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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 March 31, 2003

[  ] 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. AND SUBSIDIARY

(Exact Name of Small Business Issuer as Specified in Its Charter)

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

2122 Palm Harbor BoulevardPalm Harbor, Florida 34683(Address of Principal Executive Offices)

(727) 786-3888

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(Issuers Telephone Number, Including Area Code)




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(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 |  | 1,618,916 shares             
|                                       |  |                              
|(class)                                |  | Outstanding at April 17, 2003

Transitional Small Business Format (Check One): YES [  ] NO [X]



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MADISON BANCSHARES, INC. AND SUBSIDIARY

INDEX

|                              |                                                                   |                                                                                                                             |       |       |     | 
|----------------------------- | ----------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ----- | ----- | --- | 
|                              |                                                                   |                                                                                                                             |       | Page 
|                              |                                                                   |                                                                                                                             |       |      
|PART I. FINANCIAL INFORMATION |                                                                   |                                                                                                                             |       |      
|                              | Item 1. Interim Financial Statements                              |                                                                                                                             |       |       |    
|                              |                                                                   | Condensed Consolidated Balance Sheets -
At March 31, 2003 (unaudited) and At December 31, 2002                              |       |       | 2   | 
|                              |                                                                   | Condensed Consolidated Statements of Earnings -
Three Months ended March 31, 2003 and 2002 (unaudited)                      |       |       | 3   | 
|                              |                                                                   | Condensed Consolidated Statements of Changes in Stockholders Equity
Three Months Ended March 31, 2003 and 2002 (unaudited) |       |       | 4   | 
|                              |                                                                   | Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2003 and 2002 (unaudited)                    |       |       | 5   | 
|                              |                                                                   | Notes to Condensed Consolidated Financial Statements (unaudited)                                                            |       |       | 6-9 | 
|                              |                                                                   | Review by Independent Certified Public Accountants                                                                          |       |       | 10  | 
|                              |                                                                   | Independent Accountants Report                                                                                             |       |       | 11  | 
|                              | Item 2. Managements Discussion and Analysis or Plan of Operation |                                                                                                                             |       | 12-15 |    
|                              | Item 3. Controls and Procedures                                   |                                                                                                                             |       | 16    |    
|PART II. OTHER INFORMATION    |                                                                   |                                                                                                                             |       |      
|                              | Item 1. Legal Proceedings                                         |                                                                                                                             |       | 16    |    
|                              | Item 6. Exhibits and Reports on Form 8-K                          |                                                                                                                             |       | 17    |    
|SIGNATURES                    |                                                                   |                                                                                                                             | 18    |      
|CERTIFICATIONS                |                                                                   |                                                                                                                             | 18-20 |      

1



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MADISON BANCSHARES, INC. AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

|                                                                             |                                                                                                                             |                            |         |           |         |              |         |        |         | 
|---------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | --------- | ------- | ------------ | ------- | ------ | ------- | 
|                                                                             |                                                                                                                             |                            |         | March 31, |         | December 31,
|                                                                             |                                                                                                                             |                            |         |           |         |             
|                                                                             |                                                                                                                             | 2003                       |         | 2002     
|                                                                             |                                                                                                                             |                            |         |          
|Assets                                                                       |                                                                                                                             | (Unaudited)                |         |           |         |             
|Cash and due from banks                                                      |                                                                                                                             | $                          | 2,748   |           |         |              | 3,222   |       
|Interest-bearing deposits with banks                                         |                                                                                                                             |                            | 78      |           |         |              | 2,965   |       
|Federal funds sold                                                           |                                                                                                                             |                            | 141     |           |         |              | 4,703   |       
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             | Cash and cash equivalents                                                                                                   |                            |         | 2,967     |         |              |         | 10,890 |        
|                                                                            
|Securities available for sale                                                |                                                                                                                             |                            | 21,394  |           |         |              | 23,868  |       
|Loans, net of allowance for loan losses of $2,185 in 2003
and $2,058 in 2002 |                                                                                                                             |                            | 161,033 |           |         |              | 152,679 |       
|Accrued interest receivable                                                  |                                                                                                                             |                            | 747     |           |         |              | 706     |       
|Premises and equipment, net                                                  |                                                                                                                             |                            | 4,160   |           |         |              | 3,960   |       
|Federal Home Loan Bank stock, at cost                                        |                                                                                                                             |                            | 1,060   |           |         |              | 759     |       
|Deferred tax asset                                                           |                                                                                                                             |                            | 326     |           |         |              | 332     |       
|Other assets                                                                 |                                                                                                                             |                            | 739     |           |         |              | 915     |       
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             |                                                                                                                             | $                          | 192,426 |           |         |              | 194,109 |       
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             | Liabilities and Stockholders Equity                                                                                        |                            |         |           |         |              |         |        |        
|Liabilities:                                                                 |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             | Noninterest-bearing demand deposits                                                                                         |                            |         | 17,147    |         |              |         | 15,771 |        
|                                                                             | Savings, NOW and money-market deposits                                                                                      |                            |         | 66,326    |         |              |         | 68,334 |        
|                                                                             | Time deposits                                                                                                               |                            |         | 73,415    |         |              |         | 79,290 |        
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             |                                                                                                                             | Total deposits             |         |           | 156,888 |              |         |        | 163,395 | 
|                                                                            
|                                                                             | Federal Home Loan Bank advances                                                                                             |                            |         | 13,500    |         |              |         | 10,000 |        
|                                                                             | Other borrowings                                                                                                            |                            |         | 3,966     |         |              |         | 3,164  |        
|                                                                             | Official checks                                                                                                             |                            |         | 1,282     |         |              |         | 1,859  |        
|                                                                             | Accrued expenses and other liabilities                                                                                      |                            |         | 1,605     |         |              |         | 1,133  |        
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             |                                                                                                                             | Total liabilities          |         |           | 177,241 |              |         |        | 179,551 | 
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|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 1,618,916 and 1,613,028 in 2003 and 2002 |                            |         | 16        |         |              |         | 16     |        
|                                                                             | Additional paid-in capital                                                                                                  |                            |         | 14,204    |         |              |         | 14,148 |        
|                                                                             | Retained earnings                                                                                                           |                            |         | 700       |         |              |         | 149    |        
|                                                                             | Accumulated other comprehensive income                                                                                      |                            |         | 265       |         |              |         | 245    |        
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             |                                                                                                                             | Total stockholders equity |         |           | 15,185  |              |         |        | 14,558  | 
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       
|                                                                             |                                                                                                                             | $                          | 192,426 |           |         |              | 194,109 |       
|                                                                             |                                                                                                                             |                            |         |           |         |              |         |       

See Accompanying Notes to Condensed Consolidated Financial Statements.

