Special Cautionary Notice Regarding Forward-looking Statements

Statements and financial discussion and analysis contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements include information about possible or assumed future results of the Company's operations or performance. Words such as "believe", "expect", "anticipate", "estimate", "continue", "intend", "may", "will", "should", or similar expressions, identifies these forward-looking statements. Many possible factors or events could affect the future financial results and performance of the Company and could cause those financial results or performance to differ materially from those expressed in the forward-looking statement. These possible events or factors include, without limitation:

• changes in the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the Company's loan portfolio and allowance for loan losses;

• changes in interest rates and market prices, which could reduce the Company's net interest margins, asset valuations and expense expectations;

• changes in the levels of loan prepayments and the resulting effects on the value of the Company's loan portfolio;

• changes in local economic and business conditions which adversely affect the ability of the Company's customers to transact profitable business with the Company, including the ability of borrowers to repay their loans according to their terms or a change in the value of the related collateral;

• increased competition for deposits and loans adversely affecting rates and terms;

• the Company's ability to identify suitable acquisition candidates;

• the timing, impact and other uncertainties of the Company's ability to enter new markets successfully and capitalize on growth opportunities;

• increased credit risk in the Company's assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of the total loan portfolio;

• the failure of assumptions underlying the establishment of and provisions made to the allowance for loan losses;

• changes in the availability of funds resulting in increased costs or reduced liquidity;

• a deterioration or downgrade in the credit quality and credit agency ratings of the securities in the Company's securities portfolio;

• increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios;

• the Company's ability to acquire, operate and maintain cost effective and efficient systems without incurring unexpectedly difficult or expensive but necessary technological changes;

• the loss of senior management or operating personnel and the potential inability to hire qualified personnel at reasonable compensation levels;

• government intervention in the U.S. financial system; and

• changes in statutes and government regulations or their interpretations applicable to bank holding companies and our present and future banking and other subsidiaries, including changes in tax requirements and tax rates.

All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company analyzes the major elements of the Company's balance sheets and statements of income. This section should be read in conjunction with the Company's Condensed Consolidated Financial Statements and accompanying notes and other detailed information appearing elsewhere in this document.

Overview

The Company recorded net income of $2.1 million for the three months ended September 30, 2008, down approximately $1.1 million compared with net income of $3.2 million for the same quarter in 2007. The Company's diluted earnings per share ("EPS") for the three months ended September 30, 2008 was $0.19, a decrease of $0.10 per diluted share compared with diluted EPS of $0.29 for the same quarter in 2007. Net income for the nine months ended September 30, 2008 was $6.6 million, a decrease of approximately $2.8 million compared with $9.4 million for the same period in 2007. The Company's diluted EPS for the nine months ended September 30, 2008 was $0.60, a decrease of $0.24 compared with $0.84 for the same period in 2007. Details of the changes in the various components of net income are further discussed below.

Total assets were $1.59 billion at September 30, 2008, up approximately $134.8 million or 9.2% compared with $1.46 billion at December 31, 2007. Investment securities at September 30, 2008 were $105.6 million, down approximately $32.1 million or 23.3% compared with $137.7 million at December 31, 2007. Net loans at September 30, 2008 were $1.33 billion, up approximately $137.1 million or 11.5% compared with $1.19 billion at December 31, 2007. Total deposits at September 30, 2008 were $1.27 billion, up approximately $74.2 million or 6.2% compared with $1.19 billion at December 31, 2007. The Company's return on average assets ("ROAA") for the three months ended September 30, 2008 and 2007 was 0.52% and 0.91%, respectively. The Company's ROAA for the nine months ended September 30, 2008 and 2007 was 0.57% and 0.94%, respectively.

Shareholders' equity at September 30, 2008 was $123.4 million compared with $117.4 million at December 31, 2007, an increase of approximately $6.0 million or 5.1%. The Company's return on average equity ("ROAE") for the three months ended September 30, 2008 and 2007 was 6.67% and 11.11%, respectively. The Company's ROAE for the nine months ended September 30, 2008 and 2007 was 7.21% and 11.24%, respectively.

