<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 June 30, 1996
-------------------------------------------------
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 July 31, 1996.
Class A 1,840,370
- --------------------------------------- --------------------------------------
CLASS NUMBER OF SHARES
Common 1,520,972
- --------------------------------------- --------------------------------------
CLASS NUMBER OF SHARES
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
- ------------------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets
June 30, 1996 and December 31, 1995 3
Condensed consolidated statements of income
Three months ended June 30, 1996 and 1995 and
Six months ended June 30, 1996 and 1995 5
Condensed consolidated statements of cash flows
Six months ended June 30, 1996 and 1995 7
Notes to condensed consolidated financial
statements -- June 30, 1996 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 11
Part II. Other Information
- ---------------------------
<S> <C>
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 18
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
- ----------
</TABLE>
* Not applicable
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
Assets
- ------
<S> <C> <C>
Cash and due from banks $ 43,153 $ 37,406
Federal funds sold 20,000 -
Interest-bearing deposits
with banks 213 105
Investment Securities:
Securities held to maturity, at
amortized cost (fair value $133,202
and $130,214 for June 30, 1996 and
December 31, 1995) 133,275 128,020
Securities available for sale, at
fair value 122,518 128,172
Loans, net of unearned discount 396,159 362,728
Less-allowance for loan losses (4,122) (3,932)
-------- --------
Net loans 392,037 358,796
-------- --------
Premises and equipment, net 17,411 17,899
Other assets 8,733 7,704
-------- --------
Total assets $737,340 $678,102
======== ========
</TABLE>
-3-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONT.)
(Unaudited)
(In Thousands Except Share Information)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Liabilities
- -----------
Noninterest-bearing demand deposits $139,905 $128,236
-------- --------
Interest-bearing deposits:
Savings deposits and NOW accounts 189,037 191,963
Money market accounts 28,339 26,594
Other time deposits 248,328 208,293
-------- --------
Total interest-bearing deposits 465,704 426,850
-------- --------
Total deposits 605,609 555,086
-------- --------
Securities sold under agreements
to repurchase 55,999 54,657
Treasury, tax and loan demand notes 15,716 6,045
Federal Home Loan Bank advances - 3,500
Other liabilities 5,031 5,052
-------- --------
Total liabilities 682,355 624,340
-------- --------
Shareholders' Equity
- --------------------
Class A Common Stock (aggregate
liquidation preference of $11,609) 3,679 3,677
Common Stock 3,388 3,390
Surplus 10,368 10,368
Unrealized gain (loss) on securities
available for sale, net of taxes (1,045) 356
Retained earnings 39,365 36,704
Less cost of shares in treasury,
172,527 common shares in 1996
and 171,027 in 1995 (770) (733)
-------- --------
Total shareholders' equity 54,985 53,762
-------- --------
Total liabilities and
shareholders' equity $737,340 $678,102
======== ========
</TABLE>
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 Six Months
Ended June 30 Ended June 30
---------------- -----------------
1996 1995 1996 1995
------- ------- -------- -------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 8,987 $ 7,919 $17,530 $15,588
Interest on securities:
U.S. Treasury and Government
agencies 2,955 2,830 5,929 5,583
Obligations of states and political
subdivisions 715 769 1,419 1,529
Other securities 118 91 208 179
Interest on Federal funds sold and
securities purchased under
agreements to resell 178 331 291 442
Interest on deposits with banks 3 2 6 4
------- ------- ------- -------
Total interest income 12,956 11,942 25,383 23,325
------- ------- ------- -------
Interest expense:
Interest on savings deposits and
NOW accounts 1,724 1,976 3,485 3,957
Interest on money market accounts 213 226 421 441
Interest on other time deposits 3,453 2,754 6,702 4,916
Interest on Federal funds purchased
and securities sold under
agreements to repurchase 698 715 1,368 1,355
Interest on Treasury, tax and loan
demand notes 88 31 179 82
Interest on Federal Home Loan Bank
advances - 42 42 109
------- ------- ------- -------
Total interest expense 6,176 5,744 12,197 10,860
------- ------- ------- -------
Net interest income 6,780 6,198 13,186 12,465
Provision for loan losses 330 225 660 525
Net interest income after provision for
loan losses ------- ------- ------- -------
$ 6,450 $ 5,973 $12,526 $11,940
------- ------- ------- -------
</TABLE>
-5-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONT.)
