<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, 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 (630) 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, 1996.
Class A 1,852,700
- --------------------------------------------------------- ----------------
CLASS NUMBER OF SHARES
Common 1,520,393
- --------------------------------------------------------- ----------------
CLASS NUMBER OF SHARES
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
INDEX
Part I. Financial Information
- ------------------------------
Item 1. Financial Statements (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Condensed consolidated balance sheets
September 30, 1996 and December 31, 1995 3
Condensed consolidated statements of income
Three months ended September 30, 1996 and 1995 and
Nine months ended September 30, 1996 and 1995 5
Condensed consolidated statements of cash flows
Nine months ended September 30, 1996 and 1995 7
Notes to condensed consolidated financial
statements -- September 30, 1996 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
- ----------
</TABLE>
* 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, 1996 AND DECEMBER 31, 1995
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- -------------
Assets
- ------
<S> <C> <C>
Cash and due from banks $ 50,934 $ 37,406
Federal funds sold and securities
purchased under agreements to resell 28,000 0
Interest-bearing deposits
with banks 250 105
Securities held to maturity, at
amortized cost (fair value $129,624
and $130,214 at September 30, 1996
and December 31, 1995) 129,259 128,020
Securities available for sale, at
fair-value 131,810 128,172
Loans, net of unearned discount 412,393 362,728
Less-allowance for loan losses (4,125) (3,932)
-------- --------
Net loans 408,268 358,796
-------- --------
Premises and equipment, net 17,165 17,899
Other assets 8,533 7,704
-------- --------
Total assets $774,219 $678,102
======== ========
</TABLE>
-3-
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONT.)
(Unaudited)
(In Thousands Except Share Information)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- -------------
<S> <C> <C>
Liabilities
- -----------
Noninterest-bearing demand deposits $138,377 $128,236
-------- --------
Interest-bearing deposits:
Savings deposits and NOW accounts 184,790 191,963
Money market accounts 29,420 26,594
Other time deposits 286,795 208,293
-------- --------
Total interest-bearing deposits 501,005 426,850
-------- --------
Total deposits 639,382 555,086
-------- --------
Securities sold under agreements
to repurchase 51,838 54,657
Treasury tax and loan demand notes 20,278 6,045
Federal Home Loan Bank advances - 3,500
Other liabilities 5,856 5,052
-------- --------
Total liabilities 717,354 624,340
-------- --------
Shareholders' Equity
- --------------------
Class A Common Stock (aggregate
liquidation preference of $11,616) 3,682 3,677
Common Stock 3,408 3,390
Surplus 10,406 10,368
Unrealized gain (loss) on securities
available for sale, net of taxes (609) 356
Retained earnings 40,748 36,704
Less cost of shares in treasury,
172,527 in 1996 and 171,027
common shares in 1995 (770) (733)
-------- --------
Total shareholders' equity 56,865 53,762
-------- --------
Total liabilities and
shareholders' equity $774,219 $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 Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 9,187 $ 8,094 $26,718 $23,683
Interest on investment securities:
U.S. Treasury and government
agencies 2,998 2,798 8,926 8,381
Obligations of states and political
subdivisions 717 779 2,136 2,308
Other securities 109 74 317 252
Interest on Federal funds sold and
securities purchased under
agreements to resell 321 430 612 871
Interest on deposits with banks 3 2 9 6
------- ------- ------- -------
Total interest income 13,335 12,177 38,718 35,501
------- ------- ------- -------
Interest expense:
Interest on savings deposits and
NOW accounts 1,690 1,941 5,174 5,898
Interest on money market accounts 233 196 654 637
Interest on other time deposits 3,849 2,966 10,551 7,872
Interest on securities sold under
agreements to repurchase 717 707 2,086 2,062
Interest on Treasury, tax and loan
demand notes 107 49 286 131
Interest on Federal Home Loan Bank
advances - 33 42 152
------- ------- ------- -------
Total interest expense 6,596 5,892 18,793 16,752
------- ------- ------- -------
Net interest income 6,739 6,285 19,925 18,749
Provision for loan losses 375 225 1,035 750
Net interest income after provision for ------- ------- ------- -------
loan losses $ 6,364 $ 6,060 $18,890 $17,999
------- ------- ------- -------
</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
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Other income:
