<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: September 30, 1997
Commission file number 0-1739
MADISON BANCSHARES GROUP, LTD.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issue as Specified In Its Charter)
Pennsylvania 23-2512079
- -------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1767 Sentry Parkway West, Blue Bell, PA 19422
- ------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(215) 641-1111
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter periods that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
1,044,033 shares of Issuer's Common Stock, par value $1 per share, issued
and outstanding as of November 13,1997.
Transitional Small business Disclosure format:
(Check one): Yes No X
--- ---
1
<PAGE>
PART I
ITEM 1--FINANCIAL STATEMENTS
SEE ANNEX A
2
<PAGE>
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This report contains "forward-looking" statements. Madison Bancshares
Group, Ltd. is including this statement for the express purpose of
availing itself of the protections of the safe harbor provided by the
Private Securities Litigation Reform Act of 1995 with respect to all
such forward-looking statements. Examples of forward-looking statements
include, but are not limited to (a) projections of changes in
capital-to-assets ratio, (b) statements of plans and objectives of the
Company or its management or Board of Directors, (c) statements of
future economic performance and (d) statements of assumptions underlying
other statements and statements about the Company or its business.
Presented herein are the results of operations of Madison Bancshares
Group, Ltd. (the "Company") and its wholly owned subsidiary, The Madison
Bank (the "Bank"), for the quarters ended September 30, 1997 and 1996,
respectively.
CAPITAL RESOURCES
The total number of shares of common stock outstanding on September 30,
1997 was 1,044,033 as compared to 971,360 at December 31, 1996. On
February 20, 1997, 72,673 shares of common stock were issued pursuant
to a 7-1/2% stock dividend declared on January 21, 1997. The book value
per share of the Company's common stock at December 31, 1996 was $7.64
and $8.18 per share at September 30, 1997, as adjusted for the stock
dividend.
During the nine month period, January 1, 1997 to September 30, 1997, the
Bank's total assets increased by approximately $20,950,930. or
approximately 27% to $126,921,805.
The chart below depicts various capital ratios applicable to state
chartered Federal Reserve member banks and compares the Bank's actual
ratios at September 30, 1997 and December 31, 1996, respectively, which
exceeded the levels required for a bank to be classified as
well-capitalized.
Regulatory Actual Actual
Ratio Minimum 12/31/96 9/30/97
----- ---------- -------- --------
Qualifying Total Capital to
Risk Weighted Assets.................. 8.0% 10.09% 10.33%
Tier 1 Capital, net of intangibles
to Risk Weighted Assets............... 4.0% 9.08% 9.26%
Tier 1 Leverage Ratio of Capital to
Total Adjusted Average Assets......... 4.0% 8.37% 7.59%
3
<PAGE>
The Company's capital-to-assets ratio decreased from 7.52% as of
December 31, 1996 to 6.72% as of September 30, 1997. The decrease in the
capital-to-assets ratio for the nine months and quarter ended September 30,
1997, was attributable to the growth of assets at a faster rate than
retained earnings. Management anticipates that its capital-to-assets ratio
will decline in future periods as the Company's assets continue to grow. The
Company's average return on equity as of December 31, 1996, was 7.04%; and
its return on average assets was .61%. As of September 30, 1997, the
Company's average return on equity was 8.93% and its return on average
assets was .67%.
LIQUIDITY
The Bank's Asset/Liability Management Committee, comprised of the members of
the Bank's Executive Committee and its Treasurer, are responsible for
managing the liquidity position and interest rate sensitivity of the Bank.
The Committee's function is to balance the Bank's interest sensitive assets
and liabilities, while providing adequate liquidity for projected needs. The
primary objective of the Asset/Liability Committee is to optimize net
interest margin in an ever changing rate environment.
Due to the nature of the Company's business, some degree of interest rate
risk is inherent and appropriate. Management attempts to manage the level of
earnings exposure arising from interest rate movements.
Interest rate sensitivity is measured by the difference between interest
earning assets and interest bearing liabilities which mature or reprice
within a specific time interval ("Gap"). A positive Gap indicates that
interest earning assets exceed interest bearing liabilities within a given
interval. A positive Gap position results in increased net interest income
when rates increase and a corresponding decrease when rates decline.
In the opinion of the Company's management, the effect of any future
inflation, reflected in a higher costs of funds environment, would be
minimal since the Bank has the ability to quickly increase yields on its
interest earning assets (primarily short term investments and commercial
loans) through the matching of funds.
At September 30, 1997, the risk management review indicated that if interest
rates change in the future, the general effect on profits of the Bank's Gap
position, within a one year period, would be plus or minus (+ or -) $28,780
or .02 basis points. Management believes that any impact will not be
significant.
Management attempts to structure the Balance Sheet to provide for the
repricing of assets and liabilities in approximately equal amounts.
4
<PAGE>
RESULTS OF OPERATIONS
As of September 30, 1997, the Company held deposits aggregating
$108,439,793, representing an increase of approximately 24% from deposits of
$87,199,991 held at December 31, 1996. Of the deposits held at September 30,
1997, $17,993,422, or approximately 17%, were non-interest bearing deposits.
At September 30, 1997 total deposit accounts numbered 7,282 and outstanding
loans receivable in connection with loans made to 1,380 loan accounts
totaled approximately $101,325,890 (excluding loan loss reserve and deferred
loan fees). The following tables and graphs set forth a comparative
breakdown of the Company's deposits and loans outstanding as of
September 30, 1997 and December 31, 1996, respectively.
