<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 1998

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from                 to
                                          -----------------
---------------------

Commission file Number  0-21292

                MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                     Wisconsin                                39-1413328
------------------------------------------------        ----------------------
(State or other jurisdiction of incorporation or          (I.R.S. Employer 
                    organization)                       Identification Number)

                    14100 West National Avenue, PO Box 511160
                        New Berlin, Wisconsin 53151-1160
--------------------------------------------------------------------------------
                     (Address of principal executive office)

                                 (414) 827-6713
--------------------------------------------------------------------------------
               Registrant's telephone number, including area code:


--------------------------------------------------------------------------------
 (Former name, former address and former fiscal year, if changed since last 
  report)

Indicate by check mark whether the Registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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       .
     -----      -------

                      Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.

 Common Stock, par value $1.00 per share       1,364,698 (split adjusted) Shares
----------------------------------------       ---------------------------------
              Class                                Outstanding at May 1, 1998


<PAGE>   2


                MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.

                                    FORM 10-Q

                                      INDEX

                                                                     PAGE NUMBER

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

        Unaudited Consolidated Statements of Financial Condition as 
        of March 31, 1998 and December 31, 1997                          3

        Unaudited Consolidated Statements of Income for the Three 
        Months ended March 31, 1998 and 1997                             4

        Unaudited Consolidated Statements of Cash Flows for the 
        Three Months ended March 31, 1998 and 1997                       5

        Notes to Unaudited Consolidated Financial Statements             6


Item 2. Management's Discussion and Analysis of Financial 
Condition and Results of Operations                                      10

Item 3. Quantitative and Qualitative Disclosure About Market Risk        14

PART II. OTHER INFORMATION

Items 1-6                                                                16

Signatures                                                               17


                                       2
<PAGE>   3





PART I. FINANCIAL INFORMATION

MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


<TABLE>
<CAPTION>
                                                                MARCH 31,    DECEMBER 31,     
                                                                  1998          1997
                                                               ---------     ---------
                                                                    (In Thousands)
<S>                                                            <C>           <C>      
ASSETS
Cash and due from banks                                        $  12,393     $  10,694
Interest-bearing deposits at other banks                           1,052           821
Federal funds sold                                                12,168         3,843
                                                               ---------     ---------
Cash and cash equivalents                                         25,613        15,358
Securities available-for-sale at fair value:
  Investment securities                                           12,568        12,649
  Mortgage-related securities                                     33,156        28,169
Loans receivable                                                 222,059       227,178
Accrued interest receivable                                        1,656         1,553
Federal Home Loan Bank stock                                       1,050         1,050
Premises and equipment                                             8,937         8,891
Other assets                                                       2,289         1,830
                                                               ---------     ---------
Total assets                                                   $ 307,228     $ 296,678
                                                               =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits                                                     $ 274,610     $ 264,669
  Borrowings                                                       1,250         1,500
  Accrued interest payable                                           362           332
  Advance payments by borrowers for taxes and insurance              444           179
  Other liabilities                                                  643           502
                                                               ---------     ---------
Total liabilities                                                277,309       267,182

Stockholders' equity
  Common stock $1.00 par value; 1,500,000 authorized;
    shares issued: 1,365,449--1998; 1,355,850--1997; shares
    outstanding: 1,362,403--1998; 1,355,460--1997                  1,365         1,356
  Additional paid in capital                                      10,846        10,556
  Net unrealized gain on securities available-for-sale                62            19
  Retained earnings                                               17,742        17,574
  Treasury stock, at cost (3,046 shares--1998; 390
    shares--1997)                                                    (96)           (9)
                                                               ---------     ---------
Total stockholders' equity                                        29,919        29,496
                                                               ---------     ---------
Total liabilities and stockholders' equity                     $ 307,228     $ 296,678
                                                               =========     =========
</TABLE>






See notes to unaudited consolidated financial statements.

