---

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

FORM 10-QSB



---

(Mark One)

|x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended September 30, 2006



| ̈ | Transition report under Section 13 or 15(d) of the Exchange Act
|- | ---------------------------------------------------------------

For the transition period from  to

Commission file number 333-103651



---

MARCO COMMUNITY BANCORP, INC.

(Exact Name of Small Business Issuer as Specified in Its Charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 84-1620092                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

1770 San Marco Road

Marco Island, Florida 34145

(Address of Principal Executive Offices)

(239) 389-5200

(Issuers Telephone Number, Including Area Code)



(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)



---

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that 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 whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    YES ̈NO  x

State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date;



|                                       |  |                                
|-------------------------------------- |  | -------------------------------
|Common stock, par value $.01 per
share |  | 3,155,059 shares               
|(class)                                |  | Outstanding at October 26, 2006

Transitional Small Business Format (Check One):    YES ̈NO  x



---



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION



|                                                                                                                                |  |      
|------------------------------------------------------------------------------------------------------------------------------- |  | -----
|                                                                                                                                |  | Page 
|Item 1. Financial Statements                                                                                                    |  |      
|                                                                                                                                | 
|Condensed Consolidated Balance Sheets -At September 30, 2006 (unaudited) and at December 31, 2005                               |  | 2    
|                                                                                                                                | 
|Condensed Consolidated Statements of Earnings -Three and Nine Months ended September 30, 2006 and 2005 (unaudited)              |  | 3    
|                                                                                                                                | 
|Condensed Consolidated Statements of Changes in Stockholders Equity -Nine Months ended September 30, 2006 and 2005 (unaudited) |  | 4    
|                                                                                                                                | 
|Condensed Consolidated Statements of Cash Flows -Nine Months ended September 30, 2006 and 2005 (unaudited)                      |  | 5    
|                                                                                                                                | 
|Notes to Condensed Consolidated Financial Statements (unaudited)                                                                |  | 6-11 
|                                                                                                                                | 
|Review by Independent Registered Public Accounting Firm                                                                         |  | 12   
|                                                                                                                                | 
|Report of Independent Registered Public Accounting Firm                                                                         |  | 13   
|                                                                                                                                | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                                   |  | 14-19
|                                                                                                                                | 
|Item 3. Controls and Procedures                                                                                                 |  | 20   
|                                                                                                                                | 
|PART II. OTHER INFORMATION                                                                                                      |  |      
|                                                                                                                                | 
|Item 1. Legal Proceedings                                                                                                       |  | 20   
|                                                                                                                                | 
|Item 6. Exhibits                                                                                                                |  | 21   
|                                                                                                                                | 
|SIGNATURES                                                                                                                      |  | 22   



1



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

($ in thousands, except per share amounts)



|                                                                                                                                  |  |                   |         |                  |        
|--------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ---------------- | -------
|                                                                                                                                  |  | September 30,2006 |         | December 31,2005
|                                                                                                                                  |  | (Unaudited)       |         |                 
|Assets                                                                                                                            |  |                   |         |                  |        
|Cash and due from banks                                                                                                           |  | $                 | 1,904   |                  | 2,140  
|Federal funds sold                                                                                                                |  |                   | 16,766  |                  | 15,151 
|Interest-bearing deposits                                                                                                         |  |                   | 2,114   |                  | 2,050  
|                                                                                                                                  |  |                   |         |                  |        
|Total cash and cash equivalents                                                                                                   |  |                   | 20,784  |                  | 19,341 
|                                                                                                                                  |  |                  
|Securities held to maturity (fair value of $2,319)                                                                                |  |                   | 2,330   |                  |       
|Loans, net of allowance for loan losses of $2,047 in 2006 and $1,699 in 2005                                                      |  |                   | 128,741 |                  | 132,773
|Premises and equipment, net                                                                                                       |  |                   | 3,635   |                  | 3,736  
|Federal Reserve Bank stock, at cost                                                                                               |  |                   | 402     |                  | 372    
|Federal Home Loan Bank stock, at cost                                                                                             |  |                   | 345     |                  |       
|Accrued interest receivable                                                                                                       |  |                   | 706     |                  | 710    
|Other assets                                                                                                                      |  |                   | 634     |                  | 496    
|                                                                                                                                  |  |                   |         |                  |        
|Total assets                                                                                                                      |  | $                 | 157,577 |                  | 157,428
|                                                                                                                                  |  |                   |         |                  |        
|Liabilities and Stockholders Equity                                                                                              |  |                   |         |                  |        
|                                                                                                                                  |  |                  
|Liabilities:                                                                                                                      |  |                   |         |                  |        
|Noninterest-bearing demand deposits                                                                                               |  |                   | 4,069   |                  | 5,750  
|Savings, NOW and money-market deposits                                                                                            |  |                   | 45,309  |                  | 65,072 
|Time deposits                                                                                                                     |  |                   | 84,164  |                  | 66,563 
|                                                                                                                                  |  |                   |         |                  |        
|Total deposits                                                                                                                    |  |                   | 133,542 |                  | 137,385
|                                                                                                                                  |  |                  
|Official checks                                                                                                                   |  |                   | 1,418   |                  | 559    
|Accrued interest payable and other liabilities                                                                                    |  |                   | 1,029   |                  | 1,112  
|                                                                                                                                  |  |                   |         |                  |        
|Total liabilities                                                                                                                 |  |                   | 135,989 |                  | 139,056
|                                                                                                                                  |  |                   |         |                  |        
|Stockholders equity:                                                                                                             |  |                   |         |                  |        
|Preferred stock, no par value; 1,000,000 shares authorized, none issued or outstanding                                            |  |                   |        |                  |       
|Common stock, $.01 par value; 9,000,000 shares authorized, 3,088,545 and 2,842,949 shares issued and outstanding in 2006 and
2005 |  |                   | 31      |                  | 28     
|Additional paid-in capital                                                                                                        |  |                   | 19,569  |                  | 17,420 
|Retained earnings                                                                                                                 |  |                   | 1,988   |                  | 924    
|                                                                                                                                  |  |                   |         |                  |        
|Total stockholders equity                                                                                                        |  |                   | 21,588  |                  | 18,372 
|                                                                                                                                  |  |                   |         |                  |        
|Total liabilities and stockholders equity                                                                                        |  | $                 | 157,577 |                  | 157,428
|                                                                                                                                  |  |                   |         |                  |        

See Accompanying Notes to Condensed Consolidated Financial Statements.



