<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, 1999
--------------------------------
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 60523
- --------------------------------------------------- ----------
(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
------- -------
The number of shares of the registrant's common stock outstanding as of July 31,
1999 was 6,620,776.
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
INDEX
Page
----
Part I. Financial Information
- ------------------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets
June 30, 1999 and December 31, 1998 3
Condensed consolidated statements of income
Three months ended June 30, 1999 and 1998 and
Six months ended June 30, 1999 and 1998 5
Condensed consolidated statements of cash flows
Six months ended June 30, 1999 and 1998 7
Notes to condensed consolidated financial
statements -- June 30, 1999 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 12
Part II. Other Information
- ---------------------------
Item 1. Legal Proceedings *
Item 2. Changes in Securities 22
Item 3. Defaults upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 27
Signatures 28
- ----------
* 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, 1999 AND DECEMBER 31, 1998
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -------------
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 39,091 $ 41,759
Federal funds sold 31,116 362
Interest-bearing deposits
with banks 22 11,402
Securities held-to-maturity, at
amortized cost (fair value, $107,257
and $143,980 at June 30, 1999 and
December 31, 1998, respectively) 107,020 141,253
Securities available-for-sale, at
fair value 202,335 156,421
Loans, net of unearned discount 680,642 631,987
Less allowance for loan losses (4,473) (4,445)
---------- ----------
Net loans 676,169 627,542
---------- ----------
Premises and equipment, net 20,742 21,032
Other assets 11,490 9,504
---------- ----------
Total assets $1,087,985 $1,009,275
========== ==========
</TABLE>
3
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
(In Thousands Except Share Information)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---- ----
Liabilities
- -----------
<S> <C> <C>
Noninterest-bearing demand deposits $ 184,825 $ 187,209
---------- ----------
Interest-bearing deposits:
Savings deposits and NOW accounts 176,582 177,572
Money market accounts 46,720 44,375
Time deposits
Under $100,000 241,054 181,924
$100,000 and over 193,567 186,722
---------- ----------
Total interest-bearing deposits 657,923 590,593
---------- ----------
Total deposits 842,748 777,802
---------- ----------
Federal funds purchased and securities
sold under agreements to repurchase 71,430 83,586
Treasury, tax and loan demand notes 17,435 3,682
Federal Home Loan Bank borrowings 68,000 57,500
Other liabilities 9,356 9,644
---------- ----------
Total liabilities $1,008,969 $ 932,214
---------- ----------
Shareholders' Equity
- --------------------
Preferred Stock - -
Class A common stock - 8,040
Common stock 14,567 6,527
Surplus 11,977 11,955
Accumulated other comprehensive
income 69 2,263
Retained earnings 58,298 54,406
Less cost of shares in treasury,
662,480 common shares at June 30,
1999, and 353,000 Class A and
347,416 common shares at
December 31, 1998. (5,895) (6,130)
---------- ----------
Total shareholders' equity 79,016 77,061
---------- ----------
Total liabilities and
shareholders' equity $1,087,985 $1,009,275
========== ==========
</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,
1999 1998 1999 1998
------------- -------------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $12,387 $ 9,778 $24,295 $18,933
Interest on securities:
U.S. Treasury and Government
agencies 3,114 3,763 6,051 7,218
Obligations of states and political
subdivisions 724 629 1,390 1,237
Other securities 111 300 482 601
Interest on Federal funds sold and
securities purchased under
agreements to resell 404 779 575 1,045
Interest on deposits with banks 201 191 396 376
------- ------- ------- -------
Total interest income 16,941 15,440 33,189 29,410
------- ------- ------- -------
Interest expense:
Interest on savings deposits and
NOW accounts 1,200 1,501 2,419 2,958
Interest on money market accounts 409 307 726 592
Interest on time deposits 5,605 5,288 10,804 9,583
Interest on Federal funds purchased
and securities sold under
agreements to repurchase 703 599 1,289 1,169
Interest on Treasury, tax and loan
demand notes 81 159 150 269
Interest on Federal Home Loan Bank
borrowings 980 811 1,919 1,594
------- ------- ------- -------
Total interest expense 8,978 8,665 17,307 16,165
------- ------- ------- -------
Net interest income 7,963 6,775 15,882 13,245
Provision for loan losses 210 90 420 150
------- ------- ------- -------
Net interest income after provision for
loan losses $ 7,753 $ 6,685 $15,462 $13,095
------- ------- ------- -------
</TABLE>
5
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
(In Thousands Except Share Information)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1999 1998 1999 1998
---------------------- ----------------------
<S> <C> <C> <C> <C>
Other income:
Service charges on deposit accounts $ 921 $ 791 $ 1,743 $ 1,563
Investment management and trust fees 320 289 566 505
Merchant card processing fees 479 332 859 624
Income from revenue sharing agreement 225 225 450 450
Other operating income 393 383 776 674
Investment securities gains 101 - 101 79
---------- ---------- ---------- ----------
Total other income 2,439 2,020 4,495 3,895
---------- ---------- ---------- ----------
Other expenses:
Salaries and employee benefits 3,981 3,461 7,914 6,886
Occupancy expense 384 377 812 760
Equipment expense 443 443 881 863
Data processing 245 204 485 346
Professional fees 223 127 349 244
Postage, stationery and supplies 219 225 422 436
Advertising and business development 310 294 615 573
Merchant interchange expense 381 245 675 457
Other operating expenses 348 261 660 446
---------- ---------- ---------- ----------
Total other expenses 6,534 5,637 12,813 11,011
---------- ---------- ---------- ----------
Income before income taxes 3,658 3,068 7,144 5,979
---------- ---------- ---------- ----------
Income tax expense 1,040 887 2,032 1,720
---------- ---------- ---------- ----------
Net income $ 2,618 $ 2,181 $ 5,112 $ 4,259
========== ========== ========== ==========
Earnings per share:
Basic $ .40 $ .33 $ .77 $ .64
========== ========== ========== ==========
Diluted .39 .32 .76 .62
========== ========== ========== ==========
Dividends paid per share:
Class A Common $ .100 $ .090 $ .200 $ .165
========== ========== ========== ==========
Common .083 .075 .165 .138
========== ========== ========== ==========
Weighted average number of shares:
Basic 6,615,588 6,673,106 6,601,601 6,684,164
