Financial Performance - Net income for Q1 2024 was $3,000, a significant decrease from $435,000 in Q1 2023, primarily due to a $431,000 increase in interest expense on short-term borrowings [11]. - Net interest income decreased by $606,000, or 19.08%, to $2.6 million in Q1 2024 compared to $3.2 million in Q1 2023, driven by a $726,000 increase in interest expense [3]. - The annualized return on average assets decreased to 0.00% for Q1 2024, down from 0.19% in Q4 2023 [25]. - Basic and diluted net income per share was reported at $0.00 for Q1 2024, down from $0.06 in Q4 2023 [25]. - Net income for the first quarter of 2024 was $3,000, a significant decline from $435,000 in the first quarter of 2023 [22]. Assets and Deposits - Total assets increased by $18.1 million, or 5.13%, to $369.9 million as of March 31, 2024, from $351.8 million on December 31, 2023 [7]. - Total assets increased to $369,870,000 as of March 31, 2024, compared to $351,813,000 at December 31, 2023, reflecting a growth of 5.9% [25]. - Total deposits rose by $9.2 million, or 3.05%, to $309.2 million as of March 31, 2024, compared to $300.1 million on December 31, 2023 [8]. - Total deposits decreased to $309,231,000 as of March 31, 2024, down 9.8% from $343,014,000 a year earlier [21]. - Deposits rose to $309,231,000 from $300,067,000, indicating a growth of 0.4% [25]. Interest and Margins - The net interest margin decreased by 0.55% to 2.86% in Q1 2024, down from 3.41% in Q1 2023, due to increased average deposit costs [13]. - The net interest margin declined to 2.86% in Q1 2024, compared to 3.17% in Q4 2023 [25]. - Net interest income decreased to $2,572,000 for the three months ended March 31, 2024, down 18.9% from $3,178,000 in the same period of 2023 [22]. Credit Losses and Allowances - The allowance for credit losses on loans was $2.0 million, or 1.14% of total loans, as of March 31, 2024, compared to $2.2 million, or 1.22%, as of December 31, 2023 [10]. - The allowance for credit losses was $2,035,000 as of March 31, 2024, compared to $2,161,000 a year earlier [21]. - The provision for credit loss allowance on loans was $169,000 in Q1 2024, compared to a release of $42,000 in Q1 2023, reflecting a strategic change in direction [15]. - The allowance for loan losses to loans ratio was 1.14% as of March 31, 2024, slightly down from 1.22% at December 31, 2023 [25]. - Nonperforming loans to average loans ratio improved to 0.21% in Q1 2024 from 0.30% in Q4 2023 [25]. Capital Ratios - The Bank's total regulatory capital to risk-weighted assets was 18.30% on March 31, 2024, up from 17.57% for the same period in 2023, indicating strong capital position [4]. - Common Equity Tier 1 Capital ratio was 17.14% as of March 31, 2024, exceeding the required minimum of 4.50% [24]. - Total Risk-Based Capital ratio stood at 18.30% as of March 31, 2024, well above the 8.00% requirement [24]. - Common Equity Tier 1 Capital ratio remained stable at 17.14% as of March 31, 2024, consistent with the previous quarter [25]. Expenses - Noninterest expense decreased by $83,000 to $2.86 million in Q1 2024 compared to $2.94 million in Q1 2023, primarily due to lower salary and employee benefits [16]. - Noninterest expenses totaled $2,861,000 for the three months ended March 31, 2024, a decrease of 2.8% from $2,944,000 in the same period of 2023 [22]. - The dividend payout ratio was exceptionally high at 9426% for Q1 2024, compared to 172% in Q4 2023 [25]. Liquidity - Cash and cash equivalents increased by $27.4 million, or 179.69%, from December 31, 2023, to March 31, 2024 [7]. - Cash and cash equivalents increased to $42,628,000 as of March 31, 2024, up from $14,592,000 a year earlier, reflecting a significant increase in liquidity [21].

GLEN BURNIE, Md., April 12, 2024 (GLOBE NEWSWIRE) -- Glen Burnie Bancorp (NASDAQ:GLBZ), parent company of The Bank of Glen Burnie®, announced that its Board of Directors declared a regular dividend of ten cents ($0.10) per share of common stock at their meeting on April 11, 2024. This action marks the company's 127th consecutive dividend. The regular dividend is payable on May 6, 2024, to shareholders of record at the close of business on April 22, 2024. Glen Burnie Bancorp, parent company to The Bank of Gl ...

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023 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) Table of Contents | MARYLAND | 52-1782444 | | --- | --- | | (State or other ju ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-24047 GLEN BURNIE BANCORP (Exact name of registrant as specified in its charter) Maryland 52-1782444 WASHINGTON, D.C. 20549 (State or other jurisdiction of (I.R.S. Employer incorporation ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 incorpor ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 incorpo ...

PART I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Glen Burnie Bancorp, a Maryland-based bank holding company, operates through its subsidiary, The Bank of Glen Burnie, providing commercial and retail banking services primarily in Anne Arundel County, Maryland. The Bank focuses on personalized service for small-to-medium-sized businesses and individual consumers, offering a range of deposit and lending products. The Company and its subsidiary are subject to extensive federal and state regulations, including those from the Federal Reserve Board, FDIC, and Maryland Commissioner of Financial Regulation, which govern capital adequacy, lending practices, and consumer protection. - Glen Burnie Bancorp is a Maryland-based bank holding company, established in 1990, operating through its subsidiary, The Bank of Glen Burnie, which was organized in 1949. The Bank serves northern Anne Arundel County and surrounding areas with a main office and several branch locations[18](index=18&type=chunk) - The Bank's core business involves commercial and retail banking, including accepting demand and time deposits, and originating various loans such as residential and commercial mortgages, home equity lines, commercial loans, and indirect automobile loans[18](index=18&type=chunk)[19](index=19&type=chunk) - The Bank differentiates itself by offering personalized service, flexibility, prompt decision-making, and direct access to senior management, aiming to fill a gap left by larger, more impersonal regional and national banks[25](index=25&type=chunk)[26](index=26&type=chunk) [General Business Description](index=3&type=section&id=GENERAL) Glen Burnie Bancorp operates as a Maryland bank holding company through its subsidiary, The Bank of Glen Burnie, offering commercial and retail banking services. - Glen Burnie Bancorp, a Maryland bank holding company, owns The Bank of Glen Burnie, a commercial bank serving northern Anne Arundel County and surrounding areas since 1949. It offers commercial and retail banking, including deposits and various loans[18](index=18&type=chunk) [Availability of Information](index=3&type=section&id=AVAILABILITY%20OF%20INFORMATION) Company information and SEC filings are accessible free of charge on The Bank of Glen Burnie's website. - Company information, including SEC filings (10-K, 10-Q, 8-K), is available free of charge on The Bank of Glen Burnie's website via a link to the SEC's EDGAR system under the 'Investor Relations' menu[21](index=21&type=chunk) [Market Area](index=3&type=section&id=MARKET%20AREA) The Bank's primary market for lending and deposits is Anne Arundel County, Maryland, with lending extending across the state. - The Bank's primary market for lending and deposits is Anne Arundel County, Maryland, a growing area with diverse economic drivers including an international airport, defense industry, and large private sector employers. Lending activities extend across the entire State of Maryland and, to a limited extent, surrounding states[22](index=22&type=chunk) [Competition](index=5&type=section&id=COMPETITION) The Bank faces intense competition from various financial institutions, leveraging personalized service for small-to-medium-sized businesses. - The Bank faces intense competition for deposits and loans from other financial institutions, including savings institutions, commercial banks, credit unions, mutual funds, and securities firms. Credit unions have a significant cost advantage due to federal income tax exemptions[23](index=23&type=chunk)[24](index=24&type=chunk) - Competition impacts the Bank's interest rates, loan and deposit terms, and product offerings. The Bank competes by offering competitive rates, responsive service, and personal service to small-to-medium-sized businesses[24](index=24&type=chunk) [Strategy](index=5&type=section&id=STRATEGY) The Company's strategy focuses on serving small-to-medium-sized businesses and individual consumers with personalized service amidst industry consolidation. - The Company's strategy leverages banking industry consolidation, which has created opportunities for community banks to serve small-to-medium-sized businesses and individual consumers who seek personalized service and local decision-making, contrasting with the mass-market approach of larger institutions[25](index=25&type=chunk)[26](index=26&type=chunk) [Products and Services](index=5&type=section&id=PRODUCTS%20AND%20SERVICES) The Bank offers a comprehensive suite of consumer and commercial loans and deposit products, targeting small and medium-sized businesses. - The Bank's primary market focus is on small and medium-sized businesses, their owners, professionals, executives, real estate investors, and individual consumers in its primary market area, offering a full range of consumer and commercial loans and deposit products[27](index=27&type=chunk) [General](index=5&type=section&id=General) The Bank provides a full range of consumer and commercial loans, including real estate, construction, and indirect automobile lending. - The Bank offers a full range of consumer and commercial loans, including residential and commercial real estate, construction, land acquisition and development, commercial, and consumer installment loans (e.g., indirect automobile lending)[27](index=27&type=chunk)[29](index=29&type=chunk) [Lending Activities](index=7&type=section&id=Lending%20Activities) Lending activities are governed by Board-approved policies to manage credit risk, covering various loan types with specific approval authorities and conservative underwriting. - The Bank's lending activities are governed by Board-approved written policies to manage credit risk, including credit evaluation, lending limits, collateral requirements, and ongoing monitoring of credit deterioration. Loan approval authority ranges from individual lending officers (**$750,000**) to the Board of Directors (over **$3,000,000**)[30](index=30&type=chunk)[31](index=31&type=chunk) - Real estate lending includes long-term residential and commercial mortgages, and shorter-term construction and land development loans, primarily secured by properties in Anne Arundel County, Maryland. The Bank maintains conservative loan-to-value ratios (e.g., **80%** for owner-occupied residential mortgages) and avoids sub-prime lending[37](index=37&type=chunk) - Commercial loans include working capital, equipment, vehicle loans, lines of credit, and letters of credit, underwritten based on borrower creditworthiness. Indirect automobile lending, commenced in 1998, finances new and used vehicles through a network of local dealers, with strict underwriting and documentation guidelines[39](index=39&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) [Deposit Activities](index=13&type=section&id=Deposit%20Activities) Deposits serve as the Bank's primary funding source, offering diverse consumer and business products with competitive rates. - Deposits are the Bank's primary funding source, offering consumer and business products including demand, money market, savings, time deposits, and IRAs. The Bank aims to attract deposit relationships from its loan clients by offering competitive rates and commercial cash management products[52](index=52&type=chunk) [Other Banking Products](index=13&type=section&id=Other%20Banking%20Products) Beyond traditional deposits, the Bank offers treasury services, debit cards, ATMs, safe deposit boxes, and digital banking solutions. - Beyond traditional deposits, the Bank offers treasury services (wire transfer, ACH), debit cards, ATMs, safe deposit boxes, and digital banking services including telephone, mobile, and internet banking with bill pay and mobile deposit capture[53](index=53&type=chunk) [Employees](index=13&type=section&id=EMPLOYEES) As of December 31, 2022, The Bank of Glen Burnie had 89 full-time equivalent employees with excellent employee relations. - As of December 31, 2022, The Bank of Glen Burnie had **89** full-time equivalent employees. None are union-represented, and management reports excellent employee relations[54](index=54&type=chunk) [Supervision and Regulation](index=13&type=section&id=SUPERVISON%20AND%20REGULATION) Glen Burnie Bancorp and its subsidiary are subject to extensive federal and state regulations governing operations, capital, and consumer protection. - Glen Burnie Bancorp and its subsidiary Bank are extensively regulated by federal and state laws, including the Bank Holding Company Act (BHCA), Federal Reserve Board, FDIC, SEC, and Maryland Commissioner of Financial Regulation. These regulations cover operations, capital adequacy, lending, and consumer protection[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - The Dodd-Frank Act significantly changed financial institution regulation, imposing heightened capital requirements and establishing the Consumer Financial Protection Bureau (CFPB). The Company has incurred higher operating costs due to compliance[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - As of December 31, 2022, the Bank was categorized as 'well capitalized,' exceeding all minimum regulatory capital requirements, including common equity Tier 1, Tier 1, total risk-based capital, and leverage ratios[79](index=79&type=chunk)[81](index=81&type=chunk) [Item 2. Properties](index=27&type=section&id=Item%202.