| 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      |

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

----

|               |                                                                      |                       |
|--------------------|---------------------------------------------------------------------------|----------------------------|
|  PART I  |
|               |                                                                      |                       |
| Item 1.            | Business                                                                  | 3                          |
| Item 2.            | Properties                                                                | 16                         |
| Item 3.            | Legal Proceedings                                                         | 17                         |
|               | Executive Officers of the Registrant                                      | 17                         |
|               |                                                                      |                       |
| PART II            |
|               |                                                                      |                       |
| Item 5.            | Market for Registrant’s Common Equity, Related                      |                       |
|               | Stockholder Matters and Issuer Purchases of Equity Securities             |     18 |
| Item 6.            | Selected Financial Data                                                   | 19                         |
| Item 7.            | Management’s Discussion and Analysis of Financial                   |                       |
|               | Condition and Results of Operations                                       | 20                         |
| Item 8.            | Financial Statements and Supplementary Data                               | 28                         |
| Item 9.            | Changes in and Disagreements with Accountants                             |                       |
|               | on Accounting and Financial Disclosure                                    | 28                         |
| Item 9A.           | Controls and Procedures                                                   | 29                         |
| Item 9B.           | Other Information                                                         | 29                         |
|               |                                                                      |                       |
| PART III           |
|               |                                                                      |                       |
| Item 10.           | Directors, Executive Officers and Corporate Governance                    | 30                         |
| Item 11.           | Executive Compensation                                                    | 30                         |
| Item 12.           | Security Ownership of Certain Beneficial Owners                           |                       |
|               | and Management and Related Stockholder Matters                            | 30                         |
| Item 13.           | Certain Relationships and Related Transactions, and Director Independence | 30                         |
| Item 14.           | Principal Accountant Fees and Services                                    | 30                         |
|               |                                                                      |                       |
| PART IV            |
|               |                                                                      |                       |
| Item 15.           | Exhibits and Financial Statement Schedules                                | 31                         |
|               |                                                                      |                       |
| Signatures         | 32                                                                        |

----

----

|                          |   | At December 31, |    |
|------------------------------------|--------|-----------------|---------|
|                               |   | 2010            |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| (Dollars in Thousands)             |   |  $         |    |   |  % |   |   |  $ |   |   |  % |   |   |  $ |   |   |  % |   |   |  $ |   |   |  % |   |   |  $ |   |   |  % |   |
| Mortgage:                          |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                        |   | $               | 102,199 |   |   |   | 43.62 | % |   | $ | 95,683 |   |   |   | 39.81 | % |   | $ | 87,708 |   |   |   | 36.85 | % |   | $ | 76,781 |   |   |   | 37.98 | % |   | $ | 68,341 |   |   |   | 34.88 | % |
| Commercial                         |   |            | 72,670  |   |   |   | 31.02 |   |   |   | 79,845 |   |   |   | 33.23 |   |   |   | 76,153 |   |   |   | 31.99 |   |   |   | 47,843 |   |   |   | 23.66 |   |   |   | 53,164 |   |   |   | 27.13 |   |
| Construction and land development  |   |            | 5,363   |   |   |   | 2.29 |   |   |   | 1,743 |   |   |   | 0.73 |   |   |   | 6,590 |   |   |   | 2.77 |   |   |   | 5,876 |   |   |   | 2.91 |   |   |   | 1,609 |   |   |   | 0.83 |   |
|                               |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer:                          |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                        |   |            | 16,407  |   |   |   | 7.00 |   |   |   | 15,965 |   |   |   | 6.64 |   |   |   | 16,451 |   |   |   | 6.91 |   |   |   | 17,087 |   |   |   | 8.45 |   |   |   | 15,044 |   |   |   | 7.67 |   |
| Credit card                        |   |            | 168     |   |   |   | 0.07 |   |   |   | 166 |   |   |   | 0.07 |   |   |   | 173 |   |   |   | 0.07 |   |   |   | 143 |   |   |   | 0.07 |   |   |   | 144 |   |   |   | 0.08 |   |
| Indirect automobile                |   |            | 30,286  |   |   |   | 12.93 |   |   |   | 37,092 |   |   |   | 15.44 |   |   |   | 43,970 |   |   |   | 18.47 |   |   |   | 49,260 |   |   |   | 24.37 |   |   |   | 52,539 |   |   |   | 26.81 |   |
| Commercial                         |   |            | 7,193   |   |   |   | 3.07 |   |   |   | 9,801 |   |   |   | 4.08 |   |   |   | 6,974 |   |   |   | 2.94 |   |   |   | 5,184 |   |   |   | 2.56 |   |   |   | 5,077 |   |   |   | 2.60 |   |
| Gross loans                        |   |            | 234,286 |   |   |   | 100.00 | % |   |   | 240,295 |   |   |   | 100.00 | % |   |   | 238,019 |   |   |   | 100.00 | % |   |   | 202,174 |   |   |   | 100.00 | % |   |   | 195,918 |   |   |   | 100.00 | % |
| Unearned income on loans           |   |            | (1,035  | ) |   |   |   |   |   |   | (839 | ) |   |   |   |   |   |   | (864 | ) |   |   |   |   |   |   | (816 | ) |   |   |   |   |   |   | (743 | ) |   |   |   |   |
| Gross loans net of unearned income |   |            | 233,251 |   |   |   |   |   |   |   | 239,456 |   |   |   |   |   |   |   | 237,155 |   |   |   |   |   |   |   | 201,357 |   |   |   |   |   |   |   | 195,175 |   |   |   |   |   |
| Allowance for credit losses        |   |            | (3,400  | ) |   |   |   |   |   |   | (3,573 | ) |   |   |   |   |   |   | (2,022 | ) |   |   |   |   |   |   | (1,604 | ) |   |   |   |   |   |   | (1,839 | ) |   |   |   |   |
| Loans, net                         |   | $               | 229,851 |   |   |   |   |   |   | $ | 235,883 |   |   |   |   |   |   | $ | 235,133 |   |   |   |   |   |   | $ | 199,753 |   |   |   |   |   |   | $ | 193,336 |   |   |   |   |   |

----

|                              |   | Due WithinOne Year |   |   | Due Over One ToFive Years |   |   | Due OverFive Years |   |   | Total   |   |
|-----------------------------------|--------|------------------------------|--------|--------|-----------------------------------------------|--------|--------|------------------------------|--------|--------|---------|--------|
|                              |   |                         |   |   | (In Thousands)                                |   |   |                         |   |   |    |   |
| Real Estate - mortgage:           |   |                         |   |   |                                          |   |   |                         |   |   |    |   |
| Residential                       |   | $                            | 8,633  |   |                                          | $      | 2,666  |                         |   | $      | 90,900  |   |   | $ | 102,199 |   |
| Commercial                        |   |                         | 19,039 |   |                                          |   | 33,336 |                         |   |   | 20,295  |   |   |   | 72,670 |   |
| Construction and land development |   |                         | 2,393  |   |                                          |   | 2,163  |                         |   |   | 807     |   |   |   | 5,363 |   |
| Installment                       |   |                         | 1,120  |   |                                          |   | 8,254  |                         |   |   | 7,033   |   |   |   | 16,407 |   |
| Credit Card                       |   |                         | 37     |   |                                          |   | 14     |                         |   |   | 117     |   |   |   | 168 |   |
| Indirect automobile               |   |                         | 1,237  |   |                                          |   | 22,784 |                         |   |   | 6,265   |   |   |   | 30,286 |   |
| Commercial                        |   |                         | 3,954  |   |                                          |   | 3,239  |                         |   |   | -       |   |   |   | 7,193 |   |
|                              |   | $                            | 36,413 |   |                                          | $      | 72,456 |                         |   | $      | 125,417 |   |   | $ | 234,286 |   |

----

----

|                                                          |   | At December 31, |   |
|---------------------------------------------------------------|--------|---------------------------|--------|
|                                                          |   | 2010                      |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                          |   | (Dollars In Thousands)    |   |
| Restructured Loans                                            |   | $                         | -      |   |   | $ | 87 |   |   | $ | - |   |   | $ | 578 |   |   | $ | - |   |
|                                                          |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-accrual loans:                                            |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – mortgage:                                 |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                   |   | $                         | 976    |   |   | $ | 215 |   |   | $ | - |   |   | $ | - |   |   | $ | 3 |   |
| Commercial                                                    |   |                      | 4,522  |   |   |   | 2,626 |   |   |   | 659 |   |   |   | - |   |   |   | - |   |
| Real estate - construction                               |   |                      | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Installment                                                   |   |                      | 125    |   |   |   | 176 |   |   |   | 208 |   |   |   | 212 |   |   |   | 46 |   |
| Commercial                                                    |   |                      | 1,360  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8 |   |
| Total non-accrual loans                                       |   |                      | 6,983  |   |   |   | 3,017 |   |   |   | 867 |   |   |   | 212 |   |   |   | 57 |   |
|                                                          |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing loans past due 90 days or more                       |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – mortgage:                                 |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                   |   |                      | -      |   |   |   | 8 |   |   |   | 3 |   |   |   | 512 |   |   |   | 2 |   |
| Commercial                                                    |   |                      | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real estate - construction                               |   |                      | -      |   |   |   | - |   |   |   | 5 |   |   |   | - |   |   |   | - |   |
| Installment                                                   |   |                      | -      |   |   |   | 1 |   |   |   | 26 |   |   |   | - |   |   |   | - |   |
| Commercial                                                    |   |                      | -      |   |   |   | 12 |   |   |   | - |   |   |   | 128 |   |   |   | - |   |
| Total accruing loans past due 90 days or more                 |   |                      | -      |   |   |   | 21 |   |   |   | 34 |   |   |   | 640 |   |   |   | 2 |   |
| Total non-accrual and past due loans                          |   | $                         | 6,983  |   |   | $ | 3,038 |   |   | $ | 901 |   |   | $ | 852 |   |   | $ | 59 |   |
| Non-accrual and past due loans to gross loans                 |   |                      | 2.99   | % |   |   | 1.26 | % |   |   | 0.38 | % |   |   | 0.43 | % |   |   | 0.03 | % |
| Allowance for credit losses to non-accrual and past due loans |   |                      | 48.69  | % |   |   | 117.61 | % |   |   | 224.42 | % |   |   | 188.27 | % |   |   | 3,116.95 | % |

----

|                                        |   | Year Ended December 31, |    |
|---------------------------------------------|--------|----------------------------------------|---------|
|                                        |   | 2010                                   |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                        |   | (Dollars In Thousands)                 |    |
| Beginning Balance                           |   | $                                      | 3,573   |   |   | $ | 2,022 |   |   | $ | 1,604 |   |   | $ | 1,839 |   |   | $ | 2,201 |   |
|                                        |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans charged off                           |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate - mortgage:                     |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                 |   |                                   | 66      |   |   |   | 85 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |
| Commercial                                  |   |                                   | 825     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real estate - construction                  |   |                                   | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Installment                                 |   |                                   | 959     |   |   |   | 1,070 |   |   |   | 1,079 |   |   |   | 591 |   |   |   | 528 |   |
| Credit card & related                   |   |                                   | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                                  |   |                                   | 12      |   |   |   | 133 |   |   |   | 2 |   |   |   | - |   |   |   | 253 |   |
| Total                                       |   |                                   | 1,862   |   |   |   | 1,288 |   |   |   | 1,081 |   |   |   | 591 |   |   |   | 782 |   |
|                                        |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries                                  |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate - mortgage:                     |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                 |   |                                   | 85      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1 |   |
| Commercial                                  |   |                                   | 11      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real estate - construction                  |   |                                   | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Installment                                 |   |                                   | 497     |   |   |   | 359 |   |   |   | 333 |   |   |   | 258 |   |   |   | 335 |   |
| Credit card & related                   |   |                                   | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                                  |   |                                   | 46      |   |   |   | 37 |   |   |   | 20 |   |   |   | 48 |   |   |   | 22 |   |
| Total                                       |   |                                   | 639     |   |   |   | 396 |   |   |   | 353 |   |   |   | 306 |   |   |   | 358 |   |
| Net charge offs/(recoveries)                |   |                                   | 1,223   |   |   |   | 892 |   |   |   | 728 |   |   |   | 285 |   |   |   | 424 |   |
| Provisions (credited) charged to operations |   |                                   | 1,050   |   |   |   | 2,443 |   |   |   | 1,146 |   |   |   | 50 |   |   |   | 62 |   |
| Ending balance                              |   | $                                      | 3,400   |   |   | $ | 3,573 |   |   | $ | 2,022 |   |   | $ | 1,604 |   |   | $ | 1,839 |   |
| Average loans                               |   | $                                      | 234,495 |   |   | $ | 239,788 |   |   | $ | 219,485 |   |   | $ | 199,632 |   |   | $ | 186,706 |   |
| Net charge-offs to average loans            |   |                                   | 0.53    | % |   |   | 0.37 | % |   |   | 0.33 | % |   |   | 0.14 | % |   |   | 0.23 | % |

----

|                             |   | At December 31,            |   |
|----------------------------------|--------|--------------------------------------|--------|
|                             |   | 2010                                 |   |   | 2009 |   |
| Portfolio                        |   | Allowance ForEach Category |   |   | Percentage Of Loans InEach Category ToTotal Loans |   |   | Allowance ForEach Category |   |   | Percentage Of Loans InEach Category ToTotal Loans |   |
|                             |   | (Dollars In Thousands)               |   |
| Real Estate - mortgage:          |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Residential                      |   | $                                    | 196    |   |   |   | 43.62 | % |   | $ | 162 |   |   |   | 39.81 | % |
| Commercial                       |   |                                 | 2,096  |   |   |   | 31.02 |   |   |   | 2,377 |   |   |   | 33.23 |   |
| Real Estate — construction |   |                                 | 12     |   |   |   | 2.29 |   |   |   | 4 |   |   |   | 0.73 |   |
| Installment                      |   |                                 | 196    |   |   |   | 7.00 |   |   |   | 146 |   |   |   | 6.64 |   |
| Credit Card                      |   |                                 | -      |   |   |   | 0.07 |   |   |   | - |   |   |   | 0.07 |   |
| Indirect automobile              |   |                                 | 634    |   |   |   | 12.93 |   |   |   | 697 |   |   |   | 15.44 |   |
| Commercial                       |   |                                 | 263    |   |   |   | 3.07 |   |   |   | 237 |   |   |   | 4.08 |   |
| Unallocated                      |   |                                 | 3      |   |   |   | - |   |   |   | (50 | ) |   |   | - |   |
| Total                            |   | $                                    | 3,400  |   |   |   | 100.00 | % |   | $ | 3,573 |   |   |   | 100.00 | % |

|                        |   | At December 31,            |   |
|----------------------------------|--------|--------------------------------------|--------|
|                             |   | 2008                                 |   |   | 2007 |   |   | 2006 |   |
| Portfolio                        |   | Allowance ForEach Category |   |   | Percentage OfLoans In EachCategory ToTotal Loans |   |   | Allowance ForEach Category |   |   | Percentage OfLoans In EachCategory ToTotal Loans |   |   | Allowance ForEach Category |   |   | Percentage OfLoans In EachCategory ToTotal Loans |   |
|                             |   | (Dollars In Thousands)               |   |
| Real Estate – mortgage:    |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                      |   | $                                    | 123    |   |   |   | 36.85 | % |   | $ | 117 |   |   |   | 37.98 | % |   | $ | 149 |   |   |   | 34.88 | % |
| Commercial                       |   |                                 | 460    |   |   |   | 31.99 |   |   |   | 163 |   |   |   | 23.66 |   |   |   | 314 |   |   |   | 27.13 |   |
| Real Estate – construction |   |                                 | 63     |   |   |   | 2.77 |   |   |   | 102 |   |   |   | 2.91 |   |   |   | 14 |   |   |   | 0.83 |   |
| Installment                      |   |                                 | 161    |   |   |   | 6.91 |   |   |   | 55 |   |   |   | 8.45 |   |   |   | 103 |   |   |   | 7.67 |   |
| Credit Card                      |   |                                 | -      |   |   |   | 0.07 |   |   |   | - |   |   |   | 0.07 |   |   |   | - |   |   |   | 0.08 |   |
| Indirect automobile              |   |                                 | 942    |   |   |   | 18.47 |   |   |   | 892 |   |   |   | 24.37 |   |   |   | 1,119 |   |   |   | 26.81 |   |
| Commercial                       |   |                                 | 240    |   |   |   | 2.94 |   |   |   | 257 |   |   |   | 2.56 |   |   |   | 260 |   |   |   | 2.60 |   |
| Unallocated                      |   |                                 | 33     |   |   |   | - |   |   |   | 18 |   |   |   | - |   |   |   | 120 |   |   |   | - |   |
| Total                            |   | $                                    | 2,022  |   |   |   | 100.00 | % |   | $ | 1,604 |   |   |   | 100.00 | % |   | $ | 1,839 |   |   |   | 100.00 | % |

|                                                    |   | At December 31, |   |
|---------------------------------------------------------|--------|-----------------|--------|
|                                                    |   | 2010            |   |   | 2009 |   |   | 2008 |   |
|                                                    |   | (In Thousands)  |   |
| U.S. Treasury securities                                |   | $               | -      |   |   | $ | - |   |   | $ | - |   |
| U.S. Government agencies and mortgage backed securities |   |            | 52,365 |   |   |   | 54,030 |   |   |   | 25,571 |   |
| Obligations of states and political subdivisions        |   |            | 34,776 |   |   |   | 30,073 |   |   |   | 31,466 |   |
| Corporate trust preferred                               |   |            | 1,793  |   |   |   | 2,080 |   |   |   | 2,169 |   |
| Total investment securities                             |   | $               | 88,935 |   |   | $ | 86,183 |   |   | $ | 59,206 |   |

