##### Table of Contents

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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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(Mark One)

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

For the quarterly period ended June 30, 2006



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

For the transition period from  to

Commission file number 333-103651



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MARCO COMMUNITY BANCORP, INC.

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



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

1770 San Marco Road

Marco Island, Florida 34145

(Address of Principal Executive Offices)

(239) 389-5200

(Issuers Telephone Number, Including Area Code)



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



---

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  YES  x    NO ̈

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

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



|                                       |  |                             
|-------------------------------------- |  | ----------------------------
|Common stock, par value $.01 per
share |  | 3,005,857 shares            
|(class)                                |  | Outstanding at July 26, 2006

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



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

INDEX



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



1



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

($ in thousands, except per share amounts)



|                                                                                                                                  |  |              |         |                  |        
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---------------- | -------
|                                                                                                                                  |  | June 30,2006 |         | December 31,2005
|                                                                                                                                  |  | (Unaudited)  |         |                 
|Assets                                                                                                                            |  |              |         |                  |        
|Cash and due from banks                                                                                                           |  | $            | 1,507   |                  | 2,140  
|Federal funds sold                                                                                                                |  |              | 22,893  |                  | 15,151 
|Interest-bearing deposits                                                                                                         |  |              | 2,090   |                  | 2,050  
|                                                                                                                                  |  |              |         |                  |        
|Total cash and cash equivalents                                                                                                   |  |              | 26,490  |                  | 19,341 
|                                                                                                                                  |  |             
|Loans, net of allowance for loan losses of $2,047 in 2006 and $1,699 in 2005                                                      |  |              | 125,667 |                  | 132,773
|Premises and equipment, net                                                                                                       |  |              | 3,679   |                  | 3,736  
|Federal Reserve Bank stock, at cost                                                                                               |  |              | 402     |                  | 372    
|Accrued interest receivable                                                                                                       |  |              | 651     |                  | 710    
|Other assets                                                                                                                      |  |              | 483     |                  | 496    
|                                                                                                                                  |  |              |         |                  |        
|Total assets                                                                                                                      |  | $            | 157,372 |                  | 157,428
|                                                                                                                                  |  |              |         |                  |        
|Liabilities and Stockholders Equity                                                                                              |  |              |         |                  |        
|                                                                                                                                  |  |             
|Liabilities:                                                                                                                      |  |              |         |                  |        
|Noninterest-bearing demand deposits                                                                                               |  |              | 4,776   |                  | 5,750  
|Savings, NOW and money-market deposits                                                                                            |  |              | 46,783  |                  | 65,072 
|Time deposits                                                                                                                     |  |              | 84,479  |                  | 66,563 
|                                                                                                                                  |  |              |         |                  |        
|Total deposits                                                                                                                    |  |              | 136,038 |                  | 137,385
|                                                                                                                                  |  |             
|Official checks                                                                                                                   |  |              | 351     |                  | 559    
|Accrued interest payable and other liabilities                                                                                    |  |              | 589     |                  | 1,112  
|                                                                                                                                  |  |              |         |                  |        
|Total liabilities                                                                                                                 |  |              | 136,978 |                  | 139,056
|                                                                                                                                  |  |              |         |                  |        
|Stockholders equity:                                                                                                             |  |              |         |                  |        
|Preferred stock, no par value; 1,000,000 shares authorized, none issued or outstanding                                            |  |              |        |                  |       
|Common stock, $.01 par value; 9,000,000 shares authorized, 2,994,226 and 2,842,949 shares issued and outstanding in 2006 and
2005 |  |              | 30      |                  | 28     
|Additional paid-in capital                                                                                                        |  |              | 18,778  |                  | 17,420 
|Retained earnings                                                                                                                 |  |              | 1,586   |                  | 924    
|                                                                                                                                  |  |              |         |                  |        
|Total stockholders equity                                                                                                        |  |              | 20,394  |                  | 18,372 
|                                                                                                                                  |  |              |         |                  |        
|Total liabilities and stockholders equity                                                                                        |  | $            | 157,372 |                  | 157,428
|                                                                                                                                  |  |              |         |                  |        

See Accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Unaudited)

(In thousands, except per share amounts)