Service charges on deposit accounts $ 623 $ 600 $ 1,824 $ 1,744
Trust fees 160 152 497 436
Other operating income 462 323 1,208 944
Investment securities gains 8 - 11 -
---------- ---------- ---------- ----------
Total other income 1,253 1,075 3,540 3,124
---------- ---------- ---------- ----------
Other expenses:
Salaries and employee benefits 3,026 2,798 9,014 8,247
Occupancy expense 365 350 1,063 1,018
Equipment expense 451 426 1,307 1,290
Data processing fees 433 321 1,194 1,099
Professional fees 81 84 244 218
Postage, stationery and supplies 174 158 552 607
Advertising and business development 392 343 1,186 1,049
FDIC premiums 1 (29) 2 539
Other operating expenses 415 456 1,251 1,370
---------- ---------- ---------- ----------
Total other expenses 5,338 4,907 15,813 15,437
---------- ---------- ---------- ----------
Income before provision for income
taxes 2,279 2,228 6,617 5,686
Provision for income taxes 557 528 1,627 1,215
---------- ---------- ---------- ----------
Net income $ 1,722 $ 1,700 $ 4,990 $ 4,471
========== ========== ========== ==========
Earnings per common share and common
equivalent share $ .50 $ .49 $ 1.45 $ 1.30
========== ========== ========== ==========
Dividends per share:
Class A Common $ .090 $ .0750 $ .270 $ .2250
Common .075 .0625 .225 .1875
========== ========== ========== ==========
Weighted average number of common
shares and common share
equivalents 3,443,876 3,433,360 3,447,971 3,430,674
========== ========== ========== ==========
</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, 1996 AND 1995
(In Thousands)
<TABLE>
<CAPTION>
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,990 $ 4,471
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, discount accretion, premium
amortization and amortization of intangibles 2,529 2,936
Provision for loan losses 1,035 750
Investment securities gains (11) -
Increase in other assets (576) (1,139)
Increase in other liabilities 988 1,262
-------- --------
Net cash provided by operating activities 8,955 8,280
-------- --------
Cash flows from investing activities:
Purchases of securities held to maturity (41,033) (51,959)
Purchases of securities available for sale (70,905) (14,388)
Proceeds from maturities of securities
held to maturity 36,034 62,642
Proceeds from sales and maturities of
securities available for sale 68,531 17,761
Increase in loans (50,507) (32,993)
Additions to premises and equipment (690) (647)
-------- --------
Net cash used in investing activities (58,570) (19,584)
-------- --------
Cash flows from financing activities:
Increase in demand deposits 10,141 11,966
Decrease in savings and NOW accounts (7,173) (25,168)
Increase (decrease) in money market accounts 2,826 (1,065)
Increase in time deposits 78,502 51,229
Increase (decrease) in Treasury, tax and
loan demand notes 14,233 (3,137)
Repayment of Federal Home Loan Bank advances (3,500) (2,500)
Decrease in securities sold under agreements
to repurchase (2,819) (10,901)
Exercise of stock options 61 4
Purchase of treasury stock (37) -
Dividends paid (946) (746)
-------- --------
Net cash provided by financing activities 91,288 19,682
-------- --------
</TABLE>
-7-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Net increase in cash and cash
equivalents 41,673 8,378
Cash and cash equivalents at beginning
of period 37,511 36,301
------- -------
Cash and cash equivalents at end
period $79,184 $44,679
======= =======
Supplemental disclosures:
Interest paid $18,185 $16,397
Income taxes paid 1,855 1,231
======= =======
</TABLE>
-8-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 nine month periods ended September 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 commitments to extend credit follows (in thousands):
September 30, 1996 December 31, 1995
------------------ -----------------
<TABLE>
<CAPTION>
<S> <C> <C>
Commercial $ 86,556 $ 62,225
Home equity 62,546 59,536
Credit card 309,530 313,523
</TABLE>
-9-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
3. Shareholders' Equity:
Shares authorized, issued and outstanding are as follows:
<TABLE>
<CAPTION>
September 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 1,840,949 1,838,682
Outstanding 1,840,949 1,838,682
Common Stock,
$2.00 par value:
Authorized 3,000,000 3,000,000
Issued 1,703,920 1,695,187
Outstanding 1,531,393 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 of Directors declared an increase in its October
cash dividend--22% on its Class A Common stock and 20% on its Common stock. The
new Class A Common quarterly dividend was $.11 per share, up from the July
dividend of $.09 per share. The new Common dividend was $.09 per share, up from
the July dividend of $.075. The dividends were both paid October 21, 1996 to
shareholders of record on October 10, 1996.