2



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MADISON BANCSHARES, INC. AND SUBSIDIARY

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

|                          |                                     |                                                     |     |                    |       |      |     |       |       | 
|------------------------- | ----------------------------------- | --------------------------------------------------- | --- | ------------------ | ----- | ---- | --- | ----- | ----- | 
|                          |                                     |                                                     |     | Three Months Ended
|                          |                                     |                                                     |     | March 31,         
|                          |                                     |                                                     |     |                   
|                          |                                     |                                                     |     | 2003               |       | 2002
|                          |                                     |                                                     |     |                    |       |     
|Interest income:          |                                     |                                                     |     |                    |       |      |     |      
|                          | Loans                               |                                                     | $   | 2,837              |       |      |     | 2,615 |      
|                          | Securities available for sale       |                                                     |     | 220                |       |      |     | 250   |      
|                          | Other interest-earning assets       |                                                     |     | 19                 |       |      |     | 44    |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Total interest income                               |     |                    | 3,076 |      |     |       | 2,909 | 
|                          |                                     |                                                     |     |                    |       |      |     |      
|Interest expense:         |                                     |                                                     |     |                    |       |      |     |      
|                          | Deposits                            |                                                     |     | 875                |       |      |     | 1,050 |      
|                          | Borrowed funds                      |                                                     |     | 145                |       |      |     | 126   |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Total interest expense                              |     |                    | 1,020 |      |     |       | 1,176 | 
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Net interest income                                 |     |                    | 2,056 |      |     |       | 1,733 | 
|Provision for loan losses |                                     |                                                     | 122 |                    |       |      | 109 |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Net interest income after provision for loan losses |     |                    | 1,934 |      |     |       | 1,624 | 
|                          |                                     |                                                     |     |                    |       |      |     |      
|Noninterest income:       |                                     |                                                     |     |                    |       |      |     |      
|                          | Service charges on deposit accounts |                                                     |     | 180                |       |      |     | 113   |      
|                          | Other service charges and fees      |                                                     |     | 58                 |       |      |     | 41    |      
|                          | Gain on sale of deposit accounts    |                                                     |     | 200                |       |      |     |      |      
|                          | Other                               |                                                     |     | 64                 |       |      |     | 9     |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Total noninterest income                            |     |                    | 502   |      |     |       | 163   | 
|                          |                                     |                                                     |     |                    |       |      |     |      
|Noninterest expenses:     |                                     |                                                     |     |                    |       |      |     |      
|                          | Employee compensation and benefits  |                                                     |     | 901                |       |      |     | 709   |      
|                          | Occupancy and equipment             |                                                     |     | 203                |       |      |     | 172   |      
|                          | Data processing expense             |                                                     |     | 78                 |       |      |     | 65    |      
|                          | Professional fees                   |                                                     |     | 47                 |       |      |     | 31    |      
|                          | Federal deposit insurance premium   |                                                     |     | 7                  |       |      |     | 6     |      
|                          | Other expense                       |                                                     |     | 311                |       |      |     | 239   |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Total noninterest expenses                          |     |                    | 1,547 |      |     |       | 1,222 | 
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Earnings before income taxes                        |     |                    | 889   |      |     |       | 565   | 
|Income taxes              |                                     |                                                     | 338 |                    |       |      | 212 |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          |                                     | Net earnings                                        |     | $                  | 551   |      |     |       | 353   | 
|                          |                                     |                                                     |     |                    |       |      |     |      
|Earnings per share:       |                                     |                                                     |     |                    |       |      |     |      
|                          | Basic earnings per share            |                                                     | $   | 0.34               |       |      |     | 0.22  |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|                          | Diluted earnings per share          |                                                     | $   | 0.32               |       |      |     | 0.21  |      
|                          |                                     |                                                     |     |                    |       |      |     |      
|Dividends per share       |                                     | $                                                   |    |                    |       |      |    |      
|                          |                                     |                                                     |     |                    |       |      |     |      

See Accompanying Notes to Condensed Consolidated Financial Statements.

3



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MADISON BANCSHARES, INC. AND SUBSIDIARY

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

Three Months Ended March 31, 2003 and 2002
(Dollars in thousands)

