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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB(Mark One)

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002

[  ] Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from _______________ to _______________

Commission file number 0-32867

MADISON BANCSHARES, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-3720289                          
|                                                               |  |                                     
|(State or Other Jurisdiction
of Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)

35388 U.S. Highway 19, NorthPalm Harbor, Florida 34684(Address of Principal Executive Offices)

(727) 786-3888(Issuers Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)

Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period 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 [  ]

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date;

|                                       |  |                                
|-------------------------------------- |  | -------------------------------
|Common stock, par value $.01 per share |  | 1,534,004 shares               
|                                       |  |                                
|(class)                                |  | Outstanding at October 14, 2002



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TABLE OF CONTENTS



|                              |                                                                    |                                                                                  |  |  |  |  |  | 
|----------------------------- | ------------------------------------------------------------------ | -------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                      
|                              | PART I. FINANCIAL INFORMATION                                     
|                              |                                                                    | Condensed Consolidated Balance Sheets                                           
|                              |                                                                    | Condensed Consolidated Statements of Earnings (Unaudited)                       
|                              |                                                                    | Condensed Consolidated Statements of Changes in Stockholders Equity (Unaudited)
|                              |                                                                    | Condensed Consolidated Statements of Cash Flows (Unaudited)                     
|                              |                                                                    | Notes to Condensed Consolidated Financial Statements (Unaudited)                
|                              |                                                                    | Report on Review by Independent Certified Public Accountants                    
|                              | Item 2. Managements Discussion and Analysis Or Plan of Operations
|                              | Item 3. Controls and Procedures                                   
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                         
|                              | Item 2. Changes in Securities and Use of Proceeds                 
|                              | Item 6. Exhibits and Reports on Form 8-K                          
|SIGNATURES                   
|CERTIFICATIONS               
|CEO Certificate              
|CFO Certificate              



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##### Table of Contents



MADISON BANCSHARES, INC.

INDEX




PART I. FINANCIAL INFORMATION




|                             |                                                                    |                                                                                                                                |       |       |     | 
|---------------------------- | ------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------ | ----- | ----- | --- | 
|                             |                                                                    | Page                                                                                                                          
|                             |                                                                    |                                                                                                                               
|Item 1. Financial Statements
|                             |                                                                    | Condensed Consolidated Balance Sheets -
At September 30, 2002 (unaudited) and At December 31, 2001                             |       |       | 2   | 
|                             |                                                                    | Condensed Consolidated Statements of Earnings -
Three and Nine Months ended September 30, 2002 and 2001 (unaudited)            |       |       | 3   | 
|                             |                                                                    | Condensed Consolidated Statements of Changes in Stockholders Equity
Nine Months Ended September 30, 2002 and 2001 (unaudited) |       |       | 4   | 
|                             |                                                                    | Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2002 and 2001 (unaudited)                    |       |       | 5-6 | 
|                             |                                                                    | Notes to Condensed Consolidated Financial Statements (unaudited)                                                               |       |       | 7-9 | 
|                             |                                                                    | Review by Independent Certified Public Accountants                                                                             |       |       | 10  | 
|                             |                                                                    | Report on Review by Independent Certified Public Accountants                                                                   |       |       | 11  | 
|                             | Item 2. Managements Discussion and Analysis or Plan of Operations |                                                                                                                                |       | 12-16 |    
|                             | Item 3. Controls and Procedures                                    |                                                                                                                                |       | 17    |    
|PART II. OTHER INFORMATION   |                                                                    |                                                                                                                                |       |      
|                             | Item 1. Legal Proceedings                                          |                                                                                                                                |       | 17    |    
|                             | Item 2. Changes in Securities and Use of Proceeds                  |                                                                                                                                |       | 17    |    
|                             | Item 6. Exhibits and Reports on Form 8-K                           |                                                                                                                                |       | 18    |    
|SIGNATURES                   |                                                                    |                                                                                                                                | 19    |      
|CERTIFICATIONS               |                                                                    |                                                                                                                                | 19-21 |      

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##### Table of Contents



MADISON BANCSHARES, INC.




PART I. FINANCIAL INFORMATION




Item 1. Financial Statements

Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts)

|                                                                             |                                                                                                                             |                            |         |               |         |              |         |        |         | 
|---------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------------- | ------- | ------------ | ------- | ------ | ------- | 
|                                                                             |                                                                                                                             |                            |         | September 30, |         | December 31,
|                                                                             |                                                                                                                             |                            |         |               |         |             
|Assets                                                                       |                                                                                                                             | 2002                       |         | 2001         
|                                                                             |                                                                                                                             |                            |         |              
|                                                                             |                                                                                                                             |                            |         | (Unaudited)   |         |              |         |       
|Cash and due from banks                                                      |                                                                                                                             | $                          | 3,023   |               |         |              | 2,440   |       
|Interest-bearing deposits with banks                                         |                                                                                                                             |                            | 79      |               |         |              | 33      |       
|Federal funds sold                                                           |                                                                                                                             |                            | 9,229   |               |         |              | 328     |       
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             | Cash and cash equivalents                                                                                                   |                            |         | 12,331        |         |              |         | 2,801  |        
|Securities available for sale                                                |                                                                                                                             |                            | 26,646  |               |         |              | 20,882  |       
|Loans, net of allowance for loan losses of $1,948 in 2002
and $1,477 in 2001 |                                                                                                                             |                            | 158,657 |               |         |              | 137,601 |       
|Accrued interest receivable                                                  |                                                                                                                             |                            | 740     |               |         |              | 712     |       
|Premises and equipment, net                                                  |                                                                                                                             |                            | 3,954   |               |         |              | 2,888   |       
|Federal Home Loan Bank of Atlanta stock, at cost                             |                                                                                                                             |                            | 765     |               |         |              | 618     |       
|Deferred tax asset                                                           |                                                                                                                             |                            | 208     |               |         |              | 250     |       
|Other assets                                                                 |                                                                                                                             |                            | 1,169   |               |         |              | 779     |       
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             |                                                                                                                             | $                          | 204,470 |               |         |              | 166,531 |       
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             | Liabilities and Stockholders Equity                                                                                        |                            |         |               |         |              |         |        |        
|Liabilities:                                                                 |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             | Noninterest-bearing demand deposits                                                                                         |                            |         | 15,182        |         |              |         | 11,164 |        
|                                                                             | Savings, NOW and money-market deposits                                                                                      |                            |         | 76,084        |         |              |         | 53,727 |        
|                                                                             | Time deposits                                                                                                               |                            |         | 82,477        |         |              |         | 72,193 |        
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             |                                                                                                                             | Total deposits             |         |               | 173,743 |              |         |        | 137,084 | 
|                                                                             | Federal Home Loan Bank advances                                                                                             |                            |         | 10,000        |         |              |         | 12,200 |        
|                                                                             | Other borrowings                                                                                                            |                            |         | 3,737         |         |              |         | 1,801  |        
|                                                                             | Official checks                                                                                                             |                            |         | 1,009         |         |              |         | 1,736  |        
|                                                                             | Accrued expenses and other liabilities                                                                                      |                            |         | 1,954         |         |              |         | 1,457  |        
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             |                                                                                                                             | Total liabilities          |         |               | 190,443 |              |         |        | 154,278 | 
|Stockholders equity:                                                        |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             | Preferred stock, $0.01 par value, authorized 1,000,000 shares;
none issued or outstanding                                   |                            |         |              |         |              |         |       |        
|                                                                             | Common stock, $0.01 par value, authorized 4,000,000 shares;
issued and outstanding 1,534,004 and 1,493,971 in 2002 and 2001 |                            |         | 15            |         |              |         | 15     |        
|                                                                             | Additional paid-in capital                                                                                                  |                            |         | 13,001        |         |              |         | 12,653 |        
|                                                                             | Retained earnings (accumulated deficit)                                                                                     |                            |         | 780           |         |              |         | (355   | )      
|                                                                             | Accumulated other comprehensive income (loss)                                                                               |                            |         | 231           |         |              |         | (60    | )      
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             |                                                                                                                             | Total stockholders equity |         |               | 14,027  |              |         |        | 12,253  | 
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       
|                                                                             |                                                                                                                             | $                          | 204,470 |               |         |              | 166,531 |       
|                                                                             |                                                                                                                             |                            |         |               |         |              |         |       

See Accompanying Notes to Condensed Consolidated Financial Statements.

