturities because debtors may have the right to call or
         prepay obligations with or without call or prepayment penalties.
         Mortgage-backed securities have no stated maturity and primarily
         reflect investments in various Pass-through and Participation
         Certificates issued by the Federal National Mortgage Association and
         the Government National Mortgage Association. Repayment of
         mortgage-backed securities is affected by the contractual repayment
         terms of the underlying mortgages collateralizing these obligations and
         the current level of interest rates.


                                     F - 12
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. INVESTMENT SECURITIES (continued)

<TABLE>
<CAPTION>

                                                                   AVAILABLE FOR SALE                   HELD TO MATURITY
                                                                   AMORTIZED            FAIR            AMORTIZED       FAIR
         DECEMBER 31, 2000                                         COST                 VALUE           COST            VALUE
         -----------------                                         ----                 -----           ----            -----
         <S>                                                     <C>                 <C>             <C>             <C>
         DUE WITHIN ONE YEAR                                       $ -                 $   -           $  499,841      $  499,478
         DUE OVER ONE TO FIVE YEARS                                6,973,148            6,976,182       3,634,136       3,684,832
         DUE OVER FIVE TO TEN YEARS                                  679,801              696,287       7,490,924       7,449,653
         DUE OVER TEN YEARS                                       10,679,976           10,929,913       8,140,725       7,944,945
         MORTGAGE-BACKED, DUE IN MONTHLY
         INSTALLMENTS                                              2,727,023            2,706,579      11,520,311      11,440,213
                                                                   ---------            ---------      ----------      ----------

                                                                 $21,059,948          $21,308,961     $31,285,937     $31,019,121
                                                                 ===========          ===========     ===========     ===========

</TABLE>

<TABLE>
<CAPTION>

                                                                   AVAILABLE FOR SALE                   HELD TO MATURITY
                                                                   Amortized            Fair            Amortized       Fair
         December 31, 1999                                         Cost                 Value           Cost            Value
         -----------------                                         ----                 -----           ----            -----
         <S>                                                    <C>                  <C>           <C>             <C>
         Due within one year                                       $ -              $   -            $  500,047      $  500,134
         Due over one to five years                                5,483,560            5,310,974     3,653,770       3,577,422
         Due over five to ten years                                1,000,000              954,063     6,990,185       6,635,625
         Due over ten years                                        -                    -             7,455,013       6,745,000
         Mortgage-backed, due in monthly
         installments                                              8,431,417            8,399,916    10,058,227       9,583,570
                                                                   ---------            ---------    ----------       ---------

                                                                 $14,914,977          $14,664,953   $28,657,242     $27,041,751
                                                                 ===========          ===========   ===========     ===========
         </TABLE>

         <TABLE>
         <CAPTION>

                                                                   AVAILABLE FOR SALE                   HELD TO MATURITY
                                                                   Amortized            Fair            Amortized       Fair
         December 31, 1998                                         Cost                 Value           Cost            Value
         -----------------                                         ----                 -----           ----            -----
         <S>                                                      <C>              <C>              <C>             <C>
         Due within one year                                      $ 1,499,909       $   1,509,844    $  1,250,357    $  1,259,844
         Due over one to five years                                13,445,861          13,690,797       1,247,271       1,291,953
         Due over five to ten years                                 4,069,469           4,186,029       7,489,009       7,517,969
         Due over ten years                                          -                  -               7,997,662       7,917,830
         Mortgage-backed, due in monthly
         installments                                              12,512,882          12,601,469      14,576,989      14,552,135
         ------------                                              ----------          ----------      ----------      ----------

                                                                  $31,528,121      $   31,988,139     $32,561,288     $32,539,731
                                                                  ===========      ==============     ===========     ===========

</TABLE>

         Proceeds from sales of securities prior to maturity were $4,540,643,
         $14,985,138, and $25,889,152 for the years ended December 31, 2000,
         1999, and 1998, respectively. Losses of $26,237 were realized on those
         sales for 2000. Gains of $59,647 and losses of $123,614 were realized
         on those sales for 1999. Gains of $418,519 and losses of $5,011 were
         realized on those sales for 1998. Realized gains and losses were
         calculated based on the amortized cost of the securities at the date of
         trade. Income tax benefit (expense) relating to net gains/losses on
         sales of investment securities was $10,133, $24,704, and ($159,697) for
         the years ended December 31, 2000, 1999, and 1998, respectively.

         Securities with amortized costs of approximately $1,271,000,
         $1,742,000, and $2,994,000 were pledged as collateral for short-term
         borrowings and financial instruments with off-balance sheet risk at
         December 31, 2000, 1999, and 1998, respectively.

         The Bank has no derivative financial instruments required to be
         disclosed under SFAS No. 119, DISCLOSURE ABOUT DERIVATIVE FINANCIAL
         INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS.


                                     F - 13
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. LOANS

        Major categories of loans are as follows:

<TABLE>
<CAPTION>

                                                                        2000                    1999               1998
                                                                        ----                    ----               ----
         <S>                                                         <C>                     <C>                <C>
         Mortgage:
           Residential                                                $ 36,187,294            $ 34,098,848       $ 33,931,494
           Commercial                                                   40,168,603              42,342,103         43,915,342
           Construction and land development                             5,256,921               6,094,894          2,382,657
         Lease financing                                                    70,675                 341,277          1,059,382
         Demand and time                                                 3,655,180               3,359,785          4,654,006
         Installment                                                    81,124,897              68,518,095         43,147,377
                                                                        ----------              ----------         ----------
                                                                       166,463,570             154,755,002        129,090,258
         Unearned income on loans                                         (705,024)               (726,811)          (747,946)
                                                                         --------                --------           --------
                                                                       165,758,546             154,028,191        128,342,312
         Allowance for credit losses                                    (3,384,815)             (2,921,631)        (2,841,060)
                                                                       ----------              ----------         ----------

                                                                      $162,373,731            $151,106,560       $125,501,252
                                                                      ============            ============       ============

</TABLE>

         During 1998 the Bank instituted an automotive indirect lending program
         where vehicle collateralized loans made by dealers to consumers are
         acquired by the Bank. The Bank's installment loan portfolio included
         approximately $61,725,000, $50,967,000, and $24,630,000 of such loans
         at December 31, 2000, 1999, and 1998, respectively.

         The Bank makes loans to customers located primarily in Anne Arundel
         County and surrounding areas of Central Maryland. Although the loan
         portfolio is diversified, its performance will be influenced by the
         economy of the region.

         Executive officers, directors, and their affiliated interests enter
         into loan transactions with the Bank in the ordinary course of
         business. These loans are made on the same terms, including interest
         rates and collateral, as those prevailing at the time for comparable
         loans with unrelated borrowers. They do not involve more than normal
         risk of collectibility or present other unfavorable terms. At December
         31, 2000, 1999, and 1998, the amounts of such loans outstanding were
         $1,319,700, $1,417,716, and $1,495,082, respectively. During 2000, loan
         additions and repayments were $69,500 and $167,516, respectively.

         The allowance for credit losses is as follows:

<TABLE>
<CAPTION>

                                                                         2000               1999              1998
                                                                         ----               ----              ----

         <S>                                                        <C>                <C>               <C>
         Balance, beginning of year                                  $   2,921,631      $   2,841,060     $   4,139,396
         Provision for credit losses                                     -                    300,000          (500,000)
         Recoveries                                                      1,223,618            454,277           296,617
         Loans charged off                                                (760,434)          (673,706)       (1,094,953)
                                                                         --------            --------       ----------

         Balance, end of year                                        $   3,384,815      $   2,921,631     $   2,841,060
                                                                     =============      =============     =============

</TABLE>

         Loans on which the accrual of interest has been discontinued
         amounted to $370,053, $1,011,826, and $1,724,782 at December 31,
         2000, 1999, and 1998, respectively. Interest that would have been
         accrued under the terms of these loans totaled $48,484, $168,644,
         and $269,112 for the years ended December 31, 2000, 1999, and 1998,
         respectively.

