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**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

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**FORM        10-Q **

| **(Mark One)** |   |                                                                                                                                                                                                          |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| þ              |   | **QUARTERLY                  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                  ACT OF                  1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,                  2007** |
|                |
| o                   |   | **TRANSITION                  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                  ACT OF                  1934**                                                               |

**Commission        file number: 0-25141**

**MetroCorp        Bancshares, Inc.**

*(Exact        name of registrant as specified in its charter)*

| **Texas**                                                                                          | *76-0579161*                                          |
|----------------------------------------------------------------------------------------------------|-------------------------------------------------------|
| *(State                  or other jurisdiction of incorporation or                  organization)* | (I.R.S.                  Employer Identification No.) |

**9600        Bellaire Boulevard, Suite 252**

**Houston,        Texas 77036**

*(Address        of principal executive offices including zip code)*

**(713)        776-3876**

*(Registrant’s        telephone number, including area code)*

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**PART        I**

**FINANCIAL        INFORMATION**

**Item 1.**
***Condensed Consolidated Financial Statements.***

**METROCORP        BANCSHARES, INC.**

**CONDENSED        CONSOLIDATED BALANCE SHEETS**

**(In        thousands, except share amounts)**

**(Unaudited)**

|                                                                                                                                                                                                                                                                                        |   | **March 31,** |      | **December 31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                        |   | **2007**           |      | **2006**              |   |
| **ASSETS**                                                                                                                                                                                                                                                                                  |   |               |      |                  |   |
|                                                                                                                                                                                                                                                                                        |   |               |      |                  |   |
| Cash                    and due from banks                                                                                                                                                                                                                                                  |   | $                  | 25,955    |                  | $      | 25,709 |   |
| Federal                    funds sold and other short-term investments                                                                                                                                                                                                                      |   |               | 24,466    |                  |   | 125,649 |   |
| Total                    cash and cash equivalents                                                                                                                                                                                                                                          |   |               | 50,421    |                  |   | 151,358 |   |
| Securities                    available-for-sale, at fair value                                                                                                                                                                                                                             |   |               | 174,685   |                  |   | 181,544 |   |
| Other                    investments                                                                                                                                                                                                                                                        |   |               | 4,971     |                  |   | 4,931 |   |
| Loans,                    net of allowance for loan losses of $11,900 and $11,436,                    respectively                                                                                                                                                                          |   |               | 994,378   |                  |   | 875,120 |   |
| Accrued                    interest receivable                                                                                                                                                                                                                                              |   |               | 6,110     |                  |   | 5,841 |   |
| Premises                    and equipment, net                                                                                                                                                                                                                                              |   |               | 7,914     |                  |   | 7,585 |   |
| Goodwill                                                                                                                                                                                                                                                                                    |   |               | 21,827    |                  |   | 21,827 |   |
| Core                    deposit intangibles                                                                                                                                                                                                                                                 |   |               | 1,016     |                  |   | 1,103 |   |
| Customers'                    liability on acceptances                                                                                                                                                                                                                                      |   |               | 4,683     |                  |   | 7,693 |   |
| Foreclosed                    assets, net                                                                                                                                                                                                                                                   |   |               | 2,657     |                  |   | 2,747 |   |
| Other                    assets                                                                                                                                                                                                                                                             |   |               | 9,028     |                  |   | 8,685 |   |
| Total                    assets                                                                                                                                                                                                                                                             |   | $                  | 1,277,690 |                  | $      | 1,268,434 |   |
|                                                                                                                                                                                                                                                                                        |   |               |      |                  |   |   |   |
| **LIABILITIES                    AND SHAREHOLDERS' EQUITY**                                                                                                                                                                                                                                 |   |               |      |                  |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                   |   |               |      |                  |   |   |   |
| Noninterest-bearing                                                                                                                                                                                                                                                                         |   | $                  | 201,772   |                  | $      | 208,750 |   |
| Interest-bearing                                                                                                                                                                                                                                                                            |   |               | 888,978   |                  |   | 872,914 |   |
| Total                    deposits                                                                                                                                                                                                                                                           |   |               | 1,090,750 |                  |   | 1,081,664 |   |
| Junior                    subordinated debentures                                                                                                                                                                                                                                           |   |               | 36,083    |                  |   | 36,083 |   |
| Other                    borrowings                                                                                                                                                                                                                                                         |   |               | 25,802    |                  |   | 26,316 |   |
| Accrued                    interest payable                                                                                                                                                                                                                                                 |   |               | 1,774     |                  |   | 1,822 |   |
| Acceptances                    outstanding                                                                                                                                                                                                                                                  |   |               | 4,683     |                  |   | 7,693 |   |
| Other                    liabilities                                                                                                                                                                                                                                                        |   |               | 9,238     |                  |   | 8,908 |   |
| Total                    liabilities                                                                                                                                                                                                                                                        |   |               | 1,168,330 |                  |   | 1,162,486 |   |
| Commitments                    and contingencies                                                                                                                                                                                                                                            |   |               | -         |                  |   | - |   |
|                                                                                                                                                                                                                                                                                        |   |               |      |                  |   |   |   |
| Shareholders'                    equity:                                                                                                                                                                                                                                                    |   |               |      |                  |   |   |   |
| Common                    stock, $1.00 par value, 50,000,000 shares authorized; 10,994,965                    shares                    issued and 10,955,669 and 10,946,135 shares outstanding at March                    31, 2007                    and December 31, 2006, respectively |   |               | 10,995    |                  |   | 10,995 |   |
| Additional                    paid-in capital                                                                                                                                                                                                                                               |   |               | 26,294    |                  |   | 25,974 |   |
| Retained                    earnings                                                                                                                                                                                                                                                        |   |               | 74,435    |                  |   | 71,783 |   |
| Accumulated                    other comprehensive loss                                                                                                                                                                                                                                     |   |               | (2,054    | )                     |   | (2,421 | ) |
| Treasury                    stock, at cost                                                                                                                                                                                                                                                  |   |               | (310      | )                     |   | (383 | ) |
| Total                    shareholders' equity                                                                                                                                                                                                                                               |   |               | 109,360   |                  |   | 105,948 |   |
| Total                    liabilities and shareholders' equity                                                                                                                                                                                                                               |   | $                  | 1,277,690 |                  | $      | 1,268,434 |   |

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**METROCORP        BANCSHARES, INC.**