                                       3
<PAGE>   4



MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                          THREE MONTHS           THREE MONTHS 
                                              ENDED                  ENDED                    
                                            MARCH 31,              MARCH 31,                             
                                              1998                   1997                
                                          ------------           ------------
<S>                                       <C>                    <C>        
Interest income:
  Loans, including fees                   $   4,837              $    4,141  
  Investment securities:                                                     
    Taxable                                     195                     243  
    Exempt from federal income taxes             11                       0  
  Mortgage-related securities                   479                     380  
  Other                                         109                     182  
                                          ---------              ----------  
Total interest income                         5,631                   4,946  
                                                                             
Interest expense:                                                            
  Deposits                                    2,487                   2,057  
  Borrowings                                     25                     111  
                                          ---------              ----------  
Total interest expense                        2,512                   2,168  
                                                                             
Net interest income                           3,119                   2,778  
Provision for loan losses                        75                      48  
                                          ---------              ----------  
Net interest income after provision for                                      
  loan losses                                 3,044                   2,730  
                                                                             
Noninterest income:                                                          
  Service charges on deposit accounts           187                     166  
  Service charges on loans                       22                      15  
  Net gain on securities sales                    0                      43  
  Other                                         241                     172  
                                          ---------              ----------  
                                                450                     396  
                                                                             
Noninterest expenses:                                                        
  Salaries and employee benefits              1,806                   1,620  
  Premises and equipment                        421                     332  
  Data processing fees                          157                     150  
  Federal deposit insurance premiums             19                      18  
  Other                                         562                     505  
                                          ---------              ----------  
                                              2,965                   2,625  
                                                                             
Income before income taxes                      529                     501  
Income taxes                                    180                     196  
                                          ---------              ----------  
Net income                                $     349              $      305  
                                          =========              ==========  
                                                                             
Basic earnings per share                  $    0.26              $     0.24  
                                          ---------              ----------  
                                                                             
Diluted earnings per share                $    0.25              $     0.23  
                                          =========              ==========  
                                                                             
Dividends per share                       $    0.13              $     0.13  
                                          =========              ==========  
</TABLE>
                                                                   
See notes to unaudited consolidated financial statements.

                                       4
<PAGE>   5



MERCHANTS AND MANUFACTURERS BANCORPORATION, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED MARCH 31,
                                                                                  1998           1997
                                                                              ------------  --------------
                                                                                    (In Thousands)
<S>                                                                           <C>           <C>           
OPERATING ACTIVITIES
  Net income                                                                  $        349  $          305
  Adjustments to reconcile net income to cash
    provided by operating activities
       Provision for loan losses                                                        75              48
       Provision for depreciation                                                      135             119
       Net amortization of investments securities premiums and discounts                24              43
       Net realized investment security gains                                            0             (43)
       Increase in accrued interest receivable                                        (103)            (76)
       Increase (decrease) in accrued interest payable                                  30             (10)
       Other                                                                          (233)             78
                                                                              ------------      ----------
Net cash provided by operating activities                                              277             464

INVESTING ACTIVITIES
Purchase of securities available-for-sale                                           (6,163)           (486)
Proceeds from sales of securities available-for-sale                                     0           1,310
Proceeds from redemptions and maturities of securities available-for-sale            1,299           7,803
Net decrease (increase) in loans                                                     5,044          (4,962)
Purchase of premises and equipment                                                    (182)           (659)
                                                                              ------------      ----------
Net cash (used) by investing activities                                                 (2)          3,006

FINANCING ACTIVITIES
Net increase in deposits                                                             9,940           7,554
Net decrease in borrowings                                                            (250)         (1,950)
Increase in advance payments by borrowers for taxes and insurance                      259             405
Payment of cash dividends to stockholders                                             (181)           (172)
Purchase of treasury stock                                                            (158)           (134)
Proceeds from sale of treasury stock                                                    71              65
Proceeds from issuing additional common stock                                          299               0
                                                                              ------------      ----------
Net cash provided by financing activities                                            9,980           5,768

Increase in cash and cash equivalents                                               10,255           9,238
Cash and cash equivalents at beginning of period                                    15,358          22,272
                                                                              ------------      ----------
Cash and cash equivalents at end of period                                    $     25,613      $   31,510
                                                                              ============      ==========


Supplemental cash flow information:
  Interest paid                                                               $      2,481      $    2,171
  Income taxes paid                                                                    257             185
</TABLE>

