U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q


(Mark
One)





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





For
the quarterly period ended September 30, 2008





£
            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 Registrant 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 registrant: (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 T  NO
£





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See the definition of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act (Check one):




Large
      accelerated filer £
              Accelerated
      filer £Non-accelerated
      filer £
              Smaller
      reporting company T


(Do not
check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES £  NO
T





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
                
                3,222,608 shares(class)
                
                Outstanding
      at October 31, 2008













MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES





INDEX








PART
      I. FINANCIAL INFORMATIONItem 1. Financial Statements
                
                PageCondensed Consolidated Balance Sheets - At September 30, 2008
      (unaudited) and at December 31, 2007
                
                2Condensed Consolidated Statements of Operations - Three and
      Nine Months ended September 30, 2008 and 2007
    (unaudited)
                
                3Condensed Consolidated Statements of Changes in Stockholders'
      Equity - Nine Months ended September 30, 2008 and 2007
      (unaudited)
                
                4Condensed Consolidated Statements of Cash Flows – Nine Months
      ended September 30, 2008 and 2007 (unaudited)
                
                5-6Notes to Condensed Consolidated Financial Statements
      (unaudited)
                
                7-14Review by Independent Registered Public Accounting
      Firm
                
                15Report of Independent Registered Public Accounting
      Firm
                
                16Item 2.  Management's Discussion and Analysis of
      Financial Condition and Results of Operations
                
                17-25Item 4T.  Controls and Procedures
                
                26PART
      II. OTHER INFORMATIONItem 1.  Legal Proceedings
                
                27Item 5.  Other Information
                
                27Item 6.  Exhibits
                
                28SIGNATURES
                
                29




1
 Index





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,
                  
                  
                  December 31,Assets
                  
                  2008
                  
                  
                  2007(Unaudited)Cash
      and due from banks
                  
                  $
                  2,829
                  
                  
                  
                  2,479Federal
      funds sold
                  
                  
                  7,495
                  
                  
                  
                  8,695Total
      cash and cash equivalents
                  
                  
                  10,324
                  
                  
                  
                  11,174Security
      available for sale
                  
                  
                  1,002
                  
                  
                  
                  1,009Securities
      held to maturity (fair value of $8,251 and $5,606)
                  
                  
                  8,281
                  
                  
                  
                  5,561Loans,
      net of allowance for loan losses of $5,669 in 2008 and $3,794 in
      2007
                  
                  
                  103,088
                  
                  
                  
                  119,876Other
      real estate owned
                  
                  
                  2,816
                  
                  
                  
                  2,857Premises
      and equipment, net
                  
                  
                  3,401
                  
                  
                  
                  3,360Federal
      Reserve Bank stock, at cost
                  
                  
                  465
                  
                  
                  
                  468Federal
      Home Loan Bank stock, at cost
                  
                  
                  262
                  
                  
                  
                  293Accrued
      interest receivable
                  
                  
                  523
                  
                  
                  
                  602Deferred
      income taxes
                  
                  
                  3,753
                  
                  
                  
                  2,020Other
      assets
                  
                  
                  141
                  
                  
                  
                  2,311Total
      assets
                  
                  $
                  134,056
                  
                  
                  
                  149,531Liabilities
      and Stockholders' EquityLiabilities:Noninterest-bearing
      demand deposits
                  
                  
                  4,233
                  
                  
                  
                  4,068Savings,
      NOW and money-market deposits
                  
                  
                  34,293
                  
                  
                  
                  38,342Time
      deposits
                  
                  
                  73,433
                  
                  
                  
                  81,303Total
      deposits
                  
                  
                  111,959
                  
                  
                  
                  123,713Repurchase
      agreements
                  
                  
                  1,329
                  
                  
                  
                  1,232Official
      checks
                  
                  
                  277
                  
                  
                  
                  797Dividends
      payable
                  
                  
                  23
                  
                  
                  
                  35Accrued
      interest payable and other liabilities
                  
                  
                  699
                  
                  
                  
                  936Total
      liabilities
                  
                  
                  114,287
                  
                  
                  
                  126,713Stockholders'
      equity:Preferred
      stock, no par value; 1,000,000 shares authorized, 96 shares
      outstanding
                  
                  
                  -
                  
                  
                  
                  -Preferred
      stock, series B, $51,000 liquidation value; 96 shares
      outstanding
                  
                  
                  4,896
                  
                  
                  
                  4,896Common
      stock, $.01 par value; 9,000,000 shares authorized, 3,222,608 shares
      issued and outstanding in 2008 and 2007
                  
                  
                  32
                  
                  
                  
                  32Additional
      paid-in capital
                  
                  
                  20,713
                  
                  
                  
                  20,874Accumulated
      deficit
                  
                  
                  (5,873
                  )
                  
                  
                  (2,993
                  )Accumulated
      other comprehensive income
                  
                  
                  1
                  
                  
                  
                  9Total
      stockholders' equity
                  
                  
                  19,769
                  
                  
                  
                  22,818Total
      liabilities and stockholders' equity
                  
                  $
                  134,056
                  
                  
                  
                  149,531








See
Accompanying Notes to Condensed Consolidated Financial
Statements.





2
 Index




MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Condensed
Consolidated Statements of Operations (Unaudited)


(In
thousands, except per share amounts)





Three
      Months Ended
                  September 30,
                
                
                Nine
      Months Ended
                  September 30,2008
                
                
                2007
                
                
                2008
                
                
                2007Interest
      income:Loans
                
                $
                1,648
                
                
                
                2,338
                
                
                
                5,497
                
                
                
                7,647Securities
                
                
                133
                
                
                
                78
                
                
                
                334
                
                
                
                214Other
      interest-earning assets
                
                
                67
                
                
                
                204
                
                
                
                339
                
                
                
                877Total
      interest income
                
                
                1,848
                
                
                
                2,620
                
                
                
                6,170
                
                
                
                8,738Interest
      expense:Deposits
                
                
                951
                
                
                
                1,452
                
                
                
                3,342
                
                
                
                4,421Other
      borrowings
                
                
                7
                
                
                
                5
                
                
                
                23
                
                
                
                8Total
      interest expense
                
                
                958
                
                
                
                1,457
                
                
                
                3,365
                
                
                
                4,429Net
      interest income
                
                
                890
                
                
                
                1,163
                
                
                
                2,805
                
                
                
                4,309Provision
      for loan losses
                
                
                150
                
                
                
                455
                
                
                
                3,155
                
                
                
                5,750Net
      interest income (expense) after provision for loan losses
                
                
                740
                
                
                
                708
                
                
                
                (350
                )
                
                
                (1,441
                )Noninterest
      income:Service
      charges on deposit accounts
                
                
                7
                
                
                
                6
                
                
                
                19
                
                
                
                19CLCC
      loan brokerage fees
                
                
                22
                
                
                
                -
                
                
                
                22
                
                
                
                828Other
      service charges and fees
                
                
                46
                
                
                
                40
                
                
                
                124
                
                
                
                137Total
      noninterest income
                
                
                75
                
                
                
                46
                
                
                
                165
                
                
                
                984Noninterest
      expenses:Salaries
      and employee benefits
                
                
                753
                
                
                
                749
                
                
                
                1,998
                
                
                
                2,268Occupancy
      and equipment
                
                
                148
                
                
                
                161
                
                
                
                461
                
                
                
                497Advertising
                
                
                23
                
                
                
                25
                
                
                
                100
                
                
                
                148Insurance
                
                
                11
                
                
                
                13
                
                
                
                53
                
                
                
