<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, 1999
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.
1,562,018 shares of Issuer's Common Stock, par value $1 per share, issued
and outstanding as of May 12, 1999.
<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, 1999 and 1998. The Bank commenced operations in August,
1989.
CAPITAL RESOURCES
The total shares of common stock outstanding on March 31, 1999
were 1,562,018 as compared to 1,252,773 at March 31, 1998. In
October, 1997, a 20% stock dividend was declared, resulting in the
issuance of 208,710 shares of common stock. The book value of the
Company's common stock at December 31, 1998 was $6.05 per share
and at March 31, 1999 was $6.14 per share.
The chart below depicts certain capital ratios applicable to state
chartered Federal Reserve member banks and bank holding companies.
The Company's actual capital ratios at March 31, 1999 and December
31, 1998, respectively, each of which exceeded the levels required
to be classified "adequately capitalized" under applicable
regulatory guidelines.
<TABLE>
<CAPTION>
Regulatory Actual Actual
Ratio Minimum Dec. 31, 1998 Mar. 31, 1999
----- ------- ------------- -------------
<S> <C> <C> <C>
Qualifying Total Capital to
Risk Weighted Assets 8.0% 10.72% 10.75%
Tier 1 Capital, net of intangibles
to Risk Weighted Assets 4.0% 9.71% 9.66%
Tier 1 Leverage Ratio of Capital to
Total Adjusted Average Assets 4.0% 8.26% 7.75%
</TABLE>
<PAGE>
The Company's capital-to-assets ratio was 6.39% as of December 31,
1998 as compared to 6.35% at of March 31, 1999. 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 31,1999, the Company's average return on
equity was 6.16% and its return on average assets was .39%. The
Company's average return on equity as of December 31, 1998 was
5.13%; and its return on average assets was .34%.
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, 1999, 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
$15,400. The Company is in a negative gap position. Accordingly,
if rates fell 200 basis points, monthly revenues a year from now
would increase approximately $600 and a rise in rates by 200
basis points would represent a monthly loss in revenues of
approximately $(20,700), 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>
ANALYSIS OF FINANCIAL CONDITION
As of March 31, 1999, the Company held deposits aggregating
$135,296,098, which reflects an increase over deposits of
$132,594,518 held at December 31, 1998. Of the $135,296,098
deposits held at March 31, 1999, $24,295,788, or approximately
18%, were non-interest bearing deposits. Total deposit accounts
numbered 11,895 at March 31, 1999. As of the same date,
outstanding loans receivable in connection with loans made to
1,707 loan accounts totaled approximately $114,458,321 (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,
1999 and December 31, 1998, respectively.
DEPOSIT LIABILITIES
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
% of % of
Type of Account Balance Portfolio Balance Portfolio
--------------- ------- --------- ------- ---------
<S> <C> <C> <C> <C>
Non-Interest bearing (1) 24,295,788 18% 23,423,200 18%
Interest bearing (2) 12,623,234 9 11,785,117 9
Money Market (3) 17,393,846 13 17,109,125 13
Savings (4) 8,001,287 6 11,089,034 8
CD's Under 100M (5) 40,393,351 30 38,136,009 29
CD's Over 100M (6) 32,588,592 24 31,052,033 23
------------ --- ------------ ---
Totals $135,296,098 100% $132,594,518 100%
------------ --- ------------ ---
------------ --- ------------ ---
</TABLE>
[CHART]
<PAGE>
LOANS OUTSTANDING
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
% of % of
Type of Account Balance Portfolio Balance Portfolio
--------------- ------- --------- ------- ---------
<S> <C> <C> <C> <C>
Real Estate Loans, Mortgages(1) $ 31,559,101 25% $ 33,743,039 27%
Commercial Loans (2) 73,584,874 59 72,425,657 57
Consumer Loans (3) 9,314,346 7 9,235,390 7
Residential Loans Held for
Sale (4) 10,883,245 9 11,593,638 9
------------ --- ------------ ---
Totals $125,341,566 100% $126,997,724 100%
------------ --- ------------ ---
------------ --- ------------ ---
</TABLE>
[CHART]
RESULTS OF OPERATIONS
For the three months ended March 31, 1999, the Company's net
income was $146,748 or $.09 per share (diluted), as compared to
net income of $188,030 or $.12 per share (diluted) during the
three month period ended March 31, 1998. The decrease was
attributable to expenses associated with additional branch and
mortgage divisions to the Bank.