|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |     |  
|-------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | - | ------ | - | ------- |  | ------------ | - | -------- |  | -------- | --- | ------- |  | ----------- | --- | - |  | ------ | --- | -
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  | Accumulated |     |   |  |       
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  | Other       |     |   |  |       
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  | Retained |     | Compre- |  |             |     |  
|                                                               |                                                                                                 |   |        |   |         |  | Additional   |   | Earnings |  | hensive  |     |         |  |            
|                                                               |                                                                                                 |   | Common |   | Paid-in |  | (Accumulated |   | Income   |  |          |     |        
|                                                               |                                                                                                 |   | Stock  |   | Capital |  | Deficit)     |   | (Loss)   |  | Total   
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |         
|Balance at December 31, 2001                                   |                                                                                                 | $ | 15     |   |         |  | 12,653       |   |          |  | (355     | )   |         |  | (60         | )   |   |  | 12,253 |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Comprehensive income:                                          |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|                                                               | Net earnings (unaudited)                                                                        |   |        |  |         |  |              |  |          |  |          | 353 |         |  |             |    |   |  |        | 353 |  
|                                                               | Net change in unrealized loss on
securities available for sale, net of
taxes of $56 (unaudited) |   |        |  |         |  |              |  |          |  |          |    |         |  |             | (91 | ) |  |        | (91 | )
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Comprehensive income (unaudited)                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  | 262    |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Sale of common stock (5,000 shares) (unaudited)                |                                                                                                 |   |       |   |         |  | 52           |   |          |  |         |     |         |  |            |     |   |  | 52     |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Balance at March 31, 2002 (unaudited)                          |                                                                                                 | $ | 15     |   |         |  | 12,705       |   |          |  | (2       | )   |         |  | (151        | )   |   |  | 12,567 |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Balance at December 31, 2002                                   |                                                                                                 | $ | 16     |   |         |  | 14,148       |   |          |  | 149      |     |         |  | 245         |     |   |  | 14,558 |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Comprehensive income:                                          |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|                                                               | Net earnings (unaudited)                                                                        |   |        |  |         |  |              |  |          |  |          | 551 |         |  |             |    |   |  |        | 551 |  
|                                                               | Net change in unrealized gain on
securities available for sale, net of
taxes of $15 (unaudited) |   |        |  |         |  |              |  |          |  |          |    |         |  |             | 20  |   |  |        | 20  |  
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Comprehensive income (unaudited)                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  | 571    |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Exercise of common stock options (3,888
shares) (unaudited)    |                                                                                                 |   |       |   |         |  | 25           |   |          |  |         |     |         |  |            |     |   |  | 25     |    
|Common stock issued as compensation (2,000 shares)
(unaudited) |                                                                                                 |   |       |   |         |  | 31           |   |          |  |         |     |         |  |            |     |   |  | 31     |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    
|Balance at March 31, 2003 (unaudited)                          |                                                                                                 | $ | 16     |   |         |  | 14,204       |   |          |  | 700      |     |         |  | 265         |     |   |  | 15,185 |    
|                                                               |                                                                                                 |   |        |   |         |  |              |   |          |  |          |     |         |  |             |     |   |  |        |    

See Accompanying Notes to Condensed Consolidated Financial Statements.

4



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

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

|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |        |       |      |        |  
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ---------------------------------------------------- | ----- | ------------------ | ------ | ------ | ----- | ---- | ------ | -
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       | Three Months Ended
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       | March 31,         
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                   
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       | 2003               |        | 2002  
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|Cash flows from operating activities:             |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  | Net earnings                                                                                  |                                                                                                                           | $                                                                   | 551                                                  |       |                    |        | 353    |      
|                                                  | Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities: |                                                                                                                           |                                                                     |                                                      |       |                    |        |        |      
|                                                  |                                                                                               |                                                                                                                           | Provision for loan losses                                           |                                                      |       | 122                |        |        |       | 109  |       
|                                                  |                                                                                               |                                                                                                                           | Depreciation and amortization                                       |                                                      |       | 103                |        |        |       | 96   |       
|                                                  |                                                                                               |                                                                                                                           | Amortization of discounts and premiums on deferred loan fees, net   |                                                      |       | 104                |        |        |       | (3   | )     
|                                                  |                                                                                               |                                                                                                                           | (Increase) decrease in accrued interest receivable                  |                                                      |       | (41                | )      |        |       | 24   |       
|                                                  |                                                                                               |                                                                                                                           | Credit for deferred income taxes                                    |                                                      |       | (9                 | )      |        |       |     |       
|                                                  |                                                                                               |                                                                                                                           | Gain on sale of deposit accounts                                    |                                                      |       | (200               | )      |        |       |     |       
|                                                  |                                                                                               |                                                                                                                           | Common stock issued as compensation                                 |                                                      |       | 31                 |        |        |       |     |       
|                                                  |                                                                                               |                                                                                                                           | Decrease (increase) in other assets                                 |                                                      |       | 176                |        |        |       | (102 | )     
|                                                  |                                                                                               |                                                                                                                           | Decrease in official checks, accrual expenses and other liabilities |                                                      |       | (105               | )      |        |       | (716 | )     
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  |                                                                                               |                                                                                                                           |                                                                     | Net cash provided by (used in) operating activities  |       |                    | 732    |        |       |      | (239   | )
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|Cash flows from investing activities:             |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  | Net (increase) decrease in loans                                                              |                                                                                                                           |                                                                     | (8,580                                               | )     |                    |        | 1,615  |      
|                                                  | Net purchase of securities available for sale                                                 |                                                                                                                           |                                                                     |                                                     |       |                    |        | (8,066 | )    
|                                                  | Securities available for sale principle repayments                                            |                                                                                                                           |                                                                     | 2,509                                                |       |                    |        | 1,671  |      
|                                                  | Net purchase of premises and equipment                                                        |                                                                                                                           |                                                                     | (303                                                 | )     |                    |        | (156   | )    
|                                                  | Purchase of Federal Home Loan Bank stock                                                      |                                                                                                                           |                                                                     | (301                                                 | )     |                    |        |       |      
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  |                                                                                               |                                                                                                                           |                                                                     | Net cash used in investing activities                |       |                    | (6,675 | )      |       |      | (4,936 | )
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|Cash flows from financing activities:             |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  | Cash paid in connection with sale of deposit accounts                                         |                                                                                                                           |                                                                     | (11,497                                              | )     |                    |        |       |      
|                                                  | Net increase in deposits                                                                      |                                                                                                                           |                                                                     | 5,190                                                |       |                    |        | 18,068 |      
|                                                  | Net increase (decrease) in other borrowings                                                   |                                                                                                                           |                                                                     | 802                                                  |       |                    |        | (277   | )    
|                                                  | Net increase (decrease) in Federal Home Loan Bank advances                                    |                                                                                                                           |                                                                     | 3,500                                                |       |                    |        | (2,200 | )    
|                                                  | Proceeds from sale of common stock                                                            |                                                                                                                           |                                                                     |                                                     |       |                    |        | 52     |      
|                                                  | Proceeds from exercise of common stock options                                                |                                                                                                                           |                                                                     | 25                                                   |       |                    |        |       |      
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  |                                                                                               |                                                                                                                           |                                                                     | Net cash (used in) provided by financing activities  |       |                    | (1,980 | )      |       |      | 15,643 |  
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  |                                                                                               |                                                                                                                           |                                                                     | Net (decrease) increase in cash and cash equivalents |       |                    | (7,923 | )      |       |      | 10,468 |  
|Cash and cash equivalents at beginning of period  |                                                                                               |                                                                                                                           | 10,890                                                              |                                                      |       |                    | 2,801  |       
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|Cash and cash equivalents at end of period        |                                                                                               | $                                                                                                                         | 2,967                                                               |                                                      |       |                    | 13,269 |       
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|Supplemental disclosure of cash flow information: |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  | Cash paid during the period for:                                                              |                                                                                                                           |                                                                     |                                                      |       |                    |        |        |      
|                                                  |                                                                                               | Interest                                                                                                                  |                                                                     | $                                                    | 1,046 |                    |        |        | 1,060 |     
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       
|                                                  |                                                                                               | Income taxes                                                                                                              |                                                                     | $                                                    | 105   |                    |        |        | 165   |     
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |        |      
|                                                  | Noncash
transaction-                                                                          |                                                                                                                           |                                                                     |                                                      |       |                    |        |        |      
|                                                  |                                                                                               | Accumulated other comprehensive income, net change in
unrealized gain (loss) on securities available for sale, net of tax |                                                                     | $                                                    | 20    |                    |        |        | (91   | )   
|                                                  |                                                                                               |                                                                                                                           |                                                                     |                                                      |       |                    |        |       

