U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the quarterly period ended March 31, 2004

[ ]  TRANSITION REPORT UNDER SECTION 13 OR  15 (d) OF THE EXCHANGE ACT

     For the transition period from  ____________________ to _________________

                        Commission file number 000-32641

                           JAMES MONROE BANCORP, INC.
        (Exact Name of Small Business Issuer as Specified in its Charter)

                VIRGINIA                               54-1941875
     (State or Other Jurisdiction           (I.R.S. Employer Identification No.)
   of Incorporation or Organization)

                  3033 WILSON BLVD., ARLINGTON, VIRGINIA 22201
                    (Address of Principal Executive Offices)

                                  703-524-8100
                (Issuer's Telephone Number, Including Area Code)

                                       N/A
              (Former Name, Former Address and Former Fiscal Year,
                         If Changed Since Last Report)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of May 7, 2004.

Common stock, $1 par value--2,956,887 shares outstanding, without adjustment for
    the three for two stock split in the form of a 50% stock dividend for
    shareholders of record on May 14, 2004, payable on June 1, 2004.


                                       1
<PAGE>

<TABLE>
<CAPTION>
                           JAMES MONROE BANCORP, INC.
                                TABLE OF CONTENTS
<S>       <C>                                                                         <C>
                                                                                      Page No.
Part I.   Financial Information

          Item 1.  Financial Statements
                   Consolidated Balance Sheets at March 31, 2004,
                      December 31, 2003, and March 31, 2003                                 3
                   Consolidated Statements of Income for the three months
                      ended March 31, 2004 and 2003                                         4
                   Consolidated Statements of Changes in Stockholders'
                      Equity for the three months ended March 31, 2004 and 2003             5
                   Consolidated Statements of Cash Flows for the three months
                      ended March 31, 2004 and 2003                                         6
                   Notes to Interim Consolidated Financial Statements                       7

          Item 2.  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                                     12

          Item 3.  Controls and Procedures                                                 27

Part II.  Other Information

          Item 1.  Legal Proceedings                                                       28

          Item 2.  Changes in Securities and Small Business Issuer
                   Purchases of Equity Securities                                          28

          Item 3.  Defaults Upon Senior Securities                                         28

          Item 4.  Submission of Matters to a Vote of Security Holders                     28

          Item 5.  Other Information                                                       28

          Item 6.  Exhibits and Reports on Form 8-K                                        28
</TABLE>





                                       2
<PAGE>

                          PART I. Financial Information

Item 1. Financial Statements
                                       JAMES MONROE BANCORP, INC.
                                           AND SUBSIDIARIES
                                      CONSOLIDATED BALANCE SHEETS
                         March 31, 2004, December 31, 2003, and March 31, 2003
                             (Dollars in thousands, except share data)
<TABLE>
<CAPTION>
                                                         (Unaudited)           (Audited)          (Unaudited)
                                                           MARCH 31,          DECEMBER 31,          MARCH 31,
ASSETS                                                       2004                2003                 2003
                                                        -------------        -------------       -------------
<S>                                                      <C>                  <C>                 <C>
Cash and due from banks                                  $    15,845          $    11,908         $    24,387
Interest bearing deposits in banks                                --                   --               1,461
Federal funds sold                                            16,365                   --              22,566
Securities available for sale, at fair value                 110,158              122,328              65,066
Mortgages held for sale                                          590                  561                 206
Loans, net of allowance for loan losses of $2,111
  at March 31, 2004, $1,955 at December 31, 2003 and
  $1,513 at March 31, 2003                                   187,203              167,092             131,967
Bank premises and equipment, net                               1,613                1,388               1,399
Accrued interest receivable                                    1,536                1,336                 957
Other assets                                                     794                1,038                 340
                                                        -------------        -------------       -------------
TOTAL ASSETS                                             $   334,104          $   305,651         $   248,349
                                                        =============        =============       =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
  Noninterest bearing deposits                           $    91,350          $    65,598         $    70,745
  Interest bearing deposits                                  192,031              189,518             152,573
                                                        -------------        -------------       -------------
Total deposits                                               283,381              255,116             223,318
Federal funds purchased                                        5,000                6,886                   -
Trust preferred capital notes                                  9,000                9,000               5,000
Accrued interest payable and other liabilities                 1,105                  758                 674
                                                        -------------        -------------       -------------
  Total liabilities                                          298,486              271,760             228,992
                                                        -------------        -------------       -------------
STOCKHOLDERS' EQUITY
Common stock, $1 par value; authorized
  10,000,000 shares; issued and outstanding 4,435,331
  shares at March 31, 2004, 2,943,802 shares at
  December 31, 2003, 2,300,633 shares at March 31,
  2003                                                         4,435                2,944               2,301
Capital surplus                                               24,163               25,425              12,894
Retained earnings                                              6,245                5,491               3,358
Accumulated other comprehensive income                           775                   31                 804
                                                        -------------        -------------       -------------
  Total stockholders' equity                                  35,618               33,891              19,357
                                                        -------------        -------------       -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $   334,104          $   305,651         $   248,349
                                                        =============        =============       =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       3
<PAGE>

                              JAMES MONROE BANCORP, INC.
                                   AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF INCOME
                   Forthe Three Months Ended March 31, 2004 and 2003
                     (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                   (Unaudited)
                                                           THREE MONTHS ENDED MARCH 31,
                                                       -----------------------------------
                                                            2004                 2003
                                                       --------------      --------------
<S>                                                        <C>                 <C>
INTEREST AND DIVIDEND INCOME:
  Loans, including fees                                    $   2,783           $   2,190
  Securities, taxable                                          1,023                 700
  Federal funds sold                                               9                  36
  Other interest income                                            8                   1
                                                         ------------        ------------
Total interest and dividend income                             3,823               2,927
INTEREST EXPENSE:
  Deposits                                                       831                 813
  Borrowed funds                                                 131                  64
                                                         ------------        ------------
Total interest expense                                           962                 877
                                                         ------------        ------------
Net interest income                                            2,861               2,050
PROVISION FOR LOAN LOSSES                                        299                 178
                                                         ------------        ------------
Net interest income after provision for loan losses            2,562               1,872
NONINTEREST INCOME:
  Service charges and fees                                        84                  74
  Gain on sale of securities                                      40                  15
  Gain on sale of mortgage loa                                    63                   -
  Other                                                           94                  60
                                                         ------------        ------------
Total noninterest income                                         281                 149
NONINTEREST EXPENSES:
  Salaries and wages                                             844                 587
  Employee benefits                                              179                 104
  Occupancy expenses                                             165                 155
  Equipment expenses                                              74                  96
  Other operating expenses                                       435                 398
                                                         ------------        ------------
Total noninterest expenses                                     1,697               1,340
                                                         ------------        ------------
Income before income taxes                                     1,146                681
PROVISION FOR INCOME TAXES                                       392                217
                                                         ------------        ------------
Net income                                                 $     754           $    464
                                                         ============        ============

EARNING  PER SHARE, basic                                  $    0.17           $   0.13
EARNINGS PER SHARE, diluted                                $    0.16           $   0.13
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                     JAMES MONROE BANCORP, INC.
                                                        AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                         For the Three Months Ended March 31, 2004 and 2003
                                                      (Dollars in thousands)
                                                           (Unaudited)


                                                                               ACCUMULATED
                                                                                  OTHER                                TOTAL
                                            COMMON    CAPITAL     RETAINED     COMPREHENSIVE      COMPREHENSIVE     STOCKHOLDERS'
                                            STOCK     SURPLUS     EARNINGS     INCOME (LOSS)         INCOME           EQUITY
                                       -----------  ----------   ----------   ---------------    ---------------    ---------------
<S>                                       <C>        <C>           <C>           <C>                 <C>              <C>
BALANCE, JANUARY 1, 2003                  $ 1,841    $ 13,354      $ 2,894       $  1,106                             $  19,195
Comprehensive income:
  Net income                                                           464                           $   464                464
  Net change in unrealized gains
    on available for sale securities,
    net of deferred taxes of $156                                                    (302)              (302)              (302)
                                                                                                    ---------
  Total comprehensive income                                                                         $   162
                                                                                                    --=======
  Effect of stock split                       460        (460)                                                               --
                                         ---------  ----------    ---------     -----------                          -----------
BALANCE, MARCH 31, 2003                   $ 2,301    $ 12,894      $ 3,358       $    804                             $  19,357
                                         =========  ==========    =========     ===========                          ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                               ACCUMULATED
                                                                                  OTHER                                TOTAL
                                            COMMON    CAPITAL     RETAINED     COMPREHENSIVE      COMPREHENSIVE     STOCKHOLDERS'
                                            STOCK     SURPLUS     EARNINGS       INCOME               INCOME           EQUITY
                                       -----------  ----------   ----------   ---------------    ----------------   ---------------
<S>                                       <C>        <C>           <C>           <C>                 <C>              <C>
BALANCE, JANUARY 1, 2004                  $ 2,944    $ 25,425      $ 5,491       $     31                             $  33,891
Comprehensive income:
  Net income                                                           754                           $   754                754
  Net change in unrealized gains
    on available for sale securities,
    net of deferred taxes of $383                                                     744                744                744
                                                                                                    ---------
  Total comprehensive income                                                                         $ 1,498
                                                                                                    =========
  Exercise of stock options                    11         157                                                               168
  Issuance of common stock                      2          59                                                                61
  Effect of stock split                     1,478      (1,478)                                                               --
                                         ---------  ----------   ----------     -----------                          -----------
BALANCE, MARCH 31, 2004                   $ 4,435    $ 24,163      $ 6,245       $    775                             $  35,618
                                         =========  ==========   -=========     ===========                          ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.