----

|                                               |   | One Year Or Less |   |   | One To Five Years |   |   | Five to Ten Years |   |   | More Than Ten Years |   |   | Total      |   |
|---------------------------------------------------------|--------|---------------------------------|--------|--------|----------------------------------|--------|--------|----------------------------------|--------|--------|------------------------------------|--------|--------|------------|--------|
|                                                    |   | Amort.Cost                      |   |   | WeightedAverageYield             |   |   | Amort.Cost                       |   |   | WeightedAverageYield               |   |   | Amort.Cost |   |   | WeightedAverageYield |   |   | Amort.Cost |   |   | WeightedAverageYield |   |   | Amort.Cost |   |   | WeightedAverageYield |   |
| U.S. Treasury securities                                |   | $                               | -      |   |                             |   | -      | %                                |   | $      | -                                  |   |   |       | -      | % |   | $ | - |   |   |   | - | % |   | $ | - |   |   |   | - | % |   | $ | - |   |   |   | - | % |
| U.S. Government agencies and mortgage backed securities |   |                            | -      |   |                             |   | -      |                             |   |   | -                                  |   |   |       | -      |   |   |   | 1,125 |   |   |   | 5.00 |   |   |   | 51,241 |   |   |   | 4.50 |   |   |   | 52,366 |   |   |   | 4.51 |   |
| Obligations of states and political subdivisions        |   |                            | -      |   |                             |   | -      |                             |   |   | 1,589                              |   |   |       | 3.51   |   |   |   | 305 |   |   |   | 3.43 |   |   |   | 32,882 |   |   |   | 4.47 |   |   |   | 34,776 |   |   |   | 4.42 |   |
| Corporate trust preferred                               |   |                            | -      |   |                             |   | -      |                             |   |   | -                                  |   |   |       | -      |   |   |   | - |   |   |   | - |   |   |   | 1,793 |   |   |   | 8.60 |   |   |   | 1,793 |   |   |   | 8.60 |   |
| Total investment securities                             |   | $                               | -      |   |                             |   | -      | %                                |   | $      | 1,589                              |   |   |       | 3.51   | % |   | $ | 1,430 |   |   |   | 4.67 | % |   | $ | 85,916 |   |   |   | 4.58 | % |   | $ | 88,935 |   |   |   | 4.56 | % |

|                          |   | Amount(In Thousands) |         |
|-------------------------------|--------|---------------------------|--------------|
| Three months or less          |   | $                         | 7,517        |   |
| Over three through six months |   |                      | 6,504        |   |
| Over six through 12 months    |   |                      | 7,736        |   |
| Over 12 months                |   |                      |  22,436 |   |
| Total                         |   | $                         | 44,193       |   |

----

----

----

----

----

----

|                                                                     | YearOpened |   | Owned/Leased |   | Book Value |      |   | ApproximateSquare Footage |   |   | Deposits |   |
|--------------------------------------------------------------------------|------------|--------|--------------|--------|-----------------|-----------|--------|--------------------------------|--------|--------|----------|--------|
| Main Office:                                                             |       |   |         |   |            |      |   |                           |   |   |     |   |
| 101 Crain Highway, S.E.Glen Burnie, MD  21061                  | 1953       |   | Owned        |   | $               | 699,341   |   |                           |   | 10,000 |     |   | $ | 86,441,035 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| Branches:                                                                |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| Odenton1405 Annapolis RoadOdenton, MD  21113                   | 1969       |   | Owned        |   |            | 167,783   |   |                           |   | 6,000  |     |   |   | 38,975,886 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| Riviera Beach8707 Ft. Smallwood RoadPasadena, MD  21122        | 1973       |   | Owned        |   |            | 228,426   |   |                           |   | 2,500  |     |   |   | 31,055,075 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| Crownsville1221 Generals HighwayCrownsville, MD  21032         | 1979       |   | Owned        |   |            | 315,033   |   |                           |   | 3,000  |     |   |   | 51,986,175 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| Severn811 Reece RoadSevern, MD  21144                          | 1984       |   | Owned        |   |            | 142,713   |   |                           |   | 2,500  |     |   |   | 26,756,463 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| New Cut Road740 Stevenson RoadSevern, MD  21144                | 1995       |   | Owned        |   |            | 1,397,720 |   |                           |   | 2,600  |     |   |   | 25,193,939 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| LinthicumBurwood Village Shopping CenterGlen Burnie, MD  21060 | 2005       |   | Leased       |   |            | 107,903   |   |                           |   | 2,500  |     |   |   | 15,938,661 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| Severna Park534 Ritchie HighwaySeverna Park, MD   21146   | 2002       |   | Leased       |   |            | 60,684    |   |                           |   | 2,184  |     |   |   | 18,626,494 |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| Operations Centers:                                                      |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| 106 Padfield Blvd.Glen Burnie, MD  21061                       | 1991       |   | Owned        |   |            | 736,177   |   |                           |   | 16,200 |     |   |   | N/A |   |
|                                                                     |       |   |         |   |            |      |   |                           |   |   |     |   |   |   |   |
| 103 Crain Highway, S.E.Glen Burnie, MD 21061                             | 2000       |   | Owned        |   |            | 267,835   |   |                           |   | 3,727  |     |   |   | N/A |   |

----

----

| NAME                   |   | AGE    |   | POSITIONS                                         |
|------------------------|--------|--------|--------|---------------------------------------------------|
|                   |   |   |   |                                              |
| F. William Kuethe, Jr. |   | 78     |   | President Emeritus                                |
| Michael G. Livingston  |   | 57     |   | President and Chief Executive Officer             |
| John E. Porter         |   | 57     |   | Senior Vice President and Chief Financial Officer |

----

| ITEM 5. | MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|------------------------------------------------------------------------------------------------------------------------|

|          |   | 2010   |   |   | 2009   |   |
|---------------|--------|--------|--------|--------|--------|--------|
| Quarter Ended |   | High   |   |   | Low    |   |   | Dividends |   |   | High |   |   | Low |   |   | Dividends |   |
|          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March 31,     |   | $      | 11.70  |   |   | $      | 8.50 |   |   | $ | 0.10 |   |   | $ | 10.96 |   |   | $ | 8.41 |   |   | $ | 0.10 |   |
| June 30,      |   |   | 10.95  |   |   |   | 9.00 |   |   |   | 0.10 |   |   |   | 9.40 |   |   |   | 7.80 |   |   |   | 0.10 |   |
| September 30  |   |   | 10.10  |   |   |   | 7.74 |   |   |   | 0.10 |   |   |   | 9.25 |   |   |   | 7.70 |   |   |   | 0.10 |   |
| December 31   |   |   | 9.60   |   |   |   | 7.75 |   |   |   | 0.10 |   |   |   | 9.76 |   |   |   | 8.09 |   |   |   | 0.10 |   |

----

|                                                     |   | Year Ended December 31,                     |      |
|---------------------------------------------------------------|--------|---------------------------------------------|-----------|
|                                                          |   | 2010                                        |      |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                          |   | (Dollars In Thousand Except Per Share Data) |      |
| Operations Data:                                              |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                           |   | $                                           | 12,880    |   |   | $ | 12,102 |   |   | $ | 11,922 |   |   | $ | 11,866 |   |   | $ | 11,821 |   |
| Provision for Credit Losses                                   |   |                                        | 1,050     |   |   |   | 2,443 |   |   |   | 1,146 |   |   |   | 50 |   |   |   | 62 |   |
| Other Income                                                  |   |                                        | 1,899     |   |   |   | 2,365 |   |   |   | 2,051 |   |   |   | 2,157 |   |   |   | 2,244 |   |
| Other Expense                                                 |   |                                        | 11,178    |   |   |   | 10,995 |   |   |   | 13,102 |   |   |   | 10,433 |   |   |   | 10,682 |   |
| Net Income                                                    |   |                                        | 2,065     |   |   |   | 1,262 |   |   |   | 404 |   |   |   | 2,782 |   |   |   | 2,720 |   |
|                                                          |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share Data:                                                   |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic Net Income Per Share                                    |   | $                                           | 0.76      |   |   | $ | 0.46 |   |   | $ | 0.14 |   |   | $ | 0.93 |   |   | $ | 0.92 |   |
| Diluted Net Income Per Share                                  |   |                                        | 0.76      |   |   |   | 0.46 |   |   |   | 0.14 |   |   |   | 0.93 |   |   |   | 0.92 |   |
| Cash Dividends Declared Per Common Share                      |   |                                        | 0.40      |   |   |   | 0.40 |   |   |   | 0.45 |   |   |   | 0.45 |   |   |   | 0.45 |   |
| Weighted Average Common Shares Outstanding:                   |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                         |   |                                        | 2,690,218 |   |   |   | 2,734,524 |   |   |   | 2,981,124 |   |   |   | 2,988,796 |   |   |   | 2,972,362 |   |
| Diluted                                                       |   |                                        | 2,690,218 |   |   |   | 2,734,524 |   |   |   | 2,981,124 |   |   |   | 2,988,796 |   |   |   | 2,972,362 |   |
|                                                          |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial Condition Data:                                     |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                  |   | $                                           | 347,067   |   |   | $ | 353,397 |   |   | $ | 332,502 |   |   | $ | 307,274 |   |   | $ | 317,746 |   |
| Loans Receivable, Net                                         |   |                                        | 229,851   |   |   |   | 235,883 |   |   |   | 235,133 |   |   |   | 199,753 |   |   |   | 193,337 |   |
| Total Deposits                                                |   |                                        | 294,445   |   |   |   | 294,358 |   |   |   | 269,768 |   |   |   | 252,917 |   |   |   | 274,833 |   |
| Long Term Borrowings                                          |   |                                        | 20,000    |   |   |   | 27,034 |   |   |   | 27,072 |   |   |   | 17,107 |   |   |   | 7,140 |   |
| Junior Subordinated Debentures                                |   |                                        | -         |   |   |   | 5,155 |   |   |   | 5,155 |   |   |   | 5,155 |   |   |   | 5,155 |   |
| Total Stockholders’ Equity                              |   |                                        | 26,333    |   |   |   | 25,149 |   |   |   | 27,908 |   |   |   | 29,736 |   |   |   | 28,201 |   |
|                                                          |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance Ratios:                                           |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on Average Assets                                      |   |                                        | 0.58      | % |   |   | 0.36 | % |   |   | 0.13 | % |   |   | 0.89 | % |   |   | 0.84 | % |
| Return on Average Equity                                      |   |                                        | 7.75      |   |   |   | 4.87 |   |   |   | 1.49 |   |   |   | 9.60 |   |   |   | 10.00 |   |
| Net Interest Margin (1)                                       |   |                                        | 4.05      |   |   |   | 4.29 |   |   |   | 4.31 |   |   |   | 4.39 |   |   |   | 4.31 |   |
| Dividend Payout Ratio                                         |   |                                        | 52.11     |   |   |   | 85.59 |   |   |   | 332.98 |   |   |   | 48.33 |   |   |   | 49.18 |   |
|                                                          |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Ratios:                                               |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average Equity to Average Assets                              |   |                                        | 7.45      | % |   |   | 7.37 | % |   |   | 8.99 | % |   |   | 9.28 | % |   |   | 8.36 | % |
| Leverage Ratio                                                |   |                                        | 7.64      |   |   |   | 8.86 |   |   |   | 10.50 |   |   |   | 11.34 |   |   |   | 10.30 |   |
| Total Risk-Based Capital Ratio                                |   |                                        | 12.58     |   |   |   | 14.40 |   |   |   | 14.93 |   |   |   | 17.50 |   |   |   | 17.07 |   |
|                                                          |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset Quality Ratios:                                         |   |                                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Credit Losses to Gross Loans                    |   |                                        | 1.45      | % |   |   | 1.18 | % |   |   | 0.85 | % |   |   | 0.80 | % |   |   | 0.94 | % |
| Non-accrual and Past Due Loans to Gross Loans                 |   |                                        | 2.99      | % |   |   | 1.26 | % |   |   | 0.38 | % |   |   | 0.43 | % |   |   | 0.03 | % |
| Allowance for Credit Losses to Non-Accrual and Past Due Loans |   |                                        | 48.69     | % |   |   | 117.61 | % |   |   | 224.42 | % |   |   | 188.27 | % |   |   | 3,116.95 | % |
| Net Loan Charge-offs  (Recoveries) to Average Loans |   |                                        | 0.53      | % |   |   | 0.37 | % |   |   | 0.33 | % |   |   | 0.14 | % |   |   | 0.23 | % |

----

----

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

----

----

|                                                                                        |   | Year Ended December 31, |      |
|--------------------------------------------------------------------------------------------------|--------|----------------------------------------|-----------|
|                                                                                             |   | 2010                                   |      |   | VS. |   |   | 2009 |   |   | 2009 |   |   | VS. |   |   | 2008 |   |
|                                                                                             |   |                                   |      |   | Change Due To: |   |   |   |   |   | Change Due To: |   |
|                                                                                             |   | Increase/Decrease                      |      |   |  Rate |   |   |  Volume |   |   | Increase/Decrease |   |   |  Rate |   |   |  Volume |   |
|                                                                                             |   | (In Thousands)                         |      |
| ASSETS:                                                                                          |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                         |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                                                                               |   | $                                      | (2        | ) |   | $ | - |   |   | $ | (2 | ) |   | $ | 7 |   |   | $ | (44 | ) |   | $ | 51 |   |
| Interest-bearing deposits                                                                        |   |                                   | 1         |   |   |   | 2 |   |   |   | (1 | ) |   |   | (115 | ) |   |   | (229 | ) |   |   | 114 |   |
|                                                                                             |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities:                                                                           |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities, obligations of U.S. government agencies and mortgage-backed securities |   |                                   |   62 |   |   |   | (461 | ) |   |   |   523 |   |   |   | (109 | ) |   |   | (404 | ) |   |   |   295 |   |
| Obligations of states and political subdivisions(1)                                              |   |                                   | 121       |   |   |   | - |   |   |   | 121 |   |   |   | (121 | ) |   |   | 68 |   |   |   | (189 | ) |
| All other investment securities                                                                  |   |                                   | (23       | ) |   |   | (10 | ) |   |   | (13 | ) |   |   | (4 | ) |   |   | (1 | ) |   |   | (3 | ) |
| Total investment securities                                                                      |   |                                   | 160       |   |   |   | (471 | ) |   |   | 631 |   |   |   | (234 | ) |   |   | (337 | ) |   |   | 103 |   |
|                                                                                             |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans, net of unearned income:                                                                   |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand, time and lease                                                                           |   |                                   | 76        |   |   |   | 36 |   |   |   | 40 |   |   |   | 9 |   |   |   | (122 | ) |   |   | 131 |   |
| Mortgage and construction                                                                        |   |                                   | (177      | ) |   |   | (307 | ) |   |   | 130 |   |   |   | 995 |   |   |   | (436 | ) |   |   | 1,431 |   |
| Installment and credit card                                                                      |   |                                   | (501      | ) |   |   | 77 |   |   |   | (578 | ) |   |   | (212 | ) |   |   | 54 |   |   |   | (266 | ) |
| Total gross loans(2)                                                                             |   |                                   | (602      | ) |   |   | (194 | ) |   |   | (408 | ) |   |   | 792 |   |   |   | (504 | ) |   |   | 1,296 |   |
| Allowance for credit losses                                                                      |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total net loans                                                                                  |   |                                   | (602      | ) |   |   | (194 | ) |   |   | (408 | ) |   |   | 792 |   |   |   | (504 | ) |   |   | 1,296 |   |
| Total interest-earning assets                                                                    |   | $                                      | (443      | ) |   | $ | (663 | ) |   | $ | 220 |   |   | $ | 450 |   |   | $ | (1,114 | ) |   | $ | 1,564 |   |
|                                                                                             |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES:                                                                                     |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits:                                                                       |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and NOW                                                                                  |   | $                                      | 14        |   |   | $ | - |   |   | $ | 14 |   |   | $ | (22 | ) |   | $ | (23 | ) |   | $ | 1 |   |
| Money market                                                                                     |   |                                   | 10        |   |   |   | - |   |   |   | 10 |   |   |   | (5 | ) |   |   | (8 | ) |   |   | 3 |   |
| Other time deposits                                                                              |   |                                   | (1,264    | ) |   |   | (1,225 | ) |   |   | (39 | ) |   |   | 184 |   |   |   | (958 | ) |   |   | 1,142 |   |
| Total interest-bearing deposits                                                                  |   |                                   | (1,240    | ) |   |   | (1,225 | ) |   |   | (15 | ) |   |   | 157 |   |   |   | (989 | ) |   |   | 1,146 |   |
| Non-interest-bearing deposits                                                                    |   |                                   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Borrowed funds                                                                                   |   |                                   | (3        | ) |   |   | 169 |   |   |   | (172 | ) |   |   | 130 |   |   |   | (147 | ) |   |   | 277 |   |
| Total interest-bearing liabilities                                                               |   | $                                      | (1,243    | ) |   | $ | (1,056 | ) |   | $ | (187 | ) |   | $ | 287 |   |   | $ | (1,136 | ) |   | $ | 1,423 |   |