                43Data
      processing
                
                
                63
                
                
                
                61
                
                
                
                194
                
                
                
                189Regulatory
      assessments
                
                
                101
                
                
                
                39
                
                
                
                300
                
                
                
                65Telephone
                
                
                16
                
                
                
                21
                
                
                
                53
                
                
                
                63Professional
      fees
                
                
                156
                
                
                
                169
                
                
                
                411
                
                
                
                310Stationery
      and supplies
                
                
                11
                
                
                
                9
                
                
                
                29
                
                
                
                35Other
      real estate owned
                
                
                226
                
                
                
                357
                
                
                
                482
                
                
                
                393Other
                
                
                101
                
                
                
                87
                
                
                
                352
                
                
                
                327Total
      noninterest expenses
                
                
                1,609
                
                
                
                1,691
                
                
                
                4,433
                
                
                
                4,338Loss
      before income taxes
                
                
                (794
                )
                
                
                (937
                )
                
                
                (4,618
                )
                
                
                (4,795
                )Income
      tax benefit
                
                
                (299
                )
                
                
                (335
                )
                
                
                (1,738
                )
                
                
                (1,766
                )Net
      loss
                
                
                (495
                )
                
                
                (602
                )
                
                
                (2,880
                )
                
                
                (3,029
                )Dividends
      on preferred stock
                
                
                69
                
                
                
                -
                
                
                
                205
                
                
                
                -Net
      loss available to common shareholders
                
                $
                (564
                )
                
                
                (602
                )
                
                
                (3,085
                )
                
                
                (3,029
                )Net
      loss per common share, basic and diluted
                
                $
                (0.17
                )
                
                
                (0.19
                )
                
                
                (0.96
                )
                
                
                (0.95
                )Weighted-average
      number of shares outstanding, basic and diluted
                
                
                3,223
                
                
                
                3,218
                
                
                
                3,223
                
                
                
                3,181Dividends
      per common share
                
                $
                -
                
                
                
                -
                
                
                
                -
                
                
                
                0.12








See
Accompanying Notes to Condensed Consolidated Financial Statements.





3
 Index





MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Condensed
Consolidated Statements of Changes in Stockholders' Equity





Nine
Months Ended September 30, 2008 and 2007


($
in thousands)





PreferredStock
                
                
                Common
      Stock
                
                
                Additional
      Paid-In
      Capital
                
                
                Retained
      Earnings
      (Accumulated
      Deficit)
                
                
                Accumulated
      Other
      Comprehensive
      Income
                
                
                Total
      Stockholders'EquityBalance
      at December 31, 2006
                
                $
                -
                
                
                
                32
                
                
                
                20,165
                
                
                
                2,481
                
                
                
                -
                
                
                
                22,678Exercise
      of stock options (61,912 shares), including tax benefit of $220
      (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                609
                
                
                
                -
                
                
                
                -
                
                
                
                609Share-based
      compensation (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                83
                
                
                
                -
                
                
                
                -
                
                
                
                83Cash
      dividends paid (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (378
                )
                
                
                -
                
                
                
                (378
                )Net
      loss (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (3,029
                )
                
                
                -
                
                
                
                (3,029
                )Balance
      at September 30, 2007 (unaudited)
                
                $
                -
                
                
                
                32
                
                
                
                20,857
                
                
                
                (926
                )
                
                
                -
                
                
                
                19,963Balance
      at December 31, 2007
                
                $
                4,896
                
                
                
                32
                
                
                
                20,874
                
                
                
                (2,993
                )
                
                
                9
                
                
                
                22,818Comprehensive
      loss:Net
      loss (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,880
                )
                
                
                -
                
                
                
                (2,880
                )Net
      change in unrealized gain on security available for sale, net of tax
      effect (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (8
                )
                
                
                (8
                )Comprehensive
      loss (unaudited)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (2,888
                )Share-based
      compensation (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                44
                
                
                
                -
                
                
                
                -
                
                
                
                44Dividends
      declared-preferred (unaudited)
                
                
                -
                
                
                
                -
                
                
                
                (205
                )
                
                
                -
                
                
                
                -
                
                
                
                (205
                )Balance
      at September 30, 2008 (unaudited)
                
                $
                4,896
                
                
                
                32
                
                
                
                20,713
                
                
                
                (5,873
                )
                
                
                1
                
                
                
                19,769








See
Accompanying Notes to Condensed Consolidated Financial
Statements.





4
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Condensed
Consolidated Statements of Cash Flows (Unaudited)


(In
thousands)





Nine
      Months Ended
                  September 30,2008
                
                
                2007Cash
      flows from operating activities:Net
      loss
                
                $
                (2,880
                )
                
                
                (3,029
                )Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
                
                
                207
                
                
                
                210Share-based
      compensation
                
                
                44
                
                
                
                83Provision
      for loan losses
                
                
                3,155
                
                
                
                5,750Deferred
      income tax benefit
                
                
                (1,734
                )
                
                
                (1,986
                )Amortization
      of loan fees and costs, net
                
                
                30
                
                
                
                31Decrease
      in accrued interest receivable
                
                
                79
                
                
                
                184Decrease
      (increase) in other assets
                
                
                2,170
                
                
                
                (590
                )Write-down
      of other real estate owned
                
                
                30
                
                
                
                340Loss
      on sale of other real estate owned
                
                
                257
                
                
                
                -(Decrease)
      increase in official checks, accrued interest payable and other
      liabilities
                
                
                (757
                )
                
                
                60Net
      cash provided by operating activities
                
                
                601
                
                
                
                1,053Cash
      flows from investing activities:Purchase
      of securities held to maturity
                
                
                (6,007
                )
                
                
                (3,924
                )Principal
      payment of securities held to maturity
                
                
                957
                
                
                
                432Proceeds
      from maturity of securities held to maturity
                
                
                2,330
                
                
                
                -Redemption
      of Federal Reserve Bank stock
                
                
                62
                
                
                
                -Redemption
      of Federal Home Loan Bank stock
                
                
                31
                
                
                
                52Purchase
      of Federal Reserve Bank stock
                
                
                (59
                )
                
                
                -Net
      decrease (increase) in loans
                
                
                12,171
                
                
                
                (2,626
                )Proceeds
      from sale of other real estate owned
                
                
                1,186
                
                
                
                -Purchase
      of premises and equipment
                
                
                (248
                )
                
                
                (48
                )Net
      cash provided by (used in) investing activities
                
                
                10,423
                
                
                
                (6,114
                )Cash
      flows from financing activities:Net
      decrease in deposits
                
                
                (11,754
                )
                
                
                (10,510
                )Net
      increase in repurchase agreements
                
                
                97
                
                
                
                529Net
      proceeds from exercise of common stock options
                
                
                -
                
                
                
                389Cash
      dividends paid
                
                
                -
                
                
                
                (378
                )Preferred
      dividends paid
                
                
                (217
                )
                
                
                -Tax
      benefit from exercise of stock options
                
                
                -
                
                
                
                220Net
      cash used in financing activities
                
                
                (11,874
                )
                
                
                (9,750
                )Net
      decrease in cash and cash equivalents
                
                
                (850
                )
                
                
                (14,811
                )Cash
      and cash equivalents at beginning of period
                
                
                11,174
                
                
                
                26,905Cash
      and cash equivalents at end of period
                
                $
                10,324
                
                
                
                12,094Supplemental
      disclosure of cash flow information:Cash
      paid (received) during the period for:Interest
                
                $
                3,489
                
                
                
                4,224Income
      taxes
                
                $
                (2,116
                )
                
                
                660





(continued)




5
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Condensed
Consolidated Statements of Cash Flows (Unaudited), Continued


(In
thousands)





Nine
      Months Ended
                  September 30,2008
                
                
                2007Noncash
      transactions:Preferred
      dividends payable at beginning of period
                
                $
                35
                
                
                
                -Preferred
      dividends payable at end of period
                
                $
                23
                
                
                
                -Transfer
      of loans to other real estate owned
                
                $
                1,432
                
                
                
                2,211Net
      change in unrealized gain on security available for sale, net of tax
      effect
                
                $
                (8
                )
                
                
                -








See
Accompanying Notes to Condensed Consolidated Financial Statements.





