FIRST OAK BROOK BANCSHARES, INC., (NASDAQ:FOBB): 2005 Earnings
(Unaudited) FIRST OAK BROOK BANCSHARES, INC., (NASDAQ:FOBB)
announced net income for 2005 of $16.633 million, down from $19.072
million for 2004. Diluted earnings per share were $1.67 in 2005
compared to $1.91 in 2004, down 13%. Earnings in 2005 resulted in a
return on average shareholders' equity (ROE) of 12.46% and a return
on average assets (ROA) of .78%. Net interest income was $51.358
million in 2005 compared to $53.411 million in 2004. The decrease
in net interest income resulted from a 33 basis point decrease in
the net interest margin to 2.56%, partially offset by a 9% increase
in average earning assets. The growth in average earning assets
included an increase in average loans of $197.9 million partially
offset by a decrease in average investments of $23.7 million.
Margin compression in 2005 was primarily the consequence of
interest rates rising faster on deposits than on loans and
investments. The Federal Reserve's monetary policy by virtue of
which the Fed has been gradually increasing short-term interest
rates, the flattening of the "yield curve" where shorter-term
interest rates have caught up with longer-term interest rates, and
stiff competition among banks in the highly competitive Chicago
market were major factors driving this margin compression. The
Company recorded a provision for loan losses of $360,000 during
2005 compared to $500,000 recorded in 2004. The decrease is
primarily due to high asset quality. Other income, excluding
securities gains and losses, increased 10% primarily as a result of
the following: -- Merchant credit card processing fees - up
$2,038,000, primarily due to new customer growth and increased
volume. Merchant volume rose 35% to $384.2 million in 2005 from
$284.3 million in 2004. Merchant outlets totaled 638 at December
31, 2005 as compared to 566 at December 31, 2004. -- Gain on
mortgages sold - up $707,000, primarily due to increased mortgage
originations arising from the "Guaranteed Best Rate" promotion.
Mortgages originated, including mortgages sold and mortgages held
in the portfolio, rose 120% to $125.1 million in 2005 from $56.8 in
2004. -- Investment management and trust fees - up $433,000,
primarily from increases in discretionary assets under management
which rose to $832.8 million, up from $751.0 million at December
31, 2004. Total trust assets under administration rose to $1.057
billion, up from $944.3 million at December 31, 2004. -- Other
operating income - up $195,000, primarily due to an increase of
approximately $59,000, or 38%, in retail annuity sales to $213,000
in 2005 from $154,000 in 2004, and a gain of $87,000 on the sale of
repossessed property. -- Income from sale of covered call options -
down $568,000, or 51%, to $542,000 in 2005 compared to $1.1 million
in 2004. -- Treasury management fees - down $1,084,000, primarily
due to higher earnings credit rates (ECRs) being paid on commercial
checking account balances. Treasury management clients retain the
option to pay for Bank services in cash fees or by maintaining
deposits in their checking accounts, or a combination of both. As
rates rise, so do the ECRs we offer clients on their checking
balances, and the less clients have to make up in cash fees. Other
expenses rose 8% for 2005 primarily as a result of the following:
-- Merchant credit card interchange expense - up $1,824,000, or
38%, to $6.6 million in 2005 from $4.8 million in 2004 primarily
due to increased volume. -- Salaries and employee benefits - up
$1,497,000, primarily due to higher compensation costs, an increase
in average full-time equivalents (FTE) and increased costs of
employee benefits. -- Advertising and business development - up
$397,000, primarily due to the promotion of the new "Guaranteed
Best Rate" mortgage and home equity products and individual
marketing and entertainment costs. -- Occupancy and equipment - up
$331,000, primarily due to branch expansion. The Bank opened four
branches in 2005 (one in March and three in October), bringing its
total to 21. -- Professional fees - up $329,000, primarily due to
increased ongoing costs related to compliance with the
Sarbanes-Oxley Act and legal fees arising from the Company's
prosecution of lawsuits related to the 60 W. Erie loan fraud
discovered in 2002. In 2004, a nonrecurring reimbursement of legal
fees related to a fully recovered problem credit reduced the
Company's legal expense by $65,000. -- Provision for other real
estate owned - down $1,217,000. No valuation adjustment was
necessary in 2005. See "Asset Quality." Chief Executive Officer's
Comments on 2005 Richard M. Rieser, Jr., Company CEO said, "We are
heartened by our progress on a number of key initiatives undertaken
in 2005, especially in the face of the Federal Reserve's continued
gradual hiking of short-term interest rates, the flattened yield
curve where short-term rates rose to roughly approximate
longer-term rates, and fierce competition for deposits and loans
among banks in the Chicago market. "Despite these challenges, the
Company proved itself a prodigious deposit gatherer, a consistent
corporate strength. We ended the year 2005 with deposits up 10%, or
$169 million, rising to $1.884 billion from $1.715 billion in 2004.
