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SECURITIES AND EXCHANGE COMMISSION Page 1 of 116
Washington, DC 20549 Exhibit Index on
Page 31
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
Commission file number 0-14511
TODAY'S BANCORP, INC.*
-------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 36-2902424
- -------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) dentification No.)
50 West Douglas St., Freeport, Illinois 61032
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (815) 235-8596
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock par value $5.00 per share.
Preferred Stock Purchase Rights.
Indicate by check mark whether 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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
----
As of March 19, 1996, the aggregate market value of the registrant's common
stock held by nonaffiliates was approximately $73,527,672.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
2,748,698 shares of common stock, par value $5 per share, at March 19, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for fiscal year ended December 31,
1995 to the extent expressly stated herein, are incorporated by reference into
Parts I and II. Certain portions of the registrant's Proxy Statement dated
March 22, 1996 for the annual meeting of stockholders to be held on April 18,
1996 are incorporated by reference in Part III.
* Effective January 1, 1995, the Company changed its name from Northwest
Illinois Bancorp, Inc. to TODAY'S BANCORP, INC.
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PART I
Item 1. BUSINESS
GENERAL
TODAY'S BANCORP, INC. (the "Parent"), is a bank holding company
incorporated under Delaware law in 1977. The Parent was originally
named Northwest Illinois Bancorp, Inc. and changed its name to TODAY'S
BANCORP, INC. effective January 1, 1995. The company includes: the
parent company, TODAY'S BANCORP, INC.; its wholly-owned subsidiaries,
TODAY'S BANK - East and TODAY'S BANK - West; its mortgage banking
company, TODAY'S MORTGAGE SOURCE; and TODAY'S FINANCIAL SERVICES
(collectively, the "Company").
Banking constitutes the main business segment of the Company and there
are no foreign operations. TODAY'S BANK - East is the largest
subsidiary, and at December 31, 1995, accounted for approximately 73%
of the consolidated assets of the Company.
The Banks are Illinois chartered commercial banks with trust powers,
conducting full service domestic banking business at twelve locations
throughout Northwestern Illinois.
The Freeport locations are one of the two primary banks of a total of
three local banks in a city of 28,000 and compete locally for deposits
and loans, generally county wide, within approximately a 50-mile
radius of Freeport with several smaller banks, a number of savings and
loan associations, credit unions and finance companies.
The Galena portfolio consists primarily of real estate mortgage and
installment loans. Extensive historical restoration, coupled with the
development of hotel, convention and resort facilities have made the
Galena area a well known and widely visited tourist attraction and
recreational center. The Galena Territory, which is situated six
miles east of Galena, is a successful resort community and convention
center. The Galena office has been instrumental in providing mortgage
financing to this key component of the Galena economy as well as
installment loans to its consumer base.
The Rockford offices are located in the Rockford Metro Area
(consisting of Winnebago and Boone Counties). One Rockford branch is
strategically located near downtown Rockford along one of the major
thoroughfares feeding daily commuters into the business district.
Another Rockford location established in early 1994, is located in the
quickly growing East side market area. An additional Rockford
location was opened in August, 1995 in the expanding northeast section
of Rockford. This storefront location, in addition to our other
Rockford locations, emphasizes a community banking orientation which
concentrates on providing top quality service to customers.
The Pecatonica location is the only financial institution in the town
of Pecatonica, a rural community of approximately 1,700 people. The
Company also operates a facility and an ATM in the town of Winnebago,
a community of approximately 2,200 people
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located nine miles southeast of Pecatonica. Consumer loans constitute
the major portion of its loan portfolio.
The East Dubuque, Scales Mound and additional Galena locations were
added in September, 1994 with the acquisition of Tri-State Bank &
Trust Co. With this acquisition, the Company was able to expand its
market share in the Northwestern Illinois area by moving into new
communities.
TODAY'S MORTGAGE SOURCE is based out of Rockford, Illinois. This
subsidiary specializes in both retail and wholesale mortgage
originations and currently is covering a two state area.
TODAY'S FINANCIAL SERVICES was established in 1995 and includes the
operations of trust, asset management, full service investment
brokerage, insurance and other fee-based services.
Employee relations have been harmonious and include a competitively
based employee benefit program. The Company had 230 full-time
equivalent employees at year end.
The Banks each conduct a general banking business embracing most of
the services, both consumer and commercial, which banks may lawfully
provide, including the following principal services: the acceptance
of deposits into demand, savings and time accounts and the servicing
of such accounts; the establishment of IRA and Keogh accounts;
commercial, industrial, consumer and real estate lending, including
installment loans, student loans, farm loans, personal lines of credit
and overdraft check protection; safe deposit operations; and an
extensive variety of additional services tailored to the needs of
individual customers, such as the acquisition of U.S. Treasury notes
and bonds, the sale of travelers' checks, money orders and cashier's
checks, direct deposit services, automatic transfer of funds between
accounts, and other special services.
Loans, both commercial and consumer, are provided on either a secured
or unsecured basis to corporations, partnerships and individuals.
Commercial lending covers such categories as business, industry,
capital, agricultural, inventory and real estate, with the latter
including residential properties.
SUPERVISION AND REGULATION
The growth and earnings performance of the Company can be affected not
only by management decisions and general economic conditions, but
also by the policies of various governmental regulatory authorities
including, but not limited to, the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), the Federal Deposit
Insurance Corporation ("FDIC"), the Illinois Commissioner of Banks and
Trust Companies (the "Commissioner"), the Internal Revenue Service and
state taxing authorities. Financial institutions and their holding
companies are extensively
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regulated under federal and state law. The effect of such statutes,
regulations and policies can be significant, and cannot be predicted
with a high degree of certainty.
Federal and state laws and regulations generally applicable to
financial institutions, such as the Company, regulate, among other
things, the scope of business, investments, reserves against deposits,
capital levels relative to operations, the nature and amount of
collateral for loans, the establishment of branches, mergers,
consolidations and dividends. This supervision and regulation is
intended primarily for the protection of the FDIC's deposit insurance
fund and the depositors, rather than the stockholders, of a financial
institution.
The following references to material statutes and regulations
affecting the Company are brief summaries thereof and do not purport
to be complete, and are qualified in their entirety by reference to
such statutes and regulations. Any change in applicable law or
regulations may have a material effect on the business of the Company.
The Parent is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and is
registered as such with the Federal Reserve Board. As a bank holding
company, it is required to file with the Federal Reserve Board annual
reports and information regarding its business operations and those of
its subsidiaries. It is subject to regulation and examination by the
Federal Reserve Board.
TODAY'S BANK - East and TODAY'S BANK - West are chartered under the
Illinois Banking Act, as amended (the "IBA"), and are subject to the
examination, supervision, reporting and enforcement requirements of
the FDIC under the Federal Deposit Insurance Act, as amended, and the
Commissioner under the IBA. The deposits of the Banks are insured by
the Bank Insurance Fund of the FDIC to the extent permitted by law.
THE PARENT
ACQUISITIONS. The BHCA requires every bank holding company to obtain
the prior approval of the Federal Reserve Board before merging with or
consolidating into another bank holding company, acquiring
substantially all the assets of any bank, or acquiring direct or
indirect ownership or control of more than 5% of the voting shares of
any bank.
The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring direct or indirect ownership or control of
more than 5% of the voting shares of any company which is not a bank,
and from engaging in any business other than that of banking, managing
and controlling banks or furnishing services to banks and their
subsidiaries. With prior Federal Reserve Board approval, however, the
Company may engage in, and may own shares of companies engaged in,
certain businesses determined by the Federal Reserve Board to be so
closely related to banking or managing or controlling banks as to be a
proper incident thereto.
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INTERSTATE BANKING. Adequately capitalized and managed bank holding
companies are permitted to acquire control of a bank in any state.
States, however, may prohibit acquisitions of banks that have not been
in existence for at least five years. Illinois bank holding
companies are permitted to acquire banks and bank holding companies,
and be acquired by bank holding companies, located in any state which
authorizes such acquisitions under qualifications and conditions which
are not unduly restrictive, as determined by the Commissioner, when
compared to those imposed under Illinois law. The Federal Reserve
Board is prohibited from approving an application if the applicant
controls more than 10 percent of the total amount of deposits of
insured depository institutions nationwide. In addition, interstate
acquisitions would be subject to statewide concentration limits. The
Federal Reserve Board would be prohibited from approving an
application if, prior to consummation, the applicant controls any
insured depository institution or branch in the home state of the
target bank, and the applicant, following consummation would control
30 percent or more of the total amount of deposits of insured
depository institutions in that state.
This legislation also provides that the provisions on concentration
limits do not affect the authority of any state to limit the
percentage of the total amount of deposits in the state which would be
held or controlled by any bank or bank holding company to the extent
the application of the limitation does not discriminate against out-
of-state institutions. States may also waive the statewide
concentration limit. The legislation authorizes the Federal Reserve
Board to approve an application without regard to the 30 percent
state-wide concentration limit, if the state allows a greater
percentage of total deposits to be so controlled, or the acquisition
is approved by the state bank regulator and the standard on which such
approval is based does not have the effect of discriminating against
out-of-state institutions.
Recently enacted interstate branching legislation permits banks to
merge across state lines, thereby creating a main bank in one state
with branches in other states. Approval of interstate bank mergers
will be subject to certain conditions: adequate capitalization;
adequate management; CRA compliance; deposit concentration limits (as
set forth above); and compliance with federal and state antitrust
laws. An interstate merger transaction may involve the acquisition of
a branch without the acquisition of the bank only if the law of the
state in which the branch is located permits out-of-state banks to
acquire a branch of a bank in that state without acquiring the bank.
Following the consummation of an interstate transaction, the resulting
bank may establish additional branches at any location where any bank
involved in the transaction could have established a branch under
applicable federal or state law, if such bank had not been a party to
the merger transaction.
Interstate branches will be required to comply with host state
community reinvestment, consumer protection, fair lending, and
intrastate branching laws, as if the branch were chartered by the host
state. An exception is provided for national bank branches if federal
law preempts the state requirements or if the OCC determines that the
state law has a discriminatory effect on out-of-state banks. All
other laws of the host state will apply to the branch to the same
extent as if the branch were a bank, the main office of which is
located in the host state.
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The interstate branching by merger provisions will become effective on
June 1, 1997, unless a state takes legislative action prior to that
date. States may pass laws to either "opt-in" before June 1, 1997, or
to "opt-out" by expressly prohibiting merger transactions involving
out-of-state banks, provided the legislative action is taken before
June 1, 1997.
The effects on the Company of such recent changes in interstate
banking law cannot be accurately predicted, but it is likely that
there will be increased competition from national and regional banking
firms headquartered outside of Illinois that may have greater
resources than the Company.
CHANGE OF CONTROL. Federal law prohibits acquisition of "control" of
a bank or bank holding company without prior written notice to certain
federal bank regulators. "Control" is defined in certain cases as
acquisition of as little as 10% of the outstanding shares.
Furthermore, the Company cannot purchase its own stock where the gross
consideration paid during the preceding twelve months will equal 10%
or more of the Company's net worth without obtaining approval of the
Federal Reserve Board.
Any person, including associates and affiliates of and groups acting
in concert with such person, who purchases 10% or more of the Common
Stock of the Company, or thereafter acquires additional securities of
the Company such that it owns more than 10% of the Common Stock of the
Company, may be required to obtain approval of the Federal Reserve
Board under the Change in Bank Control Act, and any corporation,
partnership, trust or organized group that acquires a controlling
interest in the Company may have to obtain approval of the Federal
Reserve Board to become a bank holding company and thereafter be
subject to regulation as such.
SEC REGULATION. The Company's Common Stock is registered with the SEC
under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended. Consequently, the Company is
subject to the information, proxy solicitation, insider trading and
other restrictions and requirements of SEC under the Securities
Exchange Act of 1934, and is required to file various reports with the
SEC.
THE BANKS
The Banks are required to comply with various banking laws, including
laws governing maximum rates of interest chargeable on certain types
of loans, maximum credit that may be extended to any one borrower,
restrictions on loans to bank insiders and affiliates and limitations
on the type and amounts of securities in which banks may invest.
Extensions of credit by the Banks are subject to a variety of federal
laws and regulations, including truth-in-lending statutes, the Equal
Credit Opportunity Act, the Real Estate Settlement Procedures Act and
the Financial Institutions Regulatory and Interest Rate Control Act of
1978. In terms of permitted activities and services, the Banks are
also affected by federal laws such as the Depository Institutions
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Deregulation and Monetary Control Act of 1980, the Garn-St. Germain
Depository Institutions Act of 1982, the Competitive Equality Banking
Act of 1987, the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (see "FINANCIAL INSTITUTIONS REFORM, RECOVERY
AND ENFORCEMENT ACT OF 1989," below) and the Federal Deposit Insurance
Corporation Improvement Act of 1991 (see "FEDERAL DEPOSIT INSURANCE
CORPORATION ACT OF 1991," below).
The Banks are subject to certain restrictions under the Federal
Reserve Act and the Federal Deposit Insurance Act on loans and other
extensions of credit to the Company or to its subsidiaries,
investments in the stock or other securities of the Company or its
subsidiaries, or advances to any borrower collateralized by such stock
or other securities.
Banks located in Illinois are permitted to establish branches anywhere
in Illinois without regard to the location of other banks' main
offices or the number of branches maintained by the bank establishing
the branch.
Effective July 1, 1992, banks in Illinois that are commonly owned,
directly or indirectly, by the same bank holding company, such as the
Banks, may establish "affiliate facilities." An affiliate facility
may conduct the following transactions for another commonly owned bank
if authorized by that bank: (1) receive deposits; (2) cash and issue
checks, drafts and money order; (3) change money; and (4) receive
payments on existing indebtedness.
DIVIDENDS
GENERAL. The Parent is a legal entity separate and distinct from the
Banks. There are various state banking regulations which would limit
the ability of the Banks to finance, pay dividends or otherwise supply
funds to the Parent.
THE PARENT. The holders of the Parent's Common Stock are entitled to
receive such dividends as are declared by the Board of Directors.
The Federal Reserve Board has issued a policy statement on the payment
of cash dividends by bank holding companies. In the policy statement,
the Federal Reserve Board expressed its view that a bank holding
company experiencing earnings weaknesses should not pay cash dividends
exceeding its net income or which could only be funded in ways that
weakened the bank holding company's financial health, such as by
borrowing.
ILLINOIS BANK RESTRICTIONS. Under the provisions of the IBA,
dividends may not be declared by the state-chartered banks, (1) except
out of the bank's net profits; and (2) unless the bank has transferred
to surplus at least one-tenth of its net profits since the date of the
declaration of the last preceding dividend, until the amount of its
surplus is at least equal to its capital. Net profits under the IBA
must be adjusted for losses and bad debts unless such debts are
secured and in the process of collection. Additionally, the payment
of dividends by a state-charted bank, whose deposits are insured by
the
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Bank Insurance Fund, is affected by the requirement to maintain
minimum capital pursuant to the capital adequacy guidelines issued by
the FDIC. The Banks exceeded the minimum capital requirements under
FDIC guidelines as of December 31, 1995 (see "CAPITAL REQUIREMENTS,"
below).
CAPITAL REQUIREMENTS
The Federal Reserve Board and the FDIC have adopted risk-based capital
guidelines to provide a framework for assessing the adequacy of the
capital of banks and bank holding companies. These guidelines became
effective on December 31, 1990, and were fully phased in on December
31, 1992. These guidelines apply to all banks and bank holding
companies regardless of size and are used in the examination and
supervisory process as well as in the analysis of applications to be
acted upon by the regulatory authorities. These guidelines require
banks and bank holding companies to maintain capital based upon the
credit risk of their operations.
The risk-based capital guidelines are designed to require the
maintenance of capital commensurate with both on and off-balance sheet
credit risks. The minimum ratios established by the guidelines are
based on capital, as defined, to total risk-weighted assets. Total
risk-weighted assets are calculated by assigning each on-balance sheet
asset and off-balance sheet item to one of four risk categories
(depending on the nature of each item). The amount of the items in
each category is then multiplied by the risk-weight assigned to that
category (0%, 20%, 50% or 100%). Total risk-weighted assets equals
the sum of the resulting amounts.
The risk-based capital guidelines require the Company and its Bank
Subsidiaries to meet a minimum Tier 1 capital ratio of 4% and a total
risk-based capital ratio of 8%. Tier 1 capital generally consists of
(a) common stockholders' equity, (b) qualifying perpetual preferred
stock and related surplus, subject to certain limitations specified by
the appropriate regulatory authority, and (c) minority interests in
the equity accounts of consolidated subsidiaries; less goodwill and
any other intangible assets and investments in subsidiaries that the
regulatory agencies determine should be deducted from Tier 1 capital.
Tier 2 capital includes Tier 1 capital plus the allowed portion of the
allowance for possible loan losses to risk-weighted assets.
The Federal Reserve Board and the FDIC have adopted an additional
capital standard for banks and bank holding companies. Under this new
standard, a 3% "leverage" ratio of Tier 1 capital to total assets is
the minimum requirement for banking organizations that are deemed the
strongest and most highly rated by its respective regulator. A higher
minimum leverage ratio (4% to 5% or higher) is required of less highly
rated banking organizations and of bank holding companies which
propose to engage in expansionary business activities. The principal
objective of the leverage ratio is to place a constraint on the
maximum degree to which a bank holding company may leverage its equity
capital base.
As of December 31, 1995, the Parent and the Banks exceeded all of the
applicable capital requirements discussed above. As of December 31,
1995, the Banks also met
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the criteria for classification as "well capitalized" institutions
under the prompt corrective action rules and the deposit insurance
premium rules promulgated under the Financial Deposit Insurance
Corporation Improvement Act of 1991. Designation as a well capitalized
institution under these regulations does not constitute a
recommendation or endorsement of the Company and the Banks by federal
bank regulators.
The following table presents the Company's capital ratios as of
December 31, 1995:
<TABLE>
<CAPTION>
TODAY'S TODAY'S
Total BANK- BANK-
Company East West
------- ------- -------
Company Capital Ratios
<S> <C> <C> <C>
Average shareholders' equity to average assets.... 8.7% 8.0% 7.8%
Leverage (minimum requirements-3%)(1)(2)(3)....... 7.9 7.9 7.8
Risk-based capital ratios (1)(2)
Tier 1 (minimum requirement - 4%)............... 10.3 10.3 11.4
Tier 2 (minimum requirement - 8%)............... 11.2 11.1 12.2
</TABLE>
(1) Computed in accordance with current Federal Reserve Board guidelines.
(2) Risk based capital and leverage ratios were initially effective
December 31, 1990.
(3) Under banking agency regulations, the minimum leverage ratio is 3.0%
of adjusted total assets plus an additional amount of at least 100 to
200 basis points for all but the most highly rated.
FINANCIAL INSTITUTION REFORM, RECOVERY
AND ENFORCEMENT ACT OF 1989
The passage of the Financial Institution Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") resulted in significant changes in
the enforcement powers of federal banking agencies, and more
significantly, the manner in which the thrift industry is regulated.
While FIRREA's primary purpose is to address public concern over the
financial crisis of the thrift industry through the imposition of
strict reforms on that industry, FIRREA grants bank holding companies
more expansive rights of entry into "the savings institution" market
through the acquisition of both healthy and failed savings
institutions. Under the provisions of FIRREA, a bank holding company
can expand its geographic market or increase its concentration in an
existing market by acquiring a savings institution, but it cannot
expand its product market by acquiring a savings institution.
Under FIRREA, a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred
by, the FDIC in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance
provided by the FDIC to a commonly controlled FDIC-insured depository
institution in danger of default (the "Cross Guarantee"). "Default"
is defined generally as the appointment of a conservator or receiver
and "in danger of default" is defined generally as the existence of
certain conditions indicating either that there is no reasonable
prospect that the institution will be able to meet the demands of its
depositors or pay its obligations in the absence of regulatory
assistance, or that its capital has been depleted and there is no
reasonable prospect that it will be
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replenished in the absence of regulatory assistance. The Cross
Guarantee thus enables the FDIC to assess a bank holding company's
healthy Bank Insurance Fund members for the losses of any of such bank
holding company's failed Bank Insurance Fund members. Cross Guarantee
liabilities are generally superior in priority to obligations of the
depository institution to its stockholders due solely to their status
as stockholders and obligations to other affiliates.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
On December 19, 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") was enacted into law. The
regulatory framework of FDICIA represents a comprehensive and
fundamentally changed approach to banking supervision. The new
approach imposes relatively detailed standards and mandates the
development of additional regulations governing nearly every aspect of
the operation and management of banks, in addition to many aspects of
bank holding companies. In addition to providing for the
recapitalization of the Bank Insurance Fund, FDICIA contains, among
other things: (i) truth-in-savings legislation that requires
financial institutions to disclose terms, conditions, fees and yields
on deposit accounts in a uniform manner; (ii) provisions that impose
strict audit requirements and expand the role of the independent
auditors of financial institutions; (iii) provisions that limit the
powers of state-chartered banks to those of national banks unless the
state-chartered bank meets minimum capital requirements and the FDIC
finds that the activity to be engaged in by the state-chartered banks
poses no significant risk to the Bank Insurance Fund; (v) provisions
that require the expedited resolution of problem financial
institutions; (vi) provisions that require regulatory agencies to
develop a method for financial institutions to provide information
concerning the estimated fair market value of assets and liabilities
as supplemental disclosures to the financial statements filed with the
regulatory agencies; (vii) provisions that require regulators to
consider adopting capital requirements that account for interest rate
risk; and (viii) provisions that require the regulatory agencies to
adopt regulations that facilitate cross-industry transactions, and
provide for the acquisition of banks by thrift institutions.
DEPOSIT INSURANCE PREMIUMS. Pursuant to the requirements of FDICIA,
the FDIC adopted regulations that assessed deposit insurance premiums
based upon a bank's capital level and supervisory evaluation. Banks
were placed into one of three categories (well capitalized, adequately
capitalized and less than adequately capitalized) with each category
divided into three subgroups (healthy, supervisory concern, and
substantial supervisory concern) based upon supervisory evaluations.
The risk-related premiums system contained gradations between
insurance groups.
A well-capitalized bank is one that has at least a 10% total risk-
based capital ratio, a 6% Tier-1 risk-based capital ratio and a 5%
Tier-1 leverage capital ratio. An adequately capitalized bank will
have at least an 8% total risk-based capital ratio, a 4% Tier-1
risk-based capital ratio and a 4% Tier-1 leverage capital ratio. An
undercapitalized bank will be one that does not meet either of the
above definitions. These capital definitions are identical to those
adopted by the FDIC for use in a
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separate "prompt corrective action" regulation, except the premium
rule excludes references in the other regulation to supervisory
evaluations and directives.
Currently, TODAY'S BANK-East and TODAY'S BANK-West pay a minimum
required assessment of $2,000 per bank.
SUPERVISORY REFORMS. FDICIA contains several significant bank
supervisory reforms including the establishment of a new regulatory
system of "prompt corrective action" which links supervisory actions
to bank capital levels. These categories include: well-capitalized,
adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized. Bank regulators
will apply increasingly stringent regulatory sanctions and
restrictions to institutions if they fall into the latter three
categories. These sanctions range, in order of severity, from being
required to file and operate under a capital plan that is approved by
the regulators, to restrictions on asset growth and interest rates
paid, to the appointment of a receiver or a conservator for the
institution. The FDIC has adopted regulations, effective December 19,
1992, that set forth capital definitions for purposes of taking
"prompt corrective action." These capital definitions are as follows:
<TABLE>
<CAPTION>
Risk-Based Capital Ratio
------------------------
Total Tier I Leverage Ratio(1)
-------------------------------------
<S> <C> <C> <C>
Well Capitalized 10% 6% 5%
Adequately
Capitalized 8% 4% 4%(2)
Undercapitalized below 8% below 4% below 4%(2)
Significantly
Undercapitalized below 6% below 3% below 3%
Critically
Undercapitalized 2% or less(3)
</TABLE>
----------------------
(1) Tier I capital to total assets
(2) 4% reduced to 3% for MACRO and CAMEL 1 rated institutions
(3) Ratio of tangible capital to total assets
As of December 31, 1995, each of the Banks is considered to be a "well
capitalized" institution under these guidelines.
