BLOOMINGTON, Ind. – October 23, 2007 –- Monroe Bancorp (the “Company”), NASDAQ: MROE, the independent Bloomington-based holding company for Monroe Bank (the “Bank”), today reported net income of $6,200,000 or $0.977 per diluted common share, for the nine months ended September 30, 2007, compared to $5,767,000 or $0.871 per diluted common share for the same period in 2006. This represents a 7.5 percent increase in net income and a 12.2 percent increase in diluted earnings per share. Return on average assets (ROAA) and return on average equity (ROAE) were 1.11 percent and 15.80 percent, respectively, for the first nine months of 2007 compared to 1.06 percent and 14.91 percent, respectively, for the first nine months of 2006.

“I am pleased with the growth of year-to-date earnings, but at the same time mindful of the importance of keeping asset quality management issues at the forefront of our efforts to grow the Company,” said Mark D. Bradford, President and Chief Executive Officer.

The Company also reported net income of $1,998,000 or $0.319 per diluted common share, for the quarter ended September 30, 2007, compared to $2,053,000 or $0.311 per diluted common share for the same period in 2006. This represents a 2.7 percent decrease in net income and a 2.6 percent increase in diluted earnings per share. Return on average assets (ROAA) and return on average equity (ROAE) for the third quarter of 2007 were 1.05 percent and 15.27 percent, respectively, compared to 1.11 percent and 15.62 percent respectively for the third quarter of 2006.

Net income for the third quarter of 2007 decreased by $192,000 or 8.8 percent compared to net income for the second quarter of 2007. The decline in net income between the linked quarters is largely the result of a $149,000 decline in net interest income and a $90,000 increase in the loan loss provision. Both of these results can be linked to the increase in nonperforming loans that occurred during the third quarter.

Financial Performance
Net interest income after the provision for loan losses increased $395,000 or 2.5 percent to $16,403,000 for the nine months ended September 30, 2007 compared to $16,008,000 for the same period in 2006. The tax-equivalent net interest margin for the first nine months of 2007 was 3.40 percent, compared to 3.42 percent for the first nine months of 2006.

Net interest income after the provision for loan losses decreased 2.5 percent to $5,359,000 for the three months ended September 30, 2007 compared to $5,494,000 for the same period in 2006. A $45,000 increase in the provision for loan losses accounted for 33.3 percent of the decrease in net interest income between the two periods. The tax-equivalent net interest margin for the quarter ended September 30, 2007 was 3.31 percent, compared to 3.44 percent for the quarter ended June 30, 2007 and 3.43 percent for the third quarter of 2006. The tax-equivalent net interest margin for the third quarter of 2007 was reduced by approximately seven basis points due to the impact of loans being placed on non-accrual during the quarter.

Noninterest income totaled $7,783,000 for the first nine months of 2007 compared to $7,117,000 for the same period of 2006. Excluding the effect of the Company’s deferred compensation plan, discussed in the “Use of Non-GAAP Financial Information” section of this release (page 4), noninterest income totaled $7,561,000 for the first nine months of 2007 compared to $7,006,000 for the same period of 2006. The $555,000 or 7.9 percent increase over the same period of 2006 was primarily the result of a $391,000 increase in trust fees.

Noninterest income totaled $2,651,000 for the third quarter of 2007 compared to $2,497,000 for the same period of 2006. Excluding the effect of the Company’s deferred compensation plan, noninterest income totaled $2,594,000 for the third quarter of 2007 compared to $2,432,000 for the same period of 2006, an increase of $162,000 or 6.7 percent. The increase in noninterest income was driven by a $182,000 increase in trust fees.

Trust fees grew 41.8 percent to $617,000 for the three months ended September 30, 2007 compared to $435,000 for the same period of 2006. The increase in trust fees was driven by growth in trust assets under management. Trust assets under management reached $348,653,000 at September 30, 2007, growing 28.3 percent, or $76,887,000 over the $271,766,000 at December 31, 2006 and by 33.7 percent, or $87,805,000 over the September 30, 2006 total of $260,848,000. Management does not anticipate that trust assets will sustain this rate of growth on an ongoing basis.

Noninterest expense totaled $15,642,000 for the first nine months of 2007 compared to $14,785,000 for the same period of 2006. Noninterest expense, excluding the effect of the Company’s deferred compensation plan, was $15,341,000 for the first nine months of 2007, compared to $14,609,000 for the same period of 2006. The $732,000, or 5.0 percent increase is largely the result of a $411,000 or 4.6 percent increase in total compensation expense.