See Accompanying Notes to Condensed Consolidated Financial Statements.

5



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)



|1. |  | General.Madison BancShares, Inc. (the Holding Company) owns 100% of
the outstanding common stock of Madison Bank (the Bank) (collectively,
the Company). The only significant activity of the Holding Company is
the operation of the Bank. 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 two 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 March 31, 2003 and the results
of operations and cash flows for the three-month periods ended March 31,
2003 and 2002. The results of operations for the three months ended
March 31, 2003 are not necessarily indicative of the results to be
expected for the year ending December 31, 2003.                                                                                                                            
|  
|2. |  | Loan Impairment and Loan Losses.Loans identified as impaired at March
31, 2003 and 2002 and for the three-month periods then ended are as
follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                                                         |  |                    |       |      |  |  |       | 
|------------------------------------------------------------------------ |  | ------------------ | ----- | ---- |  |  | ----- | 
|                                                                         |  | Three Months Ended
|                                                                         |  | March 31,         
|                                                                         |  |                   
|                                                                         |  | 2003               |       | 2002
|                                                                         |  |                    |       |     
|Gross loans with related allowance for losses recorded,
at end of period |  | $                  | 2,707 |      |  |  | 1,415 | 
|Less: Allowance on these loans                                           |  |                    | 273   |      |  |  | 142   | 
|                                                                         |  |                    |       |      |  |  |       | 
|Net investment in impaired loans, at end of period                       |  | $                  | 2,434 |      |  |  | 1,273 | 
|                                                                         |  |                    |       |      |  |  |       | 
|Average investment in impaired loans                                     |  | $                  | 2,707 |      |  |  | 1,481 | 
|                                                                         |  |                    |       |      |  |  |       | 
|Interest income recognized on impaired loans                             |  | $                  | 54    |      |  |  | 3     | 
|                                                                         |  |                    |       |      |  |  |       | 
|Interest income received on impaired loans                               |  | $                  | 54    |      |  |  | 3     | 
|                                                                         |  |                    |       |      |  |  |       | 

The activity in the allowance for loan losses is as follows (in thousands):

|                               |  |                    |       |      |  |  |       |  
|------------------------------ |  | ------------------ | ----- | ---- |  |  | ----- | -
|                               |  | Three Months Ended
|                               |  | March 31,         
|                               |  |                   
|                               |  | 2003               |       | 2002
|                               |  |                    |       |     
|Balance at beginning of period |  | $                  | 2,058 |      |  |  | 1,477 |  
|Provision for loan losses      |  |                    | 122   |      |  |  | 109   |  
|Charge-offs                    |  |                    | (6    | )    |  |  | (21   | )
|Recoveries                     |  |                    | 11    |      |  |  | 6     |  
|                               |  |                    |       |      |  |  |       |  
|Balance at end of period       |  | $                  | 2,185 |      |  |  | 1,571 |  
|                               |  |                    |       |      |  |  |       |  

(continued)

6



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|2. |  | Loan Impairment and Loan Losses, Continued.Nonaccrual and past due loans
were as follows (in thousands):
|-- |  | --------------------------------------------------------------------------------------------------------

|                                                 |  |              |       |      |  |  |       | 
|------------------------------------------------ |  | ------------ | ----- | ---- |  |  | ----- | 
|                                                 |  | At March 31,
|                                                 |  |             
|                                                 |  | 2003         |       | 2002
|                                                 |  |              |       |     
|Nonaccrual loans                                 |  | $            | 2,707 |      |  |  | 1,415 | 
|Past due ninety days or more, but still accruing |  |              |      |      |  |  |      | 
|                                                 |  |              |       |      |  |  |       | 
|                                                 |  | $            | 2,707 |      |  |  | 1,415 | 
|                                                 |  |              |       |      |  |  |       | 