                                     F - 14
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. LOANS (continued)

     Information regarding loans classified by the Bank as impaired are
     summarized as follows:

<TABLE>
<CAPTION>

                                                                          2000              1999              1998
                                                                          ----              ----              ----
         <S>                                                         <C>               <C>              <C>
         Loans classified as impaired                                 $  207,579        $ 1,043,944      $  2,528,851
         Allowance for credit losses on impaired loans                    77,633            217,907           423,571
         Average balance of impaired loans                                63,105          1,842,757         2,417,615

         Following is a summary of cash receipts on impaired loans and how they were
         applied:

         Cash receipts applied to reduce principal balance               $ 6,389           $ 83,828      $     62,811
         Cash receipts recognized as interest income                         581                -              37,313
                                                                         -------           --------      ------------
         Total cash receipts                                             $ 6,970           $ 83,828      $     70,124
                                                                         =======           ========      ============

</TABLE>

         At December 31, 2000, the total recorded investment in troubled debt
         restructurings amounted to $369,594. The average recorded investment in
         troubled debt restructurings amounted to $383,642 for the year ended
         December 31, 2000. The allowance for credit losses relating to troubled
         debt restructurings was $66,479 at December 31, 2000. Interest income
         on troubled debt restructurings of $93,653 was recognized for cash
         payments received in 2000. All investments in troubled debt were
         performing under the terms of the modified agreements.

         At December 31, 1999, the total recorded investment in troubled debt
         restructurings amounted to $243,137. The average recorded investment in
         troubled debt restructurings amounted to $252,477 for the year ended
         December 31, 1999. The allowance for credit losses relating to troubled
         debt restructurings was $73,635 at December 31, 1999. Interest income
         on troubled debt restructurings of $17,660 was recognized for cash
         payments received in 1999. All investments in troubled debt were
         performing under the terms of the modified agreements.

         At December 31, 1998, the total recorded investment in troubled debt
         restructurings amounted to $136,874. The average recorded investment in
         troubled debt restructurings amounted to $134,625 for the year ended
         December 31, 1998. The allowance for credit losses relating to troubled
         debt restructurings was $70,000 at December 31, 1998. Interest income
         on troubled debt restructurings of $10,670 was recognized for cash
         payments received in 1998. All investments in troubled debt were
         performing under the terms of the modified agreements, with the
         exception of one loan classified as impaired in the amount of $156,947
         as of December 31, 1998.

         The Bank has no commitments to loan additional funds to the borrowers
         of restructured, impaired, or non-accrual loans.


                                     F - 15
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. PREMISES AND EQUIPMENT

         A summary of premises and equipment is as follows:

<TABLE>
<CAPTION>

                                                 Useful
                                                  lives                       2000            1999             1998
                                                  -----                       ----            ----             ----
<S>                                             <C>                    <C>              <C>              <C>
        Land                                                            $    684,977      $  591,377       $  509,803
        Buildings                                5-50 years                4,112,520       4,004,737        3,900,421
        Equipment and fixtures                   5-30 years                4,479,403       4,385,699        4,125,205
        Construction in progress                                             246,461          10,333           21,675
                                                                             -------          ------           ------
                                                                           9,523,361       8,992,146        8,584,104
        Accumulated depreciation                                          (5,254,958)     (4,738,822)      (4,163,722)
                                                                         ----------       ----------      ----------

                                                                        $  4,268,403    $  4,253,324       $4,420,382
                                                                        ============    ============       ==========

</TABLE>

         Depreciation expense was $551,784, $575,100, and $596,716 for the years
         ended December 31, 2000, 1999, and 1998, respectively. Amortization of
         software and intangible assets was $197,286, $187,046, and $179,369 for
         the years ended December 31, 2000, 1999, and 1998, respectively.

         The Bank leases its South Crain Highway and Severna Park branches.
         Minimum lease obligations under the South Crain Highway branch is
         $71,800 per year through September 2004, adjusted annually by the CPI.
         Minimum lease obligations under the Severna Park branch are $36,560 per
         year through September 2004, adjusted annually by the CPI. The Bank is
         also required to pay all maintenance costs under all these leasing
         arrangements. Total rent expense was $122,060, $85,980, and $53,591 for
         the years ended December 31, 2000, 1999, and 1998, respectively.

         During 2000, the Bank purchased a building and land for $307,957,
         anticipated to be used for future banking operations (see Note 7).

         During 1999, GBB Properties, Inc. purchased land for $82,774,
         anticipated to be used for a future branch location.

         In December 2000, the Board of Directors of the Company voted to close
         the Ferndale Shopping Center branch, effective upon final approval from
         all Federal and state regulatory agencies. At December 31, 2000,
         management determined that certain leasehold improvements made to the
         Ferndale branch were impaired as prescribed by SFAS No. 121 and have no
         net realizable value. These leasehold improvements had a book value of
         $184,535 at December 31, 2000 and will be reflected as an asset
         impairment loss from continuing operations. The Bank has also accrued
         approximately $96,000 relating to the estimated cost of closing the
         Ferndale branch. These costs are included in other operating expenses
         (see Note 13).

NOTE 6. SHORT-TERM BORROWINGS

         Short-term borrowings are as follows:

<TABLE>
<CAPTION>

                                                                                2000           1999             1998
                                                                                ----           ----             ----
         <S>                                                             <C>              <C>              <C>
         Notes payable - U.S. Treasury                                    $     487,978    $   464,936      $   143,904
         FHLB advances                                                          -            2,000,000        1,000,000
                                                                             -------         ---------        ---------

                                                                          $     487,978    $ 2,464,936       $1,143,904
                                                                          =============    ===========       ==========

</TABLE>


                                     F - 16
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. SHORT-TERM BORROWINGS (continued)

         The Bank owned 6,523 shares of common stock of the FHLB at December 31,
         2000. The Bank is required to maintain an investment of .3% of total
         assets, adjusted annually. This investment was a condition for
         obtaining a variable rate credit facility with the FHLB. The credit
         available under this facility is determined at 12% of the Bank's total
         assets, adjusted quarterly based on call reports, or approximately
         $28,705,000 at December 31, 2000. There were $7,000,000 in long-term
         advances under this credit arrangement at December 31, 2000 (see Note
         7). At December 31, 1999 and 1998 the Bank had short-term advances of
         $2,000,000 and $1,000,000, bearing interest at 4.55% and 5.15%,
         respectively, and maturing within the next year. The credit facility is
         secured by a floating lien on the Bank's residential mortgage loan
         portfolio and by investment securities with amortized cost of
         approximately $250,000, $750,000, and $1,000,000 at December 31, 2000,
         1999, and 1998, respectively. Average short-term borrowings were
         approximately $640,000, $1,506,000, and $256,000 during 2000, 1999, and
         1998, respectively.

         Notes payable to the U.S. Treasury are Federal treasury tax and loan
         deposits accepted by the Bank from its customers to be remitted on
         demand to the Federal Reserve Bank. The Bank pays interest on these
         balances at a slight discount to the Federal funds rate. The note
         payable is secured by investment securities with an amortized cost of
         approximately $997,000, $995,000, and $1,494,000 at December 31, 2000,
         1999, and 1998, respectively.

         The Bank also has available $5,000,000 in a short-term credit facility,
         secured by Federal funds sold, from another bank for short term
         liquidity needs, if necessary. There were no borrowings outstanding
         under this credit arrangement at December 31, 2000, 1999, and 1998.

NOTE 7. LONG-TERM BORROWINGS

         Long-term borrowings are as follows:

<TABLE>
<CAPTION>

                                                                                              2000
                                                                                           ----------
         <S>                                                                              <C>
         Federal Home Loan Bank of Atlanta, convertible advance                            $7,000,000
         Note payable-individual, interest at 7%, payments of $3,483,
           including principal and interest, due monthly through October 2010,
            secured by real estate to be used for future banking operations.                  296,523
                                                                                              -------

                                                                                           $7,296,523
                                                                                           ==========

</TABLE>

         The Federal Home Loan Bank of Atlanta convertible advance has a final
         maturity of September 2010 and an interest rate of 5.84%, payable
         quarterly, which is fixed for two years through September 2002. At that
         time, the Federal Home Loan Bank of Atlanta has the option of
         converting the rate to a three month LIBOR; however, if converted, the
         borrowing can be repaid without penalty. The proceeds of the
         convertible advance were used to purchase higher yielding investment
         securities.