Deposit Liabilities
<TABLE>
<CAPTION>
September 30,1997 December 31, 1996
--------------------------- --------------------------
% of % of
Type of Account Balance Portfolio Balance Portfolio
--------------- -------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Non-Interest bearing (1)..................................... 17,993,422 17% 14,660,464 17%
Interest bearing (2)......................................... 6,722,354 6 4,564,916 5
Money Market (3)............................................. 15,265,122 14 14,409,382 17
Savings (4).................................................. 4,541,403 4 4,571,352 5
CD's Under 100M (5).......................................... 37,542,718 35 25,649,521 33
CD's Over 100M (6)........................................... 26,374,774 24 23,344,356 23
-------------- --- ------------- ---
Totals....................................................... $108,439,793 100% $87,199,991 100%
-------------- --- ------------- ---
-------------- --- ------------- ---
</TABLE>
09/30/97 12/31/96
Graph Graph
[Pie Chart] [Pie Chart]
5
<PAGE>
Loans Outstanding
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
--------------------------- --------------------------
% of % of
Type of Account Balance Portfolio Balance Portfolio
--------------- -------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Real Estate Loans, Mortgages(1).................................... $ 48,498,596 48% $44,800,169 48%
Commercial Loans (2)............................................... 43,183,778 43 38,685,537 41
Consumer Loans (3)................................................. 9,003,210 8 8,348,462 9
Residential Loans Held for Sale (4)................................ 640,306 1 2,111,618 2
-------------- --- ------------- ---
Totals............................................................. $101,325,890 100% $93,945,786 100%
-------------- --- ------------- ---
-------------- --- ------------- ---
</TABLE>
09/30/97 12/31/96
Graph Graph
[Pie Chart] [Pie Chart]
Net interest income, the difference between the interest earned on loans and
other investments and the interest paid on deposits and other borrowings, is
the primary source of the Bank's and the Company's earnings.
6
<PAGE>
The graph below sets forth the Bank's interest income and interest expense
growth for the period from September 30, 1996, through September 30, 1997:
[Graph]
For the nine months ended September 30, 1997, the Company had net income of
$553,168, or $.53 per share, as compared to net income of $415,624 or $.40
per share during the nine month period ended September 30, 1996. For the
quarter ended September 30, 1997, the Company had a profit of $226,182 or
$.22 per share as compared to $154,710, or $.15 per share for the quarter
ended September 30, 1996. The increase in net income from the quarter and
nine months ended September 30, 1997 was attributable to asset growth of the
Bank, specifically loan growth.
The Company's net interest income, after provision for loan losses was
$3,604,494 for the nine months ended September 30, 1997 as compared to
$3,108,763 as of September 30, 1996. Interest income was $7,041,709 for the
nine months ended September 30, 1997, as compared to $5,910,707 the nine
months ended September 30, 1996. For the quarters ended September 30, 1997
and 1996, the Bank's interest income was $2,440,729 and $2,014,278. Interest
expense on deposits and borrowed funds increased from $2,504,444 for the
nine months ended September 30, 1996, to $3,167,215 for the nine months
ended September 30, 1997, a 26% increase.
7
<PAGE>
The increase in interest income was due primarily to growth in loans. The
increase in interest expense was due to growth in deposits and borrowed
funds, as the graph below depicts.
[Graph]
As of December 31, 1996, the Bank had $875,438 in its allowance for loan
losses, representing .96% of outstanding loans receivable. For the first
nine months ended September 30, 1997, the Bank added $270,000 to the
reserve. Loans charged off against the reserve as of September 30, 1997
amounted to $163,811. Recoveries to previously charged off loans were
minimal for the nine months ended September 30, 1997. The allowance for loan
loss reserve was $981,762 at September 30, 1997, representing .97% of
outstanding loans receivable. Management believes that the allowance for
loan losses is reasonable and adequate to cover any known losses or any
losses reasonably expected in the portfolio.
Other real estate owned at September 30, 1997 totaled $457,818. This
represents one property in Bryn Mawr, Pennsylvania in connection with which
the Bank has entered into a lease purchase agreement. The Bank receives a
monthly rental fee. During the third quarter of 1997, the Bank received a
$50,000 payment from the borrower. The property is in excellent condition
and continues to be well maintained.
For the nine months ended September 30, 1997, non-interest expenses were
$3,295,141 as compared to $2,805,950 during the same period in 1996. Of this
amount, $1,679,600, or approximately 51%, was attributable to salary and
related employee benefits as compared to $1,281,148, or 46% during the first
nine months of fiscal 1996.
8
<PAGE>
Salary expenses were $566,240 for the third quarter 1997 as compared to
$448,313 in the third quarter 1996. The increase in salary and related
expenses was due to increased staffing for branch expansion to accommodate
the Bank's growth.
Combined occupancy and equipment expenses for the nine months ended
September 30, 1997 were $691,688 as compared to $547,497 during the same
period in 1996. For the quarter ended September 30, 1997, occupancy and
equipment expenses were $233,411 as compared to $194,665 for the quarter
ended September 30, 1996. The increase was due to annual increases in rent
expenses, the lease of additional space at the Bank's main office and the
addition of two (2) new branches.
For the nine months ended September 30, 1997, business development expenses
totaled $120,878 as compared to $88,233 for the nine months ended
September 30, 1996, a 37% increase. For the quarter ended September 30,
1997, business development expenses totaled $42,534 as compared to $31,276
for the quarter ended September 30, 1996. The increased expense was directly
attributed to a higher level of community involvement and sales promotions
in connection with branch expansion and retail sales development.
Stationary and supplies expenses increased by 46% for the nine months ended
September 30, 1997, to $103,947 at September 30, 1997 from $70,965 at
September 30, 1996. For the quarter ended September 30, 1997, supplies
expense was $18,323 as compared to $31,087 for the quarter ended
September 30, 1996, a 41% decrease. This decrease was attributable to the
Bank purchasing additional brochures and internal documents for the new
branch in 1996 and the purchases for the new branch in 1997 was done in
the second quarter of 1997. The overall increase from September 30, 1996
to September 30, 1997 was due to asset growth and volume as well as
personnel growth.
