First Oak Brook Bancshares, Inc., (NASDAQ:FOBB): 2005 Second
Quarter Earnings (Unaudited) FIRST OAK BROOK BANCSHARES, INC.,
(NASDAQ:FOBB) announced net income for the second quarter of 2005
of $4.455 million, down from $4.801 million for the second quarter
of 2004. Diluted earnings per share were $.45 in the second quarter
of 2005 compared to $.48 in 2004, down 6%. Net interest income was
$13.023 million in the second quarter of 2005 compared to $13.265
million in the second quarter of 2004. The decrease in net interest
income resulted from a 36 basis point decrease in the net interest
margin to 2.62%, partially offset by an 11% increase in average
earning assets. Margin compression in the second quarter of 2005
was primarily the result of interest rates rising faster on
deposits than on loans and investments and the flattening yield
curve. The growth in average earning assets included an increase in
average loans of $184.9 million and an increase in average
investment securities of $33.6 million. No provision for loan
losses was recorded in the second quarter of 2005 due to high asset
quality and a low level of charge-offs for the quarter. Other
income, excluding securities gains and losses, increased 7%
primarily as a result of the following: -- Merchant credit card
processing fees - up $570,000, primarily due to new customer growth
and increased volume. Merchant outlets totaled 628 at June 30, 2005
as compared to 488 at June 30, 2004. -- Other operating income - up
$148,000, due to retail annuity sales and a gain on the sale of
repossessed property. -- Investment management and trust fees - up
$101,000, primarily from increases in discretionary assets under
management which rose to $772.2 million, up from $634.3 million at
June 30, 2004. -- Income from sale of covered call options - down
$379,000. -- Treasury management fees - down $178,000, primarily
due to higher earnings credit rates being paid on demand deposit
account balances. Other expenses rose 10% for the second quarter of
2005 primarily as a result of the following: -- Merchant credit
card interchange expense - up $501,000, primarily due to increased
volume. -- Salaries and employee benefits - up $215,000. --
Advertising and business development - up $138,000, primarily due
to expenses associated with individual sales and promotion efforts
and the promotion of the new "guaranteed best rate" mortgage
products. Six Month Earnings (Unaudited) Net income for the first
six months of 2005 was $8.735 million, down from $9.566 million for
the first six months of 2004. Diluted earnings per share were $.88
in the first six months of 2005 compared to $.96 in 2004, down 8%.
Net interest income was $25.838 million in the first six months of
2005 compared to $26.383 million in the first six months of 2004.
The decrease in net interest income resulted from a 37 basis point
decrease in the net interest margin to 2.66%, partially offset by a
12% increase in average earning assets. Margin compression in the
first six months of 2005 was primarily the result of interest rates
rising faster on deposits than on loans and investments and the
flattening yield curve. The growth in average earning assets
included an increase in average loans of $168.6 million and an
increase in average investment securities of $55.3 million. No
provision for loan losses was recorded in the first six months of
2005 compared to $500,000 recorded in 2004, due to high asset
quality and a low level of charge-offs in 2005. Other income,
excluding security gains, increased 6%, primarily as a result of
the following: -- Merchant credit card processing fees - up
$890,000, primarily due to new merchants and increased volume. --
Investment management and trust fees - up $196,000, primarily from
an increase in discretionary assets under management. -- Other
operating income - up $176,000 due to retail annuity sales and a
gain on the sale of repossessed property. -- Income from sale of
covered call options - down $474,000. -- Treasury management fees -
down $428,000, primarily due to higher earnings credit rates being
paid on demand deposit account balances. Other expenses rose 9% for
the first six months of 2005 primarily as a result of the
following: -- Merchant credit card interchange expense - up
$803,000, primarily due to increased volume. -- Salaries and
employee benefits - up $621,000. -- Professional fees - up
$170,000, primarily due to a reimbursement of legal fees in 2004
