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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

(Mark One)

for the fiscal year ended December 31, 2004

or

for the transition period from                      to                     

Commission file number 0-15261.

BRYN MAWR BANK CORPORATION

(Exact name of registrant as specified in its charter)

(Registrant’s telephone number, including area code) (610) 525-1700

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock ($1 par value)

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x     No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (& 229 405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes x     No ¨

The aggregate market value of shares of common stock held by non-affiliates of Registrant (including fiduciary accounts administered by affiliates*) was $190,770,000 on June 30, 2004.

As of December 31, 2004, 8,597,958 shares of common stock were outstanding.

Documents Incorporated by Reference: Parts I, II and IV - Portions of Registrant’s Annual Report to Shareholders for the year ended December 31, 2004, as indicated, Parts I and III - Definitive Proxy Statement of Registrant filed with the Commission pursuant to Regulation 14A.

The exhibit index is on pages 63 through 68. There are 259 pages in this report.

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Form 10-K

Bryn Mawr Bank Corporation

Index

UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF FEBRUARY 24, 2005.

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PART I

GENERAL

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

Certain of the statements contained in this report may constitute forward-looking statements for the purposes of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended, and may involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Bryn Mawr Bank Corporation (the “Corporation”) to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements include statements with respect to the Corporation’s financial goals, business plans, business prospects, credit quality, credit risk, reserve adequacy, liquidity, origination and sale of residential mortgage loans, mortgage servicing rights, the effect of changes in accounting standards, and market and pricing trends loss. The words “expect,” “anticipate,” “intended,” “plan,” “believe,” “seek,” “estimate,” and similar expressions are intended to identify such forward-looking statements. The Corporation’s actual results may differ materially from the results anticipated by the forward-looking statements due to a variety of factors, including without limitation:

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All written or oral forward-looking statements attributed to the Corporation are expressly qualified in their entirety by use of the foregoing cautionary statements. All forward-looking statements included in this Report are based upon information presently available, and the Corporation assumes no obligation to update any forward-looking statements.

BRYN MAWR BANK CORPORATION

The Corporation, hereinafter sometimes referred to as the Registrant, was incorporated under the laws of the Commonwealth of Pennsylvania on August 8, 1986. The Corporation is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “Act”). On January 2, 1987, under a Plan of Reorganization, the Corporation acquired all of the issued and outstanding shares of The Bryn Mawr Trust Company (the “Bank”), through an exchange of three shares of the Corporation stock for each share of Bank stock issued.

THE BRYN MAWR TRUST COMPANY

The Bank, the principal subsidiary of the Corporation, is a state chartered bank subject to the Pennsylvania Banking Code of 1965, as amended, which was incorporated under the laws of the Commonwealth of Pennsylvania on March 25, 1889. In addition, the Bank is a member of the Federal Reserve System and, therefore, is subject to the laws and regulations, which govern a Federal Reserve member bank. The Bank is engaged in a general commercial and retail banking business, providing basic banking services as well as a full range of wealth management services, including trust services.

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INSURANCE COUNSELLORS OF BRYN MAWR, INC.

Insurance Counsellors of Bryn Mawr, Inc. (“Insurance Counsellors”) was incorporated on December 30, 1997 as a wholly owned subsidiary of the Bank. Insurance Counsellors began operations on February 1, 1998. The staff of Insurance Counsellors sells insurance products, including all facets of casualty, property and allied insurance lines, as well as life insurance, annuities, medical insurance and accident and health insurance for groups and individuals.

BRYN MAWR BROKERAGE CO., INC.

In January 2003, Bryn Mawr Brokerage Co., Inc. (“BM Brokerage”) was made an inactive subsidiary. The Bank continues to offer an array of brokerage related services to the Corporation’s affiliates’ customers, including trading of shares, annuities and mutual funds through a networking agreement with UVEST Financial Services, Inc, a broker-dealer headquartered in Charlotte, North Carolina.

JOSEPH W. ROSKOS & CO., INC.