For the nine months ended September 30, 1997, other operating expenses
totaled $385,317, or approximately 12% of total other expenses, as compared
to $409,006, or 15%, during the same period in 1996. For the quarter ended
September 30, 1997, these expenses totaled $138,294 as compared to $160,656
for the quarter ended September 30, 1996. The decrease from third quarter
1996 as compared to third quarter 1997 was directly related to the timing of
purchased materials and brochures in 1996 to market the Bank's products.
Other operating expenses were comprised primarily of Director fees, business
promotional materials, telephone, fidelity insurance premium, and shares and
loan taxes.
Income tax expense for the nine months and quarter ended September 30, 1997
was $300,271 and $122,271 as compared to $228,140 and $80,665 for the nine
months and quarter ended September 30, 1996. The tax provision increased due
to the increase in net income.
Interest income on investment securities relates primarily to interest on
U.S. Government obligations and Municipal Bonds. Interest income on U.S.
Government and Municipals was $229,757 as of September 30, 1996 as
9
<PAGE>
compared to $182,278 as of September 30, 1997. For the quarter ended
September 30, 1996 interest income was $70,660 as compared to $58,276 for
the quarter ended September 30, 1996. The decrease is a direct result of
the change in liquidity position of the Company from investments to loans.
Interest income on other securities is comprised primarily of Federal Home
Loan Bank stock dividends and Federal Reserve Bank stock dividends. For the
nine months and quarter ended September 30, 1997, the dividend amounts were
$43,116 and $12,263 as compared to $47,408 and $30,522 for the nine months
and quarter ended September 30, 1996. This decrease was due to the amount of
dividend payments from the Federal Home Loan Bank.
Interest income on temporary investments represents Federal Funds sold. For
the nine months and quarter ended September 30, 1997, interest income on
federal funds sold was $85,835 and $32,979 as compared to $64,949 and $4,066
for the nine months and quarter ended September 30, 1996. The increase in
interest on Federal Funds sold was attributable to a successful deposit
campaign the Bank had whereas the funds raised were put in short-term
investments temporarily to await loan funding and to pay off maturing
borrowed funds.
Total interest and fees on loans as of September 30, 1997 was $6,730,480 as
compared to $5,568,593 for the nine months ended September 30, 1996, and
$2,337,271 for the quarter ended September 30, 1997 as compared to
$1,909,030 for the quarter ended September 30, 1996. The Bank experienced a
19% loan growth while the yield on the portfolio decreased from 9.42% to
9.32% during this same period. The decrease in rates from September 30, 1996
to September 30, 1997 had little overall effect on earnings due to the
Bank's ability to respond to market fluctuations by repricing liabilities on
a timely basis with market fluctuations and the increased loan growth.
Other income of $544,086 for the period from January 1, 1997 to September
30, 1997, was primarily comprised of service charges on deposit accounts and
gains on sales of mortgage loans in the secondary market. During the same
period in 1996, other income totaled $340,951. The increase was due to
refinancings of mortgage loans and growth in service charges on deposit
accounts. For the quarter ended September 30, 1997, other income increased
to $198,588 from $129,401 for the quarter ended September 30, 1996,
primarily due to growth in service charges on deposit accounts.
RECENT DEVELOPMENTS
On October 21, 1997, the Board of Directors declared a stock dividend in the
amount of twenty (20%) percent, payable in shares of the Registrant's common
stock. Such dividend is payable on or about November 21, 1997 to holders of
the Registrant's shares of common stock on November 7, 1997. No fractional
shares will be issued in connection with such dividend.
10
<PAGE>
PART II--OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Not Applicable.
ITEM 2 CHANGES IN SECURITIES
Not Applicable.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5 OTHER INFORMATION
On or about August 25, 1997 The Madison Bank opened its fifth branch
located at 100 W. Main Street, Lansdale, Pennsylvania.
11
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Filed
<TABLE>
<CAPTION>
Page Number in
Exhibit Number Sequential Numbering System
- -------------- ---------------------------
<S> <C> <C>
2 None --
4 Amended and Restated Articles of Incorporation, as amended, and *
Amended and Restated Bylaws of the Issuer
10(g) Madison Bancshares Group, Ltd. 1997 Stock Option Plan --
11 Not Applicable --
15 Not Applicable --
18 Not Applicable --
19 None --
20 None --
23 None --
24 None --
25 None --
27 Financial Data Schedule --
28 None --
</TABLE>
- ------------------------
* Incorporated by reference from the Issuer's Registration Statement on
Form S-1 No. 33-27146
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 1997.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Issuer has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Madison Bancshares Group, Ltd.
--------------------------------------
Vito A. DeLisi
President
--------------------------------------
E. Cheryl Hinkle
Vice President
Date Executed: November 13, 1997
13
<PAGE>
ANNEX A
14
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
Cash and Cash Equivalents:
Cash and amounts due from banks.................... $ 6,015,728 $ 4,381,957
Federal funds sold................................. 13,000,000 925,000
------------------ -----------------
Total cash and cash equivalents.................. 19,015,728 5,306,957
Investment Securities:
Held to maturity (fair value--1997 $2,115,789;
1996 $2,559,503)................................. 2,106,118 2,108,206
Available for sale (amortized cost 1997 $3,271,626;
1996 $4,750,585)................................. 3,273,844 3,585,406
Loans (Net of allowance for loan losses--1997,
$981,762; 1996, $875,438).......................... 99,460,853 90,783,582
Mortgage loans held for sale........................ 640,306 2,111,618
Real Estate Owned................................... 457,818 511,618
Furniture, Equipment and Leasehold Improvements..... 911,778 584,533
Accrued interest receivable......................... 731,984 641,570
Other Assets........................................ 323,376 337,385
------------------ -----------------
TOTAL............................................... $ 126,921,805 $ 105,970,875
------------------ -----------------
------------------ -----------------
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Deposits:
Noninterest-bearing demand deposits................ $ 17,993,422 $ 14,660,464
Interest-bearing demand deposits................... 6,722,354 4,564,916
Savings deposits................................... 4,541,403 4,571,352
Money market deposits.............................. 15,265,122 14,409,382
Time deposits...................................... 63,917,492 48,993,877
------------------ ----------------
Total Deposits................................. 108,439,793 87,199,991
Borrowed Funds....................................... 9,000,000 10,000,000
Accrued Interest Payable............................. 890,271 704,707
Accrued Expenses and Other Liabilities............... 55,970 91,957
------------------ -----------------
Total Liabilities.............................. 118,386,034 97,996,655
------------------ -----------------
Commitments
Shareholders Equity:
Preferred stock, $5 par value--authorized 5,000,000 shares;
issued and outstanding, 0 shares.