related to a fully recovered problem credit and increased ongoing
costs related to compliance with the Sarbanes-Oxley Act. --
Advertising and business development - up $136,000, due primarily
to the promotion of the new "guaranteed best rate" mortgage
product. Chief Executive Officer & President's Comments Richard
M. Rieser, Jr., Company CEO and President said, "Despite current
margin pressures, we are pleased with our strong loan growth of
over $155 million since year end. In addition, our Investment
Management and Trust Department is approaching $1 billion in total
assets and our Merchant Credit Card Department had a record
quarter. We are also very excited by our branch expansion. Our new
Darien branch is already up to $43 million in deposits in just 16
weeks and we are still on target to add to our North Shore presence
in Glencoe and Northbrook and open another Dupage County office in
Wheaton later this year." Assets and Equity at June 30, 2005
(Unaudited) Total assets were $2.150 billion at June 30, 2005, up
3% from $2.083 billion at December 31, 2004. Shareholders' equity
was $136.3 million at June 30, 2005 compared to $133.8 million at
December 31, 2004. Book value per share was $13.68, at June 30,
2005. Under the Company's Stock Repurchase Program, the Company
repurchased 88,603 shares at an average price of $29.75 during the
first six months of 2005. The repurchased stock is held as treasury
stock and used for general corporate purposes. The Company's and
Oak Brook Bank's capital ratios met the "well capitalized" criteria
of the Federal Reserve and FDIC, respectively. "Well-capitalized"
status reduces Fed regulatory burdens and helps lessen FDIC
insurance assessments. Asset Quality (Unaudited) Net charge-offs
for the first six months of 2005 totaled $30,000 compared to
$131,000 in the first six months of 2004. In 2005, charge-offs
totaled $242,000, which related primarily to the indirect vehicle
portfolio. Recoveries totaled $212,000 including $32,000 in
restitution from the 60 W. Erie loan fraud. The remaining
recoveries relate primarily to the Company's indirect vehicle
portfolio. In 2004, charge-offs of $306,000 and recoveries of
$175,000 related primarily to the indirect vehicle portfolio. As of
June 30, 2005 and December 31, 2004, the Company's allowance for
losses stood at $8.5 million. This allowance represented .69% of
loans outstanding at June 30, 2005, and .80% of loans outstanding
at year end. At June 30, 2005, nonperforming loans (including
nonaccrual loans of $103,000 and loans past due greater than 90
days of $58,000) were $161,000, compared to $148,000 at December
31, 2004. At June 30, 2005, nonperforming assets totaled $1.19
million, a substantial decrease from $10.15 million at December 31,
2004. Nonperforming assets include Other Real Estate Owned (OREO)
of $936,000, nonperforming loans of $161,000, and repossessed
vehicles held for sale of $93,000. OREO totaled $936,000 at June
30, 2005, down from $9.857 million at December 31, 2004. OREO
consists of one remaining full-floor unit and six parking spaces
from a luxury condominium project in Chicago. The Company
recognized a gain of $87,000 on the sale of the Chicago Heights
OREO property during the second quarter of 2005. Branch Network
(Unaudited) Oak Brook Bank currently operates eighteen banking
offices, sixteen in the western suburbs of Chicago, one in the
northern suburbs of Chicago, and one at Huron and Dearborn Streets
in downtown Chicago, in addition to an Internet branch at
www.obb.com. The Bank has announced four additional branches for
Glencoe, Northbrook, Wheaton, and Homer Glen. The Bank expects to
open the Glencoe, Northbrook, and Wheaton branches in the latter
part of 2005, and the Homer Glen branch in 2006. The Bank continues
to evaluate branch expansion opportunities in the Chicago area.
Shareholder Information (Unaudited) The Company's Common Stock
trades on the Nasdaq Stock Market(R) under the symbol FOBB. FOBB
remained a member of the Russell 2000(R) Index effective July 1,
2005 for a term of one year. Twenty-one firms make a market in the
Company's Common stock. The following six firms provide research
coverage: Howe Barnes Investments, Inc.; Sandler, O'Neill &
Partners; Stifel Nicolaus & Co.; Keefe, Bruyette & Woods,
Inc.; FTN Financial Securities Corp.; and Sidoti & Co. At our
Web site www.firstoakbrook.com you will find shareholder
information including this press release and electronic mail boxes.