<PAGE>
ANALYSIS OF NET INTEREST INCOME
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.
The graph below sets forth the Company's interest income and
interest expense growth for the period from March 31, 1998 through
March 31, 1999:
[CHART]
The Company's net interest income, after provision for loan
losses, for the quarters ended March 31, 1999 and March 31, 1998
was $1,689,217 and $1,294,981, respectively. Total interest income
was $3,080,806 for the quarter ended March 31, 1999, as compared
to $2,633,727 for the quarter ended March 31, 1998. Interest
expense on deposits and borrowings increased to $1,271,589 from
$1,218,746 for the corresponding quarter of 1998.
<PAGE>
The increase in interest income primarily was due to growth in
loans as the graph below depicts.
[CHART]
PROVISION FOR LOAN LOSSES
As of December 31, 1998 the Company had $1,111,817 in its
allowance for loan losses representing .96% of outstanding loans
receivable, excluding residential loans held for sale. During the
first quarter of 1999, the Company added $120,000 to the reserve.
The allowance for loan loss reserve was $1,224,486 or 1.06% of
total loans receivable as of March 31, 1999. The principal amount
of non-accrual loans at March 31, 1999 totaled $1,449,842 as
compared to $1,088,946 as of December 31, 1998. 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, 1999 totaled $734,089. This
consists of two properties acquired at sheriff's sale. One
property in Bryn Mawr, Pennsylvania was under agreement of sale
for $580,000 and settled subsequent to March 31, 1999. The
proceeds from the sale was more than sufficient to cover the
approximate $485,000 outstanding balance in real estate owned. The
second property is a commercial building in Upper Darby,
Pennsylvania. The property is currently listed for sale with a
realtor and was appraised for $300,000. Management continues to
monitor and evaluate the Bank's exposure on this property, which
is carried at $255,956.
INTEREST EXPENSE
Interest expense of $1,271,589 represented 41% of gross interest
income for the three months ended March 31, 1999. Interest expense
increased slightly
<PAGE>
over the same period in 1998. Although the average cost of funds
decreased from 4.89% at March 31, 1998 to 4.42% at March 31,
1999, the interest expense related to debt service obligations on
the Company's Trust Preferred Securities issued in July 1998.
NON-INTEREST EXPENSE
For the quarter ended March 31, 1999, non-interest expenses were
$2,230,527 as compared to $1,266,111 during the first quarter of
1998, a 76% increase. Of this amount, $1,286,460, or approximately
58%, was attributable to salary and related employee benefits as
compared to $653,291, or 52%, during the first quarter of 1998.
The increase was primarily due to increased staffing to
accommodate the Company's growth and the addition of the mortgage
department which opened in June, 1998.
Occupancy expenses of $253,902 accounted for 11% of total
non-interest expenses in the first quarter of 1999. This was an
increase over the same period in 1998 of 32%. The increased
occupancy expenses is directly attributable to the additional
space the Bank leased to accommodate the mortgage business as well
as additional space to support the internal growth of the Bank.
Occupancy expense at March 31, 1998 was $192,632 or 15% of total
non-interest expenses.
Equipment expenses of $95,537 for the quarter ended March 31, 1999
represented an increase of 56% from $61,059 for the first quarter
of 1998. The increase was a result of additional maintenance
contracts on certain of the Bank's equipment and additional
equipment leases for branch expansion, the mortgage business, and
upgrades to the Bank's existing equipment.