                                       5
<PAGE>

                                      JAMES MONROE BANCORP, INC.
                                           AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                          For the Three Months Ended March 31, 2004 and 2003
                                        (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                      (Unaudited)
                                                                              THREE MONTHS ENDED MARCH 31,
                                                                         ---------------------------------------
                                                                              2004                  2003
                                                                         -----------------     -----------------
<S>                                                                        <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                               $      754              $     464
  Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization                                                    65                     75
  Provision for loan losses                                                       299                    178
  Amortization of bond premium                                                     33                    108
  Accretion of bond discount                                                       (2)                   (20)
  Realized (gain) on sales of securities available for sale                       (40)                   (15)
  Realized (gain) on sales of mortgage loans held-for-sale                        (63)                    --
  Originiation of mortgage loans held-for-sale                                 (3,288)                  (206)
  Proceeds from sales of mortgage loans held-for-sale                           3,322                     --
  Deferred income tax (benefit)                                                  (118)                   (53)
  (Increase) in accrued interest receivable                                      (200)                   (41)
  (Increase) decrease in other assets                                             362                    (49)
  Increase (decrease) in accrued interest payable and other liabilities           347                    (54)
                                                                         --------------         --------------
    Net cash provided by operating activities                                   1,471                    387
                                                                         --------------         --------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of securities available for sale                                   (6,324)               (26,636)
  Proceeds from calls and maturities of securities available for sale           5,825                  3,388
  Proceeds from sales of securities available for sale                         13,422                 33,869
  Purchases of premises and equipment                                            (290)                  (141)
  (Increase) decrease in interest bearing cash balances                            --                   (806)
  (Increase) decrease in Federal funds sold                                   (16,365)                 6,260
  Net (increase) in loans                                                     (20,410)               (12,433)
                                                                         --------------         --------------
    Net cash (used in) provided by investing activities                       (24,142)                 3,501
                                                                         --------------         --------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in demand deposits, savings deposits
    and money market accounts                                                  29,937                  6,265
  Net increase (decrease) in time deposits                                     (1,672)                 3,183
  Net increase in Federal funds purchased                                      (1,886)                    --
  Proceeds from issuance of common stock                                          229                     --
                                                                         --------------         --------------
    Net cash provided by financing activities                                  26,608                  9,448
                                                                         --------------         --------------
    Increase in cash and due from banks                                   $     3,937            $    13,336
CASH AND DUE FROM BANKS
  Beginning                                                               $    11,908            $    11,051
                                                                         --------------         --------------
  Ending                                                                  $    15,845            $    24,387
                                                                         ==============         ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Interest paid on deposits and borrowed funds                            $       895            $       876
                                                                         ==============         ==============
  Income taxes paid                                                       $       279            $       216
                                                                         ==============         ==============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES,
  unrealized gain (loss) on securities available for sale                 $     1,127            $      (458)
                                                                         ==============         ==============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       6
<PAGE>

                   JAMES MONROE BANCORP, INC. AND SUBSIDIARIES
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.

Organization. James Monroe Bancorp, Inc. was incorporated under the laws of the
Commonwealth of Virginia on April 9, 1999 to be the holding company for James
Monroe Bank. James Monroe Bancorp acquired all of the shares of James Monroe
Bank on July 1, 1999 in a mandatory share exchange under which each outstanding
share of common stock of James Monroe Bank was exchanged for one share of James
Monroe Bancorp common stock. James Monroe Bank, a Virginia chartered commercial
bank, which is a member of the Federal Reserve System, is James Monroe Bancorp's
sole operating subsidiary. James Monroe Bank commenced banking operations on
June 8, 1998. As of March 31, 2004 the Company operated the main office in
Arlington, Virginia, one branch in Annandale, Virginia, one branch and a
drive-up facility in Leesburg, Virginia, and one branch in Fairfax City,
Virginia.

Basis of Presentation. In the opinion of management, the accompanying unaudited
consolidated financial statements of James Monroe Bancorp, Inc. and Subsidiaries
(the Company) have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-QSB. Accordingly, they do not
include all the information and footnotes required for complete financial
statements. In the opinion of management, all adjustments and reclassifications
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 2004 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2004, or any other
period. The unaudited interim consolidated financial statements should be read
in conjunction with the audited consolidated financial statements and footnotes
for the year ended December 31, 2003.

Stock Compensation Plans. At March 31, 2004, the Company has three stock based
compensation plans. The Company accounts for these plans under the recognition
and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. No stock based employee compensation
cost is reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of the grant. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition
provisions of SFAS No. 123, Accounting for Stock Based Compensation, to stock
based employee compensation. The per share calculations have been restated to
reflect the 3-for-2 stock split discussed in Note 7 and all preceding stock
splits.

                                                      QUARTER ENDED MARCH 31,
                                                      ----------------------
                                                         2004         2003
                                                      --------      --------
      (Dollars in thousands, except per share data)

      Net income, as reported                          $    754   $    464
      Deduct:Total stock-based employee compensation
      expense determined under fair value based method     (336)        (9)
      for all awards
                                                       ---------  ---------
      Pro forma net income                             $    418   $    455
                                                       =========  =========

      Earnings per share:
           Basic-as reported                              0.17       0.13
                                                       =========  =========
           Basic-pro forma                                0.09       0.13
                                                       =========  =========
           Diluted-as reported                            0.16       0.13
                                                       =========  =========
           Diluted-pro forma                              0.09       0.12
                                                       -========  =========


                                       7
<PAGE>



         The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions:

                                              2004              2003
                                          ------------      -----------

          Dividend yield                       0.00%            0.00%
          Expected life                    7.6 years        8.3 years
          Expected volatility                 38.08%           32.07%
          Risk free interest rate              3.75%            4.07%

NOTE 2.

Earnings Per Share. The following table discloses the calculation of basic and
diluted earnings per share for the three months ended March 31, 2004 and 2003.
The average shares outstanding and per share calculations have been restated to
reflect the 3-for-2 stock split discussed in Note 7 and all preceding stock
splits.

<TABLE>
<CAPTION>
                                                              THREE-MONTHS ENDED
                                                                  MARCH 31,
                                                        -----------------------------
                                                            2004            2003
                                                        -------------    ------------
<S>                                                      <C>              <C>
       (Dollars in thousands, except per share data)

       Net Income                                        $       754      $      464
                                                        =============    ============
       Weighted average shares outstanding--basic          4,429,442       3,451,269

       Common share equivalents for stock options            233,298         226,469
                                                        -------------    ------------
       Weighted average shares outstanding--diluted        4,662,740       3,677,738
                                                        =============    ============

       Earnings per share-basic                          $      0.17      $     0.13
                                                        =============    ============
       Earnings per share-diluted                        $      0.16      $     0.13
                                                        =============    ============
</TABLE>


                                       8

<PAGE>


NOTE 3.

Securities available for sale. Securities available for sale are reported at
fair value with unrealized gains and losses (net of income taxes) recorded in
stockholders' equity as a component of "accumulated other comprehensive income."
Actual gains and losses on the sales of these securities, if any, are computed
using the specific identification method and included in "gain (loss) on sale of
securities" on the income statement. The amortized cost and carrying value
(estimated market value) of securities available for sale at March 31, 2004,
December 31, 2003, and March 31, 2003, are summarized in the tables that follow.
The Company classifies all securities as available for sale.

<TABLE>
<CAPTION>
                                                                March 31, 2004
                                       ---------------------------------------------------------------
                                                           Gross           Gross          Estimated
                                        Amortized       Unrealized       Unrealized         Market
   (Dollars in thousands)                  Cost            Gains           Losses           Value
                                       -------------  ---------------  --------------   --------------
<S>                                     <C>               <C>            <C>              <C>
   U.S. Government and federal agency   $    80,016       $      828     $      (105)     $    80,739
   Mortgage-backed securities                21,544              181             (60)          21,665
   Corporate notes                            6,280              331              --            6,611
   Restricted Stock                           1,143               --              --            1,143
                                       -------------  ---------------  --------------   --------------
                                        $   108,983       $    1,340     $     (165)      $   110,158
                                       =============  ===============  ==============   ==============
</TABLE>

<TABLE>
<CAPTION>
                                                              December 31, 2003
                                       ---------------------------------------------------------------
                                                           Gross           Gross          Estimated
                                        Amortized       Unrealized       Unrealized         Market
   (Dollars in thousands)                  Cost            Gains           Losses           Value
                                       -------------  ---------------  --------------   --------------
<S>                                     <C>               <C>            <C>              <C>
   U.S. Government and federal agency   $    95,196       $      322     $     (589)      $    94,929
   Mortgage-backed securities                19,883              206           (162)           19,927
   Corporate notes                            6,301              279             (9)            6,571
   Restricted Stock                             901               --             --               901
                                       -------------  ---------------  --------------   --------------
                                        $   122,281       $      807     $     (760)      $   122,328
                                       =============  ===============  ==============   ==============
</TABLE>

<TABLE>
<CAPTION>
                                                             March 31, 2003
                                       ---------------------------------------------------------------
                                                           Gross           Gross          Estimated
                                        Amortized       Unrealized       Unrealized         Market
   (Dollars in thousands)                  Cost            Gains           Losses           Value
                                       -------------  ---------------  --------------   --------------
<S>                                     <C>               <C>            <C>              <C>
   U.S. Government and federal agency   $    27,006       $      259     $       --       $    27,265
   Mortgage-backed securities                23,161              520            (13)           23,668
   Corporate notes                           12,898              458             (4)           13,352
   Restricted Stock                             781               --             --               781
                                       -------------  ---------------  --------------   --------------
                                        $    63,846       $    1,237     $      (17)      $    65,066
                                       =============  ===============  ==============   ==============
</TABLE>



                                       9

<PAGE>


NOTE 4.