**CONDENSED        CONSOLIDATED STATEMENTS OF INCOME**

**(In        thousands, except per share amounts)**

**(Unaudited)**

|                                                                 |   | **For                  the Three Months** |   |
|----------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                 |   | **Ended                  March 31,**      |   |
|                                                                 |   | **2007**                                  |   | **2006** |   |
| Interest                  income:                                    |   |                                      |   |   |   |
| Loans                                                                |   | $                                         | 20,621 |   | $ | 16,423 |   |
| Securities:                                                          |   |                                      |   |   |   |   |   |
| Taxable                                                              |   |                                      | 1,864  |   |   | 2,209 |   |
| Tax-exempt                                                           |   |                                      | 85     |   |   | 206 |   |
| Other                  investments                                   |   |                                      | 68     |   |   | 55 |   |
| Federal                  funds sold and other short-term investments |   |                                      | 968    |   |   | 638 |   |
| Total                  interest income                               |   |                                      | 23,606 |   |   | 19,531 |   |
| Interest                  expense:                                   |   |                                      |   |   |   |   |   |
| Time                  deposits                                       |   |                                      | 7,601  |   |   | 5,027 |   |
| Demand                  and savings deposits                         |   |                                      | 1,525  |   |   | 916 |   |
| Junior                  subordinated debentures                      |   |                                      | 520    |   |   | 520 |   |
| Other                  borrowings                                    |   |                                      | 324    |   |   | 323 |   |
| Total                  interest expense                              |   |                                      | 9,970  |   |   | 6,786 |   |
| Net                  interest income                                 |   |                                      | 13,636 |   |   | 12,745 |   |
| Provision                  for loan losses                           |   |                                      | 137    |   |   | 258 |   |
| Net                  interest income after provision for loan losses |   |                                      | 13,499 |   |   | 12,487 |   |
| Noninterest                  income:                                 |   |                                      |   |   |   |   |   |
| Service                  fees                                        |   |                                      | 1,216  |   |   | 1,461 |   |
| Loan-related                  fees                                   |   |                                      | 177    |   |   | 211 |   |
| Letters                  of credit commissions and fees              |   |                                      | 204    |   |   | 171 |   |
| Other                  noninterest income                            |   |                                      | 69     |   |   | 76 |   |
| Total                  noninterest income                            |   |                                      | 1,666  |   |   | 1,919 |   |
| Noninterest                  expenses:                               |   |                                      |   |   |   |   |   |
| Salaries                  and employee benefits                      |   |                                      | 5,746  |   |   | 5,290 |   |
| Occupancy                  and equipment                             |   |                                      | 1,970  |   |   | 1,544 |   |
| Foreclosed                  assets, net                              |   |                                      | 42     |   |   | 43 |   |
| Other                  noninterest expense                           |   |                                      | 2,467  |   |   | 2,634 |   |
| Total                  noninterest expenses                          |   |                                      | 10,225 |   |   | 9,511 |   |
|                                                                 |   |                                      |   |   |   |   |   |
| Income                  before provision for income taxes            |   |                                      | 4,940  |   |   | 4,895 |   |
| Provision                  for income taxes                          |   |                                      | 1,850  |   |   | 1,664 |   |
| Net                  income                                          |   | $                                         | 3,090  |   | $ | 3,231 |   |
| Earnings                  per common share:                          |   |                                      |   |   |   |   |   |
| Basic                                                                |   | $                                         | 0.28   |   | $ | 0.30 |   |
| Diluted                                                              |   | $                                         | 0.28   |   | $ | 0.29 |   |
| Weighted                  average shares outstanding:                |   |                                      |   |   |   |   |   |
| Basic                                                                |   |                                      | 10,953 |   |   | 10,868 |   |
| Diluted                                                              |   |                                      | 11,163 |   |   | 11,030 |   |
| Dividends                  per common share                          |   | $                                         | 0.04   |   | $ | 0.04 |   |

----

**METROCORP        BANCSHARES, INC.**

**CONDENSED        CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**(In        thousands)**

**(Unaudited)**

|                                                                                 |   | **For                    the Three Months** |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                 |   | **Ended                    March 31,**      |   |
|                                                                                 |   | **2007**                                    |   | **2006** |   |
|                                                                                 |   |                                        |   |   |   |
| Net                    income                                                        |   | $                                           | 3,090  |   | $ | 3,231 |   |
|                                                                                 |   |                                        |   |   |   |   |   |
| Other                    comprehensive income (loss), net of tax:                    |   |                                        |   |   |   |   |   |
| Unrealized                    gain (loss) on investment securities, net:             |   |                                        |   |   |   |   |   |
| Unrealized                    holding gain (loss) arising during the period          |   |                                        | 367    |   |   | (480 | ) |
| Less:                    reclassification adjustment for gain included in net income |   |                                        | -      |   |   | 1 |   |
| Other                    comprehensive income (loss)                                 |   |                                        | 367    |   |   | (481 | ) |
| Total                    comprehensive income                                        |   | $                                           | 3,457  |   | $ | 2,750 |   |

**METROCORP        BANCSHARES, INC.**

**CONDENSED        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**

**For        the Three Months Ended March 31, 2007**

**(In        thousands)**

**(Unaudited)**

|                                                                     |   |                  |   |                        |   |           |         |              |   | **Accumulated**                    |   |         |         |      |   |
|--------------------------------------------------------------------------|--------|-----------------------|--------|-----------------------------|--------|----------------|--------------|-------------------|--------|------------------------------------|--------|--------------|--------------|-----------|--------|
|                                                                     |   |                  |   |                        |   | **Additional** |         |              |   | **Other**                          |   | **Treasury** |         |      |   |
|                                                                     |   | **Common Stock** |   | **Paid-In**                 |   | **Retained**   |         | **Comprehensive** |   | **Stock, At**                 |   |         |         |
|                                                                     |   | **Shares**            |   | **At                  Par** |   | **Capital**    |         | **Earnings**      |   | **Income                  (Loss)** |   | **Cost**     |         | **Total** |   |
| Balance                  at December 31, 2006                            |   |                  | 10,946 |                   | $      | 10,995         |    | $                 | 25,974 |                          | $      | 71,783       |    | $         | (2,421 | )   | $ | (383 | )   | $ | 105,948 |   |
| Re-issuance                  of treasury stock                           |   |                  | 10     |                        |   | -              |         |              | 90     |                               |   | -            |         |      | -      |   |   | 73 |   |   | 163 |   |
| Stock-based                  compensation expense recognized in earnings |   |                  | -      |                        |   | -              |         |              | 230    |                               |   | -            |         |      | -      |   |   | - |   |   | 230 |   |
| Net                  income                                              |   |                  | -      |                        |   | -              |         |              | -      |                               |   | 3,090        |         |      | -      |   |   | - |   |   | 3,090 |   |
| Other                  comprehensive income                              |   |                  | -      |                        |   | -              |         |              | -      |                               |   | -            |         |      | 367    |   |   | - |   |   | 367 |   |
| Cash                  dividends ($0.04 per share)                        |   |                  | -      |                        |   | -              |         |              | -      |                               |   | (438         | )            |      | -      |   |   | - |   |   | (438 | ) |
| Balance                  at March 31, 2007                               |   |                  | 10,956 |                        | $      | 10,995         |         | $                 | 26,294 |                               | $      | 74,435       |         | $         | (2,054 | ) | $ | (310 | ) | $ | 109,360 |   |

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**METROCORP        BANCSHARES, INC**