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ANNUAL AUDIT AND REPORTING REQUIREMENTS. FDICIA also requires annual
on-site examinations by federal bank regulators for all depository
institutions, with certain exceptions for those well-capitalized and
managed institutions with assets less than $500 million, and imposes
certain audit and accounting requirements on financial institutions.
These requirements include annual independent audits, an independent
accountant's attestation of management's report on the bank's internal
control structure, and independent audit committees of outside
auditors. These provisions are currently not applicable for the
Company since none of the Banks have assets greater than $500 million.
DEPOSIT INSURANCE. Deposit insurance changes promulgated by FDICIA
will, among other things, impose new limits on brokered deposits based
upon bank capital levels and on uninsured deposits that had previously
received de facto protection under the "too big to fail".
FDICIA would generally prohibit any institution that is not "well
capitalized" from accepting brokered deposits. An institution is
"well capitalized" if it has capital significantly in excess of
regulatory minimums. An institution that is "adequately capitalized,"
that is, that meets all applicable minimum capital requirements, could
accept brokered deposits but only after obtaining a waiver from the
FDIC. Any institution that is "under capitalized," which is defined
to include any institution that fails to meet any applicable minimum
capital requirements, is prohibited from accepting brokered deposits.
The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the
institution has engaged or is engaging in unsafe or unsound condition
to continue operations or has violated any applicable law, regulation,
order, or any condition imposed in writing by, or written agreement
with, the FDIC. The FDIC may also suspend deposit insurance
temporarily during the hearing process for a permanent termination of
insurance if the institution has no tangible capital. Management of
the Company is not aware of any activity or condition that could
result in termination of the deposit insurance of any of the Banks.
SUPERVISION AND REGULATION OF MORTGAGE BANKING OPERATIONS
The Company's mortgage banking business is subject to the rules and
regulations of HUD, FHA, VA, FMHA and FNMA with respect to
originating, processing, selling and servicing mortgage loans. Those
rules and regulations, among other things, prohibit discrimination and
establish underwriting guidelines which include provisions for
inspections and appraisals, require credit reports on prospective
borrowers, and fix maximum loan amounts. Moreover, lenders such as
the Company are required annually to submit to FNMA, FHA and VA
audited financial statements, and each regulatory entity has its own
financial requirements. The Company's affairs are also subject to
examination by the FRB, FNMA, FHA and VA at all times to assure
compliance with the applicable regulations, policies and procedures.
Mortgage origination activities are subject to, among others, the
Equal Credit Opportunity Act, Federal Truth-in-Lending Act, Fair
Credit Reporting Act and the Real Estate Settlement
<PAGE>
Page 13
Procedures Act and the regulations promulgated thereunder which
prohibit discrimination and require the disclosure of certain basic
information to mortgagors concerning credit terms and settlement
costs. Additionally, there are various state and local laws and
regulations affecting the Company's operations as well as requirements
promulgated by various private investors such as life insurance
companies and others to whom loans have been sold.
FEDERAL MONETARY POLICY
The businesses of the Banks are affected in important respects by the
policies of monetary authorities, and particularly the Federal Reserve
Board. The Federal Reserve Board attempts to regulate the national
supply of bank credit in order to achieve, among other things, maximum
employment and a stable price level. Among the instruments of
monetary policy used by the Federal Reserve Board to implement these
objectives are open market transactions in United States government
securities, changes in the discount rate on member bank borrowings and
changes in reserve requirements against member bank deposits. These
means are used in varying combinations to influence overall growth of
bank loans, investments, and deposits, and they may also affect
interest rates charged on loans or paid for deposits.
The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks in the
past and are expected to continue to do so in the future. In view of
changing conditions in the national economy, the money markets and the
relationships of international currencies, as well as the effect of
actions by monetary and fiscal authorities, including the Federal
Reserve Board, no prediction can be made as to possible future changes
in interest rates, deposit levels, loan demand, capital requirements,
or the business and earnings of the Bank.
<PAGE>
Page 14
STATISTICAL DATA
The statistical data required by Industry Guide 3 under the Securities
Exchange Act of 1934 is set forth on pages 15 through 26. This data
should be read in conjunction with the financial statements and
related notes and the discussion included in Management's Discussion
and Analysis of Financial Condition and Results of Operations as set
forth in the registrant's 1995 Annual Report to Shareholders and on
pages 29 through 34 of the Annual Report, which is incorporated herein
by reference.
<PAGE>
Page 15
TODAY'S BANCORP, INC.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Dollars in thousands, interest and average rates on taxable equivalent basis)
<TABLE>
<CAPTION>
For the year ended December 31, 1995 1994 1993
--------------------------- ---------------------------- ----------------------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- ------ ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans (1) (2) $346,525 $31,750 9.16% $283,630 $24,416 8.61% $226,940 $19,066 8.40%
Federal funds sold and
interest bearing deposits 9,790 592 6.05% 8,640 402 4.65% 6,968 206 2.96%
Mortgage loans originated for sale 2,247 185 8.23% 9,266 780 8.42% 22,212 1,368 6.16%
Taxable investments 91,454 5,651 6.18% 82,339 4,452 5.41% 87,344 4,950 5.67%
Tax exempt investments (3) 17,304 1,518 8.77% 18,598 1,639 8.81% 21,066 1,877 8.91%
------- ------ ------- ------ ------- ------
Total earning assets 467,320 39,696 8.49% 402,473 31,689 7.87% 364,530 27,467 7.53%
------- ------ ------- ------ ------- ------
Interest bearing liabilities:
Interest bearing demand and
savings deposits 141,000 3,859 2.74% 133,754 3,142 2.35% 122,405 2,874 2.35%
Other time deposits 246,714 14,277 5.79% 199,941 10,047 5.02% 168,670 8,795 5.21%
Federal funds purchased, securities
sold under agreements to repurchase
and other short-term borrowings 11,333 578 5.10% 10,433 416 3.99% 18,637 569 3.05%
Term borrowings, principally advances
from Federal Home Loan Bank 15,412 1,061 6.88% 9,643 571 5.92% 4,320 280 6.48%
------- ------ ------- ------ ------- ------
Total interest bearing liabilities 414,459 19,775 4.77% 353,771 14,176 4.01% 314,032 12,518 3.99%
------- ------ ------- ------ ------- ------
Net interest income and net interest
margin (4) $19,921 4.26% $17,513 4.35% $14,949 4.10%
------- ------- -------
------- ------- -------
Noninterest bearing deposits 42,619 41,343 36,788
Other liabilities 3,717 3,511 3,429
Capital 43,768 39,849 37,047
------- ------- ------
Total noninterest bearing
liabilities and equity 90,104 84,703 77,264
------- ------- ------
Cash and due from banks 15,195 13,390 11,814
Other assets, net of allowance for
possible loan losses 22,048 22,611 14,952
------- ------- ------
Total noninterest bearing assets 37,243 36,001 26,766
------- ------- ------
Net noninterest sources 52,861 48,702 50,498
------- ------- ------
Total resources $504,563 $438,474 $391,296
-------- -------- --------
-------- -------- --------
</TABLE>
(1) Net of unearned discount; average loan balances include loans on nonaccrual
status.
(2) Loan fees, which are immaterial in amount, are included in loan interest
income.
(3) Tax exempt interest shown is the fully taxable equivalent assuming a 34%
rate.
(4) Net interest margin is net interest income divided by average amounts of
total earning assets.
<PAGE>
Page 16
TODAY'S BANCORP, INC.
CHANGES IN INTEREST EARNED AND INTEREST PAID
The following table describes changes in net interest income attributable to
changes in the average volume of interest bearing assets and liabilities
compared to changes in interest rates. Rate/volume variances are allocated
entirely to change due to volume.
<TABLE>
<CAPTION>
For the year ended December 31, 1995 1994
----------------------------- -----------------------------
(Dollars in thousands) Due to Increase (Decrease) In Due to Increase (Decrease) In
----------------------------- -----------------------------
Change in Change in
Volume Rate Interest Volume Rate Interest
------ ---- ------- ------ ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Loans (1) $4,819 $2,515 $7,334 $4,881 $469 $5,350
Federal funds sold
and interest bearing
deposits 83 107 190 78 118 196
Mortgage loans originated
for sale (587) (8) (595) (1,090) 502 (588)
Taxable investments 1,075 124 1,199 (271) (227) (498)
Tax exempt invest-
ments (2) (116) (5) (121) (222) (16) (238)
----- --- ----- ----- ---- -----
Change in total
interest income $5,274 $2,733 $8,007 $3,376 $846 $4,222
-------------------------- -----------------------------
-------------------------- -----------------------------
Interest bearing
deposits $3,424 $1,523 $4,947 $1,683 ($163) $1,520
Federal funds purchased,
securities sold under
agreements to repurchase
and other short-term
borrowings 19 143 162 (327) 174 (153)
Other borrowings 408 82 490 315 (24) 291
--- -- --- --- ---- ---
Change in total
interest expense $3,851 $1,748 $5,599 $1,671 ($13) $1,658
-------------------------- -----------------------------
-------------------------- -----------------------------
</TABLE>
(1) Loan fees, which are immaterial in amount, are included in loan interest
income.
(2) Tax exempt interest shown is the fully taxable equivalent assuming a 34%
income tax rate.
<PAGE>
Page 17
TODAY'S BANCORP, INC.
INVESTMENT PORTFOLIO
The following table sets forth certain information with respect to the book
value of the investment portfolio. Securities available for sale and trading
account securities are recorded at estimated fair value at December 31 and
securities held to maturity are recorded at amortized cost. Amortized cost is
the original cost adjusted for the amortization of premiums and accretion of
discounts on the constant yield basis. The classifications shown below are in
accordance with Statement of Financial Accounting Standard No. 115, "Accounting
for Certain Investments in Debt and Equity Securities", which the Company
adopted on December 31, 1993.
<TABLE>
<CAPTION>
December 31,
---------------------------
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
Trading account securities $0 $6,350 $0
------- ------- -------
Securities available for sale:
U.S. Government obligations 54,791 52,111 44,982
Obligations of states and political
subdivisions 2,197 0 0
Mortgage-backed securities 12,144 4,464 6,450
Corporate and other securities 7,801 6,723 13,566
-------- ------- -------
Subtotal 76,933 63,298 64,998
-------- ------- -------
Securities held to maturity:
U.S. Government obligations 0 1,494 0
Obligations of states and political
subdivisions 16,146 17,641 19,666
Mortgage-backed securities 13,510 12,798 14,677
Corporate and other securities 4,381 4,310 3,401
-------- ------- -------
Subtotal 34,037 36,243 37,744
-------- ------- -------
TOTAL $110,970 $105,891 $102,742
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
Page 18
TODAY'S BANCORP, INC.
INVESTMENT MATURITIES
The following table shows the maturities of investment securities, at amortized
cost, at December 31, 1995, and the weighted average yields (for tax-exempt
obligations on a fully taxable basis assuming a 34% tax rate) of such
securities:
<TABLE>
<CAPTION>
MATURING
-----------------------------------------------------------------------------
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
------ ------ ------ ----- ------ ----- ------ -----
Amount Yield Amount Yield Amount Yield Amount Yield
------ ------ ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities available for sale:
U.S. Government obligations $19,801 5.18% $34,187 6.56% $0 $0
Obligations of states and
political subdivisions 0 2,148 7.42% 0 0
Mortgage-backed securities 2,187 5.44% 2,878 5.67% 0 7,055 6.07%
Corporate and other securities 2,735 6.07% 4,950 7.09% 0 0
------ ------ ------ -----
Subtotal 24,723 44,163 0 7,055
------ ------ ------ -----
Securities held to maturity:
U.S. Government obligations 0 0 0 0
Obligations of states and
political subdivisions 2,408 9.46% 5,728 7.87% 6,249 8.02% 1,761 9.15%
Mortgage-backed securities 95 7.88% 322 8.22% 1,467 6.05% 11,626 6.36%
Corporate and other securities 4,381 5.98% 0 0 0
------ ------ ----- ------
Subtotal 6,884 6,050 7,716 13,387
------ ------ ------ ------
TOTAL $31,607 $50,213 $7,716 $20,442
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The maturity shown above for mortgage-backed securities was determined by the
stated maturity on the investment.
At December 31, 1995, the Corporation held no securities of any one issuer with
a book value exceeding 10% of capital.
The Company made a one-time transfer of securities from the held to maturity
classification to the available for sale classification. See Footnote Three
of the annual report for full disclosure.
<PAGE>
Page 19
TODAY'S BANCORP, INC.
LOAN PORTFOLIO - TYPES OF LOANS
The schedule below sets forth the amount of loans categorized by type for each
of the last five years ended December 31.
<TABLE>
<CAPTION>
(Dollars in thousands)
Percent Percent Percent Percent Percent
Type of Loan 1995 of Total 1994 of Total 1993 of Total 1992 of Total 1991 of Total
------------ ---- -------- ---- -------- ---- -------- ---- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio loans:
Commercial, financial,
and agricultural $221,068 61% $187,172 56% $148,714 58% $112,910 52% $101,116 50%
Real estate - mortgage 79,795 22% 72,305 22% 51,959 20% 53,247 25% 54,454 27%
Installment (1) 61,555 17% 71,305 22% 56,694 22% 50,535 23% 45,582 23%
-------- --- -------- --- -------- --- -------- --- -------- ---
Total $362,418 100% $330,782 100% $257,367 100% $216,692 100% $201,152 100%
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Agricultural loans in-
cluded in the above
amount $43,544 12% $28,753 9% $33,118 13% $25,940 12% $21,880 11%
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Mortgage loans held
for sale $1,116 100% $1,288 100% $24,342 100% $3,939 100% $5,082 0%
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
</TABLE>
(1) Installment loans are shown net of unearned discount which was $154, $375,
$748, $1,259, and $1,966 at December 31, 1995, 1994, 1993, 1992, and 1991
respectively.
<PAGE>
Page 20
TODAY'S BANCORP, INC.
LOAN PORTFOLIO
LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
The following schedule as of December 31, 1995, shows loan maturities and the
amounts of those loans having fixed interest rates and those having adjustable
or floating rates.
(Dollars in thousands)
<TABLE>
<CAPTION>
Total For
Loans Due After
One Year Having:
Due in ----------------------
Due Within One to Due After Fixed Floating
Type of Loan One Year Five years Five Years Total Rates Rates
- ---------------------------- ---------- ---------- ---------- ----- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Portfolio loans:
Commercial, financial
and agricultural $82,713 $85,135 $53,220 $221,068 $73,218 $65,137
Real estate - mortgagae 6,143 20,530 53,122 79,795 28,500 45,152
Installment, net of
unearned discount 5,654 53,076 2,825 61,555 52,190 3,711
------- -------- -------- -------- -------- --------
Total $94,510 $158,741 $109,167 $362,418 $153,908 $114,000
------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- --------
Mortgage loans held
for resale $1,116 - - $1,116 - -
------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- --------
</TABLE>
<PAGE>
Page 21
TODAY'S BANCORP, INC.
LOAN PORTFOLIO - RISK ELEMENTS
The following table provides information on trends in the Company's
nonperforming loans
since 1991:
(Dollars in thousands)
<TABLE>
<CAPTION>
at December 31
------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
90 Days Past Due $408 $222 $224 $401 $319
Renegotiated 363 359 736 1,000 1,193
Nonaccrual 1,063 1,839 821 1,069 1,324
----- ----- --- ----- -----
$1,834 $2,420 $1,781 $2,470 $2,836
------------------------------------------------------
------------------------------------------------------
</TABLE>
Interest income on nonaccruing loans for the year ended December 31, 1995 would
have been approximately $ 79 if such loans had been current in accordance with
their original terms and outstanding throughout the year or since origination.
Interest recognized on these loans for the year ended December 31, 1995 totaled
approximately $ 35.
The Company discontinues the accrual of interest income on any loan when, in the
opinion of management, there is reasonable doubt as to the timely collectability
of interest or principal. Nonaccrual loans are returned to an accrual status
when, in the opinion of management, the financial position of the borrower
indicates that there is no longer any reasonable doubt as to the timely payment
of principal and interest.
Loans, now current, where there are serious doubts as to the ability of the
borrower to comply with the present loan repayment terms are immaterial.
Included in the past due, renegotiated and nonaccrual loans are $495 of
agricultural loans as of December 31, 1995.
During 1995, the Company adopted FAS No. 114 and No. 118. See footnote Four of
the Annual Report for full disclosure.
<PAGE>
Page 22
TODAY'S BANCORP, INC.
ANALYSIS OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
In establishing the allowance for possible loan losses, management relies on its
review of the loan portfolio to assess the risk characteristics and ascertain
whether there are probable losses which must be provided for. Specific
considerations in determining the adequacy of the allowance for possible loan
losses are as follows:
(1) Analytical reviews of loan loss experience in relation to outstanding loans
and the existing level of the allowance for possible loan losses.
(2) A continuing review of problem, nonperforming or other loans by senior
management.
(3) A rating of loans requiring continuing review in order to estimate future
loss exposure.
(4) Regular examinations and appraisals of the loan portfolio conducted by the
internal audit and loan review staff, state and federal supervisory
authorities and independent accountants.
(5) Management's judgment with respect to current and expected economic
conditions and their impact on the existing portfolio.
<PAGE>
Page 23
TODAY'S BANCORP, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table sets forth loans charged off and recovered by the type of
loan and an analysis of the allowance for possible loan losses for each of the
past five years. Management believes that the allowance for possible loan
losses is adequate to absorb future losses in the portfolio.
<TABLE>
<CAPTION>
(Dollars in thousands)
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Amount of allowance for possible
loan losses at beginning of period $3,144 $2,737 $2,515 $2,547 $2,449
Additions (subtractions) arising
from purchase (sale) transactions 0 375 0 (74) 0
Amount of loans charged off during
period:
Commercial, financial & agricultural 392 104 108 173 262
Installment 695 519 297 334 304
Real estate - mortgage 29 42 15 40 38
------ ------ ------ ------ ------
Total losses 1,116 665 420 547 604
------ ------ ------ ------ ------
Amount of recoveries of loans
during period:
Commercial, financial & agricultural 42 81 182 64 101
Installment 217 114 100 58 91
Real estate - mortgage 42 - - 5 -
------ ------ ------ ------ ------
Total recoveries 301 195 282 127 192
------ ------ ------ ------ ------
Net loans charged off during period 815 470 138 420 412
Additions to allowance for possible loan
losses charged to operating expenses
during period 960 502 360 462 510
Amount of allowance for possible
loan losses at end of period $3,289 $3,144 $2,737 $2,515 $2,547
------------------------------------------------
------------------------------------------------
Average amount of loans outstanding $346,525 $283,630 $226,940 $204,203 $199,840
------------------------------------------------
------------------------------------------------
Ratio of net loans charged off to
average loans 0.24% 0.17% 0.06% 0.21% 0.21%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
<PAGE>
Page 24
TODAY'S BANCORP, INC.
ALLOCATION FOR THE ALLOWANCE FOR LOAN LOSSES
The following table sets forth the allocation of the allowance for possible loan
losses by category as of December 31:
<TABLE>
<CAPTION>
(Dollars in thousands) Percent of
Allowance Loans to
1995 Amount Total Loans
- ---- ------ -----------
<S> <C> <C>
Commercial, financial and
agricultural loans $2,102 61 %
Real estate - mortgage loans 288 22
Installment loans 899 17
--------- --
Total $3,289 100 %
--------- -----
--------- -----
1994
- ----
Commercial, financial and
agricultural loans $2,377 56 %
Real estate - mortgage loans 252 22
Installment loans 515 22
--------- --
Total $3,144 100 %
--------- -----
--------- -----
1993
- ----
Commercial, financial and
agricultural loans $1,991 58 %
Real estate - mortgage loans 200 20
Installment loans 546 22
--------- --
Total $2,737 100 %
--------- -----
--------- -----
1992
- ----
Commercial, financial and
agricultural loans $1,940 52 %
Real estate - mortgage loans 170 25
Installment loans 405 23
--------- --
Total $2,515 100 %
--------- -----
--------- -----
1991
- ----
Commercial, financial and
agricultural loans $1,815 50 %
Real estate - mortgage loans 269 27
Installment loans 463 23
--------- --
Total $2,547 100 %
--------- -----
--------- -----
</TABLE>
<PAGE>
Page 25
TODAY'S BANCORP, INC.
DEPOSITS
The following table sets forth the average deposits for the last three years.
All deposits are in domestic bank offices; there are no foreign deposits.
<TABLE>
<CAPTION>
(Dollars in thousands)
1995 1994 1993
----------------------------- ---------------------------- -----------------------------
Deposits Expense Rate Deposits Expense Rate Deposits Expense Rate
--------- ------- ---- --------- ------- ---- --------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest bearing
demand deposits 48,467 975 2.01% 48,825 965 1.98% 47,676 1,053 2.21%
Savings deposits 91,876 2,884 3.14% 84,929 2,177 2.56% 74,729 1,821 2.44%
Time deposits 255,657 14,277 5.58% 199,941 10,047 5.02% 168,670 8,795 5.21%
Total interest
bearing deposits 396,000 18,136 4.58% 333,695 13,189 3.95% 291,075 11,669 4.01%
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Noninterest bearing
demand deposits 49,821 41,343 36,788
------ ------ ------
Total deposits $445,821 $375,038 $327,863
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Maturities of time deposits and certificates of deposit of $100,000 or more as
of December 31, 1995 are:
<TABLE>
<CAPTION>
<S> <C>
(Dollars in thousands)
Maturing in 3 months or less $17,992
Maturing in over 3 to 6 months 5,698
Maturing in over 6 to 12 months 8,626
Maturing in over 12 months 17,877
------
Total $50,193
---------
---------
</TABLE>
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Return on assets (1) 0.97% 0.84% 1.11%
Return on equity (2) 11.15% 9.23% 11.74%
Dividend payout ratio (3) 30.03% 36.50% 26.67%
Equity to assets ratio (4) 8.67% 9.09% 9.47%
(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Dividends declared per common share divided by net income per share.
(4) Average equity divided by average total assets.
</TABLE>
<PAGE>
Page 26
TODAY'S BANCORP, INC.
SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Balance at December 31 $6,425 $1,150
Average Balance 4,698 739
Maximum amount outstanding
at any month end 6,425 1,150
Average interest rate:
During the year 5.70% 3.98%
At December 31 5.69% 4.97%
All of the short-term advances are from Federal Home Loan Bank and mature within
12 months.
</TABLE>
<PAGE>
Page 27
Item 2. PROPERTIES
The Company owns all of the following properties:
TODAY'S BANCORP and its subsidiary, TODAY'S BANK-East, occupy
approximately 65% of the floor space of 66,000 square feet, with the
balance leased to outside tenants. Adjacent to this building is a two-
level parking deck with parking for approximately 200 cars. Other
TODAY'S BANK-East facilities owned include an additional Freeport
location, a Rock City location, a Pecatonica location, a Winnebago
location and two Rockford locations.
The additional facility in Freeport is located at 1705 South West
Street. This facility is comprised of approximately 1,600 square feet
and contains four drive-up teller installations.
The Rock City facility is located at 123 Main Street, Rock City,
Illinois and is comprised of approximately 7,900 square feet and
contains two drive-up teller installations.