Joseph W. Roskos & Co., Inc. (“JWR&Co”) was acquired as of January 1, 1999 as a wholly owned subsidiary of the Corporation to offer high quality personalized family business office services to high net worth individuals, including accounting, tax preparation services, consulting and fiduciary support services. During 2003, Corporation management determined that JWR&Co was not attaining its strategic goals and that it would be in the best interest of the Corporation to discontinue offering family business office services through JWR&Co. The Corporation negotiated the sale of

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substantially all of the assets of JWR&Co effective June 30, 2003 to Private Family Office, Inc. (“PFO”) which is owned by the former president of JWR&Co (the “Asset Sale”).

BMT SETTLEMENT SERVICES, INC.

BMT Settlement Services, Inc. (“BMT Settlement”) began operation in February 2002. BMT Settlement is a limited partner in Bryn Mawr Settlement Services, LP (the “Limited Partnership”), with Commonwealth Land Transfer Company, to provide title search and abstract services to Bank customers. Under the terms of the Limited Partnership’s partnership agreement, BMT Settlement receives seventy percent of the profits of the Limited Partnership, after expenses. During 2003 and 2004, the services of the Limited Partnership were used by some mortgage borrowers using the services of BMT Mortgage Company, a division of the Bank, as well as commercial and consumer loan customers of the Bank.

SUMMARY OF SERVICES AND MARKET AREA

The Corporation will, through its subsidiaries, especially the Bank, seek to market its services by providing superior banking services. This includes deposits, lending and wealth management services, as well as other financial services. The other services include insurance sales and services through Insurance Counsellors; brokerage related services through the Bank, and title abstract services through BMT Settlement’s affiliation with the Limited Partnership. The primary market for these services is in portions of Montgomery, Delaware, Chester and Philadelphia counties in southeastern Pennsylvania. The sale of the products and the offering of the services assist in successfully addressing the challenges in the ever-changing competitive financial services market.

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WEBSITE DISCLOSURES

The Corporation makes available, free of charge through its website, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonable practical after the reports are electronically filed with the Securities and Exchange Commission (”SEC”). These reports can be obtained by logging onto the Corporation’s website at www.bmtc.com and clicking on Bryn Mawr Bank Corporation’s SEC Filings.

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OPERATIONS

BRYN MAWR BANK CORPORATION

The Corporation had no active staff as of December 31, 2004 and conducted no activities other than those activities through its subsidiaries, the Bank, Insurance Counsellors, and BMT Settlement.

A complete list of directors and executive officers of the Corporation and the Bank, as of February 24, 2005 is incorporated by reference to page 14 of the Corporation’s Annual Report to Shareholders for the year ended December 31, 2004.

THE BRYN MAWR TRUST COMPANY

The Bank is engaged in commercial and retail banking business, providing basic banking services, including the acceptance of demand, time and savings deposits and the making of commercial, real estate and consumer loans and other extensions of credit. The Bank also provides a full range of wealth management services including estate administration, investment advisory services, pension and profit sharing administration and personal financial planning, including tax preparation. As of December 31, 2004, the market value of assets administered by the Bank’s Wealth Management Division was $1,938,000,000.

During 2004 residential mortgage interest rates began to rise and the level of residential mortgage refinancing activity previously reported by the Bank declined. The sale of residential mortgage loans to the secondary market declined by 77%, from $628,052,000 in 2003 to $144,916,000 in 2004. This decrease in the volume of loan sales is directly attributable to a 73%

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decline in gains on the sale of loans and a 71% decrease in the segment profit of the Mortgage Banking segment. As of February 24, 2005, the Bank had no commissioned mortgage originators; however, an incentive plan is in place to encourage the managers and staff of the BMT Mortgage Division to produce revenues.

In March 2004 the Bank entered into a long term lease for property located in Exton, Chester County, Pennsylvania, to build a new full-service branch. This branch is expected to open for business during the first quarter of 2005.

At December 31, 2004, the Bank had 220 full time and 35 part time employees, including 120 officers, equaling 237.5 full time equivalent staff.

INSURANCE COUNSELLORS OF BRYN MAWR, INC.

Insurance Counsellors is a full-service insurance agency, through which the Bank offers insurance and related products and services to its customer base. This includes casualty, property and allied insurance lines, as well as life insurance, annuities, medical insurance and accident and health insurance for groups and individuals.

Insurance Counsellors employs 4 licensed insurance agents and a support staff of 1 full time person, who have significant expertise in the design, sale and service of insurance products. Insurance Counsellors is able to offer insurance products of more than thirty life and health companies for specialized insurance needs. Insurance Counsellors generated $431,000 of revenue during 2004.