|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. Outstanding stock options are considered
dilutive securities for purposes of calculating diluted EPS which is
computed using the treasury stock method. All per share amounts reflect
the 5% stock dividend declared on December 23, 2002. The following table
presents the calculations of EPS (dollars in thousands, except per share
amounts).
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |        |  |              |     |       |  |        |           |  |  |   |     | 
|------------------------------ | --------------------------------------------------------------------- |  | ---------------------------- | --- | ------ |  | --------- | --------- | -------- |  | ------ | --- | ------ |  | ------------ | --- | ----- |  | ------ | --------- |  |  | - | --- | 
|                               |                                                                       |  | Three Months Ended March 31,
|                               |                                                                       |  |                             
|                               |                                                                       |  | 2003                         |     | 2002  
|                               |                                                                       |  |                              |     |       
|                               |                                                                       |  |                              |     |        |  | Weighted- |           | Per      |  |        |     |        |  | Weighted-Per |     |       |  |       
|                               |                                                                       |  |                              |     |        |  | Average   |           | Share    |  |        |     |        |  | Average      |     | Share
|                               |                                                                       |  | Earnings                     |     | Shares |  | Amount    |           | Earnings |  | Shares |     | Amount
|                               |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |       
|Basic EPS:                     |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |        |  |              |     |       |  |        |           |  |  |   |    
|                               | Net earnings available to
common stockholders                         |  | $                            | 551 |        |  |           | 1,616,687 |          |  | $      | .34 |        |  | $            | 353 |       |  |        | 1,572,343 |  |  | $ | .22 | 
|                               |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |        |  |              |     |       |  |        |           |  |  |   |    
|Effect of dilutive securities- |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |        |  |              |     |       |  |        |           |  |  |   |    
|                               | Incremental shares from assumed
conversion of options                 |  |                             |     |        |  | 99,037    |           |          |  |        |     |        |  |             |     |       |  | 71,737 |           |  |  |   |    
|                               |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |        |  |              |     |       |  |        |           |  |  |   |    
|Diluted EPS:                   |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |        |  |              |     |       |  |        |           |  |  |   |    
|                               | Net earnings available to
common stockholders
and assumed conversions |  | $                            | 551 |        |  |           | 1,715,724 |          |  | $      | .32 |        |  | $            | 353 |       |  |        | 1,644,080 |  |  | $ | .21 | 
|                               |                                                                       |  |                              |     |        |  |           |           |          |  |        |     |        |  |              |     |       |  |        |           |  |  |   |    

(continued)

7



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|4. |  | Stock Options.The Company has stock option plans for certain officers
and directors of the Company. The options vest over a five year period
from date of grant and are then exercisable for up to an eight year
period. All per share amounts reflect the 5% stock dividend declared on
December 23, 2002. A summary of stock option transactions follows ($ in thousands,
except per share amounts):
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         |  |        |         |              |  |           |            |           |  |          |       |   |  |  |       |  
|---------------------------------------- |  | ------ | ------- | ------------ |  | --------- | ---------- | --------- |  | -------- | ----- | - |  |  | ----- | -
|                                         |  |        |         |              |  |           |            |           |  | Weighted |       |   |  | 
|                                         |  | Number |         | Range of     |  | Average   |            | Aggregate
|                                         |  | of     |         | Per Share    |  | Per Share |            | Option   
|                                         |  | Shares |         | Option Price |  | Price     |            | Price    
|                                         |  |        |         |              |  |           |            |          
|Options outstanding at December 31, 2002 |  |        | 188,508 |              |  |           | 4.69-13.86 |           |  |          | 7.18  |   |  |  | 1,353 |  
|Options exercised                        |  |        | (3,888  | )            |  |           | (6.38      | )         |  |          | (6.38 | ) |  |  | (25   | )
|                                         |  |        |         |              |  |           |            |           |  |          |       |   |  |  |       |  
|Options outstanding at March 31, 2003    |  |        | 184,620 |              |  | $         | 4.69-13.86 |           |  |          | 7.19  |   |  |  | 1,328 |  
|                                         |  |        |         |              |  |           |            |           |  |          |       |   |  |  |       |  



| |  | The Company accounts for their stock option plans under the recognition
and measurement principles of APB No. 25. No stock-based employee
compensation cost is reflected in net earnings, as all options granted
under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following table
illustrates the effect on net earnings if the Company had applied the
fair value recognition provisions of SFAS No. 123 to stock-based
employee compensation ($ in thousands, except per share amounts).
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                       |                      |   |                    |      |      |  |     |      | 
|-------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | - | ------------------ | ---- | ---- |  | --- | ---- | 
|                                                                                                                                       |                      |   | Three Months Ended
|                                                                                                                                       |                      |   | March 31,         
|                                                                                                                                       |                      |   |                   
|                                                                                                                                       |                      |   | 2003               |      | 2002
|                                                                                                                                       |                      |   |                    |      |     
|Net earnings, as reported                                                                                                              |                      | $ | 551                |      |      |  | 353 |     
|Deduct: Total stock-based employee compensation
determined under the fair value based method for all
awards, net of related tax effect |                      |   | (19                | )    |      |  | (18 | )   
|                                                                                                                                       |                      |   |                    |      |      |  |     |     
|Proforma net earnings                                                                                                                  |                      | $ | 532                |      |      |  | 335 |     
|                                                                                                                                       |                      |   |                    |      |      |  |     |     
|Earnings per share:                                                                                                                    |                      |   |                    |      |      |  |     |     
|                                                                                                                                       | Basic, as reported   |   | $                  | 0.34 |      |  |     | 0.22 | 
|                                                                                                                                       |                      |   |                    |      |      |  |     |     
|                                                                                                                                       | Basic, proforma      |   | $                  | 0.33 |      |  |     | 0.21 | 
|                                                                                                                                       |                      |   |                    |      |      |  |     |     
|                                                                                                                                       | Diluted, as reported |   | $                  | 0.32 |      |  |     | 0.21 | 
|                                                                                                                                       |                      |   |                    |      |      |  |     |     
|                                                                                                                                       | Diluted, proforma    |   | $                  | 0.31 |      |  |     | 0.20 | 
|                                                                                                                                       |                      |   |                    |      |      |  |     |     