The Pecatonica location has occupied its office at 430 West Main
Street since March 30, 1981. The banking office consists of a modern
structure of approximately 11,350 square feet. The main floor
provides space for six tellers, seven private offices, a conference
room, a board room, a safe deposit vault and four drive-up lanes.
There is adequate parking located adjacent to the building.
In 1992, the Company began operations at an additional facility
located at 585 S. Winnebago Rd. in Winnebago which comprises
approximately 2,100 square feet and contains one drive-up teller
installation.
One of the Rockford facilities is located at 850 North Church Street,
Rockford, Illinois. The office building consists of a modern five-
story structure encompassing approximately 22,000 square feet and
contains three drive-up teller installations. The Bank owns two large
lots, which are adjacent to its offices, that are used for tenant and
employee parking for up to 150 cars. The Bank utilizes the first two
floors of the office building, while the remaining three floors are
leased.
In January 1994, the Company purchased an additional facility at 6833
Stalter Drive, Rockford, Illinois. The office building consists of a
modern two-story structure encompassing approximately 22,000 square
feet which was constructed in 1992. The Company uses approximately
12,700 square feet and the balance is leased to outside tenants.
There is adequate parking located adjacent to the building.
TODAY'S BANK-West has two locations in Galena, Illinois, a facility in
East Dubuque, Illinois and a facility in Scales Mound, Illinois.
TODAY'S BANK-West's main office is headquartered at 115 Perry Street
in Galena. The office building consists of a two-story structure
encompassing 12,500 square feet, which was constructed in 1969 and
contains three drive-up teller installations. The Bank uses the main
floor and a board room and conference room on the second floor. The
remainder of the second floor is leased.
<PAGE>
Page 28
The other Galena facility is located at 953 Gear Street and is a
modern one-story facility that was constructed in 1976. The building
encompasses 2,000 square feet and has two drive-up teller
installations. The lower level includes a large board room. The
building is located in a newly developed retail area and has adequate
parking available.
The facility in East Dubuque is located at 350 Wall Street on the edge
of downtown East Dubuque. The one-story building encompasses 5,000
square feet and is currently being remodeled to more effectively meet
the Company's needs. There are two drive-up teller installations
attached to the building and the Company has its own parking lot next
to the facility.
The Scales Mound facility is located at 311 North Railroad and
encompasses 1,200 square feet. There are two drive-up facilities
attached to the building.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings against the registrant or its
subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
Page 29
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The information required for this item is incorporated by reference
from the Company's 1995 Annual Report to Shareholders on page 28,
attached hereto as Exhibit 13a.
ITEM 6. SELECTED FINANCIAL DATA
The information required for this item is incorporated by reference
from the Company's 1995 Annual Report to Shareholders on page 34,
attached hereto as Exhibit 13a.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required for this item is incorporated by reference
from the Company's 1995 Annual Report to Shareholders on pages 29
through 34, attached hereto as Exhibit 13a.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information for this item is incorporated by reference from the
Company's 1995 Annual Report to Shareholders on pages 8 through 27,
attached hereto as Exhibit 13a and page 83, attached hereto as Exhibit
13b.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The information for this item is incorporated by reference from the
Company's proxy statement, page 17, attached hereto as Exhibit 99(a).
<PAGE>
Page 30
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required for this item is incorporated by reference
from the Company's proxy statement, pages 2 through 5, attached hereto
as Exhibit 99(a).
ITEM 11. EXECUTIVE COMPENSATION
The information required for this item is incorporated by reference
from the Company's proxy statement, pages 6 and 7, attached hereto as
Exhibit 99(a).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required for this item is incorporated by reference
from the Company's proxy statement, pages 13 through 15, attached
hereto as Exhibit 99(a).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required for this item is incorporated by reference
from the Company's proxy statement, page 13, attached hereto as
exhibit 99(a), and Note Four on page 18 of the Company's 1995 Annual
Report to Shareholders, attached hereto as Exhibit 13a.
<PAGE>
Page 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) INDEX TO FINANCIAL STATEMENTS
The following consolidated financial statements and related notes and
Report of Independent Accountants are incorporated by reference from
the 1995 Annual Report to Shareholders, attached hereto as Exhibit 13a
and 13b.
Annual Report
Exhibit 13a Page No.
------------ -------------
Consolidated Balance Sheets as of
December 31, 1995 and 1994 8
Consolidated Statements of Income for the
years ended December 31, 1995, 1994,
and 1993 9
Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1994,
and 1993 10
Consolidated Statements of Changes in Capital
for the years ended December 31, 1995,
1994, and 1993 11
Notes to Consolidated Financial Statements 12-26
Independent Auditors' Report for 1995 and 1994 27
Exhibit 13b
-----------
Independent Auditors' Report for 1993 Page 83
(a)(2) Schedules I and II thereon have been omitted since they are not
applicable.
(a)(3) Index to Exhibits
-----------------
The following exhibits required by Item 601 of Regulation S-K are
included along with this 10-K filing:
Regulation S-K Item 601 No.
---------------------------
(3) a. Certificate of Incorporation incorporated by reference to Exhibit
(3)a. of registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 (File number 0-14511).
b. By-laws incorporated by reference to Exhibit (3)a. of
registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 (File number 0-14511).
(4) a. Rights Agreement between registrant and Bank of America
Illinois(Rights Agent) incorporated by reference to Exhibit 1 of
registrant's registration statement on Form 8-A (file number 0-
14511) filed December 18, 1990.
b. Amendment No. 1 to Rights Agreement between registrant and Bank
of America Illinois(Rights Agent) incorporated by reference to
Exhibit 4 of registrant's registration statement on Form 8-K
(file number 0-14511) filed April 9, 1994.
<PAGE>
Page 32
EXECUTIVE COMPENSATION PLANS
(10) a. Incentive Plan for Management incorporated by reference to
Exhibit 10(b) of registrant's registration statement on Form S-2
(No. 33-30213) filed July 28, 1989.
b. Nonqualified Stock Option Plan incorporated by reference to
exhibit 10(c) of registrant's Annual Report on Form 10-K for the
year ended December 31, 1988 (File number 0-14511).
c. Employment Agreements between registrant and Dan Heine and
registrant and R. William Owen incorporated by reference to
exhibit 10(d) of registrant's Annual Report on Form 10-K for the
year ended December 31, 1988 (File number 0-14511).
d. Indemnity Agreements between registrant and the Company's
directors and executive officers incorporated by reference to
exhibit 10(e) of registrant's Annual Report on Form 10-K for the
year ended December 31, 1992 (File number 0-14511).
e. Compensation Deferral Plan incorporated by reference to exhibit
10(f) of registrant's Annual Report on Form 10-K for the year
ended December 31, 1992 (File number 0-14511).
f. Severance Agreements between registrant and the Company's Senior
Executive Officers filed herewith (see pages 34 through 39).
(11) Computation of net income per share. See attached page 40.
(13) a. Annual Report to Shareholders for the year ended December 31,
1995. Except to the extent specifically incorporated herein by
said report, the annual report is furnished solely for the
information of the Commission and is not to be deemed "filed" as
part of this report. See attached pages 41 through 82.
b. Independent Auditors' Report for 1993. See attached page 83.
(21) Subsidiaries of the registrant. See attached page 84.
(23) Consents of experts. See attached pages 85 through 86.
(99) a. Other documents. (Proxy Statement) See attached pages 87 through
104.
b. Other documents. (Form 11K) See attached pages 105 through 116.
(b) REPORTS ON FORM 8-K
There were no Reports on Form 8-K filed the quarter ended December 31,
1995.
REGULATION S-K ITEM 601 NO.
(Note: Exhibits 2, 9, 12, 16, 18, 22, 24, 27, and 28 as requested by
Regulation S-K, Item 601, have been omitted in this 10-K filing since the
information requested is not required or not applicable.)
<PAGE>
Page 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TODAY'S BANCORP, INC.
---------------------
(Registrant)
DATE: March 19, 1996 By /s/ Dan Heine
-------------------
Dan Heine
President and
Chief Executive Officer
By /s/ R. William Owen
-------------------
R. William Owen
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
The following are all directors and all signed on March 19, 1996
/s/ Allen E. Fehr /s/ Thomas A. Ferguson, Jr.
---------------------- ---------------------------
Allen E. Fehr Thomas A. Ferguson, Jr.
/s/ Frank E. Furst /s/ Craig D. Hartman
---------------------- ---------------------------
Frank E. Furst Craig D. Hartman
/s/ Dan Heine /s/ Edward D. Higgins
---------------------- ---------------------------
Dan Heine Edward D. Higgins
/s/ Raymond E. Johnson /s/ J. Michael Hillard
---------------------- ---------------------------
Raymond E. Johnson J. Michael Hillard
/s/ R. William Owen /s/ James C. Skyrms
---------------------- ---------------------------
R. William Owen James C. Skyrms
/s/ Ruth M. Smith
----------------------
Ruth M. Smith
<PAGE>
Exhibit 10(f)
Page 34
SEVERANCE AGREEMENT
This Severance Agreement ("Agreement") made and entered into this 21st
day of November, 1995, by and between __________________ ("Executive") and
TODAY'S BANCORP, INC. ("Company").
WHEREAS, the Executive has been employed as ___________________ of
TODAY'S BANK EAST since January, 1995; and
WHEREAS, the Executive has raised concerns over the future of the Company
and over his/her future employment should the Company undergo a Change of
Control (as defined in paragraph 4 below); and
WHEREAS, the Company wishes to retain the Executive's services and
resolve the Executive's concerns; and
WHEREAS, the Board of Directors of the Company has approved and
authorized the Company to offer and execute this Agreement with the Executive.
NOW, THEREFORE, the Company and Executive hereby agree as follows:
1. The Executive agrees to continue his/her employment with the
Company and agrees to continue his/her employment even if the there is a Change
of Control in the Company providing that after the Change of Control, the
Company does not terminate the Executive or substantially reduce the Executive's
duties and responsibilities as defined in paragraph 5 below.
2. In the event there is a Change of Control and the Executive is
terminated within twelve (12) months of the Change of Control other than for
"cause", the Executive shall be entitled to severance pay equal to 100% of the
base salary, incentive compensation and bonus payments paid to the Executive by
the Company in the calendar year prior to the year the Change of Control occurs
(the "Severance Payment"). If the Executive's employment is terminated for
"cause" following a Change of Control, the Executive shall have no right to
receive the Severance Payment. "Cause" shall mean: personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than a law, rule or regulation relating to a
traffic violation or similar offense) or a final cease and desist order.
<PAGE>
Page 35
3. In the event there is a Change of Control and the Executive's job
duties and responsibilities are substantially reduced (as defined in paragraph 5
below) within twelve (12) months of the Change of Control, the Executive has the
option of terminating his/her employment and receiving the Severance Payment.
The Executive must notify the President of the Company in writing within one (1)
month of the substantial change in job duties and responsibilities. The
Executive's right to terminate his/her employment as provided in this paragraph
will expire within thirteen (13) months after the Change of Control.
4. For purposes of this Agreement, Change of Control shall be deemed
to occur upon any of the following:
(a) the acquisition of 25% or more of the outstanding voting
securities of the Company, directly or indirectly, in a
transaction or series of transactions, by any person or
persons acting as a group within the meaning of Section
13(d) of the Securities and Exchange Act of 1934, as
amended; or the acquisition of more than 10% but less than
25% of the outstanding voting securities of the Company as
described above, if the Board of Directors of the Company
determines that a Change in Control has occurred;
(b) a merger or consolidation of the Company where the Company
is not the surviving corporation;
(c) a merger or consolidation of the Company where the Company
is the surviving corporation but where more than 50% of the
Company's voting securities following such merger or
consolidation are held by a person or persons, whether or
not acting as a group, who were not stockholders of the
Company during the two years preceding the announcement of
such merger or consolidation;
(d) during any two consecutive years the members of the
Company's Board of Directors sitting at the beginning of
that period cease to be a majority unless the newly elected
directors were nominated by at least two-thirds of the
members sitting at the beginning of the period;
(e) the sale or transfer by the Company of all or substantially
all of its assets; or
(f) the filing with the Board of Governors of the Federal
Reserve System of a change in control notice with respect to
the Company.
<PAGE>
Page 36
5. For purposes of this Agreement, a substantial change in the
Executive's job duties and responsibilities shall mean any, or a combination of
any, of the following:
(a) a change in Executive's supervisor from an officer of the
Company to a non-officer of the Company;
(b) a fifty (50%) percent or greater reduction in the number of
subordinates reporting to the Executive;
(c) a loss of one or more of Executive's principal job duties or
responsibilities. A principal job duty means the job exists
in order to perform this job function or functions; or,
without the assignment of this particular duty or function,
the remaining duties and responsibilities of the job are
rendered part-time, non-management, clerical, administrative
or paraprofessional;
(d) a demotion in job title or reduction in compensation
(including bonuses) or benefits; or
(e) the Company demands that the Executive transfer to a
different work location located more than fifty (50) miles
from the Executive's current work location.
6. (a) For a one year period following the Executive's receipt of
the Severance Payment (the "Restrictive Period"), the
Executive will not, in an area encompassing a ten mile
radius from Rockford, Freeport and Galena, Illinois,
directly or indirectly (I) engage or participate in any
business directly or indirectly competitive with the
business of the Company; (ii) enter the employ of, or render
any other services to any person engaged in the banking
business; or (iii) become interested in any such person in
any capacity, including, without limitation, as an
individual, partner, shareholder, lender, officer, director,
principal, agent or trustee; provided, however, that the
Executive may own, directly or indirectly, solely as an
investment, securities of any person traded on any national
securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System as long as the
Executive is not a controlling person of, or a member of a
group which controls, such person and as long as the
Executive does not own, directly or indirectly, more than 5%
of any class of equity securities, or securities convertible
into or exercisable or exchangeable for 5% or more of any
class of equity securities, of such person.
<PAGE>
Page 37
(b) During the Restrictive Period, the Executive will not,
directly or indirectly, solicit any employee of the Company
or any of its direct or indirect subsidiaries or affiliates
or parent corporations, if any (collectively, the
"Affiliated Group") for employment with, or representation
of (through consulting or any similar arrangement), the
Executive or any corporation, partnership, bank or other
entity by which the Executive is employed or of which the
Executive is an owner, partner, principal or shareholder or
in which the Executive has substantial financial interest.
(c) The Executive hereby acknowledges that the lists of
customers, vendors, marketing methods and plans and all
other methods of operation of the Affiliated Group,
including without limitation confidential statistics, group,
divisional or individual subsidiary sales and profit
information, proposed advertising and promotional programs,
accounting and financial systems and other operating systems
used by the Affiliated Group, as they may exist from time to
time, are trade secrets and are proprietary information and,
as such, are valuable, special and unique assets of the
Affiliated Group. Accordingly, the Executive hereby agrees
that he will not, during the Restrictive Period, disclose
any of the information described in the immediately
preceding sentence to any person, for any reason or purpose
whatsoever. The provisions of this Section shall not apply
to information and data which is generally available to the
public or otherwise becomes generally available to the
public.
(d) During the Restrictive Period, the Executive shall not
directly or indirectly, request or advise a customer of the
Company or the Affiliated Group to curtail or cancel such
customer's business relationship with the Company or the
Affiliated Group.
(e) If the Executive breaches or threatens to commit a breach of
any of the provisions contained in this Section (the
"Restrictive Covenants"), in addition to the other remedies
available for a breach of this Agreement, the Company shall
have the following rights and remedies, each of which shall
be independent of the others and severally enforceable, and
each of which is in addition to and not in lieu of any other
rights and remedies available to the Company under law or in
equity:
(i) The right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or
threatened breach of the
<PAGE>
Page 38
Restrictive Covenants would cause irreparable injury to
the Company and that money damages would not provide an
adequate remedy to the Company; and
(ii) The right and remedy to require the Executive to
account for and pay over to the Company all
compensation, profits, monies, accruals, increments or
other benefits derived or received by the Executive as
a result of any action constituting a breach of the
Restrictive Covenants.
(f) The Executive hereby acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in duration
and geographical scope and in all other respects. If any
court determines that any of the Restrictive Covenants, or
any part thereof, is invalid or unenforceable, the remainder
of the Restrictive Covenants shall not thereby be affected
and shall be given full effect without regard to the invalid
portions. If any court determines that any of the
Restrictive Covenants or any part hereof is unenforceable
because of the duration or geographical scope of such
provision, such court shall have the power to reduce the
duration or scope of such provision, as the case may be,
and, in its reduced form, such provision shall then be
enforceable.
7. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in the City of
Rockford in accordance with the laws of the State of Illinois by three (3)
arbitrators, one of whom shall be appointed by the Company, one by the
Executive, and the third of whom shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the Chief
Judge of the United States Court of Appeals for the Seventh Circuit. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators,
which shall be as provided in this Paragraph 6. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. In the event it shall be necessary or desirable for the Executive to
retain legal counsel and/or incur other costs and expenses in connection with
the enforcement of any and all of his/her rights under this Agreement, the
Company shall pay (or the Executive shall be entitled to recover from the
Company as the case may be) his/her reasonable attorneys' fees and costs and
expenses in connection with the enforcement of Executive's rights (including the
enforcement of any arbitration award in court) regardless of the final outcome,
unless the arbitrators shall determine that under the circumstances, recovery by
the Executive of all or a part of any such fees and costs and expenses would be
unjust.
<PAGE>
Page 39
8. This Agreement is personal to the Executive. The Executive may
not assign or delegate any of his/her rights or obligations hereunder without
first obtaining the written consent of the Company.
9. This Agreement shall be covered by the laws of the United States
and the State of Illinois.
10. This Agreement is binding on the Company's successors and assigns.
11. The parties expressly agree that nothing in this Agreement creates
an employment contract for any specific term and that the Executive remains an
employee at will. The only rights created in this Agreement are those relating
to the provision of a severance benefit following a Change in Control in
exchange for the Executive's continued services for the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this ____ day of November, 1995.
TODAY'S BANCORP, INC.
By:________________________________
Dan Heine, President and CEO
Executive__________________________
Attest:
_______________________________________
Cynthia Lower
Vice President - Human Resources
<PAGE>
Page 40
TODAY'S BANCORP, INC.
Exhibit 11 - Computation of Net Income Per Share
for the years ended December 31
<TABLE>
<CAPTION>
Average Shares Outstanding** 1995 1994 1993
- -------------------------- ---- ---- -----
<S> <C> <C> <C>
1. Average number of shares
outstanding 2,728,339 2,681,191 2,642,700
2. Net additional shares
resulting from assumed
exercise of stock options* 28,269 19,986 45,835
------- ------- -------
3. Adjusted average shares
outstanding for fully
diluted computation 2,756,608 2,704,177 2,688,535
--------- --------- ---------
--------- --------- ---------
Net income per share:
Primary $ 1.79 $ 1.37 $ 1.65
------- ------- -------
------- ------- -------
Assuming full dilution $ 1.77 $ 1.36 $ 1.62
------- ------- -------
------- ------- -------
</TABLE>
- ------------------
*Assumes proceeds from exercise of stock options used to purchase treasury
shares at the greater of the year-end or the average market price during the
period.
**All number of shares and per share amounts have been retroactively restated to
reflect the three-for-two stock split that took place in February, 1993.
<PAGE>
Page 50
CONSOLIDATED BALANCE SHEETS TODAY'S BANCORP, INC.
<TABLE>
<CAPTION>
As of December 31 (dollars in thousands)
- -----------------------------------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $ 16,603 $ 15,144
Federal funds sold 5,330 11,570
- -----------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS 21,933 26,714
Mortgage loans held for sale 1,116 1,288
Time deposits in other banks 434 1,607
Trading account securities - 6,350
Securities available for sale 76,933 63,298
Securities held to maturity with aggregate fair values
of $34,257 and $35,476, respectively 34,037 36,243
Loans, net of unearned interest of $154 and
$375, respectively 362,418 330,782
Allowance for possible loan losses (3,289) (3,144)
- -----------------------------------------------------------------------------------------------
NET LOANS 359,129 327,638
Premises and equipment 12,633 12,637
Accrued interest and other assets 12,269 13,591
- -----------------------------------------------------------------------------------------------
TOTAL ASSETS $518,484 $489,366
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Liabilities
Deposits:
Non interest bearing $49,821 $45,937
Interest bearing 396,000 371,810
- -----------------------------------------------------------------------------------------------
TOTAL DEPOSITS 445,821 417,747
Federal funds purchased, securities sold under
agreements to repurchase and other short-
term borrowings 8,298 13,130
Other liabilities 4,354 3,860
Other borrowings 13,497 13,797
- -----------------------------------------------------------------------------------------------
Total liabilities 471,970 448,534
- -----------------------------------------------------------------------------------------------
Commitments and contingencies
Capital
Preferred stock, without par value:
Authorized - 200,000 shares;
issuable in series; none issued or outstanding - -
Common stock, par value $5 per share:
Authorized - 6,000,000 shares;
Issued - 2,742,865 and 2,705,745 shares, respectively
Outstanding - 2,742,865 and 2,705,257 shares, respectively 13,714 13,529
Capital surplus 6,357 6,036
Retained earnings 25,809 22,396
Unrealized gain (loss) on securities available for sale,
net of taxes of $384 and ($713), respectively 634 (1,127)
Treasury shares - None and 488 shares,
respectively, at cost - (2)
- -----------------------------------------------------------------------------------------------
TOTAL CAPITAL 46,514 40,832
- -----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL $518,484 $489,366
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
8
<PAGE>
Page 51
CONSOLIDATED STATEMENTS OF INCOME TODAY'S BANCORP, INC.
<TABLE>
<CAPTION>
For the years ended December 31 (dollars in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $31,750 $24,416 $19,066
Interest on federal funds sold and time deposits in other banks 592 402 206
Interest and fees on mortgage loans originated for sale 185 780 1,368
Interest on investment securities
Trading Securities 101 - -
Securities available for sale - taxable 3,981 3,483 -
Securities available for sale - exempt from federal income taxes 9 - -
Securities held to maturity - taxable 1,569 969 4,950
Securities held to maturity - exempt from federal income taxes 993 1,082 1,239
- --------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 39,180 31,132 26,829
- --------------------------------------------------------------------------------------------------------------
Interest Expense
Interest on deposits 18,136 13,189 11,669
Interest on federal funds purchased, securities sold under
agreements to repurchase, and other short-term borrowings 578 416 569
Interest on term borrowings, principally advances from
Federal Home Loan Bank 1,061 571 280
- ---------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 19,775 14,176 12,518
- ---------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 19,405 16,956 14,311
Provision for possible loan losses (960) (502) (360)
- ---------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 18,445 16,454 13,951
- ---------------------------------------------------------------------------------------------------------------
Other Operating Income
Trust department income 1,624 1,427 1,368
Service charges on deposit accounts 1,655 1,296 1,325
Mortgage banking fees and gain on sale of
mortgage servicing rights 725 1,416 3,769
Securities gains, net 62 76 42
Trading account securities gains (losses) 77 (643) -
Other income 838 798 792
- ---------------------------------------------------------------------------------------------------------------
TOTAL OTHER OPERATING INCOME 4,981 4,370 7,296
- ---------------------------------------------------------------------------------------------------------------
Operating income after interest expense and
provision for possible loan losses 23,426 20,824 21,247
- ---------------------------------------------------------------------------------------------------------------
Other Operating Expenses
Salaries, wages, and employee benefits 7,318 7,498 7,862
Net occupancy expense 1,471 1,128 1,122
Furniture and equipment expense 1,335 1,119 861
Printing, stationery, and supplies 698 425 483
FDIC insurance expense 488 813 733
Data processing expense 1,057 918 935
Marketing and advertising 712 330 288
Other expenses 2,881 3,232 2,639
- ---------------------------------------------------------------------------------------------------------------
TOTAL OTHER OPERATING EXPENSES 15,960 15,463 14,923
- ---------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 7,466 5,361 6,324
Income tax provision 2,587 1,682 1,973
- ---------------------------------------------------------------------------------------------------------------
NET INCOME $ 4,879 $ 3,679 $ 4,351
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE $ 1.79 $ 1.37 $ 1.65
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
9
<PAGE>
Page 52
CONSOLIDATED STATEMENTS OF CASH FLOWS TODAY'S BANCORP, INC.
