##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-54081
 MADISON BANCORP, INC.
  Maryland
    
    27-258073(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)9649 Belair Road, Suite 300, Baltimore, Maryland
    
    21236(Address of principal executive offices)
    
    (Zip Code)
 (410) 529-7400  (Registrants telephone number, including area code)
 Not Applicable  (Former name, former address and former fiscal year, if changed since last report)
 o þ
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



MADISON BANCORP, INC.
 Table of Contents
 PageNo.Part I. Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Statements of Financial Condition as of
December 31, 2010 (unaudited) and
March 31, 2010
    
    
    2Consolidated Statements of Operations for the Three and
Nine Months Ended December 31, 2010 and 2009 (unaudited)
    
    
    3Consolidated Statement of Changes in Shareholders Equity
for the Nine Months Ended December 31, 2010 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Nine Months
Ended December 31, 2010
and 2009 (unaudited)
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23Part II. Other InformationItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. [Removed and Reserved]
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24Signatures
    
    
    25EX-31.1EX-32.0
   1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 MADISON BANCORP, INC AND SUBSIDIARIES
 
 Consolidated Statements of Financial Condition
 December 31, 2010 and March 31, 2010
 December 31,
    
    
    March 31,2010
    
    
    2010(Unaudited)
    
    
    (Audited)AssetsAssetsCash and cash equivalents
    
    $
    11,442,859
    
    
    $
    13,354,975Certificates of deposit
    
    
    1,448,715
    
    
    
    956,972Investment securities available-for-sale
    
    
    48,038,395
    
    
    
    33,480,669Investment securities held-to-maturity
    
    
    0
    
    
    
    2,283,707Federal Home Loan Bank stock, at cost
    
    
    242,500
    
    
    
    242,500Loans receivable, net
    
    
    86,619,908
    
    
    
    90,336,475Property and equipment, net
    
    
    3,860,966
    
    
    
    3,983,182Ground rents, net
    
    
    464,625
    
    
    
    477,273Other real estate owned
    
    
    434,000
    
    
    
    0Accrued interest receivable
    
    
    424,836
    
    
    
    430,549Deferred income taxes
    
    
    117,630
    
    
    
    5,828Prepaid expenses and other assets
    
    
    975,611
    
    
    
    1,337,364Total Assets
    
    $
    154,070,045
    
    
    $
    146,889,494Liabilities and Shareholders EquityLiabilitiesDeposits:Noninterest bearing
    
    $
    6,178,379
    
    
    $
    5,267,672Interest bearing
    
    
    133,585,327
    
    
    
    131,697,595Total Deposits
    
    
    139,763,706
    
    
    
    136,965,267Advances from borrowers for taxes and insurance
    
    
    221,311
    
    
    
    557,686Other liabilities
    
    
    265,572
    
    
    
    303,514Total Liabilities
    
    
    140,250,589
    
    
    
    137,826,467Shareholders EquityCommon Stock, $.01 par value, 10,000,000 shares
authorized. Issued: 608,116 shares at December 31, 2010
and 0 at March 31, 2010
    
    
    6,081
    
    
    
    0Additional paid-in capital
    
    
    5,335,052
    
    
    
    0Retained earnings
    
    
    8,887,797
    
    
    
    8,903,564Unearned ESOP shares
    
    
    (397,300
    )
    
    
    0Accumulated other comprehensive income (loss)
    
    
    (12,174
    )
    
    
    159,463Total Shareholders Equity
    
    
    13,819,456
    
    
    
    9,063,027Total Liabilities and Shareholders Equity
    
    $
    154,070,045
    
    
    $
    146,889,494
   2




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##### Table of Contents



MADISON BANCORP, INC AND SUBSIDIARIES
 
 Consolidated Statements of Operations

(Unaudited)
 Three and Nine Months Ended December, 2010 and 2009
 Three Months Ended
    
    
    Nine Months EndedDecember 31
    
    
    December 312010
    
    
    2009
    
    
    2010
    
    
    2009Interest RevenueInterest and fees on loans
    
    $
    1,251,278
    
    
    $
    1,296,674
    
    
    $
    3,814,392
    
    
    $
    3,844,980Investment securities available-for-sale
    
    
    230,231
    
    
    