Noninterest expense was $5,283,000 for the three months ended September 30, 2007, compared to $5,011,000 for the same period of 2006. Noninterest expense, adjusted to remove the effect of the Company’s deferred compensation plan, was $5,201,000 for the three months ended September 30, 2007, compared to $4,923,000 for the same period of 2006. The $278,000 or 5.7 percent increase in noninterest expense is largely the result of a $91,000 or 3.0 percent increase in total compensation expense.

Asset Quality
Nonperforming assets and 90-day past due loans totaled $5,159,000 (0.68 percent of total assets) at September 30, 2007 compared to $2,497,000 (0.33 percent of total assets) at December 31, 2006 and $2,795,000 (0.38 percent of total assets) at September 30, 2006. The growth of nonperforming loans reflects the weakness in the housing and residential construction markets. Management believes that emerging economic conditions could result in further deterioration in this pool of assets resulting in the potential for higher delinquencies, non-performing loans and net charge-offs. Management is devoting significant attention to the resolution of problem assets. As of September 30, 2007 the Board of Directors feels that the allowance for loan losses was adequate.

The Company experienced $882,000 of net charge-offs during the first nine months of 2007 compared to $391,000 for the same period of 2006. Net charge-offs for the third quarter of 2007 totaled $686,000 compared to net charge-offs of $22,000 for the third quarter of 2006. The ratio of the reserve for loan losses to total loans was 1.09 percent at September 30, 2007 compared to 1.10 percent at September 30, 2006.

Financial Condition
Total assets were $754,786,000 as of September 30, 2007 compared to $763,377,000 at June 30, 2007 and $729,050,000 as of September 30, 2006. Loans, including loans held for sale, totaled $564,904,000 on September 30, 2007, compared to $563,989,000 at June 30, 2007 and $555,990,000 at September 30, 2006.

“Loan growth has been limited by several factors such as a slowdown in customers’ and prospects’ need for additional funding, the impact of commercial real estate loans being refinanced by insurance companies, and our efforts to reduce exposure with borrowers experiencing financial stress,” said Mr. Bradford.

Total deposits were $611,504,000 as of September 30, 2007 compared to $614,592,000 at June 30, 2007 and $566,107,000 as of September 30, 2006.

Additional Financial Information

Stock Buyback Activity
The Company repurchased 56,042 shares of its common stock during the third quarter at an average price including commission of $17.40. The Company has purchased a total of 417,792 shares at a total cost of $7,224,000 since the program was announced in June of 2006. The average price of these shares, including commission, was $17.29. The Company’s repurchase activity was funded with proceeds from a trust preferred subordinated debenture and other debt. Net interest expense during the quarter associated with the trust preferred subordinated debenture totaled $137,000.

The Board recently decided to suspend repurchase activities for the fourth quarter of 2007 and the first quarter of 2008. The Company’s most recent stock repurchase transaction took place on August 7, 2007.

Other News
We continue to actively pursue strategies to build business in both our Core market (Monroe, Jackson, and Lawrence Counties) and our Central Indiana market (Hamilton and Hendricks Counties). One strategy that has proven to be an effective business development tool is to host educational seminars relating to our financial services. These seminars put our product experts in front of groups of our best customers and prospects. This strategy has been used in the core market at an increased rate this year and we have started hosting seminars in our Central Indiana market. We are also using other group gatherings to promote the Bank. While a long-standing activity in our core market, we held a Women’s Seminar for the first time in August in Hendricks County and this event was very well received. These seminars are intended to educate women about the financial choices available to them.

We also recently introduced a strategy bank-wide of hosting networking mixers to develop stronger relationships with our centers of influence. In Central Indiana, over 200 high net worth customers and prospects attended a function called “Unsurpassed Elegance”, hosted by Monroe Bank, where organizations partnering with the Bank showcased luxury and custom aircraft and automobiles. The Bank hosted a series of mixers in South Central Indiana, with each designed to reach a specific center of influence. The mixers are intended to enhance retail, loans and wealth management sales efforts.

While the construction of the Avon and Plainfield banking centers in Hendricks County has been progressing according to plan, Bank employees have been readying themselves for the opening of these full-service banking centers. Plainfield is slated to open on December 10, 2007 and Avon in January 2008.

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 NASDAQÒ Global Stock Market under the symbol MROE.

See attachments for additional financial information. For further information, contact: Mark D. Bradford, President and Chief Executive Officer, (812) 331-3455.
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:
· 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. The table called “on page 9 of this release 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.
· 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 is included at the end of the attached financial summary which 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.