<TABLE>
<CAPTION>
For the years ended December 31 (dollars in thousands)
- -----------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 4,879 $ 3,679 $ 4,351
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 2,049 1,621 1,195
Provision (benefit) for deferred income taxes (254) 44 (211)
Provision for possible loan losses 960 502 360
Securities gains, net (62) (76) (42)
Trading account securities (gains) losses (77) 643 -
Proceeds from sales of trading account securities 6,427 - -
Loans originated for resale (44,049) (149,634) (272,029)
Loans sold 44,221 172,688 251,626
(Increase) decrease in accrued interest and other assets 406 (731) (243)
Increase (decrease) in other liabilities 201 (492) 487
Other 355 572 580
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 15,056 28,816 (13,926)
- -----------------------------------------------------------------------------------------------------------------------------
Investing Activities
Proceeds from/(purchase of) maturities of time deposits in other banks 1,173 (269) (53)
Securities available for sale:
Proceeds from sales, maturities, and repayments of mortgage-backed securities 783 1,630 -
Proceeds from sales of investment securities 5,037 7,573 -
Proceeds from calls and maturities of investment securities 24,170 20,781 -
Purchase of investment securities (26,158) (28,850) -
Securities held to maturity:
Proceeds from sales, maturities, and repayments of mortgage-backed securities 3,044 5,267 7,767
Proceeds from sales of investment securities 358 1,682 2,537
Proceeds from calls and maturities of investment securities 3,064 3,471 37,701
Purchase of investment securities (19,153) (7,167) (35,018)
Net increase in loans held for portfolio (32,451) (47,343) (40,813)
Purchases of premises and equipment (1,688) (4,068) (1,531)
Payment for acquisitions, net of cash and cash equivalents acquired of $2,613 - (3,487) -
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (41,821) (50,780) (29,410)
- -----------------------------------------------------------------------------------------------------------------------------
Financing Activities
Net increase in deposits 28,074 34,186 15,635
Net increase (decrease) in federal funds purchased, securities sold
under agreements to repurchase, and other short-term borrowings (4,832) 3,208 (714)
Payments on term borrowings and advances from Federal Home Loan Bank (3,300) (15,425) (2,133)
Cash dividends paid (1,466) (1,341) (1,162)
Proceeds from exercise of stock options 508 738 161
Increase in term borrowings and advances from Federal Home Loan Bank 3,000 9,222 18,100
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 21,984 30,588 29,887
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,781) 8,624 (13,449)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 26,714 18,090 31,539
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 21,933 $ 26,714 $ 18,090
- -----------------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information
Net cash paid during the year for:
Interest $ 19,551 $ 13,719 $ 12,548
Income taxes 2,135 1,775 1,931
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
The notes to consolidated financial statements are an integral part of these
statements.
</TABLE>
10
<PAGE>
Page 53
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL TODAY'S BANCORP, INC.
For the years ended December 31 (dollars in thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized
Preferred Common Capital Retained Gain (Loss) Treasury
Stock Stock Surplus Earnings on Securities Stock Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $ - $ 9,019 $ 9,974 $ 16,869 $ (83) $ (329) $35,450
Net income for 1993 - - - 4,351 - - 4,351
Cash dividends declared,
$.44 per share - - - (1,162) - - (1,162)
Transfer for three-for-two
stock split - 4,510 (4,510) - - -
Stock options exercised,
12,151 shares - - 97 - - 64 161
Unrealized loss on marketable
equity securities - - - - (132) - (132)
Effect of change in accounting
principle for securities
available for sale on
December 31, 1993,
net of tax effect of $257 - - - - 406 - 406
- -------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 - 13,529 5,561 20,058 191 (265) 39,074
Net income for 1994 - - - 3,679 - - 3,679
Cash dividends declared,
$.50 per share - - - (1,341) - - (1,341)
Stock options exercised,
52,664 shares - - 475 - - 263 738
Net unrealized loss on
securities, net of tax
effect of $970 - - - - (1,712) - (1,712)
Recognition of unrealized loss
on marketable equity securities
in trading account, net of tax
effect of $249 - - - - 394 - 394
- -------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 - 13,529 6,036 22,396 (1,127) (2) 40,832
Net income for 1995 - - - 4,879 - - 4,879
Cash dividends declared,
$.5375 per share - - - (1,466) - - (1,466)
Stock options exercised,
37,610 shares - 185 321 - - 2 508
Net unrealized gain
on securities, net of tax
effect of $1,113 - - - - 1,761 - 1,761
- -------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 $ - $13,714 $ 6,357 $25,809 $ 634 $ - $46,514
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
11
<PAGE>
Page 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- -----------------------------------------------------------------------------
Note One - Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the parent
company, TODAY'S BANCORP, INC., and its wholly-owned subsidiaries, TODAY'S BANK-
East and TODAY'S BANK-West (collectively, the "Company"), after elimination of
all intercompany transactions.
Certain reclassifications have been made to the 1994 financial statements to
conform with the 1995 presentation.
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of incomes and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, and federal funds sold. Generally, federal funds
are purchased and sold for one-day periods.
Investment Securities
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," on December 31, 1993. Under SFAS No. 115, the Company has
classified each of its investment securities as either held to maturity,
available for sale, or trading. Securities classified as held to maturity are
recorded at cost, adjusted for the amortization of premiums and accretion of
discounts on the constant yield basis. Securities available for sale are
recorded at fair value and unrealized gains and losses are reported, net of tax,
as a component of capital until realized. Gains and losses realized on the sale
of investments are determined by the specific identification method and are
recognized as a component of net income upon realization. Trading account
securities are stated at fair value. Realized and unrealized gains and losses
from trading securities are reflected in income.
Loans
Loans are carried at their principal amount outstanding plus any unamortized net
deferred origination costs or less any unamortized net deferred origination
fees. Interest on commercial, real estate, and certain installment and consumer
loans is accrued and recognized as income based upon the outstanding principal
amount and the contractual interest rate of each loan. Unearned interest on
discounted installment loans is credited to income based upon the sum-of-the-
months-digits method.
The accrual of interest income is discontinued on any loan (including a loan
impaired under SFAS No. 114) for which, in the opinion of management, there is
reasonable doubt as to the ultimate collectibility of interest and principal or
when either principal or interest is 90 days or more past due and not well
secured and in the process of collection.
Loan origination fees and certain direct origination costs on loans retained in
the portfolio are deferred and amortized over the lives of the loans using
amortization methods which management believes approximate the effective yield
method.
Mortgage loans held for sale in the secondary market are recorded at the lower
of cost or fair market value. Gains and losses on the sale of mortgage loans
and servicing fee income are included in other operating income.
Allowance for Possible Loan Losses
The allowance for possible loan losses represents management's recognition of
the assumed collection risks of extending credit and the quality of the loan
portfolio. Other factors, including the loan loss experience and the current
economic environment, are also considered in determining the amount of required
allowance to cover the potential loan losses in the portfolio.
Beginning in 1995, the Company adopted SFAS No. 114 (as amended by SFAS No.
118), "Accounting by Creditors for Impairment of a Loan." Under the new
standard, the 1995 allowance for credit losses related to loans that are
identified as impaired is based on discounted cash flows using the loan's
initial effective interest rate or the fair value of the collateral for certain
collateral dependent loans. A loan is considered impaired when it is probable
that a creditor will be unable to collect principal and interest due according
to the contractual terms of the loan agreement. Prior to 1995, the allowance
for credit losses related to these loans was based on undiscounted cash flows or
the fair value of the collateral for collateral dependent loans. No additional
provision to the allowance for loan losses was required as a result of adopting
this standard.
12
<PAGE>
Page 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- -----------------------------------------------------------------------------
Note One - Summary of Significant Accounting Policies (continued)
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is generally computed using the straight-line method. Buildings
and building equipment are depreciated over lives which range from 10 to 45
years while fixtures and equipment are depreciated over lives ranging from three
to 10 years. Expenditures for maintenance and repairs which do not materially
extend the useful lives of the assets are charged to operating expenses as
incurred; renewals and betterments are capitalized.
Trust Department Fees
Trust fees are recognized principally on the cash basis, which management
believes approximates the accrual basis.
Income Taxes
The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes." Under SFAS No. 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under SFAS No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
TODAY'S BANCORP and its subsidiaries file a consolidated federal income tax
return. Each subsidiary provides for income taxes on a separate return basis,
and remits to TODAY'S BANCORP amounts determined to be currently payable.
Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires
entities to disclose information about the fair value of their financial
instruments, including assets and liabilities, both on- and off-balance-sheet.
The definition of a financial instrument is consistent with that of SFAS No.
105, "Disclosures of Information about Financial Instruments with Off-Balance-
Sheet Risk and Financial Instruments with Concentrations of Credit Risk".
Interest Rate Agreement
The Company has entered into an interest rate swap agreement as a means of
managing its interest rate exposure. This agreement is used for purposes other
than trading and is accounted for on a deferred basis. The net interest
differential paid or received on this instrument is being recognized in earnings
over the life of the contract as an adjustment to interest expense on the
underlying liability being hedged.
Significant Group Concentrations of Credit Risk
The Company grants commercial, real estate, agricultural, and consumer loans to
customers located within northwest Illinois. The Company has a diversified loan
portfolio in which there is no substantial portion of loans dependent on a
single industry or other concentration.
Excess of Purchase Price Over Carrying Value of Assets Acquired (Goodwill)
The unamortized excess of the purchase price over the fair value of assets
acquired ("goodwill") is included in other assets and is being amortized on a
straight-line basis over 25 years for acquisitions prior to 1990 and 15 years
for acquisitions after 1990.
Net Income Per Common Share
Net income per common share and dividends per common share have been computed
using the weighted average number of common shares outstanding after giving
retroactive effect, for all periods presented, to the three-for-two stock split
effected in the form of a stock dividend in February, 1993. The dilutive effect
of outstanding stock options on any year presented is not material.
13
<PAGE>
Page 56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- -----------------------------------------------------------------------------
Note Two - Disclosures About Fair Value of Financial Instruments
The fair value estimates are made as of December 31 based on relevant market
information and information about the instruments. Because no market exists for
a significant portion of the Company's financial and non-financial instruments,
fair value estimates are based on judgments regarding future expected loss
experience, current economic conditions, risk characteristics of various
instruments, and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and therefore cannot
be determined with precision. Changes in assumptions could significantly affect
the estimates. Because of the wide range of permissible valuation techniques
and the numerous estimates which must be made, it may be difficult to make
reasonable comparisons of the Company's fair value information with that of
other financial institutions.
It is important that the many uncertainties discussed above be considered when
using the estimated fair value disclosures and to realize that because of these
uncertainties, the aggregate fair value amount should in no way be construed as
representative of the underlying value of the Company.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash and Cash Equivalents
For these short-term instruments, the carrying amount is a reasonable estimate
of fair value.
Investment Securities
The fair value of investments, except certain state and political subdivisions,
is estimated based on bid prices published in financial newspapers or bid
quotations received from securities dealers. The fair value of certain
obligations of state and political subdivisions is not readily available through
market sources, so fair value estimates are based on quoted market prices of
similar instruments.
Loans and Mortgage Loans Held For Sale
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial and
agriculture, real estate, and installment. Each loan category is further
segmented into fixed and adjustable rate interest terms and by performing and
nonperforming categories.
The estimated fair value of performing loans is calculated by discounting
scheduled cash flows through the estimated maturity using estimated market
discount rates that reflect the credit and interest rate risk inherent in the
loan. For certain variable rate loans with no significant credit concerns and
frequent repricings, estimated fair values are based on the carrying values.
Where appropriate, adjustments have been made for credit and other costs so as
to reflect market rates more accurately.
Fair value for significant nonperforming loans is based on recent internal or
external appraisals of the underlying collateral. If appraisals are not
available, estimated cash flows are discounted using a rate commensurate with
the risk associated with the estimated cash flows. Assumptions regarding credit
risk, cash flows, and discount rates are judgmentally determined using available
market information and specific borrower information.
The estimated fair value of mortgage loans is estimated based on quoted market
prices. No amount has been recorded on the balance sheet for mortgage loan
servicing rights originated by the Company. The amount recorded for purchase of
mortgage loan servicing rights approximates fair value. The fair value is
estimated based on current market conditions.
Deposits
The fair value of deposits with no stated maturity, such as demand deposits
(both interest and non interest bearing), savings accounts, and certain money
market savings accounts, is the amount payable on demand at the reporting date.
The fair value of all other deposits is based on the discounted value of
contractual cash flows. The discount rate is estimated using the rates
currently offered for deposits of similar remaining maturities.
Core Deposits
The Company has not separately recorded an amount for the value of its core
deposit intangibles. A portion of the goodwill currently recorded represents
core deposits for banks acquired since 1984. The fair value of the core deposit
intangibles is determined by segregating the deposits into categories and then
discounting cash flows through an average maturity using estimated market
discount rates that reflect the risk inherent in the deposits.
14
<PAGE>
Page 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- ----------------------------------------------------------------------------
Note Two - Disclosures About Fair Value of Financial Instruments (continued)
Short-term Borrowings
The carrying amounts for short-term borrowings, which include federal funds
purchased and securities sold under agreement to repurchase, approximate fair
value because they mature in 90 days or sooner.
Term Borrowings
The estimated fair value of term borrowings is based on rates currently
available to the Company for debt with similar terms and remaining maturities.
Commitments to Extend Credit, Standby Letters of Credit, and Financial
Guarantees Written
The carrying value and estimated fair value of these instruments at each date is
negligible since the Company currently charges insignificant fees related to
these instruments.
For all other balance sheet items, the carrying amount approximates estimated
fair value with the exception of goodwill and premises and equipment for which
no estimates of fair value have been made.
The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents and time deposits $ 22,367 $ 22,369 $28,321 $28,321
Investment securities 110,970 111,190 105,891 105,124
Loans and mortgage loans held for sale 363,534 361,973 332,070 321,673
Core deposits - 3,386 - 14,955
Financial liabilities:
Non interest bearing deposits 49,821 49,821 45,937 45,937
Interest bearing deposits 396,000 397,473 371,810 366,163
Short-term borrowings 8,298 8,289 13,130 13,130
Other borrowings 13,497 13,832 13,797 12,258
Off-balance-sheet financial instruments:
Interest rate swap - (67) - -
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Page 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Three - Investment Securities
Securities available for sale and trading account securities are recorded at
estimated fair value and securities held to maturity are recorded at amortized
cost. Amortized cost is the original cost adjusted for the amortization of
premiums and accretion of discounts on the constant yield basis. The amortized
cost and estimated fair values of investment securities at December 31 are as
follows:
<TABLE>
<CAPTION>
Gross Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Securities available for sale:
U.S. Government obligations $ 53,988 $ 864 $ (61) $ 54,791
Obligations of states and
political subdivisions 2,148 49 - 2,197
Mortgage-backed securities 12,120 65 (41) 12,144
Corporate and other securities 7,685 120 (4) 7,801
- -----------------------------------------------------------------------------------
SUB TOTAL 75,941 1,098 (106) 76,933
- -----------------------------------------------------------------------------------
Securities held to maturity:
Obligations of states and
political subdivisions 16,146 289 (83) 16,352
Mortgage-backed securities 13,510 90 (75) 13,525
Corporate and other securities 4,381 3 (4) 4,380
- -----------------------------------------------------------------------------------
SUB TOTAL 34,037 382 (162) 34,257
- -----------------------------------------------------------------------------------
TOTALS $ 109,978 $1,480 $ (268) $ 111,190
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
1994
Securities available for sale:
U.S. Government obligations $ 53,526 $ 4 $(1,419) $ 52,111
Mortgage-backed securities 4,755 - (291) 4,464
Corporate and other securities 6,898 3 (178) 6,723
- -----------------------------------------------------------------------------------
SUB TOTAL 65,179 7 (1,888) 63,298
- -----------------------------------------------------------------------------------
Securities held to maturity:
U.S. Government obligations 1,494 - (31) 1,463
Obligations of states and
political subdivisions 17,641 134 (179) 17,596
Mortgage-backed securities 12,798 16 (609) 12,205
Corporate and other securities 4,310 - (98) 4,212
- -----------------------------------------------------------------------------------
SUB TOTAL 36,243 150 (917) 35,476
- -----------------------------------------------------------------------------------
Trading account securities 6,993 - (643) 6,350
- -----------------------------------------------------------------------------------
TOTALS $ 108,415 $ 157 $(3,448) $ 105,124
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Page 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Three - Investment Securities (continued)
The book value and estimated fair values of debt securities at December 31, 1995
with contractual maturities are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Available For Sale Held To Maturity
------------------------ ----------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or sooner $ 22,535 $ 22,496 $ 4,914 $ 4,934
Due after one year through
five years 41,286 42,293 6,097 6,195
Due after five years through
10 years - - 5,880 5,903
Due after 10 years - - 1,759 1,823
- --------------------------------------------------------------------------------
Securities with contractual
maturities 63,821 64,789 18,650 18,855
Nonmarketable securities - - 1,877 1,877
Mortgage-backed securities 12,120 12,144 13,510 13,525
- --------------------------------------------------------------------------------
TOTALS $ 75,941 $ 76,933 $ 34,037 $ 34,257
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Proceeds from sales, gains and losses related to available for sale and trading
account investment securities are as follows. Proceeds from sales of investment
securities at or near the maturity date are not included in this data.
<TABLE>
<CAPTION>
1995 1994
----------------------- ---------------------
Marketable Marketable
Debt Equity Debt Equity
Securities Securities Securities Securities
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Proceeds from sales $ 5,820 $ 6,427 $ 9,203 $ -
Gross realized gains 62 77 69 -
Gross realized losses - - - -
Change in net unrealized
gain (loss) included
in capital, net of tax 1,761 - (1,533) -
Change in net unrealized
gain (loss) on trading
securities included in
income, net of tax - 47 - (394)
- --------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of held to maturity securities totaled $358 for 1995 which
represents restricted stock sales. These securities were sold as required by a
regulating entity.
In conjunction with the Financial Accounting Standards Board's ("FASB") issuance
of "A Guide to Implementation of Statement 115 on Accounting for Certain
Investments in Debt and Equity Securities", the Company transferred on December
22, 1995 $14,759 of held to maturity securities to available for sale. The net
unrealized gain related to the transferred securities was $105 and was
recognized as a component of capital, net of tax.
Investment securities with a par value of $54,232 and $42,020 at December 31,
1995 and 1994, respectively, were pledged as collateral for deposits and other
purposes.
17
<PAGE>
Page 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Four - Loans
The carrying value of portfolio loan categories at December 31 are as follows:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Commercial and agricultural $ 221,068 $ 187,172
Real estate 79,795 72,305
Installment, net of unearned interest 61,555 71,305
- --------------------------------------------------------------------------------
TOTALS $ 362,418 $ 330,782
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The aggregate amount of loans to executive officers and directors of the Company
and its significant subsidiaries and loans to associates and business affiliates
of these executive officers and directors was approximately $2,510 and $2,187 at
December 31, 1995 and 1994, respectively. During 1995, $2,156 of new loans to
such interests were made while repayments totaled $959.
Transactions in the allowance for possible loan losses were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $ 3,144 $ 2,737 $ 2,515
Allowance of purchased subsidiary - 375 -
Recoveries on loans previously
charged off 301 195 282
Provision charged to operating
expense 960 502 360
- --------------------------------------------------------------------------------
4,405 3,809 3,157
Loans charged off (1,116) (665) (420)
- --------------------------------------------------------------------------------
BALANCE AT DECEMBER 31 $ 3,289 $ 3,144 $ 2,737
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
At December 31, 1995, the recorded investment in loans that are considered to be
impaired under SFAS No. 114 was $432, all of which were on a nonaccrual basis.
Included in this amount is $27 of impaired loans for which the related allowance
for credit losses is $27, and $405 of impaired loans that, as a result of write-
downs, do not have an allowance for credit losses. The average recorded
investment in impaired loans during the year ended December 31, 1995 was
approximately $1,197. No interest income was recognized on impaired loans in
1995.
Information as to nonaccrual loans at December 31 was as follows:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Principal balance $ 1,063 $ 1,839
Interest income effect
Gross amount of interest that would have been
recorded at contractual rate 79 153
Interest included in income 35 44
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Note Five - Capital Restrictions
The Company is required to maintain minimum amounts of capital to total "risk
weighted" assets, as defined by the banking regulators. The Company is required
to have minimum Tier 1 capital, Tier 2 capital, and leverage ratios of 4.0%,
8.0%, and 4.0%, respectively. The Company's actual ratios at December 31, 1995
were 10.3%, 11.2%, and 7.9%, respectively.
18
<PAGE>
Page 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Six - Restrictions on Cash and Due from Banks
Minimum cash balances, which are based on the deposit level at the subsidiary
banks, are required by regulatory agencies to be maintained as legal reserve
requirements. Cash balances restricted from usage due to these requirements
were $2,490 and $1,788 at December 31, 1995 and 1994, respectively.
- --------------------------------------------------------------------------------
Note Seven - Reorganization
Early in 1995, the Company combined its five subsidiary banks into two separate
banking units which are named TODAY'S BANK and are wholly-owned subsidiaries of
TODAY'S BANCORP, INC. State Bank of Freeport, Bank of Pecatonica and First
State Bank & Trust Company of Rockford combined into a single entity on January
1, 1995, and First National Bank of Galena and Tri-State Bank and Trust merged
on February 1, 1995.
In addition, the Company changed the name of its mortgage banking subsidiary to
TODAY'S MORTGAGE SOURCE and has set up a new financial services company called
TODAY'S FINANCIAL SERVICES COMPANY. TODAY'S FINANCIAL SERVICES COMPANY includes
the operations of trust, asset management, full service investment brokerage,
insurance, and other fee-based services which previously were provided by the
individual banks.
- --------------------------------------------------------------------------------
Note Eight - Premises and Equipment
Premises and equipment at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------------------------------------------------------------
Accumulated Net Accumulated Net
Cost Depreciation Value Cost Depreciation Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Land $ 1,601 $ - $ 1,601 $ 1,621 $ - $ 1,621
Buildings and
building equipment 15,994 7,571 8,423 15,299 6,887 8,412
Fixtures and equipment 8,142 5,533 2,609 7,400 4,796 2,604
- -------------------------------------------------------------------------------------------------------------------
Totals $25,737 $13,104 $12,633 $24,320 $11,683 $12,637
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Net occupancy expense in the consolidated statements of income is shown net of
rental income of $504, $535, and $350 in 1995, 1994, and 1993, respectively.
Depreciation expense was $1,637, $1,369, and $988 in 1995, 1994, and 1993,
respectively.
- --------------------------------------------------------------------------------
Note Nine - Deposits
The following schedule presents the detailed carrying value of interest bearing
deposits at December 31:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Interest bearing checking accounts $ 48,467 $ 48,767
Savings accounts 35,772 43,704
Money market savings accounts 56,104 51,195
Certificates of deposit ($100,000 or more) 44,681 33,132
Time deposits ($100,000 or more) 5,512 10,463
Other interest bearing deposits, principally
time deposits under $100,000 205,464 184,549
- --------------------------------------------------------------------------------
Totals $396,000 $371,810
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Page 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Ten - Employee Benefit Plans
The Company has a defined benefit pension plan covering substantially all
employees. Plan benefits are principally based upon years of service and the
last five years' average earnings. The Company's funding policy is to
contribute annually the maximum amount that can be deducted for federal income
tax purposes.
