Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-24047 GLEN BURNIE BANCORP (Exact name of registrant as specified in its charter) Maryland 52-1782444 (State or other jurisdiction of (I.R.S. Employer inc ...

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

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

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 ...