-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QcD885FOwXxKDKA9WQ0aAUnvuFE36HPxEM+tGNqkH7oHJqoDRb6vwZixBZvUpTjw HoeddMPlf2uphgjsOFooXQ== 0000904280-98-000203.txt : 19980518 0000904280-98-000203.hdr.sgml : 19980518 ACCESSION NUMBER: 0000904280-98-000203 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLEN BURNIE BANCORP CENTRAL INDEX KEY: 0000890066 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 521782444 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24047 FILM NUMBER: 98626076 BUSINESS ADDRESS: STREET 1: 101 CRAIN HIGHWAY SE CITY: GLEN BURNIE STATE: MD ZIP: 21061 BUSINESS PHONE: 4107663300 MAIL ADDRESS: STREET 1: 101 CRAIN HWY SE CITY: GLEN BURNIE STATE: MD ZIP: 21061 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ____________ Commission file number 0-24047 -------- GLEN BURNIE BANCORP ----------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 52-1782444 - ------------------------------------ --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 101 Crain Highway, S.E., Glen Burnie, MD 21061 --------------------------------------------------- (Address of principal executive offices) (Zip Code) 410-766-3300 --------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable -------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. The number of outstanding shares of the registrant's common stock as of March 31, 1998 was 1,094,319. GLEN BURNIE BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share amounts) (Unaudited)
MARCH 31, DECEMBER 31, 1998 1997 ------------ ----------- ASSETS Cash and due from banks. . . . . . . . . . . . . . $ 10,144 $ 9,687 Federal funds sold . . . . . . . . . . . . . . . . 7,273 18,850 Investment securities available for sale, at fair value. . . . . . . . . . . . . . . . . . 41,441 40,679 Investment securities held to maturity, at cost (fair value March 31: $41,717; December 31: $41,566) . . . . . . . . . . . . . 41,286 41,179 Loans receivable, net of allowance for credit losses March 31: $3,888; December 31: $4,139. . . . . . . . . . . . . . . 109,563 111,545 Premises and equipment at cost, net of accumulated depreciation . . . . . . . . . . . . 4,477 4,319 Other real estate owned. . . . . . . . . . . . . . 748 749 Goodwill . . . . . . . . . . . . . . . . . . . . . 408 422 Other assets . . . . . . . . . . . . . . . . . . . 5,001 4,493 -------- -------- Total assets . . . . . . . . . . . . . $220,341 $231,900 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Deposits . . . . . . . . . . . . . . . . . . . . . $198,363 $207,110 Short-term borrowings. . . . . . . . . . . . . . . 557 890 Other liabilities. . . . . . . . . . . . . . . . . 2,456 4,935 -------- -------- Total liabilities. . . . . . . . . . . . $201,376 $212,935 -------- -------- STOCKHOLDERS' EQUITY: Common stock, par value $10, authorized 5,000,000 shares; issued and outstanding: March 31: 1,094,319 shares; December 31: 1,092,768 shares. . . . . . . . . . . . . . . . . . . . . 10,943 10,928 Surplus. . . . . . . . . . . . . . . . . . . . . . 6,575 6,575 Retained earnings. . . . . . . . . . . . . . . . . 1,151 1,237 Accumulated other comprehensive income . . . . . . 296 225 -------- -------- Total stockholders' equity. . . . . . . 18,965 18,965 -------- -------- Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . $220,341 $231,900 ======== ========
See accompanying notes to condensed consolidated financial statements. 2 GLEN BURNIE BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share amounts) (Unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------- 1998 1997 -------- -------- Interest income on Loans, including fees . . . . . . . . . . . . . $ 2,575 $ 2,860 U.S. Treasury and U.S. Government agency securities . . . . . . . . . . . . . . 1,155 1,278 State and municipal securities. . . . . . . . . 112 346 Other . . . . . . . . . . . . . . . . . . . . . 154 104 ---------- ---------- Total interest income. . . . . . . . . . . . . 3,996 4,588 ---------- ---------- Interest expense on Deposits. . . . . . . . . . . . . . . . . . . . 1,532 1,826 Short-term borrowings . . . . . . . . . . . . . 8 10 ---------- ---------- Total interest expense. . . . . . . . . . . 1,540 1,836 ---------- ---------- Net interest income. . . . . . . . . . . 2,456 2,752 Provision for credit losses. . . . . . . . . . . . 0 270 ---------- ---------- Net interest income after provision for credit losses. . . . . . . . . . . 2,456 2,482 ---------- ---------- Other income Service charges on deposit accounts . . . . . . 288 266 Other fees and commissions. . . . . . . . . . . 51 55 Other non-interest income . . . . . . . . . . . 1,144 29 Gains on investment securities. . . . . . . . . 32 3 ---------- ---------- Total other income. . . . . . . . . . . . . 1,515 353 ---------- ---------- Other expenses Salaries and employee benefits. . . . . . . . . 1,283 1,235 Occupancy . . . . . . . . . . . . . . . . . . . 327 323 Other expenses. . . . . . . . . . . . . . . . . 2,447 912 ---------- ---------- Total other expenses. . . . . . . . . . . . 4,057 2,470 ---------- ---------- Income before income taxes . . . . . . . . . . . . (86) 365 Income tax expense (benefit) . . . . . . . . . . . (89) (10) ---------- ---------- Net income . . . . . . . . . . . . . . . . . . . . $ 3 $ 375 ========== ========== Basic earnings (loss) per share of common stock. . $ 0.0027 $ 0.34 ========== ========== Weighted-average shares of common stock outstanding. . . . . . . . . . . . . . . . . . . 1,093,111 1,092,768 ========== ==========