Loans. Major classifications of loans at March 31, 2004, December 31, 2003, and
March 31, 2003 are summarized in the following table.
<TABLE>
<CAPTION>
                                                            MARCH 31,     DECEMBER 31,     MARCH 31,
      (Dollars in thousands)                                   2004           2003           2003
                                                        ---------------  -------------  --------------
<S>                                                       <C>              <C>           <C>
      Construction loans                                  $    20,751      $  18,130     $    15,111

      Commercial loans                                         31,374         24,885          26,834
      Commercial real estate loans                            123,895        113,316          80,540
      Real estate-1-4 family residential                        1,445          3,801           1,410
      Home equity loans                                         3,677          3,193           2,769
      Consumer loans                                            7,986          5,691           6,640
      Deposit overdrafts                                          186             31             176
                                                        --------------  -------------  --------------
                                                              189,314        169,047         133,480

      Less allowance for loan losses                           (2,111)        (1,955)         (1,513)
                                                        --------------  -------------  --------------
      Net Loans                                           $   187,203    $   167,092     $   131,967
                                                        ==============  =============  ==============
</TABLE>




         Changes in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>
                                                       QUARTER ENDED,   YEAR ENDED,   QUARTER ENDED,
                                                         MARCH 31,     DECEMBER 31,     MARCH 31,
      (Dollars in thousands)                                2004           2003            2003
                                                        -------------  -------------   -------------
      <S>                                                 <C>            <C>             <C>
      Beginning balance                                   $    1,955     $    1,390      $    1,390
      Loans charged-off                                         (144)          (112)            (55)
      Recoveries of loans previously charged-off                   1             15              --
                                                        -------------  -------------   -------------
           Net charge-offs                                      (143)           (97)            (55)
                                                        -------------  -------------   -------------
      Provision for loan losses                                  299            662             178
                                                        -------------  -------------   -------------
      Ending balance                                      $    2,111     $    1,955      $    1,513
                                                        =============  =============   =============
</TABLE>

The following table presents the amounts of nonperforming assets at the dates
indicated



<TABLE>
<CAPTION>
                                                         MARCH 31,        DECEMBER 31,       MARCH 31,
     (Dollars in thousands)                                2004              2003              2003
                                                      --------------    --------------    --------------
<S>                                                      <C>               <C>               <C>
     Nonaccrual loans                                    $      343        $      510        $      345
     Loans past-due 90-days or more                               7                34                --
     Restructured loans                                          --                --                --
     Other real estate owned                                     --                --                --
                                                      --------------    --------------    --------------
          Total nonperforming assets                     $      350        $      544        $      345
                                                      ==============    ==============    ==============
</TABLE>



                                       10
<PAGE>


NOTE 5.

Deposits. Interest bearing deposits consist of the following:

<TABLE>
<CAPTION>
                                                               MARCH 31,     DECEMBER 31,      MARCH 31,
     (Dollars in thousands)                                      2004           2003             2003
                                                            -------------   -------------    ------------
<S>                                                          <C>              <C>              <C>
     NOW accounts                                            $    11,147      $    12,068      $    8,323
     Savings accounts                                              2,448            2,846           1,254
     Money market accounts                                       131,595          126,091         101,492
     Certificates of deposit under $100,000                       13,194           13,115          12,169
     Certificates of deposit $100,000 and over                    32,226           33,694          27,602
     Individual retirement accounts                                1,421            1,704           1,733
                                                            -------------   --------------   -------------
                                                             $   192,031      $   189,518     $   152,573
                                                            =============   ==============   =============
</TABLE>


NOTE 6.

Trust Preferred Capital Securities. On March 25, 2002, James Monroe Statutory
Trust I, a subsidiary of the Company, was formed for the purpose of issuing
redeemable trust preferred securities and purchasing the Company's junior
subordinated debentures, which are its sole assets. The Company owns all of
Trust I's outstanding common securities. On March 26, 2002, $5 million of the
trust preferred securities were issued in a pooled underwriting totaling
approximately $500 million. The securities bear interest at a rate equal to the
three month LIBOR plus 360 basis points, subject to a cap of 11% which is set
and payable on a quarterly basis. During 2003, the interest rates ranged from
5.00% to 4.61%. The rate for the quarterly period beginning December 26, 2003,
was 4.61%. The securities have a maturity date of March 25, 2032, and are
subject to varying call provisions beginning March 26, 2007.

On July 16, 2003, James Monroe Statutory Trust II, a newly formed subsidiary of
the Company, was formed for the purpose of issuing redeemable trust preferred
securities and purchasing the Company's junior subordinated debentures, which
are its sole assets. The Company owns all of Trust II's outstanding common
securities. On July 31, 2003, $4 million of the trust preferred securities were
issued in a private placement transaction. The securities bear interest at a
rate equal to the three month LIBOR plus 310 basis points, subject to a cap of
12% which is set and payable on a quarterly basis. During 2003, the interest
rates ranged from 4.21% to 4.24%. The securities have a maturity date of July
31, 2033, and are subject to ranging call provisions beginning July 31, 2008.

The trust preferred securities may be included in Tier 1 capital for regulatory
capital adequacy determination purposes up to 25% of Tier 1 capital. The portion
of the securities not considered as Tier 1 capital will be included in Tier 2
capital. At December 31, 2003, all of the trust preferred securities qualified
as Tier 1 capital.

The Company and the Trusts believe that, taken together, the Company's
obligations under the junior subordinated debentures, the Indentures, the Trust
Declarations and the Guarantees entered into in connection with the issuance of
the trust preferred securities constitute a full and unconditional guarantee by
the Company of the Trusts' respective obligations with respect to the trust
preferred securities.

Subject to certain exceptions and limitations, the Company may elect from time
to time to defer interest payments on the junior subordinated debt securities,
which would result in a deferral of distribution payments on the related trust
preferred securities.

NOTE 7.

Common Stock Split. The Company authorized a 3-for-2 stock split in the form of
a 50% stock dividend for shareholders of record on May 14, 2004, payable June 1,
2004. The earnings per common share for all periods presented have been restated
to reflect the stock split as has the Stockholders' Equity section of the
balance sheet as of March 31, 2004.

On May 16, 2003, the Company issued 459,968 additional shares necessary to
effect a 5-for-4 common stock split in the form of a 25% stock dividend to
shareholders of record April 25, 2003. The earnings per common share for all
periods prior to May 2003 have been restated to reflect the stock split.


                                       11
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

FORWARD LOOKING STATEMENTS

         This Management's Discussion and Analysis and other portions of this
report contain forward looking statements within the meaning of the Securities
Exchange Act of 1934, as amended, including statements of goals, intentions, and
expectations as to future trends, plans, events or results of Company operations
and policies and regarding general economic conditions. In some cases, forward
looking statements can be identified by use of such words as "may," "will,"
"anticipate," "believes," "expects," "plans," "estimates," "potential,"
"continue," "should," and similar words or phases. These statements are based
upon current and anticipated economic conditions, nationally and in the
Company's market, interest rates and interest rate policies, competitive
factors, government agencies and other third parties, which by their nature are
not susceptible to accurate forecast, and are subject to significant
uncertainty. Because of these uncertainties and the assumptions on which this
discussion and the forward looking statements are based, actual future
operations and results in the future may differ materially from those indicated
herein. Readers are cautioned against placing undue reliance on any such forward
looking statement.

INTRODUCTION

         This Management's Discussion and Analysis reviews the financial
condition and results of operations of the Company and its subsidiaries as of
and for the three months ended March 31, 2004 and 2003. Some tables cover more
than these periods to comply with Securities and Exchange Commission disclosure
requirements or to illustrate trends over a period of time. When reading this
discussion, reference should be made to the consolidated financial statements
and related notes that appear herein and to our consolidated financial
statements and footnotes thereto for the year ended December 31, 2003.