(Unaudited)
(In Thousands Except Share Information)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
---------------------- --------------------
1996 1995 1996 1995
------ ------ ------ --------
<S> <C> <C> <C> <C>
Other income:
Service charges on deposit accounts $ 598 $ 569 $ 1,202 $ 1,145
Trust fees 169 158 337 285
Other operating income 392 318 744 619
Investment securities gains (losses) (7) - 3 -
----- ----- ------ ------
Total other income 1,152 1,045 2,286 2,049
----- ----- ------ ------
Other expenses:
Salaries and employee benefits 3,025 2,756 5,988 5,449
Occupancy expense 356 337 698 668
Equipment expense 433 434 856 863
Data processing fees 382 377 761 777
Professional fees 87 79 163 133
Postage, stationery and supplies 193 226 378 449
Advertising and business development 397 369 794 705
FDIC premiums 1 284 1 568
Other operating expenses 396 479 836 918
----- ----- ------ ------
Total other expenses 5,270 5,341 10,475 10,530
----- ----- ------ ------
Income before provision for income
taxes 2,332 1,677 4,337 3,459
Provision for income taxes 594 317 1,070 688
----- ----- ------ ------
Net income $1,738 $1,360 $ 3,267 $ 2,771
===== ===== ====== ======
Earnings per common share and common
equivalent share $ .50 $ .40 $ .95 $ .81
===== ===== ====== ======
Dividends per share:
Class A Common $ .090 $.0750 $ .180 $ .150
Common .075 .0625 .150 .125
===== ===== ====== ======
Weighted average number of common
shares and common share equivalents 3,451,477 3,429,968 3,448,039 3,428,625
========= ========= ========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-6-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(In Thousands)
<TABLE>
<CAPTION>
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,267 $ 2,771
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, discount accretion, premium
amortization and amortization of intangibles 1,752 1,714
Provision for loan losses 660 525
Gains on securities available for sale (3) -
Decrease (increase) in other assets (539) 337
Increase (decrease) in other liabilities 163 880
-------- --------
Net cash provided by operating activities 5,300 6,227
-------- --------
Cash flows from investing activities:
Purchases of securities held to maturity (24,754) (35,074)
Purchases of securities available for sale (55,137) (2,474)
Proceeds from maturities of securities
held to maturity 19,102 41,150
Proceeds from sales and maturities of
securities available for sale 58,308 14,496
Increase in loans (33,901) (8,661)
Additions to premises and equipment (456) (480)
-------- --------
Net cash used in investing activities (36,838) 8,957
-------- --------
Cash flows from financing activities:
Increase in demand deposits 11,669 13,306
Decrease in savings and NOW accounts (2,924) (26,491)
Increase (decrease) in money market accounts 1,745 (890)
Increase in time deposits 40,033 41,781
Increase (decrease) in securities sold under
agreements to repurchase 1,342 (10,513)
Increase (decrease) in Treasury, tax and
loan demand notes 9,671 (1,745)
Repayment of Federal Home Loan Bank advances (3,500) (2,500)
Purchase of treasury stock (37) -
Dividends paid (606) (466)
-------- --------
Net cash provided by financing activities 57,393 12,482
-------- --------
</TABLE>
-7-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net increase in cash and cash equivalents 25,855 27,666
Cash and cash equivalents at beginning
of period 37,511 36,301
------- -------
Cash and cash equivalents at end of
period $63,366 $63,967
======= =======
Supplemental disclosures:
Interest paid $12,100 $10,531
Income taxes paid 1,200 694
======= =======
</TABLE>
-8-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(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 six months period ended June 30, 1996 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1996. 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, 1995.
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 these commitments to extend credit follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Commercial $ 83,930 $ 62,225
Home equity 61,367 59,536
Credit card 305,602 313,523
</TABLE>
-9-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
3. Shareholders' Equity:
Shares authorized, issued and outstanding are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
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 1,839,706 1,838,682
Outstanding 1,839,706 1,838,682
Common Stock,
$2.00 par value:
Authorized 3,000,000 3,000,000
Issued 1,694,163 1,695,187
Outstanding 1,521,636 1,524,160
</TABLE>
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 16, 1996 the Board declared an increase in its October cash dividend--
22% on its Class A Common and 20% on its Common stock. The new Class A Common
quarterly dividend will be $.11 per share, up from the current quarterly
dividend of $.09 per share. The new Common quarterly dividend will be $.09 per
share, up from the current quarterly dividend of $.075. The dividends will both
be payable October 21, 1996 to shareholders of record on October 10, 1996.