The following table sets forth the plan's funded status and amounts recognized
in the Company's consolidated balance sheets at December 31:
<TABLE>
<CAPTION>
1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation, including
vested benefits of $4,025 and $3,638, respectively $ 4,201 $ 3,942
- -----------------------------------------------------------------------------------------------------
Plan assets at fair value, principally consisting of bank certificates
of deposit, U.S. Government obligations, mutual funds,
and 21,930 and 21,330 common shares of the Company
at December 31,1995 and 1994, respectively $ 4,715 $ 3,774
Projected benefit obligation for service rendered to date 4,722 4,918
- -----------------------------------------------------------------------------------------------------
Underfunded projected benefit obligation (7) (1,144)
Unrecognized prior service cost (69) (72)
Unrecognized net (gain) loss from past experience
different from that assumed (131) 969
Unrecognized net asset at December 31
being recognized over approximately 19 years (248) (276)
- -----------------------------------------------------------------------------------------------------
PENSION LIABILITY INCLUDED IN OTHER LIABILITIES $(455) $(523)
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
Pension expense for the years ended December 31 includes the following
components:
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $221 $289 $251
Interest cost on projected benefit obligation 322 319 296
Actual return on assets (880) 237 (501)
Net amortization and deferral 554 (575) 226
- -----------------------------------------------------------------------------------------------------
PENSION EXPENSE $217 $270 $272
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Discount rate 7.50% 7.25% 7.25%
Rate of increase in future compensation 4.00% 5.00% 5.00%
Expected long-term rate of return 7.50% 7.50% 7.50%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
The Company sponsors an Employee Stock Ownership Plan ("ESOP") which enables
employees to acquire shares of TODAY'S BANCORP'S common stock. The plan covers
substantially all employees who meet minimum age and length of service
requirements. The plan is designed to enable participants to acquire TODAY'S
BANCORP'S common stock and to allow elective salary deferrals under Section
401(k) of the Internal Revenue Code. Participants may choose to invest their
contributions in TODAY'S BANCORP'S common stock or in a savings account.
20
<PAGE>
Page 63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Ten - Employee Benefit Plans (continued)
Participants may elect to have an amount from one to 15% of their compensation,
and any portion of their bonus, withheld by the Company in any plan year and
placed in the plan's trust account. Company matching contributions (whether in
cash or in shares of common stock) will be made each year for a portion of the
participant's elective salary deferral. All matching contributions are placed
in each participant's common stock account. The Company is also permitted to
contribute an additional amount at the discretion of the Board of Directors.
The Company's contribution was $55, $51, and $59 for 1995, 1994, and 1993,
respectively.
Tri-State Bank and Trust Company (see Note Sixteen) sponsored a 401(k) plan
("Tri-State's Plan") which enabled employees to defer a portion of their salary
on a pre-tax basis. Tri-State Bank's plan was frozen on December 31, 1994, and
all Tri-State Bank employees were eligible to participate in the TODAY'S BANCORP
Employee Pension Plan and ESOP as of January 1, 1995. Tri-State's Plan covered
substantially all employees of Tri-State who met minimum age and length of
service requirements. Participants could elect to have an amount from one to
15% of their compensation withheld in any plan year and placed in Tri-State's
Plan's trust account. Company matching contributions were made equal to 50% of
the employee's elective deferral up to a maximum of four percent. The
participant may choose to invest their contributions into any of three
investment funds available to Tri-State's Plan. The Company's expense since
October 1, 1994, when TODAY'S BANCORP acquired the subsidiary, through December
31, 1994, when the plan was frozen, was $2.
- --------------------------------------------------------------------------------
Note Eleven - Term Borrowings
Term borrowings included the following at December 31:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Subsidiary banks:
Federal Home Loan Bank advances:
Due in 1995, fixed rates ranging from 4.42% to 5.2078% $ - $ 1,150
Due in 1996, fixed rates ranging from 4.45% to 6.56% 6,425 3,425
Due in 1997, fixed rate of 4.80% 850 1,000
Parent Company:
Term loan, due September 27, 1997, interest at 8.58% 3,000 3,000
Revolving credit note, due September 27, 1996, interest at
Federal Funds rate plus 2% (7.60% at December 31, 1995) 3,222 5,222
- --------------------------------------------------------------------------------
tOTAL OUTSTANDING $13,497 $13,797
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The Federal Home Loan Bank advances are collateralized by a blanket security
agreement on the Company's real estate loans and mortgage loans held for sale
which are collateralized by one- to four-unit family residences. Interest is
payable quarterly on the term loan and monthly on the Federal Home Loan Bank
advances.
The term loan and revolving credit note are collateralized by all of the common
stock of TODAY'S BANK-East. The agreement requires, among other matters, the
maintenance of a minimum consolidated net worth for the Company and TODAY'S
BANK-East, maintenance of a capital to risk weighted assets ratio of at least
nine percent for the Company, maintenance of Tier 1 Capital of at least eight
percent, and maintenance of certain debt ratios. At December 31, 1995, the
Company was in compliance with all of the terms of the agreement and had $3,778
available under a $10,000 line of credit facility.
The interest is payable quarterly on the term loan and revolving credit note.
Principal is due at maturity date.
21
<PAGE>
Page 64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
Note Twelve - Common Stock
The Company sponsors an incentive stock option plan under which options to
purchase up to a maximum of 60,000 common shares may be granted to key officers.
The plan also provides for the grant of up to two stock appreciation rights to
accompany each option. Under the plan, each option's exercise price is equal to
the stock's fair market value at the grant date. Over the periods in which the
stock appreciation rights vest, the Company accrues as compensation expense the
excess of the fair market value over the related options' exercise price.
Compensation expense recognized for the stock appreciation rights totaled $2 in
1993. As of December 31, 1993 all stock appreciation rights and the related
options were exercised.
The 1989 Nonqualified Stock Option Plan authorizes the Company to grant options
to key managerial employees on up to 240,000 shares of the Company's common
stock, at not less than the fair market value of such shares on the date the
options are granted. An option cannot be exercised until one year after it has
been granted, and must be exercised within a six-year period from the date of
grant.
The following table reflects the activity in the stock appreciation rights and
options; amounts have been restated to reflect the three-for-two stock split in
February, 1993.
<TABLE>
<CAPTION>
Stock Incentive Nonqualified
Appreciation Stock Stock
Rights Options Options
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1992 900 450 124,031
Exercised (900) (450) (11,526)
- --------------------------------------------------------------------------------
Balance at December 31, 1993 - - 112,505
Granted - - 28,050
Exercised - - (52,663)
Expired - - (8,200)
- --------------------------------------------------------------------------------
Balance at December 31, 1994 - - 79,692
Granted - - 48,700
Exercised - - (37,610)
- --------------------------------------------------------------------------------
Balance at December 31, 1995 - - 90,782
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
At December 31, 1995, the nonqualified stock options were exercisable at an
average of $15.28 per share or $1,387.
There were 30,600 shares reserved for future incentive stock options and 30,690
shares reserved for future nonqualified stock option grants at December 31,
1995.
- --------------------------------------------------------------------------------
Note Thirteen - Stockholders' Rights Plan
In December, 1990, the Board of Directors of the Company adopted a Stockholders'
Rights Plan and declared a dividend of one preferred stock purchase right
("right") for each outstanding share of the Company's common stock at December
31, 1990. Each right entitles the shareholder to purchase from the Company one
one-hundredth of a share of Series A Preferred stock at an exercise price of $50
or, under certain circumstances, to acquire Series A Preferred stock of the
Company or stock of a corporation acquiring the Company with a market value of
twice the exercise price of each right for $50. The rights will not be
exercisable or transferable apart from the Company's common stock until the
earlier of (1) 10 days following public announcement that a person has acquired
beneficial ownership of 15% or more of the Company's common stock, or (2) 10
days following the commencement of, or public announcement of an intention to
make, a tender or exchange offer to acquire beneficial ownership of 15% or more
of the Company's common stock. The Board of Directors may redeem the rights at
a price of $.01 per right, payable either in cash or common stock of the Company
at the Company's option, at any time prior to the close of business on the tenth
day (or such later date as may be fixed by the Board of Directors) after public
announcement that a person has acquired beneficial ownership of 15% or more of
the Company's common stock. The rights expire on December 12, 2000, if not
previously redeemed.
The authorized preferred stock includes 120,000 shares designated as Series A
Preferred stock. Each one-hundredth of a share of Series A Preferred stock is
equivalent in voting power to one share of the Company's common stock and would
be paid dividends equal to the dividend paid on each share of common stock.
22
<PAGE>
Page 65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Fourteen - Income Taxes
The income tax provision for each of the three years ended December 31 is
summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Current $2,841 $1,638 $2,184
Deferred (254) 44 (211)
- --------------------------------------------------------------------------------
TOTALS $2,587 $1,682 $1,973
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Income taxes on security gains were $24, $26, and $14 for 1995, 1994, and 1993,
respectively.
The reasons for the difference between income taxes provided and the amount
computed by applying the statutory federal income tax rate of 34% to income
before income taxes were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Income taxes computed at statutory rates
on income before income taxes $2,538 $1,823 $2,150
State income taxes, net of federal benefit 222 151 159
Tax effect of nontaxable interest income (323) (353) (394)
Goodwill amortization 138 84 70
Other 12 (23) (12)
- ------------------------------------------------------------------------------------------
TOTALS $2,587 $1,682 $1,973
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
Deferred tax assets and liabilities included the following major components of
the temporary differences at December 31:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Investments $ $ 979
Allowance for possible loan losses 693 561
Deferred directors' fees 333 284
Pension expense 150 183
Capital loss carryforward 219 -
Other 120 94
- --------------------------------------------------------------------------------
TOTAL DEFERRED TAX ASSETS 1,515 2,101
- --------------------------------------------------------------------------------
Deferred tax liabilities
Purchase accounting write-up of buildings 565 601
Investments 381 -
Deferred loan fees 515 358
Prepaid FDIC insurance - 185
Other 99 142
- --------------------------------------------------------------------------------
TOTAL DEFERRED TAX LIABILITIES 1,560 1,286
- --------------------------------------------------------------------------------
NET DEFERRED TAX (LIABILITY) ASSET $ (45) $ 815
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
No valuation allowance has been provided at this time since management believes
that it is more likely than not that the deferred tax assets will be fully
realized.
23
<PAGE>
Page 66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Fifteen - Off-Balance-Sheet Risk
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 and standby
letters of credit. These instruments involve, to varying degrees, elements of
credit risk in excess of the amount recognized in the balance sheet. 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 and standby
letters of credit is represented by the contractual amount of these instruments.
The Company uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments and requires collateral
to support these financial instruments when it is deemed necessary.
The contract amount of financial instruments outstanding at December 31 which
represent credit risk are as follows:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit $62,428 $58,205
Standby letters of credit 3,581 4,453
</TABLE>
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. Management does not anticipate any material
loss as a result of these commitments.
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. Management does not anticipate any material
loss as a result of these commitments.
Additionally, the Company entered into an interest swap agreement to reduce the
impact of changes in interest rates on its money market deposit accounts.
TODAY'S BANK will receive the three-month Libor rate in exchange for a fixed
rate of 5.855%. The swap agreement has a notional amount of $5,000 and matures
on December 4, 2000. The agreement is secured by a pledge of all common stock
shares of TODAY'S BANK - East and the continued, unlimited guaranty of TODAY'S
BANCORP, INC. The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreement; however,
the Company does not anticipate nonperformance by the counterparty.
- --------------------------------------------------------------------------------
Note Sixteen - Acquisitions
Effective September 30, 1994, the Company acquired all of the outstanding shares
of Tri-State Bank and Trust Company and Tri-State Insurance Company of East
Dubuque, Illinois. The acquisitions have been accounted for as purchase
transactions and, accordingly, the operations of the acquired companies are
included in the consolidated results of operations of the Company beginning
October 1, 1994.
The following is a summary of the acquisitions:
<TABLE>
<CAPTION>
<S> <C>
Cash paid $6,100
Fair value of net assets acquired, including $2,613
of cash and cash equivalents 3,452
- --------------------------------------------------------------------------------
Excess of purchase price over fair value of net assets acquired $2,648
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Goodwill related to this and other acquisitions was $8,324 at December 31, 1995
and $8,639 at December 31, 1994. Accumulated amortization was $2,435 and $2,070
at December 31, 1995 and 1994, respectively. The Company reviews the value of
goodwill on an ongoing basis and assesses the recoverability of the asset
remaining.
24
<PAGE>
Page 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Seventeen - Parent Company Only Financial Statements
Condensed Balance Sheets
As of December 31
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and cash equivalents $ 1,524 $ 1,237
Investment in and advances to subsidiaries 48,336 44,388
Premises and equipment 3,186 3,195
Other assets 580 945
- ------------------------------------------------------------------------------------------
TOTAL ASSETS $53,626 $49,765
- ------------------------------------------------------------------------------------------
Liabilities and Capital
Term borrowings $6,222 $8,222
Other liabilities 890 711
Capital 46,514 40,832
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL $53,626 $49,765
- ------------------------------------------------------------------------------------------
Condensed Statements of Income
For the years ended December 31
1995 1994 1993
- ------------------------------------------------------------------------------------------
Income
Dividends from subsidiaries $4,000 $2,771 $2,370
Other operating income 3,883 3,082 2,533
- ------------------------------------------------------------------------------------------
TOTAL INCOME 7,883 5,853 4,903
- ------------------------------------------------------------------------------------------
Expenses
Interest on term borrowings 637 278 114
Salaries, wages, and employee benefits 2,258 2,019 2,151
Other operating expenses 2,125 1,686 1,459
- ------------------------------------------------------------------------------------------
TOTAL EXPENSES 5,020 3,983 3,724
- ------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX BENEFITS AND EQUITY
IN UNDISTRIBUTED NET INCOME OF SUBSIDIARIES 2,863 1,870 1,179
Income tax benefit 330 329 512
- ------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN UNDISTRIBUTED NET
INCOME OF SUBSIDIARIES 3,193 2,199 1,691
Equity in undistributed net income of subsidiaries 1,686 1,480 2,660
- ------------------------------------------------------------------------------------------
NET INCOME $4,879 $3,679 $4,351
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
Page 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TODAY'S BANCORP, INC.
(Dollars in thousands)
- --------------------------------------------------------------------------------
Note Seventeen - Parent Company Only Financial Statements (continued)
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows
For the years ended December 31
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 4,879 $ 3,679 $ 4,351
Adjustments to reconcile net income
to net cash provided by operating activities:
Equity in income of subsidiaries, net of dividends received (1,686) (1,480) (2,660)
Net (increase) decrease in advances to unconsolidated subsidiaries (718) 263 (109)
Depreciation 413 358 179
Deferred income tax expense (benefit) 10 (40) (28)
(Increase) decrease in other assets 5 (602) (98)
Increase (decrease) in other liabilities 746 (167) 444
Other (2) (17) (35)
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,647 1,994 2,044
- --------------------------------------------------------------------------------------------------------------
Investing Activities
Purchases of premises and equipment (402) (2,806) (435)
Payment for acquisitions - (6,100) -
- --------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (402) (8,906) (435)
- --------------------------------------------------------------------------------------------------------------
Financing Activities
Payments on term borrowings (2,000) (100) (2,133)
Cash dividends paid (1,466) (1,341) (1,162)
Proceeds from exercise of stock options 508 738 161
Increase in term borrowings - 8,222 -
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (2,958) 7,519 (3,134)
- --------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 287 607 (1,525)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,237 630 2,155
- --------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,524 $ 1,237 $ 630
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information
Net cash paid during the year for:
Interest $ 649 $ 118 $ 114
Income taxes 2,135 1,775 1,931
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
Page 69
INDEPENDENT AUDITORS' REPORT TODAY'S BANCORP, INC.
- --------------------------------------------------------------------------------
The Board of Directors
TODAY'S BANCORP, INC.
We have audited the accompanying consolidated balance sheets of TODAY'S BANCORP,
INC. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, cash flows and changes in capital for the
years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
accompanying consolidated statements of income, cash flows and changes in
capital of TODAY'S BANCORP, INC. and subsidiaries for the year ended December
31, 1993 were audited by other auditors whose report thereon dated January 24,
1994 expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 1995 and 1994 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of TODAY'S BANCORP, INC. and subsidiaries as of December 31, 1995 and
1994, and the consolidated results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/KPMG Peat Marwick LLP
Chicago, Illinois
January 22, 1996
27
<PAGE>
Page 70
QUARTERLY FINANCIAL DATA AND STOCK PRICE SUMMARY TODAY'S BANCORP, INC.
(Amounts in thousands, except per share data)
- --------------------------------------------------------------------------------
Selected unaudited quarterly financial data for the years ended December 31,
1995 and 1994 follow:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Interest income $ 9,196 $ 9,887 $10,016 $10,081 $ 39,180
Interest expense 4,592 4,921 5,092 5,170 19,775
- -------------------------------------------------------------------------------------------
NET INTEREST INCOME 4,604 4,966 4,924 4,911 19,405
Provision for possible loan losses (165) (165) (285) (345) (960)
Other operating income 1,291 1,250 1,350 1,090 4,981
Other operating expense (4,252) (4,271) (3,871) (3,566) (15,960)
- -------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 1,478 1,780 2,118 2,090 7,466
Income tax provision 499 619 756 713 2,587
- -------------------------------------------------------------------------------------------
NET INCOME $ 979 $ 1,161 $ 1,362 $ 1,377 $ 4,879
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
PER SHARE
NET INCOME $ .36 $ .43 $ .50 $ .50 $ 1.79
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
CASH DIVIDENDS $ .1250 $ .1375 $ .1375 $ .1375 $ .5375
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
MARKET PRICE
High $ 17.50 $ 17.25 $ 21.00 $ 24.25
Low $ 16.25 $ 17.00 $ 17.00 $ 20.00
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
1994
Interest income $ 7,059 $ 7,214 $ 7,927 $ 8,932 $ 31,132
Interest expense 3,087 3,261 3,530 4,298 14,176
- -------------------------------------------------------------------------------------------
NET INTEREST INCOME 3,972 3,953 4,397 4,634 16,956
Provision for possible loan losses (118) (120) (129) (135) (502)
Other operating income 1,249 641 1,229 1,251 4,370
Other operating expense (3,651) (4,111) (3,610) (4,091) (15,463)
- -------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 1,452 363 1,887 1,659 5,361
Income tax provision 479 68 647 488 1,682
- -------------------------------------------------------------------------------------------
NET INCOME $ 973 $ 295 $ 1,240 $ 1,171 $ 3,679
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
PER SHARE
NET INCOME $ .37 $ .11 $ .46 $ .43 $ 1.37
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
CASH DIVIDENDS $ .125 $ .125 $ .125 $ .125 $ .50
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
MARKET PRICE
High $ 20.00 $ 19.25 $ 18.50 $ 18.25
Low $ 17.00 $ 17.00 $ 16.50 $ 16.00
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
Notes to Quarterly Financial Data and Stock Price Summary
The Company's common stock is traded on the over-the-counter market and is
quoted on the NASDAQ Stock Market under the symbol TDAY. These stock
quotations represent sales prices without retail mark-ups, mark-downs, or
commissions and do not necessarily represent actual transactions. As of
February 1, 1996, the Company had approximately 894 common shareholders.
28
<PAGE>
Page 71
MANAGEMENT'S DISCUSSION AND ANALYSIS OF TODAY'S BANCORP, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
- --------------------------------------------------------------------------------
The following discussion and analysis provides an overview of significant
factors which affected TODAY'S BANCORP, INC.'s ("TODAY'S") financial statements
and results of operations. This commentary is intended to provide readers with
a more comprehensive review than is apparent from the consolidated financial
statements and notes alone.
On September 30, 1994, the Company acquired 100% of the outstanding common stock
of Tri-State Bank and Trust Co. of East Dubuque ("Tri-State Bank") and Tri-State
Insurance Company. These transactions were accounted for as purchases;
therefore, the results of their financial performance are included only from
that date forward.
Earnings Overview
The Company reported record earnings in 1995, increasing net income 32.6% from
1994. In 1995, net income was $4,879 as compared to $3,679 in 1994 and $4,351
in 1993. On a per share basis, the results were $1.79, $1.37, and $1.65 for the
years ended December 31, 1995, 1994, and 1993, respectively. The increase in
earnings was primarily due to margin improvements resulting from loan growth,
the Tri-State Bank purchase, and additional fees from service charges. In
addition, a refund of $270 was received during the second half of 1995 for the
insurance premiums paid on deposits when the Federal Deposit Insurance
Corporation ("FDIC") determined the Bank Insurance Fund ("BIF") was adequately
funded and the premium was reduced from $244 to $42 for the fourth quarter.
Also, during 1994, trading account securities were written down $643. During
1995, this investment was sold and resulted in a gain of $77.
TODAY'S return on average equity was 11.15% in 1995. In 1994, the return on
average equity was 9.23% and in 1993, it was 11.74%. Return on average assets
was .97%, .84% and 1.11% for the same periods, respectively.
Net Interest Income
Net interest income is defined as the difference between interest income and
interest expense (the "margin"). This key component of profitability increased
to $19,405 for the year ended December 31, 1995. Of this $2,449 improvement in
the margin over 1994, Tri-State Bank contributed approximately $1,300 of the
1995 margin increase. The remaining increases were attributable to a number of
factors, including profitable loan growth and a stable source of funding,
reflective of the Company's market area. Although the sources of funding in the
market area remain stable, costs to generate and retain these sources remain
competitive in our market environment, and are above peer averages.
Interest income totaled $39,180 for 1995, an increase of $8,048 from 1994. A
significant portion of the increase was attributable to increased interest and
fees on loans due to growth in the loan portfolio and the Tri-State acquisition.
The Company's deposit base provides a very steady and stable source of funds.
Interest on deposits increased from $13,189 in 1994 to $18,136 in 1995 due to
more aggressive pricing, the higher rate environment during the first quarter
of 1995, and continued growth in the deposit levels.
The following table reflects various aspects of interest income and expense
expressed as a percent of average interest earning assets and liabilities:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Yield on interest earning assets 8.5% 7.8% 7.5%
Cost of interest bearing liabilities 4.8 4.0 4.0
Interest margin/earning assets 4.2 4.3 4.1
- --------------------------------------------------------------------------------
</TABLE>
As reflected in the above table, the interest margin has remained stable
throughout the period despite significant volatility in the overall interest
rate environment. Efforts are underway to increase net income through more
favorable pricing of loans and deposits, while not compromising loan quality.
29
<PAGE>
Page 72
MANAGEMENT'S DISCUSSION AND ANALYSIS OF TODAY'S BANCORP, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
- --------------------------------------------------------------------------------
Other Operating Income
Revenues from noninterest-related activities increased $611, or 14.0%, in 1995
compared to 1994. Approximately $200 of this increase was due to the
acquisition of Tri-State. The remaining increase in other operating income was
attributable to the growth in deposit fees and trust revenues. The increase in
these categories from 1994 was $359, or 27.7% and $197, or 13.8%, respectively.
The increase in deposit fees was mainly due to a revised fee structure in 1995,
and the increase in trust revenues was due to a combination of new accounts
and increased fees on most existing accounts. Trust fees generally are based
on the market value of the trust assets, and these market values increased
significantly in 1995. The increase in trust fees and deposit fees, coupled
with a reversal in trading account activities, offset a significant decrease
in mortgage banking revenues.
