<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
----------------------------------------------
OR
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________________ to __________________
Commission file number 0-14468
-------
First Oak Brook Bancshares, Inc.
- - -----------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 36-3220778
- - -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Sixteenth Street, Oak Brook, Illinois 60521
- - --------------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 571-1050
--------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
------- -------
Indicate number of shares outstanding of each of the issuer's classes of
common stock, as of October 31, 1995.
Class A 1,837,570
- - ------------------------------------- --------------------------------------
CLASS NUMBER OF SHARES
Common 1,525,272
- - ------------------------------------- --------------------------------------
CLASS NUMBER OF SHARES
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
INDEX
Page
----
Part I. Financial Information
- - ------------------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets
September 30, 1995 and December 31, 1994 3
Condensed consolidated statements of income
Three months ended September 30, 1995 and 1994 and
Nine months ended September 30, 1995 and 1994 5
Condensed consolidated statements of cash flows
Nine months ended September 30, 1995 and 1994 7
Notes to condensed consolidated financial
statements -- September 30, 1995 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 11
Part II. Other Information
- - ---------------------------
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
- - ----------
* Not applicable
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(Unaudited)
(In Thousands)
September 30, December 31,
1995 1994
-------------- -------------
Assets
- - ------
Cash and due from banks $ 30,571 $ 33,710
Federal funds sold and securities
purchased under agreements to resell 14,000 2,500
Interest-bearing deposits
with banks 108 91
Securities held to maturity, at
amortized cost (fair value $140,383
and $140,216 at September 30, 1995
and December 31, 1994) 137,742 143,604
Securities available for sale, at
fair-value 116,706 120,339
Loans, net of unearned discount 342,053 309,681
Less-allowance for loan losses (3,988) (3,859)
-------- --------
Net loans 338,065 305,822
-------- --------
Premises and equipment, net 18,193 18,989
Other assets 8,631 9,650
-------- --------
Total assets $664,016 $634,705
======== ========
-3-
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONT.)
(Unaudited)
(In Thousands Except Share Information)
September 30, December 31,
1995 1994
-------------- -------------
Liabilities
- - -----------
Noninterest-bearing demand deposits $121,203 $109,237
-------- --------
Interest-bearing deposits:
Savings deposits and NOW accounts 198,186 223,354
Money market accounts 25,538 26,602
Other time deposits 205,658 154,430
-------- --------
Total interest-bearing deposits 429,382 404,386
-------- --------
Total deposits 550,585 513,623
-------- --------
Federal funds purchased and securities
sold under agreements to repurchase 51,087 61,988
Treasury tax and loan demand notes 3,452 6,589
Federal Home Loan Bank advances 3,500 6,000
Other liabilities 4,859 3,596
-------- --------
Total liabilities 613,483 591,796
-------- --------
Shareholders' Equity
- - --------------------
Class A Common Stock (aggregate
liquidation preference of $11,595) 3,675 3,671
Common Stock 3,392 3,396
Surplus 10,368 10,364
Unrealized loss on securities
available for sale (885) (4,780)
Retained earnings 34,716 30,991
Less cost of shares in treasury,
171,027 common shares (733) (733)
-------- --------
Total shareholders' equity 50,533 42,909
-------- --------
Total liabilities and
shareholders' equity $664,016 $634,705
======== ========
See Notes to Condensed Consolidated Financial Statements.
-4-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 8,094 $ 6,609 $23,683 $19,065
Interest on investment securities:
U.S. Treasury and government
agencies 2,798 2,720 8,381 7,836
Obligations of states and political
subdivisions 779 714 2,308 1,995
Other securities 74 96 252 267
Interest on Federal funds sold and
securities purchased under
agreements to resell 430 272 871 824
Interest on deposits with banks 2 2 6 5
------- ------- ------- -------
Total interest income 12,177 10,413 35,501 29,992
------- ------- ------- -------
Interest expense:
Interest on savings deposits and
NOW accounts 1,941 2,046 5,898 5,500
Interest on money market accounts 196 216 637 591
Interest on other time deposits 2,966 1,527 7,872 4,306
Interest on Federal funds purchased
and securities sold under
agreements to repurchase 707 383 2,062 907
Interest on Treasury, tax and loan
demand notes 49 66 131 206
Interest on Federal Home Loan Bank
advances 33 70 152 206
------- ------- ------- -------
Total interest expense 5,892 4,308 16,752 11,716
------- ------- ------- -------
Net interest income 6,285 6,105 18,749 18,276
Provision for loan losses 225 300 750 900
Net interest income after provision for ______ ______ ______ ______
loan losses $ 6,060 $ 5,805 $17,999 $17,376
------- ------- ------- -------
</TABLE>
-5-
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONT.)