----

|                                                                                        |   | Year Ended December 31, |         |
|--------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------------|
|                                                                                             |   | 2010                                   |         |   | 2009 |   |   | 2008 |   |
|                                                                                             |   | AverageBalance                         |         |   | Interest |   |   | Yield/Cost |   |   | AverageBalance |   |   | Interest |   |   | Yield/Cost |   |   | AverageBalance |   |   | Interest |   |   | Yield/Cost |   |
|                                                                                             |   | (Dollars In Thousands)                 |         |
| ASSETS:                                                                                          |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                         |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                                                                               |   | $                                      | 3,797        |   |   | $ | 10 |   |   |   | 0.25 | % |   | $ | 4,843 |   |   | $ | 12 |   |   |   | 0.26 | % |   | $ | 433 |   |   | $ | 5 |   |   |   | 1.15 | % |
| Interest-bearing deposits                                                                        |   |                                   | 11,188       |   |   |   | 16 |   |   |   | 0.14 |   |   |   | 12,337 |   |   |   | 15 |   |   |   | 0.12 |   |   |   | 6,560 |   |   |   | 130 |   |   |   | 1.98 |   |
|                                                                                             |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities:                                                                           |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities, obligations of U.S. government agencies and mortgage-backed securities |   |                                   | 56,868       |   |   |   | 1,916 |   |   |   | 3.37 |   |   |   | 44,367 |   |   |   | 1,854 |   |   |   | 4.18 |   |   |   | 38,532 |   |   |   | 1,963 |   |   |   | 5.09 |   |
| Obligations of states and political subdivisions(1)                                              |   |                                   | 31,341       |   |   |   | 2,134 |   |   |   | 6.81 |   |   |   | 29,557 |   |   |   | 2,013 |   |   |   | 6.81 |   |   |   | 32,421 |   |   |   | 2,134 |   |   |   | 6.58 |   |
| All other investment securities                                                                  |   |                                   | 1,995        |   |   |   | 166 |   |   |   | 8.32 |   |   |   | 2,138 |   |   |   | 189 |   |   |   | 8.84 |   |   |   | 2,168 |   |   |   | 193 |   |   |   | 8.90 |   |
| Total investment securities                                                                      |   |                                   | 90,204       |   |   |   | 4,216 |   |   |   | 4.67 |   |   |   | 76,062 |   |   |   | 4,056 |   |   |   | 5.33 |   |   |   | 73,121 |   |   |   | 4,290 |   |   |   | 5.87 |   |
|                                                                                             |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans, net of unearned income:                                                                   |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand, time and lease                                                                           |   |                                   | 8,946        |   |   |   | 475 |   |   |   | 5.31 |   |   |   | 8,132 |   |   |   | 399 |   |   |   | 4.91 |   |   |   | 6,082 |   |   |   | 390 |   |   |   | 6.41 |   |
| Mortgage and construction                                                                        |   |                                   | 175,812      |   |   |   | 10,593 |   |   |   | 6.03 |   |   |   | 173,741 |   |   |   | 10,770 |   |   |   | 6.20 |   |   |   | 151,656 |   |   |   | 9,775 |   |   |   | 6.45 |   |
| Installment and credit card                                                                      |   |                                   | 49,737       |   |   |   | 3,578 |   |   |   | 7.19 |   |   |   | 57,915 |   |   |   | 4,079 |   |   |   | 7.04 |   |   |   | 61,747 |   |   |   | 4,291 |   |   |   | 6.95 |   |
| Total gross loans(2)                                                                             |   |                                   | 234,495      |   |   |   | 14,646 |   |   |   | 6.25 |   |   |   | 239,788 |   |   |   | 15,248 |   |   |   | 6.36 |   |   |   | 219,485 |   |   |   | 14,456 |   |   |   | 6.59 |   |
| Allowance for credit losses                                                                      |   |                                   | (3,874       | ) |   |   |   |   |   |   |   |   |   |   | (2,037 | ) |   |   |   |   |   |   |   |   |   |   | (1,479 | ) |   |   |   |   |   |   |   |   |
| Total net loans                                                                                  |   |                                   | 230,621      |   |   |   | 14,646 |   |   |   | 6.35 |   |   |   | 237,751 |   |   |   | 15,248 |   |   |   | 6.41 |   |   |   | 218,006 |   |   |   | 14,456 |   |   |   | 6.63 |   |
| Total interest-earning assets                                                                    |   |                                   | 335,810      |   |   |   | 18,888 |   |   |   | 5.62 |   |   |   | 330,993 |   |   |   | 19,331 |   |   |   | 5.84 |   |   |   | 298,120 |   |   |   | 18,881 |   |   |   | 6.33 |   |
| Cash and due from banks                                                                          |   |                                   | 3,182        |   |   |   |   |   |   |   |   |   |   |   | 4,488 |   |   |   |   |   |   |   |   |   |   |   | 7,891 |   |   |   |   |   |   |   |   |   |
| Other assets                                                                                     |   |                                   | 18,696       |   |   |   |   |   |   |   |   |   |   |   | 16,709 |   |   |   |   |   |   |   |   |   |   |   | 14,740 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                     |   | $                                      | 357,688      |   |   |   |   |   |   |   |   |   |   | $ | 352,192 |   |   |   |   |   |   |   |   |   |   | $ | 320,751 |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY:                                                      |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits:                                                                       |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and NOW                                                                                  |   | $                                      | 75,541       |   |   |   | 176 |   |   |   | 0.23 | % |   | $ | 71,124 |   |   |   | 162 |   |   |   | 0.23 | % |   | $ | 69,468 |   |   |   | 184 |   |   |   | 0.26 | % |
| Money market                                                                                     |   |                                   | 16,756       |   |   |   | 67 |   |   |   | 0.40 |   |   |   | 14,363 |   |   |   | 57 |   |   |   | 0.40 |   |   |   | 13,751 |   |   |   | 62 |   |   |   | 0.45 |   |
| Other time deposits                                                                              |   |                                   | 136,822      |   |   |   | 3,454 |   |   |   | 2.52 |   |   |   | 137,764 |   |   |   | 4,718 |   |   |   | 3.42 |   |   |   | 110,049 |   |   |   | 4,534 |   |   |   | 4.12 |   |
| Total interest-bearing deposits                                                                  |   |                                   | 229,119      |   |   |   | 3,697 |   |   |   | 1.61 |   |   |   | 223,251 |   |   |   | 4,937 |   |   |   | 2.21 |   |   |   | 193,268 |   |   |   | 4,780 |   |   |   | 2.47 |   |
| Short-term borrowed funds                                                                        |   |                                   | 522          |   |   |   | 1 |   |   |   | 0.29 |   |   |   | 262 |   |   |   | 0 |   |   |   | 0.02 |   |   |   | 2,209 |   |   |   | 51 |   |   |   | 2.31 |   |
| Long-term borrowed funds                                                                         |   |                                   | 28,747       |   |   |   | 1,601 |   |   |   | 5.57 |   |   |   | 32,206 |   |   |   | 1,605 |   |   |   | 4.98 |   |   |   | 26,287 |   |   |   | 1,424 |   |   |   | 5.42 |   |
| Total interest-bearing liabilities                                                               |   |                                   | 258,389      |   |   |   | 5,299 |   |   |   | 2.05 |   |   |   | 255,719 |   |   |   | 6,542 |   |   |   | 2.56 |   |   |   | 221,764 |   |   |   | 6,255 |   |   |   | 2.82 |   |
|                                                                                             |   |                                   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing deposits                                                                    |   |                                   | 71,212       |   |   |   |   |   |   |   |   |   |   |   | 67,572 |   |   |   |   |   |   |   |   |   |   |   | 68,340 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                |   |                                   | 1,451        |   |   |   |   |   |   |   |   |   |   |   | 2,957 |   |   |   |   |   |   |   |   |   |   |   | 1,806 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                                                                       |   |                                   | 26,636       |   |   |   |   |   |   |   |   |   |   |   | 25,944 |   |   |   |   |   |   |   |   |   |   |   | 28,841 |   |   |   |   |   |   |   |   |   |
| Total liabilities and equity                                                                     |   | $                                      | 357,688      |   |   |   |   |   |   |   |   |   |   | $ | 352,192 |   |   |   |   |   |   |   |   |   |   | $ | 320,751 |   |   |   |   |   |   |   |   |   |
| Net interest income                                                                              |   |                                   |    |   |   | $  |  13,589 |   |   |   |   |   |   |   |   |   |   | $ |  12,789 |   |   |   |   |   |    |    |    |   |   | $  | 12,626 |    |    |    |    |    |
| Net interest spread                                                                              |   |                                   |         |   |   |   |   |   |   |   | 3.57 | % |   |   |   |   |   |   |   |   |   |   | 3.28 | % |   |   |   |   |   |   |   |   |   |   | 3.51 | % |
| Net interest margin                                                                              |   |                                   |         |   |   |   |   |   |   |   | 4.05 | % |   |   |   |   |   |   |   |   |   |   | 4.29 | % |   |   |   |   |   |   |   |   |   |   | 4.31 | % |

----

----

----

|                                        |   | 0-3 Months        |     |   | Over 3 To12 Months |   |     | Over 1Through 5 Years |   |   | Over 5Years |   |   | Total  |    |
|--------------------------------------------------|--------|------------------------|----------|--------|-----------------------------------|--------|----------|--------------------------------------|--------|--------|------------------|--------|--------|--------|---------|
|                                             |   | (Dollars In Thousands) |     |
| Assets:                                          |   |                   |     |   |                              |   |     |                                 |   |   |             |   |   |   |    |
| Cash and due from banks                          |   | $                      | -        |   |                              | $      | -        |                                 |   | $      | -                |   |   | $      | -       |   |   | $ | 8,060 |   |
| Federal funds and overnight deposits             |   |                   | 940      |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 940 |   |
| Securities                                       |   |                   | -        |   |                              |   | 555      |                                 |   |   | 1,054            |   |   |   | 85,659  |   |   |   | 87,268 |   |
| Loans                                            |   |                   | 13,697   |   |                              |   | 18,282   |                                 |   |   | 72,455           |   |   |   | 125,417 |   |   |   | 229,851 |   |
| Fixed Assets                                     |   |                   | -        |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 4,124 |   |
| Other Assets                                     |   |                   | -        |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 16,824 |   |
|                                             |   |                   |     |   |                              |   |     |                                 |   |   |             |   |   |   |    |   |   |   |   |   |
| Total assets                                     |   | $                      | 14,637   |   |                              | $      | 18,837   |                                 |   | $      | 73,509           |   |   | $      | 211,076 |   |   | $ | 347,067 |   |
|                                             |   |                   |     |   |                              |   |     |                                 |   |   |             |   |   |   |    |   |   |   |   |   |
| Liabilities:                                     |   |                   |     |   |                              |   |     |                                 |   |   |             |   |   |   |    |   |   |   |   |   |
| Demand deposit accounts                          |   | $                      | -        |   |                              | $      | -        |                                 |   | $      | -                |   |   | $      | -       |   |   | $ | 68,056 |   |
| NOW accounts                                     |   |                   | 23,683   |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 23,683 |   |
| Money market deposit accounts                    |   |                   | 16,711   |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 16,711 |   |
| Savings accounts                                 |   |                   | 53,007   |   |                              |   | 244      |                                 |   |   | -                |   |   |   | -       |   |   |   | 53,251 |   |
| IRA accounts                                     |   |                   | 3,818    |   |                              |   | 9,624    |                                 |   |   | 23,904           |   |   |   | 1,114   |   |   |   | 38,460 |   |
| Certificates of deposit                          |   |                   | 21,968   |   |                              |   | 36,594   |                                 |   |   | 35,252           |   |   |   | 469     |   |   |   | 94,283 |   |
| Short-term borrowings                            |   |                   | 4,274    |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 4,274 |   |
| Long-term borrowings                             |   |                   | -        |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 20,000 |   |
| Other liabilities                                |   |                   | -        |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 2,016 |   |
| Stockholders’ equity                       |   |                   | -        |   |                              |   | -        |                                 |   |   | -                |   |   |   | -       |   |   |   | 26,333 |   |
|                                             |   |                   |     |   |                              |   |     |                                 |   |   |             |   |   |   |    |   |   |   |   |   |
| Total liabilities and Stockholders’ equity |   | $                      | 123,461  |   |                              | $      | 46,462   |                                 |   | $      | 59,156           |   |   | $      | 1,583   |   |   | $ | 347,067 |   |
|                                             |   |                   |     |   |                              |   |     |                                 |   |   |             |   |   |   |    |   |   |   |   |   |
| GAP                                              |   | $                      | (110,407 | )      |                              | $      | (27,625  | )                                    |   | $      | 14,353           |   |   | $      | 209,493 |   |   |   |   |   |
| Cumulative GAP                                   |   |                   | (110,407 | )      |                              |   | (138,032 | )                                    |   |   | (123,679         | )      |   |   | 85,814  |   |   |   |   |   |
| Cumulative GAP as a % of total assets            |   |                   | (31.81   | %)     |                              |   | (39.77   | %)                                   |   |   | (35.64           | %)     |   |   | 24.73   | % |   |   |   |   |

|                                 |   | Immediate Change in Rates |   |
|--------------------------------------|--------|------------------------------------------|--------|
|                                 |   |  -200                               |   |   |  -100 |   |   |  +100 |   |   |  +200 |   |
|                                 |   | Basis Points                        |   |   | Basis Points |   |   | Basis Points |   |   | Basis Points |   |
|                                 |   |
| % Change in Net Interest Income      |   |                                     | -3.5   | % |   |   | -1.9 | % |   |   | 0.4 | % |   |   | -1.8 | % |
| % Change in Economic Value of Equity |   |                                     | -19.8  | % |   |   | -11.2 | % |   |   | 0.4 | % |   |   | -11.7 | % |

----

----

| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|---------|---------------------------------------------|

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

----

| ITEM 9A. | CONTROLS AND PROCEDURES |
|----------|-------------------------|

| ITEM 9B. | OTHER INFORMATION |
|----------|-------------------|

----

| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|----------|--------------------------------------------------------|

| ITEM 11. | EXECUTIVE COMPENSATION |
|----------|------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|----------|------------------------------------------------------------------------------------------------|

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
|----------|--------------------------------------------------------------------------|

| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|----------|----------------------------------------|

----

| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
|----------|--------------------------------------------|

|                                                                                                                  | Page |
|-----------------------------------------------------------------------------------------------------------------------|------|
| Report of Independent registered Public Accounting Firm                                                               | F-1  |
| Consolidated Balance Sheets as of December 31, 2010, 2009 and 2008                                                    | F-2  |
| Consolidated Statements of Income for the Years Ended December 31, 2010, 2009 and 2008                                | F-3  |
| Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2010, 2009 and 2008                  | F-4  |
| Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2010, 2009 and 2008 | F-5  |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008                            | F-6  |
| Notes to Consolidated Financial Statements                                                                            | F-8  |

| 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              | Articles of Amendment, dated October 8, 2003 (incorporated by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2003, 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)                                                                                                                              |
| 3.4              | By-Laws (incorporated by reference to Exhibit 3.4 to the Registrant’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2003, 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             | Amended and Restated Change-in-Control Severance Plan (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2001, 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 3.2 to the Registrant’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2001, File No. 0-24047)                                                                                                                          |
| 23               | Consent of TGM Group LLC                                                                                                                                                                                                                                                                                              |
| 31.1             | Rule 15d-14(a) Certification of Chief Executive Officer                                                                                                                                                                                                                                                               |
| 31.2             | Rule 15d-14(a) Certification of Chief Financial Officer                                                                                                                                                                                                                                                               |
| 32.1             | Section 1350 Certifications                                                                                                                                                                                                                                                                                           |

