UNITED STATES

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, 2003



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 0-21554



DENMARK BANCSHARES, INC.

(Exact name of registrant as specified in its charter)





|Wisconsin                                                      | 39-1472124                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer Identification No.)

103 East Main Street, Denmark, Wisconsin 54208-0130

(Address of principal executive offices)



(920) 863-2161

(Registrant's telephone number, including area code)





---

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



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 [  ]



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



Yes [ ]  No [X]





APPLICABLE ONLY TO CORPORATE ISSUERS:



As of April 15, 2003, there were 108,448 shares of the registrant's Common Stock (no par value) issued and outstanding.







DENMARK BANCSHARES, INC.

TABLE OF CONTENTS

Quarterly Report On Form 10-Q

For The Quarter Ended March 31, 2003





|                                                                                                | Page No.
|----------------------------------------------------------------------------------------------- | --------
|                                                                                                |         
|PART I.Financial Information                                                                    |         
|                                                                                                |         
|Item 1.    Financial Statements                                                                 |         
|                                                                                                |         
|Consolidated Statements of Financial Condition                                                  | 3       
|                                                                                                |         
|Consolidated Statements of Income                                                               | 4       
|                                                                                                |         
|Consolidated Statements of Cash Flows                                                           | 5       
|                                                                                                |         
|Notes to Consolidated Financial Statements                                                      | 6       
|                                                                                                |         
|Item 2.    Managements Discussion and Analysis of Financial Condition
and Results of Operations | 8       
|                                                                                                |         
|Item 3.    Quantitative and Qualitative Disclosures About Market Risk                           | 12      
|                                                                                                |         
|Item 4.    Controls and Procedures                                                              | 12      
|PART II.Other Information                                                                       |         
|                                                                                                |         
|Item 2.    Changes in Securities and Use of Proceeds                                            | 12      
|                                                                                                |         
|Item 6.    Exhibits and Reports on Form 8-K                                                     | 12      
|Signatures                                                                                      | 13      
|                                                                                                |         
|Certifications                                                                                  | 14      































































This report may contain certain forward-looking statements, including without limitation, statements regarding results of operations, the adequacy of the allowance for loan losses, the amounts of charge-offs and recoveries, capital to assets ratios, capacity for paying dividends and liquidity.  These forward-looking statements are inherently uncertain and actual results may differ from Company expectations. The following factors which, among others, could impact current and future performance include but are not limited to: (i) adverse changes in asset quality and resulting credit risk-related losses and expenses; (ii) adverse changes in the local economy; (iii) fluctuations in market rates and prices which can negatively affect net interest margin, asset valuations and expense expectations; and (iv) changes in regulatory requirements of federal and state agencies applicable to banks and bank holding companies, which could have materially adverse effect on the Company's future operating results. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties.  All forward-looking statements contained in this report are based upon information presently available and the Company assumes no obligation to update any forward-looking statements.

8



Results of Operations



Net income for the quarter ended March 31, 2003, was $1,272,968, or $11.75 per share, a decrease of $30,928 or 2%, compared to $1,303,896, or $11.96 per share, for the corresponding period in 2002.  This decrease was the result of lower net interest income and higher noninterest expenses, which more than offset a decrease in the provision for loan losses and higher noninterest income.



Net interest income for the quarter ended March 31, 2003, was $3,649,648, a decrease of $86,759 over the corresponding period in the prior year.  The following table sets forth a summary of the changes in interest earned and interest paid resulting from changes in volume and changes in rates:





This decrease was primarily attributable to the lower average net interest rate spread, which fell from 4.19% during the first quarter of 2002 to 4.02% during the quarter ended March 31, 2003.  The Company's yield on earning assets was 6.54% during the first quarter of 2003 compared to 7.21% during the quarter ended March 31, 2002.  The average cost of funds was 2.52% during the first quarter of 2003, a decrease of 50 basis points compared to the quarter ended March 31, 2002.



In the first quarter of 2003 the Company's provision for credit losses was $162,000 compared to $211,000 for the first quarter of 2002.  Net charge-offs were $18,510 in the first quarter of 2003 compared to net charge-offs of $285,597 during the first quarter of 2002.



Noninterest income for the three months ended March 31, 2003, was $484,793, an increase of $86,826 over the corresponding period in 2002.  Gains from the sales of residential real estate loans increased by $137,353 during the first quarter of 2003.  The Bank sold $16.2 million of mortgage loans in the first quarter of 2003 compared to $7.2 million during the first quarter of 2002.  Commissions from insurance sales decreased by $46,020 during the first quarter of 2003 compared to the corresponding period in 2002.  The lower insurance commissions are mostly attributable to a decline in bonuses received based on volume and loss experience from previous years.