See accompanying notes to condensed consolidated financial statements. 3 GLEN BURNIE BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands, except per share amounts) (Unaudited)
THREE MONTHS ENDED MARCH 31, ---------------------- 1998 1997 -------- -------- Net income . . . . . . . . . . . . . . . . . . . . $ 3 $ 375 Other comprehensive income (expense), net of tax Unrealized gains (losses) on available-for-sale investment securities . . . . . . . . . . . . 116 (275) Less applicable income taxes (benefits) . . . 45 (106) ------ ------- 71 (169) ------ ------- Comprehensive income . . . . . . . . . . . . . . . $ 74 $ 206 ====== =======
See accompanying notes to condensed consolidated financial statements. 4 GLEN BURNIE BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands, except per share amounts) (Unaudited)
THREE MONTHS ENDED MARCH 31, --------------------- 1998 1997 -------- -------- Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . $ 3 $ 375 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, and accretion . . . . 139 214 Provision for credit losses . . . . . . . . . . . 0 270 Changes in assets and liabilities: (Increase) decrease in other assets. . . . . . (575) (594) Decrease in other liabilities. . . . . . . . . (2,472) (1,604) -------- -------- Net cash used by operating activities. . . . . . . . $ (2,905) $ (1,339) -------- -------- Cash flows from investing activities: Proceeds from disposals of investment securities . . . . . . . . . . . . . . . . . . 9,807 3,582 Purchases of investment securities . . . . . . . (10,529) (9,830) Decrease in loans, net . . . . . . . . . . . . . 1,982 4,776 Purchases of premises and equipment. . . . . . . (314) (208) Purchases of other real estate . . . . . . . . . 0 (20) Proceeds from sales of premises and equipment. . . . . . . . . . . . . . . . . . . 0 5 -------- -------- Net cash provided (used) by investing activities . . 946 (1,695) -------- -------- Cash flows from financing activities: Increase (decrease) in deposits, net . . . . . . (8,747) (8,167) Increase (decrease) in short-term borrowings . . (333) 2,368 Dividends paid . . . . . . . . . . . . . . . . . (81) (44) -------- -------- Net cash provided (used) by financing activities . . (9,161) (5,843) -------- -------- Increase (decrease) in cash and cash equivalents . . (11,120) (8,877) Cash and cash equivalents, beginning of year . . . . 28,537 22,678 -------- -------- Cash and cash equivalents, end of period . . . . . . $ 17,417 $ 13,801 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 GLEN BURNIE BANCORP AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION --------------------- The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, changes in stockholders' equity, and cash flows in conformity with generally accepted accounting principles. However, all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of the unaudited consolidated financial statements have been included in the results of operations for the three months ended March 31, 1998 and 1997. Operating results for the three-month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. NOTE 2 - EARNINGS PER SHARE ------------------ Information for net income per share and weighted average shares outstanding for prior periods have been restated to reflect 1% stock dividends declared in June, September and December 1997 and a 20% stock dividend paid in January 1998. NOTE 3 - ADOPTION OF NEW FINANCIAL ACCOUNTING STANDARDS ---------------------------------------------- On January 1, 1998 the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and displaying comprehensive income and its components (revenues, expense, gains and losses) in a full set of general-purpose financial statements. This Statement requires that an enterprise (a) classify items of other comprehensive income by their nature in the financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of a statement of financial position. In accordance with the provisions of SFAS No. 130, comparative financial statements presented for earlier periods have been reclassified to reflect the provisions of the statement. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Glen Burnie Bancorp, a Maryland corporation (the "Company"), and its subsidiaries, The Bank of Glen Burnie (the "Bank") and GBB Properties, Inc., both Maryland corporations, had consolidated net income of $3,000 ($0.0027 basic earnings per share) for the first quarter of 1998 compared to first quarter 1997 consolidated net income of $375,000 ($0.34 basic earnings per share). The decrease in first quarter consolidated net income was primarily attributable to additional reserves for litigation and legal and other expenses related to a proxy contest at the 1998 Annual Meeting of Stockholders which was held in March 1998. NET INTEREST INCOME. The Company's consolidated net interest income prior to provisions for credit losses was $2,456,000 for the first quarter of 1998 compared to $2,752,000 for the same period in 1997, a decrease of $296,000, or 10.8%. The decrease in net interest income for the three month period was primarily attributable to a decline in interest income which offset a smaller decrease in interest expense. Interest