6
 Index




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 Commercial Lending Capital Corp. ("CLCC") (collectively
the "Company").   The Holding Company's only business activity is
the operation of the Bank and CLCC.  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 up to the
applicable limits by the Federal Deposit Insurance Corporation. CLCC was
incorporated to provide commercial loans to customers that would otherwise seek
financing elsewhere because of credit limit constraints.  Effective
October 2008, CLCC's mission and overall focus changed to a full time effort to
sell classified loans and OREO assets of both Marco Community Bank and Marco
Community Bancorp, Inc.




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,
2008, the results of operations for the three- and nine-month periods ended
September 30, 2008 and 2007 and cash flows for the nine month periods ended
September 30, 2008 and 2007.  The results of operations for the three-
and nine- month periods ended September 30, 2008 are not necessarily indicative
of the results to be expected for the year ending December 31,
2008.





2.
            Loan
      Impairment and Loan Losses


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




Three
      Months Ended
                    September 30,
                  
                  
                  Nine
      Months Ended
                    September 30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007Balance
      at end of period
                  
                  $
                  10,925
                  
                  
                  
                  13,533
                  
                  
                  
                  10,925
                  
                  
                  
                  13,533Total
      related allowance for losses
                  
                  $
                  3,821
                  
                  
                  
                  1,189
                  
                  
                  
                  3,821
                  
                  
                  
                  1,189Average
      investment in impaired loans
                  
                  $
                  11,118
                  
                  
                  
                  11,681
                  
                  
                  
                  10,655
                  
                  
                  
                  5,838Interest
      income recognized on impaired loans
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  
                  102
                  
                  
                  
                  -Interest
      income received on impaired loans
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -




At
September 30, 2008, the Company had $12.9 million in nonaccrual loans and no
loans which were over ninety days past due and still accruing
interest.  At September 30, 2007, the Company had $14.8 million in
nonaccrual loans and no loans which were ninety days past due but still accruing
interest.





(continued)





7
 Index




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 Ended
                    September 30,
                  
                  
                  Nine
      Months Ended
                    September 30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007Beginning
      balance
                  
                  $
                  6,050
                  
                  
                  
                  2,961
                  
                  
                  
                  3,794
                  
                  
                  
                  2,047Charge-offs
                  
                  
                  (531
                  )
                  
                  
                  (74
                  )
                  
                  
                  (1,280
                  )
                  
                  
                  (4,455
                  )Provision
      for loan losses
                  
                  
                  150
                  
                  
                  
                  455
                  
                  
                  
                  3,155
                  
                  
                  
                  5,750Ending
      balance
                  
                  $
                  5,669
                  
                  
                  
                  3,342
                  
                  
                  
                  5,669
                  
                  
                  
                  3,342




At
September 30, 2008 the Company has eleven loan pools with original terms of one
year.  At September 30, 2008, $2.5 million was outstanding compared to
$7.9 million at September 30, 2007.  The Company charged-off $605,000
of these loan pools in 2008, compared to a charge-off of $3.2 million for the
nine months ended September 30, 2007.





3.
            Other
      Real Estate Owned


Other
real estate owned ("OREO") is comprised of real estate properties obtained in
partial or total satisfaction of loan obligations.  At September 30,
2008 OREO totaled $2.8 million which was comprised of nine residential real
estate lots held for an average of eleven months and four residential properties
held for an average of six months and recorded at estimated fair value less
estimated selling costs.  Changes in the value subsequent to transfer
are recorded in non-interest expense along with direct operating
expenses.  Gains or losses not previously recognized resulting from
the sale of OREO is recognized in non-interest expense on the date of
sale.  During the nine months ended September 30, 2008, the Company
wrote down $30,000, recorded $1.2 million in proceeds from the sale of three
residential properties which resulted in a $257,000 loss.  The Company
also recorded $195,000 in expenses to refurbish or maintain the properties
held.





At the
time of booking OREO, the Bank orders a current appraisal and books OREO at a
discounted value based off the current appraisal.  OREO is actively
marketed by professional real estate individuals in an attempt to sell parcels
at their current market value.  The Company is exposed to the
weakening real estate conditions in the Florida markets including Orlando,
Naples, Fort Myers and Tampa.  With the general economic downturn, the
Company may not be able to sell its OREO property at the current market value
and may experience an increase in OREO.





4.
            Loss
      Per Common Share


Loss per
share of common stock has been computed on the basis of the weighted-average
number of shares of common stock outstanding. Outstanding stock options are not
considered dilutive securities for the three and nine month periods ended
September 30, 2008 and 2007 due to the net losses incurred by the
Company.





(continued)





8
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Notes
to Condensed Consolidated Financial Statements (Unaudited),
Continued








5.
            Regulatory
      Capital


The Bank
is required to maintain certain minimum regulatory capital
requirements.  The following is a summary at September 30, 2008 of the
regulatory capital requirements for a well capitalized financial institution and
the Bank's actual capital on a percentage basis:





Actual
                  
                  
                  Regulatory
                    RequirementTotal
      capital to risk-weighted assets
                  
                  
                  16.49
                  %
                  
                  
                  10.00
                  %Tier
      I capital to risk-weighted assets
                  
                  
                  15.19
                  %
                  
                  
                  6.00
                  %Tier
      I capital to total assets - leverage ratio
                  
                  
                  11.11
                  %
                  
                  
                  5.00
                  %





6.
            Share-Based
      Compensation


Effective
January 1, 2006, the Company adopted the fair value recognition provisions of
FASB Statement No. 123(R), Share-Based Payment("SFAS
123(R)"), using the
modified-prospective-transition method.  Under that transition method,
compensation cost recognized 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 option on the date the options become fully vested.  The
Company recognizes stock-based compensation expense in salaries and employee
benefits in the accompanying consolidated statements of operations on an
accelerated basis over the vesting period.





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 CLCC.  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.





The
Directors' Stock Option Plan is for the benefit of directors of the Holding
Company, the Bank and CLCC.  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.





(continued)





9
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Notes
to Condensed Consolidated Financial Statements (Unaudited),
Continued








6.
            Share-Based
      Compensation, Continued


The
Advisory Directors' Stock Option Plan is for the benefit of advisory directors
of the Company.  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.





The plans
were amended in 2007 to increase the size of the three Company plans so that the
number of shares of common stock reserved for issuance under all three Company
plans is a collective amount equal to 15% of the common stock outstanding, up to
a maximum of 1,500,000 shares.  At September 30, 2008, an aggregate of
71,614 options remain available for grant in all three plans.