Recent Developments

In September, 2008, the Banks received notice that a commercial borrower in the health care industry (the "Borrower") filed a voluntary petition under Chapter 11 for bankruptcy reorganization. The amount owed to MetroBank by the Borrower is approximately $13.0 million, $3.0 million of which is secured by accounts receivable and $10.0 million of which is secured by a medical real property located in Grand Prairie, Texas. The amount owed to Metro United by the Borrower is approximately $3.0 million, which is secured by the same medical real property located in Grand Prairie, Texas. Management currently believes the collateral value is sufficient to cover the outstanding principal and interest receivable balances on the loans and there will be no impairment loss related to these loans based on recent appraisals of the medical real property, review of accounts receivable and discussions with management. However, it is difficult to predict at this time what impact, if any, the bankruptcy proceedings will have on the ability of MetroBank and Metro United to obtain repayment under the loans or realize on the collateral securing the loans. Management intends to aggressively pursue repayment of these loans and recovery and liquidation of the collateral securing the loans if necessary.

In October 2008, the Company filed a "shelf" registration statement on Form S-3 with the Securities and Exchange Commission to provide future flexibility in raising capital in order to take advantage of opportunities that become available should the need arise. After the shelf registration becomes effective, the Company may offer and sell from time to time, in one or more offerings, up to $100 million of senior or subordinated debt securities (in one or more series), preferred stock, depositary shares, common stock, warrants representing rights to purchase these securities and units comprised of two or more of these securities in any combination. The terms of any offering under the shelf registration statement will be established at the time of any such offering.

On October 3, 2008, the Troubled Asset Relief Program ("TARP") was signed into law. TARP gave the U.S. Department of the Treasury ("Treasury") authority to deploy up to $700 billion into the financial system with an objective of improving liquidity in capital markets. On October 14, 2008, the Treasury announced the Capital Purchase Program ("CPP"), which provides for direct equity investment of perpetual preferred stock by the Treasury in qualified financial institutions. The program is voluntary and requires an institution to comply with a number of restrictions and provisions, including limits on executive compensation, stock redemptions and declaration of dividends. Applications of publicly traded institutions must be submitted by November 14, 2008 and are subject to approval by the Treasury. The CPP provides for the purchase by the Treasury of perpetual senior preferred stock in an aggregate amount ranging from 1% to 3% of a company's risk-weighted assets. The senior preferred stock will pay cumulative dividends at a rate of 5% per year, until the fifth anniversary of the Treasury investment, and at a rate of 9% per year thereafter. The CPP also requires a participant to issue to the Treasury warrants to purchase common stock equal to 15% of the capital invested by the Treasury.

The terms of the CPP could reduce investment returns to the Company's shareholders by restricting increases in dividends paid on the Company's common stock without Treasury consent, diluting existing shareholders' interests and restricting capital management practices. Although the Company and the Banks meet all applicable regulatory capital requirements and the Banks remain well capitalized, the Company has applied for participation in the CPP. Participation in the program is not automatic and is subject to approval by the Treasury.

Also on October 14, 2008, the systemic risk exception to the FDIC Act was enacted, enabling the FDIC to temporarily provide a 100% guarantee of the unsecured senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in non-interest bearing transaction deposit accounts under a Temporary Liquidity Guarantee Program. Coverage under the Temporary Liquidity Guarantee Program is available for 30 days without charge and thereafter at a cost of 75 basis points per annum for unsecured senior debt and 10 basis points per annum for non-interest bearing transaction deposits on balances above $250,000, unless the institution opts out before December 5, 2008. The Company plans to participate in the Temporary Liquidity Guarantee Program.

Results of Operations

Net Interest Income and Net Interest Margin. For the three months ended September 30, 2008, net interest income, before the provision for loan losses, was $13.8 million, down approximately $839,000 or 5.7% compared with $14.7 million for the same quarter in 2007. The decrease was due primarily to lower yields on average earning assets because of interest rate cuts by the Federal Reserve, partially offset by increased loan volume. The decrease in net interest income reflects a $2.8 million decrease in interest income that was offset by a $2.0 million decrease in interest expense. Average interest-earning assets for the three months ended September 30, 2008 were $1.49 billion, up approximately $183.4 million or 14.1% compared with $1.30 billion for the same quarter in 2007. The weighted average yield on interest-earning assets for the three months ended September 30, 2008 was 6.39%, down 173 basis points compared with 8.12% for the same quarter in 2007. Average interest-bearing liabilities for the three months ended September 30, 2008 were $1.22 billion, up approximately $164.5 million or 15.6% compared with $1.06 billion for the same quarter in 2007. The weighted average rate paid on interest-bearing liabilities for the three months ended September 30, 2008 was 3.28%, down 123 basis points compared with 4.51% for the same quarter in 2007. Interest rate cuts by the Federal Reserve resulted in a decrease in yields and costs for the three and nine months ended September 30, 2008, compared with the same period in 2007.