Noninterest expense increased by $97,461 or 5% during the three months ended March 31, 2003, over the corresponding period in 2002.  Salaries and benefits expense increased $46,231 or 3% over the corresponding period in 2002.  This increase is the result of higher salaries and wages, which increased by $32,206 or 3% primarily as a result of regular salary increases and higher group health insurance expenses, which increased by $16,406 or 7%.  Other operating expenses increased by $62,936 or 23%.  This increase was primarily the result of expenses associated with real estate properties acquired through foreclosure.  During the first quarter, the Bank incurred $17,978 of expenses for utilities, insurance and real estate taxes on properties held as other real estate. The Bank also incurred a loss of $19,851 on the sale of one of the properties.  As of March 31, 2003, the Bank has six properties held as other real estate with a carrying value of $889,173. The FDIC's deposit insurance assessment was $19,055 higher during the most recent quarter compared to the corresponding period in the prior year.  This increase was primarily due to a higher FDIC risk classification for the Bank, which resulted from an examination in September 2001.  Following a more recent regulatory examination during September 2002, the Bank expects its FDIC risk classification to return to prior lower levels, effective July 1, 2003. There is a time lag between the regulatory examination process and the effective dates of FDIC risk classifications that determine FDIC assessment rates.



Return on average assets in the first quarter of 2003 was 1.47%, compared to 1.54% for the corresponding period in 2002.  Return on average equity in the first quarter of 2003 was 13.7%, compared to 15.4% for the corresponding period in the prior year.

9

Financial Condition



Total assets increased by $12,040,078 between December 31, 2002, and March 31, 2003.  Federal funds sold increased by $19.7 million during the first quarter.  Total loans, including loans held for sale, decreased by $7.7 million during the first quarter of 2003.  The Bank sold $16.6 million of fixed rate mortgages to the secondary mortgage market.  Total deposits increased by $11.8 million during the first three months of 2003.  The increases in total assets, federal funds sold and total deposits were all related to a $14 million increase in the short-term deposits of a commercial depositor.



The following table sets forth major types of loans (excluding loans held for sale) by primary collateral and the percentage of total loans for each type:





Loans secured by residential properties declined by $4.1 million during the first quarter as borrowers continue to choose fixed rate loans for fifteen or thirty years during this historically low interest rate environment.  The Bank sells substantially all of these loans to the secondary mortgage market.  Loans secured by commercial properties decreased by $3.5 million during the first quarter of 2003.  A commercial borrower refinanced $2.9 million with another financial institution during the quarter.   Total agricultural loans decreased by $1.5 million during the quarter.  The Bank did not renew a $1.0 million agricultural loan that was purchased as participation with another financial institution.  During the first quarter, several agricultural borrowers secured their loans with real estate in order to lengthen the amortization period and reduce the payment amount.   This resulted in an increase in agricultural loans secured by real estate and a decrease in other agricultural loans.



The allowance for credit losses increased by $143,490 during the quarter ended March 31, 2003. The allowance equals 2.18% of total loans at March 31, 2003, compared to 2.06% at December 31, 2002.  Nonaccrual loans totaled $6,075,063 at March 31, 2003, a decrease of $15,429 compared to December 31, 2002.  The Company's ratio of loans more than 30 days past due (including nonaccrual loans) to total loans was 3.6% at March 31, 2003 compared to 3.9% at December 31, 2002.  As of March 31, 2003, management has identified $14.8 million of potential problem loans compared to $13.9 million at year-end.  Potential problem loans are loans that are performing but have a greater risk of nonperformance.



Demand deposits increased $10,645,534 or 34.1% during the first quarter of 2003.  The increase in demand deposits is attributable to a large commercial depositor whose balance as of March 31, 2003, was $14.0 million higher than at December 31, 2002.  Exclusive of this depositor, demand deposits were $3.4 million lower than at year-end.  Management attributes this decrease to a normal seasonal fluctuation.  Interest bearing deposits increased by $1,118,252 or 0.5% between December 31, 2002, and March 31, 2003.



Stockholders' equity increased by $877,576 to $37,027,160 as of March 31, 2003.  As of March 31, 2003, the Company's leverage ratio was 10.2%, the risk-based core capital ratio was 13.9% and the risk-based total capital ratio was 15.1%.  The Company and the Bank continue to maintain capital levels well above the regulatory minimum levels.



On March 25, 2003, the Company's board of directors declared a semiannual $6.00 per share dividend payable on July 1, 2003, to all shareholders of record on June 10, 2003.



10

Liquidity



Liquidity refers to the ability of the Company to generate adequate amounts of cash to meet the Company's needs for cash.  Cash and cash equivalents decreased by $713,127 during the first quarter of 2003.  The major sources and uses of cash are detailed in the accompanying Consolidated Statements of Cash Flows. The federal funds sold totaling $32.0 million and the available-for-sale investment portfolio amounting to $15.4 million as of March 31, 2003, are readily convertible to cash if needed for liquidity purposes.



In addition to on-balance sheet sources of funds the Company also has off-balance sheet sources available to meet liquidity needs.  The Company has unused lines of credit of $38.8 million as of March 31, 2003.  Management believes the Company's liquidity position as of March 31, 2003, is adequate under current economic conditions.



