Part I [Business](index=3&type=section&id=Item%201.%20Business) Glen Burnie Bancorp operates as a community-focused commercial bank in Maryland, generating revenue primarily from net interest income - Glen Burnie Bancorp is a bank holding company whose main subsidiary is The Bank of Glen Burnie, the oldest independent commercial bank in Anne Arundel County, Maryland[18](index=18&type=chunk) - The Bank's primary business involves accepting deposits and originating various loans, including **residential and commercial real estate, commercial loans, and indirect automobile loans**[18](index=18&type=chunk)[19](index=19&type=chunk) - The company's strategy is to differentiate itself through **personalized service, local decision-making, and flexibility**, targeting small-to-medium-sized businesses and consumers[25](index=25&type=chunk)[26](index=26&type=chunk) - The company faces competition from a range of financial institutions, including larger banks, savings institutions, and credit unions, competing on interest rates, service quality, and convenience[23](index=23&type=chunk)[24](index=24&type=chunk) - The Company and the Bank are extensively regulated by multiple federal and state agencies, including the **Federal Reserve Board, the FDIC, and the Maryland Commissioner of Financial Regulation**[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [Products and Services](index=5&type=section&id=Item%201.%20Business-Products%20and%20Services) The Bank offers a full range of lending products, including real estate and auto loans, and deposit services for individuals and businesses - The Bank's lending portfolio includes residential and commercial real estate, construction, commercial, and consumer installment loans, with a focus on **indirect automobile lending**[27](index=27&type=chunk)[29](index=29&type=chunk) - Loan approval authority is structured in tiers: individual officers up to **$750,000**, the Officer's Loan Committee up to **$1,000,000**, the Executive Committee up to **$3,000,000**, and the Board of Directors for greater amounts[31](index=31&type=chunk) - The indirect automobile lending program, started in 1998, operates through a network of approximately **60 dealers**, primarily financing vehicles for terms up to 84 months[42](index=42&type=chunk)[44](index=44&type=chunk) - Deposit products are a major source of funding and include demand, money market, savings accounts, and time deposits, complemented by treasury services and online/mobile banking[52](index=52&type=chunk)[53](index=53&type=chunk) [Supervision and Regulation](index=13&type=section&id=Item%201.%20Business-Supervision%20and%20Regulation) The company and its bank subsidiary operate under extensive federal and state regulations governing capital, lending, and consumer protection - The Company is a bank holding company regulated by the Federal Reserve Board, while the Bank is a state non-member bank regulated by the **FDIC and the Maryland Commissioner of Financial Regulation**[56](index=56&type=chunk)[57](index=57&type=chunk) - The Bank must adhere to **Basel III capital rules**, which mandate specific minimum capital ratios plus a capital conservation buffer; the Bank was in compliance as of December 31, 2021[75](index=75&type=chunk)[79](index=79&type=chunk) - The **Dodd-Frank Act** significantly changed financial regulation, established the Consumer Financial Protection Bureau (CFPB), and imposed higher operating costs for compliance[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Dividend payments by the Bank are restricted by law, requiring prior approval if they exceed the sum of net income for the current year and retained net income for the previous two years[88](index=88&type=chunk) - The Bank maintains a **"satisfactory" rating** for compliance with the Community Reinvestment Act (CRA), which is considered in regulatory reviews[86](index=86&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) The Bank owns its main office and most of its branch locations, with two branches and two operations centers supporting its network Office and Branch Details | Office Location | Status | Approx. Square Footage | Deposits (in thousands) | | :--- | :--- | :--- | :--- | | **Main Office:** | | | | | 101 Crain Highway, S.E., Glen Burnie | Owned | 10,000 | $98,515 | | **Branches:** | | | | | Odenton | Owned | 6,000 | $38,221 | | Riviera Beach | Owned | 2,500 | $41,347 | | Crownsville | Owned | 3,000 | $81,749 | | Severn (Reece Road) | Owned | 2,500 | $36,671 | | Severn (New Cut Road) | Owned | 2,600 | $50,116 | | Linthicum | Leased | 2,500 | $24,595 | | Severna Park | Leased | 2,184 | $12,033 | | **Operations Centers:** | | | | | 106 Padfield Blvd., Glen Burnie | Owned | 16,200 | N/A | | 103 Crain Highway, S.E., Glen Burnie | Owned | 3,727 | N/A | [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company faces no material legal actions beyond routine proceedings arising in the ordinary course of business - Management believes there are **no pending or threatened legal proceedings** expected to have a material adverse effect on the Company's financial condition or operations[100](index=100&type=chunk) [Executive Officers of the Registrant](index=28&type=section&id=Executive%20Officers%20of%20the%20Registrant) The company is led by an experienced executive team with deep expertise in the banking industry Executive Leadership (as of Dec 31, 2021) | Name | Age | Position | | :--- | :--- | :--- | | John D. Long | 66 | President and Chief Executive Officer | | Andrew J. Hines | 60 | Executive Vice President and Chief Lending Officer | | Jeffrey D. Harris | 66 | Senior Vice President and Treasurer and Chief Financial Officer | | Michelle R. Stambaugh | 62 | Senior Vice President and HR Director | | Donna L. Smith | 59 | Senior Vice President and Director of Branch and Deposit Operations | Part II [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's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the Nasdaq, with a consistent history of paying quarterly dividends to its shareholders - The Company's common stock trades on the Nasdaq Capital Market under the symbol **"GLBZ"**; as of February 17, 2022, there were **330 record holders**[108](index=108&type=chunk) - The ability to pay dividends depends on the Bank's earnings and is subject to regulatory oversight, but the Company does not anticipate these restrictions will materially limit future dividend payments[111](index=111&type=chunk) Stock Price and Dividend Data | Quarter Ended | 2021 High | 2021 Low | 2021 Dividends | 2020 High | 2020 Low | 2020 Dividends | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | March 31 | $11.55 | $11.18 | $0.10 | $7.98 | $7.98 | $0.10 | | June 30 | $13.01 | $12.67 | $0.10 | $8.49 | $8.49 | $0.10 | | September 30 | $12.12 | $12.12 | $0.10 | $10.30 | $10.27 | $0.10 | | December 31 | $14.14 | $14.00 | $0.10 | $11.00 | $10.76 | $0.10 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income increased in 2021 due to lower expenses and credit loss provisions, while assets grew despite a decrease in the loan portfolio [Comparison of Results of Operations (2021 vs. 2020)](index=32&type=section&id=Item%207-Comparison%20of%20Results%20of%20Operations%20for%20the%20Years%20Ended%20December%2031%2C%202021%20and%202020) Net income rose significantly in 2021, driven by reduced interest and noninterest expenses and a larger credit loss provision release - The increase in net income was primarily driven by **lower interest expense (down 29.11%)**, **lower noninterest expense (down 6.36%)**, and a larger release of credit loss provisions[121](index=121&type=chunk)[125](index=125&type=chunk)[141](index=141&type=chunk) - Noninterest income decreased by **38.04%** mainly due to a **$0.6 million loss on the sale of investment securities** in 2021[140](index=140&type=chunk) - The net interest margin decreased to **3.00%** in 2021 from 3.18% in 2020[125](index=125&type=chunk) Key Performance Metrics | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net Income | $2.5 million | $1.7 million | +$0.8 million | | Basic and Diluted EPS | $0.88 | $0.59 | +$0.29 | | Net Interest Income | $12.4 million | $12.2 million | +$0.2 million | | Total Interest Income | $13.5 million | $13.7 million | -$0.2 million | | Total Interest Expense | $1.1 million | $1.5 million | -$0.4 million | | Release of Credit Loss Provision | $1.0 million | $0.7 million | +$0.3 million | | Noninterest Income | $0.6 million | $1.0 million | -$0.4 million | | Noninterest Expense | $11.0 million | $11.7 million | -$0.7 million | [Financial Condition](index=38&type=section&id=Item%207-Financial%20Condition) Total assets grew due to increased cash and investments funded by deposit growth, while the loan portfolio contracted - The decrease in the loan portfolio was primarily due to pay downs outpacing **$55.8 million in new originations**, with decreases across real estate, commercial, and consumer loan categories[156](index=156&type=chunk) - The investment portfolio was restructured in 2021 to lower its overall duration, resulting in the sale of approximately **$33.4 million in securities** and a pre-tax loss of about **$591,300**[151](index=151&type=chunk) - **Nonperforming assets decreased significantly by 92.2%** from $5.1 million in 2020 to $0.35 million in 2021, primarily due to the resolution of nonaccrual loans and the sale of OREO[165](index=165&type=chunk)[167](index=167&type=chunk) - The allowance for credit losses increased from $1.5 million (0.58% of loans) to **$2.5 million (1.17% of loans)**, largely driven by the adoption of the **CECL methodology**[171](index=171&type=chunk)[172](index=172&type=chunk) Balance Sheet Summary | Balance Sheet Item | Dec 31, 2021 | Dec 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | $442.1 million | $419.5 million | +5.38% | | Cash and Cash Equivalents | $62.2 million | $37.1 million | +67.6% | | Investment Securities | $155.9 million | $114.0 million | +36.7% | | Total Loans, net | $207.9 million | $252.3 million | -17.6% | | Total Deposits | $383.2 million | $349.6 million | +9.62% | | Total Borrowings | $20.0 million | $29.9 million | -33.1% | | Stockholders' Equity | $35.7 million | $37.1 million | -3.71% | [Capital Resources and Liquidity](index=53&type=section&id=Item%207-Capital%20Resources%20and%20Liquidity) The Bank maintains a strong, well-capitalized position and robust liquidity supported by deposits and available borrowing capacity - Stockholders' equity decreased by **$1.4 million to $35.7 million** in 2021, mainly due to **$1.8 million in net unrealized losses** on the available-for-sale bond portfolio[184](index=184&type=chunk) - Primary sources of liquidity include the deposit base, amortization of loans and securities, and funds from operations; liquid assets included **$62.2 million in cash** and **$156.0 million in available-for-sale securities**[197](index=197&type=chunk)[199](index=199&type=chunk) - The Bank has external liquidity sources, including **$88.2 million available** from the FHLB and **$17.0 million in unsecured federal funds lines** at year-end 2021[200](index=200&type=chunk)[201](index=201&type=chunk) Bank