income declined $592,000 (12.9%) for the three months ended March 31, 1998, compared to the same period in 1997. The decline in interest income was attributable principally to a decline in earning assets. Interest expense declined $296,000 (16.1%) for the three-month period ended March 31, 1998, compared to the same period in 1997. The tax-equivalent net interest margin for the three months ended March 31, 1998 was 4.98%, compared to 4.95% for the three months ended March 31, 1997. The increase in net interest margin for the three months ended March 31, 1998 was primarily due to an increase in the ratio of interest-earning assets to interest-bearing liabilities as a result of the run-off of interest-bearing deposits during the quarter. This has had the effect of increasing the proportion of funding from non-interest bearing demand accounts. PROVISION FOR CREDIT LOSSES. During the three months ended March 31, 1998, the Company made no provision for credit losses, compared to $270,000 in provisions during the three months ended March 31, 1997. The decrease in provision reflects lower charge-off activity and a reduction in classified loans during the 1998 period. During the three months ended March 31, 1998, the Company recorded net charge-offs of $251,000, compared to $1,046,000 in net charge-offs during the three months ended March 31, 1997. OTHER INCOME. Other income increased $1,162,000 (329.2%) during the three months ended March 31, 1998 compared to the same period in 1997. The increase in other income reflects income attributable to an insurance settlement with the Company's fidelity bond insurer during the first quarter of 1998. OTHER EXPENSE. Other expense increased by $1,587,000, or 64.3%, for the quarter compared to the same quarter in 1997, primarily due to management's determination to establish additional reserves for litigation. In addition, the Company experienced a significant increase in legal and professional fees in connection with a proxy contest at the 1998 Annual Meeting of Stockholders. INCOME TAXES. During the three months ended March 31, 1998, the Company recorded an income tax benefit of $89,000, compared to a tax benefit of $10,000, during the three months ended March 31, 1997. Due primarily to its holdings of tax- exempt state, county and municipal securities, the Company recorded tax losses during the three months ended March 31, 1998 and 1997. These net operating losses were applied to prior years' earnings resulting in tax benefits in each of the periods. The Company has recently reduced its holdings of tax- exempt state, county and municipal securities and reinvested the proceeds in U.S. Government agency securities, the income on which is not exempt from federal taxation. Accordingly, the Company anticipates an increase in taxable income which may reduce the availability of future tax benefits. FINANCIAL CONDITION The Company's assets declined to $220,341,000 at March 31, 1998 from $231,900,000 at December 31, 1997 primarily due to a decline in the balance of federal funds sold. The Company also continued to experience loan portfolio run-off. The Bank's net loans totaled $109,563,000 at March 31, 1998, compared to $111,545,000 on December 31, 1997, a decrease of $1,982,000 (1.8%). The Bank experienced its most significant declines in the commercial loan and 7 commercial and residential mortgage portfolios which declined by approximately $1.0 million, $1.0 million and $1.8 million, respectively, during the quarter. The Bank attributes these declines to refinancing of residential mortgages at other lenders and increased competition for the small business customer which is the Bank's primary market. These declines were partially offset by the Bank's indirect lending program which was begun in January and has grown to a portfolio of over $3.0 million at March 31, 1998. The Company's total investment securities portfolio (including both investment securities available for sale and investment securities held to maturity) totaled $82,727,000 at March 31, 1998, a $869,000 or 1.1%, increase from $81,858,000 at December 31, 1997. The aggregate market value of investment securities held by the Bank as of March 31, 1998 was $83,158,000 compared to $82,245,000 as of December 31, 1997, a $913,000 (1.1%) decrease. Deposits as of March 31, 1998 totaled $198,363,000, a decrease of $8,747,000 (4.2%) for the year to date. Demand deposits as of March 31, 1998 totaled $43,387,000 which is a decrease of $4,264,000 (8.9%) from $47,651,000 at December 31, 1997. NOW accounts as of March 31, 1998 totaled $20,723,000 which is an increase of $141,000 (0.7%) from $20,582,000 at December 31, 1997. Money market accounts rose by $787,000 (4%) for the year to date to total $19,090,000 on March 31, 1998. Savings deposits decreased by $1,086,000 or 2.5%, year to date. Meanwhile, certificates of deposit over $100,000 totaled $9,658,000 on March 31, 1998, an increase of $2,194,000 (29.4%) from December 31, 1997. Other time deposits (made up of certificates of deposit less than $100,000 and individual retirement accounts) totaled $63,240,000 on March 31, 1998, a $5,234,000 (7.6%) increase from December 31, 1997. ASSET QUALITY. The following table sets forth the amount of the Bank's restructured loans, non-accrual loans and accruing loans 90 days or more past due at the dates indicated.