-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 - Second Quarter Results
- -------------------
Net income for the second quarter of 1996 was $1,738,000 compared with
$1,360,000 earned in the second quarter of 1995, an increase of 28%. Earnings
per share for the second quarter of 1996 were $.50 as compared to $.40 for 1995.
Key performance indicators for the 1996 second quarter show a return on average
assets of .97% compared with .85% for the 1995 second quarter. For the second
quarter of 1996, the return on average shareholders' equity was 12.76% compared
with 11.63% for the same quarter of 1995.
Net interest income is the difference between interest earned on loans and
investments and interest paid on deposits and other interest-bearing
liabilities. Net interest income, on a tax-equivalent basis, increased $558,000
or 9%. This increase is attributable to a 12% increase in average earning
assets, primarily loans, offset by a 3% decrease in the net interest margin. The
net interest margin for the second quarter of 1996 was 4.35% compared to 4.47%
for the same period last year.
Average loans for the second quarter of 1996 grew 23% or $72 million in
comparison to the second quarter of 1995. The increase was primarily in real
estate (residential mortgages and construction loans) and indirect auto loans.
Credit card growth was constrained as a result of vigorous competition from
companies with far greater marketing resources.
-11-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
Average balances and effective interest yields and rates on a tax equivalent
basis for the second quarters of 1996 and 1995 were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
Average Effective Average Effective
Balance Yield Balance Yield
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Federal funds sold $ 13,564 5.28% $ 21,933 6.05%
Interest-bearing
deposits with banks 215 5.61 128 6.27
Securities 257,098 6.38 252,053 6.38
Loans 386,365 9.40 314,634 10.15
-------- ---- -------- -----
Total earning assets/
yield $657,242 8.13% $588,748 8.38%
======== ==== ======== =====
Interest-bearing
deposits $460,515 4.71% $412,594 4.82%
Short-term debt 63,789 4.96 55,368 5.40
Long-term debt - - 3,500 4.81
-------- ---- -------- -----
Total interest-bearing
liabilities/cost of
funds $524,304 4.74% $471,462 4.89%
======== ==== ======== =====
Net interest margin 4.35% 4.47%
==== =====
Net interest spread 3.39% 3.49%
==== =====
</TABLE>
Based on management's review of the adequacy of the loan loss reserve, the
provision for loan losses was increased to $330,000 for the second quarter of
1996. The increase was to reserve for the growth in the loan portfolio and
increased credit card charge offs.
Total other income increased $107,000 or 10%. Service charges on deposit
accounts increased $29,000 primarily due to an increase in service charges and
fees on commercial accounts. The increase in other operating income was
principally attributable to increased fees on mortgages sold and merchant credit
card processing fees.
Other expenses decreased $71,000. Salaries and employee benefits rose $269,000
due to upgrading of staff, normal salary increases and higher benefit payments.
The Company invested in these positions to enhance customer sales and service
and expand business development opportunities.
-12-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
FDIC premiums decreased $283,000 due to lower assessments. The FDIC premium was
lowered to $500 per quarter for well capitalized banks, effective January 1,
1996.
Other operating expenses decreased $83,000 primarily due to decreased credit
card fraud expense and the end of intangible amortization relating to a bank
acquisition.
Earnings Highlights - Six Month Results
- -------------------
Net income for the six months ended June 30, 1996 was $3,267,000, compared with
$2,771,000 earned in 1995, an increase of 18%. Earnings per share for the first
six months of 1996 were $.95 as compared to $.81 earned in 1995.
Key performance indicators for the first six months of 1996 and 1995 show a
return on average assets of .93% and .89% respectively. Return on average
shareholders' equity was 12.02% for 1996 compared with 12.39% for 1995.
On a tax equivalent basis, net interest income for the first six months of 1996
totaled $13,841,000 as compared to $13,168,000 in 1995, a 5% increase. This
increase is due to a 12% increase in average earning assets offset by a 7%
decrease in the net interest margin to 4.31% in 1996 from 4.61% in 1995.