**CONDENSED        CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In        thousands)**

**(Unaudited)**

|                                                                                                                           |   | **For                    the Three Months Ended****March                    31,** |     |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|----------|
|                                                                                                                           |   | **2007**                                                                          |     | **2006** |   |
|                                                                                                                           |   |                                                                              |     |   |   |
| Cash                    flows from operating activities:                                                                       |   |                                                                              |     |   |   |   |   |
| Net                    income                                                                                                  |   | $                                                                                 | 3,090    |   | $ | 3,231 |   |
| Adjustments                    to reconcile net income to net cash provided by operating                    activities:        |   |                                                                              |     |   |   |   |   |
| Depreciation                                                                                                                   |   |                                                                              | 433      |   |   | 326 |   |
| Provision                    for loan losses                                                                                   |   |                                                                              | 137      |   |   | 258 |   |
| Gain                    on sale of securities, net                                                                             |   |                                                                              | -        |   |   | (2 | ) |
| Amortization                    of premiums and discounts on securities                                                        |   |                                                                              | 8        |   |   | 24 |   |
| Amortization                    of deferred loan fees and discounts                                                            |   |                                                                              | (650     | ) |   | (574 | ) |
| Amortization                    of core deposit intangibles                                                                    |   |                                                                              | 87       |   |   | 118 |   |
| Stock-based                    compensation                                                                                    |   |                                                                              | 230      |   |   | 28 |   |
| Excess                    tax benefits from stock-based compensation                                                           |   |                                                                              | -        |   |   | (12 | ) |
| Changes                    in:                                                                                                 |   |                                                                              |     |   |   |   |   |
| Accrued                    interest receivable                                                                                 |   |                                                                              | (269     | ) |   | 72 |   |
| Other                    assets                                                                                                |   |                                                                              | (553     | ) |   | (302 | ) |
| Accrued                    interest payable                                                                                    |   |                                                                              | (48      | ) |   | (11 | ) |
| Other                    liabilities                                                                                           |   |                                                                              | 330      |   |   | 2,030 |   |
| Net                    cash provided by operating activities                                                                   |   |                                                                              | 2,795    |   |   | 5,186 |   |
|                                                                                                                           |   |                                                                              |     |   |   |   |   |
| Cash                    flows from investing activities:                                                                       |   |                                                                              |     |   |   |   |   |
| Purchases                    of securities available-for-sale                                                                  |   |                                                                              | (89      | ) |   | (235 | ) |
| Proceeds                    from maturities, calls, and principal paydowns of securities                    available-for-sale |   |                                                                              | 7,476    |   |   | 11,266 |   |
| Net                    change in loans                                                                                         |   |                                                                              | (118,745 | ) |   | (14,764 | ) |
| Proceeds                    from sale of foreclosed assets                                                                     |   |                                                                              | 90       |   |   | - |   |
| Purchases                    of premises and equipment                                                                         |   |                                                                              | (762     | ) |   | (255 | ) |
| Net                    cash used in investing activities                                                                       |   |                                                                              | (112,030 | ) |   | (3,988 | ) |
|                                                                                                                           |   |                                                                              |     |   |   |   |   |
| Cash                    flows from financing activities:                                                                       |   |                                                                              |     |   |   |   |   |
| Net                    change in:                                                                                              |   |                                                                              |     |   |   |   |   |
| Deposits                                                                                                                       |   |                                                                              | 9,086    |   |   | 10,116 |   |
| Other                    borrowings                                                                                            |   |                                                                              | (514     | ) |   | (479 | ) |
| Proceeds                    from stock option exercises                                                                        |   |                                                                              | 75       |   |   | 303 |   |
| Re-issuance                    of treasury stock                                                                               |   |                                                                              | 88       |   |   | 91 |   |
| Dividends                    paid                                                                                              |   |                                                                              | (437     | ) |   | (437 | ) |
| Excess                    tax benefits from stock-based compensation                                                           |   |                                                                              | -        |   |   | 12 |   |
| Net                    cash provided by financing activities                                                                   |   |                                                                              | 8,298    |   |   | 9,606 |   |
|                                                                                                                           |   |                                                                              |     |   |   |   |   |
| Net                    (decrease) increase in cash and cash equivalents                                                        |   |                                                                              | (100,937 | ) |   | 10,804 |   |
| Cash                    and cash equivalents at beginning of period                                                            |   |                                                                              | 151,358  |   |   | 81,812 |   |
| Cash                    and cash equivalents at end of period                                                                  |   | $                                                                                 | 50,421   |   | $ | 92,616 |   |

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**METROCORP        BANCSHARES, INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**1.    **
**BASIS        OF PRESENTATION**

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**2.    **
**SECURITIES        **

|                                                                                |   | **As                  of March 31, 2007**   |    | **As                  of December 31, 2006** |   |
|-------------------------------------------------------------------------------------|--------|---------------------------------------------|---------|----------------------------------------------|--------|
|                                                                                |   | **Amortized****Cost**                       |    | **Gross                  Unrealized Gains**  |   | **Gross                  Unrealized Losses** |   | **Fair****Value** |   | **Amortized****Cost** |   | **Gross                  Unrealized Gains** |   | **Gross                  Unrealized Losses** |   | **Fair****Value** |   |
|                                                                                |   | **(Dollars                  in thousands)** |    |
| **Securities                  available for sale**                                  |   |                                        |    |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  Government agencies                                           |   | $                                           | 27      |                                         | $      | 1 |   | $ | (1 | ) | $ | 27 |   | $ | 28 |   | $ | 1 |   | $ | ─ |   | $ | 29 |   |
| U.S.                  Government sponsored enterprises                              |   |                                        | 36,915  |                                         |   | ─ |   |   | (412 | ) |   | 36,503 |   |   | 36,906 |   |   | ─ |   |   | (510 | ) |   | 36,396 |   |
| Obligations                  of state and political subdivisions                    |   |                                        | 6,530   |                                         |   | 165 |   |   | ─ |   |   | 6,695 |   |   | 7,425 |   |   | 157 |   |   | ─ |   |   | 7,582 |   |
| Mortgage-backed                  securities and collateralized mortgage obligations |   |                                        | 114,638 |                                         |   | 82 |   |   | (2,639 | ) |   | 112,081 |   |   | 121,196 |   |   | 62 |   |   | (3,060 | ) |   | 118,198 |   |
| Other                  debt securities                                              |   |                                        | 105     |                                         |   | 1 |   |   | (1 | ) |   | 105 |   |   | 143 |   |   | 1 |   |   | (1 | ) |   | 143 |   |
| Investment                  in ARM and CRA funds                                    |   |                                        | 19,707  |                                         |   | ─ |   |   | (433 | ) |   | 19,274 |   |   | 19,658 |   |   | ─ |   |   | (462 | ) |   | 19,196 |   |
| Total                  available for sale securities                                |   | $                                           | 177,922 |                                         | $      | 249 |   | $ | (3,486 | ) | $ | 174,685 |   | $ | 185,356 |   | $ | 221 |   | $ | (4,033 | ) | $ | 181,544 |   |
|                                                                                |   |                                        |    |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                  investments**                                              |   |                                        |    |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FHLB/Federal                  Reserve Bank stock                                    |   | $                                           | 3,888   |                                         | $      | ─ |   | $ | ─ |   | $ | 3,888 |   | $ | 3,848 |   | $ | ─ |   | $ | ─ |   |   | 3,848 |   |
| Investment                  in subsidiary trust                                     |   |                                        | 1,083   |                                         |   | ─ |   |   | ─ |   |   | 1,083 |   |   | 1,083 |   |   | ─ |   |   | ─ |   |   | 1,083 |   |
| Total                  other investments                                            |   | $                                           | 4,971   |                                         | $      | ─ |   | $ | ─ |   | $ | 4,971 |   | $ | 4,931 |   | $ | ─ |   | $ | ─ |   | $ | 4,931 |   |