2



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Unaudited)

(In thousands, except per share amounts)



|                                                       |  |                                 |       |                                |       |      |       |      |      
|------------------------------------------------------ |  | ------------------------------- | ----- | ------------------------------ | ----- | ---- | ----- | ---- | -----
|                                                       |  | Three Months EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                                                       |  | 2006                            |       | 2005                           |       | 2006 |       | 2005
|Interest income:                                       |  |                                 |       |                                |       |      |       |      |      
|Loans                                                  |  | $                               | 2,721 |                                | 2,066 |      | 8,164 |      | 5,566
|Other interest-earning assets                          |  |                                 | 322   |                                | 209   |      | 904   |      | 414  
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Total interest income                                  |  |                                 | 3,043 |                                | 2,275 |      | 9,068 |      | 5,980
|                                                       |  |                                 |       |                               
|Interest expense-                                      |  |                                 |       |                                |       |      |       |      |      
|Deposits                                               |  |                                 | 1,273 |                                | 726   |      | 3,580 |      | 1,882
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Net interest income                                    |  |                                 | 1,770 |                                | 1,549 |      | 5,488 |      | 4,098
|                                                       |  |                                 |       |                               
|Provision for loan losses                              |  |                                 |      |                                | 77    |      | 348   |      | 301  
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Net interest income after provision for loan losses    |  |                                 | 1,770 |                                | 1,472 |      | 5,140 |      | 3,797
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Noninterest income:                                    |  |                                 |       |                                |       |      |       |      |      
|Service charges on deposit accounts                    |  |                                 | 7     |                                | 4     |      | 23    |      | 11   
|MCBCLC loan brokerage fees                             |  |                                 |      |                                | 155   |      | 164   |      | 519  
|Other service charges and fees                         |  |                                 | 52    |                                | 73    |      | 150   |      | 202  
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Total noninterest income                               |  |                                 | 59    |                                | 232   |      | 337   |      | 732  
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Noninterest expenses:                                  |  |                                 |       |                                |       |      |       |      |      
|Salaries and employee benefits                         |  |                                 | 701   |                                | 558   |      | 1,876 |      | 1,381
|Occupancy and equipment                                |  |                                 | 119   |                                | 125   |      | 388   |      | 327  
|Advertising                                            |  |                                 | 25    |                                | 23    |      | 122   |      | 104  
|Insurance                                              |  |                                 | 10    |                                | 6     |      | 27    |      | 20   
|Data processing                                        |  |                                 | 51    |                                | 41    |      | 151   |      | 119  
|Telephone                                              |  |                                 | 12    |                                | 9     |      | 34    |      | 28   
|Professional fees                                      |  |                                 | 81    |                                | 60    |      | 196   |      | 188  
|Stationery and supplies                                |  |                                 | 10    |                                | 14    |      | 31    |      | 52   
|Director fees                                          |  |                                 | 30    |                                | 19    |      | 86    |      | 48   
|Other                                                  |  |                                 | 106   |                                | 95    |      | 326   |      | 288  
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Total noninterest expenses                             |  |                                 | 1,145 |                                | 950   |      | 3,237 |      | 2,555
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Earnings before income taxes                           |  |                                 | 684   |                                | 754   |      | 2,240 |      | 1,974
|                                                       |  |                                 |       |                               
|Income taxes                                           |  |                                 | 282   |                                | 284   |      | 879   |      | 743  
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Net earnings                                           |  | $                               | 402   |                                | 470   |      | 1,361 |      | 1,231
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Earnings per share, basic                              |  | $                               | 0.13  |                                | 0.18  |      | 0.46  |      | 0.50 
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Weighted-average number of shares outstanding, basic   |  |                                 | 3,025 |                                | 2,649 |      | 2,967 |      | 2,486
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Earnings per share, diluted                            |  | $                               | 0.13  |                                | 0.17  |      | 0.42  |      | 0.47 
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Weighted-average number of shares outstanding, diluted |  |                                 | 3,203 |                                | 2,720 |      | 3,237 |      | 2,601
|                                                       |  |                                 |       |                                |       |      |       |      |      
|Dividends per share                                    |  | $                               |      |                                |      |      | 0.10  |      |     
|                                                       |  |                                 |       |                                |       |      |       |      |      

See Accompanying Notes to Condensed Consolidated Financial Statements.



3



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in
Stockholders Equity

Nine Months Ended September 30, 2006 and 2005

($ in thousands)



|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|------------------------------------------------------------------------------------ |  | ----------- | -- | ------------------------ | ------ | ------------------------------------ | ----- | - | ------------------------ | ------ | -
|                                                                                     |  | CommonStock |    | AdditionalPaid-InCapital |        | RetainedEarnings(AccumulatedDeficit) |       |   | TotalStockholdersEquity |       
|Balance at December 31, 2004                                                         |  | $           | 16 |                          | 14,322 |                                      | (665  | ) |                          | 13,673 |  
|Exercise of stock warrants (253,568 shares) (unaudited)                              |  |             | 3  |                          | 2,314  |                                      |      |   |                          | 2,317  |  
|Net earnings (unaudited)                                                             |  |             |   |                          |       |                                      | 1,231 |   |                          | 1,231  |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|Balance at September 30, 2005 (unaudited)                                            |  | $           | 19 |                          | 16,636 |                                      | 566   |   |                          | 17,221 |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|Balance at December 31, 2005                                                         |  |             | 28 |                          | 17,420 |                                      | 924   |   |                          | 18,372 |  
|Exercise of stock warrants (194,823 shares) (unaudited)                              |  |             | 2  |                          | 1,557  |                                      |      |   |                          | 1,559  |  
|Exercise of stock options (50,773 shares), including tax benefit of $178 (unaudited) |  |             | 1  |                          | 483    |                                      |      |   |                          | 484    |  
|Share-based compensation (unaudited)                                                 |  |             |   |                          | 109    |                                      |      |   |                          | 109    |  
|Cash dividends paid (unaudited)                                                      |  |             |   |                          |       |                                      | (297  | ) |                          | (297   | )
|Net earnings (unaudited)                                                             |  |             |   |                          |       |                                      | 1,361 |   |                          | 1,361  |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|Balance at September 30, 2006 (unaudited)                                            |  | $           | 31 |                          | 19,569 |                                      | 1,988 |   |                          | 21,588 |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  

See Accompanying Notes to Condensed Consolidated Financial Statements.