%20Properties) The Bank of Glen Burnie operates its main office and several branch locations, with most properties owned. The main office in Glen Burnie, MD, and six branches are owned, while two branches (Linthicum and Severna Park) are leased. The Bank also owns two operations centers. Property Ownership and Deposits (2022) | Location | Ownership | Book Value ($ thousands) | Approximate Square Footage | Deposits ($ thousands) | | :-------------------------- | :-------- | :----------------------- | :------------------------- | :--------------------- | | Main Office: Glen Burnie, MD | Owned | 857 | 10,000 | 82,828 | | Odenton, MD | Owned | 56 | 6,000 | 34,784 | | Riviera Beach, MD | Owned | 112 | 2,500 | 41,534 | | Crownsville, MD | Owned | 108 | 3,000 | 84,471 | | Severn, MD (811 Reece Road) | Owned | 46 | 2,500 | 37,950 | | Severn, MD (740 Stevenson Road) | Owned | 748 | 2,600 | 48,735 | | Linthicum, MD | Leased | 23 | 2,500 | 21,787 | | Severna Park, MD | Leased | 20 | 2,184 | 10,858 | | Operations Centers: Glen Burnie, MD (106 Padfield Blvd.) | Owned | — | 16,200 | N/A | | Operations Centers: Glen Burnie, MD (103 Crain Highway, S.E.) | Owned | — | 3,727 | N/A | [Item 3. Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The Company and the Bank are routinely involved in legal proceedings arising from ordinary business activities, such as collection suits. Management, in consultation with legal counsel, believes no current pending or threatened legal actions are expected to have a material adverse effect on their financial condition or results of operations. - The Company and Bank are involved in routine legal proceedings, primarily collection suits, in the ordinary course of business. Management does not anticipate any material adverse effects on financial condition or operations from these proceedings[101](index=101&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Glen Burnie Bancorp. - Mine Safety Disclosures are not applicable to the registrant[102](index=102&type=chunk) [Executive Officers of the Registrant](index=28&type=section&id=EXECUTIVE%20OFFICERS%20OF%20THE%20REGISTRANT) The executive leadership team of Glen Burnie Bancorp as of December 31, 2022, includes John D. Long as President and CEO, Andrew J. Hines as Executive Vice President and Chief Lending Officer, Jeffrey D. Harris as Senior Vice President, Treasurer, and CFO, Michelle R. Stambaugh as Senior Vice President and HR Director, and Donna L. Smith as Senior Vice President and Director of Branch and Deposit Operations. Executive Officers (2022) | Name | Age | Positions | | :-------------------- | :-- | :---------------------------------------------------- | | John D. Long | 67 | President and Chief Executive Officer | | Andrew J. Hines | 61 | Executive Vice President and Chief Lending Officer | | Jeffrey D. Harris | 67 | Senior Vice President and Treasurer and Chief Financial Officer | | Michelle R. Stambaugh | 63 | Senior Vice President and HR Director | | Donna L. Smith | 60 | Senior Vice President and Director of Branch and Deposit Operations | PART II - Financial Information [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Glen Burnie Bancorp's common stock is traded on the Nasdaq Capital Market under the symbol "GLBZ." As of February 17, 2023, there were 2,865,046 shares outstanding held by 325 record holders. The Company declared a regular quarterly dividend of $0.10 per share throughout 2021 and 2022, but future dividend payments are subject to Board discretion and regulatory restrictions. - As of December 31, 2022, the Company had **2,865,046** shares of common stock outstanding, traded on the Nasdaq Capital Market (GLBZ), with **325** record holders as of February 17, 2023[109](index=109&type=chunk) Common Stock Price and Dividends Declared (2021-2022) | Quarter Ended | 2022 High | 2022 Low | 2022 Dividends | 2021 High | 2021 Low | 2021 Dividends | | :-------------- | :-------- | :------- | :------------- | :-------- | :------- | :------------- | | March 31, | $12.84 | $12.84 | $0.10 | $11.55 | $11.18 | $0.10 | | June 30, | $10.99 | $10.61 | $0.10 | $13.01 | $12.67 | $0.10 | | September 30, | $10.10 | $9.45 | $0.10 | $12.12 | $12.12 | $0.10 | | December 31, | $8.31 | $8.31 | $0.10 | $14.14 | $14.00 | $0.10 | - The Company's ability to pay dividends relies on the Bank's dividend payments and is subject to federal and state regulations, which impose restrictions based on net earnings and capital levels[112](index=112&type=chunk) [Item 6. Selected Financial Data](index=29&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the registrant. - Selected Financial Data is not applicable[113](index=113&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's Discussion and Analysis provides an overview of Glen Burnie Bancorp's financial performance and condition for 2022 and 2021. The Company experienced a decrease in net income in 2022, primarily due to lower interest income and a reduced release of credit loss provision, partially offset by decreased interest expense and increased noninterest income. Total assets and loans decreased, while stockholders' equity saw a significant decline due to unrealized losses on investment securities. The Company maintains strong capital ratios and adequate liquidity, actively managing interest rate risk and credit exposures. - Net income decreased by **$771,000** in 2022 compared to 2021, primarily due to an **$805,000** decrease in interest income, an **$863,000** decrease in the release of credit loss provision, and a **$388,000** increase in noninterest expenses, partially offset by a **$221,000** decrease in interest expense and a **$727,000** increase in noninterest income[122](index=122&type=chunk) - Total assets decreased by **$60.6 million (13.72%)** to **$381.4 million** at December 31, 2022, from **$442.1 million** at December 31, 2021, driven by declines in interest-bearing deposits in other financial institutions and the loan portfolio[143](index=143&type=chunk) - Stockholders' equity decreased by **$19.7 million (55.05%)** to **$16.1 million** at December 31, 2022, mainly due to a **$20.4 million** increase in net unrealized losses on the available-for-sale bond portfolio[179](index=179&type=chunk) [Forward-Looking Statements](index=29&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially. - This report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from projections. These factors include changes in economic conditions, interest rates, regulations, credit losses, and competition[114](index=114&type=chunk)[116](index=116&type=chunk) [Overview](index=32&type=section&id=OVERVIEW) This section provides a high-level summary of the Company's financial performance and key indicators for the reporting periods. Key Financial Performance Indicators (2021-2022) | Metric | 2022 | 2021 | Change (YoY) | | :---------------------------------- | :----- | :----- | :----------- | | Net Interest Income ($ millions) | $11.9 | $12.4 | -4.03% | | Total Interest Income ($ millions) | $12.7 | $13.5 | -5.96% | | Interest Expense ($ millions) | $0.9 | $1.1 | -20.58% | | Net Income ($ millions) | $1.7 | $2.5 | -32.00% | | Basic & Diluted EPS | $0.61 | $0.88 | -30.68% | | Return on Average Assets | 0.41% | 0.58% | -0.17 pp | | Return on Average Equity | 7.26% | 6.99% | +0.27 pp | | Dividend Payout Ratio | 65% | 45% | +20 pp | | Equity to Asset Ratio | 4.21% | 8.08% | -3.87 pp | [Comparison of Results of Operations for the Years Ended December 31, 2022 and 2021](index=32&type=section&id=COMPARISON%20OF%20RESULTS%20OF%20OPERATIONS%20FOR%20THE%20YEARS%20ENDED%20DECEMBER%2031%2C%202022%20AND%202021) This section compares the Company's operational results for 2022 and 2021, highlighting changes in income, expenses, and credit loss provisions. - The **$771,000** decrease in 2022 consolidated net income was primarily driven by an **$805,000** decrease in interest income and an **$863,000** decrease in the release of credit loss provision, partially offset by a **$221,000** decrease in interest expense and a **$727,000** increase in noninterest income[122](index=122&type=chunk) Net Interest Income and Margin (2021-2022) | Metric | 2022 ($ millions) | 2021 ($ millions) | Change (YoY) | | :---------------- | :---------------- | :---------------- | :----------- | | Net Interest Income | $11.9 | $12.4 | -4.03% | | Total Interest Income | $12.7 | $13.5 | -5.96% | | Total Interest Expense | $0.9 | $1.1 | -20.58% | | Net Interest Margin | 2.81% | 3.00% | -0.19 pp | - The decrease in total interest income was mainly due to a **$2.3 million** decrease in interest and fees on loans, partially offset by a **$1.5 million** increase in interest and dividends on securities and interest on deposits with banks. The decrease in total interest expense was primarily due to a **$138,000** decrease in interest on deposits and an **$83,000** decrease in interest on borrowings[125](index=125&type=chunk)[126](index=126&type=chunk) [Allowance for Credit Losses](index=36&type=section&id=Allowance%20for%20Credit%20Losses) The Company's allowance for credit losses is determined using the CECL methodology, estimating expected lifetime losses based on historical data and forecasts. - The Company adopted the CECL methodology for allowance for credit losses (ACL) on January 1, 2021, which estimates expected credit losses over the life of an exposure. The ACL is based on historical loss experience, adjusted for current conditions and reasonable forecasts of future economic conditions[131](index=131&type=chunk)[132](index=132&type=chunk)[135](index=135&type=chunk) Allowance for Credit Losses - Loans (2021-2022) | Metric | December 31, 2022 | December 31, 2021 | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | Release of Credit Loss Provision ($ millions) | $0.1 | $1.0 | -86.30% | | Allowance for Credit Losses - Loans ($ millions) | $2.2 | $2.5 | -12.00% | | ACL as % of Total Loans | 1.16% | 1.17% | -0.01 pp | | ACL as % of Nonaccrual & Past Due Loans | 434.0% | 700.3% | -266.3 pp | | Net Charge-offs ($ millions) | $0.2 | ($0.4) (Net Recoveries) | +$0.6 | [Noninterest Income](index=38&type=section&id=Noninterest%20Income) Noninterest income saw a significant increase in 2022, primarily driven by gains on investment securities and derivative contracts. Noninterest Income (2021-2022) | Metric | 2022 ($ millions) | 2021 ($ millions) | Change (YoY) | | :-------------------------------- | :---------------- | :---------------- | :----------- | | Total Noninterest Income | $1.4 | $0.6 | +115.95% | | Gain (loss) on investment securities sold | $0.002 | ($0.588) | +$0.59 | | Gain on unwind of derivative contracts | $0.206 | $0.0 | +$0.206 | - The significant increase in noninterest income was primarily driven by a **$0.6 million** loss on investment securities sold in 2021 (vs. negligible gain in 2022) and a **$0.2 million** gain on the unwind of derivative swap contracts recognized in 2022[140](index=140&type=chunk) [Noninterest Expenses](index=38&type=section&id=Noninterest%20Expenses) Total noninterest expenses increased in 2022, mainly due to higher professional fees and other operational costs. Noninterest Expenses (2021-2022) | Expense Category | 2022 ($ millions) | 2021 ($ millions) | Change (YoY) | | :-------------------------------- | :---------------- | :---------------- | :----------- | | Total Noninterest Expenses | $11.3 | $11.0 | +3.54% | | Salary and employee benefits | $6.4 | $6.5 | -1.52% | | Legal, accounting, and other professional fees | $1.0 | $0.7 | +48.93% | | Other expenses | $1.3 | $1.1 | +17.51% | - The overall increase in noninterest expenses was mainly due to higher legal, accounting, and other professional fees, and an increase in other expenses, partially offset by a slight decrease in salary and employee benefits[141](index=141&type=chunk) [Income Taxes](index=38&type=section&id=Income%20Taxes) Income tax expense decreased in 2022, primarily reflecting the lower income before taxes for the period. Income Tax Expense (2021-2022) | Metric | 2022 ($ millions) | 2021 ($ millions) | Change (YoY) | | :---------------- | :---------------- | :---------------- | :----------- | | Income Tax Expense | $0.24 | $0.58 | -58.46% | | Income Before Taxes | $1.985 | $3.093 | -35.82% | - The decrease in income tax expense was primarily due to lower income before taxes in 2022[142](index=142&type=chunk) [Financial Condition](index=38&type=section&id=FINANCIAL%20CONDITION) This section analyzes the Company's balance sheet, including assets, liabilities, and equity, highlighting key changes and trends. Total Assets and Liabilities (2021-2022) | Metric | December 31, 2022 ($ millions) | December 31, 2021 ($ millions) | Change (YoY) | | :---------------- | :------------------------------- | :------------------------------- | :----------- | | Total Assets | $381.4 | $442.1 | -13.72% | | Total Deposits | $362.9 | $383.2 | -5.30% | | Total Borrowings | $0 | $20.0 | -100.00% | [Total Assets and Liabilities](index=38&type=section&id=Total%20Assets%20and%20Liabilities) Total assets and liabilities decreased in 2022, primarily due to reductions in interest-bearing deposits and the loan portfolio. - Total assets decreased by **$60.6 million**, or **13.72%**, to **$381.4 million** at December 31, 2022, primarily due to decreases in interest-bearing deposits in other financial institutions and loan portfolio balances[143](index=143&type=chunk) [Cash](index=38&type=section&id=Cash) Cash and cash equivalents experienced a significant decrease in 2022, driven by reduced deposits and borrowings. Cash and Cash Equivalents (2021-2022) | Metric | December 31, 2022 ($ millions) | December 31, 2021 ($ millions) | Change (YoY) | | :------------------------- | :------------------------------- | :------------------------------- | :----------- | | Cash and Cash Equivalents | $30.1 | $62.2 | -51.61% | - The **$32.1 million** decrease in cash and cash equivalents was primarily driven by a **$20.3 million** decrease in deposit balances and a **$20.0 million** decrease in borrowings, partially offset by a **$15.9 million** increase in investment securities and a **$24.0 million** decrease in net loans[145](index=145&type=chunk) [Investment Securities](index=40&type=section&id=Investment%20Securities) The investment securities portfolio decreased in 2022, primarily due to unrealized losses on available-for-sale securities and redemptions. Investment Securities Portfolio (2021-2022) | Metric | December 31, 2022 ($ millions) | December 31, 2021 ($ millions) | Change (YoY) | | :------------------------- | :------------------------------- | :------------------------------- | :----------- | | Investment Securities Portfolio | $144.1 | $155.9 | -7.56% | | Unrealized Loss on AFS Securities | $28.6 (increase) | N/A | N/A | | Paydowns and Redemptions | $14.2 | N/A | N/A | | Purchases of AFS Securities | $31.5 | N/A | N/A | - The decrease in the investment securities portfolio was primarily due to a **$28.6 million** increase in unrealized losses on available-for-sale securities and **$14.2 million** in paydowns and redemptions, partially offset by **$31.5 million** in new purchases[148](index=148&type=chunk) - In 2021, the Company restructured its bond portfolio to lower overall duration, selling government agency securities for pre-tax losses of approximately **$591,300**[149](index=149&type=chunk) [Loans](index=41&type=section&id=Loans) Net loan receivables decreased in 2022, as paydowns exceeded new originations across various loan categories. Net Loan Receivables (2021-2022) | Metric | December 31, 2022 ($ millions) | December 31, 2021 ($ millions) | Change (YoY) | | :-------------------- | :------------------------------- | :------------------------------- | :----------- | | Net Loan Receivables | $184.3 | $207.9 | -11.45% | | Paydowns | $59.0 | N/A | N/A | | New Originations | $35.0 | N/A | N/A | - The decrease in net loan receivables was primarily due to **$59.0 million** in paydowns outpacing **$35.0 million** in new originations, resulting in decreases across real estate, commercial and industrial, and consumer loan segments[154](index=154&type=chunk) Nonperforming Loans and Assets (2021-2022) | Metric | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | Change (YoY) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Total Nonperforming Loans | $498 | $353 | +41.08% | | Total Nonperforming Assets | $498 | $353 | +41.08% | | Nonperforming Loans to Gross Loans | 0.3% | 0.2% | +0.1 pp | | Allowance for Credit Losses to Nonperforming Loans | 434.0% | 700.3% | -266.3 pp | [Deposits](index=49&type=section&id=Deposits) Total deposits decreased in 2022, with shifts in composition across noninterest-bearing, money market, and time deposit accounts. Deposit Composition (2021-2022) | Deposit Type | December 31, 2022 ($ millions) | % of Total 2022 | December 31, 2021 ($ millions) | % of Total 2021 | Change (YoY) | | :------------------------------------------ | :------------------------------- | :-------------- | :------------------------------- | :-------------- | :----------- | | Noninterest-bearing deposits | $143.3 | 39.5% | $155.6 | 40.6% | -7.9% | | Interest-bearing checking and savings | $153.2 | 42.1% | $144.1 | 37.7% | +6.3% | | Money market | $15.8 | 4.4% | $23.1 | 6.0% | -31.6% | | Time deposits | $50.7 | 14.0% | $60.4 | 15.7% | -16.0% | | Total Deposits | $362.9 | 100.0% | $383.2 | 100.0% | -5.3% | - Total deposits decreased by **$20.3 million**, or **5.3%**, at December 31, 2022, compared to 2021. This was driven by decreases in noninterest-bearing deposits, money market balances, and time deposits, partially offset by increases in interest-bearing checking and savings accounts[174](index=174&type=chunk) [Borrowings](index=50&type=section&id=Borrowings) The Bank utilizes FHLB borrowings and federal funds lines of credit to supplement funding, with FHLB borrowings reduced to zero in 2022. - The Bank utilizes Federal Home Loan Bank (FHLB) borrowings to supplement deposits, with total credit availability of **$103.9 million** at December 31, 2022. Total borrowings were **$0** at December 31, 2022, down from **$20.0 million** in 2021[144](index=144&type=chunk)[176](index=176&type=chunk) - The Bank also has unsecured federal funds lines of credit totaling **$17.0 million** from two financial institutions[176](index=176&type=chunk) [Capital Resources](index=50&type=section&id=CAPITAL%20RESOURCES) Stockholders' equity significantly decreased in 2022 due to unrealized losses on the available-for-sale bond portfolio, though the Bank remains well-capitalized. Stockholders' Equity and Book Value (2021-2022) | Metric | December 31, 2022 | December 31, 2021 | Change (YoY) | | :------------------------- | :------------------ | :------------------ | :----------- | | Stockholders' Equity ($ millions) | $16.1 | $35.7 | -55.05% | | Book Value per Common Stock | $5.60 | $12.51 | -55.24% | | Net Unrealized Losses on AFS Portfolio ($ millions) | $20.4 (increase) | N/A | N/A | - The significant decrease in stockholders' equity was primarily due to a **$20.4 million** increase in net unrealized losses on the available-for-sale bond portfolio, partially offset by an increase in retained earnings and stock issuances[179](index=179&type=chunk) - The Bank was classified as 'well capitalized' at December 31, 2022 and 2021, exceeding all regulatory minimum capital requirements under Basel III Capital Rules[186](index=186&type=chunk)[187](index=187&type=chunk) [Liquidity](index=54&type=section&id=LIQUIDITY) The Company maintains liquidity through its deposit base, loan and investment repayments, and external funding sources like FHLB lines of credit. - The Company's liquidity is primarily derived from its deposit base, loan and investment security repayments, and operations. Additional liquidity sources include cash, interest-bearing deposits, federal funds sold, and available-for-sale securities[189](index=189&type=chunk)[191](index=191&type=chunk) - External funding sources include a **$103.9 million** line of credit with the FHLB and unsecured federal funds lines of credit totaling **$17.0 million**. The Asset/Liability Management Committee (ALCO) and Investment Committee manage liquidity and investment portfolio strategy[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Off-Balance Sheet Arrangements](index=56&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) The Bank engages in off-balance sheet arrangements, including credit commitments and letters of credit, which are managed for associated risks. - The Bank engages in off-balance sheet arrangements, including commitments to extend credit and standby letters of credit, which involve credit and interest rate risk. Many commitments are expected to expire unused, and collateral is obtained based on credit evaluations[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - As of December 31, 2022, the Bank accrued **$477,215** as a reserve for credit losses on unfunded commitments, an increase of **$106,535** from 2021[200](index=200&type=chunk) [Market Risk Management](index=58&type=section&id=MARKET%20RISK%20MANAGEMENT) The Company manages interest rate risk through a policy that sets limits on potential changes in net interest income and economic value of equity. - The primary market risk is interest rate fluctuation, managed by the Investment Committee through a comprehensive interest rate risk management policy. This policy sets limits on risk, measured by potential changes in net interest income (NII) and economic value of equity (EVE) under hypothetical interest rate shock scenarios[201](index=201&type=chunk)[204](index=204&type=chunk) - At December 31, 2022, the Company was in an asset-sensitive position, which is theoretically favorable in a rising rate environment. NII is projected to benefit from rising rates, while EVE shows a negative effect in an increasing rate environment due to slower repricing of liabilities compared to assets[209](index=209&type=chunk)[212](index=212&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) Estimated Changes in Net Interest Income (12-month modeling period) | Scenario | Policy Limit | December 31, 2022 | December 31, 2021 | | :--------- | :----------- | :------------------ | :------------------ | | -200 bp | -15% | -12% | -11% | | -100 bp | -10% | -6% | -7% | | +100 bp | -10% | 1% | 9% | | +200 bp | -15% | 3% | 20% | Estimated Changes in Economic Value of Equity (EVE) | Scenario | Policy Limit | December 31, 2022 | December 31, 2021 | | :--------- | :----------- | :------------------ | :------------------ | | -200 bp | -20% | 4% | -40% | | -100 bp | -10% | 3% | -18% | | +100 bp | -10% | -6% | 6% | | +200 bp | -20% | -12% | 9% | [Impact of Inflation and Changing Prices](index=62&type=section&id=IMPACT%20OF%20INFLATION%20AND%20CHANGING%20PRICES) The Company's financial performance is more significantly impacted by interest rate fluctuations than general inflation due to its monetary asset and liability structure. - The Company's financial statements are prepared using historical dollars, not adjusted for inflation. Due to the monetary nature of its assets and liabilities, interest rates have a greater impact on performance than general inflation, as interest rates do not necessarily move in tandem with the prices of goods and services[217](index=217&type=chunk) [Critical Accounting Policies](index=62&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) Critical accounting policies involve significant management estimates and judgments, particularly for allowance for credit losses, fair value, and income taxes. - Critical accounting policies involve significant management estimates and judgments due to inherent uncertainties, with potential material impact on financial statements. Key policies include the allowance for credit losses on loans, fair value measurements, and accounting for income taxes[218](index=218&type=chunk)[219](index=219&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the registrant, as the relevant disclosures are included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." - Quantitative and Qualitative Disclosures About Market Risk are not applicable, as the information is provided in Item 7[226](index=226&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=64&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The required financial statements and supplementary data are included in the Company's Consolidated Financial Statements, as detailed in Item 15 of this Annual Report. - The financial statements and supplementary data are included in the Company's Consolidated Financial Statements, as referenced in Item 15[227](index=227&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=64&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure. - There are no changes in or disagreements with accountants on accounting and financial disclosure[228](index=228&type=chunk) [Item 9A. Controls and Procedures](index=66&type=section&id=Item%209A.%20Controls%20and%20Procedures) The Company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures and internal control over financial reporting as of December 31, 2022, concluding that both systems were effective. No material changes in internal control over financial reporting occurred during the fourth quarter of 2022. - The Company's CEO and CFO concluded that the system of disclosure controls and procedures was effective as of December 31, 2022[230](index=230&type=chunk) - Management, with CEO and CFO participation, assessed the effectiveness of internal control over financial reporting based on the COSO framework and concluded it was effective as of December 31, 2022[231](index=231&type=chunk)[232](index=232&type=chunk) - No material changes in internal control over financial reporting occurred during the fourth quarter of 2022[233](index=233&type=chunk) [Item 9B. Other Information](index=66&type=section&id=Item%209B.%20Other%20Information) This item is not applicable to the registrant. - Other Information is not applicable[234](index=234&type=chunk) PART III - Corporate Governance and Executive Matters [Item 10. Directors, Executive Officers and Corporate Governance](index=67&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding the identity, business experience, and remuneration of directors and executive officers, as well as details on the Audit Committee and compliance with Section 16(a) of the Exchange Act and the Code of Ethics, is incorporated by reference from the Company's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders. - Information on directors, executive officers, corporate governance, Audit Committee, Section 16(a) compliance, and Code of Ethics is incorporated by reference from the 2023 Proxy Statement[236](index=236&type=chunk) [Item 11. Executive Compensation](index=67&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the "Director Compensation" and "Executive Compensation" sections of the Company's definitive Proxy Statement. - Executive compensation details are incorporated by reference from the 'Director Compensation' and 'Executive Compensation' sections of the Proxy Statement[237](index=237&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=67&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners and management, along with related stockholder matters, is incorporated by reference from the "Voting Securities and Principal Holders Thereof" and "Securities Ownership of Management" sections of the Company's definitive Proxy Statement. - Security ownership information for beneficial owners and management is incorporated by reference from the 'Voting Securities and Principal Holders Thereof' and 'Securities Ownership of Management' sections of the Proxy Statement[238](index=238&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=67&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the "Proposal I — Election of Directors" and "Transactions with Management" sections of the Company's definitive Proxy Statement. - Information on related transactions and director independence is incorporated by reference from the 'Proposal I — Election of Directors' and 'Transactions with Management' sections of the Proxy Statement[239](index=239&type=chunk) [Item 14. Principal Accountant Fees and Services](index=67&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the "Proposal II — Authorization for Appointment of Auditors" and "Disclosure of Independent Auditor Fees" sections of the Company's definitive Proxy Statement. - Details on principal accountant fees and services are incorporated by reference from the 'Proposal II — Authorization for Appointment of Auditors' and 'Disclosure of Independent Auditor Fees' sections of the Proxy Statement[240](index=240&type=chunk) PART IV - Exhibits and Financial Statement Schedules [Item 15. Exhibits and Financial Statement Schedules](index=68&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K. It includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Income, Comprehensive Income, Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements. All required schedules are omitted due to absence of conditions or inclusion in the financial statements. - The section includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Income, Comprehensive Income (Loss), Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[242](index=242&type=chunk)[255](index=255&type=chunk) - All financial statement schedules are omitted because the required information is either absent or already included in the consolidated financial statements and related notes[243](index=243&type=chunk) - A comprehensive list of exhibits, including