|                                                       |  |                            |       |                          |       |      |       |      |      
|------------------------------------------------------ |  | -------------------------- | ----- | ------------------------ | ----- | ---- | ----- | ---- | -----
|                                                       |  | Three Months EndedJune 30, |       | Six Months EndedJune 30,
|                                                       |  | 2006                       |       | 2005                     |       | 2006 |       | 2005
|Interest income:                                       |  |                            |       |                          |       |      |       |      |      
|Loans                                                  |  | $                          | 2,784 |                          | 1,881 |      | 5,443 |      | 3,499
|Other interest-earning assets                          |  |                            | 325   |                          | 101   |      | 582   |      | 206  
|                                                       |  |                            |       |                          |       |      |       |      |      
|Total interest income                                  |  |                            | 3,109 |                          | 1,982 |      | 6,025 |      | 3,705
|                                                       |  |                            |       |                          |       |      |       |      |      
|Interest expense-                                      |  |                            |       |                          |       |      |       |      |      
|Deposits                                               |  |                            | 1,250 |                          | 599   |      | 2,307 |      | 1,157
|                                                       |  |                            |       |                          |       |      |       |      |      
|Net interest income                                    |  |                            | 1,859 |                          | 1,383 |      | 3,718 |      | 2,548
|                                                       |  |                            |       |                         
|Provision for loan losses                              |  |                            | 68    |                          | 98    |      | 348   |      | 224  
|                                                       |  |                            |       |                          |       |      |       |      |      
|Net interest income after provision for loan losses    |  |                            | 1,791 |                          | 1,285 |      | 3,370 |      | 2,324
|                                                       |  |                            |       |                          |       |      |       |      |      
|Noninterest income:                                    |  |                            |       |                          |       |      |       |      |      
|Service charges on deposit accounts                    |  |                            | 10    |                          | 4     |      | 16    |      | 8    
|MCBCLC loan brokerage fees                             |  |                            | 95    |                          | 285   |      | 164   |      | 364  
|Other service charges and fees                         |  |                            | 47    |                          | 78    |      | 98    |      | 128  
|                                                       |  |                            |       |                          |       |      |       |      |      
|Total noninterest income                               |  |                            | 152   |                          | 367   |      | 278   |      | 500  
|                                                       |  |                            |       |                          |       |      |       |      |      
|Noninterest expenses:                                  |  |                            |       |                          |       |      |       |      |      
|Salaries and employee benefits                         |  |                            | 599   |                          | 444   |      | 1,175 |      | 823  
|Occupancy and equipment                                |  |                            | 132   |                          | 105   |      | 269   |      | 203  
|Advertising                                            |  |                            | 53    |                          | 26    |      | 97    |      | 81   
|Insurance                                              |  |                            | 9     |                          | 8     |      | 17    |      | 13   
|Data processing                                        |  |                            | 53    |                          | 43    |      | 100   |      | 78   
|Telephone                                              |  |                            | 11    |                          | 13    |      | 22    |      | 19   
|Professional fees                                      |  |                            | 64    |                          | 58    |      | 115   |      | 128  
|Stationary and supplies                                |  |                            | 8     |                          | 16    |      | 21    |      | 38   
|Director fees                                          |  |                            | 28    |                          | 15    |      | 56    |      | 29   
|Other                                                  |  |                            | 94    |                          | 110   |      | 220   |      | 192  
|                                                       |  |                            |       |                          |       |      |       |      |      
|Total noninterest expenses                             |  |                            | 1,051 |                          | 838   |      | 2,092 |      | 1,604
|                                                       |  |                            |       |                          |       |      |       |      |      
|Earnings before income taxes                           |  |                            | 892   |                          | 814   |      | 1,556 |      | 1,220
|                                                       |  |                            |       |                         
|Income taxes                                           |  |                            | 336   |                          | 306   |      | 597   |      | 459  
|                                                       |  |                            |       |                          |       |      |       |      |      
|Net earnings                                           |  | $                          | 556   |                          | 508   |      | 959   |      | 761  
|                                                       |  |                            |       |                          |       |      |       |      |      
|Earnings per share, basic                              |  | $                          | 0.19  |                          | 0.21  |      | 0.33  |      | 0.32 
|                                                       |  |                            |       |                          |       |      |       |      |      
|Weighted-average number of shares outstanding, basic   |  |                            | 2,980 |                          | 2,430 |      | 2,937 |      | 2,405
|                                                       |  |                            |       |                          |       |      |       |      |      
|Earnings per share, diluted                            |  | $                          | 0.17  |                          | 0.20  |      | 0.30  |      | 0.31 
|                                                       |  |                            |       |                          |       |      |       |      |      
|Weighted-average number of shares outstanding, diluted |  |                            | 3,199 |                          | 2,481 |      | 3,205 |      | 2,456
|                                                       |  |                            |       |                          |       |      |       |      |      
|Dividends per share                                    |  | $                          |      |                          |      |      | 0.10  |      |     
|                                                       |  |                            |       |                          |       |      |       |      |      

See Accompanying Notes to Condensed Consolidated Financial Statements.



3



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders Equity

Six Months Ended June 30, 2006
and 2005

($ in thousands)



|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|------------------------------------------------------------------------------------ |  | ----------- | -- | ------------------------ | ------ | ------------------------------------ | ----- | - | ------------------------ | ------ | -
|                                                                                     |  | CommonStock |    | AdditionalPaid-InCapital |        | RetainedEarnings(AccumulatedDeficit) |       |   | TotalStockholdersEquity |       
|Balance at December 31, 2004                                                         |  | $           | 16 |                          | 14,322 |                                      | (665  | ) |                          | 13,673 |  
|Exercise of stock warrants (89,548 shares) (unaudited)                               |  |             | 1  |                          | 813    |                                      |      |   |                          | 814    |  
|Net earnings (unaudited)                                                             |  |             |   |                          |       |                                      | 761   |   |                          | 761    |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|Balance at June 30, 2005 (unaudited)                                                 |  | $           | 17 |                          | 15,135 |                                      | 96    |   |                          | 15,248 |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|Balance at December 31, 2005                                                         |  |             | 28 |                          | 17,420 |                                      | 924   |   |                          | 18,372 |  
|Exercise of stock warrants (119,290 shares) (unaudited)                              |  |             | 1  |                          | 953    |                                      |      |   |                          | 954    |  
|Exercise of stock options (31,987 shares), including tax benefit of $138 (unaudited) |  |             | 1  |                          | 331    |                                      |      |   |                          | 332    |  
|Share-based compensation (unaudited)                                                 |  |             |   |                          | 74     |                                      |      |   |                          | 74     |  
|Cash dividends paid (unaudited)                                                      |  |             |   |                          |       |                                      | (297  | ) |                          | (297   | )
|Net earnings (unaudited)                                                             |  |             |   |                          |       |                                      | 959   |   |                          | 959    |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  
|Balance at June 30, 2006 (unaudited)                                                 |  | $           | 30 |                          | 18,778 |                                      | 1,586 |   |                          | 20,394 |  
|                                                                                     |  |             |    |                          |        |                                      |       |   |                          |        |  

See Accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)



|                                                                                       |  |                          |        |   |      |         |  
|-------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | ------- | -
|                                                                                       |  | Six Months EndedJune 30, |       
|                                                                                       |  | 2006                     |        |   | 2005 |        
|Cash flows from operating activities:                                                  |  |                          |        |   |      |         |  
|Net earnings                                                                           |  | $                        | 959    |   |      | 761     |  
|Adjustments to reconcile net earnings to net cash provided by operating activities:    |  |                          |        |   |      |         |  
|Depreciation                                                                           |  |                          | 139    |   |      | 114     |  
|Share  based compensation                                                             |  |                          | 74     |   |      |        |  
|Provision for loan losses                                                              |  |                          | 348    |   |      | 224     |  
|Amortization of loan fees and costs, net                                               |  |                          | (19    | ) |      | (36     | )
|Decrease (increase) in accrued interest receivable                                     |  |                          | 59     |   |      | (144    | )
|Decrease in other assets                                                               |  |                          | 13     |   |      | 203     |  
|(Decrease) increase in official checks, accrued interest payable and other liabilities |  |                          | (731   | ) |      | 501     |  
|                                                                                       |  |                          |        |   |      |         |  
|Net cash provided by operating activities                                              |  |                          | 842    |   |      | 1,623   |  
|                                                                                       |  |                          |        |   |      |         |  
|Cash flows from investing activities:                                                  |  |                          |        |   |      |         |  
|Net decrease (increase) in loans                                                       |  |                          | 6,777  |   |      | (20,390 | )
|Purchase of premises and equipment                                                     |  |                          | (82    | ) |      | (308    | )
|Purchase of Federal Reserve Bank Stock                                                 |  |                          | (30    | ) |      |        |  
|                                                                                       |  |                          |        |   |      |         |  
|Net cash provided by (used in) investing activities                                    |  |                          | 6,665  |   |      | (20,698 | )
|                                                                                       |  |                          |        |   |      |         |  
|Cash flows from financing activities:                                                  |  |                          |        |   |      |         |  
|Net (decrease) increase in deposits                                                    |  |                          | (1,347 | ) |      | 18,734  |  
|Net proceeds from exercise of common stock warrants and options                        |  |                          | 1,148  |   |      | 814     |  
|Cash dividends paid                                                                    |  |                          | (297   | ) |      |        |  
|Tax benefit from exercise of stock options                                             |  |                          | 138    |   |      |        |  
|                                                                                       |  |                          |        |   |      |         |  
|Net cash (used in) provided by financing activities                                    |  |                          | (358   | ) |      | 19,548  |  
|                                                                                       |  |                          |        |   |      |         |  
|Net increase in cash and cash equivalents                                              |  |                          | 7,149  |   |      | 473     |  
|                                                                                       |  |                         
|Cash and cash equivalents at beginning of period                                       |  |                          | 19,341 |   |      | 18,043  |  
|                                                                                       |  |                          |        |   |      |         |  
|Cash and cash equivalents at end of period                                             |  | $                        | 26,490 |   |      | 18,516  |  
|                                                                                       |  |                          |        |   |      |         |  
|Supplemental disclosure of cash flow information:                                      |  |                          |        |   |      |         |  
|Cash paid during the period for:                                                       |  |                          |        |   |      |         |  
|Interest                                                                               |  | $                        | 2,246  |   |      | 1,165   |  
|                                                                                       |  |                          |        |   |      |         |  
|Income taxes                                                                           |  | $                        | 960    |   |      |        |  
|                                                                                       |  |                          |        |   |      |         |  

See Accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)



|1. | Description of Business and Basis of Presentation
|-- | -------------------------------------------------

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

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



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

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



|                                             |  |                                 |     |                               |    
|-------------------------------------------- |  | ------------------------------- | --- | ----------------------------- | ---
|                                             |  | Three Months EndedJune 30, 2006 |     | Six Months EndedJune 30, 2006
|Balance at end of period                     |  | $                               | 741 |                               | 741
|                                             |  |                                 |     |                               |    
|Total related allowance for losses           |  | $                               | 63  |                               | 63 
|                                             |  |                                 |     |                               |    
|Average investment in impaired loans         |  | $                               | 741 |                               | 370
|                                             |  |                                 |     |                               |    
|Interest income recognized on impaired loans |  | $                               |    |                               |   
|                                             |  |                                 |     |                               |    
|Interest income received on impaired loans   |  | $                               |    |                               |   
|                                             |  |                                 |     |                               |    

