<PAGE>

                                                                      EXHIBIT 13







                       COMMERCEFIRST BANCORP LOGO OMITTED


                   RAISING BANKING TO THE POWER OF BUSINESS(R)


                                  ANNUAL REPORT

                                      2005

                                1804 West Street
                               Annapolis, MD 21401
                               www.commerce1st.com

<PAGE>

                    [CommerceFirst Bancorp, Inc. Letterhead]


March 15, 2006

To our Fellow Shareholders:

            We are pleased to report that 2005 was an excellent year for your
Company. We are proud to present the following report of accomplishments:

               o Total assets increased to over $112.5 million by December 31,
                 2005, an increase of $36.6 million or 48% over December 31,
                 2004.

               o Net loans outstanding grew over 39%, to $75.0 million.

               o Deposits grew by 34% to $88.2 million.

               o The Bank's net interest margin increased to over 4.8%.

               o The Company recorded its third consecutive profitable year,
                 with net earnings in excess of $1 million.

               o We successfully completed our capital stock offering in
                 February 2005, with net proceeds of $9.5 million to the
                 Company.

               o We have received approval from Federal and State regulatory
                 authorities to open our third office. We expect to open that
                 office at 910 Cromwell Park Drive, Glen Burnie, Maryland late
                 in the second quarter of 2006.

               o W. Craig Engelhaupt, a banker with 20 years of experience,
                 joined our team in 2005 and will concentrate his efforts in
                 Howard County.

               o And in the first quarter of 2006, we filed a request with
                 Federal and State regulatory authorities for permission to open
                 our fourth office, to be located at 6230 Old Dobbin Lane,
                 Columbia, Maryland. Assuming approval, this will be our first
                 office in Howard County.

            As always we appreciate your support in terms of referrals and
patronage. We look forward to sharing our successes as we focus on implementing
our 2006 Strategic Plan.

Very truly yours,

/s/ Milton D. Jernigan II                         /s/ Richard J. Morgan

Milton D. Jernigan II                             Richard J. Morgan
Chairman of the Board                             President and CEO

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

            Forward Looking Statements. Certain information contained in this
discussion may include "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
are generally identified by phrases such as "the Company expects," "the Company
believes" or words of similar import. Such forward-looking statements involve
known and unknown risks including, but not limited to, changes in general
economic and business conditions, interest rate fluctuations, competition within
and from outside the banking industry, new products and services in the banking
industry, risk inherent in making loans such as repayment risks and fluctuating
collateral values, problems with technology utilized by the Company, changing
trends in customer profiles and changes in laws and regulations applicable to
the Company. Although the Company believes that its expectations with respect to
the forward-looking statements are based upon reliable assumptions within the
bounds of its knowledge of its business and operations, there can be no
assurance that actual results, performance or achievements of the Company will
not differ materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. Readers are cautioned
against placing undue reliance on any such forward-looking statements. The
Company does not undertake to update any forward-looking statements to reflect
occurrences or events that may not have been anticipated as of the date of such
statements.

            This discussion and analysis provides an overview of the financial
condition and results of operations of CommerceFirst Bancorp, Inc. (the
"Company") and CommerceFirst Bank (the "Bank") for the years 2005 and 2004. It
is intended that this discussion and analysis help the readers in their analysis
of the accompanying audited Consolidated Financial Statements. You should read
this discussion in conjunction with the Consolidated Financial Statements and
Notes thereto provided elsewhere in this report.

GENERAL

            CommerceFirst Bancorp, Inc. is the bank holding company for
CommerceFirst Bank, a Maryland chartered commercial bank headquartered in
Annapolis, Maryland. The Bank was capitalized, became a wholly owned subsidiary
of the Company and commenced operations on June 29, 2000.

            During the first quarter of 2005 the Company sold an aggregate of
981,333 additional shares of common stock. Of the shares sold, 175,000 were sold
on a rights offering basis to shareholders of record as of December 9, 2004 at a
price of $10.50 per share, and 806,333 shares were sold in a public offering
also at a price of $10.50 per share. The offerings, which closed on February 28,
2005, raised an aggregate of approximately $9.6 million, net of expenses of the
offering, financial advisory fees and underwriter's commission. In March 2005,
the Company contributed $6,000,000 to the capital of the Bank. The remaining
proceeds of the offerings are available for general corporate purposes,
including further contribution to the Bank for use in its lending and investment
activities and other operations.

            On March 1, 2005 trading in the Company's common stock commenced on
the NASDAQ Capital Market under the symbol "CMFB".

            In October 2005, the Bank filed an application to establish a new
branch office, its third banking office, to be located in leased space in the
BWI Airport Business District on Cromwell Park Drive, Glen Burnie, Maryland.
Regulatory approval has been received and the office is expected to commence
operations late in the second quarter or early in the third quarter of 2006.

            Also in October 2005, the Bank announced that W. Craig Engelhaupt, a
banker with 20 years of commercial banking experience, had joined the
organization as Senior Vice President and will lead the business development in
the Howard County market.

            In February 2006, the Bank filed an application to establish a new
branch office, its four banking office, to be located in leased space in the
Liberty Place office park on Old Dobbin Lane, Columbia, Maryland. Assuming
regulatory approval, the office is expected to commence operations late in the
second quarter or early in the third quarter of 2006.

OVERVIEW

            The Company's assets at December 31, 2005 were $112.5 million, an
increase of $36.6 million or 48.2%, from December 31, 2004, principally due to
increases in the loan portfolio, funded by increases in the core funding program
and by increases in the capital position as the result of the successful common
stock offering concluded during the first quarter of 2005. That offering raised
about $9.6 million, net of expenses of the offering, financial advisory fees and
underwriter's commission. The Company's assets at December 31, 2004 were $75.9
million, an increase of $24.6 million or 48.0%, from December 31, 2003,
principally due to increases in the loan portfolio, funded primarily by
increases in the core funding portfolio.


                                       2
<PAGE>

            At December 31, 2005, gross loans totaled $77.1 million (including
loans held for sale of $323 thousand), exclusively commercial term loans and
lines of credit ($38.6 million) and real estate secured term loans ($38.5
million). By comparison, at December 31, 2004, gross loans totaled $53.0
million, exclusively commercial term loans and lines of credit ($30.7 million)
and real estate secured term loans ($22.3 million). At December 31, 2003, gross
loans totaled $33.3 million, exclusively commercial term loans and lines of
credit ($20.9 million) and real estate secured term loans ($12.4 million).

            At December 31, 2005, deposits totaled $88.2 million, principally
certificates of deposit ($46.2 million), demand deposits ($17.9 million) and
money market deposit accounts ($17.2 million). By comparison, at December 31,
2004, deposits totaled $65.7 million, principally certificates of deposit ($28.8
million), demand deposits ($20.7 million) and money market deposit accounts
($13.6 million). Deposits at December 31, 2003 totaled $40.6 million, primarily
money market deposit accounts ($16.2 million), certificates of deposits ($13.2
million) and demand deposits ($9.4 million). A significant additional funding
source is provided by the securities sold under agreement to repurchase program.
At December 31, 2005, balances in this program totaled $6.0 million. By
comparison, at December 31, 2004, balances in this program totaled $3.1 million
in comparison to $4.7 million at December 31, 2003.

            At December 31, 2005 nonperforming assets of approximately $592
thousand were in non-accrual status. By comparison, at December 31, 2004 and
December 31, 2003, respectively, nonperforming assets of approximately $1.1
million and $391 thousand were in nonaccrual status.

                              RESULTS OF OPERATIONS

            The Company reported a net profit of $1.0 million for the year ended
December 31, 2005 after recording a provision for income tax expense of $658
thousand, as compared to a net profit of $1.1 million for the year ended
December 31, 2004, after recording an income tax benefit of $862 thousand, and
to a net profit of $143 thousand for the year ended December 31, 2003 with no
income tax provision. The results of operations for the year ended December 31,
2005 are entirely attributable to the operations of the Company's sole
subsidiary, CommerceFirst Bank. The substantial increase in the earnings for the
year ended December 31, 2004 (as compared to the year ended December 31, 2003)
is attributable to the recognition of the net deferred tax benefit and to the
results of operations of the Bank. At September 30, 2004, in compliance with
SFAS No. 109, Accounting for Income Taxes, the Bank eliminated the valuation
allowance for the deferred tax asset, thereby recognizing $944 thousand in
income tax benefits in income. See Note 2 to the Consolidated Financial
Statements appearing elsewhere in this report for additional information. This
increase in income was partially offset by a provision for credit losses of $350
thousand related to one borrower, as described below under ASSET QUALITY. The
Company is currently recognizing income tax expense based upon earnings in each
period.

            On a per share basis, the Company had earnings of $0.63 per basic
and $0.62 per diluted share for the year ended December 31, 2005, as compared to
earnings per basic and diluted share of $1.33 and $0.17 for the years ended
December 31, 2004 and 2003 respectively. However, the average number of basic
shares outstanding in 2005 was 1,647,645, as compared to 822,250 in 2004 and
2003; the average number of diluted shares outstanding in 2005 was 1,672,928, as
compared to 822,250 in 2004 and 2003. The increase in number of basic shares
outstanding is attributable, and the increase in diluted shares is primarily
attributable, to the results of the stock offering discussed above.

            During the years ended December 31, 2005, 2004 and 2003, the Company
had return on equity, return on assets and equity to asset ratios as follows:


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                              RETURN ON AVERAGE ASSETS AND AVERAGE EQUITY
                                      ----------------------------------------------------------------------------------------

                                                                            Years ended
                                                                      -------------------------
      (Dollars in thousands)
                                          DECEMBER 31, 2005               December 31, 2004             December 31, 2003
                                      ---------------------------     -------------------------     --------------------------
<S>                                             <C>                            <C>                           <C>
Return on Average Equity                        6.76%                          18.02%                         2.48%
Return on Average Earning Assets                1.19%                           2.05%                         0.33%
Ratio of Average Equity
      to Average Assets                        17.05%                          10.97%                        12.73%
</TABLE>

            The Company expects that as the proceeds of the offering are further
deployed, its return on equity will increase, although there can be no assurance
on this.

            Total loans outstanding (including loans held for sale of $323
thousand) at December 31, 2005 reached $77.1 million, in comparison to $53.0
million in total loans outstanding at December 31, 2004, an increase of 45.5%.
The Company ended the year 2005 with deposits and repurchase agreements of $94.2
million as compared to $68.8 million at December 31, 2004, an increase of 36.9%.
The business development/lending staff remains very active in contacting new
prospects and continues its efforts to increase the Bank's profile and
recognition within the community. Management believes that this will translate
into continued growth of a portfolio of quality loans and ongoing deposit
relationships, although there can be no assurance of this.

NET INTEREST INCOME AND NET INTEREST MARGIN

            Net interest income is the difference between income on assets and
the cost of funds supporting those assets. Earning assets are composed primarily
of loans and investments; the expense associated with interest bearing deposits
and customer repurchase agreements and other borrowings is the cost of funds.
Non-interest bearing deposits and capital are other components representing
funding sources. Changes in the volume and mix of assets and funding sources,
along with the changes in yields earned and rates paid, determine changes in net
interest income.

            Net interest income was $4.2 million in 2005, a 75.0% increase as
compared to $2.4 million in 2004, which reflected a 20.0% increase over the $2.0
million in 2003. Total interest income for the year ended December 31, 2005 was
$5.6 million, an 86.7% increase as compared to $3.0 million in 2004 and $2.5
million for the same period in 2003. Total interest expenses for the years ended
December 31, 2005, 2004 and 2003 were $1.4 million, $588 thousand and $530
thousand, respectively. The increase in interest income is primarily the result
of increased balances of earning assets and increased rates on earning assets.
The increase in net interest income is jointly the result of increased balances
of earning assets and increased rates earned, which offset increases in rates
paid to attract the necessary funding to support those assets.

            The following table provides information for the designated periods
with respect to average balances, income and expense and annualized yields and
costs associated with various categories of interest earning assets and interest
bearing liabilities for the past three years. Non-accrual loans have been
included in the preparation of the table. The table includes a measurement of
spread and margin. Interest spread is the mathematical difference between the
average interest yield on interest earning assets and average interest paid on
interest bearing liabilities. Interest margin is the net interest yield on
interest earning assets and is derived by dividing net interest income by
average interest earning assets. Management believes that the interest margin is
a better indicator of asset earning results when compared to peer groups or
industry standards, particularly in a mature financial institution.


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                          CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
                                   ----------------------------------------------------------------------------------------

(Dollars in thousands)
                                          DECEMBER 31, 2005            December 31, 2004             December 31, 2003
                                   ---------------------------    --------------------------    ---------------------------
<S>                                <C>        <C>       <C>       <C>       <C>       <C>       <C>        <C>       <C>
                                    AVERAGE             YIELD/     Average            Yield/    Average              Yield/
                                    BALANCE   INTEREST    RATE     Balance  Interest    Rate    Balance    Interest    Rate
                                   --------   --------  ------    --------  --------  ------    --------   --------  ------
ASSETS
Total loans1/                      $ 64,234    $ 4,950   7.71%    $ 40,569   $ 2,754    6.79%   $ 33,078   $  2,253   6.81%
Investment securities2/               9,733        296   3.04%       6,931       180    2.59%      6,989        201   2.87%
Federal funds sold                   12,523        393   3.14%       5,541        66    1.19%      3,242         35   1.09%
                                   --------   --------            --------  --------            --------   --------
TOTAL INTEREST-
      EARNING ASSETS                 86,490      5,639   6.52%      53,041     3,000    5.66%     43,309      2,489   5.75%
                                   --------   --------  ------    --------  --------  ------    --------   --------  ------

Less allowance for credit losses     (1,416)                          (822)                         (648)
Cash and due from banks               3,210                          2,184                         1,931
Premises and equipment, net             164                            120                           127
Other assets                          1,166                            633                           458
                                   --------                       --------                      --------
TOTAL ASSETS                       $ 89,615                       $ 55,156                      $ 45,176
                                   ========                       ========                      ========

LIABILITIES AND STOCK-
    HOLDERS' EQUITY
Interest-bearing demand deposits    $ 2,422       $ 16   0.67%     $ 1,824       $ 4    0.24%   $  1,119        $ 4   0.34%
Money market deposit accounts        16,129        272   1.68%      14,084       100    0.71%     14,114        136   0.96%
Savings                                 448          2   0.50%         223         1    0.25%        307          2   0.52%
Certificates of deposit              35,361      1,113   3.15%      17,593       464    2.64%     12,171        356   2.93%
Repurchase agreements                 3,003         36   1.20%       4,160        18    0.44%      4,644         31   0.67%
Other borrowed funds                      -          -   0.00%          38         1    2.08%         90          2   1.88%
                                   --------   --------            --------  --------            --------   --------
TOTAL INTEREST-BEARING
     LIABILITIES                     57,364      1,439   2.51%      37,922       588    1.55%     32,445        530   1.64%
                                   --------   --------  ------    --------  --------  -------   --------   --------  ------

Non-interest-bearing
      demand deposits                16,489                         10,889                         6,770
Other liabilities                       484                            297                           211
Stockholders' equity                 15,278                          6,049                         5,750
                                   --------                       --------                      --------
TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY         $ 89,615                       $ 55,156                      $ 45,176
                                   ========                       ========                      ========

Net interest income                            $ 4,200                       $ 2,412                       $  1,958
                                              ========                      ========                       ========

Net interest spread                                      4.01%                          4.11%                         4.11%
                                                        ======                        =======                        ======

Net interest margin                                      4.86%                          4.55%                         4.52%
                                                        ======                        =======                        ======
</TABLE>

1/ Interest income on loans includes net fees of $126 thousand in 2005, $70
thousand in 2004 and $63 thousand in 2003.
2/ Yields on securities available for sale have been calculated on the basis of
historical cost and do not give effect to changes in fair value of such
securities, which are reflected as a component of stockholders' equity.

