UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


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

For the quarterly period ended June 30, 2008

                                       OR

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

For the transition period from                 to

Commission File No. 0-31951
                    -------

                                 MONROE BANCORP
                                 --------------
             (Exact name of registrant as specified in its charter)

          Indiana                                         35-1594017
          -------                                         ----------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                            210 East Kirkwood Avenue
                             Bloomington, IN 47408
                             ---------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (812) 336-0201
                                 --------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]                                Accelerated filer [X]
Non-accelerated filer   [ ]                        Smaller reporting company [ ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Outstanding Shares of Common Stock on August 8, 2008: 6,227,550

                                       1
<PAGE>

                         MONROE BANCORP AND SUBSIDIARY
                                   FORM 10-Q

                                     INDEX
                                                                        Page No.
                                                                        --------

Part I. Financial Information:


   Item 1.  Financial Statements:

               Consolidated Condensed Balance Sheets ..........................3

               Consolidated Condensed Statements of Income - Six Months........4

               Consolidated Condensed Statements of Income - Three Months......5

               Consolidated Condensed Statement of Shareholders' Equity........6

               Consolidated Condensed Statements of Cash Flows ................7

               Notes to Consolidated Condensed Financial Statements............8

   Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations............................10

   Item 3.  Quantitative and Qualitative Disclosures about Market Risk........22

   Item 4.  Controls and Procedures ..........................................24

Part II. Other Information:

   Item 1.  Legal Proceedings.................................................24

   Item 1A. Risk Factors......................................................24

   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.......24

   Item 3.  Defaults Upon Senior Securities ..................................24

   Item 4.  Submission of Matters to a Vote of Security Holders...............24

   Item 5.  Other Information.................................................25

   Item 6.  Exhibits..........................................................25

Signatures....................................................................28

Exhibit Index.................................................................29


                                       2
<PAGE>

     Part I. Financial Information

     Item 1. Financial Statements

                         MONROE BANCORP AND SUBSIDIARY
                     Consolidated Condensed Balance Sheets
                 (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                  June 30,   December 31,
                                                                                    2008         2007
                                                                                 (Unaudited)
                                                                                 ----------- ------------
<S>                                                                              <S>         <C>
Assets
     Cash and due from banks..................................................... $  13,005   $  19,929
     Federal funds sold..........................................................     2,493       1,077
     Interest-earning deposits...................................................    13,297       4,634
                                                                                  ---------   ---------
         Total cash and cash equivalents                                             28,795      25,640

     Trading securities, at fair value...........................................     3,495       3,647
     Investment securities:
         Available for sale......................................................   102,091     121,005
         Held to maturity........................................................     1,005       1,006
                                                                                  ---------   ---------
            Total investment securities..........................................   103,096     122,011

     Loans.......................................................................   598,259     581,857
     Allowance for loan losses...................................................    (7,748)     (6,654)
                                                                                  ---------   ---------
         Net loans...............................................................   590,511     575,203
     Loans held for sale.........................................................     4,110       2,974
     Premises and equipment......................................................    20,534      20,029
     Federal Home Loan Bank of Indianapolis stock, at cost.......................     2,312       2,312
     Other assets................................................................    25,351      26,264
                                                                                  ---------   ---------
                    Total assets................................................. $ 778,204   $ 778,080
                                                                                  =========   =========

Liabilities
     Deposits:
         Noninterest-bearing..................................................... $  79,548   $  81,542
         Interest-bearing........................................................ $ 544,323     538,175
                                                                                  ---------   ---------
            Total deposits....................................................... $ 623,871     619,717

     Borrowings.................................................................. $  88,723      96,421
     Other liabilities........................................................... $   9,578       7,490
                                                                                  ---------   ---------
                    Total liabilities............................................ $ 722,172     723,628

Commitments and Contingent Liabilities

Shareholders' Equity
     Common stock, no-par value
        Authorized, 18,000,000 shares
        Issued and outstanding - 6,227,550 and 6,227,550 shares, respectively           137         137
     Additional paid-in capital..................................................     4,398       4,349
     Retained earnings...........................................................    51,718      49,881
     Accumulated other comprehensive income (loss)...............................       (83)        223
     Unearned ESOT shares........................................................      (138)       (138)
                                                                                  ---------   ---------
                    Total shareholders' equity...................................    56,032      54,452
                                                                                  ---------   ---------
                    Total liabilities and shareholders' equity................... $ 778,204   $ 778,080
                                                                                  =========   =========
</TABLE>
     See notes to consolidated condensed financial statements.
                                       3
<PAGE>

                         MONROE BANCORP AND SUBSIDIARY
                  Consolidated Condensed Statements of Income
                                  (Unaudited)
                 (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                         June 30,
                                                                                  ----------------------
                                                                                    2008          2007
                                                                                  --------      --------
<S>                                                                               <C>           <C>
Interest Income
     Loans, including fees....................................................... $ 19,052      $ 21,166
     Trading securities..........................................................       55            54
     Investment securities
         Taxable.................................................................    1,876         1,958
         Tax exempt..............................................................      671           601
     Federal funds sold..........................................................      110           262
     Other interest income.......................................................       84            60
                                                                                  --------      --------
                    Total interest income........................................   21,848        24,101
                                                                                  --------      --------

Interest Expense
     Deposits....................................................................    9,035        10,502
     Short-term borrowings.......................................................      514         1,312
     Other borrowings............................................................      667           703
                                                                                  --------      --------
                    Total interest expense.......................................   10,216        12,517
                                                                                  --------      --------
                    Net interest income..........................................   11,632        11,584
     Provision for loan losses...................................................    1,930           540
                                                                                  --------      --------
                    Net interest income after provision for loan losses..........    9,702        11,044
                                                                                  --------      --------

Noninterest Income
     Fiduciary activities........................................................    1,242         1,022
     Service charges on deposit accounts.........................................    1,854         1,799
     Commission income...........................................................      466           471
     Securities gains ...........................................................      579            42
     Unrealized gains (losses) on trading securities.............................     (266)          116
     Net gains on loans sales....................................................      372           439
     Debit card interchange fees.................................................      542           452
     Other operating income......................................................      599           791
                                                                                  --------      --------
                    Total other income...........................................    5,388         5,132
                                                                                  --------      --------

Noninterest Expenses
     Salaries and employee benefits..............................................    6,421         6,187
     Net occupancy and equipment expense.........................................    1,703         1,536
     Advertising.................................................................      398           387
     Legal fees..................................................................      287           273
     Appreciation (depreciation) in directors' and executives'
         deferred compensation plans.............................................     (187)          212
     Other operating expense.....................................................    2,140         1,764
                                                                                  --------      --------
                    Total other expenses.........................................   10,762        10,359
                                                                                  --------      --------

                    Income before income tax.....................................    4,328         5,817
                    Income tax expense...........................................      875         1,615
                                                                                  --------      --------
                                   Net income.................................... $  3,453      $  4,202
                                                                                  ========      ========

     Basic earnings per share.................................................... $  0.555      $  0.660
     Diluted earnings per share.................................................. $  0.554      $  0.657
     Dividends declared and paid per share....................................... $   0.26      $   0.24
</TABLE>
     See notes to consolidated condensed financial statements.

                                       4
<PAGE>

                         MONROE BANCORP AND SUBSIDIARY
                  Consolidated Condensed Statements of Income
                                  (Unaudited)
                 (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                    Three Months Ended
                                                                                          June 30,
                                                                                   ----------------------
                                                                                     2008          2007
                                                                                   --------      --------
<S>                                                                                <C>           <C>
Interest Income
     Loans, including fees........................................................ $  9,051      $ 10,754
     Trading securities...........................................................       23            27
     Investment securities
         Taxable..................................................................      893           989
         Tax exempt...............................................................      336           305
     Federal funds sold...........................................................       23           136
     Other interest income........................................................       40            38
                                                                                   --------      --------
                    Total interest income.........................................   10,366        12,249
                                                                                   --------      --------

Interest Expense
     Deposits.....................................................................    4,077         5,408
     Short-term borrowings........................................................      205           607
     Other borrowings.............................................................      328           381
                                                                                   --------      --------
                    Total interest expense........................................    4,610         6,396
                                                                                   --------      --------
                    Net interest income...........................................    5,756         5,853
     Provision for loan losses....................................................    1,050           255
                                                                                   --------      --------
                    Net interest income after provision for loan losses...........    4,706         5,598
                                                                                   --------      --------

Noninterest Income
     Fiduciary activities.........................................................      634           537
     Service charges on deposit accounts..........................................      985           932
     Commission income............................................................      246           239
     Securities gains.............................................................      439            41
     Unrealized gains (losses) on trading securities..............................      (50)           83
     Net gains on loans sales.....................................................      175           262
     Debit card interchange fees..................................................      281           238
     Other operating income.......................................................      314           353
                                                                                   --------      --------
                    Total other income............................................    3,024         2,685
                                                                                   --------      --------

Noninterest Expenses
     Salaries and employee benefits...............................................    3,156         3,198
     Net occupancy and equipment expense..........................................      830           717
     Advertising..................................................................      179           162
     Legal fees...................................................................      102           118
     Appreciation (depreciation) in directors' and executives'
         deferred compensation plans..............................................      (23)          148
     Other operating expense......................................................    1,127           923
                                                                                   --------      --------
                    Total other expenses..........................................    5,371         5,266
                                                                                   --------      --------

                    Income before income tax......................................    2,359         3,017
                    Income tax expense............................................      499           827
                                                                                   --------      --------
                                   Net income..................................... $  1,860      $  2,190
                                                                                   ========      ========

     Basic earnings per share..................................................... $  0.299      $  0.348
     Diluted earnings per share................................................... $  0.299      $  0.346
     Dividends declared and paid per share........................................ $   0.13      $   0.12
</TABLE>
     See notes to consolidated condensed financial statements.