Checking, money market accounts and $100,000 and under CDs all
rose, while savings accounts and jumbo CDs declined. In short, our
core deposits grew smartly in 2005. We don't rely on any brokered
CDs for our funding. "We attribute our success as deposit gatherers
to two long-pursued strategies: First, we continue to lead and
innovate in the Treasury Management industry, which helps us
attract and retain lower-cost commercial checking deposits. To
illustrate our leading edge capabilities, this year we introduced
Remote Capture, a way our clients can convert their receivables
from checks to images on their own premises and then to transmit
this electronic data remotely to us for collection. "Second, we
continued in 2005 to expand our branch network. In 2005, we opened
a record four offices, bringing our total to 21. In March 2005, we
opened our 18th office in Darien, which at year-end held over $61
million in deposits. In October 2005, we opened 3 additional
offices -- in Glencoe, Northbrook and Wheaton -- which at year-end
had attracted $88.3 million in new deposits. "In the cases of our
new Glencoe and Northbrook offices (combined deposits of $71.7
million at year-end), we introduced a new refinement to our
market-driven approach. We branded these two new branches, serving
super-affluent communities on Chicago's North Shore, as Chicago
Private Bank (CPB). CPB is headed by experienced private bankers
and offers exclusive services such as a doorman and concierge who
make 'house calls' in our Mini-Cooper concierge cars. The CPB model
has been so well-received that we're expanding it, having at the
end of 2005 put a private banker in our downtown Chicago office at
Dearborn and Huron Streets. "It is not, however, in our deposit
liabilities, but in our investment and loan assets where we
continue to face our severest tests. Over the course of 2005, we
grew our loan portfolio $240.6 million, or 22%, to $1.312 billion
from $1.072 billion at the end of 2004. Loan growth was spread over
all four major components of our portfolio. Commercial real estate
and construction grew $78 million, or 24%. Commercial and
Industrial (C&I) loans grew $42.4 million, or 28%. Residential
mortgage and home equities grew $28.1 million, or 11%. And consumer
loans, including indirect auto, Harley Davidson motorcycles, and
other consumer loans, climbed $92 million, or 27%. "Unfortunately,
balance sheet loan growth alone does not tell the whole story. Our
$334 million indirect auto portfolio yielded 4.11% for the fourth
quarter of 2005 -- below today's marginal cost of funds. Within the
indirect auto portfolio there is a significant portion of 'A' paper
written in 2003 and 2004 at about 3.5%. While this segment is high
quality and turns relatively fast (average life is 31 months), it
will take us awhile to boost the overall portfolio yield. In
December 2005, our average new auto originations yielded 5.49%, and
we project for the year 2006 an average auto portfolio yield of
4.68%, depending on new indirect loan volume. The $71 million
Harley Davidson motorcycle portfolio yielded 5.46% for the fourth
quarter of 2005. "Similarly, a closer look at C&I loan volume
reflects strong growth in our leasing and syndicated loans, but
relatively flat outstandings within our small business and
middle-market loan sector. We are focusing significant management
effort and financial resources on building up our small business
and middle-market C&I loan origination capabilities. Late in
the year, we brought in Bill McGowan as an Executive VP to address
this challenge. Previously, Bill was a senior lender in the
Fifth/Third and Old Kent organizations and, prior to that, served
as a division head in commercial lending at American National Bank.