    228,305
    
    
    
    665,370
    
    
    
    649,429Investment securities held-to-maturity
    
    
    15,699
    
    
    
    72,614
    
    
    
    63,334
    
    
    
    306,315Interest-bearing deposits
    
    
    14,185
    
    
    
    14,633
    
    
    
    41,306
    
    
    
    34,097Other
    
    
    6,289
    
    
    
    6,438
    
    
    
    21,255
    
    
    
    22,122Total Interest Revenue
    
    
    1,517,682
    
    
    
    1,618,664
    
    
    
    4,605,657
    
    
    
    4,856,943Interest ExpenseInterest on deposits:Time
    
    
    525,558
    
    
    
    683,402
    
    
    
    1,658,317
    
    
    
    2,242,214Savings
    
    
    14,670
    
    
    
    21,318
    
    
    
    43,301
    
    
    
    83,539NOW and money market demand accounts
    
    
    8,769
    
    
    
    12,898
    
    
    
    31,449
    
    
    
    39,863Other interest expense
    
    
    3
    
    
    
    15
    
    
    
    42
    
    
    
    64Total Interest Expense
    
    
    549,000
    
    
    
    717,633
    
    
    
    1,733,109
    
    
    
    2,365,680Net Interest Income
    
    
    968,682
    
    
    
    901,031
    
    
    
    2,872,548
    
    
    
    2,491,263Provision for Loan Losses
    
    
    78,832
    
    
    
    91,074
    
    
    
    190,507
    
    
    
    201,074Net Interest Income after Provision for Loan Losses
    
    
    889,850
    
    
    
    809,957
    
    
    
    2,682,041
    
    
    
    2,290,189Noninterest RevenueGain (Loss) on disposal of property
    
    
    0
    
    
    
    (185
    )
    
    
    0
    
    
    
    (1,367
    )Gain on sale of investment securities
    
    
    62,261
    
    
    
    0
    
    
    
    118,639
    
    
    
    0Other than temporary impairment of securities
    
    
    0
    
    
    
    (39,350
    )
    
    
    0
    
    
    
    (193,407
    )Other
    
    
    65,876
    
    
    
    51,563
    
    
    
    217,063
    
    
    
    166,920Total Noninterest Revenue
    
    
    128,137
    
    
    
    12,028
    
    
    
    335,702
    
    
    
    (27,854
    )Noninterest ExpensesSalaries and employee benefits
    
    
    463,273
    
    
    
    468,624
    
    
    
    1,419,270
    
    
    
    1,477,417Occupancy & equipment expense
    
    
    278,074
    
    
    
    264,947
    
    
    
    824,309
    
    
    
    777,292Advertising
    
    
    2,731
    
    
    
    3,118
    
    
    
    6,277
    
    
    
    9,473Audit and accounting
    
    
    37,581
    
    
    
    19,388
    
    
    
    104,571
    
    
    
    60,223FDIC premiums and OTS assessments
    
    
    100,097
    
    
    
    69,000
    
    
    
    297,495
    
    
    
    294,376Data processing
    
    
    44,246
    
    
    
    53,264
    
    
    
    142,332
    
    
    
    150,487Stationary and postage
    
    
    16,623
    
    
    
    21,387
    
    
    
    54,044
    
    
    
    64,917Other operating expenses
    
    
    73,801
    
    
    
    43,691
    
    
    
    185,212
    
    
    
    162,383Total Noninterest Expenses
    
    
    1,016,426
    
    
    
    943,419
    
    
    
    3,033,510
    
    
    
    2,996,568Income (Loss) Before Income Taxes
    
    
    1,561
    
    
    
    (121,434
    )
    
    
    (15,767
    )
    
    
    (734,233
    )Income Tax Expense (Benefit)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Net Income (Loss)
    
    $
    1,561
    
    
    $
    (121,434
    )
    
    $
    (15,767
    )
    
    $
    (734,233
    )Basic earnings per common share
    
    $
    0.00
    
    
    
    N/A
    
    
    $
    (0.03
    )
    
    
    N/ADiluted earnings per common share
    
    
    0.00
    
    
    