(continued)

8



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued



|4. |  | Stock Options, Continued.The fair value of each option granted is
estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions, there were no options granted
during the three months ended March 31, 2003:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                           |  |                    |       |  
|-------------------------------------------------------------------------- |  | ------------------ | ----- | -
|                                                                           |  | Three Months Ended
|                                                                           |  | March 31,         
|                                                                           |  | 2002              
|                                                                           |  |                   
|Weighted-average risk-free interest rate                                   |  |                    | 5.28  | %
|Dividend yield                                                             |  |                    | 2.00  | %
|Volatility                                                                 |  |                    | 28.00 | %
|Expected life in years                                                     |  |                    | 10    |  
|Weighted-average grant date fair value of options issued
during the period |  | $                  | 2.45  |  
|                                                                           |  |                    |       |  



|5. |  | Regulatory Capital.The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at March 31,
2003, of the regulatory capital requirements and the Banks actual capital
on a percentage basis:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                |  |        |       |             |  |            |      |  
|----------------------------------------------- |  | ------ | ----- | ----------- |  | ---------- | ---- | -
|                                                |  |        |       |             |  | Regulatory
|                                                |  | Actual |       | Requirement
|                                                |  |        |       |            
|Total capital to risk-weighted assets           |  |        | 11.04 | %           |  |            | 8.00 | %
|Tier I capital to risk-weighted assets          |  |        | 9.79  | %           |  |            | 4.00 | %
|Tier I capital to total assets  leverage ratio |  |        | 8.75  | %           |  |            | 4.00 | %



|6. |  | Sale of Deposit Accounts.On February 7, 2003, the Company sold the
deposit accounts at one of the banking offices in Pinellas County. Total
deposits at this office were $11.7 million and the Company realized a net
pretax gain of $200,000. The office was closed effective with the closing
of this transaction.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

Review by Independent Certified Public Accountants

Hacker, Johnson & Smith PA, independent certified public accountants, has made
a limited review of the financial data as of March 31, 2003, and for the
three-month periods ended March 31, 2003 and 2002 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



---



##### 



Independent Accountants Report

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

We have reviewed the accompanying condensed consolidated balance sheet of
Madison BancShares, Inc. and Subsidiary (the Company) as of March 31, 2003,
and the related condensed consolidated statements of earnings, changes in
stockholders equity and cash flows for the three-month periods ended March 31,
2003 and 2002. These interim 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 of the Company as of December 31, 2002, 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 31,
2003 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, 2002, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.

/s/ Hacker, Johnson & Smith, PA

HACKER, JOHNSON & SMITH PA
Tampa, Florida
April 10, 2003

11



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

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

General



| |  | Madison BancShares, Inc. (the Holding Company) owns 100% of the outstanding
common stock of Madison Bank (the Bank) (collectively, the Company). The
only significant activity of the Holding Company is the operation of the
Bank. 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 two 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 three months ended March 31,
2003, was from net deposit inflows of approximately $5.2 million, a net
increase in Federal Home Loan Bank advances of approximately $3.5 million and
principle repayments of securities available for sale of approximately $2.5
million. Cash was used primarily to originate net loans of approximately
$8.6 million and to fund the sale of approximately $11.7 million in deposits.
At March 31, 2003, the Bank exceeded its regulatory liquidity
requirements.                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit,
unused lines of credit and construction loans and standby letters of credit.
These instruments involve, to varying degrees, elements of credit and
interest-rate risk in excess of the amounts recognized in the consolidated
balance sheet. The contract or notional amounts of those instruments reflect
the extent of the Companys involvement in particular classes of financial
instruments.                                                            
|
| |  | The Companys exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit,
unused lines of credit and construction loans and standby letters of credit
is represented by the contractual amount of those instruments. The Company
uses the same credit policies in making commitments as it does for
on-balance-sheet instruments.                                                                                                                                                                                                                                                                              
|
| |  | Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total committed amounts do
not necessarily represent future cash requirements. The Company evaluates
each customers credit worthiness on a case-by-case basis. The amount of
collateral obtained, if it is deemed necessary by the Company upon extension
of credit, is based on managements credit evaluation of the counter party.
|
| |  | Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that
involved in extending loans to customers.                                                                                                                                                                                                                                                                                                                                                                                                                   

12



---



##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

A summary of the amounts of the Companys financial instruments, with
off-balance sheet risk at March 31, 2003, follows (in thousands):

|                                              |  |          |        | 
|--------------------------------------------- |  | -------- | ------ | 
|                                              |  | Contract
|                                              |  | Amount  
|                                              |  |          |        | 
|Commitments to extend credit                  |  | $        | 13,608 | 
|                                              |  |          |        | 
|Unused lines of credit and construction loans |  | $        | 18,501 | 
|                                              |  |          |        | 
|Standby letters of credit                     |  | $        | 968    | 
|                                              |  |          |        | 

Management believes that the Company has adequate resources to fund all of
its commitments and that substantially all its existing commitments will be
funded in 2003.