Capital Ratios | Capital Ratios (Bank) | Dec 31, 2021 (Actual) | Well Capitalized Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 Ratio | 15.32% | 6.50% | | Tier 1 Risk-Based Capital Ratio | 15.32% | 8.00% | | Total Risk-Based Capital Ratio | 16.03% | 10.00% | | Tier 1 Leverage Ratio | 8.40% | 5.00% | [Market Risk and Critical Accounting Policies](index=58&type=section&id=Item%207-Market%20Risk%20and%20Critical%20Accounting%20Policies) The company's primary market risk is interest rate fluctuation, managed via simulation analysis, with key accounting policies in place - The primary market risk is interest rate risk, managed by the ALCO; the Bank's interest rate risk profile was **neutral to slightly asset-sensitive** at year-end 2021[211](index=211&type=chunk)[217](index=217&type=chunk) - The company identified three critical accounting policies requiring significant management judgment: **Allowance for Credit Losses, Fair Value Measurements, and Accounting for Income Taxes**[224](index=224&type=chunk) Net Interest Income Sensitivity | Estimated Change in Net Interest Income (12-month horizon) | +200 bp | +100 bp | -100 bp | -200 bp | | :--- | :--- | :--- | :--- | :--- | | **December 31, 2021** | 20% | 9% | -7% | -11% | | **December 31, 2020** | 15% | 6% | -5% | -7% | Economic Value of Equity (EVE) Sensitivity | Estimated Change in Economic Value of Equity (EVE) | +200 bp | +100 bp | -100 bp | -200 bp | | :--- | :--- | :--- | :--- | :--- | | **December 31, 2021** | 9% | 6% | -18% | -40% | | **December 31, 2020** | 12% | 8% | -26% | -37% | [Controls and Procedures](index=65&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal controls over financial reporting were effective - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[235](index=235&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the Company's internal control over financial reporting was **effective** as of December 31, 2021[237](index=237&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fourth quarter of 2021[238](index=238&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=67&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, officers, and governance is incorporated by reference from the 2022 Proxy Statement - Required information for this item is **incorporated by reference** from the registrant's definitive proxy statement for the 2022 Annual Meeting of Stockholders[242](index=242&type=chunk) [Executive Compensation](index=67&type=section&id=Item%2011.%20Executive%20Compensation) Details on executive and director compensation are incorporated by reference from the 2022 Proxy Statement - Required information for this item is **incorporated by reference** from the registrant's definitive proxy statement for the 2022 Annual Meeting of Stockholders[243](index=243&type=chunk) [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 on security ownership by principal holders and management is incorporated by reference from the 2022 Proxy Statement - Required information for this item is **incorporated by reference** from the registrant's definitive proxy statement for the 2022 Annual Meeting of Stockholders[244](index=244&type=chunk) [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 related party transactions and director independence is incorporated by reference from the 2022 Proxy Statement - Required information for this item is **incorporated by reference** from the registrant's definitive proxy statement for the 2022 Annual Meeting of Stockholders[245](index=245&type=chunk) [Principal Accountant Fees and Services](index=67&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Details regarding principal accountant fees and services are incorporated by reference from the 2022 Proxy Statement - Required information for this item is **incorporated by reference** from the registrant's definitive proxy statement for the 2022 Annual Meeting of Stockholders[246](index=246&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=68&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the report, including key corporate documents - The report includes the consolidated financial statements for the years ended December 31, 2021 and 2020, along with the report of the independent registered public accounting firm[249](index=249&type=chunk) - Exhibits filed with the report include Articles of Incorporation, By-Laws, various employee and director compensation plans, consent from the public accounting firm (UHY LLP), and **CEO/CFO certifications**[251](index=251&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets](index=81&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $442.1 million in 2021, driven by higher cash and investments, while stockholders' equity slightly declined Balance Sheet Highlights (in thousands) | (dollars in thousands) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and Cash Equivalents | $62,181 | $37,093 | | Investment securities available for sale | $155,927 | $114,049 | | Loans, net | $207,922 | $252,296 | | **Total Assets** | **$442,066** | **$419,486** | | **LIABILITIES & EQUITY** | | | | Total Deposits | $383,247 | $349,620 | | Total Borrowings (Short & Long-term) | $20,000 | $29,912 | | Total Liabilities | $406,350 | $382,393 | | Total Stockholders' Equity | $35,716 | $37,093 | | **Total Liabilities and Stockholders' Equity** | **$442,066** | **$419,486** | [Consolidated Statements of Income](index=83&type=section&id=Consolidated%20Statements%20of%20Income) Net income increased to $2.5 million in 2021 from $1.7 million in 2020, boosted by higher net interest income and lower expenses Income Statement Highlights (in thousands) | (dollars in thousands, except per share) | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net Interest Income | $12,443 | $12,154 | | Release of credit loss provision | $(975) | $(689) | | Net interest income after provision | $13,418 | $12,843 | | Total Noninterest Income | $627 | $1,012 | | Total Noninterest Expenses | $10,952 | $11,696 | | Income before income taxes | $3,093 | $2,159 | | **NET INCOME** | **$2,516** | **$1,668** | | **Basic and diluted net income per share** | **$0.88** | **$0.59** | [Note 1. Summary of Significant Accounting Policies](index=88&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note details key accounting policies, including the significant adoption of the CECL standard for credit loss estimation in 2021 - The Company adopted **ASU 2016-13 (CECL)**, effective January 1, 2021, changing the allowance for credit losses to a lifetime expected credit loss model[319](index=319&type=chunk)[351](index=351&type=chunk) - The adoption of CECL resulted in a cumulative-effect adjustment that **decreased retained earnings by $1,472,000** as of January 1, 2021[351](index=351&type=chunk)[352](index=352&type=chunk) - The Company uses interest rate swap agreements, designated as cash flow hedges, to manage interest rate risk, with gains or losses reported in other comprehensive income[339](index=339&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) The loan portfolio decreased to $210.4 million in 2021, while the allowance for credit losses increased due to the CECL adoption - The allowance for credit losses increased from $1,476,000 to **$2,470,000**; the adoption of **ASC 326 (CECL)** added $1,574,000 to the allowance, offset by a provision release of $975,000[382](index=382&type=chunk) - Total nonaccrual loans **decreased dramatically from $4,512,000** at the end of 2020 to **$338,000** at the end of 2021[386](index=386&type=chunk) - As of December 31, 2021, the company had only **one Troubled Debt Restructuring (TDR)** with a recorded investment of $36,139, which was on nonaccrual status[398](index=398&type=chunk) Loan Portfolio Composition (in thousands) | Loan Category (Gross) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Loans Secured by Real Estate | $136,705 | $148,555 | | Commercial and Industrial Loans | $17,447 | $27,912 | | Consumer Loans | $56,240 | $77,305 | | **Total Gross Loans** | **$210,392** | **$253,772** | | Less: Allowance for credit losses | $(2,470) | $(1,476) | | **Loans, net** | **$207,922** | **$252,296** | [Note 13. Stockholders' Equity](index=136&type=section&id=Note%2013.%20Stockholders'%20Equity) The note details stockholders' equity components, dividend restrictions, and the Bank's well-capitalized regulatory status - Dividend payments are restricted; prior regulatory approval is needed for dividends exceeding the Bank's net profits for the current year plus retained net profits for the preceding two years[437](index=437&type=chunk) - The Company offers a dividend reinvestment plan allowing stockholders to purchase shares at **95% of fair market value**; 11,841 shares were purchased under this plan in 2021[444](index=444&type=chunk) Regulatory Capital Ratios (Bank) | Regulatory Capital Ratios (Bank) | Actual (Dec 31, 2021) | Required for Well Capitalized Status | | :--- | :--- | :--- | | Common Equity Tier 1 Capital Ratio | 15.32% | 6.50% | | Total Risk-Based Capital Ratio | 16.03% | 10.00% | | Tier 1 Risk-Based Capital Ratio | 15.32% | 8.00% | | Tier 1 Leverage Ratio | 8.40% | 5.00% |

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, 2021 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](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section details Glen Burnie Bancorp's unaudited consolidated financial statements and management's analysis for the periods ended June 30, 2021 [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Financial%20Statements%3A) This section presents Glen Burnie Bancorp's unaudited consolidated financial statements, including balance sheets, income, comprehensive income, equity changes, cash flows, and detailed accounting notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%3A%20As%20of%20June%2030%2C%202021%20%28unaudited%29%20and%20December%2031%2C%202020%20%28audited%29) Consolidated financial position as of June 30, 2021, and December 31, 2020, showing assets, liabilities, and stockholders' equity | Metric | June 30, 2021 ($) | December 31, 2020 ($) | | :-------------------------------- | :-------------------------- | :-------------------------- | | **ASSETS** | | | | Total Assets | $432.77M | $419.49M | | Cash and Cash Equivalents | $26.77M | $37.09M | | Investment securities available for sale, at fair value | $157.59M | $114.05M | | Loans, net | $231.98M | $252.30M | | Allowance for credit losses | $(2.89M) | $(1.48M) | | **LIABILITIES** | | | | Total Deposits | $368.88M | $349.62M | | Total Liabilities | $397.38M | $382.39M | | **STOCKHOLDERS' EQUITY** | | | | Total Stockholders' Equity | $35.40M | $37.09M | - Total assets increased by **$13.3 million (3.17%)** from December 31, 2020, to June 30, 2021, primarily driven by an increase in investment securities available for sale, offset by decreases in interest-bearing deposits and loans[133](index=133&type=chunk) - The allowance for credit losses increased significantly from **$1,476 thousand** at December 31, 2020, to **$2,887 thousand** at June 30, 2021, due to the adoption of the CECL methodology[8](index=8&type=chunk) [Consolidated Statements of Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20%28Loss%29%3A%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020%20%28unaudited%29) Income and loss performance for the three and six months ended June 30, 2021, and 2020, highlighting key revenue and expense drivers | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Interest Income | $3.29M | $3.34M | $6.45M | $6.84M | | Total Interest Expense | $274 | $398 | $557 | $849 | | Net Interest Income | $3.02M | $2.94M | $5.89M | $5.99M | | (Release) provision for credit losses | $(67) | $487 | $(471) | $407 | | Total Noninterest Income | $280 | $228 | $527 | $484 | | Total Noninterest Expenses | $2.79M | $2.81M | $5.62M | $5.85M | | NET INCOME (LOSS) | $480 | $(96) | $1.07M | $174 | | Basic and diluted net income (loss) per share | $0.17 | $(0.03) | $0.38 | $0.06 | - Net income significantly improved for both the three- and six-month periods ended June 30, 2021, primarily due to a release of credit losses compared to a provision in the prior year, and an increase in noninterest income[11](index=11&type=chunk)[119](index=119&type=chunk) - Net interest income increased by **$78 thousand (2.66%)** for the three-month period but decreased by **$92 thousand (1.53%)** for the six-month period, mainly due to lower interest and fees on loans, offset by increased interest on investment securities and decreased interest expense on deposits[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29%3A%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020%20%28unaudited%29) Comprehensive income and loss for the three and six months ended June 30, 2021, and 2020, including net income and other comprehensive income components | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $480 | $(96) | $1.07M | $174 | | Net unrealized gain (loss) on securities available for sale (net of tax) | $1.63M | $412 | $(962) | $1.08M | | Net unrealized gain (loss) on interest rate swaps (net of tax) | $64 | $(57) | $165 | $(561) | | Other comprehensive income (loss) | $1.69M | $355 | $(797) | $515 | | Comprehensive income | $2.17M | $259 | $277 | $689 | - Comprehensive income for the three-month period ended June 30, 2021, significantly increased to **$2.17 million** from **$259 thousand** in 2020, driven by higher net income and net unrealized gains on available-for-sale securities and interest rate swaps[13](index=13&type=chunk)[132](index=132&type=chunk) - For the six-month period, comprehensive income decreased to **$277 thousand** from **$689 thousand** in 2020, primarily due to higher net unrealized losses on available-for-sale securities, despite higher net income and net unrealized gains on interest rate swaps[13](index=13&type=chunk)[132](index=132&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%3A%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020%20%28unaudited%29) Changes in stockholders' equity for the six months ended June 30, 2021, and 2020, reflecting net income, dividends, and accounting adjustments | Metric | December 31, 2020 ($) | June 30, 2021 ($) | | :------------------------------------ | :------------------ | :------------ | | Balance, beginning of year | $37.09M | $37.09M | | Net income | $1.07M | $1.07M | | Cash dividends, $0.20 per share | $(569) | $(569) | | Dividends reinvested | $66 | $66 | | Transition adjustment (ASC 326) | $(1.47M) | $(1.47M) | | Other comprehensive loss | $(797) | $(797) | | Balance, end of period | $35.40M | $35.40M | - Stockholders' equity decreased by **$1.70 million (4.58%)** during the six-month period ended June 30, 2021, primarily due to a **$1.5 million** reduction in retained earnings from the adoption of the CECL accounting standard and **$0.8 million** in unrealized losses (net of taxes) on available-for-sale investment securities and derivative contracts[16](index=16&type=chunk)[167](index=167&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%3A%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020%20%28unaudited%29) Cash flow activities for the six months ended June 30, 2021, and 2020, categorized into operating, investing, and financing sections | Metric | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $1.53M | $1.45M | | Net cash used in investing activities | $(25.94M) | $(12.13M) | | Net cash provided by financing activities | $14.09M | $32.36M | | Net (decrease) increase in cash and cash equivalents | $(10.33M) | $21.69M | | Cash and cash equivalents at end of year | $26.77M | $34.98M | - Net cash used in investing activities significantly increased to **$(25,944) thousand** in 2021 from **$(12,125) thousand** in 2020, primarily due to higher purchases of investment securities available for sale[18](index=18&type=chunk) - Net cash provided by financing activities decreased to **$14,085 thousand** in 2021 from **$32,362 thousand** in 2020, mainly due to a decrease in short-term borrowings, despite an increase in deposits[18](index=18&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed explanations of significant accounting policies, estimates, and financial statement line items [NOTE 1 – ORGANIZATIONAL](index=9&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATIONAL) Overview of Glen Burnie Bancorp and its subsidiary, The Bank of Glen Burnie, including their business and geographic scope - Glen Burnie Bancorp is a Maryland-organized bank holding company that owns The Bank of Glen Burnie, a commercial bank providing financial services in Anne Arundel County and surrounding Central Maryland[19](index=19&type=chunk) [NOTE 2 – BASIS OF PRESENTATION](index=9&type=section&id=NOTE%202%20%E2%80%93%20BASIS%20OF%20PRESENTATION) Explanation of the accounting principles used in preparing the financial statements, including interim reporting and the adoption of CECL - The financial statements are prepared in conformity with U.S. GAAP for interim reporting, reflecting normal recurring adjustments, and operating results for interim periods are not necessarily indicative of full-year results[20](index=20&type=chunk) - Effective January 1, 2021, the Company adopted ASU 2016-13 (ASC 326), implementing the Current Expected Credit Loss (CECL) methodology for allowance for credit losses, replacing the incurred loss methodology[22](index=22&type=chunk)[21](index=21&type=chunk) - The CECL methodology requires estimating expected credit losses over the life of an exposure, considering past events, current conditions, and reasonable and supportable forecasts, with the ACL including allowances for loan losses and reserves for unfunded commitments[22](index=22&type=chunk)[23](index=23&type=chunk)[34](index=34&type=chunk) [NOTE 3 – EARNINGS PER SHARE](index=15&type=section&id=NOTE%203%20%E2%80%93%20EARNINGS%20PER%20SHARE) Calculation of basic and diluted earnings per share for the reported periods | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $479,657 | $(96,000) | $1,073,650 | $173,793 | | Weighted average common shares outstanding | 2,847,191 | 2,832,974 | 2,845,493 | 2,831,174 | | Basic and diluted net income per share | $0.17 | $(0.03) | $0.38 | $0.06 | - Basic and diluted EPS significantly improved to **$0.17** for the three months and **$0.38** for the six months ended June 30, 2021, compared to losses or lower gains in the prior year, reflecting increased net income[42](index=42&type=chunk) [NOTE 4 – INVESTMENT SECURITIES](index=15&type=section&id=NOTE%204%20%E2%80%93%20INVESTMENT%20SECURITIES) Details on the Company's investment securities portfolio, including classification, fair value, and unrealized gains/losses - The Company held no trading or held-to-maturity securities at June 30, 2021, or December 31, 2020; all investment securities are classified as available-for-sale and reported at fair value with unrealized gains/losses in other comprehensive income[43](index=43&type=chunk) | Investment Category | Amortized Cost (June 30, 2021) ($) | Fair Value (June 30, 2021) ($) | Amortized Cost (Dec 31, 2020) ($) | Fair Value (Dec 31, 2020) ($) | | :-------------------------------- | :----------------------------- | :------------------------- | :---------------------------- | :-------------------------- | | Collateralized mortgage obligations | $25.24M | $25.45M | $24.26M | $24.64M | | Agency mortgage-backed securities | $32.57M | $33.04M | $26.07M | $26.95M | | Municipal securities | $41.93M | $42.69M | $28.68M | $29.41M | | Corporate securities | $1.50M | $1.50M | $0 | $0 | | U.S. Government agency securities | $55.98M | $54.92M | $33.35M | $33.05M | | Total securities available for sale | $157.22M | $157.59M | $112.35M | $114.05M | - At June 30, 2021, the Company recorded total unrealized losses of **$1.56 million** on 87 debt securities, primarily due to decreases in market value and spread volatility, but management does not believe these are credit loss impairments as there is no intent or requirement to sell before recovery[48](index=48&type=chunk) [NOTE 5 – LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES](index=18&type=section&id=NOTE%205%20%E2%80%93%20LOANS%20RECEIVABLE%20AND%20ALLOWANCE%20FOR%20LOAN%20LOSSES) Analysis of the loan portfolio, including segment breakdown, allowance for credit losses, and non-accrual loans - Net loans decreased by **$20.3 million (8.05%)** from **$252.3 million** at December 31, 2020, to **$232.0 million** at June 30, 2021, with significant decreases in automobile loans and Commercial SBA PPP loans[57](index=57&type=chunk) | Loan Portfolio Segment | June 30, 2021 (Amount) ($) | June 30, 2021 (%) | December 31, 2020 (Amount) ($) | December 31, 2020 (%) | | :-------------------------------- | :----------------------- | :---------------- | :------------------------- | :-------------------- | | Loans Secured by Real Estate | $147.49M | 63% | $148.56M | 58% | | Commercial and Industrial | $21.43M | 9% | $27.91M | 11% | | Consumer Loans | $65.95M | 28% | $77.31M | 31% | | Loans, net of deferred fees and costs | $234.87M | 100% | $253.77M | 100% | | Less: Allowance for credit losses | $(2.89M) | | $(1.48M) | | | Loans, net | $231.98M | | $252.30M | | - The allowance for credit losses increased to **$2,887 thousand** at June 30, 2021, from **$1,476 thousand** at December 31, 2020, largely due to the adoption of the CECL methodology, which resulted in a **$1,574 thousand** impact upon adoption[56](index=56&type=chunk)[61](index=61&type=chunk)[97](index=97&type=chunk) - Non-accrual loans decreased from **$4,512 thousand** at December 31, 2020, to **$4,109 thousand** at June 30, 2021, and the allowance for loan losses to nonaccrual & 90+ days past due and still accruing loans improved from **32.6% to 69.9%**[69](index=69&type=chunk)[75](index=75&type=chunk)[74](index=74&type=chunk) [NOTE 6 – FAIR VALUE](index=31&type=section&id=NOTE%206%20%E2%80%93%20FAIR%20VALUE) Information on fair value measurements, including the hierarchy used for valuation and specific asset/liability categories - The Company uses a fair value hierarchy (Level 1, 2, 3) for valuation, with most investment securities available-for-sale and interest rate swaps classified as Level 2, and impaired loans as Level 3[85](index=85&type=chunk)[87](index=87&type=chunk) | Asset/Liability | Fair Value (June 30, 2021) ($) | Level 