                                       5
<PAGE>

                         MONROE BANCORP AND SUBSIDIARY
            Consolidated Condensed Statement of Shareholders' Equity
                            For the Six Months Ended
                                 June 30, 2008
                                  (Unaudited)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                                             Unearned
                                     Common Stock                                            Accumulated     Employee
                                 -------------------   Additional                               Other         Stock
                                    Shares              Paid in    Comprehensive  Retained  Comprehensive   Ownership
                                 Outstanding  Amount    Capital        Income     Earnings  Income (Loss)  Trust Shares   Total
                                 -----------------------------------------------------------------------------------------------
<S>                               <C>         <C>       <C>          <C>          <C>          <C>           <C>        <C>
Balances January 1, 2008......... 6,227,550   $  137    $  4,349                  $ 49,881     $   223       $   (138)  $ 54,452

Comprehensive Income:
Net income for the period........                                     $  3,453       3,453                                 3,453
 Other comprehensive income -
  unrealized loss on securities,
  net of tax and reclassification
  adjustment.....................                                         (306)                   (306)                     (306)
ESOT shares earned...............                             18                                                              18
Stock option compensation
  expense........................                             31                                                              31
Repurchase of stock, at cost.....         -                    -                                                               -
Cash dividend ($0.26 per share)                                                     (1,616)                               (1,616)
                                 -----------------------------------------------------------------------------------------------
Balances June 30, 2008........... 6,227,550   $  137    $  4,398      $  3,147    $ 51,718     $   (83)      $   (138)  $ 56,032
                                 ===============================================================================================
</TABLE>

See notes to consolidated condensed financial statements.




                                       6
<PAGE>

                         MONROE BANCORP AND SUBSIDIARY
                Consolidated Condensed Statements of Cash Flows
                                  (Unaudited)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                      Six Months Ended
                                                                                           June 30,
                                                                                   -----------------------
                                                                                     2008          2007
                                                                                   ---------     ---------
<S>                                                                                <C>           <C>
Operating Activities
      Net income.................................................................. $   3,453     $   4,202
      Adjustments to reconcile net income to net cash provided
           by operating activities:
          Provision for loan losses...............................................     1,930           540
          Depreciation and amortization...........................................       584           550
          Deferred income tax.....................................................      (553)          (75)
          Investment securities amortization, net.................................       (19)          (25)
          Investment securities gains including redemptions.......................      (579)          (41)
          Net change in trading securities........................................       166             6
          Gain on disposal of premises and equipment..............................        (6)          (81)
          Origination of loans held for sale......................................   (26,669)      (31,454)
          Proceeds from sale of loans held for sale...............................    25,906        31,347
          Gain on sale of loans held for sale.....................................      (372)         (439)
          ESOT shares earned......................................................        18            32
          (Gain) loss on sale of foreclosed assets................................       (14)            -
          Stock-based compensation expense........................................        31            30
          Net change in:
              Interest receivable and other assets................................     1,281        (1,363)
              Interest payable and other liabilities..............................     4,339        (1,922)
                                                                                   ---------     ---------
                    Net cash provided by operating activities.....................     9,496         1,307
                                                                                   ---------     ---------

Investing Activities
      Purchase of securities available for sale...................................   (40,106)      (30,123)
      Proceeds from sales of securities available for sale........................    39,525           250
      Proceeds from paydowns and maturities of securities available for sale......    17,359        29,756
      Proceeds from paydowns and maturities of securities held to maturity........         -           646
      Proceeds from sale of foreclosed assets.....................................       660
      Net change in loans.........................................................   (17,536)       (4,177)
      Proceeds from sale of premises and equipment................................         6
      Purchase of premises and equipment..........................................    (1,089)       (2,732)
                                                                                   ---------     ---------
                    Net cash used by investing activities.........................    (1,181)       (6,380)
                                                                                   ---------     ---------

Financing Activities
      Net change in:
          Noninterest-bearing, interest-bearing demand and savings deposits.......    14,024        45,653
          Certificates of deposit.................................................    (9,870)      (20,388)
          Borrowings..............................................................   (10,674)      (14,009)
      Proceeds from Federal Home Loan Bank advances...............................    15,000
      Repayments of Federal Home Loan Bank advances...............................   (12,024)          (22)
      Cash dividends paid.........................................................    (1,616)       (1,511)
      Proceeds from trust preferred debentures....................................         -         5,155
      Repurchase of common stock..................................................         -        (4,086)
                                                                                   ---------     ---------
                    Net cash provided (used) by financing activities..............    (5,160)       10,792
                                                                                   ---------     ---------
Net Change in Cash and Cash Equivalents...........................................     3,155         5,719
Cash and Cash Equivalents, Beginning of Period....................................    25,640        33,546
                                                                                   ---------     ---------
Cash and Cash Equivalents, End of Period.......................................... $  28,795     $  39,265
                                                                                   =========     =========

Supplemental cash flow disclosures
      Interest paid............................................................... $  10,225     $  11,863
      Income tax paid.............................................................     1,400         1,520
</TABLE>
See notes to consolidated condensed financial statements.

                                       7
<PAGE>

                         MONROE BANCORP AND SUBSIDIARY
              Notes to Consolidated Condensed Financial Statements
                                 June 30, 2008
                                  (Unaudited)

Note 1: Basis of Presentation
-----------------------------
The consolidated condensed financial statements include the accounts of Monroe
Bancorp (the "Company") and its wholly owned subsidiary, Monroe Bank, a state
chartered bank (the "Bank") and the Bank's wholly owned subsidiary MB Portfolio
Management, Inc ("MB") and MB's wholly owned subsidiary MB REIT, Inc. A summary
of significant accounting policies is set forth in Note 1 of Notes to Financial
Statements included in the December 31, 2007, Annual Report to Shareholders. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

The interim consolidated condensed financial statements have been prepared in
accordance with instructions to Form 10-Q, and therefore do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.

The interim consolidated condensed financial statements at June 30, 2008, and
for the three and six months ended June 30, 2008 and 2007, have not been audited
by independent accountants, but reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows for
such periods.

The consolidated condensed balance sheet of the Company as of December 31, 2007
has been derived from the audited consolidated balance sheet of the Company as
of that date. Certain information and note disclosures normally included in the
Company's annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K filed with the Securities
and Exchange Commission.

The results of operations for the period are not necessarily indicative of the
results to be expected for the year.

Note 2: Earnings Per Share
--------------------------
The number of shares used to compute basic and diluted earnings per share was as
follows:
<TABLE>
<CAPTION>
                                                                  Six months ended
                                                             ----------------------------
                                                             June 30, 2008  June 30, 2007
                                                             -------------  -------------
            <S>                                              <C>            <C>
            Net income (in thousands)....................... $       3,453  $       4,202
                                                             =============  =============
            Weighted average shares outstanding.............     6,227,550      6,389,074
            Average unearned ESOT shares....................       (10,700)       (19,900)
                                                             -------------  -------------
            Shares used to compute basic earnings
               per share....................................     6,216,850      6,369,174
            Effect of dilutive securities- stock options....        12,829         25,971
                                                             -------------  -------------
            Shares used to compute diluted earnings
               per share....................................     6,229,679      6,395,145
                                                             =============  =============

            Earnings per share, basic....................... $       0.555  $        0.660
            Earnings per share, diluted..................... $       0.554  $        0.657
</TABLE>


                                       8
<PAGE>

Options to purchase 30,000 shares of common stock at $16 per share, 210,000
shares of common stock at $22 per share, and 13,000 shares of common stock at
$16.83 were outstanding at June 30, 2008, and options to purchase 210,000 shares
of common stock at $22 per share were outstanding at June 30, 2007, but were not
included in the computation of diluted earnings per share for the six months
ended June 30, 2008 and 2007, respectively because the options' exercise price
was greater than the average market price of the common shares.
<TABLE>
<CAPTION>
                                                                  Three months ended
                                                             ----------------------------
                                                             June 30, 2008  June 30, 2007
                                                             -------------  -------------
            <S>                                              <C>            <C>
             Net income (in thousands)...................... $       1,860  $       2,190
                                                             =============  =============
             Weighted average shares outstanding............     6,227,550      6,317,424
             Average unearned ESOT shares...................        (9,500)       (18,700)
                                                             -------------  -------------
             Shares used to compute basic earnings
                per share...................................     6,218,050      6,298,724
             Effect of dilutive securities- stock options...        10,029         26,236
                                                             -------------  -------------
             Shares used to compute diluted earnings
                per share...................................     6,228,079      6,324,960
                                                             =============  =============

             Earnings per share, basic...................... $       0.299  $       0.348
             Earnings per share, diluted.................... $       0.299  $       0.346
</TABLE>

Options to purchase 11,000 shares at $14.73 per share, 30,000 shares of common
stock at $16 per share, 210,000 shares of common stock at $22 per share, and
13,000 shares of common stock at $16.83 were outstanding at June 30, 2008, and
options to purchase 210,000 shares of common stock at $22 per share were
outstanding at June 30, 2007, but were not included in the computation of
diluted earnings per share for the three months ended June 30, 2008 and 2007,
respectively because the options' exercise price was greater than the average
market price of the common shares.


Note 3: Change in Accounting Principle
--------------------------------------
Effective January 1, 2008, the Company adopted Statement of Financial Accounting
Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair
value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements. FAS 157 has been applied prospectively as of the
beginning of the period. FAS 157 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. FAS 157 also
establishes a fair value hierarchy which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring
fair value. The standard describes three levels of inputs that may be used to
measure fair value:

      Level 1: Quoted prices in active markets for identical assets or
      liabilities.
      Level 2: Observable inputs other than Level 1 prices, such as quoted
      prices for similar assets or liabilities; quoted prices in active markets
      that are not active; or other inputs that are observable or can be
      corroborated by observable market data for substantially the full term of
      the assets or liabilities.
      Level 3: Unobservable inputs that are supported by little or no market
      activity and that are significant to the fair value of the assets or
      liabilities.