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BRYN MAWR BROKERAGE CO., INC.

Effective January 2003, BM Brokerage was made an inactive subsidiary. Since January 2003, the Bank has offered securities products, including mutual funds, annuities, individual stocks and bonds and retirement plans through the Bank’s branch system. The Bank has entered into a networking agreement with UVEST Financial Services, Inc., a broker-dealer headquartered in Charlotte, North Carolina to provide the necessary back office support.

JOSEPH W. ROSKOS & CO. INC.

During 2003, Corporation management determined that JWR&Co was not attaining its strategic goals and that it would be in the best interest of the Corporation to discontinue offering family office services through JWR&Co. Therefore, the Corporation sold substantially all of the assets (the “Asset Sale”) of JWR&Co to PFO, effective June 30, 2003. The assets of JWR&Co, consisted of client accounts receivable and advances, fixed assets and prepaid expenses. The Asset Sale price was $2,350,000. JWR&Co received $400,000 in cash and three notes from PFO aggregating $1,950,000. The notes were for the accounts receivable and client advances, the fixed assets and prepaid expenses and for the goodwill, respectively. The note for the goodwill represented the value of the associated intangible assets of JWR&Co. The intangibles included the value of the client list, which was included in the Asset Sale. The note for the accounts receivable and client advances is being paid down from the proceeds of collected accounts receivable, with a term of 6 months. The note associated with the fixed assets and prepaid expenses is for a 5-year term. The goodwill note has an amortization of 15 years with a 10-year balloon payment. All three notes bear interest at a rate of 6%, with the interest rate on the goodwill note resetting after 7 years. There are no prepayment penalties on the notes. As of December 31, 2004, none of the notes were delinquent. PFO is also renting certain fixed assets and office space from the Bank.

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BMT SETTLEMENT SERVICES, INC.

BMT Settlement’s primary market area is located in southeastern Pennsylvania. BMT Settlement is housed in the main office of the Bank, located at 801 Lancaster Avenue, Bryn Mawr, PA 19010. BMT Settlement is a limited partner in the Limited Partnership with Commonwealth Land Transfer Company. During 2004, BMT Settlement earned $112,000 in revenues. BMT Settlement had no employees as of December 31, 2004.

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SOURCES OF THE CORPORATION’S REVENUE

The following table shows, for a five-year period, the percentage of consolidated revenues from continuing operations by major source generated by the Corporation’s subsidiaries from the activities indicated below.

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STATISTICAL INFORMATION

The statistical information required in this Item I is incorporated by reference to the information appearing in the Corporation’s Annual Report to Shareholders for the year ended December 31, 2004, as follows:

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Financial Information About Segments

The financial information concerning the Corporation’s business segments is incorporated by reference to pages 7 through 9 of the

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Corporation’s Annual Report to the shareholders for the year ended December 31, 2004 and Note 21, page 43, Segment Information, to the financial statements accompanying that Annual Report.

COMPETITION

The Corporation’s principal purpose is to hold the stock of the Bank and the Corporation’s other subsidiaries. Therefore, there is presently neither a market area nor competition for the Corporation since it does not conduct competitive business activity other than through its subsidiaries.

The Bank’s market area is primarily located in portions of Delaware, Montgomery, Chester and Philadelphia Counties in southeastern Pennsylvania. The greatest concentration of activity is within a limited radius of Bryn Mawr, Pennsylvania, the site of the Bank’s main banking office. The Bank has seven full service branch offices located in Bryn Mawr, Havertown, Wayne, Wynnewood, Paoli, West Conshohocken and Newtown Square, Pennsylvania. In addition, there are seven limited service facilities located in life care communities in Waverly Heights, Martins Run, the Quadrangle, Beaumont at Bryn Mawr, Bellingham, White Horse Village and Rosemont Presbyterian Village. The Bank plans to open its eighth full service branch in Exton, Chester County, Pennsylvania during the first quarter 2005. All facilities are located in Montgomery, Chester or Delaware Counties.

The banking business is highly competitive. The Bank competes not only with other commercial banks but it also experiences competition from savings and loan associations, trust companies and credit unions for deposits and

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loans, as well as from consumer finance companies, mortgage companies, insurance companies, stock brokerage companies and other entities providing one or more of the services and products offered by the Bank. All of those organizations must be considered competitors of the Bank.