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

(continued)



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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 EndedJune 30, |       | Six Months EndedJune 30, |      
|                          |  | 2006                       |       | 2005                     |       | 2006 |       | 2005 |      
|Beginning balance         |  | $                          | 1,979 |                          | 1,205 |      | 1,699 |      | 1,081 |  
|Charge-offs               |  |                            |      |                          |      |      |      |      | (2    | )
|Provision for loan losses |  |                            | 68    |                          | 98    |      | 348   |      | 224   |  
|                          |  |                            |       |                          |       |      |       |      |       |  
|Ending balance            |  | $                          | 2,047 |                          | 1,303 |      | 2,047 |      | 1,303 |  
|                          |  |                            |       |                          |       |      |       |      |       |  



|3. | Earnings Per Share (EPS)
|-- | --------------------------

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



|                                                                      |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|--------------------------------------------------------------------- |  | -------- | --- | ---------------------- | ----- | -------------- | - | -------- |  | ---------------------- | --- | -------------- | ----- |  | - | ----
|                                                                      |  | 2006     |     | 2005                  
|                                                                      |  | Earnings |     | Weighted-AverageShares |       | PerShareAmount |   | Earnings |  | Weighted-AverageShares |     | PerShareAmount
|Three Months Ended June 30:                                           |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Basic EPS-                                                            |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Net earnings available to common stockholders                         |  | $        | 556 |                        | 2,980 |                | $ | 0.19     |  | $                      | 508 |                | 2,430 |  | $ | 0.21
|                                                                      |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Effect of dilutive securities-                                        |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Incremental shares from assumed conversion of options and warrants    |  |          |     |                        | 219   |                |   |          |  |                        |     |                | 51    |  |   |     
|                                                                      |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Diluted EPS-                                                          |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Net earnings available to common stockholders and assumed conversions |  | $        | 556 |                        | 3,199 |                | $ | 0.17     |  | $                      | 508 |                | 2,481 |  | $ | 0.20
|                                                                      |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Six Months Ended June 30:                                             |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Basic EPS-                                                            |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Net earnings available to common stockholders                         |  | $        | 959 |                        | 2,937 |                | $ | 0.33     |  | $                      | 761 |                | 2,405 |  | $ | 0.32
|                                                                      |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Effect of dilutive securities-                                        |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Incremental shares from assumed conversion of options and warrants    |  |          |     |                        | 268   |                |   |          |  |                        |     |                | 51    |  |   |     
|                                                                      |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Diluted EPS-                                                          |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     
|Net earnings available to common stockholders and assumed conversions |  | $        | 959 |                        | 3,205 |                | $ | 0.30     |  | $                      | 761 |                | 2,456 |  | $ | 0.31
|                                                                      |  |          |     |                        |       |                |   |          |  |                        |     |                |       |  |   |     

(continued)



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|4. | Regulatory Capital
|-- | ------------------

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



|                                                |  |        |   |  |                       |  
|----------------------------------------------- |  | ------ | - |  | --------------------- | -
|                                                |  | Actual |   |  | RegulatoryRequirement |  
|Total capital to risk-weighted assets           |  | 13.66  | % |  | 10.00                 | %
|Tier I capital to risk-weighted assets          |  | 12.47  | % |  | 6.00                  | %
|Tier I capital to total assets - leverage ratio |  | 9.36   | % |  | 5.00                  | %



|5. | Share-Based Compensation
|-- | ------------------------

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

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

(continued)



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|5. | Share-Based Compensation, Continued
|-- | -----------------------------------

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

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



|                                                                                                                |  |                                 |      |   |                               |      |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ---- | - | ----------------------------- | ---- | -
|                                                                                                                |  | Three Months EndedJune 30, 2005 |      |   | Six Months EndedJune 30, 2005 |     
|Net earnings, as reported                                                                                       |  | $                               | 508  |   |                               | 761  |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards |  |                                 | (35  | ) |                               | (69  | )
|                                                                                                                |  |                                 |      |   |                               |      |  
|Proforma net earnings                                                                                           |  | $                               | 473  |   |                               | 692  |  
|                                                                                                                |  |                                 |      |   |                               |      |  
|Basic earnings per share:                                                                                       |  |                                 |      |   |                               |      |  
|As reported                                                                                                     |  | $                               | 0.21 |   |                               | 0.32 |  
|                                                                                                                |  |                                 |      |   |                               |      |  
|Proforma                                                                                                        |  | $                               | 0.19 |   |                               | 0.29 |  
|                                                                                                                |  |                                 |      |   |                               |      |  
|                                                                                                                |  |                                
|Diluted earnings per share:                                                                                     |  |                                 |      |   |                               |      |  
|As reported                                                                                                     |  | $                               | 0.20 |   |                               | 0.31 |  
|                                                                                                                |  |                                 |      |   |                               |      |  
|Proforma                                                                                                        |  | $                               | 0.19 |   |                               | 0.29 |  
|                                                                                                                |  |                                 |      |   |                               |      |  

In 2004, the Company adopted three stock option plans. The Employees Stock Option Plan is for
the benefit of officers and other key employees of the Holding Company, the Bank and MCBCLC. A total of 181,100 shares (adjusted) have been reserved for this plan. Stock options are granted at an exercise price equal to or greater than the fair
market value of the common stock on the date of grant. These options have ten year terms and vest 20% a year over a five year period. At June 30, 2006, 12,400 options (adjusted) remain available for grant.