(Unaudited)
(In Thousands Except Share Information)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------------ ------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Other income:
Service charges on deposit accounts $ 600 $ 639 $ 1,744 $ 2,013
Other operating income 475 334 1,380 1,220
Investment securities gains(losses) - (17) - 37
---------- ---------- ---------- ----------
Total other income 1,075 956 3,124 3,270
---------- ---------- ---------- ----------
Other expenses:
Salaries and employee benefits 2,798 2,588 8,247 7,667
Occupancy expense 350 320 1,018 961
Equipment expense 426 419 1,290 1,235
Data processing fees 321 368 1,099 987
Professional fees 84 77 218 231
Postage, stationery and supplies 158 227 607 646
Advertising and business development 343 313 1,049 915
FDIC premiums (29) 274 539 819
Other operating expenses 456 484 1,370 1,125
---------- ---------- ---------- ----------
Total other expenses 4,907 5,070 15,437 14,586
---------- ---------- ---------- ----------
Income before provision for income
taxes 2,228 1,691 5,686 6,060
Provision for income taxes 528 346 1,215 1,399
---------- ---------- ---------- ----------
Net income $ 1,700 $ 1,345 $ 4,471 $ 4,661
========== ========== ========== ==========
Earnings per common share and common
equivalent share $.49 $.39 $1.30 $1.36
========== ========== ========== ==========
Dividends per share:
Class A Common $.0750 $.0750 $.2250 $.208
Common .0625 .0625 .1875 .170
========== ========== ========== ==========
Weighted average number of common
shares and common share
equivalents 3,433,360 3,429,462 3,430,674 3,425,329
========== ========== ========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-6-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(In Thousands)
<TABLE>
<CAPTION>
1995 1994
----- -----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,471 $ 4,661
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, discount accretion, premium
amortization and amortization of intangibles 2,936 3,220
Provision for loan losses 750 900
Gains on securities available for sale - (37)
Increase in other assets (1,139) (1,413)
Increase (decrease) in other liabilities 1,262 (501)
-------- --------
Net cash provided by operating activities 8,280 6,830
-------- --------
Cash flows from investing activities:
Purchases of securities held to maturity (51,959) (41,090)
Purchases of securities available for sale (14,388) (58,660)
Proceeds from maturities of securities
held to maturity 62,642 6,225
Proceeds from sales and maturities of
securities available for sale 17,761 63,404
Increase in loans (32,993) (10,370)
Additions to premises and equipment (647) (249)
-------- --------
Net cash used in investing activities (19,584) (40,740)
Cash flows from financing activities:
Increase (decrease) in demand deposits 11,966 (3,243)
Decrease in savings and NOW accounts (25,168) (1,513)
Decrease in money market accounts (1,065) (632)
Increase in time deposits 51,229 13,740
Decrease in Treasury, tax and loan
demand notes (3,137) (2,778)
Repayment of Federal Home Loan Bank advances (2,500) -
Increase (decrease) in Federal funds
purchased and securities sold under
agreements to repurchase (10,901) 12,324
Exercise of stock options 4 -
Dividends paid (746) (613)
-------- --------
Net cash provided by financing activities 19,682 17,285
-------- --------
</TABLE>
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<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
(Continued)
1995 1994
----- ------
Net increase (decrease) in cash and cash
equivalents 8,378 (16,625)
Cash and cash equivalents at beginning
of period 36,301 87,853
------- --------
Cash and cash equivalents at end of
period $44,679 $ 71,228
======= ========
Supplemental disclosures:
Interest paid $16,397 $ 11,688
Income taxes paid 1,231 1,786
======= ========
-8-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring items) considered necessary
for a fair presentation have been included. Operating results for the three
and nine month periods ended September 30, 1995 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1995. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1994.