|                                                                                |   | **Less                  Than 12 Months**    |    | **Greater                  Than 12 Months** |   | **Total**         |   |
|-------------------------------------------------------------------------------------|--------|---------------------------------------------|---------|---------------------------------------------|--------|-------------------|--------|
|                                                                                |   | **Fair****Value**                           |    | **Gross****Unrealized****Losses**           |   | **Fair****Value** |   | **Gross****Unrealized****Losses** |   | **Fair****Value** |   | **Gross****Unrealized****Losses** |   |
|                                                                                |   | **(Dollars                  in thousands)** |    |
| **Securities                  available for sale**                                  |   |                                        |    |                                        |   |              |   |   |   |   |   |   |   |
| U.S.                  Government agencies                                           |   | $                                           | 11      |                                        | $      | (1                | )      | $ | ─ |   | $ | ─ |   | $ | 11 |   | $ | (1 | ) |
| U.S.                  Government sponsored enterprises                              |   |                                        | ─ |                                        |   | ─           |   |   | 36,503 |   |   | (412 | ) |   | 36,503 |   |   | (412 | ) |
| Mortgage-backed                  securities and collateralized mortgage obligations |   |                                        | 10,236  |                                        |   | (118              | )      |   | 94,200 |   |   | (2,522 | ) |   | 104,436 |   |   | (2,640 | ) |
| Other                  debt securities                                              |   |                                        | 13      |                                        |   | (1                | )      |   | ─ |   |   | ─ |   |   | 13 |   |   | (1 | ) |
| Investment                  in ARM and CRA funds                                    |   |                                        | 4,523   |                                        |   | (6                | )      |   | 14,751 |   |   | (426 | ) |   | 19,274 |   |   | (432 | ) |
| Total                  securities                                                   |   | $                                           | 14,783  |                                        | $      | (126              | )      | $ | 145,454 |   | $ | (3,360 | ) | $ | 160,237 |   | $ | (3,486 | ) |

----

**3.    **
**ALLOWANCE        FOR LOAN LOSSES**

|                                                                |   | **As                    of and for the three months ended****March 31, 2007** |   | **As                    of and for the three months ended****March 31, 2006** |   |
|---------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|
|                                                                |   | **(Dollars                    in thousands)**                                           |   |
| Allowance                    for loan losses at beginning of period |   | $                                                                                       | 11,436 |                                                                                    | $      | 13,169 |   |
| Provision                    for loan losses                        |   |                                                                                    | 137    |                                                                                    |   | 258 |   |
| Charge-offs                                                         |   |                                                                                    | (226   | )                                                                                       |   | (1,097 | ) |
| Recoveries                                                          |   |                                                                                    | 553    |                                                                                    |   | 1,399 |   |
| Allowance                    for loan losses at end of period       |   | $                                                                                       | 11,900 |                                                                                    | $      | 13,729 |   |

**4.    **
**INCOME        TAXES**

----

**5.    **
**EARNINGS        PER COMMON SHARE**

|                                                                                                                 |   | **For                  the Three Months**                     |   |
|----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                                                                                                                 |   | **Ended                  March 31,**                          |   |
|                                                                                                                 |   | **2007**                                                      |   | **2006** |   |
|                                                                                                                 |   | **(In                  thousands, except per share amounts)** |   |
|                                                                                                                 |   |                                                          |   |   |   |
| Net                  income available to common shareholders                                                         |   | $                                                             | 3,090  |   | $ | 3,231 |   |
|                                                                                                                 |   |                                                          |   |   |   |   |   |
|                                                                                                                 |   |                                                          |   |   |   |   |   |
| Weighted                  average common shares in basic EPS                                                         |   |                                                          | 10,953 |   |   | 10,868 |   |
| Effect                  of dilutive securities                                                                       |   |                                                          | 210    |   |   | 162 |   |
| Weighted                  average common and potentially dilutive common shares used in diluted                  EPS |   |                                                          | 11,163 |   |   | 11,030 |   |
|                                                                                                                 |   |                                                          |   |   |   |   |   |
|                                                                                                                 |   |                                                          |   |   |   |   |   |
| Earnings                  per common share:                                                                          |   |                                                          |   |   |   |   |   |
| Basic                                                                                                                |   | $                                                             | 0.28   |   | $ | 0.30 |   |
| Diluted                                                                                                              |   | $                                                             | 0.28   |   | $ | 0.29 |   |

**6.    **
**LITIGATION**

**7.    **
**OFF-BALANCE        SHEET ACTIVITIES**

----

|                                                                          |   | **As                  of****March 31, 2007** |    | **As                  of****December 31, 2006** |   |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------|---------|-----------------------------------------------------------|--------|
|                                                                          |   | **(Dollars                  in thousands)**            |    |
| Unfunded                  loan commitments including unfunded lines of credit |   | $                                                      | 267,376 |                                       | $      | 234,501 |   |
| Standby                  letters of credit                                    |   |                                                   | 7,137   |                                                      |   | 7,597 |   |
| Commercial                  letters of credit                                 |   |                                                   | 9,457   |                                                      |   | 9,596 |   |
| Operating                  leases                                             |   |                                                   | 10,797  |                                                      |   | 9,718 |   |
| Total                  financial instruments with off-balance sheet risk      |   | $                                                      | 294,767 |                                                      | $      | 261,412 |   |

**8.    **
**OPERATING        SEGMENT INFORMATION**

|                                                                 |   | **MetroBank**                               |    | **Metro                  United** |   | **Other** |   | **Consolidated** |   |
|----------------------------------------------------------------------|--------|---------------------------------------------|---------|-----------------------------------|--------|-----------|--------|------------------|--------|
|                                                                 |   | **(Dollars                  in thousands)** |    |
|                                                                 |   |                                        |    |                              |   |      |   |             |   |
| Total                  interest income                               |   | $                                           | 18,589  |                              | $      | 5,000     |   | $                | 17     |   | $ | 23,606 |   |
| Total                  interest expense                              |   |                                        | 6,879   |                              |   | 2,571     |   |             | 520    |   |   | 9,970 |   |
| Net                  interest income                                 |   |                                        | 11,710  |                              |   | 2,429     |   |             | (503   | ) |   | 13,636 |   |
| Provision                  for loan losses                           |   |                                        | -       |                              |   | 137       |   |             | -      |   |   | 137 |   |
| Net                  interest income after provision for loan losses |   |                                        | 11,710  |                              |   | 2,292     |   |             | (503   | ) |   | 13,499 |   |
| Noninterest                  income                                  |   |                                        | 1,590   |                              |   | 76        |   |             | -      |   |   | 1,666 |   |
| Noninterest                  expense                                 |   |                                        | 7,856   |                              |   | 2,060     |   |             | 309    |   |   | 10,225 |   |
| Income                  before income tax provision                  |   |                                        | 5,444   |                              |   | 308       |   |             | (812   | ) |   | 4,940 |   |
| Provision                  for income taxes                          |   |                                        | 1,972   |                              |   | 125       |   |             | (247   | ) |   | 1,850 |   |
| Net                  income                                          |   | $                                           | 3,472   |                              | $      | 183       |   | $                | (565   | ) | $ | 3,090 |   |
|                                                                 |   |                                        |    |                              |   |      |   |             |   |   |   |   |   |
| Net                  loans                                           |   | $                                           | 748,512 |                              | $      | 245,866   |   | $                | -      |   | $ | 994,378 |   |
| Total                  assets                                        |   |                                        | 990,734 |                              |   | 285,713   |   |             | 1,243  |   |   | 1,277,690 |   |
| Deposits                                                             |   |                                        | 855,381 |                              |   | 236,905   |   |             | (1,536 | ) |   | 1,090,750 |   |