Bill is working hard to recruit additional senior lenders to
augment our commercial loan origination platform. "Historically and
continuing in 2005, the Company has been under-loaned. At the
beginning of 2005, Oak Brook Bank had a loan to deposit ratio of
63%. By year-end 2005, we increased this ratio to 70%. Nonetheless,
we trail peers who average 89% and sometimes more. The result is
that the Company has, in relation to peers, an oversized investment
portfolio. While in 2005 we shrunk our investment portfolio by
$48.4 million, we still have approximately $364 million of excess
lower yielding investments when compared to our peers. We see a
very profitable opportunity over the next several years in
redeploying investment dollars into better yielding loans or,
failing that, into higher yielding investments. With projected cash
flows from investments totaling approximately $253.7 million over
the next two years and our much anticipated growth in commercial
lending capability, we are hopeful we can realize an improved loan
to deposit ratio. "We want to emphasize that, in fulfilling our
loan growth goals, we do not expect to compromise credit quality.
High credit quality has always been a hallmark of our conservative
culture. Evidencing this, at year-end 2005 non-performing assets
(NPAs) from all sources dropped to just $900,000 from $10.2 million
a year ago. The largest portion of this reduction in NPAs resulted
from our sell-out of the 60 W. Erie condos. Net charge-offs in 2005
dropped to just $94,000 from $323,000 in 2004. "During 2005, we
continued to produce healthy fee revenues. Investment Management
& Trust fees climbed 17% to $3.054 million. Merchant credit
card fees rose 34% to $8.016 million from $5.978 million. And gains
on mortgages sold increased 292% to $949,000 from $242,000 --
largely due to our "Guaranteed Best Rate" (GBR) program introduced
in March 2005. Under GBR, we offer to meet or beat the best
mortgage or home equity line rates in Chicago, or pay $300. In
addition, we offer low fixed closing costs (plus title and taxes)
to take the surprises away at the closing table. For the first time
we used broadcast TV to promote this program, in addition to our
usual radio, newspaper, and direct mail media. "Over 2005, the
Company strengthened and deepened its management team and refined
its organizational structure. Our Wealth Advisory Group, headed by
Senior EVP Tom Sawyer, expanded beyond Investment Management and
Trust to include Chicago Private Bank in Glencoe and Northbrook.
Chicago Private Bank brought on board 3 seasoned private bankers --
Scott Landau as President (Scott was formerly Senior VP in Wealth
Management at LaSalle), and two Managing Directors. "Our Retail
Group, under Senior EVP Darin Campbell's fine leadership, deepened
its executive ranks in all areas, but particularly on the Retail
Branch side where we named VPs for Sales, Products, and Operations
and Compliance. "On the Commercial side, we promoted two Senior VPs
to co-head Commercial Banking and introduced a mentoring program
where seasoned and less experienced commercial bankers are teamed
up. In C&I Lending, EVP Bill McGowan joined the Bank and is
providing clarity of direction and focus in building up our
commercial lending platform. We reorganized our Credit
Administration and Closing Divisions for better support. "In our
Real Estate Group, headed by Senior EVP Larry Silberman, we
streamlined our organization, creating two efficient departments
out of three. Operating even more efficiently, we doubled
commercial real estate and construction loan originations, built
from scratch two new owned branches in Darien and Wheaton, built
out two leased facilities in Glencoe and Northbrook, and sold our
remaining condo inventory at 60 W. Erie. "Our Finance and
Administrative Group, under Senior EVP and CFO Rose Bouman,
operated very smoothly, notwithstanding the heavy burden of
Sarbanes-Oxley compliance and the additional workload generated by
our continued growth. Notable hires include an experienced head of
Compliance and a skilled Director of Education to manage both
internal training and to serve as Dean of Chicago Private Bank