A summary
of the plans is as follows (in thousands, except for share and per share
information):





Numberof
                                Shares
                              
                              
                              Weighted
      -
                                Average
      Per
                                ShareExercisePrice
                              
                              
                              Weighted
      -Average
                                Remaining
                                ContractualTerm
                              
                              
                              Aggregate
                                Intrinsic
                                ValueThe
      Employees' Plan:Options
      outstanding at December 31, 2007
                              
                              
                              188,200
                              
                              
                              $
                              9.35Options
      granted
                              
                              
                              13,000
                              
                              
                              
                              6.04Options
      forfeited
                              
                              
                              (69,037
                              )
                              
                              
                              10.35Options
      outstanding at September 30, 2008
                              
                              
                              132,163
                              
                              
                              $
                              8.68
                              
                              
                              
                              8.61
                              
                              
                              $
                              -Options
      exercisable at September 30, 2008
                              
                              
                              33,850
                              
                              
                              $
                              7.10
                              
                              
                              
                              6.86
                              
                              
                              $
                              -The
      Directors' Plan:Options
      outstanding at December 31, 2007
                              
                              
                              56,250
                              
                              
                              
                              7.78Options
      granted
                              
                              
                              68,750
                              
                              
                              
                              4.83Options
      outstanding at September 30, 2008
                              
                              
                              125,000
                              
                              
                              $
                              7.33
                              
                              
                              
                              4.56
                              
                              
                              $
                              2Options
      exercisable at September 30, 2008
                              
                              
                              50,250
                              
                              
                              $
                              6.60
                              
                              
                              
                              5.82
                              
                              
                              $
                              -The
      Advisory Directors' Plan:Options
      outstanding at December 31, 2007 and September 30, 2008
                              
                              
                              20,251
                              
                              
                              $
                              8.78
                              
                              
                              
                              2.50
                              
                              
                              $
                              -Options
      exercisable at September 30, 2008
                              
                              
                              8,228
                              
                              
                              $
                              6.00
                              
                              
                              
                              .50
                              
                              
                              $
                              -




There
were no options exercised during the nine months ended September 30,
2008.  The total intrinsic value of options exercised during the nine
months ended September 30, 2007 was $699,000.  There was a $220,000
tax benefit recognized for the nine months ended September 30,
2007.  At September 30, 2008, there was $352,000 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 4.1 years.  The total fair value of shares
vested and recognized as compensation expense was $44,000.  The total
fair value of shares vested and recognized as compensation expense was $83,000
for the nine month period ended September 30, 2007, and no income tax benefit
was recognized.





(continued)





10
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Notes
to Condensed Consolidated Financial Statements (Unaudited),
Continued





6.
            Share-Based
      Compensation, Continued


The fair
value of each option granted for the three and nine months ended September 30,
2008 and 2007 is estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions ($ in
thousands):





Three
      Months Ended
                        September 30,
                      
                      
                      Nine
      Months Ended
                        September 30,2008
                      
                      
                      2007
                      
                      
                      2008
                      
                      
                      2007Weighted-average
      risk-free interest rate
                      
                      
                      3.82
                      %
                      
                      
                      4.47
                      %
                      
                      
                      3.91
                      %
                      
                      
                      4.74
                      %Weighted-average
      dividend yield
                      
                      
                      -
                      %
                      
                      
                      -
                      %
                      
                      
                      -
                      %
                      
                      
                      1.14
                      %Weighted-average
      expected stock volatility
                      
                      
                      74.67
                      %
                      
                      
                      51.96
                      %
                      
                      
                      55.62
                      %
                      
                      
                      27.31
                      %Expected
      life in years
                      
                      6.5
      years
                      
                      
                      6.5
      years
                      
                      
                      6.5
      years
                      
                      
                      6.5
      yearsPer
      share weighted-average grant-date fair value of options issued during ther
      period
                      
                      $
                      2.46
                      
                      
                      
                      5.78
                      
                      
                      
                      1.94
                      
                      
                      
                      6.11





As part
of its adoption of SFAS 123(R), 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
123(R).  Expected volatility is based on historical volatility of the
Company's stock.  The risk-free rate for periods within the
contractual life of the option is based on the U.S. Treasury yield curve in
effect at the time of the grant.  The dividend yield assumption is
based on the Company's history and expectation of dividend
payments.





7.
            Fair
      Value Measurements


On
January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements for
financial assets and liabilities.  This standard defines fair value,
provides guidance for measuring fair value and requires certain
disclosures.  This standard does not require any new fair value
measurements, but rather applies to all other accounting pronouncements that
require or permit fair value measurements.  This standard does not
apply to measurements related to share-based payments.





(continued)




11
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Notes
to Condensed Consolidated Financial Statements (Unaudited),
Continued








7.
            Fair
      Value Measurements, Continued


SFAS 157
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. The statement utilizes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels.  The following is a brief
description of those three levels:





-
            Level
      1:  Observable inputs such as quoted prices (unadjusted) in
      active markets for identical assets or
  liabilities.


-
            Level
      2:  Inputs other than quoted prices that are observable for the
      asset or liability, either directly or indirectly.  These
      include quoted prices for similar assets or liabilities in active markets
      and quoted prices for identical or similar assets or liabilities that are
      not active.  Such inputs may include interest rates and yield
      curves, volatilities, prepayment speeds, credit risks, and default
      rates.


-
            Level
      3:  Unobservable inputs to measure fair value of assets and
      liabilities for which there is little, if any market activity at the
      measurement date, using reasonable inputs and assumptions based upon the
      best information at the time, to the extent that inputs are available
      without undue cost and effort.




Valuation of Available for Sale
Security. The value of the security available for sale is determined by
matrix pricing, which is a mathematical technique widely used in the industry to
value debt securities without relying exclusively on quoted prices for the
specific security but rather by relying on the security's relationship to the
other benchmark quoted security.  Accordingly, the fair value estimate
for the available for sale security is classified as Level 2.




Valuation of Impaired Loans.
A loan is considered impaired when, based upon current information and events,
it is probable that we will be unable to collect all amounts due, including
principal and interest, according to the contractual terms of the loan
agreement.  The Company's impaired loans are normally collateral
dependent and, as such, are carried at the lower of the Company's net recorded
investment in the loan or the estimated fair value of the collateral less
estimated selling costs. Adjustments to the recorded investment are made through
specific valuation allowances that are recorded as part of the overall allowance
for loan losses.  Estimates of fair value are determined based on a
variety of information, including the use of available appraisals, estimates of
the market value by licensed appraisers or local real estate brokers and the
knowledge and experience of the Company's management related to values of
properties in the Company's market areas.  These officers take into
consideration the type and location of the property as well as current economic
conditions in the area the property is located in assessing estimates of fair
value.  Accordingly, the fair value estimates for impaired loans is
classified as Level 3.





(continued)





12
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Notes
to Condensed Consolidated Financial Statements (Unaudited),
Continued








7.
            Fair
      Value Measurements, Continued


Our
listing of financial assets and liabilities subject to fair value measurements
on a recurring basis are as follows (in thousands):





Fair Value Measurements at Reporting Date
      UsingFair
      Value as of September 30,2008
                  
                  
                  Quoted
      Prices In Active Markets for Identical Assets
                    (Level 1)
                  
                  
                  Significant
      Other Observable Inputs
                    (Level 2)
                  
                  
                  Significant
      Unobservable Inputs
                    (Level 3)Available
      for sale security
                  
                  $
                  1,002
                  
                  
                  
                  -
                  
                  
                  
                  1,002
                  
                  
                  
                  -





Assets
      measured at fair value on a non-recurring basis are summarized below (in
      thousands):





Net Carrying Value atSeptember30,
      2008
                  
                  
                  Total LossesTotal
                  
                  
                  Level 1
                  
                  
                  Level 2
                  
                  
                  Level 3
                  
                  
                  Three Months Ended September 30,
      2008
                  
                  
                  Nine Months Ended September 30,
      2008Impaired
      loans
                  
                  $
                  8,413
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,413
                  
                  
                  
                  -
                  
                  
                  
                  2,833
                  (1)





(1)
            Represents
      a specific valuation allowance (recorded as part of the overall allowance
      for loan losses) for twelve nonaccrual loans totaling $9,548 in accordance
      with SFAS 114.