2. Commitments and Contingent Liabilities:
In the normal course of business, there are various outstanding commitments
and contingent liabilities, including commitments to extend credit, which
are not reflected in the financial statements. The Company's exposure to
credit loss in the event of nonperformance by the other party to the
commitments and lines of credit is limited to their contractual amount. Many
commitments to extend credit expire without being used, or, in the case of
credit cards, the Company, at its discretion, may cancel any credit card
line. Additionally, some credit card lines are drawn down and paid off
monthly. Therefore, the amounts stated below do not necessarily represent
future cash commitments. These commitments are subject to the same credit
policy as followed for loans recorded in the financial statements.
The summary of commitments to extend credit follows (in thousands):
September 30, 1995 December 31, 1994
------------------ -----------------
Commercial $ 51,985 $ 38,205
Home equity 58,555 54,732
Credit card 272,835 292,135
-9-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
3. Shareholders' Equity:
Shares authorized, issued and outstanding are as follows:
September 30, December 31,
1995 1994
-------------- ------------
(Unaudited)
Preferred Stock, Series B,
no par value:
Authorized 100,000 100,000
Issued None None
Outstanding None None
Class A Common Stock,
$2.00 par value:
Authorized 4,000,000 4,000,000
Issued 1,837,570 1,835,666
Outstanding 1,837,570 1,835,666
Common Stock,
$2.00 par value:
Authorized 3,000,000 3,000,000
Issued 1,696,299 1,697,903
Outstanding 1,525,272 1,526,876
Each share of Class A Common stock is entitled to one-twentieth of one vote
and a cash dividend of at least 120% of the dividend declared on the Common
stock. Holders of the Class A Common stock, upon liquidation of the Company,
are entitled to receive an aggregate amount per share equal to the $6.31
offering price of the Class A Common stock before any amount is paid to
holders of the Common stock.
The Common stock is convertible into Class A Common stock on a one-for-one
basis at any time.
On July 18, 1995, the Board of Directors declared a 20% increase in the
October cash dividend on its Class A Common and Common. The new Class A
Common dividend will be $.09 per share, up from the July dividend of $.075
per share. The new Common dividend will be $.075 per share, up from the July
dividend of $.0625. The dividends were both paid October 20, 1995 to
shareholders of record on October 10, 1995.
4. Statement of Financial Accounting Standards No. 118 "Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures" (amendment of
FASB No. 114):
The Company adopted this Statement as of January 1, 1995. The adoption of
this Statement had no impact since the Company had no impaired loans, as
defined, through September 30, 1995.
-10-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Earnings Highlights - Third Quarter Results
- - -------------------
During the third quarter of 1995, the Company earned $1,700,000, compared with
$1,345,000 in the third quarter of 1994, an increase of 26%. Earnings per share
for the third quarter of 1995 were $.49 as compared to $.39 in the same period
last year.
Key performance indicators for the 1995 third quarter show a return on average
assets of 1.02% compared with .89% for the 1994 third quarter. For the third
quarter of 1995, the return on average shareholders' equity was 13.74% compared
with 12.72% for the same quarter of 1994.
Net interest income is the difference between interest earned on loans and
investments and interest paid on deposits and other interest-bearing
liabilities. On a tax equivalent basis, net interest income for the third
quarter of 1995 totaled $6,636,000 as compared to $6,433,000 in 1994, a 3%
increase. The increase in net interest income was due to a 10% increase in
average earning assets offset by a 6% decrease in net interest margin. The net
interest margin for the third quarter of 1995 was 4.36% compared to 4.64% for
the same period last year.
The compression of the net interest margin was the result of the following:
. During the third quarter of 1994, the prime rate was adjusted upwards from
7.25% to 7.75%, while in the third quarter of 1995 the prime declined from
9.00% to 8.75%. In a rising interest rate environment, such as we experienced
in 1994, the Company enjoyed temporary margin improvements due to the
difference in timing of the repricing of assets and deposit liabilities.
Conversely, in a declining interest rate environment, as in the third quarter
of 1995, the Company has experienced margin compression.
. The cost of interest bearing deposits increased nearly 100 basis points from
the third quarter of 1994 to the third quarter of 1995. Retail consumers
showed continued strong preferences for longer term, higher yielding CD's over
shorter-term, lower yielding saving and money market funds--in essence,
locking in higher yields. The third quarter of 1995 average balance for
savings and money market accounts declined $36 million in comparison to the
same period in 1994, while the third quarter of 1995 average balance for time
deposits increased $65 million compared to the same period in 1994.