            Net interest margin was 4.86% in 2005 as compared to 4.55% in 2004
and 4.52% in 2003. Interest spread was 4.01% in 2005 as compared to 4.11% in
2004 and an identical 4.11% recorded in 2003. The increase in margin from 2004
to 2005 reflects the redeployment of assets from relatively low yielding
short-term investment to higher yielding loans, and to the investment of the
proceeds from the capital offering. The decrease in spread is largely
attributable to rising interest rates paid during the year to attract
certificates of deposit.

RATE/VOLUME ANALYSIS OF NET INTEREST INCOME

            The following table sets forth certain information regarding changes
in interest income and interest expense of the Company for the periods
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to: (i) changes in
volume (change in volume of the asset multiplied by the prior period's rate) and
(ii) changes in rates (change in rate multiplied by the current period's
volume).


                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                        EFFECT OF RATE AND VOLUME CHANGES ON NET INTEREST INCOME
                                  -----------------------------------------------------------------------------------------------

                                             YEAR ENDED DECEMBER 31,                            Year ended December 31,
                                  -------------------------------------------         -------------------------------------------
                                                 2005 VS 2004                                        2004 vs 2003
                                              -------------------                                 -------------------
                                                        DUE TO CHANGE                                         Increase
                                     INCREASE            IN AVERAGE:                    Increase             in Average:
                                       OR        ----------------------------              or        ----------------------------
                                    (DECREASE)        RATE          VOLUME              (Decrease)         Rate         Volume
                                  -------------  ------------    ------------         ----------------------------   ------------
(Dollars in thousands)
<S>                                   <C>              <C>           <C>                    <C>              <C>           <C>
Interest earning assets
     Loans                            $ 2,195          $ 588         $ 1,607                $ 502            $ (8)         $ 510
     Investment portfolio                 117             44              73                  (21)            (19)            (2)
     Federal funds sold                   327            244              83                   31               6             25
                                  ------------   ------------    ------------         ------------   -------------   ------------
     Total interest income            $ 2,639          $ 876         $ 1,763                $ 512           $ (21)         $ 533
                                  ============   ============    ============         ============   =============   ============

Interest bearing liabilities:
     Interest bearing
        demand deposits                  $ 12           $ 11             $ 1                  $ 0            $ (2)           $ 2
     Money market
        deposit accounts                  172            158              14                  (36)            (36)            (0)
     Savings deposits                       2              1               1                   (1)             (1)            (0)
     Certificates of deposit              648            179             469                  108             (51)           159
     Repurchase agreements                 18             23              (5)                 (13)            (10)            (3)
     Other borrowed funds                  (1)            (0)             (1)                  (1)             (0)            (1)
                                  ------------   ------------    ------------         ------------   -------------   ------------
     Total interest expense             $ 851          $ 371           $ 480                 $ 57           $ (99)         $ 156
                                  ------------   ------------    ------------         ------------   -------------   ------------
     Net interest income              $ 1,788          $ 505         $ 1,283                $ 454            $ 78          $ 377
                                  ============   ============    ============         ============   =============   ============
</TABLE>

Allowance and Provision for Credit Losses

            The provision for credit losses represents the expense recognized to
fund the allowance for credit losses. At December 31, 2005, the allowance for
credit losses stood at $1.6 million, or 2.1% of outstanding gross loans. Of this
amount, "specific" reserves were $784 thousand and "general" reserves were $831
thousand. Specific reserves are used to individually allocate an allowance for
loans identified as impaired, or which otherwise exhibit adverse characteristics
that suggest a heightened risk of non-collection. General reserves are those
made with respect to other classified and unclassified loans in our portfolio
based upon the methodology discussed below in order to maintain the allowance at
a level which reflects our best estimate of the losses inherent in the portfolio
with respect to such loans. Whether specific or general, amounts in the
allowance for credit losses are available to absorb losses with respect to any
loan. At December 31, 2004, the allowance for credit losses stood at $1.15
million, or 2.2% of outstanding gross loans. Of this amount, "specific" reserves
were $580 thousand and "general" reserves were $574 thousand. At December 31,
2003, the allowance for credit losses stood at $604 thousand, or 1.81% of
outstanding gross loans. Of this amount, general reserves were $299 thousand and
specific reserves were $305 thousand. The provision expense of $360 thousand for
the year ended December 31, 2005 reflected a decrease of $230 thousand from the
provision expense of $590 thousand for the year ended December 31, 2004 which in
turn reflected an increase of $320 thousand from the year ended December 31,
2003, primarily as a result of a specific provision for a single lending
relationship which became nonperforming in the third quarter of 2004 as a result
of unexpected reversals in the borrower's business.

            Management has devised and refined a comprehensive review
methodology to assess the adequacy of the allowance. This methodology permits
several different assessments to be made. Currently, principal consideration is
accorded the assessment based upon the risk rating assigned to individual
credits. Specific provisions reflect the amount of loss estimated to be embedded
in the loan, based upon current information about the borrower, other sources of
repayment and the realizable value of collateral. Other assessments may be made
by general categories of credits and by industry groups (at a number of levels)
based upon Standard Industrial Classification codes. The methodology has the
flexibility to permit additional evaluation criteria if so desired. Risk ratings
are assigned to all credits at inception, and are reviewed at least annually.
Consideration is given to many different factors: past credit record, capacity
to repay, character of borrower, value of collateral, industry standards and
overall economic conditions. Management considers, in addition to the above, the
growth and composition of the portfolio, the loss experience of other banks in
our peer group, the results of examinations and evaluations of the overall
portfolio by regulatory examiners and by external auditors, and the local, state
and national economic outlook. Based principally on the above factors and on
current economic conditions and perceived loan quality, the allowance is
believed to be adequate as of December 31, 2005.


                                       6
<PAGE>

            In addition to the above adequacy review, management also considers
some bulk measures of adequacy. Specifically, an analysis is made of the entire
portfolio, less the government guaranteed portion of SBA loans and those loans
secured by cash deposits within the Bank. An additional measure compares the
gross loan total without consideration of guarantees and/or collateral to the
allowance. Each quarter, management formally recommends to the Board of the Bank
the proposed amount to be allocated monthly to the allowance and accordingly
charged to the appropriate expense account.

            The activity in the allowance for credit losses is shown in the
following table. All charge-offs and recoveries relate to commercial loans.

<TABLE>
<CAPTION>
                                                                          ALLOWANCE FOR CREDIT LOSSES
                                                  -----------------------------------------------------------------------

(Dollars in thousands)                               DECEMBER 31                December 31                December 31
                                                        2005                       2004                       2003
                                                  -----------------           ----------------           ----------------
<S>                                                        <C>                          <C>                        <C>
Balance at beginning of year                               $ 1,154                      $ 604                      $ 655
Provision for credit losses                                    360                        590                        270
Loans (charged off) (commercial)                               (15)                       (73)                      (333)
Recoveries (commercial)                                        116                         32                         12
                                                  -----------------           ----------------           ----------------
Net (charge-offs)/recoveries                                   101                        (40)                      (321)
                                                  -----------------           ----------------           ----------------
Balance at end of year                                     $ 1,615                    $ 1,154                      $ 604
                                                  =================           ================           ================

Ratio of net (chargeoffs)/
 recoveries to average loans                                 (0.15)%                     0.10%                      0.97%
</TABLE>

            During 2005, one commercial loan totaling $15 thousand was
determined to be uncollectible and was charged off. Also during 2005, the Bank
recorded recoveries of $116 thousand, all of which is related to a commercial
loan charged off in 2003.

            During 2004, three unrelated commercial loans totaling $73 thousand
were determined to be uncollectible and were charged off.

            During 2003, three unrelated commercial loans totaling $333 thousand
were determined to be uncollectible and were charged off.

            Additionally, the Bank has established a reserve for unfunded
commitments that is recorded by a provision charged to other expenses. At
December 31, 2005, the balance of this reserve was $30 thousand, as compared to
$24 thousand and $18 thousand at December 31, 2004 and 2003, respectively. The
reserve is an amount that management believes will be adequate over time to
absorb possible losses on unfunded commitments (off-balance sheet financial
instruments) that may become uncollectible in the future.

                                  ASSET QUALITY

            In its lending activities, the Bank seeks to develop sound credits
with customers who will grow with the Bank. There has not been an effort to
rapidly build the portfolio and earnings at the expense of asset quality. At the
same time, the extension of credit inevitably carries some risk of non-payment.


                                       7
<PAGE>

            The following table shows an analysis of nonperforming assets at the
dates indicated:

<TABLE>
<CAPTION>
                                                                       ANALYSIS OF NONPERFORMING ASSETS
                                                        -------------------------------------------------------------

      (Dollars in thousands)                              DECEMBER 31             December 31            December 31
                                                             2005                    2004                   2003
                                                        ----------------        ---------------        --------------
<S>                                                               <C>                  <C>                     <C>
Nonaccrual loans
      Commercial                                                  $ 592                $ 1,057                 $ 391
Accrual loans - Past due 90 days or more                              -                      -                     -
Real estate owned                                                     -                      -                     -
                                                        ----------------        ---------------        --------------
      Total nonperforming assets                                  $ 592                $ 1,057                 $ 391
                                                        ================        ===============        ==============
</TABLE>


            At December 31, 2005, the Bank had two loans totaling $592 thousand
in non-accrual status as compared to three loans totaling $1.1 million at
December 31, 2004. The reduction in the amount of non-accrual loans from
December 31, 2004 is attributable to the receipt of $433 thousand on August 1,
2005 in partial payment of two loans and an overdraft outstanding at December
31, 2004, and to the receipt of $152 thousand from the Small Business
Administration in payment of a claim (and a portion of related expenses) of $149
thousand outstanding at December 31, 2004. One loan in the amount of $9 thousand
was recognized as impaired during the year and placed in non-accrual status.
Collection proceedings have started and the Bank has established specific
reserves of $9 thousand for this loan. During 2005, there were no amounts
included in gross interest income attributable to loans in non-accruals status.

            In addition, at December 31, 2005, there were two related commercial
loans totaling $272 thousand considered to be potential problem loans. One of
these loans in the amount of $113 thousand carries a 75% Small Business
Administration guarantee. The other loan, in the amount of $159 thousand, is
secured by real estate and by assignment of all business assets. Specific
reserves of $192 thousand have been allocated for these loans. Both of these
loans are current and are in accrual status.

            Finally, at December 31, 2005, there were seven commercial loans
totaling $456 thousand which are not considered potential problem loans and are
generally well secured by collateral, but which exhibit characteristics that
warrant closer scrutiny and attention to these credits than would otherwise be
appropriate. Specific reserves of $158 thousand have been allocated to these
seven loans. Five of the seven loans totaling $312 thousand are related; one
loan in the amount of $135 thousand carries an 85% Small Business Administration
guarantee; specific reserves of $98.6 thousand have been allocated to these five
loans. For these purposes, a "potential problem loan" is defined as a loan which
is not included in the past due, non-accrual or restructured categories but for
which known information about possible credit problems causes management to have
serious doubts as to the ability of the borrower to comply with the present loan
repayment terms. One of the seven loans in the amount of $50 thousand was past
due sixty or more days at December 31, 2005.

            At December 31, 2005, there was one additional accrual loan in the
amount of $23 thousand past due thirty days or more. There was no real estate
owned. Generally, the accrual of interest is discontinued when a loan is
specifically determined to be impaired or when principal or interest is
delinquent for ninety days or more.

            At December 31, 2004, two of the three loans in non-accrual status,
totaling $908 thousand to the same borrower, were recognized as impaired on
September 1, 2004 and placed on non-accrual status at that time; in addition,
there was an overdraft of $53 thousand on this borrower's checking account
occasioned by a draw against a Letter of Credit issued on behalf of the
borrower. Both loans were secured by real estate and by assignment of all
business assets, including accounts receivable. One of the loans, for $258
thousand, also carried a 75% Small Business Administration guarantee and had
priority over the other extensions of credit by the Bank in the real estate
collateral; this loan has been repaid from the proceeds of the liquidation of a
portion of the real estate collateral, without drawing upon the guarantee. In
addition, the overdraft had been repaid from the same source. After provision of
$55 thousand in an escrow account to meet certain expenses as agreed, the
balance of $67 thousand was applied to the remaining loan. This loan, now in the
amount of $583 thousand, is secured by real estate and by all remaining business
assets, but the Bank is unable at this time to place a realistic valuation on
those business assets. In September 2004, the Bank recorded a charge of $350
thousand against earnings and established a specific reserve of $369 thousand
for these loans; the specific reserve now allocated to the remaining loan is
$426 thousand.

            At December 31, 2003, the Bank had no loans delinquent beyond 30
days, and three loans totaling $391 thousand in nonaccrual status for which the
Bank had provided specific reserves of $30 thousand in the allowance for credit
losses.


                                       8
<PAGE>

            The following table shows the allocation of the allowance for credit
losses at the dates indicated. The allocation of portions of the allowance to
specific categories of loans is not intended to be indicative of future losses,
and does not restrict the use of the allowance to absorb losses in any category
of loans.

<TABLE>
<CAPTION>
                                                                 LOAN LOSS RESERVE PROPORTIONAL ALLOCATION
                                    ------------------------------------------------------------------------------------------------

(Dollars in thousands)
                                             DECEMBER 31, 2005                December 31, 2004               December 31, 2003
                                    ------------------------------------------------------------------------------------------------
                                       BALANCE        PERCENTAGE        Balance        Percentage      Balance        Percentage
                                                    OF TOTAL LOANS                   of total loans                 of total loans

<S>                                       <C>             <C>              <C>           <C>                 <C>         <C>
Commercial                                  $ 784          50.03%            $ 580        57.93%             $ 305        62.61%
Real estate - commercial mortgage               -          49.97%                -        42.07%                 -        37.39%
Unallocated                                   831               -              574             -               299             -
                                    --------------  --------------   --------------  ------------    -------------- ----------------
Balance, end of period                    $ 1,615         100.00%          $ 1,154       100.00%             $ 604       100.00%
                                    ==============  ==============   ==============  ============    ============== ================
</TABLE>

            The loan portfolio is the largest component of earning assets and
accounts for the greatest portion of total interest income. At December 31,
2005, total loans were $77.1 million, a 45.5% increase from the $53.0 million in
loans outstanding at December 31, 2004. At December 31, 2004, total loans were
$53.0 million, a 59.2% increase from the $33.3 million in loans outstanding at
December 31, 2003. In general, loans consist of internally generated loans and
participation loans purchased from other local community banks. Lending activity
is confined to the Bank's market area. The Bank does not engage in foreign
lending activities.