    N/A
    
    
    
    (0.03
    )
    
    
    N/A
   3




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##### Table of Contents



MADISON BANCORP, INC AND SUBSIDIARIES
 
 Consolidated Statement of Changes in Shareholders Equity

(Unaudited)
 Nine Months Ended December 31, 2010
 AccumulatedAdditional
    
    
    
    
    
    
    Unearned
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    ESOP
    
    
    Comprehensive
    
    
    TotalStock
    
    
    Capital
    
    
    Earnings
    
    
    Shares
    
    
    Income
    
    
    EquityBalance March 31, 2010
    
    $
    0
    
    
    $
    0
    
    
    $
    8,903,564
    
    
    $
    0
    
    
    $
    159,463
    
    
    $
    9,063,027Comprehensive income:Net (Loss)
    
    
    
    
    
    
    
    
    
    
    (15,767
    )
    
    
    
    
    
    
    
    
    
    
    (15,767
    )Net unrealized gain
on available for sale
securities, net of tax
effect of $(111,802)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (171,637
    )
    
    
    (171,637
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (187,404
    )Issuance of common stock
    
    
    6,081
    
    
    
    5,333,987
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,340,068Acquisition of unearned ESOP shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (425,680
    )
    
    
    
    
    
    
    (425,680
    )ESOP shares released for allocation
    
    
    
    
    
    
    1,065
    
    
    
    
    
    
    
    28,380
    
    
    
    
    
    
    
    29,445Balance December 31, 2010
    
    $
    6,081
    
    
    $
    5,335,052
    
    
    $
    8,887,797
    
    
    $
    (397,300
    )
    
    $
    (12,174
    )
    
    $
    13,819,456
  4




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##### Table of Contents



MADISON BANCORP, INC AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows

(Unaudited)
 Nine Months Ended December 31, 2010 and 2009
 December 31, 2010
    
    
    December 31, 2009Cash flows from Operating ActivitiesNet loss
    
    $
    (15,767
    )
    
    $
    (734,233
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Amortization (accretion) of investment securities
    
    
    62,358
    
    
    
    (156,636
    )Decrease in net deferred loan costs
    
    
    (19,636
    )
    
    
    23,986Provision for loan losses
    
    
    190,507
    
    
    
    201,074Loss on sale of ground rents
    
    
    6,548
    
    
    
    0(Gain) on sale of investment securities
    
    
    (118,639
    )
    
    
    0Other than temporary impairment charge
    
    
    0
    
    
    
    193,407Loss on disposal of property and equipment
    
    
    0
    
    
    
    1,367Depreciation and amortization
    
    
    174,315
    
    
    
    201,657Changes in operating assets and liabilities:Accrued interest receivable
    
    
    5,713
    
    
    
    15,750Prepaid expenses and other assets
    
    
    361,753
    
    
    
    (883,411
    )Other liabilities
    
    
    (37,942
    )
    
    
    (157,928
    )Net Cash provided by (used in) operating activities
    
    
    609,210
    
    
    
    (1,294,967
    )Cash flows from Investing ActivitiesDecrease (increase) in loans receivable, net
    
    
    3,111,696
    
    
    
    (936,710
    )(Increase) in investment certificates of deposit, net
    
    
    (491,743
    )
    
    
    (953,715
    )Activity in held-to-maturity securities:Sales
    
    
    687,875
    
    
    
    0Maturities and repayments
    
    
    430,089
    
    
    
    636,484Activity in available-for-sale securities:Sales
    
    
    5,381,794
    
    
    
    0Maturities, repayments and calls
    
    
    16,763,090
    
    
    
    15,160,602Purchases
    
    
    (36,160,260
    )
    
    
    (21,804,732
    )Purchase of property and equipment
    
    
    (52,099
    )
    
    
    (133,780
    )Proceeds from sale of ground rents
    
    
    6,100
    
    
    
    15,750Net cash (used in) investing activities
    
    
    (10,323,458
    )
    
    
    (8,016,101
    )Cash flow from Financing ActivitiesIncrease in deposits, net
    
    
    2,798,439
    
    
    