(continued)



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|5. | Share-Based Compensation, Continued
|-- | -----------------------------------

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

The Advisory Directors Stock Option Plan is for the benefit of advisory directors of the Company. A total of 37,500 shares (adjusted) have been
reserved for this plan. Stock options are granted at an exercise price equal to or greater than the fair market value of the common stock on the date of grant. These options have six year terms and begin vesting one year after the date of grant at
25% a year over a four year period. At June 30, 2006, 13,500 options (adjusted) remain available for grant. A summary of the plans is as follows (in thousands, except for share and per share information):



|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|---------------------------------------- |  | --------------- | - |  | --------------------------------------- | ----- | ---------------------------------------- | ---- | ----------------------- | - | -----
|                                         |  | Number ofShares |   |  | Weighted-Average Per ShareExercisePrice |       | Weighted-AverageRemainingContractualTerm |      | AggregateIntrinsicValue
|The Employees Plan:                     |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options outstanding at December 31, 2005 |  | 124,300         |   |  | $                                       | 6.82  |                                          |      |                         |   |      
|Options granted                          |  | 30,000          |   |  |                                         | 16.00 |                                          |      |                         |   |      
|Options exercised                        |  | (1,800          | ) |  |                                         | 6.60  |                                          |      |                         |   |      
|Options forfeited                        |  | (4,800          | ) |  |                                         | 6.38  |                                          |      |                         |   |      
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options outstanding at June 30, 2006     |  | 147,700         |   |  | $                                       | 8.70  |                                          | 8.61 |                         | $ | 1,189
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options exercisable at June 30, 2006     |  | 34,500          |   |  | $                                       | 6.29  |                                          | 7.89 |                         | $ | 361  
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|The Directors Plan:                     |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options outstanding at December 31, 2005 |  | 138,750         |   |  |                                         | 6.18  |                                          |      |                         |   |      
|Options exercised                        |  | (30,000         | ) |  |                                         | 6.00  |                                          |      |                         |   |      
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options outstanding at June 30, 2006     |  | 108,750         |   |  | $                                       | 6.23  |                                          | 7.68 |                         | $ | 1,144
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options exercisable at June 30, 2006     |  | 108,750         |   |  | $                                       | 6.23  |                                          | 7.68 |                         | $ | 1,144
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|The Advisory Directors Plan:            |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options outstanding at December 31, 2005 |  | 24,000          |   |  |                                         | 6.00  |                                          |      |                         |   |      
|Options exercised                        |  | (187            | ) |  |                                         | 6.00  |                                          |      |                         |   |      
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options outstanding at June 30, 2006     |  | 23,813          |   |  | $                                       | 6.00  |                                          | 3.25 |                         | $ | 256  
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      
|Options exercisable at June 30, 2006     |  | 5,797           |   |  | $                                       | 6.00  |                                          | 3.25 |                         | $ | 62   
|                                         |  |                 |   |  |                                         |       |                                          |      |                         |   |      

(continued)



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|5. | Share-Based Compensation, Continued
|-- | -----------------------------------

The total
intrinsic value of options exercised during the three and six months ended June 30, 2006 was $148,000 and $386,000, respectively. The tax benefit relating to the stock options exercised was $51,000 and $138,000 during the three and six months
ended June 30, 2006. At June 30, 2006, there was $210,000 of total unrecognized compensation expense related to nonvested share-based compensation arrangements granted under the plans. The cost is expected to be recognized over a
weighted-average period of 1.4 years. The total fair value of shares vested and recognized as compensation expense was $32,000 and $74,000 for the three and six months ended June 30, 2006, respectively, and the associated income tax benefit
recognized was $12,000 and $28,000 in the three and six months ended June 30, 2006, respectively.

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



|                                                                                     |  |                            |           |   |                          |          |   |      |           |   |      |          |  
|------------------------------------------------------------------------------------ |  | -------------------------- | --------- | - | ------------------------ | -------- | - | ---- | --------- | - | ---- | -------- | -
|                                                                                     |  | Three Months EndedJune 30, |           |   | Six Months EndedJune 30, |         
|                                                                                     |  | 2006                       |           |   | 2005                     |          |   | 2006 |           |   | 2005 |         
|Weighted-average risk-free interest rate                                             |  |                            | 5.14      | % |                          | 4.25     | % |      | 5.14      | % |      | 4.26     | %
|Dividend yield                                                                       |  |                            | 1.23      | % |                          |         | % |      | 1.23      | % |      |         | %
|Expected stock volatility                                                            |  |                            | 24.79     | % |                          | 10.82    | % |      | 24.79     | % |      | 10.85    | %
|Expected life in years                                                               |  |                            | 6.5 years |   |                          | 10 years |   |      | 6.5 years |   |      | 10 years |  
|Per share weighted-average grant-date fair value of options issued during the period |  | $                          | 3.21      |   |                          | 3.58     |   |      | 3.21      |   |      | 3.59     |  
|                                                                                     |  |                            |           |   |                          |          |   |      |           |   |      |          |  

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



|6. | Cash Dividend
|-- | -------------

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



|7. | Stock Repurchase Program
|-- | ------------------------

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



11



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##### Table of Contents

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 June 30, 2006, and for the three- and six- month periods ended June 30, 2006 and 2005 presented in this document, in accordance with standards
established by the Public Company Accounting Oversight Board.