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MADISON BANCSHARES, INC.




Condensed Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)

|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |       |       | 
|------------------------- | ----------------------------------- | --------------------------------------------------- | --- | ------------------ | ----- | ----------------- | --- | ----- | ----- | ---- | --- | ----- | ----- |  | --- | ----- | ----- | 
|                          |                                     |                                                     |     | Three Months Ended |       | Nine Months Ended
|                          |                                     |                                                     |     | September 30,      |       | September 30,    
|                          |                                     |                                                     |     |                    |       |                  
|                          |                                     |                                                     |     | 2002               |       | 2001              |     | 2002  |       | 2001
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |     
|Interest income:          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          | Loans                               |                                                     | $   | 2,838              |       |                   |     | 2,777 |       |      |     | 8,162 |       |  |     | 8,036 |      
|                          | Securities available for sale       |                                                     |     | 311                |       |                   |     | 147   |       |      |     | 910   |       |  |     | 498   |      
|                          | Securities held to maturity         |                                                     |     |                   |       |                   |     | 121   |       |      |     |      |       |  |     | 326   |      
|                          | Other interest-earning assets       |                                                     |     | 12                 |       |                   |     | 42    |       |      |     | 76    |       |  |     | 285   |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Total interest income                               |     |                    | 3,161 |                   |     |       | 3,087 |      |     |       | 9,148 |  |     |       | 9,145 | 
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|Interest expense:         |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          | Deposits                            |                                                     |     | 1,028              |       |                   |     | 1,437 |       |      |     | 3,084 |       |  |     | 4,599 |      
|                          | Borrowed funds                      |                                                     |     | 143                |       |                   |     | 119   |       |      |     | 407   |       |  |     | 269   |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Total interest expense                              |     |                    | 1,171 |                   |     |       | 1,556 |      |     |       | 3,491 |  |     |       | 4,868 | 
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Net interest income                                 |     |                    | 1,990 |                   |     |       | 1,531 |      |     |       | 5,657 |  |     |       | 4,277 | 
|Provision for loan losses |                                     |                                                     | 110 |                    |       |                   | 191 |       |       |      | 509 |       |       |  | 349 |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Net interest income after provision for loan losses |     |                    | 1,880 |                   |     |       | 1,340 |      |     |       | 5,148 |  |     |       | 3,928 | 
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|Non-interest income:      |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          | Service charges on deposit accounts |                                                     |     | 141                |       |                   |     | 114   |       |      |     | 374   |       |  |     | 347   |      
|                          | Other service charges and fees      |                                                     |     | 49                 |       |                   |     | 19    |       |      |     | 122   |       |  |     | 62    |      
|                          | Gain on sale of securities          |                                                     |     |                   |       |                   |     |      |       |      |     | 4     |       |  |     | 23    |      
|                          | Other                               |                                                     |     | 116                |       |                   |     | 41    |       |      |     | 178   |       |  |     | 117   |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Total non-interest income                           |     |                    | 306   |                   |     |       | 174   |      |     |       | 678   |  |     |       | 549   | 
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|Non-interest expenses:    |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          | Employee compensation and benefits  |                                                     |     | 786                |       |                   |     | 606   |       |      |     | 2,209 |       |  |     | 1,772 |      
|                          | Occupancy and equipment             |                                                     |     | 184                |       |                   |     | 170   |       |      |     | 532   |       |  |     | 488   |      
|                          | Data processing expense             |                                                     |     | 65                 |       |                   |     | 64    |       |      |     | 197   |       |  |     | 188   |      
|                          | Professional fees                   |                                                     |     | 45                 |       |                   |     | 78    |       |      |     | 107   |       |  |     | 127   |      
|                          | Federal deposit insurance premium   |                                                     |     | 7                  |       |                   |     | 6     |       |      |     | 19    |       |  |     | 19    |      
|                          | Other expense                       |                                                     |     | 320                |       |                   |     | 269   |       |      |     | 790   |       |  |     | 700   |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Total non-interest expenses                         |     |                    | 1,407 |                   |     |       | 1,193 |      |     |       | 3,854 |  |     |       | 3,294 | 
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Earnings before income taxes                        |     |                    | 779   |                   |     |       | 321   |      |     |       | 1,972 |  |     |       | 1,183 | 
|Income taxes              |                                     |                                                     | 296 |                    |       |                   | 118 |       |       |      | 746 |       |       |  | 440 |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          |                                     | Net earnings                                        |     | $                  | 483   |                   |     |       | 203   |      |     |       | 1,226 |  |     |       | 743   | 
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|Earnings per share:       |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          | Basic earnings per share            |                                                     | $   | .32                |       |                   |     | .14   |       |      |     | .81   |       |  |     | .50   |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|                          | Diluted earnings per share          |                                                     | $   | .30                |       |                   |     | .13   |       |      |     | .77   |       |  |     | .48   |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      
|Dividends per share       |                                     | $                                                   |    |                    |       |                   | .05 |       |       |      | .06 |       |       |  | .05 |      
|                          |                                     |                                                     |     |                    |       |                   |     |       |       |      |     |       |       |  |     |      

See Accompanying Notes to Condensed Consolidated Financial Statements.

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MADISON BANCSHARES, INC.




Condensed Consolidated Statements of Changes in Stockholders Equity (Unaudited)

Nine Months Ended September 30, 2002 and 2001
(In thousands)