-13-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
Average balances and effective interest yields and rates on a tax equivalent
basis for the first six months of 1996 and 1995 were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
Average Effective Average Effective
Balance Yield Balance Yield
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Federal Funds sold $ 10,966 5.34% $ 14,791 6.03%
Interest-bearing
deposits with banks 233 5.18 135 5.98
Securities 258,018 6.34 248,918 6.42
Loans 376,625 9.40 312,396 10.11
-------- ---- -------- -----
Total earning assets/
yield $645,842 8.11 $576,240 8.41%
======== ==== ======== =====
Interest-bearing
deposits $451,802 4.72 $405,009 4.64%
Short-term debt 61,677 5.04 54,097 5.35
Long-term debt 1,750 4.83 4,715 4.66
-------- ---- -------- -----
Total interest-bearing
liabilities/cost of
funds $515,229 4.76% $463,821 4.72%
======== ==== ======== =====
Net interest margin 4.31% 4.61%
==== =====
Net interest spread 3.35% 3.69%
==== =====
</TABLE>
Total other income rose $237,000 or 12%. Service charges on deposit accounts
increased $57,000 primarily due to an increase in business account analysis fees
and service charges on personal accounts. Trust fees increased $52,000 primarily
due to an increase in assets under management. The increase in other operating
income was primarily attributable to increased merchant credit card processing
fees, mutual fund commissions and fees on mortgages sold.
Other expenses decreased $55,000. Salaries and employee benefits rose $539,000
due to upgrading of staff, normal salary increases and higher benefit payments.
Advertising and business development costs increased $89,000 primarily due to
the advertising of retail products and increased business development expenses.
-14-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
FDIC premiums decreased $567,000. The premiums were lowered to $500 per quarter
as of January 1, 1996.
Other operating expense is down $82,000 primarily due to a decrease in credit
card fraud expense and reduction in the amortization of intangibles.
Asset Quality
- -------------
Asset quality remains excellent, with nonperforming assets (nonaccrual loans,
renegotiated loans, loans past due 90 days or more and still accruing) totaling
only $335,000. Net chargeoffs for the first six months of 1996 totaled $469,000
or .25% of average loans outstanding. The allowance for loan losses to total
loans was 1.04% at June 30, 1996.
The following table summarizes the Company's nonperforming assets (in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Nonaccrual $ 0 $ 0
Loans which are past due
90 days or more 335 104
----- -----
Total nonperforming loans 335 104
Other real estate owned - -
----- -----
Total nonperforming assets $ 335 $ 104
===== =====
Nonperforming loans to loans
outstanding .08% .03%
Nonperforming assets to loans
outstanding and other real
estate owned .08% .03%
Allowance for loan losses to
nonperforming loans 12.30x 37.81x
</TABLE>
Current economic trends of higher consumer debt burdens and a rise in consumer
bankruptcies contributed to the increase in percent of net credit card
chargeoffs to average credit card outstandings of 1.66% in the first six months
of 1996 as compared to 1.36% during the same period in 1995. This compares
favorably to an industry average for net credit card chargeoffs of 4.19% for the
first quarter of 1996. Net credit card chargeoffs totaled $260,000 for the
second quarter of 1996 compared to $216,000 for the first quarter of 1996. We
expect some continued deterioration in the credit card portfolio and may
increase the provision for loan losses accordingly.
In July, 1996, a commercial real estate development loan with a current balance
of $2,012,000 was put on nonaccrual status. The
-15-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
developer is in the process of establishing a two-part liquidation plan--
complete and auction the existing town home inventory and rezone the remaining
land to build single family housing.
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 remains strong at $55 million. The unrealized loss on
securities available for sale at June 30, 1996 is $1,045,000 compared to a
$356,000 gain at December 31, 1995.
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 June 30, 1996 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.
<TABLE>
<CAPTION>
Well Company Oak Brook
Capitalized Consolidated Bank
------------ ------------- ----------
<S> <C> <C> <C>
Tier 1
Risk-based >6% 12.87% 11.02%
-
Total Capital
Ratio >10% 13.82% 11.97%
-
Tier 1 Capital
leverage >5% 7.76% 6.69%
-
</TABLE>
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
-16-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
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 $18,476,000 from the Federal Home Loan Bank of Chicago.
Parent Company:
. Revolving credit arrangement for $5,000,000. The line is currently unused
and will mature on May 1, 1997. It is anticipated to be renewed annually.
. The parent company also had cash, short-term investments, and other readily
marketable securities totaling $8,685,000 at June 30, 1996.
-17-
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held May 7, 1996 at 1400 Sixteenth
Street, Oak Brook Bank Conference Center, Oak Brook, Illinois.