----

|           | GLEN BURNIE BANCORP |
|----------------|---------------------|
|           |                |   |
| March 10, 2011 | By:                 | /s/ Michael G. Livingston |
|           |                | Michael G. Livingston |
|           |                | President and Chief Executive Officer |

| Signature                              |   | Title                              |   | Date           |
|----------------------------------------|--------|------------------------------------|--------|----------------|
|                                   |   |                               |   |           |
| /s/ Michael G. Livingston              |   | President, Chief Executive Officer |   | March 10, 2011 |
|   Michael G. Livingston      |   | and Director                       |   |           |
|                                   |   |                               |   |           |
| /s/ F. William Kuethe, Jr.             |   | President Emeritus and Director    |   | March 10, 2011 |
| F. William Kuethe, Jr.                 |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/ John E. Porter                     |   | Senior Vice President and Chief    |   | March 10, 2011 |
| John E. Porter                         |   | Financial Officer                  |   |           |
|                                   |   |                               |   |           |
| /s/ John E. Demyan                     |   | Chairman of the Board and Director |   | March 10, 2011 |
| John E. Demyan                         |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/ Shirley E. Boyer                   |   | Director                           |   | March 10, 2011 |
| Shirley E. Boyer                       |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/ Thomas Clocker                     |   | Director                           |   | March 10, 2011 |
| Thomas Clocker                         |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/ Norman E. Harrison, Jr.            |   | Director                           |   | March 10, 2011 |
| Norman E. Harrison, Jr.                |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/ F. W. Kuethe, III                  |   | Director                           |   | March 10, 2011 |
| F. W. Kuethe, III                      |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/ Charles Lynch                      |   | Director                           |   | March 10, 2011 |
| Charles Lynch                          |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/ Edward L. Maddox                   |   | Director                           |   | March 10, 2011 |
| Edward L. Maddox                       |   |                               |   |           |
|                                   |   |                               |   |           |
| /s/  William N. Scherer, Sr. |   | Director                           |   | March 10, 2011 |
| William N. Scherer, Sr.                |   |                               |   |           |

----

| /s/ Karen B. Thorwarth |   | Director |   | March 10, 2011 |
|------------------------|--------|----------|--------|----------------|
| Karen B. Thorwarth     |   |     |   |           |
|                   |   |     |   |           |
| /s/ Mary Lou Wilcox    |   | Director |   | March 10, 2011 |
| Mary Lou Wilcox        |   |     |   |           |

----

----

----

| December 31,                                                                                                                                          |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                                                                                                                                  |   |   |        |   |   |   |        |   |   |
| Assets                                                                                                                                                |   |   |        |   |   |   |        |   |   |
| Cash and due from banks                                                                                                                               |   | $      | 6,492,313   |   |   | $      | 6,993,811   |   |   | $ | 6,960,377 |   |
| Interest-bearing deposits in other financial institutions                                                                                             |   |   | 1,567,673   |   |   |   | 3,748,387   |   |   |   | 7,883,816 |   |
| Federal funds sold                                                                                                                                    |   |   | 940,317     |   |   |   | 691,624     |   |   |   | 6,393,710 |   |
| Cash and cash equivalents                                                                                                                             |   |   | 9,000,303   |   |   |   | 11,433,822  |   |   |   | 21,237,903 |   |
| Investment securities available for sale, at fair value                                                                                               |   |   | 87,268,359  |   |   |   | 84,462,605  |   |   |   | 57,948,645 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                 |   |   | 1,745,100   |   |   |   | 1,858,300   |   |   |   | 1,767,600 |   |
| Maryland Financial Bank stock, at cost                                                                                                                |   |   | 100,000     |   |   |   | 100,000     |   |   |   | 100,000 |   |
| Common stock in the Glen Burnie Statutory Trust I                                                                                                     |   |   | -           |   |   |   | 155,000     |   |   |   | 155,000 |   |
| Ground rents, at cost                                                                                                                                 |   |   | 178,200     |   |   |   | 184,900     |   |   |   | 184,900 |   |
| Loans, less allowance for credit losses                                                                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
| 2010 $3,399,516; 2009 $3,572,528; 2008 $2,021,690;                                                                                               |   |   | 229,850,888 |   |   |   | 235,882,862 |   |   |   | 235,132,621 |   |
| Premises and equipment, at cost, less accumulated depreciation                                                                                        |   |   | 4,123,616   |   |   |   | 4,120,597   |   |   |   | 3,099,448 |   |
| Accrued interest receivable on loans and investment securities                                                                                        |   |   | 1,538,883   |   |   |   | 1,626,792   |   |   |   | 1,680,392 |   |
| Deferred income tax benefits                                                                                                                          |   |   | 3,348,974   |   |   |   | 3,129,435   |   |   |   | 2,286,483 |   |
| Other real estate owned                                                                                                                               |   |   | 215,000     |   |   |   | 25,000      |   |   |   | 550,000 |   |
| Cash value of life insurance                                                                                                                          |   |   | 7,954,062   |   |   |   | 7,702,656   |   |   |   | 7,434,573 |   |
| Other assets                                                                                                                                          |   |   | 1,743,891   |   |   |   | 2,714,728   |   |   |   | 924,650 |   |
|                                                                                                                                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Total assets                                                                                                                                          |   | $      | 347,067,276 |   |   | $      | 353,396,697 |   |   | $ | 332,502,215 |   |
|                                                                                                                                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Liabilities and Stockholders' Equity                                                                                                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Liabilities:                                                                                                                                          |   |   |        |   |   |   |        |   |   |   |   |   |
| Deposits:                                                                                                                                             |   |   |        |   |   |   |        |   |   |   |   |   |
| Noninterest-bearing                                                                                                                                   |   | $      | 68,056,159  |   |   | $      | 67,807,699  |   |   | $ | 63,538,759 |   |
| Interest-bearing                                                                                                                                      |   |   | 226,388,669 |   |   |   | 226,550,138 |   |   |   | 206,228,839 |   |
| Total deposits                                                                                                                                        |   |   | 294,444,828 |   |   |   | 294,357,837 |   |   |   | 269,767,598 |   |
| Short-term borrowings                                                                                                                                 |   |   | 4,273,948   |   |   |   | 81,290      |   |   |   | 629,855 |   |
| Long-term borrowings                                                                                                                                  |   |   | 20,000,000  |   |   |   | 27,033,711  |   |   |   | 27,071,712 |   |
| Junior subordinated debentures owed to unconsolidated subsidiary trust                                                                                |   |   | -           |   |   |   | 5,155,000   |   |   |   | 5,155,000 |   |
| Dividends payable                                                                                                                                     |   |   | 231,579     |   |   |   | 230,285     |   |   |   | 385,794 |   |
| Accrued interest payable on deposits                                                                                                                  |   |   | 55,131      |   |   |   | 112,599     |   |   |   | 139,579 |   |
| Accrued interest payable on junior subordinated debentures                                                                                            |   |   | -           |   |   |   | 171,518     |   |   |   | 171,518 |   |
| Other liabilities                                                                                                                                     |   |   | 1,729,144   |   |   |   | 1,105,335   |   |   |   | 1,272,907 |   |
| Total liabilities                                                                                                                                     |   |   | 320,734,630 |   |   |   | 328,247,575 |   |   |   | 304,593,963 |   |
|                                                                                                                                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Commitments and contingencies                                                                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Stockholders' equity:                                                                                                                                 |   |   |        |   |   |   |        |   |   |   |   |   |
| Common stock, par value $1, authorized 15,000,000 shares; issued and outstanding 2010 2,702,091 shares; 2009 2,683,015 shares; 2008 2,967,727 shares; |   |   | 2,702,091   |   |   |   | 2,683,015   |   |   |   | 2,967,727 |   |
| Surplus                                                                                                                                               |   |   | 9,334,810   |   |   |   | 9,190,911   |   |   |   | 11,568,241 |   |
| Retained earnings                                                                                                                                     |   |   | 15,300,344  |   |   |   | 14,311,508  |   |   |   | 14,129,637 |   |
| Accumulated other comprehensive loss, net of tax benefits                                                                                             |   |   | (1,004,599  | )      |   |   | (1,036,312  | )      |   |   | (757,353 | ) |
| Total stockholders' equity                                                                                                                            |   |   | 26,332,646  |   |   |   | 25,149,122  |   |   |   | 27,908,252 |   |
|                                                                                                                                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                                                            |   | $      | 347,067,276 |   |   | $      | 353,396,697 |   |   | $ | 332,502,215 |   |

----

----

| Years Ended December 31,                                                             |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|--------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                                                 |   |   |       |   |   |   |       |   |   |
| Interest income on:                                                                  |   |   |       |   |   |   |       |   |   |
| Loans, including fees                                                                |   | $      | 14,646,011 |   |   | $      | 15,248,717 |   |   | $ | 14,456,017 |   |
| U.S. Government agency securities                                                    |   |   | 1,915,845  |   |   |   | 1,854,201  |   |   |   | 1,962,553 |   |
| State and municipal securities                                                       |   |   | 1,400,651  |   |   |   | 1,308,116  |   |   |   | 1,410,676 |   |
| Corporate trust preferred securities                                                 |   |   | 166,085    |   |   |   | 189,012    |   |   |   | 192,749 |   |
| Federal funds sold                                                                   |   |   | 9,632      |   |   |   | 12,428     |   |   |   | 5,034 |   |
| Other                                                                                |   |   | 40,743     |   |   |   | 31,823     |   |   |   | 149,007 |   |
| Total interest income                                                                |   |   | 18,178,967 |   |   |   | 18,644,297 |   |   |   | 18,176,036 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Interest expense on:                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Deposits                                                                             |   |   | 3,696,631  |   |   |   | 4,937,282  |   |   |   | 4,780,185 |   |
| Short-term borrowings                                                                |   |   | 1,492      |   |   |   | 49         |   |   |   | 50,567 |   |
| Long-term borrowings                                                                 |   |   | 952,705    |   |   |   | 1,058,749  |   |   |   | 877,101 |   |
| Junior subordinated debentures                                                       |   |   | 648,127    |   |   |   | 546,430    |   |   |   | 546,180 |   |
| Total interest expense                                                               |   |   | 5,298,955  |   |   |   | 6,542,510  |   |   |   | 6,254,033 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net interest income                                                                  |   |   | 12,880,012 |   |   |   | 12,101,787 |   |   |   | 11,922,003 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Provision for credit losses                                                          |   |   | 1,050,000  |   |   |   | 2,442,976  |   |   |   | 1,145,649 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net interest income after provision for credit losses                                |   |   | 11,830,012 |   |   |   | 9,658,811  |   |   |   | 10,776,354 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Other income:                                                                        |   |   |       |   |   |   |       |   |   |   |   |   |
| Service charges on deposit accounts                                                  |   |   | 648,183    |   |   |   | 693,725    |   |   |   | 737,070 |   |
| Other fees and commissions                                                           |   |   | 823,854    |   |   |   | 817,559    |   |   |   | 849,417 |   |
| Gains on investment securities, net                                                  |   |   | 175,164    |   |   |   | 585,882    |   |   |   | 190,930 |   |
| Income on life insurance                                                             |   |   | 251,406    |   |   |   | 268,083    |   |   |   | 273,170 |   |
| Total other income                                                                   |   |   | 1,898,607  |   |   |   | 2,365,249  |   |   |   | 2,050,587 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Other expenses:                                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
| Salaries and wages                                                                   |   |   | 4,856,835  |   |   |   | 4,792,480  |   |   |   | 4,694,461 |   |
| Employee benefits                                                                    |   |   | 1,823,669  |   |   |   | 1,503,848  |   |   |   | 1,525,023 |   |
| Occupancy                                                                            |   |   | 830,105    |   |   |   | 871,081    |   |   |   | 903,976 |   |
| Furniture and equipment                                                              |   |   | 761,997    |   |   |   | 761,462    |   |   |   | 754,191 |   |
| Other expenses                                                                       |   |   | 2,643,509  |   |   |   | 2,989,201  |   |   |   | 2,408,690 |   |
| Total impairment losses on investment securities                                     |   |   | 979,322    |   |   |   | 1,179,652  |   |   |   | 3,640,644 |   |
| Portion of impairment losses recognized in other comprehensive income (before taxes) |   |   | (717,114   | )      |   |   | (1,102,873 | )      |   |   | (824,644 | ) |
| Net impairment loss on investment securities                                         |   |   | 262,208    |   |   |   | 76,779     |   |   |   | 2,816,000 |   |
| Total other expenses                                                                 |   |   | 11,178,323 |   |   |   | 10,994,851 |   |   |   | 13,102,341 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Income (loss) before income taxes (benefits)                                         |   |   | 2,550,296  |   |   |   | 1,029,209  |   |   |   | (275,400 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Federal and state income taxes (benefits)                                            |   |   | 485,511    |   |   |   | (233,253   | )      |   |   | (679,362 | ) |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net income                                                                           |   | $      | 2,064,785  |   |   | $      | 1,262,462  |   |   | $ | 403,962 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic and diluted earnings per share of common stock                                 |   | $      | 0.76       |   |   | $      | 0.46       |   |   | $ | 0.14 |   |

----

----

| Years Ended December 31,                                                                                                                          |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                                                                                                              |   |   |      |   |   |   |      |   |   |
| Net income                                                                                                                                        |   | $      | 2,064,785 |   |   | $      | 1,262,462 |   |   | $ | 403,962 |   |
|                                                                                                                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Other comprehensive income (loss), net of tax                                                                                                     |   |   |      |   |   |   |      |   |   |   |   |   |
| Unrealized holding gains (losses) arising during the period (net of deferred taxes (benefits) 2010 ($13,677); 2009 $18,260; 2008 ($1,264,081));   |   |   | (20,709   | )      |   |   | 27,648    |   |   |   | (1,913,998 | ) |
| Reclassification adjustment for impairment loss included in net income (net of deferred tax benefits 2010$104,293; 2009 $30,539; 2008 $1,110,771) |   |   | 157,915   |   |   |   | 46,240    |   |   |   | 1,705,229 |   |
| Reclassification adjustment for gains included in net income (net of deferred taxes 2010 $69,671; 2009 $233,034; 2008 $75,942;)                   |   |   | (105,493  | )      |   |   | (352,847  | )      |   |   | (114,988 | ) |
| Total other comprehensive income (loss)                                                                                                           |   |   | 31,713    |   |   |   | (278,959  | )      |   |   | (323,757 | ) |
|                                                                                                                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Comprehensive income                                                                                                                              |   | $      | 2,096,498 |   |   | $      | 983,503   |   |   | $ | 80,205 |   |

----

----

|                                             |   |              |      |   |      |   |      |     |   |   |       |   |   | Accumulated   |       |   |   |   |
|-------------------------------------------------------|--------|-------------------|-----------|--------|-----------|--------|-----------|----------|--------|--------|------------|--------|--------|---------------|------------|--------|--------|--------|
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   | Other         |       |   |   |   |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   | Comprehensive |       |   | Total  |   |
|                                                  |   | Common Stock |      |   |      |   |      | Retained |   |   | (Loss)     |   |   | Stockholders' |       |
|                                                  |   | Shares            |      |   | Par Value |   |      | Surplus  |   |   | Earnings   |   |   | Income        |       |   | Equity |   |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   |          |       |   |   |   |
| Balances, December 31, 2007                           |   |              | 2,498,465 |   |      | $      | 2,498,465 |     |   | $      | 11,921,129 |   |   | $             | 15,750,156 |   |   | $      | (433,596 | ) |   | $ | 29,736,154 |   |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Net income                                            |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | 403,962    |   |   |   | - |   |   |   | 403,962 |   |
| Cummulative effect of adoption of EITF 06-04          |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | (179,794   | )      |   |   | - |   |   |   | (179,794 | ) |
| Shares repurchased and retired                        |   |              | (50,300   | )      |      |   | (50,300   | )        |   |   | (526,939   | )      |   |          | -          |   |   |   | - |   |   |   | (577,239 | ) |
| Cash dividends, $.45 per share                        |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | (1,345,128 | )      |   |   | - |   |   |   | (1,345,128 | ) |
| Dividends reinvested under dividend reinvestment plan |   |              | 20,003    |   |      |   | 20,003    |     |   |   | 174,051    |   |   |          | -          |   |   |   | - |   |   |   | 194,054 |   |
| Stock split effected in form of 20% stock dividend    |   |              | 499,559   |   |      |   | 499,559   |     |   |   | -          |   |   |          | (499,559   | )      |   |   | - |   |   |   | - |   |
| Other comprehensive loss, net of tax                  |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | -          |   |   |   | (323,757 | ) |   |   | (323,757 | ) |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Balances, December 31, 2008                           |   |              | 2,967,727 |   |      |   | 2,967,727 |     |   |   | 11,568,241 |   |   |          | 14,129,637 |   |   |   | (757,353 | ) |   |   | 27,908,252 |   |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Net income                                            |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | 1,262,462  |   |   |   | - |   |   |   | 1,262,462 |   |
| Shares repurchased and retired                        |   |              | (305,083  | )      |      |   | (305,083  | )        |   |   | (2,530,626 | )      |   |          | -          |   |   |   | - |   |   |   | (2,835,709 | ) |
| Cash dividends, $.40 per share                        |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | (1,080,591 | )      |   |   | - |   |   |   | (1,080,591 | ) |
| Dividends reinvested under dividend reinvestment plan |   |              | 20,371    |   |      |   | 20,371    |     |   |   | 153,296    |   |   |          | -          |   |   |   | - |   |   |   | 173,667 |   |
| Other comprehensive loss, net of tax                  |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | -          |   |   |   | (278,959 | ) |   |   | (278,959 | ) |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Balances, December 31, 2009                           |   |              | 2,683,015 |   |      |   | 2,683,015 |     |   |   | 9,190,911  |   |   |          | 14,311,508 |   |   |   | (1,036,312 | ) |   |   | 25,149,122 |   |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Net income                                            |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | 2,064,785  |   |   |   | - |   |   |   | 2,064,785 |   |
| Cash dividends, $.40 per share                        |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | (1,075,949 | )      |   |   | - |   |   |   | (1,075,949 | ) |
| Dividends reinvested under dividend reinvestment plan |   |              | 19,076    |   |      |   | 19,076    |     |   |   | 143,899    |   |   |          | -          |   |   |   | - |   |   |   | 162,975 |   |
| Other comprehensive income, net of tax                |   |              | -         |   |      |   | -         |     |   |   | -          |   |   |          | -          |   |   |   | 31,713 |   |   |   | 31,713 |   |
|                                                  |   |              |      |   |      |   |      |     |   |   |       |   |   |          |       |   |   |   |   |   |   |   |   |   |
| Balances, December 31, 2010                           |   |              | 2,702,091 |   |      | $      | 2,702,091 |     |   | $      | 9,334,810  |   |   | $             | 15,300,344 |   |   | $      | (1,004,599 | ) |   | $ | 26,332,646 |   |