Professional fees for the quarter ended March 31, 1999 were
$27,514 as compared to $15,364 for the quarter ended March 31,
1998, a 79% increase. The increase is attributable to Year 2000
expenses and employing additional outside services for product
development and support.
Business development expenses for the quarter ended March 31, 1999
were $71,873 as compared to $44,609 for the quarter ended March
31, 1998, a 61% increase. The increase is attributable to the
additional staff added to the mortgage and branch divisions
marketing the Bank's products.
Other operating expenses comprised primarily of advertising,
accounting, auto and travel, insurance and examinations, postage
and freight, data processing fees, printing and supplies and
Pennsylvania Shares Tax payments, during the quarter ended March
31, 1999 were $495,241, or approximately 22% of total non-interest
expenses. During the first quarter of 1998 other operating
expenses were $299,156 or approximately 24% of total expenses. The
66% increase from March 1998 to March 1999 in operating expenses
is attributable to additional branch and mortgage divisions and
asset growth.
<PAGE>
Income tax expense of $128,900 was provided for the quarter ended
March 31, 1999. Income tax expense for the quarter ended March 31,
1998 was $72,244. This increase in income tax expense is due to
income tax calculation timing differences.
INTEREST INCOME
Interest income on investment securities relates primarily to
interest on U.S. Government Obligations and municipal bonds.
Interest income of $33,100 for the quarter ended March 31, 1999,
decreased 45% from $59,939 for the quarter ended March 31, 1998.
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 1999 was $11,097 as compared to $10,336 first quarter
1998. The 7% increase was due to increased investment in Federal
Home Loan Bank Stock.
Interest income on temporary investments represents Federal Funds
sold. At March 31, 1999, interest income on Federal Funds sold was
$106,285 as compared to $134,758 at March 31, 1998, a 21%
decrease. The decrease was a direct result of the change in the
Company's liquidity position through deposit growth.
Total interest and fees on loans at March 31, 1999 was $2,930,324
compared to $2,428,694 at March 31, 1998, representing a 21%
increase. The Company experienced a 18% average loan growth while
the yield on the portfolio increased from 9.56% to 9.74%. The
static rates from March, 1998 to March, 1999 had insignificant
impact on earnings.
YEAR 2000 MATTERS
The "Year 2000" issue is the result of computer programs written
using two digits rather than four to define the applicable year.
Any of the Company's computer programs, systems or devices that
have time sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000.
The Company has undertaken a comprehensive upgrade of its computer
systems for Year 2000 compliance. This included the completion of
a conversion of the Company's computer system with a Year 2000
compliant core processing system during 1998, and the replacement
of personal computers with models which will role over (or will be
manually reset) to the Year 2000 date change. These upgrades were
the main result of the completion of the Company's awareness,
assessment and renovation phases of Year 2000 planning. Testing of
mission critical systems has been completed within the timeframes
established by federal regulators. Implementation of compliant
systems will take place during 1999, based on the results of
system
<PAGE>
validation. The Company is also developing business resumption
contingency plans to deal with unforeseen Year 2000 disruptions.
The total costs of the Year 2000 issue has not been and is not
expected to be material to the Company's financial position or
results of operations in any given year. These costs and the date
on which the Company plans to complete the Year 2000 business
resumption planning process are based on Management's best
estimates, which were derived utilizing numerous assumptions of
future events including the continued availability of certain
resources, third party modification plans and other factors.
However, there can be no guarantee that these estimates will be
achieved and actual results could differ from those plans. Based
upon current information, the Company believes that it's Year 2000
expenditures for 1999 will be approximately $23,500.
The risks associated with the Year 2000 issue include system
failure or miscalculations causing disruptions of operations
including, among other things, an inability to process
transactions and engage in normal business activities. Although
the Company is actively working towards compliance, certain
contingency plans have been established to mitigate the impact
should the aforementioned risks be realized. The Company is
currently working on a business resumption plan. This Plan, to be
completed during 1999, should enable the Company to resume
operations and continue to provide services in the event of an
unforeseen disruption due to the century date change, should
systems or processes outside the Company fail.
