BLOOMINGTON, Ind. – January 29, 2008 – Monroe Bancorp (the “Company”), NASDAQ: MROE, the independent Bloomington-based holding company for Monroe Bank (the “Bank”), reported net income of $7,806,000 or $1.235 per diluted common share, for the year ended December 31, 2007, compared to $7,586,000 or $1.150 per diluted common share for 2006. This represents a 2.9 percent increase in net income and a 7.4 percent increase in diluted earnings per share.

Return on average shareholders’ equity (ROE) for 2007 was 14.79 percent, compared to 14.59 percent for the year ended December 31, 2006. Return on average assets (ROA) for the year ended December 31, 2007 was 1.04 percent, which matched the Company’s 2006 performance.

“I am pleased by the earnings growth that we achieved during 2007 considering the downturn in economic conditions during the second half of the year,” said Mark D. Bradford, President and Chief Executive Officer of Monroe Bancorp and Monroe Bank.

Financial Performance
Net interest income before the provision for loan losses increased 1.7 percent to $23,039,000 for the year ended December 31, 2007 compared to $22,665,000 for 2006. The tax equivalent net interest margin declined during 2007, decreasing from 3.42 percent for the year ended December 31, 2006, to 3.37 percent for 2007. A significant factor contributing to the decline in the Company’s net interest margin is interest expense associated with Trust Preferred Stock that was issued primarily to fund the repurchase of stock. The average balance of the subordinated debentures supporting the Trust Preferred Stock was $7,146,000 in 2007 compared to $1,364,000 for 2006. Trust preferred interest expense totaled $483,000 in 2007 compared to $96,000 in 2006. The increase in non-performing assets discussed later in this release was also significant to the decrease in the Company’s net interest margin. See the table called “Reconciliation of GAAP Net Interest Margin to Non-GAAP Net Interest Margin on a Tax-Equivalent Basis” for a reconcilement of GAAP net interest margin to Non-GAAP net interest margin on a tax equivalent basis.
Noninterest income totaled $10,251,000 for the year ended December 31, 2007, compared to $9,492,000 in 2006. Excluding the effect of the Company’s deferred compensation plan, noninterest income totaled $10,086,000 for 2007 compared to $9,285,000 during 2006. The $801,000 increase (8.6 percent) was achieved even though revenues from the sale of mortgages declined by $228,000 or 21.8 percent due to a reduction in real estate transactions and a less favorable rate environment. See the table called “Reconciliation of GAAP Noninterest Income & Expense to Noninterest Income & Expense Without the Financial Impact of the Deferred Compensation Plan” for a reconcilement of GAAP noninterest income and expense to noninterest income and expense without the financial impact of the deferred compensation plan.

The trust and asset management area continues to be a strong contributor to the success of the Company. Trust fees grew to $2,243,000 for the year ended December 31, 2007, an increase of $542,000 or 31.9 percent. Trust assets under management totaled $353,668,000 at December 31, 2007 compared to $271,766,000 at December 31, 2006, which represents a 30.1 percent increase. Management does not anticipate that trust assets will sustain this rate of growth on an ongoing basis.

Driven primarily by increasing transaction volumes, interchange fees earned on Visa Check Cards increased to $950,000, a 22.4 percent increase over the $776,000 earned for 2006. Interchange fees earned on Visa Check Card transactions are included in Other Operating Income in the attached financials.

Commissions from the sale of investment products increased from $785,000 in 2006 to $910,000 in 2007. This was largely due to increased sales resulting from branch based sales initiatives and the favorable impact of the transition of this business from a transaction based commission business into one that is management fees based.
“Growing noninterest income in areas such as trust fees, commissions on the sale of investment products and Visa Check Card interchange is very important to our overall success. The increase in noninterest income helped offset the pressure on our net interest margin,” said Mr. Bradford.

Total noninterest expense increased 2.6 percent to $20,626,000 for the year ended December 31, 2007, as compared to $20,098,000 for 2006. Noninterest expense, excluding the effect of the Company’s deferred compensation plan, was $20,344,000 for 2007, compared to $19,784,000 for 2006. The $560,000, or 2.8 percent increase is largely the result of increases in salary and legal expense, which were partially offset by reductions in incentive compensation and benefit expense.

Asset Quality
The Company’s loan delinquency ratio, which is loan balances past due 30 days or more as a percent of total loans, was 1.72 percent at December 31, 2007, up from 1.26 percent at December 31, 2006. Two real estate development loans contributed $4,990,000 or 0.85% to the delinquency ratio. At December 31, 2007, non-performing assets and 90-day past due loans totaled $8,214,000 (1.06 percent of total assets) compared to $2,497,000 (0.33 percent of total assets) one year earlier. Net charge-offs as a percentage of loans totaled 0.26 percent for 2007 compared to 0.11 percent for 2006. The ratio of the allowance for loan losses to total loans increased from 1.10% at year-end 2006 to 1.14% at year-end 2007.