4



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)



|                                                                                       |      |                                |        |      |  |         |  
|-------------------------------------------------------------------------------------- | ---- | ------------------------------ | ------ | ---- |  | ------- | -
|                                                                                       |      | Nine Months EndedSeptember 30, |       
|                                                                                       | 2006 |                                |        | 2005 | 
|Cash flows from operating activities:                                                  |      |                                |        |      |  |         |  
|Net earnings                                                                           |      | $                              | 1,361  |      |  | 1,231   |  
|Adjustments to reconcile net earnings to net cash provided by operating activities:    |      |                                |        |      |  |         |  
|Depreciation                                                                           |      |                                | 211    |      |  | 178     |  
|Share-based compensation                                                               |      |                                | 109    |      |  |        |  
|Provision for loan losses                                                              |      |                                | 348    |      |  | 301     |  
|Amortization of loan fees and costs, net                                               |      |                                | (26    | )    |  | (69     | )
|Decrease (increase) in accrued interest receivable                                     |      |                                | 4      |      |  | (176    | )
|(Increase) decrease in other assets                                                    |      |                                | (138   | )    |  | 183     |  
|Increase (decrease) in official checks, accrued interest payable and other liabilities |      |                                | 776    |      |  | (229    | )
|                                                                                       |      |                                |        |      |  |         |  
|Net cash provided by operating activities                                              |      |                                | 2,645  |      |  | 1,419   |  
|                                                                                       |      |                                |        |      |  |         |  
|Cash flows from investing activities:                                                  |      |                                |        |      |  |         |  
|Net decrease (increase) in loans                                                       |      |                                | 3,710  |      |  | (22,908 | )
|Purchase of securities held to maturity                                                |      |                                | (2,330 | )    |  |        |  
|Purchase of premises and equipment                                                     |      |                                | (110   | )    |  | (379    | )
|Purchase of Federal Reserve Bank Stock                                                 |      |                                | (30    | )    |  | (144    | )
|Purchase of Federal Home Loan Bank Stock                                               |      |                                | (345   | )    |  |        |  
|                                                                                       |      |                                |        |      |  |         |  
|Net cash provided by (used in) investing activities                                    |      |                                | 895    |      |  | (23,431 | )
|                                                                                       |      |                                |        |      |  |         |  
|Cash flows from financing activities:                                                  |      |                                |        |      |  |         |  
|Net (decrease) increase in deposits                                                    |      |                                | (3,843 | )    |  | 29,969  |  
|Net proceeds from exercise of common stock warrants and options                        |      |                                | 1,865  |      |  | 2,317   |  
|Cash dividends paid                                                                    |      |                                | (297   | )    |  |        |  
|Tax benefit from exercise of stock options                                             |      |                                | 178    |      |  |        |  
|                                                                                       |      |                                |        |      |  |         |  
|Net cash (used in) provided by financing activities                                    |      |                                | (2,097 | )    |  | 32,286  |  
|                                                                                       |      |                                |        |      |  |         |  
|Net increase in cash and cash equivalents                                              |      |                                | 1,443  |      |  | 10,274  |  
|                                                                                       |      |                               
|Cash and cash equivalents at beginning of period                                       |      |                                | 19,341 |      |  | 18,043  |  
|                                                                                       |      |                                |        |      |  |         |  
|Cash and cash equivalents at end of period                                             |      | $                              | 20,784 |      |  | 28,317  |  
|                                                                                       |      |                                |        |      |  |         |  
|Supplemental disclosure of cash flow information:                                      |      |                                |        |      |  |         |  
|Cash paid during the period for:                                                       |      |                                |        |      |  |         |  
|Interest                                                                               |      | $                              | 3,257  |      |  | 1,806   |  
|                                                                                       |      |                                |        |      |  |         |  
|Income taxes                                                                           |      | $                              | 1,190  |      |  | 225     |  
|                                                                                       |      |                                |        |      |  |         |  

See Accompanying Notes to Condensed Consolidated Financial Statements.



5



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Description of Business and Basis of Presentation

General. Marco Community Bancorp, Inc. (the Holding Company) which was incorporated on January 28, 2003 owns 100% of the outstanding common stock of Marco Community Bank (the
Bank) and MCB Commercial Lending Corp. (MCBCLC) (collectively the Company). The Holding Companys only business activity is the operation of the Bank and MCBCLC. The Bank is a state (Florida) chartered
commercial bank. The Bank offers a variety of community banking services to individual and corporate customers through its banking office located in Marco Island, Florida and its loan production office in Fort Myers, Florida. The deposits of the
Bank are insured by the Federal Deposit Insurance Corporation. MCBCLC was incorporated to provide commercial loans to customers that would otherwise seek financing elsewhere because of credit limit constraints.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting principally of normal
recurring accruals) necessary to present fairly the financial position at September 30, 2006, the results of operations for the three- and nine-month periods ended September 30, 2006 and 2005 and cash flows for the nine month periods ended
September 30, 2006 and 2005. The results of operations for the three- and nine- month periods ended September 30, 2006 are not necessarily indicative of the results to be expected for the year ending December 31, 2006.

2. Loan Impairment and Loan Losses

Impaired
collateral dependent loans were as follows (in thousands):



|                                             |  |                                      |     |                                     |    
|-------------------------------------------- |  | ------------------------------------ | --- | ----------------------------------- | ---
|                                             |  | Three Months EndedSeptember 30, 2006 |     | Nine Months EndedSeptember 30, 2006
|Balance at end of period                     |  | $                                    | 741 |                                     | 741
|                                             |  |                                      |     |                                     |    
|Total related allowance for losses           |  | $                                    | 63  |                                     | 63 
|                                             |  |                                      |     |                                     |    
|Average investment in impaired loans         |  | $                                    | 741 |                                     | 494
|                                             |  |                                      |     |                                     |    
|Interest income recognized on impaired loans |  | $                                    |    |                                     |   
|                                             |  |                                      |     |                                     |    
|Interest income received on impaired loans   |  | $                                    |    |                                     |   
|                                             |  |                                      |     |                                     |    

The Company had no impaired loans during the nine months ended September 30, 2005. At
September 30, 2006, the Company had $863,000 in nonaccrual loans and no loans which were over 90 days past due and still accruing interest. At September 30, 2005, the Company had no nonaccrual loans or loans which were over ninety days
past due but still accruing interest.