Common stock, $1 par value--authorized 20,000,000
shares; issued and outstanding, 1997, 1,044,033 shares;
1996, 971,360 shares................................ 1,044,033 971,360
Capital surplus....................................... 7,821,575 7,185,686
Accumulated deficit................................... (331,301) (175,907)
Net unrealized losses on available
for sale securities................................. 1,464 (6,919)
----------------- ----------------
Total shareholders' equity........................ 8,535,771 7,974,220
----------------- ----------------
TOTAL................................................. $ 126,921,805 $ 105,970,875
----------------- ----------------
----------------- ----------------
</TABLE>
F-1
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans......................... $ 2,337,211 $ 1,909,030 $ 6,730,480 $ 5,568,593
Interest and dividends on investment securities:
US Government obligations........................ 46,086 58,443 145,688 193,084
Municipal bonds.................................. 12,190 12,217 36,590 36,673
Other securities................................. 12,263 30,522 43,116 47,408
Interest on temporary investments................ 32,979 4,066 85,835 64,949
------------ ------------ ------------ ------------
2,440,729 2,014,278 7,041,709 5,910,707
------------ ------------ ------------ ------------
Interest expense:
Interest on:
Demand deposits................................... 33,824 18,571 88,169 56,991
Savings and money market deposits................. 148,225 147,913 443,322 466,437
Time deposits..................................... 816,247 564,982 2,282,500 1,818,087
Federal Funds Purchased........................... 96,377 131,882 353,224 162,929
------------ ------------ ------------ -----------
1,094,673 863,348 3,167,215 2,504,444
------------ ------------ ------------ ------------
Net interest income before provision for loan losses.. 1,346,056 1,150,930 3,874,494 3,406,263
Provision for loan losses............................. 90,000 80,000 270,000 297,500
------------ ------------ ------------ ------------
Net interest income after provision for loan losses... 1,256,056 1,070,930 3,604,494 3,108,763
------------ ------------ ------------ ------------
Other noninterest income:
Gain on sale of mortgage loans....................... 25,843 10,061 75,186 39,211
Service charges on deposit accounts.................. 154,774 104,061 412,322 257,184
Other................................................ 17,971 15,279 56,578 44,556
------------ ------------ ------------ ------------
Total noninterest income........................... 198,588 129,401 544,086 340,951
------------ ------------ ------------ ------------
Other noninterest expenses:
Salary and employee benefits......................... 566,240 448,313 1,679,600 1,281,148
Occupancy............................................ 185,461 143,699 528,885 400,262
Equipment............................................ 47,950 50,966 162,803 147,235
Computer processing.................................. 60,225 54,161 182,287 155,502
Deposit insurance.................................... 5,443 0 11,811 1,500
Legal................................................ 17,591 15,374 32,515 65,200
Professional fees.................................... 10,260 14,000 44,260 47,880
Business development................................. 42,534 31,276 120,878 88,233
Office and stationary supplies....................... 18,323 31,087 103,947 70,965
Advertising.......................................... 13,870 15,424 42,838 49,019
Proxy related expenses............................... 0 0 0 90,000
Other operating...................................... 138,294 160,656 385,317 409,006
------------ ------------ ------------ ------------
Total other noninterest expenses.................... 1,106,191 964,956 3,295,141 2,805,950
------------ ------------ ------------ ------------
Income before income taxes............................ 348,453 235,375 853,439 643,764
Provision taxes....................................... 122,271 80,665 300,271 228,140
------------ ------------ ------------ ------------
Net income............................................ $ 226,182 $ 154,710 $ 553,168 $ 415,624
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per common share........................... $ 0.22 $ 0.15 $ 0.53 $ 0.40
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average number of shares..................... 1,044,033 1,040,826 1,044,033 1,040,826
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- ----------------------------
1997 1996 1997 1996
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 226,182 154,710 $ 553,168 415,624
Adjustments for non-cash items included in net income:
Depreciation and amortization......................... 34,608 37,582 106,007 104,480
Provision for loan losses............................. 90,000 80,000 270,000 297,500
Net amortization of bond premium/discount............. (3,684) (2,619) (6,367) 6,613
Amortization of deferred fees & costs, net............ (12,021) (7,180) (67,822) (49,784)
Gain on sale of mortgage notes........................ (25,843) (10,061) (75,186) (39,211)
Changes in assets and liabilities which provided
(used) cash:
Interest receivable.................................. (59,430) 24,641 (90,414) 2,735
Mortgage loans held for resale....................... 452,064 639,438 1,546,498 72,745
Other assets......................................... 107,496 70,238 14,009 (208,542)
Accrued expenses and other liabilities............... 21,284 (229,078) (35,987) (221,119)
Accrued interest payable............................. (70,436) 359,703 185,564 151,521
------------- ----------- ------------- -------------
Net cash provided by (used in) operating activities..... 760,220 1,117,374 2,399,470 532,562
------------- ----------- ------------- -------------
Cash flow from investing activities:
Proceeds from sale of investment securities available
for sale.............................................. 0 0 129,300 0
Proceeds from maturity of investments:
Held to maturity...................................... 0 660,300 0 2,260,300
Available for sale.................................... 0 0 500,000 1,000,000
Purchase of investments available for sale............ (300,900) 0 (300,900) (2,804,431)
Net change in loans to customers...................... (3,481,545) (6,489,935) (8,879,449) (12,677,014)
Cost capitalized (recovered) for real estate owned.... 51,300 0 53,800 (3,190)
Purchase of furniture, equipment and leasehold
improvements........................................ (398,830) (113,420) (433,252) (210,415)
------------- ----------- ------------- -------------
Net cash used in investing activities................... (4,129,975) (5,943,055) (8,930,501) (12,434,750)
