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 June 30, 2003 _________________


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

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 July 31, 2003.

            Common stock, $1 par value--2,333,654 shares outstanding

Transitional Small Business Disclosure Format (check one)   Yes [   ]   No [ X ]



<PAGE>

                           JAMES MONROE BANCORP, INC.
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 Page No.
<S>               <C>                                                                              <C>
Part I.           Financial Information

                  Item. 1. Financial Statements
                           Consolidated Balance Sheets at June 30, 2003,
                                December 31, 2002, and June 30, 2002                                3
                           Consolidated Income Statements for the three-months
                                 and six-months ended June 30, 2003 and 2002                        4
                           Consolidated Statements of Changes in Stockholders'
                                Equity for the six-months ended June 30, 2003 and 2002              5
                           Consolidated Statements of Cash Flows for the six-months
                                ended June 30, 2003 and 2002                                        6
                           Notes to Interim Consolidated Financial Statements                       7

                  Item 2.  Management's Discussion and Analysis or Plan
                           of Operation                                                            13

                  Item 3.  Controls and Procedures                                                 27

Part II.          Other Information

                  Item 1.  Legal Proceedings                                                       28

                  Item 2.  Changes in Securities and Use of Proceeds                               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 1. FINANCIAL INFORMATION

Item. 1. FINANCIAL STATEMENTS

                                             JAMES MONROE BANCORP, INC.
                                                  AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
                                        ($ in thousands, except share data)

<TABLE>
<CAPTION>
                                                                      (Unaudited)        (Audited)          (Unaudited)
                                                                        JUNE 30,        DECEMBER 31,          JUNE 30,
                                                                         2003              2002                 2002
                                                                      -----------       ------------        -----------
     ASSETS
<S>                                                                    <C>                <C>               <C>
Cash and due from banks                                                $ 22,182           $ 11,051          $ 12,703
Interest-bearing deposits in banks                                          547                655             2,910
Federal funds sold                                                       42,424             28,826            21,080
Securities available-for-sale at fair value                              81,580             76,063            46,505
Mortgage loans held-for-sale                                              3,484                 --                --
Loans, net of allowance for loan losses of $1,669 at June 30,
     2003, $1,390 at December 31, 2002, and $1,283 at June 30, 2002     144,018            119,657           104,087
Bank premises and equipment, net                                          1,416              1,333             1,346
Accrued interest receivable                                               1,084                916               803
Other assets                                                                319                292               401
                                                                      ---------          ---------         ---------

                                                                      $ 297,054          $ 238,793         $ 189,835
                                                                      =========          =========         =========

   LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
 Deposits:
  Noninterest-bearing deposits                                        $ 106,861           $ 66,729          $ 44,520
  Interest-bearing deposits                                             164,238            147,141           122,371
                                                                      ---------          ---------         ---------
     Total deposits                                                     271,099            213,870           166,891

Trust preferred capital notes                                             5,000              5,000             5,000
Accrued interest payable and other liabilities                              741                728               478
                                                                      ---------          ---------         ---------
     Total liabilities                                                  276,840            219,598           172,369
                                                                      ---------          ---------         ---------

STOCKHOLDERS' EQUITY
 Common stock, $1 par value; authorized 5,000,000 shares;
 Issued and outstanding 2,303,275 at June 30, 2003, 1,840,677
 at December 31, 2002, and 1,839,585 at June 30, 2002                     2,303              1,841             1,840
 Capital surplus                                                         12,946             13,354            13,342
 Retained earnings                                                        3,963              2,894             1,851
 Accumulated other comprehensive income                                   1,002              1,106               433
                                                                      ---------          ---------         ---------
     Total stockholders' equity                                          20,214             19,195            17,466
                                                                      ---------          ---------         ---------

                                                                      $ 297,054          $ 238,793         $ 189,835
                                                                      =========          =========         =========

</TABLE>

See notes to interim consolidated financial statements.



                                       3
<PAGE>


                           JAMES MONROE BANCORP, INC.
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                     ($ in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                  (Unaudited)              (Unaudited)
                                                              THREE MONTHS ENDED         SIX MONTHS ENDED
                                                             ---------------------     ---------------------
                                                             JUNE 30      JUNE 30      JUNE 30      JUNE 30
                                                               2003         2002         2003        2002
                                                             --------     --------     --------     --------
<S>                                                           <C>          <C>          <C>          <C>
INTEREST INCOME:
 Loans, including fees                                        $2,383       $1,885       $4,573       $3,590
 Mortgage loans held for sale                                     25           --           25           --
 Securities, taxable                                             692          428        1,390          720
 Federal funds sold                                               62           83           99          116
 Other interest income                                            --            7            1            9
                                                              ------       ------       ------       ------
     Total interest income                                     3,162        2,403        6,088        4,435
INTEREST EXPENSE:
   Deposits                                                      838          863        1,650        1,524
   Borrowed funds                                                 63           74          127           77
                                                              ------       ------       ------       ------
            Total interest expense                               901          937        1,777        1,601
                                                              ------       ------       ------       ------
     Net interest income                                       2,261        1,466        4,311        2,834

PROVISION FOR LOAN LOSSES                                        171           70          349          251
                                                              ------       ------       ------       ------
     Net interest income after provision for loan losses       2,090        1,396        3,962        2,583
NONINTEREST INCOME:
 Service charges and fees                                         80           60          155          134
 Other                                                            74           63          133          118
 Gain on sale of securities                                       41           --           56           16
 Gain on sale of mortgages held-for-sale                          85           --           85           --
                                                              ------       ------       ------       ------
     Total noninterest income                                    280          123          429          268
NONINTEREST EXPENSES:
 Salaries and wages                                              642          481        1,228          918
 Employee benefits                                               105           82          209          158
 Occupancy expenses                                              148          130          303          256
 Equipment expenses                                              104           70          200          127
 Other operating expenses                                        449          303          848          613
                                                              ------       ------       ------       ------
     Total noninterest expense                                 1,448        1,066        2,788        2,072
                                                              ------       ------       ------       ------
     Income before income taxes                                  922          453        1,603          779
PROVISION FOR INCOME TAXES                                       312          157          529          269
                                                              ------       ------       ------       ------
     Net income                                               $  610       $  296       $1,074       $  510
                                                              ======       ======       ======       ======

EARNINGS PER SHARE-BASIC                                      $ 0.26       $ 0.16       $ 0.47       $ 0.28
                                                              ======       ======       ======       ======
EARNINGS PER SHARE-DILUTED                                    $ 0.25       $ 0.15       $ 0.44       $ 0.27
                                                              ======       ======       ======       ======

</TABLE>

See notes to interim consolidated financial statements


                                       4
<PAGE>


           JAMES MONROE BANCORP, INC.
                AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Six Months Ended June 30, 2003 and 2002
                ($ in thousands)
                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                ACCUMULATED
                                                                                  OTHER
                                                                                  COMPRE-     COMPRE-      TOTAL
                                               COMMON     CAPITAL     RETAINED    HENSIVE     HENSIVE   STOCKHOLDERS'
                                                STOCK     SURPLUS     EARNINGS    INCOME      INCOME       EQUITY
                                               -------    --------    --------    --------    --------    --------
<S>                                            <C>        <C>         <C>         <C>         <C>         <C>
BALANCE, JANUARY 1, 2002                       $   960    $  9,522    $  1,341    $    144                $ 11,967
  Comprehensive income:
  Net income                                                               510                $    510         510
  Net change in unrealized gains
   on available for sale securities,
   net of deferred taxes of $149                                                       289         289         289
                                                                                              --------
 Total comprehensive income                                                                   $    799
                                                                                              ========
 Exercise of stock options                           6          48                                              54
 Proceeds from sale of common stock                261       4,385                                           4,646
 Effect of 3 for 2 stock split                     613        (613)                                             --
                                               -------    --------    --------    --------                --------
BALANCE, JUNE 30, 2002                         $ 1,840    $ 13,342    $  1,851    $    433                $ 17,466
                                               =======    ========    ========    ========                ========
</TABLE>