----

----

| Years Ended December 31,                                                                                            |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|---------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                                                                                                |   |   |        |   |   |   |        |   |   |
| Cash flows from operating activities:                                                                               |   |   |        |   |   |   |        |   |   |
| Net income                                                                                                          |   | $      | 2,064,785   |   |   | $      | 1,262,462   |   |   | $ | 403,962 |   |
| Adjustments to reconcile net income to net cash provided by operating activities                                    |   |   |        |   |   |   |        |   |   |   |   |   |
| Depreciation, amortization, and accretion                                                                           |   |   | 1,001,488   |   |   |   | 652,780     |   |   |   | 421,229 |   |
| Provision for credit losses                                                                                         |   |   | 1,050,000   |   |   |   | 2,442,976   |   |   |   | 1,145,649 |   |
| Deferred income tax benefits, net                                                                                   |   |   | (240,485    | )      |   |   | (658,719    | )      |   |   | (1,605,603 | ) |
| Gains on disposals of assets, net                                                                                   |   |   | (248,221    | )      |   |   | (569,428    | )      |   |   | (173,393 | ) |
| Impairment losses on investment securities                                                                          |   |   | 262,208     |   |   |   | 76,779      |   |   |   | 2,816,000 |   |
| Income on investment in life insurance                                                                              |   |   | (251,406    | )      |   |   | (268,083    | )      |   |   | (273,170 | ) |
| Changes in assets and liabilities:                                                                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Decrease (increase) in accrued interest receivable                                                                  |   |   | 87,909      |   |   |   | 53,600      |   |   |   | (171,752 | ) |
| Decrease (increase) in other assets                                                                                 |   |   | 869,991     |   |   |   | (1,838,514  | )      |   |   | (118,962 | ) |
| (Decrease) increase in accrued interest payable                                                                     |   |   | (228,986    | )      |   |   | (26,980     | )      |   |   | 5,305 |   |
| Increase (decrease) in other liabilities                                                                            |   |   | 623,809     |   |   |   | (167,572    | )      |   |   | (72,369 | ) |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Net cash provided by operating activities                                                                           |   |   | 4,991,092   |   |   |   | 959,301     |   |   |   | 2,376,896 |   |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash flows from investing activities:                                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
| Maturities of available for sale mortgage-backed securities                                                         |   |   | 13,219,687  |   |   |   | 7,612,135   |   |   |   | 4,402,208 |   |
| Sales of available for sale debt securities                                                                         |   |   | 9,073,406   |   |   |   | 24,920,635  |   |   |   | 25,977,280 |   |
| Purchases of available for sale mortgage-backed securities                                                          |   |   | (18,958,955 | )      |   |   | (54,787,147 | )      |   |   | (981,811 | ) |
| Purchases of other available for sale investment securities                                                         |   |   | (6,748,849  | )      |   |   | (4,456,293  | )      |   |   | (13,318,481 | ) |
| Purchase of FHLB stock                                                                                              |   |   | 113,200     |   |   |   | (90,700     | )      |   |   | (385,700 | ) |
| Redemption of common stock in the Glen Burnie Staturtory Trust I                                                    |   |   | 155,000     |   |   |   | -           |   |   |   | - |   |
| (Decrease) increase in loans, net                                                                                   |   |   | 4,469,727   |   |   |   | (3,218,217  | )      |   |   | (37,075,138 | ) |
| Proceeds from sales of other real estate                                                                            |   |   | 450,827     |   |   |   | 548,994     |   |   |   | 50,000 |   |
| Purchases of premises and equipment                                                                                 |   |   | (377,912    | )      |   |   | (1,398,320  | )      |   |   | (501,717 | ) |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Net cash provided (used) by investing activities                                                                    |   |   | 1,396,131   |   |   |   | (30,868,913 | )      |   |   | (21,149,259 | ) |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash flows from financing activities:                                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
| Increase (decrease) in noninterest-bearing deposits, NOW accounts, money market accounts, and savings accounts, net |   |   | 248,460     |   |   |   | 4,268,940   |   |   |   | (5,221,614 | ) |
| (Decrease) increase in time deposits, net                                                                           |   |   | (161,469    | )      |   |   | 20,321,299  |   |   |   | 22,072,446 |   |
| Increase (decrease) in short-term borrowings                                                                        |   |   | 4,192,658   |   |   |   | (548,565    | )      |   |   | 127,326 |   |
| Proceeds from long-term borrowings                                                                                  |   |   | -           |   |   |   | -           |   |   |   | 10,000,000 |   |
| Repayments of long-term borrowings                                                                                  |   |   | (7,033,711  | )      |   |   | (38,001     | )      |   |   | (35,423 | ) |
| Cash dividends paid                                                                                                 |   |   | (1,074,655  | )      |   |   | (1,236,100  | )      |   |   | (1,344,344 | ) |
| Common stock dividends reinvested                                                                                   |   |   | 162,975     |   |   |   | 173,667     |   |   |   | 194,054 |   |
| Redemption of guaranteed preferred beneficial interests in                                                          |   |   |        |   |   |   |        |   |   |   |   |   |
| Glen Burnie Bancorp junior subordinated debentures                                                                  |   |   | (5,155,000  | )      |   |   | -           |   |   |   | - |   |
| Repurchase and retirement of common stock                                                                           |   |   | -           |   |   |   | (2,835,709  | )      |   |   | (577,239 | ) |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Net cash (used) provided by financing activities                                                                    |   |   | (8,820,742  | )      |   |   | 20,105,531  |   |   |   | 25,215,206 |   |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| (Decrease) increase in cash and cash equivalents                                                                    |   |   | (2,433,519  | )      |   |   | (9,804,081  | )      |   |   | 6,442,843 |   |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash and cash equivalents, beginning of year                                                                        |   |   | 11,433,822  |   |   |   | 21,237,903  |   |   |   | 14,795,060 |   |
|                                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash and cash equivalents, end of year                                                                              |   | $      | 9,000,303   |   |   | $      | 11,433,822  |   |   | $ | 21,237,903 |   |

----

----

| Years Ended December 31,                                                              |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|---------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                                                  |   |   |      |   |   |   |      |   |   |
| Supplementary Cash Flow Information:                                                  |   |   |      |   |   |   |      |   |   |
| Interest paid                                                                         |   | $      | 5,527,941 |   |   | $      | 6,569,490 |   |   | $ | 6,248,728 |   |
| Income taxes paid                                                                     |   |   | 275,000   |   |   |   | 1,125,000 |   |   |   | 600,000 |   |
| Total decrease (increase) in unrealized depreciation on available for sale securities |   |   | 52,659    |   |   |   | (463,192  | )      |   |   | (551,125 | ) |
|                                                                                  |   |   |      |   |   |   |      |   |   |   |   |   |
| Supplementary Noncash Investing Activities:                                           |   |   |      |   |   |   |      |   |   |   |   |   |
| Loans converted to other real estate                                                  |   |   | 512,247   |   |   |   | 25,000    |   |   |   | 550,000 |   |

----

----

----

----

----

| Investment securities are summarized as follows: |   |
|--------------------------------------------------|--------|
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   | Gross |   |   | Gross |   |   |   |   |
|                                             |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| December 31, 2010                                |   | Cost |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale:                              |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies                         |   | $ | 1,028,360 |   |   | $ | 51,640 |   |   | $ | 200 |   |   | $ | 1,079,800 |   |
| State and municipal                              |   |   | 34,775,927 |   |   |   | 54,285 |   |   |   | 1,960,277 |   |   |   | 32,869,935 |   |
| Corporate trust preferred                        |   |   | 1,793,287 |   |   |   | 64,898 |   |   |   | 717,115 |   |   |   | 1,141,070 |   |
| Mortgage-backed                                  |   |   | 51,337,038 |   |   |   | 984,851 |   |   |   | 144,335 |   |   |   | 52,177,554 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | $ | 88,934,612 |   |   | $ | 1,155,674 |   |   | $ | 2,821,927 |   |   | $ | 87,268,359 |   |

|                      |   |      |       |   | Gross      |   |    | Gross      |   |   |      |   |
|---------------------------|--------|-----------|------------|--------|------------|--------|---------|------------|--------|--------|-----------|--------|
|                      |   | Amortized |       |   | Unrealized |   |    | Unrealized |   |   | Fair      |   |
| December 31, 2009         |   | Cost      |       |   | Gains      |   |    | Losses     |   |   | Value     |   |
|                      |   |      |       |   |       |   |    |       |   |   |      |   |
| Available for sale:       |   |      |       |   |       |   |    |       |   |   |      |   |
| U.S. Government agencies  |   | $         | 3,180,360  |   |       | $      | 14,060  |       |   | $      | 135,330   |   |   | $ | 3,059,090 |   |
| State and municipal       |   |      | 30,073,170 |   |       |   | 335,146 |       |   |   | 664,647   |   |   |   | 29,743,669 |   |
| Corporate trust preferred |   |      | 2,080,282  |   |       |   | 33,521  |       |   |   | 1,102,874 |   |   |   | 1,010,929 |   |
| Mortgage-backed           |   |      | 50,849,527 |   |       |   | 368,642 |       |   |   | 569,252   |   |   |   | 50,648,917 |   |
|                      |   |      |       |   |       |   |    |       |   |   |      |   |   |   |   |   |
|                      |   | $         | 86,183,339 |   |       | $      | 751,369 |       |   | $      | 2,472,103 |   |   | $ | 84,462,605 |   |

----

| December 31, 2008         |   | AmortizedCost |       |   | GrossUnrealizedGains |   |    | GrossUnrealizedLosses |   |   | FairValue |   |
|---------------------------|--------|---------------|------------|--------|----------------------|--------|---------|-----------------------|--------|--------|-----------|--------|
|                      |   |          |       |   |                 |   |    |                  |   |   |      |   |
| Available for sale:       |   |          |       |   |                 |   |    |                  |   |   |      |   |
| U.S. Government agencies  |   | $             | 8,686,877  |   |                 | $      | 191,455 |                  |   | $      | 140,280   |   |   | $ | 8,738,052 |   |
| State and municipal       |   |          | 31,466,012 |   |                 |   | 235,128 |                  |   |   | 979,935   |   |   |   | 30,721,205 |   |
| Corporate trust preferred |   |          | 2,168,928  |   |                 |   | -       |                  |   |   | 971,426   |   |   |   | 1,197,502 |   |
| Mortgage-backed           |   |          | 16,884,368 |   |                 |   | 413,682 |                  |   |   | 6,164     |   |   |   | 17,291,886 |   |
|                      |   |          |       |   |                 |   |    |                  |   |   |      |   |   |   |   |   |
|                      |   | $             | 59,206,185 |   |                 | $      | 840,265 |                  |   | $      | 2,097,805 |   |   | $ | 57,948,645 |   |

|                                    |   | Less than 12 months |       |   | 12 months or more |   |      | Total  |   |
|-----------------------------------------|--------|------------------------------------|------------|--------|----------------------------------|--------|-----------|--------|--------|
|                                    |   | Fair                               |       |   | Unrealized                       |   |      | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                    |   | Value                              |       |   | Loss                             |   |      | Value  |   |   | Loss |   |   | Value |   |   | Loss |   |
| Obligations of U.S. Government agencies |   | $                                  | 9,000      |   |                             | $      | 200       |   |   | $ | - |   |   | $ | - |   |   | $ | 9,000 |   |   | $ | 200 |   |
| State and Municipal                     |   |                               | 24,187,563 |   |                             |   | 1,489,402 |   |   |   | 3,045,857 |   |   |   | 470,875 |   |   |   | 27,233,420 |   |   |   | 1,960,277 |   |
| Corporate trust preferred               |   |                               | -          |   |                             |   | -         |   |   |   | 121,070 |   |   |   | 717,115 |   |   |   | 121,070 |   |   |   | 717,115 |   |
| Mortgaged-backed                        |   |                               | 7,309,166  |   |                             |   | 85,522    |   |   |   | 3,244,475 |   |   |   | 58,813 |   |   |   | 10,553,641 |   |   |   | 144,335 |   |
|                                    |   |                               |       |   |                             |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   | $                                  | 31,505,729 |   |                             | $      | 1,575,124 |   |   | $ | 6,411,402 |   |   | $ | 1,246,803 |   |   | $ | 37,917,131 |   |   | $ | 2,821,927 |   |

----

|                                        |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|---------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                        |   |   |      |   |   |   |      |   |   |
| Estimated credit losses, beginning of year  |   | $      | 2,892,779 |   |   | $      | 2,816,000 |   |   | $ | - |   |
| Credit losses - no previous OTTI recognized |   |   | -         |   |   |   | 76,779    |   |   |   | 2,816,000 |   |
| Credit losses - previous OTTI recognized    |   |   | 262,208   |   |   |   | -         |   |   |   | - |   |
|                                        |   |   |      |   |   |   |      |   |   |   |   |   |
| Estimated credit losses, end of year        |   | $      | 3,154,987 |   |   | $      | 2,892,779 |   |   | $ | 2,816,000 |   |

----

|                                         |   | Available for Sale |       |
|----------------------------------------------|--------|--------------------|------------|
|                                         |   | Amortized          |       |   | Fair |   |
| December 31, 2010                            |   | Cost               |       |   | Value |   |
|                                         |   |               |       |   |   |   |
| Due within one year                          |   | $                  | -          |   |   | $ | - |   |
| Due over one to five years                   |   |               | 1,589,004  |   |   |   | 1,609,925 |   |
| Due over five to ten years                   |   |               | 304,997    |   |   |   | 312,135 |   |
| Due over ten years                           |   |               | 35,703,573 |   |   |   | 33,168,745 |   |
| Mortgage-backed, due in monthly installments |   |               | 51,337,038 |   |   |   | 52,177,554 |   |
|                                         |   |               |       |   |   |   |   |   |
|                                         |   | $                  | 88,934,612 |   |   | $ | 87,268,359 |   |
|                                         |   |               |       |   |   |   |   |   |
| December 31, 2009                            |   |               |       |   |   |   |   |   |
|                                         |   |               |       |   |   |   |   |   |
| Due within one year                          |   | $                  | 649,998    |   |   | $ | 650,982 |   |
| Due over one to five years                   |   |               | 1,825,146  |   |   |   | 1,850,726 |   |
| Due over five to ten years                   |   |               | 565,946    |   |   |   | 571,123 |   |
| Due over ten years                           |   |               | 32,292,722 |   |   |   | 30,740,857 |   |
| Mortgage-backed, due in monthly installments |   |               | 50,849,527 |   |   |   | 50,648,917 |   |
|                                         |   |               |       |   |   |   |   |   |
|                                         |   | $                  | 86,183,339 |   |   | $ | 84,462,605 |   |
|                                         |   |               |       |   |   |   |   |   |
| December 31, 2008                            |   |               |       |   |   |   |   |   |
|                                         |   |               |       |   |   |   |   |   |
| Due within one year                          |   | $                  | -          |   |   | $ | - |   |
| Due over one to five years                   |   |               | 4,577,077  |   |   |   | 4,560,487 |   |
| Due over five to ten years                   |   |               | 5,563,224  |   |   |   | 5,685,637 |   |
| Due over ten years                           |   |               | 32,181,516 |   |   |   | 30,410,635 |   |
| Mortgage-backed, due in monthly installments |   |               | 16,884,368 |   |   |   | 17,291,886 |   |
|                                         |   |               |       |   |   |   |   |   |
|                                         |   | $                  | 59,206,185 |   |   | $ | 57,948,645 |   |