Below is a description of the valuation methodologies used for instruments
measured at fair value on a recurring and non-recurring basis and recognized in
the accompanying balance sheet, as well as the general classification of such
instruments pursuant to the valuation hierarchy.


                                       9
<PAGE>

Trading and Available-for-sale Securities
Where quoted market prices are available in an active market, securities are
classified within Level 1 of the valuation hierarchy. Level 1 securities include
highly liquid government bonds, mortgage products and exchange traded equities.
If quoted market prices are not available, then fair values are estimated by
using pricing models, quoted prices of securities with similar characteristics
or discounted cash flows. Level 2 securities include certain collateralized
mortgage and debt obligations and certain municipal securities. In certain cases
where Level 1 or Level 2 inputs are not available, securities are classified
within Level 3 of the hierarchy. At this time the Company has no securities
classified as Level 3 securities.

Impaired Loans
Loans impairment is reported when full payment under the loan terms is not
expected. Impaired loans are carried at the present value of estimated future
cash flows using the loan's existing rate, or the fair value of collateral if
the loan is collateral dependent. During 2008, certain impaired loans were
partially charged-off or re-evaluated, resulting in a remaining balance for
these loans, net of specific allowance, of $2,144,000 as of June 30, 2008. This
valuation would be considered Level 3. Level 3 inputs for impaired loans
included current and prior appraisals, discounting factors, the borrowers'
financial results and other considerations including expected cash flows.

The following table presents the fair value measurements of assets and
liabilities recognized in the accompanying balance sheet measured at fair value
on a recurring and non-recurring basis and the level within the FAS 157 fair
value hierarchy in which the fair value measurements fall at June 30, 2008:
<TABLE>
<CAPTION>
                                                                Fair Value Measurements Using
                                                        ---------------------------------------------
                                                        Quoted Prices in   Significant
                                                         Active Markets       Other      Significant
                                                          for Identical     Observable   Unobservable
                                                             Assets           Inputs        Inputs
                                             Fair Value     (Level 1)        (Level 2)     (Level 3)
                                             --------------------------------------------------------
<S>                                          <C>            <C>              <C>          <C>
Fair value measured on a recurring basis
  Trading securities                         $    3,495     $   3,495        $       -    $        -
  Available-for-sale securities                 102,091        11,155           90,936             -
Fair value measured on a non-recurring basis
  Impaired loans, net of specific allowance       2,144             -                -         2,144
</TABLE>


Note 4: Reclassifications
-------------------------
Reclassifications of certain amounts in the 2007 consolidated condensed
financial statements have been made to conform to the 2008 presentation.


Note 5: Contingencies
---------------------
The Company and Bank are from time to time subject to other claims and lawsuits
which arise primarily in the ordinary course of business. It is the opinion of
management that the disposition or ultimate resolution of such claims and
lawsuits will not have a material adverse effect on the consolidated financial
position of the Company.


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

General
-------
Monroe Bancorp is a one-bank holding company formed under Indiana law in 1984.
The Company holds all of the outstanding stock of Monroe Bank, which was formed
in 1892. Banking is the primary business activity of the Company.

The Bank, with its primary offices located in Bloomington, Indiana, conducts
business from seventeen locations in Monroe, Jackson, Lawrence and Hendricks
counties in Indiana. Approximately 70 percent of the Bank's business is in
Monroe County and is concentrated in and around the city of Bloomington.


                                       10
<PAGE>

The Bank is a traditional community bank which provides a variety of financial
services to its customers, including:
    o accepting deposits;
    o making commercial, mortgage and personal loans;
    o originating fixed rate residential mortgage loans for sale into the
      secondary market;
    o providing personal and corporate trust services;
    o providing investment advisory and brokerage services; and
    o providing annuities and other investment products.

The majority of the Bank's revenue is derived from interest and fees on loans
and investments, and the majority of its expense is interest paid on deposits
and general and administrative expenses related to its business.

Critical Accounting Policies
----------------------------
The most significant accounting policies followed by the Company are presented
in Note 1 to the consolidated financial statements on pages 37 to 39 of the 2007
Annual Report to Shareholders. Certain of these policies are important to the
portrayal of the Company's financial condition, since they require management to
make difficult, complex or subjective judgments, some of which may relate to
matters that are inherently uncertain. Management has identified these policies
in the Critical Accounting Policies section of the Management's Discussion and
Analysis on pages 22 to 23 of the 2007 Annual Report to Shareholders. There have
been no changes in these critical accounting policies to date.

Non-GAAP Financial Measures
---------------------------
In January 2003, the United States Securities and Exchange Commission ("SEC")
issued Regulation G, "Conditions for Use of Non-GAAP Financial Measures." A
non-GAAP financial measure is a numerical measure of a company's historical or
future performance, financial position, or cash flow that excludes (includes)
amounts or adjustments that are included (excluded) in the most directly
comparable measure calculated in accordance with generally accepted accounting
principles ("GAAP"). Regulation G requires companies that present non-GAAP
financial measures to disclose a numerical reconciliation to the most directly
comparable measurement using GAAP as well as the reason why the non-GAAP measure
is an important measure.

Management has used the following non-GAAP financial measures throughout this
quarterly report on Form 10-Q.

o In the "Net Interest Income / Net Interest Margin" section, the discussion is
  focused on tax-equivalent rates and margin. Municipal bond and municipal loan
  interest has been converted to a tax-equivalent rate using a federal tax rate
  of 34 percent. Management believes a discussion of the changes in
  tax-equivalent rates and margin is more relevant because it better explains
  changes in after-tax net income.

o In the "Noninterest Income / Noninterest Expense" section of this document, we
  report noninterest income and noninterest expense without the effect of
  unrealized gains and losses on securities in a grantor trust ("rabbi trust")
  which is a non-GAAP financial measure. Other income includes realized and
  unrealized securities gains and losses and capital gain dividends on trading
  securities (mutual funds) held in a rabbi trust in connection with the
  Company's Directors' and Executives' Deferred Compensation Plans. These
  securities are held as trading securities, and hence, unrealized gains and
  losses are recognized on the income statement. Any unrealized or realized loss
  on securities held in the rabbi trust net of any dividend, interest and
  capital gain dividend income earned on the securities in the rabbi trust
  (included in net interest income) are directly offset by a decrease to
  directors' fee/deferred executive compensation expense (included in other
  expense), and conversely, any net realized or unrealized gain combined with
  interest, dividends and capital gain dividends earned on the securities in the
  trust are directly offset by an increase to directors' fee/deferred executive
  compensation expense. These offsets are included in the line item identified
  on pages 4 and 5 of the consolidated financial statements as "Appreciation
  (depreciation) on directors' and executives' deferred compensation plans." The
  activity in the rabbi trust has no effect on the Company's net income,
  therefore, management believes a more accurate comparison of current and prior
  year noninterest income and noninterest expense can be made if the rabbi trust
  realized and unrealized gains,


                                       11
<PAGE>

  losses, capital gain dividends and offsetting appreciation (depreciation) on
  the deferred compensation plans and trustee fees are removed.

Results of Operations
---------------------

Overview
--------
Net income for the second quarter of 2008 was 1,860,000, a 15.1 percent decrease
from net income of $2,190,000 for the same quarter last year. Basic and diluted
earnings per share for the second quarter of 2008 were $0.299, down 14.1 percent
from $0.348 per basic share and down 13.6 percent from $0.346 per diluted share
for the second quarter of 2008. Annualized return on average equity (ROAE) for
the second quarter of 2008 decreased to 13.26 percent compared to 16.93 percent
for second quarter of 2007. The annualized return on average assets (ROAA) was
0.96 percent for the second quarter of 2008 compared to 1.17 percent for the
same period of 2007.

Net income for the first six months of 2008 was $3,453,000, a 17.8 percent
decrease from net income of $4,202,000 for the same period last year. Basic
earnings per share for the first six months of 2008 were $0.555, down 15.9
percent from $0.660 per share for the same period of 2007. Diluted earnings per
share for the first six months of 2008 were $0.554, down 15.7 percent from
$0.657 per share for the same period of 2007. Annualized ROAE for the six months
ended June 30, 2008 decreased to 12.46 percent compared to 16.09 percent for the
first six months of 2007. The annualized ROAA was 0.89 percent for the six
months ended June 30, 2008 compared to 1.14 percent for the first six months of
2007.

The decline in net income resulted primarily from an increase in the provision
for loan losses. The provision for loan losses totaled $1,050,000 for the second
quarter of 2008 compared to $255,000 for the same period of 2007. Net interest
income for the second quarter of 2008, after the provision for loan losses,
decreased $892,000, or 15.9 percent from the second quarter of 2007. The
provision for loan losses totaled $1,930,000 for the six months ended June 30,
2008 compared to $540,000 for the same period of 2007. Net interest income for
the six months ended June 30, 2008, after the provision for loan losses,
decreased by $1,342,000 or 12.2 percent compared to the same period in 2007.