You will also have the option of directly linking to additional
financial information filed with the SEC. The consolidated balance
sheets, income statements, and selected financial data are
enclosed. Forward-Looking Statements This release contains certain
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends
such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and this statement is
included for purposes of invoking these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions
and describe the Company's future plans, strategies and
expectations, can generally be identified by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project,"
or similar expressions. The Company's ability to predict results or
the actual effect of future plans or strategies is inherently
uncertain and actual results may differ materially from the results
projected in forward-looking statements due to various factors.
These risks and uncertainties include, but are not limited to,
fluctuations in market rates of interest and loan and deposit
pricing; a deterioration of general economic conditions in the
Company's market areas; legislative or regulatory changes; adverse
developments in our loan or investment portfolios; the assessment
of the provision and reserve for loan losses; developments
pertaining to the loan fraud and condominium project at 60 W. Erie,
Chicago; significant increases in competition or changes in
depositor preferences or loan demand, difficulties in identifying
attractive branch sites or other expansion opportunities, or
unanticipated delays in regulatory approval or construction
buildout; difficulties in attracting and retaining qualified
personnel; and possible dilutive effect of potential acquisitions
or expansion. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not
be placed on such statements. We undertake no obligation to update
publicly any of these statements in light of future events except
as may be required in subsequent periodic reports filed with the
Securities and Exchange Commission. -0- *T FIRST OAK BROOK
BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) (Unaudited) June 30, December 31, June 30, 2005 2004
2004 ------------------------------------ (Dollars in thousands)
Assets Cash and due from banks $35,427 $34,273 $29,313 Fed funds
sold and interest-bearing deposits with banks 41,409 51,479 136,095
Investment securities: Held-to-maturity, at amortized cost 37,554
35,469 23,297 Available-for-sale, at fair value 711,027 786,198
765,915 Trading, at fair value 907 - - Non-marketable securities -
FHLB stock 19,941 19,410 38,517
------------------------------------ Total investment securities
769,429 841,077 827,729 Loans: Commercial 130,808 116,653 101,494
Syndicated 64,389 34,958 26,829 Construction 111,675 75,833 59,141
Commercial mortgage 258,145 247,840 241,852 Residential mortgage
125,643 109,097 105,930 Home equity 158,546 151,873 146,296
Indirect auto 303,386 276,398 260,644 Indirect Harley Davidson
65,673 51,560 46,314 Other consumer 8,548 7,443 7,744 ------------
----------- ----------- Total loans, net of unearned income
1,226,813 1,071,655 996,244 Allowance for loan losses (8,516)
(8,546) (8,738) ------------ ----------- ----------- Net loans
1,218,297 1,063,109 987,506 Other real estate owned, net of
valuation reserve 936 9,857 12,664 Premises and equipment, net of
accumulated depreciation 37,024 34,561 34,188 Bank owned life
insurance 25,349 24,858 21,435 Other assets 21,989 23,310 21,057