(CPB) University, our financial and business continuing education
program for clients and friends of CPB. "This management team did
an admirable job charting our course throughout 2005. With this
even stronger and deeper leadership, we are confident their talent
and dedication will provide the sort of ongoing guidance and
inspiration so necessary when margins are under pressure." 2005
Fourth Quarter Earnings (Unaudited) Net income for the fourth
quarter of 2005 was $3.834 million, down from $4.94 million for the
fourth quarter of 2004. Diluted earnings per share were $.38 in
2005 compared to $.49 in 2004, down 22%. Earnings for the fourth
quarter of 2005 resulted in an annualized ROE of 11.45% and an
annualized ROA of .69%. Net interest income was $12.802 million for
the fourth quarter of 2005 as compared to $13.26 million in the
fourth quarter of 2004, down 3%. The decrease in net interest
income resulted from a 28 basis point decrease in the net interest
margin to 2.44%, partially offset by a 7% increase in average
earning assets. The margin was favorably impacted by an increase in
loan fees of $805,000 in the fourth quarter of 2005 compared to
2004, primarily due to an increase in prepayment penalties. The
growth in average earning assets included an increase in average
loans of $247.6 million partially offset by a decrease in average
investment securities of $106.1 million. Margin compression in 2005
was primarily the result of interest rates rising faster on
deposits than on loans and investments. Federal Reserve action, the
flattened yield curve, and the competitive Chicago market were
major factors driving this margin compression. The Company recorded
a provision for loan losses of $180,000 for the fourth quarter of
2005. No provision for loan losses was recorded for the fourth
quarter of 2004. Net pre-tax securities losses of $57,000 for the
fourth quarter of 2005 included a charge of $292,000 related to the
"other-than-temporary" impairment of FNMA Series G perpetual
preferred stock held by the Company. Other income, excluding
securities losses, rose 11%, primarily as a result of the
following: -- Merchant credit card processing fees - up $507,000,
primarily due to new customer growth and increased volume. -- Gain
on mortgages sold - up $192,000, primarily due to increased
mortgage originations arising from the "Guaranteed Best Rate"
promotion. -- Investment management and trust fees - up $101,000,
primarily from an increase in discretionary assets under
management. -- Treasury management fees - down $306,000, primarily
due to higher earnings credit rates being paid on commercial
checking account balances. Other expenses rose 13% in the fourth
quarter of 2005, primarily as a result of the following: --
Merchant credit card interchange expense - up $461,000, primarily
due to increased volume. -- Salaries and employee benefits - up
$443,000, due in part to staffing for three new branches opened in
October 2005, partially offset by a reduction in supplemental
retirement benefits expense. -- Advertising and business
development - up $208,000, due primarily to the promotion of the
new "Guaranteed Best Rate" mortgage product and increased
individual marketing and entertainment costs. -- Occupancy and
equipment - up $141,000 due to branch expansion. Assets and Equity
at December 31, 2005 (Unaudited) Total assets were a record $2.229
billion at December 31, 2005, up 7% from $2.083 billion at December
31, 2004. Shareholders' equity was $134.6 million at December 31,
2005 compared to $133.8 million at December 31, 2004. Book value
per share rose to $13.47 at December 31, 2005. Equity includes an
other comprehensive loss of $7.6 million at December 31, 2005
related to the Company's investment portfolio compared to $432,000
of other comprehensive income at December 31, 2004. Under the
Company's Stock Repurchase Program, the Company repurchased 113,603
shares at an average price of $29.11 during 2005. The repurchased
stock is held as treasury stock and is to be used for general
corporate purposes. Oak Brook Bank's capital ratios met the "well
capitalized" criteria of the FDIC. "Well capitalized" status
reduces regulatory burdens and lessens FDIC insurance assessments.