<TABLE>
<CAPTION>
                                                                                ACCUMULATED
                                                                                  OTHER
                                                                                  COMPRE-     COMPRE-      TOTAL
                                               COMMON     CAPITAL     RETAINED    HENSIVE     HENSIVE   STOCKHOLDERS'
                                                STOCK     SURPLUS     EARNINGS    INCOME      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                                                             1,074                $  1,074       1,074
  Net change in unrealized gains
   on available for sale securities,
   net of deferred taxes of $54                                                       (104)       (104)       (104)
                                                                                              --------
 Total comprehensive income                                                                   $    970
                                                                                              ========
 Proceeds from sale of common stock                  2          52                                              54
 Effect of 5-for-4 stock split                     460        (460)                                             --
 Cash paid in lieu of fractional shares                                     (5)                                 (5)
                                               -------    --------    --------    --------                --------
BALANCE, JUNE 30, 2003                         $ 2,303    $ 12,946    $  3,963    $  1,002                $ 20,214
                                               =======    ========    ========    ========                ========

</TABLE>

See notes to interim consolidated financial statements.


                                       5
<PAGE>


                            JAMES MONROE BANCORP, INC.
                                 AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 ($ in thousands)

<TABLE>
<CAPTION>
                                                                                   (Unaudited)
                                                                            SIX MONTHS ENDED JUNE 30,
                                                                           ---------------------------
                                                                              2003            2002
                                                                            --------        --------
<S>                                                                         <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                                                 $  1,074        $    510
 Adjustments to reconcile net income to net cash provided by (used in)
  operating activities:
   Depreciation and amortization                                                 151             112
   Provision for loan losses                                                     349             251
   Gain on sale of securities                                                    (56)            (16)
   Gain on sale of mortgage loans held-for-sale                                  (85)             --
   Origination of mortgage loans held-for-sale                               (17,039)             --
   Proceeds from sale of mortgages held-for sale                              13,640              --
   (Increase) in accrued interest receivable                                    (168)           (172)
   Amortization of bond premium                                                  234              46
   Accretion of bond discount                                                    (40)            (19)
   Decrease in other assets                                                       27              49
   Increase in accrued interest and other liabilities                             13              46
                                                                            --------        --------
     Net cash provided by operating activities                              $ (1,900)       $    807
                                                                            --------        --------

CASH FLOWS FROM INVESTING ACTIVITIES
 Purchases of securities available for sale                                 $(59,932)       $(31,610)
 Proceeds from calls and maturities of securities available for sale          12,391           7,359
 Proceeds from sales of securities available for sale                         41,728              --
 Purchases of premises and equipment                                            (234)           (451)
 (Increase) in Federal funds sold and interest-bearing deposits              (13,490)        (12,486)
 Net (increase) in loans                                                     (24,710)        (19,231)
                                                                            --------        --------
     Net cash (used in) investing activities                                $(44,247)       $(56,419)
                                                                            --------        --------

CASH FLOWS FROM FINANCING ACTIVITIES
 Net increase in demand deposits, savings deposits
  and money market accounts                                                 $ 55,414        $ 32,345
 Net increase in time deposits                                                 1,815          20,288
 Issuance of common stock                                                         54           4,700
 Issuance of trust preferred capital notes                                        --           5,000
 Cash paid in lieu of fractional shares                                           (5)             --
                                                                            --------        --------
     Net cash provided by financing activities                              $ 57,278        $ 62,333
                                                                            --------        --------

     Increase in cash and due from banks                                    $ 11,131        $  6,721

CASH AND DUE FROM BANKS
 Beginning                                                                    11,051           5,982
                                                                            --------        --------
 Ending                                                                     $ 22,182        $ 12,703
                                                                            ========        ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
 Interest paid                                                              $  1,816        $  1,328
                                                                            ========        ========
 Income taxes paid                                                          $    443        $    346
                                                                            ========        ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES,
   Unrealized gain (loss) on securities available for sale                  $   (158)       $    438
                                                                            ========        ========
</TABLE>


See notes to interim 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 June 30, 2003 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 and six-month periods ended June 30, 2003 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2003, 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, 2002.

Stock Compensation Plans. At June 30, 2003, the Company had a stock-based
compensation plan. The Company accounts for this plan 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.

<TABLE>
<CAPTION>
                                              THREE-MONTHS ENDED JUNE 30,     SIX-MONTHS ENDED JUNE 30,
                                              ---------------------------     -------------------------
                                                   2003        2002              2003         2002
                                                 --------    --------           ---------   --------
<S>                                              <C>         <C>                <C>         <C>
Net income, as reported                          $    610    $    296           $   1,074   $    510
Deduct:Total stock-based employee
compensation expense determined under fair
value based method for all awards                      (9)        (19)                (18)       (37)
                                                 --------    --------           ---------    -------
Pro forma net income                             $    601    $    277           $   1,056   $    473
                                                 ========    ========           =========    =======
Earnings per share:
     Basic- as reported                              0.26        0.16                0.47       0.28
                                                 ========    ========           =========    =======
     Basic- pro forma                                0.26        0.15                0.46       0.26
                                                 ========    ========           =========    =======
     Diluted- as reported                            0.25        0.15                0.44       0.27
                                                 ========    ========           =========    =======
     Diluted- pro forma                              0.24        0.14                0.43       0.25
                                                 ========    ========           =========    =======
</TABLE>



                                       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:

                                                               2002
                                                             --------
              Dividend yield                                    0.00%
              Expected life                                  10 years
              Expected volatility                               0.50%
              Risk-free interest rate                           5.05%

No options have been granted in 2003.

NOTE 2--

Earnings Per Share. The following table discloses the calculation of basic and
diluted earnings per share for the three months and six-months ended June 30,
2003 and 2002. The amounts for all periods presented have been restated to
reflect a 5-for4 stock split in the form of a 25% stock dividend for
shareholders of record on April 25, 2003, and paid May 16, 2003.

<TABLE>
<CAPTION>
                                                   THREE-MONTHS ENDED          SIX-MONTHS ENDED
                                                        JUNE 30                     JUNE 30
                                                ------------------------    ------------------------
                                                   2003          2002          2003          2002
                                                ----------    ----------    ----------    ----------
<S>                                             <C>           <C>           <C>           <C>
Net Income                                      $      610    $      296    $    1,074    $      510
Weighted average shares outstanding--basic       2,301,946     1,815,808     2,301,295     1,809,536
Common share equivalents for stock options         175,301       105,063       163,140        98,004
                                                ------------------------    ------------------------
Weighted average shares outstanding--diluted     2,477,247     1,920,871     2,464,435     1,907,540
                                                ========================    ========================

Earnings per share-basic                        $     0.26    $     0.16    $     0.47    $     0.28
                                                ========================    ========================
Earnings per share-diluted                      $     0.25    $     0.15    $     0.44    $     0.27
                                                ========================    ========================

</TABLE>


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 on sale of
securities" on the income statement. The amortized cost and carrying value
(estimated market value) of securities available-for-sale at June 30, 2003,
December 31, 2002, and June 30, 2002, are summarized in the tables that follow.
The Company classifies all securities as available-for-sale.