------------ ----------- ----------- Total assets $2,149,860
$2,082,524 $2,069,987 ============ =========== =========== FIRST
OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited) (Unaudited) June 30, December 31, June 30, 2005
2004 2004 ----------------------------------- (Dollars in
thousands) Liabilities Noninterest-bearing demand deposits $279,506
$265,251 $263,682 Interest-bearing deposits: Savings deposits and
NOW accounts 258,112 291,028 279,697 Money market accounts 210,446
166,777 138,605 Time deposits: Under $100,000 423,718 376,841
384,810 $100,000 and over 642,940 614,639 644,276 ------------
----------- ----------- Total interest-bearing deposits 1,535,216
1,449,285 1,447,388 ------------ ----------- ----------- Total
deposits 1,814,722 1,714,536 1,711,070 Fed funds purchased and
securities sold under agreements to repurchase 24,370 25,285 22,954
Treasury, tax and loan demand notes 5,478 7,792 20,300 FHLB of
Chicago borrowings 128,903 161,418 165,500 Junior subordinated
notes issued to capital trusts 23,713 23,713 23,713 Other
liabilities 16,388 15,993 8,972 ------------ -----------
----------- Total liabilities 2,013,574 1,948,737 1,952,509
Shareholders' equity: Preferred stock - - - Common stock 21,850
21,850 21,850 Surplus 8,186 7,751 6,349 Accumulated other
comprehensive (loss) income (632) 432 (9,098) Retained earnings
120,104 114,897 108,521 Less cost of shares in treasury (13,222)
(11,143) (10,144) ------------ ----------- ----------- Total
shareholders' equity 136,286 133,787 117,478 ------------
----------- ----------- Total liabilities and shareholders' equity
$2,149,860 $2,082,524 $2,069,987 ============ ===========
=========== FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months ended
Six months ended June 30, % June 30, % (In thousands except 2005
2004 Change 2005 2004 Change per share data)
----------------------- ----------------------- Interest and
dividend income: Loans $15,713 $12,154 29 $29,575 $23,850 24
Investment securities: U.S. Treasuries and U.S. Government agencies
7,456 6,952 7 15,079 13,938 8 State and municipal obligations 439
492 (11) 864 955 (10) Other securities 822 1,121 (27) 1,660 2,268
(27) Fed funds sold and interest-bearing deposits with banks 251
137 83 377 217 74 -------- -------- -------- -------- Total
interest and dividend income 24,681 20,856 18 47,555 41,228 15
Interest expense: Savings deposits and NOW accounts 869 751 16
1,724 1,456 18 Money market accounts 1,047 401 161 1,688 768 120
Time deposits 7,812 4,772 64 14,377 9,219 56 Fed funds purchased
and securities sold under agreements to repurchase 223 54 313 418
189 121 Treasury, tax and loan demand notes 63 12 425 74 31 139
FHLB of Chicago borrowings 1,157 1,236 (6) 2,523 2,450 3 Junior
subordinated notes issued to capital trusts 487 365 33 913 732 25
-------- -------- -------- -------- Total interest expense 11,658
7,591 54 21,717 14,845 46 -------- -------- -------- -------- Net
interest income 13,023 13,265 (2) 25,838 26,383 (2) Provision for
loan losses - 250 (a) - 500 (a) -------- -------- -------- --------
Net interest income after provision for loan losses 13,023 13,015 -
25,838 25,883 - FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months ended
Six months ended June 30, % June 30, % (In thousands except 2005
2004 Change 2005 2004 Change per share data)
----------------------- ----------------------- Other income:
Service charges on deposit accounts: Treasury management 909 1,087
(16) 1,866 2,294 (19) Retail and small business 317 322 - 582 619