1 ($) | Level 2 ($) | Level 3 ($) | | :-------------------------------- | :------------------------- | :------ | :------ | :------ | | Securities available for sale | $157.59M | $0 | $157.59M | $0 | | Interest rate swap | $(722) | $0 | $(722) | $0 | | Impaired loans | $4.10M | $0 | $0 | $4.10M | | Total | $160.98M | $0 | $156.87M | $4.11M | - Impaired loans totaled **$4.1 million** at June 30, 2021, with specific reserves of **$10 thousand**, valued using Level 3 inputs, primarily based on discounted independent appraisals[87](index=87&type=chunk) [NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS](index=36&type=section&id=NOTE%207%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) Discussion of recently adopted and pending accounting standards, including the impact of CECL adoption - The Company early adopted ASU 2016-13 (CECL) on January 1, 2021, resulting in a **$1.47 million** decrease to retained earnings for the cumulative effect[96](index=96&type=chunk)[97](index=97&type=chunk) | Allowance for Credit Losses | December 31, 2020 ($) | CECL Adoption Impact ($) | January 1, 2021 ($) | | :-------------------------------- | :------------------ | :------------------- | :-------------- | | Total allowance for loan 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 | | Decrease to retained earnings (net of tax) | | $1,472 | | - The Company is currently evaluating the impact of ASU No. 2020-04 and ASU No. 2021-01, both related to Reference Rate Reform, on its consolidated financial statements[100](index=100&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk) [NOTE 8 – REVENUE RECOGNITION](index=40&type=section&id=NOTE%208%20%E2%80%93%20REVENUE%20RECOGNITION) Explanation of the Company's policies for recognizing revenue from various sources - The Company adopted ASU No. 2014-09 (Topic 606) on January 1, 2018, with no material impact on revenue measurement or recognition, as most revenue is from financial instruments outside Topic 606's scope[106](index=106&type=chunk)[107](index=107&type=chunk) - Noninterest revenue streams, such as service charges on deposit accounts and other fees (debit card income, ATM fees, merchant services), are recognized when services are provided or completed[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial performance, condition, market risk, liquidity, capital, and critical accounting policies, including COVID-19 and CECL impacts [FORWARD-LOOKING STATEMENTS](index=40&type=section&id=FORWARD-LOOKING%20STATEMENTS) Cautionary statement regarding forward-looking information and factors that could cause actual results to differ materially - The report contains forward-looking statements, and readers are cautioned not to place undue reliance on them, as actual results may differ materially due to various factors, including those in the Form 10-K and the impact of COVID-19[111](index=111&type=chunk)[113](index=113&type=chunk) [OVERVIEW](index=42&type=section&id=OVERVIEW) Summary of the Company's financial performance and strategic position, including key financial ratios and capital strength - Total interest income declined by **$384 thousand** for the six months ended June 30, 2021, due to lower interest on loans and overnight funds, partially offset by increased interest on securities from a **$73.1 million** investment portfolio increase[115](index=115&type=chunk) | Metric | Q2 2021 (%) | Q2 2020 (%) | YTD 2021 (%) | YTD 2020 (%) | | :---------------------- | :------ | :------ | :------- | :------- | | Return on average assets | 0.45% | (0.10)% | 0.51% | 0.09% | | Return on average equity | 5.51% | (1.05)% | 6.10% | 0.95% | - The Bank maintained strong liquidity and capital positions, with a total regulatory capital to risk-weighted assets ratio of **14.29%** at June 30, 2021, exceeding 'well-capitalized' requirements[115](index=115&type=chunk)[117](index=117&type=chunk) [RESULTS OF OPERATIONS](index=42&type=section&id=RESULTS%20OF%20OPERATIONS) Detailed analysis of the Company's financial results, including net interest income, credit losses, and noninterest income/expenses [Net Interest Income](index=44&type=section&id=Net%20Interest%20Income) Analysis of interest income and expense, and their impact on net interest margin | Metric | Q2 2021 ($) | Q2 2020 ($) | YTD 2021 ($) | YTD 2020 ($) | | :-------------------- | :------ | :------ | :------- | :------- | | Net Interest Income | $3.02M | $2.94M | $5.89M | $5.99M | | Net Interest Margin | 2.92% | 3.12% | 2.92% | 3.23% | | Yield on earning assets | 3.18% | 3.54% | 3.20% | 3.69% | | Cost of funds | 0.28% | 0.45% | 0.29% | 0.49% | - Net interest income increased by **$78 thousand (2.66%)** for Q2 2021 but decreased by **$92 thousand (1.53%)** for the six-month period, primarily due to lower interest on loans and a decrease in the cost of interest-bearing deposits, offset by increased investment portfolio income[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Net interest margin decreased for both periods (Q2: **2.92% vs 3.12%**; YTD: **2.92% vs 3.23%**), driven by lower yields on interest-earning assets and lower cost of funds in a reduced interest rate environment[124](index=124&type=chunk) [Provision for Credit Losses](index=47&type=section&id=Provision%20for%20Credit%20Losses) Review of the Company's provision for credit losses, reflecting changes in loan quality and economic conditions | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | (Release) provision for credit losses | $(67) | $487 | $(471) | $407 | | Allowance for credit losses to total loans | 1.23% | 0.84% | | | - The Company recognized a release of credit losses of **$67 thousand** for Q2 2021 and **$471 thousand** for the six-month period, a significant improvement from provisions in the prior year, mainly due to lower average loan balances and net loan recoveries[128](index=128&type=chunk) [Noninterest Income](index=47&type=section&id=Noninterest%20Income) Analysis of income generated from sources other than interest, such as service charges and fees | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Noninterest Income | $280 | $228 | $527 | $484 | - Noninterest income increased by **$52 thousand (22.81%)** for Q2 2021 and **$43 thousand (8.88%)** for the six-month period, primarily driven by higher other fees and commissions and a gain on the sale of other real estate owned (OREO)[129](index=129&type=chunk) [Noninterest Expenses](index=47&type=section&id=Noninterest%20Expenses) Review of operating expenses not directly related to interest-earning assets | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Noninterest Expenses | $2.79M | $2.81M | $5.62M | $5.85M | - Noninterest expenses slightly decreased by **$15 thousand (0.53%)** for Q2 2021 and by **$230 thousand (3.93%)** for the six-month period, mainly due to reductions in salary and benefits, occupancy, and legal/accounting fees, partially offset by increases in data processing and telephone costs[130](index=130&type=chunk) [Income Taxes](index=47&type=section&id=Income%20Taxes) Analysis of income tax expense or benefit and the effective tax rate | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense (benefit) | $91 | $(32) | $197 | $43 | | Annualized effective tax rate | 15.83% | 20.05% | | | - Income tax expense increased significantly for Q2 2021 due to higher income before taxes, while the annualized effective tax rate decreased to **15.83%** due to an increase in tax-exempt municipal securities[131](index=131&type=chunk) [Comprehensive Income (Loss)](index=47&type=section&id=Comprehensive%20Income%20%28Loss%29) Review of comprehensive income, including net income and other comprehensive income components - Comprehensive income for Q2 2021 increased to **$2.17 million** from **$259 thousand** in 2020, driven by higher net income and unrealized gains on available-for-sale securities and interest rate swaps[132](index=132&type=chunk) - For the six-month period, comprehensive income decreased to **$277 thousand** from **$689 thousand** in 2020, primarily due to higher net unrealized losses on available-for-sale securities, despite higher net income[132](index=132&type=chunk) [FINANCIAL CONDITION](index=47&type=section&id=FINANCIAL%20CONDITION) Assessment of the Company's financial position, including asset and liability trends, and capital adequacy [General](index=47&type=section&id=General) Overview of changes in total assets, loans, and cash and cash equivalents - Total assets increased by **$13.3 million (3.17%)** to **$432.8 million** at June 30, 2021, primarily due to a **$43.6 million (38.18%)** increase in investment securities available for sale, offset by a **$20.3 million (8.05%)** decrease in net loans[133](index=133&type=chunk) - The decrease in loans was mainly attributable to reductions in single-family residential, multi-family residential, commercial and industrial, commercial SBA PPP, consumer, and automobile loans[133](index=133&type=chunk) - Cash and cash equivalents decreased by **$10.3 million (27.83%)** to **$26.8 million**, resulting from the purchase of investment securities[135](index=135&type=chunk) [Nonperforming Loans and Assets](index=49&type=section&id=Nonperforming%20Loans%20and%20Assets) Analysis of asset quality, including nonaccrual loans, past due loans, and other nonperforming assets | Metric | June 30, 2021 ($) | December 31, 2020 ($) | | :------------------------------------ | :------------ | :---------------- | | Nonaccrual loans | $4,109 | $4,512 | | Accruing loans past due 90+ days | $15 | $18 | | Total nonperforming loans | $4,124 | $4,530 | | Real estate acquired through foreclosure | $0 | $575 | | Total nonperforming assets | $4,124 | $5,105 | | Nonperforming assets to total assets | 0.95% | 1.22% | - Total nonperforming assets decreased to **$4.124 million** at June 30, 2021, from **$5.105 million** at December 31, 2020, with the ratio of nonperforming assets to total assets improving from **1.22% to 0.95%**[139](index=139&type=chunk) - Impaired loans totaled **$4.1 million** at June 30, 2021, including **$4.1 million** in nonaccrual loans and **$37 thousand** in troubled debt restructurings[138](index=138&type=chunk) [Deposits](index=49&type=section&id=Deposits) Review of deposit trends, including changes in noninterest-bearing, interest-bearing, and time deposits | Deposit Type | June 30, 2021 (Amount) ($) | June 30, 2021 (% of Total) | December 31, 2020 (Amount) ($) | December 31, 2020 (% of Total) | | :------------------------------------------ | :----------------------- | :------------------------- | :------------------------- | :----------------------------- | | Noninterest-bearing deposits | $143.25M | 38.8% | $132.63M | 37.9% | | Interest-bearing checking, savings and money market | $159.33M | 43.2% | $148.71M | 42.6% | | Total time deposits | $66.30M | 18.0% | $68.28M | 19.5% | | Total Deposits | $368.88M | 100.0% | $349.62M | 100.0% | - Total deposits increased by **$19.3 million (5.51%)** to **$368.9 million** at June 30, 2021, driven by increases in noninterest-bearing deposits, interest-bearing checking, savings, and money market accounts[139](index=139&type=chunk)[141](index=141&type=chunk) - Time