On October 15, 1996 the Board declared an increase in its January, 1997 cash
dividend--18% on its Class A Common stock and 17% on its Common stock. The new
Class A Common quarterly dividend will be $.13 per share, up from the October,
1996 quarterly dividend of $.11 per share. The new Common quarterly dividend
will be $.105 per share, up from the October, 1996 quarterly dividend of $.09
per share. The dividends will both be payable January 22, 1997 to shareholders
of record on January 10, 1997.
-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 1996, the Company earned $1,722,000, compared with
$1,700,000 in the third quarter of 1995, an increase of 1%. Earnings per share
for the third quarter of 1996 were $.50 as compared to $.49 in the same period
last year.
Key performance indicators for the 1996 third quarter show a return on average
assets of .92% compared with 1.02% for the 1995 third quarter. For the third
quarter of 1996, the return on average shareholders' equity was 12.34% compared
with 13.74% 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. On a tax equivalent basis, net interest income for the third
quarter of 1996 totaled $7,075,000 as compared to $6,636,000 in 1995, a 7%
increase. The increase in net interest income was due to a 13% increase in
average earning assets offset by a 6% decrease in net interest margin. The net
interest margin for the third quarter of 1996 was 4.12% compared to 4.36% for
the same period last year.
The compression of the net interest margin was the result of the following:
. During the third quarter of 1995, the prime rate averaged 8.77%, while in
1996 the prime rate averaged 8.25%. Third quarter 1996 yields on earning
assets reflect this decrease, declining 27 basis points in comparison with
the third quarter of 1995, while the yield on interest-bearing liabilities
declined only 6 basis points in comparison with the third quarter of 1995.
. Retail consumers showed a strong preference for higher yielding CD's over
shorter-term, lower yielding savings and money market accounts. The third
quarter 1996 average balance for savings and money market accounts declined
$11 million compared to third quarter 1995, while the third quarter 1996
average balance for time deposits increased $71 million compared to third
quarter 1995. Competitive pressure for consumer deposits from banks and
mutual funds kept CD rates relatively high.
-11-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
Average loans for the third quarter of 1996 increased $76 million or 23% in
comparison to the third quarter of 1995. The increase was primarily in real
estate (construction loans and residential mortgages) and indirect auto loans.
Credit card growth was constrained as a result of vigorous competition from
companies with far greater marketing resources.
Average balances and effective interest yields and rates on a tax equivalent
basis for the third 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 $ 24,268 5.28% $ 29,371 5.80%
Interest-bearing
deposits with banks 248 5.31 122 6.50
Securities 256,713 6.38 248,040 6.35
Loans 401,565 9.15 325,643 9.90
-------- ---- -------- ----
Total earning assets/
yield $682,794 7.97% $603,176 8.24%
======== ==== ======== ====
Interest-bearing
deposits $479,507 4.79% $419,426 4.82%
Short-term debt 65,838 4.99 56,679 5.30
Long-term debt - - 3,500 4.76
-------- ---- -------- ----
Total interest-bearing
liabilities/cost of
funds $545,345 4.81% $479,605 4.87%
======== ==== ======== ====
Net interest margin 4.12% 4.36%
==== ====
Net interest spread 3.16% 3.37%
==== ====
</TABLE>
Based on management's review of the adequacy of the loan loss reserve, the
Company recorded a provision for loan losses of $375,000 for the third quarter
of 1996, an increase of $150,000 over the third quarter of 1995. See the Asset
Quality section for further information.
