FOBB First Oak Brook Bancshares (MM)

First Oak Brook Bancshares, Inc. (NASDAQ:FOBB): -0- *T 2005 Third Quarter Earnings (Unaudited) *T FIRST OAK BROOK BANCSHARES, INC., (NASDAQ:FOBB) announced net income for the third quarter of 2005 of $4.064 million, down from $4.566 million for the third quarter of 2004. Diluted earnings per share were $.41 in the third quarter of 2005 compared to $.46 in 2004, down 11%. Net interest income was $12.718 million in the third quarter of 2005 compared to $13.768 million in the third quarter of 2004. The decrease in net interest income resulted from a 33 basis point decrease in the net interest margin to 2.48%, partially offset by a 4% increase in average earning assets. Margin compression in the third 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 $205.3 million offset by a decrease in average investment securities of $97.3 million. The Company recorded a provision for loan losses of $180,000 during the third quarter of 2005. No provision for loan losses was recorded for the third quarter of 2004. Other income, excluding securities gains and losses, increased 18% primarily as a result of the following: -- Merchant credit card processing fees - up $641,000, primarily due to new customer growth and increased volume. Merchant outlets totaled 640 at September 30, 2005 as compared to 522 at September 30, 2004. -- Gain on mortgages sold - up $365,000, primarily due to increased mortgage originations arising from the "Guaranteed Best Rate" promotion. -- Investment management and trust fees - up $136,000, primarily from increases in discretionary assets under management which rose to $803.6 million, up from $665.3 million at September 30, 2004. -- Treasury management fees - down $350,000, primarily due to higher earnings credit rates being paid on demand deposit account balances. Other expenses rose 1% for the third quarter of 2005 primarily as a result of the following: -- Merchant credit card interchange expense - up $560,000, primarily due to increased volume. -- Salaries and employee benefits - up $433,000, due in part to staffing for three new branches opening in October 2005. -- Professional fees - up $114,000, 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. -- Provision for other real estate owned - down $1,217,000. No valuation adjustment was necessary in 2005. See "Asset Quality." Nine Month Earnings (Unaudited) Net income for the first nine months of 2005 was $12.799 million, down from $14.132 million for the first nine months of 2004. Diluted earnings per share were $1.28 in the first nine months of 2005 compared to $1.41 in 2004, down 9%. Net interest income was $38.556 million in the first nine months of 2005 compared to $40.151 million in the first nine months of 2004. The decrease in net interest income resulted from a 35 basis point decrease in the net interest margin to 2.60%, partially offset by a 9% increase in average earning assets. The growth in average earning assets included an increase in average loans of $181.0 million and a slight increase in average investment securities of $4.0 million. Margin compression in the first nine 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 Company recorded a provision for loan losses of $180,000 in the first nine months of 2005 compared to $500,000 recorded in 2004. The decrease is primarily due to high asset quality and net recoveries for the first nine months of 2005. Other income, excluding security gains, increased 10%, primarily as a result of the following: -- Merchant credit card processing fees - up $1,531,000, primarily due to new customer growth and increased volume. -- Gain on mortgages sold - up $515,000, primarily due to increased mortgage originations arising from the "Guaranteed Best Rate" promotion. -- Investment management and trust fees - up $332,000, primarily from an increase in discretionary assets under management. -- Other operating income - up $175,000, primarily due to an increase of $85,000 in retail annuity sales and a gain of $87,000 on the sale of repossessed property. -- Income from sale of covered call options - down $495,000. -- Treasury management fees - down $778,000, primarily due to higher earnings credit rates being paid on demand deposit account balances. Other expenses rose 6% for the first nine months of 2005 primarily as a result of the following: -- Merchant credit card interchange expense - up $1,363,000, primarily due to increased volume. -- Salaries and employee benefits - up $1,054,000. -- Professional fees - up $284,000, primarily due to increased ongoing costs related to compliance with the Sarbanes-Oxley Act, legal fees arising from the Company's prosecution of lawsuits related to the 60 W. Erie loan fraud discovered in 2002 and a reimbursement of legal fees in 2004 related to a fully recovered problem credit. -- Advertising and business development - up $189,000, 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 the pressure on our margin from rising deposit costs, we are very pleased with our robust loan growth of over $195 million since year end to a record high of $1.267 billion at September 30, 2005. "Loan growth has been strong in 2005 in all categories except Commercial and Industrial Lending. To energize C&I Lending, we are pleased to announce that William McGowan, 43, has just joined the Bank as the new Executive Vice President and Department Head. Bill comes to us with outstanding credentials. Most recently, Bill was Executive Vice President and a Director of Cornerstone Bank, a de novo founded by the Fitzgerald family in Palatine, Illinois. Previously, Bill was Senior Vice President for Fifth-Third Bank in Illinois where he oversaw 9 middle market commercial lending divisions, and before that Bill served as President and Market Manager of Corporate Banking for Old Kent Bank-Illinois, Fifth-Third's predecessor. Bill started his banking career at American National Bank in 1984 and remained there until 1998, leaving American as First Vice President and a division head in commercial lending. Bill earned his BBA in Finance at the University of Notre Dame in 1984 and his MBA at DePaul University. We are confident that with Bill's strong credit, relationship management, recruiting and team-building skills, he will provide the leadership necessary to build our C&I lending business. "We are also excited by the Wealth Advisory Group's progress. Not only did our Wealth Advisory Group surpass $1 billion in assets under administration in the Third Quarter, but also it just introduced a new brand, "Chicago Private Bank," in the North Shore market. The "Chicago Private Bank" is the way we are identifying Oak Brook Bank's 19th and 20th offices, which opened on Monday, October 17th in Glencoe and Northbrook, Illinois. Our brand promise is to bring a new, different and better kind of bank to high net worth individuals, professionals and business owners on the North Shore by having exceptional bankers deliver extraordinary service in elegant surroundings. To differentiate our services, we are emphasizing the knowledge, know-how, and networking capacity of our managers. We believe we have hired leaders who are more than smart and analytical, but who are also experts in their specialized fields and familiar with these affluent communities and who, because of their deep understanding, can be more creative, imaginative, and empathetic -- bankers worthy of clients' trust. We have also hired doormen and concierges to cater to clients. If customers need something picked up or dropped-off at their homes or businesses, our Mini-Cooper concierge cars will arrive in a jiffy. "To head this private banking initiative, we're pleased to announce that Scott Landau has joined the Chicago Private Bank as President. Previously, Scott was Senior Vice President in the Wealth Management Group of LaSalle Bank and head of LaSalle's Highland Park office. Teamed with Scott is Jill Greenberg, Managing Director of Chicago Private Bank and head of our new Glencoe office. Formerly, Jill was Vice President and manager of residential lending in LaSalle's Wealth Management Group. "What we think is especially novel about our Chicago Private Bank strategy is the way we have married, in our new Glencoe and Northbrook offices, more traditional retail and commercial banking services to specialized private banking products. Essentially, our mission is to deliver absolutely first-rate service, the banking equivalent of what you'd expect to find at a five-star hotel." Assets and Equity at September 30, 2005 (Unaudited) Total assets were a record $2.179 billion at September 30, 2005, up 5% from $2.083 billion at December 31, 2004. Shareholders' equity was $135.0 million at September 30, 2005 compared to $133.8 million at December 31, 2004. Book value per