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                                 EXHIBIT 10.3

                           PENN MAR BANCSHARES, INC.
                             EMPLOYMENT AGREEMENT
                             --------------------

     THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of ___________ ____,
2000, is entered by and between Penn Mar Bancshares, Inc. (the "Company") and
Daniel E. Dutterer ("Employee").

     The Company and Employee, in consideration of the mutual promises set forth
herein and for other valuable consideration the sufficiency of which is hereby
acknowledged and intending to be legally bound, agree as follows:

     1.   Employment.   The Company agrees to employ Employee, and Employee
          ----------
agrees to accept employment with the Company.  Employee agrees to perform his
duties and responsibilities in accordance with the terms and conditions set
forth herein.

     1.1. Employment Term.  The term of this Agreement (the "Employment Term")
          ---------------
shall commence on September 1, 2000 and, unless previously terminated in
accordance with Section 6 of this Agreement or extended by mutual agreement of
the parties, shall terminate on the effective date of an employment agreement in
substantially similar form as Exhibit A hereto between Penn Mar Community Bank
(the "Bank") and Employee or the effective date of a resolution by the board of
directors of the Company in which the board makes a determination to abandon
efforts to raise capital for the purposes of chartering the Bank.

     1.2. Duties and Responsibilities.
          ---------------------------

     (a)  During the Employment Term, Employee shall serve as Treasurer of the
Company and shall perform in a satisfactory manner all duties and accept all
responsibilities incidental to such position or as may be assigned to him from
time to time by the Company's Board of Directors or the Chairman.  Employee
shall devote his productive time, ability, attention, and energies to the
fulfillment of said duties during the Employment Term.  During such time, the
Employee shall not directly or indirectly render any services of a business,
commercial, or professional nature to any other person or organization except
for entities affiliated with the Company, whether or not for compensation,
without the prior written consent of the Company.

     (b)  Employee represents to the Company that he is not subject or a party
to any employment, non-competition, non-disclosure or other agreement, covenant,
understanding or restriction which would prohibit Employee from executing this
Agreement and performing fully his duties and responsibilities hereunder, or
which would in any manner, directly or indirectly, limit or affect the duties
and responsibilities which may now or in the future be assigned to Employee by
the Company.

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     1.3(a)   Compensation.  The Company shall pay Employee a base salary at the
              ------------
annual rate of $100,000.  The Company agrees that the Employee's base salary
will be reviewed annually by the Company's Board of Directors to determine, in
light of the performance of Employee and the Company, if an increase is
appropriate.  Such increases shall be in the sole discretion of the Company's
Board of Directors.  All compensation under this Agreement shall be paid less
withholding required by law or agreed to by Employee, and shall be payable as
determined by the Board of Directors of the Company. The Company also agrees to
reimburse Employee for reasonable business expenses incurred by Employee in the
discharge of his duties.

     1.3(b).  Company and Employee agree that the Company will offer Employee an
incentive compensation plan, the terms of which to be agreed upon by the
parties.

     2.       Other Benefits.
              --------------

     2.1.     Vacation.  For the duration of the Employment Term, Employee shall
              --------
be entitled to vacation per the policies of the Company as applicable to
executive-level employees.  Earned but unused vacation will be forfeited at the
end of each calendar year.

     2.2.     Plan Benefits. The Company shall provide Employee the following
              -------------
benefits: family health, dental and vision insurance, life insurance equal to
two year's base salary and officers and directors liability insurance.  The
foregoing benefits shall be provided to Employee at the same cost as such
benefits are provided to other employees of the Company.  Employee shall be
eligible to participate in any exclusive stock option plan offered by the
Company or Penn Mar Community Bank as may be applicable.

     2.3      Supplemental Disability Insurance. Employee shall receive long-
              ---------------------------------
term and short-term disability insurance equal to 60% of Employees base salary.

     2.4      Automobile.  The Company agrees to provide the Employee with an
              ----------
automobile during the term of this Agreement.

     3.       Non-Disclosure of Confidential Information and Records.
              ------------------------------------------------------

     3.1.     During the term of his employment, Employee will have access to
the Company's proprietary information or information which is entrusted to the
Company, including information relating to business plans and to business as
conducted or anticipated to be conducted, and to past, current or anticipated
products, employees, and services ("Confidential Information").