AT AT MARCH 31, DECEMBER 31, 1998 1997 ------------ ------------ (Dollars in thousands) Restructured Loans . . . . . . . . . . . $ -- $ 344 Non-accrual Loans: Real estate -- mortgage: Residential . . . . . . . . . . . . $1,019 $1,078 Commercial. . . . . . . . . . . . . 756 761 Real estate -- construction . . . . . 474 608 Installment . . . . . . . . . . . . . 465 665 Credit card & related . . . . . . . . -- -- Commercial. . . . . . . . . . . . . . 344 369 ------ ------ Total nonaccrual loans. . . . . . 3,058 3,481 Accruing Loans Past Due 90 Days or More: Real estate -- mortgage: Residential . . . . . . . . . . . . 14 5 Commercial. . . . . . . . . . . . . -- -- Real estate -- construction . . . . . -- -- Installment . . . . . . . . . . . . . -- -- Credit card & related . . . . . . . . -- -- Commercial. . . . . . . . . . . . . . -- -- ------ ------ Total accruing loans past due 90 days or more. . . . . . . 14 5 ------ ------ Total non-accrual and past due loans. . . . . . . . . . . . $3,072 $3,486 ====== ====== Non-accrual and past due loans to gross loans. . . . . . . . . . . . . . 2.71% 3.01% ====== ====== Allowance for credit losses to non- accrual and past due loans . . . . . . 126.57% 118.73% ====== ======
8 At March 31, 1998, there were $765,715 in loans outstanding not reflected in the above table as to which known information about possible credit problems of borrowers caused management to have serious doubts as to the ability of such borrowers to comply with present loan repayment terms. Such loans consist of loans which were not 90 days or more past due but where the borrower is in bankruptcy or has a history of delinquency or the loan to value ratio is considered excessive due to deterioration of the collateral or other factors. ALLOWANCE FOR CREDIT LOSSES. The allowance for credit losses is established through a provision for credit losses charged to expense. Loans are charged against the allowance for credit losses when management believes that the collectibility of the principal is unlikely. The allowance, based on evaluations of the collectibility of loans and prior loan loss experience, is an amount that management believes will be adequate to absorb possible losses on existing loans that may become uncollectible. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions and trends that may affect the borrowers' ability to pay. Transactions in the allowance for credit losses for the three months ended March 31, 1998 and 1997 were as follows:
THREE MONTHS ENDED MARCH 31, --------------------- 1998 1997 -------- -------- (DOLLARS IN THOUSANDS) Beginning balance. . . . . . . . . . . . . . $ 4,139 $ 5,061 -------- -------- Charge-offs. . . . . . . . . . . . . . . . . (325) (1,093) Recoveries . . . . . . . . . . . . . . . . . 74 47 -------- -------- Net charge-offs. . . . . . . . . . . . . . . (251) (1,046) Provisions charged to operations . . . . . . 0 270 -------- -------- Ending balance . . . . . . . . . . . . . . . $ 3,888 $ 4,285 ======== ======== Average loans. . . . . . . . . . . . . . . . $115,743 $127,951 Net charge-offs to average loans . . . . . . 0.22% 0.82%
Net charge-offs during the three months ended March 31, 1998 declined to $251,000 from $1,046,000 during the comparable period in 1997. The Company attributes the reduction in charge-off activity to improvements in asset quality. LIQUIDITY AND CAPITAL RESOURCES The Company currently has no business other than that of the Bank and does not currently have any material funding commitments. The Company's principal sources of liquidity are cash on hand and dividends received from the Bank. The Bank is subject to various regulatory restrictions on the payment of dividends. The Bank's principal sources of funds for investments and operations are net income, deposits from its primary market area, principal and interest payments on loans, interest received on investment securities and proceeds from maturing investment securities. Its principal funding commitments are for the origination or purchase of loans and the payment of maturing deposits. Deposits are considered a primary source of funds supporting the Bank's lending and investment activities. The Bank's most liquid assets are cash and cash equivalents, which are cash on hand, amounts due from financial institutions, federal funds sold, certificates of deposit with other financial institutions that have an original maturity of three months or less and money market mutual funds. The levels of