Financial Condition
Total assets at December 31, 2007 were $778,080,000, an increase of 4.0 percent from $748,193,000 at December 31, 2006. Total loans, including loans held for sale, totaled $584,831,000 on December 31, 2007, a 4.5 percent increase from total loans on December 31, 2006, which were $559,463,000.

Total deposits at December 31, 2007 were $619,717,000 compared to $589,328,000 at December 31, 2006, an increase of $30,389,000 or 5.2 percent.
Stock Repurchase Activity

The Company purchased a total of 287,792 shares of its stock during 2007 at an average price of $17.59. The Company’s most recent purchase was 1,042 shares on August 7, 2007 for $17.20 per share including commission.

Fourth Quarter Results
Net income for the fourth quarter of 2007 totaled $1,606,000 compared to $1,998,000 for the third quarter of 2007, and $1,819,000 for the fourth quarter of 2006. The decrease in fourth quarter earnings is largely the result of an increase in the provision for loan losses. The provision for loan losses totaled $1,150,000 for the fourth quarter of 2007, $805,000 (233.3 percent) above the third quarter of 2007 and $850,000 (283.3 percent) above the fourth quarter of 2006. The increase in the Company’s provision for loan losses resulted from Management’s regular assessment of asset quality (e.g., level of non-performing assets and loan delinquencies), evaluation of specific credits, economic trends and other factors. Charts included in the attached financial information provide additional insights into year over year changes in asset quality.

Other Company News
December 11, 2007 saw the Plainfield Banking Center in Hendricks County open its doors for business and the Avon Banking Center followed shortly after, opening officially on January 14, 2008. Both of these full-service banking centers follow the January 2006 opening of the full-service banking center in Brownsburg which marked the start of the Company’s transition from less visible, limited service branches in Hendricks County to more visible, strategically located full-service banking centers. A fourth new banking center, to be located in Noblesville, in Hamilton County, is expected to open during the summer of 2008.

While the Bank’s expansion into Central Indiana remained a primary focus during 2007, the Bank is anticipating expanding its presence in all markets by offering customers the opportunity to open accounts online. Starting January 2, 2008, this convenient online account opening alternative will broaden the delivery channel for checking and savings products in a fashion that allows customers to open accounts in a time, place and manner of their choosing. Comments Mr. Bradford: “We feel that our current customer base will enjoy the convenience of online account opening, and we also believe this service will allow us to compete in the online market to attract new customers.”

The Company will hold its Annual Meeting of Shareholders at 10 a.m., Thursday, April 24, 2008 at the Bloomington/Monroe County Convention Center in downtown Bloomington, Indiana.

About Monroe Bancorp
Monroe Bancorp, headquartered in Bloomington, Indiana, is an Indiana bank holding company with Monroe Bank as its wholly owned subsidiary. Monroe Bank was established in Bloomington in 1892, and offers a full range of financial, trust and investment services through its locations in Central and South Central Indiana. The Company's common stock is traded on the NASDAQ Global Stock Market under the symbol MROE.

Use of Non-GAAP Financial Information
To supplement the Company's consolidated condensed financial statements presented on a GAAP basis, the Company has used the following non-GAAP measures of reporting:
(1) The net interest margin is reported on a tax equivalent basis. The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate of 34%. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. A table called 'Reconciliation of GAAP Net Interest Margin to Non-GAAP Net Interest Margin on a Tax-Equivalent Basis', included at the end of the attached financial summary, reconciles the non-GAAP financial measure “net interest income (tax-equivalent)” with net interest income calculated and presented in accordance with GAAP. The table also reconciles the non-GAAP financial measure “net interest margin (tax-equivalent)” with net interest margin calculated and presented in accordance with GAAP.
(2) Noninterest income and noninterest expense are reported without the effect of income and expenses related to securities held in a rabbi trust for the deferred compensation plan. A table called 'Reconciliation of GAAP Noninterest Income & Expense to Noninterest Income & Expense Without the Financial Impact of the Deferred Compensation Plan', included at the end of the attached financial summary, details all the items included in noninterest income and expense associated with the deferred compensation plan / rabbi trust and reconciles the GAAP numbers to the non-GAAP numbers. 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 items related to the rabbi trust are removed.

The Company believes these adjustments are appropriate to enhance an overall understanding of the Company's past financial performance and also its prospects for the future. These adjustments to the Company’s GAAP results are made with the intent of providing both management and investors a more complete understanding of the underlying operational results and trends and the Company's marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with generally accepted accounting principles in the United States.

Forward-Looking Statements
This release contains forward-looking statements about the Company which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. This release 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) competitive pressures among depository institutions; (2) changes in the interest rate environment; (3) prepayment speeds, charge-offs and loan loss provisions; (4) general economic conditions, either national or in the markets in which the Company does business; (5) legislative or regulatory changes adversely affecting 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 other factors which could affect the financial results of the Company is included in the Company's filings with the Securities and Exchange Commission.