In this paper we analyze the combined envelope-centroid dynamics of magnetically focused high-intensity charged beams surrounded by conducting walls. Similar to the case where conducting walls are absent, it is shown that the envelope and centroid dynamics decouple from each other. Mismatched envelopes still decay into equilibrium with simultaneous emittance growth, but the centroid keeps oscillating with no appreciable energy loss. Some estimates are performed to analytically obtain characteristics of halo formation seen in the full simulations.