Off-Balance Sheet Arrangements



The Company and its subsidiaries are parties 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 and standby letters of credit.  Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position.  The contract or notional amounts of those instruments reflect the extent of involvement the Company and its subsidiaries have in particular classes of financial instruments.



The exposure of the Company and its subsidiaries to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of these instruments.  The Company and its subsidiaries use the same credit policies in making commitments and conditional obligations as for on-balance sheet instruments.  The Company and its subsidiaries require collateral or other security to support financial instruments with credit risk.





The following table sets forth the Company's commitments to extend credit and standby letters of credit:





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 commitment amounts do not necessarily represent future cash requirements.  The Company and its subsidiaries evaluate each customer's creditworthiness on a case-by-case basis.  Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.



Standby letters of credit are conditional commitments issued by the bank to guarantee the performance of a customer to a third party.   Those guarantees are primarily issued to support commercial business transactions.  When a customer fails to perform according to the terms of the agreement, the bank honors drafts drawn by the third party in amounts up to the contract amount.  A majority of the letters of credit expire within one year.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.  Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties and residential properties.  All letters of credit are fully collateralized.



11

Item 3.  Quantitative and Qualitative Disclosures About Market Risk







Item 4.  Controls and Procedures

The Company's management,under the supervision and with the participation of the Company's principalexecutive officer and principal financial officer, has evaluated theCompany's disclosure controls and procedures within 90 days prior to thefiling date of this report.  Based on that evaluation, managementbelieves that the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time period specified by the Securities and Exchange Commission's rules and forms.

There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of management's evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.





Part II.  Other Information

Item 2.  Changes in Securities and Use of Proceeds

On January 9, 2003, the Company sold $175,500 (250 shares each at $702.00) of no par common stock that was previously reacquired.  The shares were sold directly to Associated Trust Company for the benefit of the Denmark State Bank Profit Sharing & Retirement Saving Plan.  The sale of these securities was exempt from registration by Section 4(6) of the Securities Act of 1933, as amended.   The proceeds were used for capital expenditures associated with the construction of the new office building in Denmark.



Item 6.  Exhibits and Reports on Form 8-K









99.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



99.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





(b) The Company filed no reports on Form 8-K during the first quarter of 2003.





12

















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.









|                      | DENMARK BANCSHARES, INC.



/s/ Darrell R. Lemmens
|--------------------- | --------------------------------------------------
|Date:  April 16, 2003 | Darrell R. Lemmens,                               
|                      | Principal Executive Officer,                      
|                      | Chairman of the Board, and                        
|                      | President



/s/ Dennis J. Heim                   
|Date:  April 16, 2003 | Dennis J. Heim                                    
|                      | Vice President and Treasurer,                     
|                      | Principal Financial and                           
|                      | Accounting Officer                                















13

































CERTIFICATIONS



I, Dennis J. Heim, Vice President and Treasurer of Denmark Bancshares, Inc., certify that:



1. I have reviewed this quarterly report on Form 10-Q of Denmark Bancshares, Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrant's other certifying officers 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 subsidiaries, is made known to us by others within those entities, 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 officers 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 (or persons performing the equivalent function):



a) all significant deficiencies in the design or operation of 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 officers 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 internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|                      | /s/ Dennis J. Heim           
|--------------------- | -----------------------------
|Date:  April 16, 2003 | Dennis J. Heim               
|                      | Vice President and Treasurer,
|                      | Principal Financial and      
|                      | Accounting Officer           



14

CERTIFICATIONS



I, Darrell R. Lemmens, Chairman of the Board and President of Denmark Bancshares, Inc., certify that:



1. I have reviewed this quarterly report on Form 10-Q of Denmark Bancshares, Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrant's other certifying officers 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 subsidiaries, is made known to us by others within those entities, 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 officers 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 (or persons performing the equivalent function):



a) all significant deficiencies in the design or operation of 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 officers 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 internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|                      | /s/ Darrell R. Lemmens              
|--------------------- | ------------------------------------
|Date:  April 16, 2003 | Darrell R. Lemmens,                 
|                      | Principal Executive Officer,        
|                      | Chairman of the Board, and President





15

DENMARK BANCSHARES, INC.

EXHIBIT (99.1)



Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to subsection (b) of section 1350, I hereby certify, to the best of my knowledge, that:



The Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Darrell R. Lemmens

Darrell R. Lemmens

Principal Executive Officer

A signed original of this written statement required by Section 906 has been provided to Denmark Bancshares, Inc. and will be retained by Denmark Bancshares, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.





DENMARK BANCSHARES, INC.

EXHIBIT (99.2)



Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to subsection (b) of section 1350, I hereby certify, to the best of my knowledge, that:



The Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Dennis J. Heim

Dennis J. Heim

Principal Financial Officer



A signed original of this written statement required by Section 906 has been provided to Denmark Bancshares, Inc. and will be retained by Denmark Bancshares, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.