(continued)



6



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



2. Loan Impairment and Loan Losses, Continued

The activity in the allowance for loan losses follows (in thousands):



|                          |  |                                 |       |                                |       |      |       |      |       |  
|------------------------- |  | ------------------------------- | ----- | ------------------------------ | ----- | ---- | ----- | ---- | ----- | -
|                          |  | Three Months EndedSeptember 30, |       | Nine Months EndedSeptember 30, |      
|                          |  | 2006                            |       | 2005                           |       | 2006 |       | 2005 |      
|Beginning balance         |  | $                               | 2,047 |                                | 1,303 |      | 1,699 |      | 1,081 |  
|Charge-offs               |  |                                 |      |                                |      |      |      |      | (2    | )
|Provision for loan losses |  |                                 |      |                                | 77    |      | 348   |      | 301   |  
|                          |  |                                 |       |                                |       |      |       |      |       |  
|Ending balance            |  | $                               | 2,047 |                                | 1,380 |      | 2,047 |      | 1,380 |  
|                          |  |                                 |       |                                |       |      |       |      |       |  

3. Earnings Per Share (EPS)

Earnings per share (EPS) of common stock has been computed on the basis of the weighted-average number of shares of common stock outstanding.
Outstanding stock options and warrants are considered dilutive securities for purposes of calculating diluted EPS which is computed using the treasury stock method. All per share amounts reflect the three-for-two stock split paid on
December 15, 2005. The following table presents the calculations of EPS (in thousands, except for per share amounts).



|                                                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|--------------------------------------------------------------------- | -------- | ---- | ---------------------- | ---- | -------------- |  | -------- | ---- | ---------------------- | - | -------------- |  | ----- |  | - | ----
|                                                                      |          | 2006 |                        | 2005
|                                                                      | Earnings |      | Weighted-AverageShares |      | PerShareAmount |  | Earnings |      | Weighted-AverageShares |   | PerShareAmount
|Three Months Ended September 30:                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Basic EPS-                                                            |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Net earnings available to common stockholders                         |          | $    | 402                    |      | 3,025          |  | $        | 0.13 |                        | $ | 470            |  | 2,649 |  | $ | 0.18
|                                                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Effect of dilutive securities-                                        |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Incremental shares from assumed conversion of options and warrants    |          |      |                        |      | 178            |  |          |      |                        |   |                |  | 71    |  |   |     
|                                                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Diluted EPS-                                                          |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Net earnings available to common stockholders and assumed conversions |          | $    | 402                    |      | 3,203          |  | $        | 0.13 |                        | $ | 470            |  | 2,720 |  | $ | 0.17
|                                                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Nine Months Ended September 30:                                       |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Basic EPS-                                                            |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Net earnings available to common stockholders                         |          | $    | 1,361                  |      | 2,967          |  | $        | 0.46 |                        | $ | 1,231          |  | 2,486 |  | $ | 0.50
|                                                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Effect of dilutive securities-                                        |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Incremental shares from assumed conversion of options and warrants    |          |      |                        |      | 270            |  |          |      |                        |   |                |  | 115   |  |   |     
|                                                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Diluted EPS-                                                          |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     
|Net earnings available to common stockholders and assumed conversions |          | $    | 1,361                  |      | 3,237          |  | $        | 0.42 |                        | $ | 1,231          |  | 2,601 |  | $ | 0.47
|                                                                      |          |      |                        |      |                |  |          |      |                        |   |                |  |       |  |   |     



(continued)

7



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



4. Regulatory Capital

The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at September 30, 2006 of the regulatory capital requirements for a well capitalized financial
institution and the Banks actual capital on a percentage basis:



|                                                |  |        |   |  |                       |  
|----------------------------------------------- |  | ------ | - |  | --------------------- | -
|                                                |  | Actual |   |  | RegulatoryRequirement |  
|Total capital to risk-weighted assets           |  | 14.88  | % |  | 10.00                 | %
|Tier I capital to risk-weighted assets          |  | 13.69  | % |  | 6.00                  | %
|Tier I capital to total assets - leverage ratio |  | 10.75  | % |  | 5.00                  | %

5. Share-Based Compensation

Prior to January 1, 2006, the Companys employees and directors stock option plans were accounted for under the recognition and measurement provisions of APB Opinion No. 25 (Opinion 25), Accounting
for Stock Issued to Employees, and related Interpretations, as permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation (as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and
Disclosure) (collectively SFAS 123). No stock-based employee compensation cost was recognized in the Companys consolidated statements of earnings through December 31, 2005, as all options granted under the plans had an exercise price
equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment(SFAS
123R), using the modified-prospective-transition method. Under that transition method, compensation cost recognized in 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of
January 1, 2006, based on the grant date fair value calculated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to December 31, 2005, based on the
grant-date fair value estimated in accordance with the provisions of SFAS 123(R). The directors advisory stock option plan is being expensed over the vesting period based on the fair value of the common stock on the date fully vested.

In addition, prior to the adoption of SFAS 123(R), the tax benefits of stock options exercised were classified as operating cash flows. Since the
adoption of SFAS 123(R), tax benefits resulting from tax deductions in excess of the compensation cost recognized for options are classified as financing cash flows. As the Company adopted the modified-prospective-transition method, the prior period
condensed consolidated cash flow statement was not adjusted to reflect current period presentation.



(continued)

8



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



5. Share-Based Compensation, Continued

The Company accelerated the vesting of all unvested options in the Directors Plan in 2005, primarily to reduce noncash compensation expense that
would have been recorded in its consolidated statements of earnings in future years due to the adoption of SFAS No. 123(R) in January 2006. In accordance with SFAS 123, in 2005 the Company expensed the remaining unrecognized compensation cost
associated with these options in the proforma disclosure. At December 31, 2005, all options in the Directors Plan were exercisable. In March 2006, one director resigned and exercised 7,500 stock options. This resulted in a net expense of
$7,500 during the nine months ended September 30, 2006 for the stock options that would not have been fully vested under the original vesting schedule.

The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123 to options granted under the Companys stock option
plans for the three and nine months ended September 30, 2005. For purposes of this pro forma disclosure, the value of the options is estimated using the Black-Scholes option-pricing model and is being amortized to expense over the options
vesting periods. All per share amounts reflect the three-for-two stock split paid on December 15, 2005 (in thousands, except per share data).



|                                                                                                                |  |                                      |     |                                     |       |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | --- | ----------------------------------- | ----- | -
|                                                                                                                |  | Three Months EndedSeptember 30, 2005 |     | Nine Months EndedSeptember 30, 2005 |      
|Net earnings, as reported                                                                                       |  | $                                    | 470 |                                     | 1,231 |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards |  |                                      |    |                                     | (69   | )
|                                                                                                                |  |                                      |     |                                     |       |  
|Proforma net earnings                                                                                           |  | $                                    | 470 |                                     | 1,162 |  
|                                                                                                                |  |                                      |     |                                     |       |  
|Basic earnings per share:                                                                                       |  |                                      |     |                                     |       |  
|As reported                                                                                                     |  | $                                    | .18 |                                     | .50   |  
|                                                                                                                |  |                                      |     |                                     |       |  
|Proforma                                                                                                        |  | $                                    | .18 |                                     | .47   |  
|                                                                                                                |  |                                      |     |                                     |       |  
|Diluted earnings per share:                                                                                     |  |                                      |     |                                     |       |  
|As reported                                                                                                     |  | $                                    | .17 |                                     | .47   |  
|                                                                                                                |  |                                      |     |                                     |       |  
|Proforma                                                                                                        |  | $                                    | .17 |                                     | .45   |  
|                                                                                                                |  |                                      |     |                                     |       |  

In 2004, the Company adopted three stock option plans. The Employees Stock Option Plan is
for the benefit of officers and other key employees of the Holding Company, the Bank and MCBCLC. A total of 181,100 shares (adjusted) have been reserved for this plan. Stock options are granted at an exercise price equal to or greater than the fair
market value of the common stock on the date of grant. These options have ten year terms and vest 20% a year over a five year period. At September 30, 2006, 1,400 options (adjusted) remain available for grant.



