SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
MADISON BANCSHARES GROUP, LTD,
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(Name of Registrant as Specified In Its Charter)
ALAN T. SCHIFFMAN
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(Name of Person(s) Filing Proxy Statement)
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was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange
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ALAN T. SCHIFFMAN
790 PENLLYN PIKE, SUITE 302
BLUE BELL, PA 19422
215/646-2000
May 14, 1996
Dear Fellow Shareholder:
In an attempt to get your vote, or at least to induce you not
to vote for the Alternative Nominees, Messrs. DeLisi and DePaul, on behalf of
the incumbent Board, have sent you two letters (one on May 3rd, the other on May
9th) that are replete with untrue or simply misleading statements. I feel that I
must reply to these letters, and place the facts before you. As a shareholder of
Madison Bancshares Group, Ltd., you must have the facts to make an informed
decision in this election of directors.
The statement by Mr. DeLisi that the Board did not comment on
my "insurgency" in its own Proxy Statement because it did not believe that I
would take "so drastic" an action is untrue. The Truth: I notified the Company
of my intent to solicit proxies for the Alternative Nominees on April 17th. On
April 18th, the Board filed a Complaint against me to prevent me from soliciting
proxies, in which Mr. DeLisi affirmed, under penalty of perjury, that the
Company believed I was planning to solicit proxies for an alternative slate of
nominees. Why did the Board not comment on my "insurgency" in its proxy
statement, and wait until now to make its comments to you in the letters of May
3rd and May 9th? I believe the answer is obvious; the Board hoped to influence
you to vote for the incumbents before I had a chance to reply effectively. I
hope they have been mistaken.
The statements or inferences by both Mr. DeLisi and Mr. DePaul
that the Board removed me as President and Chairman of the Company for any
reason other than my attempts to influence and move the Board to consider offers
to acquire the Company are untrue. The Truth: I was removed because I actively
and forcefully advocated consideration of the sale of the Company; in particular
consideration of the two excellent initial offers received in March, including
serious negotiations with the banks from which the offers were received. I have
no doubt that, had I been willing to "play ball" with the majority of directors
who prefer keeping Madison Bank as their private club, I still would be in
office as Chairman and President.
Mr. DePaul's description of the litigation which the Company
brought against me is incomplete and misleading. The Truth: The action which the
Board attempted to enjoin me from pursuing in its litigation against me was this
proxy contest. I ask whether you believe that informing shareholders of these
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offers, and giving them an opportunity to express their views on them, is
contrary to the shareholders' interests? Mr. DePaul's letter also fails to
inform you that, on the day after his letter was mailed to shareholders, the
Company voluntarily withdrew its lawsuit against me.
The Statements by Mr. DeLisi and Mr. DePaul to the effect that
the incumbent directors' interests are the same as yours is misleading. The
Truth: It is very pleasant, to say the least, to control a bank, and the
Company's incumbent directors very much enjoy the perks and prestige of their
office. For example, as I write this letter, Madison Bank has outstanding loans
to the incumbent directors in an amount equal to approximately 50% of the Bank's
total capital -- an amount in excess of $4,000,000. This does not include loans
to friends, business associates, etc.
The non-management shareholders of the Company, unfortunately,
have not had as pleasurable an experience as its directors. Until the recent
rise in the Company's stock price, the price of the Company's stock had
languished for years at levels at or substantially below the initial public
offering price for the shares. Acceptance of either offer described in my Proxy
Statement would result in shareholders receiving a substantial premium over the
Company's present stock price, and a very substantial premium over the levels
that prevailed before the recent price movements.
The statement by Mr. DePaul that Janney Montgomery Scott was
in the best position to advise the Company, and Janney did not have a conflict
of interest in evaluating the offers, is untrue. The Truth: The Board's
Executive Committee recommended rejection of the offers before Janney was
engaged. The only exposure that the Board as a whole had to the Janney report
was a description of it given by members of the Negotiating Committee over the
telephone, at a time when none of the directors other than Negotiating Committee
members had heard from Janney's representatives, or even seen Janney's report.
The Negotiating Committee's description itself was peppered with errors and
disagreements among Negotiating Committee members as to what the Janney report
said and what it meant.
It also is untrue that Janney was without a conflicting
interest. Janney was engaged to underwrite a public equity offering for the
Company after the offers to acquire the Company had been received and, of
course, before the Board had received the benefit of Janney's "evaluation" of
the offers. At the time of Janney's engagement as underwriter, the Company paid
Janney an advance of $25,000 on account of the very substantial fees,
commissions and unaccountable expense allowance that it would receive as
underwriter of the financing. The fact that Janney was engaged to underwrite a
financing for the Company after the offers were received, and before it rendered
its evaluation, clearly
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demonstrates that rejection of the offers was a virtual certainty in the minds
of a majority of the incumbent directors.
Finally, it is not true that Janney was in the best position
to evaluate the offers. In fact, the investment banking firm whose
representatives the Executive Committee refused to hear on March 14th had been
an investment banker and financial adviser to the Company for four years prior
to the receipt of the offers. I am aware that this firm's recommendation would
have been to pursue the offers.
Mr. DeLisi's and Mr. DePaul's suggestion that the Board's plan
to grow the Bank from within justifies the summary rejection of the offers is
misleading. The Truth: The Board's current plan is substantially the same plan
it has had since the Bank was founded. While the Bank has experienced some
growth in size, its growth and profitability, by any measure, and the return it
has provided to shareholders of the Company, have been anemic by comparison with
the larger, well financed banks who made the offers which the Board rejected. Do
you honestly believe that incumbent management of the Company will reverse this
set of facts, and lead the Bank to substantially outperform these other banks? I
do not, and that is why I recommended serious consideration of the offers and
negotiations with the banks making the offers.
A vote for the incumbent nominees will be a vote for more of
the same, with, I fear, substantially the same results. I URGE YOU TO VOTE FOR
THE ALTERNATIVE NOMINEES. SIGN AND RETURN THE GREEN PROXY CARD OR, IF YOUR
SHARES ARE HELD IN "STREET NAME", CONTACT (CALL) YOUR BROKER TO VOTE VIA
TELEPHONE OR CALL ME FOR ASSISTANCE IN CASTING YOUR VOTE FOR THE ALTERNATIVE
NOMINEES.
Very truly yours,
ALAN T. SCHIFFMAN
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MADISON BANCSHARES GROUP, LTD.
STATISTICAL HIGHLIGHTS
Notwithstanding the incumbent Board's representations to the contrary, this
Proxy solicitation is about ENHANCING SHAREHOLDER value, discarding Directors
who are more interested in the prestige and "perks" of this office than in
servicing the interest of the shareholders who elect them, and sending the
remaining Board and Management a message that "business as usual" is not
acceptable to you, the Company's shareholders.
Operating a bank is not without risk. Since inception through 1995 the
performance of your Company was below average.
The following performance facts are presented for your independent analysis:
MADISON BANK
STATISTICAL COMPARISONS
<TABLE>
<CAPTION>
1995
Peer
1995(1) Group(2)
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<S> <C> <C>
Return on:
Average Assets .67% .71%
Average Equity 7.77% 8.76%
Non interest expense 3.87%f 3.16%
Net income 5.46%
Two year average growth:
Total Assets 18.5 % 24.3 %
Net Loans 17.8 % 21.1 %
Total Deposits 19.3 % 26.1 %
Allowance for loan losses 1.03% 1.42%
</TABLE>
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1 Source Company's 1995 Annual Report.
2 Pennsylvania DeNovo Bank Report - Hopper Soliday & Co., Inc.
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