For the nine months ended September 30, 2008, net interest income, before the provision for loan losses, was $42.3 million, down approximately $228,000 or 0.5% compared with $42.5 million for the same period in 2007. The decrease was due primarily to lower yields on average earning assets partially offset by increased loan volume. The decrease reflects a $2.4 million decrease in interest income partially offset by a $2.2 million decrease in interest expense. Average interest-earning assets for the nine months ended September 30, 2008 were $1.44 billion, up approximately $180.4 million or 14.3% compared with $1.26 billion for the same period in 2007. The weighted average yield on interest-earning assets for the nine months ended September 30, 2008 was 6.83%, down 124 basis points compared with 8.07% for the same period in 2007. Average interest-bearing liabilities for the nine months ended September 30, 2008 were $1.18 billion, up approximately $176.3 million or 17.6% compared with $1.00 billion for the same period in 2007. The weighted average rate paid on interest-bearing liabilities for the nine months ended September 30, 2008 was 3.54%, down 91 basis points compared with 4.45% for the same period in 2007.

The net interest margin for the three months ended September 30, 2008 was 3.70%, down 76 basis points compared with 4.46% for the same quarter in 2007. The yield on average earning assets decreased 173 basis points, which was partially offset by a decrease in the cost of average earning assets of 97 basis points.

The net interest margin for the nine months ended September 30, 2008 was 3.92%, down 59 basis points compared with 4.51% for the same period in 2007. For the nine months ended September 30, 2008, the yield on average earning assets decreased 124 basis points, which was partially offset by a decrease in the cost of average earning assets of 65 basis points.

Total Interest Income. Total interest income for the three months ended September 30, 2008 was $23.9 million, down approximately $2.8 million or 10.5% compared with $26.7 million for the same period in 2007. Although total interest earning assets increased, the impact of interest rate cuts during the third quarter 2008 offset the effect of volume increases. Total interest income for the nine months ended September 30, 2008 was $73.6 million, down approximately $2.4 million or 3.2% compared with $76.0 million for the same period in 2007, primarily due to decreases in average yield, partially offset by loan growth.

Interest Income from Loans. Interest income from loans for the three months ended September 30, 2008 was $22.3 million, down approximately $2.3 million or 9.3% compared with $24.6 million for the same quarter in 2007. The decrease was the result of declines in average yield partially offset by increased loan volume. Average total loans for the three months ended September 30, 2008 were $1.33 billion compared with average total loans for the same quarter in 2007 of $1.11 billion, an increase of approximately $211.8 million or 19.0%. For the three months ended September 30, 2008, the yield on average total loans was 6.69%, down 207 basis points compared with 8.76% for the same quarter in 2007.

Interest income from loans for the nine months ended September 30, 2008 was $68.7 million, up approximately $603,000 or 0.9% compared with $68.1 million for the same period in 2007. The increase was the result of a higher volume of loans, partially offset by a lower yield on loans. Average total loans for the nine months ended September 30, 2008 were $1.28 billion compared with average total loans for the same period in 2007 of $1.03 billion, an increase of approximately $250.6 million or 24.4%. For the nine months ended September 30, 2008, the yield on average total loans was 7.18%, down 169 basis points compared with 8.87% for the same period in 2007.

Approximately $942.0 million or 70.0% of the total loan portfolio at September 30, 2008 were variable rate loans that periodically reprice and are sensitive to changes in market interest rates. For the three months ended September 30, 2008, the yield on average total loans was approximately 169 basis points above the average prime rate over the same period. To lessen interest rate sensitivity in the event of a falling interest rate environment, the Company originates variable rate loans with interest rate floors. At September 30, 2008, approximately $684.5 million in loans or 50.9% of the total loan portfolio were variable rate loans with interest rate floors that carried a weighted average interest rate of 6.76%. At September 30, 2007, variable rate loans with interest rate floors carried a weighted average interest rate of 8.51% and comprised 45.7% of the total loan portfolio.