Asset Quality (Unaudited) Net charge-offs for 2005 totaled $94,000
compared to net charge-offs of $323,000 in 2004. In 2005,
charge-offs totaled $461,000, which related primarily to the
indirect vehicle portfolio. Recoveries totaled $367,000 including
$32,000 in restitution from the 60 W. Erie loan fraud and a $39,000
recovery on a commercial loan charged-off in 2002. The remaining
recoveries relate primarily to the Company's indirect vehicle
portfolio. In 2004, charge-offs totaled $683,000, of which $104,000
related to a write-down of a related commercial and commercial real
estate property transferred into OREO. The remaining charge-offs
and recoveries relate primarily to the Company's indirect vehicle
portfolio. As of December 31, 2005, the Company's allowance for
losses stood at $8.8 million, or .67% of loans outstanding,
compared to $8.5 million, or .80% of loans outstanding at December
31, 2004. At December 31, 2005, nonperforming loans (including
nonaccrual loans of $150,000 and loans past due greater than 90
days of $647,000) were $797,000, compared to $148,000 at December
31, 2004. At December 31, 2005, nonperforming assets totaled
$900,000, a substantial decrease from $10.2 million at December 31,
2004. Nonperforming assets include nonperforming loans of $797,000,
repossessed vehicles held for sale of $88,000, and Other Real
Estate Owned (OREO) of $15,000. OREO totaled $15,000 at December
31, 2005, down from $9.857 million at December 31, 2004. The
Company has completed the sale of all 24 units and 52 of the 53
parking spaces at the 60 W. Erie condominium project. The Company
is maintaining a warranty reserve to pay for any known or
anticipated obligations. The Bank remains the plaintiff in a number
of civil lawsuits brought against various individuals and entities
which arose as a result of the fraud perpetrated by two of the
original developers of this property. The amount and timing of any
recoveries from the government mandated restitution or the civil
lawsuits cannot be ascertained at this time. Expanding Branch
Network (Unaudited) Oak Brook Bank currently operates 21 banking
offices, 17 in the western suburbs of Chicago, three 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. In March 2005, Oak Brook Bank opened its 18th office
in Darien, Illinois, which currently has deposits of over $61
million. On October 17, 2005, Oak Brook opened its new 19th and
20th offices in Glencoe and Northbrook, Illinois, branded as
"Chicago Private Bank", which had attracted $71.7 million in
deposits at December 31, 2005. Later in October 2005, Oak Brook
Bank opened its 21st office in Wheaton, Illinois with $16.6 million
in deposits at December 31, 2005. The Bank has also announced two
additional offices in Homer Glen in the southwest suburbs
(currently under construction) and Oak Lawn in the south suburbs of
Chicago, both of which are expected to open in 2006. The Bank
continues to evaluate branch expansion opportunities in the greater
Chicago area. Although the opening of new offices increases
operating expenses until breakeven is reached, management believes
judicious branch expansion is a key to the Company's longer-term
profitable growth prospects. 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
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; 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) December
31, December 31, % 2005 2004 Change
------------------------------------ (Dollars in thousands) Assets
Cash and due from banks $37,445 $34,273 9 Fed funds sold and
interest- bearing deposits with other banks 3,316 51,479 (94)
Investment securities: Held-to-maturity, at amortized cost 33,118
35,469 (7) Available-for-sale, at fair value 738,277 786,198 (6)
Trading, at fair value 924 - (a) Non-marketable securities - FHLB
stock 20,378 19,410 5 ------------ ------------ Total investment
securities 792,697 841,077 (6) Loans: Commercial 89,919 88,087 2
Commercial lease financing 40,853 28,566 43 Syndicated 63,272
34,958 81 Construction 122,689 75,833 62 Commercial mortgage