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



12



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##### Table of Contents

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 June 30, 2006, the related interim condensed
consolidated statements of earnings for the three- and six- month periods ended June 30, 2006 and 2005 and the related interim condensed consolidated statements of cash flows and changes in stockholders equity for the six-month periods
ended June 30, 2006 and 2005. These interim condensed financial statements are the responsibility of the Companys management.

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

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

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



|                              
|------------------------------
|/s/ Hacker, Johnson & Smith PA
|                              
|HACKER, JOHNSON & SMITH PA    
|Tampa, Florida                
|July 31, 2006                 



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Comparison of June 30, 2006 and December 31, 2005

General

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

Liquidity and Capital Resources

The Companys primary source of cash during the six months ended June 30, 2006 was from net loan repayments of $6.8 million. Cash was used primarily to fund deposit outflows totaling $1.3 million and to
invest in federal funds sold of $7.7 million. At June 30, 2006, the Bank exceeded its regulatory liquidity requirements.

Off-Balance Sheet
Arrangements

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

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

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



14



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##### Table of Contents

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Off-Balance Sheet Arrangements, Continued

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

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



|                       |  |                |       
|---------------------- |  | -------------- | ------
|                       |  | ContractAmount
|Unused lines of credit |  | $              | 28,506
|                       |  |                |       

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

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



|                                                 |  |                             |   |  |                            |   |  |                             |  
|------------------------------------------------ |  | --------------------------- | - |  | -------------------------- | - |  | --------------------------- | -
|                                                 |  | Six MonthsEndedJune 30,2006 |   |  | Year EndedDecember 31,2005 |   |  | Six MonthsEndedJune 30,2005 |  
|Average equity as a percentage of average assets |  | 11.85                       | % |  | 11.50                      | % |  | 10.95                       | %
|Total equity to total assets at end of period    |  | 12.96                       | % |  | 11.67                      | % |  | 10.95                       | %
|Return on average assets (1)                     |  | 1.17                        | % |  | 1.15                       | % |  | 1.17                        | %
|Return on average equity (1)                     |  | 9.87                        | % |  | 10.03                      | % |  | 10.66                       | %
|Noninterest expense to average assets (1)        |  | 2.55                        | % |  | 2.59                       | % |  | 2.46                        | %

---

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



15



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##### Table of Contents

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 June 30, |        
|                                                                 |  | 2006                        |         |                      | 2005 |                   
|                                                                 |  | AverageBalance              |         | InterestandDividends |      | AverageYield /Cost |  |      | AverageBalance |  | InterestandDividends |         | AverageYield/Cost |  
|                                                                 |  | ($ in thousands)            |        
|Interest-earning assets:                                         |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Loans                                                            |  | $                           | 134,402 |                      |      | 2,784              |  | 8.31 | %              |  | $                    | 114,262 |                   |   | 1,881 |  | 6.60 | %
|Other interest-earning assets (1)                                |  |                             | 28,788  |                      |      | 325                |  | 4.53 |                |  |                      | 14,364  |                   |   | 101   |  | 2.82 |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total interest-earning assets                                    |  |                             | 163,190 |                      |      | 3,109              |  | 7.64 |                |  |                      | 128,626 |                   |   | 1,982 |  | 6.18 |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Noninterest-earning assets                                       |  |                             | 3,469   |                      |      |                    |  |      |                |  |                      | 5,876   |                   |   |       |  |      |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total assets                                                     |  | $                           | 166,659 |                      |      |                    |  |      |                |  | $                    | 134,502 |                   |   |       |  |      |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Interest-bearing liabilities:                                    |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Savings, MMDA, NOW                                               |  |                             | 51,577  |                      |      | 249                |  | 1.94 |                |  |                      | 77,860  |                   |   | 306   |  | 1.58 |  
|Time deposits                                                    |  |                             | 87,702  |                      |      | 1,001              |  | 4.58 |                |  |                      | 35,418  |                   |   | 293   |  | 3.32 |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total interest-bearing liabilities                               |  |                             | 139,279 |                      |      | 1,250              |  | 3.60 |                |  |                      | 113,278 |                   |   | 599   |  | 2.12 |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Noninterest-bearing liabilities                                  |  |                             | 7,395   |                      |      |                    |  |      |                |  |                      | 6,456   |                   |   |       |  |      |  
|Stockholders equity                                             |  |                             | 19,985  |                      |      |                    |  |      |                |  |                      | 14,768  |                   |   |       |  |      |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total liabilities and stockholders equity                       |  | $                           | 166,659 |                      |      |                    |  |      |                |  | $                    | 134,502 |                   |   |       |  |      |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Net interest income                                              |  |                             |         |                      | $    | 1,859              |  |      |                |  |                      |         |                   | $ | 1,383 |  |      |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Interest-rate spread (2)                                         |  |                             |         |                      |      |                    |  | 4.04 | %              |  |                      |         |                   |   |       |  | 4.06 | %
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Net interest-earning assets, net margin (3)                      |  | $                           | 23,911  |                      |      |                    |  | 4.57 | %              |  | $                    | 15,348  |                   |   |       |  | 4.31 | %
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  
|Ratio of interest-earning assets to interest-bearing liabilities |  |                             | 1.17    |                      |      |                    |  |      |                |  |                      | 1.14    |                   |   |       |  |      |  
|                                                                 |  |                             |         |                      |      |                    |  |      |                |  |                      |         |                   |   |       |  |      |  