    8,242,693(Decrease) in advances from borrowers, net
    
    
    (336,375
    )
    
    
    (365,615
    )Net Proceeds from the issuance of common stock
    
    
    5,340,068
    
    
    
    0Net cash provided by financing activities
    
    
    7,802,132
    
    
    
    7,877,078(Decrease) in Cash and Cash Equivalents
    
    
    (1,912,116
    )
    
    
    (1,433,990
    )Cash and Cash Equivalents, Beginning of Period
    
    
    13,354,975
    
    
    
    16,321,326Cash and Cash Equivalents, End of Period
    
    $
    11,442,859
    
    
    $
    14,887,336Supplemental disclosure of cash flow information:Loans transferred to other real estate owned
    
    $
    434,000
    
    
    $
    0Cash paid for interest on deposits
    
    $
    554,159
    
    
    $
    722,465
  5




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##### Table of Contents



Note 1: Activities and Summary of Significant Accounting Policies
      Reclassification
 Subsequent Events 
  6




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##### Table of Contents



Note 2: Supplemental Disclosure for Earnings per Share
  Three Months ended,
    
    
    Nine Months ended,December 31, 2010
    
    
    December 31, 2010Net Income (loss)
    
    $
    1,561
    
    
    $
    (15,767
    )Average common shares outstanding
    
    
    568,430
    
    
    
    568,430Earnings per common share, basic
    
    $
    0.00
    
    
    $
    (0.03
    )
  7




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##### Table of Contents



Note 3: Investment Securities
  Gross
    
    
    GrossUnrealized
    
    
    Unrealized
    
    
    EstimatedAmortized Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueDecember 31, 2010Investment securities
available-for-sale:U.S. government agencies
    
    $
    9,976,042
    
    
    $
    2,279
    
    
    $
    65,079
    
    
    $
    9,913,242Brokered certificates of deposit
    
    
    4,534,261
    
    
    
    2,360
    
    
    
    20,167
    
    
    
    4,516,454Mortgage-backed securities (Agency)
    
    
    30,269,562
    
    
    
    424,876
    
    
    
    356,078
    
    
    
    30,338,360Collateralized mortgage obligations
(Agency)
    
    
    2,802,486
    
    
    
    31,360
    
    
    
    5,503
    
    
    
    2,828,343Collateralized mortgage obligations
(Nonagency)
    
    
    476,147
    
    
    
    47,149
    
    
    
    81,300
    
    
    
    441,996$
    48,058,498
    
    
    $
    508,024
    
    
    $
    528,127
    
    
    $
    48,038,395
 Gross
    
    
    GrossUnrealized
    
    
    Unrealized
    
    
    EstimatedAmortized Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMarch 31, 2010Investment securities
available-for-sale:U.S. government agencies
    
    $
    4,499,222
    
    
    $
    15,793
    
    
    $
    1,150
    
    
    $
    4,513,865Brokered certificates of deposit
    
    
    2,670,928
    
    
    
    0
    
    
    
    6,425
    
    
    
    2,664,503Mortgage-backed securities (Agency)
    
    
    26,010,952
    
    
    
    341,079
    
    
    
    49,730
    
    
    
    26,302,301$
    33,181,102
    
    
    $
    356,872
    
    
    $
    57,305
    
    
    $
    33,480,669Investment securities held-to-maturity:Mortgage-backed securities (Agency)
    
    $
    1,177,893
    
    
    $
    34,377
    
    
    $
    6,606
    
    
    $
    1,205,664Mortgage-backed securities
(Nonagency)
    
    
    1,105,814
    
    
    
    86,774
    
    
    
    174,963
    
    
    
    1,017,625$
    2,283,707
    
    
    $
    121,151
    
    
    $
    181,569
    
    
    $
    2,223,289
  8




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##### Table of Contents



Note 3: Investment Securities (Continued)
  Available-for-saleAmortizedCost
    
    
    Fair ValueAmounts maturing in:One year or less
    
    $
    731,261
    
    
    $
    731,895After one year through five years
    
    
    8,804,811
    
    
    
    8,764,225After five years through ten years
    
    
    1,080,581
    
    
    
    1,080,756After ten years
    
    
    3,893,650
    
    
    