**9.    **
**NEW        ACCOUNTING PRONOUNCEMENTS**

----

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

***Special        Cautionary Notice Regarding Forward-looking        Statements***

|   | • | changes                  in interest rates and market prices, which could reduce the Company’s net                  interest margins, asset valuations and expense                  expectations; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes                  in the levels of loan prepayments and the resulting effects on                  the value                  of the Company’s loan portfolio; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes                  in local economic and business conditions which adversely affect                  the                  ability of the Company’s customers to transact profitable business with                  the Company, including the ability of borrowers to repay their                  loans                  according to their terms or a change in the value of the related                  collateral; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | increased                  competition for deposits and loans adversely affecting rates and                  terms; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------|

|   | • | the                  Company’s ability to identify suitable acquisition                  candidates; |
|--------|---------|------------------------------------------------------------------------------------------------------------|

|   | • | the                  timing, impact and other uncertainties of the Company’s ability to enter                  new markets successfully and capitalize on growth                  opportunities; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | increased                  credit risk in the Company’s assets and increased operating risk caused by                  a material change in commercial, consumer and/or real estate loans                  as a                  percentage of the total loan                  portfolio; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the                  failure of assumptions underlying the establishment of and provisions                  made                  to the allowance for loan losses; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes                  in the availability of funds resulting in increased costs or reduced                  liquidity; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------|

|   | • | increased                  asset levels and changes in the composition of assets and the resulting                  impact on our capital levels and regulatory capital                  ratios; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the                  Company’s ability to acquire, operate and maintain cost effective and                  efficient systems without incurring unexpectedly difficult or expensive                  but necessary technological                  changes; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the                  loss of senior management or operating personnel and the potential                  inability to hire qualified personnel at reasonable compensation                  levels;                  and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes                  in statutes and government regulations or their interpretations                  applicable                  to bank holding companies and our present and future banking and                  other                  subsidiaries, including changes in tax requirements and tax                  rates. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Overview**

**Results        of Operations**

*Net        Interest Income and Net Interest Margin.*

*Total        Interest Income.*

*Interest        Income from Loans.*

----

*Interest        Income from Investments.*

*Total        Interest Expense.*

*Interest        Expense on Deposits.*

*Interest        Expense on Other Borrowings.*

----

|                                                                             |   | **For                  The Three Months Ended March 31,** |      |
|----------------------------------------------------------------------------------|--------|-----------------------------------------------------------|-----------|
|                                                                             |   | **2007**                                                  |      |  **2006** |   |
|                                                                             |   | **Average**                                               |      | **Interest** |   | **Average** |   |  **Average** |   | **Interest** |   | **Average** |   |
|                                                                             |   | **Outstanding**                                           |      | **Earned/** |   | **Yield/** |   |  **Outstanding** |   | **Earned/** |   | **Yield/** |   |
|                                                                             |   | **Balance**                                               |      | **Paid** |   | **Rate(1)** |   |  **Balance** |   | **Paid** |   | **Rate(1)** |   |
|                                                                             |   | **(Dollars                  in thousands)**               |      |
| **Assets**                                                                       |   |                                                      |      |   |   |   |   |    |   |   |   |   |   |
| Interest-earning                  assets:                                        |   |                                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                            |   | $                                                         | 933,829   |     | $ | 20,621 |     |   | 8.96 | %   | $ | 772,913 |     | $ | 16,423 |     |   | 8.62 | % |
| Taxable                  securities                                              |   |                                                      | 170,962   |   |   | 1,864 |   |   | 4.42 |   |   | 210,123 |   |   | 2,209 |   |   | 4.26 |   |
| Tax-exempt                  securities                                           |   |                                                      | 6,895     |   |   | 85 |   |   | 5.00 |   |   | 16,685 |   |   | 206 |   |   | 5.01 |   |
| Other                  investments (2)                                           |   |                                                      | 4,938     |   |   | 68 |   |   | 5.58 |   |   | 4,347 |   |   | 55 |   |   | 5.13 |   |
| Federal                  funds sold and other short-term investments             |   |                                                      | 75,476    |   |   | 968 |   |   | 5.20 |   |   | 60,411 |   |   | 638 |   |   | 4.28 |   |
| Total                  interest-earning assets                                   |   |                                                      | 1,192,100 |   |   | 23,606 |   |   | 8.03 |   |   | 1,064,479 |   |   | 19,531 |   |   | 7.44 |   |
| Allowance                  for loan losses                                       |   |                                                      | (11,641   | ) |   |   |   |   |   |   |   | (13,811 | ) |   |   |   |   |   |   |
| Total                  interest-earning assets, net of allowance for loan losses |   |                                                      | 1,180,459 |   |   |   |   |   |   |   |   | 1,050,668 |   |   |   |   |   |   |   |
| Noninterest-earning                  assets                                      |   |                                                      | 81,087    |   |   |   |   |   |   |   |   | 81,789 |   |   |   |   |   |   |   |
| Total                  assets                                                    |   | $                                                         | 1,261,546 |   |   |   |   |   |   |   | $ | 1,132,457 |   |   |   |   |   |   |   |
|                                                                             |   |                                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and shareholders' equity**                        |   |                                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:                                   |   |                                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  demand deposits                                |   | $                                                         | 68,341    |   | $ | 205 |   |   | 1.21 | % | $ | 80,918 |   | $ | 169 |   |   | 0.85 | % |
| Savings                  and money market accounts                               |   |                                                      | 171,520   |   |   | 1,320 |   |   | 3.12 |   |   | 143,532 |   |   | 747 |   |   | 2.11 |   |
| Time                  deposits                                                   |   |                                                      | 632,118   |   |   | 7,601 |   |   | 4.88 |   |   | 549,036 |   |   | 5,027 |   |   | 3.71 |   |
| Junior                  subordinated debentures                                  |   |                                                      | 36,083    |   |   | 520 |   |   | 5.76 |   |   | 36,083 |   |   | 520 |   |   | 5.76 |   |
| Other                  borrowings                                                |   |                                                      | 26,695    |   |   | 324 |   |   | 4.92 |   |   | 26,659 |   |   | 323 |   |   | 4.91 |   |
| Total                  interest-bearing liabilities                              |   |                                                      | 934,757   |   |   | 9,970 |   |   | 4.33 |   |   | 836,228 |   |   | 6,786 |   |   | 3.29 |   |
| Noninterest-bearing                  liabilities:                                |   |                                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                  demand deposits                             |   |                                                      | 202,256   |   |   |   |   |   |   |   |   | 188,767 |   |   |   |   |   |   |   |
| Other                  liabilities                                               |   |                                                      | 16,390    |   |   |   |   |   |   |   |   | 12,845 |   |   |   |   |   |   |   |
| Total                  liabilities                                               |   |                                                      | 1,153,403 |   |   |   |   |   |   |   |   | 1,037,840 |   |   |   |   |   |   |   |
| Shareholders'                  equity                                            |   |                                                      | 108,143   |   |   |   |   |   |   |   |   | 94,617 |   |   |   |   |   |   |   |
| Total                  liabilities and shareholders' equity                      |   | $                                                         | 1,261,546 |   |   |   |   |   |   |   | $ | 1,132,457 |   |   |   |   |   |   |   |
|                                                                             |   |                                                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                             |   |                                                      |      |   | $ | 13,636 |   |   |   |   |   |   |   | $ | 12,745 |   |   |   |   |
| Net                  interest spread                                             |   |                                                      |      |   |   |   |   |   | 3.71 | % |   |   |   |   |   |   |   | 4.15 | % |
| Net                  interest margin                                             |   |                                                      |      |   |   |   |   |   | 4.64 | % |   |   |   |   |   |   |   | 4.86 | % |