         At December 31, 2000, the scheduled maturities of long-term borrowings
         are approximately as follows:

<TABLE>
<CAPTION>

                                                                    2000
                                                                ----------
         <S>                                               <C>
         2001                                              $        21,700
         2002                                                       23,300
         2003                                                       25,000
         2004                                                       26,800
         2005                                                       28,700
         2006 and thereafter                                     7,171,023
         ----                                                    ---------

                                                           $     7,296,523
                                                           ===============

</TABLE>


                                     F - 17
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. DEPOSITS

         Major classifications of interest-bearing deposits are as follows:

<TABLE>
<CAPTION>

                                                                                2000             1999              1998
                                                                              ----------       ----------        ----------
         <S>                                                        <C>                    <C>               <C>
         NOW and SuperNOW                                           $         19,644,885   $   18,562,778    $   20,600,751
         Money Market                                                         16,766,390       17,628,665        20,049,677
         Savings                                                              40,687,639       41,116,776        40,965,943
         Certificates of Deposit, $100,000 or more                            11,995,756        6,345,179         5,758,269
         Other time deposits                                                  63,911,176       65,292,304        66,875,699
                                                                              ----------       ----------        ----------

                                                                            $153,005,846     $148,945,702      $154,250,339
                                                                            ============     ============      ============

</TABLE>

<TABLE>
<CAPTION>

         Interest expense on deposits is as follows:

                                                                              2000             1999              1998
                                                                              -------          -------           -------
         <S>                                                        <C>                   <C>               <C>
         NOW and SuperNOW                                           $         217,558      $   230,708       $   377,632
         Money Market                                                         449,850          527,466           546,382
         Savings                                                              961,028          938,117         1,069,853
         Certificates of Deposit, $100,000 or more                            557,693          435,885           443,489
         Other time deposits                                                3,376,299        3,371,452         3,611,472
                                                                            ---------        ---------         ---------

                                                                    $       5,562,428      $ 5,503,628       $ 6,048,828
                                                                    =================      ===========       ===========

</TABLE>

         At December 31, 2000, the scheduled maturities of time deposits are
         approximately as follows:

<TABLE>
<CAPTION>

                                                         2000
                                                      ----------
            <S>                                     <C>
            2001                                    $ 48,330,000
            2002                                      14,803,000
            2003                                       6,997,000
            2004                                       1,776,000
            2005 and thereafter                        4,001,000
            ----                                       ---------

                                                    $ 75,907,000
                                                    ============

</TABLE>

         Deposit balances of executive officers and directors and their
         affiliated interests totaled approximately $734,000, $369,000, and
         $356,000 at December 31, 2000, 1999, and 1998, respectively.

         The Bank had no brokered deposits at December 31, 2000, 1999, and 1998.


                                     F - 18
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. INCOME TAXES

        The components of income tax expense for the years ended December
        31, 2000, 1999, and 1998 are as follows:

<TABLE>
<CAPTION>

                                                                                    2000               1999            1998
                                                                                    ----               ----            ----
<S>                                                                             <C>               <C>              <C>
        Current:
        Federal                                                                  $  1,271,219      $   264,850      $   (1,841)
        State                                                                         240,567            -             351,738
                                                                                      -------          -------         -------

          Total current                                                             1,511,786          264,850         349,897
                                                                                    ---------          -------         -------
        Deferred income taxes (benefits):
        Federal                                                                        51,660          793,015         352,880
        State                                                                       (125,385)          128,179         103,470
                                                                                    --------           -------         -------

          Total deferred                                                             (73,725)          921,194         456,350
                                                                                     -------           -------         -------

            Income tax expense                                                   $  1,438,061      $ 1,186,044      $  806,247
                                                                                 ============      ===========      ==========

</TABLE>

        The 1998 current State provision consisted of disallowed prior years'
        refund claims.

         A reconciliation of income tax expense computed at the statutory rate
         of 34% to the actual income tax expense for the years ended December
         31, 2000, 1999, and 1998 is as follows:

<TABLE>
<CAPTION>

                                                                                    2000               1999            1998
                                                                                    ----               ----            ----

<S>                                                                             <C>               <C>              <C>
        Income before income taxes                                               $  3,712,927      $ 2,631,394      $  1,639,439
                                                                                 ============      ===========      ============

        Taxes computed at Federal income tax rate                                $  1,262,395      $   894,674        $  557,409
        Federal excise tax on pension plan termination and
        settlement                                                                    238,636          196,800               -
        Increase (decrease) resulting from:
        Tax-exempt income                                                             (49,261)           -               (61,361)
        State income taxes, net of Federal income tax benefit                          76,021           84,598           300,437
        AMT credits                                                                   (87,421)           -                  -
        Other                                                                          (2,309)           9,972             9,762
                                                                                       ------            -----             -----

        Income tax expense                                                       $  1,438,061      $ 1,186,044        $  806,247
                                                                                 ============       ===========       ==========

</TABLE>

        Sources of deferred income taxes and the tax effects of each for the
                years ended December 31, 2000, 1999, and 1998 are as follows:

<TABLE>
<CAPTION>

                                                                                    2000               1999            1998
                                                                                    ----               ----            ----

<S>                                                                             <C>                 <C>            <C>
        Depreciation                                                             $  (46,174)         $ (11,998)     $  13,318
        Securities discount accretion                                                 7,066              2,858        (19,471)
        Provision for credit losses                                                 (18,725)           139,705        658,694
        Deferred compensation and pension benefit plans                            (646,776)           542,275        (76,205)
        Charitable contributions                                                     29,372             32,430        (15,844)
        Write-downs on other real estate owned                                       (9,462)             4,773         (2,317)
        Alternative minimum tax credits                                             610,974            126,090        (16,764)
        Net operating loss carryover                                                -                   85,061        (85,061)
                                                                                    -------             ------        -------

        Deferred income tax expense (benefit)                                    $  (73,725)         $ 921,194      $ 456,350
                                                                                 ==========          =========      =========

</TABLE>


                                     F - 19
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. INCOME TAXES (continued)

         The components of the net deferred income tax benefits as of December
         31, 2000, 1999, and 1998 are as follows:

<TABLE>
<CAPTION>

                                                                                        2000           1999            1998
                                                                                        ----           ----            ----

<S>                                                                            <C>                   <C>           <C>
        Deferred income tax benefits:
          Allowance for credit losses                                           $       2,986         $   -         $  123,966
          Deferred compensation and benefit plans                                     326,055          276,334         728,247
          Other real estate owned                                                       9,462            -               4,773
          Charitable contributions                                                       -              29,372          61,802
          Alternative minimum tax credits                                              60,239          671,213         797,303
          Net operating loss carryover                                                   -              -               85,061
          Net unrealized depreciation on investment
            securities available for sale                                                -              96,560          -
                                                                                      -------           ------        --------
              Total deferred income tax benefits                                      398,742        1,073,479       1,801,152
                                                                                      -------        ---------       ---------

        Deferred income tax liabilities:
          Accumulated depreciation                                                    146,156          192,330         204,328
          Allowance for credit losses                                                   -               15,739          -
          Securities discount accretion                                                29,483           22,417          19,559
          Prepaid pension plan contributions                                            -              597,056         506,694
          Net unrealized appreciation on investment
            securities available for sale                                              96,170          -               177,659
                                                                                       ------          -------         -------
                Total deferred income tax liabilities                                 271,809          827,542         908,240
                                                                                      -------          -------         -------
            Net deferred income tax benefits, included
              in other assets.                                                   $    126,933       $  245,937      $  892,912
                                                                                 ============       ==========      ==========

</TABLE>

        Management has determined that no valuation allowance is required as it
        is more likely than not that the net deferred income tax benefits will
        be fully realizable in future years.

NOTE 10. PENSION AND PROFIT SHARING PLANS

         Through 1998, the Bank had a defined benefit pension plan covering
         substantially all of its employees. Benefits were based on the
         employee's average rate of earnings for the five consecutive years
         before retirement. The Bank's funding policy was to contribute annually
         an amount between the minimum and maximum actuarially determined
         contribution, using the frozen entry age actuarial cost method. Assets
         of the plan were held in a trust fund principally comprised of growth
         and income mutual funds managed by another bank.

         The Bank officially terminated the plan on December 27, 1999 and
         received IRS approval for plan termination in February 2000. The Bank
         settled all accrued benefits under the plan in October 2000. The Bank
         has established a defined contribution plan as a replacement plan. Upon
         termination of the pension plan all participants became 100% vested.
         All accrued benefits under the terminated and settled pension plan were
         provided to participants through the purchase of annuities, or, in the
         case of actively employed participants, at their option, in the form of
         a lump sum rollover to the new defined contribution plan.

         As a result of the termination of the defined benefit plan in 1999, the
         Bank has recognized a curtailment gain of $1,311,997, included in other
         income. The Bank has also accrued a 25% safe harbor contribution of
         $328,000, included in employee benefit expense, and excise taxes of
         $196,800, payable on curtailment gains recognized, included in Federal
         and state income tax expense.


