<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: March 31, 1998
Commission file number 0-17539
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.
1,252,773 shares of Issuer's Common Stock, par value $1 per share, issued
and outstanding as of May 11, 1998.
<PAGE>
PART 1
ITEM 1--FINANCIAL STATEMENTS
SEE ANNEX A
<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. (the "Company") 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 March 31, 1998 and 1997. The
Bank commenced operations in August, 1989.
CAPITAL RESOURCES
The total shares of common stock outstanding on March 31, 1998 were
1,252,773 as compared to 1,044,033 at March 31, 1997. In October, 1997, a
20% stock dividend was declared, resulting in the issuance of 208,710
shares of common stock. The book value per share of the Company's common
stock at December 31, 1997 was $6.98 and at March 31, 1998 was $7.13 per
share, as adjusted for stock dividends.
The chart below depicts certain capital ratios applicable to state
chartered Federal Reserve member banks and compares the Bank's actual
ratios at March 31, 1998 and December 31, 1997, respectively, each of
which exceeded the levels required for a bank to be classified
"adequately capitalized" under applicable regulatory guidelines.
<TABLE>
<CAPTION>
REGULATORY ACTUAL ACTUAL
RATIO MINIMUM 12/31/97 3/31/98
- ----------------------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Qualifying Total Capital to
Risk Weighted Assets............................................................... 8.0% 9.98% 10.01%
Tier 1 Capital, net of intangibles to Risk Weighted Assets......................... 4.0% 9.02% 9.09%
Tier 1 Leverage Ratio of Capital to Total Adjusted Average Assets.................. 4.0% 7.17% 7.12%
</TABLE>
<PAGE>
The Company's capital-to-assets ratio was 6.55% at of December 31, 1997
as compared to 7.12% at of March 31, 1998. The increase was due to
borrowed funds being repaid which caused assets to decrease in the
interim. Management anticipates that the capital-to-assets ratio will
decline in future periods as the Company's assets continue to grow. For
the quarter ended March 31,1998, the Company's average return on equity
was 8.52% and its return on average assets was .58%. The Company's
average return on equity as of December 31, 1997 was 9.05%; 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 Management 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 the opposite when rates decline.
At March 31, 1998, the risk management review included an "earnings at
risk" analysis as well as a "risk sensitivity" analysis. Potential
monthly net revenue change indicated that in a static rate environment,
increased earnings would be approximately $2,500. If rates fell 200 basis
points, monthly revenues a year from now would increase approximately
$38,300 and a rise in rates by 200 basis points would represent a monthly
loss in revenues of approximately $26,200, due to the current negative
gap position of the Company.
Management attempts to structure the Balance Sheet to provide for the
repricing of assets and liabilities in approximately equal amounts.
<PAGE>
RESULTS OF OPERATIONS
As of March 31, 1998, the Company held deposits aggregating $115,257,268,
which reflects an increase over deposits of $114,832,410 held at December
31, 1997. Of the $115,257,268 deposits held at March 31, 1998,
$17,108,935, or approximately 15%, were non-interest bearing deposits.
Total deposit accounts numbered 7,924 at March 31, 1998. As of the same
date, outstanding loans receivable in connection with loans made to 1,470
loan accounts totaled approximately $105,789,559 (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 for the periods ended March 31, 1998 and December 31, 1997,
respectively.
DEPOSIT LIABILITIES
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
% OF % OF
TYPE OF ACCOUNT BALANCE PORTFOLIO BALANCE PORTFOLIO
- -------------------------------------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Non-Interest bearing (1).............. 17,108,935 15% 16,076,381 14%
Interest bearing (2).................. 8,986,134 8 8,164,080 7
Money Market (3)...................... 13,954,031 12 14,039,724 12
Savings (4)........................... 6,117,646 5 5,270,011 5
CD's Under 100M (5)................... 36,187,970 31 37,169,174 32
CD's Over 100M (6).................... 32,902,552 29 34,113,040 30
-------------- ----------- -------------- -----------
Totals................................ $ 115,257,268 100% $ 114,832,410 100%
-------------- ----------- -------------- -----------
-------------- ----------- -------------- -----------
</TABLE>
[GRAPHIC]
<PAGE>
LOANS OUTSTANDING
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
% OF % OF
TYPE OF ACCOUNT BALANCE PORTFOLIO BALANCE PORTFOLIO
- ------------------------------------------ -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Real Estate Loans, Mortgages(1)........... $ 41,674,032 39% $ 40,594,799 39%
Commercial Loans (2)...................... 55,157,416 51 52,722,906 51
Consumer Loans (3)........................ 8,958,111 8 10,055,470 10
Residential Loans Held for
Sale (4)................................ 1,641,534 2 290,900 0
-------------- ----------- -------------- -----------
Totals.................................... $ 107,431,093 100% $ 103,664,075 100%
-------------- ----------- -------------- -----------
-------------- ----------- -------------- -----------
</TABLE>
[GRAPHIC]
The primary source of earnings for Madison Bancshares Group, Ltd. (the
"Company") and its wholly owned subsidiary, The Madison Bank (the "Bank")
is net interest income, the difference between the interest earned on
loans and other investments and the interest paid on deposits and other
borrowings.