|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |       | 
|----------------------------------------- | ------------------------------------------------------------------------------------------------ | - | ------ | - | ------- |  | ------------ | - | -------- |  | -------- | ----- | ------- |  | ----------- | --- |  |  | ------ | ----- | 
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  | Accumulated |     |  |  |       
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  | Other       |     |  |  |       
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  | Retained |       | Compre- |  |             |     | 
|                                          |                                                                                                  |   |        |   |         |  | Additional   |   | Earnings |  | hensive  |       |         |  |            
|                                          |                                                                                                  |   | Common |   | Paid-in |  | (Accumulated |   | Income   |  |          |       |        
|                                          |                                                                                                  |   | Stock  |   | Capital |  | Deficit)     |   | (Loss)   |  | Total   
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |         
|Balance at December 31, 2000              |                                                                                                  | $ | 14     |   |         |  | 12,032       |   |          |  | (770     | )     |         |  | (337        | )   |  |  | 10,939 |      
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Comprehensive income:                     |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|                                          | Net earnings (unaudited)                                                                         |   |        |  |         |  |              |  |          |  |          | 743   |         |  |             |    |  |  |        | 743   | 
|                                          | Net change in unrealized loss on
securities available for sale, net of
taxes of $173 (unaudited) |   |        |  |         |  |              |  |          |  |          |      |         |  |             | 317 |  |  |        | 317   | 
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Comprehensive income (unaudited)          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  | 1,060  |      
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Stock dividend (unaudited)                |                                                                                                  |   | 1      |   |         |  | 602          |   |          |  | (603     | )     |         |  |            |     |  |  |       |      
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Cash dividend declared (unaudited)        |                                                                                                  |   |       |   |         |  |             |   |          |  | (75      | )     |         |  |            |     |  |  | (75    | )    
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Balance at September 30, 2001 (unaudited) |                                                                                                  | $ | 15     |   |         |  | 12,634       |   |          |  | (705     | )     |         |  | (20         | )   |  |  | 11,924 |      
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Balance at December 31, 2001              |                                                                                                  | $ | 15     |   |         |  | 12,653       |   |          |  | (355     | )     |         |  | (60         | )   |  |  | 12,253 |      
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Comprehensive income:                     |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|                                          | Net earnings (unaudited)                                                                         |   |        |  |         |  |              |  |          |  |          | 1,226 |         |  |             |    |  |  |        | 1,226 | 
|                                          | Net change in unrealized loss on
securities available for sale, net of
taxes of $177 (unaudited) |   |        |  |         |  |              |  |          |  |          |      |         |  |             | 291 |  |  |        | 291   | 
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Comprehensive income (unaudited)          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  | 1,517  |      
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Stock options exercised (unaudited)       |                                                                                                  |   |       |   |         |  | 97           |   |          |  |         |       |         |  |            |     |  |  | 97     |      
|Sale of common stock (unaudited)          |                                                                                                  |   |       |   |         |  | 251          |   |          |  |         |       |         |  |            |     |  |  | 251    |      
|Cash dividend paid (unaudited)            |                                                                                                  |   |       |   |         |  |             |   |          |  | (91      | )     |         |  |            |     |  |  | (91    | )    
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      
|Balance at September 30, 2002 (unaudited) |                                                                                                  | $ | 15     |   |         |  | 13,001       |   |          |  | 780      |       |         |  | 231         |     |  |  | 14,027 |      
|                                          |                                                                                                  |   |        |   |         |  |              |   |          |  |          |       |         |  |             |     |  |  |        |      

See Accompanying Notes to Condensed Consolidated Financial Statements.

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MADISON BANCSHARES, INC.




Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |         |      |         |  
|------------------------------------------------ | ----------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------- | ------- | ----------------- | ------- | ----- | ------- | ---- | ------- | -
|                                                 |                                                                                     |                                                                                  |                                           |         | Nine Months Ended
|                                                 |                                                                                     |                                                                                  |                                           |         | September 30,    
|                                                 |                                                                                     |                                                                                  |                                           |         |                  
|                                                 |                                                                                     |                                                                                  |                                           |         | 2002              |         | 2001 
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |      
|Cash flows from operating activities:            |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|                                                 | Net earnings                                                                        |                                                                                  | $                                         | 1,226   |                   |         |       | 743     |     
|                                                 | Adjustments to reconcile net earnings to net cash provided by
operating activities: |                                                                                  |                                           |         |                   |         |       |         |     
|                                                 |                                                                                     | Provision for loan losses                                                        |                                           |         | 509               |         |       |         | 349  |        
|                                                 |                                                                                     | Depreciation and amortization                                                    |                                           |         | 275               |         |       |         | 267  |        
|                                                 |                                                                                     | Amortization of discounts and premiums on securities and deferred loan
fees, net |                                           |         | 71                |         |       |         | 1    |        
|                                                 |                                                                                     | Credit for deferred income taxes                                                 |                                           |         | (135              | )       |       |         | (136 | )      
|                                                 |                                                                                     | (Increase) decrease in accrued interest receivable                               |                                           |         | (28               | )       |       |         | 81   |        
|                                                 |                                                                                     | Increase in other assets                                                         |                                           |         | (390              | )       |       |         | (86  | )      
|                                                 |                                                                                     | (Decrease) increase in official checks, accrued expenses and other liabilities   |                                           |         | (230              | )       |       |         | 494  |        
|                                                 |                                                                                     | Gain on sale of securities available for sale                                    |                                           |         | (4                | )       |       |         | (23  | )      
|                                                 |                                                                                     | Gain on sale of loans                                                            |                                           |         |                  |         |       |         | (6   | )      
|                                                 |                                                                                     | Gain on sale of foreclosed real estate                                           |                                           |         | (78               | )       |       |         |     |        
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|                                                 |                                                                                     |                                                                                  | Net cash provided by operating activities |         |                   | 1,216   |       |         |      | 1,684   |  
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|Cash flows from investing activities:            |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|                                                 | Net increase in loans                                                               |                                                                                  |                                           | (21,670 | )                 |         |       | (25,095 | )   
|                                                 | Securities held to maturity principle repayments                                    |                                                                                  |                                           |        |                   |         |       | 20      |     
|                                                 | Purchase of securities available for sale                                           |                                                                                  |                                           | (12,119 | )                 |         |       |        |     
|                                                 | Securities available for sale principle repayments                                  |                                                                                  |                                           | 4,780   |                   |         |       | 1,369   |     
|                                                 | Net proceeds from sales of securities available for sale                            |                                                                                  |                                           | 2,004   |                   |         |       | 2,427   |     
|                                                 | Net purchase of premises and equipment                                              |                                                                                  |                                           | (1,341  | )                 |         |       | (215    | )   
|                                                 | Purchase of Federal Home Loan Bank stock                                            |                                                                                  |                                           | (147    | )                 |         |       | (26     | )   
|                                                 | Proceeds from sale of loans                                                         |                                                                                  |                                           |        |                   |         |       | 1,663   |     
|                                                 | Net proceeds from sale of foreclosed real estate                                    |                                                                                  |                                           | 155     |                   |         |       |        |     
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|                                                 |                                                                                     |                                                                                  | Net cash used in investing activities     |         |                   | (28,338 | )     |         |      | (19,857 | )
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|Cash flows from financing activities:            |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|                                                 | Net increase in deposits                                                            |                                                                                  |                                           | 36,659  |                   |         |       | 9,192   |     
|                                                 | Net (decrease) increase in Federal Home Loan Bank advances                          |                                                                                  |                                           | (2,200  | )                 |         |       | 9,750   |     
|                                                 | Net increase in other borrowings                                                    |                                                                                  |                                           | 1,936   |                   |         |       | 1,006   |     
|                                                 | Cash dividends paid                                                                 |                                                                                  |                                           | (91     | )                 |         |       |        |     
|                                                 | Proceeds from sale of common stock                                                  |                                                                                  |                                           | 251     |                   |         |       |        |     
|                                                 | Proceeds from stock options exercised                                               |                                                                                  |                                           | 97      |                   |         |       |        |     
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|                                                 |                                                                                     |                                                                                  | Net cash provided by financing activities |         |                   | 36,652  |       |         |      | 19,948  |  
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|                                                 |                                                                                     |                                                                                  | Net increase in cash and cash equivalents |         |                   | 9,530   |       |         |      | 1,775   |  
|Cash and cash equivalents at beginning of period |                                                                                     |                                                                                  | 2,801                                     |         |                   |         | 2,672 |        
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        
|Cash and cash equivalents at end of period       |                                                                                     | $                                                                                | 12,331                                    |         |                   |         | 4,447 |        
|                                                 |                                                                                     |                                                                                  |                                           |         |                   |         |       |        

(continued)