The following items affected second quarter and year-to-date results:

    o General Economic Conditions in the Real Estate Markets - Among the primary
      areas of management focus during 2008 were managing the deterioration of
      asset quality resulting from slowing economic activity and stresses in the
      multi-family residential housing markets. Nonperforming assets and 90-day
      past due loans totaled $16,472,000 (2.12 percent of total assets) at June
      30, 2008 compared to $8,355,000 (1.08 percent of total assets) at March
      31, 2008 and $3,397,000 (0.44 percent of total assets) at June 30, 2007.
    o Securities Gains - Securities gains of $579,000 were realized from sales
      of securities during the first six months of 2008 compared to $42,000 in
      the same period of 2007.
    o Benefit Expenses - Benefit expenses increased by $318,000 or 35.4 percent
      to $1,216,000 for the first six months of 2008 compared to $898,000 for
      the first six months of 2007. The increase in benefit expenses resulted
      primarily from an increase in the cost of the Company's health insurance
      plan which totaled $459,000 for the first six months of 2008, $249,000
      greater than the $210,000 expense for the same period of 2007. The
      increase was largely due to higher claims experienced in 2008.
    o Deposit Insurance Expense - The Company experienced a $169,000 or 491.5
      percent increase in deposit insurance expense in the first six months of
      2008 related to the Federal Deposit Insurance Reform Act of 2005.
    o Occupancy Expense - The Company opened two new full service banking
      centers, one in December of 2007 and the second in January of 2008 which
      contributed to the $167,000 or 10.9 percent increase in occupancy expense
      in the first six months of 2008 compared to the same period in 2007.

The Company successfully opened a new full-service banking center in Avon in
Hendricks County on January 14, 2008. This followed shortly after the opening on
December 11, 2007 of a new banking center in Plainfield,


                                       12
<PAGE>

also in Hendricks County. Grand opening ceremonies were held during the first
quarter for both banking centers. The Company previously opened a new
full-service banking center in Brownsburg, Indiana in January 2006, which
replaced a limited-service office opened in 2002. Management is pleased with the
progress of its Hendricks County banking centers. Average deposits for the month
of June 2008 at the Brownsburg banking center were $45,692,000 compared to
$44,816,000 for June 2007 and $29,730,000 for June 2006. Average deposits for
the month of June 2008 at the Plainfield and Avon banking centers were
$19,289,000 and 17,185,000, respectively. The opening of the Avon Banking Center
completes the Company's transition from less visible, limited service branches
in Hendricks County to more visible, strategically located full-service banking
centers. Another new banking center, to be located in Noblesville, in Hamilton
County, is expected to open in September 2008 and will commence the Company's
growth plans in the northeast area of the Indianapolis metro region.

Net Interest Income / Net Interest Margin
-----------------------------------------
The two tables on the following pages present information to assist in
analyzing net interest income. The table of Average Balance Sheets and Interest
Rates presents the major components of interest-earning assets and
interest-bearing liabilities, related interest income and expense and the
resulting yield or cost. Interest income presented in the table has been
adjusted to a tax-equivalent basis assuming a 34 percent tax rate. The tax-
equivalent adjustment recognizes the income tax savings when comparing taxable
and tax-exempt assets.




















                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                                       Average Balance Sheets and Interest Rates
                                                        -----------------------------------------------------------------------
                                                          Six Months Ended June 30, 2008       Six Months Ended June 30, 2007
                                                        ----------------------------------   ----------------------------------
                                                         Average              Average Rate    Average              Average Rate
                           ASSETS                        Balance   Interest   (annualized)    Balance   Interest   (annualized)
                                                        ---------  --------   ------------   ---------  --------   ------------
<S>                                                     <C>        <C>        <C>            <C>        <C>        <C>
Interest earning assets
   Securities
      Taxable.......................................... $  79,511  $  1,869       4.73%      $  86,706  $  1,960       4.56%
      Tax-exempt (1)...................................    39,160     1,017       5.22%         34,615       911       5.30%
                                                        ---------  --------                  ---------  --------
         Total securities..............................   118,671     2,886       4.89%        121,321     2,871       4.77%

   Loans (2)...........................................   586,783    19,060       6.53%        561,486    21,172       7.60%
   FHLB Stock..........................................     2,312        62       5.39%          2,312        52       4.54%
   Federal funds sold..................................     7,184       110       3.07%          9,538       262       5.54%
   Interest-earning deposits...........................     9,667       114       2.37%          3,393        84       4.97%
                                                        ---------  --------                  ---------  --------
          Total interest earning assets................   724,617    22,232       6.17%        698,050    24,441       7.06%
                                                        ---------  --------                  ---------  --------

Noninterest earning assets
  Allowance for loan losses............................    (7,130)                              (6,305)
   Premises and equipment & other assets...............    47,615                               39,969
   Cash and due from banks.............................    13,420                               14,624
                                                        ---------                            ---------
         Total assets.................................. $ 778,522                            $ 746,338
                                                        =========                            =========

       LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
   Total interest-bearing deposits..................... $ 561,039     9,035       3.24%      $ 523,493    10,502       4.05%
   Borrowed funds......................................    73,805     1,181       3.22%         83,867     2,015       4.85%
                                                        ---------  --------                  ---------  --------
      Total interest-bearing liabilities...............   634,844    10,216       3.24%        607,360    12,517       4.16%
                                                        ---------  --------                  ---------  --------


Noninterest-bearing liabilities
   Noninterest-bearing demand deposits.................    77,367                               78,017
   Other liabilities...................................    10,584                                8,305
   Shareholders' equity................................    55,727                               52,656
                                                        ---------                            ---------
          Total liabilities and shareholders' equity... $ 778,522                            $ 746,338
                                                        =========                            =========


Interest margin recap
Net interest income and interest rate spread
   Tax-equivalent net interest income spread...........              12,016       2.93%                   11,924       2.90%
   Tax-equivalent net interest margin as a percent of
       total average earning assets....................                           3.33%                                3.44%
Tax-equivalent adjustment (1)..........................                 384                                  340
                                                                   --------                             --------

   Net interest income                                               11,632                             $ 11,584
                                                                   ========                             ========
</TABLE>
(1) Interest income on tax-exempt securities has been adjusted to a tax
    equivalent basis using a marginal income tax rate of 34%.
(2) Nonaccrual loans are included in average loan balances and loan fees are
    included in interest income.


                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                       Average Balance Sheets and Interest Rates
                                                        -----------------------------------------------------------------------
                                                         Three Months Ended June 30, 2008     Three Months Ended June 30, 2007
                                                        ----------------------------------   ----------------------------------
                                                         Average              Average Rate    Average              Average Rate
                           ASSETS                        Balance   Interest   (annualized)    Balance   Interest   (annualized)
                                                        ---------  --------   ------------   ---------  --------   ------------
<S>                                                     <C>        <C>        <C>            <C>        <C>        <C>
Interest earning assets
   Securities
      Taxable.......................................... $  76,315  $    882       4.65%      $  86,072  $    995       4.64%
      Tax-exempt (1)...................................    39,864       510       5.14%         34,981       462       5.30%
                                                        ---------  --------                  ---------  --------
          Total securities.............................   116,179     1,392       4.82%        121,053     1,457       4.83%

   Loans (2)...........................................   591,310     9,057       6.16%        565,373    10,761       7.63%
   FHLB Stock..........................................     2,312        34       5.96%          2,312        22       3.82%
   Federal funds sold..................................     3,907        23       2.39%          9,693       136       5.63%
   Interest-earning deposits...........................     9,733        49       2.03%          4,233        52       4.97%
                                                        ---------  --------                  ---------  --------
           Total interest earning assets...............   723,441    10,555       5.87%        702,664    12,428       7.09%
                                                        ---------  --------                  ---------  --------

Noninterest earning assets
  Allowance for loan losses............................    (7,375)                              (6,329)
   Premises and equipment & other assets...............    47,956                               41,180
   Cash and due from banks.............................    12,567                               13,965
                                                        ---------                            ---------
          Total assets................................. $ 776,589                            $ 751,480
                                                        =========                            =========

         LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
   Total interest-bearing deposits..................... $ 554,065     4,077       2.96%      $ 530,015     5,408       4.09%
   Borrowed funds......................................    76,056       533       2.82%         81,231       988       4.88%
                                                        ---------  --------                  ---------  --------
      Total interest-bearing liabilities...............   630,121     4,610       2.94%        611,246     6,396       4.20%
                                                        ---------  --------                  ---------  --------


Noninterest-bearing liabilities
   Noninterest-bearing demand deposits.................    79,062                               79,405
   Other liabilities...................................    10,986                                8,937
   Shareholders' equity................................    56,420                               51,892
                                                        ---------                            ---------
           Total liabilities and shareholders' equity.. $ 776,589                            $ 751,480
                                                        =========                            =========


Interest margin recap
Net interest income and interest rate spread
   Tax-equivalent net interest income spread...........            $  5,945       2.93%                 $  6,032       2.90%
   Tax-equivalent net interest margin as a percent of
      total average earning assets.....................                           3.31%                                3.44%
Tax-equivalent adjustment (1)..........................                 189                                  179
                                                                   --------                             --------

          Net interest income..........................            $  5,756                             $  5,853
                                                                   ========                             ========
</TABLE>
(1) Interest income on tax-exempt securities has been adjusted to a tax
    equivalent basis using a marginal income tax rate of 34%.
(2) Nonaccrual loans are included in average loan balances and loan fees are
    included in interest income.


                                       15
<PAGE>

Net Interest Income / Net Interest Margin (continued)
-----------------------------------------------------
Net interest income is the primary source of the Company's earnings. It is a
function of the net interest margin and the volume of average earning assets.
The net interest margin as a percent of average earnings assets was 3.23 percent
for the first six months of 2008, down from 3.35 percent for the same period in
2007 and was 3.20 percent for the second quarter of 2008, down from 3.34 percent
for the same period in 2007. Adjusting for tax- exempt income and expense, as
discussed in the "Non-GAAP Financial Measures" section, the tax-equivalent net
interest margin as a percent of average earning assets was 3.33 percent for the
first six months of 2008, down from 3.44 percent for the same period last year
and was 3.31 percent for the quarter ended June 30, 2008, down from 3.44 percent
for the same quarter last year. The eleven basis point drop in the
tax-equivalent net interest margin during the first six months of 2008 compared
to the same period in 2007 and the thirteen basis point drop in the second
quarter of 2008 compared to 2007 were primarily the result of higher balances of
nonperforming assets and fixed assets.