(continued)

9



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



5. Share-Based Compensation, Continued

The Directors Stock Option Plan is for the benefit of directors of the Holding Company, the Bank and MCBCLC. A total of 142,500 shares (adjusted)
have been reserved for this plan. Stock options are granted at an exercise price equal to or greater than the fair market value of the common stock on the date of grant. These options have ten year terms and have various vesting schedules. At
September 30, 2006, 3,750 options (adjusted) remain available for grant.

The Advisory Directors Stock Option Plan is for the
benefit of advisory directors of the Company. A total of 37,500 shares (adjusted) have been reserved for this plan. Stock options are granted at an exercise price equal to or greater than the fair market value of the common stock on the date of
grant. These options have six year terms and begin vesting one year after the date of grant at 25% a year over a four year period. At September 30, 2006, 15,565 options (adjusted) remain available for grant. A summary of the plans is as follows
(in thousands, except for share and per share information):



|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|----------------------------------------- |  | --------------- | - |  | -------------------------------------- | ----- | ---------------------------------------- | ---- | ----------------------- | - | ---
|                                          |  | Numberof Shares |   |  | Weighted-Average PerShareExercisePrice |       | Weighted-AverageRemainingContractualTerm |      | AggregateIntrinsicValue
|The Employees Plan:                      |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options outstanding at December 31, 2005  |  | 124,300         |   |  | $                                      | 6.82  |                                          |      |                         |   |    
|Options granted                           |  | 47,000          |   |  |                                        | 16.00 |                                          |      |                         |   |    
|Options exercised                         |  | (12,150         | ) |  |                                        | 6.09  |                                          |      |                         |   |    
|Options forfeited                         |  | (10,800         | ) |  |                                        | 6.35  |                                          |      |                         |   |    
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options outstanding at September 30, 2006 |  | 148,350         |   |  | $                                      | 9.82  |                                          | 8.69 |                         | $ | 814
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options exercisable at September 30, 2006 |  | 25,200          |   |  | $                                      | 6.51  |                                          | 7.95 |                         | $ | 214
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|The Directors Plan:                      |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options outstanding at December 31, 2005  |  | 138,750         |   |  |                                        | 6.18  |                                          |      |                         |   |    
|Options exercised                         |  | (37,500         | ) |  |                                        | 6.00  |                                          |      |                         |   |    
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options outstanding at September 30, 2006 |  | 101,250         |   |  | $                                      | 6.25  |                                          | 7.46 |                         | $ | 885
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options exercisable at September 30, 2006 |  | 101,250         |   |  | $                                      | 6.25  |                                          | 7.46 |                         | $ | 885
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|The Advisory Directors Plan:             |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options outstanding at December 31, 2005  |  | 24,000          |   |  |                                        | 6.00  |                                          |      |                         |   |    
|Options exercised                         |  | (1,123          | ) |  |                                        | 6.00  |                                          |      |                         |   |    
|Options forfeited                         |  | (2,065          | ) |  |                                        | 6.00  |                                          |      |                         |   |    
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options outstanding at September 30, 2006 |  | 20,812          |   |  | $                                      | 6.00  |                                          | 2.00 |                         | $ | 187
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    
|Options exercisable at September 30, 2006 |  | 10,285          |   |  | $                                      | 6.00  |                                          | 2.00 |                         | $ | 92 
|                                          |  |                 |   |  |                                        |       |                                          |      |                         |   |    



(continued)

10



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



5. Share-Based Compensation, Continued

The total intrinsic value of options exercised during the three and nine months ended September 30, 2006 was $184,000 and $570,000, respectively. The
tax benefit relating to the stock options exercised was $40,000 and $178,000 during the three and nine months ended September 30, 2006. At September 30, 2006, there was $313,000 of total unrecognized compensation expense related to
nonvested share-based compensation arrangements granted under the plans. The cost is expected to be recognized over a weighted-average period of 1.5 years. The total fair value of shares vested and recognized as compensation expense was $35,000 and
$109,000 for the three and nine months ended September 30, 2006, respectively, and no income tax benefit was recognized.

The fair
value of each option granted for the nine months ended September 30, 2006 and 2005 is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions ($ in thousands):



|                                                                                      |      |                                 |           |      |                                |           |      |  |           |      |  |           |  
|------------------------------------------------------------------------------------- | ---- | ------------------------------- | --------- | ---- | ------------------------------ | --------- | ---- |  | --------- | ---- |  | --------- | -
|                                                                                      |      | Three Months EndedSeptember 30, |           |      | Nine Months EndedSeptember 30, |          
|                                                                                      | 2006 |                                 |           | 2005 |                                |           | 2006 |  |           | 2005 | 
|Weighted-average risk-free interest rate                                              |      |                                 | 5.04      | %    |                                | 4.25      | %    |  | 4.79      | %    |  | 4.25      | %
|Weighted-average dividend yield                                                       |      |                                 | 1.23      | %    |                                |          | %    |  | 1.14      | %    |  |          | %
|Weighted-average expected stock volatility                                            |      |                                 | 31.29     | %    |                                | 10.78     | %    |  | 23.98     | %    |  | 10.83     | %
|Expected life in years                                                                |      |                                 | 6.5 years |      |                                | 6.5 years |      |  | 6.5 years |      |  | 8.0 years |  
|                                                                                      |      |                                 |           |     
|Per share weighted-average grant- date fair value of options issued during the period |      | $                               | 5.91      |      |                                | 1.73      |      |  | 6.26      |      |  | 1.88      |  
|                                                                                      |      |                                 |           |      |                                |           |      |  |           |      |  |           |  

As part of its adoption of SFAS 123R, the Company examined its historical pattern of option
exercises in an effort to determine if there were any pattern based on certain employee populations. From this analysis, the Company could not identify any patterns in the exercise of options. As such, the Company used the guidance in Staff
Accounting Bulletin No. 107 to determine the estimated life of options issued subsequent to the adoption of SFAS 123R. Expected volatility is based on historical volatility of the Companys stock.