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##### Table of Contents



MADISON BANCSHARES, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
(In thousands)

|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |      |     |       |  | 
|------------------------------------------------- | -------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------ | - | ----- | ----------------- |  | ---- | --- | ----- |  | 
|                                                  |                                  |                                                                                                                           |              |   |       | Nine Months Ended
|                                                  |                                  |                                                                                                                           |              |   |       | September 30,    
|                                                  |                                  |                                                                                                                           |              |   |       |                  
|                                                  |                                  |                                                                                                                           |              |   |       | 2002              |  | 2001
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |     
|Supplemental disclosure of cash flow information: |                                  |                                                                                                                           |              |   |       |                   |  |     
|                                                  | Cash paid during the period for: |                                                                                                                           |              |   |       |                   |  |      |    
|                                                  |                                  |                                                                                                                           | Interest     |   | $     | 3,523             |  |      |     | 4,841 | 
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |     
|                                                  |                                  |                                                                                                                           | Income taxes |   | $     | 859               |  |      |     | 555   | 
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |      |     |       | 
|Noncash transactions:                             |                                  |                                                                                                                           |              |   |       |                   |  |     
|                                                  |                                  | Loans reclassified to foreclosed real estate                                                                              |              | $ | 1,537 |                   |  |      |    |      
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |     
|                                                  |                                  | Foreclosed real estate reclassified to loans                                                                              |              | $ | 1,460 |                   |  |      |    |      
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |     
|                                                  |                                  | Accumulated other comprehensive income (loss), net change in
unrealized loss on securities available for sale, net of tax |              | $ | 291   |                   |  |      | 317 |      
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |     
|                                                  |                                  | Cash dividend declared                                                                                                    |              | $ |      |                   |  |      | 75  |      
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |     
|                                                  |                                  | Stock dividends                                                                                                           |              | $ |      |                   |  |      | 603 |      
|                                                  |                                  |                                                                                                                           |              |   |       |                   |  |     

See Accompanying Notes to Condensed Consolidated Financial Statements.

6



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##### Table of Contents



MADISON BANCSHARES, INC.




Notes to Condensed Consolidated Financial Statements (Unaudited)



|1. |  | General.On June 19, 2001, the shareholders of Madison Bank (the Bank)
approved a plan of corporate reorganization under which the Bank would
become a wholly-owned subsidiary of Madison BancShares, Inc. (the Holding
Company) (collectively, the Company). This transaction became
effective on September 4, 2001. Initially, the only activity of the
Holding Company is the operation of the Bank. This corporate
reorganization was accounted for similar to a pooling of interests. All
previously issued $1.10 par value common shares of the Bank were exchanged
on a one for one basis for $.01 par value common shares of the Holding
Company. The Bank is a state-chartered commercial bank incorporated under
the laws of the State of Florida. The deposits of the Bank are insured by
the Federal Deposit Insurance Corporation. The Bank currently provides a
variety of banking services to small and middle-market businesses and
individuals through its three banking offices located in Pinellas County,
Florida and one banking office in Pasco County, Florida.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In the opinion of the management of the Company, the accompanying
condensed consolidated financial statements contain all adjustments
(consisting principally of normal recurring accruals) necessary to
present fairly the financial position at September 30, 2002, the results
of operations for the three- and nine-month periods ended September 30,
2002 and 2001 and cash flows for the nine-month periods ended September
30, 2002 and 2001. The results of operations and other data for the
three- and nine-month periods ended September 30, 2002 are not
necessarily indicative of results that may be expected for the year
ending December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|2. |  | Loan Impairment and Loan Losses.Loans identified as impaired at
September 30, 2002 and 2001 and for the nine-month periods then ended are
as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                                                         |  |                   |       |      |  |  |       | 
|------------------------------------------------------------------------ |  | ----------------- | ----- | ---- |  |  | ----- | 
|                                                                         |  | Nine Months Ended
|                                                                         |  | September 30,    
|                                                                         |  |                  
|                                                                         |  | 2002              |       | 2001
|                                                                         |  |                   |       |     
|Gross loans with related allowance for losses recorded,
at end of period |  | $                 | 2,685 |      |  |  | 1,230 | 
|Less allowance on these loans                                            |  |                   | 268   |      |  |  | 123   | 
|                                                                         |  |                   |       |      |  |  |       | 
|Net investment in impaired loans, at end of period                       |  | $                 | 2,417 |      |  |  | 1,107 | 
|                                                                         |  |                   |       |      |  |  |       | 
|Average net investment in impaired loans                                 |  | $                 | 1,634 |      |  |  | 5     | 
|                                                                         |  |                   |       |      |  |  |       | 
|Interest income recognized on impaired loans                             |  | $                 |      |      |  |  |      | 
|                                                                         |  |                   |       |      |  |  |       | 
|Interest income received on impaired loans                               |  | $                 |      |      |  |  |      | 
|                                                                         |  |                   |       |      |  |  |       | 



| |  |  | On July 9, 2002, an impaired loan with a balance of approximately $1.4
million was transferred to foreclosed real estate. During the three
months ended September 30, 2002 this property was sold for a gain of
approximately $78,000.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(continued)

7



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##### Table of Contents



MADISON BANCSHARES, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|2. |  | Loan Impairment and Loan Losses, Continued.The activity in the
allowance for loan losses is as follows (in thousands):
|-- |  | ----------------------------------------------------------------------------------------------------------------------

|                               |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       | 
|------------------------------ |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | 
|                               |  | Three Months Ended |       | Nine Months Ended
|                               |  | September 30,      |       | September 30,    
|                               |  |                    |       |                  
|                               |  | 2002               |       | 2001              |  | 2002 |       | 2001
|                               |  |                    |       |                   |  |      |       |     
|Balance at beginning of period |  | $                  | 1,868 |                   |  |      | 1,196 |      |  |  | 1,477 |   |  |  | 966   | 
|Provision for loan losses      |  |                    | 110   |                   |  |      | 191   |      |  |  | 509   |   |  |  | 349   | 
|Net (charge-offs) recoveries   |  |                    | (30   | )                 |  |      | 7     |      |  |  | (38   | ) |  |  | 79    | 
|                               |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       | 
|Balance at end of period       |  | $                  | 1,948 |                   |  |      | 1,394 |      |  |  | 1,948 |   |  |  | 1,394 | 
|                               |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       | 



|3. |  | Earnings Per Share (EPS).Earnings per share (EPS) of common stock
has been computed on the basis of the weighted-average number of shares of
common stock outstanding. For 2002 and 2001, outstanding stock options
are considered dilutive securities for purposes of calculating diluted EPS
which is computed using the treasury stock method. The following tables
present the calculations of EPS (dollars in thousands, except per share
amounts).
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |     | 
|-------------------------------- | --------------------------------------------------------------------- |  | -------- | ----- | ------ |  | --------- | --------- | -------- |  | ------ | --- | ------ |  | --------- | --- | ----- |  |  | --------- |  |  | - | --- | 
|                                 |                                                                       |  | 2002     |       | 2001  
|                                 |                                                                       |  |          |       |       
|                                 |                                                                       |  |          |       |        |  | Weighted- |           | Per      |  |        |     |        |  | Weighted- |     | Per  
|                                 |                                                                       |  |          |       |        |  | Average   |           | Share    |  |        |     |        |  | Average   |     | Share
|                                 |                                                                       |  | Earnings |       | Shares |  | Amount    |           | Earnings |  | Shares |     | Amount
|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |       
|Three Months Ended September 30: |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|Basic EPS:                       |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|                                 | Net earnings available to common stockholders                         |  | $        | 483   |        |  |           | 1,514,714 |          |  | $      | .32 |        |  | $         | 203 |       |  |  | 1,491,656 |  |  | $ | .14 | 
|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|Effect of dilutive securities-   |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|                                 | Incremental shares from assumed conversion
of options                 |  |          |       |        |  |           | 93,337    |          |  |        |     |        |  |           |     |       |  |  | 61,401    |  |  |   |     | 
|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|Diluted EPS:                     |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|                                 | Net earnings available to common stockholders
and assumed conversions |  | $        | 483   |        |  |           | 1,608,051 |          |  | $      | .30 |        |  | $         | 203 |       |  |  | 1,553,057 |  |  | $ | .13 | 
|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|Nine Months Ended September 30:  |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|Basic EPS:                       |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|                                 | Net earnings available to common stockholders                         |  | $        | 1,226 |        |  |           | 1,505,795 |          |  | $      | .81 |        |  | $         | 743 |       |  |  | 1,491,656 |  |  | $ | .50 | 
|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|Effect of dilutive securities-   |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|                                 | Incremental shares from assumed conversion
of options                 |  |          |       |        |  |           | 81,626    |          |  |        |     |        |  |           |     |       |  |  | 56,611    |  |  |   |     | 
|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|Diluted EPS:                     |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    
|                                 | Net earnings available to common stockholders
and assumed conversions |  | $        | 1,226 |        |  |           | 1,587,421 |          |  | $      | .77 |        |  | $         | 743 |       |  |  | 1,548,267 |  |  | $ | .48 | 
|                                 |                                                                       |  |          |       |        |  |           |           |          |  |        |     |        |  |           |     |       |  |  |           |  |  |   |    