     3.2.     In further consideration of Employee's employment and continued
employment, and other benefits provided to Employee by the Company, Employee
agrees as follows: (i) except as required by Employee's duties to the Company,
not to at any time directly or indirectly disclose to or use for others or
appropriate for his own personal use or cause to be used by others any
Confidential Information without first obtaining the written consent of the
Board of Directors of the Company to do so; (ii) all records and other writings
of Confidential Information prepared by Employee, or which come into his
possession or control, or which he has access to, are and shall remain the
exclusive property of the Company, and upon notice of termination of

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Employee's employment, Employee will not remove any such records or copies
thereof, but all shall be left with the Company, and any such records or copies
not with the Company in an Employee's possession or control, shall be, upon
notice of termination of employment, immediately returned to the Company along
with any other property of the Company.

     3.3.   The requirements of this Section 3 shall apply during the time of
Employee's employment with the Company and thereafter with no time limitation,
unless it can be demonstrated conclusively that such Confidential Information
has through no act or fault of Employee become part of the public domain.

     4.     No Solicitation.  Employee agrees that, for a period of one (1) year
            ---------------
after the employment of the Employee by the Company or any of its affiliates has
ended (whether or not such employment is pursuant to this Agreement), he will
not either directly or indirectly, (i) call on or solicit any person,
institution, corporation, trust or other entity who or which at the time of such
termination was, or within one (1) year prior thereto had been, a customer of
the Company or any of its affiliates or (ii) solicit the employment of any
person who was employed by the Company or any of its affiliates on a full or
part time basis at the time of Employee's termination of employment, unless such
person (a) was involuntarily discharged by the Company or such affiliates, or
(b) voluntarily terminated his relationship with the Company or such affiliate
prior to Employee's termination of employment.

     5.     Equitable Relief.
            ----------------

     5.1.   Employee acknowledges that the restrictions contained in Sections 3
and 4 are reasonable and necessary to protect the legitimate interests of the
Company and its affiliates, that the Company would not have entered into this
Agreement in the absence of such restrictions and that any violation of any
provision of these Sections will result in irreparable injury to the Company and
its affiliates.  Employee further represents and acknowledges that (i) he has
been advised by the Company to consult his own legal counsel in respect of this
Agreement, and (ii) that he has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with his counsel.

     5.2.   Employee agrees that the Company's remedy at law for a breach of
paragraphs 3 and 4 would be inadequate and that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of providing
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 3 and 4, which rights
shall be cumulative and in addition to any other rights or remedies to which the
Company may be entitled.  In the event that any of the provisions of Sections 3
and 4 should ever be adjudicated to exceed the time, geographic or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic or other limitations permitted by applicable law.

     5.3.   The Company and Employee irrevocably and unconditionally (i) agrees
that any suit, action or other legal proceeding arising out of this Agreement,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the United States District Court for the District of

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Maryland, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Carroll County, Maryland,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which the Company or
Employee may have to the laying of venue of any such suit. The Company and
Employee also irrevocably and unconditionally consents to the service of any
process, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 10 of this Agreement.

     5.4.   Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 3 and 4 of this Agreement to any business
or enterprise (i) which he may directly or indirectly own, manage, operate,
finance, join, control or participate in the ownership, management, operation,
financing, or control of, or (ii) with which he may be connected as an officer,
director, employee, partner, principal, agent, representative, consultant or
otherwise, or in connection with which he may use or permit his name to be used;
provided, however, that this provision shall not apply in respect of Section 4
of this Agreement after expiration of the time periods set forth therein.

     6.     Termination.  This Agreement shall terminate prior to the expiration
            -----------
of its term set forth in Section 1.1 above, upon the occurrence of any one of
the following events:

     6.1.   Disability.  In the event that Employee becomes unable to perform
            ----------
his duties hereunder for a period of six (6) consecutive months or otherwise is
deemed to be disabled within the meaning of the Company's then existing
disability benefit program, this Agreement may be terminated by the Company and
the Company shall have no further liability or obligation to Employee for
compensation; provided, however, that if the Employee becomes disabled during
the Employment Term, the Company shall pay to him or his legal representatives
an amount equal to the installment of his salary set forth in Section 1.3 hereof
for the month in which he becomes disabled which have been earned but not yet
paid.  This Section shall be interpreted in compliance with the Family Medical
Leave Act to the extent that the provisions of that law would apply.

