---



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 March 31, 2004



| ̈ | 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      |  | (I.R.S. Employer   
|of Incorporation or Organization) |  | Identification No.)



1122 North Collier
Boulevard

Marco Island, Florida 34145

(Address of Principal Executive Offices)



(239) 394-3901

(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 12, 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 ̈



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 |  | 1,300,352 shares             
|(class)                                |  | Outstanding at April 21, 2004



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



---



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



INDEX



|                                                                                                                                                                                                        |  |      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----
|                                                                                                                                                                                                        |  | Page 
|                                                                                                                                                                                                        | 
|PART I. FINANCIAL INFORMATION                                                                                                                                                                           |  |      
|                                                                                                                                                                                                        | 
|Item 1. Financial Statements                                                                                                                                                                            |  |      
|                                                                                                                                                                                                        | 
|Condensed Consolidated Balance Sheets - At March 31, 2004 (unaudited) and at December 31, 2003                                                                                                          |  | 2    
|                                                                                                                                                                                                        | 
|Condensed Consolidated Statements of Operations - Three Months ended March 31, 2004 and for the Period from January 28, 2003 (Date of Incorporation) to March 31, 2003 (unaudited)                      |  | 3    
|                                                                                                                                                                                                        | 
|Condensed Consolidated Statements of Changes in Stockholders Equity - Three Months ended March 31, 2004 and for the Period from January 28, 2003 (Date of Incorporation) to March 31, 2003 (unaudited) |  | 4    
|                                                                                                                                                                                                        | 
|Condensed Consolidated Statements of Cash Flows  Three Months ended March 31, 2004 and for the Period from January 28, 2003 (Date of Incorporation) to March 31, 2003 (unaudited)                      |  | 5    
|                                                                                                                                                                                                        | 
|Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                        |  | 6-7  
|                                                                                                                                                                                                        | 
|Review by Independent Accountants                                                                                                                                                                       |  | 8    
|                                                                                                                                                                                                        | 
|Independent Accountants Report                                                                                                                                                                         |  | 9    
|                                                                                                                                                                                                        | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                           |  | 10-12
|                                                                                                                                                                                                        | 
|Item 3. Controls and Procedures                                                                                                                                                                         |  | 13   
|                                                                                                                                                                                                        | 
|PART II. OTHER INFORMATION                                                                                                                                                                              |  |      
|                                                                                                                                                                                                        | 
|Item 1. Legal Proceedings                                                                                                                                                                               |  | 13   
|                                                                                                                                                                                                        | 
|Item 6. Exhibits and Reports on Form 8-K                                                                                                                                                                |  | 14   
|                                                                                                                                                                                                        | 
|SIGNATURES                                                                                                                                                                                              |  | 15   



1



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



Condensed Consolidated Balance Sheets



|                                                                                                                                  |  |               |            |   |                  |            |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | ---------- | -
|                                                                                                                                  |  | March 31,2004 |            |   | December 31,2003 |           
|                                                                                                                                  |  | (Unaudited)   |            |   |                  |           
|Assets                                                                                                                            |  |               |            |   |                  |            |  
|Cash and due from banks                                                                                                           |  | $             | 1,019,114  |   |                  | 1,019,814  |  
|Federal funds sold                                                                                                                |  |               | 13,698,000 |   |                  | 8,829,000  |  
|                                                                                                                                  |  |               |            |   |                  |            |  
|Total cash and cash equivalents                                                                                                   |  |               | 14,717,114 |   |                  | 9,848,814  |  
|Loans, net of allowance for loan losses of $413,838 in 2004 and $235,716 in 2003                                                  |  |               | 32,728,922 |   |                  | 18,625,199 |  
|Premises and equipment, net                                                                                                       |  |               | 2,501,319  |   |                  | 2,064,253  |  
|Federal Reserve Bank stock, at cost                                                                                               |  |               | 175,300    |   |                  | 180,950    |  
|Accrued interest receivable                                                                                                       |  |               | 88,267     |   |                  | 48,302     |  
|Deferred income taxes                                                                                                             |  |               | 441,031    |   |                  | 341,983    |  
|Other assets                                                                                                                      |  |               | 31,544     |   |                  | 175,766    |  
|                                                                                                                                  |  |               |            |   |                  |            |  
|Total assets                                                                                                                      |  | $             | 50,683,497 |   |                  | 31,285,267 |  
|                                                                                                                                  |  |               |            |   |                  |            |  
|Liabilities and Stockholders Equity                                                                                              |  |               |            |   |                  |            |  
|Liabilities:                                                                                                                      |  |               |            |   |                  |            |  
|Noninterest-bearing demand deposits                                                                                               |  |               | 2,669,938  |   |                  | 3,346,587  |  
|Savings, NOW and money-market deposits                                                                                            |  |               | 32,502,400 |   |                  | 14,451,702 |  
|Time deposits                                                                                                                     |  |               | 3,981,788  |   |                  | 1,730,847  |  
|                                                                                                                                  |  |               |            |   |                  |            |  
|Total deposits                                                                                                                    |  |               | 39,154,126 |   |                  | 19,529,136 |  
|Official checks                                                                                                                   |  |               | 525,018    |   |                  | 504,894    |  
|Accrued interest payable and other liabilities                                                                                    |  |               | 73,898     |   |                  | 159,106    |  
|                                                                                                                                  |  |               |            |   |                  |            |  
|Total liabilities                                                                                                                 |  |               | 39,753,042 |   |                  | 20,193,136 |  
|                                                                                                                                  |  |               |            |   |                  |            |  
|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, 1,300,277 and 1,300,000 shares issued and outstanding in 2004 and
2003 |  |               | 13,003     |   |                  | 13,000     |  
|Additional paid-in capital                                                                                                        |  |               | 11,648,440 |   |                  | 11,645,950 |  
|Accumulated deficit                                                                                                               |  |               | (730,988   | ) |                  | (566,819   | )
|                                                                                                                                  |  |               |            |   |                  |            |  
|Total stockholders equity                                                                                                        |  |               | 10,930,455 |   |                  | 11,092,131 |  
|                                                                                                                                  |  |               |            |   |                  |            |  
|Total liabilities and stockholders equity                                                                                        |  | $             | 50,683,497 |   |                  | 31,285,267 |  
|                                                                                                                                  |  |               |            |   |                  |            |  