(continued)

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##### Table of Contents



MADISON BANCSHARES, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|4. |  | Regulatory Capital.The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at September
30, 2002, of the regulatory capital requirements and the Banks actual
capital on a percentage basis:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                |  |        |       |             |  |            |      |  
|----------------------------------------------- |  | ------ | ----- | ----------- |  | ---------- | ---- | -
|                                                |  |        |       |             |  | Regulatory
|                                                |  | Actual |       | Requirement
|                                                |  |        |       |            
|Total capital to risk-weighted assets           |  |        | 10.12 | %           |  |            | 8.00 | %
|Tier I capital to risk-weighted assets          |  |        | 8.99  | %           |  |            | 4.00 | %
|Tier I capital to total assets  leverage ratio |  |        | 8.26  | %           |  |            | 4.00 | %

9



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##### Table of Contents



MADISON BANCSHARES, INC.

Review by Independent Certified Public Accountants

Hacker, Johnson & Smith PA, independent certified public accountants, have made
a review of the financial data as of September 30, 2002, and for the three- and
nine- month periods ended September 30, 2002 and 2001 presented in this
document, in accordance with standards established by the American Institute of
Certified Public Accountants.

Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.

10



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##### Table of Contents






Report on Review by Independent Certified Public Accountants

The Board of Directors
Madison BancShares, Inc.
Palm Harbor, Florida:

We have reviewed the accompanying condensed consolidated balance sheet of
Madison BancShares, Inc. and Subsidiary (the Company) as of September 30,
2002, the related condensed consolidated statements of earnings for the three-
and nine- month periods ended September 30, 2002 and 2001 and the related
condensed consolidated statements of changes in stockholders equity and cash
flows for the nine-month periods ended September 30, 2002 and 2001. These
financial statements are the responsibility of the Companys management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States
of America, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with accounting principles generally
accepted in the United States of America.

We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated balance
sheet as of December 31, 2001, and the related consolidated statements of
earnings, changes in stockholders equity and cash flows for the year then
ended (not presented herein); and in our report dated January 25, 2002 we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 2001, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.

HACKER, JOHNSON & SMITH PA
Tampa, Florida
October 10, 2002

11



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##### Table of Contents



MADISON BANCSHARES, INC.




Item 2. Managements Discussion and Analysis
Or Plan of Operations

General



| |  | On June 19, 2001, the shareholders of Madison Bank (the Bank) approved a
plan of corporate reorganization under which the Bank would become a
wholly-owned subsidiary of Madison BancShares, Inc. (the Holding Company)
(collectively, the Company). This transaction became effective on
September 4, 2001. Initially, the only activity of the Holding Company is the
operations of the Bank. This corporate reorganization was accounted for
similar to a pooling of interests. All previously issued $1.10 par value
common shares of the Bank were exchanged on a one for one basis for $.01 par
value common shares of the Holding Company. The Bank is a state-chartered
commercial bank incorporated under the laws of the State of Florida. The
deposits of the Bank are insured by the Federal Deposit Insurance
Corporation. The Bank currently provides a variety of banking services to
small and middle-market businesses and individuals through its three banking
offices located in Pinellas County, Florida and one banking office in Pasco
County, Florida.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Liquidity and Capital Resources



| |  | The Companys primary source of cash during the nine months ended September
30, 2002, was from net deposit inflows of $36.7 million. Cash was used
primarily to originate loans of $21.7 million and to purchase securities of
$12.1 million. At September 30, 2002, the Company had outstanding commitments
to originate loans totaling $10.5 million. Management believes that the
Company has adequate resources to fund all its commitments and that
substantially all of its existing commitments will be funded in 2002. At
September 30, 2002, the Bank exceeded its regulatory liquidity requirements.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following rates are presented for the dates and periods indicated:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                                                                                |  |               |       |              |               |       |      |             |  |   |      |  
|----------------------------------------------------------------------------------------------- |  | ------------- | ----- | ------------ | ------------- | ----- | ---- | ----------- |  | - | ---- | -
|                                                                                                |  | Nine Months   |       |              |               |       |      | Nine Months
|                                                                                                |  | Ended         |       | Year Ended   |               | Ended
|                                                                                                |  | September 30, |       | December 31, | September 30,
|                                                                                                |  | 2002          |       | 2001         |               | 2001 
|                                                                                                |  |               |       |              |               |      
|Average equity as a percentage
of average assets                                                |  |               | 7.19  | %            |               |       | 7.37 | %           |  |   | 7.28 | %
|Equity to total assets at end of period                                                         |  |               | 6.86  | %            |               |       | 7.36 | %           |  |   | 7.07 | %
|Book value per share (2)                                                                        |  | $             | 9.14  |              |               | $     | 8.20 |             |  | $ | 7.99 |  
|Return on average assets (1)                                                                    |  |               | 0.89  | %            |               |       | 0.67 | %           |  |   | 0.62 | %
|Return on average equity (1)                                                                    |  |               | 12.44 | %            |               |       | 9.11 | %           |  |   | 8.48 | %
|Noninterest expenses to average assets (1)                                                      |  |               | 2.81  | %            |               |       | 2.70 | %           |  |   | 2.74 | %
|Nonperforming loans and foreclosed real estate as
a percentage of total assets at end of period |  |               | 1.31  | %            |               |       | 0.85 | %           |  |   | 0.73 | %



---

|(1) |  | Annualized for the nine months ended September 30.
|--- |  | --------------------------------------------------
|   
|(2) |  | Adjusted for stock dividend.                      

12



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##### Table of Contents



MADISON BANCSHARES, INC.