---

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



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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.



|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|---------------------------------------------------------------- |  | ------------------------- | ------- | -------------------- | ---- | ----------------- |  | ---- | -------------- |  | -------------------- | ------- | ----------------- | - | ----- |  | ---- | -
|                                                                 |  | Six Months Ended June 30, |        
|                                                                 |  | 2006                      |         |                      | 2005 |                  
|                                                                 |  | AverageBalance            |         | InterestandDividends |      | AverageYield/Cost |  |      | AverageBalance |  | InterestandDividends |         | AverageYield/Cost |  
|                                                                 |  | ($ in thousands)          |        
|Interest-earning assets:                                         |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Loans                                                            |  | $                         | 134,383 |                      |      | 5,443             |  | 8.17 | %              |  | $                    | 109,140 |                   |   | 3,499 |  | 6.47 | %
|Other interest-earning assets (1)                                |  |                           | 27,157  |                      |      | 582               |  | 4.32 |                |  |                      | 16,155  |                   |   | 206   |  | 2.57 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total interest-earning assets                                    |  |                           | 161,540 |                      |      | 6,025             |  | 7.52 |                |  |                      | 125,295 |                   |   | 3,705 |  | 5.96 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Noninterest-earning assets                                       |  |                           | 3,763   |                      |      |                   |  |      |                |  |                      | 6,204   |                   |   |       |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total assets                                                     |  | $                         | 165,303 |                      |      |                   |  |      |                |  | $                    | 131,499 |                   |   |       |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Interest-bearing liabilities:                                    |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Savings, MMDA, NOW                                               |  |                           | 56,890  |                      |      | 527               |  | 1.87 |                |  |                      | 75,788  |                   |   | 589   |  | 1.57 |  
|Time deposits                                                    |  |                           | 80,590  |                      |      | 1,780             |  | 4.45 |                |  |                      | 35,215  |                   |   | 568   |  | 3.25 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total interest-bearing liabilities                               |  |                           | 137,480 |                      |      | 2,307             |  | 3.38 |                |  |                      | 111,003 |                   |   | 1,157 |  | 2.10 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Noninterest-bearing liabilities                                  |  |                           | 8,235   |                      |      |                   |  |      |                |  |                      | 6,099   |                   |   |       |  |      |  
|Stockholders equity                                             |  |                           | 19,588  |                      |      |                   |  |      |                |  |                      | 14,397  |                   |   |       |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Total liabilities and stockholders equity                       |  | $                         | 165,303 |                      |      |                   |  |      |                |  | $                    | 131,499 |                   |   |       |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Net interest income                                              |  |                           |         |                      | $    | 3,718             |  |      |                |  |                      |         |                   | $ | 2,548 |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Interest-rate spread (2)                                         |  |                           |         |                      |      |                   |  | 4.14 | %              |  |                      |         |                   |   |       |  | 3.86 | %
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Net interest-earning assets, net margin (3)                      |  | $                         | 24,060  |                      |      |                   |  | 4.64 | %              |  | $                    | 14,292  |                   |   |       |  | 4.10 | %
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  
|Ratio of interest-earning assets to interest-bearing liabilities |  |                           | 1.18    |                      |      |                   |  |      |                |  |                      | 1.13    |                   |   |       |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |                   |   |       |  |      |  

---

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



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

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

General. Net earnings for the three months ended June 30, 2006 were $556,000 or $0.19 basic and $0.17 diluted earnings per share
compared to net earnings of $508,000 or $0.21 basic and $0.20 diluted earnings per share for the three months ended June 30, 2005. The increase in the Companys net earnings was primarily due to an increase in net interest income,
partially offset by a decrease in noninterest income and an increase in noninterest expenses.

Interest Income and Expense.
Interest income increased to $3,109,000 for the three months ended June 30, 2006 from $1,982,000 for the three months ended June 30, 2005. Interest income on loans increased to $2,784,000 primarily due to an increase in the average loan
portfolio balance for the three months ended June 30, 2006 combined with an increase in the weighted-average yield earned in 2006.

Interest expense on interest-bearing deposits increased to $1,250,000 for the three months ended June 30, 2006 compared to $599,000, for the three months ended June 30, 2005. Interest expense on interest-bearing deposits increased
due to an increase in the average balance in 2005 combined with an increase in the weighted interest rate paid on deposits.