------------- ----------- ------------- -------------
Cash flow from financing activities:
Increase in demand, savings and time deposits......... 12,954,327 3,961,588 21,239,802 (1,729,063)
Increase (decrease) in borrowed funds................. (400,000) 210,000 (1,000,000) 10,210,000
Proceeds from issuance of common stock................ 0 0 0 46,078
------------- ----------- ------------- -------------
Net cash provided financing activities.................. 12,554,327 4,171,588 20,239,802 8,527,015
------------- ----------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents........................................... 9,184,572 (654,093) 13,708,771 (3,375,173)
Cash and cash equivalents, beginning of period.......... 9,831,156 7,751,922 5,306,957 10,473,002
------------- ----------- ------------- -------------
Cash and cash equivalents, end of period................$ 19,015,728 $ 7,097,829 $ 19,015,728 $ 7,097,829
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
Supplemental disclosures of cash flow information:
Interest paid.........................................$ 1,165,109 $ 719,786 $ 2,981,651 $ 2,352,923
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
Taxes paid............................................$ 0 $ 100,000 $ 275,000 $ 561,527
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
Supplemental disclosures of noncash investing
activities Unrealized loss (gain) on available for
sale securities.......................................$ 5,302 $ (3,773) $ 1,464 $ 14,968
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
1. Basis of presentation:
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for quarterly reports on
Form 10-Q and, therefore, do not include information or footnotes
necessary for a complete presentation of financial condition,
results of operations, shareholders' equity and cash flows in
conformity with generally accepted accounting principles. However,
the financial statements reflect all adjustments which in the opinion
of management are necessary for fair statement of financial results and
that all adjustments are of a normal recurring nature. The results of
operations for the nine month periods ended September 30, 1997 and 1996
are not necessarily indicative of the results which may be expected for the
entire fiscal year.
2. Principles of consolidation:
The consolidated financial statements include the accounts of Madison
Bancshares Group, Ltd. and its wholly owned subsidiary, Madison Bank (the
Bank). All material intercompany balances and transactions have been
eliminated.
3. Stock dividends:
On January 21, 1997, the Board of Directors declared a 7-1/2% stock
dividend on Common Stock outstanding. The dividend was paid on February 20,
1997 to shareholders of record on February 5, 1997. This resulted in an
additional issuance of 72,673 shares of common stock.
On January 11, 1996, the Board of Directors declared a 7-1/2% stock
dividend on Common Stock outstanding. The dividend was paid on February 15,
1996 to shareholders of record on January 31, 1996. This resulted in an
additional issuance of 67,185 shares of common stock.
The stock dividends were recorded at fair market value. Average shares
and all per share amounts included in the financial statements for 1997
and 1996 are based on the increased number of shares giving retroactive
effect to this stock dividend.
4. Provision for income taxes:
The provision for income taxes is computed in accordance with Statement
of Financial Accounting Standards (SFAS) No. 109.
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ ---------------------
9/30/97 9/30/96 9/30/97 9/30/96
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Provision for current income taxes..... $187,279 $80,665 $365,279 $249,140
Provision for deferred income taxes.... (65,008) 0 (65,008) (21,000)
-------- ------- -------- --------
Total................................ $122,271 $80,665 $300,271 $228,140
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
5. Net income per share:
Net income per share of common stock is based upon the weighted average
number of shares outstanding during the period of 1,044,033 in September,
1997 and 1,040,826 in September, 1996, after giving effect to the stock
issuance of 6,601 shares in exercised options in 1996 and prior stock
dividends.
18
<PAGE>
MADISON BANCSHARES GROUP, LTD.
1997 STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this 1997 Stock Option Plan
("Plan") of Madison Bancshares Group, Ltd. (the "Company"), is to promote the
interests of the Company by providing incentives to (i) designated officers and
other key employees of the Company and (ii) non-employee members of the
Company's Board of Director, to attract and retain such persons and to encourage
them to acquire or increase their proprietary interest in the Company and to
maximize the Company's performance during the term of their employment or period
of service with the Company.
2. Definitions. As used in the Plan, unless the context requires
otherwise, the following terms shall have the following meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) The "Committee" shall mean a committee composed of two or more
members of the Board each of whom shall be an "Outside Director" (as such
term is defined under the Internal Revenue Code of 1986, as amended (the
"Code").
(c) "Common Stock" shall mean the common stock, par value $1.00 per
share of the Company, or if, pursuant to the adjustment provisions set
forth in Section 12 hereof, another security is substituted for the Common
Stock, such other security.
(d) "Fair Market Value" shall mean the fair market value of the
Common Stock on the Grant Date (as hereinafter defined) or other relevant
date. If on such date the Common Stock is listed on a stock exchange or is
quoted on the Nasdaq Stock Market National Market (the "NM"), the Fair
Market Value shall be the closing sale price (or if such price is
unavailable, the average of the high bid price and the low asked price) on
such date. If on such date the Common Stock is traded in the over-the
counter market (but not on the NM), the Fair Market Value shall be the
average of the high bid and the low asked price on such date (or if there
are no reported bid and asked prices on the Grant Date, then the average
between the high bid price and the low asked price on the next preceding
day for which such quotations exist). If the Common Stock is neither
listed or admitted to trading on any stock exchange, quoted on the NM or
traded in the over-the -counter market, the Fair Market Value shall be
determined in good faith by the Committee in accordance with generally
accepted valuation principles and such other factors as the Committee
reasonably deems relevant.