Total other income increased $178,000 or 17%. Service charges on deposit
accounts increased $23,000 primarily due to an increase in business account
analysis fees. The increase in other operating income of $139,000 was
principally attributable to increased fees on mortgages sold and income from a
lease buy out by a tenant at the Company's Oak Brook office.
-12-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
Other expenses increased $431,000 or 9%. The increase is primarily due to
increases in salary and employee benefits, data processing and advertising and
business development expenses.
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. The FDIC premium was
lowered again to $500 per quarter for well-capitalized banks, effective January
1, 1996.
Salaries and employee benefits rose $228,000. The increase is due to upgrading
staff, normal salary increases and higher benefit payments. The Company invested
in staff upgrades to enhance customer service and expand business development
opportunities.
Data processing fees increased $112,000 primarily due to the Company's
subsidiary bank paying for its correspondent bank services in fees rather than
in balances and due to higher credit card processing fees.
Advertising and business development costs increased $49,000 primarily due to
retail product advertising and business entertainment costs.
Earnings Highlights - Nine Month Results
- -------------------
Net income for the nine months ended September 30, 1996 was $4,990,000, compared
with $4,471,000 earned in 1995, an increase of 12%. Earnings per share for the
first nine months of 1996 were $1.45 as compared to $1.30 earned in 1995.
Key performance indicators for the first nine months of 1996 and 1995 show a
return on average assets of .93% and .94%, respectively. Return on average
shareholders' equity was 12.13% for 1996 compared with 12.83% for 1995.
On a tax equivalent basis, net interest income for the first nine months of 1996
totaled $20,917,000 as compared to $19,802,000 in 1995, a 6% increase. This
increase is due to a 12% increase in average earning assets, offset by a 6%
decrease in net interest margin to 4.24% in 1996 from 4.52% 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 nine 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 $ 15,432 5.30% $ 19,705 5.91%
Interest-bearing
deposits with banks 238 5.25 130 6.17
Securities 257,579 6.35 248,622 6.40
Loans 384,999 9.31% 316,860 10.04%
-------- ---- -------- -----
Total earning assets/
yield $658,248 8.06% $585,317 8.35%
======== ==== ======== =====
Interest-bearing
deposits $461,104 4.75% $409,867 4.70%
Short-term debt 63,074 5.02 54,967 5.34
Long-term debt 1,162 4.83 4,306 4.72
-------- ---- -------- -----
Total interest-bearing
liabilities/cost of
funds $525,340 4.78% $469,140 4.77%
======== ==== ======== =====
Net interest margin 4.24% 4.52%
==== =====
Net interest spread 3.28% 3.58%
==== =====
</TABLE>
Total other income increased $416,000 or 13%. Service charges on deposit
accounts increased $80,000 primarily due to an increase in business account
analysis fees. The increase in other operating income of $264,000 was
principally attributable to increased merchant credit card fees, fees on
mortgages sold, and income from a lease buy out by a tenant at the Company's Oak
Brook office.
Trust income for the first nine months of 1996 was $497,000 compared to $436,000
for the comparable period in 1995, an increase of 14%. The discretionary assets
under management by the Trust Department have grown $24.2 million since
September 30, 1995 to $85.3 million as of September 30, 1996.
Total other expenses increased $376,000 or 2%. Salaries and employee benefits
rose $767,000. The increase is due to upgrading staff and normal salary
increases. The Company invested in staff upgrades to enhance customer service
and expand business development opportunities.
-14-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
Data processing fees increased $95,000, primarily due to higher check processing
fees, trust processing fees and messenger service charges.
Advertising and business development costs increased $137,000 primarily due to
the advertising of retail products and increased business development expenses.
FDIC premiums decreased $537,000 due to lower insurance premiums. The FDIC
premium was lowered to $500 per quarter for well capitalized banks, effective
January 1, 1996.
Other operating expense decreased $119,000. This decrease in 1996 was primarily
due to a reduction in credit card fraud expense and reduction in the
amortization of intangibles.
