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                                 EXHIBIT 10.4

                            PENN MAR COMMUNITY BANK
                             EMPLOYMENT AGREEMENT
                             --------------------

     THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of ___________, 2000,
is entered by and between Penn Mar Community Bank, a Maryland-chartered bank
(the "Bank") and Daniel E. Dutterer ("Employee").

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

     1.1.(a) Employment Term.  The term of this Agreement (the "Employment
             ---------------
Term") shall be for three years and commence on __________ ____, 2000 and,
unless previously terminated in accordance with Section 7 of this Agreement or
extended by mutual agreement of the parties, shall terminate on ___________
____, 2003 (the third anniversary of such date) upon 90 days prior written
notice by either party. If neither party gives prior written notice of
termination, this Agreement shall automatically renew for a one-year term and
successive one-year terms thereafter until such time as one party gives 90 days
prior written notice by either party of a termination.

     1.1.(b) Effective Date.  The effective date of this Agreement is
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____________, 2000.

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

     (a)     During the Employment Term, Employee shall serve as Executive Vice
President of the Bank 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 Bank's President and Board of Directors.  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 Bank, whether or not for compensation, without
the prior written consent of the Bank.

     (b)     Employee represents to the Bank 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 Bank.

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     1.3(a)   Compensation.  The Bank shall pay Employee a base salary at the
              ------------
annual rate of  $100,000. The Bank agrees that the Employee's base salary will
be reviewed annually by the Bank's Board of Directors to determine, in light of
the performance of Employee and the Bank, if an increase is appropriate.  Such
increases shall be in the sole discretion of the Bank'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 Bank. The Bank also agrees to reimburse Employee for reasonable
business expenses incurred by Employee in the discharge of his duties.

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

     2.       Other Benefits.
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     2.1.     Vacation.  For the duration of the Employment Term, Employee shall
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be entitled to vacation per the policies of the Bank 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 Bank shall provide Employee the following
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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 Bank.  Employee shall be
eligible to participate in any exclusive stock option plan offered by the Bank
or Penn Mar Bancshares, Inc. 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
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automobile during the term of this Agreement.

     3.       Non-Disclosure of Confidential Information and Records.
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     3.1.     During the term of his employment, Employee will have access to
the Bank's proprietary information or information which is entrusted to the
Bank, 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 Bank, Employee agrees
as follows: (i) except as required by Employee's duties to the Bank, 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
Bank 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 Bank, and upon
notice of termination of Employee's employment, Employee will not remove any
such records or copies thereof, but all shall be left with the Bank, and any
such records or copies not with the Bank in an Employee's possession or control,
shall be, upon notice of termination of employment, immediately returned to the
Bank along with any other property of the Bank.

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     3.3.   The requirements of this Section 3 shall apply during the time of
Employee's employment with the Bank 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.     Non-Competition.
            ---------------

     4.1.   During the Employment Term and for a period of six (6) months after
employment of the Employee by the Bank or any of its affiliates has ended
(whether or not such employment was pursuant to this Agreement), Employee will
not, unless acting pursuant thereto or with the prior written consent of the
Board of Directors of the Bank, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise with or use
or permit his name to be used in connection with, any federally-chartered or
state-chartered bank, bank holding company, savings and loan, thrift, savings
and loan holding company or other financial institution offices which are
located in Frederick, Carroll or Howard Counties or the Bank's market area (the
"Area"), whichever is larger.  The provisions of this Section 4.1 are in
addition to any rights Bank may have under applicable law.

     4.2.   The foregoing restriction shall not be construed to prohibit the
ownership by Employee of not more than five percent (5%) of any class of
securities of any corporation which is engaged in the business of banking having
a class of securities registered pursuant to the Securities Exchange Act of
1934, provided that such ownership represents a passive investment and that
neither Employee nor any group of persons, including Employee in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.

     4.3.   This covenant not to compete is an inducement to cause the Bank to
execute this Agreement and is a condition to, and consideration for, such
employment and continued employment, raises, promotions, severance, and other
benefits provided to Employee by the Bank.

     5.     No Solicitation.  Employee agrees that, for a period of one (1) year
            ---------------
after the employment of the Employee by the Bank 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 Bank or any of its affiliates or (ii) solicit the employment of any person
who was employed by the Bank 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 Bank or such affiliates, or (b)
voluntarily terminated his relationship with the Bank or such affiliate prior to
Employee's termination of employment.