CRITICAL ACCOUNTING POLICIES

         There were no changes to the Company's critical accounting policies in
the first quarter of 2004. Critical accounting policies are those applications
of accounting principles or practices that require considerable judgment,
estimation, or sensitivity analysis by management. In the financial service
industry, examples, albeit not an all inclusive list, of disclosures that may
fall within this definition are the determination of the adequacy of the
allowance for loan losses, valuation of mortgage servicing rights, valuation of
derivatives or securities without a readily determinable market value, and the
valuation of the fair value of intangibles and goodwill. Except for the
determination of the adequacy of the allowance for loan losses, the Company does
not believe there are other practices or policies that require significant
sensitivity analysis, judgments, or estimations.

         Allowance for Loan Losses. The Company has developed a methodology to
determine, on a quarterly basis, an allowance to absorb probable loan losses
inherent in the portfolio based on evaluations of the collectibility of loans,
historical loss experience, peer bank loss experience, delinquency trends,
economic conditions, portfolio composition, and specific loss estimates for
loans considered substandard or doubtful. All commercial and commercial real
estate loans that exhibit probable or observed credit weaknesses are subject to
individual review. If necessary, reserves would be allocated to individual loans
based on management's estimate of the borrower's ability to repay the loan given
the availability of collateral and other sources of cash flow. Any reserves for
impaired loans are measured based on the present rate or fair value of the
underlying collateral. The Company evaluates the collectibility of both
principal and interest when assessing the need for a loss accrual. A composite
allowance factor that considers the Company's and other peer bank loss
experience ratios, delinquency trends, economic conditions, and portfolio
composition are applied to the total of commercial and commercial real estate
loans not specifically evaluated. A percentage of this composite allowance
factor is also applied to the aggregate of unused commercial lines of credit
which the Company has an obligation to honor but where the borrower has not
elected to draw on their lines of credit.

         Homogeneous loans, such as consumer installment, residential mortgage
loans, home equity loans, and smaller consumer loans are not individually risk
graded. Reserves are established for each homogeneous pool of loans based on the
expected net charge offs from a current trend in delinquencies, losses or
historical experience and general economic conditions. The Company has no
material delinquencies in these types of loans, and has not, since inception,
had a trend or an indication of a trend that would guide the Company in expected
material losses in these types of homogeneous pools of loans.


                                       12
<PAGE>

         The Company's allowance for loan losses is determined based upon a
methodology developed by management as described above and is approved by the
board of directors each quarter.

COMPANY HIGHLIGHTS SINCE DECEMBER 31, 2003 ARE:

        o   Assets grew $28.5 million (9%).
        o   Loans grew $20.2 million (12%).
        o   Deposits grew $28.3 million (11%).
        o   Net interest margin grew to 3.91% in the first quarter of 2004
            compared to 3.73% for the full year 2003 and 3.90% during the first
            quarter of 2003.
        o   Asset quality remained strong as nonperforming assets declined $194
            thousand to $350 thousand and the allowance for loan losses totaled
            1.12% of total loans outstanding.
        o   The Company ended the quarter with excellent liquidity and adequate
            capital to support further growth.
        o   The Company continued to increase productivity and efficiency,
            improving its efficiency ratio to 54.0% during the first quarter of
            2004 compared to 60.9% during the first quarter of 2003.
        o   The Company received regulatory approval to open a sixth banking
            office in Chantilly, Virginia.
        o   The Company declared a three for two stock split in the form of a
            50% stock dividend for shareholders of record on May 14, 2004,
            payable June 1, 2004.

FINANCIAL OVERVIEW

         The following discussion provides information about the results of
operations and financial condition, liquidity, and capital resources of Bancorp
and should be read in conjunction with our consolidated financial statements and
notes thereto for the year ended December 31, 2003.

BALANCE SHEET

         Total assets increased to $334.1 million at March 31, 2004, an increase
of $28.5 million from December 31, 2003, and an increase of $85.8 million from
March 31, 2003. The increase in assets since December 31, 2003 resulted from the
Company's emphasis on deposit generation as much as loan generation. During the
three months ended March 31, 2004, deposits increased $28.3 million over
December 31, 2003, with noninterest bearing deposits increasing $25.8 million,
and interest bearing deposits increasing $2.5 million. With the growth in
deposits, the Company was able to fund $20.2 million net increase in loans.
Securities declined $12.2 million due to the call of a number of government
agency securities, resulting in the short term liquidity position of the Company
improving $18.3 million.

RESULTS OF OPERATIONS

         First Quarter 2004 vs. First Quarter 2003. For the quarter ended March
31, 2004, the Company had net income of $754 thousand, or $.17 per diluted
share, compared to $464 thousand, or $.13 per diluted share, for the comparable
quarter of 2003. Annualized return on average assets was .98% for the three
months ended March 31, 2004, compared to .83% for the same quarter in 2003.
Return on average equity was 8.70% for the quarter ended March 31, 2004,
compared with 9.79% for the first quarter of 2003.

         During the first quarter of 2004, the Company continued to focus on
managing its net interest margin, especially in light of the sustained extremely
low rate environment in 2002 and 2003. In 2001, the Federal Reserve reduced
interest rates 11 times, for a total reduction of 475 basis points, an
unprecedented reduction both in terms of the number of, and amount of, rate
changes in a 12 month period. The Federal Reserve reduced interest rates an
additional 50 basis points in November 2002, and further reduced rates by 25
basis points in June 2003. These dramatic reductions in a relatively short
period continued to impact the loan and investment portfolios in 2003, as loans
repriced on a delayed basis or renewed at lower interest rates, and as
investment securities matured or were called, and were reinvested at lower
rates. This was partially offset by continued repricing upon renewal of
certificates of deposit. These rate reductions resulted in a reduction in the
net interest margin, which declined from 5.09% in 2000 to 4.56% in 2001 to 3.90%
in 2002 to 3.73% in 2003. Despite these reductions, the Company's practice of
managing its interest rate risk process has mitigated the negative effect of
such a severely declining rate environment. In fact, the net interest margin
improved in the first quarter of 2004, increasing to 3.91%.


                                       13
<PAGE>

         Although the Company has continued to grow in asset size since its
inception in 1998 it has been able to control its operating efficiency. The
Company's efficiency ratio improved in the first quarter of 2004 to 54.0%
compared to 60.9% during the first quarter of 2003. The efficiency ratio is a
non-GAAP financial measure, which we believe provides investors with important
information regarding our operational efficiency. We compute our efficiency
ratio by dividing noninterest expense by the sum of net interest income on a tax
equivalent basis and noninterest income, which includes securities gains or
losses and gains or losses on the sale of mortgage loans. Comparison of our
efficiency ratio with those of other companies may not be possible, because
other companies may calculate the efficiency ratio differently.




























                                       14
<PAGE>


QUARTERLY RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                              2004                                 2003
                                         --------------  -------------------------------------------------------------
(Dollars in thousands except share data)     FIRST          FOURTH           THIRD          SECOND          FIRST
                                         --------------  -------------   -------------  -------------- ---------------
<S>                                       <C>            <C>             <C>             <C>            <C>
RESULTS OF OPERATIONS:
Net interest income                       $    2,861     $    2,602      $    2,495      $    2,261     $     2,050
Provision for loan losses                        299            190             123             171             178
Other income                                     281            360             358             280             149
Noninterest expense                            1,697          1,568           1,608           1,448           1,340
Income before taxes                            1,146          1,204           1,122             922             681
Net income                                       754            792             735             610             464

PER SHARE DATA:
Earnings per share, basic (1)             $     0.17     $     0.21      $     0.21      $     0.17     $      0.13
Earnings per share, diluted (1)           $     0.16     $     0.19      $     0.19      $     0.17     $      0.13
Weighted average shares (1)
          outstanding - basic              4,429,442      3,956,060       3,499,775       3,452,919       3,451,269
                      - diluted            4,662,740      4,187,978       3,738,317       3,715,871       3,677,738
AT PERIOD END
Loans                                     $  189,314     $  169,047      $  154,012      $  145,687     $   133,480
Earning assets                               316,427        291,936         272,959         273,722         222,279
Total assets                                 334,104        305,651         288,914         297,054         248,349
Deposits                                     283,381        255,116         258,527         271,099         223,318
Stockholders' equity                          35,581         33,891          20,696          20,214          19,357

Book value per share (1)                  $     8.02     $     7.67      $     5.91      $     5.85      $     5.61
Shares outstanding (1)                     4,435,331      4,415,703       3,500,463       3,454,913       3,450,950

PERFORMANCE RATIOS:
Return on average assets                        0.98%          1.05%           1.01%           0.96%           0.83%
Return on average equity                        8.70%         11.50%          14.50%          12.00%           9.79%
Net interest margin                             3.91%          3.64%           3.65%           3.77%           3.90%
Efficiency ratio (2)                           54.01%         52.93%          56.36%          56.99%          60.94%

OTHER RATIOS:
Allowance for loan losses to total loans        1.12%          1.16%           1.15%           1.15%           1.13%
Equity to assets                               10.66%         11.09%           7.16%           6.80%           7.79%
Nonperforming loans to total loans              0.18%          0.30%           0.27%           0.29%           0.26%
Net charge-offs to total loans                  0.08%          0.07%           0.02%           0.01%           0.04%
Risk adjusted capital ratios:
          Tier (1)                              20.4%          21.9%           14.7%           13.5%           14.7%
          Total                                 21.4%          22.9%           16.9%           14.4%           15.6%
          Leverage ratio                        14.2%          14.3%            9.4%            9.5%           10.4%
</TABLE>

  (1) Information has been adjusted to reflect the 3-for-2 stock split in the
form of a 50% stock dividend for shareholders of record on May 14, 2004, payable
on June 1, 2004, and the 5-for-4 stock split in the form of a 25% stock dividend
paid on May 16, 2003.