<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
<S> <C> <S>
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
(b) No current reports on Form 8-K were filed during the quarter ended
March 31, 1999.
<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
Senior Vice President
Date Executed: May 14, 1999
<PAGE>
ANNEX A
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS:
Cash and amounts due from banks $ 5,713,581 $ 7,793,484
Federal funds sold 12,500,000 7,500,000
------------ ------------
Total cash and cash equivalents 18,213,581 15,293,484
INVESTMENT SECURITIES:
Held to maturity (fair value- 1999, $3,279,042;
1998, $1,613,597) 3,271,888 1,602,493
Available for sale (amortized cost; 1999, $1,000,034;
1998, $1,000,046) 1,006,563 1,010,000
Federal Home Loan Bank Stock 527,300 527,300
Federal Reserve Bank Stock 176,400 176,400
LOANS (Net of allowance for loan losses - 1999, $1,224,486;
1998, $1,111,817) 112,943,417 113,819,315
MORTGAGE LOANS HELD FOR SALE 10,883,245 11,593,638
REAL ESTATE OWNED 734,089 734,089
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET 1,570,047 1,583,473
ACCRUED INTEREST RECEIVABLE 971,166 1,076,682
OTHER ASSETS 591,483 508,989
------------ ------------
TOTAL $150,889,179 $147,925,863
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Noninterest-bearing demand deposits 24,295,788 23,423,200
Interest-bearing demand deposits 12,623,234 11,785,117
Savings deposits 8,001,287 11,089,034
Money market deposits 17,393,846 17,109,125
Time deposits 72,981,943 69,188,042
------------ ------------
Total deposits 135,296,098 132,594,518
GUARANTEED PREFERRED BENEFICIAL INTEREST IN
SUBORDINATED DEBT 5,000,000 5,000,000
ACCRUED INTEREST PAYABLE 825,245 804,222
ACCRUED EXPENSES AND OTHER LIABILITIES 172,958 76,731
------------ ------------
Total Liabilities 141,294,301 138,475,471
------------ ------------
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, 1999 and 1998, 1,562,018 1,562,018 1,562,018
Capital surplus 7,563,433 7,563,433
Accumulated earnings 465,119 318,371
Accumulated other comprehensive income 4,308 6,570
------------ ------------
Total shareholders' equity 9,594,878 9,450,392
------------ ------------
TOTAL $150,889,179 $147,925,863
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
Interest income:
<S> <C> <C>
Interest and fees on loans $2,930,324 $2,428,694
Interest and dividends on investment securities:
US Government obligations 22,887 47,764
Other securities 21,310 22,511
Interest on temporary investments 106,285 134,758
---------- ----------
3,080,806 2,633,727
---------- ----------
Interest expense:
Interest on:
Demand deposits 59,143 47,902
Savings and money market deposits 167,426 153,919
Time deposits 932,520 1,015,237
Guaranteed preferred beneficial interest in
subordinated debt 112,500
Federal funds purchased 1,688
---------- ----------
1,271,589 1,218,746
---------- ----------
Net interest income before provision for loan losses 1,809,217 1,414,981
Provision for loan losses 120,000 120,000
---------- ----------
Net interest income after provision for loan losses 1,689,217 1,294,981
---------- ----------
Other noninterest income:
Gain on sale of mortgage loans 620,969 4,296
Service charges on deposit accounts 173,683 194,485
Other 22,306 32,623
---------- ----------
Total noninterest income 816,958 231,404
---------- ----------
Other noninterest expenses:
Salary and employee benefits 1,286,460 653,291
Occupancy 253,902 192,632
Equipment 95,537 61,059
Computer processing 84,557 72,219
Deposit insurance 7,944 4,181
Legal 25,923 21,416
Professional fees 27,514 15,364
Business development 71,873 44,609
Office and stationary supplies 53,375 27,516
Director fees 35,300 34,750
Advertising 9,020 13,345
Amortization of debt issuance costs 12,630
Other operating 266,492 125,729
---------- ----------
Total noninterest expenses 2,230,527 1,266,111
---------- ----------
Income before income taxes 275,648 260,274
Provision for income taxes 128,900 72,244
---------- ----------
Net income $ 146,748 $ 188,030
---------- ----------
---------- ----------
Net income per common share - basic $ 0.09 $ 0.13
---------- ----------
---------- ----------
Net income per common share - diluted $ 0.09 $ 0.12
---------- ----------
