In closing, Mr. Hanna added, “In these very unusual times, our strength and resolve enable us to take exceptional care of our customers, employees, and communities. Based on our capital levels, conservative underwriting policies, on- and off-balance sheet liquidity, strong loan diversification, and current economic conditions within the markets we serve, management expects to navigate the uncertainties and remain well-capitalized. I would like to thank our dedicated Glen Burnie Bancorp employees for all that they do to support our customers, communities, and shareholders – it is because of them that we remain well-positioned to execute on our strategic plan during this uncertain period.”

Highlights for the First Three Months of 2024

Net interest income decreased $606,000, or 19.08% to $2.6 million through March 31, 2024, as compared to $3.2 million during the prior-year first quarter. The decrease resulted from a $726,000 increase in interest expense. The increase in interest on deposits was driven by the higher cost of money market deposit balances. The increase in interest on borrowings was driven by a $40.0 million increase in short term borrowings due to the elevated level of deposit runoff in 2023.

The Company expects that its strong liquidity and capital positions, along with the Bank’s total regulatory capital to risk weighted assets of 18.30% on March 31, 2024, as compared to 17.57% for the same period of 2023, will provide ample capacity for future growth.

Return on average assets for the three-month period ended March 31, 2024, was 0.00%, as compared to 0.47% for the three-month period ended March 31, 2023. Return on average equity for the three-month period ended March 31, 2024, was 0.06%, as compared to 9.90% for the three-month period ended March 31, 2023. Lower net income partially offset by a lower average asset balance primarily drove the lower return on average assets, while lower net income and a higher average equity balance primarily drove the lower return on average equity.

On March 31, 2024, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 17.14% on March 31, 2024, as compared to 17.37% on December 31, 2023. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.

Balance Sheet Review

Total assets were $369.9 million on March 31, 2024, an increase of $18.1 million or 5.13%, from $351.8 million on December 31, 2023. Cash and cash equivalents increased $27.4 million or 179.69%, from December 31, 2023, to March 31, 2024. Investment securities were $128.7 million on March 31, 2024, a decrease of $10.7 million or 7.67%, from $139.4 million on December 31, 2023. Loans, net of deferred fees and costs, were $178.0 million on March 31, 2024, an increase of $1.6 million or 0.93%, from $176.3 million on December 31, 2023.

Total deposits were $309.2 million on March 31, 2024, an increase of $9.2 million or 3.05%, from $300.1 million on December 31, 2023. Noninterest-bearing deposits were $115.2 million on March 31, 2024, a decrease of $1.7 million or 1.50%, from $116.9 million on December 31, 2023. Interest-bearing deposits were $194.0 million on March 31, 2024, an increase of $10.9 million or 5.96%, from $183.1 million on December 31, 2023. Total borrowings were $40.0 million on March 31, 2024, an increase of $10.0 million, or 33.33% from $30.0 million on December 31, 2023.

As of March 31, 2024, total stockholders’ equity was $18.1 million (4.90% of total assets), equivalent to a book value of $6.28 per common share. Total stockholders’ equity on December 31, 2023, was $19.3 million (5.49% of total assets), equivalent to a book value of $6.70 per common share. The reduction in the ratio of stockholders’ equity to total assets was due to higher asset balances, along with decreases to equity from the decline in market value of the Company’s available-for-sale securities portfolio. Included in stockholders’ equity on March 31, 2024, and December 31, 2023, were unrealized losses (net of taxes) on the Company’s available-for-sale investment securities totaling $19.3 million and $18.4 million, respectively. This increase in unrealized losses primarily resulted from increasing market interest rates during the first quarter of 2024, which decreased the fair value of the investment securities. Changes in unrealized losses on the investment portfolio are attributed to changes in interest rates, not credit quality. The Company does not intend to sell, and it is more likely than not that it will not be required to sell, any securities held at an unrealized loss.