                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                     June 30, 2003
                                      -----------------------------------------------
                                                   Gross        Gross      Estimated
                                      Amortized  Unrealized   Unrealized     Market
($ in thousands)                        Cost       Gains        Losses       Value
                                      ---------  ----------   -----------  ----------
<S>                                   <C>         <C>          <C>          <C>
U.S. Government and federal agency    $ 47,550    $    392     $    (20)    $ 47,922
Mortgage-backed securities              19,045         411           (6)      19,450
Corporate notes                         12,626         757          (16)      13,367
Restricted stock                           841          --           --          841
                                      --------    --------     --------     --------
                                      $ 80,062    $  1,560     $    (42)    $ 81,580
                                      ========    ========     ========     ========

</TABLE>


<TABLE>
<CAPTION>
                                                   December 31, 2002
                                      -----------------------------------------------
                                                   Gross        Gross      Estimated
                                      Amortized  Unrealized   Unrealized     Market
($ in thousands)                        Cost       Gains        Losses       Value
                                      ---------  ----------   -----------  ----------
<S>                                   <C>         <C>          <C>          <C>
U.S. Government and federal agency    $ 35,013    $    285     $     --     $ 35,298
Mortgage-backed securities              26,606         571          (64)      27,113
Corporate notes                         12,139         884           --       13,023
Restricted stock                           629          --           --          629
                                      --------    --------     --------     --------
                                      $ 74,387    $  1,740     $    (64)    $ 76,063
                                      ========    ========     ========     ========

</TABLE>


<TABLE>
<CAPTION>
                                                      June 30, 2002
                                      -----------------------------------------------
                                                   Gross        Gross      Estimated
                                      Amortized  Unrealized   Unrealized     Market
($ in thousands)                        Cost       Gains        Losses       Value
                                      ---------  ----------   -----------  ----------
<S>                                   <C>         <C>          <C>          <C>
U.S. Government and federal agency    $ 14,096    $    119     $     (6)    $ 14,209
Mortgage-backed securities              24,091         333           (1)      24,423
Corporate notes                          7,153         212           (1)       7,364
Restricted stock                           509          --           --          509
                                      --------    --------     --------     --------
                                      $ 45,849    $    664     $     (8)    $ 46,505
                                      ========    ========     ========     ========

</TABLE>


NOTE 4--

Loans. Major classifications of loans at June 30, 2003, December 31, 2002 and
June 30, 2002 are summarized in the following table.



                                       9
<PAGE>


                                       June 30,    December 31,    June 30,
($ in thousands)                        2003          2002           2002
                                     -----------   -----------   -----------

Construction loans                    $  17,342     $  12,160     $   8,535
Commercial loans                         23,430        27,862        24,005
Real estate-Commercial                   93,952        70,318        62,187
Real estate-1-4 family residential        1,251         2,069         2,741
Home equity loans                         2,935         2,390         1,718
Consumer loans                            6,709         6,088         5,991
Deposit overdrafts                           68           160           193
                                      ---------     ---------     ---------
                                        145,687       121,047       105,370
Less allowance for loan losses           (1,669)       (1,390)       (1,283)
                                      ---------     ---------     ---------
Net Loans                             $ 144,018     $ 119,657     $ 104,087
                                      =========     =========     =========


Changes in the allowance for loan losses are summarized as follows:



($ in thousands)                                   For the Year
                                    Six-Months        Ended         Six-Months
                                  Ended June 30,   December 31,   Ended June 30,
                                      2003            2002             2002
                                  --------------  --------------  --------------

Balance at beginning of year          $ 1,390       $ 1,030          $ 1,030
Charge-offs:
     Commercial                           (34)         (122)              --
     Consumer                             (36)           (4)              --
                                      -------       -------          -------
           Total charge-offs              (70)         (126)              --
Recoveries:
     Consumer                              --             3                2
                                      -------       -------          -------
     Net charge-offs                      (70)         (123)               2
Provision for loan losses                 349           483              251
                                      -------       -------          -------
Balance at end of period              $ 1,669       $ 1,390          $ 1,283
                                      =======       =======          =======

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

                                      June 30,    December 31,      June 30,
($ in thousands)                        2003         2002             2002
                                    -----------   -----------      -----------

Nonaccrual loans excluded from
  impaired loans:
    Commercial                        $   188       $    22          $   250
    Consumer                               --            34               --
Accruing loans past due 90-days
  or more:
    Commericial                            --            --                5
Impaired loans:
    Commercial                            228           240               --
                                      -------       -------          -------
     Total nonperforming assets       $   416       $   296          $   255
                                      =======       =======          =======



                                       10

<PAGE>


NOTE 5--

Deposits. Interest-bearing deposits consist of the following:

                                             June 30,   December 31,  June 30,
                                           -------------------------------------
($ in thousands)                               2003        2002         2002
                                           ------------ ----------- ------------

NOW accounts                                 $ 11,716    $  7,490     $  5,787
Savings accounts                                1,809       1,290        1,273
Money market accounts                         110,577     100,040       65,435
Certificates of deposit under $100,000         13,291      12,272       18,365
Certificates of deposit $100,000 and over      25,130      24,315       29,552
Individual retirement accounts                  1,715       1,734        1,959
                                             --------    --------     --------
                                             $164,238    $147,141     $122,371
                                             ========    ========     ========

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 the
Trust'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 have a LIBOR-indexed floating rate of
interest which is set and payable on a quarterly basis. During 2002, the
interest rates ranged from 5.79% to 5.00%. The rate for the quarterly period
beginning June 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.

The 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 June 30, 2003, all of the trust preferred securities qualified as Tier 1
capital.

The Company and the Trust believe that, taken together, the Company's
obligations under the junior subordinated debentures, the Indenture, the Trust
declaration and the Guarantee entered into in connection with the issuance of
the trust preferred securities constitute a full and unconditional guarantee by
the Company of the Trust's 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 5-for-4 stock split in the form of
a 25% stock dividend for shareholders of record of record on April 25, 2003,
payable May 16, 2003. 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, 2003.

Note 8--

Subsequent Event. 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, due 2033, which are its sole assets. The Company owns
all of the Trust's outstanding common securities. On July 31, 2003, $4 million
of the Trust's preferred securities were issued in a private placement
transaction. The securities bear interest at a rate equal to three-month Libor
plus 310 basis points, initially 4.21%, subject to a cap of 12% prior to July
31, 2003. The securities have a maturity date of July 31, 2033, and are subject
to optional call provisions beginning July 31, 2008.



                                       11
<PAGE>


Note 9-

Recent Accounting Pronouncements

In April 2003, the Financial Accounting Standards Board issued Statement No.
149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. This Statement amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts(collectively referred to as derivatives) and for
hedging activities under FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. This Statement is effective for contracts
entered into or modified after June 30, 2003 and is not expected to have an
impact on the Corporation's consolidated financial statements.

In May 2003, the Financial Accounting Standards Board issued Statement No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. This Statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). Many of those instruments were previously classified as equity.
This Statement is effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003, except for mandatory redeemable
financial instruments of nonpublic entities. Adoption of the Statement did not
result in an impact on the Corporation's consolidated financial statements.






                                       12
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         This Management's Discussion and Analysis reviews the financial
condition and results of operations of James Monroe Bancorp, Inc. and its
subsidiaries as of and for the three and six-months ended June 30, 2003 and
2002. 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, 2002.