========== ========== ========== ==========
Diluted 6,743,036 6,847,196 6,733,812 6,856,912
========== ========== ========== ==========
</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, 1999 AND 1998
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,112 $ 4,259
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation, accretion, and amortization 1,106 1,244
Provision for loan losses 420 150
Investment securities gains (101) (79)
Increase in other assets (1,986) (1,108)
Increase (decrease) in other liabilities 842 (764)
--------- ----------
Net cash provided by operating activities 5,393 3,702
--------- ---------
Cash flows from investing activities:
Purchase of securities held-to-maturity (16,698) (15,765)
Purchase of securities available-for-sale (198,887) (71,592)
Proceeds from maturities, calls and paydowns
of securities held-to-maturity 62,213 27,324
Proceeds from maturities, calls and paydowns
of securities available-for-sale 62,151 17,058
Proceeds from sales of securities available
for sale 87,297 38,522
Increase in loans (49,047) (54,322)
Additions to premises and equipment (705) (2,466)
--------- ---------
Net cash used in investing activities (53,676) (61,241)
--------- ---------
Cash flows from financing activities:
Increase (decrease) in demand deposits (2,384) 17,048
Increase (decrease) in savings and
NOW accounts (990) 6,344
Increase in money market accounts 2,345 6,863
Increase in time deposits 65,975 84,381
Increase in treasury, tax and
loan demand notes 13,753 7,492
Proceeds from Federal Home Loan Bank borrowings 10,500 41,000
Repayment of Federal Home Loan Bank borrowings - (27,500)
Increase (decrease) in federal funds
purchased and securities sold under
agreements to repurchase (12,156) 918
Exercise of stock options 450 170
Purchase of treasury stock (193) (1,356)
Cash dividends (1,220) (1,130)
--------- ----------
Net cash provided by financing activities 76,080 134,230
--------- ---------
</TABLE>
7
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Net increase in cash and cash equivalents 27,797 76,691
Cash and cash equivalents at beginning
of period 42,432 32,954
------- --------
Cash and cash equivalents at end of
period $70,229 $109,645
======= ========
Supplemental disclosures:
Interest paid $16,590 $ 15,724
Income taxes paid 2,372 1,200
======= ========
</TABLE>
See notes to Condensed Consolidated Financial Statements.
8
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(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 month periods ended June 30, 1999 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1999. 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, 1998.
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. 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, December 31,
1999 1998
---- ----
<S> <C> <C>
Commercial $ 64,944 $64,364
Commercial mortgage 28,611 39,973
Home equity 101,780 94,500
Check credit 834 872
</TABLE>
9
<PAGE>
3. Shareholders' Equity:
Shares authorized, issued and outstanding are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Preferred Stock,
no par value:
Authorized 100,000 100,000
Issued - -
Outstanding - -
Class A Common Stock,
$2.00 par value:
Authorized - 10,000,000
Issued - 4,019,902
Outstanding - 3,666,902
Common Stock,
$2.00 par value:
Authorized 16,000,000 6,000,000
Issued 7,283,256 3,263,354
Outstanding 6,620,776 2,915,938
</TABLE>
On May 4, 1999, the Shareholders of the Company approved the
reclassification of the Common Stock into Class A Common Stock on a one-for-
one basis, having one vote per share. As a result of the reclassification,
the Class A Common Stock is now the only class of outstanding common stock
of the Company and has been renamed "Common Stock".
On May 4, 1999, the Company's Board of Directors adopted a shareholder
rights plan by providing for a dividend distribution of one preferred stock
purchase right for each share of the Company's common stock held of record
on May 21, 1999.
The June 30, 1999 presentation of shareholders' equity on the condensed
consolidated balance sheet as well as the presentation here reflects the
reclassification of the common stock. December 31, 1998 amounts have not
been reclassified.
On April 20, 1999 the Board declared the quarterly cash dividend of $.10 per
Class A common share and $.0825 per common share. As a result of the
reclassification, the dividend paid July 22, 1999 was $.10 per share on all
outstanding shares.
4. Earnings per Share:
Basic earnings per share (EPS) is computed by dividing net income by the
weighted average number of common shares outstanding for the period.
Diluted EPS is computed by dividing net income by the weighted average
number of common shares adjusted for the diluted effect of outstanding stock
options.
10
<PAGE>
The following table sets forth the denominator used for basic and diluted
earnings per share for the periods ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Denominator for
basic earnings per
share-weighted
average shares 6,615,588 6,673,106 6,601,601 6,684,164
Effect of diluted
securities:
Stock options issued
to employees and
directors 127,448 174,090 132,211 172,748
--------- --------- --------- ---------
Denominator for
diluted earnings
per share 6,743,036 6,847,196 6,733,812 6,856,912
========= ========= ========= =========
</TABLE>
5. Comprehensive Income
The Company's comprehensive income consists of net income and unrealized
gains or losses on securities available-for-sale, net of tax, and is
presented as a separate component of Shareholders' Equity. Comprehensive
income for the three and six month periods ended June 30, 1999 and 1998 is
as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
------- ------ ------- ------
<S> <C> <C> <C> <C>
Net income $ 2,618 $2,181 $ 5,112 $4,259
Other comprehensive income,
net of tax:
Unrealized holding loss
on securities held
during the period (2,115) (272) (2,127) (83)
Reclassification adjustment
of realized gain on
investment sales included
in net income (67) (-) (67) (52)
------- ------ ------- ------
Total comprehensive income $ 436 $1,909 $ 2,918 $4,124
======= ====== ======= ======
</TABLE>
6. Restatement and Reclassification:
Certain amounts in the June 30, 1998 interim condensed consolidated
financial statements have been reclassified to conform to their 1999
presentation and restated for the reclassification of common stock.
11
<PAGE>
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 1999 was $2,618,000 compared with
$2,181,000 earned in the second quarter of 1998, an increase of 20%. Basic
earnings per share for the second quarter of 1999 were $.40 as compared to $.33
for 1998, while diluted earnings per share were $.39 for 1999 compared with $.32
for 1998, an increase of 22%.