deposits, both under and over **$100,000**, experienced slight decreases[140](index=140&type=chunk)[141](index=141&type=chunk) [Lease Commitments](index=50&type=section&id=Lease%20Commitments) Information on the Company's lease obligations and the adoption of new lease accounting guidance - The Bank adopted lease guidance (FASB Leases) on January 1, 2019, recognizing operating lease ROU assets and liabilities, with no material effect on financial statements upon initial adoption[142](index=142&type=chunk)[143](index=143&type=chunk) | Year ending December 31, | Amount (dollars in thousands) ($) | | :----------------------- | :---------------------------- | | 2021 | $97 | | 2022 | $177 | | 2023 | $156 | | 2024 | $161 | | 2025 | $3 | | Thereafter | $2 | | Total | $596 | [Pension and Profit Sharing Plans](index=51&type=section&id=Pension%20and%20Profit%20Sharing%20Plans) Details on the Company's defined contribution retirement plan and employer contributions - The Bank has a defined contribution 401(k) retirement plan with discretionary employer matching contributions, and for the six months ended June 30, 2021, **$223 thousand** was accrued for projected 401(k) match and other profit-sharing benefits[144](index=144&type=chunk)[145](index=145&type=chunk) [MARKET RISK AND INTEREST RATE SENSITIVITY](index=51&type=section&id=MARKET%20RISK%20AND%20INTEREST%20RATE%20SENSITIVITY) Assessment of the Company's exposure to interest rate fluctuations and strategies for managing this risk - The Company's primary market risk is interest rate fluctuation, managed by the Asset Liability Committee (ALCO) to maximize stockholder value and protect against material financial consequences from rate changes[146](index=146&type=chunk) | Estimated Changes in Net Interest Income | -200 bp (%) | -100 bp (%) | +100 bp (%) | +200 bp (%) | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Policy Limit | (15)% | (10)% | (10)% | (15)% | | June 30, 2021 | (9)% | (6)% | 10 % | 17 % | | June 30, 2020 | (6)% | (4)% | 7 % | 13 % | - At June 30, 2021, the Bank was in a neutral to slightly asset-sensitive position, which is theoretically favorable in a rising rate environment, and measures of net interest income at risk remained within policy limits[154](index=154&type=chunk)[158](index=158&type=chunk) | Estimated Changes in Economic Value of Equity (EVE) | -200 bp (%) | -100 bp (%) | +100 bp (%) | +200 bp (%) | | :-------------------------------------------------- | :------ | :------ | :------ | :------ | | Policy Limit | (15)% | (10)% | (10)% | (15)% | | June 30, 2021 | (37)% | (19)% | 9 % | 6 % | | June 30, 2020 | (23)% | (23)% | 27 % | 45 % | [LIQUIDITY AND CAPITAL RESOURCES](index=56&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discussion of the Company's ability to meet its financial obligations and maintain adequate capital levels - The Company's principal liquidity sources are cash on hand and dividends from the Bank, while the Bank's sources include net income, deposits, loan payments, and investment securities proceeds[163](index=163&type=chunk)[164](index=164&type=chunk) - At June 30, 2021, the Bank had access to a **$109.2 million** line of credit from the FHLB of Atlanta and had **$20.0 million** in short-term and **$5.2 million** in long-term borrowings outstanding[166](index=166&type=chunk) | Capital Ratio | Actual (June 30, 2021) (%) | Adequately Capitalized Minimum (%) | Well Capitalized Minimum (%) | | :-------------------- | :--------------------- | :----------------------------- | :----------------------- | | Common equity tier 1 | 13.45% | 4.50% | 6.50% | | Total capital | 14.29% | 8.00% | 10.00% | | Tier 1 capital | 13.45% | 6.00% | 8.00% | | Tier 1 leverage | 8.58% | 4.00% | 5.00% | - The Bank was in full compliance with all 'well-capitalized' regulatory capital requirements at June 30, 2021, with strong ratios across all categories[170](index=170&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=59&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Overview of accounting policies and estimates that require significant judgment and could materially impact financial results [Allowance for Credit Losses](index=59&type=section&id=Allowance%20for%20Credit%20Losses) Explanation of the methodology and key assumptions used in estimating the allowance for credit losses - The ACL is a critical accounting estimate, significantly influenced by credit risk, historical loss rates, and management's quantitative and qualitative evaluation of past events, current conditions, and reasonable and supportable forecasts[175](index=175&type=chunk) - The adoption of the CECL methodology on January 1, 2021, replaced the 'incurred loss' approach with an 'expected loss' approach, requiring immediate recognition of expected credit losses over the life of an exposure[173](index=173&type=chunk)[174](index=174&type=chunk) - Future ACL calculations will be significantly influenced by loan portfolio composition, characteristics, quality, and prevailing economic conditions, potentially leading to greater volatility in reported earnings[176](index=176&type=chunk) [Valuation of the Securities Portfolio](index=61&type=section&id=Valuation%20of%20the%20Securities%20Portfolio) Description of the methods and assumptions used to determine the fair value and impairment of investment securities - Under ASC 326, the Company uses an allowance approach for AFS debt securities, measuring credit loss as the difference between amortized cost and expected collected amount over the security's lifetime, no longer relying on the length of time in an unrealized loss position[178](index=178&type=chunk) - Impairment assessment for AFS securities is done at the individual security level, comparing the present value of expected future cash flows to the amortized cost basis to determine credit loss[179](index=179&type=chunk) [Accrued Taxes](index=61&type=section&id=Accrued%20Taxes) Explanation of the Company's policy for estimating and recognizing income tax expense - Management estimates income tax expense based on expected obligations to tax authorities, assessing the merits and risks of tax treatments considering statutory, judicial, and regulatory guidance[182](index=182&type=chunk) [Deferred Income Taxes](index=61&type=section&id=Deferred%20Income%20Taxes) Description of how deferred income taxes are recognized and the criteria for establishing valuation allowances - Deferred income taxes are recognized for temporary differences between financial and tax reporting, with deferred tax assets recognized only if realization is more likely than not, and a valuation allowance established if doubt arises[183](index=183&type=chunk)[184](index=184&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Glen Burnie Bancorp is exempt from providing market risk disclosures under this item - The Company is a 'smaller reporting company' and is exempt from providing disclosures under Item 3[185](index=185&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management's evaluation of the effectiveness of disclosure controls and procedures and internal control over financial reporting - The Company's disclosure controls and procedures are designed to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[186](index=186&type=chunk) - The CEO and CFO concluded that the system of disclosure controls and procedures was effective as of June 30, 2021[188](index=188&type=chunk) - There have been no material changes in the Company's internal control over financial reporting during the most recent fiscal quarter[188](index=188&type=chunk) [PART II. OTHER INFORMATION](index=63&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section includes legal proceedings, equity sales, senior security defaults, mine safety, COVID-19 impact details, and a comprehensive list of exhibits [ITEM 1. LEGAL PROCEEDINGS](index=63&type=section&id=Item%201.%20Legal%20Proceedings) Information on any material legal proceedings involving the Company - The Company is party to litigation arising from normal banking and financial activities[189](index=189&type=chunk) - Management does not anticipate that any ultimate liability from these legal matters will materially affect the Company's financial condition, operating results, or liquidity[189](index=189&type=chunk) [ITEM 2. 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) Disclosure of any unregistered sales of equity securities and the application of their proceeds - No unregistered sales of equity securities or use of proceeds occurred[190](index=190&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Reporting of any defaults on senior securities - No defaults upon senior securities occurred[191](index=191&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Disclosure requirements related to mine safety - Mine Safety Disclosures are not applicable to the Company[192](index=192&type=chunk) [ITEM 5. OTHER INFORMATION](index=63&type=section&id=Item%205.%20Other%20Information) Additional material information not covered elsewhere, including the ongoing impact of the COVID-19 pandemic - The COVID-19 pandemic continues to negatively impact the global economy and the Company's markets, with an extended period of disruption potentially affecting business, results of operations, and financial condition[193](index=193&type=chunk) - As of June 30, 2021, all **225** deferred payment loans (totaling **$39.8 million**) from borrowers facing COVID-19 difficulties are now paying as agreed[193](index=193&type=chunk) - The Bank approved **133** PPP loan requests totaling **$17.4 million** in 2020 and an additional **51** requests totaling **$6.7 million** in 2021, utilizing the PPP Liquidity Facility (PPPLF) and benefiting from zero percent risk weighting for these loans[197](index=197&type=chunk) [ITEM 6. EXHIBITS](index=66&type=section&id=Item%206.%20Exhibits) A comprehensive list of all exhibits filed with the quarterly report - The exhibits include corporate governance documents (Articles of Incorporation, By-Laws), employee benefit plans (Director Stock Purchase Plan, Employee Stock Purchase Plan, Change-in-Control Severance Plan), and regulatory certifications (Rule 15d-14(a) Certifications, Section 1350 Certifications, XBRL documents)[200](index=200&type=chunk) [SIGNATURES](index=68&type=section&id=SIGNATURES) This section contains the required signatures of the registrant's authorized officers, confirming the quarterly report submission - The report is duly signed by John D. Long, President and Chief Executive Officer, and Jeffrey D. Harris, Chief Financial Officer, on behalf of Glen Burnie Bancorp[203](index=203&type=chunk)

Table of Contents 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, 2020 or ◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission file number: 0-24047 GLEN BURNIE BANCORP (Exact name of registrant as specified in its charter) MARYLAND 52-1782444 (State or other jurisdiction (I.R.S. Emp ...

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, 2020 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 ...

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, 2020 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 ...