The following rates are presented for the dates and periods indicated:

|                                                                                                |  |              |       |              |  |           |       |              |  |   |       |  
|----------------------------------------------------------------------------------------------- |  | ------------ | ----- | ------------ |  | --------- | ----- | ------------ |  | - | ----- | -
|                                                                                                |  | Three Months |       |              |  |           |       | Three Months
|                                                                                                |  | Ended        |       | Year Ended   |  | Ended    
|                                                                                                |  | March 31,    |       | December 31, |  | March 31,
|                                                                                                |  | 2003         |       | 2002         |  | 2002     
|                                                                                                |  |              |       |              |  |          
|Average equity as a percentage
of average assets                                                |  |              | 7.75  | %            |  |           | 7.20  | %            |  |   | 7.13  | %
|Equity to total assets at end of period                                                         |  |              | 7.89  | %            |  |           | 7.50  | %            |  |   | 6.92  | %
|Book value per share (2)                                                                        |  | $            | 9.38  |              |  | $         | 9.03  |              |  | $ | 7.98  |  
|Return on average assets (1)                                                                    |  |              | 1.15  | %(3)         |  |           | .92   | %            |  |   | .81   | %
|Return on average equity (1)                                                                    |  |              | 14.81 | %(3)         |  |           | 12.78 | %            |  |   | 11.38 | %
|Noninterest expenses to average assets (1)                                                      |  |              | 3.22  | %            |  |           | 2.86  | %            |  |   | 2.81  | %
|Nonperforming loans and foreclosed real estate as
a percentage of total assets at end of period |  |              | 1.41  | %            |  |           | 1.40  | %            |  |   | .78   | %



---

|(1) |  | Annualized for the three months ended March 31.                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Adjusted for stock dividend.                                                                                                                             
|   
|(3) |  | Excluding the after tax gain on sale of deposit accounts during the
period return on average assets
was .89% and the return of average equity was 11.48%.

13



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##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

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 March 31,
|                                                                                 |                                             |                                            |        |                             
|                                                                                 |                                             |                                            |        | 2003                         |         | 2002     
|                                                                                 |                                             |                                            |        |                              |         |          
|                                                                                 |                                             |                                            |        |                              |         |           |       | Interest |       | Average |      |           |      |        |        | Interest |         | Average
|                                                                                 |                                             |                                            |        | Average                      |         | and       |       | Yield/   |       | Average |      | and       |      | Yield/
|                                                                                 |                                             |                                            |        | Balance                      |         | Dividends |       | Rate     |       | Balance |      | Dividends |      | Rate  
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |       
|                                                                                 |                                             |                                            |        | (Dollars in thousands)      
|Interest-earning assets:                                                         |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 | Loans (1)                                   |                                            | $      | 156,199                      |         |           |       | 2,837    |       |         |      | 7.27      | %    |        | $      | 136,656  |         |         |       | 2,615 |       |  |      | 7.65 | %   
|                                                                                 | Securities                                  |                                            |        | 22,786                       |         |           |       | 220      |       |         |      | 3.86      |      |        |        | 21,386   |         |         |       | 250   |       |  |      | 4.68 |     
|                                                                                 | Other interest-earning assets (2)           |                                            |        | 3,967                        |         |           |       | 19       |       |         |      | 1.92      |      |        |        | 8,284    |         |         |       | 44    |       |  |      | 2.12 |     
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total interest-earning assets              |        |                              | 182,952 |           |       |          | 3,076 |         |      |           | 6.73 |        |        |          | 166,326 |         |       |       | 2,909 |  |      |      | 7.00 | 
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Noninterest-earning assets                                                       |                                             |                                            | 8,949  |                              |         |           |       |          |       |         |      |           |      |        | 7,843  |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total assets                               |        | $                            | 191,901 |           |       |          |       |         |      |           |      |        |        | $        | 174,169 |         |       |       |       |  |      |      |      | 
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Interest-bearing liabilities:                                                    |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 | Savings, NOW, money-market
deposit accounts |                                            |        | 65,673                       |         |           |       | 188      |       |         |      | 1.15      |      |        |        | 56,583   |         |         |       | 208   |       |  |      | 1.47 |     
|                                                                                 | Time deposits                               |                                            |        | 74,687                       |         |           |       | 687      |       |         |      | 3.68      |      |        |        | 77,514   |         |         |       | 842   |       |  |      | 4.35 |     
|                                                                                 | Other borrowings (3)                        |                                            |        | 16,926                       |         |           |       | 145      |       |         |      | 3.43      |      |        |        | 12,349   |         |         |       | 126   |       |  |      | 4.08 |     
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total interest-bearing liabilities         |        |                              | 157,286 |           |       |          | 1,020 |         |      |           | 2.59 |        |        |          | 146,446 |         |       |       | 1,176 |  |      |      | 3.21 | 
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Noninterest-bearing liabilities                                                  |                                             |                                            | 19,735 |                              |         |           |       |          |       |         |      |           |      |        | 15,313 |          |         |         |       |       |       |  |      |     
|Stockholders equity                                                             |                                             |                                            | 14,880 |                              |         |           |       |          |       |         |      |           |      |        | 12,410 |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|                                                                                 |                                             | Total liabilities and
stockholders equity |        | $                            | 191,901 |           |       |          |       |         |      |           |      |        |        | $        | 174,169 |         |       |       |       |  |      |      |      | 
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Net interest income                                                              |                                             |                                            |        |                              |         | $         | 2,056 |          |       |         |      |           |      |        |        |          |         | $       | 1,733 |       |       |  |      |     
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Interest-rate spread (4)                                                         |                                             |                                            |        |                              |         |           |       |          |       |         | 4.14 | %         |      |        |        |          |         |         |       |       |       |  | 3.79 | %   
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Net interest margin (5)                                                          |                                             |                                            |        |                              |         |           |       |          |       |         | 4.50 | %         |      |        |        |          |         |         |       |       |       |  | 4.17 | %   
|                                                                                 |                                             |                                            |        |                              |         |           |       |          |       |         |      |           |      |        |        |          |         |         |       |       |       |  |      |     
|Ratio of average interest-earning assets to
average interest-bearing liabilities |                                             |                                            | 1.16   |                              |         |           |       |          |       |         |      |           |      |        | 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



---



##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

Comparison of the Three-Month Periods Ended March 31, 2003 and 2002

General.Net earnings for the three-months ended March 31, 2003, were
$551,000 or $0.34 per basic and $0.32 per diluted share compared to
$353,000 or $0.22 per basic and $0.21 per diluted share for 2002.
Excluding the net after tax gain on the sale of deposit accounts, net
earnings were $427,000 or $0.26 per basic and $0.25 per diluted share.
The increase in net earnings was due to an increase in net interest
income and noninterest income including the gain on sale of deposit
accounts, partially offset by an increase in noninterest expenses and
income taxes.