            The following table sets forth information on the composition of the
loan portfolio by type (including loans held for sale):

<TABLE>
<CAPTION>
                                                                          COMPOSITION OF LOAN PORTFOLIO
                                    ------------------------------------------------------------------------------------------------

(Dollars in thousands)                       DECEMBER 31, 2005                  December 31, 2004             December 31, 2003
                                    ------------------------------------------------------------------------------------------------

                                                      PERCENTAGE                         Percentage                     Percentage
                                       BALANCE        TOTAL LOANS         Balance       total loans     Balance         total loans
                                    ---------------  --------------    --------------  ------------    --------------   ------------
<S>                                       <C>              <C>              <C>            <C>              <C>             <C>
Commercial                                $ 38,555          50.03%          $ 30,704        57.93%          $ 20,867         62.61%
Real estate - commercial mortgage           38,516          49.97%            22,301        42.07%            12,462         37.39%
                                    ---------------  --------------    --------------  ------------    --------------   ------------
Gross loans                                 77,071         100.00%            53,005       100.00%            33,329        100.00%
Less allowance for credit losses            (1,615)                           (1,154)                           (604)
Less unearned fees                             (89)                              (75)                            (37)
                                    ---------------                    --------------                  --------------
Loans, net                                $ 75,367                          $ 51,776                        $ 32,688
                                    ===============                    ==============                  ==============
</TABLE>

The following table shows the interest rate sensitivity of the
loan portfolio at December 31, 2005. Demand loans, loans without a stated
maturity and overdrafts are reported as due in one year or less. Floating rate
loans are reported to reflect the period until repricing. At December 31, 2005,
the total amount of loans due after one year with fixed rates of interest was
approximately $32.7 million.


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                INTEREST RATE SENSITIVITY OF LOAN PORTFOLIO
                                  --------------------------------------------------------------------------------------------------
(Dollars in thousands)
                                        One Year                    After One Year            After Five
                                        or Less                   through Five Years             Years                   Total
                                  --------------------       ------------------------      -------------------      ----------------
<S>                                          <C>                            <C>                      <C>                   <C>
Fixed (commercial)                            $ 4,493                        $ 7,494                  $ 1,132              $ 13,119
Fixed (real estate)                             3,874                         12,166                   11,858                27,898

Floating (commercial)                          25,436                              -                        -                25,436
Floating (real estate)                         10,618                              -                        -                10,618
                                  --------------------       ------------------------      -------------------      ----------------
                                             $ 44,421                       $ 19,660                 $ 12,990              $ 77,071
                                  ====================       ========================      ===================      ================
</TABLE>

INVESTMENT SECURITIES PORTFOLIO

            At December 31, 2005, the carrying value of the investment
securities portfolio was approximately $10.9 million as compared to carrying
value of $5.0 million at December 31, 2004. During the second quarter of 2005,
the Bank increased its securities portfolio, purchasing $3 million in U.S.
Treasury Bills due in August 2005 and $3 million in U.S. Treasury Notes due in
March 2007. In August 2005, the maturing Treasury Bills were reinvested into a
like amount of Treasury Bills due in December 2005; in December 2005, the
maturing Treasury Bills were reinvested into a like amount of Treasury Bills due
in April 2006.

            At December 31, 2004, the carrying value of our investment
securities portfolio was approximately $5.0 million as compared to carrying
value of $7.1 million at December 31, 2003. The approximately $2.1 million
decline in the size of the portfolio during 2004 is attributable to allowing $2
million to mature with the proceeds used to fund loan growth.

            The Company currently classifies its entire securities portfolio as
available for sale. Increases in the portfolio will occur whenever deposit
growth outpaces loan demand and the forecast for growth is such that the
investment of excess liquidity in investment securities (as opposed to short
term investments such as Federal Funds) is warranted. In general, the Company's
investment policy is to acquire direct U.S. Treasury securities and fully
guaranteed U.S. government agency issues with a remaining maturity of four years
or less. As the Company develops its loan portfolio, it anticipates that it will
maintain the average maturity of the securities portfolio at two years or less.
In addition, the Bank will purchase Federal Reserve stock in accordance with
regulation and expects to maintain small equity positions in stock in two
banker's banks to facilitate loan participations.

            The following table provides information regarding the composition
of CommerceFirst Bancorp's investment securities portfolio at the dates
indicated. See Note 2 to the Consolidated Financial Statements for additional
information regarding the investment securities portfolio.

<TABLE>
<CAPTION>
                                                                     COMPOSITION OF THE INVESTMENT PORTFOLIO
                                       --------------------------------------------------------------------------------------------
(Dollars in thousands)
                                                DECEMBER 31, 2005               December 31, 2004              December 31, 2003
                                       --------------------------------------------------------------------------------------------

Available for Sale                                        PERCENT                        Percent                        Percent
  (at Estimated Market Value)             BALANCE        OF TOTAL         Balance       of Total         Balance       of Total
                                       --------------  --------------   ------------  --------------   ------------- --------------
<S>                                         <C>              <C>            <C>             <C>             <C>            <C>
U.S. Treasuries                             $ 10,874          95.91%        $ 4,978          95.07%         $ 7,087         97.33%
Federal Reserve Stock                            402           3.55%            196           3.74%             132          1.82%
Corporate equities                                62           0.55%             62           1.18%              62          0.85%
                                       --------------  --------------   ------------  --------------   ------------- --------------
Total                                       $ 11,338         100.00%        $ 5,236         100.00%         $ 7,282        100.00%
                                       ==============  ==============   ============  ==============   ============= ==============
</TABLE>


                                       10
<PAGE>

            The following table sets forth the projected maturities of the U.S.
Treasury securities component of the investment securities portfolio as of
December 31, 2005 and the average yields:

<TABLE>
<CAPTION>
                                            PROJECTED MATURITIES OF THE INVESTMENT SECURITIES PORTFOLIO
                     --------------------------------------------------------------------------------------------------
(Dollars in thousands)
                               One Year                          After One Year
                               or Less                          Through Five Years             Total
                     ----------------------------       ---------------------------------------------------------------

                       Carrying         Average           Carrying         Average           Carrying         Average
                         Value           Yield              Value           Yield              Value           Yield
                     --------------    ----------       --------------   -----------       --------------    ----------
<S>                        <C>             <C>                <C>             <C>               <C>              <C>
U.S. Treasuries            $ 5,936         3.09%              $ 4,938         3.40%             $ 10,874         3.23%
                     ==============    ==========       ==============   ===========       ==============    ==========
</TABLE>

            At December 31, 2005, there were no issuers, other than the U.S.
Government, whose securities owned by the Company or the Bank had a book or
market value exceeding ten percent of the Company's stockholders' equity.

NON-INTEREST INCOME

            Non-interest income principally consists of gains from the sale of
the guaranteed portion of Small Business Administration loans and from deposit
account services charges.

            For the year ended December 31, 2005, the gains from the sales of
SBA loans amounted to $330 thousand. For the year ended December 31, 2004, the
gains from the sales of SBA loans amounted to $273 thousand. Prior to 2004,
there was no revenue from this source during any period. The Bank currently
intends to sell the guaranteed portion of most additional SBA loans, resulting
in a continuing stream of income that will vary from quarter to quarter,
depending in part upon the amounts actually sold.

            For the year ended December 31, 2005, deposit account services
charges amounted to $295 thousand as compared to $311 thousand and $327 thousand
for the years ended December 31, 2004 and 2003, respectively.

            As the Bank continues to develop these and additional sources of
income, it is expected that non-interest income will continue to be a
significant contributor to the overall profitability of the Company, although
there can be no assurance of this.

NON-INTEREST EXPENSE

            Non-interest expenses of $2.8 million were incurred in 2005 as
compared to $2.2 million in 2004 and $1.9 million in 2003. The most significant
non-interest expense item was salaries and benefits at $1.7 million in 2005; the
comparable amounts in 2004 and 2003 were $1.3 million and $1.1 million,
respectively. The increases in non-interest expenses are principally
attributable to additional staffing and to salary increases. These amounts are
in line with projections and are deemed necessary to attract and retain
qualified personnel essential to the growth and continued profitability of the
Bank and the Company. A breakdown of other non-interest expenses is in the
income statement and Note 8 to the Consolidated Financial Statements.

INCOME TAXES

            The Company uses the liability method of accounting for income taxes
as required by SFAS No.109, Accounting for Income Taxes. Under the liability
method, deferred tax assets and liabilities are determined based on differences
between the financial statement carrying amounts and the enacted rates that will
be in effect when these differences reverse. During 2005, the Company recorded
an income tax expense of $658 thousand as compared to an income tax benefit of
$862 thousand recorded in 2004. At September 30, 2004, in compliance with SFAS
No. 109, Accounting for Income Taxes, the Bank eliminated the valuation
allowance for the deferred tax asset, thereby recognizing $944 thousand in
income tax benefits in income during that quarter. Since that date, the Company
has recognized income tax expense based upon earnings in each period.

DEPOSITS AND LIQUIDITY MANAGEMENT

            Liquidity is a measure of the Bank's ability to meet the demands
required for the funding of loans and to meet depositors' requirements for use
of their funds. The Bank's principal sources of liquidity are cash balances, due
from banks, Federal funds sold and available-for-sale securities.


                                       11
<PAGE>

            At December 31, 2005, management considers the liquidity position of
the Company and Bank to be satisfactory. At December 31, 2005, under the
Company's liquidity formula, it had $24.3 million of liquidity representing
21.6% of total Company assets. Continued strong growth in deposits will be
required to fund loan growth. Accordingly, the Bank intends to maintain a
competitive posture in its deposit interest rate offerings. While adequate
liquidity is imperative, excess liquidity has the effect of a lower interest
margin, as funds not invested in loans are placed in short-term investments that
generally carry a lower yield.

            The Bank's principal sources of funds are core deposits, consisting
of demand deposits, NOW accounts, money market accounts, savings accounts and
certificates of deposit from the local market area. These accounts provide the
Bank with a relatively stable source of funds and a source of fee income.
Consistent with our focus on business banking, we do not seek significant
numbers of smaller retail consumer deposit relationships, choosing instead to
target larger deposit relationships by offering interest rates on certificates
of deposit of $100,000 or more which are near the top of the local market, and
by providing significant cash management capabilities to our commercial
customers. As a result, a substantial portion of our deposits, 80.6% as of
December 31, 2005, relate to account relationships aggregating over $100,000.

            The Bank has a concentration exposure to one entity. At December 31,
2005, that entity owned or controlled approximately $19.8 million in deposits,
or 22.4% of the deposit base. The entity is principally engaged in
transportation management, specializing in provision of emergency or other high
priority services to government agencies. The banking relationship with the
President of the Bank is longstanding, has grown significantly over the past
year and is believed to be good. The entity has advised the Bank that
approximately $8 million will be withdrawn in early 2006 to retire payables. The
Company does not believe that the withdrawal of deposits represents a negative
indication with respect to the relationship, and it believes that it has
adequate sources of liquidity to replace such deposits without significant
additional expense, although there can be no assurance of this.

            At December 31, 2005, deposits totaled $88.2 million, principally
certificates of deposit ($46.2 million), demand deposits ($17.9 million) and
money market deposit accounts ($17.2 million). By comparison, at December 31,
2004, deposits totaled $65.7 million, principally certificates of deposit ($28.8
million), demand deposits ($20.7 million), and money market deposit accounts
($13.6 million). Deposits at December 31, 2003 totaled $40.6 million, primarily
money market deposit accounts ($16.2 million), certificates of deposits ($13.2
million) and demand deposits ($9.4 million). The Bank has accepted approximately
$6.4 million in brokered Certificates of Deposit in anticipation of significant
loan funding requirements. Roughly half of these certificates mature in 2006,
with approximately equal amounts maturing in 2007 and 2008. The interest rates
paid to attract these deposits were equal to or below the rates paid to attract
local deposits. The Bank anticipates acceptance of additional brokered
Certificates of Deposit in anticipation of significant loan funding
requirements; current policy limits acceptance of brokered deposits to an amount
not to exceed 15% of deposits.

The following table reflects average deposits and average rates paid, by
category, for the periods indicated:

<TABLE>
<CAPTION>
                                                                      AVERAGE DEPOSITS AND AVERAGE RATES PAID
                                            ---------------------------------------------------------------------------------------

(Dollars in thousands)                                                        Year Ended December 31,
                                            ---------------------------------------------------------------------------------------
                                                         2005                          2004                         2003
                                            ----------------------------  ----------------------------  ---------------------------
<S>                                              <C>              <C>          <C>              <C>         <C>              <C>
Noninterest bearing demand                       $ 19,563         0.00%        $ 10,889         0.00%        $ 6,770         0.00%
Interest bearing demand                             2,422         0.67%           1,824         0.24%          1,119         0.34%
Money market                                       16,129         1.68%          14,084         0.71%         14,114         0.96%
Savings                                               448         0.50%             223         0.25%            307         0.52%
Certificates of deposit of $100,000 or more        29,426         3.10%          15,534         2.58%         11,918         2.95%
Other time deposits                                 5,936         3.39%           2,059         3.07%            253         1.64%
                                            --------------  ------------  -------------- -------------  -------------  ------------
Balance, end of period                           $ 73,924         1.90%        $ 44,613         1.04%       $ 34,481         1.44%
                                            ==============  ============  ============== =============  =============  ============
</TABLE>


                                       12
<PAGE>

The following table indicates the amount of the Bank's certificates of deposit
of $100,000 or more by time remaining to maturity as of December 31, 2005.

CERTIFICATE OF DEPOSIT ($100,000 OR >) MATURITY SCHEDULE AT DECEMBER 31, 2005
--------------------------------------------------------------------------------
(Dollars in thousands)
        Due in:   3 MONTHS OR LESS                                     $ 20,627
                  OVER 3 MONTHS THROUGH 6 MONTHS                          5,702
                  OVER 6 MONTHS THROUGH 12 MONTHS                         6,550
                  OVER 12 MONTHS                                          7,818
                                                                      ---------
                                                                       $ 40,697
                                                                      =========

            In addition, the Bank offers Securities Sold under Repurchase
Agreement/Sweep accounts to its commercial clientele. Although these funds are
technically not deposit liabilities, they are nonetheless an ongoing source of
core funding and contribute significantly to the Bank's liquidity management. At
December 31, 2005, the Bank had $6.0 million in such funding; by comparison, the
December 31, 2004 and 2003 totals were $3.1 million and $4.7 million
respectively.

            The following table provides information regarding the Company's
short-term borrowings for the periods indicated. See Note 7 to the Consolidated
Financial Statements for additional information regarding the Company's
borrowings.