(continued)




13
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Notes
to Condensed Consolidated Financial Statements (Unaudited),
Continued








8.
            Preferred
      Stock


In 2007,
the Company issued ninety-six shares of Series B Preferred Stock ("Preferred
Stock"). The shares have no voting rights, but have a liquidation preference
value of $51,000 per share.  Cash dividends are payable in arrears
within the first ten days of each March and September.  The dividends
are not cumulative, are payable semiannually at an annual rate of $2,900 and are
prorated for any partial period.  At the Company's discretion, on any
dividend payment date occurring at least two years after issuance, each share of
Preferred Stock is mandatorily convertible into 6,000 shares of common stock;
provided, however, that the Company may also convert the Preferred Stock upon
any change in control.





9.
            Subsequent
      Event


On
October 15, 2008, the Company commenced a private placement of its Series C
Preferred Stock.  The offering is expected to be completed by November
30, 2008.  The capital will be used to provide operating capital and
to support continued growth of the Company and the Bank.




14
 Index




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, 2008,
and for the three- and nine-month periods ended September 30, 2008 and 2007
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.





15
 Index




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,
2008, the related interim condensed consolidated statements of operations for
the three- and nine-month periods ended September 30, 2008 and 2007 and the
related interim condensed consolidated statements of cash flows and changes in
stockholders' equity for the nine-month periods ended September 30, 2008 and
2007. 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, 2007, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated March 12, 2008, 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, 2007, 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
17, 2008





16
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Item
2. Management's Discussion and Analysis


of
Financial Condition and Results of Operations





Comparison
of September 30, 2008 and December 31, 2007








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 Commercial Lending Capital Corp. ("CLCC") (collectively
the "Company"). The Holding Company's only business is the ownership and
operation of the Bank and CLCC.  The Bank is a Florida state-chartered
commercial bank and its deposits are insured up to the applicable limits by the
Federal Deposit Insurance Corporation.  CLCC was incorporated to
provide commercial loans to customers that would otherwise seek financing
elsewhere because of credit limit constraints.  Effective October 2008
CLCC's mission and overall focus changed to a full time effort to sell
classified loans and OREO assets of both Marco Community Bank and Marco
Community Bancorp, Inc.





The
Company is exposed to the weakening real estate conditions in the Florida
markets including Orlando, Naples, Fort Myers and Tampa.  The Company
believes the challenging market conditions found in its market area are
primarily attributable to a regional softening in demand for real estate assets
as well as an oversupply of residential and commercial properties, particularly
in the Company's local markets. Residential inventories have climbed, while
commercial space already in construction and now nearing completion has added
approximately 744,000 square feet during 2008 as recently reported in the Naples
Daily News.  Commercial vacancy rates are expected to rise from 5% to
9%, which although acceptable, has been aided by decreasing commercial lease
rates. According to a September 14, 2008 article published in the Ft. Myers News
Press, in some regional areas office space rates have fallen 59% from their peak
in 2005 on a triple net basis, and nonanchored retail space has declined
approximately 39% over the same period. The decline in residential real estate
pricing prices and falling commercial lease rates, uncertainty as to the
direction of interest rates, lack of availability of financing and an inability
to sell currently owned properties all add to an air of economic uncertainty in
the Southwest Florida region.  With the general economic down turn,
the Company has focused its lending resources on nominal loan growth and
specifically upon addressing any asset challenges presented by its existing loan
portfolios.  Pricing of loans remain competitive and current lending
initiatives are focused on Marco Island opportunities.





Liquidity
and Capital Resources





The
Company's primary source of cash during the nine months ended September 30, 2008
was from a decrease in loans of $12.0 million.  Cash was used
primarily to fund the net decrease in deposits of $11.8 million and to purchase
securities of $6.0 million.





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 or notional
amounts of those instruments reflect the extent of the Company's involvement in
particular classes of financial instruments.





17
 Index




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





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.





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, 2008 follows (in thousands):





Contract
                    AmountUnused
      lines of credit
                  
                  $
                  21,741





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





Selected
Ratios





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





Nine Months Ended September 30,
      2008
                  
                  
                  Year Ended December 31,
2007
                  
                  
                  Nine Months Ended September 30,
      2007Average
      equity as a percentage of average assets
                  
                  
                  14.27
                  %
                  
                  
                  13.53
                  %
                  
                  
                  13.09
                  %Total
      equity to total assets at end of period
                  
                  
                  14.75
                  %
                  
                  
                  15.26
                  %
                  
                  
                  13.02
                  %Return
      on average assets (1)
                  
                  
                  (2.53
                  )%
                  
                  
                  (3.08
                  )%
                  
                  
                  (2.42
                  )%Return
      on average common stockholders equity (1)
                  
                  
                  (23.00
                  )%
                  
                  
                  (24.12
                  )%
                  
                  
                  (18.46
                  )%Noninterest
      expense to average assets (1)
                  
                  
                  3.89
                  %
                  
                  
                  3.90
                  %
                  
                  
                  3.46
                  %Nonperforming
      loans to total loans
                  
                  
                  11.84
                  %
                  
                  
                  9.87
                  %
                  
                  
                  11.43
                  %Nonperforming
      assets to total assets
                  
                  
                  11.71
                  %
                  
                  
                  8.18
                  %
                  
                  
                  10.85
                  %





(1)
            Annualized
      for the nine months ended September 30, 2008 and
  2007.





18
 Index




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
      30,2008
                
                
                2007Average
      Balance
                
                
                Interest
      and
      Dividends
                
                
                Average
      Yield/
      Cost
                
                
                Average
      Balance
                
                
                Interest
      and
      Dividends
                
                
                Average
      Yield/
      CostInterest-earning
      assets:
                
                ($
      in thousands)Loans
                
                $
                110,609
                
                
                
                1,648
                
                
                
                5.91
                %
                
                $
                130,736
                
                
                
                2,338
                
                
                
                7.10
                %Investment
      securities
                
                
                10,823
                
                
                
                133
                
                
                
                4.88
                
                
                
                5,982
                
                
                
                78
                
                
                
                5.17Other
      interest-earning assets (1)
                
                
                11,613
                
                
                
                67
                
                
                
                2.29
                
                
                
                15,483
                
                
                
                204
                
                
                
                5.23Total
      interest-earning assets
                
                
                133,045
                
                
                
                1,848
                
                
                
                5.51
                
                
                
                152,201
                
                
                
                2,620
                
                
                
                6.83Noninterest-earning
      assets
                
                
                6,515
                
                
                
                
                
                
                
                
                
                
                
                8,163Total
      assets
                
                $
                139,560
                
                
                
                
                
                
                
                
                
                
                $
                160,364Interest-bearing
      liabilities:Savings
                
                
                7,854
                
                
                
                40
                
                
                
                2.02
                
                
                
                13,494
                
                
                
                84
                
                
                
                2.47Money
      market and NOW deposits
                
                
                29,251
                
                
                
                132
                
                
                
                1.79
                
                
                
                27,330
                
                
                
                153
                
                
                
                2.22Time
      deposits
                
                
                76,440
                
                
                
                779
                
                
                
                4.04
                
                
                
                93,580
                
                
                
                1,215
                
                
                