                                     F - 20
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. PENSION AND PROFIT SHARING PLANS (continued)

         As a result of the settlement of the defined benefit plan in October
         2000, the Bank has recognized a settlement gain of $1,600,126, included
         in other income. The Bank has also accrued a 25% safe harbor
         contribution of $397,728, included in employee benefit expense, and
         excise taxes of $238,636, payable on settlement gains recognized,
         included in Federal and state income tax expense.

         The following table sets forth the financial status of the pension plan
         at December 31, 2000, 1999, and 1998:

<TABLE>
<CAPTION>

                                                                               2000            1999             1998
                                                                               ----            ----             ----
<S>                                                                   <C>                 <C>                 <C>
         Projected benefit obligation at January 1,                     $  4,791,364        $   4,423,566        $4,124,137
           Service cost                                                          -               -                  208,699
           Interest                                                              -                261,367           346,128
           Actual benefit payments                                        (4,710,262)            (144,739)         (189,504)
           Interest on distributions                                             -                 (7,223)           (6,850)
           Decrease from curtailment                                             -             (1,435,130)              -
           Increase from change in discount rate                                 -              1,607,050               -
           Other adjustments                                                 (81,102)              86,473           (59,044)
                                                                             -------               ------           -------

         Projected benefit obligation at December 31,                     $    -             $  4,791,364        $4,423,566
                                                                             =======         ============        ==========

         Accumulated benefit obligation:
           Vested                                                           $    -           $  4,791,364        $4,315,501
           Nonvested                                                             -               -                  108,065
                                                                            --------           ------               -------

                                                                          $    -             $  4,791,364        $4,423,566
                                                                             =======         ============        ==========

         Plan assets at January 1,                                       $ 7,045,921         $  5,699,073        $4,670,182
           Actual contributions                                                -                    -                 -
           Actual distributions                                           (7,622,385)            (144,739)         (189,504)
           Actual returns                                                    576,464            1,491,587         1,218,395
                                                                             -------            ---------         ---------

         Plan assets at December 31,                                      $    -             $  7,045,921        $5,699,073
                                                                             =======         ============        ==========

         Plan assets at fair value                                        $    -             $  7,045,921        $5,699,073
         Projected benefit obligation                                          -               (4,791,364)       (4,423,566)
                                                                             -------           ----------         ----------
         Plan assets in excess of
           projected benefit obligation                                        -               2,254,557          1,275,507
         Unrecognized prior service cost                                       -                   -                123,133
         Unrecognized net gain                                                 -                (684,244)        (1,425,979)
         Unrecognized net asset from transition                                -                 (24,336)           (36,505)
         --------------------------------------                             ------              --------           --------

         Prepaid (accrued) pension expense included in other assets $          -            $  1,545,977         $  (63,844)
                                                                          ===========       ============         ==========

         Net pension expense includes the following:

           Service cost                                                   $    -            $     -              $  201,699
           Interest cost                                                       -                254,144             339,278
           Actual return on assets                                          (576,464)        (1,491,587)        (1,218,395)
           Net amortization and deferral                                     874,288            939,619             830,649
                                                                             -------            -------             -------

         Net pension expense (benefit)                                    $  297,824        $  (297,824)         $  153,231
                                                                          ==========        ============         ==========

</TABLE>


                                     F - 21
<PAGE>

                        NOTES  TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 10. PENSION AND PROFIT SHARING PLANS (continued)

          Assumptions used in the accounting for net pension expense were:

<TABLE>
<CAPTION>

                                                                      2000                   1999            1998
                                                                      ----                   ----            ----
<S>                                                                  <C>                    <C>             <C>
         Discount rates                                               N/A                    5.5%            8.5%
         Rate of increase in compensation levels                      N/A                    6.5%            6.5%
         Long-term rate of return on assets                           N/A                    8.5%            8.5%

</TABLE>

         The Bank also has a defined contribution retirement plan qualifying
         under Section 401(k) of the Internal Revenue Code that is funded
         through a profit sharing agreement and voluntary employee
         contributions. Effective January 1, 1999, the plan was amended to
         provide for discretionary employer matching contributions to be
         determined annually by the Board of Directors. The Bank's contributions
         to the plan are determined annually by the Board of Directors. The plan
         covers substantially all employees. The Bank's contributions to the
         plan included in employee benefit expense were $230,971, $187,704, and
         $102,757 for the years ended December 31, 2000, 1999, and 1998,
         respectively.

NOTE 11. POST-RETIREMENT HEALTH CARE BENEFITS

         The Bank provides health care benefits to employees who retire at age
         65. The plan is funded only by the Bank's monthly payments of insurance
         premiums due. The following table sets forth the financial status of
         the plan at December 31, 2000, 1999, and 1998:

<TABLE>
<CAPTION>

                                                                               2000            1999             1998
                                                                               ----            ----             ----
         Accumulated post-retirement benefit obligation:

<S>                                                                      <C>              <C>              <C>
           Retirees                                                       $   299,422      $  308,960       $  239,773
           Other active participants, fully eligible                            -               -               27,741
           Other active participants, not fully eligible                      659,531         786,293          493,449
                                                                              -------         -------          -------
                                                                              958,953       1,095,253          760,963
         Unrecognized net gain                                                250,074          11,504          347,097
         Unrecognized transition obligation                                  (467,585)       (500,984)        (534,383)
         Unrecognized past service cost                                       102,822         109,746             -
                                                                              -------         -------           -------

         Accrued post-retirement benefit cost                             $   844,264      $  715,519       $  573,677
                                                                          ===========      ==========       ==========

         Net post-retirement benefit expense for the years ended December
         31, 2000, 1999, and 1998 includes the following:

         Service cost                                                     $    73,360       $  71,739        $  56,771
         Interest cost                                                         60,006          67,844           48,979
         Amortization of unrecognized transition obligation                    33,399          33,399           33,399
         Amortization of net gain                                              (6,879)             -           (13,052)
         Amortization of past service cost                                     (6,924)         (6,924)            -
                                                                               ------          ------           ------

         Net post-retirement benefit expense                              $   152,962      $  166,058       $  126,097
                                                                          ===========      ==========       ==========

         Assumptions used in the accounting for net post-retirement benefit
         expense were:

         Health care cost trend rate                                             5.0%            5.0%             5.0%
         Discount rate                                                           6.5%            6.5%             6.8%

</TABLE>


                                     F - 22
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. POST-RETIREMENT HEALTH CARE BENEFITS (continued)

         If the assumed health care cost trend rate were increased to 6% for
         2000, 1999, and 1998, the total of the service and interest cost
         components of net periodic post-retirement health care benefit cost
         would increase by $28,474, $37,610, and $28,471 for the years ended
         December 31, 2000, 1999, and 1998, respectively, and the accumulated
         post-retirement benefit obligation would increase to $181,436,
         $203,668, and $154,568 as of December 31, 2000, 1999, and 1998,
         respectively.

NOTE 12. OTHER BENEFIT PLANS (see also Note 15)

         In March 1998, the Bank established and funded a grantor trust for
         $1,500,000 as part of a change in control severance plan covering
         substantially all employees. Participants in the plan are entitled to
         cash severance benefits upon termination of employment, for any reason
         other than just cause, should a "change in control" of the Company
         occur.

         In March 1998, the Company and Bank also established and the Bank
         funded a grantor trust for $2,000,000 for indemnification of the
         officers and directors of the Bank and/or Company for any litigation
         expenses incurred in connection with any "change of control" of the
         Company.

         Subsequent to the repurchase of the Company's common stock under a
         "Redemption Agreement" and entering into a standstill agreement (see
         Note 15), and effective as of December 31, 1998, all assets held by
         these trusts were returned to the Bank. The severance trust continues
         to exist on an unfunded status, while the litigation trust was
         terminated on December 31, 1998.

         In March 1998, the Bank established and funded a grantor trust for
         $285,000 as part of an employment agreement with the then Chief
         Operating Officer of the Bank. The agreement provided for the payment
         of benefits upon termination of employment, for a reason other than
         just cause, after a "change in control" of the Company.

         In January 2000, the Bank terminated this grantor trust, due to the
         resignation of the Chief Operating Officer of the Bank during 1999.
         Balances held in the trust of approximately $307,000 at time of
         termination were subsequently returned to the Bank.