  (2) Computed by dividing noninterest expense by the sum of net interest income
on a tax equivalent basis and noninterest income, including securities gains or
losses and gains or losses on the sale of loans. This is a non-GAAP financial
measure, which we believe provides investors with important information
regarding our operational efficiency. Comparison of our efficiency ratio with
those of other companies may not be possible, because other companies may
calculate the efficiency ratio differently.


                                       15
<PAGE>

NET INTEREST INCOME

         Net interest income is the difference between interest and fees earned
on assets and the interest paid on deposits and borrowings. Net interest income
is one of the major determining factors in the Bank's performance as it is the
principal source of revenue and earnings. Unlike the larger regional or
mega-banks that have significant sources of fee income, community banks, such as
James Monroe Bank, rely on net interest income from traditional banking
activities as the primary revenue source. Table 1 presents average balance
sheets and a net interest income analysis for the quarters ended March 31, 2004,
2003, and 2002. The Company did not have any tax exempt income during any of the
periods presented in Table 1.

         For the three month period ended March 31, 2004, net interest income
increased $811 thousand, or 40%, to $2.9 million from $2.1 million earned during
the same period in 2003. This was primarily a result of the increase in the
volume of earning assets, and partially offset by the effect of declining
interest rates, loan repricing, and short term investments. During the first
quarter of 2004, total average earning assets increased by $81.3 million, or
38%, from the same period of 2003. Average loans outstanding grew by $49.1
million, or 38%, during the first three months of 2004 compared to the same
period in 2003, but, at the same time, the yield on such loans decreased by 62
basis points. The yield on the securities portfolio declined 47 basis points.
Many securities were called throughout 2003 and into 2004. These called bonds
were reinvested in lower yielding securities. Additional securities were
purchased from the liquidity generated throughout the past year and invested in
securities at yields greater than federal funds, but less than yields generated
by loans.

COMPARISON OF AVERAGE BALANCES, INTEREST AND YIELDS

         The following table provides certain information relating to the
Company's average consolidated statements of financial condition and reflects
the interest income on interest earning assets and interest expense of interest
bearing liabilities for the periods indicated and the average yields earned and
rates paid for the quarters ended March 31, 2004, 2003, and 2002. These yields
and costs are derived by dividing income or expense by the average daily balance
of the related asset or liability for the periods presented. Yields on loans and
securities have been calculated on a tax equivalent basis. Nonaccrual loans have
been included in the average balances of loans receivable.
















                                       16
<PAGE>


TABLE 1: AVERAGE BALANCE SHEETS, NET INTEREST INCOME, AND YIELDS/RATES

<TABLE>
<CAPTION>
                                                             Three Months Ended                    Three Months Ended
                                                               March 31, 2004                         March 31, 2003
                                                   ------------------------------------- -------------------------------------
                                                     Average                   Yield/       Average                   Yield/
  (Dollars in thousands)                             Balance       Interest     Rate        Balance      Interest      Rate
                                                   ------------ ------------- ---------- ------------- ------------ ----------
<S>                                                   <C>            <C>          <C>        <C>           <C>          <C>
  ASSETS
  Loans:
    Commercial                                        $ 47,033       $   659      5.64%      $ 38,143      $   576      6.12%
    Commercial real estate                             117,290         1,938      6.65%        76,803        1,393      7.36%
    Consumer                                            13,027           186      5.74%        13,309          221      6.73%
                                                   ------------ ------------- ---------- ------------- ------------ ----------
     Total loans                                       177,350         2,783      6.31%       128,255        2,190      6.93%
  Mortgage loans held for sale                             576             8      5.59%             2           --      0.00%
  Taxable securities                                   114,394         1,023      3.60%        69,894          701      4.07%
  Federal funds sold and cash equivalents                2,334             9      1.55%        15,169           36      0.96%
                                                   ------------ ------------- ---------- ------------- ------------ ----------
  TOTAL EARNING ASSETS
                                                       294,654         3,823      5.22%       213,320        2,927      5.56%
  Less allowance for loan losses                        (2,014)                                (1,428)
  Cash and due from banks                               12,916                                 11,498
  Premises and equipment, net                            1,484                                  1,364
  Other assets                                           2,362                                  1,352
                                                   ------------                          -------------
  TOTAL ASSETS                                        $309,402                               $226,106
                                                   ============                          =============

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Interest-bearing demand deposits                    $ 11,708        $   19      0.65%      $  8,168       $   18      0.89%
  Money market deposit accounts                        126,366           535      1.70%       101,513          500      2.00%
  Savings accounts                                       2,759             8      1.17%         1,321            5      1.54%
  Time deposits                                         47,538           269      2.28%        40,393          290      2.91%
  Trust preferred capital notes                          9,000           105      4.71%         5,000           64      5.12%
  Other borrowed funds                                   7,686            26      1.34%            --           --      0.00%
                                                   ------------ ------------- ---------- ------------- ------------ ----------

     TOTAL INTEREST-BEARING LIABILITIES                205,057           962      1.89%       156,395          877      2.27%
                                                   ------------ ------------- ---------- ------------- ------------ ----------

  Net interest income and net yield on
  interest earning assets                                           $  2,861      3.91%                   $  2,050      3.90%
                                                                ============= ==========               ============ ==========

  Noninterest-bearing demand deposits                   68,432                                 49,662
  Other liabilities                                      1,039                                    830
  Stockholders' equity                                  34,874                                 19,219
                                                   ------------                          -------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUTIY       $309,402                               $226,106
                                                   ============                          =============

</TABLE>

         Interest expense for the first three months of 2004 was $962 thousand
compared with $877 thousand in interest expense for the first three months of
2003.

         Table 2 shows the composition of the net change in net interest income
for the periods indicated, as allocated between the change in net interest
income due to changes in the volume of average earning assets and interest
bearing liabilities, and the changes in net interest income due to changes in
interest rates. As the table shows, the increase in net interest income of $811
thousand for the three months ended March 31, 2004, as compared to the three
months ended March 31, 2003, is due to the growth in the volume of earning
assets and interest bearing liabilities. While the decrease in interest rates
has, to date, affected total interest income, and to a lesser extent, total
interest expense, management has controlled its exposure to changes in interest
rates such that the negative effect of the decline in interest rates and the
decline in loan yields, as adjustable rate loans have repriced downward over the
past several years, resulted in a modest


                                      17
<PAGE>

$515 thousand reduction of net interest income, whereas the growth in earning
assets and deposits resulted in an increase of $1.3 million to net interest
income.

         The yield on earning assets declined from 5.56% for the first quarter
of 2003 to 5.22% in the first quarter of 2004. The overall yield on loans
dropped 62 basis points and the securities portfolio declined 47 basis points
reflecting the overall decline in interest rates from first quarter last year to
first quarter this year.

         Interest expense during these comparable quarters, first quarter 2004
versus first quarter 2003, increased $85 thousand or 10%, from $877 thousand in
interest expense in 2003 to $962 thousand in interest expense in 2004. The
overall cost of interest bearing liabilities decreased 38 basis points from
2.27% in 2003 to 1.89% in 2004. The benefit of the decline in interest rates
exceeded the increase in interest expense resulting from $48.7 million more in
average interest bearing liabilities.

         The resulting effect of the changes in interest rates between the
quarters ended March 31, 2004 and 2003, offset by changes in the volume and mix
of earning assets and interest bearing liabilities resulted in a virtually
stable net interest margin of 3.91% in 2004 versus 3.90% in 2003. Management
believes this stability is indicative of the Company's interest rate risk
management process.

TABLE 2

<TABLE>
<CAPTION>
                                                      March 31                                    March 31
                                                   2004 vs. 2003                               2003 vs. 2002
                                    -------------------------------------------  -------------------------------------------
                                                            Due to Change                           Due to Change
                                      Increase               in Average          Increase             in Average
                                         or         ---------------------------     or        ----------------------------
(Dollars in thousands)               (Decrease)       Volume          Rate       (Decrease)       Volume           Rate
                                    -------------   ------------   ------------  ------------   ------------    ------------
<S>                                      <C>            <C>           <C>            <C>            <C>            <C>
EARNING ASSETS:
Loans                                    $   593        $   851       $  (258)       $   482        $   600        $  (118)
Mortgage loans                                 8            453          (445)            --             --             --
Taxable securities                           322            393           (71)           410            471            (61)
Federal funds sold                           (27)           (31)            4              1              3             (2)
                                    -------------   ------------   ------------  ------------   ------------    ------------
   Total interest income                     896          1,666          (770)           893          1,074           (181)

INTEREST BEARING LIABILITIES:
Interest bearing demand deposits               1              8            (7)             4              6             (2)
Money market deposit accounts                 35            124           (89)           195            250            (55)
Savings deposits                               3              6            (3)            --             --             --
Time deposits                                (21)            52           (73)           (47)           176           (223)
Borrowed funds                                67            150           (83)            59             60             (1)
                                    -------------   ------------   ------------  ------------   ------------    ------------
   Total interest expense                     85            340          (255)           211            492           (281)
                                    -------------   ------------   ------------  ------------   ------------    ------------
   Net interest income                   $   811       $  1,326       $  (515)       $   682        $   582         $  100
                                    =============   ============   ============  ============   ============    ============
</TABLE>

PROVISION AND ALLOWANCE FOR LOAN LOSSES

         The provision for loan losses is based upon a methodology that includes
among other factors, a specific evaluation of commercial and commercial real
estate loans that are considered special mention, substandard or doubtful. All
other loans are then categorized in pools of loans with common characteristics.
A potential loss factor is applied to these loans which considers the historical
charge off history of the Company and its peer group, trends in delinquencies
and loan grading, current economic conditions, and factors that include the
composition of the Company's loan portfolio. At March 31, 2004, the Company had
a $187,000 impaired loan on nonaccrual status, but which is current as to
principal and interest payments, and an additional $350,000 in loans on
nonaccrual status or past due 90 days or more and still accruing. See


                                       18
<PAGE>

Note 4 to the unaudited consolidated financial statements for additional
information regarding the Company's asset quality and allowance for loan losses.