6. Cash Dividend

On February 21, 2006, the
Board of Directors declared a $0.10 cash dividend on all outstanding common shares for stockholders of record on March 31, 2006 which was distributed on April 15, 2006.

7. Stock Repurchase Program

In July 2006, the Companys Board of Directors approved a stock
repurchase program which allows the Company to acquire up to $200,000 worth of shares of the Companys common stock in the open market.



11



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Review by Independent Registered Public Accounting Firm

Hacker, Johnson & Smith PA, the Companys independent registered public accounting firm, have made a limited review of the financial
data as of September 30, 2006, and for the three- and nine- month periods ended September 30, 2006 and 2005 presented in this document, in accordance with standards established by the Public Company Accounting Oversight Board.

Their report furnished pursuant to Article 10 of Regulation S-X is included herein.



12



---

Report of Independent Registered Public Accounting Firm

Marco Community Bancorp, Inc.

Marco Island, Florida:

We have reviewed the accompanying
interim condensed consolidated balance sheet of Marco Community Bancorp, Inc. and Subsidiaries (the Company) as of September 30, 2006, the related interim condensed consolidated statements of earnings for the three- and nine- month
periods ended September 30, 2006 and 2005 and the related interim condensed consolidated statements of cash flows and changes in stockholders equity for the nine-month periods ended September 30, 2006 and 2005. These interim
condensed financial statements are the responsibility of the Companys management.

We conducted our reviews in accordance with the
standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as
a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying interim condensed consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of the Company as of December 31, 2005, and the related consolidated
statements of earnings, changes in stockholders equity and cash flows for the year then ended (not presented herein); and in our report dated March 13, 2006, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2005, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it
has been derived.



|                              
|------------------------------
|/s/ Hacker, Johnson & Smith PA
|                              
|HACKER, JOHNSON & SMITH PA    
|Tampa, Florida                
|October 26, 2006              



13



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2. Managements Discussion and Analysis

of Financial Condition and Results of Operations

Comparison of September 30, 2006 and December 31, 2005

General

Marco Community Bancorp, Inc. (the Holding Company), which was incorporated on January 28, 2003, owns 100% of the outstanding common
stock of Marco Community Bank (the Bank) and MCB Commercial Lending Corp. (MCBCLC) (collectively the Company). The Holding Companys only business is the ownership and operation of the Bank and MCBCLC. The
Bank is a Florida state-chartered commercial bank and its deposits are insured by the Federal Deposit Insurance Corporation. MCBCLC was incorporated to provide commercial loans to customers that would otherwise seek financing elsewhere because of
credit limit constraints.

Liquidity and Capital Resources

The Companys primary source of cash during the nine months ended September 30, 2006 was from net loan repayments of $3.7 million. Cash was used primarily to fund deposit outflows totaling $3.8 million and
to purchase securities of $2.3 million. At September 30, 2006, the Bank exceeded its regulatory liquidity requirements.

Off-Balance Sheet
Arrangements

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments include unused lines of credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amounts recognized in the condensed consolidated
balance sheet. The contract on notional amounts of those instruments reflect the extent of the Companys involvement in particular classes of financial instruments.

The Companys exposure to credit loss in the event of nonperformance by the other party to the financial instruments for unused lines of credit is represented by the contractual amount of those instruments. The
Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customers credit worthiness on a case-by-case basis. The amount of
collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the counterparty.



14



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2. Managements Discussion and Analysis

of Financial Condition and Results of Operations, Continued

Off-Balance Sheet Arrangements, Continued

Unused lines of credit typically result in loans with a market interest rate when funded.

A summary of the Companys financial instruments with off-balance sheet risk at September 30, 2006 follows (in thousands):



|                       |  |                |       
|---------------------- |  | -------------- | ------
|                       |  | ContractAmount
|Unused lines of credit |  | $              | 27,573
|                       |  |                |       

Management believes that the Company has adequate resources to fund all of its commitments.

The following table shows selected ratios for the periods ended or at the dates indicated:



|                                                 |  |                                   |   |  |                            |   |  |                                   |  
|------------------------------------------------ |  | --------------------------------- | - |  | -------------------------- | - |  | --------------------------------- | -
|                                                 |  | Nine MonthsEndedSeptember 30,2006 |   |  | Year EndedDecember 31,2005 |   |  | Nine MonthsEndedSeptember 30,2005 |  
|Average equity as a percentage of average assets |  | 12.32                             | % |  | 11.50                      | % |  | 11.14                             | %
|Total equity to total assets at end of period    |  | 13.70                             | % |  | 11.67                      | % |  | 11.34                             | %
|Return on average assets (1)                     |  | 1.12                              | % |  | 1.15                       | % |  | 1.21                              | %
|Return on average equity (1)                     |  | 9.07                              | % |  | 10.03                      | % |  | 10.83                             | %
|Noninterest expense to average assets (1)        |  | 2.66                              | % |  | 2.59                       | % |  | 2.51                              | %

---

|(1) | Annualized for the nine months ended September 30, 2006 and 2005.
|--- | -----------------------------------------------------------------



15



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Results of Operations

The following table sets forth, for the
periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on
interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread; and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the
average balance of assets or liabilities, respectively, for the periods shown.