<PAGE>
The graph below sets forth the Company's interest income and interest
expense growth for the period from March 31, 1997 through March 31, 1998:
[GRAPHIC depicting the following plot points]
<TABLE>
<CAPTION>
Mar Apr May Jun Jul Aug Sep Oct Nov
---------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Int Inc 456,337 405,450 424,446 433,135 461,143 442,652 427,027 435,543 429,595
Tot Non Int Exp 396,187 390,023 392,118 387,757 425,032 368,816 373,509 404,996 383,485
<CAPTION>
Dec Jan Feb Mar
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Int Inc 477,973 446,001 418,580 480,967
Tot Non Int Exp 407,048 426,613 446,676 436,117
</TABLE>
For the three months ended March 31, 1998, the Company's net income was
$188,030 or $.15 per share, as compared to net income of $162,657 or $.13
per share during the three month period ended March 31, 1997. The
increase was attributable to asset growth of the Company, specifically
loan growth.
The Company's net interest income, after provision for loan losses, for
the quarters ended March 31, 1998 and March 31, 1997 were $1,294,981 and
$1,161,824, respectively. Total interest income was $2,633,727 for the
quarter ended March 31, 1998, as compared to $2,261,812 for the quarter
ended March 31, 1997. Interest paid on deposits and borrowings increased
to $1,218,746 from $1,009,988 during the corresponding quarter of 1998.
<PAGE>
The increase in interest income primarily was due to growth in loans as
the graph below depicts.
[GRAPH depicting the following plot points]
<TABLE>
<CAPTION>
Mar Apr May Jun Jul Aug Sep Oct Nov
---------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans 94,457,476 96,862,758 97,412,972 98,310,105 97,986,829 99,292,381 101,325,890 102,090,826 102,792,195
Deposits 90,644,847 91,201,811 94,789,470 95,503,948 95,617,568 95,591,742 108,443,328 108,929,544 112,753,001
<CAPTION>
Dec Jan Feb Mar
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Loans 103,664,075 103,041,472 104,417,919 107,431,093
Deposits 114,839,825 119,220,649 116,291,775 115,256,564
</TABLE>
As of December 31, 1997 the Company had $936,974 in its allowance for
loan losses representing .92% of outstanding loans receivable. During the
first quarter of 1998, the Company added $120,000 to the reserve
representing .87% of outstanding loans receivable. There were $149,621 of
loans charged off against the reserve in the first quarter and there were
no recoveries. The allowance for loan loss reserve is $907,353 as of
March 31, 1998. The principal amount of non-accrual loans at March 31,
1998 totaled $1,375,809 as compared to $891,852 as of December 31, 1997.
A substantial portion of the non-accrual loans are partially or fully
secured and in the process of collection. 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 March 31, 1998 totaled $466,097. This
represents one property in Bryn Mawr, Pennsylvania in connection with
which the Bank has entered into a lease purchase agreement. The Bank
continues to receive a monthly rental fee and an installment payment of
$50,000 is due on or before May 31, 1998. The property is in good
condition and continues to be properly maintained.
From the quarter ended March 31, 1998, non-interest expenses were
$1,266,111 as compared to $1,068,447 during the first quarter of 1997, a
19% increase. Of this amount, $653,291, or approximately 52%, was
attributable to salary and related employee benefits as compared to
$551,616, or 52%,
<PAGE>
during the first quarter of 1997. The increase was primarily due to
increased staffing to accommodate the Company's growth and its new branch
at Rhawn and Verree Roads in Northeast Philadelphia to be opened June,
1998.