Articles of Incorporation, By-Laws, employee stock plans, and certifications (e.g., Rule 15d-14(a) and Section 906 of Sarbanes-Oxley Act), is provided[244](index=244&type=chunk) SIGNATURES [Signatures](index=71&type=section&id=SIGNATURES) The Annual Report on Form 10-K was duly signed on March 29, 2023, by John D. Long as President and Chief Executive Officer, Jeffrey D. Harris as Senior Vice President and Chief Financial Officer, and other directors, affirming compliance with the Securities Exchange Act of 1934. - The report was signed on March 29, 2023, by John D. Long (President, CEO, and Director), Jeffrey D. Harris (Senior Vice President and CFO), and other directors, in compliance with the Securities Exchange Act of 1934[249](index=249&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) Consolidated Financial Statements [Report of Independent Registered Public Accounting Firm](index=74&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) UHY LLP, the independent registered public accounting firm, issued an unqualified opinion on Glen Burnie Bancorp's consolidated financial statements for the years ended December 31, 2022 and 2021, affirming fair presentation in accordance with U.S. GAAP. Critical audit matters identified included the Allowance for Credit Losses on Loans and Investment Securities – Fair Value Measurement, due to the significant judgment and audit effort required. - UHY LLP provided an unqualified opinion on the consolidated financial statements for 2022 and 2021, stating they are presented fairly in all material respects in conformity with U.S. GAAP[257](index=257&type=chunk) - Critical audit matters included the Allowance for Credit Losses on Loans and Investment Securities – Fair Value Measurement, due to the significant subjective and complex judgments made by management and the extensive audit effort required[262](index=262&type=chunk)[267](index=267&type=chunk)[275](index=275&type=chunk) [Financial Statements](index=73&type=section&id=FINANCIAL%20STATEMENTS) This section serves as an index to the detailed consolidated financial statements, including the balance sheets, income statements, comprehensive income statements, statements of changes in stockholders' equity, and cash flow statements, along with their accompanying notes. - The financial statements include Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes in Stockholders' Equity, and Consolidated Statements of Cash Flows[255](index=255&type=chunk) [Consolidated Balance Sheets](index=80&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show a decrease in total assets by 13.72% to $381.4 million at December 31, 2022, primarily driven by reductions in interest-bearing deposits and loans. Total liabilities also decreased, with total deposits down 5.30% and borrowings eliminated. Stockholders' equity significantly declined by 55.05% due to accumulated other comprehensive loss. Consolidated Balance Sheet Highlights (2021-2022) | Item | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | Change (YoY) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | **ASSETS** | | | | | Cash and Cash Equivalents | $30,092 | $62,181 | -51.61% | | Investment securities available for sale, at fair value | $144,133 | $155,927 | -7.56% | | Loans, net | $184,278 | $207,922 | -11.47% | | Total Assets | $381,436 | $442,066 | -13.72% | | **LIABILITIES** | | | | | Total Deposits | $362,947 | $383,247 | -5.30% | | Short-term borrowings | $0 | $10,000 | -100.00% | | Long-term borrowings | $0 | $10,000 | -100.00% | | Total Liabilities | $365,382 | $406,350 | -10.08% | | **STOCKHOLDERS' EQUITY** | | | | | Total Stockholders' Equity | $16,054 | $35,716 | -55.05% | | Accumulated other comprehensive (loss) gain | ($21,252) | ($874) | -2331.58% | [Consolidated Statements of Income](index=82&type=section&id=Consolidated%20Statements%20of%20Income) The Consolidated Statements of Income show a decrease in net income by 30.68% to $1.7 million in 2022 from $2.5 million in 2021. This was primarily driven by a 5.96% decrease in total interest income and a significant reduction in the release of credit loss provision, partially offset by a 20.58% decrease in total interest expense and a substantial increase in noninterest income. Consolidated Statements of Income Highlights (2021-2022) | Item | Year Ended December 31, 2022 ($ thousands) | Year Ended December 31, 2021 ($ thousands) | Change (YoY) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | :----------- | | Total Interest Income | $12,712 | $13,517 | -5.96% | | Total Interest Expense | $853 | $1,074 | -20.58% | | Net Interest Income | $11,859 | $12,443 | -4.70% | | Release of credit loss provision | ($112) | ($975) | -88.51% | | Total Noninterest Income | $1,354 | $627 | +115.95% | | Total Noninterest Expenses | $11,340 | $10,952 | +3.54% | | Income before income taxes | $1,985 | $3,093 | -35.82% | | Income tax expense | $240 | $577 | -58.41% | | NET INCOME | $1,745 | $2,516 | -30.68% | | Basic and diluted net income per share | $0.61 | $0.88 | -30.68% | [Consolidated Statements of Comprehensive Income (Loss)](index=84&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The Consolidated Statements of Comprehensive Income (Loss) show a significant shift from comprehensive income of $1.1 million in 2021 to a comprehensive loss of $18.6 million in 2022. This change was primarily driven by a substantial increase in net unrealized losses on securities available for sale, which amounted to $28.6 million in 2022, partially offset by a net unrealized gain on interest rate swaps. Consolidated Statements of Comprehensive Income (Loss) Highlights (2021-2022) | Item | Year Ended December 31, 2022 ($ thousands) | Year Ended December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net income | $1,745 | $2,516 | | Net unrealized loss on securities available for sale (net of tax) | ($20,698) | ($1,782) | | Net unrealized gain on interest rate swap (net of tax) | $320 | $368 | | Other comprehensive loss | ($20,378) | ($1,414) | | Comprehensive (loss) income | ($18,633) | $1,102 | [Consolidated Statements of Changes in Stockholders' Equity](index=85&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) The Consolidated Statements of Changes in Stockholders' Equity reflect a substantial decrease in total stockholders' equity from $35.7 million at December 31, 2021, to $16.1 million at December 31, 2022. This decline was primarily due to a significant increase in accumulated other comprehensive loss, driven by unrealized losses on available-for-sale securities, despite positive net income and minor contributions from dividend reinvestment. Consolidated Statements of Changes in Stockholders' Equity Highlights (2021-2022) | Item | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Balance, beginning of year | $35,716 | $37,093 | | Net income | $1,745 | $2,516 | | Cash dividends | ($1,143) | ($1,138) | | Dividends reinvested | $114 | $131 | | Other comprehensive income (loss) | ($20,378) | ($1,414) | | Balance, end of year | $16,054 | $35,716 | [Consolidated Statements of Cash Flows](index=86&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows indicate a net decrease in cash and cash equivalents of $32.1 million in 2022, a reversal from a $25.1 million increase in 2021. This was driven by significant cash outflows from financing activities, primarily due to decreases in deposits and borrowings, partially offset by cash provided by operating and investing activities. Consolidated Statements of Cash Flows Highlights (2021-2022) | Item | Year Ended December 31, 2022 ($ thousands) | Year Ended December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $2,225 | $3,656 | | Net cash provided (used) in investing activities | $7,014 | ($1,275) | | Net cash (used in) provided by financing activities | ($41,328) | $22,707 | | Net (decrease) increase in cash and cash equivalents | ($32,089) | $25,088 | | Cash and cash equivalents at end of year | $30,092 | $62,181 | [Notes to Consolidated Financial Statements](index=87&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The Notes to Consolidated Financial Statements provide detailed information on the Company's significant accounting policies, financial instruments, loan portfolio, credit risk management, capital structure, and regulatory compliance. Key updates include the adoption of the CECL methodology for credit losses and the impact of market interest rate changes on investment securities and stockholders' equity. - The Company adopted ASU 2016-13 (CECL methodology) on January 1, 2021, for estimating credit losses, replacing the incurred loss methodology. This resulted in a **$1,472,000** decrease to retained earnings upon adoption[315](index=315&type=chunk)[348](index=348&type=chunk) - As of December 31, 2022, the Bank was categorized as 'well capitalized' under Basel III Capital Rules, exceeding all minimum regulatory capital requirements[456](index=456&type=chunk)[460](index=460&type=chunk) - The fair value of investment securities available for sale decreased to **$144.1 million** at December 31, 2022, from **$155.9 million** at December 31, 2021, with significant unrealized losses primarily due to market interest rate movements, not credit deterioration[360](index=360&type=chunk)[373](index=373&type=chunk) [Note 1. Summary of Significant Accounting Policies](index=87&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note details the Company's key accounting policies, including those for investment securities, fair value measurements, and the CECL methodology for credit losses. - The Company's financial statements are prepared in accordance with U.S. GAAP, requiring management estimates in areas like loan valuations, allowance for credit losses, investment securities, fair value measurements, and deferred tax assets[293](index=293&type=chunk) - Investment securities are classified as available-for-sale (AFS) and reported at fair value, with unrealized gains/losses in other comprehensive income. Debt securities are classified as held-to-maturity (HTM) if the intent and ability to hold to maturity exist[295](index=295&type=chunk)[296](index=296&type=chunk) - The CECL methodology, adopted January 1, 2021, requires estimating lifetime expected credit losses for loans and unfunded commitments, based on historical data, current conditions, and reasonable forecasts[315](index=315&type=chunk)[316](index=316&type=chunk) [Note 2. Restrictions on Cash and Amounts Due from Banks](index=106&type=section&id=Note%202.%20Restrictions%20on%20Cash%20and%20Amounts%20Due%20from%20Banks) This note explains that Federal Reserve reserve requirements were set to zero, resulting in no average reserve balances for the reporting periods. - The Federal Reserve System set reserve requirement ratios to **zero percent** on March 26, 2020, and extended this for three years on December 22, 2020. As a result, average reserve balances were **$0** at December 31, 2022 and 2021[359](index=359&type=chunk) [Note 3. Investment Securities](index=106&type=section&id=Note%203.%20Investment%20Securities) This note provides details on the Company's investment securities portfolio, including classifications, fair values, and unrealized gains or losses. Investment Securities Available for Sale (2021-2022) | Security Type | December 31, 2022 Fair Value ($ thousands) | December 31, 2021 Fair Value ($ thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | U.S. Treasury | $6,783 | $0 | | U.S. Government agency | $36,580 | $31,351 | | Residential mortgage-backed securities | $67,148 | $77,877 | | State and municipal | $32,297 | $45,225 | | Corporate securities | $1,325 | $1,474 | | Total debt securities | $144,133 | $155,927 | - Unrealized losses on investment securities available for sale amounted to **$29.3 million** at December 31, 2022, compared to **$2.1 million** at December 31, 2021. These losses are considered temporary and primarily due to market interest rate movements, not credit deterioration[373](index=373&type=chunk) - The Company does not intend to sell, nor is it likely to be required to sell, securities in an unrealized loss position before maturity or recovery of amortized cost bases[367](index=367&type=chunk) [Note 4. Loans and Allowance for Credit Losses - Loans](index=111&type=section&id=Note%204.%20Loans%20and%20Allowance%20for%20Credit%20Losses%20-%20Loans) This note details the composition of the loan portfolio, changes in net loan receivables, and information on nonaccrual and nonperforming loans. Gross Loans by Major Categories (2021-2022) | Loan Category | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Loans Secured by Real Estate | $133,323 | $136,705 | | Commercial and Industrial Loans | $15,148 | $17,447 | | Consumer Loans | $37,969 | $56,240 | | Total Loans, net of deferred fees and costs | $186,440 | $210,392 | | Less: Allowance for credit losses | ($2,162) | ($2,470) | | Loans, net | $184,278 | $207,922 | - The Company's net loan receivables decreased by **$23.6 million** to **$184.3 million** at December 31, 2022, primarily due to paydowns outpacing new originations across all loan segments[154](index=154&type=chunk) Nonaccrual Loans and Nonperforming Assets (2021-2022) | Metric | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Nonaccrual loans | $488 | $338 | | Accruing loans past due 90+ days | $10 | $15 | | Total nonperforming loans | $498 | $353 | | Total nonperforming assets | $498 | $353 | [Note 5. Premises and Equipment](index=127&type=section&id=Note%205.%20Premises%20and%20Equipment) This note provides a breakdown of the Company's premises and equipment, including land, buildings, and accumulated depreciation. Premises and Equipment, Net (2021-2022) | Item | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :----------------------- | :-------------------------------- | :-------------------------------- | | Land | $685 | $685 | | Buildings | $6,781 | $6,723 | | Equipment and fixtures | $8,515 | $8,354 | | Construction in progress | $71 | $36 | | Operating Lease Assets | $366 | $478 | | Total | $16,418 | $16,276 | | Accumulated depreciation | ($13,141) | ($12,712) | | Net Premises and Equipment | $3,277 | $3,564 | - Depreciation and software amortization expenses were **$0.3 million** and **$0.1 million**, respectively, for both 2022 and 2021[407](index=407&type=chunk) [Note 6. Federal Home Loan Bank, Short- and Long-term Borrowings](index=127&type=section&id=Note%206.