Interest Income from Investments. Interest income from investments (which includes investment securities, Federal Funds sold, and other investments) for the three months ended September 30, 2008 was $1.6 million, a decrease of approximately $504,000 or 24.0% compared with $2.1 million for the same quarter in 2007. Average total investments for the three months ended September 30, 2008 were $161.1 million compared with average total investments for the same quarter in 2007 of $189.6 million, a decrease of approximately $28.5 million or 15.0%. The decreases in interest income from investments and average total investments were primarily the result of declining interest rates, in addition to maturities, sales and paydowns on the investment portfolio. For the three months ended September 30, 2008, the average yield on investments was 3.95% compared with 4.40% for the same quarter in 2007, a decrease of 45 basis points.

Interest income from investments for the nine months ended September 30, 2008 was $4.8 million, down approximately $3.1 million or 38.2% compared with $7.9 million for the same period in 2007. Average total investments for the nine months ended September 30, 2008 were $161.6 million compared with average total investments for the same quarter in 2007 of $231.8 million, a decrease of approximately $70.2 million or 30.3%. The decreases in interest income from investments and in average total investments were primarily the result of declining interest rates, and maturities, sales and paydowns on the investment portfolio. For the nine months ended September 30, 2008, the average yield on investments was 4.01% compared with 4.53% for the same quarter in 2008, a decrease of 52 basis points.

Total Interest Expense. Total interest expense for the three months ended September 30, 2008 was $10.1 million, down approximately $1.9 million or 16.2% compared with $12.0 million for the same quarter in 2007. Total interest expense for the nine months ended September 30, 2008 was $31.3 million, down approximately $2.2 million or 6.5% compared with $33.5 million for the same period in 2007. Interest expense decreased for both the three and nine months ended September 30, 2008 primarily due to decreases in interest rates paid on deposits, partially offset by growth in deposits and other borrowings.

Interest Expense on Deposits. Interest expense on interest-bearing deposits for the three months ended September 30, 2008 was $8.6 million, down approximately $2.8 million or 24.7% compared with $11.4 million for the same period in 2007. Interest expense on interest-bearing deposits for the nine months ended September 30, 2008 was $27.0 million, down approximately $4.2 million or 13.5% compared with $31.2 million for the same period in 2007. The decrease for the three and nine months ended September 30, 2008 was primarily due to lower interest rates incurred for interest-bearing deposits partially offset by growth in money market deposits. Average interest-bearing deposits for the three months ended September 30, 2008 were $1.03 billion compared with average interest-bearing deposits for the same quarter in 2007 of $1.01 billion, an increase of $23.3 million or 2.3%. The average interest rate incurred on interest-bearing deposits for the three months ended September 30, 2008 was 3.31% compared with 4.48% for the same quarter in 2007, a decrease of 117 basis points. Average interest-bearing deposits for the nine months ended September 30, 2008 were $1.00 billion compared with average interest-bearing deposits for the same period in 2007 of $947.5 million, an increase of $57.4 million or 6.1%. The average interest rate incurred on interest-bearing deposits for the nine months ended September 30, 2008 was 3.59% compared with 4.40% for the same period in 2007, a decrease of 81 basis points. The decrease in interest rates for the three and nine months ended September 30, 2008 primarily reflected lower market rates.

Interest Expense on Junior Subordinated Debentures. Interest expense on junior subordinated debentures for the three months ended September 30, 2008 and 2007 was $519,000, and $474,000, respectively. Interest expense on junior subordinated debentures for the nine months ended September 30, 2008 and 2007 was $1.6 million and 1.5 million, respectively. Average junior subordinated debentures for the three and nine months ended September 30, 2008 and 2007 were $36.1 million. The average interest rate incurred on junior subordinated debentures for the three months ended September 30, 2008 and 2007 was 5.75% and 5.14%, respectively. The average interest rate incurred on junior subordinated debentures for the nine months ended September 30, 2008 and 2007 was 5.76% and 5.55%, respectively. The junior subordinated debentures accrue interest at a fixed rate of 5.7625% until December 15, 2010, at which time the debentures will accrue interest at a floating rate equal to the 3-month LIBOR plus 1.55%.