                5.15Total
      interest-bearing deposits
                
                
                113,545
                
                
                
                951
                
                
                
                3.32
                
                
                
                134,404
                
                
                
                1,452
                
                
                
                4.29Repurchase
      agreements
                
                
                1,050
                
                
                
                7
                
                
                
                2.64
                
                
                
                522
                
                
                
                5
                
                
                
                3.80Total
      interest-bearing liabilities
                
                
                114,595
                
                
                
                958
                
                
                
                3.32
                
                
                
                134,926
                
                
                
                1,457
                
                
                
                4.28Noninterest-bearing
      liabilities
                
                
                4,625
                
                
                
                
                
                
                
                
                
                
                
                5,187Stockholders'
      equity
                
                
                20,340
                
                
                
                
                
                
                
                
                
                
                
                20,251Total
      liabilities and stockholders' equity
                
                $
                139,560
                
                
                
                
                
                
                
                
                
                
                $
                160,364Net
      interest income
                
                
                
                
                
                $
                890
                
                
                
                
                
                
                
                
                
                
                $
                1,163Interest-rate
      spread (2)
                
                
                
                
                
                
                
                
                
                
                2.19
                %
                
                
                
                
                
                
                
                
                
                
                2.55
                %Net
      interest-earning assets, net margin (3)
                
                $
                18,450
                
                
                
                
                
                
                
                2.65
                %
                
                $
                17,275
                
                
                
                
                
                
                
                3.03
                %Ratio
      of interest-earning assets to interest-bearing liabilities
                
                
                1.16
                
                
                
                
                
                
                
                
                
                
                
                1.13








(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.




19
 Index




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
    30,2008
                
                
                2007Average
      Balance
                
                
                Interest
      and
      Dividends
                
                
                Average
      Yield/
      Cost
                
                
                Average
      Balance
                
                
                Interest
      and
      Dividends
                
                
                Average
      Yield/
      Cost($
      in thousands)Interest-earning
      assets:Loans
                
                $
                116,996
                
                
                
                5,497
                
                
                
                6.26
                %
                
                $
                133,364
                
                
                
                7,647
                
                
                
                7.67
                %Investment
      securities
                
                
                8,832
                
                
                
                334
                
                
                
                5.04
                
                
                
                5,379
                
                
                
                214
                
                
                
                5.32Other
      interest-earning assets (1)
                
                
                17,518
                
                
                
                339
                
                
                
                2.58
                
                
                
                22,449
                
                
                
                877
                
                
                
                5.22Total
      interest-earning assets
                
                
                143,346
                
                
                
                6,170
                
                
                
                5.73
                
                
                
                161,192
                
                
                
                8,738
                
                
                
                7.25Noninterest-earning
      assets
                
                
                8,202
                
                
                
                
                
                
                
                
                
                
                
                6,457Total
      assets
                
                $
                151,548
                
                
                
                
                
                
                
                
                
                
                $
                167,649Interest-bearing
      liabilities:Savings
                
                
                9,278
                
                
                
                139
                
                
                
                2.00
                
                
                
                14,459
                
                
                
                268
                
                
                
                2.48Money
      market and NOW deposits
                
                
                30,730
                
                
                
                412
                
                
                
                1.79
                
                
                
                31,057
                
                
                
                558
                
                
                
                2.40Time
      deposits
                
                
                83,407
                
                
                
                2,791
                
                
                
                4.46
                
                
                
                93,994
                
                
                
                3,595
                
                
                
                5.11Total
      interest-bearing deposits
                
                
                123,415
                
                
                
                3,342
                
                
                
                3.61
                
                
                
                139,510
                
                
                
                4,421
                
                
                
                4.24Repurchase
      agreements
                
                
                986
                
                
                
                23
                
                
                
                3.11
                
                
                
                279
                
                
                
                8
                
                
                
                3.83Total
      interest-bearing liabilities
                
                
                124,401
                
                
                
                3,365
                
                
                
                3.60
                
                
                
                139,789
                
                
                
                4,429
                
                
                
                4.24Noninterest-bearing
      liabilities
                
                
                5,522
                
                
                
                
                
                
                
                
                
                
                
                5,922Stockholders'
      equity
                
                
                21,625
                
                
                
                
                
                
                
                
                
                
                
                21,938Total
      liabilities and stockholders' equity
                
                $
                151,548
                
                
                
                
                
                
                
                
                
                
                $
                167,649Net
      interest income
                
                
                
                
                
                $
                2,805
                
                
                
                
                
                
                
                
                
                
                $
                4,309Interest-rate
      spread (2)
                
                
                
                
                
                
                
                
                
                
                2.13
                %
                
                
                
                
                
                
                
                
                
                
                3.01
                %Net
      interest-earning assets, net margin (3)
                
                $
                18,945
                
                
                
                
                
                
                
                2.61
                %
                
                $
                21,403
                
                
                
                
                
                
                
                3.57
                %Ratio
      of interest-earning assets to interest-bearing liabilities
                
                
                1.15
                
                
                
                
                
                
                
                
                
                
                
                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.




20
 Index





MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Comparison
of the Three-Month Periods Ended September 30, 2008 and 2007







General.  Net
losses for the three months ended September 30, 2008 were $495,000 or a net loss
of $0.17 per basic and diluted common share compared to net loss of $602,000 or
a net loss of $0.19 per basic and diluted common share for the three months
ended September 30, 2007. The decrease in the net loss is primarily due to the
decrease in the provision for loan losses, somewhat offset by a decrease in the
income tax benefit.




Interest Income
and Expense.  Interest income totaled $1.8 million for the
three months ended September 30, 2008 compared to $2.6 million for the three
months ended September 30, 2007.  Interest income on loans decreased
to $1.6 million due to lower yields in the portfolio as a result of higher
levels of nonaccrual loans.  The decrease in loan interest income was
also attributable to a decrease in the loan balance
outstanding.  During both of these periods, no new credit was extended
to borrowers to fund their currently due interest or principal
payments.





Interest
expense decreased to $958,000 for the three months ended September 30, 2008
compared to $1.5 million, for the three months ended September 30,
2007.  Interest expense decreased primarily due to a decrease of $20.9
million in average deposit balances.





Marco
Community Bank has not extended new credits to any borrower for the coverage of
interest payments due upon any other extant note, nor has the Bank capitalized
interest due in any loan and in so doing added interest payable to the principal
balance of any note.





As to
interest reserves, it is the practice of Marco Community Bank to only consider
such reserves in loans where development of land or related vertical
construction is taking place as a prelude to permanent financing.  The
Bank engages in this process only in these limited circumstances, and only to
ensure that such a development or construction project is properly and fully
funded.  The Bank does not engage in the practice of extending
additional loans as a facility to bring interest payments current on borrowers
who do not have the repayment capacity to keep a loan current.




Provision for
Loan Losses.  The provision for loan losses was $150,000 for
the three months ended September 30, 2008. The allowance for loan losses is $5.7
million at September 30, 2008. While management believes that its allowance for
loan losses is adequate as of September 30, 2008, future adjustments to the
Company's allowance for loan losses may be necessary if economic conditions
differ substantially from the assumptions used in making the initial
determination.





There is
a significant correlation between the state of the regional real estate market
and the economic environment in the Bank’s market area.  The current
economic conditions have resulted in a strain upon asset quality, which required
a considered and measured response as to the need for a significant increase in
the provision for loan and lease losses.  Upon a review of its
portfolio and in light of the economic environment, the Bank made an additional
provision of $150,000 during the quarter ending September 30,
2008.  Charge-offs totaled $531,000 for the quarter ending September
30, 2008 compared to $74,000 for the quarter ending September 30, 2007 with no
recoveries occurring during either period.