---------- ----------
Weighted average number of shares - basic 1,562,018 1,503,328
---------- ----------
---------- ----------
Weighted average number of shares - diluted 1,635,973 1,623,923
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Operating activities:
Net income $ 146,748 $ 188,030
Adjustments for non-cash items included in net income:
Depreciation and amortization 89,446 45,096
Provision for loan losses 120,000 120,000
Net amortization of bond premium/discount 1,780 76
Amortization of deferred fees & costs, net 82,317 (5,866)
Gain on sale of mortgages held for sale (620,969) (4,296)
Changes in assets and liabilities which provided (used) cash:
Mortgage loans held for resale 1,331,362 (1,346,338)
Accrued interest receivable 105,516 (141,042)
Other assets (95,124) (5,829)
Accrued interest payable 21,023 178,295
Accrued expenses and other liabilities 96,227 (77,543)
------------ ------------
Net cash provided by (used in) operating activities 1,278,326 (1,049,417)
------------ ------------
Investing activities:
Purchase of investment securities held to maturity (2,200,000)
Proceeds from maturity of investment securities 530,000 1,000,000
Net change in loans to customers 673,581 (2,566,005)
Purchase of furniture, equipment and leasehold improvements (63,390) (154,503)
Proceeds on sale of real estate owned (785)
------------ ------------
Net cash used in investing activities (1,059,809) (1,721,293)
------------ ------------
Financing activities:
Increase in demand, savings and time deposits 2,701,580 424,859
Repayment of borrowed funds (9,000,000)
------------ ------------
Net cash provided by (used in) financing activities 2,701,580 (8,575,141)
------------ ------------
Net increase (decrease) in cash and cash equivalents 2,920,097 (11,345,851)
Cash and cash equivalents, beginning of year 15,293,484 23,444,986
------------ ------------
Cash and cash equivalents, end of period $ 18,213,581 $ 12,099,135
------------ ------------
------------ ------------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,250,566 $ 1,040,451
------------ ------------
------------ ------------
Income taxes $ 50,000 $ 0
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements
<PAGE>
MADISON BANCSHARES GROUP, LTD. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
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, 1999 is 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. Net income per share:
Basic net income per share is based upon the weighted average number of
common shares outstanding, while diluted net income per share is based
upon the weighted average number of common shares outstanding and
common share equivalents that would arise from the exercise of stock
options and stock warrants.
4. Stock dividend:
On May 19, 1998, the Board of Directors declared a stock dividend in
the amount of twenty percent (20%), payable in shares of the Company's
common stock. Such dividend was payable on or about June 17, 1998 to
holders of the Company's shares of common stock on June 3, 1998. No
fractional shares were issued in connection with such dividend. Per
share computations reflect the changes in the number of shares
resulting from these 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 shareholders' equity.
Comprehensive income for the three month period ended March 31, 1999
and 1998 was $144,486 and $189,175, respectively.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000846809
<NAME> MADISON BANCSHARES GROUP LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-31-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 5,714
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 12,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,006
<INVESTMENTS-CARRYING> 3,272
<INVESTMENTS-MARKET> 3,279
<LOANS> 125,051
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0
0
<COMMON> 1,562
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<INTEREST-TOTAL> 3,081
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<INCOME-PRETAX> 276
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<EPS-PRIMARY> .09
<EPS-DILUTED> .09
<YIELD-ACTUAL> 9.41
<LOANS-NON> 1,450
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<ALLOWANCE-UNALLOCATED> 1,224
</TABLE>