See notes to unaudited consolidated financial statements

                                       5
<PAGE>   6


MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 1998

NOTE A -- BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the
accounts of Merchants and Manufacturers Bancorporation, Inc. (the Corporation)
and its wholly owned subsidiaries, Lincoln State Bank, Franklin State Bank,
Lincoln Community Bank (collectively, the Banks), Achieve Mortgage Corporation
and M&M Services, Inc. Lincoln State Bank also includes the accounts of its
wholly owned subsidiary, M&M Lincoln Investment Corporation. Lincoln Community
Bank also includes the accounts of its wholly owned subsidiary, Lincoln
Investment Management Corporation. All significant intercompany balances and
transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 1998
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Corporation's Form
10-K for the year ended December 31, 1997.

This 10-Q contains various forward-looking statements concerning the Company's
prospects that are based on the current expectations and beliefs of management.
Forward-looking statements may also be made by the Corporation from time to time
in other reports and documents as well as oral presentations. When used in
written documents or oral statements, the words anticipate, believe, estimate,
expect, objective and similar expressions are intended to identify
forward-looking statements. The statements contained herein and such future
statements involve or may involve certain assumptions, risks and uncertainties,
many of which are beyond the Corporation's control, that could cause the
Corporation's actual results and performance to differ materially from what is
expected. In addition to the assumptions and other factors referenced
specifically in connection with such statements, the following factors could
impact the business and financial prospects of the Corporation: general economic
conditions; legislative and regulatory initiatives; monetary and fiscal policies
of the federal government; deposit flows; disintermidiation; the cost of funds;
general market rates of interest; interest rates or investment returns on
competing investments; demand for loan products; demand for financial services;
changes in accounting policies or guidelines; and changes in the quality or
composition of the Corporation's loan and investment portfolio.

NOTE B -- EARNINGS PER SHARE INFORMATION

On March 27, 1998 the Board of Directors of the Corporation declared a
three-for-two stock split, in the form of a 50% common stock dividend, that was
distributed on April 10, 1998 to shareholders of record on April 1, 1998. All
share data have been adjusted to reflect the effect of the three-for-two split
in the March 31, 1998 financial statements, and all prior periods presented.
 




                                      6

<PAGE>   7



Basic earnings per share for the three months ended March 31, 1998, and 1997
have been determined by dividing net income for the respective periods by the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period.

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                          March 31,
                                                    1998             1997
       ----------------------------------------------------------------------
<S>                                           <C>                <C>         
       Net income                             $      349,204     $    305,098
       Weighted average shares
           outstanding                             1,358,152        1,293,880
       ----------------------------------------------------------------------
       Earnings per share
                                              $         0.26     $       0.24
                                              =================  ============
</TABLE>

Statement of Financial Accounting Standard No. 128, Earnings Per Share, was
issued in February 1997 and is effective for interim and annual periods ending
after December 15, 1997. Statement 128 replaces the presentation of primary
earnings per share ("EPS") with a presentation of basic EPS. Basic EPS excludes
dilution and is computed by dividing income available to common stockholders by
the weighted average number of common shares outstanding for the period. Basic
EPS will typically be higher than primary EPS. Statement No. 128 also requires
presentation of diluted EPS which is computed similarly to fully diluted EPS
under existing accounting rules.

Earnings per share data for the three months ended March 31, 1998 and 1997 as 
calculated in accordance  with  Statement 128 are as follows:

<TABLE>
<CAPTION>
                                               Three Months Ended
                                                   March 31,
                                              1998             1997
       -------------------------------------------------------------
<S>                                         <C>             <C>     
       Basic earnings per 
       share                                $   0.26        $   0.24
       Diluted earnings per 
       share                                $   0.25        $   0.23
</TABLE>







                                       7
<PAGE>   8


NOTE C -- LOANS RECEIVABLE

Loans are comprised of the following categories:

<TABLE>
<CAPTION>
                                       March 31
                                 1998            1997
                              ------------------------
                                    (In Thousands)
<S>                           <C>            <C>      
Commercial business loans     $  53,818      $  48,033
Commercial real estate           82,720         60,488
Real estate mortgages            75,922         76,557
Installments                     10,848         10,623
Other                               975          1,059
                              ------------------------
Total loans                     224,283        196,760
Unearned income                     (54)           (74)
Allowance for loan losses        (2,170)        (1,982)
                              ------------------------ 
Loans, net                    $ 222,059      $ 194,704
                              ======================== 
</TABLE>