See Accompanying Notes
to Condensed Consolidated Financial Statements.



2



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Condensed Consolidated Statements of Operations (Unaudited)



|                                                                 |  |                                  |           |   |                                                                                |         |  
|---------------------------------------------------------------- |  | -------------------------------- | --------- | - | ------------------------------------------------------------------------------ | ------- | -
|                                                                 |  | Three Months EndedMarch 31, 2004 |           |   | For the Period from January 28, 2003 (Date of Incorporation) to March
31, 2003 |        
|Interest income:                                                 |  |                                  |           |   |                                                                                |         |  
|Loans                                                            |  | $                                | 320,278   |   |                                                                                |        |  
|Other interest-earning assets                                    |  |                                  | 31,365    |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Total interest income                                            |  |                                  | 351,643   |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Interest expense-                                                |  |                                  |           |   |                                                                                |         |  
|Deposits                                                         |  |                                  | 80,698    |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Net interest income                                              |  |                                  | 270,945   |   |                                                                                |        |  
|Provision for loan losses                                        |  |                                  | 178,122   |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Net interest income after provision for loan losses              |  |                                  | 92,823    |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Noninterest income:                                              |  |                                  |           |   |                                                                                |         |  
|Service charges on deposit accounts                              |  |                                  | 1,507     |   |                                                                                |        |  
|Other service charges and fees                                   |  |                                  | 2,563     |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Total noninterest income                                         |  |                                  | 4,070     |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Noninterest expenses:                                            |  |                                  |           |   |                                                                                |         |  
|Salaries and employee benefits                                   |  |                                  | 193,858   |   |                                                                                |        |  
|Occupancy and equipment                                          |  |                                  | 45,496    |   |                                                                                |        |  
|Advertising                                                      |  |                                  | 18,108    |   |                                                                                |        |  
|Insurance                                                        |  |                                  | 3,798     |   |                                                                                |        |  
|Data processing                                                  |  |                                  | 21,154    |   |                                                                                |        |  
|Telephone                                                        |  |                                  | 4,191     |   |                                                                                |        |  
|Professional fees                                                |  |                                  | 20,309    |   |                                                                                |        |  
|Preopening and organizational expenses                           |  |                                  |          |   |                                                                                | 12,467  |  
|Other                                                            |  |                                  | 53,196    |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Total noninterest expenses                                       |  |                                  | 360,110   |   |                                                                                | 12,467  |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Loss before income tax benefit                                   |  |                                  | (263,217  | ) |                                                                                | (12,467 | )
|Income tax benefit                                               |  |                                  | 99,048    |   |                                                                                |        |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Net loss                                                         |  | $                                | (164,169  | ) |                                                                                | (12,467 | )
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Loss per share, basic and diluted                                |  | $                                | (.13      | ) |                                                                                | N/A     |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Weighted-average number of shares outstanding, basic and diluted |  |                                  | 1,300,218 |   |                                                                                | N/A     |  
|                                                                 |  |                                  |           |   |                                                                                |         |  
|Dividends per share                                              |  | $                                |          |   |                                                                                | N/A     |  
|                                                                 |  |                                  |           |   |                                                                                |         |  



See Accompanying Notes
to Condensed Consolidated Financial Statements.