Asset quality, which has trended within a narrow range over the past several years, remains sound on March 31, 2024. Nonperforming assets, which consist of nonaccrual loans, restructured loans to borrowers with financial difficulty, accruing loans past due 90 days or more, and other real estate owned, represented 0.10% of total assets on March 31, 2024, as compared to 0.15% on December 31, 2023, demonstrating positive asset quality trends across the portfolio. The allowance for credit losses on loans was $2.0 million, or 1.14% of total loans, as of March 31, 2024, as compared to $2.2 million, or 1.22% of total loans, as of December 31, 2023. The allowance for credit losses for unfunded commitments was $497,000 as of March 31, 2024, as compared to $473,000 as of December 31, 2023.

Review of Financial Results

For the three-month periods ended March 31, 2024, and 2023

Net income for the three-month period ended March 31, 2024, was $3,000, as compared to $435,000 for the three-month period ended March 31, 2023. The decrease is primarily the result of a $431,000 increase in interest expense on short-term borrowings, a $295,000 increase in interest expense on deposits and a $211,000 increase in the provision for credit losses on loans, partially offset by an increase of $128,000 in loan interest income and fees and a $317,000 decrease in the provision for income taxes. The Company’s need to defend its deposit base as well as grow interest-earning asset balances necessitated a strategic change in direction.

Net interest income for the three-month period ended March 31, 2024, totaled $2.6 million, as compared to $3.2 million for the three-month period ended March 31, 2023. The $606,000 decrease in net interest income was primarily due to the $726,000 increase in interest expense related to higher balances and rates on money market deposits and short-term borrowings. Average earning-asset balances were $362.0 million on March 31, 2024, as compared to $378.2 million during the prior-year first quarter. Deposit runoff drove the decline in average interest-earning assets.

Net interest margin for the three-month period ended March 31, 2024, was 2.86%, as compared to 3.41% for the same period of 2023, a decrease of 0.55%. The decrease in the net interest margin is due to increases in average deposit costs and short-term borrowing costs, partially offset by increases in yields on investment securities, loans, and interest-bearing deposits at the Federal Reserve Bank. Loan yields increased from 4.58% to 5.06% between the two periods while the cost of interest-bearing liabilities increased from 0.20% to 1.51% between the two periods.

The average balance of interest-earning assets decreased $16.3 million while the yield increased 0.26% from 3.52% to 3.78%, when comparing the three-month periods ending March 31, 2024, and 2023, respectively. The average balance of interest-bearing funds increased $8.1 million. The average balance of noninterest-bearing funds decreased $24.4 million, and the cost of funds increased 0.87%, when comparing the three-month periods ending March 31, 2024, and 2023.

The provision for credit loss allowance on loans for the three-month period ended March 31, 2024, was $169,000, as compared to a release of $42,000 for the same period of 2023. The increase for the three-month period ended March 31, 2024, when compared to the three-month period ended March 31, 2023, primarily reflects a $5.8 million decrease in the reservable balance of the loan portfolio and a $334,000 increase in net charge offs.

Noninterest income for the three-month period ended March 31, 2024, was $229,000, as compared to $245,000 for the three-month period ended March 31, 2023.

For the quarter ended March 31, 2024, noninterest expense totaled $2.86 million, a decrease of $83,000 compared to $2.94 million for the quarter ended March 31, 2023. On a year-over-year comparative basis, noninterest expenses decreased due to an $80,000 decrease in salary and employee benefits. Salary and employee benefits expenses decreased due to reductions in group insurance costs and bonus pension/expense.

For the three-month period ended March 31, 2024, income tax benefit was $232,000, as compared with income tax expense of $86,000 for the same period a year earlier. The $232,000 income tax benefit includes $87,000 associated with amended Maryland tax returns for tax years 2022 and 2021.

Glen Burnie Bancorp Information

Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland. Founded in 1949, The Bank of Glen Burnie? is a locally owned community bank with 8 branch offices serving Anne Arundel County. The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships, and corporations. The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans. The Bank also originates automobile loans through arrangements with local automobile dealers. Additional information is available at www.thebankofglenburnie.com.

Forward-Looking Statements

The statements contained herein that are not historical financial information may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, which could cause the Company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. For a more complete discussion of these and other risk factors, please see the Company’s reports filed with the Securities and Exchange Commission.

CONTACT: For further information contact: Jeffrey D. Harris, Chief Financial Officer 410-768-8883 [email protected] 106 Padfield Blvd Glen Burnie, MD 21061