         A methodology established in 2003 determining an appropriate allowance
for loan losses was approved by the Audit Committee and the Board of Directors.
The quarterly provision is approved by the Board. The methodology is reevaluated
on a quarterly basis. Pending the development of a negative trend with respect
to past due loans or charge offs or significant changes in economic conditions,
the Company continues to maintain an allowance it believes is adequate.

         As reflected in Table 3 below, the allowance is allocated among the
various categories of loans based upon the methodology described herein.

TABLE 3

         The following table shows the allocation of the allowance for loan
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. See Note 4 to the unaudited consolidated financial statements included
in this report for additional information regarding the allowance for loan
losses and nonperforming assets.

<TABLE>
<CAPTION>

                                           MARCH 31, 2004          DECEMBER 31, 2003           MARCH 31, 2003
                                      ------------------------- ------------------------- -------------------------
                                                    Percent                    Percent                   Percent
                                                    Of Total                  Of Total                  Of Total
(Dollars in thousands)                  Amount       Loans         Amount       Loans        Amount       Loans
                                        ------       -----         ------       -----        ------       -----
<S>                                     <C>            <C>         <C>           <C>         <C>           <C>
Construction loans                      $    49        11.0%       $    50       10.8%       $    43       11.3%
Commercial loans                          1,359        16.6%           984       14.7%           695       18.7%
Commercial real estate loans                635        65.4%           823       67.0%           707       61.8%
Real estate 1-4 family residential           19         0.8%             4        2.2%            13        3.4%
Home equity loans                            14         1.9%             9        1.9%             9        2.1%
Consumer loans                               35         4.3%            85        3.4%            46        2.8%
                                      ----------     -------     ----------    -------     ----------     ------
Balance end of the period               $ 2,111         100%       $ 1,955        100%       $ 1,513        100%
                                      ==========     =======     ==========    =======     ==========     ======
</TABLE>


LOANS

         The loan portfolio is the largest component of earning assets and
accounts for the greatest portion of total interest income. At March 31, 2004,
total loans were $189.3 million, a 41.8% increase from the $133.5 million in
loans outstanding at March 31, 2003. Total loans at March 31, 2004 represented a
12.0% increase from the $169.0 million of loans at December 31, 2003. In
general, loans are internally generated with the exception of a small percentage
of participation loans purchased from other local community banks. Lending
activity is largely confined to our market of Northern Virginia. We do not
engage in highly leveraged transactions or foreign lending activities.

         Loans in the commercial category, as well as commercial real estate
mortgages, consist primarily of short term (five year or less final maturity)
and/or floating or adjustable rate commercial loans made to small to medium
sized companies. We do not have any agricultural loans in the portfolio. There
are no substantial loan concentrations to any one industry or to any one
borrower.

         Virtually all of the Company's commercial real estate mortgage and
development loans, which account for approximately 76% of our total loans at
March 31, 2004, relate to property in the Northern Virginia market. As such,
they are subject to risks relating to the general economic conditions in that
market, and the market for real estate in particular. While the region has
experienced some decline in economic activity during 2002 and 2003, the local
real estate market remains generally strong, and the Company attempts to
mitigate risk though careful underwriting, including primary reliance on the
borrower's financial capacity and ability to repay without resort to the
property, and lends primarily with respect to properties occupied or managed by
the owner.

                                       19
<PAGE>

         The Company's 1-4 family residential real estate loans are generally
not the typical purchase money first mortgage loan or refinancing, but are loans
made for other purposes and the collateral obtained is a first deed of trust on
the residential property of the borrower. The underlying loan would have a final
maturity much shorter than the typical first mortgage and may be a variable or
fixed rate loan. As reflected in Table 4, 29% of the Company's loans are fixed
rate loans and 97% of the Company's loans reprice or have a maturity date that
falls within five years.

         Consumer loans consist primarily of secured installment credits to
individuals. The consumer portfolio, which includes consumer loans, home equity
loans, and 1-4 family residential loans, represents 7.0% of the loan portfolio
at March 31, 2004, as compared to 8.3% at March 31, 2003 and 7.5% at December
31, 2003.

TABLE 4

         Table 4 shows the maturities of the loan portfolio and the sensitivity
of loans to interest rate fluctuations at March 31, 2004. Maturities are based
on the earlier of contractual maturity or repricing date. Demand loans, loans
with no contractual maturity and overdrafts are represented in one year or less.

<TABLE>
<CAPTION>
                                                                    MARCH 31, 2004
                                               ---------------------------------------------------------
                                                                AFTER ONE
                                                  WITHIN       YEAR THROUGH   AFTER FIVE
     (Dollars in thousands)                      ONE YEAR       FIVE YEARS      YEARS           TOTAL
                                               -----------     ------------  ------------   ------------
     <S>                                       <C>             <C>             <C>          <C>
     Construction loans                        $   20,751      $        --                  $   20,751
     Commercial loans                              27,651            3,723           --         31,374
     Commercial real estate loans                  34,295           83,653        5,947        123,895
     Real estate 1-4 family residential               457              346          642          1,445
     Home equity loans                              3,677               --           --          3,677
     Consumer loans                                 5,751            2,234            1          7,986
     Deposit overdrafts                               186               --           --            186
                                              ------------    -------------   ----------   ------------
        Total                                  $   92,768      $    89,956     $  6,590     $  189,314
                                              ============    =============   ==========   ============
</TABLE>

<TABLE>
<CAPTION>
                                                                AFTER ONE
                                                  WITHIN       YEAR THROUGH   AFTER FIVE
     (Dollars in thousands)                      ONE YEAR       FIVE YEARS      YEARS           TOTAL
                                              ------------    -------------  ------------  -------------
     <S>                                        <C>             <C>            <C>          <C>
     Fixed rate                                 $  12,780       $   34,838     $  6,590     $   54,208
     Variable/Adjustable rate                      79,988           55,118           --        135,106
                                              ------------    -------------   ----------   ------------
        Total                                   $  92,768       $   89,956     $  6,590     $  189,314
                                              ============    =============   ==========   ============
</TABLE>

INVESTMENT SECURITIES

         The Company currently, and for all periods shown, classifies its entire
securities portfolio as available for sale. Increases in the portfolio have
occurred whenever deposit growth has outpaced loan demand and the forecast for
loan 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, our investment philosophy is to acquire high quality
government agency securities or high grade corporate bonds, with a maturity of
five to six years or less in the case of fixed rate securities. In the case of
mortgage backed securities, the policy is to invest only in those securities
whose average expected life is projected to be approximately five to six years
or less. Mortgage backed securities with a maturity of ten years or more are
either adjustable rate securities or the expected life of the mortgage pool is
generally no more than five or six years. To the extent possible, we attempt to
"ladder" the one time call dates for all our securities. The Company's
investment policy is driven by its interest rate risk process and the need to
minimize the effect of changing interest rates to the entire balance sheet.


                                       20
<PAGE>


         The following table provides information regarding the composition of
our investment portfolio at the dates indicated.

TABLE 5

<TABLE>
<CAPTION>
                                                        AT MARCH 31, 2004              AT MARCH 31, 2003
                                                   --------------------------    ---------------------------
    (Dollars in thousands)                                         Percent of                   Percent of
                                                     Balance        Portfolio       Balance      Portfolio
                                                   ------------  ------------    -------------  ------------
    <S>                                              <C>              <C>           <C>              <C>
    AVAILABLE FOR SALE (FAIR VALUE):
         U.S. Agency                                 $  80,739         73.3%        $  27,265         41.9%
         Mortgage-backed securities                     19,414         17.6%           18,092         27.8%
         Adjustable rate mortgage-backed securities      2,251          2.0%            5,576          8.6%
         Corporate bonds                                 6,611          6.0%           13,352         20.5%
         Restricted stock                                1,143          1.0%              781          1.2%
                                                   ------------  ------------    -------------  ------------
    TOTAL                                            $ 110,158        100.0%        $  65,066        100.0%
                                                   ============  ============    =============  ============
</TABLE>





TABLE 6

         The following table provides information regarding the maturity
composition of our investment portfolio, at fair value, at March 31, 2004.