The following table presents changes in the allowance for loan losses:

<TABLE>
<CAPTION>
                                     March 31
                           1998        1997          1996
                         ---------------------------------
                                  (In Thousands)
<S>                      <C>          <C>          <C>   
Balance at January 1     $ 2,093      $ 1,939      $ 1,533
     Provisions               75           48           36
     Charge-offs              (1)          (5)         (68)
     Recoveries                3            0            0
                         ---------------------------------
Balance at March 31      $ 2,170      $ 1,982      $ 1,501
                         =================================
</TABLE>

NOTE D -- STOCKHOLDERS' EQUITY

Under federal law and regulations, the Corporation is required to meet certain
capital requirements. The Banks are required to meet leverage and risk-based
capital requirements. The leverage ratio, in general, is stockholders' equity as
a percentage of total assets. The risk-based capital ratio, in general, is
stockholders' equity plus general loan loss allowances (within certain
limitations) as a percentage of risk adjusted assets.



                                       8
<PAGE>   9



As of March 31, 1998, the most recent notification from Federal Deposit
Insurance Corporation categorized the Banks as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Banks must maintain minimum total risk-based, Tier I risk-based
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the banks'
category.

<TABLE>
<CAPTION>
                                                                                              To Be Well Capitalized
                                                                        For Capital            Under Prompt Corrective
                                               Actual                Adequacy Purposes          Action Provisions
                                      ------------------------      --------------------      ------------------------
                                         Amount       Ratio         Amount       Ratio        Amount       Ratio
                                      ------------------------      --------------------      ------------------------
          AS OF MARCH 31, 1998                                         (In Thousands)
<S>                                      <C>            <C>         <C>            <C>          <C>          <C>   
          Total Capital (to Risk-
             Weighted Assets):
               Lincoln State Bank        $12,771        10.05%      $10,164       >8.00%        $12,705     >10.00%
               Lincoln Community          11,963        18.18%        5,263       >8.00%          6,579     >10.00%
               Franklin State Bank         3,635        10.64%        2,734       >8.00%          3,417     >10.00%

          Tier 1 Capital (to Risk-
             Weighted Assets):
               Lincoln State Bank         11,663         9.18%        5,082       >4.00%          7,623      >6.00%
               Lincoln Community          11,237        17.08%        2,632       >4.00%          3,947      >6.00%
               Franklin State Bank         3,299         9.65%        1,367       >4.00%          2,050      >6.00%

          Tier 1 Capital (to Average
             Assets):
               Lincoln State Bank         11,663         7.45%        6,260       >4.00%          7,825      >5.00%
               Lincoln Community          11,237        11.57%        3,886       >4.00%          4,857      >5.00%
               Franklin State Bank         3,299         7.69%        1,715       >4.00%          2,144      >5.00%
</TABLE>








                                       9
<PAGE>   10


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Financial Condition

At March 31, 1998, the Corporation's consolidated total assets were $307.2
million as compared to $296.7 million at December 31, 1997. This increase was
due to a $9.9 million increase in total deposits, which was used to fund
short-term investments and mortgage-related securities.

Investment securities available-for-sale decreased $81,000 from December 31,
1997 to March 31, 1998. Maturing investment securities in this category caused
the decrease.

Mortgage-related securities available-for-sale increased $5.0 million, or 17.7%
from $28.2 million at December 31, 1997, to $33.2 million at March 31, 1998. The
funds generated by new deposit accounts were used to purchase securities of this
type.

Loans receivable decreased $5.1 million, or 2.3%, from $227.2 million at
December 31, 1997 compared to $222.1 million at March 31, 1998. This reduction
is unusual since the Corporation's loans have annually grown 19.7% in 1997 and
16.0% in 1996. The first quarter decrease in loans was primarily due to loan
pay-offs made on two commercial loan relationships. Currently, loans receivable
consists mainly of mortgages secured by residential properties located in the
Corporation's primary market area and commercial loans secured by business
assets, real estate, and guarantees. At March 31, 1998 the Corporation has not
designated any loans held for sale.