Key performance indicators for the 1999 second quarter show a return on average
assets of 1.00% compared with .94% for the 1998 second quarter. For the second
quarter of 1999, the return on average shareholders' equity was 13.25% compared
with 11.98% for the same quarter of 1998.
Net interest income is the difference between interest earned on loans,
investments and other earning assets and interest paid on deposits and other
interest-bearing liabilities. Net interest income, on a tax-equivalent basis,
increased $1,241,000 or 18% as compared to the same period in 1998. This
increase is attributable to a 14% increase in average interest earning assets
and a 10 basis point increase in the net interest margin to 3.37% from 3.27% for
the same period last year.
12
<PAGE>
Average balances and effective interest yields and rates on a tax equivalent
basis for the quarters ended June 30, 1999 and 1998 were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1999 1998
---------------------------------- ---------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold $ 33,869 $ 404 4.78% $ 56,190 $ 778 5.56%
Interest-bearing deposits with banks 11,701 201 6.90 11,435 191 6.70
Securities/1/ 270,919 4,242 6.28 311,101 4,946 6.38
Loans/1/ 672,313 12,433 7.42 488,784 9,811 8.05
---------- ------- ---- -------- -------- ----
Total earning assets/interest income $ 988,802 $17,280 7.01% $867,510 $ 15,726 7.27%
Cash and due from banks 38,958 42,100
Other assets 30,524 28,527
Allowance for loan losses (4,415) (3,932)
---------- --------
Total average assets $1,053,869 $934,205
========== ========
Interest-bearing deposits $ 642,466 $ 7,214 4.50% $570,490 $ 7,096 4.99%
Short-term debt 67,590 784 4.65 58,063 758 5.24
FHLB borrowings 68,000 980 5.78 56,000 811 5.81
---------- ------- ---- -------- -------- ----
Total interest-bearing liabilities/interest
expense $ 778,056 $ 8,978 4.63% $684,553 $ 8,665 5.08%
Demand deposits 186,934 167,718
Other liabilities 9,622 8,910
---------- --------
Total liabilities $ 974,612 $861,181
Shareholders' equity 79,257 73,024
---------- --------
Total liabilities and shareholders' equity $1,053,869 $934,205
========== ========
Net interest income/1//spread $ 8,302 2.38% $ 7,061 2.19%
======= ==== ======== ====
Net interest margin 3.37% 3.27%
==== ====
</TABLE>
Average loans for the second quarter of 1999 grew 38%, or $183.5 million, led by
commercial real estate loans (up $57.5 million), indirect auto loans (up $56.3
million), commercial loans (up $41.4 million), residential real estate loans (up
$17.7 million) and home equity loans (up $10.7 million). Loan growth since
December 31, 1998 of $48.7 million was primarily due to indirect auto loans (up
$19.8 million) and commercial real estate loans (up $22.4 million).
Average interest-bearing deposits increased $72.0 million or 13% as compared to
the second quarter of 1998 due primarily to an increase in time deposits (up
$54.5 million), NOW accounts (up $11.1 million) and money market accounts (up
$11.1 million). In addition, time deposits increased $66.0 million since
December 31, 1998 in response to successful retail deposit promotions.
- -----------------
/1/Tax equivalent basis. Interest income and average yield on tax exempt loans
and investment securities include the effects of tax equivalent adjustments
using a tax rate of 34%.
13
<PAGE>
Total other income increased $419,000 or 21%. Service charges on deposit
accounts increased $130,000 primarily due to an increase in business account
analysis fees. In addition, the Company recognized a gain on the sale of
securities of $101,000 in 1999. There were no gains in the quarter ended June
30, 1998.
Merchant card processing fees increased $147,000 primarily due to several new
merchant accounts and rate increases as a result of higher interchange fees.
Merchant interchange expense (in other operating expenses) also rose $136,000 as
compared to the second quarter of 1998.
Total other expenses increased $897,000 or 16%. Annualized operating expenses as
a percentage of average assets increased slightly to 2.5% for 1999 compared with
2.4% for 1998. Annualized net overhead expenses as a percentage of average
assets remained constant at 1.7% for both periods and the efficiency ratio
(other expenses to net interest income and other income) improved to 62.8% in
1999 from 64.1% in 1998. The increase in operating expenses was primarily due to
staffing increases to support growing areas of the bank in addition to
infrastructure costs and related expenses to support the new branch opened in
Glen Ellyn, Illinois. In addition, professional fees increased $96,000 primarily
due to additional services related to the changes in corporate structure
approved by shareholders at the annual meeting.
Earnings Highlights - Six Month Results
Net income for the six months ended June 30, 1999 was $5,112,000, compared with
$4,259,000 earned in 1998, an increase of 20%. Basic earnings per share for the
first six months of 1999 were $.77 as compared to $.64 earned in 1998 while
diluted earnings per share were $.76 in 1999 as compared to $.62 in 1998, an
increase of 23%.
Key performance indicators for the six month period show a return on average
assets of 1.00% compared with .96% for the comparable period in 1998. The return
on average shareholders' equity for the first six months of 1999 was 13.12%
compared with 11.65% for 1998.
Net interest income for the first six months of 1999, on a tax equivalent basis,
increased $2,722,000 or 20%. This increase is due to a 16% increase in average
earning assets and a 10 basis point increase in the net interest margin to 3.47%
in 1999 from 3.37% in 1998.