Insurance Counsellors’ market area is primarily located in southeastern Pennsylvania, New Jersey and Delaware, although they are able to market and sell insurance products and services anywhere in the United States. Insurance Counsellors is housed in the main office building of the Bank, located at 801 Lancaster Avenue, Bryn Mawr, Pennsylvania. Insurance Counsellors’ primary competition is from insurance agencies and insurance agents.

JWR&Co’s assets were sold effective June 30, 2003 and therefore, its operations were discontinued.

BMT Settlement’s primary market area is in southeastern Pennsylvania. BMT Settlement is housed in the main office of the Bank. The general partner in the Limited Partnership, Commonwealth Land Transfer Company, which provides the title, search and abstract services, is located in Wayne, PA. The Limited Partnership’s main competition is other title abstract companies. Commonwealth Land Transfer Company offers its services to residential and commercial real estate borrowers.

SUPERVISION AND REGULATION

Bank holding companies, such as the Corporation, and its subsidiaries, including the Bank, are subject to extensive regulation under both federal

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and state law. To the extent that the following information describes statutory provisions and regulations, which apply to the Corporation and its subsidiaries, it is qualified in its entirety by reference to those statutory provisions and regulations.

Regulation of the Corporation

The Bank Holding Company Act

The Corporation, as a bank holding company, is regulated under the Bank Holding Company Act of 1956, as amended (the “Act”). The Act limits the business of bank holding companies to banking, managing or controlling banks, performing certain servicing activities for subsidiaries and engaging in such other activities as the Federal Reserve Board may determine to be closely related to banking. The Corporation and its non-bank subsidiaries are subject to the supervision of the Federal Reserve Board and the Corporation is required to file with the Federal Reserve Board an annual report and such additional information as the Federal Reserve Board may require pursuant to the Act and the regulations which implement the Act. The Federal Reserve Board also conducts inspections of the Corporation and each of its non-banking subsidiaries.

The Act prohibits the Federal Reserve Board from approving a bank holding company’s application to acquire a bank or bank holding company located outside the state in which the operations of its banking subsidiaries are principally conducted, unless such acquisition is

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specifically authorized by statute of the state in which the bank or bank holding company to be acquired is located. Pennsylvania law permits bank holding companies located in any state to acquire Pennsylvania banks and bank holding companies, provided that the home state of the acquiring company has enacted “reciprocal” legislation. In this context, reciprocal legislation is generally defined as legislation that expressly authorizes Pennsylvania bank holding companies to acquire banks or bank holding companies located in another state on terms and conditions substantially no more restrictive than those applicable to such an acquisition in Pennsylvania by a bank holding company located in the other state.

The Act requires each bank holding company to obtain prior approval by the Federal Reserve Board before it may acquire (i) direct or indirect ownership or control of more than 5% of the voting shares of any company, including another bank holding company or a bank, unless it already owns a majority of such voting shares, or (ii) all, or substantially all, of the assets of any company. The Act provides that the Federal Reserve Board shall not approve any acquisition by a bank holding company of more than 5% of the voting shares or substantially all of the assets of a bank located outside of the state in which the operation of the holding company’s bank subsidiaries are principally conducted, unless such acquisition is specifically authorized by a statute of the state in which the bank whose shares are to be acquired is located.

The Act also prohibits a bank holding company from engaging in, or from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company engaged in non-banking activities unless the

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Federal Reserve Board, by order or regulation, has found such activities to be so closely related to banking or to managing or controlling banks as to be appropriate. The Federal Reserve Board has by regulation determined that certain activities are so closely related to banking or to managing or controlling banks, so as to permit bank holding companies, such as the Corporation, and its subsidiaries formed for such purposes, to engage in such activities, subject to obtaining the Federal Reserve Board’s approval in certain cases.

The Act further provides that the Federal Reserve Board shall not approve any such acquisition that would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of the country, or that in any other manner would be in restraint of trade, unless the anti-competitive effects of the proposed transactions are clearly outweighed by the public interest and the probable effect of the transaction in meeting the convenience and needs of the communities to be served.