CRITICAL ACCOUNTING POLICIES

         There were no changes to the Company's critical accounting policies in
the second quarter of 2003. The critical accounting policy with respect to
determining the quarterly allowance for loan losses has been consistently
applied since its adoption. 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 relating to its financial
statements 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 loan interest 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 banks'
loss experience ratios, delinquency trends, economic conditions, and portfolio
composition is 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.

         Homogenous 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 homogenous pool of loans based on the
expected net charge-offs from a current trend in delinquencies, peer group
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 homogenous pools of loans.

         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.

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,"


                                       13
<PAGE>

"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.

FINANCIAL OVERVIEW

COMPANY HIGHLIGHTS SINCE DECEMBER 31, 2002 ARE:
-----------------------------------------------

             o  Assets grew $58.3 million (24%).
             o  Loans grew $24.6 million (20%).
             o  Deposits grew $57.2 million (27%).
             o  After interest rates dropped 50 basis points in November 2002,
                and another 25 basis points in May 2003, our net interest margin
                has decreased to 3.71% by the end of the fourth quarter of 2002
                and rose slightly to 3.77% for the first half of 2003. The
                sustained low interest rate environment coupled with the
                significant liquidity generated by the Company in 2003 has
                caused compression in the net interest margin from the 3.82% for
                the second quarter, 2002.
             o  Asset quality remains strong with $70 thousand in charge offs in
                the first half of 2003, $416 thousand on nonaccrual status and
                no loans over 90-days past-due and not accruing interest.

         The following discussion provides information about the results of
operations and financial condition, liquidity, and capital resources of James
Monroe Bancorp, Inc. and should be read in conjunction with our consolidated
financial statements and footnotes thereto for the year ended December 31, 2002.

BALANCE SHEETS

         Total assets increased to $297.1 million at June 30, 2003, an increase
of $58.3 million from December 31, 2002, and an increase of $107.2 million from
June 30, 2002. The increase in assets since December 31, 2002 resulted from the
Company's emphasis on deposit generation as much as loan generation. During the
six-months ended June 30, 2003, deposits increased $57.2 million over December
31, 2002, with noninterest-bearing deposits increasing $40.1 million, and
interest-bearing deposits increasing $17.1 million. With the growth in deposits,
the Company was able to fund $24.6 million net increase in loans, including $13
million in the second quarter. Securities increased $5.5 million and the
liquidity position of the Company increased by $22 million.




                                       14
<PAGE>


TABLE 1

QUARTERLY RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                  2003                                       2002
                                       ----------------------------     --------------------------------------------------
(IN THOUSANDS EXCEPT SHARE DATA)         SECOND           FIRST            FOURTH             THIRD             SECOND
                                       ----------     -------------     -------------     -------------     -------------
<S>                                    <C>            <C>               <C>               <C>               <C>
RESULTS OF OPERATIONS:
----------------------
Net interest income                    $    2,261     $       2,050     $       1,932     $       1,715     $       1,467
Provision for loan and lease losses           171               178                98               134                70
Other income                                  280               149               358               134               123
Noninterest expense                         1,448             1,340             1,188             1,134             1,066
Income before taxes                           922               681             1,004               581               454
Net income                                    610               464               661               382               296

PER SHARE DATA:
---------------
Earnings per share, basic              $     0.26     $        0.20     $        0.32     $        0.17     $        0.16
Earnings per share, diluted            $     0.25     $        0.19     $        0.31     $        0.16     $        0.15
Weighted average shares
     outstanding-basic                  2,301,946         2,300,846         2,054,844         2,299,455         1,815,808
                -diluted                2,477,247         2,451,825         2,160,539         2,405,840         1,920,873
AT PERIOD END
-------------
Loans                                  $  145,687     $     133,480     $     121,047     $     115,303     $     105,370
Earning assets                            273,722           222,279           226,591           185,552           175,864
Total assets                              297,054           248,349           238,793           204,088           189,835
Deposits                                  271,099           223,318           213,870           180,338           166,891
Stockholders' equity                       20,214            19,357            19,195            18,129            17,466
Book value*                            $     8.78     $        8.41  $           8.34  $           7.88  $           7.60
Shares outstanding*                     2,303,275         2,300,633         2,300,846         2,299,455         2,299,455

PERFORMANCE RATIOS:
-------------------
Return on average assets                     0.96%             0.83%             0.88%             0.79%             0.73%
Return on average equity                    12.00%            15.47%            10.15%             8.49%             9.56%
Net interest margin                          3.77%             3.90%             3.90%             3.75%             3.86%
Efficiency ratio**                          56.99%            60.94%            60.67%            61.33%            67.04%

OTHER RATIOS:
-------------
Allowance for loan losses to total
     loans                                   1.15%             1.13%             1.15%             1.23%             1.22%
Equity to assets                             6.80%             7.79%             8.04%             8.88%             9.20%
Nonperforming loans to total loans           0.29%             0.26%             0.24%             0.20%             0.24%
Net charge-offs to average loans             0.01%             0.04%             0.12%             0.00%             0.00%
Risk-Adjusted Capital Ratios:
     Tier 1                                  13.5%             14.7%             15.4%             16.8%             17.9%
     Total                                   14.4%             15.6%             16.4%             17.9%             18.9%
     Leverage Ratio                           9.5%             10.4%             10.5%             11.7%             13.4%

</TABLE>

*  Information has been adjusted to reflect the 5-for-4 stock split in the form
   of a 25% stock dividend paid on May 16, 2003 to shareholders of record
   April 25, 2003 and for all preceding stock splits.

** The Company computes the Efficiency Ratio including all categories of
   noninterest income and noninterest expense.

COMPARISON OF OPERATING RESULTS - SIX MONTHS ENDED JUNE 30, 2003 TO SIX MONTHS
ENDED JUNE 30, 2002

         For the six months ended June 30, 2003, the Company had net income of
$1,074,000, or $.44 per share on a fully diluted basis, compared to $510,000, or
$.27 per share, for the comparable six month period of 2002.

                                       15
<PAGE>

Annualized return on average assets was .90% for the six months ended June 30,
2003, compared to .70% for the same six month period in 2002, and the return on
average equity was 10.93% for the first six months of 2003, compared with 8.32%
for the same period a year ago.

         During 2003, the Company continued to focus on managing its net
interest margin, especially in light of the rapidly changing interest rate
environment in 2001 and then the sustained extremely low rate environment in
2002. 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 an
additional 25 basis points in May 2003. These rate reductions had a direct
impact in 2001 and 2002 on the rates earned on the Bank's outstanding floating
or adjustable rate loans, as well as new loans, and on the rates earned on other
investments. These dramatic reductions in a relatively short period continued to
impact the loan and investment portfolios in 2002, 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 4.56% in 2001 to 3.90% in 2002 to 3.83% 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.
Although the Company continued to grow in asset size since its inception in
1998, and added its third and fourth branches in 2002, it has been able to
control its operating efficiency. The Company's Efficiency Ratio decreased from
67.09% in the second quarter of 2002 to 56.99% in the second 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, net of
securities gains or losses. Comparison of our efficiency ratio with those of
other companies may not be possible, because other companies may calculate the
efficiency ratio differently.

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 2 presents average balance
sheets and a net interest income analysis for the six months ended June 30, 2003
and June 30, 2002. The Company did not have any tax-exempt income during any of
the periods presented in Table 2.