|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|---------------------------------------------------------------- | -------------- | -------------------------------- | -------------------- | ---- | ----------------- | ----- |  | -------------- | - | -------------------- | - | ----------------- |  | - | ----- |  | ---- | -
|                                                                 |                | Three Months Ended September 30, |                     
|                                                                 | 2006           |                                  |                      | 2005 |                  
|                                                                 | AverageBalance |                                  | InterestandDividends |      | AverageYield/Cost |       |  | AverageBalance |   | InterestandDividends |   | AverageYield/Cost | 
|                                                                 |                | ($ in thousands)                 |                     
|Interest-earning assets:                                         |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Loans                                                            |                | $                                | 128,358              |      |                   | 2,721 |  | 8.41           | % |                      | $ | 116,004           |  |   | 2,066 |  | 7.07 | %
|Other interest-earning assets (1)                                |                |                                  | 26,476               |      |                   | 322   |  | 4.83           |   |                      |   | 23,704            |  |   | 209   |  | 3.50 |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total interest-earning assets                                    |                |                                  | 154,834              |      |                   | 3,043 |  | 7.80           |   |                      |   | 139,708           |  |   | 2,275 |  | 6.46 |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Noninterest-earning assets                                       |                |                                  | 3,239                |      |                   |       |  |                |   |                      |   | 6,228             |  |   |       |  |      |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total assets                                                     |                | $                                | 158,073              |      |                   |       |  |                |   |                      | $ | 145,936           |  |   |       |  |      |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Interest-bearing liabilities:                                    |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Savings, MMDA, NOW                                               |                |                                  | 46,629               |      |                   | 253   |  | 2.15           |   |                      |   | 76,092            |  |   | 320   |  | 1.67 |  
|Time deposits                                                    |                |                                  | 84,410               |      |                   | 1,020 |  | 4.79           |   |                      |   | 45,403            |  |   | 406   |  | 3.55 |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total interest-bearing liabilities                               |                |                                  | 131,039              |      |                   | 1,273 |  | 3.85           |   |                      |   | 121,495           |  |   | 726   |  | 2.37 |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Noninterest-bearing liabilities                                  |                |                                  | 5,952                |      |                   |       |  |                |   |                      |   | 7,659             |  |   |       |  |      |  
|Stockholders equity                                             |                |                                  | 21,082               |      |                   |       |  |                |   |                      |   | 16,782            |  |   |       |  |      |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total liabilities and stockholders equity                       |                | $                                | 158,073              |      |                   |       |  |                |   |                      | $ | 145,936           |  |   |       |  |      |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Net interest income                                              |                |                                  |                      |      | $                 | 1,770 |  |                |   |                      |   |                   |  | $ | 1,549 |  |      |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Interest-rate spread (2)                                         |                |                                  |                      |      |                   |       |  | 3.95           | % |                      |   |                   |  |   |       |  | 4.09 | %
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Net interest-earning assets, net margin (3)                      |                | $                                | 23,795               |      |                   |       |  | 4.54           | % |                      | $ | 18,213            |  |   |       |  | 4.40 | %
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Ratio of interest-earning assets to interest-bearing liabilities |                |                                  | 1.18                 |      |                   |       |  |                |   |                      |   | 1.15              |  |   |       |  |      |  
|                                                                 |                |                                  |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  

---

|(1) | Includes interest-earning deposits, federal funds sold, Federal Reserve Bank stock and Federal Home Loan Bank stock.
|--- | --------------------------------------------------------------------------------------------------------------------

|(2) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net interest margin is annualized net interest income divided by average interest-earning assets.
|--- | -------------------------------------------------------------------------------------------------



16



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the average balance of assets or liabilities, respectively, for the periods shown.



|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|---------------------------------------------------------------- | -------------- | ------------------------------- | -------------------- | ---- | ----------------- | ----- |  | -------------- | - | -------------------- | - | ----------------- |  | - | ----- |  | ---- | -
|                                                                 |                | Nine Months Ended September 30, |                     
|                                                                 | 2006           |                                 |                      | 2005 |                  
|                                                                 | AverageBalance |                                 | InterestandDividends |      | AverageYield/Cost |       |  | AverageBalance |   | InterestandDividends |   | AverageYield/Cost | 
|                                                                 |                | ($ in thousands)                |                     
|Interest-earning assets:                                         |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Loans                                                            |                | $                               | 132,350              |      |                   | 8,164 |  | 8.25           | % |                      | $ | 111,536           |  |   | 5,566 |  | 6.67 | %
|Other interest-earning assets (1)                                |                |                                 | 27,187               |      |                   | 904   |  | 4.45           |   |                      |   | 18,851            |  |   | 414   |  | 2.94 |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total interest-earning assets                                    |                |                                 | 159,537              |      |                   | 9,068 |  | 7.60           |   |                      |   | 130,387           |  |   | 5,980 |  | 6.13 |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Noninterest-earning assets                                       |                |                                 | 3,301                |      |                   |       |  |                |   |                      |   | 5,976             |  |   |       |  |      |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total assets                                                     |                | $                               | 162,838              |      |                   |       |  |                |   |                      | $ | 136,363           |  |   |       |  |      |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Interest-bearing liabilities:                                    |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Savings, MMDA, NOW                                               |                |                                 | 53,429               |      |                   | 781   |  | 1.95           |   |                      |   | 75,890            |  |   | 909   |  | 1.60 |  
|Time deposits                                                    |                |                                 | 81,877               |      |                   | 2,799 |  | 4.57           |   |                      |   | 38,648            |  |   | 973   |  | 3.37 |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total interest-bearing liabilities                               |                |                                 | 135,306              |      |                   | 3,580 |  | 3.54           |   |                      |   | 114,538           |  |   | 1,882 |  | 2.20 |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Noninterest-bearing liabilities                                  |                |                                 | 7,475                |      |                   |       |  |                |   |                      |   | 6,633             |  |   |       |  |      |  
|Stockholders equity                                             |                |                                 | 20,057               |      |                   |       |  |                |   |                      |   | 15,192            |  |   |       |  |      |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Total liabilities and stockholders equity                       |                | $                               | 162,838              |      |                   |       |  |                |   |                      | $ | 136,363           |  |   |       |  |      |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Net interest income                                              |                |                                 |                      |      | $                 | 5,488 |  |                |   |                      |   |                   |  | $ | 4,098 |  |      |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Interest-rate spread (2)                                         |                |                                 |                      |      |                   |       |  | 4.06           | % |                      |   |                   |  |   |       |  | 3.93 | %
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Net interest-earning assets, net margin (3)                      |                | $                               | 24,231               |      |                   |       |  | 4.60           | % |                      | $ | 15,849            |  |   |       |  | 4.20 | %
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  
|Ratio of interest-earning assets to interest-bearing liabilities |                |                                 | 1.18                 |      |                   |       |  |                |   |                      |   | 1.14              |  |   |       |  |      |  
|                                                                 |                |                                 |                      |      |                   |       |  |                |   |                      |   |                   |  |   |       |  |      |  

---

|(1) | Includes interest-earning deposits, federal funds sold, Federal Reserve Bank stock and Federal Home Loan Bank stock.
|--- | --------------------------------------------------------------------------------------------------------------------

|(2) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net interest margin is annualized net interest income divided by average interest-earning assets.
|--- | -------------------------------------------------------------------------------------------------



17



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended September 30, 2006 and 2005

General. Net earnings for the three months ended September 30, 2006 were $402,000 or $0.13 basic and diluted earnings per share
compared to net earnings of $470,000 or $0.18 basic earnings per share and $0.17 diluted earnings per share for the three months ended September 30, 2005. The decrease in the Companys net earnings was primarily due to a decrease in
noninterest income and an increase in noninterest expenses partially offset by an increase in net interest income.

Interest Income
and Expense. Interest income increased to $3,043,000 for the three months ended September 30, 2006 from $2,275,000 for the three months ended September 30, 2005. Interest income on loans increased to $2,721,000 primarily due to an
increase in the average loan portfolio balance for the three months ended September 30, 2006 combined with an increase in the weighted-average yield earned in 2006.