----

|                              |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|-----------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
| Mortgage:                         |   |   |        |   |   |   |        |   |   |
| Residential                       |   | $      | 102,199,134 |   |   | $      | 95,683,441  |   |   | $ | 87,707,878 |   |
| Commercial                        |   |   | 72,669,909  |   |   |   | 79,845,030  |   |   |   | 76,152,837 |   |
| Construction and land development |   |   | 5,363,232   |   |   |   | 1,742,515   |   |   |   | 6,589,673 |   |
| Demand and time                   |   |   | 7,193,070   |   |   |   | 9,800,625   |   |   |   | 6,974,607 |   |
| Installment                       |   |   | 46,860,351  |   |   |   | 53,222,692  |   |   |   | 60,593,752 |   |
|                              |   |   | 234,285,696 |   |   |   | 240,294,303 |   |   |   | 238,018,747 |   |
| Unearned income on loans          |   |   | (1,035,292  | )      |   |   | (838,913    | )      |   |   | (864,436 | ) |
|                              |   |   | 233,250,404 |   |   |   | 239,455,390 |   |   |   | 237,154,311 |   |
| Allowance for credit losses       |   |   | (3,399,516  | )      |   |   | (3,572,528  | )      |   |   | (2,021,690 | ) |
|                              |   |   |        |   |   |   |        |   |   |   |   |   |
|                              |   | $      | 229,850,888 |   |   | $      | 235,882,862 |   |   | $ | 235,132,621 |   |

|                        |   | Commercial |    |   |             |   |      | Consumer |   |   |             |   |   |        |    |   |   |   |
|-----------------------------|--------|------------|---------|--------|------------------|--------|-----------|----------|--------|--------|------------------|--------|--------|-------------|---------|--------|--------|--------|
|                        |   | and        |    |   | Commercial       |   |      | and      |   |   | Residential      |   |   |        |    |   |   |   |
| 2010                        |   | Industrial |    |   | Real Estate |   |      | Indirect |   |   | Real Estate |   |   | Unallocated |    |   | Total  |   |
|                        |   |       |    |   |             |   |      |     |   |   |             |   |   |        |    |   |   |   |
| Balance, beginning of year  |   | $          | 237,461 |   |             | $      | 2,380,024 |     |   | $      | 842,901          |   |   | $           | 162,142 |   |   | $      | (50,000 | ) |   | $ | 3,572,528 |   |
| Provision for credit losses |   |       | (7,822  | )      |             |   | 542,416   |     |   |   | 448,197          |   |   |        | 14,959  |   |   |   | 52,250 |   |   |   | 1,050,000 |   |
| Recoveries                  |   |       | 45,731  |   |             |   | 10,593    |     |   |   | 497,479          |   |   |        | 85,195  |   |   |   | - |   |   |   | 638,998 |   |
| Loans charged off           |   |       | (12,119 | )      |             |   | (824,810  | )        |   |   | (959,060         | )      |   |        | (66,021 | )      |   |   | - |   |   |   | (1,862,010 | ) |
|                        |   |       |    |   |             |   |      |     |   |   |             |   |   |        |    |   |   |   |   |   |   |   |   |   |
| Balance, end of year        |   | $          | 263,251 |   |             | $      | 2,108,223 |     |   | $      | 829,517          |   |   | $           | 196,275 |   |   | $      | 2,250 |   |   | $ | 3,399,516 |   |

----

|                        |   | 2009   |       |   | 2008   |   |
|-----------------------------|--------|--------|------------|--------|--------|--------|
|                        |   |   |       |   |   |   |
| Balance, beginning of year  |   | $      | 2,021,690  |   |   | $      | 1,604,491 |   |
| Provision for credit losses |   |   | 2,442,976  |   |   |   | 1,145,649 |   |
| Recoveries                  |   |   | 395,584    |   |   |   | 352,933 |   |
| Loans charged off           |   |   | (1,287,722 | )      |   |   | (1,081,383 | ) |
|                        |   |   |       |   |   |   |   |   |
| Balance, end of year        |   | $      | 3,572,528  |   |   | $      | 2,021,690 |   |

|                                     |   | Commercial |     |   |        |   |       | Consumer |   |   |        |   |   |   |      |
|------------------------------------------|--------|------------|----------|--------|-------------|--------|------------|----------|--------|--------|-------------|--------|--------|--------|-----------|
|                                     |   | and        |     |   | Commercial  |   |       | and      |   |   | Residential |   |   |   |      |
|                                     |   | Industrial |     |   | Real Estate |   |       | Indirect |   |   | Real Estate |   |   | Total  |      |
| Individually evaluated impaired balance: |   |       |     |   |        |   |       |     |   |   |        |   |   |   |      |
| Balance, beginning of year               |   | $          | 757,553  |   |        | $      | 7,870,847  |     |   | $      | 5,969       |   |   | $      | 189,260   |   |   | $ | 8,823,629 |   |
| Originations                             |   |       | -        |   |        |   | 125,117    |     |   |   | -           |   |   |   | -         |   |   |   | 125,117 |   |
| Sales/repayments                         |   |       | (101,676 | )      |        |   | (2,765,713 | )        |   |   | (4,823      | )      |   |   | (2,566    | ) |   |   | (2,874,778 | ) |
| Charge-offs                              |   |       | -        |   |        |   | (824,810   | )        |   |   | -           |   |   |   | (59,000   | ) |   |   | (883,810 | ) |
| Transfers to/from collectively impaired  |   |       | 137,776  |   |        |   | 4,593,949  |     |   |   | 77,358      |   |   |   | 1,035,279 |   |   |   | 5,844,362 |   |
|                                     |   |       |     |   |        |   |       |     |   |   |        |   |   |   |      |   |   |   |   |   |
| Balance, end of year                     |   | $          | 793,653  |   |        | $      | 8,999,390  |     |   | $      | 78,504      |   |   | $      | 1,162,973 |   |   | $ | 11,034,520 |   |
| Fair value of ending Balance             |   | $          | 610,821  |   |        | $      | 7,298,090  |     |   | $      | 57,124      |   |   | $      | 1,129,114 |   |   | $ | 9,095,149 |   |
|                                     |   |       |     |   |        |   |       |     |   |   |        |   |   |   |      |   |   |   |   |   |
| Collectively evaluated impaired balance: |   |       |     |   |        |   |       |     |   |   |        |   |   |   |      |   |   |   |   |   |
| Balance, beginning of year               |   | $          | -        |   |        | $      | -          |     |   | $      | 475,008     |   |   | $      | 215,000   |   |   | $ | 690,008 |   |
| Originations                             |   |       | -        |   |        |   | -          |     |   |   | -           |   |   |   | -         |   |   |   | - |   |
| Sales/repayments                         |   |       | -        |   |        |   | -          |     |   |   | (16,550     | )      |   |   | -         |   |   |   | (16,550 | ) |
| Charge-offs                              |   |       | (12,119  | )      |        |   | -          |     |   |   | (959,060    | )      |   |   | (7,021    | ) |   |   | (978,200 | ) |
| Transfers to/from collectively impaired  |   |       | 12,119   |   |        |   | -          |     |   |   | 889,819     |   |   |   | (207,979  | ) |   |   | 693,959 |   |
|                                     |   |       |     |   |        |   |       |     |   |   |        |   |   |   |      |   |   |   |   |   |
| Balance, end of year                     |   | $          | -        |   |        | $      | -          |     |   | $      | 389,217     |   |   | $      | -         |   |   | $ | 389,217 |   |
| Fair value of ending Balance             |   | $          | -        |   |        | $      | -          |     |   | $      | 381,298     |   |   | $      | -         |   |   | $ | 381,298 |   |

----

|                                           |   | Commercial |    |   |             |   |      | Consumer |   |   |             |   |   |   |    |
|------------------------------------------------|--------|------------|---------|--------|------------------|--------|-----------|----------|--------|--------|------------------|--------|--------|--------|---------|
|                                           |   | and        |    |   | Commercial       |   |      | and      |   |   | Residential      |   |   |   |    |
|                                           |   | Industrial |    |   | Real Estate |   |      | Indirect |   |   | Real Estate |   |   | Total  |    |
| Allowance for individually evaluated impaired: |   |       |    |   |             |   |      |     |   |   |             |   |   |   |    |
| Balance, beginning of year                     |   | $          | 47,290  |   |             | $      | 2,122,715 |     |   | $      | 3,588            |   |   | $      | 5,387   |   |   | $ | 2,178,980 |   |
| Provision for credit losses                    |   |       | 101,930 |   |             |   | 392,802   |     |   |   | 17,792           |   |   |   | 9,298   |   |   |   | 521,822 |   |
| Recoveries                                     |   |       | 45,731  |   |             |   | 10,593    |     |   |   | -                |   |   |   | 85,195  |   |   |   | 141,519 |   |
| Loans charged off                              |   |       | (12,119 | )      |             |   | (824,810  | )        |   |   | -                |   |   |   | (66,021 | ) |   |   | (902,950 | ) |
|                                           |   |       |    |   |             |   |      |     |   |   |             |   |   |   |    |   |   |   |   |   |
| Balance, end of year                           |   | $          | 182,832 |   |             | $      | 1,701,300 |     |   | $      | 21,380           |   |   | $      | 33,859  |   |   | $ | 1,939,371 |   |
|                                           |   |       |    |   |             |   |      |     |   |   |             |   |   |   |    |   |   |   |   |   |
| Allowance for collectively evaluated impaired: |   |       |    |   |             |   |      |     |   |   |             |   |   |   |    |   |   |   |   |   |
| Balance, beginning of year                     |   | $          | -       |   |             | $      | -         |     |   | $      | 8,719            |   |   | $      | -       |   |   | $ | 8,719 |   |
| Provision for credit losses                    |   |       | -       |   |             |   | -         |     |   |   | 460,781          |   |   |   | -       |   |   |   | 460,781 |   |
| Recoveries                                     |   |       | -       |   |             |   | -         |     |   |   | 497,479          |   |   |   | -       |   |   |   | 497,479 |   |
| Loans charged off                              |   |       | -       |   |             |   | -         |     |   |   | (959,060         | )      |   |   | -       |   |   |   | (959,060 | ) |
|                                           |   |       |    |   |             |   |      |     |   |   |             |   |   |   |    |   |   |   |   |   |
| Balance, end of year                           |   | $          | -       |   |             | $      | -         |     |   | $      | 7,919            |   |   | $      | -       |   |   | $ | 7,919 |   |

|            |   | Commercial |      |   |        |   |       | Consumer |   |   |        |   |   |   |        |
|-----------------|--------|------------|-----------|--------|-------------|--------|------------|----------|--------|--------|-------------|--------|--------|--------|-------------|
|            |   | and        |      |   | Commercial  |   |       | and      |   |   | Residential |   |   |   |        |
|            |   | Industrial |      |   | Real Estate |   |       | Indirect |   |   | Real Estate |   |   | Total  |        |
|            |   |       |      |   |        |   |       |     |   |   |        |   |   |   |        |
| Pass            |   | $          | 5,852,779 |   |        | $      | 66,763,903 |     |   | $      | 44,931,931  |   |   | $      | 102,281,090 |   |   | $ | 219,829,703 |   |
| Special mention |   |       | 642,248   |   |        |   | 686,338    |     |   |   | 1,543,756   |   |   |   | 809,127     |   |   |   | 3,681,469 |   |
| Substandard     |   |       | 698,043   |   |        |   | 8,999,390  |     |   |   | 259,939     |   |   |   | 692,427     |   |   |   | 10,649,799 |   |
| Doubtful        |   |       | -         |   |        |   | -          |     |   |   | 124,725     |   |   |   | -           |   |   |   | 124,725 |   |
| Loss            |   |       | -         |   |        |   | -          |     |   |   | -           |   |   |   | -           |   |   |   | - |   |
|            |   |       |      |   |        |   |       |     |   |   |        |   |   |   |        |   |   |   |   |   |
|            |   | $          | 7,193,070 |   |        | $      | 76,449,631 |     |   | $      | 46,860,351  |   |   | $      | 103,782,644 |   |   | $ | 234,285,696 |   |

|                      |   |    |        |   |            |   |      | 90 Days or |   |   |       |   |   |   |      |
|---------------------------|--------|---------|-------------|--------|-----------------|--------|-----------|----------------------|--------|--------|------------|--------|--------|--------|-----------|
|                      |   |    |        |   | 30-89 Days |   |      | More and        |   |   |       |   |   |   |      |
|                      |   | Current |        |   | Past Due   |   |      | Still Accruing  |   |   | Nonaccrual |   |   | Total  |      |
|                      |   |    |        |   |            |   |      |                 |   |   |       |   |   |   |      |
| Commercial and industrial |   | $       | 5,735,517   |   |            | $      | 97,999    |                 |   | $      | -          |   |   | $      | 1,359,554 |   |   | $ | 7,193,070 |   |
| Commercial real estate    |   |    | 70,675,983  |   |            |   | 1,251,402 |                 |   |   | -          |   |   |   | 4,522,246 |   |   |   | 76,449,631 |   |
| Consumer and indirect     |   |    | 45,155,344  |   |            |   | 1,580,082 |                 |   |   | -          |   |   |   | 124,925   |   |   |   | 46,860,351 |   |
| Residential real estate   |   |    | 102,706,757 |   |            |   | 99,608    |                 |   |   | -          |   |   |   | 976,279   |   |   |   | 103,782,644 |   |
|                      |   |    |        |   |            |   |      |                 |   |   |       |   |   |   |      |   |   |   |   |   |
|                      |   | $       | 224,273,601 |   |            | $      | 3,029,091 |                 |   | $      | -          |   |   | $      | 6,983,004 |   |   | $ | 234,285,696 |   |

----

|                                                                                 |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|--------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Loans classified as impaired with a valuation allowance                              |   | $      | 11,423,737 |   |   | $      | 9,513,637  |   |   | $ | 1,387,043 |   |
| Allowance for credit losses on impaired loans                                        |   |   | 1,947,290  |   |   |   | 2,187,699  |   |   |   | 629,036 |   |
| Average balance of impaired loans                                                    |   |   | 12,466,887 |   |   |   | 10,111,516 |   |   |   | 1,458,245 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Following is a summary of cash receipts on impaired loans and how they were applied: |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash receipts applied to reduce principal balance                                    |   | $      | 498,629    |   |   | $      | 2,604,832  |   |   | $ | 131,730 |   |
| Cash receipts recognized as interest income                                          |   |   | 589,625    |   |   |   | 380,190    |   |   |   | 41,062 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Total cash receipts                                                                  |   | $      | 1,088,254  |   |   | $      | 2,985,022  |   |   | $ | 172,792 |   |

----

|                     | Useful     |   |   |       |   |   |   |       |   |   |
|--------------------------|------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                     | lives      |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|                     |       |   |   |       |   |   |   |       |   |   |
| Land                     |       |   | $      | 684,977    |   |   | $      | 684,977    |   |   | $ | 684,977 |   |
| Buildings                | 5-50 years |   |   | 5,937,856  |   |   |   | 5,864,145  |   |   |   | 4,796,309 |   |
| Equipment and fixtures   | 5-30 years |   |   | 5,200,693  |   |   |   | 5,093,759  |   |   |   | 5,056,015 |   |
| Construction in progress |       |   |   | 39,704     |   |   |   | 322        |   |   |   | 121,973 |   |
|                     |       |   |   | 11,863,230 |   |   |   | 11,643,203 |   |   |   | 10,659,274 |   |
| Accumulated depreciation |       |   |   | (7,739,614 | )      |   |   | (7,522,606 | )      |   |   | (7,559,826 | ) |
|                     |       |   |   |       |   |   |   |       |   |   |   |   |   |
|                     |       |   | $      | 4,123,616  |   |   | $      | 4,120,597  |   |   | $ | 3,099,448 |   |

| Short-term borrowings are as follows: |   |   |      |   |   |   |   |   |   |
|---------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|
|                                  |   |   |      |   |   |   |   |   |   |
|                                  |   | 2010   |      |   | 2009   |   |   | 2008   |   |
|                                  |   |   |      |   |   |   |   |   |   |
| Notes payable - U.S. Treasury         |   | $      | 273,948   |   |   | $      | 81,290 |   |   | $ | 629,855 |   |
| FHLB                                  |   |   | 4,000,000 |   |   |   | -      |   |   |   | - |   |
|                                  |   |   |      |   |   |   |   |   |   |   |   |   |
|                                  |   | $      | 4,273,948 |   |   | $      | 81,290 |   |   | $ | 629,855 |   |

----

|                                                                                                                                                        |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                                                                                                                        |   |   |       |   |   |   |       |   |   |
| Federal Home Loan Bank of Atlanta, convertible advances                                                                                                     |   | $      | 20,000,000 |   |   | $      | 27,000,000 |   |   | $ | 27,000,000 |   |
| Mortgage payable-individual, interest at 7%, payments of $3,483, including principal and interest, due monthly through October 2010, secured by real estate |   |   | -          |   |   |   | 33,711     |   |   |   | 71,712 |   |
|                                                                                                                                                        |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                                                                                        |   | $      | 20,000,000 |   |   | $      | 27,033,711 |   |   | $ | 27,071,712 |   |

|                |   | 2010   |       |
|---------------------|--------|--------|------------|
|                |   |   |       |
| 2016 and thereafter |   |   | 20,000,000 |   |