         For the six-month period ended June 30, 2003, net interest income
increased $1.5 million, or 52%, to $4.3 million from the $2.8 million for the
same period in 2002, primarily as a result of increases in the volume of earning
assets. Total average earning assets increased by $89.4 million, or 65%, from
the six-months ended June 30, 2002 to the same period of 2003. Average loans
outstanding grew by $37.6 million, or 39%, during the first half of 2003
compared to the same period in 2002, but, at the same time, the yield on such
loans decreased by 62 basis points. The federal funds rate, which is the
short-term liquidity yield, saw a similar decrease of 52 basis points, while the
securities portfolio saw the greatest decline of 196 basis points. Many
securities were called in 2002 and reinvested in lower yielding securities.
Additional securities were purchased from the liquidity generated in 2003 and
invested in securities at yields greater than that of the federal funds but less
than the yields generated by loans.



                                       16
<PAGE>


TABLE 2

AVERAGE BALANCE SHEETS, NET INTEREST INCOME, AND YIELDS/RATES

<TABLE>
<CAPTION>
                                                       SIX MONTHS ENDED             SIX MONTHS ENDED
                                                         JUNE 30, 2003                JUNE 30, 2002
-------------------------------------------------------------------------------------------------------------
                                               AVERAGE                YIELD/   AVERAGE                YIELD/
                                               BALANCE    INTEREST    RATE     BALANCE      INTEREST   RATE
-------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>         <C>      <C>         <C>         <C>
ASSETS
Loans:
     Commercial                               $  39,109   $   1,243   6.41%    $  30,754   $   1,028   6.74%
     Commercial real estate                      81,955       2,889   7.11        53,310       2,091   7.91
     Consumer                                    13,472         441   6.60        12,836         471   7.40
                                              ------------------------------   -----------------------------
          Total Loans                           134,536       4,573   6.85        96,900       3,590   7.47
Mortgage loans held for sale                      1,092          25   4.62            --          --     --
Taxable securities                               72,645       1,390   3.86        24,935         720   5.82
Federal funds sold and cash equivalents          18,852         100   1.07        15,848         125   1.59
                                              ------------------------------   -----------------------------
               TOTAL EARNING ASSETS             227,125       6,088   5.41%      137,683       4,435   6.50%
Less allowance for loan losses                   (1,508)                          (1,171)
Cash and due from banks                          12,296                            8,334
Premises and equipment, net                       1,386                            1,237
Other assets                                      1,585                            1,114
                                              ---------                        ---------
               TOTAL ASSETS                   $ 240,884                        $ 147,197
                                              =========                        =========
LIABILITIES AND
     STOCKHOLDERS' EQUITY
Interest-bearing demand deposits              $   8,933   $      39   0.88%    $   5,190   $      28   1.09%
Money market deposit accounts                   105,321       1,029   1.97        52,109         681   2.64
Savings accounts                                  1,465          11   1.51         1,119          10   1.80
Time deposits                                    40,916         571   2.81        40,192         805   4.04
Trust preferred capital notes                     5,000         127   5.12         2,680          77   5.79
                                              ------------------------------   -----------------------------
               TOTAL INTEREST-BEARING
                           LIABILITIES          161,635       1,777   2.22%      101,290       1,601   3.19%
                                              ------------------------------   -----------------------------
Net Interest Income and Net Yield
on Interest-Earning Assets                                $   4,311   3.83%                $   2,834   4.15%
                                                          =================                =================

Noninterest-bearing demand
     deposits                                    58,619                           32,911
Other liabilities                                   819                              631
Stockholders' equity                             19,811                           12,365
                                              ---------                        ---------
               TOTAL LIABILITIES AND
                STOCKHOLDERS' EQUITY          $ 240,884                        $ 147,197
                                              =========                        =========

</TABLE>

         Interest expense for the first six-months of 2003 was $1.8 million
compared with $1.6 million in interest expense for the first six-months of 2002.
This increase is predominately a result of the growth in the volume of
interest-bearing liabilities of $60.3 million. Most of the Company's
interest-bearing time deposits have maturities of one year or less and
therefore, when rates fall, these deposits will not immediately reprice at lower
rates, becoming eligible for repricing at lower rates during the 12 months
following a declining rate environment. As a result of competitive conditions in
the Company's market and the sustained low rate environment the Company has not
been able to reduce deposit rates at the same rate that asset yields have
dropped, and as a result the net interest margin was compressed, dropping from
4.15% in 2002 to 3.83% in 2003.



                                       17
<PAGE>

         Table 3 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 assets and the changes in
interest rates. As previously discussed, the table shows the increase in net
interest income for the six-months ended June 30, 2003, as compared to the
six-months ended June 30, 2002. Net interest income grew by $1.6 million from
the increase in the volume of earning assets and interest-bearing liabilities
offset by the negative effect of changes in interest rates of $95 thousand.

TABLE 3

EFFECT OF VOLUME RATE CHANGES ON NET INTEREST INCOME

                                         SIX-MONTHS ENDED JUNE 30
                                             2003 VS. 2002
                                  -------------------------------------
                                                   DUE TO CHANGE
                                   INCREASE          IN AVERAGE:
                                      OR       ------------------------
($ in thousands)                  (DECREASE)    VOLUME       RATE
                                  -------------------------------------
EARNING ASSETS:
Loans                              $   983     $ 1,248    $  (265)
Mortgage loans                          25          25         --
Taxable securities                     670         814       (144)
Federal funds sold                     (25)         34        (59)
                                   ------------------------------
     Total interest income           1,653       2,121       (468)


INTEREST-BEARING LIABILITIES:
Interest-bearing demand
     deposits                           11          16         (5)
Money market deposit
     accounts                          348         462       (114)
Savings deposits                         1           2         (1)
Time deposits                         (234)         15       (249)
Trust preferred capital notes           50          54         (4)
                                   ------------------------------
     Total interest expense            176         549       (373)
                                   ------------------------------
          Net Interest Income      $   494     $ 1,572    $   (95)
                                   ==============================



                                       18

<PAGE>


TABLE 4

AVERAGE BALANCE SHEETS, NET INTEREST INCOME, AND YIELDS/RATES


<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED                 THREE MONTHS ENDED
                                                            JUNE 30, 2003                       JUNE 30, 2002
---------------------------------------------------------------------------------------------------------------------------
                                                  AVERAGE                 YIELD/     AVERAGE                  YIELD/
                                                  BALANCE    INTEREST     RATE       BALANCE     INTEREST      RATE
---------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>           <C>      <C>          <C>           <C>
ASSETS
Loans:
     Commercial                                  $  40,066   $    632      6.33%    $  31,752    $     554     7.00%
     Commercial real estate                         87,049      1,531      7.05        57,984        1,103     7.63
     Consumer                                       13,632        220      6.47        11,547          228     7.92
                                                 --------------------------------   ---------------------------------
          Total Loans                              140,747      2,383      6.79       101,283        1,885     7.46
Mortgage loans                                       2,170         25      4.62            --           --       --
Taxable securities                                  75,366        692      3.68        30,741          428     5.58
Federal funds sold and cash equivalents             22,491         62      1.11        21,986           90     1.64
                                                 --------------------------------   ---------------------------------
                   TOTAL EARNING ASSETS            240,774      3,162      5.27%      154,010        2,403     6.26%
Less allowance for loan losses                      (1,586)                            (1,236)
Cash and due from banks                             13,091                              9,432
Premises and equipment, net                          1,408                              1,319
Other assets                                         1,813                              1,310
                                                 ---------                          ---------
                   TOTAL ASSETS                  $ 255,500                          $ 164,835
                                                 =========                          =========
LIABILITIES AND
     STOCKHOLDERS' EQUITY
Interest-bearing demand deposits                 $   9,689   $     21      0.87%    $   5,140    $      13     1.01%
Money market deposit accounts                      109,087        528      1.94        57,792          376     2.61
Savings accounts                                     1,607          6      1.50         1,179            5     1.70
Time deposits                                       41,434        283      2.74        47,733          469     3.94
Trust preferred capital notes                        5,000         63      5.05         5,000           74     5.94
                                                 --------------------------------   ---------------------------------
                   TOTAL INTEREST-BEARING
                              LIABILITIES          166,817        901     2.17%       116,844          937     3.22%
                                                 --------------------------------   ---------------------------------
Net Interest Income and Net Yield on
Interest-Earning Assets                                      $  2,261     3.77%                  $   1,466     3.82%
                                                             ====================                ====================
Noninterest-bearing demand
     deposits                                       67,480                             34,771
Other liabilities                                      807                                658
Stockholders' equity                                20,396                             12,562
                                                 ---------                          ---------
                   TOTAL LIABILITIES AND
                    STOCKHOLDERS' EQUITY         $ 255,500                          $ 164,835
                                                 =========                          =========
</TABLE>