    3,852,82014,510,303
    
    
    
    14,429,696Mortgage-backed securities (Agency)
    
    
    30,269,562
    
    
    
    30,338,360Collateralized mortgage obligations
(Agency)
    
    
    2,802,486
    
    
    
    2,828,343Collateralized mortgage obligations
(Nonagency)
    
    
    476,147
    
    
    
    441,996$
    48,058,498
    
    
    $
    48,038,395
   9




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##### Table of Contents



Note 4: Loans Receivable
  December 31,
    
    
    March 31,2010
    
    
    2010Loans secured by mortgages:Residential1-4 Single family
    
    $
    57,060,172
    
    
    $
    62,875,698Multifamily
    
    
    1,686,019
    
    
    
    1,736,945Commercial
    
    
    11,716,469
    
    
    
    11,597,811Land
    
    
    5,783,793
    
    
    
    4,849,495Lines of credit
    
    
    1,673,656
    
    
    
    1,407,436Residential construction
    
    
    3,564,183
    
    
    
    2,395,52881,484,292
    
    
    
    84,862,913Consumer
    
    
    877,165
    
    
    
    1,203,106Commercial
    
    
    4,753,283
    
    
    
    4,755,553Total loans receivable
    
    
    87,114,740
    
    
    
    90,821,572Net deferred costs
    
    
    100,268
    
    
    
    119,903Allowance for loan losses
    
    
    (595,100
    )
    
    
    (605,000
    )Loans receivable, net
    
    $
    86,619,908
    
    
    $
    90,336,475
 Note 5: Allowance for Loan Losses
  Nine Months
    
    
    
    
    
    
    Nine MonthsEnded
    
    
    
    
    
    
    EndedDecember 31,
    
    
    Year Ended
    
    
    December 31,2010
    
    
    March 31, 2010
    
    
    2009Balance  Beginning of Period
    
    $
    605,000
    
    
    $
    379,500
    
    
    $
    379,500Provision for loan losses
    
    
    190,507
    
    
    
    242,074
    
    
    
    201,074Recoveries:Residential1-4 Single
family
    
    
    1,641
    
    
    
    0
    
    
    
    0Charge Offs:Residential1-4 Single
family
    
    
    (28,232
    )
    
    
    (16,574
    )
    
    
    (16,574
    )Residential construction
    
    
    (173,816
    )Balance  End of Period
    
    $
    595,100
    
    
    $
    605,000
    
    
    $
    564,000
 December 31,
    
    
    March 31,2010
    
    
    2010Nonaccrual loans:Residential1-4 Single family
    
    $
    269,181
    
    
    $
    72,297Residential construction
    
    
    0
    
    
    
    607,815Allowance for loan losses as
percentage of nonaccrual loans
    
    
    221.08
    %
    
    
    88.96
    %Foregone interest on nonaccrual loans
    
    $
    15,087
    
    
    $
    22,705
  10




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##### Table of Contents



Note 6: Fair Value Measurements
  
    
    Level 1  Valuation is based on quoted prices in active markets for
identical assets and liabilities.
    
    Level 2  Valuation is determined from quoted prices for similar assets or
liabilities in active markets, quoted prices for identical or similar
instruments in markets that are not active or by model-based techniques in
which all significant inputs are observable in the market.
    
    Level 3  Valuation is derived from model-based techniques in which at
least one significant input is unobservable and based on the Banks own
estimates about the assumptions that market participants would use to value the
asset or liability.
  December 31, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalInvestment securities
available-for-sale
    
    $
    11,335,920
    
    
    $
    36,099,528
    
    
    $
    602,947
    
    
    $
    48,038,395
 March 31, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalInvestment securities
available-for-sale
    
    $
    956,772
    
    
    $
    32,520,274
    
    
    $
    3,623
    
    
    $
    33,480,669
    11




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##### Table of Contents



Note 6: Fair Value Measurements (Continued)
  December 31, 2010
    
    
    March 31, 2010(in thousands)
    
    
    (in thousands)Book
    
    
    Fair
    
    
    Book
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueAssets:Cash and cash equivalents
    