Interest expense of $1,218,746 represented 46% of gross interest income
for the three months ended March 31, 1998. Interest expense increased by
21% over the same period in 1997. Even though the average cost of funds
increased from 4.81% at March 31, 1997 to 4.89% at March 31, 1998, the
increase in interest expense rose due to interest bearing liabilities
increasing from an average of $84 million in 1997 to an average of $99.5
million in 1998, an average increase of 18%.
Occupancy expenses of $192,632 accounted for 15% of total non-interest
expenses in the first quarter of 1998 as compared to $167,277, or 16%,
during the first quarter of 1997. This 15% increase was due to expenses
incurred to open new branches.
Equipment expenses of $61,059 for the quarter ended March 31, 1998
represented an increase of $4,166 from $56,893 for the first quarter of
1997. The increase was a result of additional maintenance contracts on
certain of the Bank's equipment and additional equipment leases for
branch expansion and employee growth.
Other operating expenses comprised primarily of advertising, business
development expenses, professional fees, data processing fees, printing
and supplies and Pennsylvania Shares Tax payments, during the quarter
ended March 31, 1998 were $359,129, or approximately 28% of total
non-interest expenses. During the first quarter of 1997 other operating
expenses were $292,661 or approximately 27% of total expenses.
Income tax expense of $72,244 was provided for the quarter ended March
31, 1998. Income tax expense for the quarter ended March 31, 1997 was
$86,000. The slight decrease in income tax expense is due to income tax
calculation timing differences.
Interest income on investment securities relates primarily to interest on
U.S. Government Obligations and municipal bonds. Interest income of
$59,939 for the quarter ended March 31, 1998, decreased 8% from $65,249
for the quarter ended March 31, 1997. The decrease is a direct result of
the change in investments of short term funds as opposed to investment
securities.
Interest income on other securities is comprised primarily of dividends
from investments of Federal Home Loan Stock. First quarter 1998 was
$10,336 as compared to $17,133 first quarter 1997. The 40% decrease was
due to decreased investment in Federal Home Loan Bank Stock.
Interest income on temporary investments represents Federal Funds sold.
At March 31, 1998, interest income on Federal Funds sold was $134,758, as
compared to $23,657 at March 31, 1997, a 470% increase. The increase was a
<PAGE>
direct result of the change in the Company's liquidity position through
deposit growth.
Total interest and fees on loans at March 31, 1998 was $2,428,694
compared to $2,155,773 at March 31, 1997, representing a 13% increase.
The Company experienced a 14% average loan growth while the yield on the
portfolio increased from 9.49% to 9.56%. The static rates from March,
1997 to March, 1998 had insignificant impact on earnings.
RECENT DEVELOPMENTS
The Company is pursuing the development of its own mortgage banking
operation. Accordingly, the Company is entering into a 42 month lease to
occupy 1,811 square feet of space on second floor of its main
headquarters to start up a mortgage subsidiary.