14
<PAGE>
Average balances and effective interest yields and rates on a tax equivalent
basis for the first six months of 1999 and 1998 were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1999 1998
---------------------------------- --------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold $ 24,337 $ 575 4.76% $ 38,050 $ 1,045 5.54%
Interest-bearing deposits with banks 11,610 396 6.89 11,212 376 6.76
Securities/1/ 265,759 8,487 6.44 301,288 9,556 6.40
Loans/1/ 660,381 24,382 7.45 475,503 18,999 8.06
---------- ---------- ------- -------- ------- ----
Total earning assets/interest income $ 962,087 $ 33,840 7.09% $826,053 $29,976 7.32%
Cash and due from banks 39,208 42,567
Other assets 30,117 27,638
Allowance for loan losses (4,468) (4,134)
---------- --------
Total average assets $1,026,944 $892,124
========== ========
Interest-bearing deposits $ 623,677 $ 13,949 4.51% $534,400 $13,133 4.96%
Short-term debt 63,845 1,439 4.55 55,458 1,438 5.23
FHLB borrowings 66,931 1,919 5.78 55,508 1,594 5.79
---------- ---------- ------- -------- ------- ----
Total interest-bearing liabilities/interest
expense $ 754,453 $ 17,307 4.63% $645,366 $16,165 5.05%
Demand deposits 184,372 165,208
Other liabilities 9,566 8,738
---------- --------
Total liabilities $ 948,391 $819,312
Shareholders' equity 78,553 72,812
---------- --------
Total liabilities and shareholders' equity $1,026,944 $892,124
========== ========
Net interest income/1//spread $ 16,533 2.46% $13,811 2.27%
========== ==== ======= ====
Net interest margin 3.47% 3.37%
==== ====
</TABLE>
Average loans for the first six months of 1999 grew 39%, or $184.9 million, led
by indirect auto loans (up $57.3 million), commercial real estate loans (up
$53.7 million), commercial loans (up $45.9 million), residential real estate
loans (up $19.6 million) and home equity loans (up $9.2 million).
Average interest-bearing deposits increased $89.3 million or 17% as compared to
the first six months of 1998 due primarily to an increase in average time
deposits (up $70.5 million) and NOW accounts (up $12.4 million).
Total other income increased $600,000 or 15%. Service charges on deposit
accounts increased $180,000 primarily due to an increase in business account
analysis fees.
Merchant card processing fees increased $235,000 primarily due to several new
merchant accounts and rate increases as a result of
- -------------------------
/1/ Tax equivalent basis. Interest income and average yield on tax exempt loans
and investment securities include the effects of tax equivalent adjustments
using a tax rate of 34%.
15
<PAGE>
higher interchange fees. Merchant interchange expense (in the other operating
expenses) also rose $218,000 as compared to the same period in 1998.
Investment management and trust fee income rose $61,000 primarily due to an
increase in discretionary assets under investment management. Discretionary
assets under investment management totaled $231 million at June 30, 1999
compared to $174 million at June 30, 1998.
Other operating income increased $102,000 primarily due to gains on mortgages
sold, servicing released, into the secondary market.
Total other expenses increased $1,802,000 or 16%. Annualized operating expenses
as a percentage of average assets remained constant at 2.5% for both periods.
Annualized net overhead expenses as a percentage of average assets also remained
constant at 1.7% for both periods and the efficiency ratio (other expenses to
net interest income and other income) improved to 62.9% in 1999 from 64.2% in
1998. The increase in operating expenses was primarily due to staffing
increases to support growing areas of the bank in addition to infrastructure
costs and related expenses to support the branches opened during 1998 in Aurora
and Glen Ellyn, Illinois. In addition, professional fees increased $105,000
primarily due to additional services related to the changes in corporate
structure approved by shareholders at the annual meeting.
Asset Quality
- -------------
Asset quality remains strong, with nonperforming assets (nonaccrual loans, loans
past due 90 days or more and still accruing and other real estate owned)
totaling $175,000 at June 30, 1999 as compared to $272,000 at December 31, 1998.
Net charge-offs through June 30, 1999 totaled $392,000 or .12% (annualized), of
average loans outstanding as compared to $526,000 or .22% (annualized) for the
same period in 1998.
The Company's provision for possible loan losses was $210,000 for the second
quarter of 1999 as compared to $90,000 for 1998. The year-to-date provisions
through June 30, were $420,000 and $150,000 for 1999 and 1998, respectively.
The Company's provision for loan losses is sufficient to provide for probable
losses and maintain the allowance at an adequate level commensurate with
management's periodic evaluation of the risks inherent in the loan portfolio.
The allowance for possible loan losses was $4,473,000 at June 30, 1999 and
$4,445,000 at December 31, 1998. Management believes the allowance at June 30,
1999 is at an adequate level.
16
<PAGE>
The following table summarizes the Company's nonperforming assets (in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- ------------
<S> <C> <C>
Nonaccrual $ 68 $ -
Loans which are past due
90 days or more 107 272
----- -----
Total nonperforming loans 175 272
Other real estate owned - -
----- -----
Total nonperforming assets $ 175 $ 272
===== =====
Nonperforming loans to loans
outstanding .03% .04%
Nonperforming assets to loans
outstanding and other real
estate owned .03% .04%
Allowance for loan losses to
nonperforming loans 25.56x 16.34x
Allowance for loan losses to
loans outstanding .66 .70
Net charge offs to average
loans outstanding (annualized) .12 .10
</TABLE>
Capital
- -------
Shareholders' equity remains strong at $79.0 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 the Bank's ratios 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, 1999 and
the minimum ratios for "well capitalized" banks.
<TABLE>
<CAPTION>
Well Company Oak Brook
Capitalized Consolidated Bank
----------- ------------ ----
<S> <C> <C> <C>
Tier 1
Risk-based >6% 10.56% 10.16%
Total Capital
Ratio >10% 11.17% 10.76%
Tier 1 Capital
leverage >5% 7.34% 7.05%
</TABLE>
On January 27, 1998, the Board of Directors authorized a stock repurchase
program. This program allows the Company to repurchase up to 200,000 shares of
its common stock. The program originally was to expire in July 1999, but it has
been extended through December 31, 2000. Repurchases are being made in the
17
<PAGE>
open market or through negotiated transactions from time to time depending on
market conditions. The repurchased stock is held as treasury stock to be used
for general corporate purposes. As of June 30, 1999, approximately 105,000
shares of stock are available to be purchased under this repurchase plan.
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, the ability to
attract consumer time deposits and access to various borrowing arrangements.
Available borrowing arrangements are summarized as follows:
Oak Brook Bank:
. Federal funds lines of $110 million with six correspondent banks, subject
to continued good financial standing. As of June 30, 1999, all $110
million was available for use under these lines.
. Reverse repurchase agreement lines of $150 million with two brokerage
firms, subject to the availability of collateral and continued good
financial standing of the Bank. As of June 30, 1999, approximately $25
million was available to the Bank based upon the Bank's excess collateral
available to pledge to these lines.
. Additional advances from the Federal Home Loan Bank of Chicago are
available based on the pledge of specific collateral and FHLB stock
ownership. As of June 30, 1999, approximately $15 million remains
available to the Bank under the FHLB agreements.