Asset Quality
Asset quality remains good, with nonperforming assets (nonaccrual loans,
renegotiated loans, loans past due 90 days or more and still accruing, and other
real estate owned) totaling $2,902,000 at September 30, 1996. Net chargeoffs for
the first nine months of 1996 totaled $842,000 or .29% (annualized) of average
loans outstanding. The allowance for loan losses to total loans was 1.00% at
September 30, 1996.
The following table summarizes the Company's nonperforming assets (in
thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Nonaccrual $2,024 $ 0
Loans which are past due
90 days or more 878 104
------ -----
Total nonperforming loans $2,902 $ 104
====== =====
Nonperforming loans to loans
outstanding .70% .03%
Allowance for loan losses to
nonperforming loans 1.42x 37.81x
</TABLE>
The $2,024,000 in nonaccrual loans consists of one commercial real estate
development loan collateralized by fourteen condominium units and a combination
of raw and improved land. As part of a two-phase liquidation plan, the
condominium inventory was auctioned on October 27, 1996. After receipt of the
net auction proceeds, assuming all sales close, the remaining principal balance
of the loan will be approximately $1.2 million. Management is pursuing
collection and does not anticipate significant loss.
-15-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
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 1.96% in the first nine months
of 1996 as compared to 1.53% during the same period in 1995. This compares
favorably to an industry average for net credit card chargeoffs of 4.48% for the
second quarter of 1996.
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 $56.9 million at September 30, 1996. The after-tax
unrealized loss on securities available for sale at September 30, 1996 is $.6
million compared to a $.4 million 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 September 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>
Minimum
Ratio to be
"Well Company Oak Brook
Capitalized" Consolidated Bank
------------- ------------- ----------
<S> <C> <C> <C>
Tier 1 (greater than
Risk-based or equal to) 6% 12.51% 10.78%
Total Capital (greater than
Ratio or equal to) 10% 13.41% 11.68%
Tier 1 Capital (greater than
leverage or equal to) 5% 7.59% 6.57%
</TABLE>
-16-
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
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 $53,500,000 with seven correspondent
banks.
. Reverse repurchase agreement lines of $50,000,000 with two brokerage
firms.
. Advances up to $18,475,000 from the Federal Home Loan Bank of Chicago.
Parent Company:
. Revolving credit arrangement for $5,000,000. The line is currently
unused and matures 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 $9,116,000 at September 30, 1996.
-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 Schedule
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 November 7, 1996 /S/RICHARD M. RIESER, JR.
------------------- ----------------------------
Richard M. Rieser, Jr.,
President and Director
Date November 7, 1996 /S/ROSEMARIE BOUMAN
------------------- ----------------------------
Rosemarie Bouman,
Vice President, Chief
Financial Officer and Treasurer
(Principal Accounting 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 50,934
<INT-BEARING-DEPOSITS> 250
<FED-FUNDS-SOLD> 28,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 131,810
<INVESTMENTS-CARRYING> 129,259
<INVESTMENTS-MARKET> 129,624
<LOANS> 412,393
<ALLOWANCE> 4,125
<TOTAL-ASSETS> 774,219
<DEPOSITS> 639,382
<SHORT-TERM> 72,116
<LIABILITIES-OTHER> 5,856
<LONG-TERM> 0
<COMMON> 7,090
0
0
<OTHER-SE> 49,775
<TOTAL-LIABILITIES-AND-EQUITY> 774,219
<INTEREST-LOAN> 26,718
<INTEREST-INVEST> 11,379
<INTEREST-OTHER> 621
<INTEREST-TOTAL> 38,718
<INTEREST-DEPOSIT> 16,379
<INTEREST-EXPENSE> 18,793
<INTEREST-INCOME-NET> 19,925
<LOAN-LOSSES> 1,035
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 15,813
<INCOME-PRETAX> 6,617
<INCOME-PRE-EXTRAORDINARY> 6,617
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,990
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.45
<YIELD-ACTUAL> 4.12
<LOANS-NON> 2,024
<LOANS-PAST> 878
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,932
<CHARGE-OFFS> 947
<RECOVERIES> 105
<ALLOWANCE-CLOSE> 4,125
<ALLOWANCE-DOMESTIC> 4,125
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