Interest Expense on Other Borrowings. Interest expense on other borrowed funds for the three months ended September 30, 2008 was $974,000, up approximately $810,000 compared with $164,000 for the same period in 2007. Interest expense on other borrowed funds for the nine months ended September 30, 2008 was $2.7 million, up approximately $1.9 million compared with $753,000 for the same period in 2007. The increase in interest expense for both the three and nine months ended September 30, 2008 was primarily due to increases in Federal Home Loan Bank ("FHLB") advances and security repurchases agreements, which were partially offset by lower interest rates paid. As part of its strategy to control interest expense, the Company took advantage of lower cost wholesale funding in lieu of higher cost deposits. Average other borrowed funds for the three months ended September 30, 2008 were $154.7 million compared with average other borrowed funds for the same quarter in 2007 of $13.5 million, an increase of $141.2 million. The average interest rate incurred on borrowed funds for the three months ended September 30, 2008 was 2.50%, compared with 4.82% for the same quarter in 2007, a decrease of 232 basis points. Average other borrowed funds for the nine months ended September 30, 2008 were $139.5 million compared with average other borrowed funds for the same period in 2007 of $20.6 million, an increase of $118.9 million. The average interest rate incurred on borrowed funds for the nine months ended September 30, 2008 was 2.63%, compared with 4.89% for the same period in 2007, a decrease of 226 basis points.

The following tables present for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates for the periods indicated. No tax-equivalent adjustments were made and all average balances are daily average balances. Nonaccruing loans have been included in the tables as loans having a zero yield with income, if any, recognized at the end of the loan term.

                                                  For The Three Months Ended September 30,
                                             2008                                           2007
                            Average         Interest       Average         Average         Interest       Average
                          Outstanding       Earned/         Yield/       Outstanding       Earned/         Yield/
                            Balance           Paid         Rate(1)         Balance           Paid         Rate(1)
                                                           (Dollars in thousands)

Assets
Interest-earning
assets:
Total loans               $  1,325,350     $   22,295           6.69 %   $  1,113,551     $   24,583           8.76 %
Taxable securities             108,075          1,207           4.44          159,253          1,708           4.26
Tax-exempt securities            3,852             47           4.85            5,934             73           4.88
Other investments (2)           25,813            235           3.62            4,600             70           6.04
Federal funds sold and
other short-term
investments                     23,400            110           1.87           19,799            252           5.05
Total interest-earning
assets                       1,486,490         23,894           6.39        1,303,137         26,686           8.12
Allowance for loan
losses                         (16,083 )                                      (12,949 )
Total interest-earning
assets, net of
allowance for loan
losses                       1,470,407                                      1,290,188
Noninterest-earning
assets                         107,457                                        107,268
Total assets              $  1,577,864                                   $  1,397,456

Liabilities and
shareholders' equity
Interest-bearing
liabilities:
Interest-bearing demand
deposits                  $     59,209            114           0.77 %   $     63,529            191           1.19 %
Savings and money
market accounts                319,953          2,227           2.77          283,115          2,863           4.01
Time deposits                  652,404          6,240           3.81          661,591          8,335           5.00
Junior subordinated
debentures                      36,083            519           5.75           36,083            474           5.14
Other borrowings (3)           154,689            974           2.50           13,505            164           4.82
Total interest-bearing
liabilities                  1,222,338         10,074           3.28        1,057,823         12,027           4.51
Noninterest-bearing
liabilities:
Noninterest-bearing
demand deposits                213,735                                        205,816
Other liabilities               18,032                                         19,245
Total liabilities            1,454,105                                      1,282,884

Shareholders' equity           123,759                                        114,572
Total liabilities and
shareholders' equity      $  1,577,864                                   $  1,397,456

Net interest income                        $   13,820                                     $   14,659
Net interest spread                                             3.11 %                                         3.61 %
Net interest margin                                             3.70 %                                         4.46 %

. . .