3



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Condensed Consolidated Statements of Changes in Stockholders Equity



For the Period from January 28, 2003 (Date of Incorporation)

to March 31,
2003 and the Three Months Ended March 31, 2004



|                                                    |  |             |        |                          |            |                    |          |   |                          |            |  
|--------------------------------------------------- |  | ----------- | ------ | ------------------------ | ---------- | ------------------ | -------- | - | ------------------------ | ---------- | -
|                                                    |  | CommonStock |        | AdditionalPaid-InCapital |            | AccumulatedDeficit |          |   | TotalStockholdersEquity |           
|Balance at January 28, 2003 (date of incorporation) |  | $           |       |                          |           |                    | (90,473  | ) |                          | (90,473    | )
|Net loss (unaudited)                                |  |             |       |                          |           |                    | (12,467  | ) |                          | (12,467    | )
|                                                    |  |             |        |                          |            |                    |          |   |                          |            |  
|Balance at March 31, 2003 (unaudited)               |  | $           |       |                          |           |                    | (102,940 | ) |                          | (102,940   | )
|                                                    |  |             |        |                          |            |                    |          |   |                          |            |  
|Balance at December 31, 2003                        |  | $           | 13,000 |                          | 11,645,950 |                    | (566,819 | ) |                          | 11,092,131 |  
|Exercise of stock warrants (277 shares) (unaudited) |  |             | 3      |                          | 2,490      |                    |         |   |                          | 2,493      |  
|Net loss (unaudited)                                |  |             |       |                          |           |                    | (164,169 | ) |                          | (164,169   | )
|                                                    |  |             |        |                          |            |                    |          |   |                          |            |  
|Balance at March 31, 2004 (unaudited)               |  | $           | 13,003 |                          | 11,648,440 |                    | (730,988 | ) |                          | 10,930,455 |  
|                                                    |  |             |        |                          |            |                    |          |   |                          |            |  



See Accompanying Notes
to Condensed Consolidated Financial Statements.



4



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Condensed Consolidated Statements of Cash Flows (Unaudited)



|                                                                                          |  |                                  |             |   |                                                                            |          |  
|----------------------------------------------------------------------------------------- |  | -------------------------------- | ----------- | - | -------------------------------------------------------------------------- | -------- | -
|                                                                                          |  | Three Months EndedMarch 31, 2004 |             |   | For the Period fromJanuary 28, 2003(Date ofIncorporation) toMarch
31, 2003 |         
|Cash flows from operating activities:                                                     |  |                                  |             |   |                                                                            |          |  
|Net loss                                                                                  |  | $                                | (164,169    | ) |                                                                            | (12,467  | )
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |                                  |             |   |                                                                            |          |  
|Depreciation                                                                              |  |                                  | 17,755      |   |                                                                            |         |  
|Provision for loan losses                                                                 |  |                                  | 178,122     |   |                                                                            |         |  
|Credit for deferred income taxes                                                          |  |                                  | (99,048     | ) |                                                                            |         |  
|Amortization of loan fees, net                                                            |  |                                  | (5,591      | ) |                                                                            |         |  
|Increase in accrued interest receivable                                                   |  |                                  | (39,965     | ) |                                                                            |         |  
|Decrease in other assets                                                                  |  |                                  | 144,222     |   |                                                                            | 24,716   |  
|(Decrease) increase in official checks, accrued interest payable and other liabilities    |  |                                  | (65,084     | ) |                                                                            | 4,374    |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Net cash (used in) provided by operating activities                                       |  |                                  | (33,758     | ) |                                                                            | 16,623   |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Cash flows from investing activities:                                                     |  |                                  |             |   |                                                                            |          |  
|Net increase in loans                                                                     |  |                                  | (14,276,254 | ) |                                                                            |         |  
|Purchase of premises and equipment                                                        |  |                                  | (454,821    | ) |                                                                            | (899,705 | )
|Redemption of Federal Reserve Bank Stock                                                  |  |                                  | 5,650       |   |                                                                            |         |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Net cash used in investing activities                                                     |  |                                  | (14,725,425 | ) |                                                                            | (899,705 | )
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Cash flows from financing activities:                                                     |  |                                  |             |   |                                                                            |          |  
|Net increase in deposits                                                                  |  |                                  | 19,624,990  |   |                                                                            |         |  
|Net proceeds from exercise of common stock warrants                                       |  |                                  | 2,493       |   |                                                                            |         |  
|Increase in due to organizers                                                             |  |                                  |            |   |                                                                            | 60,000   |  
|Net increase in line of credit                                                            |  |                                  |            |   |                                                                            | 852,456  |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Net cash provided by financing activities                                                 |  |                                  | 19,627,483  |   |                                                                            | 912,456  |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Net increase in cash and cash equivalents                                                 |  |                                  | 4,868,300   |   |                                                                            | 29,374   |  
|Cash and cash equivalents at beginning of period                                          |  |                                  | 9,848,814   |   |                                                                            | 12,835   |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Cash and cash equivalents at end of period                                                |  | $                                | 14,717,114  |   |                                                                            | 42,209   |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Supplemental disclosure of cash flow information:                                         |  |                                  |             |   |                                                                            |          |  
|Cash paid during the period for:                                                          |  |                                  |             |   |                                                                            |          |  
|Interest, net of interest capitalized of $19,119                                          |  | $                                | 65,365      |   |                                                                            |         |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  
|Income taxes                                                                              |  | $                                |            |   |                                                                            |         |  
|                                                                                          |  |                                  |             |   |                                                                            |          |  