NOTE 13. OTHER OPERATING EXPENSES

         Other operating expenses include the following:

<TABLE>
<CAPTION>

                                                                               2000             1999         1998

<S>                                                                      <C>               <C>            <C>
         Professional services                                            $    642,609      $   714,929    $ 2,163,448
         Stationery, printing and supplies                                     224,453          251,388        241,029
         Postage and delivery                                                  269,710          235,110        239,519
         FDIC assessment                                                        67,393           22,481         81,162
         Directors fees and expenses                                           114,442          134,092        151,737
         Marketing                                                             251,113          342,737        305,794
         Data processing                                                       231,097          222,709        205,839
         Correspondent bank services                                            95,245           98,896        114,689
         Telephone                                                             100,026          102,757         95,572
         Liability insurance                                                    98,446           91,783         89,149
         Losses and expenses on real estate owned (OREO)                        58,334           38,218         33,414
         Asset impairment loss on Ferndale branch and
           related closing expenses (see Note 5)                               280,460          -                -
         Other                                                                 608,843          595,645        391,567
                                                                               -------          -------        -------

                                                                          $  3,042,171      $ 2,850,745    $ 4,112,919
                                                                          ============      ===========    ===========
</TABLE>


                                     F - 23
<PAGE>

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. LITIGATION CHARGES

           In 1998, the Company accrued for losses of $420,000 and incurred
           additional actual losses of $805,003 relating to legal claims
           involving fraudulent check endorsement issues and/or bankruptcies.
           These nonrecurring charges were included in other expenses for 1998.
           In 1999, the Company settled on these claims for $220,000.

NOTE 15. REPURCHASE AND RETIREMENT OF COMPANY COMMON STOCK

           During 1998, the Company was pursued by another competing financial
           institution (the institution) in a hostile take-over attempt. In
           November 1998, the Company reached an agreement with the institution
           to repurchase 213,168 shares of its common stock, or approximately
           19.5% of its then outstanding shares, for an aggregate purchase price
           of $5,580,764. In conjunction with the redemption agreement, the
           Company and the institution also entered into a standstill agreement
           through November 2008. Under the standstill agreement, the Company
           will make payments over five years totaling $675,510 beginning with a
           payment of $150,000 in January 1999 and four subsequent annual
           payments of $131,378.

           During 2000 and 1999, the Company made payments totaling $131,378 and
           $281,378, respectively, relating to the standstill agreement. These
           payments are included in other expenses.

NOTE 16. COMMITMENTS AND CONTINGENCIES

           Financial instruments:

           The Bank is a party to financial instruments in the normal course of
           business to meet the financing needs of its customers. These
           financial instruments include commitments to extend credit and
           standby letters of credit, which involve, to varying degrees,
           elements of credit and interest rate risk in excess of the amounts
           recognized in the consolidated financial statements.

           Outstanding loan commitments, unused lines of credit and letters of
           credit are as follows:

<TABLE>
<CAPTION>
                                                                December 31,
                                            --------------------------------------------------
                                                2000               1999            1998
                                             ----------         ----------       ----------
<S>                                       <C>                  <C>                 <C>
Loan commitments:
   Construction and land development        $     450,000      $    740,000    $  1,537,400
   Other mortgage loans                            79,000           739,800       1,671,050
                                               ----------       ----------        ----------
                                            $     529,000      $  1,479,800    $  3,208,450
                                               ==========        ==========      ==========
Unused lines of credit:
   Home-equity lines                        $   3,417,102      $  3,215,502    $  3,029,929
   Commercial lines                             7,615,035         9,981,462       6,149,939
   Unsecured consumer lines                       908,600           824,978         851,390
                                                ----------       ----------      ----------
                                            $  11,940,737      $ 14,021,942    $ 10,031,258
                                               ==========        ==========      ==========
Letters of credit:                          $   1,237,878      $  1,384,969    $  2,012,626
                                               ==========        ==========      ==========
</TABLE>

                                     F - 24
<PAGE>

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16. COMMITMENTS AND CONTINGENCIES (continued)

           Loan commitments and lines of credit are agreements to lend to
           customers as long as there is no violation of any conditions of the
           contracts. Loan commitments generally have interest rates fixed at
           current market amounts, fixed expiration dates, and may require
           payment of a fee. Lines of credit generally have variable interest
           rates. Many of the loan commitments and lines of credit are expected
           to expire without being drawn upon; accordingly, the total commitment
           amounts do not necessarily represent future cash requirements. The
           Bank evaluates each customer's creditworthiness on a case-by-case
           basis. The amount of collateral or other security obtained, if deemed
           necessary by the Bank upon extension of credit, is based on
           management's credit evaluation. Collateral held varies but may
           include deposits held in financial institutions, U.S. Treasury
           securities, other marketable securities, accounts receivable,
           inventory, property and equipment, personal residences,
           income-producing commercial properties, and land under development.
           Personal guarantees are also obtained to provide added security for
           certain commitments.

           Letters of credit are conditional commitments issued by the Bank to
           guarantee the performance of a customer to a third party. Those
           guarantees are primarily issued to guarantee the installation of real
           property improvements and similar transactions. The credit risk
           involved in issuing letters of credit is essentially the same as that
           involved in extending loan facilities to customers. The Bank holds
           collateral and obtains personal guarantees supporting those
           commitments for which collateral or other securities is deemed
           necessary.

           The Bank's exposure to credit loss in the event of nonperformance by
           the customer is the contractual amount of the commitment. Loan
           commitments, lines of credit, and letters of credit are made on the
           same terms, including collateral, as outstanding loans. As of
           December 31, 2000, 1999, and 1998, the Bank has provided as an
           allowance for credit losses related to these financial instruments
           with off-balance sheet risk $105,642, $71,623, and $67,168,
           respectively, which is reflected as a reduction of loans.

           Sale of credit card portfolio:

           On February 15, 2000, the Bank sold its credit card portfolio to
           another financial institution. The outstanding balance of the
           portfolio as of the date of settlement was $1,064,857.

           As a result of the sale, the Bank was required to fund a loan loss
           reserve from part of the settlement proceeds for all non-business
           accounts with the financial institution of approximately $48,000.
           This reserve is for a one year period with any remaining reserve
           returned to the Bank. The Bank has no additional responsibilities for
           any loan losses in excess of the initial reserves. As of December 31,
           2000, the loan loss reserve was depleted. In addition to the loan
           loss reserve for non-business accounts, the Bank was also required to
           guarantee all business accounts for a one year period. Total Bank
           exposure for business accounts is approximately $427,000 with a total
           outstanding balance of approximately $70,000 as of December 31, 2000.

                                     F - 25
<PAGE>

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. GUARANTEED PREFERRED BENEFICIAL INTEREST IN JUNIOR SUBORDINATED
         DEBENTURES

           On September 7, 2000, Glen Burnie Statutory Trust I, a Connecticut
           business trust newly formed and wholly owned by the Company, issued
           $5,155,000 of capital securities at 10.6% to institutional investors.
           The proceeds were upstreamed to the Company as junior subordinated
           debt under the same terms and conditions. The Company has, through
           various contractual arrangements, fully and unconditionally
           guaranteed all of Statutory Trust I's obligations with respect to the
           capital securities. These capital securities qualify as Tier I
           capital and are presented in the Consolidated Balance Sheets as
           "Guaranteed Preferred Beneficial Interests in Glen Burnie Bancorp's
           Junior Subordinated Debentures." The sole asset of the Statutory
           Trust I is $5,155,000 of junior subordinated debentures issued by the
           Company. These junior subordinated debentures carry an interest rate
           of 10.6%, payable semiannually, with a non call provision over the
           first 10 year period, and a declining 10 year premium call
           thereafter. Both the capital securities Statutory Trust I and the
           junior subordinated debentures are scheduled to mature on September
           7, 2030, unless called by the Company not earlier than September 7,
           2010.

           Cost associated with the issuance of the trust preferred securities
           totaling $150,000 were capitalized and are being amortized through
           2030. The unamortized balance is included in Other Assets in the
           Consolidated Balance Sheets.

NOTE 18. STOCKHOLDERS' EQUITY

           Restrictions on dividends:

           Banking regulations limit the amount of dividends that may be paid
           without prior approval of the Bank's regulatory agencies. Regulatory
           approval is required to pay dividends which exceed the Bank's net
           profits for the current year plus its retained net profits for the
           preceding two years. Retained earnings from which dividends may not
           be paid without prior approval were approximately $2,694,000 and
           $2,276,000 at December 31, 2000 and 1999, respectively, based on the
           earnings restrictions and minimum capital ratio requirements noted
           below.

           Change in par value of common stock:

           In December 1999, the Company changed the par value of its common
           stock from $10 par value to $1 par value. The $9 per share of par
           value has been reclassified as surplus. Prior year financial
           statements presented have been restated to conform to the current
           year's presentation.