Net interest income was $11,632,000 for the six months ended June 30, 2008
compared to $11,584,000 for the same period in 2007, an increase of 0.4 percent.
Adjusting for tax-exempt income and expense, as discussed in the "Non-GAAP
Financial Measures" section, tax-equivalent net interest income was $12,015,000
for the six months ended June 30, 2008 compared to $11,924,000 for the same
period in 2007, an increase of 0.8 percent.

Net interest income was $5,756,000 for the three months ended June 30, 2008
compared to $5,853,000 for the same period in 2007, a decrease of 1.7 percent.
Adjusting for tax-exempt income and expense, as discussed in the "Non-GAAP
Financial Measures" section, tax-equivalent net interest income was $5,945,000
for the three months ended June 30, 2008 compared to $6,032,000 for the same
period in 2007, a decrease of 1.4 percent.

Noninterest Income / Noninterest Expense
----------------------------------------
Total noninterest income for the first six months of 2008 was $5,388,000
compared to $5,132,000 for the same period in 2007. Excluding the effect of the
Company's deferred compensation plan, discussed in the "Non- GAAP Financial
Measures" section, noninterest income for the six months ended June 30, 2008 was
$5,622,000 compared to $4,967,000 for the same period of 2007, an increase of
$655,000 or 13.2 percent.

Significant changes in noninterest income occurred primarily in the following
areas:
    o Securities gains of $579,000 were realized from sales of securities during
      the first six months of 2008 compared to $42,000 in the same period of
      2007.
    o Trust fees grew $220,000 or 21.5 percent to $1,242,000 for the six months
      ended June 30, 2008 compared to $1,022,000 for the same period of 2007.
      The increase in trust fees was driven by growth in trust assets under
      management and to a lesser extent, a fee schedule increase that was
      implemented during April of 2007. Trust assets under management reached
      $338,948,000 at June 30, 2008, growing 3.0 percent, or $9,800,000 over the
      June 30, 2007 total of $329,148,000.

Total noninterest income for the second quarter of 2008 was $3,024,000, a
$339,000 or 12.6 percent increase from $2,685,000 for the same period in 2007.
Excluding the effect of the Company's deferred compensation plan, discussed in
the "Non-GAAP Financial Measures" section, noninterest income totaled $3,066,000
for the second quarter of 2008 compared to $2,560,000 for the same period of
2007, an increase of $506,000 or 19.8 percent.

Significant changes in noninterest income occurred primarily in the following
areas:
    o Securities gains of $439,000 were realized from sales of securities during
      the second quarter of 2008 compared to $41,000 in the second quarter of
      2007.
    o Trust fees grew $97,000 or 18.1 percent to $634,000 for the three months
      ended June 30, 2008 compared to $537,000 for the same period of 2007.

For the six months ended June 30, 2008, total noninterest expense was
$10,762,000 compared to $10,359,000 for the same period in 2007. Excluding the
effect of the Company's deferred compensation plan, discussed in the "Use of
Non-GAAP Financial Measures" section, total noninterest expense for the second
quarter of 2007 was $10,941,000, a $801,000 or 7.9 percent increase from
$10,140,000 for the same period in 2007.


                                       16
<PAGE>

Significant changes in noninterest expense occurred in the following areas:
    o Benefit expenses increased by $318,000 or 35.4 percent to $1,216,000 for
      the first six months of 2008 compared to $898,000 for the first six months
      of 2007. The increase in benefit expenses resulted primarily from an
      increase in the cost of the Company's health insurance plan which totaled
      $459,000 for the first six months of 2008, $249,000 greater than the
      $210,000 expense for the same period of 2007. The increase was largely due
      to higher claims experienced in 2008.
    o Deposit insurance expense increased $169,000 or 491.5 percent increase in
      the first six months of 2008 related to the Federal Deposit Insurance
      Reform Act of 2005.
    o Occupancy expense increased $167,000 or 10.9 percent increase in occupancy
      expense in the first six months of 2008 compared to the same period in
      2007 primarily because the Company opened two new full service banking
      centers, one in December of 2007 and the second in January of 2008.

For the quarter ended June 30, 2008, total noninterest expense was $5,371,000
compared to $5,266,000 for the same period in 2007. Excluding the effect of the
Company's deferred compensation plan, discussed in the "Use of Non-GAAP
Financial Measures" section, total noninterest expense for the second quarter of
2008 was $5,390,000, compared to $5,114,000 for the same period of 2007. The
$276,000 or 5.4 percent increase is largely the result of an $113,000 or 15.8
percent increase in occupancy expense resulting from the Company opening two new
full service banking centers, one in December of 2007 and the second in January
of 2008.

Income Taxes
------------
The Company records a provision for income taxes currently payable, along with a
provision for those taxes payable in the future. Such deferred taxes arise from
differences in timing of certain items for financial statement reporting rather
than income tax reporting. The major difference between the effective tax rate
applied to the Company's financial statement income and the federal and state
statutory rate of approximately 40 percent is interest on tax-exempt securities,
tax credits received and the effect of the Company's Delaware based investment
holding company and a real estate investment trust (REIT).

The Company's effective tax rate was 20.22 percent for the six months ended June
30, 2008 compared to 27.76 percent for the same period in 2007. The tax rate
decreased primarily because municipal bond (tax-exempt) income represented a
higher percentage of total income in the first six months of 2008 as compared to
the same period in 2007 and the impact of tax credits received on new market tax
credit investments made in April 2007 and June 2008.

Financial Condition
-------------------

Assets and Liabilities
----------------------
Total assets of the Company at June 30, 2008 were $778,204,000 an increase of
0.02 percent or $124,000 compared to $778,080,000 at December 31, 2007. Loans
(including loans held for sale) increased to $602,369,000 at June 30, 2008
compared to $584,831,000 at December 31, 2007, an increase of 3.0 percent.
Deposits increased to $623,871,000 at June 30, 2008 compared to $619,717,000 at
December 31, 2007, an increase of $4,154,000 or 0.7 percent. Borrowings
decreased to $88,723,000 at June 30, 2008 compared to $96,421,000 at December
31, 2007, an 8.0 percent decrease.

Capital
-------
Shareholders' equity increased by $1,580,000 at June 30, 2008 compared to
December 31, 2007. This increase was a result of year-to-date net income of
$3,453,000, ESOP shares earned of $18,000, and option expense of $31,000, offset
by unrealized loss on securities in the Company's available-for-sale securities
portfolio totaling $306,000 (net of tax) and dividends paid of $1,616,000.

The Company and the Bank are subject to various regulatory capital requirements
administered by the federal banking agencies and are assigned to a capital
category. The assigned capital category is largely determined by three ratios
that are calculated according to the regulations: total risk adjusted capital,
Tier 1 capital, and Tier 1 leverage ratios. The ratios are intended to measure
capital relative to assets and credit risk associated with those


                                       17
<PAGE>

assets and off-balance sheet exposures of the entity. The capital category
assigned to an entity can also be affected by qualitative judgments made by
regulatory agencies about the risk inherent in the entity's activities that are
not part of the calculated ratios.

There are five capital categories defined in the regulations ranging from well
capitalized to critically undercapitalized. Classification of a bank in any of
the undercapitalized categories can result in actions by regulators that could
have a material effect on a bank's operations. At June 30, 2008 and December 31,
2007, the Company and the Bank were categorized as well capitalized and met all
applicable capital adequacy requirements. There are no conditions or events
since June 30, 2008 that management believes have changed the Company's or
Bank's classification.

The actual and required capital amounts and ratios are as follows:
<TABLE>
<CAPTION>
                                                                             Required for             To Be Well
                                                          Actual          Adequate Capital (1)      Capitalized (1)
                                                    -----------------------------------------------------------------
                                                      Amount   Ratio       Amount      Ratio       Amount      Ratio
                                                    -----------------------------------------------------------------
<S>                                                  <C>       <C>        <C>          <C>        <C>         <C>
As of June 30, 2008
-------------------
Total capital (1) (to risk-weighted assets)
    Consolidated...................................  $ 71,984  11.73 %    $ 49,106      8.00 %         N/A      N/A
    Bank............................................   71,404  11.70        48,838      8.00      $ 61,048    10.00 %
Tier I capital (1) (to risk-weighted assets)
    Consolidated...................................    64,310  10.48        24,553      4.00           N/A      N/A
    Bank............................................   63,772  10.45        24,419      4.00        36,629     6.00
Tier I capital (1) (to average assets)
    Consolidated...................................    64,310   8.28        31,064      4.00           N/A      N/A
    Bank............................................   63,772   8.25        30,919      4.00        38,649     5.00

As of December 31, 2007
-----------------------
Total capital (1) (to risk-weighted assets)
    Consolidated...................................  $ 69,106  11.37 %   $  48,624      8.00 %         N/A      N/A
    Bank............................................   68,430  11.33        48,325      8.00      $ 60,406    10.00 %
Tier I capital (1) (to risk-weighted assets)
    Consolidated...................................    62,452  10.28        24,312      4.00           N/A      N/A
    Bank............................................   61,776  10.23        24,162      4.00        36,244     6.00
Tier I capital (1) (to average assets)
    Consolidated...................................    62,452   8.14        30,701      4.00           N/A      N/A
    Bank............................................   61,776   8.09        30,548      4.00        38,185     5.00
</TABLE>
(1) As defined by regulatory agencies

Classification of Assets, Allowance for Loan Losses, and Nonperforming Loans
----------------------------------------------------------------------------
The Bank currently classifies loans internally to assist management in
addressing collection and other risks. The Bank maintains a "watch list"
representing credits that require above average attention in order to mitigate
the risk of default or loss. Over the periods noted below, the watch list
consisted of the following:

    Watch List Data                          6/30/2008    3/31/2008    6/30/2007
    ---------------                          ---------    ---------    ---------
    Total Watch List ($)                    27,911,000   25,528,000   13,876,000
    Number of Watch List Customers                  42           40           34
    Total Watch List $ > 30 Days Past Due   16,129,000   10,874,000    5,464,000
    Total Watch List $ Secured by R/E       24,929,000   22,338,000   10,437,000
    Total Watch List $ Secured by Non-R/E    2,782,000    2,891,000    3,009,000
    Total Watch List $ Unsecured               200,000      299,000      322,000


                                       18
<PAGE>

As of June 30, 2008, 42.2 percent of the watch list exposure was less than
thirty days past due, compared to 57.4 percent as of March 31, 2008 and 60.6
percent as of June 30, 2007. The largest areas of stress within the loan
portfolio are loans for Residential Real Estate Development and loans secured by
1-4 Family Non-Owner Occupied Residential Properties. As of June 30, 2008, loans
totaling $40,323,000 were secured by Residential Real Estate Development
collateral with $9,481,000 of these loans being on the watch list of which
$8,016,000 were more than thirty days past due. The majority ($35,317,000 or
87.6 percent) of the $40,323,000 of loans secured by Residential Real Estate
Development collateral were originated out of the Central Indiana region
(greater Indianapolis). Of the $35,317,000 of loans originated by the Central
Indiana region and secured by Residential Real Estate Development collateral,
$9,451,000 of these loans were on the watch list (included in the $9,481,000
reported above), of which $7,986,000 were more than thirty days past due.