such assets are dependent on the Bank's operating financing and investment activities at any given time. The variations in levels of cash and cash equivalents are influenced by deposit flows and anticipated future deposit flows. The Bank's cash and cash equivalents (cash due 9 from banks, interest-bearing deposits in other financial institutions, and federal funds sold), as of March 31, 1998, totaled $17,417,000, a decrease of $11,120,000 (39.0%) from the December 31, 1997 total of $28,537,000. The Bank may draw on a $22,634,000 line of credit from the Federal Home Loan Bank of Atlanta. Borrowings under the line are secured by a lien on the Bank's residential mortgage loans. As of March 31, 1998, however, no amounts were outstanding under this line. The Bank also has a secured $5.0 million of credit from another commercial bank on which no amounts were outstanding on March 31, 1998. The Company's stockholders' equity remained constant at $18,965,000 as dividends accrued offset increases in the equity account attributable to earnings and an increase in net unrealized appreciation on securities available for sale. Net unrealized appreciation on securities available for sale increased $71,000 to $296,000 at March 31, 1998 from $225,000 at December 31, 1997 as a declining rate environment increased the market value of the available for sale portfolio. Retained earnings, however, declined by $86,000 as the result of the accrual of $74,000 for cash dividends to be paid after the end of the quarter. Included in the accrual was $15,000 transferred to stockholders' equity in consideration for shares to be issued under the Company's dividend reinvestment plan in lieu of cash dividends. The Federal Reserve Board and the FDIC have established guidelines with respect to the maintenance of appropriate levels of capital by bank holding companies and state non-member banks, respectively. The regulations impose two sets of capital adequacy requirements: minimum leverage rules, which require bank holding companies and banks to maintain a specified minimum ratio of capital to total assets, and risk-based capital rules, which require the maintenance of specified minimum ratios of capital to "risk-weighted" assets. At March 31, 1998, the Bank was in full compliance with these guidelines with a Tier 1 leverage ratio of 8.09%, a Tier 1 risk-based capital ratio of 14.87% and a total risk-based capital ratio of 16.14%. YEAR 2000 PLANNING As the year 2000 approaches, an important business issue has emerged regarding how existing application software programs and operating systems can accommodate this date value. For many years, software applications routinely conserved magnetic storage space by using only two digits to record calendar years; for example, the year 1999 is stored as "99". On January 1, 2000, the calendars in many software applications will change from "99" to "00". Many of these software applications, in their current form, will produce erroneous results or will fail to run at all since their logic cannot deal with this transaction. The Company's mainframe computer hardware and systems software are Year 2000 compliant. The Company primarily utilizes third-party vendor application software for all computer applications. The third-party vendors for the Company's banking applications are in the process of modifying, upgrading or replacing their computer applications to insure Year 2000 compliance. In addition, the Company has instituted a Year 2000 compliance program whereby the Company is reviewing the Year 2000 compliance issues that may be faced by its third-party vendors. Under such program, the Company will examine the need for modifications or replacement of all non-Year 2000 compliant pieces of software. The Company does not currently expect that the cost of its Year 2000 compliance program will be material to its financial conditions and believes that it will satisfy such compliance program by the end of 1998 without material disruption of its operations. In the event that the Company's significant suppliers do not successfully and timely achieve Year 2000 compliance, the Company's business of operations could be adversely affected. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not applicable. 