     6.2.   Death.  In the event that Employee dies during the Employment Term,
            -----
the Company shall pay to his executors, legal representatives or administrators
an amount equal to the installment of his salary set forth in Section 1.3 hereof
for the month in which he dies, and thereafter, except as otherwise provided in
this Agreement, the Company shall have no further liability or obligation
hereunder to his executors, legal representatives, administrators, heirs or
assigns or any other person claiming under or through him, provided, however,
that Employee's estate or designated beneficiaries shall be entitled to receive
the payments described for such recipients under any death benefit plan which
may be in effect for executive-level employees of the Company and in which
Employee participated.

     6.3.   Termination by Company For Cause.  Nothing in this Agreement shall
            --------------------------------
be construed to prevent its termination by the Company at any time for "cause"
without prior notice.  For purposes of this Agreement, "cause" shall mean the
failure of Employee to perform or observe any of the terms or provisions of this
Agreement or to comply fully with the lawful directives of the Directors of the
Company, dishonesty, misconduct, conviction of a crime or

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otherwise causing embarrassment to the Company and its public reputation,
substance abuse, misappropriation of funds, disparagement of the Company or
failure to comply with Company policy.

     6.4.   Termination by the Company Without Cause.  This Agreement may be
            ----------------------------------------
terminated by the Company for any reason whatsoever, by giving 30 days' prior
written notice of termination to the other party.  If Employee is terminated
without cause pursuant to this Section 6.4, Employee shall be entitled to the
base salary earned prior to the date of termination as provided for in this
Agreement, computed pro-rata up to and including the date of termination plus a
continued monthly base salary (at the then current rate) for six (6) months
following termination.  Notwithstanding the foregoing, such right to a continued
salary shall terminate at such time as the Employee has found other employment
comparable with Employee's employment with the Company.  Employee shall use his
best efforts to obtain such employment.  If Employee is not able to find
comparable employment, any compensation received by Employee from any employment
during the remaining term of this Agreement shall be deducted from any continued
compensation as provided herein.

     6.5.   Effect of Termination at Employee's Election.  In the event of the
            --------------------------------------------
termination of this Agreement by Employee prior to the completion of the
Employment Term, Employee shall provide the Company with thirty (30) days prior
written notice and shall be entitled to the base compensation earned prior to
the date of termination as provided for in this Agreement under Section 1.3,
computed pro-rata up to and including the date of termination.

     7.     Change of Control.
            -----------------

     7.1    For purposes of this Agreement, a "Change of Control" shall mean:

     (a)    The acquisition by any individual, entity or group (a "Person") of
beneficial ownership (within the meaning of the Federal Securities Laws) of
forty percent (40%) or more of either (i) the then outstanding shares of common
stock of the Bank or the Company or (ii) the combined voting power of the then
outstanding voting securities of the Bank or the Company entitled to vote
generally in the election of directors provided, however, that all transactions
engaged in by the Company and/or the Bank in connection with its formation
activities, including, but not limited to the Company's initial public offering
and the Bank's sales of shares of its capital stock to the Company, shall not
constitute a "Change of Control"; or

     (b)    If the individuals who, as of the date hereof, constitute the Board
of Directors of the Bank (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Bank's stockholders, was approved by a majority
of the directors then comprising the Incumbent Board or a committee appointed by
a majority of the directors then comprising the Incumbent Board, shall be
considered as though such individual were a member of the Incumbent Board; or

     (c)    the approval by the stockholders of the Bank or the Company of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were the stockholders

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of the Bank or the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own, directly or indirectly, more
than forty percent (40%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or consolidated
company's then outstanding voting securities, or of a liquidation or dissolution
of the Bank or the Company or of the sale or other disposition of all or
substantially all of the assets of the Bank or the Company.

     7.2.   Change of Control Payments.
            --------------------------

     (a)    For purposes of this Section 7, the "Change of Control Date" shall
mean the first date on which a Change of Control occurs. Notwithstanding
anything to the contrary in this Agreement, if a Change of Control occurs and if
the Employee's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Employee that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect the Change of Control
or (ii) otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Change of Control Date"
shall mean the date immediately prior to the date of such termination of
employment.

     (b)    Upon a Change of Control, if Employee is employed by the Company on
the Change of Control Date, the Company shall pay Employee two hundred percent
(200%) of Employee's "base amount" as such term is defined in Section 280(b)(3)
of the Internal Revenue Code of 1986, as amended, at Employee's option, either
(i) in a lump sum payment within five (5) days of the Change of Control Date;
(ii) in substantially equal bi-weekly payments over a period of one (1) year,
the first such payment commencing within five (5) days of the Change of Control
Date; or (iii) in substantially equal bi-weekly payments over a period of two
(2) full years, the first such payment commencing within five (5) days of the
Change of Control Date.