| (1) | Annualized. |
|-----|-------------|

| (2) | Other                  investments include Federal Reserve Bank stock, Federal Home Loan                  Bank                  stock and investment in subsidiary                  trust. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                 |   | **Three                  Months Ended March 31,** |   |
|----------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                 |   | **2007                  vs 2006**                 |   |
|                                                                 |   | **Increase                  (Decrease)**          |   |   |   |
|                                                                 |   | **Due                  to**                       |   |   |   |
|                                                                 |   | **Volume**                                        |   | **Rate** |   | **Total** |   |
|                                                                 |   | **(Dollars                  in thousands)**       |   |
|                                                                 |   |                                              |   |   |   |   |   |
| **Interest-earning                  assets:**                        |   |                                              |   |   |   |   |   |
| Loans                                                                |   | $                                                 | 3,419  |   | $ | 779 |   | $ | 4,198 |   |
| Taxable                  securities                                  |   |                                              | (412   | ) |   | 67 |   |   | (345 | ) |
| Tax-exempt                  securities                               |   |                                              | (121   | ) |   | - |   |   | (121 | ) |
| Other                  investments                                   |   |                                              | 7      |   |   | 6 |   |   | 13 |   |
| Federal                  funds sold and other short-term investments |   |                                              | 159    |   |   | 171 |   |   | 330 |   |
| Total                  increase in interest income                   |   |                                              | 3,052  |   |   | 1,023 |   |   | 4,075 |   |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |
| **Interest-bearing                  liabilities:**                   |   |                                              |   |   |   |   |   |   |   |   |
| Interest-bearing                  demand deposits                    |   |                                              | (26    | ) |   | 62 |   |   | 36 |   |
| Savings                  and money market accounts                   |   |                                              | 146    |   |   | 427 |   |   | 573 |   |
| Time                  deposits                                       |   |                                              | 761    |   |   | 1,813 |   |   | 2,574 |   |
| Junior                  subordinated debentures                      |   |                                              | -      |   |   | - |   |   | - |   |
| Other                  borrowings                                    |   |                                              | -      |   |   | 1 |   |   | 1 |   |
| Total                  increase in interest expense                  |   |                                              | 881    |   |   | 2,303 |   |   | 3,184 |   |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |
| Increase                  (decrease) in net interest income          |   | $                                                 | 2,171  |   | $ | (1,280 | ) | $ | 891 |   |

*Provision        for Loan Losses.*

*Noninterest        Income.*

*Noninterest        Expense.*

----

*Income        Taxes.*

**Financial        Condition**

*Loan        Portfolio.*

|                                                              |   | **As                    of March 31, 2007**   |      | **As                    of December 31, 2006** |   |
|-------------------------------------------------------------------|--------|-----------------------------------------------|-----------|------------------------------------------------|--------|
|                                                              |   | **Amount**                                    |      | **Percent**                                    |   | **Amount** |   | **Percent** |   |
|                                                              |   | **(Dollars                    in thousands)** |      |
|                                                              |   |                                          |      |
| Commercial                    and industrial                      |   | $                                             | 400,865   |                                           |   | 39.70 | %    | $ | 367,072 |   |   | 41.25 | % |
| Real                    estate mortgage                           |   |                                          |           |                                           |   |  |   |   |  |   |   |  |   |
| Residential                                                       |   |                                          | 7,363     |                                           |   | 0.73 |   |   | 4,847 |   |   | 0.55 |   |
| Commercial                                                        |   |                                          | 493,224   |                                           |   | 48.85 |   |   | 424,431 |   |   | 47.70 |   |
|                                                              |   |                                          | 500,587   |                                           |   | 49.58 |   |   | 429,278 |   |   | 48.25 |   |
| Real                    estate construction                       |   |                                          |           |                                           |   |  |   |   |  |   |   |  |   |
| Residential                                                       |   |                                          | 30,165    |                                           |   | 2.99 |   |   | 27,781 |   |   | 3.13 |   |
| Commercial                                                        |   |                                          | 70,230    |                                           |   | 6.96 |   |   | 58,311 |   |   | 6.55 |   |
|                                                              |   |                                          | 100,395   |                                           |   | 9.95 |   |   | 86,092 |   |   | 9.68 |   |
| Consumer                    and other                             |   |                                          | 7,805     |                                           |   | 0.77 |   |   | 7,332 |   |   | 0.82 |   |
| Gross                    loans                                    |   |                                          | 1,009,652 |                                           |   | 100.00 | % |   | 889,774 |   |   | 100.00 | % |
| Unearned                    discounts, interest and deferred fees |   |                                          | (3,374    | )                                              |   |   |   |   | (3,218 | ) |   |   |   |
| Total                    loans                                    |   |                                          | 1,006,278 |                                           |   |   |   |   | 886,556 |   |   |   |   |
| Allowance                    for loan losses                      |   |                                          | (11,900   | )                                              |   |   |   |   | (11,436 | ) |   |   |   |
| Loans,                    net                                     |   | $                                             | 994,378   |                                           |   |   |   | $ | 875,120 |   |   |   |   |

*Nonperforming        Assets.*

----

|                                                                                                      |   | **As                    of**                  |   | **As                    of**    |   |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|---------------------------------|--------|
|                                                                                                      |   | **March 31, 2007**                  |   | **December 31, 2006** |   |
|                                                                                                      |   | **(Dollars                    in thousands)** |   |
| Nonaccrual                    loans                                                                       |   | $                                             | 7,383  |                            | $      | 9,414 |   |
| Accruing                    loans 90 days or more past due                                                |   |                                          | 250    |                            |   | 29 |   |
| Other                    real estate (“ORE”) and other assets repossessed (“OAR”) |   |                                          | 2,657  |                            |   | 2,747 |   |
| Total                    nonperforming assets                                                             |   |                                          | 10,290 |                            |   | 12,190 |   |
| Nonperforming                    loans guaranteed by the SBA, Ex-Im Bank and OCCGF                        |   |                                          | (2,596 | )                               |   | (2,857 | ) |
| Total                    net nonperforming assets                                                         |   | $                                             | 7,694  |                            | $      | 9,333 |   |
|                                                                                                      |   |                                          |        |                            |   |  |   |
| Total                    nonperforming assets to total assets                                             |   |                                          | 0.81   | %                               |   | 0.96 | % |
| Total                    nonperforming assets to total loans and ORE/OAR                                  |   |                                          | 1.02   | %                               |   | 1.37 | % |
| Net                    nonperforming assets to total assets (1)                                           |   |                                          | 0.60   | %                               |   | 0.74 | % |
| Net                    nonperforming assets to total loans and ORE/OAR (1)                                |   |                                          | 0.76   | %                               |   | 1.05 | % |

| (1) | Net                  nonperforming assets are net of the loan portions guaranteed by                  the SBA,                  Ex-Im Bank and OCCGF. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                        |   | **As                  of****March 31, 2007** |   | **As                  of****December 31, 2006** |   |
|-----------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                                        |   | **(Dollars                  in thousands)**            |   |
| Impaired                  loans with no SFAS No. 114 valuation reserve |   | $                                                      | 4,608  |                                            | $      | 6,715 |   |
| Impaired                  loans with a SFAS No. 114 valuation reserve  |   |                                                   | 2,775  |                                                      |   | 2,699 |   |
| Total                  recorded investment in impaired loans                |   | $                                                      | 7,383  |                                                      | $      | 9,414 |   |
|                                                                        |   |                                                   |   |                                                      |   |   |   |
| Valuation                  allowance related to impaired loans              |   | $                                                      | 1,075  |                                                      | $      | 900 |   |