279,018 247,840 13 Residential mortgage 130,819 109,097 20 Home
equity 158,279 151,873 4 Indirect auto 333,863 276,398 21 Indirect
Harley Davidson 71,341 51,560 38 Other consumer 22,211 7,443 198
------------ ------------ Total loans, net of unearned income
1,312,264 1,071,655 22 Allowance for loan losses (8,812) (8,546) 3
------------ ------------ Net loans 1,303,452 1,063,109 23 Other
real estate owned, net of valuation reserve 15 9,857 (100) Premises
and equipment, net of accumulated depreciation 40,684 34,561 18
Bank owned life insurance 25,853 24,858 4 Other assets 25,830
23,310 11 ------------ ------------ Total assets $2,229,292
$2,082,524 7 ============ ============ (a) Percentage change
information not meaningful. FIRST OAK BROOK BANCSHARES, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) December 31,
December 31, % 2005 2004 Change
------------------------------------ (Dollars in thousands)
Liabilities Noninterest-bearing demand deposits $278,667 $265,251 5
Interest-bearing deposits: Savings deposits and NOW accounts
258,683 291,028 (11) Money market accounts 267,060 166,777 60 Time
deposits: Under $100,000 493,443 376,841 31 $100,000 and over
585,829 614,639 (5) ------------ ------------ Total
interest-bearing deposits 1,605,015 1,449,285 11 ------------
------------ Total deposits 1,883,682 1,714,536 10 Fed funds
purchased and securities sold under agreements to repurchase 31,531
25,285 25 Treasury, tax and loan demand notes 6,472 7,792 (17) FHLB
of Chicago borrowings 133,888 161,418 (17) Junior subordinated
notes issued to capital trusts 23,713 23,713 - Other liabilities
15,419 15,993 (4) ------------ ------------ Total liabilities
2,094,705 1,948,737 7 Shareholders' equity: Preferred stock - - -
Common stock 21,850 21,850 - Surplus 9,021 7,751 16 Accumulated
other comprehensive (loss) income (7,607) 432 (1861) Retained
earnings 124,455 114,897 8 Less: cost of shares in treasury
(13,132) (11,143) 18 ------------ ------------ Total shareholders'
equity 134,587 133,787 1 ------------ ------------ Total
liabilities and shareholders' equity $2,229,292 $2,082,524 7
============ ============ FIRST OAK BROOK BANCSHARES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three
months Year ended ended (In thousands except December 31, %
December 31, % per share data) 2005 2004 Change 2005 2004 Change
---------------------- ---------------------- Interest and dividend
income: Loans $19,233 $13,053 47 $66,206 $49,691 33 Investment
securities: U.S. Treasuries and U.S. Government agencies 7,330
8,058 (9) 29,589 30,064 (2) State and municipal obligations 434 496
(13) 1,749 1,953 (10) Corporate and other securities 821 909 (10)
3,332 4,312 (23) Fed funds sold and interest-bearing deposits with
other banks 415 236 76 1,178 691 70 ------- ------- ------- -------
Total interest and dividend income 28,233 22,752 24 102,054 86,711
18 Interest expense: Savings deposits and NOW accounts 1,110 889 25
3,828 3,149 22 Money market accounts 2,011 584 244 5,229 1,811 189
Time deposits 10,045 6,068 66 33,335 21,167 57 Fed funds purchased
and securities sold under agreements to repurchase 293 128 129 985
403 144 Treasury, tax and loan demand notes 23 12 92 119 47 153
FHLB of Chicago borrowings 1,418 1,405 1 5,248 5,197 1 Junior
subordinated notes issued to capital trusts 531 406 31 1,952 1,526
28 ------- ------- ------- ------- Total interest expense 15,431
9,492 63 50,696 33,300 52 ------- ------- ------- ------- Net
interest income 12,802 13,260 (3) 51,358 53,411 (4) Provision for
loan losses 180 - (a) 360 500 (28) ------- ------- ------- -------
Net interest income after provision for loan losses 12,622 13,260
(5) 50,998 52,911 (4) FIRST OAK BROOK BANCSHARES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three
months Year ended ended (In thousands except December 31, %
December 31, % per share data) 2005 2004 Change 2005 2004 Change
---------------------- ---------------------- Other income: Service
charges on deposit accounts: Treasury management 734 1,040 (29)