In addition, as of June 30, 2008, there were $53,691,000 of loans secured by 1-4
Family Non-Owner Occupied Residential Properties with $3,498,000 of these loans
being on the watch list of which $2,446,000 were more than thirty days past due.
These two categories combined account for 46.5 percent of the watch list.
Approximately 19.5 percent ($10,487,000) of the $53,691,000 of loans secured by
1-4 Family Non-Owner Occupied Residential Properties were originated in our
Central Indiana region. Of the $10,487,000 of loans originated by the Central
Indiana region and secured by 1-4 Family Non-Owner Occupied Properties,
$2,589,000 of these loans were on the watch list (included in the $3,498,000
reported above), of which $1,800,000 were more than thirty days past due.

Although the amount of loans internally classified has increased, Management
believes that the Bank has sufficient collateral to reduce potential losses. The
allowance for loan losses was $7,748,000, or 1.30 percent of portfolio loans
(excluding loans held for sale) at June 30, 2008 compared to $6,654,000, or 1.14
percent, of portfolio loans at December 31, 2007. A portion of classified loans
are nonaccrual loans. The Bank had nonperforming assets (nonaccrual loans,
restructured loans, OREO and 90-days past due loans still accruing) totaling
$16,472,000 or 2.12 percent of total assets at June 30, 2008 compared to
$8,214,000 or 1.06 percent of total assets at December 31, 2007.

During the second quarter of 2008, the Bank had net loan charge-offs totaling
$575,000 compared to net recoveries of $17,000 for the same period in 2007. Past
due loans (30 days or more) were 2.87 percent of total loans at June 30, 2008
compared to 1.29 percent of total loans at June 30, 2007.

Liquidity
---------
Liquidity refers to the ability of a financial institution to generate
sufficient cash to fund current loan demand, meet savings deposit withdrawals
and pay operating expenses. The primary sources of liquidity are cash,
interest-bearing deposits in other financial institutions, marketable
securities, loan repayments, increased deposits and total institutional
borrowing capacity.

Cash Requirements
Management believes that the Company has adequate liquidity and adequate sources
for obtaining additional liquidity if needed. The Company's internal
Asset/Liability Committee (ALCO) meets regularly to review projected loan demand
and discuss appropriate funding sources to adequately manage the Company's gap
position and minimize interest rate risk.

Short-term liquidity needs resulting from normal deposit/withdrawal functions
are provided by the Company retaining a portion of cash generated from
operations and through utilizing federal funds and repurchase agreements.
Long-term liquidity and other liquidity needs are provided by the ability of the
Company to borrow from the Federal Home Loan Bank of Indianapolis (FHLB), to
obtain brokered certificates of deposit (CDs) and to borrow on a line of credit.
FHLB advances were $21,249,000 at June 30, 2008 compared to $18,273,000 at
December 31, 2007. At June 30, 2008, the Company had excess borrowing capacity
at the FHLB of $33,225,000 as limited by the Company's board resolution in
effect at that date. In terms of managing the Company's liquidity, management's
primary focus is on increasing deposits to fund future growth. However, the
Board may increase its resolution limit on FHLB advances if the Company needs
additional liquidity.


                                       19
<PAGE>

Over the past year, the Company has also utilized alternative funding sources.
The Company obtained an unsecured line of credit with U. S. Bank during 2006.
The maximum amount that can be borrowed is $10,000,000. The line of credit
carries a variable interest rate of 1.50 percent over LIBOR and changes monthly.
At June 30, 2008, the Company had $10,000,000 available on this line of credit.
In July 2005, the Company began using brokered CDs as an alternate source of
funding. As of June 30, 2008, the Company had $13,101,000 of brokered CDs on its
balance sheet, compared to $10,034,000 at December 31, 2007 and $21,611,000 at
June 30, 2007.

At the bank holding company level, the Company primarily uses cash to pay
dividends to shareholders and to repurchase stock. During the past twelve
months, the main source of funding for the holding company has been dividends
from the Bank. During the first and second quarters of 2008, the Bank paid
dividends totaling $1,697,000 to the holding company. As of July 1, 2008, the
amount of dividends the Bank can pay to the parent company without prior
regulatory approval was $11,632,000, versus $9,628,000 at January 1, 2008. As
discussed in Note 11 to the Consolidated Financial Statements (page 47 of the
2007 Annual Report to Shareholders) and Item 1 of the December 31, 2007 Form
10-K, the Bank is subject to many regulations and, among other things, may be
limited in its ability to pay dividends or transfer funds to the holding
company. Accordingly, consolidated cash flows as presented in the Consolidated
Statements of Cash Flows on page 7 may not represent cash immediately available
to the holding company.

Sources and Uses of Cash
The following discussion relates to the Consolidated Statements of Cash Flows
(page 7 of the consolidated condensed financial statements). During the six
months ended June 30, 2008, $9,496,000 of cash was provided by operating
activities, compared to $1,307,000 provided during the same period in 2007. The
increase in the cash provided in this area was primarily a result of an increase
in interest payable and other liabilities totaling $6,262,000. During the first
six months of 2008, $1,181,000 was used by investing activities, compared to
$6,380,000 being used in the same period of 2007. The decrease in the cash used
in this category occurred primarily due to an increase of $39,275,000 in the
cash provided from the proceeds from the sale of available for sale securities
offset by an increase of $13,359,000 in cash used by the net change in loans.
During the first six months of 2008, $5,160,000 of cash was used by financing
activities compared to $10,792,000 provided during the same period in 2007. The
increase in cash used in this area was primarily the result of an increase in
the cash used by the overall net change in demand and savings deposits,
certificates of deposit and borrowings.

Overall, net cash and cash equivalents increased $3,155,000 during the six
months ended June 30, 2008 compared to an increase of $5,719,000 in the same
period of 2007.

Impact of Inflation and Changing Prices
---------------------------------------
The financial statements and related data presented herein have been prepared in
accordance with generally accepted accounting principles. These principles
require the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time, due to inflation.

The primary assets and liabilities of the Company are monetary in nature.
Consequently, interest rates generally have a more significant impact on
performance than the effects of inflation. Interest rates, however, do not
necessarily move in the same direction or with the same magnitude as the price
of goods and services. In a period of rapidly rising interest rates, the
liquidity and the maturity structure of the Company's assets and liabilities are
critical to the maintenance of acceptable performance levels. The Company
constantly monitors the liquidity and maturity structure of its assets and
liabilities, and believes active asset/liability management has been an
important factor in its ability to record consistent earnings growth through
periods of interest rate volatility.

Other
-----
The Securities and Exchange Commission maintains a Web site that contains
reports, proxy information statements, and other information regarding
registrants that file electronically with the Commission, including Monroe
Bancorp (ticker symbol MROE). The address is http://www.sec.gov.


                                       20
<PAGE>

Future Accounting Matters
-------------------------
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" which
replaces SFAS No. 141, "Business Combinations". This Statement retains the
fundamental requirements in SFAS No. 141 that the acquisition method of
accounting (formerly referred to as purchase method) is used for all business
combinations and that an acquirer is identified for each business combination.
This Statement defines the acquirer as the entity that obtains control of one or
more businesses in the business combination and establishes the acquisition date
as of the date that the acquirer achieves control. This Statement requires an
acquirer to recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at the acquisition date, measured at
their fair values. This Statement requires the acquirer to recognize
acquisition-related costs and restructuring costs separately from the business
combination as period expense. This Statement requires that loans acquired in a
purchase business combination be the present value of amounts to be received.
Valuation allowances should reflect only those losses incurred by the investor
after acquisition. This Statement is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. Management is
currently in the process of determining what effect the provisions of this
Statement will have on the Company's financial position or results of
operations.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements - an Amendment to ARB No. 51." This Statement
establishes new accounting and reporting standards that require the ownership
interests in subsidiaries held by parties other than the parent be clearly
identified, labeled, and presented in the consolidated statement of financial
position within equity, but separate from the parent's equity. The Statement
also requires the amount of consolidated net income attributable to the parent
and to the noncontrolling interest be clearly identified and presented on the
face of the consolidated statement of income. This Statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. Management is currently in the process of determining
what effect the provisions of this Statement will have on the Company's
financial position or results of operations.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No. 133."
This Statement changes the disclosure requirements for derivative instruments
and hedging activities. Entities are required to provide enhanced disclosures
about a) how and why an entity uses derivative instruments, b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance, and
cash flows. This Statement is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008. Management
is currently in the process of determining what effect the provisions of this
Statement will have on the Company's consolidated financial statements.