10 PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On February 13, 1998 the Board of Directors declared a dividend distribution of one Right for each outstanding share of Common Stock to stockholders of record at the close of business on February 13, 1998. Each Right entitles a registered stockholder to purchase from the Company one share of Common Stock on the date of exercise, at a Purchase Price of $100.00, subject to adjustment. The Rights are not exercisable until the "Distribution Date" and will expire at the close of business on February 13, 2008, unless earlier redeemed. The "Distribution Date" will occur upon the earlier of (i) 10 days following a public announcement that a person other than an Exempt Person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 10% of more of the outstanding shares of Common Stock or (ii) 10 business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning 10% or more of such outstanding shares of Common Stock. Additional information about the Rights distributed to stockholders may be found in the Rights Agreement that is attached as an exhibit to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS On March 12, 1998, the registrant held its annual meeting of stockholders to elect twelve directors and authorize the Board to appoint an auditing firm for 1998. Directors Theodore L. Bertier, Jr., Shirley E. Boyer, Thomas Clocker, John E. Demyan, Alan E. Hahn, Charles L. Hein, F. William Kuethe, Jr., Frederick W. Kuethe, III, Eugene P. Nepa, William N. Scherer, Sr., Karen B. Thorwarth and Mary Lou Wilcox were each re-elected to the Board of Directors of Glen Burnie Bancorp. The following is a record of the votes cast in the election of directors:
NOMINEE FOR NOMINEE FOR ------- --- ------- --- Theodore L. Bertier, Jr. 563,075 Parker Chapman 457,966 Shirley E. Boyer 562,769 Larry Craine 457,966 Thomas Clocker 562,219 Susan Demyan 459,069 John E. Demyan 561,666 Richard Fine 459,069 Alan E. Hahn 562,952 Steven Goff 457,966 Charles L. Hein 562,952 James North 457,966 F. William Kuethe, Jr. 561,972 Charles Phelps 457,719 Frederick W. Kuethe, III 561,913 William D. Schaefer 457,966 Eugene P. Nepa 563,075 Matthew Shimoda 459,069 William N. Scherer, Sr. 563,075 Ronald Staines 457,966 Karen B. Thorwarth 563,075 Michael Watson 457,719 Mary Lou Wilcox 563,075 Neil Williams 459,069
In addition, there were 33,269 broker non-votes. The second matter submitted to stockholder to authorize the Board of Directors to select an outside accounting firm for the 1998 fiscal year was also approved by a vote cast of 551,427 For and 455,561 Against. In addition, there were 33,269 broker non-votes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits - The following exhibits are filed with this report. 27.1 Financial Data Schedule (EDGAR Only). 27.2 Restated Financial Data Schedule (EDGAR Only). (b) Reports on Form 8-K. On March 2, 1998, Glen Burnie Bancorp filed a Form 8-K which reported, under Item 5, the adoption of a Stockholder Rights Plan by the Board of Directors on February 13, 1998. No financial statements were filed with this report. 11 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GLEN BURNIE BANCORP ------------------- (Registrant): Date: May 14, 1998 By:/s/ John E. Porter ---------------------------- John E. Porter Chief Financial Officer (Duly authorized officer and principal financial officer) EX-27.1 2 - ARTICLE 9 FIN. DATA SCHEDULE FOR 1ST QTR 10-Q
9 The schedule contains summary financial information extracted from the Condensed Consolidated Financial Statements of Glen Burnie Bancorp and its subsidiaries for the three months ending March 31, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 MAR-31-1998 9,017 1,127 7,273 0 41,441 41,286 41,717 113,451 3,888 220,341 198,363 557 2,456 0 10,943 0 0 8,022 220,341 2,575 1,267 154 3,996 1,532 1,540 2,456 0 32 4,057 (86) 3 0 0 3 .00 .00 4.98 3,058 14 0 765,715 4,139 325 74 3,888 3,888 0 0
EX-27.2 3 - ARTICLE 9 FIN. DATA SCHEDULE FOR 1ST QTR 10-Q
9 The schedule contains summary financial information extracted from the Condensed Consolidated Financial Statements of Glen Burnie Bancorp and its subsidiaries for the three months ending March 31, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1997 MAR-31-1997 10,651 179,386 3,150 0 53,566 48,494 48,190 119,626 4,285 246,819 224,579 2,916 937 0 8,839 0 0 9,548 246,819 2,860 1,728 0 4,588 1,826 1,836 2,752 270 3 2,470 365 375 0 0 375 0.34 0.34 4.95 4,422 17 0 0 5,061 1,093 47 4,285 4,285 0 0 The above numbers have been restated for the adoption of SFAS 128 and a two-for-one stock split effected through the payment of a 100% stock dividend on January 10, 1998.
-----END PRIVACY-ENHANCED MESSAGE-----