Provision
for Loan Losses. The provision for loan losses is charged to operations to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the
Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Companys market areas, and other factors related to the collectibility of the Companys loan portfolio. The
provision for loan losses was $68,000 for the three months ended June 30, 2006 compared to $98,000 for the comparable period in 2005. Management believes the balance in the allowance for loan losses of $2,047,000 at June 30, 2006 is
adequate.

Noninterest Income.Noninterest income decreased to $152,000 during the three month period ended June 30, 2006
compared to $367,000 for the same period in 2005 primarily due to a decrease in loan brokerage fees earned in 2006.

Noninterest
Expenses. Noninterest expenses increased to $1,051,000 during the three-month period ended June 30, 2006 compared to $838,000 for the same period in 2005. Noninterest expense increased primarily due to the overall growth of the Company.

Income Taxes. The Company recorded a provision for income taxes of $336,000 for the three-month period ended June 30,
2006 (an effective rate of 37.7%) compared to an income tax provision of $306,000 for the 2005 period (an effective rate of 37.6%).



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Comparison of the Six-Month Periods Ended June 30, 2006 and 2005

General. Net earnings for the six months ended June 30, 2006 were $959,000 or $0.33 basic and $0.30 diluted earnings per share compared to net earnings of $761,000 or $0.32 basic and $0.31 diluted
earnings per share for the six months ended June 30, 2005. The increase in the Companys net earnings was primarily due to an increase in net interest income, partially offset by a decrease in noninterest income and an increase in
noninterest expenses and the provision for income taxes.

Interest Income and Expense. Interest income increased to $6,025,000
for the six months ended June 30, 2006 from $3,705,000 for the six months ended June 30, 2005. Interest income on loans increased to $5,443,000 primarily due to an increase in the average loan portfolio balance for the six months ended
June 30, 2006 combined with an increase in the weighted-average yield earned in 2006.

Interest expense on interest-bearing deposits
increased to $2,307,000 for the six months ended June 30, 2006 compared to $1,157,000, for the six months ended June 30, 2005. Interest expense on interest-bearing deposits increased due to an increase in the average balance in 2006
combined with an increase in the weighted interest rate paid on deposits.

Provision for Loan Losses. The provision for loan
losses is charged to operations to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of
nonperforming loans, general economic conditions, particularly as they relate to the Companys market areas, and other factors related to the collectibility of the Companys loan portfolio. The provision for loan losses was $348,000 for
the six months ended June 30, 2006 compared to $224,000 for the comparable period in 2005. Management believes the balance in the allowance for loan losses of $2,047,000 at June 30, 2006 is adequate.

Noninterest Income.Noninterest income decreased to $278,000 during the six month period ended June 30, 2006 compared $500,000 for the
same period in 2005 primarily due to a decrease in loan brokerage fees earned in 2006.

Noninterest Expenses. Noninterest
expenses increased to $2,092,000 during the six-month period ended June 30, 2006 compared to $1,604,000 for the same period in 2005. Noninterest expense increased primarily due to the overall growth of the Company.

Income Taxes. The Company recorded a provision for income taxes of $597,000 for the six-month period ended June 30, 2006 (an effective
rate of 38.4%) compared to an income tax provision of $459,000 for the 2005 period (an effective rate of 37.6%).



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 3. Controls and Procedures



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



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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 4. Submission of Matters to a Vote of Security Holders

On April 29, 2006, Marco Community Bancorp, Inc. held
its Annual Meeting of Shareholders. At this Annual Meeting, the following proposals were considered and acted upon:

PROPOSAL I. To elect
nine directors:



|                      |  |           |  |         
|--------------------- |  | --------- |  | --------
|                      |  | For       |  | Withheld
|John V. (Jack) Cofer  |  | 1,964,575 |  | 0       
|Joel M. Cox           |  | 1,964,575 |  | 0       
|Bruce G. Fedor        |  | 1,963,474 |  | 1,101   
|Jamie B. Greusel      |  | 1,939,549 |  | 25,026  
|Melanie J. Hanson     |  | 1,964,245 |  | 330     
|Robert A. Marks       |  | 1,963,474 |  | 1,101   
|Stephen A. McLaughlin |  | 1,963,474 |  | 1,101   
|E. Terry Skone        |  | 1,964,575 |  | 0       
|Richard Storm, Jr.    |  | 1,961,644 |  | 2,931   

PROPOSAL II. The ratification of the appointment of Hacker, Johnson & Smith PA as the
independent auditors for the Company for the fiscal year ending December 31, 2006:



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|1,956,535 |  |        |  | 8,040  



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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 6. Exhibits



|(a) | Exhibits
|--- | --------

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



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



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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: August 3, 2006 |  | By:                                       |  | /s/ Stephen A. McLaughlin                     
|                     |  |                                           |  | Stephen A. McLaughlin, Chief Executive Officer
|                     |  |                                          
|Date: August 3, 2006 |  | By:                                       |  | /s/ Thomas M. Whelan                          
|                     |  |                                           |  | Thomas M. Whelan, Senior Vice President and   
|                     |  |                                           |  | Chief Financial Officer                       



22