----

|                                      |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|-------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                      |   |   |        |   |   |   |        |   |   |
| NOW and SuperNOW                          |   | $      | 23,683,375  |   |   | $      | 22,353,053  |   |   | $ | 21,079,314 |   |
| Money Market                              |   |   | 16,710,611  |   |   |   | 15,284,223  |   |   |   | 12,764,167 |   |
| Savings                                   |   |   | 53,007,293  |   |   |   | 48,378,319  |   |   |   | 45,801,719 |   |
| Certificates of Deposit, $100,000 or more |   |   | 30,885,936  |   |   |   | 31,576,905  |   |   |   | 27,882,777 |   |
| Other time deposits                       |   |   | 102,101,454 |   |   |   | 108,957,638 |   |   |   | 98,700,862 |   |
|                                      |   |   |        |   |   |   |        |   |   |   |   |   |
|                                      |   | $      | 226,388,669 |   |   | $      | 226,550,138 |   |   | $ | 206,228,839 |   |

|                                      |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|-------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                      |   |   |      |   |   |   |      |   |   |
| NOW and SuperNOW                          |   | $      | 27,833    |   |   | $      | 27,702    |   |   | $ | 30,618 |   |
| Money Market                              |   |   | 66,840    |   |   |   | 57,280    |   |   |   | 62,475 |   |
| Savings                                   |   |   | 147,998   |   |   |   | 134,607   |   |   |   | 153,301 |   |
| Certificates of Deposit, $100,000 or more |   |   | 734,355   |   |   |   | 1,063,174 |   |   |   | 976,446 |   |
| Other time deposits                       |   |   | 2,719,605 |   |   |   | 3,654,519 |   |   |   | 3,557,345 |   |
|                                      |   |   |      |   |   |   |      |   |   |   |   |   |
|                                      |   | $      | 3,696,631 |   |   | $      | 4,937,282 |   |   | $ | 4,780,185 |   |

----

| At December 31, 2010, the scheduled maturities of time deposits are approximately as follows: |   |
|-----------------------------------------------------------------------------------------------|--------|
|                                                                                          |   |   |   |
|                                                                                          |   | 2010 |   |
|                                                                                          |   |   |   |
| 2011                                                                                          |   | $ | 72,247,000 |   |
| 2012                                                                                          |   |   | 21,714,000 |   |
| 2013                                                                                          |   |   | 17,761,000 |   |
| 2014                                                                                          |   |   | 7,190,000 |   |
| 2015                                                                                          |   |   | 12,493,000 |   |
| 2016 and thereafter                                                                           |   |   | 1,582,000 |   |
|                                                                                          |   |   |   |   |
|                                                                                          |   | $ | 132,987,000 |   |

|                              |   | 2010   |     |   | 2009   |   |     | 2008   |   |
|-----------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
| Current:                          |   |   |     |   |   |   |     |   |   |
| Federal                           |   | $      | 472,423  |   |   | $      | 268,693  |   |   | $ | 655,129 |   |
| State                             |   |   | 253,573  |   |   |   | 156,773  |   |   |   | 271,112 |   |
|                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Total current                     |   |   | 725,996  |   |   |   | 425,466  |   |   |   | 926,241 |   |
| Deferred income taxes (benefits): |   |   |     |   |   |   |     |   |   |   |   |   |
| Federal                           |   |   | (231,837 | )      |   |   | (509,545 | )      |   |   | (1,275,873 | ) |
| State                             |   |   | (8,648   | )      |   |   | (149,174 | )      |   |   | (329,730 | ) |
|                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Total deferred                    |   |   | (240,485 | )      |   |   | (658,719 | )      |   |   | (1,605,603 | ) |
|                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Income tax expense (benefit)      |   | $      | 485,511  |   |   | $      | (233,253 | )      |   | $ | (679,362 | ) |

----

|                                                  |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|-------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                  |   |   |      |   |   |   |      |   |   |
| Income (loss) before income tax expense (benefit)     |   | $      | 2,550,296 |   |   | $      | 1,029,209 |   |   | $ | (275,400 | ) |
|                                                  |   |   |      |   |   |   |      |   |   |   |   |   |
| Taxes computed at Federal income tax rate             |   | $      | 867,102   |   |   | $      | 349,925   |   |   | $ | (93,636 | ) |
| Increase (decrease) resulting from:                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Tax-exempt income                                     |   |   | (530,509  | )      |   |   | (502,488  | )      |   |   | (547,038 | ) |
| State income taxes, net of Federal income tax benefit |   |   | 161,650   |   |   |   | (80,690   | )      |   |   | (38,688 | ) |
| Other                                                 |   |   | (12,732   | )      |   |   | -         |   |   |   | - |   |
|                                                  |   |   |      |   |   |   |      |   |   |   |   |   |
| Income tax expense (benefit)                          |   | $      | 485,511   |   |   | $      | (233,253  | )      |   | $ | (679,362 | ) |

|                                                                    |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|-------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                                    |   |   |      |   |   |   |      |   |   |
| Deferred income tax benefits:                                           |   |   |      |   |   |   |      |   |   |
| Accrued deferred compensation                                           |   | $      | 99,454    |   |   | $      | 90,594    |   |   | $ | 82,049 |   |
| Impairment loss on investment securities                                |   |   | 1,176,090 |   |   |   | 1,072,662 |   |   |   | 1,110,771 |   |
| Allowance for credit losses                                             |   |   | 1,077,153 |   |   |   | 1,206,604 |   |   |   | 563,737 |   |
| Nonaccrual interest                                                     |   |   | 69,103    |   |   |   | 11,849    |   |   |   | - |   |
| Alternative minimum tax credits                                         |   |   | 199,140   |   |   |   | -         |   |   |   | 66,371 |   |
| Net unrealized depreciation on investment securities available for sale |   |   | 663,477   |   |   |   | 684,422   |   |   |   | 500,186 |   |
| Accumulated depreciation                                                |   |   | 39,916    |   |   |   | 35,692    |   |   |   |  - |   |
| Other real estate owned                                                 |   |   | 2,644     |   |   |   | -         |   |   |   | - |   |
| Reserve for unfunded commitments                                        |   |   | 78,890    |   |   |   | 78,890    |   |   |   | 78,890 |   |
| Total deferred income tax benefits                                      |   |   | 3,405,867 |   |   |   | 3,180,713 |   |   |   | 2,402,004 |   |
|                                                                    |   |   |      |   |   |   |      |   |   |   |   |   |
| Deferred income tax liabilities:                                        |   |   |      |   |   |   |      |   |   |   |   |   |
| Accumulated depreciation                                                |   |   | -         |   |   |   | -         |   |   |   | 41,113 |   |
| Accumulated securities discount accretion                               |   |   | 56,893    |   |   |   | 51,278    |   |   |   | 74,408 |   |
| Total deferred income tax liabilities                                   |   |   | 56,893    |   |   |   | 51,278    |   |   |   | 115,521 |   |
|                                                                    |   |   |      |   |   |   |      |   |   |   |   |   |
| Net deferred income tax benefits                                        |   | $      | 3,348,974 |   |   | $      | 3,129,435 |   |   | $ | 2,286,483 |   |

----

----

|                                |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|-------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                |   |   |      |   |   |   |      |   |   |
| Professional services               |   | $      | 454,147   |   |   | $      | 489,485   |   |   | $ | 485,685 |   |
| Stationery, printing and supplies   |   |   | 202,796   |   |   |   | 189,446   |   |   |   | 214,815 |   |
| Postage and delivery                |   |   | 167,922   |   |   |   | 162,782   |   |   |   | 187,017 |   |
| FDIC assessment                     |   |   | 464,585   |   |   |   | 549,716   |   |   |   | 35,544 |   |
| Directors fees and expenses         |   |   | 203,833   |   |   |   | 200,765   |   |   |   | 198,939 |   |
| Marketing                           |   |   | 227,883   |   |   |   | 246,947   |   |   |   | 255,921 |   |
| Data processing                     |   |   | 61,008    |   |   |   | 82,743    |   |   |   | 100,562 |   |
| Correspondent bank services         |   |   | 54,399    |   |   |   | 87,249    |   |   |   | 60,706 |   |
| Telephone                           |   |   | 172,507   |   |   |   | 173,550   |   |   |   | 160,242 |   |
| Liability insurance                 |   |   | 63,383    |   |   |   | 67,264    |   |   |   | 71,497 |   |
| (Gains) losses and expenses on OREO |   |   | (121,876  | )      |   |   | 64,790    |   |   |   | 8,343 |   |
| Other ATM expense                   |   |   | 110,899   |   |   |   | 155,818   |   |   |   | 232,670 |   |
| Other                               |   |   | 582,023   |   |   |   | 518,646   |   |   |   | 396,749 |   |
|                                |   |   |      |   |   |   |      |   |   |   |   |   |
|                                |   | $      | 2,643,509 |   |   | $      | 2,989,201 |   |   | $ | 2,408,690 |   |

|                              |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|-----------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Loan commitments:                 |   |   |       |   |   |   |       |   |   |
| Construction and land development |   | $      | -          |   |   | $      | 1,155,200  |   |   | $ | 400,000 |   |
| Other mortgage loans              |   |   | 2,013,000  |   |   |   | 2,270,000  |   |   |   | 2,590,000 |   |
|                              |   |   |       |   |   |   |       |   |   |   |   |   |
|                              |   | $      | 2,013,000  |   |   | $      | 3,425,200  |   |   | $ | 2,990,000 |   |
| Unused lines of credit:           |   |   |       |   |   |   |       |   |   |   |   |   |
| Home-equity lines                 |   | $      | 8,130,179  |   |   | $      | 6,404,113  |   |   | $ | 6,395,182 |   |
| Commercial lines                  |   |   | 10,738,826 |   |   |   | 11,335,335 |   |   |   | 13,380,292 |   |
| Unsecured consumer lines          |   |   | 808,053    |   |   |   | 805,479    |   |   |   | 785,487 |   |
|                              |   |   |       |   |   |   |       |   |   |   |   |   |
|                              |   | $      | 19,677,058 |   |   | $      | 18,544,927 |   |   | $ | 20,560,961 |   |
|                              |   |   |       |   |   |   |       |   |   |   |   |   |
| Letters of credit:                |   | $      | 71,762     |   |   | $      | 79,250     |   |   | $ | 196,530 |   |

----

----

----

|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   | To Be Well Capitalized |   |
|---------------------------|--------|--------|------------|--------|------------------------|--------|--------|------------------------|--------|--------|-----------------------------------|--------|--------|---------------------------------------|--------|
|                      |   |   |       |   |                   |   |   | For Capital       |   |   | Under Prompt Corrective |   |
|                      |   | Actual |       |   | Adequacy Purposes |   |   | Action Provisions |   |
|                      |   | Amount |       |   | Ratio                  |   |   | Amount                 |   |   | Ratio                             |   |   | Amount                                |   |   | Ratio |   |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| As of December 31, 2010   |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| Total Capital             |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| (to Risk Weighted Assets) |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| Company                   |   | $      | 30,361,000 |   |                   |   | 12.6   | %                      |   | $      | 19,307,000                        |   |   |                                  | 8.0    | % |   | N/A |   |
| Bank                      |   |   | 29,974,000 |   |                   |   | 12.4   | %                      |   |   | 19,307,000                        |   |   |                                  | 8.0    | % |   | $ | 24,134,000 |   |   |   | 10.0 | % |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets) |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                   |   |   | 27,337,000 |   |                   |   | 11.3   | %                      |   |   | 9,651,000                         |   |   |                                  | 4.0    | % |   | N/A |   |
| Bank                      |   |   | 26,951,000 |   |                   |   | 11.2   | %                      |   |   | 9,651,000                         |   |   |                                  | 4.0    | % |   |   | 14,477,000 |   |   |   | 6.0 | % |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| (to Average Assets)       |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                   |   |   | 27,337,000 |   |                   |   | 7.6    | %                      |   |   | 14,313,000                        |   |   |                                  | 4.0    | % |   | N/A |   |
| Bank                      |   |   | 26,951,000 |   |                   |   | 7.7    | %                      |   |   | 13,928,000                        |   |   |                                  | 4.0    | % |   |   | 17,410,000 |   |   |   | 5.0 | % |

----

|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   | To Be Well Capitalized |   |
|---------------------------|--------|--------|------------|--------|------------------------|--------|--------|------------------------|--------|--------|-----------------------------------|--------|--------|---------------------------------------|--------|
|                      |   |   |       |   |                   |   |   | For Capital       |   |   | Under Prompt Corrective |   |
|                      |   | Actual |       |   | Adequacy Purposes |   |   | Action Provisions |   |
|                      |   | Amount |       |   | Ratio                  |   |   | Amount                 |   |   | Ratio                             |   |   | Amount                                |   |   | Ratio |   |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| As of December 31, 2009   |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| Total Capital             |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| (to Risk Weighted Assets) |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |
| Company                   |   | $      | 34,048,000 |   |                   |   | 14.5   | %                      |   | $      | 18,798,000                        |   |   |                                  | 8.0    | % |   | N/A |   |
| Bank                      |   |   | 33,745,000 |   |                   |   | 14.4   | %                      |   |   | 18,786,000                        |   |   |                                  | 8.0    | % |   | $ | 23,483,000 |   |   |   | 10.0 | % |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets) |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                   |   |   | 31,100,000 |   |                   |   | 13.2   | %                      |   |   | 9,403,000                         |   |   |                                  | 4.0    | % |   | N/A |   |
| Bank                      |   |   | 30,799,000 |   |                   |   | 13.1   | %                      |   |   | 9,390,000                         |   |   |                                  | 4.0    | % |   |   | 14,085,000 |   |   |   | 6.0 | % |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| (to Average Assets)       |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                   |   |   | 31,100,000 |   |                   |   | 8.9    | %                      |   |   | 14,041,000                        |   |   |                                  | 4.0    | % |   | N/A |   |
| Bank                      |   |   | 30,799,000 |   |                   |   | 8.7    | %                      |   |   | 14,193,000                        |   |   |                                  | 4.0    | % |   |   | 14,741,000 |   |   |   | 5.0 | % |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2008   |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Total Capital             |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets) |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                   |   | $      | 35,687,000 |   |                   |   | 14.9   | %                      |   | $      | 19,122,000                        |   |   |                                  | 8.0    | % |   | N/A |   |
| Bank                      |   |   | 35,707,000 |   |                   |   | 15.0   | %                      |   |   | 19,107,000                        |   |   |                                  | 8.0    | % |   | $ | 23,884,000 |   |   |   | 10.0 | % |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets) |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                   |   |   | 33,665,000 |   |                   |   | 14.1   | %                      |   |   | 9,564,000                         |   |   |                                  | 4.0    | % |   | N/A |   |
| Bank                      |   |   | 33,485,000 |   |                   |   | 14.0   | %                      |   |   | 9,553,000                         |   |   |                                  | 4.0    | % |   |   | 14,330,000 |   |   |   | 6.0 | % |
|                      |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital            |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| (to Average Assets)       |   |   |       |   |                   |   |   |                   |   |   |                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Company                   |   |   | 33,665,000 |   |                   |   | 10.5   | %                      |   |   | 12,825,000                        |   |   |                                  | 4.0    | % |   | N/A |   |
| Bank                      |   |   | 33,485,000 |   |                   |   | 10.2   | %                      |   |   | 13,196,000                        |   |   |                                  | 4.0    | % |   |   | 16,495,000 |   |   |   | 5.0 | % |

----

| Earnings per common share are calculated as follows: |   |   |      |   |   |   |      |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|
|                                                 |   |   |      |   |   |   |      |   |   |
|                                                 |   | 2010   |      |   | 2009   |   |      | 2008 |   |
| Basic:                                               |   |   |      |   |   |   |      |   |   |
| Net income                                           |   | $      | 2,064,785 |   |   | $      | 1,262,462 |   |   | $ | 403,962 |   |
| Weighted average common shares outstanding           |   |   | 2,690,218 |   |   |   | 2,734,524 |   |   |   | 2,981,124 |   |
| Basic net income per share                           |   | $      | 0.76      |   |   | $      | 0.46      |   |   | $ | 0.14 |   |