    $
    11,443
    
    
    $
    11,443
    
    
    $
    13,355
    
    
    $
    13,355Certificates of deposit
    
    
    1,449
    
    
    
    1,449
    
    
    
    957
    
    
    
    957Investment securities
    
    
    48,038
    
    
    
    48,038
    
    
    
    35,764
    
    
    
    35,704Loans, net
    
    
    86,620
    
    
    
    86,698
    
    
    
    90,336
    
    
    
    90,249Total financial assets
    
    $
    147,550
    
    
    $
    147,628
    
    
    $
    140,412
    
    
    $
    140,265
 December 31, 2010
    
    
    March 31, 2010(in thousands)
    
    
    (in thousands)Book
    
    
    Fair
    
    
    Book
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueLiabilities:Deposits
    
    $
    139,764
    
    
    $
    141,604
    
    
    $
    136,965
    
    
    $
    140,111Advanced payments by borrowers for
taxes and insurance
    
    
    221
    
    
    
    221
    
    
    
    558
    
    
    
    558Total financial liabilities
    
    $
    139,985
    
    
    $
    141,825
    
    
    $
    137,523
    
    
    $
    140,669
  Cash and cash equivalents
 Investment securities held-to-maturity
 Loans, net:
 Deposits:
 Note 7: Accounting Standards Updates
   12




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13




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##### Table of Contents



Note 8: Commitment and Financial Instruments with Off-Balance-Sheet Credit Risk
    Mortgage loans commitments fixed rate
    
    $
    2,397,000Mortgage loans commitments variable rate
    
    
    3,153,000Commitments to originate nonmortgage loans
    
    
    98,000Commitments to purchase loans
    
    
    737,000Unused equity lines of credit (variable rate)
    
    
    1,744,000Commercial and consumer lines of credit
    
    
    814,000Standby letters of credit
    
    
    473,000Total
    
    $
    9,416,000
   14




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
 Safe Harbor Statement for Forward-Looking Statements
   Critical Accounting Policies
  Allowance for Loan Losses.
 Fair Value of Investments.
  15




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##### Table of Contents



Comparison of Financial Condition at December 31, 2010 and March 31, 2010
 Assets.
 Loans.
 Cash and Cash Equivalents.
 Securities.
 Ground Rent.
 Deposits.
 Borrowings.
 Results of Operations for the Three Months Ended December 31, 2010 and 2009
 Overview.
 Net Interest Income.
  16




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##### Table of Contents



Average Balance and Yields
  17




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##### Table of Contents



Three Months EndedDecember 312010
    
    
    2009Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    and
    
    
    Yield/
    
    
    Average
    
    
    and
    
    
    Yield/Balance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    CostAssets:Interest-bearing due from banks
    
    $
    17,102,278
    
    
    $
    14,185
    
    
    
    0.33
    %
    
    $
    20,425,202
    
    
    $
    14,633
    
    
    
    0.28
    %Investment securities available-for-sale
    
    
    39,626,202
    
    
    
    230,231
    
    
    
    2.31
    %
    
    
    28,033,544
    
    
    
    228,305
    
    
    
    3.23
    %Investment securities held-to-maturity
    
    
    1,458,393
    
    
    
    15,699
    
    
    
    4.27
    %
    
    
    2,854,799
    
    
    
    72,614
    
    
    
    10.09
    %Loans receivable, net
    
    
    88,189,793
    
    
    
    1,251,278
    
    
    
    5.63
    %
    
    
    90,187,568
    
    
    
    1,296,674
    
    
    
    5.70
    %Other interest-earning assets
    
    
    712,715
    
    
    
    6,289
    
    
    
    3.50
    %
    
    
    724,852
    
    
    
    6,438
    
    
    
    3.52
    %Total interest-earning assets
    
    
    147,089,381
    
    
    $
    1,517,682
    
    
    
    4.09
    %
    
    
    142,225,965
    
    
    $
    1,618,664
    
    
    
    4.52
    %Non-interest-earning assets
    
    
    8,934,506
    
    
    
    
    
    
    
    
    
    
    
    6,036,610Total assets
    
    $
    156,023,887
    
    
    
    
    
    
    
    
    