                                       19
<PAGE>


TABLE 5

EFFECT OF VOLUME RATE CHANGES ON NET INTEREST INCOME

<TABLE>
<CAPTION>
                                    THREE-MONTHS ENDED JUNE 30
                                          2002 VS. 2001
                                 --------------------------------
                                                  DUE TO CHANGE
                                  INCREASE         IN AVERAGE:
                                     OR       -------------------
($ in thousands)                 (DECREASE)   VOLUME       RATE
                                 --------------------------------
<S>                              <C>         <C>         <C>
EARNING ASSETS:
Loans                            $   498     $   649     $  (151)
Mortgage loans                        25          25          --
Taxable securities                   264         346         (82)
Federal funds sold                   (28)          2         (30)
                                 --------------------------------
     Total interest income           759       1,022        (263)
INTEREST-BEARING LIABILITIES:
Interest-bearing demand
     deposits                          8           9          (1)
Money market deposit
     accounts                        152         215         (63)
Savings deposits                       1           2          (1)
Time deposits                       (186)        (57)       (129)
Trust preferred capital notes        (11)         --         (11)
                                 --------------------------------
     Total interest expense          (36)        169        (205)
                                 --------------------------------
          Net Interest Income    $   795     $   853     $   (58)
                                 ================================

</TABLE>

SECOND QUARTER RATE/VOLUME ANALYSIS. For the second quarter of 2003, net
interest income was $2.3 million compared to $1.5 million for the same quarter
of 2002, which represents a $795 thousand increase or 54%. For these comparable
quarters, the yield on earning assets declined from 6.26% for the second quarter
of 2002 to 5.27% in the second quarter of 2003 reflecting the significant
decline in interest rates that had occurred in 2002. The overall yield on loans
dropped 67 basis points, the securities portfolio declined 190 basis points and
the yield on Federal funds and cash equivalents declined 53 basis points
reflecting the general decline in interest rates from last year to this year.

         Interest expense during these comparable quarters, second quarter 2003
versus second quarter 2002, decreased $36 thousand or 4.0%, from $937 thousand
in interest expense to $901 thousand in interest expense primarily due to the
decrease in interest rates on interest-bearing liabilities. The overall cost of
interest-bearing liabilities decreased 105 basis points from 3.22% in 2002 to
2.17% in 2003.

         The resulting effect of the changes in interest rates between the
quarters ended June 30, 2003 and 2002, and the changes in the volume and mix of
earning assets and interest-bearing liabilities resulted in a 3.77% net interest
margin for the second quarter of 2003 versus a 3.82% net interest margin in
2002. Market interest rates in general are approximately 54 basis points lower
in the second quarter of 2003 compared with second quarter 2002 as can be seen
by the difference in the yield on Federal funds sold and cash equivalents. This
yield is the short-term liquidity yield which demonstrates the level at which
rates have changed between the comparative quarters.

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 company
and peer group historical charge off history, trends in delinquencies and loan
grading, current economic conditions, and factors that include the composition
of the Company's loan portfolio.



                                       20
<PAGE>

         The methodology established for 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 each quarter. The methodology
is reevaluated on a quarterly basis. Subject to the possible development of a
negative trend with respect to past due loans or charge offs or significant
changes in economic conditions, the Company believes that it maintains an
allowance that is adequate but not excessive.

         As reflected in Table 6 below, the allowance is allocated among the
various categories of loans in rough proportion to the level of loans
outstanding in such categories. Management considers the allowance to be
adequate for the periods presented.

TABLE 6

         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>
                                              June 30, 2003            December 31, 2002           June 30, 2002
                                        -------------------------  ------------------------   ------------------------
                                                         Percent                  Percent                    Percent
                                                         Of Loans                 Of Loans                   Of Loans
                                                           In                        In                         In
($ in thousands)                          Amount         Category      Amount     Category      Amount      Category
                                        -------------------------  -------------------------  ------------------------
<S>                                       <C>              <C>       <C>            <C>         <C>            <C>
Construction loans                        $   45            12%      $   35          10%        $   73          6%
Commercial loans                             678            16%         765          23%           547         23%
Commercial real estate                       841            64%         504          58%           507         59%
Real estate 1-4 family residential
loans                                          4             1%           6           2%            28          2%
Home equity loans                              9             2%           8           2%            21          2%
Consumer loans                                92             5%          72           5%           107          8%
                                          ---------------------    ---------------------        ------------------
Total Loans                               $1,669           100%      $1,390         100%        $1,283        100%
                                          =====================    =====================        ==================
</TABLE>


LOANS

         The loan portfolio is the largest component of earning assets and
accounts for the greatest portion of total interest income. At June 30, 2003,
total loans were $146 million, a 38.3% increase from the $105 million in loans
outstanding at June 30, 2002. Total loans at June 30, 2003, represented a 20.4%
increase from the $121 million of loans at December 31, 2002. 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 60.4% of the Company's total
loans, 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 experienced some
decline in economic activity during 2002, 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 resorting to the property, and lends primarily with
respect to owner occupied or managed properties.



                                       21
<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 7, twenty-six percent of the Company's
loans are fixed rate loans. Ninety-eight percent 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 8% of the loan portfolio at
June 30, 2003, as compared to 12% at June 30, 2002.

TABLE 7

         Table 7 shows the maturities of the loan portfolio and the sensitivity
of loans to interest rate fluctuations at June 30, 2003. 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>
                                                              JUNE 30, 2003
                                          ---------------------------------------------------------
                                                         AFTER ONE
                                           WITHIN       YEAR THROUGH       AFTER FIVE
                                          ONE YEAR       FIVE YEARS           YEARS         TOTAL
                                          ---------------------------------------------------------
                                                              ($ in thousands)
<S>                                       <C>             <C>             <C>             <C>
Construction loans                        $ 17,342        $     --        $     --        $ 17,342
Commercial loans                            20,702           2,728              --          23,430
Commercial real estate loans                43,667          47,650           2,703          94,020
Real estate 1-4 family residential           1,189              62              --           1,251
Home equity loans                            2,935              --              --           2,935
Consumer loans                               4,938           1,578              68           6,584
Overdrafts                                     125              --              --        $    125
                                          --------------------------------------------------------
                                          $ 90,898        $ 52,018        $  2,771        $145,687
                                          ========================================================
</TABLE>


<TABLE>
<CAPTION>
                                                         AFTER ONE
                                           WITHIN       YEAR THROUGH       AFTER FIVE
                                          ONE YEAR       FIVE YEARS           YEARS        TOTAL
                                          ---------------------------------------------------------
                                                              ($ in thousands)
<S>                                       <C>            <C>              <C>             <C>

Fixed Rate                                $ 17,285       $  17,342        $  2,771        $  37,398
Variable/Adjustable Rate                    73,613          34,676              --          108,289
                                          ---------------------------------------------------------
                    Total                 $ 90,898       $  52,018        $  2,771        $ 145,687
                                          =========================================================

</TABLE>


INVESTMENT SECURITIES

         The carrying value (fair value) of the Company's securities portfolio
increased $5.5 million to $81.6 million at June 30, 2003 from $76.1 million at
December 31, 2002. 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 the
Company attempts to "ladder" the one time call dates for all its securities.