           Stock repurchase program:

           In December 2000, the Company instituted a Stock Repurchase Program.
           Under the program, the Company may spend up to $250,000 to repurchase
           its outstanding stock. The repurchases may be made from time to time
           at a price not to exceed $16 per share. The Company will terminate
           the Program by December 2001 or earlier. During January 2001, the
           company repurchased 4,000 shares at an average price of $14.50.

                                     F - 26
<PAGE>

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18. STOCKHOLDERS EQUITY (continued)

           Employee stock purchase benefit plans:

           During 1998, the Company established a stock-based
           compensation plan, which is described below. The Bank applies
           Accounting Principles Board Opinion ("APB") No. 25 and related
           Interpretations in accounting for this plan. Net compensation cost
           (benefit) of ($10,889), $90, and $21,607 have been recognized in the
           accompanying consolidated financial statements in 2000, 1999, and
           1998, respectively. If compensation cost for the Company's
           stock-based compensation plan had been determined based on the fair
           value at the grant date for awards under this plan consistent with
           the methods outlined in SFAS No. 123 ACCOUNTING FOR STOCK-BASED
           COMPENSATION, there would be no material change in reported net
           income.

           Employees who have completed one year of service are eligible to
           participate in the employee stock purchase plan. The number of shares
           of common stock granted under options will bear a uniform
           relationship to compensation. The plan allows employees to buy stock
           under options granted at the lesser of 85% of the fair market value
           of the stock on the date of grant or exercise. Options granted will
           expire no later than 27 months from the grant date or upon
           termination of employment. Activity under this plan is as follows:


<TABLE>
<CAPTION>

                                                                                                                            Grant
                                                                                                    Shares                  Price
           <S>                                                                                   <C>                   <C>
           Granted on July 1, 1998, expiring October 1, 1999                                        5,794               $   21.25
           Expired                                                                                    (32)
           Exercised                                                                                 (935)
                                                                                                  -------
           Outstanding December 31, 1998                                                            4,827               $   21.25

           Exercised                                                                               (1,040)              $   21.25
           Expired                                                                                 (3,787)              $   21.25

           Granted on August 12, 1999, expiring November 12, 2000                                   4,095               $   19.76
           Exercised                                                                                 (975)
                                                                                                  -------
           Outstanding December 31, 1999                                                            3,120               $   19.76

           Expired                                                                                 (3,120)              $   19.76
                                                                                                  -------
           Outstanding December 31, 2000                                                            -
                                                                                                  =======
</TABLE>

           At December 31, 2000, 1999, and 1998, there were 27,708, 27,708, and
           24,065 shares of common stock reserved for issuance under the plan,
           respectively.

           The Board of Directors may suspend or discontinue the plan at its
           discretion.

           Dividend reinvestment and stock purchase plan:

           The Company's dividend reinvestment and stock purchase plan allows
           all participating stockholders the opportunity to receive additional
           shares of common stock in lieu of cash dividends at 95% of the fair
           market value on the dividend payment date.

           During 2000, 1999, and 1998, 13,894, 4,832, and 7,015 shares of
           common stock, respectively, were purchased under the plan. At
           December 31, 2000, 1999, and 1998, there were 111,897, 125,791, and
           109,658 shares of common stock reserved for issuance under the plan,
           respectively.

                                     F - 27
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18. STOCKHOLDERS EQUITY (continued)

           The Board of Directors may suspend or discontinue the plan at
           its discretion.

           Stockholder purchase plan:

           The Company's stockholder purchase plan allows participating
           stockholders an option to purchase newly issued shares of common
           stock. The number of shares that may be purchased pursuant to options
           shall be determined by the Board of Directors. Options granted will
           expire no later than three months from the grant date. Each option
           will entitle the stockholder to purchase one share of common stock,
           and will be granted in proportion to stockholder share holdings. At
           the discretion of the Board of Directors, stockholders may be given
           the opportunity to purchase unsubscribed shares.

<TABLE>
<CAPTION>

                                                                                                Grant
                                                                             Shares             Price

           <S>                                                             <C>                <C>
           Granted on November 30, 1998, expiring January 29, 1999           110,396            $ 26.125
           Exercised                                                          (7,388)
                                                                            --------

           Outstanding December 31, 1998                                     103,008            $ 26.125

           Exercised                                                          (3,347)           $ 26.125
           Expired                                                           (99,661)           $ 26.125

           Granted on June 24, 1999, expiring September 24, 1999              50,000            $ 23.250
           Exercised                                                          (3,722)
           Expired                                                           (46,278)           $ 23.250

           Granted on September 24, 1999, expiring December 24, 1999          50,000            $ 23.000
           Exercised                                                          (2,401)
           Expired                                                           (47,599)           $ 23.000
                                                                            --------

           Outstanding December 31, 1999                                     -

           Granted on January 24, 2000, expiring March 24, 2000               50,000            $ 18.800
           Exercised                                                          (1,538)
           Expired                                                           (48,462)           $ 18.800

           Granted on March 21, 2000, expiring June 23, 2000                  50,000            $ 18.800
           Exercised                                                          (1,121)
           Expired                                                           (48,879)           $ 18.800
                                                                            --------

           Outstanding December 31, 2000                                        -
                                                                            ========
</TABLE>

           At December 31, 2000, 1999, and 1998 there were 121,111, 123,770, and
           112,612 shares of common stock reserved for issuance under the plan,
           respectively.


           The Board of Directors may suspend or discontinue the plan at its
           discretion.

                                     F - 28
<PAGE>

                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18. STOCKHOLDERS EQUITY (continued)

           Regulatory capital requirements:

           The Company and Bank are subject to various regulatory capital
           requirements administered by Federal and State banking agencies.
           Failure to meet minimum capital requirements can initiate certain
           mandatory, and possibly additional discretionary actions by
           regulators that, if undertaken, could have a direct material effect
           on the Company's financial statements. The Company and Bank must meet
           specific capital guidelines that involve quantitative measures of the
           Company's and Bank's assets, liabilities, and certain off-balance
           sheet items as calculated under regulatory accounting principles. The
           Company's and Bank's capital amounts and classification are also
           subject to qualitative judgments by the regulators about components,
           risk weightings, and other factors.

           Quantitative measures established by regulation to ensure capital
           adequacy require the Company and Bank to maintain minimum amounts and
           ratios (as defined in the regulations) of total and Tier I capital to
           risk-weighted assets and of Tier I capital to average assets.
           Management believes, as of December 31, 2000, 1999, and 1998, that
           the Company and Bank meet all capital adequacy requirements to which
           it is subject.

           As of December 31, 2000, the most recent notification from the FDIC
           categorized the Bank as well capitalized under the regulatory
           framework for prompt corrective action. To be categorized as well
           capitalized the Bank must maintain minimum total risk-based, Tier I
           risk-based, and Tier I leverage ratios. There are no conditions or
           events since that notification that management believes have changed
           the Bank's category.

           A comparison of capital as of December 31, 2000, 1999, and 1998 with
           minimum requirements is approximately as follows:
<TABLE>
<CAPTION>

                                                                                       TO BE WELL CAPITALIZED
                                                                     FOR CAPITAL      UNDER PROMPT CORRECTIVE
                                                   ACTUAL         ADEQUACY PURPOSES     ACTION PROVISIONS
                                            AMOUNT       RATIO     AMOUNT    RATIO      AMOUNT      RATIO
                                           --------     -------   --------  -------    --------    -------
<S>                                       <C>           <C>       <C>          <C>     <C>           <C>
          AS OF DECEMBER 31, 2000
             TOTAL CAPITAL
               (TO RISK WEIGHTED ASSETS)
                COMPANY                   $24,092,000    14.0%    $13,772,000   8.0%            N/A
                BANK                       23,655,000    13.7%     13,863,000   8.0%   $17,328,000    10.0%

             TIER I CAPITAL
               (TO RISK WEIGHTED ASSETS)
                COMPANY                    21,925,000    12.7%      6,886,000   4.0%            N/A
                BANK                       21,474,000    12.4%      6,932,000   4.0%    10,397,000     6.0%

             TIER I CAPITAL
               (TO AVERAGE ASSETS)
                COMPANY                    21,925,000     9.3%      9,424,000   4.0%            N/A
                BANK                       21,474,000     9.1%      9,424,000   4.0%    11,780,000     5.0%