Forward-Looking Statements
--------------------------
This Quarterly Report on Form 10-Q contains forward-looking statements about the
Company which we believe are within the meaning of the Private Securities
Litigation Reform Act of 1995. This Form 10-Q contains certain forward-looking
statements with respect to the financial condition, results of operations,
plans, objectives, future performance and business of the Company.
Forward-looking statements can be identified by the fact that they do not relate
strictly to historical or current facts. They often include the words "believe,"
"expect," "anticipate," "intend," "plan," "estimate" or words of similar
meaning, or future or conditional verbs such as "will," "would," "should,"
"could" or "may" or words of similar meaning. These forward-looking statements,
by their nature, are subject to risks and uncertainties. There are a number of
important factors that could cause future results to differ materially from
historical performance and these forward-looking statements. Factors that might
cause such a difference include, but are not limited to: (1) changes in
competitive pressures among depository institutions; (2) changes in the interest
rate environment; (3) changes in prepayment speeds, charge-offs and loan loss
provisions; (4) changes in general economic conditions, either national or in
the markets in which the Company does business; (5) legislative or regulatory
changes adversely affect the business of the Company; (6) changes in real estate
values or the real estate markets; and (7) the Company's business development
efforts in new markets in and around Hendricks and Hamilton Counties. Further
information on


                                       21
<PAGE>

other factors which could affect the financial results of the Company are
included in the Company's Form 10-K for the year ended December 31, 2007 as
filed with the Securities and Exchange Commission.


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

Market risk of the Company encompasses exposure to both liquidity risk and
interest rate risk and is reviewed on an ongoing basis by management and
quarterly by the Asset/Liability Committee ("ALCO") and the Board of Directors.
Liquidity was addressed as part of the discussion entitled "Liquidity."

The Company's interest sensitivity position at June 30, 2008 remained consistent
with the Company's primary goal of maximizing interest margin while maintaining
a low exposure to interest rate risk.

Management uses several techniques to measure interest rate risk. Interest rate
risk exposure is measured using an interest rate sensitivity analysis to
determine the change in the net portfolio value ("NPV") of its cash flows from
assets and liabilities in the event of hypothetical changes in interest rates.
Management also forecasts the net interest income that the Bank's current
balance sheet would yield over the next twelve months assuming the same
hypothetical changes in interest rates. A third method used by the Bank to
measure interest rate risk is an interest rate sensitivity gap analysis. The gap
analysis is utilized to quantify the repricing characteristics of the Bank's
assets and liabilities.

Management believes that its forecast of changes in net interest income under
various rate shocks is the more valuable and easiest to interpret interest rate
risk measurement technique. Management believes that interested parties will
derive a better understanding of how the Company's intermediation activities
will perform under different rate scenarios from its presentation of projected
net interest income under various rate shocks. This should help users of the
information form clearer opinions of the Company's interest rate sensitivity.

The Company's Board of Directors adopted an interest rate risk policy which
established a 20 percent maximum increase or decrease in net interest income in
the event of a sudden and sustained 2 percent (200 basis point) increase or
decrease in interest rates.

The following table summarizes the results of management's forecast of net
interest income that would be generated by the Bank's June 30, 2008 balance
sheet under various rate shocks:


                        Projected Net Interest    $ Change
                           Income Over the     in Net Interest     % Change
Change in Interest Rate   Next Twelve Months       Income       in Net Interest
   (basis points)           (in thousands)     (in thousands)       Income
-------------------------------------------------------------------------------
       +200                    $ 23,228          $   (1,460)        (5.91) %
       +100                      23,689                (999)        (4.04)
          0                      24,688                   0             0
       -100                      26,104               1,416          5.74
       -200                      26,890               2,202          8.92


For comparative purposes, the following table summarizes the results of
management's forecast of net interest income that would be generated by the
Bank's December 31, 2007 balance sheet under various rate shocks:


                                       22
<PAGE>

Projected Change in Net Interest Income - December 31, 2007


                        Projected Net Interest    $ Change
                           Income Over the     in Net Interest     % Change
Change in Interest Rate   Next Twelve Months       Income       in Net Interest
   (basis points)           (in thousands)     (in thousands)       Income
-------------------------------------------------------------------------------
       +200                    $ 20,726          $   (1,247)        (5.68) %
       +100                      21,434                (539)        (2.45)
          0                      21,973                   0             0
       -100                      22,092                 119          0.54
       -200                      22,030                  57          0.26


The Company's liability sensitivity over the twelve-month horizon has increased
during the first six months of 2008 as borrowers have taken actions to lock in
current low rates and depositors have tended to show a preference for shorter
term or liquid deposit products. As a result, the projected net change in net
income related to upward or downward rate shocks is greater than it was on
December 31, 2007. The change is particularly significant in the event of
declining rates.

Management believes a 200 basis point (2 percent) change in interest rates, in
either direction, over the next twelve months is unlikely. Nonetheless, it is
informative to quantify how rate changes of this magnitude could affect net
interest income derived from the Company's current balance sheet and use this
measure to the Company's interest rate risk.

The June 30, 2008 table indicates that the Bank's projected net interest income
for the next twelve months would decline by 5.9 percent in the event of a sudden
and sustained 200 basis point increase in interest rates. This result is largely
driven by the Company having more liabilities, primarily deposits, that would
reprice over the twelve month horizon than assets. As a result, the Company's
net interest expense would increase faster than interest income in the event of
an upward rate shock.

Net interest income is projected to increase in the event of an immediate 200
basis point decrease in interest rates. The projected 8.9 percent increase in
net interest income is largely the result of the Company's increased liability
sensitivity, much of which resulted from growth of Money Market Savings Accounts
and public funds jumbo CD's during the first six months of the year. Public
Jumbo CD's tend to be for very short terms (often seven to twenty days) which
makes them very sensitive to changing rates. Borrowers increasingly locking in
current low rates by extending the term of their debt has also contributed to
the increase in liability sensitivity.

The forecasts from both time periods indicate the interest rate sensitivities of
the Bank's assets and liabilities are relatively well matched over the rate
shock ranges between a decrease of 100 basis points and an increase of 200 basis
points. The estimated changes in net interest income calculated as of June 30,
2008, are within the approved guidelines established by the Board of Directors.

Computations of prospective effects of hypothetical interest rate changes are
based on a number of assumptions, including relative levels of market interest
rates, loan prepayments and deposit run-off rates, and should not be relied upon
as indicative of actual results. These computations do not contemplate actions
management may undertake in response to changes in interest rates.

Certain shortcomings are inherent in the method of computing the estimated net
interest income under hypothetical rate shocks. Actual results may differ from
that information presented in the table above should market conditions vary from
the assumptions used in preparation of the table information. If interest rates
remain or decrease below current levels, the proportion of adjustable rate loans
in the loan portfolio could decrease in future periods due to refinancing
activity. Also, in the event of an interest rate change, prepayment and early
withdrawal levels would likely be different from those assumed in the table.
Lastly, the ability of many borrowers to repay their adjustable rate debt may
decline during a rising interest rate environment.


                                       23
<PAGE>

Item 4.     Controls and Procedures.
-------     ------------------------

Monroe Bancorp's management is responsible for establishing and maintaining
effective disclosure controls and procedures, as defined under Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934. As of June 30, 2008, an
evaluation was performed under the supervision and with the participation of
management, including the Chief Executive Officer (the Company's principal
executive officer) and Chief Financial Officer (the Company's principal
financial officer), of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures as of June 30, 2008 were effective in
ensuring material information required to be disclosed in this Quarterly Report
on Form 10-Q was recorded, processed, summarized, and reported on a timely
basis.

There were no changes in the Company's internal control over financial reporting
that occurred during the quarter ended June 30, 2008 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


Part II  -  Other Information
-------     -----------------

Item 1.     Legal Proceedings.
-------     ------------------
            None

Item 1A.    Risk Factors.
--------    -------------
            There have been no material changes in our risk factors from those
            disclosed in our 2007 Annual Report on Form 10-K.

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

            Stock Repurchased During the Second Quarter of 2008
            ---------------------------------------------------

            The stock repurchase plan was announced June 16, 2006. The total
            dollar amount approved was $10,000,000. The plan has no expiration
            date, but the Board of Directors may terminate the plan at anytime.
            The Board of Directors suspended repurchase activities beginning in
            the fourth quarter of 2007 and as of June 30, 2008, the Board of
            Directors has not determined when stock repurchases will recommence.
            The Company's most recent stock repurchase transaction took place on
            August 7, 2007.

Item 3.     Defaults upon Senior Securities.
-------     --------------------------------
            Not applicable.

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

            a) On April 24, 2008, the Corporation held its annual meeting of
               shareholders.

            b) At the annual meeting, the following individuals were elected to
               a three-year director term expiring in 2011:
                 a. James D. Bremner
                 b. Steven R. Crider
                 c. Paul W. Mobley

               At the annual meeting, the following individuals were elected to
               a one-year director term expiring in 2009:
                 a. Mark D. Bradford
                 b. James G. Burkhart


                                       24
<PAGE>

            The following individual's terms as directors continued after the
            meeting:
            Bradford J. Bomba, Jr.
            Joyce Claflin Harrell
            Harry F. McNaught, Jr.
            Charles R. Royal, Jr.

            c) The following matters were voted upon at the annual meeting.

               (i)   The first item was the election of directors to serve a
                     three-year term. The vote tabulation for the election of
                     James D. Bremner was 5,884,854 "for" and 12,885 withheld;
                     the vote tabulation for the election of Steven R. Crider
                     was 5,879,922 "for" and 17,817 withheld; and the vote
                     tabulation for the election of Paul W. Mobley was 5,648,477
                     "for" and 249,261 withheld.

               (ii)  The second item was the election of directors to serve a
                     one-year term. The vote tabulation for the election of Mark
                     D. Bradford was 5,882,452 "for" and 15,287 withheld; and
                     the vote tabulation for the election of James G. Burkhart
                     was 5,884,865 "for" and 12,874 withheld.