Matters presented to the shareholders for vote were the election of directors,
approval of the First Oak Brook Bancshares, Inc. amended and restated
Performance Bonus Plan and the ratification of the selection of the independent
auditors. The results of the votes on these matters are as follows:
ELECTION OF DIRECTORS
- ---------------------
FOR DIRECTORS
<TABLE>
<CAPTION>
EUGENE RICHARD FRANK MIRIAM ALTON GEOFFREY ROBERT
HEYTOW RIESER PARIS FITZGERALD WITHERS STONE WROBEL
------ ------ ----- ---------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Common
Votes 1,299,576 1,299,576 1,299,576 1,299,576 1,299,576 1,299,464 1,299,576
Total Class A
Votes 80,998 80,983 80,998 80,998 80,962 80,940 80,975
--------- --------- --------- --------- --------- --------- ---------
Total Votes 1,380,574 1,380,559 1,380,574 1,380,574 1,380,538 1,380,404 1,380,551
========= ========= ========= ========= ========= ========= =========
Percent of Total
Vote 85.43 85.43 85.43 85.43 85.43 85.42 85.43
</TABLE>
WITHHOLD DIRECTORS
<TABLE>
<CAPTION>
EUGENE RICHARD FRANK MIRIAM ALTON GEOFFREY ROBERT
HEYTOW RIESER PARIS FITZGERALD WITHERS STONE WROBEL
------ ------ ----- ---------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Common
Votes 4,218 4,218 4,218 4,218 4,218 4,330 4,218
Total Class A
Votes 32 47 32 32 68 90 54
--------- --------- --------- --------- --------- --------- ---------
Total Votes 4,250 4,265 4,250 4,250 4,286 4,420 4,272
========= ========= ========= ========= ========= ========= =========
Percent of Total
Vote .26 .26 .26 .26 .27 .27 .26
</TABLE>
-18-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
APPROVAL OF FIRST OAK BROOK BANCSHARES, INC. AMENDED AND RESTATED PERFORMANCE
- -----------------------------------------------------------------------------
BONUS PLAN
- ----------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
Total Common
Votes 1,263,825 28,257 2,312
Total Class A
Votes 76,729 3,442 803
--------- ------ -----
Total Votes 1,340,554 31,699 3,115
========= ====== =====
Percent of Total
Vote 82.96 1.96 .19
</TABLE>
RATIFICATION OF THE SELECTION OF THE INDEPENDENT AUDITORS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
Total Common
Votes 1,302,039 - 1,797
Total Class A
Votes 82,326 61 48
--------- -- -----
Total Votes 1,384,365 61 1,845
========= == =====
Percent of Total
Vote 85.67 .004 .11
</TABLE>
The number of Common and Class A Common shares eligible to vote were 1,524,056
and 1,838,786 respectively. The Class A Common shares represent 91,939 votes
because each share is entitled to 1/20th of one vote.
-19-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit (10.1) Third Amendment Dated June 19, 1996, to the Data Processing
Agreement between First Data Resources Inc. and Oak Brook
Bank dated November 22, 1991. (Exhibit 10.3 to the Company's
Form 10-K Annual Report for the year ended December 31,
1994, incorporated herein by reference. Amendment thereto
dated March 1, 1996 filed with the Company's Form 10-K
Annual Report for the year ended December 31, 1995,
incorporated herein by reference) Amendment thereto dated
June 19, 1996 filed herewith.
Exhibit (27) Financial Data Schedule
B. Reports on Form 8-K
None
-20-
<PAGE>
FIRST OAK BROOK BANCHARES, 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 August 5, 1996 /S/RICHARD M. RIESER, JR.
--------------------- --------------------------------
Richard M. Rieser, Jr.,
President, Assistant
Secretary, and Director
Date August 5, 1996 /S/ROSEMARIE BOUMAN
--------------------- --------------------------------
Rosemarie Bouman,
Vice President, Chief
Financial Officer and
Chief Accounting Officer
-21-
<PAGE>
Exhibit (10.1)
3D AMENDMENT TO SERVICE AGREEMENT
This 3d Amendment to Service Agreement made and entered into this 19th day
of June, 1996 by and between Oak Brook Bank, 1400 Sixteenth Street, Oak Brook,
Illinois 60521 ("Buyer") and First Data Resources Inc., 7301 Pacific Street,
Omaha, Nebraska 68114 ("FDRI").