Interest Income and Expense.Interest income increased by $167,000 to $3.1
million for the three-month period ended March 31, 2003 from $2.9 million
for the three months ended March 31, 2002. Interest on loans increased to
$2.8 million for the three-months ended March 31, 2003 compared to $2.6
million in 2002 due to an increase in the average loan portfolio balance
to $156.2 million from $136.7 million which was partially offset by a
decrease in the weighted-average yield earned in 2003 to 7.27% from 7.65%
in 2002. Interest on securities decreased for the three months ended
March 31, 2003 to $220,000 from $250,000 in 2002. The decrease was due to
a decrease in the weighted-average yield earned in 2003 to 3.86% from
4.68% in 2002 which was partially offset by an increase in the average
portfolio balance to $22.8 million in 2003 from $21.4 million in 2002.
Interest on other interest-earning assets decreased from $44,000 in 2002
to $19,000 in 2003.

Interest expense on deposits decreased by $175,000 to $875,000 for the
three-months ended March 31, 2003 from $1,050,000 in 2002. The decrease is
due to a decrease in the average rate paid on interest-bearing deposits in
2003 to 2.49% from 3.13% in 2002, which was partially offset by an increase
in the average deposits in 2003 to $140.4 million compared to $134.1
million in 2002. The increase in average interest bearing deposits was
partially offset by the sale of $11.7 million in deposits on February 7,
2003.

Interest expense on other borrowings increased to $145,000 for the
three-months ended March 31, 2003 from $126,000 for the three-months ended
March 31, 2002. The increase is due to an increase in average other
borrowings to $16.9 million in 2003 from $12.3 million in 2002, partially
offset by a decrease in the weighted rate paid to 3.43% in 2003 from 4.08%
in 2002.

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 $122,000 for the three-month period ended March 31, 2003
compared to $109,000 for the same period in 2002. The allowance for loan
losses is $2,185,000 at March 31, 2003. While management believes that
its allowance for loan losses is adequate as of March 31, 2003, 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 $502,000 in 2003 from
$163,000 for the three- months ended March 31, 2002. The increase is
primarily due to an increase in service charges on deposit accounts,
mortgage lending fees and a
gain recognized on the sale of deposit accounts of $200,000.

Noninterest Expense.Total noninterest expense increased to $1,547,000 for
the three months ended March 31, 2003 from $1,222,000 for the comparable
period ended March 31, 2002, primarily due to an increase in employee
compensation and benefits of $192,000.

Income Taxes.Income taxes for the three months ended March 31, 2003, was
$338,000 or 38.0% of earnings before income taxes compared to $212,000 or
37.5% for the period ended March 31, 2002.

15



---



##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

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. and Subsidiary, or its subsidiary is a party or to which any of their
property is subject.

16



---



##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

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. and Subsidiary                                                               
|*           |  |                        | 4    |  |  | Sample Stock Certificate for Madison BancShares, Inc.                                                           
|*           |  |                        | 10.2 |  |  | Employment Agreement of Robert McGivney                                                                         
|*           |  |                        | 10.3 |  |  | Employment Agreement of David Paetzold                                                                          
|*           |  |                        | 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                                             
|**          |  |                        | 10.7 |  |  | Employment Agreement of Otho B. Young, III                                                                      
|            |  |                        | 11   |  |  | Statement re: 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 Certification required under Section 906 of
Sarbanes-Oxley Act
of 2002                                      
|            |  |                        | 99.4 |  |  | CFO Certification required under Section 906 of
Sarbanes-Oxley Act
of 2002                                      



---

|*  |  | These exhibits were filed with Madisons Form 10-SB on June 6, 2001. 
|-- |  | ---------------------------------------------------------------------
|  
|** |  | This exhibits were filed with Madisons Form 10-KSB on March 17, 2003



|(b) |  | Reports on Form 8-K.There was one Form 8-K filed on February 10, 2003
to disclose that all of the executive officers and directors of Madison
BancShares, Inc. and Subsidiary, individually purchased a total of 81,734
shares of common stock at $12.86 per share in a private transaction. Each
individual had filed a Form 4, Statement of Changes in Beneficial
Ownership with the Securities and Exchange Commission reflecting their
respective purchases.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17



---



##### 



MADISON BANCSHARES, INC. AND SUBSIDIARY

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. AND SUBSIDIARY
(Registrant)
|                    
|                     |  |                                                      |  |                                                                                
|                    
|Date: April 21, 2003 |  | By:                                                  |  | /s/ Robert B. McGivneyRobert B. McGivney, President and Chief
Executive Officer
|                    
|                     |  |                                                      |  |                                                                                
|                    
|Date: April 21, 2003 |  | By:                                                  |  | /s/ Martin W. GladyszMartin W. Gladysz, Chief Financial
Officer and Treasurer  

18



---



##### 



CERTIFICATIONS

I, Robert B. McGivney, certify, that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Madison
BancShares, Inc. and Subsidiary;                                                                                                                                                                                                                              
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|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:                                                                                                      



| | (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: April 21, 2003 |  | By: |  | /s/ Robert B. McGivneyRobert B. McGivney, President and Chief
Executive Officer

19



---



##### 



I, Martin W. Gladysz, certify, that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Madison
BancShares, Inc. and Subsidiary;                                                                                                                                                                                                                              
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|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:                                                                                                      



| | (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: April 21, 2003 |  | By: |  | /s/ Martin W. GladyszMartin W. Gladysz, Chief Financial Officer
and Treasurer

20