Results of Operations

The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest and dividend income of the
Company from interest-earning assets and the resultant average yields; (ii) the
total dollar amount of interest expense on interest-bearing liabilities and the
resultant average cost; (iii) net interest income; (iv) interest-rate spread;
and (v) net interest margin.

|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |      |      | 
|-------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------ | ------ | -------------------------------- | ------- | --------- | ----- | -------- | ----- | ------- | ---- | --------- | ---- | ------ | ------ | -------- | ------- | ------- | ----- | ----- | ----- |  | ---- | ---- | ---- | 
|                                                                                 |                                             |                                            |        | Three Months Ended September 30,
|                                                                                 |                                             |                                            |        |                                 
|                                                                                 |                                             |                                            |        | 2002                             |         | 2001     
|                                                                                 |                                             |                                            |        |                                  |         |          
|                                                                                 |                                             |                                            |        |                                  |         |           |       | Interest |       | Average |      |           |      |        |        | Interest |         | Average
|                                                                                 |                                             |                                            |        | Average                          |         | and       |       | Yield/   |       | Average |      | and       |      | Yield/
|                                                                                 |                                             |                                            |        | Balance                          |         | Dividends |       | Rate     |       | Balance |      | Dividends |      | Rate  
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |       
|                                                                                 |                                             |                                            |        | (Dollars in thousands)          
|Interest-earning assets:                                                         |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 | Loans (1)                                   |                                            | $      | 150,685                          |         |           |       | 2,838    |       |         |      | 7.53      | %    |        | $      | 130,862  |         |         |       | 2,777 |       |  |      | 8.49 | %   
|                                                                                 | Securities                                  |                                            |        | 27,746                           |         |           |       | 311      |       |         |      | 4.48      |      |        |        | 22,089   |         |         |       | 268   |       |  |      | 4.85 |     
|                                                                                 | Other interest-earning assets (2)           |                                            |        | 1,435                            |         |           |       | 12       |       |         |      | 3.34      |      |        |        | 4,219    |         |         |       | 42    |       |  |      | 3.98 |     
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total interest-earning assets              |        |                                  | 179,866 |           |       |          | 3,161 |         |      |           | 7.03 |        |        |          | 157,170 |         |       |       | 3,087 |  |      |      | 7.86 | 
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Noninterest-earning assets                                                       |                                             |                                            | 9,371  |                                  |         |           |       |          |       |         |      |           |      |        | 6,777  |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total assets                               |        | $                                | 189,237 |           |       |          |       |         |      |           |      |        |        | $        | 163,947 |         |       |       |       |  |      |      |      | 
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Interest-bearing liabilities:                                                    |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 | Savings, NOW, money-market
deposit accounts |                                            |        | 61,802                           |         |           |       | 229      |       |         |      | 1.48      |      |        |        | 50,361   |         |         |       | 299   |       |  |      | 2.37 |     
|                                                                                 | Time deposits                               |                                            |        | 81,087                           |         |           |       | 799      |       |         |      | 3.94      |      |        |        | 76,629   |         |         |       | 1,138 |       |  |      | 5.94 |     
|                                                                                 | Other interest-bearing liabilities (3)      |                                            |        | 14,911                           |         |           |       | 143      |       |         |      | 3.84      |      |        |        | 10,006   |         |         |       | 119   |       |  |      | 4.76 |     
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total interest-bearing liabilities         |        |                                  | 157,800 |           |       |          | 1,171 |         |      |           | 2.97 |        |        |          | 136,996 |         |       |       | 1,556 |  |      |      | 4.54 | 
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Noninterest-bearing liabilities                                                  |                                             |                                            | 17,801 |                                  |         |           |       |          |       |         |      |           |      |        | 15,074 |          |         |         |       |       |       |  |      |     
|Stockholders equity                                                             |                                             |                                            | 13,636 |                                  |         |           |       |          |       |         |      |           |      |        | 11,877 |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total liabilities and
stockholders equity |        | $                                | 189,237 |           |       |          |       |         |      |           |      |        |        | $        | 163,947 |         |       |       |       |  |      |      |      | 
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Net interest income                                                              |                                             |                                            |        |                                  |         | $         | 1,990 |          |       |         |      |           |      |        |        |          |         | $       | 1,531 |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Interest-rate spread (4)                                                         |                                             |                                            |        |                                  |         |           |       |          |       |         | 4.06 | %         |      |        |        |          |         |         |       |       |       |  | 3.32 | %   
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Net interest margin (5)                                                          |                                             |                                            |        |                                  |         |           |       |          |       |         | 4.43 | %         |      |        |        |          |         |         |       |       |       |  | 3.90 | %   
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Ratio of average interest-earning assets to
average interest-bearing liabilities |                                             |                                            | 1.14   |                                  |         |           |       |          |       |         |      |           |      |        | 1.15   |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                  |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     



---

|(1) |  | Includes loans on nonaccrual status.                                                                                                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes Federal Home Loan Bank stock, federal funds sold and
interest-bearing deposits.                                                                 
|   
|(3) |  | Includes securities sold under agreements to repurchase, Federal Home
Loan Bank advances and other borrowings.                                           
|   
|(4) |  | Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average rate of interest-bearing
liabilities.
|   
|(5) |  | Net interest margin is net interest income divided by average
interest-earning assets.                                                                   

13



---



##### Table of Contents



MADISON BANCSHARES, INC.

The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest and dividend income of the
Company from interest-earning assets and the resultant average yields; (ii) the
total dollar amount of interest expense on interest-bearing liabilities and the
resultant average cost; (iii) net interest income; (iv) interest-rate spread;
and (v) net interest margin.

|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |      |      | 
|-------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------ | ------ | ------------------------------- | ------- | --------- | ----- | -------- | ----- | ------- | ---- | --------- | ---- | ------ | ------ | -------- | ------- | ------- | ----- | ----- | ----- |  | ---- | ---- | ---- | 
|                                                                                 |                                             |                                            |        | Nine Months Ended September 30,
|                                                                                 |                                             |                                            |        |                                
|                                                                                 |                                             |                                            |        | 2002                            |         | 2001     
|                                                                                 |                                             |                                            |        |                                 |         |          
|                                                                                 |                                             |                                            |        |                                 |         |           |       | Interest |       | Average |      |           |      |        |        | Interest |         | Average
|                                                                                 |                                             |                                            |        | Average                         |         | and       |       | Yield/   |       | Average |      | and       |      | Yield/
|                                                                                 |                                             |                                            |        | Balance                         |         | Dividends |       | Rate     |       | Balance |      | Dividends |      | Rate  
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |       
|                                                                                 |                                             |                                            |        | (Dollars in thousands)         
|Interest-earning assets:                                                         |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 | Loans (1)                                   |                                            | $      | 144,254                         |         |           |       | 8,162    |       |         |      | 7.54      | %    |        | $      | 123,126  |         |         |       | 8,036 |       |  |      | 8.70 | %   
|                                                                                 | Securities                                  |                                            |        | 26,221                          |         |           |       | 910      |       |         |      | 4.63      |      |        |        | 22,544   |         |         |       | 824   |       |  |      | 4.87 |     
|                                                                                 | Other interest-earning assets (2)           |                                            |        | 4,485                           |         |           |       | 76       |       |         |      | 2.26      |      |        |        | 7,827    |         |         |       | 285   |       |  |      | 4.85 |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total interest-earning assets              |        |                                 | 174,960 |           |       |          | 9,148 |         |      |           | 6.97 |        |        |          | 153,497 |         |       |       | 9,145 |  |      |      | 7.94 | 
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Noninterest-earning assets                                                       |                                             |                                            | 7,784  |                                 |         |           |       |          |       |         |      |           |      |        | 6,861  |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total assets                               |        | $                               | 182,744 |           |       |          |       |         |      |           |      |        |        | $        | 160,358 |         |       |       |       |  |      |      |      | 
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Interest-bearing liabilities:                                                    |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 | Savings, NOW, money-market
deposit accounts |                                            |        | 59,768                          |         |           |       | 656      |       |         |      | 1.46      |      |        |        | 47,975   |         |         |       | 972   |       |  |      | 2.70 |     
|                                                                                 | Time deposits                               |                                            |        | 79,522                          |         |           |       | 2,428    |       |         |      | 4.07      |      |        |        | 79,169   |         |         |       | 3,627 |       |  |      | 6.11 |     
|                                                                                 | Other interest-bearing liabilities (3)      |                                            |        | 13,848                          |         |           |       | 407      |       |         |      | 3.92      |      |        |        | 7,729    |         |         |       | 269   |       |  |      | 4.64 |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total interest-bearing liabilities         |        |                                 | 153,138 |           |       |          | 3,491 |         |      |           | 3.04 |        |        |          | 134,873 |         |       |       | 4,868 |  |      |      | 4.81 | 
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Noninterest-bearing liabilities                                                  |                                             |                                            | 16,466 |                                 |         |           |       |          |       |         |      |           |      |        | 13,809 |          |         |         |       |       |       |  |      |     
|Stockholders equity                                                             |                                             |                                            | 13,140 |                                 |         |           |       |          |       |         |      |           |      |        | 11,676 |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total liabilities and
stockholders equity |        | $                               | 182,744 |           |       |          |       |         |      |           |      |        |        | $        | 160,358 |         |       |       |       |  |      |      |      | 
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Net interest income                                                              |                                             |                                            |        |                                 |         | $         | 5,657 |          |       |         |      |           |      |        |        |          |         | $       | 4,277 |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Interest-rate spread (4)                                                         |                                             |                                            |        |                                 |         |           |       |          |       |         | 3.93 | %         |      |        |        |          |         |         |       |       |       |  | 3.13 | %   
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Net interest margin (5)                                                          |                                             |                                            |        |                                 |         |           |       |          |       |         | 4.31 | %         |      |        |        |          |         |         |       |       |       |  | 3.72 | %   
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Ratio of average interest-earning assets to
average interest-bearing liabilities |                                             |                                            | 1.14   |                                 |         |           |       |          |       |         |      |           |      |        | 1.14   |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                                 |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     