</TABLE>

                                     F - 29
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18. STOCKHOLDERS EQUITY (continued)
<TABLE>
<CAPTION>
                                                                                              TO BE WELL CAPITALIZED
                                                                            FOR CAPITAL      UNDER PROMPT CORRECTIVE
                                                       ACTUAL             ADEQUACY PURPOSES     ACTION PROVISIONS
                                               AMOUNT          RATIO     AMOUNT       RATIO    AMOUNT        RATIO
                                              --------        -------   --------     -------  --------      -------
         <S>                                  <C>             <C>      <C>            <C>    <C>            <C>
         As of December 31, 1999
           Total Capital
             (to Risk Weighted Assets)
              Company                         $16,912,000     10.8%    $12,527,000      8.0%          N/A
              Bank                             16,586,000     10.3%     12,870,000      8.0%   $16,087,000     10.0%

           Tier I Capital
             (to Risk Weighted Assets)
              Company                          14,942,000      9.5%      6,265,000      4.0%          N/A
              Bank                             14,563,000      9.0%      6,437,000      4.0%     9,655,000      6.0%

           Tier I Capital
             (to Average Assets)
              Company                          14,942,000      6.8%      8,815,000      4.0%          N/A
              Bank                             14,563,000      6.6%      8,813,000      4.0%    11,016,000      5.0%

         As of December 31, 1998
           Total Capital
             (to Risk Weighted Assets)
              Company                         $14,785,000     10.5%    $11,265,000      8.0%          N/A
              Bank                             14,495,000     10.4%     11,150,000      8.0%   $13,938,000     10.0%

           Tier I Capital
             (to Risk Weighted Assets)
              Company                          13,018,000      9.3%      5,599,000      4.0%          N/A
              Bank                             12,736,000      9.1%      5,598,000      4.0%     8,397,000      6.0%

           Tier I Capital
             (to Average Assets)
              Company                          13,018,000      6.0%      8,722,000      4.0%          N/A
              Bank                             12,736,000      5.8%      8,723,000      4.0%    10,904,000      5.0%
</TABLE>

NOTE 19. EARNINGS PER COMMON SHARE

         Earnings per common share are calculated as follows:
         <TABLE>
         <CAPTION>

                                                                             2000            1999            1998
                                                                         -----------      -----------     ----------
         <S>                                                       <C>                 <C>               <C>
         Basic:
           Net income                                              $      2,274,866    $  1,445,350      $    833,192
           Weighted average common shares outstanding                     1,100,804       1,085,078         1,253,275
           Basic net income per share                              $           2.07    $       1.33      $       0.66

         Diluted:
           Net income                                                                                    $    833,192
           Weighted average common shares outstanding                                                       1,253,275
           Dilutive effect of stock options                                                                       362
                                                                                                           ----------
           Average common shares outstanding - diluted                                                      1,253,637
           Diluted net income per share                                                                  $       0.66
</TABLE>

           Diluted earnings per share calculations were not required for 2000
           since there were no outstanding options at December 31, 2000.

                                     F - 30
<PAGE>

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19. EARNINGS PER COMMON SHARE (continued)

           Diluted earnings per share calculations were not required for 1999,
           due to all options having an anti-dilutive effect and the Company
           having a simple capital structure.

           During 1998, options relating to the stockholder purchase plan have
           an anti-dilutive effect, and therefore were not included in the
           diluted calculation.

NOTE 20. FAIR VALUES OF FINANCIAL INSTRUMENTS

           In accordance with the disclosure requirements of SFAS No. 107, the
           estimated fair value and the related carrying values of the Company's
           financial instruments are as follows:
<TABLE>
<CAPTION>
                                                  2000                         1999                        1998
                                         ----------------------------------------------------------------------------------
                                         CARRYING       FAIR          Carrying       Fair         Carrying       Fair
                                         AMOUNT         VALUE         Amount         Value        Amount         Value
                                         ----------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>           <C>          <C>            <C>
FINANCIAL ASSETS:
  CASH AND DUE FROM BANKS                $9,559,329     $9,559,329    $8,317,450    $8,317,450   $8,197,344     $8,197,344
  INTEREST-BEARING DEPOSITS IN
    OTHER FINANCIAL INSTITUTIONS             50,947         50,947        10,245        10,245    4,958,337      4,958,337
  FEDERAL FUNDS SOLD                      5,898,863      5,898,863       555,627       555,627    2,863,635      2,863,635
  CERTIFICATES OF DEPOSIT IN OTHER
    FINANCIAL INSTITUTIONS                  100,000        100,000          -             -            -              -
  INVESTMENT SECURITIES
    AVAILABLE FOR SALE                   21,308,961     21,308,961    14,664,953    14,664,953   31,988,139     31,988,139
  INVESTMENT SECURITIES HELD TO
    MATURITY                             31,285,937     31,019,121    28,657,242    27,041,751   32,561,288     32,539,731
  FEDERAL HOME LOAN BANK STOCK              652,300        652,300       652,300       652,300      936,400        936,400
  COMMON STOCK - STATUTORY TRUST I          155,000        155,000       -              -            -              -
  GROUND RENTS                              249,900        249,900       254,025       254,025      257,025        257,025
  LOANS, LESS ALLOWANCE FOR
   CREDIT LOSSES                        162,373,731    162,525,000   151,106,560   138,422,000  125,501,252    125,980,000
  ACCRUED INTEREST RECEIVABLE             1,681,219      1,681,219     1,279,067     1,279,067    1,401,660      1,401,660

FINANCIAL LIABILITIES:

  DEPOSITS                              205,968,337    205,969,000   194,089,995   194,002,000  199,611,115    201,124,000
  SHORT-TERM BORROWINGS                     487,978        487,978     2,464,936     2,464,936    1,143,904      1,143,904
  LONG-TERM BORROWINGS                    7,296,523      7,296,523          -             -            -              -
  DIVIDENDS PAYABLE                         213,345        213,345       136,666       136,666      123,039        123,039
  ACCRUED INTEREST PAYABLE                  195,166        195,166       152,555       152,555      160,597        160,597
  ACCRUED INTEREST PAYABLE ON
    JUNIOR SUBORDINATED DEBENTURES          166,986        166,986          -             -            -              -
  GUARANTEED PREFERRED BENEFICIAL
    INTERESTS IN GLEN BURNIE
    BANCORP JUNIOR SUBORDINATED
    DEBENTURES                            5,155,000      5,155,000          -             -            -              -

  UNRECOGNIZED FINANCIAL INSTRUMENTS:
    COMMITMENTS TO EXTEND
      CREDIT                             12,469,737     12,364,095    15,501,742    15,430,119   13,239,708     13,172,540
    STANDBY LETTERS OF CREDIT             1,237,878      1,237,878     1,384,969     1,384,969    2,012,626      2,012,626
</TABLE>

                                     F - 31
<PAGE>

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  NOTE 20. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)

           For purposes of the disclosures of estimated fair value, the
           following assumptions were used.

           Loans:

           The estimated fair value for loans is determined by discounting
           future cash flows using current rates at which similar loans would be
           made to borrowers with similar credit ratings and for the same
           remaining maturities.

           Investment securities:

           Estimated fair values are based on quoted market prices.

           Deposits:

           The estimated fair value of deposits with no stated maturity, such as
           noninterest-bearing demand deposits, savings, NOW accounts and money
           market accounts, is equal to the amount payable on demand at the
           reporting date (that is, their carrying amounts). The fair value of
           certificates of deposit is based on the rates currently offered for
           deposits of similar maturities. The fair value estimates do not
           include the benefit that results from the low-cost funding provided
           by the deposit liabilities compared to the cost of borrowing funds in
           the market.

           Other assets and liabilities:

           The estimated fair values for cash and due from banks,
           interest-bearing deposits in other financial institutions, Federal
           funds sold, accrued interest receivable and payable, and short-term
           borrowings are considered to approximate cost because of their
           short-term nature.

           Other assets and liabilities of the Bank that are not defined as
           financial instruments are not included in the above disclosures, such
           as property and equipment. Also, non-financial instruments typically
           not recognized in the financial statements nevertheless may have
           value but are not included in the above disclosures. These include,
           among other items, the estimated earnings power of core deposit
           accounts, the trained work force, customer goodwill, and similar
           items.

NOTE 21.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

           In September 2000, the Financial Accounting Standards Board (FASB)
           issued Statement No. 140, ACCOUNTING FOR TRANSFERS AND SERVICING OF
           FINANCIAL ASSETS AND EXTINGUISHMENT OF LIABILITIES. This statement
           replaces Statement No. 125. The Statement revises the standards for
           accounting for securitizations and other transfers of financial
           assets and collateral and required disclosures. Statement No. 140 is
           effective for transfers and servicing of financial assets and
           extinguishments of liabilities occurring after March 31, 2001 with
           the exception of certain financial statement disclosures, which are
           effective for fiscal years ending after December 15, 2000. The Bank
           is currently in compliance with this pronouncement.