    
    $
    148,262,575Liabilities and shareholders equity:Time deposits
    
    $
    103,389,085
    
    
    $
    525,558
    
    
    
    2.02
    %
    
    $
    102,057,270
    
    
    $
    683,402
    
    
    
    2.66
    %Savings
    
    
    22,829,955
    
    
    
    14,670
    
    
    
    0.25
    %
    
    
    22,737,880
    
    
    
    21,318
    
    
    
    0.37
    %NOW and money market accounts
    
    
    7,277,376
    
    
    
    8,769
    
    
    
    0.48
    %
    
    
    8,074,483
    
    
    
    12,898
    
    
    
    0.63
    %Total interest-bearing deposits
    
    
    133,496,416
    
    
    
    548,997
    
    
    
    1.63
    %
    
    
    132,869,633
    
    
    
    717,618
    
    
    
    2.14
    %Other interest-bearing liabilities
    
    
    391,361
    
    
    
    3
    
    
    
    0.00
    %
    
    
    373,040
    
    
    
    15
    
    
    
    0.02
    %Total interest-bearing liabilities
    
    
    133,887,777
    
    
    
    549,000
    
    
    
    1.63
    %
    
    
    133,242,673
    
    
    
    717,633
    
    
    
    2.14
    %Non-interest-bearing deposits
    
    
    6,987,958
    
    
    
    
    
    
    
    
    
    
    
    5,233,464Other non-interest-bearing liabilities
    
    
    504,825
    
    
    
    
    
    
    
    
    
    
    
    469,478Total liabilities
    
    
    141,380,560
    
    
    
    
    
    
    
    
    
    
    
    138,945,615Total shareholders equity
    
    
    14,643,327
    
    
    
    
    
    
    
    
    
    
    
    9,316,960Total liabilities and shareholders equity
    
    $
    156,023,887
    
    
    
    
    
    
    
    
    
    
    $
    148,262,575Net interest income
    
    
    
    
    
    $
    968,682
    
    
    
    
    
    
    
    
    
    
    $
    901,031Interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.46
    %
    
    
    
    
    
    
    
    
    
    
    2.38
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    2.51
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    109.86
    %
    
    
    
    
    
    
    
    
    
    
    106.74
    %
  18




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Provision for Loan Losses.
 Noninterest Revenue.
 Noninterest Expenses.
 Income Tax Expense.
 Results of Operations for the Nine Months Ended December 31, 2010 and 2009
 Overview.
 Net Interest Income.
    19




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Average Balance and Yields
  20




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##### Table of Contents



Nine Months EndedDecember 312010
    
    
    2009Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    and
    
    
    Yield/
    
    
    Average
    
    
    and
    
    
    Yield/Balance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    CostAssets:Interest-bearing balances due from banks
    
    $
    17,623,415
    
    
    $
    41,306
    
    
    
    0.31
    %
    
    $
    19,546,250
    
    
    $
    34,097
    
    
    
    0.23
    %Investment securities available-for-sale
    
    
    34,672,885
    
    
    
    665,370
    
    
    
    2.55
    %
    
    
    27,297,341
    
    
    
    649,429
    
    
    
    3.16
    %Investment securities held-to-maturity
    
    
    1,802,920
    
    
    
    63,334
    
    
    
    4.66
    %
    
    
    2,958,639
    
    
    
    306,315
    
    
    
    13.74
    %Loans receivable, net
    
    
    89,271,062
    
    
    
    3,814,392
    
    
    
    5.67
    %
    
    
    89,423,671
    
    
    
    3,844,980
    
    
    
    5.71
    %Other interest-earning assets
    
    
    716,805
    
    
    
    21,255
    
    
    
    3.94
    %
    
    
    731,216
    
    
    
    22,122
    
    
    
    4.02
    %Total interest-earning assets
    
    
    144,087,087
    
    
    $
    4,605,657
    
    
    
    4.24
    %
    
    
    139,957,117
    
    
    $
    4,856,943
    
    
    
    4.61
    %Non-interest-earning assets
    
    
    7,103,855
    
    
    
    
    
    
    
    
    
    
    
    4,810,827Total assets
    
    $
    151,190,942
    
    
    
    
    