(6) Investment management and trust fees 762 661 15 1,496 1,300 15
Merchant credit card processing fees 2,056 1,486 38 3,707 2,817 32
Gains on mortgages sold, net of fees and costs 187 108 73 275 125
120 Income from bank owned life insurance 247 211 17 491 424 16
Income from sale of covered call options 58 437 (87) 306 780 (61)
Securities dealer income 57 74 (23) 92 101 (9) Other operating
income 498 350 42 851 675 26 Investment securities gains (losses)
135 (5) (a) 298 162 (a) -------- -------- -------- -------- Total
other income 5,226 4,731 10 9,964 9,297 7 Other expenses: Salaries
and employee benefits 6,291 6,076 4 12,788 12,167 5 Occupancy 859
799 8 1,735 1,654 5 Equipment 557 509 9 1,073 1,029 4 Data
processing 494 456 8 983 894 10 Professional fees 276 258 7 582 412
41 Postage, stationery and supplies 282 268 5 523 505 4 Advertising
and business development 706 568 24 1,217 1,081 13 Merchant credit
card interchange expense 1,700 1,199 42 3,062 2,259 36 Other
operating expense 570 537 6 1,090 1,072 2 -------- --------
-------- -------- Total other expense 11,735 10,670 10 23,053
21,073 9 -------- -------- -------- -------- Income before income
taxes 6,514 7,076 (8) 12,749 14,107 (10) Income tax expense 2,059
2,275 (9) 4,014 4,541 (12) -------- -------- -------- -------- Net
income $4,455 $4,801 (7) $8,735 $9,566 (9) ======== ========
======== ======== Diluted earnings per share $0.45 $0.48 (6) $0.88
$0.96 (8) ======== ======== ======== ======== (a) Percentage change
information not meaningful. FIRST OAK BROOK BANCSHARES, INC. AND
SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED) Three
months ended Six months ended (In thousands June 30, % June 30, %
except per 2005 2004 Change 2005 2004 Change share data)
--------------------------- --------------------------- AVERAGE
BALANCES: Loans, net of unearned income $1,163,565 $978,715 19
$1,122,570 $954,012 18 Investment securities 814,973 781,396 4
829,603 774,329 7 Earning assets 2,014,411 1,812,873 11 1,980,874
1,771,044 12 Total assets 2,125,483 1,932,143 10 2,094,268
1,891,607 11 Demand deposits 277,098 278,240 - 274,129 265,802 3
Total deposits 1,779,878 1,575,413 13 1,740,076 1,522,457 14
Interest bearing liabilities 1,701,787 1,520,007 12 1,673,048
1,489,564 12 Shareholders' equity 131,946 121,749 8 132,503 123,006
8 COMMON STOCK DATA: Earnings per share: Basic 0.45 0.49 (8) 0.89
0.98 (9) Diluted 0.45 0.48 (6) 0.88 0.96 (8) Weighted average
shares outstanding: Basic 9,802,540 9,743,842 1 9,821,210 9,729,189
1 Diluted 9,946,913 9,990,636 - 9,976,629 9,989,710 - Cash
dividends paid per share $0.18 $0.16 13 $0.34 $0.30 13 Market price
at period end $28.22 $30.30 (7) Book value per share $13.68 $11.73
17 Price to book 2.06x 2.58x ratio (20) Price to 15.42x 15.95x
earnings ratio (1) (3) Period end shares outstanding 9,794,170
9,754,216 - FINANCIAL RATIOS Return on average assets (2) 0.84%
1.00% (16) 0.84% 1.02% (18) Return on average shareholders' equity
(2) 13.54% 15.86% (15) 13.29% 15.64% (15) Overhead ratio (2) 1.30%
1.32% (2) 1.33% 1.34% (1) Efficiency ratio (2) 64.31% 59.29% 8
64.39% 59.06% 9 Net interest margin on average earning assets (2,
3) 2.62% 2.98% (12) 2.66% 3.03% (12) Net interest spread (2, 3)
2.19% 2.65% (17) 2.25% 2.72% (17) Dividend payout ratio (2) 39.26%
32.35% 21 40.39% 32.48% 24 --------- (1) Calculated using the end
of period market price divided by the last twelve months diluted
earnings of $1.83 per share in 2005 and $1.90 per share in 2004.