<TABLE>
<CAPTION>
                                                                         SHORT-TERM BORROWINGS1/
                                      ---------------------------------------------------------------------------------------------

(Dollars in thousands)                       Maximum
                                              Amount                                                                     Ending
                                          Outstanding at         Average          Average             Ending            Average
                                          Any Month End          Balance           Rate              Balance              Rate
                                         ---------------       -----------      -----------       -------------        ----------
<S>                                          <C>                <C>                <C>               <C>                  <C>
Year ended December 31, 2005                 $ 6,010            $ 3,003            1.20%             $ 6,010              2.09%
Year Ended December 31, 2004                   7,284              4,198            0.60%               3,086              0.41%
Year Ended December 31, 2003                   9,763              4,734            0.69%               4,694              0.37%
</TABLE>

1/ Short-term borrowings consist of customer repurchase agreements, federal
funds purchased and Treasury Tax and Loan balances.

         The Bank may draw upon $3.7 million Federal funds borrowing facilities
from other financial institutions. At December 31, 2005, no amounts were
outstanding under these facilities. The Company believes its levels of liquidity
and capital are adequate to conduct the business of the Company and Bank.

OFF-BALANCE SHEET ARRANGEMENTS

            With the exception of the Bank's obligations in connection with its
irrevocable letters of credit, and loan commitments, the Bank has no off-balance
sheet arrangements that have or are reasonably likely to have a current or
future effect on the Bank's financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures, or
capital resources, that is material to investors. For additional information on
off-balance sheet arrangements, please see "Note 10 - Commitment and
Contingencies" of the Notes to the Consolidated Financial Statements.

                          INTEREST RATE RISK MANAGEMENT

            Banks and other financial institutions are dependent upon net
interest income, the difference between interest earned on interest earning
assets and interest paid on interest bearing liabilities. Changes in interest
rates inevitably have an impact on interest income. GAP, a measure of the
difference in volume between interest bearing assets and interest bearing
liabilities, is a means of monitoring the sensitivity of a financial institution
to changes in interest rates. The chart below provides an indicator of the rate
sensitivity of the Company. A positive GAP indicates the degree to which the
volume of repriceable assets exceeds repriceable liabilities in particular time
periods. The Company has a positive GAP of 16.6% out to three months and a
cumulative positive GAP of 6.1% out to 12 months, an asset sensitive position,
which would generally indicate increased net interest income in a rising rate
environment. However, this measurement of interest rate risk sensitivity
represents a static position as of a single day and is not necessarily
indicative of the interest rate risk position at any other point in time, does
not take into account the sensitivity of yields and costs of specific assets and
liabilities to changes in market rates, and does not take into account the
specific timing of when changes to a specific asset or liability will occur.


                                       13
<PAGE>

            Management has carefully considered its strategy to maximize
interest income by reviewing interest rate levels and economic indicators. The
positive GAP position out three months noted above exceeds the policy limits
established as part of the Asset/Liability Policy; however, the relevant factors
justifying the exception have been thoroughly discussed with the Board of
Directors and management believes that existing strategies are appropriate to
current economic and interest rate trends.

<TABLE>
<CAPTION>
                                                                              GAP ANALYSIS
                                          -----------------------------------------------------------------------------------------
(Dollars in thousands)
                                             0-3           4-12            1-3             3-5           Over
                                           Months         Months          Years           Years         5 Years         Total
                                          ------------   ------------   -------------   ------------   ------------   -------------
<S>                                          <C>             <C>             <C>           <C>            <C>             <C>
Interest-earning assets:
      Federal funds sold                     $ 20,671            $ -             $ -            $ -            $ -        $ 20,671
      Investment securities                       996          4,940           4,937              -              -          10,873
      Loans                                    39,345          4,492           6,992         12,636         12,989          76,454
                                          ------------   ------------   -------------   ------------   ------------   -------------
   Total interest-earning assets               61,012          9,432          11,929         12,636         12,989         107,998
                                          ------------   ------------   -------------   ------------   ------------   =============

Interest-bearing liabilities:
      Money market deposit accounts            17,248              -               -              -              -          17,248
      NOW accounts                              6,331              -               -              -              -           6,331
      Savings                                     402              -               -              -              -             402
      Certificates of deposit                  20,627         12,252           7,818              -              -          40,697
      Other time deposits                         272          3,036           2,252              -              -           5,560
      Repurchase agreements                     6,010              -               -              -              -           6,010
                                          ------------   ------------   -------------   ------------   ------------   -------------
    Total interest-bearing liabilities         50,890         15,288          10,070              -              -        $ 76,248
                                          ------------   ------------   -------------   ------------   ------------   =============

GAP                                            10,122         (5,856)          1,859         12,636         12,989

CUMULATIVE GAP                               $ 10,122        $ 4,266         $ 6,125       $ 18,761       $ 31,750
                                          ============   ============   =============   ============   ============

CUMULATIVE GAP TO CUMULATIVE
      INTEREST-EARNING ASSETS                  16.59%          6.06%           7.44%         19.75%         29.40%
</TABLE>

                         CAPITAL RESOURCES AND ADEQUACY

            The assessment of capital adequacy depends on a number of factors
such as asset quality, liquidity, earnings performance, and changing competitive
conditions and economic forces. The adequacy of the Company's capital is
reviewed by management on an ongoing basis. Management seeks to maintain a
capital structure that will assure an adequate level of capital to support
anticipated asset growth and to absorb potential losses.

            The capital positions of the Company and the Bank continue to meet
regulatory requirements. The primary indicators relied on by bank regulators in
measuring the capital position are the Tier I risk-based capital, total
risk-based capital, and leverage ratios. For the Company and the Bank, Tier I
capital consists of common stockholders' equity; total risk-based capital
consists of Tier I capital and a portion of the allowance for loan losses.
Risk-based capital ratios are calculated with reference to risk-weighted assets.
The leverage ratio compares Tier I capital to total average assets. All of these
ratios are well in excess of the mandated minimum requirement of 4.00%, 8.00%,
and 3-5%, respectively. Detail of these ratios is shown in Note 11 to the
Consolidated Financial Statements.

            During the first quarter of 2005 the Company sold an aggregate of
981,333 additional shares of common stock. Of the shares sold, 175,000 were sold
on a rights offering basis to shareholders of record as of December 9, 2004 at a
price of $10.50 per share, and 806,333 shares were sold in a public offering
also at a price of $10.50 per share. The offerings raised an aggregate of
approximately $9.6 million, net of expenses of the offering, financial advisory
fees and underwriter's commission. The proceeds of the offerings will be
available for contribution to the Bank for use in its lending and investment
activities and other operations, and for general corporate purposes.

                      MARKET FOR COMMON STOCK AND DIVIDENDS

            Since March 1, 2005, the Company's Common Stock has been listed for
trading on the Nasdaq Capital Market (formerly known as the Nasdaq Small Cap
Market) under the symbol "CFMB." Prior to that date, the Company's Common Stock
was not traded on any organized exchange or on the Nasdaq National Market or the
Nasdaq Capital Market. The following table sets forth the high and low bid
prices for the Common Stock during each calendar quarter since the first quarter
of 2003. These quotations reflect inter-dealer prices, without retail markup,
markdown or commission, and may not represent actual transactions. These
quotations do not necessarily reflect the intrinsic or market values of the
Common Stock. As of December 31, 2005, there were 1,803,583 shares of Common
Stock outstanding, held by approximately 307 shareholders of record.


                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                             STOCK PRICE TABLE
                         -------------------------------------------------------------------------------------------------------

                                           2005                                 2004                                2003
                                     ------------------                   -----------------                   ------------------
                             High                Low              High             Low                High              Low
                         ------------     -------------      -------------     ------------       ------------     -------------
<S>                        <C>                 <C>               <C>              <C>                <C>               <C>
First Quarter              $ 13.50             $ 11.50           $ 9.25           $ 9.00             $ 8.50            $ 8.25
Second Quarter             $ 11.80             $ 11.00           $ 9.50           $ 9.25             $ 8.75            $ 8.25
Third Quarter              $ 12.60             $ 11.40           $ 9.50           $ 9.13             $ 8.75            $ 8.25
Fourth Quarter             $ 13.70             $ 12.25          $ 13.00           $ 9.65             $ 9.25            $ 8.75
</TABLE>

            The Company has not paid any dividends to date. The payment of
dividends by the Company will depend largely upon the ability of the Bank, its
sole operating business, to declare and pay dividends to the Company.
Regulations of the Federal Reserve Board and Maryland law place limits on the
amount of dividends the Bank may pay to the Company without prior approval.
Prior regulatory approval is required to pay dividends which exceed the Bank's
net profits for the current year plus its retained net profits for the preceding
two calendar years, less required transfers to surplus. Additionally, without
prior approval, the Bank may pay dividends only out of its undivided profits.
Even if the Bank and the Company have earnings in an amount sufficient to pay
dividends, the Board of Directors may determine to retain earnings for the
purpose of funding the growth of the Company and the Bank.

                              FINANCIAL STATEMENTS

            The audited financial statements for the Company as of December 31,
2005 and 2004 and for each of the years in the three-year period ended December
31, 2005 are included herewith.


                                       15

<PAGE>

                    [Letterhead of Trice Geary & Myers, LLC]

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors
CommerceFirst Bancorp, Inc. and Subsidiary
Annapolis, Maryland

We have audited the accompanying consolidated balance sheets of CommerceFirst
Bancorp, Inc. and subsidiary as of December 31, 2005 and 2004, and the related
consolidated statements of income, changes in stockholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 2005. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
CommerceFirst Bancorp, Inc. and subsidiary as of December 31, 2005 and 2004, and
the consolidated results of their operations and their consolidated cash flows
for each of the years in the three-year period ended December 31, 2005 in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Trice Geary & Myers, LLC

Salisbury, Maryland
January 20, 2006



                                       16
<PAGE>

                   COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
December 31,                                                                          2005              2004
-----------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                <C>
                                                            ASSETS

 Cash and due from banks                                                          $ 3,625,647        $ 3,196,520
 Federal funds sold                                                                20,671,899         14,202,382
                                                                               ---------------     --------------
       Cash and cash equivalents                                                   24,297,546         17,398,902
 Investment securities available for sale, at fair value                           10,873,547          4,978,100
 Federal Reserve Bank stock, at cost                                                  402,450            195,900
 Atlantic Central Bankers Bank stock, at cost                                          37,000             37,000
 Maryland Financial Bank stock, at cost                                                25,000             25,000
 Loans, less allowance for credit losses
      2005 $1,615,108;  2004 $1,153,874                                            75,043,570         51,017,418
 SBA loans held for sale, at fair value                                               323,066            759,056
 Premises and equipment, at cost, less
       accumulated depreciation                                                       164,385            184,832
 Accrued interest receivable on loans and investment securities                       406,854            233,946
 Deferred tax asset                                                                   651,837            876,084
 Other assets                                                                         319,694            246,292
                                                                               ---------------     --------------

                 TOTAL ASSETS                                                   $ 112,544,949       $ 75,952,530
                                                                               ===============     ==============

                                                LIABILITIES AND STOCKHOLDERS' EQUITY

 Liabilities:
 Deposits:
       Noninterest-bearing demand                                                $ 17,930,847       $ 20,691,315
       Interest-bearing                                                            70,236,500         45,037,635
                                                                               ---------------     --------------
                 Total deposits                                                    88,167,347         65,728,950
 Securities sold under agreements to repurchase                                     6,010,222          3,086,450
 Accrued interest payable on deposits                                                  58,912             36,412
 Other liabilities                                                                    945,394            326,617
                                                                               ---------------     --------------
                 TOTAL LIABILITIES                                                 95,181,875         69,178,429
                                                                               ---------------     --------------

 COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENT

 Stockholders' equity:
 Common stock, par value $.01, authorized 4,000,000 shares;
       issued and outstanding 2005 1,803,583 shares;
       2004 822,250 shares                                                             18,036              8,223
 Surplus                                                                           17,683,450          8,099,012
 Accumulated deficit                                                                 (272,375)        (1,305,795)
 Accumulated other comprehensive loss                                                 (66,037)           (27,339)
                                                                               ---------------     --------------
                 TOTAL STOCKHOLDERS' EQUITY                                        17,363,074          6,774,101
                                                                               ---------------     --------------

                TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $ 112,544,949       $ 75,952,530
                                                                               ===============     ==============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
consolidated financial statements.

                                       17
<PAGE>

                       COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
                           Consolidated Statements of Income

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,                                                            2005             2004           2003
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>              <C>

Interest income on:
      Loans, including fees                                                      $4,949,541      $ 2,754,729      2,252,608
      U.S. Treasury securities                                                      275,168          169,304        192,070
      Other investments                                                              20,923           10,242          8,700
      Federal funds sold                                                            393,253           66,103         35,177
                                                                                ------------    -------------    -----------
               Total interest income                                              5,638,885        3,000,378      2,488,555
                                                                                ------------    -------------    -----------

INTEREST EXPENSE ON:
      Deposits                                                                    1,402,736          568,954        497,640
      Securities sold under agreements to repurchase                                 35,993           18,141         31,044
      Short-term borrowings                                                               -              790          1,689
                                                                                ------------    -------------    -----------
               Total interest expense                                             1,438,729          587,885        530,373
                                                                                ------------    -------------    -----------

               NET INTEREST INCOME                                                4,200,156        2,412,493      1,958,182

PROVISION FOR CREDIT LOSSES                                                         360,000          590,000        270,000
                                                                                -----------    -------------    -----------

               NET INTEREST INCOME AFTER
                  PROVISION FOR CREDIT LOSSES                                     3,840,156        1,822,493      1,688,182
                                                                                ------------    -------------    -----------

OTHER INCOME:
      Service charges on deposit accounts                                           294,634          310,896        327,079
      Gains on sale of SBA loans                                                    329,887          273,497              -
                                                                                ------------    -------------    -----------
               Total other income                                                   624,521          584,393        327,079
                                                                                ------------    -------------    -----------

OTHER EXPENSES:
      Salaries and employee benefits                                              1,732,805        1,321,179      1,123,714
      Legal and professional                                                        111,576           64,754         78,760
      Loan collection expenses                                                       27,974           28,713         23,160
      Rent and occupancy                                                            254,199          223,892        197,488
      Marketing and business development                                             53,196           44,112         28,064
      Insurance                                                                      33,953           33,820         29,218
      Data processing                                                                72,161           56,468         50,815
      Support services                                                              164,403          131,906         96,896
      Correspondent service charges                                                  36,019           28,414         21,433
      Office supplies                                                                42,810           38,286         24,593
      Depreciation and amortization                                                  83,331           79,793        100,983
      Other expenses                                                                160,675          127,754         97,553
                                                                                ------------    -------------    -----------
               Total other expenses                                               2,773,102        2,179,091      1,872,677
                                                                                ------------    -------------    -----------

INCOME BEFORE INCOME TAXES                                                        1,691,575          227,795        142,584

FEDERAL AND STATE INCOME TAX (EXPENSE) BENEFIT                                     (658,155)         862,000              -
                                                                                ------------    -------------    -----------

NET INCOME                                                                       $1,033,420      $ 1,089,795      $ 142,584
                                                                                ============    =============    ===========

BASIC EARNINGS PER SHARE OF COMMON STOCK                                             $ 0.63           $ 1.33         $ 0.17
                                                                                ============    =============    ===========

DILUTED EARNINGS PER SHARE OF COMMON STOCK                                           $ 0.62           $ 1.33         $ 0.17
                                                                                ============    =============    ===========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
consolidated financial statements.