%20Federal%20Home%20Loan%20Bank%2C%20Short-%20and%20Long-term%20Borrowings) This note details the Bank's FHLB borrowings and federal funds lines of credit, including changes in outstanding balances and credit availability. - The Bank had **$0** in short- and long-term FHLB advances at December 31, 2022, down from **$10.0 million** each in 2021. Total FHLB credit availability was **$103.9 million** at December 31, 2022[410](index=410&type=chunk) - The Bank also has **$17.0 million** in unsecured federal funds lines of credit from two financial institutions[412](index=412&type=chunk) - The Company terminated two interest rate swap contracts early on October 31, 2022, recognizing a gain of **$206,000** in noninterest income. As of December 31, 2022, there were no outstanding interest rate swaps designated as cash flow hedges[417](index=417&type=chunk) [Note 7. Deposits](index=132&type=section&id=Note%207.%20Deposits) This note provides a detailed breakdown of deposit balances by type, highlighting changes in composition and total deposits. Major Classifications of Deposit Balances (2021-2022) | Deposit Type | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Noninterest-bearing deposits | $143,262 | $155,624 | | Interest-bearing checking | $40,086 | $37,305 | | Money Market | $15,791 | $23,103 | | Savings | $113,101 | $106,818 | | Time deposits, $100,000 or more | $19,999 | $24,624 | | Time deposits below $100,000 | $30,708 | $35,773 | | Total Deposits | $362,947 | $383,247 | - Total deposits decreased by **$20.3 million (5.3%)** in 2022. Noninterest-bearing deposits, money market, and time deposits decreased, while interest-bearing checking and savings increased[174](index=174&type=chunk) [Note 8. Income Taxes](index=133&type=section&id=Note%208.%20Income%20Taxes) This note details the components of income tax expense, including current and deferred taxes, and the impact of income before taxes. Income Tax Expense Components (2021-2022) | Item | Year Ended December 31, 2022 ($ thousands) | Year Ended December 31, 2021 ($ thousands) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | | Current income tax expense | $450 | $295 | | Deferred income tax expense | ($210) | $282 | | Total Income tax expense | $240 | $577 | - The decrease in total income tax expense in 2022 was primarily due to lower income before taxes. Management believes all deferred tax assets will be fully realizable, and there are no uncertain tax positions[142](index=142&type=chunk)[427](index=427&type=chunk) [Note 9. Pension and Profit Sharing Plans](index=135&type=section&id=Note%209.%20Pension%20and%20Profit%20Sharing%20Plans) This note outlines the Company's contributions to its 401(k) plan for employees. 401(k) Plan Contributions (2021-2022) | Item | Year Ended December 31, 2022 ($ thousands) | Year Ended December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Annual contributions to 401(k) plan | $277 | $493 | [Note 10. Other Benefit Plans](index=135&type=section&id=Note%2010.%20Other%20Benefit%20Plans) This note describes other employee benefit plans, including Bank Owned Life Insurance (BOLI) and a change-in-control severance plan. Bank Owned Life Insurance (BOLI) (2021-2022) | Item | December 31, 2022 ($ millions) | December 31, 2021 ($ millions) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Cash value of BOLI policies | $8.5 | $8.3 | | Income on insurance investment | $0.2 | $0.2 | - The Bank has an unfunded grantor trust as part of a change-in-control severance plan for substantially all employees, entitling them to cash severance benefits upon qualifying termination[431](index=431&type=chunk) [Note 11. Other Noninterest Expenses](index=135&type=section&id=Note%2011.%20Other%20Noninterest%20Expenses) This note provides a breakdown of various other noninterest expenses, including loan-related costs and professional fees. Other Noninterest Expenses (2021-2022) | Expense Category | Year Ended December 31, 2022 ($ thousands) | Year Ended December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Loan related expenses | $145 | $195 | | Director, executive and audit committee fees and expenses | $177 | $167 | | Provision (release) for unfunded commitments | $107 | ($119) | | Other expenses (total) | $1,303 | $1,109 | [Note 12. Commitments and Contingencies](index=136&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) This note details the Bank's off-balance sheet commitments, such as loan commitments and letters of credit, and the associated reserve for losses. Outstanding Loan Commitments and Letters of Credit (2021-2022) | Item | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Other mortgage loans | $9,280 | $2,863 | | Home-equity lines | $10,142 | $9,224 | | Commercial lines | $10,717 | $15,432 | | Unsecured consumer lines | $579 | $648 | | Letters of credit | $45 | $55 | | Total Commitments to extend credit | $30,718 | $28,167 | - The Bank accrued **$477,215** as a reserve for losses on unfunded commitments at December 31, 2022, an increase from **$370,680** in 2021[436](index=436&type=chunk) [Note 13. Stockholders' Equity](index=137&type=section&id=Note%2013.%20Stockholders%27%20Equity) This note details the components of stockholders' equity, dividend restrictions, and the Bank's compliance with regulatory capital requirements. - The Company's ability to pay dividends is subject to regulatory restrictions, requiring prior approval if dividends exceed net profits for the current year plus retained net profits for the preceding two years. Approximately **$20.7 million** of retained earnings were restricted at December 31, 2022[439](index=439&type=chunk)[440](index=440&type=chunk) - The Company has an employee stock purchase plan and a dividend reinvestment and stock purchase plan. In 2022, **11,166** shares were purchased under the dividend reinvestment plan[443](index=443&type=chunk)[446](index=446&type=chunk) - The Bank was 'well-capitalized' at December 31, 2022 and 2021, exceeding all Basel III Capital Rules requirements. The Company's risk-based capital ratios are not materially different from the Bank's[456](index=456&type=chunk)[459](index=459&type=chunk)[460](index=460&type=chunk) [Note 14. Earnings Per Common Share](index=142&type=section&id=Note%2014.%20Earnings%20Per%20Common%20Share) This note presents the calc

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 inc ...

Part I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Glen Burnie Bancorp as of June 30, 2022, reflect decreased assets, lower net income, and reduced equity due to unrealized securities losses [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$429.4 million** and stockholders' equity sharply declined to **$21.3 million**, driven by increased accumulated other comprehensive loss from unrealized securities losses Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 (unaudited) | December 31, 2021 (audited) | | :--- | :--- | :--- | | **Total Assets** | **$429,393** | **$442,066** | | Cash and Cash Equivalents | $51,366 | $62,181 | | Investment securities available for sale, at fair value | $157,823 | $155,927 | | Loans, net | $198,460 | $207,922 | | **Total Liabilities** | **$408,128** | **$406,350** | | Total Deposits | $385,765 | $383,247 | | **Total Stockholders' Equity** | **$21,265** | **$35,716** | | Accumulated other comprehensive loss | $(15,350) | $(874) | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income for H1 2022 decreased to **$0.54 million** from **$1.07 million**, primarily due to lower net interest income and a smaller release for credit losses, compressing the net interest margin Consolidated Income Statement Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $2,803 | $3,016 | $5,484 | $5,894 | | Release for credit losses | $(116) | $(67) | $(217) | $(471) | | Noninterest Income | $260 | $280 | $514 | $527 | | Noninterest Expense | $2,835 | $2,792 | $5,619 | $5,621 | | **Net Income** | **$309** | **$480** | **$540** | **$1,074** | | **Basic and diluted EPS** | **$0.11** | **$0.17** | **$0.19** | **$0.38** | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a comprehensive loss of **$13.9 million** for the six-month period, primarily driven by a **$14.9 million** net unrealized loss on available-for-sale securities Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net Income | $309 | $540 | | Other comprehensive (loss) income | $(6,068) | $(14,476) | | *Net unrealized (loss) on securities* | *(6,202)* | *(14,854)* | | *Net unrealized gain on swaps* | *134* | *378* | | **Comprehensive (loss) income** | **$(5,759)** | **$(13,936)** | [Consolidated Statement of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity decreased by **$14.5 million** to **$21.3 million** at June 30, 2022, primarily due to other comprehensive loss from unrealized securities losses Changes in Stockholders' Equity - Six Months Ended June 30, 2022 (in thousands) | Item | Amount | | :--- | :--- | | Balance, December 31, 2021 | $35,716 | | Net income | $540 | | Cash dividends, $0.20 per share | $(571) | | Other comprehensive loss | $(14,476) | | **Balance, June 30, 2022** | **$21,265** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by **$10.8 million** for the six months ended June 30, 2022, driven by net cash used in investing activities, partially offset by operating and financing cash flows Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $534 | $1,534 | | Net cash provided by (used in) investing activities | $(13,352) | $(25,944) | | Net cash provided by financing activities | $2,003 | $14,085 | | **Net decrease in cash and cash equivalents** | **$(10,815)** | **$(10,325)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies, including CECL adoption, investment securities, loan portfolio, fair value measurements, and recent accounting pronouncements [Note 2 - Basis of Presentation](index=9&type=section&id=Note%202%20%E2%80%93%20BASIS%20OF%20PRESENTATION) Financial statements conform to U.S. GAAP, with a key policy being the adoption of ASU 2016-13 (CECL) for estimating expected credit losses on financial assets - The Company adopted the Current Expected Credit Loss (CECL) methodology on January 1, 2021, which requires an estimate of credit losses expected over the life of an exposure, replacing the previous incurred loss model[22](index=22&type=chunk) - The allowance for credit losses (ACL) is based on a quarterly assessment using historical loss experience (20-year look-back), adjusted for current conditions and reasonable future economic forecasts[23](index=23&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The reserve for unfunded commitments, which totaled **$30.2 million** on June 30, 2022, is also calculated using the CECL methodology[34](index=34&type=chunk) [Note 4 - Investment Securities](index=15&type=section&id=NOTE%204%20%E2%80%93%20INVESTMENT%20SECURITIES) The investment portfolio, entirely AFS securities valued at **$157.8 million**, experienced significant unrealized losses of **$21.4 million** due to rising interest rates, which management deems temporary Investment Securities Portfolio (in thousands) | Security Type | Amortized Cost (Jun 2022) | Fair Value (Jun 2022) | Fair Value (Dec 2021) | | :--- | :--- | :--- | :--- | | Collateralized mortgage obligations | $19,105 | $17,756 | $21,688 | | Agency mortgage-backed securities | $62,834 | $58,410 | $56,189 | | Municipal securities | $43,153 | $33,990 | $45,225 | | U.S. Government agency securities | $45,498 | $39,356 | $31,351 | | **Total AFS Securities** | **$179,081** | **$157,823** | **$155,927** | - Gross unrealized losses on AFS securities increased tenfold from **$2.1 million** at Dec 31, 2021 to **$21.4 million** at June 30, 2022, affecting 239 securities[45](index=45&type=chunk)[47](index=47&type=chunk) - Management believes the unrealized losses are temporary and not due to credit quality issues, stating it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost basis[47](index=47&type=chunk) [Note 5 - Loans Receivable and Allowance for Credit Losses](index=18&type=section&id=NOTE%205%20%E2%80%93%20LOANS%20RECEIVABLE%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) Net loans decreased to **$198.5 million**, while the allowance for credit losses stood at **$2.2 million** and non-accrual loans improved to **$220,000** Loan Portfolio Composition (in thousands) | Loan Class | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Single-family residential | $80,170 | $78,119 | | Commercial Real Estate | $45,081 | $48,729 | | Automobile | $47,993 | $54,150 | | Commercial and industrial | $15,591 | $17,447 | | Other | $11,863 | $12,005 | | **Total Loans** | **$200,698** | **$210,392** | Allowance for Credit Losses (ACL) Activity - H1 2022 (in thousands) | Activity | Amount | | :--- | :--- | | Beginning Balance (Jan 1, 2022) | $2,470 | | Charge-offs | $(107) | | Recoveries | $92 | | Release for credit losses | $(217) | | **Ending Balance (Jun 30, 2022)** | **$2,238** | Asset Quality - Non-accrual Loans (in thousands) | Loan Class | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Single-family residential | $110 | $123 | | Automobile | $110 | $144 | | SBA guaranty | $0 | $71 | | **Total Non-accrual** | **$220** | **$338** | [Note 6 - Fair Value](index=30&type=section&id=NOTE%206%20%E2%80%93%20FAIR%20VALUE) The company utilizes a three-level fair value hierarchy, with most recurring fair value assets, primarily AFS securities totaling **$157.8 million**, classified as Level 2 - ASC 820 establishes a three-level fair value hierarchy: Level 1 (quoted prices for identical assets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[86](index=86&type=chunk)[88](index=88&type=chunk) Fair Value Measurements at June 30, 2022 (in thousands) | Asset/Liability Type | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | **Recurring:** | | | | | | Securities available for sale | $— | $157,823 | $— | $157,823 | | Interest rate swap | $— | $80 | $— | $80 | | **Non-recurring:** | | | | | | Impaired loans | $— | $— | $206 | $206 | [Note 7 - Recent Accounting Pronouncements](index=35&type=section&id=NOTE%207%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company adopted ASU 2016-13 (CECL) on January 1, 2021, resulting in a **$1.47 million** decrease to retained earnings due to an increased allowance for credit losses - The Company early adopted ASU 2016-13 (CECL) on January 1, 2021[97](index=97&type=chunk) Impact of CECL Adoption on Jan 1, 2021 (in thousands) | Item | Dec 31, 2020 Balance | Adoption Impact | Jan 1, 2021 Balance | | :--- | :--- | :--- | :--- | | Allowance for credit losses (Loans) | $1,476 | $1,574 | $3,050 | | Reserve for unfunded commitments | $33 | $457 | $490 | | **Total allowance for credit