    
    
    
    
    
    $
    144,767,944Liabilities and shareholders equity:Time deposits
    
    $
    102,851,672
    
    
    $
    1,658,317
    
    
    
    2.14
    %
    
    $
    99,495,982
    
    
    $
    2,242,214
    
    
    
    2.99
    %Savings
    
    
    23,209,295
    
    
    
    43,301
    
    
    
    0.25
    %
    
    
    22,091,257
    
    
    
    83,539
    
    
    
    0.50
    %NOW and money market accounts
    
    
    7,551,915
    
    
    
    31,449
    
    
    
    0.55
    %
    
    
    7,868,993
    
    
    
    39,863
    
    
    
    0.67
    %Total interest-bearing deposits
    
    
    133,612,882
    
    
    
    1,733,067
    
    
    
    1.72
    %
    
    
    129,456,232
    
    
    
    2,365,616
    
    
    
    2.43
    %Other interest-bearing liabilities
    
    
    473,608
    
    
    
    42
    
    
    
    0.01
    %
    
    
    453,309
    
    
    
    64
    
    
    
    0.02
    %Total interest-bearing liabilities
    
    
    134,086,490
    
    
    
    1,733,109
    
    
    
    1.72
    %
    
    
    129,909,541
    
    
    
    2,365,680
    
    
    
    2.42
    %Non-interest-bearing deposits
    
    
    5,982,406
    
    
    
    
    
    
    
    
    
    
    
    4,941,600Other non-interest-bearing liabilities
    
    
    456,261
    
    
    
    
    
    
    
    
    
    
    
    485,675Total liabilities
    
    
    140,525,157
    
    
    
    
    
    
    
    
    
    
    
    135,336,816Total shareholders equity
    
    
    10,665,785
    
    
    
    
    
    
    
    
    
    
    
    9,431,128Total liabilities and shareholders equity
    
    $
    151,190,942
    
    
    
    
    
    
    
    
    
    
    $
    144,767,944Net interest income
    
    
    
    
    
    $
    2,872,548
    
    
    
    
    
    
    
    
    
    
    $
    2,491,263Interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.52
    %
    
    
    
    
    
    
    
    
    
    
    2.19
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.65
    %
    
    
    
    
    
    
    
    
    
    
    2.36
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    107.46
    %
    
    
    
    
    
    
    
    
    
    
    107.73
    %
  21




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Provision for Loan Losses.
 Noninterest Revenue.
 Noninterest Expenses.
 Income Tax Expense.
 Liquidity and Capital Resources
 Liquidity Management.
     22




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##### Table of Contents



Capital Management.
  Off-Balance Sheet Arrangements.
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
  
 Item 4. Controls and Procedures
   23




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. [Removed and Reserved]
  
 Item 5. Other Information.
  
 Item 6. Exhibits
 3.1
    
    
    Articles of Incorporation of Madison Bancorp, Inc. (1)3.2
    
    
    Bylaws of Madison Bancorp, Inc. (2)4.0
    
    
    Form of Stock Certificate of Madison Bancorp, Inc. (3)31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer32.0
    
    
    Section 1350 Certification
 
 (1)
    
    Incorporated herein by reference to Exhibit 3.1 to the Companys Registration
Statement on Form S-1 (File No. 333-167455), as amended, initially filed with the
Securities and Exchange Commission on June 11, 2010.(2)
    
    Incorporated herein by reference to Exhibit 3.2 to the Companys Registration
Statement on Form S-1 (File No. 333-167455), as amended, initially filed with the
Securities and Exchange Commission on June 11, 2010.(3)
    
    Incorporated herein by reference to Exhibit 4 to the Companys Registration
Statement on Form S-1 (File No. 333-167455), as amended, initially filed with the
Securities and Exchange Commission on June 11, 2010.  24




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##### Table of Contents



SIGNATURES
  MADISON BANCORP, INC.Dated: February 10, 2011
    By:
    /s/ Michael P. GavinMichael P. GavinPresident and Chief Executive Officer
(principal executive)/s/ Paul A. LovelacePaul A. LovelaceSenior Vice President and Chief Financial Officer
(principal financial and accounting officer)  25