W I T N E S S E T H:
WHEREAS, Buyer and FDRI heretofore entered into a Service Agreement dated
as of November 22, 1991 as amended by Amendments to Service Agreement dated
September 2, 1994, March 1, 1996, N/A (the "Service Agreement"); and
WHEREAS, Buyer and FDRI now desire to amend the Service Agreement as
hereinafter more particularly set forth;
NOW THEREFORE, Buyer and FDRI hereby agree as follows:
1. Article 1 of the Service Agreement is hereby amended by the addition of
a Section 1.7, to read as follows, effective June 19, 1996 (hereinafter referred
to as the "Effective Date"):
"1.7 CREDIT PERFORMANCE SERVICES. During the remaining term of this
Agreement, FDRI will make available to Buyer the following Credit
Performance Services:
(a) Credit Performance Services shall consist of those services
described both in this section and in Exhibit 'A' of this Agreement.
FDRI shall supply all equipment, facilities, and personnel necessary to
provide the Credit Performance Services.
(b) In the event FDRI determines that performance of Credit
Performance Services in accordance with the terms of this section and
Exhibit 'A' in any jurisdiction requires licensing by such
jurisdiction, FDRI shall cause the Credit Performance Services to be
performed by an entity which meets the requirements of such
jurisdiction, unless otherwise directed by Buyer to cease performing
Credit Performance Services in such jurisdiction. If no such entity is
available to provide such Services in accordance with the terms of this
Agreement, FDRI shall advise Buyer, and FDRI shall have no further
obligation to provide or cause to be provided the Credit Performance
Services in such jurisdictions.
<PAGE>
2
(c) In order to assist FDRI with its performance of the Credit
Performance Services, Buyer hereby agrees:
(i) to notify FDRI, on a monthly basis, regarding those
Cardholder Accounts On File for which Buyer elects to have FDRI
perform Credit Performance Services;
(ii) to approve all payment plans and receive all payments from
the Cardholder Accounts On File;
(iii) to make all decisions, in its sole discretion, as to if and
when any Cardholder Accounts On File are to be turned over to a
collection agency;
(iv) that FDRI is hereby authorized to contact the Cardholder
Accounts On File, whether in writing or verbally, in Buyer's
clients' names;
(v) that FDRI is acting as an agent of Buyer in providing the
Credit Performance Services; and
(vi) to establish all parameters regarding the content and timing
of all telephone and letter contact which FDRI will initiate on
Buyer's behalf with the Cardholder Accounts On File.
(d) Buyer represents and warrants to FDRI the following:
(i) no delinquent or overlimit account placed now or hereafter
by Buyer in its sole discretion with FDRI for services under this
Agreement will have been in default at the time FDRI will have
first begun to perform services with respect to such account;
(ii) Buyer owns all of the delinquent and overlimit accounts
placed by Buyer with FDRI for the application of the Credit
Performance Services hereunder, and each of such delinquent and
overlimit accounts constitutes a valid and bona fide claim for
goods and/or services furnished to the applicable cardholder;
(iii) all information provided by Buyer to FDRI in connection with
the performance of Credit Performance Services hereunder with
respect to any delinquent or overlimit account will be true and
correct.
(e) FDRI represents and warrants that, assuming the accuracy of the
<PAGE>
3
representations and warranties of Buyer set forth in paragraph (d)
above, the performance by FDRI of the Credit Performance Services to be
provided to Buyer under this Agreement does not violate any of the laws
in effect as of the date hereof (other than those laws which would
otherwise be applicable to Buyer if Buyer were performing the Credit
Performance Services for itself) regulating the licensing and
collection practices of entities performing debt collection activities.
(f) Buyer hereby agrees that it shall, pursuant to the provisions of
Section 5.1 of this Agreement, indemnify and hold harmless FDRI and its
employees from and against any and all liability, loss, damage or
expense, including reasonable attorneys fees which FDRI and its
employees may suffer which relate solely to a breach by Buyer of its
representations and warranties set forth in paragraph (d) above. FDRI
hereby agrees that it shall, pursuant to the provisions of Section 5.1
of this Agreement, indemnify and hold harmless Buyer and its employees
from and against any and all liability, loss, damage or expense,
including reasonable attorneys fees which Buyer and its employees may
suffer which relate solely to a breach by FDRI of its representation
and warranty set forth in paragraph (e) above; provided, however, that
FDRI shall not be obligated to so indemnify Buyer or its employees from
any liability, loss, damage or expense to the extent that any breach by
FDRI of its representation and warranty set forth in paragraph (e)
above results from a breach by Buyer of the representations and
warranties of Buyer set forth in paragraph (d) above. Notwithstanding
anything in Section 5.1 to the contrary, in no event shall the
cumulative liability of FDRI for any and all damages of any nature
whatsoever in connection with FDRI's performance of the Credit
Performance Services on behalf of Buyer during any one Processing Year
exceed one million dollars ($1,000,000.00).