     8.     Failure of Bank to Open.  If the Bank is unable to open or fails to
            -----------------------
open due to any reason, Employee shall be entitled to a continued monthly base
salary (at the them current rate) for a period of six (6) months from the date
the Bank fails to or decides not to open.  Notwithstanding the foregoing, such
right to a continued salary shall terminate at such time as the Employee has
found other employment comparable with Employee's employment with the Company.
Employee shall use his best efforts to obtain such employment.  If Employee is
not able to find comparable employment, any compensation received by Employee
from any employment during the remaining term of this Agreement shall be
deducted from any continued compensation as provided herein.

     9.     Survival.  Notwithstanding the termination of employment under this
            --------
Agreement for any reason, the Employee's obligations under Sections 3 and 4
hereof shall survive and remain in full force and effect for the periods therein
provided, and the provisions for equitable relief in Section 5 of the Agreement
shall continue in force.

     10.    Governing Law.  This Agreement shall be governed by and interpreted
            -------------
under the laws of the State of Maryland without giving effect to any conflict of
laws provisions.

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     11.    Litigation Expenses.  In the event of a lawsuit by either party to
            -------------------
enforce the provisions of this Agreement, the prevailing party shall be entitled
to recover reasonable costs, expenses and attorney's fees from the other party.
Disputes arising under Section 6 of the Agreement shall be submitted to an
arbitrator (who is agreeable to both parties).  The decision of the arbitrator
shall be binding on both parties and the fees (including legal fees) and cost
attributable to that arbitration process will be assessed as part of that
process by the arbitrator.  Such arbitration shall be held in the Baltimore
metropolitan area and shall be conducted by the American Arbitration Association
(or other mutually selected arbitrators) ("AAA") by an arbitrator selected using
the AAA's procedures.

     12.    Notices.  All notices and other communications required or permitted
            -------
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received);

            If to the Company to:  J. Geoffrey Sturgill, Jr., Chairman and
                                   President
                                   Penn Mar Bancshares, Inc.
                                   135 East Main Street
                                   Westminster, Maryland 21158

            copy to:               Frank C. Bonaventure, Jr., Esquire
                                   Ober, Kaler, Grimes & Shriver
                                   120 East Baltimore Street
                                   Baltimore, Maryland 21202

            If to Employee, to:    Daniel E. Dutterer
                                   3301 Black Steer Drive
                                   Finksburg, Maryland 21048

or to such other names and addresses as the Company or Employee, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

     13.    Contents of Agreement; Amendment and Assignment.
            -----------------------------------------------

     13.1.  This Agreement supersedes all prior agreements and sets forth the
entire understanding among the parties with respect to the subject matter hereof
and cannot be changed, modified, extended or terminated except upon written
amendment approved by the Board of Directors of the Company.  Without
limitation, nothing in this Agreement shall be construed as giving Employee any
right to be retained in the employ of the Company beyond the expiration of the
Employment Term and Employee specifically acknowledges that he shall be an
employee-at-will of the Company thereafter, and thus subject to discharge by the
Company with or without cause and without compensation of any nature unless a
new Agreement is executed by both parties (or employment is continued at will).

     13.2.  All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal

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representatives, successors and assigns of the parties, except that the duties
and responsibilities of Employee hereunder are of a personal nature and shall
not be assignable or delegatable in whole or in part by Employee.

     14.  Severability.  If any provision of this Agreement or application
          ------------
thereof to anyone or under any circumstance is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction.

     15.  Remedies Cumulative; No Waiver.  No remedy conferred upon the parties
          ------------------------------
by this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity.  No delay or
omission by the parties in exercising any right, remedy or power hereunder or
existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by the parties from time to time
and as often as may be deemed expedient or necessary by such party in its sole
discretion.

     16.  Miscellaneous.  All section headings are for convenience only.  This
          -------------
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in marking proof of this Agreement or any counterpart
to produce or account for any of the other counterparts.



                           [signatures on next page]

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     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.


Witness:                      PENN MAR BANCSHARES, INC.


______________________        By:___________________________________
                                  Name:
                                  Title:


Witness:

______________________        ______________________________________
                              Daniel E. Dutterer

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