*Allowance        for Loan Losses and Reserve for Unfunded Lending Commitments.*

----

----

|                                                                                                                                       |   | **As                    of and for the****Three                    Months Ended March 31,** |      |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|-----------|
|                                                                                                                                       |   | **2007**                                                                                         |      | **2006** |   |
|                                                                                                                                       |   | **(Dollars                    in thousands)**                                                    |      |
| Average                    total loans outstanding for the period                                                                          |   | $                                                                                                | 933,829   |   | $ | 772,913 |   |
| Total                    loans outstanding at end of period                                                                                |   | $                                                                                                | 1,006,278 |   | $ | 786,693 |   |
|                                                                                                                                       |   |                                                                                             |      |   |   |   |   |
| Allowance                    for loan losses at beginning of period                                                                        |   | $                                                                                                | 11,436    |   | $ | 13,169 |   |
| Provision                    for loan losses                                                                                               |   |                                                                                             | 137       |   |   | 258 |   |
| Charge-offs:                                                                                                                               |   |                                                                                             |      |   |   |   |   |
| Commercial                    and industrial                                                                                               |   |                                                                                             | -         |   |   | (997 | ) |
| Real                    estate mortgage                                                                                                    |   |                                                                                             | (219      | ) |   | (21 | ) |
| Real                    estate construction                                                                                                |   |                                                                                             | -         |   |   | - |   |
| Consumer                    and other                                                                                                      |   |                                                                                             | (7        | ) |   | (79 | ) |
| Total                    charge-offs                                                                                                       |   |                                                                                             | (226      | ) |   | (1,097 | ) |
|                                                                                                                                       |   |                                                                                             |      |   |   |   |   |
| Recoveries:                                                                                                                                |   |                                                                                             |      |   |   |   |   |
| Commercial                    and industrial                                                                                               |   |                                                                                             | 452       |   |   | 486 |   |
| Real                    estate mortgage                                                                                                    |   |                                                                                             | 99        |   |   | 851 |   |
| Real                    estate construction                                                                                                |   |                                                                                             | -         |   |   | - |   |
| Consumer                    and other                                                                                                      |   |                                                                                             | 2         |   |   | 62 |   |
| Total                    recoveries                                                                                                        |   |                                                                                             | 553       |   |   | 1,399 |   |
| Net                    recoveries (charge-offs)                                                                                            |   |                                                                                             | 327       |   |   | 302 |   |
|                                                                                                                                       |   |                                                                                             |      |   |   |   |   |
| Allowance                    for loan losses at end of period                                                                              |   |                                                                                             | 11,900    |   |   | 13,729 |   |
|                                                                                                                                       |   |                                                                                             |      |   |   |   |   |
| Reserve                    for unfunded lending commitments at beginning of period                                                         |   |                                                                                             | 793       |   |   | 546 |   |
| Provision                    for unfunded lending commitments                                                                              |   |                                                                                             | 126       |   |   | (7 | ) |
| Reserve                    for unfunded lending commitments at end of period                                                               |   |                                                                                             | 919       |   |   | 539 |   |
|                                                                                                                                       |   |                                                                                             |      |   |   |   |   |
| Allowance                    for credit losses                                                                                             |   | $                                                                                                | 12,819    |   | $ | 14,268 |   |
|                                                                                                                                       |   |                                                                                             |      |   |   |   |   |
| Ratio                    of allowance for loan losses to end of period total loans                                                         |   |                                                                                             | 1.18      | % |   | 1.75 | % |
| Ratio                    of net recoveries to average total loans                                                                          |   |                                                                                             | 0.03      | % |   | 0.04 | % |
| Ratio                    of allowance for loan losses to end of period total nonperforming                    loans                    (1) |   |                                                                                             | 155.90    | % |   | 119.17 | % |
| Ratio                    of allowance for loan losses to end of period net nonperforming                    loans (2)                      |   |                                                                                             | 236.25    | % |   | 145.88 | % |

| (1) | Total                  nonperforming loans are nonaccrual loans plus loans over 90 days                  past                  due. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Net                  nonperforming loans are nonaccrual loans plus loans over 90 days                  past due,                  net of the loan portions guaranteed by the SBA, Ex-Im Bank and                  OCCGF. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Securities.*

----

*Deposits*

*Junior        Subordinated Debentures. *

*Other        Borrowings.*

|                                                         |   | **As                  of and for the****Three ****Months Ended                  March 31, 2007** |   | **As                  of and for the****Year Ended****December 31, 2006** |   |
|--------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|--------|
|                                                         |   | **(Dollars                  in thousands)**                                                                          |   |
| FHLB                  notes:                                 |   |                                                                                                                 |   |                                                                                     |   |
| at                  end of period                            |   | $                                                                                                                    | 25,000 |                                                                 | $      | 25,000 |   |
| average                  during the period                   |   |                                                                                                                 | 25,901 |                                                                                     |   | 25,247 |   |
| maximum                  month-end balance during the period |   |                                                                                                                 | 25,000 |                                                                                     |   | 25,000 |   |
| Interest                  rate at end of period              |   |                                                                                                                 | 4.99   | %                                                                                        |   | 4.99 | % |
| Interest                  rate during the period             |   |                                                                                                                 | 5.07   |                                                                                     |   | 5.05 |   |
| Federal                  Reserve TT&L:                   |   |                                                                                                                 |   |                                                                                     |   |   |   |
| at                  end of period                            |   | $                                                                                                                    | 802    |                                                                                     | $      | 1,316 |   |
| average                  during the period                   |   |                                                                                                                 | 794    |                                                                                     |   | 702 |   |
| maximum                  month-end balance during the period |   |                                                                                                                 | 802    |                                                                                     |   | 1,316 |   |