(g) In the event of the initiation of any legal proceeding, claim or
demand against Buyer by a third party, whether a private or a
governmental entity, that relates to an indemnification claim under
paragraph (f) above, FDRI shall have the sole and absolute right after
the receipt of notice, at its option and at its own expense, to be
represented by counsel of its choice and to control, defend against,
negotiate, settle or otherwise deal with such proceeding, claim or
demand; provided, however, that Buyer may participate in any such
proceeding with counsel of its choice, with FDRI being obligated to
reimburse Buyer for its reasonable costs and expenses of such counsel.
The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand. To the extent FDRI elects not to
defend such proceeding, claim or demand, and Buyer defends against or
otherwise deals with any such proceeding, claim or demand, Buyer may
retain counsel, at its sole
<PAGE>
4
discretion and control the defense of such proceeding, claim
or demand, with FDRI being obligated to reimburse Buyer for
its reasonable costs and expenses of such counsel, or settle
or otherwise deal with such proceeding at its sole
discretion. Subject to the preceding sentence, FDRI may, in
its sole and absolute discretion, settle any other
proceeding, claim or demand that (i) relates to an
indemnification claim under paragraph (f) above and (ii)
involves only the payment of monetary damages, expenses or
costs. If the settlement involves any injunctive relief,
FDRI may not settle any such related proceeding, claim or
demand without the consent of Buyer, such consent not to be
unreasonably withheld. Within thirty (30) days after (i) any
final judgment or award shall have been rendered by a court
or governmental body of a competent jurisdiction and the
time in which the appeal therefrom has expired, (ii) a
settlement shall have been consummated, or (iii) FDRI and
Buyer shall arrive at a mutually binding agreement with
respect to each separate matter alleged by Buyer to be
indemnified, Buyer shall forward to FDRI notice of any sums
due and owing by FDRI with respect to such matter, and FDRI
shall pay all such sums so owing to Buyer by wire transfer
or certified or bank cashier's check. Buyer shall provide to
FDRI all information, assistance and authority reasonably
requested in order to evaluate any third party claim, suit
or proceeding and effect any defense, compromise or
settlement.
(h) Anything in this Agreement to the contrary
notwithstanding, Customer may terminate FDR's performance of
the Credit Performance Services hereunder at any time upon
not less than thirty (30) days' prior written notice
delivered to FDR."
2. Exhibit "A", Section III of the Service Agreement is hereby amended by
the addition of the following, effective upon the Effective Date:
"Credit Performance
Services The delinquent/overlimit account billing, skiptracing and
related services performed by FDRI on behalf of Buyer,
consisting of the following:
I. Over the Limit Accounts, Delinquent Billing Accounts from 15-29 Days
Delinquent and Delinquent Billing Accounts 30-59 Days Delinquent (30 Days
Delinquent/60 Days Delinquent on the FDRI System)
A. Week One of Each Cycle (or after Adaptive Control)
1. Three dialer attempts per day until contact established
a. One attempt to home phone number (8:00 a.m. - 10:00 a.m.)
b. One attempt to business phone number (10:00 a.m. - 5:00
p.m.)
<PAGE>
5
c. One attempt to home phone number (5:00 p.m. - 9:00 p.m.)
2. Days Worked
a. Business phone number (Monday, Tuesday, Wednesday,
Thursday and Friday)
b. Home phone number (Monday, Tuesday, Wednesday, Thursday,
Friday and Saturday a.m.)
B. Message Answering Machines for Reference to Customer Service Number
C. Refresh Bad Numbers, Telcos, Non-Contacts and Business Number Only
Accounts by Batch Referral to FastData/sm/.
D. Reattempt all New Numbers Received from FastData/sm/.
E. Refer all Non-Refreshed Number Accounts to Skiptracing Unit.
F. Reattempt all New Numbers Received from Skiptracing Unit.
G. Attempt Broken Promise Follow-Up Beginning on Fifth Day After Mail
Date.