Stockholders' equity at March 31, 1998 was $29.9 million compared to $29.5
million at December 31, 1997, an increase of $423,000. The change in
stockholders' equity consists of net income of $349,000, $299,000 from the
issuance of additional common stock, less the net purchase of treasury stock of
$87,000, payments of dividends to shareholders of $181,000 and the $43,000 net
increase in the market value of securities categorized as available for sale.
The Banks continue to exceed their regulatory capital requirements.

Nonperforming Assets and Allowance for Losses

Generally a loan is classified as nonaccrual and the accrual of interest on such
loan is discontinued when the contractual payment of principal or interest has
become 90 days past due or management has serious doubts about further
collectibility of principal or interest. Generally, loans are restored to
accrual status when the obligation is brought current, has performed in
accordance with the contractual terms for a reasonable period of time and the
ultimate collectibility of the total contractual principal and interest is no
longer in doubt.





                                       10
<PAGE>   11


Nonperforming assets are summarized, for the dates indicated, as follows:

<TABLE>
<CAPTION>
                                              March 31,       December 31,
                                                1998             1997
                                             ---------        -----------
                                                 (dollars in thousands)
<S>                                          <C>              <C>       
     Non-accrual loans:
         Mortgage loans
      One-to-four family                     $     451        $      383
      Commercial real estate                         0                82
                                             ---------        ----------
        Total mortgage loans                       451               465

    Commercial business                            206               177
    Consumer and other                              84                57
                                             ---------        ----------
        Total non-accrual loans                    741               699

Other real estate owned                              0                 0
                                             ---------        ----------
        Total nonperforming assets           $     741        $      699
                                             =========        ==========

RATIOS:
Non-accrual loans to total loans                  0.33%             0.30%
Nonperforming assets to total assets              0.24              0.24
Loan loss allowance to non-accrual loans        292.84            299.42
Loan loss allowance to total loans                0.95              0.91
</TABLE>

Nonperforming assets increased by $42,000 from $699,000 at December 31, 1997 to
$741,000 at March 31, 1998, an increase of 6.0%. Management believes that losses
will be minimal on the remaining balances, due to the collateral position in
each situation.

Results of Operations

Net interest income for the three months ended March 31, 1998 was $3.12 million,
an increase of 12.3% from the $2.78 million reported for the same period in
1997. The increased volume of interest-earning assets accounted for the higher
net interest income. The additional volume was partially offset by the reduced
net interest spread. The higher average cost of new deposits generated caused
the weighted average rate paid on deposits and borrowings to increase from 3.65%
at March 31, 1997 to 3.73% at March 31, 1998. The weighted average yield on
interest-earning assets increased from 8.00% at March 31, 1997 to 8.03% at March
31, 1998.



  `                                     11
<PAGE>   12


The following table sets forth the weighted average yield earned on the
Corporation's consolidated loan and investment portfolios, the weighted average
interest paid on deposits and borrowings, the net spread between yield earned
and rates paid and the net interest margin during the three months ended March
31, 1998 and 1997.

<TABLE>
<CAPTION>
                                                                                   For the
                                                                             Three Months Ended
                                                                                  March 31,

                                                                         1998                  1997
                                                                  ----------------------------------
              <S>                                                 <C>                          <C>
              Weighted average yield on
                 interest-earning assets                                  8.03%                8.00%

              Weighted average rate paid on
                 deposit and borrowings                                   3.73                 3.65
                                                                  ----------------------------------

              Net interest spread                                         4.30%                4.35%
                                                                  ==================================
              Net interest margin (net interest
                 income divided by average
                 earning assets)                                          4.45%                4.54%
                                                                  ==================================
</TABLE>

The provision for loan losses for the three month period ended March 31, 1998
was $75,000 compared to $48,000 for the three months ended March 31, 1997, a
increase of $27,000, or 56.3%. The higher provision is primarily due to
increases in the loan portfolio and not any anticipated loan losses. In fact,
the Corporation's ratio of nonperforming loans to total loans is well below its
peer group average. The Corporation uses a risk-based assessment of its loan
portfolio to determine the level of the loan loss allowance. This procedure is
based on internal reviews intended to determine the adequacy of the loan loss
allowance in view of presently known factors. However, changes in economic
conditions in the future financial conditions of borrowers cannot be predicted
and may result in increased future provisions to the loan loss allowance.