See Accompanying Notes
to Condensed Consolidated Financial Statements.



5



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



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) (collectively the Company). The organizing entity was merged into the Holding Company effective with the incorporation of the Holding Company. The transaction was
recorded at historical cost, similar to a pooling of interests. The Holding Companys only business activity is the operation of the Bank. 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. The deposits of the Bank are insured by the Federal Deposit Insurance Corporation. The Bank commenced operations on August 18, 2003.



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 March 31, 2004 and the results of operations and cash flows for the three-months
ended March 31, 2004 and for the period from January 28, 2003 (date of incorporation) to March 31, 2003. The results of operations for the three-months ended March 31, 2004 are not necessarily indicative of the results to be expected for the year
ending December 31, 2004.



|2. | Loan Impairment and Loan Losses
|-- | -------------------------------



The Company had no impaired loans during the three months ended March 31, 2004. Also, at March 31, 2004, the Company had no nonaccrual loans or loans
which were over ninety days past due but still accruing interest.



The activity in the allowance for loan losses follows:



|                          |  |                    |        
|------------------------- |  | ------------------ | -------
|                          |  | Three Months Ended
|                          |  | March 31, 2004    
|Beginning balance         |  | $                  | 235,716
|Provision for loan losses |  |                    | 178,122
|                          |  |                    |        
|Ending balance            |  | $                  | 413,838
|                          |  |                    |        



|3. | Loss Per Share
|-- | --------------



Basic and diluted loss per share have been computed based on the weighted-average number of shares outstanding during the period. Outstanding warrants are
not considered dilutive due to the net loss incurred by the Company.



(continued)



6



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



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 March 31, 2004 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           |  | 18.22  | % |  | 10.00                 | %
|Tier I capital to risk-weighted assets          |  | 17.15  | % |  | 6.00                  | %
|Tier I capital to total assets - leverage ratio |  | 13.12  | % |  | 5.00                  | %



|5. | Income Taxes
|-- | ------------



At March 31, 2003, the Company was in the organizational phase of operations, therefore, no deferred tax asset was recorded. The deferred tax asset was
recognized when banking operations commenced in the third quarter of 2003, when management determined it was more likely than not that the deferred tax asset would be recognized over the loss carryforward period with future earnings.



7



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Review by Independent Accountants



Hacker, Johnson
& Smith PA, independent certified public accountants, have made a limited review of the financial data as of March 31, 2004, and for the three-months ended March 31, 2004 and for the period from January 28, 2003 (date of incorporation) to March
31, 2003 presented in this document, in accordance with standards established by the American Institute of Certified Public Accountants.



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



8



---

Independent Accountants Report



Marco
Community Bancorp, Inc.

Marco Island, Florida:



We have reviewed the accompanying condensed consolidated balance sheet of Marco Community Bancorp, Inc. and Subsidiary (the Company) as of
March 31, 2004 and the related condensed consolidated statements of operations, changes in stockholders equity and cash flows for the three-months ended March 31, 2004 and for the period from January 28, 2003 (date of incorporation) to March
31, 2003. These financial statements are the responsibility of the Companys management.



We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of
America, 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 condensed consolidated
financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.