                                       18
<PAGE>

                       COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
         Consolidated Statements of Changes in Stockholders' Equity and
                          Comprehensive Income (Loss)
                      Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                                          Common                                        Other             Total
                                                          Stock                        Accumulated   Comprehensive    Stockholders'
                                                       (Par Value)        Surplus        Deficit     Income (Loss)       Equity
                                                       -----------    -------------   ------------   ------------------------------
<S>                                                    <C>            <C>             <C>            <C>              <C>

Balances, December 31, 2002                               $ 8,223      $ 8,099,012    $(2,538,174)        $ 56,815     $ 5,625,876

Comprehensive loss:
      Net loss                                                  -                -        142,584                -         142,584
      Other comprehensive loss, net of tax:
        Unrealized holding losses on securities
        available for sale arising during the period            -                -              -          (17,390)        (17,390)
                                                                                                                      -------------
Total comprehensive income                                                                                                 125,194
                                                       -----------    -------------   ------------   --------------   -------------

Balances, December 31, 2003                                 8,223        8,099,012     (2,395,590)          39,425       5,751,070
                                                       -----------    -------------   ------------   --------------   -------------

Comprehensive income:
      Net income                                                -                -      1,089,795                -       1,089,795
      Other comprehensive loss, net of tax:
        Unrealized holding losses on securities
        available for sale arising during the period            -                -              -          (66,764)        (17,390)
                                                                                                                      -------------
Total comprehensive income                                                                                               1,072,405
                                                       -----------    -------------   ------------   --------------   -------------

BALANCES, DECEMBER 31, 2004                                 8,223        8,099,012     (1,305,795)         (27,339)      6,774,101
                                                       -----------    -------------   ------------   --------------   -------------

COMPREHENSIVE INCOME:
      NET INCOME                                                -                -      1,033,420                -       1,033,420
      OTHER COMPREHENSIVE LOSS, NET OF TAX:
        UNREALIZED HOLDING LOSSES ON SECURITIES
        AVAILABLE FOR SALE ARISING DURING THE PERIOD            -                -              -          (38,698)        (38,698)
                                                                                                                      -------------
Total comprehensive income                                                                                                 994,722
                                                                                                                      -------------
      Issuance of common stock                              9,813       10,294,184              -                -      10,303,997
      Costs of raising capital                                  -         (709,746)             -                -        (709,746)
                                                       -----------    -------------   ------------   --------------   -------------

Balances, December 31, 2005                              $ 18,036      $17,683,450     $ (272,375)       $ (66,037)   $ 17,363,074
                                                       ===========    =============   ============   ==============   =============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
consolidated financial statements.

                                       19
<PAGE>

                        COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
                          Consolidated Statements of Cash Flows
                       Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                     2005             2004             2003
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                                                 $ 1,033,420      $ 1,089,795        $ 142,584
      Adjustments to reconcile net income to net cash
         provided by operating activities:
           Depreciation, amortization and accretion                                   20,411           88,976          112,444
           Deferred income tax expense (benefit)                                     244,182         (862,000)               -
           Provision for credit losses                                               360,000          590,000          270,000
           Provision for losses on unfunded commitments                                6,000            6,000            6,000
           Change in assets and liabilities:
                Increase in accrued interest receivable                             (172,908)         (61,135)         (37,030)
                Decrease (increase) in SBA loans held for sale, net                  435,990         (759,056)               -
                (Decrease) increase in other assets                                  (73,402)        (121,276)          89,584
                Increase (decrease) in accrued interest payable                       22,500           18,703           (4,536)
                Increase in other liabilities                                        612,777          101,541           53,845
                                                                                -------------   --------------   --------------

                      Net cash provided by operating activities                    2,488,970           91,548          632,891
                                                                                -------------   --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of available for sale securities                                 (11,891,160)      (3,001,250)      (2,032,500)
      Maturities of available for sale securities                                  6,000,000        5,000,000                -
      Purchases of MFB stock                                                               -                -          (25,000)
      Purchases of FRB stock                                                        (206,550)         (63,450)               -
      Proceeds from sale of FRB stock                                                      -                -            7,000
      Increase in loans, net                                                     (24,386,152)     (18,919,524)      (3,127,280)
      Purchases of premises and equipment                                            (62,884)        (174,001)         (15,476)
                                                                                -------------   --------------   --------------

                     Net cash used by investing activities                       (30,546,746)     (17,158,225)      (5,193,256)
                                                                                -------------   --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      (Decrease) increase in noninterest-bearing deposits, net                    (2,760,468)      11,304,085        3,811,430
      Increase in time deposits, net                                              25,198,865       13,811,525        1,875,856
      Increase (decrease) in securities sold under agreements
            to repurchase, net                                                     2,923,772       (1,607,429)        (632,067)
      Issuance of common stock                                                    10,303,997                -                -
      Costs of raising capital                                                      (709,746)               -                -
                                                                                -------------   --------------   --------------

                     Net cash provided by financing activities                    34,956,420       23,508,181        5,055,219
                                                                                -------------   --------------   --------------

INCREASE IN CASH AND CASH EQUIVALENTS                                              6,898,644        6,441,504          494,854

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                      17,398,902       10,957,398       10,462,544
                                                                                -------------   --------------   --------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                           $24,297,546     $ 17,398,902     $ 10,957,398
                                                                                =============   ==============   ==============

SUPPLEMENTAL CASH FLOWS INFORMATION:
      Interest paid                                                              $ 1,416,229        $ 569,182        $ 534,909
      Total decrease in unrealized appreciation
          on available for sale securities                                           (58,633)        (101,158)         (26,349)

</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
consolidated financial statements.

                                       20


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            CommerceFirst Bank (the "Bank") provides financial services to
            individuals and corporate customers located in Anne Arundel County
            and surrounding areas of Central Maryland, and is subject to
            competition from other financial institutions. The Bank is also
            subject to the regulations of certain Federal and State of Maryland
            (the "State") agencies and undergoes periodic examinations by those
            regulatory authorities. The accounting policies of the Bank conform
            to accounting principles generally accepted in the United States of
            America and to general practices within the banking industry.

            Significant accounting policies not disclosed elsewhere in the
            consolidated financial statements are as follows:

            Principles of Consolidation:

            The consolidated financial statements include the accounts of
            CommerceFirst Bancorp, Inc. (the "Company") and its subsidiary,
            CommerceFirst Bank. Intercompany balances and transactions have been
            eliminated. The Parent Only financial statements (see Note 18) of
            the Company account for the subsidiary using the equity method of
            accounting.

            Use of Estimates:

            The preparation of consolidated financial statements in conformity
            with accounting principles generally accepted in the United States
            of America requires management to make estimates and assumptions
            that affect the reported amounts of assets and liabilities and
            disclosure of contingent assets and liabilities at the dates of the
            consolidated financial statements and the reported amounts of
            revenues and expenses during the reporting periods. Actual results
            could differ from those estimates.

            Securities Held to Maturity:

            Bonds, notes and debentures for which the Bank has the positive
            intent and ability to hold to maturity are reported at cost,
            adjusted for premiums and discounts that are recognized in interest
            income using the effective interest rate method over the period to
            maturity. Securities transferred into held to maturity from the
            available for sale portfolio are recorded at fair value at time of
            transfer with unrealized gains or losses reflected in equity and
            amortized over the remaining life of the security. The Bank has no
            investment securities classified as held to maturity as of December
            31, 2005 and 2004.

            Securities Available for Sale:

            Marketable debt securities not classified as held to maturity are
            classified as available for sale. Securities available for sale may
            be sold in response to changes in interest rates, loan demand,
            changes in prepayment risk, and other factors. Changes in unrealized
            appreciation (depreciation) on securities available for sale are
            reported in other comprehensive income (loss). Realized gains
            (losses) on securities available for sale are included in other
            income (expense) and, when applicable, are reported as a
            reclassification adjustment, net of tax, in other comprehensive
            income (loss). The gains and losses on securities sold are
            determined by the specific identification method. Premiums and
            discounts are recognized in interest income using the effective
            interest rate method over the period to maturity.

            Other Securities:

            Federal Reserve Bank ("FRB"), Atlantic Central Bankers Bank ("ACBB")
            and Maryland Financial Bank ("MFB") stocks are equity interests that
            do not necessarily have readily determinable fair values for
            purposes of Statement of Financial Accounting Standard ("SFAS") No.
            115, Accounting for Certain Investments in Debt and Equity
            Securities, because their ownership is restricted and they lack a
            market.

                                       21
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Loans and Allowance for Credit Losses:

            Loans are generally carried at the amount of unpaid principal,
            adjusted for deferred loan fees, which are amortized over the term
            of the loan using the effective interest rate method. Interest on
            loans is accrued based on the principal amounts outstanding. It is
            the Bank's policy to discontinue the accrual of interest when a loan
            is specifically determined to be impaired or when principal or
            interest is delinquent for ninety days or more. When a loan is
            placed on nonaccrual status, all interest previously accrued but not
            collected is reversed against current period interest income.
            Interest income generally is not recognized on specific impaired
            loans unless the likelihood of further loss is remote. Cash
            collections on such loans are applied as reductions of the loan
            principal balance and no interest income is recognized on those
            loans until the principal balance has been collected. Interest
            income on other nonaccrual loans is recognized only to the extent of
            interest payments received. The carrying value of impaired loans is
            based on the present value of the loan's expected future cash flows
            or, alternatively, the observable market price of the loan or the
            fair value of the collateral.

            The allowance for credit losses is established through a provision
            for credit losses charged to expense. Loans are charged against the
            allowance for credit losses when management believes that the
            collectibility of the principal is unlikely. The allowance, based on
            evaluations of the collectibility of loans and prior loan loss
            experience, is an amount that management believes will be adequate
            to absorb possible losses on existing loans that may become
            uncollectible. The evaluations take into consideration such factors
            as changes in the nature and volume of the loan portfolio, overall
            portfolio quality, review of specific problem loans, and current
            economic conditions and trends that may affect the borrower's
            ability to pay.

            While management believes it has established the allowance for
            credit losses in accordance with accounting principles generally
            accepted in the United States of America and has taken into account
            the views of its regulators and the current economic environment,
            there can be no assurance that in the future the Bank's regulators
            or its economic environment will not require further increases in
            the allowance.

            Loans for which the Bank has the positive intent to sell are
            reported at lower of cost or market, as determined on a specific
            identification basis.

            Unearned Discounts and Servicing Rights of SBA Loans Sold:

            The Bank generally sells the SBA-guaranteed portions of its SBA
            loans in the secondary market. In connection with such sales, the
            Bank receives a cash premium related to the guaranteed portion being
            sold. A portion of the cash premium received from the sale of the
            guaranteed portion of the SBA loan is deferred as a discount on
            retained premiums based on the relative fair value of the guaranteed
            and unguaranteed portions to the total loan and the remainder is
            recognized as a gain at the time of the sale. The resulting unearned
            discount is recognized in interest income using an adjustable
            interest method.

            SBA loan servicing rights are initially valued by allocating the
            total cost between the loan and the servicing right based on their
            relative fair values. Since sales of SBA loans tend to occur in
            private transactions and the precise terms and conditions of the
            sales are typically not readily available, there is a limited market
            to refer to in determining the fair value of these servicing rights.
            As such, the Bank relies primarily on a discounted cash flow model
            to estimate the fair value of its servicing rights. This model
            calculates estimated fair value of these servicing rights by
            utilizing certain key characteristics such as interest rates, type
            of product (fixed vs. variable), age (new, seasoned, moderate), and
            other factors. The Bank uses assumptions in the model that it
            believes are comparable to those used by brokers and other service
            providers. The Bank also compares its estimates of fair value and

                                       22
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            assumptions to recent market activity and against its own
            experience. The resulting servicing rights are recognized in other
            non-interest expense using on adjustable interest method.

            Reserve for Unfunded Commitments:

            The reserve for unfunded commitments is established through a
            provision for unfunded commitments charged to other expenses. The
            reserve is calculated by utilizing the same methodology and factors
            as the allowance for credit losses. The reserve, based on
            evaluations of the collectibility of loans and prior loan loss
            experience, is an amount that management believes will be adequate
            over time to absorb possible losses on unfunded commitments
            (off-balance sheet financial instruments) that may become
            uncollectible in the future.

            Bank Premises and Equipment:

            Bank premises and equipment are stated at cost less accumulated
            depreciation. The provision for depreciation is computed using the
            straight-line method over the estimated useful lives of the assets.
            Leasehold improvements are depreciated over the lesser of the terms
            of the leases or their estimated useful lives. Expenditures for
            improvements that extend the life of an asset are capitalized and
            depreciated over the asset's remaining useful life. Any gains or
            losses realized on the disposition of premises and equipment are
            reflected in the consolidated statements of operations. Expenditures
            for repairs and maintenance are charged to other expenses as
            incurred. Computer software is recorded at cost and amortized over
            three years.

            Long-Lived Assets:

            The carrying value of long-lived assets and certain identifiable
            intangibles is reviewed by the Bank for impairment whenever events
            or changes in circumstances indicate that the carrying amount of an
            asset may not be recoverable, as prescribed in SFAS No. 144,
            Accounting for the Impairment or Disposal of Long-Lived Assets. As
            of December 31, 2005 and 2004, certain loans existed in which
            management considered impaired (see Note 3).

            Income Taxes:

            The provision for Federal and State income taxes is based upon the
            results of operations, adjusted for tax-exempt income. Deferred
            income taxes are provided by applying enacted statutory tax rates to
            temporary differences between financial and taxable bases.

            Temporary differences, which give rise to deferred tax assets,
            relate principally to the allowance for credit losses and unrealized
            losses on securities available for sale.

            Temporary differences, which give rise to deferred tax liabilities,
            relate principally to accumulated depreciation.

            Securities Sold Under Agreements to Repurchase:

            Securities sold under agreements to repurchase are comprised of
            customer deposit agreements with daily maturities. These obligations
            are not federally insured, but are collateralized by a security
            interest in various investment securities. These pledged securities
            are segregated and maintained by a third-party institution. The
            amortized cost of these securities at December 31, 2005 and 2004 was
            $7,973,603 and $5,019,523, respectively. The fair value of these
            securities at December 31, 2005 and 2004 was $7,899,348 and
            $4,978,100, respectively. The securities sold under agreements to
            repurchase were fully collateralized as of December 31, 2005 and
            2004.

                                       23
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Credit Risk:

            The Bank has deposits in other financial institutions in excess of
            amounts insured by the Federal Deposit Insurance Corporation
            ("FDIC"). The Bank had deposits and Federal funds sold of
            approximately $23,654,000 and $17,079,000 with three financial
            institutions as of December 31, 2005 and 2004, respectively.

            Cash and Cash Equivalents:

            The Bank has included cash and due from banks and Federal funds sold
            as cash and cash equivalents for the purpose of reporting cash
            flows.