Competitive pressure among Chicago area banks kept CD rates relatively high in
comparison to U.S. Treasury yields.
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<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
. During the third quarter of 1995, short term rates continued to rise and long
term rates fell resulting in a further "flattening of the yield curve." The
Company's subsidiary bank (like most banks) borrows money in the form of
deposits on the short end of the yield curve and invests these funds in
securities on the intermediate to long end of the yield curve. With the
flattening of the yield curve, the spread between short and long term rates
has compressed which negatively impacted the Company's third quarter net
interest margin.
Average balances and effective interest yields and rates on a tax equivalent
basis for the third quarters of 1995 and 1994 were as follows (dollars in
thousands):
1995 1994
-------------------- --------------------
Average Effective Average Effective
Balance Yield Balance Yield
------- ----- ------- -----
Federal funds sold $ 29,371 5.80% $ 24,100 4.48%
Interest-bearing
deposits with banks 122 6.50 155 5.12
Securities 248,040 6.35 244,167 6.21
Loans 325,643 9.90 281,228 9.37
-------- ---- -------- ----
Total earning assets/
yield $603,176 8.24% $549,650 7.75%
======== ==== ======== ====
Interest-bearing
deposits $419,426 4.82% $390,343 3.85%
Short-term debt 56,679 5.30 46,405 3.84
Long-term debt 3,500 4.76 6,000 4.63
-------- ---- -------- ----
Total interest-bearing
liabilities/cost of
funds $479,605 4.87% $442,748 3.86%
======== ==== ======== ====
Net interest margin 4.36% 4.64%
==== ====
Net interest spread 3.37% 3.89%
==== ====
Average loans for the third quarter of 1995 increased $44 million or 16% in
comparison to the third quarter of 1994. The increase was primarily in real
estate (commercial and residential) and indirect auto loans. Credit card and
commercial loan growth was constrained as a result of vigorous competition among
banks.
Based on management's review of the adequacy of the loan loss reserve, the
Company recorded a provision for loan losses of $225,000 for the third quarter
of 1995, consistent with the
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<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
second quarter of 1995, and slightly less than the $300,000 in the third quarter
of 1994.
Total other income increased $119,000 or 12%. Service charges on deposit
accounts decreased $39,000 primarily due to a decrease in business account
analysis fees offset by an increase in service charges and fees on personal
accounts. With the increase in the earnings credit, commercial customers were
able to offset more service charges through maintaining account balances. The
increase in other operating income of $141,000 was principally attributable to
increased trust revenue and fee income from the sale through a third party of
annuities and mutual funds.
Total other expenses decreased $163,000 or 3% primarily due to lower FDIC
insurance premiums effective June 1, 1995. During the third quarter of 1995,
the Company's subsidiary bank received from the FDIC $314,000, before taxes,
representing a refund of a portion of June premiums totaling $78,000 and a
reduction of $236,000 for the third quarter. The FDIC premium was lowered for
well-capitalized banks, effective June 1, 1995, from $.23 per $100 deposit to
$.04 per $100 deposit; accordingly, the Company expects to pay significantly
less FDIC premiums in future periods.
Salaries and employee benefits rose $210,000. The increase is due to several
new positions, upgrading staff and normal salary increases. The Company
invested in these positions to enhance customer service and expand business
development opportunities.
Data processing fees decreased $47,000 primarily due to correspondent check
clearing services paid in compensating balances rather than in service fees.
Postage, stationery and supplies decreased $69,000 primarily due to the timing
of stationery and supplies purchases.
Earnings Highlights - Nine Month Results
- - -------------------
Net income for the nine months ended September 30, 1995 was $4,471,000, compared
with $4,661,000 earned in 1994, a decrease of 4%. Earnings per share for the
first nine months of 1995 were $1.30 as compared to $1.36 earned in 1994.
Excluding securities gains and gain on other real estate, net income rose to
$4,471,000 for the first nine months of 1995, compared with $4,420,000 for the
comparable 1994 period, a 1% increase.
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<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
Key performance indicators for the first nine months of 1995 and 1994 show a
return on average assets of .94% and 1.03%, respectively. Return on average
shareholders' equity was 12.83% for 1995 compared with 14.63% for 1994.