----

|                                                              |   | 2010     |        |   | 2009   |   |        | 2008     |   |
|------------------------------------------------------------------------|--------|----------|-------------|--------|--------|--------|-------------|----------|--------|
|                                                                   |   | Carrying |        |   | Fair   |   |        | Carrying |   |   | Fair |   |   | Carrying |   |   | Fair |   |
|                                                                   |   | Amount   |        |   | Value  |   |        | Amount   |   |   | Value |   |   | Amount |   |   | Value |   |
| Financial assets:                                                      |   |     |        |   |   |   |        |     |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                |   | $        | 6,492,313   |   |   | $      | 6,492,313   |     |   | $ | 6,993,811 |   |   | $ | 6,993,811 |   |   | $ | 6,960,377 |   |   | $ | 6,960,377 |   |
| Interest-bearing deposits in other financial institutions              |   |     | 1,567,673   |   |   |   | 1,567,673   |     |   |   | 3,748,387 |   |   |   | 691,624 |   |   |   | 7,883,816 |   |   |   | 7,883,816 |   |
| Federal funds sold                                                     |   |     | 940,317     |   |   |   | 940,317     |     |   |   | 691,624 |   |   |   | 6,393,710 |   |   |   | 6,393,710 |   |   |   | 6,393,710 |   |
| Investment securities available for sale                               |   |     | 87,268,359  |   |   |   | 87,268,359  |     |   |   | 84,462,605 |   |   |   | 84,462,605 |   |   |   | 57,948,645 |   |   |   | 57,948,645 |   |
| Federal Home Loan Bank Stock                                           |   |     | 1,745,100   |   |   |   | 1,745,100   |     |   |   | 1,858,300 |   |   |   | 1,858,300 |   |   |   | 1,767,600 |   |   |   | 1,767,600 |   |
| Maryland Financial Bank Stock                                          |   |     | 100,000     |   |   |   | 100,000     |     |   |   | 100,000 |   |   |   | 100,000 |   |   |   | 100,000 |   |   |   | 100,000 |   |
| Common stock-Statutory Trust I                                         |   |     | -           |   |   |   | -           |     |   |   | 155,000 |   |   |   | 155,000 |   |   |   | 155,000 |   |   |   | 155,000 |   |
| Ground rents                                                           |   |     | 178,200     |   |   |   | 178,200     |     |   |   | 184,900 |   |   |   | 184,900 |   |   |   | 184,900 |   |   |   | 184,900 |   |
| Loans, less allowance for credit losses                                |   |     | 229,850,888 |   |   |   | 234,426,000 |     |   |   | 235,882,862 |   |   |   | 239,915,000 |   |   |   | 235,132,621 |   |   |   | 239,446,000 |   |
| Accrued interest receivable                                            |   |     | 1,538,883   |   |   |   | 1,538,883   |     |   |   | 1,626,792 |   |   |   | 1,626,792 |   |   |   | 1,680,392 |   |   |   | 1,680,392 |   |
|                                                                   |   |     |        |   |   |   |        |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                                                 |   |     |        |   |   |   |        |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                               |   |     | 294,444,828 |   |   |   | 269,480,000 |     |   |   | 294,357,837 |   |   |   | 267,358,000 |   |   |   | 269,767,598 |   |   |   | 272,091,000 |   |
| Short-term borrowings                                                  |   |     | 4,273,948   |   |   |   | 4,273,948   |     |   |   | 81,290 |   |   |   | 81,290 |   |   |   | 629,855 |   |   |   | 629,855 |   |
| Long-term borrowings                                                   |   |     | 20,000,000  |   |   |   | 19,611,000  |     |   |   | 27,033,711 |   |   |   | 25,979,000 |   |   |   | 27,071,712 |   |   |   | 27,162,000 |   |
| Dividends payable                                                      |   |     | 231,579     |   |   |   | 231,579     |     |   |   | 230,285 |   |   |   | 230,285 |   |   |   | 385,794 |   |   |   | 385,794 |   |
| Accrued interest payable                                               |   |     | 55,131      |   |   |   | 55,131      |     |   |   | 112,599 |   |   |   | 112,599 |   |   |   | 139,579 |   |   |   | 139,579 |   |
| Accrued interest payable on junior subordinated debentures             |   |     | -           |   |   |   | -           |     |   |   | 171,518 |   |   |   | 171,518 |   |   |   | 171,518 |   |   |   | 171,518 |   |
| Junior subordinated debentures owed to unconsolidated subsidiary trust |   |     | -           |   |   |   | -           |     |   |   | 5,155,000 |   |   |   | 5,707,615 |   |   |   | 5,155,000 |   |   |   | 5,281,827 |   |
| Unrecognized financial instruments:                                    |   |     |        |   |   |   |        |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit                                           |   |     | 21,690,058  |   |   |   | 21,690,058  |     |   |   | 21,970,127 |   |   |   | 21,970,127 |   |   |   | 23,550,961 |   |   |   | 23,550,961 |   |
| Standby letters of credit                                              |   |     | 71,762      |   |   |   | 71,762      |     |   |   | 79,250 |   |   |   | 79,250 |   |   |   | 196,530 |   |   |   | 196,530 |   |

----

----

|                                           |   |    |   |   |    |   |        |    |   |   | Fair       |   |
|------------------------------------------------|--------|---------|--------|--------|---------|--------|-------------|---------|--------|--------|------------|--------|
| December 31, 2009                              |   | Level 1 |   |   | Level 2 |   |        | Level 3 |   |   | Value      |   |
| Recurring:                                     |   |    |   |   |    |   |        |    |   |   |       |   |
| Securities available for sale                  |   | $       | -      |   |    | $      | 84,462,605  |    |   | $      | -          |   |   | $ | 84,462,605 |   |
|                                           |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Non-recurring:                                 |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Impaired loans                                 |   |    | -      |   |    |   | -           |    |   |   | 7,325,938  |   |   |   | 7,325,938 |   |
| OREO                                           |   |    | -      |   |    |   | 25,000      |    |   |   | -          |   |   |   | 25,000 |   |
|                                           |   |    | -      |   |    |   | 84,487,605  |    |   |   | 7,325,938  |   |   |   | 91,813,543 |   |
| Activity:                                      |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Securities available for sale:                 |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Purchases of securities                        |   |    | -      |   |    |   | 25,707,804  |    |   |   | -          |   |   |   | 25,707,804 |   |
| Sales, calls, and maturities of securities     |   |    | -      |   |    |   | (22,117,929 | )       |   |   | -          |   |   |   | (22,117,929 | ) |
| Net amortization/accretion of premium/discount |   |    | -      |   |    |   | (574,572    | )       |   |   | -          |   |   |   | (574,572 | ) |
| Increase in market value                       |   |    | -      |   |    |   | 52,659      |    |   |   | -          |   |   |   | 52,659 |   |
| OTTI on investments                            |   |    | -      |   |    |   | (262,208    | )       |   |   | -          |   |   |   | (262,208 | ) |
|                                           |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Impaired loans:                                |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| New impaired loans                             |   |    | -      |   |    |   | -           |    |   |   | 6,228,366  |   |   |   | 6,228,366 |   |
| Payments and other loan reductions             |   |    | -      |   |    |   | -           |    |   |   | (1,377,911 | )      |   |   | (1,377,911 | ) |
| Change in total provision                      |   |    | -      |   |    |   | -           |    |   |   | (240,409   | )      |   |   | (240,409 | ) |
| Loans converted to OREO                        |   |    | -      |   |    |   | -           |    |   |   | (512,247   | )      |   |   | (512,247 | ) |
|                                           |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| OREO:                                          |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| OREO converted from loans                      |   |    | -      |   |    |   | 512,247     |    |   |   | -          |   |   |   | 512,247 |   |
| Sales of OREO                                  |   |    | -      |   |    |   | (322,247    | )       |   |   | -          |   |   |   | (322,247 | ) |
|                                           |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| December 31, 2010                              |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Recurring:                                     |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Securities available for sale                  |   |    | -      |   |    |   | 87,268,359  |    |   |   | -          |   |   |   | 87,268,359 |   |
|                                           |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Non-recurring:                                 |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
| Impaired loans                                 |   |    | -      |   |    |   | -           |    |   |   | 11,423,737 |   |   |   | 11,423,737 |   |
| OREO                                           |   |    | -      |   |    |   | 215,000     |    |   |   | -          |   |   |   | 215,000 |   |
|                                           |   |    |   |   |    |   |        |    |   |   |       |   |   |   |   |   |
|                                           |   | $       | -      |   |    | $      | 87,483,359  |    |   | $      | 11,423,737 |   |   | $ | 98,907,096 |   |

----

----

----

|   | The Balance Sheets, Statements of Income, and Statements of Cash Flows for Glen Burnie Bancorp (Parent Only) are presented below: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

| Balance Sheets                                        |   |
|-------------------------------------------------------|--------|
| December 31,                                          |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Assets                                                |   |   |   |   |   |   |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |   |
| Cash                                                  |   | $ | 355,922 |   |   | $ | 348,515 |   |   | $ | 338,902 |   |
| Investment in The Bank of Glen Burnie                 |   |   | 25,946,536 |   |   |   | 29,848,797 |   |   |   | 32,727,244 |   |
| Investment in GBB Properties, Inc.                    |   |   | 255,770 |   |   |   | 260,184 |   |   |   | 261,999 |   |
| Investment in the Glen Burnie Statutory Trust I       |   |   | - |   |   |   | 155,000 |   |   |   | 155,000 |   |
| Due from subsidiaries                                 |   |   | 1,414 |   |   |   | 43,996 |   |   |   | 22,878 |   |
| Other assets                                          |   |   | 4,583 |   |   |   | 49,433 |   |   |   | 114,541 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                          |   | $ | 26,564,225 |   |   | $ | 30,705,925 |   |   | $ | 33,620,564 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders’ Equity            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends payable                                     |   | $ | 231,579 |   |   | $ | 230,285 |   |   | $ | 385,794 |   |
| Accrued interest payable on borrowed funds            |   |   | - |   |   |   | 171,518 |   |   |   | 171,518 |   |
| Borrowed funds from subsidiary                        |   |   | - |   |   |   | 5,155,000 |   |   |   | 5,155,000 |   |
| Total liabilities                                     |   |   | 231,579 |   |   |   | 5,556,803 |   |   |   | 5,712,312 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity:                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock                                          |   |   | 2,702,091 |   |   |   | 2,683,015 |   |   |   | 2,967,727 |   |
| Surplus                                               |   |   | 9,334,810 |   |   |   | 9,190,911 |   |   |   | 11,568,241 |   |
| Retained earnings                                     |   |   | 15,300,344 |   |   |   | 14,311,508 |   |   |   | 14,129,637 |   |
| Accumulated other comprehensive loss, net of benefits |   |   | (1,004,599 | ) |   |   | (1,036,312 | ) |   |   | (757,353 | ) |
| Total stockholders’ equity                      |   |   | 26,332,646 |   |   |   | 25,149,122 |   |   |   | 27,908,252 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’ equity      |   | $ | 26,564,225 |   |   | $ | 30,705,925 |   |   | $ | 33,620,564 |   |

|   | The borrowed funds from subsidiary balance represented the junior subordinated debt securities payable to the wholly-owned subsidiary trust that was deconsolidated as a result of applying the provisions of ASC Topic 810, formerly FIN 46.  The Company repaid this balance in September 2010 (See Note 8). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Statements of Income                                                                    |   |
|-----------------------------------------------------------------------------------------|--------|
| Years Ended December 31,                                                                |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |
| Dividends and distributions from subsidiaries                                           |   | $ | 1,455,000 |   |   | $ | 4,269,844 |   |   | $ | 1,902,239 |   |
| Other income                                                                            |   |   | 24,645 |   |   |   | 16,430 |   |   |   | 16,430 |   |
| Interest expense on junior subordinated debentures                                      |   |   | (648,127 | ) |   |   | (546,430 | ) |   |   | (546,180 | ) |
| Other expenses                                                                          |   |   | (105,785 | ) |   |   | (122,096 | ) |   |   | (69,468 | ) |
| Income before income tax benefit and equity in undistributed net income of subsidiaries |   |   | 725,733 |   |   |   | 3,617,748 |   |   |   | 1,303,021 |   |
| Income tax benefit                                                                      |   |   | 277,440 |   |   |   | 246,018 |   |   |   | 226,356 |   |
| Change in undistributed equity of subsidiaries                                          |   |   | 1,061,612 |   |   |   | (2,601,304 | ) |   |   | (1,125,415 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                              |   | $ | 2,064,785 |   |   | $ | 1,262,462 |   |   | $ | 403,962 |   |

----

| Statements of Cash Flows                                                                                     |   |
|--------------------------------------------------------------------------------------------------------------|--------|
| Years Ended December 31,                                                                                     |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                        |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                   |   | $ | 2,064,785 |   |   | $ | 1,262,462 |   |   | $ | 403,962 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Decrease in other assets                                                                                     |   |   | 44,850 |   |   |   | 65,108 |   |   |   | 5,001 |   |
| Decrease (increase) in due from subsidiaries                                                                 |   |   | 42,582 |   |   |   | (21,118 | ) |   |   | (169 | ) |
| Decrease in accrued interest payable                                                                         |   |   | (171,518 | ) |   |   | - |   |   |   | - |   |
| Change in undistributed equity of subsidiaries                                                               |   |   | (1,061,612 | ) |   |   | 2,601,304 |   |   |   | 1,125,415 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                                                                    |   |   | 919,087 |   |   |   | 3,907,756 |   |   |   | 1,534,209 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of common stock in the Glen Burnie Statutory Trust I                                                    |   |   | 155,000 |   |   |   | - |   |   |   | - |   |
| Capital contributed from subsidiary                                                                          |   |   | 5,000,000 |   |   |   | - |   |   |   | - |   |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by investing activities                                                                    |   |   | 5,155,000 |   |   |   | - |   |   |   | - |   |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from dividend reinvestment plan                                                                     |   |   | 162,975 |   |   |   | 173,667 |   |   |   | 194,054 |   |
| Redemption of guaranteed preferred beneficial interest in Glen Burnie Bancorp junior subordinated debentures |   |   | (5,155,000 | ) |   |   | - |   |   |   | - |   |
| Repurchase and retirement of common stock                                                                    |   |   | - |   |   |   | (2,835,709 | ) |   |   | (577,239 | ) |
| Dividends paid                                                                                               |   |   | (1,074,655 | ) |   |   | (1,236,101 | ) |   |   | (1,344,344 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used in financing activities                                                                        |   |   | (6,066,680 | ) |   |   | (3,898,143 | ) |   |   | (1,727,529 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                                                                  |   |   | 7,407 |   |   |   | 9,613 |   |   |   | (193,320 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of year                                                                                      |   |   | 348,515 |   |   |   | 338,902 |   |   |   | 532,222 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of year                                                                                            |   | $ | 355,922 |   |   | $ | 348,515 |   |   | $ | 338,902 |   |

----

| 2010                                     |   |
|------------------------------------------|--------|
| (Dollars in thousands,                   |   | Three months ended, |   |
|  except per share amounts)          |   | December 31 |   |   | September 30 |   |   | June 30 |   |   | March 31 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                          |   | $ | 4,387 |   |   | $ | 4,608 |   |   | $ | 4,612 |   |   | $ | 4,572 |   |
| Interest expense                         |   |   | 993 |   |   |   | 1,397 |   |   |   | 1,431 |   |   |   | 1,478 |   |
| Net interest income                      |   |   | 3,394 |   |   |   | 3,211 |   |   |   | 3,181 |   |   |   | 3,094 |   |
| Provision for credit losses              |   |   | - |   |   |   | 300 |   |   |   | 450 |   |   |   | 300 |   |
| Net securities gains                     |   |   | (1 | ) |   |   | 176 |   |   |   | - |   |   |   | - |   |
| Income before income taxes               |   |   | 881 |   |   |   | 900 |   |   |   | 318 |   |   |   | 451 |   |
| Net income                               |   |   | 655 |   |   |   | 689 |   |   |   | 322 |   |   |   | 399 |   |
| Net income per share (basic and diluted) |   | $ | 0.24 |   |   | $ | 0.25 |   |   | $ | 0.12 |   |   | $ | 0.15 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                     |   |
| (Dollars in thousands,                   |   | Three months ended, |   |
|  except per share amounts)          |   | December 31 |   |   | September 30 |   |   | June 30 |   |   | March 31 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                          |   | $ | 4,673 |   |   | $ | 4,749 |   |   | $ | 4,689 |   |   | $ | 4,533 |   |
| Interest expense                         |   |   | 1,570 |   |   |   | 1,649 |   |   |   | 1,655 |   |   |   | 1,668 |   |
| Net interest income                      |   |   | 3,103 |   |   |   | 3,100 |   |   |   | 3,034 |   |   |   | 2,865 |   |
| Provision for credit losses              |   |   | 1,747 |   |   |   | 337 |   |   |   | 209 |   |   |   | 150 |   |
| Net securities gains                     |   |   | 402 |   |   |   | 135 |   |   |   | 51 |   |   |   | (2 | ) |
| Income before income taxes               |   |   | (699 | ) |   |   | 648 |   |   |   | 570 |   |   |   | 510 |   |
| Net income                               |   |   | (210 | ) |   |   | 527 |   |   |   | 490 |   |   |   | 455 |   |
| Net income per share (basic and diluted) |   | $ | (0.08 | ) |   | $ | 0.20 |   |   | $ | 0.18 |   |   | $ | 0.16 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                     |   |
| (Dollars in thousands,                   |   | Three months ended, |   |
| except per share amounts)                |   | December 31 |   |   | September 30 |   |   | June 30 |   |   | March 31 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                          |   | $ | 4,604 |   |   | $ | 4,667 |   |   | $ | 4,492 |   |   | $ | 4,413 |   |
| Interest expense                         |   |   | 1,661 |   |   |   | 1,546 |   |   |   | 1,499 |   |   |   | 1,548 |   |
| Net interest income                      |   |   | 2,943 |   |   |   | 3,121 |   |   |   | 2,993 |   |   |   | 2,865 |   |
| Provision for credit losses              |   |   | 700 |   |   |   | 239 |   |   |   | 152 |   |   |   | 55 |   |
| Net securities gains                     |   |   | 50 |   |   |   | 86 |   |   |   | 48 |   |   |   | 7 |   |
| Income before income taxes               |   |   | 272 |   |   |   | (1,915 | ) |   |   | 743 |   |   |   | 625 |   |
| Net income                               |   |   | 1,382 |   |   |   | (2,118 | ) |   |   | 604 |   |   |   | 536 |   |
| Net income per share (basic and diluted) |   | $ | 0.47 |   |   | $ | (0.71 | ) |   | $ | 0.20 |   |   | $ | 0.18 |   |

----