                                       22

<PAGE>

TABLE 8

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


<TABLE>
<CAPTION>
                                          AT JUNE 30, 2003              AT JUNE 30, 2002
                                       -----------------------      -----------------------
($ in thousands)                                    Percent of                   Percent of
                                       Balance      Portfolio       Balance      Portfolio
                                       -------     -----------      -------      ----------
<S>                                    <C>            <C>           <C>             <C>
AVAILABLE-FOR-SALE
(AT ESTIMATED MARKET VALUE):
     U.S. Agency                       $47,922        58.7%         $14,209         30.6%
     Mortgage-backed securities         14,598        18.0           22,494         48.4
     Adjustable rate mortgage-           4,852         5.9            1,929          4.2
     backed securities
     Corporate bonds                    13,367        16.4            7,364         15.8
     Restricted stock                      841         1.0              509          1.0
                                       -------       -----          -------       -----
                      TOTAL            $81,580       100.0%         $46,505       100.0%
                                       =======       =====          =======       =====
</TABLE>


TABLE 9

The following table provides information regarding the composition of our
investment portfolio at market value at June 30, 2003.


MATURITY OF SECURITIES AT JUNE 30, 2003

<TABLE>
<CAPTION>
                                                    YEARS TO MARTURITY
                                        WITHIN          OVER 1 YEAR        OVER 5 YEARS           OVER
        ($ 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>
INVESTMENTS AVAILABLE-FOR-SALE:
U.S. Agency                        $     --     --    $ 44,352   2.74%   $  3,570   3.73%   $     --     --    $ 47,922   2.82%
Mortgage-backed securities               35   8.77%      1,612   4.27%      1,255   4.38%     11,696   5.34%   $ 14,598   5.15%
Adjustable Rate Mortgage-backed
  securities                             --     --          --     --          --     --       4,852   4.70%   $  4,852   4.70%
Corporate bonds                          --     --       9,201   2.95%      2,342   3.23%      1,824   6.87%   $ 13,387   3.54%
Restricted stock                         --                 --     --                 --         841   2.58%        841   2.58%
                                   --------           --------           --------           --------           --------
    TOTAL DEBT SECURITIES
      AVAILABLE-FOR-SALE           $     35   8.77%   $ 55,165   2.82%   $  7,167   3.68%   $ 19,213   5.20%   $ 81,580   3.46%
                                   ========           ========           ========           ========           ========
</TABLE>



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 June 30, 2003, our Basic
Surplus ratios (net access to cash and secured borrowings) as a percentage of
total assets were approximately 15%, compared to the present internal minimum
guideline range of 5-10%.



                                       23
<PAGE>

         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 a
matched funding matrix analysis. The matrix arrays repricing opportunities along
a time line for both assets and liabilities. The longest term, most fixed rate
sources are presented in the upper left hand corner while the shorter term, most
variable rate items, are at the lower left. Similarly, uses of funds, 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
when numbers are to the right of the diagonal line.

         At June 30, 2003, the Company is asset sensitive in the short term and
then becomes slightly liability sensitive. 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. 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. 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.

         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 50 bp up and 50 bp down increments, but not below
zero. At June 30, 2003, the following 12-month impact on net interest income is
estimated to range from a positive impact of 7.2% to a negative impact of (5.5)%
for the multiple scenarios, which remains within internal policy guidelines.
This process is performed each quarter to ensure the Company is not materially
at risk to possible changes in interest rates.

         Since the inception of the Company in 1998, it has generated more
deposit growth than it has been able to deploy into loans. The excess liquidity
has been invested in various types of securities the selection of which has been
determined by expected loan growth and the results of the quarterly interest
rate risk management process. Significant liquidity has been generated
especially in 2003 as a result of achieving growth in a number of niche deposit
generating types of customers. Given the lowest rate environment in nearly 50
years, the Company expects further declines to be either minimal or no greater
than 50 basis points. As a result, the investment strategy has been to invest
the liquidity into securities that have short maturities or one-time call dates
of 18 months or less and to ladder such investments to the extent possible in
expectation that rates are far more likely to rise in the future than to
decline.

         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
June 30, 2003. Clearly the Company is positioned to substantially improve
earnings if and when rates rise. With respect to further reductions in rates
(Declining Rate and 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 future changes in
interest rates would not have a material negative effect on the results of
operations.



                                       24
<PAGE>


                Static Rates                                     -0-%
                Most Likely Rates                                 .5%
                Ramp Up 100bp- 12 months                         4.8%
                Ramp Up 200bp- 12 months                         7.1%
                Ramp Down 100bp- 12 months                     (2.1)%
                Ramp Down 200bp- 12 months                     (5.5)%
                Rising Rate Scenario                             7.2%
                Declining Rate Scenario                        (2.6)%

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.

         The following table shows the detail of noninterest income for the
six-month periods ended June 30, 2003 and 2002.

TABLE 10
                                     Three-Months Ended   Six-Months Ended
                                          June 30,            June 30,
                                     ------------------   ----------------
($ in thousands)                        2003    2002       2003    2002
                                        ----    ----       ----    ----
Service charges on deposit accounts     $ 80    $ 60       $155    $134
Cash management fees                      27      33         53      64
Other fee income                          47      30         80      54
Gain on sale of mortgage loans            85      --         85      --
Gain on sale of securities                41      --         56      16
                                        ----    ----       ----    ----
                  Noninterest Income    $280    $123       $429    $268
                                        ====    ====       ====    ====

         The increase in noninterest income for the three and six months ended
June 30, 2003 as compared to the same periods in 2002, is the result of the
continued growth of the Company and the expansion of products and services
resulting in fee income, such as the increase in service charges on deposit
accounts. Cash management fees have declined primarily due to commercial
customers not utilizing the product during this sustained extremely low interest
rate environment.

TABLE 11

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

                                     Three-Months Ended   Six-Months Ended
                                          June 30,            June 30,
                                     ------------------   ----------------
($ in thousands)                        2003      2002      2003      2002
                                       ------    ------    ------    ------
Salaries and benefits                  $  747    $  563    $1,437    $1,076
Occupancy cost, net                       148       130       303       256
Equipment expense                         104        70       200       127
Professional fees                         124        31       204        60
Data processing costs                      98        85       197       173
Postage and supplies                       29        23        65        69
Advertising and public relations           15        31        46        69
Courier and express services               30        25        59        48
State franchise tax                        50        30        93        60
Other                                     103        78       184       134
                                       ------    ------    ------    ------
                Noninterest Expense    $1,448    $1,066    $2,788    $2,072
                                       ======    ======    ======    ======



                                       25
<PAGE>

         Noninterest expense increased $716 thousand or 35% from $2.1 million to
$2.8 million for the first six-months of 2003, compared to the same period in
2002. The increase in salary and benefit expense of $361 thousand is primarily
the result of staff merit increases for 2003 and the additional staff for the
mortgage office opened in early 2003. The growth in the size of the Company also
required adding additional personnel in the main office to support the volume of
business.