*Liquidity.*

*Capital        Resources.*

----

|                                               |   | **Minimum                    Required For Capital Adequacy Purposes** |   | **To                    Be Categorized as Well Capitalized Under Prompt Corrective Action                    Provisions** |   | **Actual                    Ratio At March 31, 2007** |
|----------------------------------------------------|--------|-----------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|
| **The                    Company**                 |   |                                                                  |   |                                                                                                                      |   |                                                            |   |   |   |
| Leverage                    ratio                  |   | 4.00                                                                  | %(1)   |                                                                                                                      | N/A    | %                                                               |   | 9.49 | % |
| Tier                    1 risk-based capital ratio |   | 4.00                                                                  |   |                                                                                                                      | N/A    |                                                            |   | 10.50 |   |
| Risk-based                    capital ratio        |   | 8.00                                                                  |   |                                                                                                                      | N/A    |                                                            |   | 12.23 |   |
| **MetroBank**                                      |   |                                                                  |   |                                                                                                                      |   |                                                            |   |   |   |
| Leverage                    ratio                  |   | 4.00                                                                  | %(2)   |                                                                                                                      | 5.00   | %                                                               |   | 9.75 | % |
| Tier                    1 risk-based capital ratio |   | 4.00                                                                  |   |                                                                                                                      | 6.00   |                                                            |   | 11.02 |   |
| Risk-based                    capital ratio        |   | 8.00                                                                  |   |                                                                                                                      | 10.00  |                                                            |   | 12.16 |   |
| **Metro                    United**                |   |                                                                  |   |                                                                                                                      |   |                                                            |   |   |   |
| Leverage                    ratio                  |   | 4.00                                                                  | %(3)   |                                                                                                                      | 5.00   | %                                                               |   | 9.79 | % |
| Tier                    1 risk-based capital ratio |   | 4.00                                                                  |   |                                                                                                                      | 6.00   |                                                            |   | 9.95 |   |
| Risk-based                    capital ratio        |   | 8.00                                                                  |   |                                                                                                                      | 10.00  |                                                            |   | 11.10 |   |

| (1) | The                  Federal Reserve Board may require the Company to maintain a leverage                  ratio                  above the required minimum. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                  OCC may require MetroBank to maintain a leverage ratio above the                  required                  minimum. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The                  FDIC may require Metro United to maintain a leverage ratio above                  the                  required minimum. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

**Critical        Accounting Estimates**

----

** **

**Item        3.    **
***Quantitative        and Qualitative Disclosures about Market Risk.***

**Item4.           **
***Controls        and Procedures***

*Evaluation        of Disclosure Controls and Procedures.*

*Changes        in Internal Control over Financial Reporting.*

----

**PART        II**

**OTHER        INFORMATION**

**Item        1.    **
***Legal        Proceedings***

**Item        1A.  **
***Risk        Factors***

**Item            2.    **
***Unregistered            Sales of Equity Securities and Use of            Proceeds***

**Item        3.    **
***Defaults        Upon Senior Securities***

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

**Item        5.    **
***Other        Information***

**Item        6.    **
***Exhibits***

| **Exhibit****Number    ** |   | **Identification                    of Exhibit**                                                                                                                                                                                                                                                                                                        |
|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                                           |   | -                    Amended and Restated Articles of Incorporation of the Company                    (incorporated herein by reference to Exhibit 3.1 to the Company's                    Registration Statement on Form S-1 (Registration No. 333-62667)                    (the                    "Registration Statement")).                       |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 3.2                                           |   | -                    Articles of Amendment to Amended and Restated Articles of Incorporation                    of                    the Company (incorporated herein by reference to Exhibit 3.2                    to the                    Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,                    2006). |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 3.3                                           |   | -                    Amended and Restated Bylaws of the Company (incorporated herein                    by                    reference to Exhibit 3.2 to the Registration                    Statement).                                                                                                                                               |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 4                                             |   | -                    Specimen form of certificate evidencing the Common Stock (incorporated                    herein by reference to Exhibit 4 to the Registration                    Statement).                                                                                                                                                      |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 11                                            |   | -                    Computation of Earnings Per Common Share, included as Note (5) to the                    unaudited Condensed Consolidated Financial Statements of this                    Form 10-Q.                                                                                                                                     |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 31.1*                                         |   | -                    Certification of the Chief Executive Officer pursuant to                    Rule 13a-14(a) of the Securities Exchange Act of 1934, as                    amended.                                                                                                                                                             |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 31.2*                                         |   | -                    Certification of the Chief Financial Officer pursuant to                    Rule 13a-14(a) of the Securities Exchange Act of 1934, as                    amended.                                                                                                                                                             |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 32.1**                                        |   | -                    Certification of the Chief Executive Officer pursuant to 18 U.S.C.                    Section 1350, adopted pursuant to Section 906 of the                    Sarbanes-Oxley Act of 2002.                                                                                                                                |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                    |
| 32.2**                                        |   | -                    Certification of the Chief Financial Officer pursuant to 18 U.S.C.                    Section 1350, adopted pursuant to Section 906 of the                    Sarbanes-Oxley Act of 2002.                                                                                                                                |

----

**SIGNATURES**

|                                     | METROCORP                  BANCSHARES, INC.  |                                                                                                                        |
|------------------------------------------|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|
|                                     |                                              |                                                                                                                        |
| Date:                    May 9, 2007     | By:                                | /s/                  George M. Lee                                                                                     |   |
|                                     |                                              | George                  M. Lee                                                                                         |   |
|                                     |                                              | Chief                  Executive Officer (principal executive officer)                                                 |   |
|                                     |
|                                     |                                              |                                                                                                                        |
| Date:                  May 9, 2007  | By:                                     | /s/                  David C. Choi                                                                                     |   |
|                                     |                                              | David                  C. Choi                                                                                         |   |
|                                     |                                              | Chief                  Financial Officer (principal financial officer/ principal accounting                  officer)  |   |

----

**EXHIBIT        INDEX**

| **Exhibit****Number    ** |   | **Identification                      of Exhibit**                                                                                                                                                                                                                                                                                                                                       |
|-----------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                                           |   | -                      Amended and Restated Articles of Incorporation of the Company                      (incorporated herein by reference to Exhibit 3.1 to the Company's                      Registration Statement on Form S-1 (Registration No. 333-62667)                      (the                      "Registration Statement")).                                              |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.2                                           |   | -                      Articles of Amendment to Amended and Restated Articles of Incorporation                      of                      the Company (incorporated herein by reference to Exhibit 3.2                      to the                      Company’s Quarterly Report on Form 10-Q for the quarter ended March                      31,                      2006). |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.3                                           |   | -                      Amended and Restated Bylaws of the Company (incorporated herein                      by                      reference to Exhibit 3.2 to the Registration                      Statement).                                                                                                                                                                        |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 4                                             |   | -                      Specimen form of certificate evidencing the Common Stock (incorporated                      herein by reference to Exhibit 4 to the Registration                      Statement).                                                                                                                                                                                 |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 11                                            |   | -                      Computation of Earnings Per Common Share, included as Note                      (5) to the                      unaudited Condensed Consolidated Financial Statements of this                      Form 10-Q.                                                                                                                                           |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 31.1*                                         |   | -                      Certification of the Chief Executive Officer pursuant to                      Rule 13a-14(a) of the Securities Exchange Act of 1934, as                      amended.                                                                                                                                                                                        |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 31.2*                                         |   | -                      Certification of the Chief Financial Officer pursuant to                      Rule 13a-14(a) of the Securities Exchange Act of 1934, as                      amended.                                                                                                                                                                                        |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 32.1**                                        |   | -                      Certification of the Chief Executive Officer pursuant to 18                      U.S.C.                      Section 1350, adopted pursuant to Section 906 of the                      Sarbanes-Oxley Act of 2002.                                                                                                                                      |
|                                          |   |                                                                                                                                                                                                                                                                                                                                                                                     |
| 32.2**                                        |   | -                      Certification of the Chief Financial Officer pursuant to 18                      U.S.C.                      Section 1350, adopted pursuant to Section 906 of the                      Sarbanes-Oxley Act of 2002.                                                                                                                                      |

----