Comparison of September 30, 2009 and December 31, 2008

General

Marco Community Bancorp, Inc. (the "Holding Company"), which was incorporated on January 28, 2003, owns 100% of the outstanding common stock of Marco Community Bank (the "Bank") and Commercial Lending Capital Corp. ("CLCC") (collectively the "Company"). The Holding Company's only business is the ownership and operation of the Bank and CLCC. The Bank is a Florida state-chartered commercial bank and its deposits are insured up to the applicable limits by the Federal Deposit Insurance Corporation. CLCC was incorporated to provide commercial loans to customers that would otherwise seek financing elsewhere because of credit limit constraints. Effective December 31, 2008, CLCC's operations were suspended due to economic conditions.

The Company's operating and capital requirements, the losses due to recent increases in nonperforming loans and declining net interest margin are factors management considered when evaluating the Company's ability to continue as a going concern.

Management is evaluating all potential sources of capital to meet the Company's capital requirements, including entering into other financing arrangements and/or strategic alliances, and seeking recapitalization opportunities. There can be no assurance, however, that additional financing or recapitalization plans will be available or forthcoming and, if available, can be obtained or undertaken on terms favorable to the Company or its existing shareholders. Further there is no assurance that any acceptable financing alternative or recapitalization plan would be successfully implemented, or receive regulatory approval. However, even if no additional capital is obtained, management expects the Company to be adequately capitalized at September 30, 2010, based on detailed financial projections.

The Company is exposed to the weakened real estate conditions in the Florida markets of Naples and Fort Myers. The Company believes the challenging market conditions are primarily attributable to a regional softening in demand for real estate assets as well as an oversupply of residential and commercial properties, particularly within the Company's local markets. However, existing home sales by area Realtors have increased substantially during the last two quarters, and this decrement in existing real estate inventories, if sustained, may drive improvement in the regional economy during the coming year.

The September 2009 report by the Regional Economic Research Institute of Florida Gulf Coast University
(http://www.fgcu.edu/cob/reri/indicators/indicators200909.pdf) noted that its regional economic indicators continue to show the impact of the slowdown in the local economy in the form of low retail sales, high unemployment rates, low permitting levels, and low inflation rates. Unemployment in the Southwest Florida region reached 13.1 percent in July, up from 13.0 percent in June. Tourism revenues, an important component of the regional economy, were down nearly 10 percent from the prior year throughout the region. Previous reports noted that unemployment rates for the region have continued to rise and it is expected that unemployment levels will remain relatively high through 2010.

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

There are some positive indications for the regional economy in that existing home sales are continuing at higher levels reflecting more affordable price levels, and sales have increased substantially during the last two quarters. Single-family home permits issued have increased over that of the same quarter in the previous year, but as noted in the report, remained historically low for the region as a result of the economic recession and a large inventory of lower-priced existing homes which are selling below replacement costs.

In response to the general economic down turn, the Company has focused its lending resources upon nominal loan growth, while specifically addressing any asset challenges presented by its existing loan portfolios. Pricing of loans remains competitive with current lending initiatives focused primarily upon Marco Island opportunities.

Liquidity and Capital Resources

Liquidity

Liquidity management involves monitoring sources and uses of funds in order to meet day-to-day cash flow requirements while maximizing profits. Liquidity represents the ability of a company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Asset liquidity is provided by cash and assets which are readily marketable, which can be pledged, or which will mature in the near future.

In addition to deposits, within its geographic market place, the sources of funds available to the Banks for lending and other business purposes include loan repayments, sales of loans and securities, and contributions from the Holding Company. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are influenced significantly by competition, general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in other sources, such as deposits at less than projected levels and may be used to fund the origination of mortgage loans designated to be sold in the secondary market.

At September 30, 2009, the Company had no outstanding borrowings from any correspondent Bank and there was $7.0 million in other available lines from correspondents.

Management regularly reviews the Bank's liquidity position and has implemented internal policies that establish guidelines for sources of asset-backed liquidity and limit the total amount of purchased funds used to support the balance sheet and funding from non-core sources.

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

Capital

The Federal Reserve Bank and other bank regulatory agencies require bank holding companies and financial institutions to maintain capital at adequate levels based on a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%. Under the risk-based standard, capital is classified into two tiers. Tier 1 capital consists of common stockholders' equity, excluding the unrealized gain (loss) on available for sale securities, minus certain intangible assets. Tier 2 capital consists of the general allowance for credit losses subject to certain limitations. An institution's qualifying capital base for purposes of its risk-based capital ratio consists of the sum of its Tier 1 and Tier 2 capital. Bank holding companies and banks are also required to maintain capital at a minimum level based on total average assets as defined by a leverage ratio.

Off-Balance Sheet Arrangements

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include unused lines of credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amounts recognized in the condensed consolidated balance sheet. The contract or notional amounts of those instruments reflect the extent of the Company's involvement in particular classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instruments for unused lines of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the counterparty.

Unused lines of credit typically result in loans with a market interest rate when funded.