In 1994, the Company recorded a trading account loss of $643 on the write-down
of an investment in a mutual fund. This investment was sold in 1995 and
resulted in a gain of $77. Mortgage fees and gains on servicing sales were
$725, compared to $1,416 earned in 1994. Mortgage banking is a cyclical
business whose revenues depend mostly upon loan production, loan selling
activities and servicing loans for others. Revenues at the mortgage banking
unit were below expectations during the year. As the market for new and
refinanced mortgages continued to lag, this affiliate did not have enough
recurring income to cover expenses. Management implemented cost reduction
efforts throughout the year to minimize the losses incurred due to the low
number of loan originations being generated. Despite cost reduction efforts,
the affiliate continued to lose money. This affiliate ended 1995 with a net
loss of $455 compared to a loss of $273 in 1994. Offsetting the 1994 loss was a
gain on sale of servicing of approximately $578. There were no gains recorded
in 1995.
Management remains optimistic that this subsidiary will return to profitability
in 1996 based on the projected interest rate environment for 1996, restructuring
of the mortgage subsidiary, and the recent addition of originators.
Other Operating Expenses
Total other operating expenses increased to $15,960, up 3.2%, from the $15,463
recorded in 1994. Management believes the current level of expenses is
comparable to those of the Company's peers, but it also recognizes there are
additional opportunities to reduce costs through more efficient use of
technology and additional consolidation. Increased efforts are underway to
lower the Company's cost structure. In 1996, additional resources will be
provided in the areas of training and job streamlining to assist in this effort.
Personnel costs continue to be the largest component of other operating
expenses. In 1995, employee-related expenses decreased $180 from the prior
year. The decrease primarily was attributable to lower mortgage banking
commissions. Mortgage personnel costs were $786 as compared to $1,367 in 1994.
The decrease in mortgage personnel costs was offset, in part, by the acquisition
of Tri-State, which added approximately $450 to salaries and benefits in 1995.
Net occupancy expense showed an increase of $343, or 30.4% between 1995 and
1994. Almost all of the increase is associated with expansion costs and an
additional banking branch in Rockford.
Furniture and equipment expense for 1995 was $1,335, an increase of $216, or
19.3%, from 1994. The majority of the variance is due to efforts to utilize
more effectively advanced personal computer technology. The Company believes
that it can improve overall operating efficiency and reduce future costs in
this manner.
FDIC insurance expense declined from the prior year by $325. This decline was a
result of the Federal Deposit Insurance Corporation's Board of Director's
decision to lower the insurance premium for banks. In August, the FDIC
determined the BIF was fully capitalized as of May, 1995. "Well
capitalized" financial institutions, as defined by the FDIC, had a reduction in
rate from $.23 per $100 of deposits to $.04 per $100 of deposits. TODAY'S has
all "well capitalized" institutions. As a consequence, TODAY received a $275
refund of previously paid premiums and a reduction in its fourth quarter premium
from $244 to $42.
Marketing and advertising expenses more than doubled from the prior year to
$712. The Company changed its name and reorganized from five banks to two banks
in the first quarter of 1995. The additional marketing costs were incurred to
educate consumers about these changes through increased print and media
advertising and to expand into new markets. Management believes the 1995
marketing campaign was successful.
Other expenses declined $351 from 1994, to $2,881. This decline was a
result of expenses incurred in 1994 related to costs associated with a planned
merger which was subsequently canceled by both parities, expenses related to
Tri-State which were reduced when Tri-State was merged, reduced regulatory exam
expenses, and other miscellaneous items.
30
<PAGE>
Page 73
MANAGEMENT'S DISCUSSION AND ANALYSIS OF TODAY'S BANCORP, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
- -------------------------------------------------------------------------------
Statement of Condition
Total assets at the end of 1995 were $518,484. This represents an increase of
$29,118 over the same date in 1994. The Company remains very focused on its
lending activities as evidenced by an increase of 9.6% in net loans outstanding
between year-ends. At December 31, 1995, total loans outstanding were $362,418
as compared to $330,782 on the same date in 1994. The continued growth in the
loan portfolio is due to the continued expansion into the Rockford and East
Dubuque markets. Components of the Company's loan portfolio are shown below:
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------------
Amount Percent Amount Percent
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial/Agricultural $221,068 61.0% $187,172 56.6%
Mortgages 79,795 22.0 72,305 21.9
Personal 61,555 17.0 71,305 21.5
- -------------------------------------------------------------------------------
Total $362,418 100.0% $330,782 100.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
Nonaccrual and impaired loans of $1,063 and $1,839 at December 31, 1995 and
1994, respectively, are included in the above categories.
At the end of 1994, the Company had $1,288 in loans held for sale as part of the
mortgage banking activities. This number remained fairly constant in 1995 at
the $1,116 level. During 1995, mortgage rates declined throughout the year. The
mortgage banking industry is optimistic that loan origination volumes will
increase in 1996.
The Company adopted SFAS No.115, "Accounting for Certain Investments in Debt and
Equity Securities" in 1993. This pronouncement requires that investment
securities be classified into three categories: those to be held to
maturity; those which are available for possible sale; and those actively being
held in a trading capacity. During 1995, the Financial Accounting Standards
Board ("FASB") elected to allow a one-time exemption to move securities between
categories. On December 22, 1995, the Company reclassified securities with a
book value of $14,792 and a market value of $14,963 from the Held to Maturity
category to the Available for Sale category. Approximately 69% of the
investment portfolio was available for sale at the end of 1995 as compared to
60% at the end of 1994. SFAS No. 115 also requires that investments being held
for possible sale be reported at their fair market value. Unrealized gains and
losses (net of income taxes) are reported as a component of capital. Due to the
decline in interest rates during 1995, there has been a wide swing in the value
of the investment securities. At the end of 1995, the net unrealized gain added
to capital was $634, while at the end of 1994, capital had been decreased by
$1,127. The reclassification of securities accounted for $105 of the increase
in the net unrealized gain included as capital.
Funding asset growth remains very challenging. Efforts have been successful, as
total deposits increased $28,074, or approximately 6.7%. Management attributes
much of the increase to personal sales and service efforts at all banking
locations. Key to continuing this trend will be the ongoing ability to match
profitable loan and deposit growth. Added banking convenience is also required
in order to attract new customer relationships. The Company opened its third
branch in the Rockford market during the third quarter. Management will
continue its efforts to identify additional branch sites and utilize new
multi-channel delivery systems.
In 1995, other borrowings declined $300, to $13,497, from 1994. The Company
repaid $2,000 on the amount borrowed in 1994 to fund the Tri-State acquisition.
Net borrowings from the Federal Home Loan Bank increased $1,700 during the year
primarily to fund loan growth.
TODAY continues to emphasize asset quality as evidenced by a very low ratio of
non-performing loans to total loans. The ratio was .4% for 1995, compared to
.7% in 1994. Non-performing loans as a percent of capital were 3.2% and 6.0%
for the same periods, respectively. In comparison to peer group data, the
numbers continue to reflect better than average quality, especially when loan
growth over the past few years is considered.
31
<PAGE>
Page 74
MANAGEMENT'S DISCUSSION AND ANALYSIS OF TODAY'S BANCORP, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
- -----------------------------------------------------------------------
The Company evaluates the allowance for possible loan losses on an ongoing
basis. The results of these reviews are reported to the Board of Directors.
The level of the allowance is a matter of judgment and is dependent upon many
factors, including a prospective view of losses inherent in the loan portfolio.
TODAY considers the level of the allowance adequate based on its latest
reviews. However, the continuing increases in loans outstanding are being
reviewed to ensure that the allowance remains adequate. Based upon current
projections, the Company is unaware of any information or uncertainties
concerning material credits that would significantly impact future operations,
liquidity, or capital.
In 1995, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 114, (as amended by SFAS No. 118) "Accounting by Creditors for
Impairment of a Loan." These pronouncements require that the allowance for
possible loan losses related to loans which are identified for evaluation be
based on discounted cash flows using the loan's initial effective interest rate
or the fair value of the collateral for certain collateral dependent loans.
Prior to 1995, the methods used were based on the undiscounted cash flows or
the fair value of the collateral. The Company determined it was not required
to make an additional provision to the allowance for loan losses in 1995 based
on this pronouncement.
Interest Rate Sensitivity and Liquidity
The Asset/Liability Committees of the subsidiary banks continually monitor
TODAY'S liquidity and rate sensitivity positions. In managing rate
sensitivity, TODAY seeks to maximize the growth of net interest income on a
consistent basis by minimizing the fluctuations associated with changing market
interest rates, along with meeting cash flow requirements that may arise from
increases in demand for loans or other assets or from decreases in deposits or
other funding sources.
The Company's liquidity position has been influenced by its funding base and
asset mix as identified in the Consolidated Statement of Cash Flows. Funding
for the year was primarily provided by proceeds from sales, calls and
maturities of investment securities of $42,883, an increase in deposits of
$28,074, and additional Federal Home Loan Bank debt of $3,000. The funds were
primarily used to purchase investment securities totaling $45,311, provide funds
for lending activities of $32,451, purchase premises and equipment of $1,688,
and retire corporate debt and Federal Home Loan Bank debt by $3,300.
The investment portfolio, with an average maturity of 2.5 years, is structured
to provide liquidity. At December 31, 1995, market values exceeded amortized
costs by $1,212 and consisted of gross unrealized gains of $1,480 and gross
unrealized losses of $268.
The following rate sensitivity table reflects the earlier of the maturity or
repricing dates for various assets and liabilities at December 31, 1995:
<TABLE>
<CAPTION>
0-3 mo 4-12 mo 1-5 yrs >5 yrs Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Uses of Funds
Investment securities $ 8,633 $ 27,242 $ 63,531 $12,564 $110,970
Time deposits in other banks 163 271 - - 434
Federal funds sold 5,330 - - - 5,330
Mortgage loans held for sale 1,116 - - - 1,116
Loans, excluding non-performing loans 155,896 50,499 108,062 46,490 360,947
- ----------------------------------------------------------------------------------------------------
Total Uses $171,138 $ 78,012 $170,593 $59,054 $478,797
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Sources of Funds
Interest bearing checking $ 48,467 $ - $ - $ - $ 48,467
Money market savings 53,993 - - - 53,993
Regular savings 37,884 - - - 37,884
Time deposits 98,344 58,127 59,592 9,135 225,198
Other interest bearing deposits 11,119 6,683 10,679 1,977 30,458
Short-term borrowings 8,298 - - - 8,298
Other borrowings 3,600 6,047 3,850 - 13,497
- ----------------------------------------------------------------------------------------------------
Total interest bearing 261,705 70,857 74,121 11,112 417,795
Net other sources 61,002 61,002
- ----------------------------------------------------------------------------------------------------
Total Sources $261,705 $ 70,857 $ 74,121 $72,114 $478,797
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Cumulative Maturity/Rate Sensitivity Gap $(90,567) $(83,412) $ 13,060 $ - $ -
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
Page 75
MANAGEMENT'S DISCUSSION AND ANALYSIS OF TODAY'S BANCORP, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
- -------------------------------------------------------------------------
On a cumulative basis, TODAY'S one-year gap resulted in $83,412 more in
interest sensitive liabilities than in assets. This generally indicates that
net interest income would decline in a rising rate environment. However, in
tracking interest rate movements of deposit rates compared to market-based
rates during past interest rate cycles, TODAY notes that certain deposit rates
tend to lag. When the cumulative rate sensitivity gap is adjusted for this
factor, TODAY feels it is in a near matched position, allowing for limited
interest rate exposure.
The cumulative rate sensitivity gap provides a general indication of interest
sensitivity at a specific point in time. TODAY utilizes simulation to analyze
the impact of changes in interest rates and volumes on net interest income.
To reduce the impact of changes in interest rates on its money market deposit
accounts, the Company entered into an interest rate swap agreement with a
notional amount of $5,000 for five years. The Company will receive the
three-month LIBOR rate in exchange for a fixed rate of 5.855%.
Capital
The Company's capital position provides a margin of safety for depositors and
stockholders and enables the Company to take advantage of profitable investment
opportunities and provide for future growth. At December 31, 1995, TODAY has
Tier 1 capital of 10.3%, Tier 2 capital of 11.2%, and a leverage ratio of
7.9%. The following table illustrates in tabular form the various ratios:
<TABLE>
<CAPTION>
Well Capitalized
Amount Ratio Guidelines
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Risk-Based Capital Ratios
Tier 1 capital $ 39,704 10.3% 6.0%
Tier 2 capital 42,993 11.2 10.0
Risk-weighted assets 385,575 n/a n/a
Supplemental Ratios
Leverage ratio 39,704 7.9 5.0
Average total assets 504,562 n/a n/a
- -------------------------------------------------------------------------------------------
</TABLE>
Bank regulators have established risk-based capital guidelines which are
intended to reflect the varying degrees of risk associated with different
balance sheet and off-balance sheet items. Tier 1 capital includes equity
capital less goodwill to risk-weighted assets, and Tier 2 capital includes Tier
1 plus the allowed portion of the allowance for possible loan losses to
risk-weighted assets. The leverage ratio is defined as Tier 1 capital to total
assets.
Under the risk-based capital guidelines presently in effect for banks and bank
holding companies, minimum capital levels are based upon the perceived risk in
the various asset categories. Certain off-balance-sheet instruments such as
loan commitments and letters of credit require capital allocations. Bank
holding companies are required to maintain minimum risk-based capital ratios.
TODAY'S ratios are above the regulatory minimum guidelines, and each of its
subsidiary banks met the regulatory criteria to be categorized as "well
capitalized" institutions at December 31, 1995. For each of the subsidiary
banks, the "well capitalized" classification permits financial institutions to
minimize the cost of FDIC insurance assessments by being charged a lesser rate
than institutions that do not meet this definition. Designation as a "well
capitalized" institution does not constitute a recommendation by federal bank
regulators. During 1995, TODAY'S premium per $100 of deposits dropped from
$.23 to $.04. For 1996, no premium is projected at this time.
The deposits of the Company are insured up to $100,000 per insured member (as
defined by law and regulation) by the FDIC, with such insurance backed by the
full faith and credit of the United States government. The Company's deposits
are predominantly insured by the BIF which is administered by the FDIC.
As insurer, the FDIC assesses deposit insurance premiums and is authorized to
conduct examinations of, and require reporting by, FDIC-insured institutions.
Deposit insurance premiums are based upon risk classifications that are
determined by the insured institution's capital ratios and the result of the
institution's supervisory examinations. Institutions assigned higher risk
classifications pay deposit insurance premiums at a higher rate than the
institutions assigned lower risk classifications.
33
<PAGE>
Page 76
MANAGEMENT'S DISCUSSION AND ANALYSIS OF TODAY'S BANCORP, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
- ------------------------------------------------------------------------
Federal banking regulators and lawmakers are believed to favor the merging of
the BIF and the Savings Association Insurance Fund ("SAIF"). Congressional
hearings on the resolution of the issues have been held, and future hearings
are scheduled. The outcome of such hearings, the impact on deposit insurance
premiums assessed, and the likelihood of the merger of the BIF and SAIF cannot
be determined at this time.
Other Developments
Management is not aware of any trends, events, uncertainties, or any
recommendations by regulatory authorities which, if they were to be
implemented, would impact the future operations, liquidity, or capital of the
Company.
During 1995, the FASB issued Statement No. 123, "Accounting for Stock-Based
Compensation," which provides new accounting guidelines governing the treatment
of employee stock options. The Statement gives entities the option of either
adopting a new fair value method of accounting for employee stock options and
expensing any related compensation costs in the statement of income or
continuing to apply Accounting Principles Board Opinion No. 25 and apply the
fair value method through proforma footnote disclosure.
The Statement is effective for the Company in 1996. The Company is currently
assessing the methods available and has not concluded which method will be
implemented.
Also during 1995, FASB issued Statement No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." This
Statement provides guidance for recognition and measurement of impairment of
long-lived assets, certain identifiable intangibles, and goodwill related both
to assets to be held and used and assets to be disposed of. The Statement is
effective for financial statements issued for fiscal years beginning after
December 15, 1995 and it is not anticipated to have a significant impact on the
financial results of the Company.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Five-Year Financial Summary
(Dollars in thousands, except per share data) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income $ 39,180 $ 31,132 $ 26,829 $ 26,937 $ 30,103
Net interest income $ 19,405 16,956 14,311 13,086 13,346
Provision for possible loan losses 960 502 360 462 510
Securities gains (losses), net 139 (567) 42 151 211
Income before income taxes 7,466 5,361 6,324 5,267 4,866
Net income 4,879 3,679 4,351 3,662 3,373
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends declared $ 1,466 $ 1,341 $ 1,162 $ 1,033 $ 960
Shareholders' equity 46,514 40,832 39,074 35,450 32,706
Rate earned on
beginning shareholders' equity 11.95% 9.42% 12.27% 11.20% 11.16%
- ---------------------------------------------------------------------------------------------------------------------
Term borrowings and advances from
Federal Home Loan Bank $ 13,497 $ 13,797 $ 20,000 $ 4,033 $ 2,333
Total deposits 445,821 417,747 344,541 328,906 314,840
Total assets 518,484 489,366 417,335 382,336 357,190
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE STATISTICS:
Net income $ 1.79 $ 1.37 $ 1.65 $ 1.39 $ 1.29
Cash dividends declared .5375 .5000 .4400 .3917 .3667
Book value 16.96 15.09 14.73 13.43 12.48
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to Five-Year Summary
Results of operations and assets of Tri-State Bank & Trust Company and
Tri-State Insurance Company are included since October, 1994.
Results of operations and assets of Whaples & Farmers State Bank of Neponset
are included through divestiture in March, 1992.
Prior year per share statistics were adjusted to give retroactive effect to the
three-for-two stock split in February, 1993.
34
<PAGE>
Page 83
Independent Auditor's Report
To the Board of Directors and Shareholders
TODAY'S BANCORP, INC.
Freeport, Illinois
We have audited the accompanying consolidated statements of income, cash flows
and changes in capital, of TODAY'S BANCORP, INC. and subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of TODAY'S BANCORP, INC and
subsidiaries' operations and their cash flows for the year ended December 31,
1993, in conformity with generally accepted accounting principles.
As discussed in Note One to the financial statements, the Company changed its
method of accounting for certain investment securities at December 31, 1993.
/s/ Coopers & Lybrand L.L.P.
Rockford, Illinois
January 24, 1994
<PAGE>
Page 84
Exhibit 21
TODAY'S BANCORP, INC.
and Consolidated Subsidiaries
Subsidiaries of the Registrant
as of December 31, 1995
Name of Corporation State of Incorporation
- ---------------------------------------------------------------
TODAY'S BANK - East Illinois
TODAY'S BANK - West Illinois
TODAY'S Mortgage Source Illinois
TODAY'S Financial Services Illinois
TODAY'S Trust Company Illinois
TODAY'S Insurance Source Agency, Ltd. Illinois
<PAGE>
Page 85
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
TODAY'S BANCORP, INC. (formerly known as Northwest Illinois Bancorp, Inc.) on
Form S-8 (File No. 33-21550) of our report dated January 24, 1994, on our audit
of the consolidated statements of income, cash flows and changes in capital of
TODAY'S BANCORP, INC. (formerly known as Northwest Illinois Bancorp, Inc.) for
the year ended December 31, 1993, which report is included in this Annual Report
on Form 10-K.
/s/ Coopers & Lybrand L.L.P
Rockford, Illinois
March 19, 1996
<PAGE>
Page 86
Exhibit 23.2
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
TODAY'S BANCORP, INC.:
We consent to incorporation by reference in the registration statement of Form
S-8 (File No. 33-21550) of TODAY'S BANCORP, INC. of our report dated January 22,
1996, relating to the consolidated balance sheet of TODAY'S BANCORP, INC. and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of income, cash flows, and changes in capital, for the years then
ended, which report appears in the December 31, 1995 Annual Report on Form 10-K
of TODAY'S BANCORP, INC.
KPMG Peat Marwick LLP
Chicago, Illinois
March 19, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 16,603
<INT-BEARING-DEPOSITS> 434
<FED-FUNDS-SOLD> 5,330
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 76,933
<INVESTMENTS-CARRYING> 34,037
<INVESTMENTS-MARKET> 34,257
<LOANS> 363,534
<ALLOWANCE> 3,289
<TOTAL-ASSETS> 518,484
<DEPOSITS> 445,821
<SHORT-TERM> 8,298
<LIABILITIES-OTHER> 4,354
<LONG-TERM> 13,497
0
0
<COMMON> 13,714
<OTHER-SE> 32,800
<TOTAL-LIABILITIES-AND-EQUITY> 518,484
<INTEREST-LOAN> 31,750
<INTEREST-INVEST> 6,653
<INTEREST-OTHER> 777
<INTEREST-TOTAL> 39,180
<INTEREST-DEPOSIT> 18,136
<INTEREST-EXPENSE> 19,775
<INTEREST-INCOME-NET> 19,405
<LOAN-LOSSES> 960
<SECURITIES-GAINS> 139
<EXPENSE-OTHER> 15,960
<INCOME-PRETAX> 7,466
<INCOME-PRE-EXTRAORDINARY> 4,879
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,879
<EPS-PRIMARY> 1.79
<EPS-DILUTED> 1.77
<YIELD-ACTUAL> 4.17
<LOANS-NON> 1,063
<LOANS-PAST> 408
<LOANS-TROUBLED> 363
<LOANS-PROBLEM> 2,617
<ALLOWANCE-OPEN> 3,144
<CHARGE-OFFS> 1,116
<RECOVERIES> 301
<ALLOWANCE-CLOSE> 3,289
<ALLOWANCE-DOMESTIC> 998
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,291
</TABLE>
<PAGE>
Page 87
FREEPORT, ILLINOIS
MARCH 22, 1996
TODAY'S BANCORP, INC.
50 WEST DOUGLAS STREET
FREEPORT, ILLINOIS 61032
PROXY STATEMENT AND NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 1996
To the Stockholders of
TODAY'S BANCORP, INC.:
The Annual Meeting of Stockholders of TODAY'S BANCORP, INC. (the "Corporation"),
will be held in the Business Conference Center, Building H, of the Highland
Community College, 2998 West Pearl City Road, Freeport, Illinois, on Thursday,
April 18, 1996, at 10:00 A.M., for the purpose of considering and voting upon
the following matters:
1. To elect three Class III Directors for a term of three years;
2. To ratify the appointment of KPMG Peat Marwick LLP as independent public
accountants for the Corporation for the fiscal year ending December 31, 1996;
and
3. To transact such other business as may properly be brought before the Annual
Meeting or any adjournment thereof.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED POSTAGE
PAID ENVELOPE AS PROMPTLY AS POSSIBLE WHETHER YOU PLAN TO ATTEND THE MEETING IN
PERSON. IT IS HOPED THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND IF YOU DO
YOU MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. THE PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO ITS EXERCISE.
<PAGE>
Page 88
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of the Corporation of proxies for use at the Annual
Meeting of Stockholders of the Corporation to be held in the Business Conference
Center, Building H, of the Highland Community College, 2998 West Pearl City
Road, Freeport, Illinois, on April 18, 1996, at 10:00 A.M. The record date for
determining stock ownership is March 15, 1996. Only Stockholders of record as
of March 15, 1996, will be entitled to notice of, and to vote at, the Annual
Meeting. As of March 15, 1996, the Corporation had issued and outstanding
2,748,698 shares of Common Stock with a par value of $5.00 per share. In the
election of the Board of Directors, and for all other matters to be voted upon
at the Annual Meeting, each issued and outstanding share is entitled to one
vote.
The 1995 Annual Report of the Corporation, including financial statements
consolidated with those of its subsidiaries, is being transmitted to each
Stockholder on or about March 22, 1996, along with this Proxy Statement (and the
accompanying proxy).
Your proxy is being solicited by the Board of Directors of the Corporation.
The cost of soliciting proxies will be borne by the Corporation. In addition to
use of the mails, proxies may be solicited personally or by telephone or
telegraph by officers, Directors and certain employees of the Corporation who
will not be specially compensated for such soliciting. The Corporation will, at
its expense, upon the receipt of a request from brokers and other custodians,
nominees and fiduciaries, forward proxy soliciting material to the beneficial
owners of shares held of record by such persons.