. The Bank has obtained a borrowing line in excess of $150 million line at
the discount window of the Federal Reserve Bank. This allows the Bank to
obtain additional liquidity as part of the Year 2000 contingency planning.
Parent Company:
. Revolving credit arrangement for $15 million. The line is currently
unused and matures on May 1, 2000. It is anticipated to be renewed
annually.
18
<PAGE>
. The parent company also had cash, short-term investments, and other
readily marketable securities totaling $4.7 million at June 30, 1999.
Year 2000 Compliance
- --------------------
The Company, through its subsidiary bank, established a Year 2000 Task Force
comprised of over thirty employees headed by senior officers from the
Information Technology and Legal Departments. In accordance with the guidelines
established by the Federal Financial Institutions Examination Council, the Task
Force developed a project plan consisting of five phases: Awareness and
Planning, Assessment, Renovation, Validation and Implementation.
During the Awareness and Planning phase, the Company's Task Force was
established. The Task Force coordinated and developed a comprehensive plan to
insure that the Company's computer programs and systems become Year 2000
compliant. The Task Force conducted a Company-wide survey of all hardware and
software programs and systems and designated a Task Force member to monitor Year
2000 compliance. This monitoring function included contacting vendors regarding
their Year 2000 efforts and obtaining the vendors' certification that their
systems are fully tested and Year 2000 compliant. The systems were prioritized
into mission critical, not-mission critical and, not-critical, and target dates
for testing were established.
During the second phase, Assessment, the Task Force identified and prioritized
all Bank systems and developed standard testing criteria. Mission critical
systems were given highest priority. The Bank completed its assessment of all
computer programs and systems and physical facilities. The Bank also assessed
its borrowers' readiness pursuant to established criteria for identifying,
monitoring, and assessing Year 2000 risks.
During the Renovation phase, the Company established timelines for installation
of Year 2000 compliant systems and system upgrades. The Bank's core data
processing system, a mission critical system was tested during the week of
February 8, 1999 and the system performed all functions in compliance with the
Year 2000. All mission critical systems are 100% tested.
Also during the Renovation Phase, the Company estimated the costs for Year 2000
testing and replacement of systems not Year 2000 compliant. The Company
estimates that the out-of-pocket costs for testing will not exceed $100,000.
Costs not quantified are the number of internal man-hours expended to assess,
test and certify that the systems are Year 2000 compliant. The Company believes
that the costs will not have a material effect on its costs of operations. The
Company will continue to expense costs for Year 2000 compliance as they occur
consistent with generally accepted accounting principles.
19
<PAGE>
The fourth phase, Validation, is still progressing, as the Company continues to
test and verify the test results for all of its systems and business resumption
plans. Testing of mission critical systems was successfully completed by June
30, 1999. The Company has written business resumption contingency plans which
were satisfactorily tested in May and which will be re-tested in November, 1999.
The testing of non-mission critical systems was completed as of August 6, 1999.
During the fifth and final phase, Implementation (currently in process), the
Company continues to implement only those systems certified to be Year 2000
compliant. The Company has completed and established written remediation
contingency plans for all required mission critical and non-mission critical
systems.
The Company has also established and is implementing its customer awareness
program. The Company is communicating to its customers through various media
its Year 2000 readiness and compliance.
Branch Expansion
- ----------------
The Company's strategy is to invest in future growth through branch expansion in
the Chicago metropolitan area. This form of growth requires a significant
investment in non-earning assets during the construction phase. Upon
completion, for a time, expenses exceed the income of the branch. While new
branches retard short-term earnings, we believe our market warrants judicious
office additions.
In December, 1998, the Company purchased a site for a branch in LaGrange,
Illinois. This branch is expected to open in the third quarter of 1999. Costs
incurred to date for the LaGrange branch have been capitalized. The Company
will begin to incur more expenses, including depreciation, when the branch is
put into service.
Qualitative and Quantitative Disclosures about Market Risk
- ----------------------------------------------------------
As described in the 1998 Annual Report to shareholders, the Company manages its
interest rate risk through measurement techniques which include a simulation
model and gap analysis. As part of the risk management process, asset liability
management policies are established and monitored by management. The policy
objective is to limit the change in annual net interest income to 10% from an
immediate and sustained parallel change in interest rates of 200 basis points.
Based on the Company's most recent evaluation, management does not believe the
Company's risk position at June 30, 1999 has changed materially from that at
December 31, 1998.
20
<PAGE>
Forward Looking Statements
- --------------------------
Except for historical matters, this report contains certain forward looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company that are subject to various
factors which could cause actual results to differ materially from these
estimates. These factors include, but are not limited to, changes in: general
economic conditions, interest rates, legislative or regulatory changes, stock
market performance, Year 2000 issues, loan demand, depositor preferences and
construction or other delays relating to branch expansion. These risks and
uncertainties should be considered in evaluating forward-looking statements.
21
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
At the close of business on May 5, 1999, all of the outstanding shares of the
Company's common stock, $2.00 par value per share having one vote per share were
reclassified, on a one-for-one basis, into shares of the Company's Class A
Common Stock, $2.00 par value per share, having one vote per share (the "Class A
Common Stock"). The reclassification was effected pursuant to the Company's
Restated Certificate of Incorporation which was approved by the shareholders at
the Company's Annual Meeting of Shareholders held May 4, 1999. As a result of
the reclassification, the Class A Common Stock became the Company's only class
of common stock and was renamed "Common Stock" (the "Common Stock"). In
addition to the reclassification, the shareholders also approved a series of
amendments to the Company's governing documents affecting the rights of holders
of Common Stock.
On May 4, 1999, the Company's Board of Directors declared a dividend
distribution of one preferred share purchase right ("Right") for each share of
Common Stock to shareholders of record on May 21, 1999. Each Right, when
exercisable, entitles the holder to purchase from the Company one two-hundredth
share of Series A Preferred Stock, no par value, subject to adjustment. Until a
distribution date occurs, the Rights will be attached to all Common Stock
certificates, including shares of Common Stock issued after May 21, 1999.