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

A summary of the Company's financial instruments with off-balance sheet risk at September 30, 2009, follows (in thousands):

                                                         Contract
                                                          Amount

                 Unused lines of credit                  $  12,474
                 Performance standby letters of credit          -


                                                         $  12,474

Management believes that the Company has adequate resources to fund all of its commitments.

Selected Ratios

The following table shows selected ratios for the periods ended or at the dates
indicated:



                                        Nine Months                                    Nine Months
                                           Ended                Year Ended                Ended
                                       September 30,           December 31,           September 30,
                                           2009                    2008                   2008
Average equity as a percentage
of average assets                              12.36 %                14.36 %                 14.27 %

Total equity to total assets at
end of period                                  10.76 %                13.61 %                 14.75 %

Return on average assets (1)                   (4.00 )%               (3.44 )%                (2.53 )%

Return on average common
stockholders equity (1)                       (52.26 )%              (32.14 )%               (23.00 )%

Noninterest expense to average
assets (1)                                      5.31 %                 3.59 %                  3.89 %

(1) Annualized for the nine-months ended September 30, 2009 and 2008.

Results of Operations

The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread; and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the average balance of assets or liabilities, respectively, for the periods shown.

                                                           Three Months Ended September 30,
                                                     2009                                   2008
                                                    Interest     Average                   Interest     Average
                                        Average        and       Yield/        Average        And       Yield/
                                        Balance     Dividends     Cost         Balance     Dividends     Cost
                                                                   ($ in thousands)
Interest-earning assets:
Loans                                  $ 109,465         1,415      5.13 %    $ 110,609         1,648      5.91 %
Investment securities                     11,486            90      3.11         10,823           133      4.88
Other interest-earning assets (1)         12,217             8      0.26         11,613            67      2.29


Total interest-earning assets            133,168         1,513      4.51        133,045         1,848      5.51


Noninterest-earning assets                 9,685                                  6,515


Total assets                           $ 142,853                              $ 139,560


Interest-bearing liabilities:
Savings                                   27,742           127      1.82          7,854            40      2.02
Money market and NOW deposits             38,299           117      1.21         29,251           132      1.79
Time deposits                             55,890           466      3.31         76,440           779      4.04


Total interest-bearing deposits          121,931           710      2.31        113,545           951      3.32


Repurchase agreements                        147             1      2.70          1,050             7      2.64


Total interest-bearing liabilities       122,078           711      2.31        114,595           958      3.32


Noninterest-bearing liabilities            5,902                                  4,625
Stockholders' equity                      14,873                                 20,340


Total liabilities and stockholders'
equity                                 $ 142,853                              $ 139,560


Net interest income                                $       802                            $       890


Interest-rate spread (2)                                            2.20 %                                 2.19 %


Net interest-earning assets, net
margin (3)                             $  11,090                    2.39 %    $  18,450                    2.65 %


Ratio of interest-earning assets to
interest-bearing liabilities                1.09                                   1.16

(1) Includes interest-earning deposits, federal funds sold, Federal Reserve Bank stock and Federal Home Loan Bank stock.

(2) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(3) Net interest margin is annualized net interest income divided by average interest-earning assets.

The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread; and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the average balance of assets or liabilities, respectively, for the periods shown.

                                                          Nine Months Ended September 30,
                                                    2009                                   2008
                                                   Interest     Average                   Interest     Average
                                       Average        and       Yield/        Average        And       Yield/
                                       Balance     Dividends     Cost         Balance     Dividends     Cost
                                                                  ($ in thousands)
Interest-earning assets:
Loans                                 $ 115,247         4,578      5.31 %    $ 116,996         5,497      6.26 %
Investment securities                     9,525           253      3.55          8,832           334      5.04
Other interest-earning assets (1)         7,273            23      0.42         17,518           339      2.58


Total interest-earning assets           132,045         4,854      4.91        143,346         6,170      5.73


Noninterest-earning assets               11,537                                  8,202


Total assets                          $ 143,582                              $ 151,548


Interest-bearing liabilities:
Savings                                  16,488           221      1.79          9,278           139      2.00
Money market and NOW deposits            36,137           344      1.27         30,730           412      1.79
Time deposits                            66,702         1,766      3.54         83,407         2,791      4.46


Total interest-bearing deposits         119,327         2,331      2.61        123,415         3,342      3.61


Repurchase agreements                       426             5      1.57            986            23      3.11


Total interest-bearing liabilities      119,753         2,336      2.61        124,401         3,365      3.60


Noninterest-bearing liabilities           6,605                                  5,522
Stockholders' equity                     17,224                                 21,625


Total liabilities and stockholders'
equity                                $ 143,582                              $ 151,548


Net interest income                               $     2,518                            $     2,805


Interest-rate spread (2)                                           2.30 %                                 2.13 %


Net interest-earning assets, net
margin (3)                            $  12,292                    2.55 %    $  18,945                    2.61 %


Ratio of interest-earning assets to
interest-bearing liabilities               1.10                                   1.15

(1) Includes interest-earning deposits, federal funds sold, Federal Reserve Bank stock and Federal Home Loan Bank stock.

(2) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(3) Net interest margin is annualized net interest income divided by average interest-earning assets.