Stockholders are urged to specify the way they wish to vote their shares by
marking the appropriate boxes on the enclosed proxy. Shares represented by
proxies which are properly executed and returned will be voted at the Annual
Meeting as specified on the proxy. If no choice is specified, the shares will
be voted FOR the nominees listed under Proposal 1 and FOR Proposal 2 in this
Proxy Statement. It is not anticipated that any action will be asked of the
Stockholders other than that set forth herein; proxies in the enclosed form,
however, will confer discretionary voting authority on the individuals specified
in the enclosed proxy regarding any other matters which may properly come before
the Annual Meeting.
Any Stockholder giving a proxy will have the right to revoke it at any time
prior to the voting thereof by filing a revoking instrument or a duly executed
proxy bearing a later date with the Secretary of the Corporation or by attending
the Annual Meeting and voting in person.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Judge of Election appointed by the Board of Directors for the Annual Meeting
and will determine whether a quorum is present. The Judge of Election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the Stockholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
1
<PAGE>
Page 89
PROPOSAL NO. 1
DIRECTORS AND EXECUTIVE OFFICERS
The Corporation has a staggered Board of Directors divided into three
classes. One class is elected annually to serve for three years. At the Annual
Meeting of Stockholders on April 18, 1996, three Class III Directors will be
elected for terms of three years or until their successors are elected and
qualified. The three nominees are indicated in the table below. The proxy
provides instructions for voting for all Director nominees or for withholding
authority to vote for one or more Director nominees. Unless instructed to the
contrary, the persons acting under the proxy solicited hereby will vote for the
nominees named as Class III Directors. The Corporation has no knowledge that
any of the nominees will refuse or be unable to serve, but if any of the
nominees becomes unavailable for election, the holders of the proxies reserve
the right to substitute another person of their choice as a nominee when voting
at the Annual Meeting. To be elected a Director, each Director nominee must
receive the favorable vote of a plurality of the shares represented and entitled
to vote at the Annual Meeting.
NOMINEES
The following persons, if elected at the Annual Meeting of Stockholders, will
serve as Class III Directors for three years.
<TABLE>
<CAPTION>
NAME, AGE AND YEAR BECAME PRINCIPAL OCCUPATION
DIRECTOR OF THE CORPORATION AND OTHER INFORMATION
- ---------------------------- ---------------------
CLASS III (TERM EXPIRES 1999)
- ----------------------------
<S> <C>
Michael A. Cavataio, Sr. (1) Real Estate Developer; Director of
Age 52 - 1996 TODAY'S BANK - East; Director of
Pioneer Financial Services, Inc. and
AON Asset Management Fund, Inc.
J. Michael Hillard Chief Operating Officer, Tri-State
Age 44 - 1994 Tours/River Trails (Tours and
Transportation Co.); Director of the
Corporation and TODAY'S BANK-West.
R. William Owen Executive Vice President, Chief Financial
Age 56 - 1986 Officer and Director of the Corporation;
Executive Vice President of TODAY'S BANK-
East; Director of TODAY'S BANK-West.
- ----------------------------------------
(1) James C. Skyrms, a Class III Director of the Corporation since 1983,
will retire as a Director of the Corporation on April 18, 1996. The Board of
Directors has slated Michael A. Cavataio, Sr. as a Class III Director nominee to
replace Mr. Skyrms.
</TABLE>
2
<PAGE>
Page 90
<TABLE>
<CAPTION>
CONTINUING DIRECTORS
- --------------------
CLASS I (TERM EXPIRES 1997)
- ---------------------------
<S> <C>
Allen E. Fehr Retired Consulting Engineer, since 1992;
Age 61 - 1993 prior thereto, Partner, Fehr-Graham &
Associates(Engineering/Consulting firm);
Director of the Corporation.
Thomas A. Ferguson, Jr. President and Chief Operating Officer,
Age 48 - 1988 Newell Companies (Manufacturer); Director
of the Corporation.
Frank E. Furst Chairman and Chief Executive Officer,
Age 56 - 1980 Furst-McNess Company (Manufacturer);
Director of the Corporation.
Ruth Mercedes Smith President, Highland Community College;
Age 62 - 1993 Director of the Corporation.
CLASS II (TERM EXPIRES 1998)
- ----------------------------
Craig D. Hartman President and Chief Executive Officer,
Age 53 - 1986 Plansmith Corporation (Bank Consulting);
Director of the Corporation.
Dan Heine President, Chief Executive Officer and
Age 49 - 1983 Director of the Corporation; Chairman,
Director and Chief Executive Officer of
TODAY'S BANK-East; Chairman and Director
of TODAY'S BANK-West.
Edward D. Higgins Retired Vice President and Secretary,
Age 70 - 1980 Borchers, Inc. (Retail Clothing); Director
of the Corporation.
Raymond E. Johnson Partner, McGreevy, Johnson & Williams (Law
Age 57 - 1988 Firm); Director of the Corporation and
TODAY'S BANK-East.
</TABLE>
3
<PAGE>
Page 91
OTHER EXECUTIVE OFFICERS
Set forth below are the executive officers of the Corporation not listed above.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE CORPORATION
- --------------------------------------------------------------------------------
<S> <C> <C>
Douglas M. Cross 43 President and Chief Operating Officer and
Director of TODAY'S BANK-East.
Daniel M. Lashinski 46 Vice President, Secretary and Treasurer of
the Corporation.
Douglas L. Mitchell 52 Executive Vice President of TODAY'S BANK-
East.
Jeffrey P. Mozena 41 President and Chief Executive Officer and
Director of TODAY'S BANK-West.
C. Brad Zulke 35 Executive Vice President of TODAY'S BANK-
East;President and Director of TODAY'S Trust
Company Company
</TABLE>
All of the Corporation's Directors hold office for the terms indicated, or
until their respective successors are duly elected and qualified, and all of the
executive officers hold office for a term of one year. There are no
arrangements or understandings between any of the Directors, executive officers
or any other person pursuant to which any of the Directors or executive officers
have been selected for their respective positions, except with respect to the
employment agreements with Messrs. Heine and Owen (see "Employment Agreements")
and severance agreements with Messrs. Cross, Mitchell, Mozena and Zulke (see
"Severance Agreements").
BOARD COMMITTEES AND MEETINGS
The Corporation has a standing audit and compensation committee but does
not have a nominating committee. The Board of Directors functions as a
nominating committee.
The current members of the audit committee are Messrs. Furst, Hillard,
Johnson and Skyrms. Mr. Owen is a nonvoting member of the audit committee. The
functions of the audit committee consist of recommending the appointment of
auditors to the Board of Directors and reviewing, with the Corporation's
internal auditor as well as the independent auditors, the scope and results of
the Corporation's procedures for internal auditing, the scope and results of the
auditing engagement and the adequacy of the Corporation's system of internal
controls (see "APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS"). This committee
met two times during 1995.
The members of the compensation committee are Ms. Smith and Messrs.
Ferguson, Furst, and Higgins. Messrs. Heine and Owen are non-voting members of
the compensation committee. The primary function of the compensation committee
is the administration of salaries and incentive compensation for senior
management of the Corporation and its subsidiaries. This committee met five
times during 1995.
4
<PAGE>
Page 92
The Board of Directors functions as a nominating committee and will
consider nominees recommended by the Stockholders. Recommendations should be
forwarded to the Secretary of the Corporation.
The Board of Directors of the Corporation met twelve times during 1995.
All Directors attended at least seventy-five percent of the meetings of the
Board and the committees on which they served during 1995, with the exception of
Edward D. Higgins, who attended 71% of such meetings.
DIRECTOR'S FEES
In 1995, Directors received a $4,000 per year retainer and $500 for each
meeting of the Board of Directors whether or not they attend. Non-officer
Directors receive $100 for each committee meeting they attend. The Board of
Directors of the Corporation has adopted and the Corporation administers a
Directors' Deferred Compensation Plan (the "Deferred Plan") in which
participation is voluntary. The Deferred Plan is not a "qualified plan" within
the meaning of Section 401(a) of the Internal Revenue Code (the "Code").
Directors' fees paid to participants are placed in a cash reserve account and
earn interest equal to that paid on fixed rate individual retirement account
deposits held by TODAY'S BANK-East. The Deferred Plan allows participants to
request that all or a portion of the amounts deferred be deemed invested in the
Corporation's Common Stock. Any shares acquired in this regard are held of
record by TODAY'S Trust Company. Any cash dividends paid on such shares are
credited to the participants cash reserve account. Currently, eight Directors,
Ms. Smith and Messrs. Fehr, Ferguson, Furst, Higgins, Hillard, Johnson and
Skyrms, participate in the Deferred Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Directors, executive officers and beneficial owners of 10% or more of
the equity securities of the Corporation are required to file certain reports
with Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"). A Form 3 must
be filed with the SEC within 10 days after the event by which the person becomes
a "reporting person" (i.e., director, executive officer, 10% owner); a Form 4
must be filed with the SEC on or before the tenth day after the end of the month
in which a change in beneficial ownership has occurred for a reporting person;
and a Form 5 must be filed with the SEC on or before the forty-fifth day after
the end of the Corporation's fiscal year for transactions or holdings that
should have been reported but were not reported. For the Corporation's fiscal
year ended December 31, 1995, all Forms 3, 4 and 5 were timely filed with the
SEC and the Corporation knows of no failure to file a required form by any
reporting person.
EXECUTIVE COMPENSATION
The following table sets forth compensation information about the
Corporation's Chief Executive Officer and the four other highest paid officers
of the Corporation or one of its subsidiaries who received more than $100,000 in
salary and bonus during 1995.
5
<PAGE>
Page 93
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Other Stock
Name and Annual Options All Other
Principal Position Year Salary Bonus Compensation (1) Granted Compensation (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dan Heine, 1995 $196,900 $-0- $17,500 17,250 $13,441
President and
Chief Executive 1994 184,875 -0- 17,600 1,750 189,850(3)
Officer
1993 173,575 78,109 18,500 -0- 7,292
R. William Owen, 1995 $128,648 $-0- $13,600 11,950 $25,158(3)
Executive Vice
President and 1994 123,700 -0- 14,600 1,150 113,121(3)
Chief Financial
Officer 1993 116,140 43,553 15,500 -0- 6,155
Douglas M. Cross, 1995 $105,610 $-0- $3,900 2,800 $49,665(3)
President and Chief
Operating Officer, 1994 100,610 18,487 6,100 700 21,081(3)
TODAY'S BANK-East
1993 92,610 34,729 3,500 -0- 12,189
C. Brad Zulke 1995 $98,375 $-0- $-0- 4,450 $16,807(3)
Executive Vice President,
TODAY'S BANK-East 1994 93,000 17,089 -0- 500 35,070(3)
1993 87,000 32,625 -0- -0- 7,496
Douglas L. Mitchell, 1995 $91,900 $-0- $4,400 -0- $23,162(3)
Executive Vice President,
TODAY'S BANK-East 1994 89,225 13,350 10,600 7,160 35,096(3)
1993 87,475 6,561 13,300 -0- 20,177(3)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents director's fees paid by the Corporation and its subsidiaries.
(2) All other compensation represents contributions by the Corporation to
the Corporation's Employee Stock Ownership Plan and amounts received upon the
exercise of stock options. The above amount does not include the amount of the
contribution made by the Corporation to its Pension Plan for any of the named
executives. The regular actuaries for the Pension Plan have indicated that the
amount of such contribution or accrual in respect of a specified person is not
and cannot readily be separated or individually calculated under the actuarial
cost method used in determining aggregate contribution requirements for the
Pension Plan. For the three years ending December 31, 1995, the Corporation
contributed a total of $728,117 to the Pension Plan.
(3) The amounts include funds received upon the exercise of nonqualified
stock options for the years indicated as follows: Heine-1994, $179,789;
Owen-1995, $18,574 and 1994, $106,763; Mitchell-1995, $15,454, 1994,
$26,685 and 1993, $13,310; and Cross-1995, $43,493 and 1994, $15,540;
Zulke-1995, $8,940 and 1994, $13,380.
6
<PAGE>
Page 94
<TABLE>
<CAPTION>
Nonqualified Options Exercised During 1995 and
Option Value Table as of December 31, 1995
Value of
Unexercised
Number of In-the-Money
Unexercised Non-qualified
Shares Nonqual. Options Options at
Acquired Value at Dec. 31, 1995 Dec. 31, 1995
Name on Exercise Realized(2) Exercisable(1) Exercisable(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dan Heine -0- $-0- 24,345 $103,093
R. William Owen 2,833 18,574 13,100 71,144
Douglas M. Cross 6,276 43,493 5,650 18,564
C. Brad Zulke 1,000 8,940 9,450 24,609
Douglas L. Mitchell 2,606 15,454 2,900 12,760
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) The initial option price of the nonqualified options was 100% of the fair
market value of the Common Stock as of the grant date. All of the nonqualified
options are fully vested and can be exercised by the named executives. For "In-
the-Money Options," the "Value of Unexercised In-the-Money Options at December
31, 1995" represents the difference between the closing price ($22.19) of the
Corporation's Common Stock on December 31, 1995, and the exercise price of the
underlying options, multiplied by the number of applicable options.
(2) The value realized represents the difference between the exercise price of
the nonqualified options and the market value of the Common Stock on the
exercise date.
7
<PAGE>
Page 95
EMPLOYMENT AGREEMENTS
On February 28, 1989, the Corporation entered into employment agreements
with Messrs. Heine and Owen. The agreements expired on December 31, 1995, but
automatically renewed for a one-year term. The agreements will continue to
automatically renew for successive one-year terms unless either the Corporation
or the executive gives written notice to the other within 45 days of the
expiration of the agreement. Messrs. Heine and Owen are to receive salaries
equal to what they are currently being paid; the amount of their salaries may be
increased (but not decreased) by the Board of Directors of the Corporation from
time to time. In addition, they are entitled to participate in all programs
offered by the Corporation to its executive officers.
Under the terms of each agreement, if the executive is terminated by the
Corporation, he shall be entitled to receive the salary and benefits due him
under the agreement for the remainder of the term of the agreement. The
executive shall be deemed to have been terminated by the Corporation if he: (a)
is terminated other than for "cause"; (b) resigns after his removal from the
position he currently holds with the Corporation; (c) resigns after a material
change in his duties; (d) is involuntary transferred outside of Freeport,
Illinois; (e) resigns following the transfer of all or substantially all of the
Corporation's assets, the liquidation, dissolution, consolidation or merger of
the Corporation where the Corporation is not the survivor, provided any such
action is not deemed a "change in control"; or (f) if he dies or becomes
disabled. If the executive is terminated for "cause", he shall not be entitled
to receive any compensation under the agreement. "Cause" is defined as personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation or a material breach of the agreement.
If the executive is terminated without "cause" within two years of a
"change in control" of the Corporation, he shall be entitled to receive a
severance payment equal to 250% of the total of his base salary, incentive
compensation and bonus paid to him by the Corporation in the calendar year prior
to the year in which the change in control occurred. These payments, however,
shall not exceed an amount which, under the Internal Revenue Code, is deemed an
"excess parachute payment."
A "change in control" shall be deemed to occur upon the acquisition of 25%
or more of the voting securities of the Corporation by any person or persons
acting as a group, or the acquisition of more than 10% but less than 25% of the
voting securities of the Corporation by any person or persons acting as a group
if the Board of Directors of the Corporation makes a determination that such
action constitutes or will constitute a change in control of the Corporation. A
change in control shall also mean a merger or consolidation where the
Corporation is not the survivor, a merger or consolidation where the Corporation
is the survivor but more than 50% of the stock following the consummation of the
transaction is held by a person or persons who were not stockholders of the
Corporation during the two years preceding the announcement of such merger or
consolidation, a sale of all or substantially all of the Corporation's assets, a
replacement of a majority of the members of the Board of Directors of the
Corporation over a two year period unless the newly elected directors were
nominated by at least two-thirds of the Board members sitting at the beginning
of the
8
<PAGE>
Page 96
period, or the filing of a change of control notice with the Board of Governors
of the Federal Reserve System. The executive shall be deemed to have been
terminated by the Corporation if he is terminated (as defined above) other than
for "cause" within two years of a change in control. In addition, he shall be
deemed to have been terminated if the Corporation elects not to renew the
agreement for the first two full calendar years following the year in which the
change in control occurs.
SEVERANCE AGREEMENTS
On November 21, 1995, the Corporation entered into severance agreements
with Messrs. Cross, Mitchell, Mozena and Zulke ("Executive"). In the event
there is a change of control and the Executive is terminated other than for
"cause" or if the Executive's duties and responsibilities are substantially
reduced within 12 months of the Change of Control, the Executive shall be
entitled to severance pay equal to 100% of the base salary, incentive
compensation and bonus payments paid to the Executive by the Company in the
calendar year prior to the year the Change of Control occurs.
A substantial change in the Executive duties is defined as: (a) a change in
the Executive's supervisor from an officer of the Company to a non-officer; (b)
a 50% or greater reduction in the number of subordinates reporting to the
Executive; (c) a demotion in job title or reduction in compensation; or (d) if
the Corporation demands that the Executive transfer to a different work location
located more than 50 miles from the Executive's current work location. "Cause"
is defined as personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform duties,
willful violation of any law, rule or regulation or a final cease and desist
order.
A "change in control" shall be deemed to occur upon the acquisition of 25%
or more of the voting securities of the Corporation by any person or persons
acting as a group, or the acquisition of more than 10% but less than 25% of the
voting securities of the Corporation by any person or persons acting as a group
if the Board of Directors of the Corporation makes a determination that such
action constitutes or will constitute a change in control of the Corporation. A
change in control shall also mean a merger or consolidation where the
Corporation is not the survivor, a merger or consolidation where the Corporation
is the survivor but more than 50% of the stock following the consummation of the
transaction is held by a person or persons who were not stockholders of the
Corporation during the two years preceding the announcement of such merger or
consolidation, a sale of all or substantially all of the Corporation's assets, a
replacement of a majority of the members of the Board of Directors of the
Corporation over a two year period unless the newly elected directors were
nominated by at least two-thirds of the Board members sitting at the beginning
of the period, or the filing of a change of control notice with the Board of
Governors of the Federal Reserve System.
9
<PAGE>
Page 97
DEFINED BENEFIT PENSION PLAN
The Corporation operates a Pension Plan for its employees. Based on
certain assumptions, including continuance of the Pension Plan, the following
table shows the estimated annual pension benefits, before any applicable offset
for social security benefits, which would be payable to employees, including
officers, at a normal retirement (age 65), after various years of service at
selected salary levels. (Benefits are payable for life, or if spousal benefits
are elected, a reduced amount is payable for the life of the employee and of the
surviving spouse.) The estimated credited years of service for the five
individuals named in the Summary Compensation Table is as follows: Heine - 26
years; Owen - 9 years; Cross - 9 years ; Zulke - 5 years; and Mitchell - 11
years.
PENSION TABLE
ANNUAL RETIREMENT BENEFITS BASED UPON
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION 10 15 20 25 30
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $20,496 $30,744 $40,992 $51,240 $61,488
150,000-500,000 24,922 37,382 49,843 62,304 74,765
</TABLE>
"Remuneration" is determined by calculating the individual's successive
highest five years' base salary in the ten years preceding retirement and is
determined substantially on the basis of the salary included in the "Summary
Compensation Table."
The above table reflects benefit amounts being equal from $150,000 to
$500,000 of salary due to the $150,000 compensation limit required by Code
Section 401(a)(17). This limitation became effective January 1, 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Dan Heine, President and Chief Executive Officer of the
Corporation, and R. William Owen, Executive Vice President and Chief Financial
Officer of the Corporation, served as non-voting members of the compensation
committee of the Board of Directors.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors (the "Committee") is
composed of four independent outside directors, all with past or present
experience with executive compensation policy-setting for large businesses. The
Committee is responsible for setting and administering salaries, benefits and
incentive plans for senior management of the Corporation and its subsidiaries.
Professional services of independent compensation consultants are utilized on a
regular basis to assist the Committee in this function.
COMPENSATION PHILOSOPHY
The Corporation has long believed that a strong relationship should exist
between executive compensation and the Corporation's value to stockholders.
Among the factors considered to preserve and enhance stockholder value are:
financial soundness; earnings per share growth; dividend growth; market
appreciation; and stock liquidity.
10
<PAGE>
Page 98
In designing its compensation programs, the Corporation has acted on the
premise that all compensation should reflect the value that is created for
stockholders within the framework of working toward the Corporation's strategic
goals. Supporting goals and beliefs regarding the Corporation's compensation
programs are reflected below:
- Compensation should be related meaningfully to improving the factors
indicated above;
- Compensation should support the short- and long-term strategic goals and
objectives of the Corporation; and
- Compensation should play a key role in attracting, developing and retaining
people of the highest character and competence.
PAY MIX AND MEASUREMENT
The Corporation's executive compensation is based on three components.
(1) BASE SALARY
Base salary levels are established through extensive research and
review of comparative information from similar peer-group companies.
Established base salaries are designed to be externally competitive and
internally compatible.
Salaries for executives are reviewed by the Committee on an annual
basis and may be adjusted at that time based on the Committee's agreement that:
(a) the individual's contribution to the Corporation has increased; (b)
competitive pay levels have increased; and (c) the predetermined goals for the
Corporation and the individual have been met.
For example, the 1995 base salary compensation for the President and
Chief Executive Officer, Mr. Dan Heine, was $196,900, an increase of 6.5% over
the 1994 base amount. The increase reflected Mr. Heine's successful individual
contributions in carrying out the Corporation's strategic objectives and also an
increase in competitive base pay levels for the comparable executive positions
of similarly-sized banking companies. A similar process was followed for other
executive officers in 1995.
(2) ANNUAL INCENTIVES
Through this short-term compensation plan, many key officers of the
Corporation - not just the CEO - are motivated to enhance stockholder value by
maximizing total earnings and also the quality of those earnings. Accordingly,
the annual incentive compensation plan is funded from a pre-set portion of the
Corporation's net income which exceeds established thresholds for net income,
return on assets, return on equity, and growth. The percentage and thresholds
are established at the beginning of the fiscal year and reflect the earnings per
share improvement target set by the Committee. Individual awards are based upon
a predetermined percentage of salary, the individual's position and the
Committee's assessment of the individual's contribution in his or her position.
The Corporation believes that the annual incentive program provides an
excellent link between the value created for stockholders and the incentive paid
to executives. Under this plan, executives do not receive any incentive
compensation unless pre-established threshold targets
11
<PAGE>
Page 99
are met. After that point, additional returns are allocated on a consistent
basis to stockholders and the incentive management pool.
During 1995 and 1994, management did not meet the minimum incentive
compensation threshold targets set by the Board of Directors. Although earnings
per share increased from $1.37 per share in 1994 to $1.79 in 1995, no incentive
compensation was paid. However, incentive compensation was awarded in years
1990 through 1993 when earnings per share grew from $1.22 in 1990 to $1.65 in
1993 as the result of minimum thresholds being met.
Under the annual incentive program, the Chief Executive Officer's
payout can reach a maximum of 52.5% of annual base salary if threshold
requirements are substantially exceeded. The CEO's incentive compensation
represented 0% of base salary in 1994 and 1995. Other executives in the annual
incentive plan have opportunity for increases that range from 20% to 52.5% of
base pay.
(3) LONG TERM INCENTIVES
Stock options have been granted to the named executives and others
under the Nonqualified Stock Option Plan. This component is intended to retain
and motivate executives to improve long-term stock market performance.
Stock options are granted at the prevailing market value and will have
value if the Corporation's stock price increases. Grants are vested one year
after they are awarded and exercisable within six years after grant. Executives
must be employed by the Company at the time of vesting in order to exercise the
options.