The descriptions of the Common Stock and Rights set forth in Item 1, Description
of Registrant's Securities to Registered, from the Company's Amendment No. 1 to
Form 8-A filed May 6, 1999 (relating to the Common Stock) and from the Company's
Form 8-A filed May 21, 1999 (relating to the Rights) are incorporated by
reference herein.
22
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held May 4, 1999 at 1400 Sixteenth
Street, Oak Brook Bank Conference Center, Oak Brook, Illinois.
Matters presented to the shareholders for vote were the election of directors,
the approval of amendments and restatements to the Company's Certificate of
Incorporation and By-laws, and the ratification of the selection of the
independent auditors. The results of the votes on these matters are as follows:
<TABLE>
<CAPTION>
ELECTION OF DIRECTORS
- ---------------------
<S> <C> <C>
Votes Votes
For Withheld
--------- --------
Eugene Heytow 2,580,763 12,395
Richard Rieser 2,570,871 22,287
Frank Paris 2,580,707 12,451
Miriam Fitzgerald 2,580,763 12,395
Geoffrey Stone 2,575,190 17,968
Robert Wrobel 2,580,763 12,395
Michael Stein 2,580,763 12,395
Stuart Greenbaum 2,580,763 12,395
</TABLE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO CERTIFICATE OF INCORPORATION TO
RECLASSIFY THE SHARES OF COMMON AND CLASS A COMMON STOCK INTO A SINGLE CLASS.
(REQUIRES A MAJORITY OF EACH CLASS TO APPROVE)
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Common Votes 2,398,571 9,052 2,084
Percent of Eligible Class Vote 81.8% .3% .1%
Class A Votes 102,928 3,881 604
Percent of Eligible Class Votes 56.0% 2.1% .3%
</TABLE>
23
<PAGE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
RELATING TO THE PREFERRED STOCK
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,481,472 28,966 6,682
Percent of Eligible Vote 79.6% .9% .2%
</TABLE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
AND BY-LAWS TO IMPLEMENT A CLASSIFIED BOARD REMOVABLE ONLY FOR CAUSE AND TO
ELECT THE DIRECTORS ELECTED AT THE MEETING FOR ONE, TWO OR THREE YEAR TERMS
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,450,625 64,968 1,476
Percent of Eligible Vote 78.6% 2.1% .1%
</TABLE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
AND BY-LAWS TO PROHIBIT SHAREHOLDERS FROM CALLING A SPECIAL MEETING OF
SHAREHOLDERS
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,367,102 128,617 21,401
Percent of Eligible Vote 75.9% 4.1% .7%
</TABLE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
AND BY-LAWS TO ELIMINATE THE POWER OF SHAREHOLDERS TO TAKE ACTION BY WRITTEN
CONSENT
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,356,185 126,795 7,140
Percent of Eligible Vote 75.6% 4.1% .2%
</TABLE>
24
<PAGE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
AND BY-LAWS TO ESTABLISH ADVANCE NOTICE PROCEDURES TO BE FOLLOWED BEFORE MATTERS
CAN BE BROUGHT BEFORE A MEETING OF SHAREHOLDERS
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,440,326 71,357 5,408
Percent of Eligible Vote 78.3% 2.3% .2%
</TABLE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO ADOPT A 75% VOTE REQUIREMENT FOR CERTAIN AMENDMENTS TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,380,509 80,809 10,801
Percent of Eligible Vote 76.4% 2.6% .3%
</TABLE>
CONSIDERATION AND APPROVAL OF AN AMENDMENT TO THE BY-LAWS TO ADOPT A 75% VOTE
REQUIREMENT FOR CERTAIN AMENDMENTS TO THE COMPANY'S BY-LAWS
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,431,149 77,083 8,887
Percent of Eligible Vote 78.0% 2.5% .3%
</TABLE>
CONSIDERATION AND APPROVAL OF THE ADOPTION OF RESTATED CERTIFICATE OF
INCORPORATION
<TABLE>
<CAPTION>
For Against Abstain
---------- -------- --------
<S> <C> <C> <C>
Votes Received 2,447,083 55,280 13,857
Percent of Eligible Vote 78.5% 1.8% .5%
</TABLE>
CONSIDERATION AND APPROVAL OF THE ADOPTION OF RESTATED BY-LAWS
<TABLE>
<CAPTION>
For Against Abstain
--------- ------- -------
<S> <C> <C> <C>
Votes Received 2,445,413 57,583 14,123
Percent of Eligible Vote 78.4% 1.8% .4%
</TABLE>
25
<PAGE>
RATIFICATION OF THE SELECTION OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE
COMPANY
<TABLE>
<CAPTION>
For Against Abstain
--------- ------- -------
<S> <C> <C> <C>
Votes Received 2,576,364 5,071 11,807
Percent of Eligible Vote 82.6% .2% .4%
</TABLE>
The number of Common and Class A Common shares eligible to vote were 2,933,583
and 3,675,583 respectively. The Class A Common shares represent 183,779 votes
because each share was entitled to 1/20th of one vote.
26
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit (3.1) Restated Certificate of Incorporation of the Company
(Exhibit 3.1 to the Company's Amendment No. 1 to
Registration Statement on Form 8-A filed May 6, 1999,
incorporated herein by reference.)
Exhibit (3.2) Amended and Restated By-Laws of the Company (Exhibit 3.2 to
the Company's Amendment No. 1 to Registration Statement on
Form 8-A filed May 6, 1999, incorporated herein by
reference.)
Exhibit (4.1) Form of Common Stock Certificate (filed herewith).
Exhibit (4.2) Rights Agreement, dated as of May 4, 1999 between the
Company and Oak Brook Bank, as Rights Agent (Exhibit 4.1 to
the Company's Registration Statement on Form 8-A filed May
21, 1999, incorporated herein by reference).
Exhibit (4.3) Certificate of Designations Preferences and Rights of
Series A Preferred Stock (Exhibit A to Exhibit 4.1 to the
Company's Registration Statement on Form 8-A filed May 21,
1999, incorporated herein by reference).
Exhibit (4.4) Form of Rights Certificate (Exhibit B to Exhibit 4.1 to
the Company's Registration Statement on Form 8-A filed May
21, 1999, incorporated herein by reference).
Exhibit (10.1) Loan agreement between First Oak Brook Bancshares, Inc.
and LaSalle National Bank dated December 1, 1991 as amended
May 1, 1999 filed herewith.