General. Net losses for the three-months ended September 30, 2009 were $1.4 million or a net loss of $0.43 per basic and diluted common share compared to a net loss of $564,000 or a net loss of $0.17 per basic and diluted common share for the three-months ended September 30, 2008. The increase in net loss is primarily due to the writedowns on real estate owned of $1,662,000 and losses on the sale of real estate owned of $164,000.

Interest Income and Expense. Interest income totaled $1.5 million for the three-months ended September 30, 2009 compared to $1.8 million for the three-months ended September 30, 2008. Interest income on loans decreased $233,000 due to lower yields in the portfolio and a lower balance of interest-earning assets.

Interest expense decreased to $711,000 for the three-months ended September 30, 2009 compared to $958,000, for the three-months ended September 30, 2008. Interest expense decreased primarily due to a decrease in the weighted average interest rate paid on deposits, which was somewhat offset by an increase in the balance of interest bearing liabilities.

Provision for Loan Losses. The provision for loan losses is determined based on management's estimates of the appropriate level of allowance for loan losses needed to absorb probable losses inherent in the existing loan portfolio, after giving consideration to charge-offs and recoveries for the period.

The provision for loan losses was $49,000 for the three-months ended September 30, 2009 compared to $150,000 for the nine-months ended September 30, 2008. The allowance for loan losses is $1.9 million at September 30, 2009.

Real estate loans continue to be the primary source of loan charge-offs. The Company charged-off $4.5 million during the three-month period ended September 30, 2009, compared to $531,000 during the comparable 2008 period.

While management believes that its allowance for loan losses is adequate as of September 30, 2009, future adjustments to the Company's allowance for loan losses may be necessary if economic conditions differ substantially from the assumptions used in making the initial determination.

Noninterest Income. Noninterest income increased to $107,000 during the three-month period ended September 30, 2009 compared to $75,000 for the same period in 2008 primarily due to an increase in the gain on sale of residential mortgage loans.

Noninterest Expenses. Noninterest expenses increased to $3.1 million during the three-month period ended September 30, 2009 compared to $1.6 million for the same period in 2008. Noninterest expense increased primarily due to an increase in writedowns on other real estate owned, losses on sale of other real estate and regulatory assessments.

Income Taxes. The Company recorded an income tax benefit of $858,000 for the three-month period ended September 30, 2009 (an effective rate of 37.6%) compared to an income tax benefit of $299,000 for the 2008 period (an effective rate of 37.7%).

General. Net losses for the nine-months ended September 30, 2009 were $4.3 million or a net loss of $1.35 per basic and diluted common share compared to a net loss of $3.1 million or a net loss of $0.96 per basic and diluted common share for the nine-months ended September 30, 2008.

Interest Income and Expense. Interest income decreased to $4.9 million for the nine-months ended September 30, 2009 from $6.2 million for the nine-months ended September 30, 2008. Interest income decreased primarily due to lower yields and a lower balance of interest-earning assets.

Interest expense decreased to $2.3 million for the nine-months ended September 30, 2009 compared to $3.4 million, for the nine-months ended September 30, 2008. Interest expense decreased due to a decrease in the average balance of deposits in 2009 and a decrease in the weighted average interest rate paid on deposits.

Provision for Loan Losses. The provision for loan losses is determined based upon management's estimates of the appropriate level of allowance for loan losses needed to absorb probable losses inherent in the existing loan portfolio, after giving consideration to charge-offs and recoveries during the period.

The provision for loan losses was $4.3 million for the nine-months ended September 30, 2009, compared to $3.2 million for the nine-months ended September 30, 2008. The Company wrote down $4.3 million in impaired loans reducing the balance of allowance for loan losses to $1.9 million at September 30, 2009. The primary reason for the increase in provision and the decrease in allowance resulted from a review of the collectability of nonperforming loans in the Bank's portfolio, and the subsequent decision to write-off as losses certain assets for which there existed a diminished probability of collection.

Real estate loans continue to be the primary source of loan charge-offs. The Company charged-off $8.9 million for the nine-month period ended September 30, 2009, compared to $1.3 million for the comparable 2008 period.

While management believes that its allowance for loan losses is adequate as of September 30, 2009, future adjustments to the Company's allowance for loan losses may be necessary if economic conditions differ substantially from the assumptions used in making the initial determination.

Noninterest Income. Noninterest income increased to $600,000 during the nine-month period ended September 30, 2009 compared to $165,000 for the same period in 2008 primarily due to an increase in the gain on sale of residential mortgage loans.

Noninterest Expenses. Noninterest expenses increased to $5.7 million during the nine-month period ended September 30, 2009 compared to $4.4 million for the same period in 2008. Noninterest expense increased primarily due to an increase in writedowns on other real estate owned, losses on sale of other real estate owned and the increased regulatory assessments which was somewhat offset by a decrease in salaries and employee benefits, professional fees and other real estate owned expense.

Income Taxes. The Company recorded an income tax benefit of $2.6 million for the nine-month period ended September 30, 2009 (an effective rate of 37.6%) compared to an income tax benefit of $1.7 million for the 2008 period (an effective rate of 37.6%).