            Earnings per common share:

            Basic earnings per common share is determined by dividing net income
            by the weighted average number of shares of common stock
            outstanding. Diluted earnings per share is calculated including the
            average dilutive common stock equivalents outstanding during the
            period, using the treasury stock method, unless they are
            anti-dilutive. Potential future dilutive common equivalent shares
            consist of stock options and warrants.

            Financial Statement Presentation:

            Certain amounts in the prior years' consolidated financial
            statements have been reclassified to conform to the current year's
            presentation.


NOTE 2. INVESTMENT SECURITIES

            Investment securities are summarized as follows:

<TABLE>
<CAPTION>

                                                                                   Gross        Gross
                                                                    Amortized   Unrealized    Unrealized      Fair
                                                                      Cost         Gains        Losses        Value
                                                                -------------   -----------   -----------   ------------
            <S>                                                 <C>             <C>           <C>           <C>
            DECEMBER 31, 2005

            AVAILABLE FOR SALE:
                   U.S. TREASURY (DUE WITHIN ONE YEAR)           $ 5,961,682           $ -     $ (25,735)   $ 5,935,947
                   U.S. TREASURY (DUE OVER ONE
                      TO FOUR YEARS)                               5,011,921             -       (74,321)     4,937,600
                                                                -------------   -----------   -----------   ------------

                                                                $ 10,973,603           $ -    $ (100,056)   $10,873,547
                                                                =============   ===========   ===========   ============

            December 31, 2004

            Available for sale:

            U.S. Treasury (due over one
                to four years)                                   $ 5,019,523           $ -     $ (41,423)   $ 4,978,100
                                                                =============   ===========   ===========   ============
</TABLE>

                                       24
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2. INVESTMENT SECURITIES (CONTINUED)

            The gross unrealized losses and fair value, aggregated by investment
            category and length of time that individual securities have been in
            a continuous unrealized loss position, at December 31, 2005 are as
            follows:


<TABLE>
<CAPTION>
                       Less than 12 months           12 months or more             Total
                    ------------------------   ------------------------   --------------------------
                       Fair       Unrealized       Fair      Unrealized      Fair        Unrealized
                       Value         Loss         Value         Loss         Value          Loss
                    -----------   ----------   -----------   ----------   ------------   -----------
<S>                 <C>           <C>          <C>           <C>          <C>            <C>
U.S. Treasury       $ 5,930,247    $ 31,628    $ 4,943,300    $ 68,428    $ 10,873,547   $ 100,056
                    ===========   ==========   ===========   ==========   ============   ===========
</TABLE>

            For individual securities classified as either available for sale or
            held to maturity, the Bank must determine whether a decline in fair
            value below the amortized cost basis is other than temporary. If the
            decline in fair value is considered to be other than temporary, the
            cost basis of the individual security shall be written down to fair
            value as a new cost basis and the amount of the write-down shall be
            included in earnings (that is, accounted for as a realized loss). On
            December 31, 2005, the Bank held three investment securities having
            continuous unrealized loss positions for more than 12 months.
            Management has determined that all unrealized loss positions as of
            December 31, 2005 are temporary unrealized losses relating to
            changes in interest rates. The Bank has the ability and intent to
            hold these securities for the time necessary to recover the
            amortized costs.

            Management's evaluation of the securities portfolio indicates that
            securities in an unrealized loss position for more than twelve
            months is not related to any credit risk concerning the securities
            but relates to actual yields on these investments versus current
            market returns.


NOTE 3. LOANS

            Major categories of loans are as follows:

<TABLE>
<CAPTION>
                                                    2005             2004
                                                -------------    -------------
            <S>                                 <C>              <C>

            Commercial mortgages                $ 38,516,360     $ 22,301,254
            Commercial demand and time            38,231,773       29,945,099
                                                -------------    -------------
                                                  76,748,133       52,246,353
            Unearned income on loans                 (89,455)         (75,061)
                                                -------------    -------------
                                                  76,658,678       52,171,292
            Allowance for credit losses           (1,615,108)      (1,153,874)
                                                -------------    -------------

                                                $ 75,043,570     $ 51,017,418
                                                =============    =============
</TABLE>

            The Bank makes business loans to customers located primarily in Anne
            Arundel County and surrounding areas of Central Maryland. Although
            the loan portfolio is diversified, its performance will be
            influenced by the economy of the region.

            Executive officers, directors, and their affiliated interests enter
            into business loan transactions with the Bank in the ordinary course
            of business. These loans are made on the same terms, including
            interest rates and collateral, as those prevailing at the time for
            comparable loans with unrelated borrowers. They do not involve more
            than normal risk of collectibility or present other unfavorable
            terms. At December 31, 2005 and 2004, such loans outstanding totaled
            $5,662,565 and $6,316,028, respectively. During 2005 and 2004, loan
            additions were $855,643 and $3,737,381, respectively. During 2005
            and 2004, loan repayments were $1,509,106 and $1,614,777,
            respectively.

                                       25
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3. LOANS (CONTINUED)

            The allowance for credit losses is as follows:

<TABLE>
<CAPTION>
                                                    2005            2004           2003
                                               -------------   -------------    -----------
            <S>                                <C>             <C>              <C>
            Balance, beginning of year          $ 1,153,874       $ 604,100      $ 655,359
            Provision for credit losses             360,000         590,000        270,000
            Recoveries                              116,000          32,458         11,500
            Loans charged off                       (14,766)        (72,684)      (332,759)
                                               -------------   -------------    -----------

            Balance, end of year                $ 1,615,108     $ 1,153,874      $ 604,100
                                               =============   =============    ===========
</TABLE>

            Loans on which the accrual of interest has been discontinued
            amounted to $591,885 and $1,057,150 at December 31, 2005 and 2004,
            respectively. Interest that would have been accrued under the terms
            of these loans totaled $68,593 and $48,543 for the years ended
            December 31, 2005 and 2004, respectively. The Bank has no
            commitments to loan additional funds to the borrowers of impaired or
            non-accrual loans.

            Information regarding loans classified by the Bank as impaired is
            summarized as follows:

<TABLE>
<CAPTION>
                                                                                      2005        2004
                                                                                   ---------  -----------
            <S>                                                                    <C>        <C>
            Loans classified as impaired, with a valuation allowance               $ 591,885  $ 1,057,150
            Allowance for credit losses on impaired loans                            434,385      369,451
            Average balance of impaired loans during year                            620,942      724,290

            According to management, the Bank has no investments in troubled
            debt restructurings as of December 31, 2005 and 2004.
</TABLE>

NOTE 4. PREMISES AND EQUIPMENT

            A summary of premises and equipment is as follows:

<TABLE>
<CAPTION>
                                                           Useful lives       2005           2004
                                                          -------------   -----------    -----------
            <S>                                           <C>             <C>            <C>
            Equipment                                       3-5 years      $ 323,104      $ 271,868
            Furniture and fixtures                           5 years         125,419        119,436
            Leasehold improvements                          4-5 years        122,609        120,845
            Software                                         3 years         173,892        169,991
                                                                          -----------    -----------
                                                                             745,024        682,140
            Accumulated depreciation and amortization                       (580,639)      (497,308)
                                                                          -----------    -----------

                                                                           $ 164,385      $ 184,832
                                                                          ===========    ===========
</TABLE>

            Depreciation expense was $63,183, $66,779 and $70,074 for the years
            ended December 31, 2005, 2004 and 2003, respectively. Amortization
            of software was $20,148, $13,014, and $30,909 for the years ended
            December 31, 2005, 2004 and 2003, respectively.

                                       26
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4. PREMISES AND EQUIPMENT (CONTINUED)

            During 2005, the Company renewed its lease for the facility that
            serves as the executive offices for the Company and as the main
            banking office for the Bank. The facility, which is approximately
            8,100 square feet and located in Annapolis, Maryland, is leased by
            the Company through April 2010, with two remaining five year renewal
            options, with annual increases of 3%. The Company leases another
            facility to serve as a branch banking office. The facility, which is
            approximately 2,100 square feet and located in Lanham, Maryland, is
            leased by the Company through August 2014, with a five year early
            termination option, with annual increases of 3%. In 2005, the
            Company entered into a lease agreement for a facility to serve as an
            additional branch banking office. The facility, which is
            approximately 2,600 square feet and located in Glen Burnie,
            Maryland, is leased by the Company through July 2011,with a sixty
            day early occupancy agreement, with annual increases of 3% and
            payments to begin August of 2006. In addition, the Company leases an
            office located in Ellicott City, Maryland, on a month to month
            basis. Total rent expense, including pro-rata portions of property
            taxes and maintenance expenses, relating to these agreements, was
            $223,222, $199,113, and $178,008 for the years ended December 31,
            2005, 2004 and 2003, respectively.


NOTE 5. SBA LOAN SERVICING RIGHTS


            Information regarding changes in SBA loan servicing rights, included
            in other assets, is summarized as follows:

                                                            2005         2004
                                                         ---------    ---------

            Balance, beginning of year                   $ 41,273          $ -
            Addition of SBA loan servicing rights          59,900       44,149
            Amortization                                  (12,632)      (2,876)
                                                         ---------    ---------

            Balance, end of year                         $ 88,541     $ 41,273
                                                         =========    =========

            The total balance of loans being serviced by the Bank was $5,332,829
            and $2,414,571 at December 31, 2005 and 2004, respectively.

            At December 31, 2005, management did not deem it necessary to
            establish a valuation allowance for loan servicing rights.


NOTE 6. DEPOSITS

            Major classifications of interest-bearing deposits are as follows:

<TABLE>
<CAPTION>
                                                               2005               2004
                                                         --------------     --------------
            <S>                                          <C>                <C>
            NOW                                            $ 6,331,349        $ 2,211,906
            Money Market                                    17,247,770         13,575,039
            Savings                                            401,661            479,752
            Certificates of Deposit, $100,000 or more       40,696,865         22,795,721
            Other time deposits                              5,558,855          5,975,217
                                                         --------------     --------------
                                                          $ 70,236,500       $ 45,037,635
                                                         ==============     ==============
</TABLE>

                                       27
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6. DEPOSITS (CONTINUED)


            Interest expense on interest-bearing deposits, by category, is as
            follows:

<TABLE>
<CAPTION>
                                                            2005         2004        2003
                                                       ------------   ----------  ----------
            <S>                                        <C>            <C>         <C>
            NOW                                           $ 16,165      $ 4,294     $ 3,762
            Money Market                                   271,701       99,648     136,068
            Savings                                          2,238          556       1,587
            Certificates of Deposit, $100,000 or more      911,692      401,172     352,085
            Other time deposits                            200,940       63,284       4,138
                                                       ------------   ----------  ----------

                                                       $ 1,402,736    $ 568,954   $ 497,640
                                                       ============   ==========  ==========
</TABLE>

            At December 31, 2005, the scheduled maturities of time deposits are
            approximately as follows:

                                 2005
                            --------------

                2006         $ 36,185,660
                2007            6,166,892
                2008            3,903,168
                            --------------
                             $ 46,255,720
                            ==============

            Deposit and repurchase agreement balances of executive officers and
            directors and their affiliated interests totaled approximately
            $9,965,000 and $9,380,000 at December 31, 2005 and 2004,
            respectively.

            Included in Certificates of Deposit, $100,000 or more and other time
            deposits are $6,437,000 and $6,335,357 of brokered certificates with
            weighted average interest rates of 4.04% and 3.43% at December 31,
            2005 and 2004, respectively.

            The Bank has a concentration exposure to one entity. At December 31,
            2005, that entity owned or controlled approximately $19.8 million in
            deposits, or 22.4% of the deposit base. The entity is principally
            engaged in transportation management, specializing in provision of
            emergency or other high priority services to government agencies.
            The banking relationship with the President of the Bank is
            longstanding, has grown significantly over the past year and is
            believed to be good. The entity has advised the Bank that
            approximately $8 million will be withdrawn in early 2006 to retire
            payables. The Company does not believe that the withdrawal of
            deposits represents a negative indication with respect to the
            relationship, and it believes that it has adequate sources of
            liquidity to replace such deposits without significant additional
            expense, although there can be no assurance of this.


NOTE 7. SHORT-TERM BORROWINGS

            The Bank has received approval of unsecured credit facilities for
            short-term liquidity needs from financial institutions of $3,700,000
            and $2,200,000 at December 31, 2005 and 2004, respectively. There
            were no borrowings outstanding under these credit arrangements at
            December 31, 2005 and 2004.

                                       28
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8. OTHER OPERATING EXPENSES

            Other operating expenses include the following:

<TABLE>
<CAPTION>
                                                                                    2005            2004           2003
                                                                              -----------     -----------     ----------
            <S>                                                               <C>             <C>             <C>
            Courier                                                             $ 12,355         $ 4,515        $ 2,209
            Internet charges                                                       9,888           9,580          9,400
            Loan fees - SBA                                                       10,764          14,347         17,196
            Postage                                                               19,515          16,409         13,337
            Repairs and maintenance                                                6,896           8,622          4,577
            Provision for losses on unfunded commitments                           6,000           6,000          6,000
            Telephone                                                             13,053          11,053         10,392
            Other                                                                 82,204          57,228         34,442
                                                                              -----------     -----------     ----------

                                                                               $ 160,675       $ 127,754       $ 97,553
                                                                              ===========     ===========     ==========
</TABLE>

NOTE 9. INCOME TAXES

            Income tax expense (benefit) components are as follows:

<TABLE>
<CAPTION>
                                                                                           2005             2004
                                                                                       -----------     ------------
            <S>                                                                        <C>             <C>
            Current:
                  Federal                                                               $ 350,888              $ -
                  State                                                                    63,085                -
                                                                                       -----------     ------------
                      Total current                                                       413,973                -
                                                                                       -----------     ------------
            Deferred income taxes (benefits):
                  Federal                                                                 198,139           67,181
                  State                                                                    46,043           14,873
                  Decrease in valuation allowance                                               -         (944,054)
                                                                                       -----------     ------------
                     Total deferred                                                       244,182         (862,000)
                                                                                       -----------     ------------

                        Income tax expense (benefit)                                    $ 658,155       $ (862,000)
                                                                                       ===========     ============
</TABLE>


            A reconciliation of income tax expense (benefit) computed at the
            statutory rate of 34% to the actual income tax expense (benefit) is
            as follows:

<TABLE>
<CAPTION>
                                                                                            2005             2004
                                                                                       -------------     ------------
            <S>                                                                        <C>               <C>
            Income before income tax expense (benefit)                                  $ 1,691,575        $ 227,795
                                                                                       =============     ============

            Tax computed at Federal income tax rate                                       $ 575,136         $ 77,450
            Increase (decrease) resulting from:
                  State income taxes, net of Federal benefit                                 41,636           25,073
                  Benefit of NOL                                                                  -         (944,054)
                  Other                                                                      41,383          (20,469)
                                                                                       -------------     ------------

                      Income tax expense (benefit)                                        $ 658,155       $ (862,000)
                                                                                       =============     ============

</TABLE>

                                       29
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9. INCOME TAXES (CONTINUED)

            The components of the net deferred tax assets are as follows:


<TABLE>
<CAPTION>
                                                                                                      2005            2004
                                                                                                   -----------     -----------
            <S>                                                                                    <C>             <C>
            Deferred tax assets:
                  Allowance for credit losses                                                       $ 623,755       $ 445,626
                  Charitable contributions                                                                  -             975
                  Net operating loss carryforwards                                                          -         428,697
                  Net unrealized losses on securities available for sale                               34,019          14,084
                  Reserve for unfunded commitments                                                     11,586           9,269
                                                                                                   -----------     -----------
                                                                                                      669,360         898,651
                                                                                                   -----------     -----------

            Deferred tax liabilities:
                  Accumulated depreciation                                                             17,523          22,567
                                                                                                   -----------     -----------

            Net deferred tax asset                                                                  $ 651,837       $ 876,084
                                                                                                   ===========     ===========

</TABLE>


            During the third quarter 2004, management removed the valuation
            allowance established in 2003 for net deferred tax assets relating
            to all amounts other than unrealized gains/losses on securities
            available for sale, as it was more likely than not that the net
            deferred tax assets would be fully realizable in future years.
            Operating losses of approximately $1,136,000 were used in 2005 to
            offset taxable income.