(2) Annualized ratio. (3) Tax equivalent basis. The net interest
margin calculations include the effects of tax equivalent
adjustments for tax exempt loans and investment securities using a
tax rate of 35% in 2005 and 2004. Tax equivalent interest income
for the three months ended June 30, 2005 and 2004 includes a tax
equivalent adjustment of $140 and $157, respectively. Tax
equivalent interest income for the six months ended June 30, 2005
and 2004 includes a tax equivalent adjustment of $274 and $300,
respectively. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED) June 30, December
31, June 30, (Dollars in thousands) 2005 2004 2004
------------------------------------ CAPITAL RATIOS Company
Consolidated (minimum for "well capitalized"): Tier 1 capital ratio
(6%) $157,792 $156,019 $149,415 10.52% 11.57% 11.80% Total
risk-based capital ratio (10%) $166,309 $164,566 $158,153 11.09%
12.20% 12.49% Capital leverage ratio (5%) $157,792 $156,019
$149,415 7.37% 7.47% 7.68% Oak Brook Bank: Tier 1 capital ratio
(6%) $147,517 $142,000 $136,300 9.91% 10.61% 10.84% Total
risk-based capital ratio (10%) $156,034 $150,547 $145,038 10.48%
11.24% 11.53% Capital leverage ratio (5%) $147,517 $142,000
$136,300 6.93% 6.82% 7.03% TRUST ASSETS Discretionary assets under
management $772,153 $751,046 $634,326 Total assets under
administration 978,053 944,318 815,542 ASSET QUALITY RATIOS
Nonperforming loans $161 $148 $388 Nonperforming assets (1) 1,190
10,150 13,119 Nonperforming loans to total loans 0.01% 0.01% 0.04%
Nonperforming assets to total assets 0.06% 0.49% 0.63% Net
charge-offs to average loans (annualized) 0.01% 0.03% 0.03%
Allowance for loan losses to total loans 0.69% 0.80% 0.88%
Allowance for loan losses to 52.90x 57.74x 22.52x nonperforming
loans ROLLFORWARD OF ALLOWANCE FOR LOAN LOSSES Balance at January 1
$8,546 $8,369 ------------ ------------ Charge-offs during the
period: Commercial loans (1) - Home equity loans - (15) Indirect
vehicle loans (237) (282) Consumer loans (4) (9) ------------
------------ Total charge-offs (242) (306) ------------
------------ Recoveries during the period: Commercial loans 39 15
Construction, land acquisition and development loans 32 - Indirect
vehicle loans 126 152 Consumer loans 15 8 ------------ ------------
Total recoveries 212 175 ------------ ------------ Net charge-offs
during the period (30) (131) Provision for loan losses - 500
------------ ------------ Allowance for loan losses at June 30
$8,516 $8,738 ============ ============ (1) Includes nonperforming
loans, OREO and repossessed vehicles. FIRST OAK BROOK BANCSHARES,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF
INCOME (UNAUDITED) 2005 2004 ----------------
-------------------------------- Second First Fourth Third Second
First Quarter Quarter Quarter Quarter Quarter Quarter -------
-------- ------- ------- ------- -------- (In thousands except per
share data) Interest income $24,681 $22,874 $22,752 $22,731 $20,856
$20,372 Interest expense 11,658 10,059 9,492 8,963 7,591 7,254
------- -------- ------- ------- ------- -------- Net interest
income 13,023 12,815 13,260 13,768 13,265 13,118 Provision for loan
losses - - - - 250 250 Other income 5,226 4,738 4,389 4,846 4,731
4,566 Other expense 11,735 11,318 10,688 11,971 10,670 10,403
------- -------- ------- ------- ------- -------- Income before
income taxes 6,514 6,235 6,961 6,643 7,076 7,031 Income tax expense
2,059 1,955 2,021 2,077 2,275 2,266 ------- -------- -------
------- ------- -------- Net income $4,455 $4,280 $4,940 $4,566
$4,801 $4,765 ======= ======== ======= ======= ======= ========
Basic earnings per share $0.45 $0.43 $0.50 $0.47 $0.49 $0.49
======= ======== ======= ======= ======= ======== Diluted earnings
per share $0.45 $0.43 $0.49 $0.46 $0.48 $0.48 ======= ========
======= ======= ======= ======== ROA (1) 0.84% 0.84% 0.94% 0.87%
1.00% 1.04% ROE (1) 13.54% 13.04% 14.88% 14.71% 15.86% 15.42% Net
interest margin (1) 2.62% 2.70% 2.72% 2.81% 2.98% 3.08%
--------------------- (1) Annualized ratio. *T
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