<PAGE>
PART II--OTHER INFORMATION
ITEMS 1 THROUGH 5
Not Applicable.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Filed
<TABLE>
<CAPTION>
PAGE NUMBER IN
EXHIBIT NUMBER SEQUENTIAL NUMBERING SYSTEM
- ------------------- --------------------------------------------------------------------------------------------
<C> <S> <C>
3 Amended and Restated Articles of Incorporation, as amended, and Amended and Restated Bylaws
of the Issuer *
27 Financial Data Schedule --
</TABLE>
- ------------------------
* Incorporated by reference from the Issuer's Registration Statement on Form
S-1 No. 33-27146
<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: May 14, 1998
<PAGE>
ANNEX A
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
Cash and Cash Equivalents:
Cash and amounts due from banks............................................. $ 6,599,135 $ 3,944,986
Federal funds sold.......................................................... 5,500,000 19,500,000
-------------- -----------------
Total cash and cash equivalents........................................... 12,099,135 23,444,986
Investment Securities:
Held to maturity (fair value--1998 $1,616,310; 1997 $1,617,371)............. 1,604,690 1,605,407
Available for sale (amortized cost 1998 $2,655,586; 1997 $3,655,536)........ 2,658,232 3,656,446
Loans (Net of allowance for loan losses--1998 $907,353; 1997 $936,974)........ 104,632,427 102,180,556
Mortgage loans held for sale.................................................. 1,641,534 290,900
Real Estate Owned............................................................. 466,097 465,312
Furniture, Equipment and Leasehold Improvements............................... 1,025,891 916,484
Accrued interest receivable................................................... 847,490 706,448
Other Assets.................................................................. 246,103 240,274
-------------- -----------------
TOTAL......................................................................... $ 125,221,599 $ 133,506,813
-------------- -----------------
-------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits......................................... $ 17,108,935 $ 16,076,381
Interest-bearing demand deposits............................................ 8,986,134 8,164,080
Savings deposits............................................................ 6,117,646 5,270,011
Money market deposits....................................................... 13,954,031 14,039,724
Time deposits............................................................... 69,090,522 71,282,214
-------------- -----------------
Total Deposits............................................................ 115,257,268 114,832,410
Borrowed Funds................................................................ 9,000,000
Accrued Interest Payable...................................................... 1,016,808 838,513
Accrued Expenses and Other Liabilities........................................ 20,130 97,672
-------------- -----------------
Total Liabilities......................................................... 116,294,206 124,768,595
-------------- -----------------
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, 1,252,773 shares.......................... 1,252,773 1,252,773
Capital surplus............................................................. 7,612,835 7,612,835
Retained earnings (deficit)................................................. 60,039 (127,991)
Net unrealized gain on available for sale securities........................ 1,746 601
-------------- -----------------
Total shareholders' equity................................................ 8,927,393 8,738,218
-------------- -----------------
TOTAL......................................................................... $ 125,221,599 $ 133,506,813
-------------- -----------------
-------------- -----------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Interest income:
Interest and fees on loans.......................................................... $ 2,428,694 $ 2,155,773
Interest and dividends on investment securities:
US Government obligations......................................................... 47,764 53,045
Municipal bonds................................................................... 12,175 12,204
Other securities.................................................................. 10,336 17,133
Interest on temporary investments................................................. 134,758 23,657
------------ ------------
2,633,727 2,261,812
------------ ------------
Interest expense:
Interest on:
Demand deposits................................................................... 47,902 25,924
Savings and money market deposits................................................. 153,919 144,038
Time deposits..................................................................... 1,015,237 715,340
Federal Funds Purchased........................................................... 1,688 124,686
------------ ------------
1,218,746 1,009,988
------------ ------------
Net interest income before provision for loan losses.................................. 1,414,981 1,251,824
Provision for loan losses............................................................. 120,000 90,000
------------ ------------
Net interest income after provision for loan losses................................... 1,294,981 1,161,824
Other noninterest income:
Gain on sale of mortgage loans...................................................... 4,296 37,401
Service charges on deposit accounts................................................. 194,485 96,501
Other............................................................................... 32,623 21,378
------------ ------------
Total noninterest income.......................................................... 231,404 155,280
------------ ------------
Other noninterest expenses:
Salary and employee benefits........................................................ 653,291 551,616
Occupancy........................................................................... 192,632 167,277
Equipment........................................................................... 61,059 56,893
Computer processing................................................................. 72,219 59,418
Deposit insurance................................................................... 4,181 2,000
Legal............................................................................... 21,416 6,050
Professional fees................................................................... 15,364 17,205
Business development................................................................ 44,609 32,437
Office and stationary supplies...................................................... 27,516 31,619
Director fees....................................................................... 34,750 30,100
Advertising......................................................................... 13,345 23,151
Other operating..................................................................... 125,729 90,681
------------ ------------