NOTE 10. COMMITMENTS AND CONTINGENCIES

             Financial instruments:

            The Bank is a party to financial instruments in the normal course of
            business to meet the financing needs of its customers. These
            financial instruments include commitments to extend credit and
            standby letters of credit, which involve, to varying degrees,
            elements of credit and interest rate risk in excess of the amounts
            recognized in the consolidated financial statements.

            Outstanding loan commitments, unused lines of credit and letters of
            credit are approximately as follows:


<TABLE>
<CAPTION>
                                                                                        2005               2004
                                                                                   --------------     --------------
             <S>                                                                   <C>                <C>
             Loan commitments:
                Commercial                                                          $ 17,324,000       $ 10,153,000
                                                                                   ==============     ==============

             Unused lines of credit:
               Commercial lines                                                     $ 20,152,000       $ 11,727,000
                                                                                   ==============     ==============

             Letters of credit:                                                        $ 702,000          $ 397,000
                                                                                   ==============     ==============
</TABLE>

            Loan commitments and lines of credit are agreements to lend to
            customers as long as there is no violation of any conditions of the
            contracts. Loan commitments generally have interest rates reflecting
            current market conditions, fixed expiration dates, and may require
            payment of a fee. Lines of credit generally have variable interest
            rates. Some of the loan commitments and lines of credit are expected
            to expire without being drawn upon; accordingly, the total
            commitment amounts do not necessarily represent future cash
            requirements. The Bank evaluates each customer's creditworthiness on
            a case-by-case basis. The amount of collateral or other security
            obtained, if deemed necessary by the Bank upon extension of credit,
            is based on the Bank's credit evaluation. Collateral held varies but
            may include

                                       30
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10. COMMITMENTS AND CONTINGENCIES (CONTINUED)

            deposits held in financial institutions, U.S. Treasury securities,
            other marketable securities, accounts receivable, inventory,
            property and equipment, personal residences, income-producing
            commercial properties, and land under development. Personal
            guarantees are normally obtained to provide added security for
            certain commitments.

            Letters of credit are conditional commitments issued by the Bank to
            guarantee the performance of a customer to a third party. Those
            guarantees are primarily issued to guarantee the installation of
            real property improvements and similar transactions. The credit risk
            involved in issuing letters of credit is essentially the same as
            that involved in extending loan facilities to customers. The Bank
            holds collateral and obtains personal guarantees supporting those
            commitments for which collateral or other securities is deemed
            necessary.

            The Bank's exposure to credit loss in the event of nonperformance by
            the customer is the contractual amount of the commitment. Loan
            commitments and lines of credit are made on the same terms,
            including collateral, as outstanding loans. As of December 31, 2005
            and 2004, the Bank has accrued $30,000 and $24,000, respectively,
            for unfunded commitments related to these financial instruments with
            off balance sheet risk, which is included in other liabilities

            Employment agreements:

            The Company has employment agreements with the Chairman of the Board
            of Directors, President, and Executive Vice President, which expire
            in 2009, and with a Senior Vice President, which expires in 2007.


NOTE 11. STOCKHOLDERS' EQUITY

            Restrictions on dividends:

            Banking regulations limit the amount of dividends that may be paid
            without prior approval of the Bank's regulatory agencies. Regulatory
            approval is required to pay dividends that exceed the Bank's net
            profits for the current year plus its retained net profits for the
            preceding two years.

            Regulatory capital requirements:

            The Company and Bank are subject to various regulatory capital
            requirements administered by Federal and State banking agencies.
            Failure to meet minimum capital requirements can initiate certain
            mandatory, and possibly additional discretionary actions by
            regulators that, if undertaken, could have a direct material effect
            on the Company's financial statements. The Company and Bank must
            meet specific capital guidelines that involve quantitative measures
            of the Company's and Bank's assets, liabilities, and certain
            off-balance sheet items as calculated under regulatory accounting
            principles. The Company's and Bank's capital amounts and
            classification are also subject to qualitative judgments by the
            regulators about components, risk weightings, and other factors.

            Quantitative measures established by regulation to ensure capital
            adequacy require the Company and Bank to maintain minimum amounts
            and ratios (as defined in the regulations) of total and Tier I
            capital to risk-weighted assets and of Tier I capital to average
            assets. Management believes, as of December 31, 2005 and 2004 the
            Company and Bank meet all capital adequacy requirements to which it
            is subject.

            As of December 31, 2005, the most recent notification from the FDIC
            categorized the Bank as well capitalized under the regulatory
            framework for prompt corrective action. To be categorized as well

                                       31
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11. STOCKHOLDERS' EQUITY (CONTINUED)

            capitalized the Bank must maintain minimum total risk-based, Tier I
            risk-based, and Tier I leverage ratios. There are no conditions or
            events since that notification that management believes have changed
            the Bank's category.


            A comparison of capital as of December 31, 2005 and 2004 with
            minimum requirements is approximately as follows:

<TABLE>
<CAPTION>

                                                                                                           To Be Well Capitalized
                                                                                                                Under Prompt
                                                                                         For Capital          Corrective Action
                                                          Actual                       Adequacy Purposes         Provisions
                                                          Amount       Ratio          Amount       Ratio    Amount        Ratio
                                                          ------       -----          ------       -----    ------        -----
            <S>                                         <C>            <C>          <C>            <C>      <C>          <C>
            As of December 31, 2005
                Total Capital
                  (to Risk Weighted Assets)
                  Company                               $18,463,186     22.5%       $6,539,000      8.0%        N/A
                  Bank                                   14,813,613     18.0%        6,537,000      8.0%    $8,171,000     10.0%

                Tier I Capital
                  (to Risk Weighted Assets)
                  Company                                17,429,111     21.2%        3,269,000      4.0%        N/A
                  Bank                                   13,779,538     16.8%        3,268,000      4.0%     4,902,000      6.0%

                Tier I Capital
                  (to Average Assets)
                  Company                                17,429,111     17.3%        4,022,000      4.0%        N/A
                  Bank                                   13,779,538     13.7%        4,021,000      4.0%     5,028,000      5.0%



            As of December 31, 2004
                Total Capital
                  (to Risk Weighted Assets)
                  Company                                $7,500,266     13.5%       $4,437,000      8.0%        N/A
                  Bank                                    7,368,874     13.3%        4,434,000      8.0%    $5,543,000     10.0%

                Tier I Capital
                  (to Risk Weighted Assets)
                  Company                                 6,801,438     12.3%        2,219,000      4.0%        N/A
                  Bank                                    6,670,046     12.0%        2,217,000      4.0%     3,326,000      6.0%

                Tier I Capital
                  (to Average Assets)
                  Company                                 6,801,438     10.6%        2,571,000      4.0%        N/A
                  Bank                                    6,670,046     10.4%        2,570,000      4.0%     3,212,000      5.0%
</TABLE>


           During the first quarter of 2005 the Company sold an aggregate of
           981,333 additional shares of common stock. Of the shares sold,
           175,000 were sold on a rights offering basis to shareholders of
           record as of December 9, 2004 at a price of $10.50 per share, and
           806,333 shares were sold in a public offering also at a price of
           $10.50 per share. The offerings, which closed on February 28, 2005,
           raised an aggregate of approximately $9.6 million, net of expenses of
           the offering, financial advisory fees and underwriter's commission.
           In March 2005, the Company contributed $6,000,000 to the capital of
           the Bank. The remaining proceeds of the offerings are available for
           general corporate purposes, including further contribution to the
           Bank for use in its lending and investment activities and other
           operations.

                                       32
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12. WARRANT AND OPTION PLANS

           At December 31, 2005, outstanding and fully vested warrants totaled
           123,337, of which no warrants had been exercised. The exercise price
           of each warrant is $10 per share and must be exercised, unless
           earlier called by the Company, not later than 10 years from August
           18, 2000. Generally, vested warrants also expire 90 days following
           the date that the organizer ceases to be a director of the Bank.
           Warrants may be called by the Company in the event that a merger,
           sale, acquisition, share exchange or other similar extraordinary
           event is approved by the Board of Directors of the Company. Upon call
           by the Company, warrant holders have 90 days in which to exercise
           their warrants. If they are not exercised, the Company will pay the
           warrant holder the difference between the exercise price of the
           warrant and the fair market value of the stock of the Company at the
           time of the closing of the transaction. In the event that an
           applicable Federal or state regulatory authority determine that the
           Bank's capital fails to meet minimum capital requirements, such
           regulatory authority may direct the Company to call all outstanding
           warrants. Any warrants not exercised will be thereafter forfeited.

           The Board of Directors of the Company also adopted a stock option
           plan as a performance incentive for the Bank's officers and key
           employees. The employment contracts, signed by the Chairman of the
           Board, President, and Executive Vice President, obligated the Company
           to issue non-transferable stock options in the amount of 2,500,
           10,000, and 7,500, respectively, at an exercise price of $10 per
           share. At December 31, 2005, all stock options had been issued by the
           Company and were fully vested, of which no options had been
           exercised.

           The Company currently applies Accounting Principles Board Opinion
           (APB) No. 25 and related Interpretations in accounting for these
           plans. Under APB No. 25, recognition of compensation expense for
           warrants and contractually committed options is not required when
           they are granted at an exercise price equal to or exceeding the fair
           market value of the Company's common stock on the grant date.
           Accordingly, no compensation cost has been recognized in the
           accompanying Consolidated Financial Statements for these plans. SFAS
           No. 123, Accounting for Stock-Based Compensation, establishes
           accounting and reporting standards for stock-based compensation
           plans. SFAS No. 123 defines a fair value base method of accounting
           for measuring compensation expense for stock-based plans to be
           recognized in the statement of income or disclosed in the notes to
           the financial statements. If compensation cost for the Company's
           stock-based compensation plan had been determined based on the fair
           value at the grant date for awards under this plan consistent with
           the methods outlined in SFAS No. 123, there would be no change in
           reported net income. See Note 17 for recently issued pronouncement
           affecting the issuance of future stock options by the Company.

NOTE 13. EMPLOYEE BENEFIT PLANS

           The Bank has employee benefit programs that include health and dental
           insurance, life and long-term and short-term disability insurance and
           a 401(k) retirement plan. Under the 401(k) plan, the Bank made a 50%
           match of eligible employee contributions up to 6% of base salary in
           2005 and 2004. The Bank's contributions to the plan, included in
           salaries and employee benefits, totaled $24,054 and $23,171, for the
           years ended December 31, 2005 and 2004, respectively.

NOTE 14. INCOME PER COMMON SHARE

            Income per common share are calculated as follows:

<TABLE>
<CAPTION>
                                                                         2005                      2004                    2003
                                                                    -------------             -------------            -----------
             <S>                                                    <C>                       <C>                      <C>
             Basic:
                  Net income                                         $ 1,033,420               $ 1,089,795              $ 142,584
                  Basic average common shares outstanding              1,647,645                   822,250                822,250
                  Basic net income per share                         $      0.63               $      1.33              $    0.17
             Diluted:
                  Diluted average common shares outstanding            1,672,928                   822,250                822,250
                  Diluted net income per share                       $      0.62               $      1.33              $    0.17
</TABLE>
                                       33
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. RELATED PARTY TRANSACTIONS

           The Bank paid $48,467, $57,403, and $29,606 during the years ended
           December 31, 2005, 2004 and 2003 respectively, to a computer
           consulting firm of which a Director is also a principal. Expenditures
           included computer hardware, software, installation, training, and
           support services.

           The Bank paid $122,949, $113,710, and $94,469 during the years ended
           December 31, 2005, 2004 and 2003 respectively, for various group
           insurance benefits for which a Director will ultimately receive
           commission compensation.

           The Bank paid $8,121, $2,851, and $4,579 during the years ended
           December 31, 2005, 2004 and 2003 respectively, for office supplies to
           a company of which a Director is also a principal.

           Expenses of approximately $3,668, $6,313, and $22,946 were paid for
           legal services with a law firm, of which the Chairman of the Board of
           the Company is a principal, for the years ended December 31, 2005,
           2004 and 2003, respectively.

           All of the above transactions appear to have been consummated on
terms equivalent to those that prevail in arms length transactions.


NOTE 16.  FAIR VALUES OF FINANCIAL INSTRUMENTS

           In accordance with the disclosure requirements of SFAS No. 107, the
           estimated fair value and the related carrying values of the Company's
           financial instruments are as follows:

<TABLE>
<CAPTION>
                                                                             2005                            2004
                                                                   --------------------------    ----------------------------
                                                                     CARRYING        FAIR           Carrying         Fair
                                                                      AMOUNT        VALUE            Amount         Value
                                                                   --------------------------    ----------------------------
           <S>                                                     <C>            <C>            <C>             <C>
           FINANCIAL ASSETS
                Cash and due from banks                             $3,625,647    $3,625,647      $ 3,196,520    $ 3,196,520
                Federal funds sold                                  20,671,899    20,671,899       14,202,382     14,202,382
                Investment securities available for
                   sale, at fair value                              10,873,547    10,873,547        4,978,100      4,978,100
                FRB stock, at cost                                     402,450       402,450          195,900        195,900
                Other equity investments, at cost                       62,000        62,000           62,000         62,000
                Loans, less allowance for credit losses             75,043,570    75,043,570       51,017,418     51,017,418
                Loans held for sale, at fair value                     323,066       323,066          759,056        759,056
                Accrued interest receivable                            406,854       406,854          233,946        233,946

           FINANCIAL LIABILITIES
                Noninterest-bearing demand                          17,930,847    17,930,847       20,691,315     20,691,315
                Interest-bearing                                    70,236,500    70,236,500       45,037,635     45,037,635
                Securities sold under agreements to
                   repurchase                                        6,010,222     6,010,222        3,086,450      3,086,450
                Accrued interest payable on deposits                    58,912        58,912           36,412         36,412
</TABLE>

           For purposes of the disclosures of estimated fair value, the
following assumptions were used.

           Loans:

           The fair value of loans is considered to approximate carrying value
because of the ability to re-price at short-term intervals.