Exhibit (27) Financial Data Schedule
B. Reports on Form 8-K
On May 6, 1999, the Company filed a Form 8-K to provide information
relating to the reclassification of its common equity into a single class.
On May 21, 1999, the Company filed a Form 8-K to provide information
relating to the implementation of a shareholder rights plan.
27
<PAGE>
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 12, 1999 /S/ROSEMARIE BOUMAN
----------------- -------------------------------
Rosemarie Bouman,
Vice President, Chief
Financial Officer and
Chief Accounting Officer
28
<PAGE>
Exhibit 4.1
NUMBER SHARES
COMMON STOCK First Oak Brook CUSIP 335847 20 8
Bancshares, Inc. SEE REVERSE
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
is the owner of
Fully Paid and Nonassessable Shares of $2.00 Par Value
each of the Common Stock of
FIRST OAK BROOK BANCSHARES, INC.
transferable only on the books of the Corporation by the holder hereof
in person or by attorney upon the surrender of this Certificate
properly endorsed. This Certificate is not valid until countersigned
and registered by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Corporation has caused this
Certificate to be signed by the facsimile signatures of its duly
authorized officers and sealed with the facsimile seal of the
Corporation.
Dated: [SEAL]
/s/ William E. Navolio /s/ Richard M. Rieser
Secretary President
Countersigned and Registered:
Oak Brook Bank (Oak Brook, IL)
By: Transfer Agent and Registrar
Authorized Signature
<PAGE>
FIRST OAK BROOK BANCSHARES, INC.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN FIRST OAK BROOK BANCSHARES,
INC. (THE "CORPORATION") AND OAK BROOK BANK, DATED AS OF MAY 4, 1999 (THE
"RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE
EVIDENCED BY THIS CERTIFICATE, THE CORPORATION WILL MAIL TO THE HOLDER OF THIS
CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING,
WITHOUT CHARGE PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR
HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
HOLDER, SHALL BECOME NULL AND VOID.
The Corporation will furnish to any shareholder, upon request and without
charge, a full statement of the designations and the powers, preferences and
rights, and the qualifications, limitations and restrictions of the shares of
any preferred or special class of stock which the Corporation is authorized to
issue in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and
determined, and the authority of the board of directors to fix and determine the
relative rights and preferences of subsequent series. Such request should be
made to the office of the Secretary of the Corporation at 1400 Sixteenth Street,
Oak Brook, Illinois 60523.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - __________ Custodian __________
(Cust) (Minor)
Under Uniform Gifts to Minors
Act __________
(State)
Additional abbreviations may also be used though not in the above list.
_______________________________________________________________________________
For value received, _____________ hereby sell, assign and transfer unto
- ----------------------------
| | | | | | | | | |
- ----------------------------
Please insert social security or other identifying number of assignee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of assignee)
_______________________________________________________________________________
________________________________________________________________________ Shares
of Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ___________________________________________
____________________________________________ Attorney to transfer the said
stock on the books of the within-named Corporation with full power of
substitution in the premises.
Dated
------------------------
----------------------------------------
----------------------------------------
Notice: The signature to this assignment
must correspond with the same as written
upon the face of the Certificate in every
particular, without alteration or
enlargement of any changes whatever.
<PAGE>
EXHIBIT (10.1)
SEVENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Amendment")
dated as of May 1, 1999, is between FIRST OAK BROOK BANCSHARES, INC. (the
"Company") and LASALLE NATIONAL BANK (the "Bank").
RECITALS:
WHEREAS, the parties have previously entered into a Revolving Credit
Agreement dated as of December 1, 1991, as amended by that certain First
Amendment dated as of January 31, 1993, that certain Second Amendment dated as
of March 31, 1994, that certain Third Amendment dated as of April 1, 1995, that
certain Fourth Amendment dated April 1, 1996, that certain Fifth Amendment dated
May 1, 1997 and that certain Sixth Amendment dated May 1, 1998 (collectively,
the "Agreement"); and
WHEREAS, at the present time the Company requests, and the Bank is
agreeable to amending the Agreement pursuant to the terms and conditions
hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, it is agreed by the parties hereto as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Agreement.
2. AMENDMENTS TO AGREEMENT.
2.1 Amendments to Section 1. Section 1 is amended by:
(a) deleting the reference to the date "May 1, 1999" and inserting a
reference to the date "April 1, 2000" in substitution therefor;
and
(b) deleting the phrase "Five Million Dollars ($5,000,000.00)" and
inserting the phrase "Fifteen Million Dollars ($15,000,000.00)"
in substitution therefor.
2.2 Amendment to Section 3.A. Section 3.A is amended by deleting the
reference to the current expiration date of the Note and
inserting a reference to the date "April 1, 2000" in substitution
therefor.
2.3 Amendment to Section 3.B(2). Section 3.B(2) is amended by
deleting the first two sentences thereof and inserting the
following in substitution therefor:
"(2) London Inter Bank Offered Rate, as announced by the Bank,
plus seventy-five one-hundreths of one percent (0.75%).
Borrowings under this option shall be on an "as available" basis
for periods of one, two or three months ("Interest Periods")."
<PAGE>
2.4 Amendment to Section 6. Section 6 is amended by adding a new
paragraph H. immediately after paragraph G. thereof to read in
its entirety as follows:
"H. Year 2000. The Company has reviewed the areas within its
business and operations which could be adversely affected by, and
has developed or is developing a program to address on a timely
basis, the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower may be unable to recognize and
perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), and have made
related appropriate inquiry of material suppliers and vendors.
Based on such review and program, the Company believes that the
"Year 2000 Problem" will not have a material adverse effect on
business or operations of the Company."
2.5 Replacement of Exhibit A. Exhibit A attached to the Agreement is
hereby deleted in its entirety and Exhibit A attached hereto is
hereby substituted therefor.
3. WARRANTIES. To induce the Bank to enter into this Amendment, the
Company warrants that:
3.1 Authorization. The Company is duly authorized to execute and
deliver this Amendment and is and will continue to be duly
authorized to borrow monies under the Agreement, as amended
hereby, and to perform its obligations under the Agreement, as
amended hereby.