                                     F - 32
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22. PARENT COMPANY FINANCIAL INFORMATION

         The Balance Sheets, Statements of Income, and Statements of Cash Flows
         for Glen Burnie Bancorp (Parent Only) are presented below:
<TABLE>
<CAPTION>

                                                 Balance Sheets
         -----------------------------------------------------------------------------------------------------------------
         December 31,                                                   2000                 1999                1998
         -----------------------------------------------------------------------------------------------------------------
         <S>                                                        <C>                  <C>                 <C>
                                                     ASSETS

         Cash                                                       $   110,768          $   184,555         $   239,226
         Investment in The Bank of Glen Burnie                       22,013,186           14,722,533          13,886,563
         Investment in GBB Properties, Inc.                             238,645              235,706             165,637
         Investment in the Glen Burnie Statutory Trust I                155,000                 -                   -
         Due from subsidiaries                                          198,479               96,321               4,789
         Other assets                                                   150,000                 -                   -
                                                                    ------------         -----------         -----------
               TOTAL ASSETS                                         $22,866,078          $15,239,115         $14,296,215
                                                                    ============         ===========         ===========
                               LIABILITIES AND STOCKHOLDERS' EQUITY

         Dividends payable                                          $   213,345          $   136,666         $   123,039
         Accrued interest payable on junior subordinated
              debentures                                                166,986                 -                   -
         Due to subsidiary                                              150,000                 -                  4,503
                                                                    ------------         -----------         -----------
               TOTAL LIABILITIES                                        530,331              136,666             127,542
                                                                    ------------         -----------         -----------
         Guaranteed preferred beneficial interests in Glen Burnie
            Bancorp junior subordinated debentures                    5,155,000                 -                   -
                                                                    ------------         -----------         -----------

         Stockholders' equity:
            Common stock                                              1,110,049            1,093,496             894,938
            Surplus                                                  10,373,549           10,149,247           9,788,889
            Retained earnings                                         5,544,305            4,013,171           3,202,488
            Accumulated other comprehensive income, net of
             taxes (benefits)                                           152,844             (153,465)            282,358
                                                                    ------------         -----------         -----------
             TOTAL STOCKHOLDERS' EQUITY                              17,180,747           15,102,449          14,168,673
                                                                    ------------         -----------         -----------
             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $22,866,078          $15,239,115         $14,296,215
                                                                    ============         ===========         ===========
</TABLE>
<TABLE>
<CAPTION>

                              Statements of Income
         ----------------------------------------------------------------------------------------------------------------
         Years Ended December 31,                                      2000                 1999                1998
         ----------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                  <C>                 <C>
         Dividends and distributions from subsidiaries              $   475,000          $   350,000         $ 5,740,764
         Standstill agreement expense                                  (131,378)            (281,378)               -
         Interest expense on junior subordinated debentures            (166,986)                -                   -
         Other expenses, net of revenues of $279 in 1998                 (2,100)              (1,078)               (840)
                                                                    ------------         -----------         -----------
         Income before income taxes and equity in
            undistributed net income of subsidiaries                    174,536               67,544           5,739,924
         Income tax benefit                                             102,158               96,035                 286
         Change in undistributed net income of subsidiaries           1,998,172            1,281,771          (4,907,018)
                                                                    ------------         -----------         -----------
            NET INCOME                                              $ 2,274,866          $ 1,445,350          $  833,192
                                                                    ============         ===========         ===========

</TABLE>
                                     F - 33
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22. PARENT COMPANY FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>

                            Statements of Cash Flows
       ---------------------------------------------------------------------------------------------------------------
       Years Ended December 31,                                           2000             1999             1998
       ---------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>             <C>
       CASH FLOWS FROM OPERATING ACTIVITIES:
        Net income                                                     $ 2,274,866    $ 1,445,350     $ 833,192
        Adjustments to reconcile net income to net
         cash provided by operating activities:
        (Increase) decrease in other assets                               (150,000)          -            1,259
         Increase in due from subsidiaries                                (102,158)       (91,533)       (4,789)
         Increase (decrease) in due to subsidiaries                        150,000         (4,503)        2,600
         Increase in accrued interest payable                              166,986           -             -
         Change in undistributed net income of
          subsidiaries                                                  (1,998,172)    (1,281,771)    4,907,018
                                                                        -----------    -----------    ---------
          Net cash provided by operating activities                        341,522         67,543     5,739,280
                                                                        -----------    -----------    ---------
        CASH FLOWS FROM INVESTING ACTIVITIES:
         Purchase of common stock in the Glen Burnie
           Statutory Trust I                                              (155,000)          -             -
         Capital contributed to subsidiary                              (5,000,000)       (60,000)         -
                                                                        -----------    -----------    ---------
             Net cash used by investing activities                      (5,155,000)       (60,000)         -
                                                                        -----------    -----------    ---------
        CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from dividend reinvestment plan                          201,755        106,149       166,515
         Issuance of guaranteed preferred beneficial interests in
          Glen Burnie Bancorp junior subordinated debentures             5,155,000           -             -
         Proceeds from sales of common stock                                49,989        270,566       212,880
         Repurchase and retirement of common stock                            -              (138)   (5,580,764)
         Dividends paid                                                   (667,053)      (438,791)     (464,880)
                                                                        -----------    -----------    ---------
           Net cash provided (used) in financing activities              4,739,691        (62,214)   (5,666,249)
                                                                        -----------    -----------    ---------
        INCREASE (DECREASE) IN CASH                                        (73,787)       (54,671)       73,031

        CASH, BEGINNING OF YEAR                                            184,555        239,226       166,195
                                                                        -----------    -----------    ---------
        CASH, END OF YEAR                                                $ 110,768      $ 184,555     $ 239,226
                                                                        ===========    ===========    =========
</TABLE>

                                     F - 34
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 23. QUARTERLY RESULTS OF OPERATIONS (Unaudited)

         The following is a summary of the Consolidated unaudited quarterly
         results of operations:
<TABLE>
<CAPTION>

                                    2000                                    THREE MONTHS ENDED,
         ---------------------------------------------------------------------------------------------------------------
         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)  DECEMBER 31   SEPTEMBER 30     JUNE 30       MARCH 31
         ---------------------------------------------------------------------------------------------------------------
<S>                                                          <C>            <C>            <C>            <C>
          INTEREST INCOME                                    $4,415         $4,141         $4,318         $3,829
          INTEREST EXPENSE                                    1,688          1,478          1,392          1,344
          NET INTEREST INCOME                                 2,727          2,663          2,926          2,485
          PROVISION FOR CREDIT LOSSES                           -              -              -             -
          NET SECURITIES GAINS (LOSSES)                         -              (26)           -             -
          INCOME (LOSS) BEFORE INCOME TAXES                   1,159            685          1,330            539
          NET INCOME                                            612            466            830            367
          NET INCOME PER SHARE (BASIC AND DILUTED)            $0.70          $0.42          $0.66          $0.29

                                    1999                                    Three months ended,
         --------------------------------------------------------------------------------------------------------------
         (Dollars in thousands, except per share amounts)  December 31   September 30     June 30       March 31
         --------------------------------------------------------------------------------------------------------------
          Interest income                                    $3,894         $3,957         $3,802         $3,895
          Interest expense                                    1,428          1,410          1,379          1,406
          Net interest income                                 2,466          2,547          2,423          2,489
          Provision for credit losses                           300            -              -              -
          Net securities gains                                  (93)             2              2             25
          Income (loss) before income taxes                   1,156            626            553            296
          Net income                                            487            403            361            194
          Net income per share (basic and diluted)            $0.52          $0.37          $0.29          $0.15

                                   1998                                     Three months ended,
         --------------------------------------------------------------------------------------------------------------
         (Dollars in thousands, except per share amounts)   December 31  September 30     June 30        March 31
         --------------------------------------------------------------------------------------------------------------

          Interest income                                    $3,977         $3,986         $3,930         $3,996
          Interest expense                                    1,499          1,537          1,520          1,540
          Net interest income                                 2,478          2,449          2,410          2,456
          Provision for credit losses                          -              (500)          -              -
          Net securities gains                                  111            165            219             32
          Income (loss) before income taxes                     460            895            371            (86)
          Net income                                             84            516            230              3
          Net income per share (basic and diluted)            $0.10          $0.47          $0.21          $0.00
</TABLE>

                                     F - 35