Total noninterest income for the three months ended March 31, 1998 was $450,000
compared to $396,000 for the three months ended March 31, 1997, an increase of
$54,000, or 13.6%. The increase is due to fees collected on new products and
services, additional service charges on loans and fees collected on transactions
performed at company-owned ATM machines.

Noninterest expense for the three months ended March 31, 1998 was $2.97 million
compared to $2.63 million for the three months ended March 31, 1997, an increase
of $340,000, or 13.0%. Salaries and employee benefits increased $186,000 or
11.5% from $1.62 million for the three-month period ended March 31, 1997
compared to $1.81 million for the three-month period 1998. Employee bonus
payments, higher benefit costs and changes in personnel accounted for the
change. Premises and equipment expense increased $89,000 or 26.8% from $332,000
for the three month period ended March 31, 1997 compared to $421,000 for the
three month period ended March 31, 1998. The increase in occupancy expense can
be attributed to maintenance and repairs made on the Corporation's properties.
Other expenses increased $57,000 in the first quarter of 1998. This can be
attributed to the growth in operating expenses such as office supplies, legal
fees, accounting fees and check losses.



                                       12
<PAGE>   13



Income before taxes for the three month period ended March 31, 1998 was $529,000
compared to $501,000 for the three months ended March 31, 1997, an increase of
$28,000 or 5.6%. Income tax expense for the three months ended March 31, 1998
decreased $16,000 over the 1997 first quarter tax expense. The effective tax
rate for the three months ended March 31, 1998 was 34.0% compared to 39.1% for
the three months ended March 31, 1997. The decrease in the tax rate can be
attributed to the purchase of tax-exempt investment securities held by the
Corporation and a reallocation of expenses throughout the Corporation's
subsidiaries. On an after tax basis, the Corporation reported net income of
$349,000 for the three month period ended March 31, 1998 compared to $305,000
for the same period in 1997.

Liquidity and Capital Resources

Liquidity management involves the ability to meet the cash flow requirements of
customers who may be either depositors wanting to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs. The Corporation had liquid assets of $25.6 million and $15.4 million at
March 31, 1998 and December 31, 1997, respectively.

Management believes liquidity and capital levels are adequate at March 31, 1998.
For a discussion of regulatory requirements, see Note D to the Unaudited
Consolidated Financial Statements.

Asset/Liability Management

Financial institutions are subject to interest rate risk to the extent their
interest-bearing liabilities (primarily deposits) mature or reprice at different
times and on a different basis than their interest-earning assets (consisting
primarily of loans and securities). Interest rate sensitivity management seeks
to match maturities on assets and liabilities and avoid fluctuating net interest
margins while enhancing net interest income during periods of changing interest
rates. The difference between the amount of interest-earning assets maturing or
repricing within a specific time period and the amount of interest-bearing
liabilities maturing or repricing within the same time period is referred to as
an interest rate gap. A gap is considered positive when the amount of interest
rate sensitive assets exceeds the amount of interest rate sensitive liabilities.
A gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets. During periods
of rising interest rates, a negative gap tends to adversely affect net interest
income while a positive gap tends to result in an increase in net interest
income. During a period of falling interest rates, a negative gap tends to
result in an increase in net interest income while a positive gap tends to
adversely affect net interest income.

In the following table, assumptions regarding prepayment and withdrawal rates
are based upon the Corporation's historical experience, and management believes
such assumptions are reasonable.





                                       13
<PAGE>   14


The following table shows the interest rate sensitivity gap for four different
time intervals as of March 31, 1998.