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, 2020 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 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Exact name of registrant as specified in its charter) Maryland 52-1782444 (State or other jurisdiction of (I.R.S. Employer incorpo ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) Glen Burnie Bancorp operates The Bank of Glen Burnie, a commercial and retail bank primarily serving Anne Arundel County, Maryland, focusing on personalized service for small to medium-sized businesses and operating under extensive federal and state regulation [General, Market Area, and Strategy](index=3&type=section&id=Item%201.%20Business%20-%20General%2C%20Market%20Area%2C%20and%20Strategy) Glen Burnie Bancorp, through its wholly-owned subsidiary The Bank of Glen Burnie, serves northern Anne Arundel County, Maryland, by providing personalized commercial and retail banking services to small and medium-sized businesses and individual consumers - The Company is a bank holding company for The Bank of Glen Burnie, a commercial bank established in **1949**, serving northern Anne Arundel County, Maryland, and surrounding areas[18](index=18&type=chunk) - The Bank's business model focuses on accepting deposits and originating various loans, including residential and commercial mortgages, commercial loans, and automobile loans, with profitability primarily driven by the **net interest spread**[19](index=19&type=chunk) - The company's strategy is to capitalize on banking industry consolidation by offering personalized service and local decision-making to small-to-medium-sized businesses, a segment it believes is inadequately served by large national and regional banks[27](index=27&type=chunk)[28](index=28&type=chunk) [Products and Services](index=4&type=section&id=Item%201.%20Business%20-%20Products%20and%20Services) The Bank offers a comprehensive suite of lending and deposit products, including residential and commercial real estate loans, construction and land development loans, commercial loans, and consumer installment loans, with a significant focus on indirect automobile lending, all governed by structured credit policies and complemented by treasury, mobile, and internet banking services - The Bank's lending activities are governed by written policies approved by the Board of Directors, with a well-defined credit process including evaluation, lending limits, and ongoing portfolio reviews[31](index=31&type=chunk) - Lending authority is tiered: individual officers up to **$750,000**, the Officer's Loan Committee up to **$1,000,000**, the Executive Committee up to **$3,000,000**, and the Board of Directors for amounts greater than **$3,000,000**[32](index=32&type=chunk) - The indirect automobile lending program, started in **1998**, finances new and used vehicles through a network of approximately **65 dealers**, primarily in Anne Arundel County and surrounding areas[44](index=44&type=chunk) - Deposit products include demand, money market, savings, and time deposits, complemented by treasury services like wire transfers, ACH, debit cards, and online/mobile banking[52](index=52&type=chunk)[53](index=53&type=chunk) [Supervision and Regulation](index=8&type=section&id=Item%201.%20Business%20-%20Supervision%20and%20Regulation) The Company and the Bank are subject to extensive regulation by multiple authorities, including the Federal Reserve Board, Maryland Commissioner of Financial Regulation, and FDIC, adhering to strict capital adequacy standards under Basel III rules, limitations on loans-to-one-borrower, and regulations governing dividends, consumer financial protection, and community reinvestment - The Company is a bank holding company regulated by the Federal Reserve Board, while the Bank is a state-chartered non-member bank supervised by the Maryland Commissioner of Financial Regulation and the FDIC[56](index=56&type=chunk)[57](index=57&type=chunk) - The Bank must comply with Basel III capital requirements, mandating minimum ratios for Common Equity Tier 1 (**4.5%**), Tier 1 (**6.0%**), and Total Capital (**8.0%**) to risk-weighted assets, plus a capital conservation buffer of **2.5%**[74](index=74&type=chunk) - Under Prompt Corrective Action regulations, the Bank was categorized as "**well capitalized**" as of December 31, 2019, exceeding all minimum capital ratio requirements[80](index=80&type=chunk) - The ability of the Bank to pay dividends is limited by state and federal laws, generally requiring prior approval if dividends exceed the sum of net income for the current year and retained net income for the previous two years[86](index=86&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) The Bank operates from a main office, seven branch locations, and two operations centers, mostly owned, with the Linthicum and Severna Park branches leased, and as of December 31, 2019, its subsidiary GBB Properties owned one foreclosed real estate property Location Type and Property Details | Location Type | Address | Owned/Leased | Book Value (thousands) | Square Footage | Deposits (thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Main Office** | 101 Crain Highway, S.E., Glen Burnie | Owned | $312 | 10,000 | $85,608 | | **Branches** | | | | | | | Odenton | 1405 Annapolis Road, Odenton | Owned | $120 | 6,000 | $31,640 | | Riviera Beach | 8707 Ft. Smallwood Road, Pasadena | Owned | $164 | 2,500 | $33,026 | | Crownsville | 1221 Generals Highway, Crownsville | Owned | $329 | 3,000 | $72,473 | | Severn | 811 Reece Road, Severn | Owned | $70 | 2,500 | $33,338 | | New Cut Road | 740 Stevenson Road, Severn | Owned | $974 | 2,600 | $34,583 | | Linthicum | Burwood Village Shopping Center, Glen Burnie | Leased | $50 | 2,500 | $18,444 | | Severna Park | 534 Ritchie Highway, Severna Park | Leased | $29 | 2,184 | $12,328 | | **Operations Centers** | | | | | | | Glen Burnie | 106 Padfield Blvd., Glen Burnie | Owned | $620 | 16,200 | N/A | | Glen Burnie | 103 Crain Highway, S.E., Glen Burnie | Owned | $256 | 3,727 | N/A | - As of December 31, 2019, the Bank's subsidiary, GBB Properties, held **one foreclosed real estate property**[96](index=96&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) The Company and the Bank are involved in routine legal proceedings arising in the ordinary course of business, with management not expecting any pending or threatened actions to have a material adverse effect on financial condition or results of operations - Management believes there are no pending or threatened legal proceedings that are expected to have a **material adverse effect** on the Company's financial condition or operations[97](index=97&type=chunk) [Mine Safety Disclosures](index=16&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[98](index=98&type=chunk) [Executive Officers of the Registrant](index=16&type=section&id=Executive%20Officers%20of%20the%20Registrant) The report lists the executive officers of the company as of December 31, 2019, including their names, ages, and positions, with key executives being John D Long, Andrew J Hines, and Jeffrey D Harris Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | John D. Long | 64 | President and Chief Executive Officer | | Andrew J. Hines | 58 | Executive Vice President and Chief Lending Officer | | Jeffrey D. Harris | 64 | Senior Vice President and Treasurer and Chief Financial Officer | | Michelle R. Stambaugh | 60 | Senior Vice President and HR Director | | Donna L. Smith | 57 | Senior Vice President and Director of Branch and Deposit Operations | PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=17&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company's common stock trades on the Nasdaq Capital Market under the symbol "GLBZ", with 348 record holders as of March 13, 2020, and a consistent quarterly dividend of $0.10 per share paid throughout 2018 and 2019, which is not expected to be materially limited by regulatory restrictions - The Common Stock is traded on the Nasdaq Capital Market under the symbol "**GLBZ**"; as of March 13, 2020, there were **348 record holders** and the closing price was **$10.02**[105](index=105&type=chunk) Stock Price and Dividends | Quarter Ended | 2019 High | 2019 Low | 2019 Dividends | 2018 High | 2018 Low | 2018 Dividends | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | March 31 | $10.74 | $10.61 | $0.10 | $12.10 | $12.03 | $0.10 | | June 30 | $11.10 | $10.94 | $0.10 | $11.36 | $10.99 | $0.10 | | September 30 | $10.95 | $10.80 | $0.10 | $12.30 | $12.25 | $0.10 | | December 31 | $11.50 | $11.50 | $0.10 | $10.43 | $10.22 | $0.10 | - The ability to pay dividends depends on the Bank's dividends to the Company and is subject to regulatory limits, though the Company does not anticipate these restrictions will materially limit its ability to pay dividends[108](index=108&type=chunk) [Selected Financial Data](index=17&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the Company - Not applicable[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for 2019 compared to 2018, highlighting stable net income at $1.6 million, a 6.8% decrease in total assets to $384.9 million, an increase in nonperforming assets, and the bank's well-capitalized and liquid position with active interest rate risk management [Comparison of Results of Operations for 2019 and 2018](index=19&type=section&id=Item%207.%20MD%26A%20-%20Comparison%20of%20Results%20of%20Operations%20for%202019%20and%202018) For the year ended December 31, 2019, net income was $1.6 million, nearly unchanged from 2018, driven by stable net interest income of $12.6 million and a significant decrease in the provision for loan losses to a negative $0.1 million, offset by lower noninterest income and higher operating expenses and taxes Key Financial Metrics | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net Income | $1.6 million | $1.6 million | +$16,000 | | Basic and Diluted EPS | $0.57 | $0.56 | +$0.01 | | Net Interest Income | $12.6 million | $12.6 million | Stable | | Provision for Loan Losses | ($0.1 million) | $0.9 million | -$1.0 million | | Noninterest Income | $1.3 million | $1.5 million | -$0.2 million | | Noninterest Expense | $11.9 million | $11.5 million | +$0.4 million | | Income Tax Expense | $0.4 million | $0.1 million | +$0.3 million | - The net interest margin increased to **3.39%** in 2019 from **3.26%** in 2018[121](index=121&type=chunk) - The decrease in the provision for loan losses was primarily due to a **$544,000 decrease** in net loan charge-offs and a **$14.4 million decrease** in loan balances[128](index=128&type=chunk) [Financial Condition](index=22&type=section&id=Item%207.%20MD%26A%20-%20Financial%20Condition) As of December 31, 2019, total assets decreased by 6.8% to $384.9 million from $413.0 million in 2018, mainly due to declines in investment securities and net loans, while nonperforming loans increased by 90.5% to $4.1 million, primarily from three commercial real estate loans, increasing total nonperforming assets to $4.9 million, despite stable total deposits - Total assets decreased by **$28.1 million (6.80%)** to **$384.9 million** at year-end 2019, driven by decreases in investment securities and loans[132](index=132&type=chunk) - Net loans decreased by **$13.9 million** to **$282.7 million**, primarily due to paydowns outpacing new originations, with the indirect auto loan portfolio seeing the largest decrease[142](index=142&type=chunk) - Total nonperforming assets increased by **$2.0 million** to **$4.9 million** at year-end 2019, representing **1.26%** of total assets, up from **0.70%** in 2018, mainly due to three commercial real estate loans totaling **$3.3 million** being added to nonaccrual status[149](index=149&type=chunk) - The allowance for loan losses decreased to **$2.1 million (0.73% of total loans)** from **$2.5 million (0.85% of total loans)** in 2018[128](index=128&type=chunk)[156](index=156&type=chunk) - Total deposits decreased slightly by **$1.0 million** to **$321.4 million**, with a shift from time deposits to noninterest-bearing and interest-bearing checking accounts[161](index=161&type=chunk) [Capital Resources and Liquidity](index=30&type=section&id=Item%207.