losses** | **$1,509** | **$2,031** | **$3,540** | | **Decrease to retained earnings (after-tax)** | | **$1,472** | | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses H1 2022 financial performance, noting decreased net income and shareholder equity from unrealized securities losses, yet maintaining strong liquidity and capital - Shareholder's equity decreased by **$14.5 million** (**40.46%**) to **$21.3 million** at June 30, 2022, primarily due to **$15.4 million** in unrealized losses (net of tax) on available-for-sale securities[108](index=108&type=chunk) - Net income for the first six months of 2022 was **$0.54 million**, down from **$1.1 million** in the same period of 2021, mainly due to a **$410,000** decrease in net interest income[113](index=113&type=chunk) - The Bank remains **well-capitalized**, with a total regulatory capital to risk-weighted assets ratio of **15.90%** at June 30, 2022[108](index=108&type=chunk) [Results of Operations](index=41&type=section&id=RESULTS%20OF%20OPERATIONS) Net income for H1 2022 decreased to **$0.54 million** from **$1.1 million**, primarily due to lower net interest income and a smaller release for credit losses, compressing the net interest margin Key Performance Ratios | Ratio | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Return on average assets (ROA) | 0.25% | 0.51% | | Return on average equity (ROE) | 3.69% | 6.10% | | Net interest margin | 2.57% | 2.92% | - Net interest income for H1 2022 decreased by **$410,000** (7.0%) to **$5.5 million**, due to lower interest income on loans from a smaller loan portfolio, partially offset by lower deposit costs[114](index=114&type=chunk) - The company recognized a release of allowance for credit losses of **$217,000** in H1 2022, compared to a larger release of **$471,000** in H1 2021[124](index=124&type=chunk) [Financial Condition](index=46&type=section&id=FINANCIAL%20CONDITION) Total assets decreased to **$429.4 million** due to lower cash and loans, while deposits modestly grew to **$385.8 million** and nonperforming assets improved to **$232,000** Nonperforming Assets (in thousands) | Category | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Nonaccrual loans | $220 | $338 | | Accruing loans past due 90+ days | $12 | $15 | | **Total nonperforming loans** | **$232** | **$353** | | Real estate acquired through foreclosure | $0 | $0 | | **Total nonperforming assets** | **$232** | **$353** | | **Nonperforming assets to total assets** | **0.05%** | **0.08%** | Deposit Composition (in thousands) | Deposit Type | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Noninterest-bearing deposits | $151,679 | $155,624 | | Interest-bearing checking, savings, money market | $175,252 | $167,226 | | Time deposits | $58,834 | $60,397 | | **Total Deposits** | **$385,765** | **$383,247** | [Liquidity and Capital Resources](index=55&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The Bank maintains strong liquidity with **$51.4 million** in cash and access to **$109.3 million** FHLB credit, remaining well-capitalized despite equity decrease from unrealized securities losses - The Bank's cash and cash equivalents totaled **$51.4 million** at June 30, 2022[157](index=157&type=chunk) - The Bank has access to a **$109.3 million** FHLB line of credit, with **$20 million** drawn as of June 30, 2022. It also has **$17 million** in unsecured federal funds lines of credit, with **$0** outstanding[158](index=158&type=chunk) Regulatory Capital Ratios (Bank Level) - June 30, 2022 | Ratio | Actual | To Be Well Capitalized | | :--- | :--- | :--- | | Common equity tier 1 | 15.13% | ≥ 6.50% | | Tier 1 capital | 15.13% | ≥ 8.00% | | Total capital | 15.90% | ≥ 10.00% | | Tier 1 leverage | 8.58% | ≥ 5.00% | [Market Risk and Interest Rate Sensitivity](index=51&type=section&id=MARKET%20RISK%20AND%20INTEREST%20RATE%20SENSITIVITY) The company's primary market risk is interest rate fluctuation, with simulation indicating an asset-sensitive position where a **-200 bp** rate shock would decrease EVE by **19%**, exceeding policy limits - The company's simulation analysis indicates an **asset-sensitive position**, meaning assets are expected to reprice faster than liabilities in a changing rate environment[148](index=148&type=chunk) Estimated Change in Net Interest Income (NII) over 12 Months | Rate Shock | June 30, 2022 | Policy Limit | | :--- | :--- | :--- | | +200 bp | +13% | (15)% | | +100 bp | +6% | (10)% | | -100 bp | -7% | (10)% | | -200 bp | -14% | (15)% | Estimated Change in Economic Value of Equity (EVE) | Rate Shock | June 30, 2022 | Policy Limit | | :--- | :--- | :--- | | +200 bp | +8% | (15)% | | +100 bp | +5% | (10)% | | -100 bp | -7% | (10)% | | -200 bp | (19)% | (15)% | [Critical Accounting Policies and Estimates](index=59&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Management identifies the Allowance for Credit Losses (ACL), securities valuation, and income tax estimation as critical accounting policies requiring significant judgment - The determination of the Allowance for Credit Losses (ACL) is a critical accounting estimate, requiring significant judgment regarding borrower risk, future cash flows, historical loss rates, and economic forecasts under the CECL model[169](index=169&type=chunk)[174](index=174&type=chunk) - Valuation of the securities portfolio is another key estimate, involving the assessment of whether declines in fair value are credit-related or due to other factors like interest rate changes[176](index=176&type=chunk)[177](index=177&type=chunk) - Estimating accrued and deferred income taxes requires management to assess the merits of tax positions and the likelihood of realizing deferred tax assets[180](index=180&type=chunk)[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a 'smaller reporting company', the company is exempt from providing this disclosure - As a 'smaller reporting company', the Company is not required to provide disclosure for this item[184](index=184&type=chunk) [Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[185](index=185&type=chunk) - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[185](index=185&type=chunk) Part II. OTHER INFORMATION [Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) Management does not expect ongoing litigation to materially affect the company's financial condition, results, or liquidity - Management does not anticipate that the ultimate liability from any ongoing litigation will have a material effect on the Company's financial condition, operating results, or liquidity[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the period - None reported[187](index=187&type=chunk) [Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None reported[188](index=188&type=chunk) [Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[189](index=189&type=chunk) [Other Information](index=63&type=section&id=Item%205.%20Other%20Information) No other information was reported for this item - None reported[190](index=190&type=chunk) [Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including corporate documents and CEO/CFO certifications - Lists filed exhibits, including CEO and CFO certifications (**31.1, 31.2, 32**) and Inline XBRL documents (**101 series**)[191](index=191&type=chunk)

[Part I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section presents the company's comprehensive financial statements, management's discussion and analysis of performance, market risk disclosures, and internal controls for the reporting period [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This chapter includes the company's consolidated balance sheets, statements of income, comprehensive income (loss), changes in stockholders' equity, and cash flows, along with detailed notes on organizational structure, accounting policies, credit loss allowance, investment securities, loans, fair value measurements, and recent accounting pronouncements [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's consolidated financial position, detailing assets, liabilities, and stockholders' equity as of March 31, 2022, and December 31, 2021 | Metric (Thousands of USD) | As of March 31, 2022 (Unaudited) | As of December 31, 2021 (Audited) | Change | Change Rate | | :------------------------ | :------------------------------- | :------------------------------- | :----- | :---------- | | **Assets** | | | | | | Cash and Cash Equivalents | 68,840 | 62,181 | 6,659 | 10.71% | | Available-for-Sale Investment Securities | 147,371 | 155,927 | (8,556) | -5.49% | | Loans, Net | 201,872 | 207,922 | (6,050) | -2.91% | | Total Assets | 437,445 | 442,066 | (4,621) | -1.05% | | **Liabilities** | | | | | | Total Deposits | 387,774 | 383,247 | 4,527 | 1.18% | | Total Liabilities | 410,165 | 406,350 | 3,815 | 0.94% | | **Stockholders' Equity** | | | | | | Total Stockholders' Equity | 27,280 | 35,716 | (8,436) | -23.62% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section outlines the company's financial performance, including interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expenses, and net income for the three months ended March 31, 2022 and 2021 | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Total Interest Income | 2,916 | 3,161 | (245) | -7.75% | | Total Interest Expense | 234 | 284 | (50) | -17.61% | | Net Interest Income | 2,682 | 2,877 | (195) | -6.78% | | Provision for Credit Losses on Loans | (100) | (404) | 304 | -75.25% | | Total Noninterest Income | 254 | 247 | 7 | 2.83% | | Total Noninterest Expenses | 2,784 | 2,828 | (44) | -1.56% | | Net Income | 231 | 594 | (363) | -61.11% | | Basic and Diluted Net Income Per Share | 0.08 | 0.21 | (0.13) | -61.90% | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the company's comprehensive income (loss), including net income and other comprehensive income (loss) components, for the three months ended March 31, 2022 and 2021 | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Net Income | 231 | 594 | (363) | -61.11% | | Unrealized Loss on Available-for-Sale Securities, Net | (8,652) | (2,591) | (6,061) | 233.92% | | Unrealized Gain on Interest Rate Swaps, Net | 244 | 102 | 142 | 139.22% | | Other Comprehensive Loss | (8,408) | (2,489) | (5,919) | 237.81% | | Comprehensive Loss | (8,177) | (1,895) | (6,282) | 331.50% | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section details the changes in the company's stockholders' equity, including net income, cash dividends, dividend reinvestments, and other comprehensive loss, for the three months ended March 31, 2022 and 2021 | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Balance as of December 31, 2021/2020 | 35,716 | 37,093 | | Net Income | 231 | 594 | | Cash Dividends | (286) | (284) | | Dividend Reinvestment | 27 | 33 | | ASC 326 Adoption Transition Adjustment | — | (1,472) | | Other Comprehensive Loss | (8,408) | (2,489) | | Balance as of March 31, 2022/2021 | 27,280 | 33,475 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities, and the net increase in cash and cash equivalents for the three months ended March 31, 2022 and 2021 | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Net Cash from Operating Activities | (230) | 283 | | Net Cash from Investing Activities | 2,620 | (17,286) | | Net Cash from Financing Activities | 4,269 | 20,384 | | Net Increase in Cash and Cash Equivalents | 6,659 | 3,381 | | Cash and Cash Equivalents at End of Period | 68,840 | 40,474 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the consolidated financial statements, covering significant accounting policies, estimates, and other relevant financial information [NOTE 1 – ORGANIZATIONAL](index=9&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATIONAL) Glen Burnie Bancorp, a bank holding company established in 1990, provides financial services in central Maryland through its wholly-owned subsidiary, The Bank of Glen Burnie, under federal and state regulation - Glen Burnie Bancorp is a Maryland bank holding company, established in 1990, providing financial services in Anne Arundel County and surrounding areas through its wholly-owned subsidiary, The Bank of Glen Burnie[19](index=19&type=chunk) - The Bank is subject to regulation and periodic examination by federal and state agencies[19](index=19&type=chunk) [NOTE 2 – BASIS OF PRESENTATION](index=9&type=section&id=NOTE%202%20%E2%80%93%20BASIS%20OF%20PRESENTATION) This note explains the basis of financial statement preparation, adhering to U.S. GAAP interim reporting requirements, and details the adoption of ASU 2016-13 (ASC 326) for credit loss allowance, including the CECL methodology, loan portfolio segmentation, and impairment model for available-for-sale debt securities - The company's financial statements are prepared in accordance with U.S. GAAP and include all necessary normal recurring adjustments[20](index=20&type=chunk) - The company adopted ASU 2016-13 (ASC 326) on January 1, 2021, changing the credit loss allowance calculation method from an incurred loss model to an expected credit loss (CECL) model[22](index=22&type=chunk)[59](index=59&type=chunk) - The CECL method requires estimating expected credit losses for loan portfolios and unfunded loan commitments based on past events, current conditions, and reasonable and supportable future forecasts[23](index=23&type=chunk)[59](index=59&type=chunk) - The company segments its loan portfolio into real estate mortgage loans, commercial and industrial loans, and consumer loans, further categorizing them to assess credit risk[25](index=25&type=chunk) - For available-for-sale (AFS) debt securities, the impairment model differs from CECL, primarily assessing whether the company intends to sell or will likely be required to sell the security before recovering its amortized cost, and whether the decline in fair value is due to credit losses[31](index=31&type=chunk)[33](index=33&type=chunk) [NOTE 3 – EARNINGS PER SHARE](index=15&type=section&id=NOTE%203%20%E2%80%93%20EARNINGS%20PER%20SHARE) This note provides the calculation and amounts for basic and diluted earnings per share, which were $0.08 for the three months ended March 31, 2022, down from $0.21 in the prior year period | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Net Income (USD) | 230,733 | 593,993 | | Weighted Average Common Shares Outstanding | 2,855,253 | 2,843,775 | | Basic and Diluted Net Income Per Share | 0.08 | 0.21 | - Diluted earnings per share calculations were the same as basic earnings per share for the three months ended March 31, 2022 and 2021, as there were no outstanding stock options[41](index=41&type=chunk) [NOTE 4 – INVESTMENT