Under the Act, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with any extension or provision of credit, lease or sale of property or furnishing any service to a customer on the condition that the customer provide additional credit or service to the bank, to its bank holding company or any other subsidiaries of its bank holding company or on the condition that the customer refrain from obtaining credit or service from a competitor of its bank holding company. Further, the Bank, as a subsidiary bank of a bank holding company, such as the Corporation, is subject to

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certain restrictions on any extensions of credit it provides to the Corporation or any of its non-bank subsidiaries, investments in the stock or securities thereof, and on the taking of such stock or securities as collateral for loans to any borrower.

In addition, the Federal Reserve Board may issue cease and desist orders against bank holding companies and non-bank subsidiaries to stop actions believed to present a serious threat to a subsidiary bank. The Federal Reserve Board also regulates certain debt obligations and changes in control of bank holding companies.

Under Federal Reserve Board policy, a bank holding company is expected to act as a source of financial strength to each of its subsidiary banks and to commit resources, including capital funds during periods of financial stress, to support each such bank. Although this “source of strength” policy has been challenged in litigation, the Federal Reserve Board continues to take the position that it has the authority to enforce it. Consistent with its “source of strength” policy for subsidiary banks, the Federal Reserve Board has stated that, as a matter of prudent banking, a bank holding company generally should not maintain a rate of cash dividends unless its net income available to common shareholders has been sufficient to fund fully the dividends, and the prospective rate of earnings retention appears to be consistent with the company’s capital needs, asset quality and overall financial condition.

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Financial Institutions Reform, Recovery and Enforcement Act

Following enactment by the United States Congress, on August 9, 1989, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) became law. Although the more significant provisions of FIRREA relate to promoting the economic viability of thrift institutions through more stringent capital requirements and changes to the regulatory structure of such institutions, FIRREA also contains provisions that directly affect banks and bank holding companies, such as the Corporation. First, FIRREA abolished the Federal Savings and Loan Insurance Corporation and required the Federal Deposit Insurance Corporation (the “FDIC”) to establish two separate funds, the Bank Insurance Fund (“BIF”) to insure banks and the Savings Association Insurance Fund (“SAIF”) to insure savings and loan associations. Second, FIRREA amended the Act to permit bank holding companies to acquire thrift institutions. Prior to FIRREA, bank holding companies were permitted to acquire only failing thrift institutions. FIRREA also abolished the restrictions on tandem operations of acquired thrift institutions and the in-state preference for acquisitions of failing thrifts. Finally, FIRREA enhanced the authority of the regulatory authorities over financial institutions, including banks and bank holding companies, to regulate more effectively with the entire structure of a bank holding company.

Federal law also grants to federal banking agencies the power to issue cease and desist orders when a depository institution or a bank holding company or an officer or director thereof is engaged in or is about to engage in unsafe and unsound practices. The Federal Reserve Board may

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require a bank holding company, such as the Corporation, to discontinue certain of its activities or activities of its other subsidiaries, other than the Bank, or divest itself of such subsidiaries if such activities cause serious risk to the Bank and are inconsistent with the Bank Holding Company Act or other applicable federal banking laws.

Federal Deposit Insurance Corporation Improvement Act of 1991

The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) is legislation designed to reform and provide funding for the deposit insurance system by, among other things, requiring early intervention and closure of troubled institutions by the regulatory authorities and the resolution of failed institutions on the least-cost basis.

The FDICIA substantially alters the deposit insurance assessment process. The requirement that the FDIC provide at least sixty (60) days notice before requiring changes to the semiannual insurance assessment has been removed and the FDIC has the ability to change deposit insurance assessment rates much more rapidly than in the past. FDICIA grants the FDIC the authority to impose special “emergency” assessments on member banks at any time if necessary to pay interest or principal on borrowings or for other appropriate purposes. FDICIA also requires the FDIC to establish a risk-based assessment system for the deposit insurance funds. In addition, FDICIA establishes capital categories, such as, “well-capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized”, and “critically undercapitalized”. Under the guidelines currently

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issued by the regulators, the Bank is currently considered “well-capitalized”.

FDICIA also requires the regulators to place a financial institution under more intense scrutiny if its capital falls into a lower capital category. In addition, FDICIA restricts the liquidity that is available, through the Federal Reserve discount window, to troubled financial institutions and increases the scope of the regulatory authorities supervisory powers over financial institutions, including the Bank and Corporation.