We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of
the Company as of December 31, 2003, and the related consolidated statements of earnings, changes in stockholders equity and cash flows for the period from January 28, 2003 (date of incorporation) to December 31, 2003 (not presented herein);
and in our report dated January 30, 2004, 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, 2003, 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

April 21, 2004



9



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Item 2. Managements Discussion and Analysis

of Financial Condition and Results of Operations



Comparison of March 31, 2004 and December 31, 2003



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) (collectively the Company). The Holding Companys only business is the ownership and operation of the Bank.
The Bank is a Florida state- chartered commercial bank and its deposits are insured by the Federal Deposit Insurance Corporation. The Bank commenced operation on August 18, 2003.



Liquidity and Capital Resources



The Companys primary source of cash during the three months ended March 31, 2004 was from net deposit inflows of $19.6 million. Cash was used
primarily to purchase federal funds of $4.9 million, originate loans, net of principal repayments totaling $14.3 million and to purchase premises and equipment of $455,000. At March 31, 2004, the Company had outstanding commitments to originate
loans totaling $5.5 million. At March 31, 2004, the Bank exceeded its regulatory liquidity requirements.



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations



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 commitments to extend credit and 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 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 commitments to extend
credit and 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.



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Item 2. Managements Discussion and Analysis

of Financial Condition and Results of Operations, Continued



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Continued



Unused lines of credit and commitments to extend 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 March 31, 2004 follows:



|                             |  |                |          
|---------------------------- |  | -------------- | ---------
|                             |  | ContractAmount
|Commitments to extend credit |  | $              | 5,533,000
|                             |  |                |          
|Unused lines of credit       |  | $              | 6,437,000
|                             |  |                |          



Management believes
that the Company has adequate resources to fund all of its commitments and that substantially all its existing commitments will be funded in 2004.



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Results of Operations



Three Months Ended March 31, 2004



General. Net losses for the three months ended March 31, 2004 and for the period from January 28, 2003 (date
of incorporation) to March 31, 2003, were $164,000 and $12,000, respectively. The Bank commenced operations on August 18, 2003. At March 31, 2004, the Company had not achieved the asset size necessary to operate profitably.



Net Interest Income.Interest income was $352,000 for the
three months ended March 31, 2004. The average balance of loans was $24.6 million with an average yield earned of 5.21% during the three months ended March 31, 2004. The average balance of other interest earning assets was $14.1 million with an
average yield earned of .91% during the three months ended March 31, 2004.



Interest expense on interest bearing deposits was $100,000, prior to the capitalization of interest, for the three months ended March 31, 2004. The average balance on deposits was $31.1 million with an average rate
paid of 1.29% during the three months ended March 31, 2004. Interest expense of $19,000 was capitalized on the construction of a permanent banking facility which is expected to open in the second quarter of 2004.



Provision for Loan Losses.The provision for loan losses was
$178,000 for the three months ended March 31, 2004. The allowance for loan losses is $414,000 at March 31, 2004. While management believes that its allowance for loan losses is adequate as of March 31, 2004, future adjustments to the Companys
allowance for loan losses may be necessary if economic conditions differ substantially from assumptions used in making the initial determination.



Noninterest Income.Noninterest income was $4,000 for the three months ended March 31, 2004. Noninterest income consists of service charges
and fees.



Noninterest Expenses.Total
noninterest expense was $360,000 for the three months ended March 31, 2004. The large components of noninterest expense consists of $194,000 of employee compensation and benefits, $45,000 of occupancy and equipment expenses, and $53,000 of other
expenses.



Income Taxes.Income tax benefit for
the three months ended March 31, 2004 was $99,000 or 37.6%.



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



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 Subsidiary is a party or to which any property is subject.



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



Item 6. Exhibits and Reports on Form 8-K



|(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 and 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.



|            |  |                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|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                                                                                                                            
|            | 
|(a) 4.3     |  | Specimen Warrant Certificate                                                                                                                 
|            | 
|(b) 10.1    |  | Letter Agreement with Michael A. Micallef                                                                                                    
|            | 
|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



|(b) | Reports on Form 8-K.There were no reports on Form 8-K filed during the three months ended March 31, 2004.
|--- | ---------------------------------------------------------------------------------------------------------



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARY



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: |  | May 12, 2004 |  |                               |  | By: |  | /s/    RICHARD STORM, JR.                  
|      |  |              |  |                               |  |     |  |                                            
|      |  |              |  |                               |  |     |  | Richard Storm, Jr., Chief Executive Officer
|      |  |              |  |                              
|Date: |  | May 12, 2004 |  |                               |  | By: |  | /s/    THOMAS M. WHELAN                    
|      |  |              |  |                               |  |     |  |                                            
|      |  |              |  |                               |  |     |  | Thomas M. Whelan, Senior Vice President and
|      |  |              |  |                               |  |     |  | Chief Financial Officer                    



15