<TABLE>
<CAPTION>
                                                                    MATURITY OF SECURITIES
                                                                       Years to Maturity

                                  Within             Over 1  Year        Over 5 Years          Over
(Dollars in thousands)            1 Year            through 5 Years     through 10 Years      10 Years            Total
                                 --------          ------------------- -----------------     --------           --------
                                  Amount  Yield     Amount      Yield   Amount     Yield       Amount    Yield    Amount   Yield
                                 -------- ------   --------    ------- -------    ------      --------  -------  -------- -------
<S>                              <C>        <C>    <C>           <C>     <C>          <C>     <C>         <C>    <C>        <C>
AVAILABLE FOR SALE (FAIR VALUE):
U. S. Agency                      $    --     --   $  60,557     2.95%   $ 17,103     4.31%   $  3,079   6.00%   $ 80,739   3.35%
Mortgage-backed securities             63   6.46%      1,489     4.77%         --       --      17,862   4.69%     19,414   4.70%
Adjustable rate mortgage-backed
  securities                           --     --          --       --          --       --       2,251   4.38%      2,251   4.38%
Corporate bonds                        --     --       6,611     4.95%         --       --         --      --       6,611   4.95%
Restricted stock                       --     --          --       --          --       --       1,143   4.78%      1,143   4.78%
                                 ---------         ----------            ---------            ---------          ---------
   Total debt securities
     Available for sale          $     63   6.46%  $  68,657     3.18%   $ 17,103     4.31%   $ 24,335   4.83%   $110,158   3.72%
                                 =========         ==========            =========            =========          =========
</TABLE>




                                       21
<PAGE>


LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT

         The primary objectives of asset and liability management are to provide
for the safety of depositor and investor funds, assure adequate liquidity, and
maintain an appropriate balance between interest sensitive earning assets and
interest bearing liabilities. Liquidity management involves the ability to meet
the cash flow requirements of customers, who may be depositors wanting to
withdraw funds or borrowers needing assurance that sufficient funds will be
available to meet their credit needs.

         We define liquidity for these purposes as the ability to raise cash
quickly at a reasonable cost without principal loss. The primary liquidity
measurement we utilize is called the Basic Surplus, which captures the adequacy
of our access to reliable sources of cash relative to the stability of our
funding mix of deposits. Accordingly, we have established borrowing facilities
with other banks (Federal funds) and the Federal Home Loan Bank as sources of
liquidity in addition to the deposits.

         The Basic Surplus approach enables us to adequately manage liquidity
from both tactical and contingency perspectives. At March 31, 2004, our Basic
Surplus ratio (net access to cash and secured borrowings as a percentage of
total assets) was approximately 14% compared to the present internal minimum
guideline range of 5% to 10%.

         Financial institutions utilize a number of methods to evaluate interest
rate risk. Methods range from the original static gap analysis (the difference
between interest sensitive assets and interest sensitive liabilities repricing
during the same period, measured at a specific point in time), to running
multiple simulations of potential interest rate scenarios, to rate shock
analysis, to highly complicated duration analysis.

         One tool that we utilize in managing our interest rate risk is the
matched funding matrix. The matrix arrays repricing opportunities along a time
line for both assets and liabilities. The longer term, more fixed rate sources
are presented in the upper left hand corner while the shorter term, more
variable rate items, are at the lower left. Similarly, uses of funds, such as
assets, are arranged across the top moving from left to right.

         The body of the matrix is derived by allocating the longest fixed rate
funding sources to the longest fixed rate assets and shorter term variable
sources to shorter term variable uses. The result is a graphical depiction of
the time periods over which we expect to experience exposure to rising or
falling rates. Since the scales of the liability and assets sides are identical,
all numbers in the matrix would fall within the diagonal lines if we were
perfectly matched across all repricing time frames. Numbers outside the diagonal
lines represent two general types of mismatches: liability sensitive in time
frames when numbers are to the left of the diagonal line and asset sensitive in
time frames when numbers are to the right of the diagonal line.

         At March 31, 2004, we were modestly liability sensitive in the short
term and then we become asset sensitive out beyond two years. This is primarily
caused by the assumptions used in allocating a repricing term to nonmaturity
deposits--demand deposits, savings accounts, and money market deposit accounts.
The actual impact due to changes in interest rates is difficult to quantify in
that the administrative ability to change rates on these products is influenced
by competitive market conditions in changing rate environments, prepayments of
loans, customer demands, and many other factors. These products may not reprice
consistently with assets such as variable rate commercial loans or other loans
that immediately reprice as the prime rate changes. While the traditional gap
analysis and the matched funding matrix show a general picture of our potential
sensitivity to changes in interest rates, it cannot quantify the actual impact
of interest rate changes.

         Thus, the Company manages its exposure to possible changes in interest
rates by simulation modeling or "what if" scenarios to quantify the potential
financial implications of changes in interest rates. In practice, each quarter
approximately 14 different "what if" scenarios are evaluated which include the
following scenarios: Static Rates, Most Likely Rate Projection, Rising Rate
Environment, Declining Rate Environment, Ramp Up 100bp and 200bp over 12-months,
and Ramp Down 100bp and 200bp over 12-months scenarios. In addition, 8 rate
shock scenarios are modeled at 50bp up and 50bp down increments but not below
zero. At March 31, 2004, the following 12-month impact on net interest income is
estimated to range from a positive impact of 4.2% if rates rise to a negative
impact of (2.7)% if rates continue to decline for the multiple scenarios. The
Company believes these ranges of exposure to changes in interest rates to be
well within acceptable range given a wide variety of potential rate change
scenarios. This process is performed each quarter to ensure the Company is not
materially at risk to possible changes in interest rates.


                                       22
<PAGE>


         The following are the projected potential percentage impact on the
Company's net interest income over the next 12 months for the most likely to
occur scenarios, but measured against a static interest rate environment as of
March 31, 2004. The Company is positioned to improve earnings if and when rates
rise. With respect to further reductions in rates, Declining Rate scenario and
the Ramp Down scenarios, the Company would experience further negative
implications on margins and earnings; however, the Company does not believe that
a 200 basis point decline is realistic given the already extremely low interest
rates. Thus management believes the exposure to further changes in interest
rates would not have a material negative effect on the results of operations.

              Static Rates                            -0-%
              Most Likely Rates                       2.6%
              Ramp Up 100bp- 12 months                3.3%
              Ramp Up 200bp- 12 months                4.2%
              Ramp Down 100bp- 12 months            (0.2)%
              Ramp Down 200bp- 12 months            (1.6)%
              Rising Rate Scenario                    2.9%
              Declining Rate Scenario               (2.7)%

NONINTEREST INCOME AND EXPENSE

         Noninterest income consists primarily of services charges on deposit
accounts and fees and other charges for banking services. Noninterest expense
consists primarily of salary and benefit costs and occupancy and equipment
expense. To date, the company has not been required to pay any premiums for
deposit insurance. To the extent that deposit premiums may become required, the
Company's results of operations will be adversely affected.

         The following table shows the detail of noninterest income for the
three month periods ended March 31, 2004 and 2003.

TABLE 7

         The categories of noninterest income that exceed 1% of operating
revenue are as follows:

                                               THREE-MONTHS ENDED MARCH 31,
                                             ---------------------------------
     (Dollars in thousands)                       2004               2003
                                             --------------     --------------
     Service charges on deposit accounts         $      84          $      74
     Cash management fees                               24                 26
     Other fee income                                   70                 34
     Gain on sale of mortgages                          63                 --
     Gain on sale of securities                         40                 15
                                             --------------     --------------
        Total noninterest income                 $     281          $     149
                                             ==============     ==============


         The increases in noninterest income for the each period shown are the
result of the continued growth of the Company and the expansion of products
resulting in fee income. During the second quarter of 2003, we began originating
conforming residential mortgage loans on a pre-sold basis, for sale to secondary
market investors, servicing released.

TABLE 8

         The categories of noninterest expense that exceed 1% of operating
revenue are as follows:

                                       23
<PAGE>


                                                THREE-MONTHS ENDED MARCH 31,
                                            ----------------------------------
     (Dollars in thousands)                      2004              2003
                                            ----------------  ----------------
     Salaries and benefits                      $     1,023        $      690
     Occupancy cost, net                                165               155
     Equipment expense                                   74                96
     Professional fees                                   45                36
     Data processing costs                              105               100
     Courier and express services                        41                28
     Advertising and public relations                    44                30
     State franchise tax                                 65                43
     Other                                              135               162
                                            ----------------  ----------------
        Other noninterest expense               $     1,697        $    1,340
                                            ================  ================

         Noninterest expense increased $357 thousand or 27% from $1.3 million to
$1.7 million for the first quarter of 2004, as compared to the same period in
2003. Approximately 93% of this increase is in salary and benefit costs. In the
second quarter of 2003 the Company added personnel to staff the newly formed
mortgage division and during 2003 the Company added a number of commercial loan
officers and processing staff to develop new business and support the growth in
customers and transactions being processed. The increase in state franchise tax
is due to the increased capital of the Bank from earnings retention and a
capital infusion in January 2004.