3.2 No Conflicts. The execution and delivery of this Amendment and
the performance by the Company of its obligations under the
Agreement, as amended hereby, do not and will not conflict with
any provision of law or of the charter or by-laws of the Company
or of any agreement binding upon the Company.
3.3 Validity and Binding Effect. The Agreement, as amended hereby,
is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency
or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of
equity limiting the availability of equitable remedies.
3.4 No Default. As of the closing date hereof, no Event of Default
under Section 9 of the Agreement, as amended by this Amendment,
or event or condition which with the giving of notice or the
passage of time, shall constitute an Event of Default, has
occurred or is continuing.
3.5 Warranties. As of the closing date hereof, the representations
and warranties in Section 6 of the Agreement are true and
correct as though made on such date, except for such changes as
are specifically permitted under the Agreement.
<PAGE>
4. CONDITIONS PRECEDENT. This Amendment shall become effective as of the
date above first written after receipt by the Bank of the following
documents:
(a) This Amendment duly executed by the Company;
(b) A Replacement Promissory Note in the form of Exhibit A attached
hereto duly executed by the Company; and
(c) Such Board of Directors Resolutions and other documentation as
the Bank shall require.
5. GENERAL.
5.1 Law. This Amendment shall be construed in accordance with and
governed by the laws of the State of Illinois.
5.2 Successors. This Amendment shall be binding upon the Company and
the Bank and their respective successors and assigns, and shall
inure to the benefit of the Company and the Bank and their
respective successors and assigns.
5.3 Confirmation of Loan Agreement. Except as amended hereby, the
Agreement shall remain in full force and effect and is hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
LASALLE NATIONAL BANK FIRST OAK BROOK BANCSHARES, INC.
By: By:
------------------------------- -------------------------------
Its: Its:
------------------------------ ------------------------------
<PAGE>
EXHIBIT A
---------
REPLACEMENT PROMISSORY NOTE
$15,000,000.00 as of May 1, 1999
FIRST OAK BROOK BANCSHARES, INC. (the "Maker"), for value received,
promises to pay to the order of LASALLE NATIONAL BANK (the "Bank") the lesser
of: the principal sum of Fifteen Million Dollars ($15,000,000.00), or the
aggregate unpaid principal amount outstanding under that certain Revolving
Credit Agreement dated December 1, 1991 between the Maker and the Bank, as
amended by that certain First Amendment dated March 31, 1993, that certain
Second Amendment dated March 31, 1994, that certain Third Amendment dated April
1, 1995, that certain Fourth Amendment dated April 1, 1996, that certain Fifth
Amendment dated May 1, 1997, that certain Sixth Amendment dated as of May 1,
1998 and that certain Seventh Amendment of even date herewith (collectively, the
"Loan Agreement") made available by the Bank to the Maker at the maturity or
maturities and in the amount or amounts as stated on the records of the Bank
together with interest (computed on actual days elapsed on the basis of a 360
day year) on any and all principal amounts outstanding hereunder from time to
time from the date hereof until maturity. Interest shall be payable at the
Maker's option at the rates and times set forth in the Loan Agreement. In no
event shall any principal amount have a maturity later than April 1, 2000.
This Revolving Credit Note shall be available for direct advances and for
Bankers' Acceptances.
Principal and interest shall be paid to the Bank at its office at 135 South
LaSalle Street, Chicago, Illinois, or at such other place as the holder of this
Note may designate in writing to the undersigned. This Note may be prepaid in
whole or in part as provided for in the Loan Agreement.
This Note evidences indebtedness incurred under the Loan Agreement (and if
amended, under all amendments thereto) to which reference is hereby made for a
statement of the terms and conditions under which the due date of the Note or
any payment thereon may be accelerated. The holder of this Note is entitled to
all of the benefits and security provided for in said Loan Agreement.
The undersigned agrees that in any action or proceeding instituted to
collect or enforce collection of this Note, the amount endorsed by the Bank on
the reverse side of this Note shall be prima-facie evidence of the unpaid
principal balance of this Note.
This Note is in substitution for, and not in repayment of, that certain
Revolving Credit Note, dated as of May 1, 1998, in the amount of $5,000,000.00,
executed by the Maker in favor of the Bank.
FIRST OAK BROOK BANCSHARES, INC.
By:
-------------------------------
Its:
------------------------------
<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> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> JUN-30-1999 JUN-30-1998
<CASH> 39,091 38,812
<INT-BEARING-DEPOSITS> 22 11,335
<FED-FUNDS-SOLD> 31,116 70,209
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 202,335 174,922
<INVESTMENTS-CARRYING> 107,020 131,258
<INVESTMENTS-MARKET> 107,257 133,343
<LOANS> 680,642 501,128
<ALLOWANCE> 4,473 3,953
<TOTAL-ASSETS> 1,087,985 953,666
<DEPOSITS> 842,748 742,399
<SHORT-TERM> 88,865 73,526
<LIABILITIES-OTHER> 9,356 8,272
<LONG-TERM> 68,000 56,000
14,567 14,567
0 0
<COMMON> 0 0
<OTHER-SE> 64,449 58,902
<TOTAL-LIABILITIES-AND-EQUITY> 1,087,985 953,666
<INTEREST-LOAN> 24,295 18,933
<INTEREST-INVEST> 7,923 9,056
<INTEREST-OTHER> 971 1,421
<INTEREST-TOTAL> 33,189 29,410
<INTEREST-DEPOSIT> 13,949 13,133
<INTEREST-EXPENSE> 17,307 16,165
<INTEREST-INCOME-NET> 15,882 13,245
<LOAN-LOSSES> 420 150
<SECURITIES-GAINS> 101 79
<EXPENSE-OTHER> 12,813 11,011
<INCOME-PRETAX> 7,144 5,979
<INCOME-PRE-EXTRAORDINARY> 7,144 5,979
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,112 4,259
<EPS-BASIC> .77 .64
<EPS-DILUTED> .76 .62
<YIELD-ACTUAL> 3.47 3.37
<LOANS-NON> 68 0
<LOANS-PAST> 107 310
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 4,445 4,329
<CHARGE-OFFS> 433 655
<RECOVERIES> 41 129
<ALLOWANCE-CLOSE> 4,473 3,953
<ALLOWANCE-DOMESTIC> 4,473 3,953
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