         The occupancy cost increase of $47 thousand for the first half of 2003
compared with the previous year was due to annualized rent increases and the
additional branches, including the mortgage office. Equipment costs increased a
modest $73 thousand for the same comparative periods due to additional equipment
required and software enhancements plus equipment for the additional branches.
With respect to the increases in data processing, the increase is due to the
increase in the volume of accounts and business transactions processed in 2003
versus 2002. The increase in the state franchise tax is due to the increased
capital of the Bank from earnings retention and the capital infusion to the bank
in 2003. Other expenses are up $50 thousand quarter to quarter primarily due to
the growth of the Bank and increased volume of banking activities

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) 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 12

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

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED JUNE 30,
                                                       -------------------------------------------
                                                                2003                   2002
                                                       -------------------------------------------
($ in thousands)                                         Average    Average    Average     Average
                                                         Balance      Rate     Balance       Rate
                                                       ------------------------  -----------------
<S>                                                     <C>          <C>      <C>           <C>
Deposits
    Noninterest-bearing demand                          $ 67,480       --%    $ 34,771        --%
    Interest-bearing demand                                9,689     0.87        5,140      1.01
    Money Market                                         109,087     1.94       57,792      2.61
    Savings                                                1,607     1.50        1,179      1.70
    Certificates of deposit of $100,000 or more           26,962     2.75       27,317      3.91
    Other time                                            14,472     2.72       20,416      3.99
                                                        -----------------     ------------------
Total Deposits                                          $229,297     1.47%    $146,615      2.36%
                                                        =================     ==================

</TABLE>


                                       26
<PAGE>


TABLE 13

         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
June 30, 2003.

<TABLE>
<CAPTION>
                                                 3 MONTHS       4 TO 6        7 TO 12       OVER 12
                                                 OR LESS        MONTHS        MONTHS        MONTHS         TOTAL
                                                -----------   -----------   -----------   -----------   -----------
($ in thousands)
<S>                                               <C>           <C>           <C>           <C>           <C>
Certificates of deposit less than $100,000        $ 3,968       $ 3,141       $ 5,257       $ 2,356       $14,722
Certificates of deposit of $100,000 or more       $ 6,565       $ 5,786       $ 9,021       $ 4,042       $25,414
                                                  -------       -------       -------       -------       -------
                                                  $10,533       $ 8,927       $14,278       $ 6,398       $40,136
                                                  =======       =======       =======       =======       =======
</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 June 30, 2003, stockholders' equity increased
$2.7 million from the $17.5 million in equity at June 30, 2002 primarily as a
result of the $2.1 million increase in retained earnings and the $1 million
increase in unrealized gains on securities available for sale, and offset by a
decrease in capital surplus.

Capital Requirement. A comparison of the Company's and the Bank's regulatory
capital at June 30, 2003, compared to minimum regulatory capital guidelines is
shown in the table that follows.

TABLE 14

<TABLE>
<CAPTION>
                                                           Minimum             Minimum To Be
                                         Actual           Guidelines         "Well Capitalized"
                                    -----------------  -----------------   -----------------------
<S>                                      <C>                 <C>                   <C>
Total Risk-Based Capital
     Company                             14.4%               8.0%                   N/A
     Bank                                11.8%               8.0%                  10.0%

Tier 1 Risk-Based Capital
     Company                             13.5%               4.0%                   N/A
     Bank                                13.4%               4.0%                   6.0%

Tier 1 Leverage Ratio
     Company                              9.5%               4.0%                   N/A
     Bank                                 7.8%               4.0%                   5.0%

</TABLE>


ITEM. 3  CONTROLS AND PROCEDURES

         The Company's management, under the supervision and with the
participation of the Company's Chief Executive Officer and Chief Operating and
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 Operating and Financial Officer concluded that the Company's
disclosure controls and procedures were adequate. There were no changes in the
Company's internal control over financial reporting (as defined in Rule 13a-15
under the Securities Act of 1934) during the quarter ended June 30, 2003 that
has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.



                                       27
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
         None

Item 2.  Changes in Securities and Use of Proceeds
         None

Item 3.  Defaults Upon Senior Securities
         None

Item 4.  Submission of Matters to a Vote of Security

         On April 30, 2003, the annual meeting of shareholders of the Company
was held for the purpose of electing twelve (12) directors to serve until the
next annual meeting and until their successors are duly elected and qualified.
The name of each director elected at the meeting, who constitute the entire
Board of Directors in office upon completion of the meeting, and the votes cast
for such persons are set forth below.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Name                                   For              Against/Withheld    Abstentions    Broker Non-votes
------------------------------------------------------------------------------------------------------------
<S>                                 <C>                       <C>                <C>             <C>
Fred A. Burroughs, III              1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
Dr. Terry L. Collins                1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
Norman P. Horn                      1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
Dr. David C. Karlgaard              1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
Richard I. Linhart                  1,228,854                 2,550              --              --
------------------------------------------------------------------------------------------------------------
Richard C. Litman                   1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
John R. Maxwell                     1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
Dr. Alvin E. Nashman                1,230,167                 1,237              --              --
------------------------------------------------------------------------------------------------------------
Helen L. Newman                     1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
Thomas L. Patterson                 1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
David W. Pijor                      1,230,354                 1,050              --              --
------------------------------------------------------------------------------------------------------------
Russell E. Sherman                  1,191,420                 8,737              --              --
------------------------------------------------------------------------------------------------------------

</TABLE>


Item 5.  Other Information
         None

Item 6.  Exhibits and reports on Form 8-K

(a)      Exhibits


                                       28
<PAGE>

Number     Description
------     -----------

3(a)       Articles of Incorporation of James Monroe Bancorp, as amended (1)

3(b)       Bylaws of James Monroe Bancorp (2)

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 (3)

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 (3)

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 (3)

4(d)       Indenture, dated as of July 31, 2003 between James Monroe Bancorp,
           Inc. and U.S. Bank, National Association, as trustee (3)

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 (3)

4(f)       Guarantee Agreement dated as of July 31, 2003, between James Monroe
           Bancorp, Inc. and U.S. Bank, National Association, as trustee (3)

10(a)      Employment contract between James Monroe Bancorp and John R.
           Maxwell(4)

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.

21         Subsidiaries of the Registrant

31(a)      Certification of Chief Executive Officer

31(b)      Certification of Chief Financial Officer

32(c)      Certification of Chief Executive Officer

32(d)      Certification of Chief Financial Officer

--------------------------
     (1) Incorporated by reference to exhibit 3(a) to the Company's Annual
         Report on Form 10-KSB for the year ended December 31, 2002.

     (2) Incorporated by reference to exhibit 3(b) to the Company's registration
         statement on Form SB-2 (No. 333-38098).

     (3) 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.

     (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, 2002.

     (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 April 11, 2003, James Monroe Bancorp, Inc. filed a Current Report on Form
8-K, under Items, 5, 9 and 12 thereof, announcing earnings for the first quarter
of 2003, and a five for four stock split in respect of its common stock in the
form of a 25% stock dividend.



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<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:    August 6, 2003              BY: /s/John R. Maxwell
                                         -------------------------------------
                                            John R. Maxwell, President &
                                            Chief Executive Officer


Date:    August 6, 2003              BY:  /s/ Richard I. Linhart
                                          -----------------------------------
                                              Richard I. Linhart, Executive Vice
                                              President & Chief Operating and
                                              Financial Officer



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