     6.     Equitable Relief.
            ----------------

     6.1.   Employee acknowledges that the restrictions contained in Sections 3,
4 and 5 are reasonable and necessary to protect the legitimate interests of the
Bank and its affiliates, that the Bank 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 Bank and
its affiliates.  Employee further represents and acknowledges that (i) he has
been advised by the Bank to consult his own legal



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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.

     6.2.   Employee agrees that the Bank's remedy at law for a breach of
paragraphs 3, 4, and 5 would be inadequate and that the Bank 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, 4, or 5,
which rights shall be cumulative and in addition to any other rights or remedies
to which the Bank may be entitled.  In the event that any of the provisions of
Sections 3, 4, or 5 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.

     6.3.   The Bank 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 Bank for preliminary
and permanent injunctive relief and other equitable relief, may be brought in
the United States District Court for the District of 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 Bank or Employee may have to the laying
of venue of any such suit.  The Bank 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 12 of
this Agreement.

     6.4.   Employee agrees that he will provide, and that the Bank may
similarly provide, a copy of Sections 3, 4, and 5 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 5 of this Agreement after expiration of the time periods set
forth therein.

     7.     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:

     7.1.   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 Bank's then existing disability
benefit program, this Agreement may be terminated by the Bank and the Bank shall
have no further liability or obligation to Employee for compensation; provided,
however, that if the Employee becomes disabled during the Employment Term, the
Bank 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.

     7.2.   Death.  In the event that Employee dies during the Employment Term,
            -----
the Bank shall pay to his executors, legal representatives or administrators an
amount equal to the installment of his salary

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set forth in Section 1.3 hereof for the month in which he dies, and thereafter,
except as otherwise provided in this Agreement, the Bank 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
Bank and in which Employee participated.

     7.3.   Termination by Bank For Cause.  Nothing in this Agreement shall be
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construed to prevent its termination by the Bank 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 Bank,
dishonesty, misconduct, conviction of a crime or otherwise causing embarrassment
to the Bank and its public reputation, substance abuse, misappropriation of
funds, disparagement of the Bank or unreasonable failure to comply with Bank
policy.

     7.4.   Termination by the Bank Without Cause.  This Agreement may be
            -------------------------------------
terminated by the Bank 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 7.4, 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 the remaining term
of this Agreement.  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 Bank.  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 provided herein.

     7.5.   Nonrenewal of the Agreement by the Bank. In the event the Bank gives
            ---------------------------------------
the notice to the Employee contemplated by Section 1.1(a) that this Agreement
will not be renewed, the Bank shall pay to the Employee the monthly base salary
Employee would otherwise be entitled had he remained as an employee of the Bank
for the three (3) month period following the date of termination, such payment
to be paid on such future dates as the base salary would have otherwise been
payable hereunder.

     7.6.   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 Bank 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.  The Employee
shall be entitled to no other compensation.

     8.     Change of Control.
            -----------------

     8.1    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 Penn Mar Bancshares, Inc. (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,

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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 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.

     8.2.   Change of Control Payments.
            --------------------------

     (a)    For purposes of this Section 8, 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 Bank 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 Bank on the
Change of Control Date, the Bank 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.

     9.     Survival.  Notwithstanding the termination of employment under this
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Agreement for any reason, the Employee's obligations under Sections 3 and 5
hereof shall survive and remain in full force and effect for the periods therein
provided, and the provisions for equitable relief in Section 6 of the Agreement
shall continue in force.

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     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.

     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 7 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
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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 Bank, to:      J. Geoffrey Sturgill, Chairman
                                     Penn Mar Community Bank
                                     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 Bank 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 Bank.  Without limitation,
nothing in this Agreement shall be construed as giving Employee any right to be
retained in the employ of the Bank beyond the expiration of the Employment Term
and Employee specifically acknowledges that he shall be an employee-at-will of
the Bank thereafter, and thus subject to discharge by the Bank 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).

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     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 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
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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.

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


Attest:                       PENN MAR COMMUNITY BANK


______________________        By:___________________________________
Secretary                        Name:
                                 Title:


Witness:

______________________        ______________________________________
                              Daniel E. Dutterer

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