---

|(1) |  | Includes loans on nonaccrual status.                                                                                                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes Federal Home Loan Bank stock, federal funds sold and
interest-bearing deposits.                                                                 
|   
|(3) |  | Includes securities sold under agreements to repurchase, Federal Home
Loan Bank advances and other borrowings.                                           
|   
|(4) |  | Interest-rate spread represents the difference between the average yield
on interest-earning assets and the average rate of interest-bearing
liabilities.
|   
|(5) |  | Net interest margin is net interest income divided by average
interest-earning assets.                                                                   

14



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##### Table of Contents



MADISON BANCSHARES, INC.

Comparison of the Three-Month Periods Ended September 30, 2002 and

2001

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|General.Net

earnings for the three-months ended September 30, 2002, were $483,000 or $.32 per basic and $.30
per diluted share compared to $203,000 or $.14 per basic and $.13 per diluted share for 2001. The increase in
net earnings was due to an increase in net interest income and noninterest income, partially offset by an
increase in noninterest expenses and the provision for income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Interest Income and

Expense.Interest income increased by $74,000 to $3,161,000 for the three-month period
ended September 30, 2002 from $3,087,000 for the three months ended September 30, 2001. Interest on loans
remained approximately the same at $2.8 million for the three-months ended September 30, 2002 compared to
2001 due to an increase in the average loan portfolio balance to $150.7 million from $130.9 million which was
offset by a decrease in the weighted-average yield earned in 2002 to 7.53% from 8.49% in 2001. Interest on
securities increased for the three months ended September 30, 2002 to $311,000 from $268,000 in 2001. The
increase was due to an increase in the average portfolio balance to $27.7 million in 2002 from $22.1 million
in 2001, partially offset by a decrease in the weighted-average yield earned in 2002 to 4.48% from 4.85% in
2001. Interest on other interest-earning assets decreased from $42,000 in 2001 to $12,000 in 2002. This
decrease was due to a decrease in the average balance of other interest-earning assets from $4.2 million in
2001 to $1.4 million in 2002 and a decrease in the yield earned on such assets from 3.98% in 2001 to 3.34% in
2002.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Interest expense on deposits decreased $409,000 to $1,028,000 for the three-months ended September 30,
2002
from $1,437,000 in 2001. The decrease is due to a decrease in the average rate paid on interest-bearing
deposits in 2002 to 2.88% from 4.53% in 2001, partially offset by an increase in the average deposits in 2002
to $142.9 million compared to $127.0 million in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Interest expense on other borrowings increased to $143,000 for the three-months ended September 30, 2002
from
$119,000 for the three-months ended September 30, 2001. The increase is due to an increase in average other
borrowings to $14.9 million in 2002 from $10.0 million in 2001, partially offset by a decrease in the
weighted rate paid to 3.84% in 2002 from 4.76% in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Provision for Loan Losses.The provision for loan losses is charged to earnings to bring the total allowance
to a level deemed appropriate by management and is based upon historical experience, the volume and type of
lending conducted by the Bank, industry standards, the amount of nonperforming loans, general economic
conditions, particularly as they relate to the Banks market areas, and other factors related to the
collectibility of the Banks loan portfolio. The provision for loan losses was $110,000 for the three-month
period ended September 30, 2002 compared to $191,000 for the same period in 2001. The allowance for loan
losses is $1,948,000 at September 30, 2002. While management believes that its allowance for loan losses is
adequate as of September 30, 2002, future adjustments to the Banks allowance for loan losses may be
necessary if economic conditions differ substantially from the assumptions used in making the initial
determination.                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Noninterest Income.Noninterest income increased to $306,000 in 2002 from $174,000 for the three- months
ended September 30, 2001. The increase is primarily due to an increase in service charges and fees and an
increase in other noninterest income, primarily due to a $78,000 gain recognized on sale of foreclosed real
estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Noninterest Expense.Total noninterest expense increased to $1,407,000 for the three months ended September
30, 2002 from $1,193,000 for the comparable period ended September 30, 2001, primarily due to an increase in
employee compensation and benefits and occupancy expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Income Taxes.The

income tax provision for the three months ended September 30, 2002, was $296,000 or 38.0%
of earnings before income taxes compared to $118,000 or 36.8% for the period ended September 30,

2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

15



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##### Table of Contents



MADISON BANCSHARES, INC.

Comparison of the Nine-Month Periods Ended September 30, 2002 and 2001

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|General.Net earnings for the nine-months ended September 30, 2002, were $1,226,000 or $.81 per basic and
     $.77 per diluted share compared to $743,000 or $.50 per basic and $.48 per diluted share for 2001. The
     increase in net earnings was due to an increase in net interest income and noninterest income, partially
     offset by an increase in noninterest expenses and the provision for income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Interest Income and