               (iii) The third item was the ratification of BKD, LLP, Certified
                     Public Accountants, as the Corporation's independent
                     auditors for fiscal year ending December 31, 2008. This
                     matter was approved by a vote of 5,838,862 shares "for",
                     11,283 shares "against", and 47,594 shares abstained.


Item 5.     Other Information.
-------     ------------------
            Not applicable.

Item 6.     Exhibits.
-------     ---------


                                       25
<PAGE>

Exhibit No:  Description of Exhibit:
-----------  -----------------------

3(i)         Monroe Bancorp Articles of Incorporation are incorporated by
             reference to registrant's Form 10 filed November 14, 2000.

3(ii)        Monroe Bancorp By-laws as Amended and Restated August 16, 2007, are
             incorporated by reference to registrant's Form 8-K filed August 22,
             2007.

10(i)*       1999 Directors' Stock Option Plan of Monroe Bancorp is incorporated
             by reference to registrant's Form 10 filed November 14, 2000.

10(ii)*      1999 Management Stock Option Plan of Monroe Bancorp is incorporated
             by reference to registrant's Form 10 filed November 14, 2000.

10 (iii)*    Deferred Compensation Trust for Monroe Bancorp is incorporated by
             reference to registrant's Form 10 filed November 14, 2000.

10(iv)*      Monroe County Bank Agreement for Supplemental Death or Retirement
             Benefits is incorporated by reference to registrant's Form 10 filed
             November 14, 2000.

10(v)*       Monroe Bancorp Thrift Plan as Amended and Restated January 1, 2001
             is incorporated by reference to registrant's Form 10-Q filed
             November 13, 2002.

10(vi)*      Monroe Bancorp Employee Stock Ownership Plan as Amended and
             Restated January 1, 2001 is incorporated by reference to
             registrant's Form 10-Q filed November 13, 2002.

10(vii)*     Third Amendment to the Monroe Bancorp Employees' Stock Ownership
             Plan is incorporated by reference to registrant's Form 10-K filed
             March 29, 2004.

10(viii)*    Monroe Bancorp Directors' Deferred Compensation Plan as Amended and
             Restated Effective January 1, 1999 and First and Second Amendments
             are incorporated by reference to registrant's Form 10-K filed March
             29, 2004.

10(ix)*      Monroe Bancorp Executives' Deferred Compensation Plan as Amended
             and Restated Effective January 1, 1999 and First, Second and Third
             Amendments are incorporated by reference to registrant's Form 10-K
             filed March 29, 2004.

10(x)*       Form of agreement under the 1999 Management Stock Option Plan of
             Monroe Bancorp is incorporated by reference to registrant's Form
             10-K filed March 15, 2005.

10(xi)*      Schedule of 2008 Directors Compensation Arrangements is
             incorporated by reference to Item 9B of the registrant's Form 10-K
             filed March 13, 2008.

10(xii)*     Schedule of 2008 Executive Officers Compensation Arrangements is
             incorporated by reference to Item 9B of the registrant's Form 10-K
             filed March 13, 2008.

10(xiii)*    Fourth Amendment to the Monroe Bancorp Employees' Stock Ownership
             Plan is incorporated by reference to Form 10-Q filed May 9, 2005.

10(xiv)*     Monroe Bancorp Directors' 2005 Deferred Compensation Plan
             incorporated by reference to Form 10-K filed March 14, 2006.

10(xv)*      Monroe Bancorp Executives' 2005 Deferred Compensation Plan
             incorporated by reference to Form 10-K filed March 14, 2006.


                                       26
<PAGE>

10(xvi)*     Form of agreement under the Monroe Bancorp Directors' 2005 Deferred
             Compensation Plan incorporated by reference to Form 10-K filed
             March 14, 2006.

10(xvii)*    Form of agreement under the Monroe Bancorp Executives' 2005
             Deferred Compensation Plan incorporated by reference to Form 10-K
             filed March 14, 2006.

10(xviii)*   First Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xix)*     Second Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xx)*      Third Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xxi)*     Fourth Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xxii)*    Fifth Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xxiii)*   Sixth Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 8, 2007.

10(xxiv)*    Seventh Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-K
             filed March 13, 2008.

10(xxv)*     Fifth Amendment to the Monroe Bancorp Employees' Stock Ownership
             Plan is incorporated by reference to Form 10-K filed March 13,
             2008.

31(i)        Certification for Annual Report on Form 10-K by Principal Executive
             Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(ii)       Certification for Annual Report on Form 10-K by Principal Financial
             Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(i)        Certification of Principal Executive Officer pursuant to Section
             906 of the Sarbanes-Oxley Act of 2002.

32(ii)       Certification of Principal Financial Officer pursuant to Section
             906 of the Sarbanes-Oxley Act of 2002.




                                       27
<PAGE>

                                   SIGNATURES

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

                                         MONROE BANCORP

     Date: August 11, 2008       By: /s/ Mark D. Bradford
           ---------------           ------------------------------------------
                                         Mark D. Bradford, President and
                                         Chief Executive Officer
                                         (Principal Executive Officer)

     Date: August 11, 2008       By: /s/ Gordon M. Dyott
           ---------------           ------------------------------------------
                                         Gordon M. Dyott, Exec. Vice President,
                                         Chief Financial Officer
                                         (Principal Financial Officer)












                                       28
<PAGE>

                                 Exhibit Index
                                 -------------


Exhibit No:  Description of Exhibit:
-----------  -----------------------

3(i)         Monroe Bancorp Articles of Incorporation are incorporated by
             reference to registrant's Form 10 filed November 14, 2000.

3(ii)        Monroe Bancorp By-laws as Amended and Restated August 16, 2007, are
             incorporated by reference to registrant's Form 8-K filed August 22,
             2007.

10(i)*       1999 Directors' Stock Option Plan of Monroe Bancorp is incorporated
             by reference to registrant's Form 10 filed November 14, 2000.

10(ii)*      1999 Management Stock Option Plan of Monroe Bancorp is incorporated
             by reference to registrant's Form 10 filed November 14, 2000.

10 (iii)*    Deferred Compensation Trust for Monroe Bancorp is incorporated by
             reference to registrant's Form 10 filed November 14, 2000.

10(iv)*      Monroe County Bank Agreement for Supplemental Death or Retirement
             Benefits is incorporated by reference to registrant's Form 10 filed
             November 14, 2000.

10(v)*       Monroe Bancorp Thrift Plan as Amended and Restated January 1, 2001
             is incorporated by reference to registrant's Form 10-Q filed
             November 13, 2002.

10(vi)*      Monroe Bancorp Employee Stock Ownership Plan as Amended and
             Restated January 1, 2001 is incorporated by reference to
             registrant's Form 10-Q filed November 13, 2002.

10(vii)*     Third Amendment to the Monroe Bancorp Employees' Stock Ownership
             Plan is incorporated by reference to registrant's Form 10-K filed
             March 29, 2004.

10(viii)*    Monroe Bancorp Directors' Deferred Compensation Plan as Amended and
             Restated Effective January 1, 1999 and First and Second Amendments
             are incorporated by reference to registrant's Form 10-K filed March
             29, 2004.

10(ix)*      Monroe Bancorp Executives' Deferred Compensation Plan as Amended
             and Restated Effective January 1, 1999 and First, Second and Third
             Amendments are incorporated by reference to registrant's Form 10-K
             filed March 29, 2004.

10(x)*       Form of agreement under the 1999 Management Stock Option Plan of
             Monroe Bancorp is incorporated by reference to registrant's Form
             10-K filed March 15, 2005.

10(xi)*      Schedule of 2008 Directors Compensation Arrangements is
             incorporated by reference to Item 9B of the registrant's Form 10-K
             filed March 13, 2008.

10(xii)*     Schedule of 2008 Executive Officers Compensation Arrangements is
             incorporated by reference to Item 9B of the registrant's Form 10-K
             filed March 13, 2008.

10(xiii)*    Fourth Amendment to the Monroe Bancorp Employees' Stock Ownership
             Plan is incorporated by reference to Form 10-Q filed May 9, 2005.

10(xiv)*     Monroe Bancorp Directors' 2005 Deferred Compensation Plan
             incorporated by reference to Form 10-K filed March 14, 2006.


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<PAGE>

10(xv)*      Monroe Bancorp Executives' 2005 Deferred Compensation Plan
             incorporated by reference to Form 10-K filed March 14, 2006.

10(xvi)*     Form of agreement under the Monroe Bancorp Directors' 2005 Deferred
             Compensation Plan incorporated by reference to Form 10-K filed
             March 14, 2006.

10(xvii)*    Form of agreement under the Monroe Bancorp Executives' 2005
             Deferred Compensation Plan incorporated by reference to Form 10-K
             filed March 14, 2006.

10(xviii)*   First Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xix)*     Second Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xx)*      Third Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xxi)*     Fourth Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xxii)*    Fifth Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 9, 2006.

10(xxiii)*   Sixth Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-Q
             filed May 8, 2007.

10(xxiv)*    Seventh Amendment to the Monroe Bancorp Thrift Plan as Amended and
             Restated January 1, 2001, incorporated by reference to Form 10-K
             filed March 13, 2008.

10(xxv)*     Fifth Amendment to the Monroe Bancorp Employees' Stock Ownership
             Plan is incorporated by reference to Form 10-K filed March 13,
             2008.

31(i)        Certification for Annual Report on Form 10-K by Principal Executive
             Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(ii)       Certification for Annual Report on Form 10-K by Principal Financial
             Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(i)        Certification of Principal Executive Officer pursuant to Section
             906 of the Sarbanes-Oxley Act of 2002.

32(ii)       Certification of Principal Financial Officer pursuant to Section
             906 of the Sarbanes-Oxley Act of 2002.




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