3,415 4,499 (24) Retail and small business 325 323 1 1,229 1,272
(3) Investment management and trust fees 777 676 15 3,054 2,621 17
Merchant credit card processing fees 2,074 1,567 32 8,016 5,978 34
Gains on mortgages sold, net 257 65 295 949 242 292 Income from
bank owned life insurance 253 213 19 995 847 17 Income from sale of
covered call options 64 137 (53) 542 1,110 (51) Securities dealer
income 72 72 - 224 224 - Other operating income 392 372 5 1,593
1,398 14 Net investment securities gains (losses) (57) (76) (a) 187
341 (45) ------- ------- ------ ------- Total other income 4,891
4,389 11 20,204 18,532 9 Other expenses: Salaries and employee
benefits 6,226 5,783 8 25,456 23,959 6 Occupancy 973 892 9 3,602
3,389 6 Equipment 601 541 11 2,218 2,100 6 Data processing 566 487
16 2,105 1,884 12 Professional fees 299 254 18 1,260 931 35
Postage, stationery and supplies 297 285 4 1,093 1,043 5
Advertising and business development 667 459 45 2,499 2,102 19
Merchant credit card interchange 1,764 1,303 35 6,648 4,824 38
Provision for other (a) real estate owned - - - - 1,217 Other
operating expense 633 684 (7) 2,269 2,283 (1) ------- -------
------- ------- Total other expense 12,026 10,688 13 47,150 43,732
8 ------- ------- ------- ------- Income before income taxes 5,487
6,961 (21) 24,052 27,711 (13) Income tax expense 1,653 2,021 (18)
7,419 8,639 (14) ------- ------- ------- ------- Net income $3,834
$4,940 (22) $16,633 $19,072 (13) ======= ======= ======= =======
Diluted earnings per share $0.38 $0.49 (22) $1.67 $1.91 (13)
======= ======= ======= ======= (a) Percentage change information
not meaningful. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED) (In thousands
Three months ended Year ended except per December 31, % December
31, % share data) 2005 2004 Change 2005 2004 Change
---------------------------- ---------------------------- AVERAGE
BALANCES: Loans, net of unearned income $1,273,963 $1,026,324 24
$1,188,504 $990,646 20 Investment securities 786,881 892,999 (12)
808,646 832,343 (3) Earning assets 2,101,418 1,966,325 7 2,031,530
1,871,611 9 Total assets 2,216,960 2,081,808 6 2,145,301 1,989,781
8 Demand deposits 271,680 270,942 - 273,284 271,259 1 Total
deposits 1,873,480 1,711,347 9 1,794,125 1,623,279 11 Interest
bearing liabilities 1,797,415 1,661,920 8 1,723,269 1,579,324 9
Shareholders' equity 132,827 132,023 1 133,453 125,401 6 COMMON
STOCK DATA: Earnings per share: Basic 0.39 0.50 (22) 1.69 1.95 (13)
Diluted 0.38 0.49 (22) 1.67 1.91 (13) Weighted average shares
outstanding: Basic 9,884,458 9,806,293 1 9,846,806 9,763,936 1
Diluted 9,987,212 10,024,442 - 9,981,683 10,005,301 - Cash
dividends paid per share $0.18 $0.16 13 $0.70 $0.62 13 Market price
at period end $27.95 $32.41 (14) Book value per share $13.47 $13.33
1 Price to book ratio 2.07x 2.43x (15) Price to earnings ratio (1)
16.74x 16.97x (1) Period end shares outstanding 9,849,425 9,820,811
- FINANCIAL RATIOS Return on average assets (2) 0.69% 0.94% (27)
0.78% 0.96% (19) Return on average shareholders' equity (2) 11.45%
14.88% (23) 12.46% 15.21% (18) Overhead ratio (2) 1.35% 1.27% 6
1.33% 1.35% (1) Efficiency ratio (2) 67.97% 60.56% 12 65.89% 60.79%
8 Net interest margin on average earning assets (2,3) 2.44% 2.72%
(10) 2.56% 2.89% (11) Net interest spread (2,3) 1.95% 2.37% (18)
2.11% 2.56% (18) Dividend payout ratio (2) 46.44% 31.58% 47 42.53%
32.70% 30 -------------- (1) Calculated using the end of period
market price divided by the last twelve months diluted earnings of
$1.67 per share in 2005 and $1.91 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 December 31, 2005 and 2004 includes a tax equivalent
adjustment of $138 and $163, respectively. Tax equivalent interest
income for the years ended December 31, 2005 and 2004 includes a
tax equivalent adjustment of $555 and $632, respectively. FIRST OAK
BROOK BANCSHARES, INC. AND SUBSIDIARIES SELECTED CONSOLIDATED
FINANCIAL DATA (UNAUDITED) December 31, December 31, (Dollars in
thousands) 2005 2004 ---------------------------- CAPITAL RATIOS