21
 Index





MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Comparison
of the Three-Month Periods Ended September 30, 2008 and 2007,
Continued







Noninterest
Income.Noninterest income was $75,000 during the three month
period ended September 30, 2008 compared to $46,000 for the same period in
2007.




Noninterest
Expenses.  Noninterest expenses decreased to $1.6 million
during the three-month period ended September 30, 2008 compared to $1.7 million
for the same period in 2007.  Noninterest expense increased primarily
due to a decrease in other real estate owned expenses.




Income
Taxes.  The Company recorded an income tax benefit of $299,000
for the three-month period ended September 30, 2008 (an effective rate of 37.7%)
compared to an income tax benefit of $335,000 for the 2007 period (an effective
rate of 35.8%).





22
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Comparison
of the Nine-Month Periods Ended September 30, 2008 and 2007







General.  Net
losses for the nine months ended September 30, 2008 were $2.9 million or a net
loss of $0.96 per basic and diluted common share compared to net loss of $3.0
million or $0.95 per basic and diluted common share for the nine months ended
September 30, 2007.  The Company's 2008 net loss was primarily due to
the addition of $3.2 million in the allowance for loan loss.





The
provision for loan loss of $3.2 million was a result of recent regulatory
examinations by the Florida Office of Financial Regulation and Federal Reserve
Bank of Atlanta, following which the Bank agreed to take certain actions
primarily related to certain loan pools it had purchased. Such pools consisted
of short term loans to borrowers with high credit scores, which were used to
finance the borrowers' acquisition and renovation of residential real estate
primarily in Duval and Hillsborough Counties, Florida. Due to liquidity and
pricing weaknesses in those markets, as well as the financial deterioration of
the loans' servicer, the Bank has further concluded that the likelihood of full
repayment of those loans is unlikely.  At September 30, 2008, the Bank
has $2.5 million remaining in these loan pools compared to $7.9 million at
September 30, 2007. The Bank charged off an additional $605,000 in 2008 compared
to $3.2 million for the period ending September 30, 2007.  For the
nine-month period ending September 30, 2008, the Bank received $1.9 million from
the sale of several loan pools. No loan pools were sold during the nine-month
period ending September 30, 2007.  The Bank believes that its
Allowance for Loan and Lease Losses is sufficient to cover any additional charge
offs in those loan pools. The Bank, however, is actively engaged in trying to
mitigate any losses and to reduce the amount of adversely classified loans. The
Bank is evaluating its options, including, but not limited to, selling the loan
pools or accepting assignment of individual loans and pursuing refinancing or
foreclosures.




Interest Income
and Expense.  Interest income decreased to $6.2 million for the
nine months ended September 30, 2008 from $8.7 million for the nine months ended
September 30, 2007.  Interest income decreased primarily due to lower
yields in the portfolio as a result of higher levels of nonaccrual loans. The
decrease in loan interest income was also attributable to a decrease in the loan
balance outstanding.  During both of these periods, no new credit was
extended to borrowers to fund their currently due interest or principal
payments.





Interest
expense decreased to $3.4 million for the nine months ended September 30, 2008
compared to $4.4 million, for the nine months ended September 30,
2007.  Interest expense decreased due to a decrease in the average
balance in 2008.





Marco
Community Bank has not extended new credits to any borrower for the coverage of
interest payments due upon any other extant note, nor has the Bank capitalized
interest due in any loan and in so doing added interest payable to the principal
balance of any note.





As to
interest reserves, it is the practice of Marco Community Bank to only consider
such reserves in loans where development of land or related vertical
construction is taking place as a prelude to permanent financing.  The
Bank engages in this process only in these limited circumstances, and only to
ensure that such a development or construction project is properly and fully
funded.  The Bank does not engage in the practice of extending
additional loans as a facility to bring interest payments current on borrowers
who do not have the repayment capacity to keep a loan current.





23
 Index








MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Comparison
of the Nine-Month Periods Ended September 30, 2008 and 2007,
Continued







Provision for
Loan Losses.  The provision for loan losses was $3.2 million
for the nine months ended September 30, 2008 compared to $5.8 million for the
nine months ended September 30, 2007. The allowance for loan losses is $5.7
million at September 30, 2008. Nonaccrual loans totaled $12.9 million at
September 30, 2008, compared to $14.8 million at September 30, 2007. While
management believes that its allowance for loan losses is adequate as of
September 30, 2008, future adjustments to the Company's allowance for loan
losses may be necessary if economic conditions differ substantially from the
assumptions used in making the initial determination.





There is
a significant correlation between the state of the regional real estate market
and the economic environment in the Bank’s market area.  The current
economic conditions have resulted in a strain upon asset quality, which required
a considered and measured response as to the need for a significant increase in
the provision for loan and lease losses.  Upon a review of its
portfolio and in light of the economic environment, the Bank made a provision of
$3.2 million during the nine-month period ending September 30, 2008, primarily
to address a specific portion of purchased loan pools within its
portfolio.  Charge-offs totaled an additional $1.3 million with no
recoveries occurring during the period.





During
this period, discussions began between the Bank and the Federal Reserve Bank of
Atlanta ("FRB") concerning the need for additional provisions to address the
weaknesses inherent in the regional economic environment and its expected effect
on the Bank’s portfolio of loans.  This discussion concluded with the
Bank adding an incremental provision of $1,339,000, which brought the total
provisions for the nine-month period ending September 30, 2008 to $3.2
million.  This had the net effect, with the incorporation of the
previously mentioned charge-offs, of bringing the allowance for loan and lease
losses to $5.7 million as of September 30, 2008.





The
process of provision calculation has evolved as the Bank has responded to the
changing local and regional market conditions and the guidance received from the
FRB.  This examination of the calculation process has entailed changes
in how the Bank segments loan categories, resulting in a more appropriate and
detailed division of loan categories and an improved and more accurate
assignment of risks specific to each.  This re-segmentation and risk
re-assessment will ensure that the Bank maintains an appropriate level of
reserves going forward in the interest of maintaining safety and soundness in
its banking practices and will allow the Bank to possess the capacity to respond
appropriately to the changing market conditions within which the Bank
operates.





Nonaccrual
loans as a percentage of the Bank’s loan portfolio was 11.8%at September 30,
2008 compared to 11.5% at September 30, 2007 while total past dues (those loans
in excess of 30 days of delinquency) were 16.0% at September 30, 2008 compared
to 15.6% at September 30, 2007. Nonperforming loans as a percent of totals loans
was 11.8% at September 30, 2008 compared to 11.4% at September 30,
2007.  The increase in this ratio required that the Bank take the
necessary actions to bolster the reserve through the funding of adequate and
appropriate provisions to ensure that proper reserves were being achieved which
would allow the Bank to maintain its operations in compliance with safe and
sound banking practices.





24
 Index





MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Comparison
of the Nine-Month Periods Ended September 30, 2008 and 2007,
Continued








Provision for
Loan Losses, Continued. In
addition, the process by which the Bank calculated these provisions and thus the
resulting maintenance level for the allowance for lease and loan losses was
substantially modified to more closely track those portions of the loan
portfolio where the Bank was incurring a heightened level of impairment to asset
quality.  This process of modification also allowed the Bank to more
accurately define segment risks and to more adequately determine an appropriate
overall reserve level.  This modified process was first utilized in
the calculation of the provision taken at March 31, 2008 in conjunction with
guidance from the appropriate regulatory agencies as to the level of reserve
that was the agencies felt was appropriate for the Bank to maintain at that
time.