II. Delinquent Billing Accounts 60 Or More Days Delinquent (90 Or More Days
Delinquent on the FDRI System)
A. Weeks One, Two, Three and Four of Each Cycle
1. Three Dialer Attempts per Day Until Contact Established.
a. One to two attempts to business phone number (8:00 a.m. -
5:00 p.m.)
b. One to two attempts to home phone number (5:00 p.m. -
9:00 p.m.)
2. Days Worked
a. Business phone number (Monday, Tuesday, Wednesday,
Thursday and Friday)
<PAGE>
6
b. Home phone number (Monday, Tuesday, Wednesday, Thursday,
Friday and Saturday a.m.)
B. Message Answering Machines for Reference to Inbound Delinquent Billing
Unit.
C. Refresh Bad Numbers, Telcos, Non-Contacts and Business Number Only
Accounts by Batch Referral to FastData/sm/.
D. Reattempt all New Numbers Received from FastData/sm/.
E. Refer all Non-Refreshed Number Accounts to Skiptracing Unit.
F. Reattempt all New Numbers Received from Skiptracing Unit.
G. Attempt Broken Promise Follow-Up Beginning on Seventh Day After Mail
Date.
H. Week Two (Repeat A - G for Non-Contacted customer).
I. Week Three (Repeat A - G for Non-Contacted customer).
J. Week Four (Repeat A - G for Non-Contacted customer)."
3. Exhibit "B" of the Service Agreement is hereby amended by the addition
of the following, effective upon the Effective Date:
XII. CREDIT PERFORMANCE SERVICE FEES
<TABLE>
<CAPTION>
Item
Number Item Per Item Charge
- ------ ---- ---------------
<S> <C> <C>
7295 Monthly Service Fee per Account in
15 - 59 Day (FDRI 40 - 89 Day) Queue $ 3.7900 /account
7296 Monthly Service Fee per Account in
60+ Day (FDRI 90+ Day) Queue Quote /account*
7297 Inbound Delinquent Billing Call 3.0000 /call accepted
7298 Skiptracing per Account Quote /account*
</TABLE>
* - At the time of the execution of this Amendment to Service Agreement, Buyer
has elected not to utilize the indicated services. In the event that Buyer
should, during the term of this Agreement, elect to utilize such services, Buyer
and FDRI shall, prior to the commencement of any such services, mutually agree
in writing on the prices to be charged for such services.
<PAGE>
7
For any other services performed by FDRI on behalf of Buyer in connection with
the Credit Performance Services which are covered under this Exhibit 'B'
(including postage), Buyer shall pay FDRI for such services at the rates set
forth in the appropriate section of this Exhibit 'B'."
4. As hereby amended and supplemented, the Service Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Service Agreement the day and year first above written.
FIRST DATA RESOURCES INC. OAK BROOK BANK
By: /s/CHRIS J. SHULER By: /s/ROSEMARIE BOUMAN
------------------------ -----------------------------
Title: Senior Vice President Title: Executive Vice President and
------------------------ -----------------------------
Chief Financial Officer
-----------------------------
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 43,153
<INT-BEARING-DEPOSITS> 213
<FED-FUNDS-SOLD> 20,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 122,518
<INVESTMENTS-CARRYING> 133,275
<INVESTMENTS-MARKET> 133,202
<LOANS> 396,159
<ALLOWANCE> 4,122
<TOTAL-ASSETS> 737,340
<DEPOSITS> 605,609
<SHORT-TERM> 71,715
<LIABILITIES-OTHER> 5,031
<LONG-TERM> 0
<COMMON> 7,067
0
0
<OTHER-SE> 47,918
<TOTAL-LIABILITIES-AND-EQUITY> 737,340
<INTEREST-LOAN> 17,530
<INTEREST-INVEST> 7,556
<INTEREST-OTHER> 297
<INTEREST-TOTAL> 25,383
<INTEREST-DEPOSIT> 10,608
<INTEREST-EXPENSE> 12,197
<INTEREST-INCOME-NET> 13,186
<LOAN-LOSSES> 660
<SECURITIES-GAINS> 3
<EXPENSE-OTHER> 10,475
<INCOME-PRETAX> 4,337
<INCOME-PRE-EXTRAORDINARY> 4,337
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,267
<EPS-PRIMARY> .95
<EPS-DILUTED> .95
<YIELD-ACTUAL> 4.35
<LOANS-NON> 0
<LOANS-PAST> 335
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,932
<CHARGE-OFFS> 536
<RECOVERIES> 66
<ALLOWANCE-CLOSE> 4,122
<ALLOWANCE-DOMESTIC> 4,122
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