Company Consolidated Tier 1 capital ratio $165,893 $156,019 10.27%
11.57% Total risk-based capital ratio $174,705 $164,566 10.82%
12.20% Capital leverage ratio $165,893 $156,019 7.40% 7.47% Oak
Brook Bank (minimum for "well capitalized"): Tier 1 capital ratio
(6%) $152,688 $142,000 9.51% 10.61% Total risk-based capital ratio
(10%) $161,500 $150,547 10.06% 11.24% Capital leverage ratio (5%)
$152,688 $142,000 6.85% 6.82% TRUST ASSETS Discretionary assets
under management $832,816 $751,046 Total assets under
administration 1,057,098 944,318 ASSET QUALITY RATIOS Nonperforming
loans $797 $148 Nonperforming assets (1) 900 10,150 Nonperforming
loans to total loans 0.06% 0.01% Nonperforming assets to total
assets 0.04% 0.49% Net charge-offs to average loans 0.01% 0.03%
Allowance for loan losses to total loans 0.67% 0.80% Allowance for
loan losses to nonperforming 11.06x 57.74x loans ROLLFORWARD OF
ALLOWANCE FOR LOAN LOSSES Balance at January 1 $8,546 $8,369
-------------- ------------- Charge-offs during the period:
Commercial loans (3) (76) Construction, land acquisition and
development loans - (64) Commercial mortgage loans - (28) Home
equity loans (1) (15) Indirect vehicle loans (446) (486) Consumer
loans (11) (14) -------------- ------------- Total charge-offs
(461) (683) -------------- ------------- Recoveries during the
period: Commercial loans 39 1 Construction, land acquisition and
development loans 32 15 Home equity loans 1 15 Indirect vehicle
loans 273 272 Consumer loans 22 57 -------------- -------------
Total recoveries 367 360 -------------- ------------- Net
charge-offs during the period (94) (323) Provision for loan losses
360 500 -------------- ------------- Allowance for loan losses at
December 31 $8,812 $8,546 ============== ============= (1) Includes
nonperforming loans, OREO and repossessed vehicles. FIRST OAK BROOK
BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED QUARTERLY
STATEMENT OF INCOME (UNAUDITED) 2005
--------------------------------------- Fourth Third Second First
Quarter Quarter Quarter Quarter --------- --------- ---------
--------- (In thousands except per share data) Interest income
$28,233 $26,266 $24,681 $22,874 Interest expense 15,431 13,548
11,658 10,059 --------- --------- --------- --------- Net interest
income 12,802 12,718 13,023 12,815 Provision for loan losses 180
180 - - Other income 4,891 5,349 5,226 4,738 Other expense 12,026
12,071 11,735 11,318 --------- --------- --------- --------- Income
before income taxes 5,487 5,816 6,514 6,235 Income tax expense
1,653 1,752 2,059 1,955 --------- --------- --------- --------- Net
income $3,834 $4,064 $4,455 $4,280 ========= ========= =========
========= Basic earnings per share $0.39 $0.41 $0.45 $0.43
========= ========= ========= ========= Diluted earnings per share
$0.38 $0.41 $0.45 $0.43 ========= ========= ========= ========= ROA
(1) 0.69% 0.74% 0.84% 0.84% ROE (1) 11.45% 11.86% 13.54% 13.04% Net
interest margin (1) 2.44% 2.48% 2.62% 2.70% 2004
--------------------------------------- Fourth Third Second First
Quarter Quarter Quarter Quarter --------- --------- ---------
--------- (In thousands except per share data) Interest income
$22,752 $22,731 $20,856 $20,372 Interest expense 9,492 8,963 7,591
7,254 --------- --------- --------- --------- Net interest income
13,260 13,768 13,265 13,118 Provision for loan losses - - 250 250
Other income 4,389 4,846 4,731 4,566 Other expense 10,688 11,971
10,670 10,403 --------- --------- --------- --------- Income before
income taxes 6,961 6,643 7,076 7,031 Income tax expense 2,021 2,077
2,275 2,266 --------- --------- --------- --------- Net income
$4,940 $4,566 $4,801 $4,765 ========= ========= ========= =========
Basic earnings per share $0.50 $0.47 $0.49 $0.49 =========
========= ========= ========= Diluted earnings per share $0.49
$0.46 $0.48 $0.48 ========= ========= ========= ========= ROA (1)
0.94% 0.87% 1.00% 1.04% ROE (1) 14.88% 14.71% 15.86% 15.42% Net
interest margin (1) 2.72% 2.81% 2.98% 3.08% (1) Annualized ratio.
*T
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