(e) "Grant Date" shall mean the date on which an Option is granted.
(f) "Option" shall mean the right, granted pursuant to the Plan, to
purchase one or more shares of Common Stock. "Incentive Stock Option" and
"Nonqualified Stock Option" shall have the meanings ascribed to such terms
in Section 422 of the Code.
(g) "Optionee" shall mean a person to whom an Option has been granted
under the Plan.
(h) "Option Shares" shall mean the Common Stock issuable upon
exercise of an Option.
3. Stock Subject to the Plan. There will be reserved for issuance upon
the exercise of Options granted from time to time under the Plan an aggregate
of 500,000 shares of Common Stock (subject to adjustment as set forth in
Section 11 hereof.) The Board shall determine from time to time whether all
or part of such 500,000 shares shall be authorized but unissued shares of
Common Stock or issued shares of Common Stock which shall have been
reacquired by the Company and which are held in its treasury. If any Option
granted under the Plan expires or terminates for any
<PAGE>
reason without having been exercised in full, the shares subject to such Option
will again become available for the grant of Options under the Plan.
4. Administration of the Plan. The Plan shall be administered by the
Committee.
(a) Subject to the provisions of the Plan, the Committee shall have
full discretion and sole authority:
(i) To designate the officers, employees and non-employee
directors of the Company to whom Options will be granted, to determine
whether an Optionee will be granted Incentive Stock Options or
Nonqualified Stock Options, to designate the number of Option Shares
to be issuable upon exercise of an Option, and to determine the time
or times at which Options shall be granted;
(ii) Subject to Sections 6(a) and 7(a) hereof to determine the
exercise price of Options granted hereunder;
(iii) To interpret the Plan;
(iv) To promulgate, amend and rescind rules, regulations,
agreements and instruments relating to the Plan, provided, however,
that no such rules or regulations shall be inconsistent with any of
the terms of the Plan;
(v) To subject any Option to such additional terms and
conditions (not inconsistent with the Plan) as may be specified when
granting the Option, including, without limitation, vesting and
additional restrictions or conditions on the exercise of an Option;
(vi) To determine circumstances upon which Options will become
immediately exercisable and to accelerate the exercisability of any
Option; and
(vii) To make all other determinations in connection with the
administration of the Plan.
(b) The Committee's interpretations of the Plan and all
determinations made by the Committee pursuant to the powers vested in it
hereunder shall be conclusive and binding on all persons having interests
in the Plan or in any Option granted under the Plan.
(c) Each member of the Committee shall be indemnified and held
harmless by the Company against any cost or expense (including counsel
fees) reasonably incurred by him or her, or liability (including any sum
paid in settlement of a claim with the approval of the Company) arising out
of any act or omission to act in connection with the Plan, unless arising
out of such member's own fraud or bad faith, to the extent permitted by
applicable law. Such indemnification shall be in addition to any rights of
indemnification the members may have as directors or otherwise under the
Certificate of Incorporation or By-Laws of the Company, any agreement of
shareholders or disinterested directors or otherwise.
5. Eligibility. Optionees shall be selected by the Committee from among
the officers, key full-time employees and non-employee directors of the Company.
6. Incentive Stock Options. The following provisions shall apply solely
with respect to Options which are specifically designated by the Committee as
"Incentive Stock Options" at the time of grant:
(a) Option Exercise Price. The price (the "Exercise Price") at which
Option Shares shall be purchased upon exercise of any Incentive Stock
Option shall be not less than the Fair Market Value of such shares on the
Grant Date, except that if on the Grant Date an Optionee owns Common Stock
(as determined
-2-
<PAGE>
under section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company, if any, then
the Exercise Price of an Incentive Stock Option granted to such Optionee
shall not be less than 110% of the Fair Market Value of such shares on the
Grant Date and, notwithstanding Section 6(b) hereof, such Incentive Stock
Option will cease to be exercisable five (5) years after the Grant Date.
(b) Term. Except as otherwise provided in Sections 6(a) and 10
hereof, each Incentive Stock Option granted hereunder will be exercisable
for a term of ten (10) years from the Grant Date.
(c) Restriction on Exercise. The Fair Market Value (as determined on
the Grant Date) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any person during any
calendar year (under this Plan and all other plans of the Company cannot be
greater than $100,000.
7. Nonqualified Stock Options. The following provision shall apply with
respect to Options which are designated by the Committee as "Nonqualified Stock
Options" at the time of grant:
(a) Option Exercise Price. The Exercise Price of a Nonqualified
Stock Option shall be not less than the Fair Market Value of such shares on
the Grant Date.
(b) Term. Except as otherwise provided in Section 10 hereof, each
Nonqualified Stock Option granted hereunder will be exercisable for a term
of ten (10) years from the Grant Date.
(c) Designation. Any Option which is not specifically designated by
the Committee as an Incentive Stock Option shall automatically be deemed to
be a Nonqualified Stock Option.
8. Vesting of Option. The vesting period, if any, for all Options
granted hereunder shall commence on the Grant Date and shall end on the date or
dates, determined by the Committee.
9. Method of Exercise. Optionees may exercise their Options from time to
time by giving written notice to the Company. The date of exercise shall be the
date on which the Company receives such notice. Such notice shall be on a form
furnished by the Company and shall state the number of Option Shares to be
purchased, the aggregate Exercise Price and shall be accompanied by payment in
full of the Exercise Price for the number of Option Shares to be delivered, such
payment to be by (i) a certified or bank cashier's check, (ii) by transfer to
the Company of capital stock of the Company having a Fair Market Value on the
date of exercise equal to the aggregate Exercise Price, (iii) by notifying the
Company to subtract from the number of Option Shares issuable to such Optionee,
that number of Option Shares having a Fair Market Value equal to the aggregate
Exercise Price, or (iv) any combinations of (i) - (iii). As soon as practicable
thereafter, the Company shall deliver to the Optionee (or other person entitled
to exercise the Option) at the principal office of the Company, or such other
place as shall be mutually acceptable, a certificate or certificates for such
Option Shares.
