BLOOMINGTON, Ind. – Monroe Bancorp (the “Company”), NASDAQ: MROE, the independent Bloomington-based holding company for Monroe Bank (the “Bank”), today reported net income of $3,714,000, or $0.56 per basic and diluted common share, for six months ended June 30, 2006, compared to $3,495,000 or $0.53 per basic and diluted common share for the same period in 2005. This represents a 6.3 percent increase in net income.
“I am very pleased with the growth of second quarter and year-to-date earnings considering the net interest margin challenges created by the flat yield curve and the expenses we have incurred opening and promoting our new Brownsburg Banking Center,” said Mark D. Bradford, President and Chief Executive Officer.

Return on average assets (ROAA) and return on average shareholders’ equity (ROAE) were 1.04 percent and 14.55 percent, respectively, for the first six months of 2006 compared to 1.09 percent and 14.56 percent, respectively, for the first six months of 2005.
The Company reported net income of $1,941,000 or $0.29 per basic and diluted common share, for the quarter ended June 30, 2006, compared to $1,852,000 or $0.28 per basic and diluted common share for the same period in 2005. This represents a 4.8 percent increase in net income. The ROAA and ROAE for the second quarter of 2006 were 1.07 percent and 15.04 percent, respectively, compared to 1.01 percent and 14.05 percent, respectively, for the first quarter of 2006 and 1.14 and 15.39% respectively for the second quarter of 2005.
Net Interest Margin Loans, including loans held for sale, totaled $559,281,000 on June 30, 2006, a 10.7 percent increase from total loans on June 30, 2005, which were $505,315,000. Loan growth was largely driven by increases in construction and commercial real estate loans. Total deposits at June 30, 2006 were $593,856,000 compared to $529,559,000 at June 30, 2005, an increase of $64,297,000 or 12.1 percent. Certificates of deposits with balances in excess of $100,000 grew by $41,612,000 during this period, accounting for nearly 65 percent of the total deposit growth.

Net interest income before the provision for loan losses, increased $912,000 or 8.9 percent to $11,114,000 for the six months ended June 30, 2006 compared to $10,202,000 for the same period in 2005. The tax-equivalent net interest margin was 3.51 percent for the second quarter of 2006, compared to 3.47 percent for the first quarter of 2006 and 3.52 percent for the second quarter of 2005.

Asset Quality
Non-performing assets and 90-day past due loans totaled $1,346,000, or 0.18 percent of total assets on June 30, 2006. This is a 66 percent reduction, compared to $3,902,000, or 0.58 percent of total assets on June 30, 2005.
“I am very pleased by the loan growth and improvement in asset quality that we were able to achieve during the first half of 2006,” said Mr. Bradford.
Net charge-offs for the six months ended June 30, 2006 were $369,000 compared to $246,000 for the six months ended June 30, 2005.

Non-Interest Income
Non-interest income totaled $4,620,000 for the first six months of 2006 compared to $4,514,000 for the corresponding period of 2005. Included in non-interest income are net realized and unrealized securities gains of $38,000 in the first half of 2006 and gains of $104,000 in the same period in 2005. Excluding net realized and unrealized securities gains and losses, non-interest income for the six months ended June 30, 2006 increased $172,000 or 3.9 percent over the first six months of 2005.

Non-Interest Expense
Total non-interest expense increased $983,000 to $9,774,000 for the six months ended June 30, 2006, as compared to $8,791,000 for the same period in 2005. Included in non-interest expense is unrealized appreciation related to the directors’ and executives’ deferred compensation plan in the amount of $81,000 for the first six months of 2006 and $34,000 for the first six months of 2005. This unrealized appreciation had no effect on net income. Non-interest expense, excluding the effect of the unrealized appreciation, grew from $8,757,000 during the first six months of 2005 to $9,693,000 during the same period of 2006, an increase of 10.7 percent. Most of the increase in operating expense was in salaries and wages, employee benefits and premises and equipment expense. Most of the increases in these areas were associated with staff and facility additions related to the Bank’s growth initiatives in its Central Indiana and Bloomington markets.

Other News
An open house event was held on Saturday, June 10 at the Bank’s Brownsburg Banking Center, which opened in January of this year. The goal of the open house was to raise both the level of customer activity and the level of awareness of the Bank in Central Indiana. “We are glad to report that both goals were achieved. Over 600 visitors participated in the open house activities. Eighty-two new accounts were opened during the five-hour open house event and 105 appointments were set with customers to open new accounts the following week,” said Bradford.

Dawn Morley was appointed Vice President, Chief Investment Officer, for Monroe Bank’s Wealth Management Group in June 2006. With a BA in Economics and an MBA, Morley brings 20 years of banking and investment experience with her to Monroe Bank. Morley will refine the Wealth Management Group’s investment program, addressing investment strategies related to asset allocation, identifying new investment opportunities and evaluating current investment selections.

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.

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 non-GAAP additional measures of operating results, noninterest income, and noninterest expense adjusted to exclude certain costs, expenses, gains and losses it believes 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 increase significantly; (2) changes in the interest rate environment reduce interest margins; (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, are less favorable than expected; (5) legislative or regulatory changes adversely affect the business of the Company; and (6) changes in real estate values or the real estate markets. 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.

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