   
<TABLE>
<CAPTION>
                                                         AMOUNTS MATURING OR REPRICING AS OF MARCH 31, 1998
                                                ---------------------------------------------------------------------------
                                                      WITHIN       SIX TO TWELVE   ONE TO FIVE        OVER
                                                    SIX MONTHS         MONTHS         YEARS        FIVE YEARS       TOTAL
                                                ---------------------------------------------------------------------------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                             <C>              <C>             <C>             <C>           <C>       
    Interest-earning assets:
    Fixed-rate mortgage loans                   $       32,073   $     19,696    $    56,598     $    5,584    $  113,951
    Adjustable-rate mortgage loans                      18,752          8,889         15,858              0        43,499
                                                --------------------------------------------------------------------------
          Total mortgage loans                          50,825         28,585         72,456          5,584       157,450
    Commercial business loans                           27,328          4,021         22,468              0        53,817
    Consumer loans                                       6,031          1,833          4,328            170        12,362
    Tax-exempt loans                                         0            600              0              0           600
    Mortgage-related securities                         18,326              0          7,287          7,543        33,156
    Fixed rate investment securities and other           3,907          3,649          1,067              0         8,623
    Variable rate investment securities and                                                                              
    other                                               17,165          1,050              0              0        18,215
                                                --------------------------------------------------------------------------
          Total interest-earning assets         $      123,582   $     39,738    $   107,606     $   13,297    $  284,223
                                                ==========================================================================

    Interest-bearing liabilities:
    Deposits
      Time deposits                             $      102,771   $     31,533    $    12,241     $        4    $  146,549
      NOW accounts                                       1,615          1,615         16,147          7,535        26,912
      Savings accounts                                   3,489          3,489         34,885         16,277        58,140
      Money market accounts                                435            435          4,347          2,029         7,246
      Advance payments for taxes and insurance             222            222              0              0           444
      Borrowings                                         1,250              0              0              0         1,250
                                                --------------------------------------------------------------------------
          Total interest-bearing liabilities    $      109,782   $     37,294    $    67,620     $   25,845    $  240,541
                                                ==========================================================================
    Interest-earning assets less
    interest-bearing
      liabilities                               $       13,800   $      2,444    $    39,986       ($12,548)   $   43,682
                                                ==========================================================================
    Cumulative interest rate sensitivity gap    $       13,800   $     16,244    $    56,230     $   43,682
                                                ============================================================
    Cumulative interest rate sensitivity gap
    as a percentage of total assets                       4.49%          5.29%         18.30%         14.22%
                                                ============================================================
</TABLE>

At March 31, 1998, the Corporation's ratio of cumulative interest-rate sensitive
gap as a percentage of total assets was 4.49% for six months and 5.29% for
one-year maturities. Therefore, the Corporation is positively gapped and may
benefit from rising interest rates.

Certain shortcomings are inherent in the method of analysis presented in the
above schedule. For example, although certain assets and liabilities may have
similar maturities or periods of repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in market
rates. Additionally, certain assets, such as adjustable rate mortgage loans,
have features that restrict changes in interest rates, on a short term basis
over the life of the asset. Further, in the event of a change in interest rates,
prepayment and early withdrawal levels would likely deviate significantly from
those assumed in calculating the schedule.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

       Not Applicable




                                       14
<PAGE>   15


PART II.  OTHER INFORMATION

Item 1.    Legal Proceedings

           As of March 31, 1998 there were no material pending legal
           proceedings, other than ordinary routine litigation incidental to
           the business of the Corporation, to which the Corporation or any
           of its subsidiaries was a party or to which any of their property
           was subject.

Item 2.    Changes in Securities - NONE

Item 3     Defaults upon Senior Securities - NONE

Item 4     Submission of Matters to Vote of Security Holders - NONE

Item 5     Other Information - NONE

Item 6     Exhibits and Reports on Form 8-K

           The Corporation did not file any reports on Form 8-K during the
           three months ended March 31, 1998. Required exhibits are
           incorporated by reference to previously filed Securities Act
           registration statements.










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<PAGE>   16



                                   SIGNATURES

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

                                               MERCHANTS AND MANUFACTURERS 
                                                   BANCORPORATION, INC.
                                           -------------------------------------
                                                      (Registrant)




Date       March 8, 1998                    /s/ Michael J. Murry
      --------------------------           -------------------------------------
                                            Michael J. Murry
                                            Chief Executive Officer & Chairman 
                                            of the Board of Directors


Date       March 8, 1998                    /s/ James C. Mroczkowski
                                           -------------------------------------
                                            James C. Mroczkowski
                                            Vice President & Chief Financial 
                                              Officer
                                            Principal Financial Officer











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