Total noninterest expenses........................................................ 1,266,111 1,068,447
------------ ------------
Income before income taxes............................................................ 260,274 248,657
Provision for income taxes............................................................ 72,244 86,000
------------ ------------
Net income............................................................................ $ 188,030 $ 162,657
------------ ------------
------------ ------------
Basic earnings per share.............................................................. $ 0.15 $ 0.13
------------ ------------
Diluted earnings per share............................................................ $ 0.14 $ 0.16
------------ ------------
------------ ------------
Basic weighted average number of shares............................................... 1,252,773 1,252,773
------------ ------------
------------ ------------
Diluted weighted average number of shares............................................. 1,353,269 1,016,606
------------ ------------
------------ ------------
</TABLE>
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------- -----------
<S> <C> <C>
Operating activities:
Net income......................................................................... $ 188,030 162,657
Adjustments for non-cash items included in net income:
Depreciation and amortization.................................................... 45,096 39,415
Provision for loan losses........................................................ 120,000 90,000
Net amortization of bond premium/discount........................................ 76 1,849
Amortization of deferred fees & costs, net....................................... (5,866) (18,313)
Gain on sale of mortgages held for sale.......................................... (4,296) (23,151)
Changes in assets and liabilities which provided (used) cash:
Mortgage loans held for resale................................................... (1,346,338) 1,430,279
Interest receivable.............................................................. (141,042) (40,159)
Other assets..................................................................... (5,829) (221,559)
Accrued interest payable......................................................... 178,295 109,833
Accrued expenses and other liabilities........................................... (77,543) (37,401)
------------- -----------
Net cash provided by (used in) operating activities.................................. (1,049,417) 1,493,450
------------- -----------
Investing activities:
Proceeds from sale of investment securities available for sale..................... 1,000,000 78,500
Proceeds from maturity of investment securities.................................... 0 0
Net change in loans to customers................................................... (2,566,790) (1,882,691)
Purchase of furniture, equipment and leasehold improvements........................ (154,503) (7,875)
Proceeds on sale of real estate owned.............................................. 0 2,000
------------- -----------
Net cash used in investing activities................................................ (1,721,293) (1,810,066)
------------- -----------
Financing activities:
Increase in demand, savings and time deposits...................................... 424,859 3,435,696
Repayment of borrowed funds........................................................ (9,000,000)
------------- -----------
Net cash provided by (used in) financing activities.................................. (8,575,141) 3,435,696
------------- -----------
Net increase (decrease) in cash and cash equivalents................................. (11,345,851) 3,119,080
Cash and cash equivalents, beginning of year......................................... 23,444,986 5,306,957
------------- -----------
Cash and cash equivalents, end of period............................................. $ 12,099,135 $ 8,426,037
------------- -----------
------------- -----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest......................................................................... $ 1,040,451 $ 900,153
------------- -----------
------------- -----------
Income taxes..................................................................... $ 0 $ 125,000
------------- -----------
------------- -----------
Supplemental disclosures of noncash investing activities
Unrealized gain (loss) on available for sale securities............................ $ 1,746 $ (10,827)
------------- -----------
------------- -----------
</TABLE>
See notes to consolidated financial statements
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
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 presentation of financial results and that all
adjustments are of a normal recurring nature. The results of operations
for the three month periods ended March 31, 1998 (the Company) 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. (the Company) and its wholly owned subsidiary, The
Madison Bank (the Bank). All material intercompany balances and
transactions have been eliminated.
3. STOCK DIVIDENDS:
On January 22, 1997, the Board of Directors declared a 7.5% stock
dividend payable to all holders of record of the Company's common stock
as of February 5, 1997. On October 9, 1997, the Board of Directors
declared a 20% stock dividend payable to all shareholders of record on
October 7, 1997. Per share computations reflect the changes in the number
of shares resulting from these dividends.
4. EARNINGS PER SHARE:
Basic earnings per share is based on the weighted average number of
common shares outstanding, while diluted earnings per share is based on
the weighted average number of common shares outstanding and common share
equivalents that would arise from the exercise of stock options or stock
warrants. Per share computations reflect changes in the number of shares
resulting from stock dividends.
5. COMPREHENSIVE INCOME:
The Company adopted Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income, effective January 1, 1998. The statement
requires disclosure of amounts from transactions and other events which
are currently excluded from the statement of operations and are recorded
directly to stockholders' equity. Total comprehensive income for the
three month periods ended March 31, 1998 and 1997 amounted to $189,175
and $158,749, respectively.
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000846809
<NAME> MADISON BANCSHARES GROUP, LTD.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 6,599
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,658
<INVESTMENTS-CARRYING> 1,605
<INVESTMENTS-MARKET> 1,616
<LOANS> 0
<ALLOWANCE> 907
<TOTAL-ASSETS> 125,222
<DEPOSITS> 115,257
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,037
<LONG-TERM> 0
0
0
<COMMON> 1,253
<OTHER-SE> 7,674
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<INTEREST-DEPOSIT> 1,217
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<EPS-PRIMARY> .15
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</TABLE>