SECURITIES](index=15&type=section&id=NOTE%204%20%E2%80%93%20INVESTMENT%20SECURITIES) This note details the accounting treatment, fair value, unrealized gains/losses, and contractual maturities of the company's investment securities, with available-for-sale securities totaling $147.4 million as of March 31, 2022, primarily due to increased unrealized losses from market value declines - The company holds no trading or held-to-maturity securities; all investment securities are classified as available-for-sale, reported at fair value, with unrealized gains and losses included in other comprehensive income[42](index=42&type=chunk) | Metric (Thousands of USD) | As of March 31, 2022 | As of December 31, 2021 | Change | Change Rate | | :------------------------ | :------------------- | :---------------------- | :----- | :---------- | | Available-for-Sale Securities Amortized Cost | 160,073 | 156,692 | 3,381 | 2.16% | | Available-for-Sale Securities Fair Value | 147,371 | 155,927 | (8,556) | -5.49% | | Total Unrealized Gains | 171 | 1,340 | (1,169) | -87.24% | | Total Unrealized Losses | (12,873) | (2,105) | (10,768) | 511.54% | - As of March 31, 2022, the company's available-for-sale debt securities portfolio had total unrealized losses of **$12,873,000** across 203 securities, primarily due to market value declines, spread volatility, and other temporary factors; management believes these securities are not credit-impaired and has no intent to sell them before maturity[47](index=47&type=chunk) | Maturity Period | Amortized Cost (Thousands of USD) | Fair Value (Thousands of USD) | | :-------------- | :-------------------------------- | :---------------------------- | | Within One Year | — | — | | One to Five Years | 12,469 | 12,411 | | Five to Ten Years | 33,967 | 32,294 | | Ten Years or More | 113,637 | 102,666 | | **Total Debt Securities** | **160,073** | **147,371** | [NOTE 5 – LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES](index=18&type=section&id=NOTE%205%20%E2%80%93%20LOANS%20RECEIVABLE%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note describes the company's loan portfolio, credit risk management, changes in the allowance for credit losses, and asset quality, showing net loans of $201.9 million as of March 31, 2022, a 2.91% decrease from December 31, 2021, with improved asset quality metrics - The company manages credit risk through loan portfolio diversification, categorizing loans into three main segments: real estate mortgage loans, commercial and industrial loans, and consumer loans[52](index=52&type=chunk)[53](index=53&type=chunk) | Loan Category (Thousands of USD) | As of March 31, 2022 | As of December 31, 2021 | Change | Change Rate | | :------------------------------- | :------------------- | :---------------------- | :----- | :---------- | | Total Real Estate Mortgage Loans | 135,469 | 136,705 | (1,236) | -0.90% | | Total Commercial and Industrial Loans | 15,834 | 17,447 | (1,613) | -9.25% | | Total Consumer Loans | 52,949 | 56,240 | (3,291) | -5.85% | | Loans, Net | 204,252 | 210,392 | (6,140) | -2.92% | | Allowance for Credit Losses | (2,380) | (2,470) | 90 | -3.64% | - For the three months ended March 31, 2022, the company released **$100 thousand** from the allowance for credit losses, compared to a **$404 thousand** release in the prior year period, primarily due to minimal charge-offs, recoveries on charged-off loans, and a reduction in the loan portfolio[60](index=60&type=chunk)[117](index=117&type=chunk) | Asset Quality Metric (Thousands of USD) | As of March 31, 2022 | As of December 31, 2021 | Change | Change Rate | | :-------------------------------------- | :------------------- | :---------------------- | :----- | :---------- | | Nonaccrual Loans | 202 | 338 | (136) | -40.24% | | Loans 90 Days or More Past Due and Still Accruing | 14 | 15 | (1) | -6.67% | | Total Nonperforming Loans | 216 | 353 | (137) | -38.81% | | Total Nonperforming Assets | 216 | 353 | (137) | -38.81% | | Nonperforming Assets to Total Assets Ratio | 0.05% | 0.02% | 0.03% | 150.00% | - As of March 31, 2022, the company had one troubled debt restructuring (TDR) loan, a single-family residential loan totaling **$35,616**, which was on nonaccrual status[73](index=73&type=chunk) [NOTE 6 – FAIR VALUE](index=30&type=section&id=NOTE%206%20%E2%80%93%20FAIR%20VALUE) This note provides the fair value measurement and disclosure framework under ASC Topic 820, including fair value hierarchy (Level 1, 2, 3) and valuation methods for available-for-sale investment securities, interest rate swaps, and impaired loans, with most securities and swaps classified as Level 2 - ASC 820 defines a fair value hierarchy, requiring entities to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, categorized into Level 1 (quoted prices in active markets), Level 2 (other significant observable inputs), and Level 3 (significant unobservable inputs)[82](index=82&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) - Available-for-sale investment securities and interest rate swaps are measured at fair value on a recurring basis, primarily using independent pricing models or model-based valuation techniques, with most classified as Level 2[84](index=84&type=chunk)[87](index=87&type=chunk) - Impaired loans are measured at fair value on a nonrecurring basis, primarily based on collateral fair value using Level 3 inputs, with independent appraisal reports discounted between **0% and 16%** based on specific circumstances for valuation[86](index=86&type=chunk) | Asset/Liability Category (Thousands of USD) | Fair Value as of March 31, 2022 | Level 1 | Level 2 | Level 3 | | :---------------------------------------- | :------------------------------ | :------ | :------ | :------ | | Cash and Cash Equivalents | 68,840 | 68,840 | — | — | | Loans, Net | 201,975 | — | — | 201,975 | | Cash Value of Life Insurance | 8,375 | — | 8,375 | — | | Deposits | 387,250 | 155,680 | 231,570 | — | | Long-Term Debt | 9,930 | — | 9,930 | — | | Short-Term Debt | 9,759 | — | 9,759 | — | [NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS](index=35&type=section&id=NOTE%207%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This note outlines recent and upcoming accounting standard updates, including the adoption of ASU 2016-13 (CECL) and its impact on retained earnings, along with the evaluation of ASU 2019-12, ASU 2020-04, ASU 2021-01, and ASU 2022-01, ASU 2022-02 - The company early adopted ASU 2016-13 (CECL) on January 1, 2021, resulting in a **$1,472,000** reduction in retained earnings[95](index=95&type=chunk)[96](index=96&type=chunk) | Metric (Thousands of USD) | As of December 31, 2020 | CECL Adoption Impact | As of January 1, 2021 | | :------------------------ | :---------------------- | :------------------- | :-------------------- | | Total Allowance for Credit Losses | 1,476 | 1,574 | 3,050 | | Reserve for Unfunded Commitments | 33 | 457 | 490 | | **Total Allowance for Credit Losses** | **1,509** | **2,031** | **3,540** | | Total Pre-Tax Impact | | 2,031 | | | Tax Impact | | (559) | | | **Reduction in Retained Earnings** | | **1,472** | | - The adoption of ASU 2019-12 (Simplifying Income Tax Accounting) had no material impact on the company's financial position or results of operations[97](index=97&type=chunk) - The company is currently evaluating the impact of ASU 2020-04, ASU 2021-01 (Reference Rate Reform), ASU 2022-01 (Derivatives and Hedging), and ASU 2022-02 (Credit Losses and Troubled Debt Restructurings) on its consolidated financial statements[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [NOTE 8 – SUBSEQUENT EVENTS](index=39&type=section&id=NOTE%208%20%E2%80%93%20SUBSEQUENT%20EVENTS) As of the report's issuance date, the company has no significant subsequent events requiring disclosure [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's detailed analysis of the company's financial condition and operating results, covering forward-looking statements, overview, operating results, financial condition, market risk, liquidity, capital resources, and critical accounting policies, noting a decline in Q1 2022 net income and EPS due to reduced net interest income and lower credit loss allowance release [FORWARD-LOOKING STATEMENTS](index=39&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section contains forward-looking statements, cautioning readers against undue reliance and noting that actual results may differ materially from expectations, with no obligation to update - The "forward-looking statements" in the report are intended to identify future expectations, but actual results may differ materially due to various factors[104](index=104&type=chunk) - The company undertakes no obligation to update any forward-looking statements[105](index=105&type=chunk) [OVERVIEW](index=39&type=section&id=OVERVIEW) Glen Burnie Bancorp faced challenges in Q1 2022 with declining total interest income and a reduced loan portfolio, leading to a significant drop in net income and EPS, and a substantial decrease in stockholders' equity due to unrealized losses on available-for-sale securities, yet maintaining strong liquidity and capital ratios - For the three months ended March 31, 2022, total interest income decreased by **$245 thousand** to **$2.9 million**, primarily due to reduced loan interest income[106](index=106&type=chunk) - The loan portfolio decreased by **$6.1 million**, or **2.91%**, during the first quarter of 2022[106](index=106&type=chunk) - The company released **$100 thousand** from the allowance for credit losses, compared to a **$404 thousand** release in the prior year period[106](index=106&type=chunk) - As of March 31, 2022, stockholders' equity decreased to **$27.3 million**, a **$8.4 million** or **23.62%** reduction from December 31, 2021, mainly due to **$9.2 million** (after-tax) in unrealized losses on available-for-sale securities[106](index=106&type=chunk)[155](index=155&type=chunk) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------- | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Return on Average Assets (ROAA) | 0.21% | 0.58% | -0.37% | -63.79% | | Return on Average Equity (ROAE) | 2.74% | 6.68% | -3.94% | -58.98% | - As of March 31, 2022, the Bank's total regulatory capital to risk-weighted assets ratio was **16.15%**, higher than **14.54%** in the prior year period[106](index=106&type=chunk) - Book value per share was **$9.55** as of March 31, 2022, down from **$11.77** as of March 31, 2021, primarily due to unrealized losses on available-for-sale securities and rapidly rising interest rates in Q1 2022[108](index=108&type=chunk) [RESULTS OF OPERATIONS](index=41&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's Q1 2022 operating results, showing a significant year-over-year decline in net income and EPS, primarily driven by reduced net interest income and lower credit loss allowance release, with slight increases in noninterest income and decreases in noninterest expenses [Net income](index=41&type=section&id=Net%20income) Net income attributable to common stockholders for the three months ended March 31, 2022, was $231 thousand, with basic and diluted earnings per share of $0.08, a significant decrease from $594 thousand and $0.21 in the prior year period | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :----------------------- | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Net Income (Thousands of USD) | 231 | 594 | (363) | -61.11% | | Basic and Diluted Net Income Per Share | 0.08 | 0.21 | (0.13) | -61.90% | - The decline in net income was primarily due to a **$304 thousand** reduction in the allowance for credit losses release in 2021, and a **$195 thousand** decrease in net interest income[110](index=110&type=chunk) [Net Interest Income](index=41&type=section&id=Net%20Interest%20Income) For the three months ended March 31, 2022, net interest income was $2.68 million, a 6.79% year-over-year decrease, primarily due to reduced loan interest income, partially offset by increased interest and dividend income from securities | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Net Interest Income | 2,682 | 2,877 | (195) | -6.79% | | Total Interest Income | 2,916 | 3,161 | (245) | -7.74% | | Total Interest Expense | 234 | 284 | (50) | -17.61% | - The decrease in interest income was mainly due to a **$6.1 million** reduction in the loan portfolio balance, partially offset by a **$193 thousand** increase in interest and dividend income from investment securities and a **$31 thousand** increase in interest income from bank deposits and federal funds[111](index=111&type=chunk)[112](index=112&type=chunk) - The decrease in interest expense was primarily due to a **$44 thousand** reduction in interest-bearing deposit expenses, attributed to a lower interest rate environment and a decline in the average balance of time deposits[113](index=113&type=chunk) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net Interest Margin | 2.54% | 2.93% | -0.39% | | Yield on Earning Assets | 2.76% | 3.17% | -0.41% | | Cost of Interest-Bearing Liabilities | 0.38% | 0.48% | -0.10% | | Net Interest Spread | 2.38% | 2.69% | -0.31% | [Provision for Credit Losses on Loans](index=43&type=section&id=Provision%20for%20Credit%20Losses%20on%20Loans) For the three months ended March 31, 2022, the company released $100 thousand from the allowance for credit losses on loans, a significant reduction from $404 thousand in the prior year, attributed to minimal charge-offs, recoveries, and a shrinking loan portfolio | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Provision for Credit Losses on Loans | (100) | (404) | 304 | -75.25% | - As of March 31, 2022, the allowance for credit losses represented **1.17%** of total loans, compared to **1.18%** as of March 31, 2021[117](index=117&type=chunk) [Noninterest Income](index=43&type=section&id=Noninterest%20Income) For the three months ended March 31, 2022, noninterest income increased to $254 thousand, up 2.83% from $247 thousand in the prior year, primarily due to higher other fees and commissions | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Total Noninterest Income | 254 | 247 | 7 | 2.83% | [Noninterest Expenses](index=43&type=section&id=Noninterest%20Expenses) For the three months ended March 31, 2022, noninterest expenses were $2.78 million, a 1.54% decrease from $2.83 million in the prior year, mainly due to reduced salaries and benefits, data processing, and telephone costs, partially offset by increased occupancy and equipment, and legal, accounting, and other professional fees | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Total