Expense.Interest income increased by $3,000 to $9,148,000 for the nine-month period
     ended September 30, 2002 from $9,145,000 for the nine months ended September 30, 2001. Interest on loans
     increased to $8,162,000 for the nine-months ended September 30, 2002 from $8,036,000 in 2001 due to an
     increase in the average loan portfolio balance to $144.3 million from $123.1 million, partially offset by a
     decrease in the weighted-average yield earned in 2002 to 7.54% from 8.70% in 2001. Interest on securities
     increased for the nine months ended September 30, 2002 to $910,000 from $824,000 in 2001. The increase was
     due to an increase in the average balance to $26.2 million in 2002 from $22.5 million in 2001, partially
     offset by a decrease in the weighted-average yield earned in 2002 to 4.63% from 4.87% in 2001. Interest from
     other interest-earning assets decreased to $76,000 for the nine-month period ending September 30, 2002,
     compared to $285,000 earned in 2001. The decrease was due to a decrease in the average balance to $4.5
     million in 2002 from $7.8 million in 2001 and a decrease in the rate earned to 2.26% in 2002 from 4.85% in
     2001.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Interest expense on deposits decreased $1,515,000 to $3,084,000 for the nine-months ended September 30, 2002,
     from $4,599,000 in 2001. The decrease is due to a decrease in the average rate paid on interest-bearing
     deposits in 2002 to 2.95% from 4.82% in 2001, partially offset by an increase in the average deposits in 2002
     to $139.3 million compared to $127.1 million in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Interest expense on other borrowings increased to $407,000 for the nine-months ended September 30, 2002 from
     $269,000 for the nine-months ended September 30, 2001. The increase is due to an increase in average other
     borrowings to $13.8 million in 2002 from $7.7 million in 2001, partially offset by a decrease in the weighted
     rate paid to 3.92% in 2002 from 4.64% in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Provision for Loan Losses.The provision for loan losses is charged to earnings to bring the total allowance
     to a level deemed appropriate by management and is based upon historical experience, the volume and type of
     lending conducted by the Bank, industry standards, the amount of nonperforming loans, general economic
     conditions, particularly as they relate to the Banks market areas, and other factors related to the
     collectibility of the Banks loan portfolio. The provision for loan losses was $509,000 for the nine-month
     period ended September 30, 2002, compared to $349,000 for the same period in 2001. The allowance for loan
     losses is $1,948,000 at September 30, 2002. While management believes that its allowance for loan losses is
     adequate as of September 30, 2002, future adjustments to the Banks allowance for loan losses may be
     necessary if economic conditions differ substantially from the assumptions used in making the initial
     determination.                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Noninterest Income.Noninterest income increased to $678,000 in 2002 from $549,000 for the nine- months ended
     September 30, 2001. The increase is due to an increase in service charges and fees and a gain recognized on
     the sale of foreclosed real estate of $78,000 included in other noninterest income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Noninterest Expense.Total noninterest expense increased to $3,854,000 for the nine-months ended September
     30, 2002, from $3,294,000 for the comparable period ended September 30, 2001, primarily due to an increase in
     employee compensation and benefits and occupancy expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Income Taxes.The income tax provision for the nine months ended September 30, 2002, was $746,000 or 37.8% of
     earnings before income taxes compared to $440,000 or 37.2% for the period ended September 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

16



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##### Table of Contents



MADISON BANCSHARES, INC.




Item 3. Controls and Procedures



|a. |  | Evaluation of disclosure controls and procedures. The Company maintains
controls and procedures designed to ensure that information required to be
disclosed in the reports that the Company files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed within 90 days of the filing date of
this report, the chief executive and chief financial officers of the
Company concluded that the Companys disclosure controls and procedures
were adequate.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b. |  | Changes in internal controls. The Company made no significant changes
in its internal controls or in other factors that could significantly
affect these controls subsequent to the date of the evaluation of those
controls by the Chief Executive and Chief Financial officers.                                                                                                                                                                                                                                                                                                                                                                                                  




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

There are no material pending legal proceeding to which Madison BancShares,
Inc., or its subsidiary is a party or to which any of their property is
subject.




Item 2. Changes in Securities and Use of Proceeds

The following sales of shares of Madison BancShares, Inc., common stock, par
value $0.01 per share (Madison BancShares Common Stock), were not registered
pursuant to the Securities Act of 1933, as amended (the Securities Act), but
were issued pursuant to the exemptions indicated below:

On September 30, 2002, Tom Castriota, a member of the board of directors,
purchased an aggregate of 5,000 shares of Madison BancShares Common Stock.
These shares were purchased at a per share price of $14.21. This transaction
was made in reliance on the exemption set forth in Section 4(2) of the
Securities Act.

Proceeds from the sales of the above securities were used for general corporate
purposes.

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##### Table of Contents



MADISON BANCSHARES, INC.

PART II. OTHER INFORMATION, CONTINUED




Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits.The following exhibits are filed with or incorporated by
reference into this report.
|--- |  | ---------------------------------------------------------------------------------------------

|            |  |                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                
|            |  |                                                                                                                       
|*   2       |  | Plan of acquisition, reorganization, arrangement, liquidation, or succession                                          
|*   3.1     |  | Articles of Incorporation of Madison BancShares, Inc.                                                                 
|*   3.2     |  | Bylaws of Madison BancShares, Inc.                                                                                    
|*   4       |  | Sample Stock Certificate for Madison BancShares, Inc.                                                                 
|*   10.1    |  | Employment Agreement of Henry Speight                                                                                 
|*   10.2    |  | Employment Agreement of Robert McGivney                                                                               
|*   10.3    |  | Employment Agreement of David Paetzold                                                                                
|** 10.4     |  | Employment Agreement of Judith Gaffney                                                                                
|*   10.5    |  | Madison Bank Amended and Restated 1998 Key
Employee Stock Compensation Program                                        
|*   10.6    |  | Madison Bank Amended and Restated 1998
Directors Stock Option Plan                                                   
|11          |  | Statement regarding Computation of Per Share Earnings at
Footnote 3 of the Condensed Consolidated Financial Statements
|*   99.1    |  | Plan of Reorganization of Madison Bank                                                                                
|*   99.2    |  | Proxy of Madison Bank                                                                                                 
|99.3        |  | CEO Certifications required under Section 906 of Sarbanes-Oxley Act of 2002                                           
|99.4        |  | CFO Certifications required under Section 906 of
Sarbanes-Oxley Act of 2002                                           



---

|*  |  | These exhibits were filed with Madisons BancShares Form 10-SB on June 6, 2001.                
|-- |  | ------------------------------------------------------------------------------------------------
|  
|** |  | These exhibits were filed with Madison BancShares Amendment One to Form
10-SB on July 17, 2001.



|(b) |  | Reports on Form 8-K.There were no reports on Form 8-K filed during the
three months ended September 30, 2002.
|--- |  | -------------------------------------------------------------------------------------------------------------

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##### Table of Contents



MADISON BANCSHARES, INC.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       |  |     |  |                                                                                
|---------------------- |  | --- |  | -------------------------------------------------------------------------------
|                       |  |     |  | MADISON BANCSHARES, INC.
    (Registrant)                                      
|                      
|                       |  |     |  |                                                                                
|                      
|Date: October 17, 2002 |  | By: |  | /s/ Robert B. McGivneyRobert B. McGivney, President and Chief
Executive Officer
|                      
|                       |  |     |  |                                                                                
|                      
|Date: October 17, 2002 |  | By: |  | /s/ Henry O. SpeightHenry O. Speight, Chief Financial Officer and
Treasurer    




CERTIFICATIONS

I, Robert B. McGivney, certify, that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Madison
Bancshares, Inc.;                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:                                                                                                      

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##### Table of Contents





| | (a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiary, is made known to us by
others within that entity, particularly during the period in
which this quarterly report is being prepared;
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                             
|
| | (c) |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                   



|5. |  | The registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or
operation of the internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                            



|6. |  | The registrants other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect the internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |     |  |                                                                                
|---------------------- |  | --- |  | -------------------------------------------------------------------------------
|Date: October 17, 2002 |  | By: |  | /s/ Robert B. McGivneyRobert B. McGivney, President and Chief
Executive Officer

I, Henry O. Speight, certify, that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Madison
Bancshares, Inc.;                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   

20



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##### Table of Contents





|4. |  | The registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiary, is made known to us by
others within that entity, particularly during the period in
which this quarterly report is being prepared;
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                             
|
| | (c) |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                   



|5. |  | The registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or
operation of the internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                            



|6. |  | The registrants other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect the internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |     |  |                                                                            
|---------------------- |  | --- |  | ---------------------------------------------------------------------------
|Date: October 17, 2002 |  | By: |  | /s/ Henry O. SpeightHenry O. Speight, Chief Financial Officer
and Treasurer

21