10. Termination of Employment. Except as set forth below, in the event
that an Optionee's employment terminates for any reason, any Options then
exercisable shall automatically terminate sixty days after the date on which
such employment terminates unless exercised.
(a) In the event that an Optionee's employment terminates by reason
of retirement, the Committee shall have the right to extend the termination
date of such Optionee's Options until the earlier of (x) three months after
the date of retirement or (y) the date on which such Options would
otherwise terminate pursuant to Sections 6(a), 6(b) and 7(b) hereof.
(b) In the event that an Optionee's employment terminates by reason
of disability, such Optionee's Options shall be extended to a date one year
after the date of disability of the Optionee (such date
-3-
<PAGE>
to be determined by the Committee), but in any event not later than the
date on which such Options would otherwise terminate pursuant to Sections
6(a), 6(b) and 7(d) hereof.
(c) In the event that an Optionee's employment terminates by reason
of death, an Option exercisable by him shall terminate on the earlier of
(i) one year after the date of death, and (ii) the date on which such
Options would otherwise terminate pursuant to Sections 6(a), 6(b) and 7(b)
hereof. During such time after death, an Option may only be exercised by
the Optionee's personal representative, executor or administrator, as the
case may be. No exercise permitted by this Section 10 shall entitle an
Optionee or his personal representative, executor or administrator to
exercise any Option which is not (on the date of death) then exercisable.
11. Changes in Capital Structure. In the event that, by reason of a stock
dividend, recapitalization, reorganization, merger, consolidation,
reclassification, stock split-up, combination of shares, exchange of shares, or
the like, the outstanding shares of Common Stock of the Company are hereafter
increased or decreased, or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of any other corporation,
then appropriate adjustments shall be made by the Board to the number and kind
of shares reserved for issuance under the Plan upon the grant and exercise of
Options. In addition, the Board shall make appropriate adjustments to the
number and kind of shares subject to outstanding Options, and the purchase price
per share thereunder shall be appropriately adjusted consistent with such
change. In no event shall fractional shares be issued or issuable pursuant to
any adjustment made under this Section 11. The determination of the Board as to
any adjustment shall be final and conclusive.
12. Mandatory Exercise. Notwithstanding anything to the contrary set
forth in the Plan, in the event that:
(a) the Company should adopt a plan of reorganization pursuant to
which it shall merger into, consolidate with, or sell its assets to, any
other corporation or entity (an "Acquiring Entity"), the Company may give
an Optionee written notice thereof :
(i) requiring such Optionee to exercise his or her Options
within thirty days after receipt of such notice, (including any
unvested Options which would, except for this Section 12, otherwise be
unexercisable at that date); or
(ii) requiring such Optionee to consent to the conversion of such
Options into an option to purchase the same number of shares of the
Acquiring Entity's common stock as would have been received by the
Optionee if the Optionee had exercised such Option; or
(iii) deeming such Options to have been exercised, in which
case the Optionee shall be entitled to receive the same consideration
per share as received by other holders of the Company's stock but
reduced by an amount equal to the Exercise Price.
(b) the Company adopts a plan of complete liquidation, the Company
will give an Optionee written notice thereof requiring such Optionee to
exercise his or her Options within thirty days after receipt of such
notice, (including any unvested Options which would, except for this
Section 12, otherwise be unexercisable at that date).
Those Options which the Company requests to be exercised as set forth above
and which shall not have been exercised in accordance with the provisions of the
Plan at the end of such 30 day period will automatically lapse irrevocably and
the Optionee will have no further rights with respect to such Options.
13. Option Grant. Each grant of an Option under the Plan will be
evidenced by an award agreement in such form as the Committee may from time to
time approve. Such award agreement will contain such provisions as the
Committee may in its discretion deem advisable, including, without limitation,
additional restrictions or conditions upon
-4-
<PAGE>
the exercise of an Option. The Committee may require an Optionee, as a
condition to the grant or exercise of an Option or the issuance or delivery of
shares upon the exercise of an Option or the payment therefor, to make such
representations and warranties and to execute and deliver such notices of
exercise and other documents as the Committee may deem consistent with the Plan
or the terms and conditions of the Option Agreement. Without limiting any of
the foregoing, in any such case referred to in the preceding sentence the
Committee may also require the Optionee to execute and deliver documents
(including the investment letter described in Section 14), containing such
representations, warranties and agreements as the Committee or counsel to the
Company shall deem necessary or advisable to comply with any exemption from
registration under the Securities Act of 1933, as amended (the "Securities Act")
any applicable State securities laws, and any other applicable law, regulation
or rule.
14. Investment Letter. If required by the Committee, each Optionee shall
execute a statement directed to the Company, upon each and every exercise by
such Optionee of any Options, that shares issued thereby are being acquired for
investment purposes only and not with a view to the distribution thereof, and
containing an agreement that such shares will not be sold or transferred unless
either (1) registered under the Securities Act, or (2) exempt from such
registration in the opinion of Company counsel. If required by applicable
securities laws, certificates representing shares of Common Stock issued upon
exercise of Options will bear a restrictive legend.
15. Requirement of Law. The granting of Options, the issuance of Option
Shares upon the exercise of an Option, and the delivery of Option Shares upon
the payment therefore shall be subject to compliance with all applicable laws,
rules, and regulations. Without limiting the generality of the foregoing, the
Company shall not be obligated to sell, issue or deliver any shares unless all
required approvals from governmental authorities and stock exchanges shall have
been obtained and all applicable requirements of governmental authorities and
stock exchanges have been complied with.