Noninterest Expenses | 2,784 | 2,828 | (44) | -1.56% | [Income Taxes](index=43&type=section&id=Income%20Taxes) For the three months ended March 31, 2022, the company recorded an income tax expense of $21 thousand, an 80.19% decrease from $106 thousand in the prior year, primarily due to lower pre-tax income in the current period | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Income Tax Expense | 21 | 106 | (85) | -80.19% | | Annualized Effective Tax Rate | 9.76% | 15.20% | -5.44% | -35.79% | [Comprehensive Income (Loss)](index=43&type=section&id=Comprehensive%20Income%20%28Loss%29) In Q1 2022, the company reported a comprehensive loss of $8.177 million, a significant increase from the $1.895 million loss in Q1 2021, primarily due to decreased net income and increased unrealized losses on available-for-sale securities, partially offset by increased unrealized gains on interest rate swaps | Metric (Thousands of USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | Change Rate | | :------------------------ | :-------------------------------- | :-------------------------------- | :----- | :---------- | | Comprehensive Loss | (8,177) | (1,895) | (6,282) | 331.50% | - The increase in comprehensive loss was primarily due to a decrease in net income and an increase in unrealized losses on available-for-sale securities, partially offset by an increase in unrealized gains on interest rate swaps[121](index=121&type=chunk) [FINANCIAL CONDITION](index=43&type=section&id=FINANCIAL%20CONDITION) This section outlines the company's financial condition as of March 31, 2022, showing a slight decrease in total assets, reduced loan portfolio and available-for-sale investment securities, but increases in cash and cash equivalents and deposits, alongside improved nonperforming loans and assets [General](index=43&type=section&id=General) As of March 31, 2022, total assets were $437.4 million, a $4.6 million (1.05%) decrease from December 31, 2021, primarily due to reductions in available-for-sale investment securities and net loans, partially offset by increases in interest-bearing deposits, other financial institution deposits, and deferred tax assets | Metric (Thousands of USD) | As of March 31, 2022 | As of December 31, 2021 | Change | Change Rate | | :------------------------ | :------------------- | :---------------------- | :----- | :---------- | | Total Assets | 437,445 | 442,066 | (4,621) | -1.05% | | Total Loans | 201,900 | 207,900 | (6,000) | -2.89% | | Available-for-Sale Investment Securities | 147,400 | 155,900 | (8,500) | -5.45% | | Cash and Cash Equivalents | 68,800 | 62,200 | 6,600 | 10.61% | - The decrease in loans was primarily attributed to reductions in construction and land, commercial loans, commercial and industrial loans, commercial SBA PPP loans, consumer loans, and automobile loans, partially offset by an increase in single-family residential loans[122](index=122&type=chunk) - The reduction in available-for-sale investment securities primarily stemmed from the depreciation of the investment portfolio, leading to increased unrealized losses[122](index=122&type=chunk) [Nonperforming Loans and Assets](index=45&type=section&id=Nonperforming%20Loans%20and%20Assets) As of March 31, 2022, total nonperforming loans were $216 thousand, a decrease from $353 thousand as of December 31, 2021, with reductions in nonaccrual loans and loans past due 90 days or more and still accruing, maintaining a low nonperforming assets to total assets ratio | Metric (Thousands of USD) | As of March 31, 2022 | As of December 31, 2021 | Change | Change Rate | | :------------------------ | :------------------- | :---------------------- | :----- | :---------- | | Nonaccrual Loans | 202 | 338 | (136) | -40.24% | | Loans 90 Days or More Past Due and Still Accruing | 14 | 15 | (1) | -6.67% | | Total Nonperforming Loans | 216 | 353 | (137) | -38.81% | | Total Nonperforming Assets | 216 | 353 | (137) | -38.81% | | Nonperforming Assets to Total Assets Ratio | 0.05% | 0.02% | 0.03% | 150.00% | - As of March 31, 2022, total impaired loans amounted to **$200 thousand**, which included **$200 thousand** in nonaccrual loans and **$36 thousand** in troubled debt restructurings (TDRs)[127](index=127&type=chunk) [Deposits](index=45&type=section&id=Deposits) As of March 31, 2022, total deposits were $387.8 million, an increase of $4.6 million (1.18%) from December 31, 2021, with growth in interest-bearing demand, savings, and money market accounts, partially offset by slight decreases in noninterest-bearing and time deposits | Deposit Category (Thousands of USD) | As of March 31, 2022 | As of December 31, 2021 | Change | Change Rate | | :---------------------------------- | :------------------- | :---------------------- | :----- | :---------- | | Noninterest-Bearing Deposits | 155,027 | 155,624 | (597) | -0.38% | | Interest-Bearing Demand Deposits | 39,099 | 37,305 | 1,794 | 4.81% | | Savings Accounts | 110,636 | 106,818 | 3,818 | 3.57% | | Money Market Accounts | 23,405 | 23,103 | 302 | 1.31% | | Total Time Deposits | 59,607 | 60,397 | (790) | -1.31% | | **Total Deposits** | **387,774** | **383,247** | **4,527** | **1.18%** | [Lease Commitments](index=46&type=section&id=Lease%20Commitments) The company adopted FASB's lease standard on January 1, 2019, recognizing assets and liabilities for operating leases, with total future minimum operating lease payments amounting to $485 thousand as of March 31, 2022 - The company adopted FASB's lease standard on January 1, 2019, recognizing assets and liabilities for operating leases, with no material impact on beginning retained earnings[131](index=131&type=chunk) | Year | Amount (Thousands of USD) | | :--- | :------------------------ | | 2022 | 138 | | 2023 | 181 | | 2024 | 161 | | 2025 | 3 | | 2026 | 2 | | Thereafter | — | | **Total** | **485** | [Pension and Profit Sharing Plans](index=48&type=section&id=Pension%20and%20Profit%20Sharing%20Plans) The bank maintains a 401(k) defined contribution retirement plan for all employees and accrued $82 thousand for 401(k) matching contributions and other profit-sharing benefits for the three months ended March 31, 2022 - The Bank maintains a 401(k) defined contribution retirement plan covering all employees[134](index=134&type=chunk) - For the three months ended March 31, 2022, the Bank accrued **$82 thousand** for 401(k) matching contributions and other profit-sharing benefits[135](index=135&type=chunk) [MARKET RISK AND INTEREST RATE SENSITIVITY](index=48&type=section&id=MARKET%20RISK%20AND%20INTEREST%20RATE%20SENSITIVITY) This section discusses the company's primary market risk—interest rate fluctuation risk—and its management through the Asset/Liability Committee (ALCO), using simulation analysis to measure the potential impact of interest rate changes on short-term earnings and long-term value, aiming for asset sensitivity in a rising rate environment - The company's primary market risk is interest rate fluctuation, managed by the Asset/Liability Committee (ALCO) with objectives to maximize shareholder value, enhance profitability and capital, and protect the company from significant financial impacts of interest rate changes[136](index=136&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - The company conducts simulation analyses at least quarterly to assess changes in net interest income and economic value of equity (EVE) under interest rate shocks of **+/- 100, 200, 300, and 400 basis points**[141](index=141&type=chunk) - As of March 31, 2022, simulation analysis indicated the Bank was in an asset-sensitive position, which is theoretically favorable in a rising interest rate environment[143](index=143&type=chunk) | Interest Rate Change Scenario | Policy Limit | As of March 31, 2022 | As of March 31, 2021 | | :---------------------------- | :----------- | :------------------- | :------------------- | | -200 bp | (15)% | (18)% | (10)% | | -100 bp | (10)% | (11)% | (7)% | | +100 bp | (10)% | 11% | 9% | | +200 bp | (15)% | 22% | 18% | | Interest Rate Change Scenario | Policy Limit | As of March 31, 2022 | As of March 31, 2021 | | :---------------------------- | :----------- | :------------------- | :------------------- | | -200 bp | (15)% | (20)% | (35)% | | -100 bp | (10)% | 4% | (10)% | | +100 bp | (10)% | 7% | 4% | | +200 bp | (15)% | 15% | 6% | - In a rising interest rate environment, the company's interest income grows faster than total interest expense, thereby increasing net interest income; however, in a declining interest rate environment, the decrease in interest income would exceed the decrease in interest expense due to already low liability costs, leading to reduced net interest income[149](index=149&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=52&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section details the company's liquidity sources and capital adequacy, primarily relying on cash, bank deposits, and loan principal/interest collections, supplemented by Federal Home Loan Bank (FHLB) credit lines, noting that despite a decrease in stockholders' equity due to unrealized losses, the bank's regulatory capital ratios remain well above "well capitalized" requirements - The company's primary liquidity sources include cash on hand, bank dividends, deposits, loan principal and interest payments, and interest and maturities from investment securities[150](index=150&type=chunk)[151](index=151&type=chunk) - As of March 31, 2022, total cash and cash equivalents amounted to **$68.8 million**, an increase of **$6.7 million**, or **10.71%**, from December 31, 2021[152](index=152&type=chunk) - As of March 31, 2022, the Bank had **$110.5 million** available from its FHLB Atlanta line of credit, along with **$9 million** and **$8 million** in unsecured federal funds lines of credit[153](index=153&type=chunk) - As of March 31, 2022, the company's stockholders' equity decreased by **$8.4 million**, or **23.62%**, primarily due to an increase in after-tax unrealized holding losses on available-for-sale securities, partially offset by unrealized market value gains on interest rate swap contracts[155](index=155&type=chunk) - The Bank's regulatory capital ratios are well above the "well capitalized" regulatory requirements, with a Tier 1 leverage ratio of **8.42%**, a Tier 1 risk-based capital ratio of **15.33%**, a Common Equity Tier 1 risk-based capital ratio of **15.33%**, and a Total risk-based capital ratio of **16.15%** as of March 31, 2022[109](index=109&type=chunk)[163](index=163&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=56&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section highlights significant judgmental accounting estimates and principles in the financial statements, including the allowance for credit losses (ACL), securities portfolio valuation, and accrued and deferred income taxes, noting the adoption of the CECL model in Q1 2021 for timely recognition of expected credit losses - The Allowance for Credit Losses (ACL) is a critical accounting estimate, relying on significant judgment regarding borrower credit risk, future cash flow estimates, historical loss rates, and qualitative and quantitative assessments of past events, current conditions, and future forecasts[164](index=164&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - The company early adopted ASC 326 (CECL) in the first quarter of 2021, changing the credit loss measurement from an "incurred loss" to an "expected loss" method, resulting in a **$1,472,000** reduction in retained earnings[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - Under ASC 326, the impairment assessment for available-for-sale (AFS) debt securities no longer considers the length of time a security has been in an unrealized loss position, but rather determines credit losses by comparing the present value of expected future cash flows to the amortized cost[170](index=170&type=chunk)[171](index=171&type=chunk) - Estimates for accrued and deferred income taxes involve judgment regarding future events and interpretations of tax laws, with the recognition of deferred tax assets depending on the likelihood of future realization[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a "smaller reporting company," the company is not required to provide disclosures for this item - As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk[178](index=178&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Company management has evaluated the disclosure controls and procedures system as of the end of the quarter and concluded it is effective, with no significant changes in internal control reported this quarter - The company's Chief Executive Officer and Chief Financial Officer have evaluated the disclosure controls and procedures system and concluded it is effective[179](index=179&type=chunk) - No significant changes in internal control were reported during the quarter[179](index=179&type=chunk) [Part II. OTHER INFORMATION](index=40&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, equity security sales, senior security defaults, mine safety disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings in the ordinary course of business, but management does not expect these matters to have a material adverse effect on its financial condition, results of operations, or liquidity - The company is involved in legal proceedings in the ordinary course of business, but management does not anticipate a material financial impact[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds during the quarter [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the quarter [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure is not applicable [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No other information is required to be disclosed this quarter [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with this report, including the company's articles of incorporation, stock plans, executive certifications, and XBRL data files - Exhibits include the company's articles of incorporation, stock plans, executive certifications (such as CEO and CFO 15d-14(a) certifications), and XBRL data files[186](index=186&type=chunk) [SIGNATURES](index=43&type=section&id=SIGNATURES) This report was signed by John D. Long, President and Chief Executive Officer, and Jeffrey D. Harris, Chief Financial Officer of Glen Burnie Bancorp, on May 13, 2022 - This report was signed by John D. Long, President and Chief Executive Officer, and Jeffrey D. Harris, Chief Financial Officer of Glen Burnie Bancorp, on May 13, 2022[189](index=189&type=chunk)