Pursuant to federal law, federal regulatory authorities review the performance of the Corporation and their subsidiaries in meeting the credit needs of the communities served by the Bank. The applicable federal regulatory authority considers compliance with this law in connection with applications for, among other things, approval of branches, branch relocations and acquisitions of banks and bank holding companies.

Pennsylvania Laws Affecting the Corporation

Pennsylvania Anti-Takeover Legislation

The Corporation is also subject to the Pennsylvania Business Corporation Law of 1988, as amended and the general business and other laws of the Commonwealth of Pennsylvania regulating corporations.

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The Pennsylvania Legislature passed the Pennsylvania Anti-Takeover Law Act 36 of the 1990 Pennsylvania Legislature (“Act 36”) on April 27, 1990 which adds additional provisions to and amends the law of Pennsylvania concerning business corporations (the “Corporation Law”). Specifically, Act 36 (i) modifies and limits the fiduciary obligations of a corporation’s directors, withholds voting rights from control shares of corporation stock until consent of the Corporation’s independent shareholders is obtained at a shareholders meeting, prevents “green mail” by providing for disgorgement of certain profits by a control person or group within eighteen (18) months after an attempt to acquire control of a corporation. Act 36 also provides for severance compensation for certain terminated employees following control share acquisitions, and regulates the effect of certain business combinations on labor contracts.

Act 36, which is the Legislature’s response to the large volume of hostile takeovers over recent years, contains provisions which permitted a corporation’s board of directors to “opt-out” of certain provisions of the Act by explicitly amending the corporation’s by-laws on or before July 26, 1990. On July 20, 1990, the Corporation’s Board amended the Corporation’s by-laws to explicitly opt-out of the provisions of Act 36 which modify and limit a director’s fiduciary duty to the Corporation, withhold voting rights from “control shares” of the Corporation stock, and provide for disgorgement of certain profits on certain shares of the Corporation stock by a control person or group within eighteen months after an attempt to acquire the Corporation’s stock. Because the Corporation’s Board of Directors opted out of the provisions of Act 36 concerning fiduciary duty, control share acquisitions, and disgorgement of profits, the severance compensation and labor contract provisions of Act 36 are inapplicable to the Corporation.

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The Corporation’s Board opted-out of those provisions of the Act by amending the Corporation’s by-laws because it believed that those provisions of the Act were not in the best economic interests of the Corporation’s shareholders. In addition, the Board believed that, without those provisions of Act 36, the Board has sufficient flexibility under the applicable law to protect the interest of the shareholders. As outlined in the Corporation’s definitive proxy statement for the 1992 shareholders’ meeting, the Board of Directors recommended that the Corporation’s shareholders ratify and approve the amendment to the Corporation’s by-laws opting out of Act 36.

Shareholder Rights Plan

The Corporation adopted a Shareholder Rights Plan to enhance and protect the value of the shareholders’ investment in the Corporation and discourage unfair or financially inadequate takeover proposals and abusive takeover practices. The Plan provides for distribution of rights to purchase shares of the Corporation’s common stock. The rights would be distributed to shareholders as a dividend at a rate of one right for each share of common stock held by shareholders of record. The rights will be exercisable only if a person or group acquires beneficial ownership of twenty percent or more of the Corporation’s common stock.

Regulation of the Bank

The Corporation’s Pennsylvania state chartered bank, The Bryn Mawr Trust Company, is regulated and supervised by the Pennsylvania Department of

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Banking (the “Department of Banking”) and subject to regulation by The Federal Reserve Board and the FDIC. The Department of Banking and the Federal Reserve Board regularly examine the Bank’s reserves, loans, investments, management practices and other aspects of its operations and the Bank must furnish periodic reports to these agencies. The Bank is a member of the Federal Reserve System.

Federal Reserve Board and Department of Banking Regulations

The Bank’s operations are subject to certain requirements and restrictions under federal and state laws, including requirements to maintain reserves against deposits, limitations on the interest rates that may be paid on certain types of deposits, restrictions on the types and amounts of loans that may be granted and the interest that may be charged thereon, limitations on the types of investments that may be made and the types of services which may be offered. Various consumer laws and regulations also affect the operations of the Bank. These regulations and laws are intended primarily for the protection of the Bank’s depositors and customers rather than holders of the Corporation’s stock.