The
quarter ending June 30, 2008 was the first full utilization of the new
calculation process, and demonstrated that the Bank had an adequate level of
loan loss reserves at that time.  Thus no additional provision was
necessary.  However, the Bank continues to monitor asset quality
meticulously going forward in order to ensure that it maintains an acceptable
level of loan and lease loss allowance, and to make appropriate provisions as
necessary in order to maintain this allowance in accordance with statute and
safe and sound banking practices.




Noninterest
Income.Noninterest income decreased to $165,000 during the
nine month period ended September 30, 2008 compared $984,000 for the same period
in 2007.  A decrease in loan brokerage fees from CLCC transactions
accounted for the decrease.




Noninterest
Expenses.  Noninterest expenses increased to $4.4 million
during the nine-month period ended September 30, 2008 compared to $4.3 million
for the same period in 2007.  Noninterest expense increased primarily
due to an increase in other real estate owned expenses in addition to regulatory
assessments and professional fees.




Income
Taxes.  The Company recorded an income tax benefit of $1.7
million for the nine-month period ended September 30, 2008 (an effective rate of
37.6%) compared to an income tax benefit of $1.8 million for the 2007 period (an
effective rate of 36.8%).





25
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Item
4T.  Controls and Procedures





(a)
Evaluation of Disclosure Controls and Procedures





We
maintain 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 management's evaluation of those controls and
procedures performed within the 90 days preceding the filing of this Report, our
Principal Executive Officer and Principal Financial Officer concluded that,
subject to the limitations noted below, the Company's disclosure controls and
procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934) are effective to ensure that the information required to be disclosed by
the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the U.S. Securities and Exchange Commission's rules
and forms.





(b)
Changes in Internal Controls





We have
made no significant changes in our internal controls over financial reporting
during the quarter ended September 30, 2008 that have materially affected or are
reasonably likely to materially affect our internal control over financial
reporting.





(c)
Limitations on the Effectiveness of Controls





Our
management, including our Principal Executive Officer and Principal Financial
Officer, does not expect that our disclosure controls and internal controls will
prevent all error and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control.





The
design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.





26
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





PART
II. OTHER INFORMATION








Item 1.  Legal Proceedings





On
Thursday,August
22,2008, Marco Community Bancorp, Inc's (the "Company") wholly owned subsidiary,
Marco Community Bank (the "Bank"), instituted an action (Marco Community Bank v. Atlantic
Capital Associates, Inc., Florida Capital Bank N.A. and Allen C. Ewing& Co., Case No.
08-6362 CA)in
the Circuit Court of the Twentieth Judicial Circuit in and for Collier County,
Florida against each of Atlantic Capital Assoc., Inc. ("ACA"), Florida Capital
Bank, N.A. ("FCB") and Allen C. Ewing & Co. ("Ewing" and collectively with
ACA and FCB, the "Defendants").





Specifically,
the Bank alleges that ACA, the loan originator, loan servicer, lender and
underwriter, along with its agents, FCB and Ewing, failed to underwrite mortgage
loans in conformity with their own offering documents, servicing agreements and
industry standards. In addition, the Bank alleges that the Defendants also
failed to perform as required under their agreements with the Bank and that all
of these failures and conflicts led up to the issuance of loan pools, which were
impaired securities founded on material misstatements and omissions in the
offering documents, servicing agreements and other material documents delivered
in connection with the purchases bythe Bank of these loan
pools.





The Bank
has instituted the action alleging violations of the Florida Securities and
Investor Protection Act, breach of contract and negligence. The Bank is
seekingto recover
damages sustained, pre-judgment interest, attorney's fees and cost in connection
with its purchase of more than $19 million of loan pools from the
Defendants.





Item 5. Other Information





On August
14, 2007, the Bank entered into a Written Agreement with the Federal Reserve
Bank of Atlanta ("FRB") and the Florida Office of Financial Regulation ("OFR").
The purpose of the Written Agreement is for the Bank to address the FRB's and
OFR's supervisory and regulatory concerns primarily related to the volume of
certain loan pools which are described elsewhere in this Form 10-Q, as well as
other loan quality issues. Pursuant to the Written Agreement, the Bank must take
corrective actions within specified time frames, which may be extended with the
consent of the FRB and the OFR although the Bank has not yet had to request any
extensions.  When the FRB and OFR have determined that the Bank is in
full compliance with the Written Agreement and that the issues that precipitated
the Written Agreement are unlikely to occur, we expect that they will release
the Bank from the Written Agreement. Failure to comply with the terms of the
Written Agreement could result in the assessment of civil money penalties
against the Bank and its Board of Directors. The actions to be taken include an
evaluation by the Bank's Board of Directors of its current management and
staffing to determine if any additional or replacement personnel are needed; the
preparation and implementation of a strategic business plan and budget designed
to improve the Bank's financial condition and credit risk management; a review
and adoption of any necessary revisions to the Bank's loan policy and loan
review/grading program; a reduction of the Bank's volume of adversely classified
assets; and the continual monitoring of the Bank's allowance for loan and lease
losses. In addition, the Bank may not make any loans to borrowers who previously
had loans charged-off by the Bank; not because of any specific concern with the
Bank, but because such provision is typically included in such written
agreements as a proactive preventive measure; must prepare a plan to effectively
manage the Bank's capital relative to its volume of adversely classified assets,
anticipated growth and risk profile; and may not pay any dividends without
regulatory consent.





27
 Index




MARCO
COMMUNITY BANCORP, INC. AND SUBSIDIARIES





Item
5. Other Information, Continued








Since
entering into the Written Agreement, the Company has made certain material
changes to its operations. These changes include: confining its lending
activities to Collier County; increasing the level of detail and analysis
contained in its loan underwriting files; restructuring its loan policy and
methodology for determining its allowance for loan losses; broadening marketing
efforts to utilize more forms of media and to emphasize increased community
involvement; cross-training employees to increase their skill sets and better
serve the Company's customers; and increasing lobby hours for the convenience of
customers.








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-Q which was filed
with the Securities and Exchange Commission on August 14, 2007, those
denominated with (c) were filed with the Company's Form 10-K which was filed
with the Securities and Exchange Commission on March 19, 2008 and those
denominated with (d) were filed with the Company's Definitive Schedules 14-A
which was filed with the Securities and Exchange Commission on March 21, 2007
and March 20, 2008.





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.
 3.3
              Articles
      of Amendment to the Articles of
Incorporation
 3.4
              Articles
      of Amendment to the Articles of
Incorporation
 (a)  4.1
              Specimen
      Common Stock Certificate
 (d)  10.1
              Employees'
      Stock Option Plan, as amended
 (d)  10.2
              Directors'
      Stock Option Plan, as amended
 (d)  10.3
              Advisory
      Directors' Stock Option Plan, as
amended
 (c)  10.4
              Employee
      Severance Agreement with Paul
Nidasso
 (c)  10.5
              Employee
      Severance Agreement with Anthony
Iannotta
 (c)  10.6
              Employee
      Severance Agreement with David
Klein
 (b)  10.8
              Written
      Agreement with the Federal Reserve Bank of Atlanta and the Florida Office
      of Financial Regulation
 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




28
 Index




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 12, 2008
                  
                  By:
                  /s/Richard Storm, Jr.Richard
      Storm, Jr., Chief Executive OfficerDate:
                  November 12, 2008
                  
                  By:
                  /s/Laura A. WittyLaura
      A. Witty, Interim Chief Financial Officer, Vice President and
      Controller






29