On a tax equivalent basis, net interest income for the first nine months of 1995
totaled $19,802,000 as compared to $19,198,000 in 1994, a 3% increase. This
increase is due to a 7% increase in average earning assets, offset by a 3%
decrease in net interest margin to 4.52% in 1995 from 4.68% in 1994.
Average balances and effective interest yields and rates on a tax equivalent
basis for the first nine months of 1995 and 1994 were as follows (dollars in
thousands):
1995 1994
-------------------- --------------------
Average Effective Average Effective
Balance Yield Balance Yield
------- ----- ------- -----
Federal Funds sold $ 19,705 5.91% $ 29,156 3.78%
Interest-bearing
deposits with banks 130 6.17 192 3.48
Securities 248,622 6.40 239,118 6.11
Loans 316,860 10.04% 280,538 9.13
-------- ----- -------- ----
Total earning assets/
yield $585,317 8.35% $549,004 7.53%
======== ===== ======== ====
Interest-bearing
deposits $409,867 4.70% $389,955 3.56%
Short-term debt 54,967 5.34 42,918 3.47
Long-term debt 4,306 4.72 6,000 4.59
-------- ----- -------- ----
Total interest-bearing
liabilities/cost of
funds $469,140 4.77% $438,873 3.57%
======== ===== ======== ====
Net interest margin 4.52% 4.68%
===== ====
Net interest spread 3.58% 3.96%
===== ====
Total other income decreased $146,000 or 5%. Service charges on deposit accounts
decreased $269,000 primarily due to a decrease in business account analysis fees
offset by an increase in service charges and fees on personal accounts. With the
increase in the earnings credit, commercial customers were able to offset more
service charges through maintaining account balances. The increase in other
operating income of $160,000 was principally attributable to increased trust
revenue and fee income from the
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<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
sale through a third party of annuities and mutual funds offset by a decrease in
gains on mortgages sold. Trust income for the first nine months of 1995 was
$436,000 compared to $331,000 for the comparable period in 1994, an increase of
32%. The discretionary assets under management by the Trust department has
grown $18.2 million since September 30, 1994 to $61.1 million as of September
30, 1995. The Investment Center, a new business initiative selling mutual funds
and annuities through a third party, launched late in 1994, has been successful
in contributing $116,000 in additional fee income in 1995. The decrease in fee
income from gains on mortgages sold was due to retaining a greater portion of
mortgage originations for the Company's loan portfolio during the first nine
months of 1995 compared to the same period in 1994.
Total other expenses increased $851,000 or 6%. Salaries and employee benefits
rose $580,000. The increase is due to several new positions, upgrading staff
and normal salary increases. The Company invested in these positions to enhance
customer service and expand business development opportunities.
Data processing fees increased $112,000, primarily due to higher credit card
processing fees and messenger service. The increase in credit card processing
is due to system enhancements and price increases. Messenger service, an
internal function in 1994, was outsourced in the first quarter of 1995. While
messenger service increased data processing fees in 1995, there are offsetting
cost savings included in salaries and employee benefits for 1995.
Advertising and business development costs increased $134,000 primarily due to
the advertising of retail products and increased business development expenses.
FDIC premiums decreased $280,000 due to lower insurance premiums effective June
1, 1995.
Other operating expense increased $245,000. Excluding the gain on the sale of
"other real estate owned" of $328,000 in 1994, the other operating expense
decreased $83,000 in 1995. This decrease in 1995 was primarily due to a
reduction in credit card fraud.
Asset Quality
- - -------------
Asset quality, remains excellent, with nonperforming assets (nonaccrual loans,
renegotiated loans, loans past due 90 days or more and still accruing, and other
real estate owned) totaling only $814,000. Net chargeoffs for the first nine
months of 1995 totaled $621,000 or .20% of average loans outstanding. The
allowance for loan losses to total loans was 1.17% at September 30, 1995.
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<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
The following table summarizes the Company's nonperforming assets (in
thousands):
September 30, December 31,
1995 1994
------------- -------------
Nonaccrual $ 70 $ 70
Loans which are past due
90 days or more 744 568
----- -----
Total nonperforming loans $ 814 $ 638
===== =====
Nonperforming loans to loans
outstanding .24% .21%
Allowance for loan losses to
nonperforming loans 4.90x 6.05x
The Company also holds, in other assets, surplus property which was formerly
used as Oak Brook Bank's drive-up facility in Oak Brook, Illinois. Oak Brook
Bank leased the property in May, 1992 for $64,000 net per year for five years to
McDonald's Corporation. Oak Brook Bank, at any time until May 31, 1997, shall
have the option to require the lessee to purchase the property, which has a book
value of $238,000, for the price of $800,000.