Interest expense on interest-bearing deposits increased to $1,273,000 for the three months ended September 30, 2006 compared to $726,000 for the three months ended September 30, 2005. Interest expense on
interest-bearing deposits increased due to an increase in the average balance in 2006 combined with an increase in the weighted interest rate paid on deposits.

Provision for Loan Losses. The provision for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the
volume and type of lending conducted by the Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Companys market areas, and other factors related to the collectibility
of the Companys loan portfolio. The Company recorded no provision for loan losses for the three months ended September 30, 2006 compared to $77,000 for the comparable period in 2005. Management believes the balance in the allowance for
loan losses of $2,047,000 at September 30, 2006 is adequate.

Noninterest Income.Noninterest income was $59,000 during
the three month period ended September 30, 2006 compared to $232,000 for the same period in 2005. A decrease in loan brokerage fees from MCBCLC transactions accounted for $155,000 of the decrease.

Noninterest Expenses. Noninterest expenses increased to $1,145,000 during the three-month period ended September 30, 2006 compared to
$950,000 for the same period in 2005. Noninterest expense increased primarily due to an increase in salaries and employee benefits.

Income Taxes. The Company recorded a provision for income taxes of $282,000 for the three-month period ended September 30, 2006 compared to a provision for income tax of $284,000 for the 2005 period.



18



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Comparison of the Nine-Month Periods Ended September 30, 2006 and 2005

General. Net earnings for the nine months ended September 30, 2006 were $1,361,000 or $0.46 basic and $0.42 diluted earnings per share
compared to net earnings of $1,231,000 or $0.50 basic and $0.47 diluted earnings per share for the nine months ended September 30, 2005. The increase in the Companys net earnings was primarily due to an increase in net interest income,
partially offset by a decrease in noninterest income and an increase in noninterest expenses and the provision for income taxes.

Interest Income and Expense. Interest income increased to $9,068,000 for the nine months ended September 30, 2006 from $5,980,000 for the nine months ended September 30, 2005. Interest income on loans increased to
$8,164,000 primarily due to an increase in the average loan portfolio balance for the nine months ended September 30, 2006 combined with an increase in the weighted-average yield earned in 2006. Interest income on other interest-earning assets
increased to $904,000 due to an increase in average other interest-earning assets combined with an increase in average yields.

Interest
expense on interest-bearing deposits increased to $3,580,000 for the nine months ended September 30, 2006 compared to $1,882,000, for the nine months ended September 30, 2005. Interest expense on interest-bearing deposits increased due to
an increase in the average balance in 2006 combined with an increase in the weighted interest rate paid on deposits.

Provision for
Loan Losses. The provision for loan losses is charged to operations to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company,
industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Companys market areas, and other factors related to the collectibility of the Companys loan portfolio. The provision
for loan losses was $348,000 for the nine months ended September 30, 2006 compared to $301,000 for the comparable period in 2005. Management believes the balance in the allowance for loan losses of $2,047,000 at September 30, 2006 is
adequate.

Noninterest Income.Noninterest income decreased to $337,000 during the nine month period ended September 30,
2006 compared $732,000 for the same period in 2005. A decrease in loan brokerage fees from MCBCLC transactions accounted for $355,000 of the decrease.

Noninterest Expenses. Noninterest expenses increased to $3,237,000 during the nine-month period ended September 30, 2006 compared to $2,555,000 for the same period in 2005. Noninterest expense
increased primarily due to an increase in salaries and employee benefits.

Income Taxes. The Company recorded a provision for
income taxes of $879,000 for the nine-month period ended September 30, 2006 (an effective rate of 39.2%) compared to an income tax provision of $743,000 for the 2005 period (an effective rate of 37.6%).



19



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 3. Controls and Procedures



|a. | Evaluation of disclosure controls and procedures. The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports
that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their
evaluation of those controls and procedures performed within 90 days of the filing date of this report, the Chief Executive and Chief Financial officers of the Company concluded that the Companys disclosure controls and procedures were
adequate.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b. | Changes in internal controls. The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent
to the date of the evaluation of those controls by the Chief Executive and Chief Financial officers.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which Marco Community Bancorp, Inc. and
Subsidiaries is a party or to which any property is subject.



20



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 6. Exhibits

(a)Exhibits

The exhibits
denominated with (a) were filed with the Companys Form SB-2 which was filed with the Securities and Exchange Commission on March 7, 2003, those denominated with (b) were filed with the Companys Form 10-KSB which was filed
with the Securities and Exchange Commission on March 29, 2004, those denominated with (c) were filed with the Companys Form SB-2 SEC No. 333-117877 which was filed with the Securities and Exchange Commission on August 2,
2004, those denominated with (d) were filed with the Companys Form 10-QSB which was filed with the Securities and Exchange Commission on November 15, 2004, and those denominated with (e) were filed with the Companys Form
8-K which was filed with the Securities and Exchange Commission on July 27, 2006.



|            |  |                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                       
|(a) 3.1     |  | Articles of Incorporation of Marco Community Bancorp, Inc. as filed with the Florida Department of State                                     
|(a) 3.2     |  | Bylaws of Marco Community Bancorp, Inc.                                                                                                      
|(a) 4.1     |  | Specimen Common Stock Certificate                                                                                                            
|(a) 4.2     |  | 2003 Warrant Plan                                                                                                                            
|(c) 4.4     |  | Specimen Warrant Certificate (2004)                                                                                                          
|(e) 10.1    |  | Employment Agreement with Howard B. Montgomery                                                                                               
|(c) 10.2    |  | Letter Agreement with Thomas M. Whelan                                                                                                       
|(d) 10.3    |  | Employees Stock Option Plan                                                                                                                 
|(d) 10.4    |  | Directors Stock Option Plan                                                                                                                 
|(d) 10.5    |  | Advisory Directors Stock Option Plan                                                                                                        
|(e) 10.6    |  | 2006 Stock Repurchase Plan                                                                                                                   
|31.1        |  | Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act                                         
|31.2        |  | Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act                                         
|32.1        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002
|32.2        |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002



21



---

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



|                       |  |                               |  |                                               
|---------------------- |  | ----------------------------- |  | ----------------------------------------------
|                       |  | MARCO COMMUNITY BANCORP, INC.
|                       |  | (Registrant)                 
|                       |  |                              
|Date: November 1, 2006 |  | By:                           |  | /s/ Stephen A. McLaughlin                     
|                       |  |                               |  | Stephen A. McLaughlin, Chief Executive Officer
|                       |  |                              
|Date: November 1, 2006 |  | By:                           |  | /s/ Thomas M. Whelan                          
|                       |  |                               |  | Thomas M. Whelan, Senior Vice President and   
|                       |  |                               |  | Chief Financial Officer                       



22