16. Tax Withholding. The Company, as and when appropriate, shall have the
right to require each Optionee purchasing or receiving shares of Common Stock
under the Plan to pay any federal, state, or local taxes required by law to be
withheld or to take whatever action it deems necessary to protect the interests
of the Company in respect to such tax obligations.
17. Assignability. To the extent permitted by applicable securities laws
or the Code, an Optionee may transfer those rights by will, by the laws of
descent and distribution, by gift or as otherwise permitted by the Committee in
its sole discretion.
18. Optionee's Rights as Shareholder and Employee. An Optionee shall have
no rights as a shareholder of the Company with respect to any shares subject to
an Option until the Option has been exercised and the certificate with respect
to the shares purchased upon exercise of the Option has been duly issued and
registered in the name of the Optionee. Nothing in the Plan shall be deemed to
give an employee any right to continued employment nor shall it be deemed to
give any employee any other right not specifically and expressly provided in the
Plan.
19. Termination and Amendment.
(a) Amendment. The Board may amend or terminate the Plan at any
time, subject to the following limitations:
(i) the approval by the shareholders of the Company will be
required in respect of any amendment that (A) materially increases the
benefits accruing to participants under the Plan, (B) increases the
aggregate number of shares of Common Stock that may be issued or
transferred under the Plan (other than by operation of Section 11
above), (C) increases the maximum number of shares of Common Stock for
which any Optionee may be granted options under this Plan or (D)
materially modifies the requirements as to eligibility for
participation in the Plan; (E) modifies the provisions for determining
the Fair Market Value; and
-5-
<PAGE>
(ii) the Board shall not amend the Plan if such amendment would
cause any Option or the exercise of any right under the Plan to fail
to comply with the requirements of Rule 16b-3 under the Exchange Act,
or if such amendment would cause the Plan or an Incentive Stock Option
or exercise of an Incentive Stock Option to fail to comply with the
requirements of Section 422 of the Code (including, without
limitation, a reduction of the option price or an extension of the
period during which an Incentive Stock Option may be exercised).
(b) Termination of Plan. The Plan will terminate on the tenth
anniversary of its effective date (as set forth in Section 20 below) unless
earlier terminated by the Board or unless extended by the Board with
approval of the stockholders.
(c) Termination and Amendment of Outstanding Grants. Except as
otherwise provided in Section 12 hereof or in any award agreement
evidencing the grant of an Option hereunder, a termination or amendment of
the Plan that occurs after an Option has been granted shall not result in
the termination or amendment of the Option unless the Optionee consents or
unless the Committee acts under Section 21(b) below. The termination of
the Plan shall not impair the power and authority of the Committee with
respect to an outstanding Option. Whether or not the Plan has terminated,
an outstanding Option may be terminated or amended under Section 21(b)
below or may be amended by agreement of the Company and the Optionee which
is consistent with the Plan.
20. Shareholder Approval. This Plan is subject to the approval of this
Plan by the holders of a majority of the shares of stock of the Company present
or represented in proxy in a vote at a duly held meeting of the shareholders of
the Company on May 20, 1997. If the Plan is not so approved by shareholders,
the Plan shall automatically terminate and be of no force and effect. Subject
to such approval, the effective date of the Plan shall be December 13, 1996.
21. Miscellaneous.
(a) Substitute Grants. The Committee may grant an Option to an
employee or a non-employee director of another corporation, if such person
becomes an employee or non-employee director of the Company, by reason of a
corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company and such other
corporation. Any Option so granted will be substituted for a stock option
granted by the other corporation, but the terms and conditions of such
Option may vary from the terms and conditions required by the Plan and from
those of the option granted by the other corporation. The Committee shall
determine the provisions of any Option so granted.
(b) Compliance with Law. The Plan, the exercise of Option and the
obligations of the Company to issue shares of Common Stock upon exercise of
Options shall be subject to all applicable laws and required approvals by
any governmental or regulatory agencies. With respect to persons subject
to Section 16 of the Exchange Act, it is the intent of the Company that the
Plan and all transactions under the Plan shall comply with all applicable
conditions of Rule 16b-3 or any successor provisions under the Exchange
Act. The Committee may revoke the grant of any Option if it is contrary to
law or modify any Option to bring it into compliance with any valid and
mandatory government regulations. The Committee may also adopt rules
regarding the withholding of taxes on payments to Optionees. The Committee
may, in its sole discretion, agree to limit its authority under this
section.
(c) Sunday or Holiday. In the event, that the time for the
performance of any action or the giving of any notice is called for under
the Plan within a period of time which ends or falls on a Sunday or legal
holiday, such period shall be deemed to end or fall on the next date
following such Sunday or legal holiday which is not a Sunday or legal
holiday.
-6-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,016
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,274
<INVESTMENTS-CARRYING> 2,106
<INVESTMENTS-MARKET> 2,116
<LOANS> 101,083
<ALLOWANCE> 982
<TOTAL-ASSETS> 126,922
<DEPOSITS> 108,440
<SHORT-TERM> 9,000
<LIABILITIES-OTHER> 946
<LONG-TERM> 0
0
0
<COMMON> 1,044
<OTHER-SE> 7,492
<TOTAL-LIABILITIES-AND-EQUITY> 126,922
<INTEREST-LOAN> 6,730
<INTEREST-INVEST> 225
<INTEREST-OTHER> 86
<INTEREST-TOTAL> 7,041
<INTEREST-DEPOSIT> 2,814
<INTEREST-EXPENSE> 3,167
<INTEREST-INCOME-NET> 3,874
<LOAN-LOSSES> 270
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<EXPENSE-OTHER> 3295
<INCOME-PRETAX> 853
<INCOME-PRE-EXTRAORDINARY> 853
<EXTRAORDINARY> 0
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<NET-INCOME> 553
<EPS-PRIMARY> .53
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<YIELD-ACTUAL> 4.47
<LOANS-NON> 1,037
<LOANS-PAST> 1,337
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<ALLOWANCE-CLOSE> 982
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</TABLE>