Capital
- - -------
Shareholders' equity grew to $50.5 million. The after-tax unrealized loss on
securities available for sale at September 30, 1995 is $.9 million compared to
$4.8 million at December 31, 1994, an improvement of $3.9 million.
The Company and its subsidiary bank's Tier 1, total risk-based capital and
leveraged ratios are in excess of minimum regulatory guidelines and also exceed
the FDIC criteria for "well capitalized" banks. The following table shows the
capital ratios of the Company and its subsidiary bank as of September 30, 1995
and the minimum ratios for "well capitalized" banks. The federal regulators
exclude the after-tax unrealized gain/loss on securities available for sale from
these ratios.
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<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
Minimum
Ratio to be
"Well Company Oak Brook
Capitalized" Consolidated Bank
------------- ------------- ----------
Tier 1
Risk-based >6% 13.26% 11.64%
-
Total Capital
Ratio >10% 14.29% 12.67%
-
Tier 1 Capital
leverage >5% 7.79% 6.84%
-
Liquidity
- - ---------
Effective management of balance sheet liquidity is necessary to fund growth in
earning assets and to pay liability maturities, depository customers' withdrawal
requirements and shareholders' dividends.
The Company has numerous sources of liquidity including a significant portfolio
of shorter term assets, readily marketable investment securities, its deposit
base, and access to borrowing arrangements. Available borrowing arrangements
are summarized as follows:
Oak Brook Bank:
. Informal Federal funds lines of $49,500,000 with seven correspondent
banks.
. Reverse repurchase agreement lines of $50,000,000 with two brokerage
firms.
. Advances up to $21,186,000 from the Federal Home Loan Bank of Chicago.
Oak Brook Bank has currently borrowed $3,500,000 of the advance.
Parent Company:
. Revolving credit arrangement for $5,000,000. The line is currently unused
and matures on April 1, 1996. It is anticipated to be renewed annually.
. The parent company also had cash, short-term investments, and other
readily marketable securities totaling $6,701,000 at September 30, 1995.
-17-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 27 - Financial Data Schedules
B. Reports on Form 8-K
None
-18-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST OAK BROOK BANCSHARES, INC.
--------------------------------
(Registrant)
Date October 27, 1995 /S/ RICHARD M. RIESER, JR.
------------------- --------------------------------
Richard M. Rieser, Jr.,
President, Assistant
Secretary, and Director
Date October 27, 1995 /S/ ROSEMARIE BOUMAN
------------------- --------------------------------
Rosemarie (Burget) Bouman,
Vice President and
Chief Financial Officer
-19-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extracted from SEC
Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 30,571
<INT-BEARING-DEPOSITS> 108
<FED-FUNDS-SOLD> 14,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 116,706
<INVESTMENTS-CARRYING> 137,742
<INVESTMENTS-MARKET> 140,383
<LOANS> 342,053
<ALLOWANCE> 3,988
<TOTAL-ASSETS> 664,016
<DEPOSITS> 550,585
<SHORT-TERM> 58,039
<LIABILITIES-OTHER> 4,859
<LONG-TERM> 0
<COMMON> 7,067
0
0
<OTHER-SE> 43,466
<TOTAL-LIABILITIES-AND-EQUITY> 664,016
<INTEREST-LOAN> 23,683
<INTEREST-INVEST> 10,941
<INTEREST-OTHER> 877
<INTEREST-TOTAL> 35,501
<INTEREST-DEPOSIT> 14,407
<INTEREST-EXPENSE> 16,752
<INTEREST-INCOME-NET> 18,749
<LOAN-LOSSES> 750
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 15,437
<INCOME-PRETAX> 5,686
<INCOME-PRE-EXTRAORDINARY> 5,686
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,471
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.30
<YIELD-ACTUAL> 4.36
<LOANS-NON> 70
<LOANS-PAST> 744
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,859
<CHARGE-OFFS> 727
<RECOVERIES> 106
<ALLOWANCE-CLOSE> 3,988
<ALLOWANCE-DOMESTIC> 3,988
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