As a bank incorporated under and subject to Pennsylvania banking laws and insured by the FDIC, the Bank must obtain the prior approval of the Department of Banking and the Federal Reserve Board before establishing a new branch banking office. Depending on the type of bank or financial institution, a merger of banks located in Pennsylvania is subject to the prior approval of one or more of the following: the Department of Banking, the FDIC, the Federal Reserve Board and the Office of the Comptroller of the

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Currency. An approval of a merger by the appropriate bank regulatory agency would depend upon several factors, including whether the merged institution is a federally insured state bank, a member of the Federal Reserve System, or a national bank. Additionally, any new branch expansion or merger must comply with branching restrictions provided by state law. Beginning in 1990, the Pennsylvania Banking Code permitted Pennsylvania banks to establish branches anywhere in the state.

The Bank is insured by the FDIC, which currently insures the Bank’s deposits to a maximum of $100,000 per depositor. For this protection, each insured bank pays a semiannual statutory insurance assessment and is subject to certain rules and regulations of the FDIC. The amount of FDIC assessments paid by individual insured depository institutions, such as the Bank, is based on their relative risk as measured by regulatory capital ratios and certain other factors. Under this system, in establishing the insurance premium assessment for each bank, the FDIC will take into consideration the probability that the deposit insurance fund will incur a loss with respect to an institution, and will charge an institution with perceived higher inherent risks a higher insurance premium. The FDIC will also consider the different categories and concentrations of assets and liabilities of the institution, the revenue needs of the deposit insurance fund, and any other factors the FDIC deems relevant. A significant increase in the assessment rate or a special additional assessment with respect to insured deposits could have an adverse impact on the results of operations and capital levels of the Bank or the Corporation.

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Regulation of the Corporation-

Government Monetary Policies

The earnings and operations of the Corporation and its subsidiaries are affected by the policies of regulatory authorities and legislative changes; in particular, the policies of the Federal Reserve Board in regulating the money supply and interest rates. Among the instruments used by the Federal Reserve Board to implement its objectives are open-market operations in U.S. Government securities, changes in the discount rate for member bank borrowings, changes in reserve requirements against bank deposits, and changes with respect to regulations affecting certain borrowing by banks and their affiliates.

The monetary and fiscal policies of the Federal Reserve Board and the other regulatory agencies have had, and will probably continue to have, an important impact on the operating results of the Bank through their power to implement national monetary policy in order to, among other things, curb inflation or combat a recession. The monetary policies of the Federal Reserve Board may have a major effect upon the levels of the Bank’s loans, investments and deposits through the Federal Reserve Board’s open market operations in United States government securities, through its regulation of, among other things, the discount rate on borrowing of depository institutions, and the reserve requirements against depository institution deposits. It is not possible to predict the nature and impact of future changes in monetary and fiscal policies.

The earnings of the Bank and, therefore, of the Corporation are affected by domestic economic conditions, particularly those conditions in

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the trade area as well as the monetary and fiscal policies of the United States government and its agencies. The payment of dividends by the Bank through the Corporation is the source on which the Corporation currently depends to pay dividends to its shareholders.

The Federal Reserve Board also has authority to prohibit a bank holding company from engaging in any activity or transaction deemed by the Federal Reserve Board to be an unsafe or unsound practice. The payment of dividends could, depending upon the financial condition of the Bank or Corporation, be such an unsafe or unsound practice and the regulatory agencies have indicated their view that it generally would be an unsafe and unsound practice to pay dividends except out of current operating earnings. The ability of the Bank to pay dividends in the future is presently and could be further influenced, among other things, by applicable capital guidelines discussed below or by bank regulatory and supervisory policies. The ability of the Bank to make funds available to the Corporation is also subject to restrictions imposed by federal law. The amount of other payments by the Bank to the Corporation is subject to review by regulatory authorities having appropriate authority over the Bank or Corporation and to certain legal limitations.

The passage of additional legislation by Congress authorizing additional continuing legal and regulatory supervision of financial institutions, requiring additional disclosure concerning deposit transactions and permitting more rapid increases in deposit insurance premiums may increase the cost and the operational expenses even for efficiently run and well-capitalized financial institutions and may adversely affect the profit margins of the Bank and the Corporation.