The Committee determines the number of options to be granted based on
the executive's position within the Corporation and in recognition of
outstanding historical performance. In 1995, 48,700 stock options were granted.
As of December 31, 1995, 217,510 stock options have been awarded, of which
111,821 have been awarded to the named executive officers.
To evaluate management's performance objectively and fairly, various safety
and soundness and profitability ratios are carefully analyzed. They include
capital, asset quality, earnings, and liquidity. Both federal and state
regulators provide reports to the full Board to further validate comparative
performance.
During 1993, the Corporation reviewed and revised its salary administration
program with the assistance of a well-respected consulting firm and in 1994 and
1995, utilized independent outside consulting services to review its
compensation and benefits package. The Committee feels secure that the
Corporation's salary administration is externally competitive, internally
equitable and supports the Corporation's Compensation philosophy and strategic
plan.
COMPENSATION COMMITTEE
Thomas A. Ferguson, Jr., Chairman
Frank E. Furst
Edward D. Higgins
Ruth Mercedes Smith
12
<PAGE>
Page 100
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and executive officers of the Corporation and their associates
were customers of, and have had transactions with, the Corporation and its
subsidiaries in the ordinary course of business during 1995. Comparable
transactions may be expected to take place in the future.
All outstanding loans, commitments to loan, transactions in repurchase
agreements and certificates of deposit and depository relationships in such
ordinary course of business, were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for transactions
with other persons and, in the opinion of management of the Corporation, did not
involve more than the normal risk of collectibility or present other unfavorable
features. See Annual Report of the Corporation, Note 4 of Notes to Consolidated
Financial Statements.
13
<PAGE>
Page 101
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 1996, the total number of
shares of Common Stock of the Corporation beneficially owned, and the percent of
such shares so owned, by each person known to the Corporation to be the
beneficial owner of more than 5% of the Common Stock of the Corporation, and by
each Director, each executive officer named in the "Summary Compensation Table"
and all Directors and executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OR NUMBER OF OF BENEFICIAL PERCENT OF
PERSONS IN GROUP OWNERSHIP(1) CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
Cede & Co. and Howe & Co. 253,653 (2) 9.23%
% TODAY'S Trust Company
50 West Douglas Street
Freeport, Illinois 61032
Pioneer Financial Services, Inc. 225,207 8.19%
1750 E. Golf Road
Schaumburg, Illinois 60173
Michael A. Cavataio, Sr. 25,699 (3) .94%
Allen E. Fehr 1,472 (3)(4) .42%
Thomas A. Ferguson 6,857 (3) .25%
Frank E. Furst 18,192 (3)(5) .66%
Craig D. Hartman 180 .0% (6)
Dan Heine 32,587 (3)(7) 1.18%
Edward D. Higgins 15,144 (3)(8) .55%
J. Michael Hillard 1,071 (3) .0% (6)
Raymond E. Johnson 23,355 (9) .85%
R. William Owen 42,225 (3)(10) 1.53%
James C. Skyrms 18,194 (3) .66%
Ruth Mercedes Smith 1,312 (3) .0% (6)
Douglas M. Cross 23,755 (3)(11) .86%
C. Brad Zulke 17,067 (3) .62%
Douglas L. Mitchell 16,817 (3)(12) .62%
All executive officers and 274,357 9.75%
Directors(17 persons) as a group
</TABLE>
14
<PAGE>
Page 102
(1) The information contained in this column is based upon information
furnished to the Corporation by the individuals named above or was ascertained
from an examination of the Corporation's stock records. The nature of
beneficial ownership for shares shown in this column is sole voting and
investment power, except as set forth in the footnotes below.
(2) Cede & Co. and Howe & Co. hold the stock as record owner on behalf of
TODAY'S Trust Company. TODAY'S Trust Company has sole voting and investment
power with respect to 101,543 of these shares (40%). The remaining 152,110
shares (60%) are voted as directed by the beneficiaries of the trusts.
(3) Includes shares held by TODAY'S Trust Company under the Director's
Deferred Compensation Plan as follows: Michael A. Cavataio, Sr. - 283 shares;
Douglas M. Cross - 1,088 shares; Allen E. Fehr - 7,392 shares; Thomas A.
Ferguson, Jr. - 2,968 shares; Frank E. Furst - 3,054 shares; Edward D. Higgins -
12,024 shares; J. Michael Hillard - 771 shares; R. William Owen - 2,135 shares;
James C. Skyrms - 8,714 shares; and Ruth M. Smith - 912 shares. Includes shares
held in the Corporation's Employee Stock Ownership Plan as follows: Douglas M.
Cross - 3,538 shares; Dan Heine - 6,192 shares; Douglas L. Mitchell - 4,591
shares; R. William Owen - 4,521 shares; and C. Brad Zulke - 2,832 shares.
Includes shares that can be acquired by the exercise of options granted by the
Corporation as follows: Douglas M. Cross - 5,650 shares; Dan Heine - 24,345
shares; Douglas L. Mitchell - 2,900 shares; R. William Owen - 13,100 shares; and
C. Brad Zulke - 9,450 shares. Does not include 21,930 shares held by the
Corporation's Pension Plan. Messrs. Owen and Mitchell serve as co-trustees of
the Pension Plan along with other employees.
(4) Includes 339 shares held by Mr. Fehr's spouse for which he disclaims
beneficial ownership.
(5) Includes 708 shares held by Mr. Furst's spouse for which he disclaims
beneficial ownership and 12,180 shares held in trust over which Mr. Furst has
investment authority.
(6) Less than 0.01%.
(7) Includes 1,000 shares held by Mr. Heine's spouse for which he disclaims
beneficial ownership. Includes 45 shares held by Mr. Heine as custodian for one
of his children over which Mr. Heine has sole voting and investment power.
(8) Includes 3,000 shares held in joint tenancy by Mr. Higgins with his spouse.
These shares are deemed shared as to voting and investment power. Includes 120
shares held by Mr. Higgin's spouse for which he disclaims beneficial ownership.
(9) Includes 300 shares held by Mr. Johnson's spouse for which he disclaims
beneficial ownership.
(10) Includes 204 shares held by Mr. Owen's spouse for which he disclaims
beneficial ownership. Includes 21,508 shares held in joint tenancy by Mr. Owen
and his spouse. These shares are deemed shared as to voting and investment
power.
(11) Includes 10,726 shares held in joint tenancy by Mr. Cross and his spouse.
These shares are deemed shared as to voting and investment power.
(12) Includes 30 shares held by Mr. Mitchell's spouse for which he disclaims
beneficial ownership.
15
<PAGE>
Page 103
CORPORATION PERFORMANCE
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Corporation's Common Stock during the five years
ended December 31, 1995 with the cumulative total return of the NASDAQ Stock
Market Index and the NASDAQ Banks Stocks Index. The comparison assumes $100.00
was invested on December 31, 1990 in the Corporation's Common Stock and in each
of the foregoing indices and assumes reinvestment of dividends.
Comparison of Five Year-Cummulative Total Returns
Performance Graph for
TODAY'S BANCORP, INC.
Prepared by the Center for Research in Security Prices
Produced on 02/21/96 including data to 12/29/95.
[Performance graph appears here]
<TABLE>
<CAPTION>
CRSP Total
Returns Index
for: 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TODAY'S BANCORP INC. 100.0 118.4 181.8 219.3 220.7 292.4
- --------------------------------------------------------------------------------------------------------
NASDAQ Stock Market
(US Companies) 100.0 160.5 186.9 214.5 209.7 296.5
- --------------------------------------------------------------------------------------------------------
NASDAQ
Bank Stocks
SIC 6020-6029,
6710-6719
US Foreign 100.0 164.1 238.9 272.4 271.4 404.3
- --------------------------------------------------------------------------------------------------------
</TABLE>
A. The lines represent monthly index levels derived from compounded daily
returns that include all divedends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/90.
16
<PAGE>
Page 104
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT
PUBLIC ACCOUNTANTS
During 1995, the Corporation engaged KPMG Peat Marwick LLP, its independent
public accountants, to audit the Corporation and to provide nonaudit services.
The appointment of the auditors is approved annually by the Board of Directors
and ratified by the Stockholders. The decision of the Board of Directors is
based on the recommendation of the Audit Committee. In making its
recommendation, the Audit Committee reviews both the audit scope and estimated
fees for professional services for the coming year. Subject to ratification by
the Stockholders, the Board of Directors has appointed KPMG Peat Marwick LLP for
the year 1996. In order to ratify the appointment, the proposal must receive
the favorable vote of a plurality of the shares represented and entitled to vote
at the Annual Meeting.
Coopers & Lybrand LLP served as the Corporation's independent accountants
for a number of years, including the fiscal year ending December 31, 1993. The
Corporation had no disagreements with Coopers & Lybrand LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion to the
subject matter of the disagreement. For the fiscal year ending December 31,
1993, Coopers & Lybrand's report on the financial statements contained no
adverse opinion and no disclaimer of opinion and was not qualified as to
uncertainty, audit scope or accounting principles.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting of Stockholders on April 18, 1996, and will be given an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF KPMG PEAT
MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS (PROPOSAL NO. 2).
STOCKHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders may submit proposals appropriate for Stockholder action at the
1997 Annual Meeting consistent with the regulations of the Securities and
Exchange Commission. All such proposals should be directed to Daniel M.
Lashinski, Vice President, Secretary and Treasurer, TODAY'S BANCORP, INC., 50
West Douglas Street, Freeport, Illinois 61032, by November 22, 1996.
BY ORDER OF THE
BOARD OF DIRECTORS
/s/ Daniel M. Lashinski
DANIEL M. LASHINSKI
VICE PRESIDENT, SECRETARY AND TREASURER
--------------------------
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
17
<PAGE>
Page 105
Exhibit 99 (b)-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
as of December 30, 1995 and 1994 and
for the year ended December 30, 1995
A. TODAY'S BANCORP, INC. EMPLOYEE STOCK OWNERSHIP PLAN
---------------------------------------------------
(Full title of the Plan)
B. TODAY'S BANCORP, INC.
50 West Douglas Street
P.O. Box 30
Freeport, Illinois 61032
------------------------------------------------------
(Name of issuer and address of its principal executive office)
<PAGE>
Page 106
INDEPENDENT AUDITORS' REPORT
Plan Administrator
TODAY'S BANCORP, INC.
Employee Stock Ownership Plan
Freeport, Illinois
We have audited the accompanying statement of net assets available for plan
benefits of TODAY'S BANCORP, INC. Employee Stock Ownership Plan as of December
30, 1995 and 1994 and the related statement of changes in net assets available
for plan benefits for the year ended December 30, 1995. These financial
statements are the responsibility of the Plan's administrator. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of TODAY'S
BANCORP, INC. Employee Stock Ownership Plan as of December 30, 1995 and 1994 and
the changes in its net assets available for plan benefits for the year ended
December 30, 1995 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules are presented for
purposes of additional analysis and are not a required part of the basic
financial statements, but are supplemental information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
March 19, 1996
<PAGE>
Page 107
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------------------------------------------- --------------------------------------------
SAVINGS STOCK LOAN SAVINGS STOCK LOAN
FUND FUND FUND COMBINED FUND FUND FUND COMBINED
--------- ----------- -------- ----------- --------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
Common stock of TODAY'S
BANCORP, INC. at fair market value;
92,970 and 91,756 shares,
respectively; and cost of
$1,236,836 and $1,155,655,
respectively $ - $2,062,772 $ - $2,062,772 $ - $1,582,791 $ - $1,582,791
Loans to participants - - 161,739 161,739 - - 69,748 69,748
Interest bearing deposits at
TODAY'S BANK-East 481,181 10,464 - 491,645 475,043 25,259 - 500,302
--------- ----------- --------- ---------- --------- ---------- --------- ----------
Total investments 481,181 2,073,236 161,739 2,716,156 475,043 1,608,050 69,748 2,152,841
Employer contributions receivable - 54,878 - 54,878 50,339 50,339
Due (to) from other funds (1,626) 1,626 - - - - - -
--------- ----------- --------- --------- --------- ---------- --------- ----------
Total assets 479,555 2,129,740 161,739 2,771,034 475,043 1,658,389 69,748 2,203,180
--------- ---------- --------- --------- --------- ---------- --------- ----------
Liabilities:
Note Payable - 114,000 - 114,000 - - - -
Stock purchase payable - - - - - 15,960 - 15,960
Other liabilities 967 2,245 - 3,212 900 - - 900
--------- ---------- --------- --------- --------- ---------- --------- ----------
Total liabilities 967 116,245 - 117,212 900 15,960 - 16,860
--------- ---------- --------- --------- --------- ---------- --------- ----------
Net assets available for plan
benefits $ 478,588 $2,013,495 $161,739 $2,653,822 $ 474,143 $1,642,429 $ 69,748 $2,186,320
--------- ---------- --------- ---------- --------- ---------- --------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Page 108
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
SAVINGS STOCK LOAN
FUND FUND FUND COMBINED
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Investment income:
Dividends on TODAY'S
BANCORP, INC. common stock $ - $ 48,480 $ - $ 48,480
Interest 28,910 354 7,182 36,446
Net depreciation in
fair value of common
stock of TODAY'S
BANCORP, INC. - 433,714 - 433,714
---------- ---------- ---------- ----------
28,910 482,548 7,182 518,640
Employer contributions - 55,056 - 55,056
Employee contributions 71,484 249,691 - 321,175
---------- ---------- ---------- ----------
Total additions 100,394 787,295 7,182 894,871
Deduction-Distributions
to participants (94,599) (328,857) - (423,456)
Interest on Notes Payable - (3,913) - (3,913)
Transfers (to) from other
funds (1,350) (83,459) 84,809 -
---------- ---------- ---------- ----------
Net increase 4,445 371,066 91,991 467,502
Net assets available for
plan benefits:
Beginning of the year 474,143 1,642,429 69,748 2,186,320
---------- ---------- ---------- ----------
End of the year $ 478,588 $ 2,013,495 $ 161,739 $ 2,653,822
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
Page 109
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
A. DESCRIPTION OF THE PLAN
The following description of the TODAY'S BANCORP, INC. (formerly Northwest
Illinois Bancorp, Inc.) Employee Stock Ownership Plan provides only
general information. Participants should refer to the Plan agreement
for a more complete description of the Plan's provisions.
1. GENERAL. TODAY'S BANCORP, INC. (the "Company") established the
TODAY'S BANCORP, INC. Employee Stock Ownership Plan (the "Plan")
effective as of January 1, 1988. As of January 1, 1989, the Plan was
amended and operates, in relevant part, as an employee stock ownership
plan ("ESOP") and is designed to comply with Section 4975(e)(7) and
the regulations thereunder of the Internal Revenue Code of 1986, as
amended ("Code"). The plan is subject to the applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
The Plan is administered by an Employee Benefits Administration
Committee comprising up to three persons appointed by TODAY'S BANCORP,
INC.'s Board of Directors. The trustees of the Plan are certain
officers employed by either TODAY'S BANCORP, INC. or one of the
subsidiary banks.
The Plan is a defined contribution plan covering substantially all
employees who are twenty-one or older and have one year of service, or
who are thirty, whichever occurs first.
2. FORFEITURES. Amounts which have been forfeited in accordance with
provisions of the Plan are allocated in the same manner as employee
matching contributions.
3. CONTRIBUTIONS. Participants may elect to contribute at least 1% and
up to 15% of their compensation, however, not in excess of statutory
limits.
The Company provides a matching contribution equal to 25% of each
participant's elective contribution, limited to elective contributions
of up to 6% of compensation. All Company matching contributions and
forfeitures are invested in the Plan's stock fund.
<PAGE>
Page 110
A. DESCRIPTION OF THE PLAN, CONTINUED
The following table presents contributions for the period ended December
30, 1995 broken down by subsidiaries participating in the Plan:
<TABLE>
<CAPTION>
Participant Employer
Contributions Contributions Total
------------- ------------- -----
<S> <C> <C> <C>
TODAY'S BANCORP, INC. $102,816 $18,719 $121,535
TODAY'S BANK - East 97,423 17,718 115,141
TODAY'S BANK - West 52,608 8,584 61,192
TODAY'S MORTGAGE SOURCE 23,801 2,920 26,721
TODAY'S FINANCIAL SERVICES 44,527 7,115 51,642
------ ----- ------
Totals $321,175 $55,056 $376,231
-------- ------- --------
-------- ------- --------
</TABLE>
Effective January 1, 1995, State Bank of Freeport, First State Bank of
Rockford and Bank of Pecatonica were merged to form TODAY'S BANK-East.
Additionally, the parent company changed its name, effective the same date,
to TODAY'S BANCORP, INC. During 1994, the Company purchased Tri-State Bank
& Trust Company. Effective February 1, 1995 First National Bank of Galena
combined with Tri-State Bank & Trust Company to form TODAY'S BANK-West.
This reorganization had no impact on the Plan or its provisions.
4. INVESTMENTS. Participants may elect to have their contributions
invested in one or both of the following investment funds:
a. THE SAVINGS FUND - invested in interest bearing deposits with
TODAY'S BANK-East, a wholly-owned subsidiary of the Company.
b. THE STOCK FUND - invested substantially in TODAY'S BANCORP, INC.
common stock. This investment is in excess of 5% of total plan
assets at the end of the year. The unrealized gain on
investments held by the plan was $825,936 and $427,136 at
December 30, 1995 and 1994, respectively. The decrease in the
unrealized gain was recognized as a negative addition in the
statement of net changes in plan assets for plan benefits during
the year.
The number of participants in the savings fund was 124 and 116,
respectively, as of December 30, 1995 and 1994. The number of
participants in the stock fund was 162 and 156, respectively, as of
December 30, 1995 and 1994. Participants who have been in the Plan
for at least ten years and have attained the age of 55 will be offered
at least three investment options.
<PAGE>
Page 111
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, continued
A. DESCRIPTION OF THE PLAN, CONTINUED
5. PARTICIPANT ACCOUNTS. Each participant's account is credited with the
participant's contribution and an allocation of (a) the Company's
contribution; (b) forfeitures of terminated participants' nonvested
accounts; and (c) Plan earnings (losses).
6. VESTING. Participants are immediately vested in their voluntary
contributions plus actual earnings thereon. Vesting in their employer
contribution accounts is based on years of continuous service. A
participant is 100% vested after six years of credited service.
7. LOAN PROVISION. The Plan allows participants to borrow funds from
their account under terms specified in the Plan.
8. BENEFIT PAYMENTS. Generally, the trustee will commence distribution
of a participant's account in a single sum payment not later than 60
days after the end of the plan year in which the latter of the
following events occur:
a. The date the participant attains age 59-1/2; and
b. The date the participant terminates employment with TODAY'S
BANCORP, INC. or its subsidiaries.
9. WITHDRAWALS. A participant who has attained age 59-1/2 years may
elect to withdraw part or all of the balance credited to his elective
contribution account. After the elective contributions have been
fully withdrawn, the participant may withdraw part or all of the
vested portion credited to his employer contribution account. If a
participant has not attained age 59-1/2 he shall be eligible to
withdraw funds from his elective contributions account but only in
certain hardship situations as provided by the Plan.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments are valued at fair market value. TODAY'S BANCORP, INC. common
stock is valued based upon the NASDAQ Stock Market quotation. The interest
bearing deposits are valued at cost which approximates fair market value.
The Plan does not require collateral or other security to support the
interest bearing deposits. The Plan presents in the statement of changes
in net assets available for Plan benefits, the net appreciation
(depreciation) in the fair value of its investments which consists of the
<PAGE>
Page 112
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, continued
realized gains or losses and the unrealized appreciation (depreciation) on
those investments.
C. NOTE PAYABLE
During 1995, the Plan entered into an unsecured $114,000 note with TODAY'S
BANCORP, INC. The proceeds of the loan were used to purchase the Company's
common stock. The agreement provides for quarterly interest payments with
the principal due at maturity on July 14, 1997. The loan bears interest at
the national prime rate plus 3%. At December 30, 1995 the interest rate
was 11.5%.
D. INCOME TAX STATUS
The Internal Revenue Service has determined that the Plan is qualified and
the trust established under the Plan is tax exempt, under Section 401 of
the Code. The Plan has been amended since receiving the determination
letter. However, the plan administrator and the Plan's tax counsel believe
that the Plan is currently designed and being operated in compliance with
the applicable requirements of the Internal Revenue Code. Therefore, they
believe that the plan was qualified and the related trust was tax-exempt as
of the financial statement date.
Amounts contributed by the Company are not taxed to the employee until
distributed from the Plan. In addition, any shares of the Company's common
stock distributed to an employee upon termination of employment are not
taxed to the employee until the time of disposition of such shares.
E. ADMINISTRATION COSTS
The costs of administering the Plan are paid by TODAY'S BANCORP, INC.
F. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their accounts
and entitled to a distribution from the plan.
<PAGE>
Page 113
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, continued
G. RECONCILIATION TO FORM 5500
Certain differences exist between net assets available for plan benefits at
December 30, 1995 and the changes therein for the year then ended as
reported in the financial statements versus the Form 5500 as filed. The
following is a reconciliation of these amounts:
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AVAILABLE at December 30,
FOR PLAN BENEFITS: 1995
---------------
<S> <C>
Distributions payable $ -
Add:
Distributions payable due to participant
withdrawals and terminations 53,378
------
Distributions payable as shown on
Form 5500 $53,378
-------
-------
Net assets available for plan benefits $ 2,653,822
Less:
Distributions payable due to participant
withdrawals and terminations 53,378
------
Net assets available for plan benefits
as shown on Form 5500 $ 2,600,444
------------
------------
STATEMENT OF CHANGES IN NET ASSETS for the year ended
AVAILABLE FOR PLAN BENEFITS: December 30, 1995
-----------------
Distributions to participants $ 423,456
Deduct:
Change in distributions to participants between
the financial statements and Form 5500 214,867
-----------
Distributions to participants as shown on
Form 5500 $ 208,589
------------
------------
Net increase in net assets $ 467,502
Add:
Change in distributions to participants between
the financial statements and Form 5500 214,867
-----------
Net increase in net assets as shown
on Form 5500 $ 682,369
------------
------------
</TABLE>
<PAGE>
Page 114
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 30, 1995
<TABLE>
<CAPTION>
Issuer Description Cost Fair Market Value
- ------ ----------- ---- -----------------
<S> <C> <C> <C>
TODAY'S Common Stock
BANCORP, INC. 92,970 shares $1,236,836 $2,062,772
Employee Stock Loans to participants
Ownership Plan amortized over a two to 161,739 161,739
ten year period with rates
ranging from 6.0% to 9.0%
TODAY'S BANK Interest bearing deposits with
- -East an average interest rate
of 6.01% for 1995 491,645 491,645
</TABLE>
<PAGE>
Page 115
TODAY'S BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 30, 1995
<TABLE>
<CAPTION>
Number of Number of Purchase Sales Cost of Net Gain
Purchases Sales Price Price Asset or (Loss)
--------- --------- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
TODAY'S BANCORP,
INC. common stock 11 - $186,459 - - -
</TABLE>
<PAGE>
Page 116
Exhibit 99(b)-2
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
TODAY'S BANCORP, INC.:
We consent to incorporation by reference in the registration statement (file No.
33-21550) on Form S-8 of TODAY'S BANCORP, INC. of our report dated March 19,
1996 relating to the statement of net assets available for plan benefits of
TODAY'S BANCORP, INC. Employee Stock Ownership Plan as of December 30, 1995 and
1994, and the related statement of changes in net assets available for plan
benefits for the year ended December 30, 1995, which report appears in the
December 30, 1995 Annual Report on Form 11-K of TODAY'S BANCORP, INC. Employee
Stock Ownership Plan.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
March 19, 1996