DEPOSITS AND OTHER BORROWINGS

         The principal sources of funds for the Bank are core deposits (demand
deposits, NOW accounts, money market accounts, savings accounts and certificates
of deposit less than $100,000) from the local market areas surrounding the
Bank's offices. The Bank's deposit base includes transaction accounts, time and
savings accounts and accounts which customers use for cash management and which
provide the Bank with a source of fee income and cross marketing opportunities
as well as a low cost source of funds. Time and savings accounts, including
money market deposit accounts, also provide a relatively stable and low cost
source of funding.

TABLE 9

         The following table reflects deposits by category for the periods
indicated.

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED MARCH 31,
                                                  --------------------------------------------------------------------------------
                                                      2004                        2003                       2002
                                                  --------------------------  --------------------------  ------------------------
(Dollars in thousands)                               Average     Average         Average     Average        Average     Average
                                                     Balance      Rate           Balance      Rate          Balance      Rate
                                                     --------    --------        --------    --------       --------    --------
<S>                                                  <C>             <C>         <C>            <C>         <C>            <C>
Deposits
    Noninterest-bearing demand                       $  68,195         --%       $  49,662        --%       $  31,032        --%
    Interest-bearing demand                             11,708       0.65            8,168      0.89            5,241      1.08
    Money Market                                       126,366       1.70          101,513      2.00           46,362      2.67
    Savings                                              2,759       1.17            1,321      1.54            1,058      1.92
    Certificates of deposit of $100,000 or more         33,003       2.25           26,956      2.83           19,161      4.06
    Other time                                          14,535       2.32           13,437      3.00           13,406      4.39
                                                  -------------  -----------  -------------  -----------  ------------  ----------
Total interest bearing deposits                        188,371       1.77%         151,395      2.18%          85,228      3.15%
                                                  -------------               -------------               ------------
Total deposits                                       $ 256,567                   $ 201,057                  $ 116,260
                                                  =============               =============               ============
</TABLE>



                                       24
<PAGE>


TABLE 10

         The following table indicates the amount of certificates of deposit of
less than $100,000 and $100,000 or more, and their remaining maturities as of
March 31, 2004.

<TABLE>
<CAPTION>

(Dollars in thousands)                         3 MONTHS           4 TO 6        7 TO 12         OVER 12
                                               OR LESS            MONTHS         MONTHS          MONTHS         TOTAL
                                              --------------------------------------------------------------------------
<S>                               <C>            <C>             <C>            <C>             <C>           <C>
Certificates of deposit less than $100,000       $  3,540        $  3,748       $  5,322        $  2,005      $  14,615
Certificates of deposit of $100,000 or more         6,766           9,548         14,340           1,572         32,226
                                              ------------    ------------   ------------    ------------   ------------
                                                 $ 10,307        $ 13,297       $ 19,661        $  3,577      $  46,841
                                              ============    ============   ============    ============   ============
</TABLE>


CAPITAL MANAGEMENT

         Management monitors historical and projected earnings, asset growth, as
well as its liquidity and various balance sheet risks in order to determine
appropriate capital levels. At March 31, 2004, stockholders' equity increased
$16.3 million to $35.6 million from the $19.4 million in equity at March 31,
2003 as a result of the $2.9 million increase in retained earnings over the past
twelve months and the $12.8 million net proceeds from the equity sold in
November 2003.

         Capital Requirement. A comparison of the Company's and the Bank's
regulatory capital at March 31, 2004, compared to minimum regulatory capital
guidelines is shown in the table that follows.

TABLE 11

                                              Minimum          Minimum To Be
                                 Actual     Guidelines      "Well Capitalized"
                               ---------  -------------    -------------------

   Total Risk-Based Capital
        Company                  21.4%          8.0%                N/A
        Bank                     13.2%          8.0%               10.0%

   Tier 1 Risk-Based Capital
        Company                  20.4%          4.0%                N/A
        Bank                     12.2%          4.0%                6.0%

   Tier 1 Leverage Ratio
        Company                  14.2%          4.0%                N/A
        Bank                      8.8%          4.0%                5.0%



ITEM 3.  CONTROLS AND PROCEDURES

         The Company's management, under the supervision and with the
participation of the Chief Executive Officer and Chief Financial Officer,
evaluated, as of the last day of the period covered by this report, the
effectiveness of the design and operation of the Company's disclosure controls
and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures were adequate. There were no changes in the Bank's internal control
over financial reporting (as defined in Rule 13a-15 under the Securities Act of
1934) during the quarter ended March 31, 2004 that has materially affected, or
is reasonably likely to materially affect, the Bank's internal control over
financial reporting.


                                       25
<PAGE>


                           PART II. Other Information

Item 1.  Legal Proceedings
         None

Item 2 - Changes in Securities and Small Business Issuer Purchases of
         Equity Securities

     (a) Modification of Rights of Registered Securities.    None

     (b) Issuance or Modification of Other Securities Affecting Rights of
         Registered Securities.     None

     (c) Sales of Unregistered Securities.     None

     (d) Use of Proceeds.     Not Applicable.

     (e) Small Business Issuer Purchases of Securities.     None

Item 3.  Defaults Upon Senior Securities
         None

Item 4.  Submission of Matters to a Vote of Security Holders
         None

Item 5.  Other Information
         None

Item 6.  Exhibits and reports on Form 8-K

(a)      Exhibits

Number      Description
-----------------------
3(a)        Articles of Incorporation of James Monroe Bancorp, as amended, filed
            herewith
3(b)        Bylaws of James Monroe Bancorp (1)
4(a)        Indenture, dated as of March 26, 2002 between James Monroe Bancorp,
            Inc. and State Street Bank and Trust Company of Connecticut,
            National Association, as trustee (2)
4(b)        Amended and Restated Declaration of Trust, dated as of March 26,
            2002 among James Monroe Bancorp, Inc., State Street Bank and Trust
            Company of Connecticut, National Association, as Institutional
            Trustee, and John R. Maxwell, David W. Pijor and Richard I. Linhart
            as Administrators (2)
4(c)        Guarantee Agreement dated as of March 26, 2002, between James Monroe
            Bancorp, Inc. and State Street Bank and Trust Company of
            Connecticut, National Association, as trustee (2)
4(d)        Indenture, dated as of July 31, 2003 between James Monroe Bancorp,
            Inc. and U.S. Bank, National Association, as trustee (2)
4(e)        Amended and Restated Declaration of Trust, dated as of July 31, 2003
            among James Monroe Bancorp, Inc., U.S. Bank, National Association,
            as Institutional Trustee, and John R. Maxwell, David W. Pijor and
            Richard I. Linhart as Administrators (2)
4(f)        Guarantee Agreement dated as of July 31, 2003, between James Monroe
            Bancorp, Inc. and U.S. Bank, National Association, as trustee (2)
10(a)       Employment contract between James Monroe Bancorp and John R.
            Maxwell(3)
10(b)       Employment contract between James Monroe Bancorp and Richard I.
            Linhart (4)
10(c)       James Monroe Bancorp1998 Management Incentive Stock Option Plan (5)
10(d)       James Monroe Bancorp 2000 Director's Stock Option Plan (6)
10(e)       James Monroe Bancorp, Inc. 2003 Equity Compensation Plan (7)
11          Statement re: Computation of Per Share Earnings

   Please refer to Note 2 to the financial statements included in this report.


                                       26
<PAGE>

21          Subsidiaries of the Registrant
31(a)       Certification of Chief Executive Officer
31(b)       Certification of Chief Financial Officer
32(a)       Certification of Chief Executive Officer
32(b)       Certification of Chief Financial Officer
--------------------------
     (1) Incorporated by reference to exhibit 3(b) to the Company's registration
         statement on Form SB-2 (No. 333-38098).
     (2) Not filed in accordance with the provisions of Item 601(b)(4)(iii) of
         Regulation SK. The Company agrees to provide a copy of these documents
         to the Commission upon request.
     (3) Incorporated by reference to exhibit of same number to the Company's
         Annual Report on Form 10-KSB for the year ended December 31, 2002.
     (4) Incorporated by reference to exhibit of same number to the Company's
         Annual Report on Form 10-KSB for the year ended December 31, 2003.
     (5) Incorporated by reference to exhibit 10(b) to the Company's
         registration statement on Form SB-2 (No. 333-38098).
     (6) Incorporated by reference to exhibit 10(c) to the Company's
         registration statement on Form SB-2 (No. 333-38098).
     (7) Incorporated by reference to exhibit 10(e) to the Company's Quarterly
         Report on Form 10-QSB for the quarter ended March 31, 2003.

(b)      Reports on Form 8-K

         On January 20, 2004, the Company filed a current report on Form 8-K
under items 9 and 12 thereof, reporting earnings for the year ended December 31,
2003.












                                       27
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:    May 11, 2004        BY: /s/John R. Maxwell
                                 ------------------
                             John R. Maxwell, President &
                             Chief Executive Officer



Date:    May 11, 2004        BY:  /s/ Richard I. Linhart
                                  ----------------------
                             Richard I. Linhart, Executive Vice
                             President & Chief Operating and Financial Officer

















                                       28