%20MD%26A%20-%20Capital%20Resources%20and%20Liquidity) The company's capital position remains strong, with stockholders' equity increasing to $35.7 million at year-end 2019, and the Bank is classified as "well capitalized" under all regulatory measures, maintaining adequate liquidity through its deposit base, loan and security repayments, and access to external funding sources including a $10.4 million line with the Federal Reserve Bank and a $95.9 million line with the FHLB - Stockholders' equity increased by **$1.6 million (4.78%)** to **$35.7 million** at December 31, 2019[168](index=168&type=chunk) Capital Ratios (Bank) | Capital Ratios (Bank) | Dec 31, 2019 (Actual) | Well Capitalized Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 Ratio | 12.47% | 6.50% | | Tier 1 Risk-Based Capital Ratio | 12.47% | 8.00% | | Total Risk-Based Capital Ratio | 13.21% | 10.00% | | Tier 1 Leverage Ratio | 9.26% | 5.00% | - Primary liquidity sources include the deposit base, amortization of loans and securities, and operations; external sources include a **$95.9 million FHLB line of credit ($70.9 million available)** and a **$10.4 million Federal Reserve discount window line**[180](index=180&type=chunk)[183](index=183&type=chunk) [Market Risk and Critical Accounting Policies](index=34&type=section&id=Item%207.%20MD%26A%20-%20Market%20Risk%20and%20Critical%20Accounting%20Policies) The company's primary market risk is interest rate fluctuation, managed by the Asset/Liability Management Committee (ALCO), with simulation analysis showing a 100 basis point increase in rates would increase net interest income by 6%, while critical accounting policies include the allowance for loan losses, fair value measurements, and accounting for income taxes - The primary market risk is interest rate risk, managed by the ALCO; the company was in an **asset-sensitive position** as of December 31, 2019[194](index=194&type=chunk)[201](index=201&type=chunk) Estimated Change in Net Interest Income (12-month horizon) | Estimated Change in Net Interest Income (12-month horizon) | -200 bp | -100 bp | +100 bp | +200 bp | | :--- | :--- | :--- | :--- | :--- | | **Policy Limit** | (4)% | (3)% | (3)% | (4)% | | **December 31, 2019** | (10)% | (6)% | 6% | 11% | - Critical accounting policies identified are: Allowance for Loan Losses, Fair Value Measurements, and Accounting for Income Taxes, all requiring significant management estimates and judgments[207](index=207&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that as of December 31, 2019, the company's disclosure controls and procedures and its internal control over financial reporting were effective in providing reasonable assurance regarding financial reporting reliability and timely disclosure, with no material changes reported during the fourth quarter of 2019 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[218](index=218&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the Company's internal control over financial reporting was **effective** as of December 31, 2019[220](index=220&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2019 that materially affected, or are reasonably likely to materially affect, these controls[222](index=222&type=chunk) PART III [Directors, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=40&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information for Items 10 through 14, including details on directors, executive officers, corporate governance, executive compensation, security ownership, certain relationships and transactions, director independence, and principal accountant fees and services, is incorporated by reference from the Company's definitive Proxy Statement for the 2020 Annual Meeting of Stockholders - Information regarding Directors, Executive Officers, and Corporate Governance (Item 10) is incorporated by reference from the **2020 Proxy Statement**[226](index=226&type=chunk) - Information regarding Executive Compensation (Item 11) is incorporated by reference from the **2020 Proxy Statement**[227](index=227&type=chunk) - Information regarding Security Ownership (Item 12), Certain Relationships and Related Transactions (Item 13), and Principal Accountant Fees and Services (Item 14) is incorporated by reference from the **2020 Proxy Statement**[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=41&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K, including a reference to the consolidated financial statements and notes, and a list of exhibits such as corporate governance documents, compensation plans, and required certifications - This item provides an index to the Consolidated Financial Statements, which begin on **page F-3** of the report[233](index=233&type=chunk) - All required financial statement schedules are omitted as they are not applicable or the information is included elsewhere in the financial statements[234](index=234&type=chunk) - A list of exhibits filed with the report is provided, including corporate governance documents, compensation plans, and certifications by the CEO and CFO[235](index=235&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets, Statements of Income, and Cash Flows](index=46&type=section&id=Consolidated%20Financial%20Statements%20-%20Core%20Statements) The consolidated financial statements present the financial position and performance of Glen Burnie Bancorp, with total assets at $384.9 million and net income of $1.6 million for 2019, consistent with 2018, and net cash from operating activities of $3.0 million, while investing activities provided $26.3 million and financing activities used $32.0 million Consolidated Balance Sheet Highlights (As of Dec 31) | (in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Total Assets | $384,942 | $413,046 | | Net Loans | $282,672 | $296,579 | | Total Deposits | $321,440 | $322,453 | | Short-term borrowings | $25,000 | $55,000 | | Total Stockholders' Equity | $35,680 | $34,051 | Consolidated Statement of Income Highlights (Year Ended Dec 31) | (in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Net Interest Income | $12,587 | $12,591 | | Provision for loan losses | ($115) | $856 | | Total Noninterest Income | $1,295 | $1,517 | | Total Noninterest Expenses | $11,946 | $11,539 | | Net Income | $1,599 | $1,583 | | Basic and diluted EPS | $0.57 | $0.56 | [Notes to Consolidated Financial Statements](index=51&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure on the company's significant accounting policies and the composition of accounts in the financial statements, covering investment securities, allowance for loan losses, credit quality, lease accounting, derivatives, regulatory capital, and fair value measurements, confirming the Bank is well-capitalized and providing specifics on loan portfolio composition, nonperforming assets, and commitments [Note 1. Summary of Significant Accounting Policies](index=51&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the fundamental accounting policies used in preparing the financial statements, covering basis of presentation, use of estimates, and specific policies for investment securities, loans, nonaccrual and impaired loans, allowance for loan losses, OREO, income taxes, and fair value measurements, also detailing the adoption of ASU 2016-02 for leases and the evaluation of ASU 2016-13 (CECL model) - The allowance for loan losses is based on historical loss experience over the current and previous **four years**, adjusted by six qualitative factors, including changes in asset quality, loan volume, economic conditions, and internal factors[289](index=289&type=chunk) - The company adopted ASU 2016-02 (Leases) on **January 1, 2019**, recognizing a lease liability and a right-of-use asset of **$0.7 million** on the consolidated balance sheet[311](index=311&type=chunk) - The company is evaluating the impact of ASU 2016-13 (CECL model), which is effective for reporting periods after **December 15, 2022**; the company expects the allowance for loan losses to **increase** upon adoption[312](index=312&type=chunk) [Note 3. Investment Securities](index=61&type=section&id=Note%203.%20Investment%20Securities) The company's available-for-sale investment portfolio totaled $71.5 million at fair value as of December 31, 2019, a decrease from $81.6 million in 2018, primarily composed of mortgage-backed securities (77.4%) and municipal securities (17.5%), with $37.9 million in securities having temporary unrealized losses of $0.3 million, which management does not consider other-than-temporary impairment Composition of Investment Securities (Available for Sale) | (in thousands) | 2019 Amount | 2019 % | 2018 Amount | 2018 % | | :--- | :--- | :--- | :--- | :--- | | U.S. Treasury | $500 | 0.6% | $990 | 1.2% | | U.S. Government agency | $3,191 | 4.5% | $1,959 | 2.4% | | Residential mortgage-backed securities | $55,320 | 77.4% | $44,793 | 54.9% | | State and municipal | $12,475 | 17.5% | $33,830 | 41.5% | | **Total** | **$71,486** | **100.0%** | **$81,572** | **100.0%** | - At December 31, 2019, securities with a total fair value of **$37.9 million** had gross unrealized losses of **$0.3 million**; management considers these losses temporary and related to market interest rates[328](index=328&type=chunk)[336](index=336&type=chunk) [Note 4. Loans and Allowance for Loan Losses](index=64&type=section&id=Note%204.%20Loans%20and%20Allowance%20for%20Loan%20Losses) Total gross loans decreased to $284.7 million in 2019 from $299.1 million in 2018, with the portfolio concentrated in indirect auto loans (36%), residential real estate (28%), and commercial real estate (27%), while nonaccrual loans significantly increased to $4.1 million, and the allowance for loan losses decreased to $2.1 million, with one troubled debt restructuring (TDR) on nonaccrual status Loan Portfolio Composition (Gross Loans) | (in thousands) | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Consumer | $12,076 | $13,071 | | Residential real estate | $81,033 | $82,637 | | Indirect | $102,384 | $116,698 | | Commercial | $11,907 | $14,284 | | Construction | $3,317 | $2,317 | | Commercial real estate | $74,021 | $70,113 | | **Total gross loans** | **$284,738** | **$299,120** | Allowance for Loan Losses Activity (2019) | (in thousands) | Amount | | :--- | :--- | | Beginning Balance (Jan 1, 2019) | $2,541 | | Charge-offs | ($616) | | Recoveries | $256 | | Provision for loan losses | ($115) | | **Ending Balance (Dec 31, 2019)** | **$2,066** | - Nonaccrual loans increased from **$1.9 million** at year-end 2018 to **$4.1 million** at year-end 2019[366](index=366&type=chunk) [Note 6. Federal Home Loan Bank and Short-term Borrowings](index=72&type=section&id=Note%206.