                                       34
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16.  FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

           Investment securities:

           Estimated fair values are based on quoted market prices.

           Deposits:

           The estimated fair value of deposits with no stated maturity, such as
           noninterest-bearing demand deposits, savings, NOW accounts and money
           market accounts, is equal to the amount payable on demand at the
           reporting date (that is, their carrying amounts).

           Other assets and liabilities:

           The estimated fair values for cash and due from banks, Federal funds
           sold and accrued interest receivable and payable are considered to
           approximate cost because of their short-term nature.

           Other assets and liabilities of the Bank that are not defined as
           financial instruments are not included in the above disclosures, such
           as property and equipment. In addition, non-financial instruments
           typically not recognized in the financial statements nevertheless may
           have value but are not included in the above disclosures. These
           include, among other items, the estimated earnings power of core
           deposit accounts, the trained work force, customer goodwill, and
           similar items.


NOTE 17. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

           In March 2004, the FASB issued FASB Interpretation No. 46 (FIN 46R),
           "Consolidation of Variable Interest Entities (Revised December
           2003)." FIN 46R clarifies certain aspects of FIN 46 and provides
           certain entities with exemptions from the requirements of FIN 46. FIN
           46R requires the consolidation by a business enterprise of variable
           interest entities (VIE) in which it is the primary beneficiary. FIN
           46R also requires the adoption of FIN 46, as of December 31, 2003,
           for all entities previously considered as special purpose entities
           and for all VIE's created after January 31, 2003. The Company has
           assessed applicability of this pronouncement and believes they are
           currently in compliance with all applicable components of this
           standard.

           In December 2004, the FASB issued SFAS No. 123, "Share-Based Payment
           (Revised 2004)." SFAS 123R establishes standards for the accounting
           for transactions in which an entity (i) exchanges its equity
           instruments for goods or services, or (ii) incurs liabilities in
           exchange for goods or services that are based on the fair value of
           the entity's equity instruments or that may be settled by the
           issuance of the equity instruments. SFAS 123R eliminates the ability
           to account for stock-based compensation using APB 25 and requires
           that such transactions be recognized as compensation cost in the
           income statement based on their fair values on the date of the grant.
           SFAS 123R is effective for the Company on January 1, 2006. The
           Company will transition to fair value based accounting for
           stock-based compensation using a modified version of prospective
           application ("modified prospective application"). Under modified
           prospective application, as it is applicable to the Company, SFAS
           123R applies to new awards and to awards modified, repurchased, or
           cancelled after January 1, 2006. Additionally, compensation cost for
           the portion of awards for which the requisite service has not been
           rendered (generally referring to non-vested awards) that are
           outstanding as of January 1, 2006 must be recognized as the remaining
           requisite service is rendered during the period of and/or the periods
           after the adoption of SFAS 123R. The attribution of compensation cost
           for those earlier awards will be based on the same method and on the
           same grant-date fair values previously determined for the pro forma
           disclosures required for companies that did not adopt the fair value
           accounting method for stock-based employee compensation.

           If additional options are issued, the Company may expect to recognize
           additional pre-tax, quarterly compensation costs beginning in the
           first quarter of 2006 as a result of the adoption of SFAS 123R.

                                       35
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 17. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

           Future levels of compensation cost recognized related to stock-based
           compensation awards (including the aforementioned expected costs
           during the period of adoption) may be impacted by new awards and/or
           modifications, repurchases and cancellations of existing awards
           before and after the adoption of this standard.

           In November 2005, the FASB issued FASB Staff Position (FSB) 115-1,
           "The Meaning of Other-Than-Temporary Impairment and Its Application
           to Certain Investments." This statement provides additional guidance
           for recognition and measurement provisions for other-than-temporary
           impairments relating to investment in debt and equity securities that
           are accounted for under FASB 115. Specifically, the guidance
           clarifies that an investor should recognize an impairment loss no
           later than when the impairment is deemed other-than-temporary, even
           if the decision to sell has not been made. The statement also
           requires certain disclosures about unrealized losses that have not
           been recognized as other-than-temporary impairments. The Company
           believes they are currently in compliance with this pronouncement.


NOTE 18. PARENT COMPANY FINANCIAL INFORMATION

           The Balance Sheets, Statements of Income and Statements of Cash Flows
for CommerceFirst Bancorp, Inc. (Parent Only) are presented below:

<TABLE>
<CAPTION>
                                               BALANCE SHEETS
            --------------------------------------------------------------------------------------------------------------------
            December 31,                                                                                2005             2004
            --------------------------------------------------------------------------------------------------------------------
            <S>                                                                                   <C>              <C>
                                                   ASSETS

            Cash                                                                                    $ 3,649,573        $ 75,612
            Investment in CommerceFirst Bank                                                         13,713,501       6,642,709
            Other assets                                                                                      -          55,780
                                                                                                  --------------   -------------

                        TOTAL ASSETS                                                               $ 17,363,074     $ 6,774,101
                                                                                                  ==============   =============

                                             STOCKHOLDERS' EQUITY

            Common stock                                                                               $ 18,036         $ 8,223
            Surplus                                                                                  17,683,450       8,099,012
            Accumulated deficit                                                                        (272,375)     (1,305,795)
            Accumulated other comprehensive loss                                                        (66,037)        (27,339)
                                                                                                  --------------   -------------

                        TOTAL STOCKHOLDERS' EQUITY                                                 $ 17,363,074     $ 6,774,101
                                                                                                  ==============   =============
</TABLE>

                               STATEMENTS OF INCOME
                Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
             -----------------------------------------------------------------------------------------------------------------
                                                                                         2005             2004          2003
             -----------------------------------------------------------------------------------------------------------------
             <S>                                                                   <C>             <C>             <C>

             Income                                                                         $ -             $ -       $ 1,079
             Expenses                                                                   (76,070)        (52,259)      (53,176)
                                                                                   -------------   -------------   -----------
             Loss before equity in income of subsidiary                                 (76,070)        (52,259)      (52,097)
             Net income of subsidiary                                                 1,109,490       1,142,054       194,681
                                                                                   -------------   -------------   -----------

                         NET INCOME                                                 $ 1,033,420     $ 1,089,795     $ 142,584
                                                                                   =============   =============   ===========
</TABLE>

                                       36
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 18. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)



                               STATEMENTS OF CASH FLOWS
                  Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
            ---------------------------------------------------------------------------------------------------------------------
                                                                                        2005            2004             2003
            ---------------------------------------------------------------------------------------------------------------------
            <S>                                                                    <C>             <C>             <C>
            CASH FLOWS FROM OPERATING ACTIVITIES:
                 Net income                                                         $ 1,033,420     $ 1,089,795        $ 142,584
                 Adjustments to reconcile net income to net
                     cash used by operating activities:
                        Decrease (increase) in other assets                              55,780         (50,780)             248
                        Net income of subsidiary                                     (1,109,490)     (1,142,054)        (194,681)
                                                                                   -------------   -------------   --------------

                     Net cash used by operating activities                              (20,290)       (103,039)         (51,849)
                                                                                   -------------   -------------   --------------

            CASH FLOWS FROM INVESTING ACTIVITIES:
                 Investment in subsidiary                                            (6,000,000)     (1,000,000)               -
                                                                                   -------------   -------------   --------------

            CASH FLOWS FROM FINANCING ACTIVITIES:
                 Issuance of common stock, net                                       10,303,997               -                -
                 Costs of raising capital                                              (709,746)              -                -
                                                                                   -------------   -------------   --------------

                     Net cash provided by financing activities                        9,594,251               -                -
                                                                                   -------------   -------------   --------------

            INCREASE (DECREASE) IN CASH                                               3,573,961      (1,103,039)         (51,849)

            CASH, BEGINNING OF YEAR                                                      75,612       1,178,651        1,230,500
                                                                                   -------------   -------------   --------------
            CASH, END OF YEAR                                                       $ 3,649,573        $ 75,612      $ 1,178,651
                                                                                   =============   =============   ==============
</TABLE>

                                       37
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the Consolidated unaudited quarterly results of
operations:

<TABLE>
<CAPTION>
                                                                                                 Three Months Ended,
                                          2005                             -------------------------------------------------------
                                  (Dollars in thousands,                   December 31   September 30    June 30     March 31
                                except per share amounts)
                ------------------------------------------------------------------------------------------------------------------
                <S>                                                        <C>           <C>            <C>         <C>
                Interest income                                                $ 1,700        $ 1,492     $ 1,297    $ 1,150
                Interest expense                                                   482            387         311        259
                Net interest income                                              1,218          1,105         986        891
                Provision for credit losses                                         90             90          90         90
                Net income before income tax                                       462            584         352        293
                Federal and state income tax expense                               166            234         145        113
                Net income                                                         296            350         207        180
                Net income per share (basic)                                    $ 0.17         $ 0.20      $ 0.11     $ 0.15
                Net income per share (diluted)                                  $ 0.16         $ 0.20      $ 0.11     $ 0.15


                                                                                                 Three months ended,
                                           2004                            -------------------------------------------------------
                                  (Dollars in thousands,                   December 31   September 30     June 30    March 31
                                except per share amounts)
                ------------------------------------------------------------------------------------------------------------------
                Interest income                                                  $ 939          $ 759       $ 680      $ 623
                Interest expense                                                   205            133         131        119
                Net interest income                                                734            626         549        503
                Provision for credit losses                                         90            410          45         45
                Net income                                                         134            758         124         74
                Net income per share (basic and diluted)                        $ 0.17         $ 0.92      $ 0.15     $ 0.09


                                           2003                                                  Three months ended,
                ------------------------------------------------------------------------------------------------------------------
                                  (Dollars in thousands,                   December 31   September 30     June 30    March 31
                                except per share amounts)
                ------------------------------------------------------------------------------------------------------------------
                Interest income                                                  $ 627          $ 628       $ 633      $ 601
                Interest expense                                                   118            116         146        150
                Net interest income                                                509            512         487        451
                Provision for credit losses                                         75             75          75         45
                Net income                                                          42             62          14         25
                Net income per share (basic and diluted)                        $ 0.05         $ 0.07      $ 0.02     $ 0.03

</TABLE>


NOTE 20. SUBSEQUENT EVENT

            In February 2006, the Bank entered into a lease agreement for a
            facility to serve as an additional branch banking office. The
            facility, which is approximately 2,400 square feet and located in
            Columbia, Maryland, is leased by the Bank through February 2016 at
            an initial rental of approximately $60,700, with annual increases of
            3%.


                                       38

<PAGE>

                              DIRECTORS & OFFICERS
                                       OF
               COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK

                        MILTON D. JERNIGAN II, ESQUIRE*
                              CHAIRMAN OF THE BOARD
                                MANAGING PARTNER
              MCNAMEE, HOSEA, JERNIGAN, KIM, GREENAN & WALKER, P.A.

                                ALVIN R. MAIER*
                           VICE CHAIRMAN OF THE BOARD
                      PRIVATE INVESTOR AND FORMER PRESIDENT
                               ERNEST MAIER, INC.

<TABLE>
<S>                                                         <C>
RICHARD J. MORGAN*                                          LAMONT THOMAS*
PRESIDENT &                                                 EXECUTIVE VICE PRESIDENT &
CHIEF EXECUTIVE OFFICER                                     CHIEF OPERATING OFFICER

WILFRED T. AZAR, III                                        NICHOLAS J. MARINO
PRESIDENT                                                   PRESIDENT
EMPIRE MANAGEMENT SERVICES                                  MARINO TRANSPORTATION SERVICES, LLC

WILLIAM F. CHESLEY                                          MICHAEL J. MILLER
PRESIDENT                                                   VICE PRESIDENT
W. F. CHESLEY REAL ESTATE, INC.                             CONCRETE GENERAL, INC. & TRI M LEASING CORP

CHARLES F. DELAVAN, ESQUIRE                                 ROBERT R. MITCHELL*
PRINCIPAL                                                   PRIVATE INVESTOR AND FORMER PRESIDENT,
BLUMENTHAL, DELAVAN & WILLIAMS, P.A.                        MITCHELL BUSINESS EQUIPMENT, INC.

GREGORY A. GRAY                                             JOHN A. RICHARDSON, SR.*
PRESIDENT                                                   PRESIDENT, CROFTON BOWLING CENTER
EASTERN WATERPROOFING &                                     FORMER PRESIDENT, BRANCH ELECTRIC
RESTORATION CO., INC.                                       SUPPLY CO., INC.

EDWARD B. HOWLIN, JR.                                       DON E. RIDDLE, JR.
PRESIDENT                                                   CHAIRMAN & CHIEF EXECUTIVE OFFICER
HOWLIN REALTY MANAGEMENT, INC.                              HOMESTEAD GARDENS, INC.

CHARLES L. HURTT, JR., CPA*                                 GEORGE C. SHENK, JR.
PRESIDENT                                                   PRESIDENT
CHARLES L. HURTT, JR., PA                                   WHITMORE PRINT & IMAGING, INC.

MILTON D. JERNIGAN, SR.                                     DALE R. WATSON
PRIVATE INVESTOR AND RETIRED FORMER FOUNDER,                PRESIDENT
CHAIRMAN AND PRESIDENT                                      ALPHA ENGINEERING ASSOCIATES, INC.
AAA RENTALS, INC. AND AAA TOOLS, INC.

                                  JEROME A. WATTS*
                                  OWNER
                                  PLAN MANAGEMENT
</TABLE>

-----------------------------------------
* Director of CommerceFirst Bancorp, Inc.


<PAGE>

                                    OFFICERS
                                       OF
                               COMMERCEFIRST BANK


                               THOMAS L. BOLANDER
                              SENIOR VICE PRESIDENT

                               W. CRAIG ENGELHAUPT
                              SENIOR VICE PRESIDENT

                                 GEORGE KAPUSTA
                              SENIOR VICE PRESIDENT

                              CANDACE M. SPRINGMANN
                      VICE PRESIDENT & CORPORATE SECRETARY

                                PENNY L. CANTWELL
                                 VICE PRESIDENT

                              MELONEE FLEMING, CCE
                                 VICE PRESIDENT

                                 DAVID STEINHOFF
                                 VICE PRESIDENT

                                 JEAN J. BARNES
                            ASSISTANT VICE PRESIDENT

                                  IRMA RUSSELL
                               ASSISTANT TREASURER

                                  ANN BRUNDIGE
                          COMMUNITY DEVELOPMENT OFFICER




                                    LOCATIONS
                                       OF
                               COMMERCEFIRST BANK

                           1804 WEST STREET, SUITE 200
                                ANNAPOLIS MD 2104

                              4451 PARLIAMENT PLACE
                                 LANHAM MD 20706






THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO ANY SHAREHOLDER OF RECORD OR ANY
BENEFICIAL OWNER OF COMMON STOCK, A COPY OF ITS 2005 ANNUAL REPORT ON FORM
10-KSB FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, UPON THE WRITTEN
REQUEST. REQUESTS SHOULD BE DIRECTED TO CANDACE M. SPRINGMANN, CORPORATE
SECRETARY, AT THE COMPANY'S EXECUTIVE OFFICES AT 1804 WEST STREET, SUITE 200,
ANNAPOLIS MD 21401.