%20Federal%20Home%20Loan%20Bank%20and%20Short-term%20Borrowings) The Bank utilizes short-term borrowings from the FHLB of Atlanta to manage funding, with $25.0 million in advances outstanding and $95.9 million in total credit availability at December 31, 2019, and uses three interest rate swaps with a total notional value of $20.0 million to hedge interest rate risk on these borrowings, converting variable-rate FHLB advances to fixed rates between 2.105% and 2.246%, resulting in a negative fair value of $336,000 - At Dec 31, 2019, the Bank had **$25.0 million** in short-term FHLB advances and total available credit of **$95.9 million** from the FHLB[373](index=373&type=chunk) - The Bank has three outstanding interest rate swaps with a total notional value of **$20.0 million**, designated as cash flow hedges to manage interest rate risk on FHLB advances[384](index=384&type=chunk) Interest Rate Swap Details (as of Dec 31, 2019) | Notional Amount (thousands) | Pay Rate (Fixed) | Receive Rate (Variable) | Maturity | | :--- | :--- | :--- | :--- | | $10,000 | 2.105% | 3M LIBOR | Oct 2022 | | $5,000 | 2.235% | 3M LIBOR | Jul 2023 | | $5,000 | 2.246% | 3M LIBOR | Aug 2023 | [Note 13. Commitments and Contingencies](index=78&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) In the normal course of business, the Bank enters into off-balance sheet financial instruments to meet customer financing needs, including $2.8 million in loan commitments, $23.5 million in unused lines of credit, and $1.1 million in standby letters of credit outstanding as of December 31, 2019, with a reserve of $37,386 accrued for potential losses on these unfunded commitments Off-Balance Sheet Commitments (as of Dec 31) | (in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Loan commitments | $2,816 | $3,589 | | Unused lines of credit | $23,482 | $19,905 | | Letters of credit | $1,059 | $1,059 | - The Bank has accrued a reserve of **$37,386** as of December 31, 2019, for potential losses on these unfunded commitments[405](index=405&type=chunk) [Note 14. Stockholders' Equity](index=79&type=section&id=Note%2014.%20Stockholders%27%20Equity) This note details components of stockholders' equity, including restrictions on dividends and various stock plans, with approximately $21.4 million of retained earnings not available for dividends without prior approval as of year-end 2019, and the company maintaining an Employee Stock Purchase Plan, a Dividend Reinvestment and Stock Purchase Plan (DRIP), and a Stockholder Purchase Plan, with 13,316 shares purchased through the DRIP in 2019 - Banking regulations limit dividend payments; as of Dec 31, 2019, approximately **$21.4 million** of retained earnings could not be paid as dividends without prior regulatory approval[408](index=408&type=chunk) - The company offers a Dividend Reinvestment and Stock Purchase Plan (DRIP) allowing stockholders to receive shares at **95% of fair market value** in lieu of cash dividends; in 2019, **13,316 shares** were issued under this plan[413](index=413&type=chunk) [Note 17. Fair Value Measurements](index=84&type=section&id=Note%2017.%20Fair%20Value%20Measurements) This note describes the framework for measuring fair value using a three-level hierarchy, with recurring measurements for securities available for sale and interest rate swaps primarily using Level 2 inputs, and non-recurring measurements for impaired loans using Level 3 inputs and foreclosed real estate (OREO) using Level 2 inputs Fair Value Measurements (as of Dec 31, 2019) | (in thousands) | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | **Recurring:** | | | | | | Securities available for sale | $0 | $58,511 | $0 | $58,511 | | Interest rate swap | $0 | ($336) | $0 | ($336) | | **Non-recurring:** | | | | | | Impaired loans | $0 | $0 | $4,638 | $4,638 | | OREO | $0 | $705 | $0 | $705 | - Securities available for sale and interest rate swaps are valued on a recurring basis, primarily using **Level 2 inputs**[442](index=442&type=chunk)[443](index=443&type=chunk) - Impaired loans are valued on a non-recurring basis using **Level 3 inputs**, mainly independent appraisals of the underlying collateral[444](index=444&type=chunk)

Accounting Standards Updates - The Company adopted ASU 2016-02 on January 1, 2019, which requires lessees to recognize a lease liability and a right-of-use asset for all operating leases[85]. - The implementation of ASU 2016-13 is expected to increase the allowance for loan losses balance, although the Company is still evaluating the potential impact on its financial statements[87]. - ASU 2016-15, effective for fiscal years beginning after December 15, 2017, did not have a material effect on the Company's consolidated financial statements[88]. - The Company adopted ASU 2018-13, which revises disclosure requirements for fair value measurements, and it is not expected to have a material impact on the financial statements[95]. - ASU 2019-05 provides entities with an option to elect the fair value option for certain financial instruments upon adoption of ASC 326-20, effective for reporting periods beginning after December 15, 2019[99]. - The Company adopted ASU 2017-01, clarifying the definition of a business, effective January 1, 2018, with no significant impact on financial statements[90]. - ASU 2016-01, effective January 1, 2018, did not have a material impact on the consolidated financial statements, as the Company's equity securities are excluded from fair value pricing[84]. - The Company adopted ASU 2017-12 on January 1, 2019, which aligns risk management activities with financial reporting for hedging relationships, with no significant impact on financial statements[92]. Financial Performance - Net income available to common stockholders for the three-month period ended September 30, 2019 was $606,000, or $0.21 per share, compared to $439,000, or $0.16 per share for the same period in 2018[112]. - Net income available to common stockholders for the nine-month period ended September 30, 2019 was $1,060,000, or $0.38 per share, compared to $1,172,000, or $0.42 per share for the same period in 2018[112]. - Return on average assets for the three-month period ended September 30, 2019 was 0.63%, compared to 0.43% for the same period in 2018[108]. - Comprehensive income for the third quarter of 2019 totaled $727,000, compared to $44,000 for the same period in 2018, driven by net unrealized gains on available-for-sale securities[126]. Income and Expenses - Net interest income for the three-month period ended September 30, 2019 was $3.1 million, a decrease of $158,000, or 4.78%, compared to the same period in 2018[113]. - Total interest income for the third quarter 2019 decreased by $272,000, or 7.05%, compared to the same period in 2018[114]. - Interest expense for the third quarter 2019 decreased by $114,000, or 20.27%, from $560,000 in 2018 to $446,000 in 2019[115]. - Noninterest income increased to $391,000 for the three-month period ended September 30, 2019, an increase of $60,000, or 18.13%, primarily due to higher other fees and commissions[123]. - Noninterest expenses for the three-month periods ended September 30 remained stable at $2.9 million for both 2018 and 2019, while nine-month expenses increased by $218,000, or 2.50%, to $8.9 million in 2019[124]. - The company recorded income tax expense of $212,000 for the three-month period ended September 30, 2019, compared to $89,000 for the same period in 2018, with an annualized effective tax rate of 22.32%[125]. Asset and Liability Management - Total assets decreased to $383.4 million at September 30, 2019, from $413.0 million at December 31, 2018, a decrease of $29.6 million or 7.17%[127]. - The company's cash and cash equivalents increased by $3.6 million, or 22.67%, to $19.6 million as of September 30, 2019, compared to $16.0 million at December 31, 2018[127]. - The Company's investment securities available for sale decreased by $16.8 million, or 20.54%, totaling $64.8 million as of September 30, 2019, compared to $81.6 million at December 31, 2018[128]. - Total deposits increased by $2.8 million, or 0.87%, totaling $325.3 million as of September 30, 2019[134]. - Noninterest-bearing deposits increased by $10.1 million, or 9.95%, totaling $111.5 million at September 30, 2019[134]. - Time deposits over $100,000 decreased by $5.9 million, or 14.09%, totaling $35.8 million at September 30, 2019[134]. Loan Portfolio and Credit Quality - The Company's loan portfolio decreased by $15.0 million, or 5.06%, in the first nine months of 2019 due to a slower pace of loan originations[107]. - Net loans decreased by $15.0 million, or 5.06%, totaling $281.6 million at September 30, 2019, primarily due to an increase in construction and commercial real estate loans[129]. - The allowance for credit losses represented 0.81% of total loans as of September 30, 2019, compared to 0.83% at the same date in 2018, indicating improved credit quality[122]. - The company recognized provisions for credit losses of negative $139,000 for the three-month period ending September 30, 2019, compared to $246,000 for the same period in 2018, reflecting a decrease in net charge-offs[122]. - Impaired loans totaled $5.0 million at September 30, 2019, including $4.2 million classified as nonaccrual loans[132]. - Total nonperforming assets increased to $5.151 million, with nonperforming assets to total assets ratio at 1.34% as of September 30, 2019, compared to 0.70% at December 31, 2018[133]. Capital and Ratios - The Bank's total regulatory capital to risk-weighted assets was 13.18% at September 30, 2019, compared to 12.64% for the same period of 2018[107]. - The Bank's Tier 1 leverage ratio was 9.26% as of September 30, 2019, exceeding the minimum requirement of 4.0%[162]. - The common equity Tier 1 capital ratio was 12.36% as of September 30, 2019, above the minimum requirement of 4.5%[162]. - The company's stockholders' equity increased by $1.3 million, or 3.87%, during the nine-month period ended September 30, 2019, primarily due to a decrease in accumulated other comprehensive loss[158]. Risk Management - The simulation analysis as of September 30, 2019, indicated that the Bank is in a neutral to slightly asset-sensitive position regarding interest rate risk[146]. - Estimated changes in net interest income for a +200 basis points change in rates showed an increase of 11% as of September 30, 2019[148]. - The economic value of equity decreased by 15% under a -200 basis points rate change scenario as of September 30, 2019[152]. - The company reported a cumulative GAP of $(143.96) million, which is -37.54% of total assets[149]. - The Bank had $20.0 million in short-term borrowings outstanding as of September 30, 2019, down from $55.0 million at December 31, 2018[157]. Internal Controls and Compliance - The Company has maintained a system of disclosure controls and procedures that is effective, as evaluated by the Chief Executive Officer and Chief Financial Officer[169]. - There have been no changes in the Company's internal control over financial reporting that materially affected or are likely to materially affect the Company's internal control[169]. - The Company is classified as a "smaller reporting company," thus not required to disclose certain market risk information[168]. Tax and Valuation - Management estimates income tax expense based on expected amounts owed to tax authorities, reflecting the net estimated amount due[165]. - Deferred income taxes are recognized for temporary differences based on enacted tax rates expected to be in effect when amounts are realized or settled[166]. - A valuation allowance is established if there is doubt about the likelihood of a deferred tax asset being realized, based on future taxable income assessments[167]. - The valuation of the securities portfolio is assessed periodically to determine if any decline in value is other than temporary, impacting earnings if so[164]. - The Company’s allowance for credit losses is based on estimates that can change with actual events, including historical losses and economic conditions[163].

Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For the Quarterly period ended June 30, 2019 FORM 10-Q 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 ...