share was $13.50 at September 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 nine 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 Federal Reserve regulatory burdens and helps lessen FDIC insurance assessments. Asset Quality (Unaudited) Net recoveries for the first nine months of 2005 totaled $8,000 compared to net charge-offs of $69,000 in the first nine months of 2004. In 2005, charge-offs totaled $293,000, which related primarily to the indirect vehicle portfolio. Recoveries totaled $301,000 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 of $365,000 and recoveries of $296,000 related primarily to the indirect vehicle portfolio. As of September 30, 2005, the Company's allowance for losses stood at $8.7 million, or .69% of loans outstanding, compared to $8.5 million, or .80% of loans outstanding at December 31, 2004. At September 30, 2005, nonperforming loans (including nonaccrual loans of $232,000 and loans past due greater than 90 days of $63,000) were $295,000, compared to $148,000 at December 31, 2004. At September 30, 2005, nonperforming assets totaled $1.3 million, a substantial decrease from $10.2 million at December 31, 2004. Nonperforming assets include Other Real Estate Owned (OREO) of $963,000, nonperforming loans of $295,000, and repossessed vehicles held for sale of $66,000. OREO totaled $963,000 at September 30, 2005, down from $9.857 million at December 31, 2004. OREO consists of one remaining full-floor unit and six parking spaces from the 60 W. Erie condominium project in Chicago. Expanding Branch Network (Unaudited) Oak Brook Bank currently operates 20 banking offices, 16 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 $58 million. On October 17, 2005, Oak Brook opened its new 19th and 20th offices in Glencoe and Northbrook, Illinois, branded as "Chicago Private Bank." (See CEO & President's comments above for details.) Later this October, Oak Brook Bank expects to open its 21st office in Wheaton, Illinois. The Bank has also announced two additional offices in Homer Glen in the southwest suburbs 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. Anticipated Fourth Quarter Outlook For the fourth quarter 2005, the Company anticipates continued margin pressure, particularly due to rising competitive rates for deposits. In addition, the Company will have opened three new branches in October 2005, the costs of and promotions for which will increase operating expenses. Offsetting these expected costs, the Company received $844,000 in loan prepayment fees on $15 million in commercial mortgages paid-off in early October. 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-two 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) September 30, December 31, September 30, 2005 2004 2004 ----------------------------------------- (Dollars in thousands) Assets Cash and due from banks $34,457 $34,273 $32,755 Fed funds sold and interest-bearing deposits with other banks 4,629 51,479 76,631 Investment securities: Held-to-maturity, at amortized cost 35,597 35,469 37,264 Available-for-sale, at fair value 736,186 786,198 810,749 Trading, at fair value 921 - - Non-marketable securities - FHLB stock 20,188 19,410 19,087 ------------- ------------- ------------- Total investment securities 792,892 841,077 867,100 Loans: Commercial 80,256 88,087 87,974 Lease financing 36,954 28,566 18,579 Syndicated 66,511 34,958 30,542 Construction 94,029 75,833 77,352 Commercial mortgage 290,919 247,840 235,730 Residential mortgage 130,047 109,097 104,219 Home equity 159,990 151,873 148,870 Indirect auto 326,610 276,398 266,693 Indirect Harley Davidson 71,322 51,560 50,529 Other consumer 10,729 7,443 7,880 ------------- ------------- ------------- Total loans, net of unearned income 1,267,367 1,071,655 1,028,368 Allowance for loan losses (8,734) (8,546) (8,800) ------------- ------------- ------------- Net loans 1,258,633 1,063,109 1,019,568 Other real estate owned, net of valuation reserve 963 9,857 11,187 Premises and equipment, net of accumulated depreciation 39,077 34,561 34,780 Bank owned life insurance 25,600 24,858 21,645 Other assets 23,191 23,310 47,118 ------------- ------------- ------------- Total assets $2,179,442 $2,082,524 $2,110,784 ============= ============= ============= FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Unaudited) September 30, December 31, September 30, 2005 2004 2004 ----------------------------------------- (Dollars in thousands) Liabilities Noninterest-bearing demand deposits $280,544 $265,251 $260,715 Interest-bearing deposits: Savings deposits and NOW accounts 259,430 291,028 289,923 Money market accounts 242,049 166,777 142,612 Time deposits: Under $100,000 452,737 376,841 397,408 $100,000 and over 592,134 614,639 631,075 ------------- ------------- ------------- Total interest-bearing deposits 1,546,350 1,449,285 1,461,018 ------------- ------------- ------------- Total deposits 1,826,894 1,714,536 1,721,733 Fed funds purchased and securities sold under agreements to repurchase 35,194 25,285 35,246 Treasury, tax and loan demand notes 4,170 7,792 16,937 FHLB of Chicago borrowings 138,896 161,418 165,500 Junior subordinated notes issued to capital trusts 23,713 23,713 23,713 Other liabilities 15,555 15,993 16,246 ------------- ------------- ------------- Total liabilities 2,044,422 1,948,737 1,979,375 Shareholders' equity: Preferred stock - - - Common stock 21,850 21,850 21,850 Surplus 8,636 7,751 6,447 Accumulated other comprehensive (loss) income (5,052) 432 1,699 Retained earnings 122,402 114,897 111,517 Less cost of shares in treasury (12,816) (11,143) (10,104) ------------- ------------- ------------- Total shareholders' equity 135,020 133,787 131,409 ------------- ------------- ------------- Total liabilities and shareholders' equity $2,179,442 $2,082,524 $2,110,784 ============= ============= ============= FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months Nine months ended ended (In thousands except September 30, % September 30, % per share data) 2005 2004 Change 2005 2004 Change ------------------------ ------------------------ Interest and dividend income: Loans $17,398 $12,788 36 $46,973 $36,638 28 Investment securities: U.S. Treasuries and U.S. Government agencies 7,180 8,068 (11) 22,259 22,006 1 State and municipal obligations 451 502 (10) 1,315 1,457 (10) Other securities 851 1,135 (25) 2,511 3,403 (26) Fed funds sold and interest-bearing deposits with banks 386 238 62 763 455 68 -------- -------- -------- -------- Total interest and dividend income 26,266 22,731 16 73,821 63,959 15 Interest expense: Savings deposits and NOW accounts 994 804 24 2,718 2,260 20 Money market accounts 1,530 459 233 3,218 1,227 162 Time deposits 8,913 5,880 52 23,290 15,099 54 Fed funds purchased and securities sold under agreements to repurchase 274 86 219 692 275 152 Treasury, tax and loan demand notes 22 4 450 96 35 174 FHLB of Chicago borrowings 1,307 1,342 (3) 3,830 3,792 1 Junior subordinated notes issued to capital trusts 508 388 31 1,421 1,120 27 -------- -------- -------- -------- Total interest expense 13,548 8,963 51 35,265 23,808 48 -------- -------- -------- -------- Net interest income 12,718 13,768 (8) 38,556 40,151 (4) Provision for loan losses 180 - (a) 180 500 (a) -------- -------- -------- -------- Net interest income after provision for loan losses 12,538 13,768 (9) 38,376 39,651 (3) FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months Nine months ended ended (In thousands except September 30, % September 30, % per share data) 2005 2004 Change 2005 2004 Change ------------------------ ------------------------ Other income: Service charges on deposit accounts: Treasury management 815 1,165 (30) 2,681 3,459 (22) Retail and small business 322 330 (2) 904 949 (5) Investment management and trust fees 781 645 21 2,277 1,945 17 Merchant credit card processing fees 2,235 1,594 40 5,942 4,411 35 Gains on mortgages sold, net of fees and costs 417 52 702 692 177 291 Income from bank owned life insurance 251 210 20 742 634 17 Income from sale of covered call options 172 193 (11) 478 973 (51) Securities dealer income 60 51 18 152 152 0 Other operating income 350 351 (0) 1,201 1,026 17 Net investment securities gains (losses) (54) 255 (a) 244 417 (a) -------- -------- -------- -------- Total other income 5,349 4,846 10 15,313 14,143 8 Other expenses: Salaries and employee benefits 6,442 6,009 7 19,230 18,176 6 Occupancy 894 843 6 2,629 2,497 5 Equipment 544 530 3 1,617 1,559 4 Data processing 556 503 11 1,539 1,397 10 Professional fees 379 265 43 961 677 42 Postage, stationery and supplies 273 253 8 796 758 5 Advertising and business development 615 562 9 1,832 1,643 12 Merchant credit card interchange 1,822 1,262 44 4,884 3,521 39 Provision for other real estate owned - 1,217 (a) - 1,217 (a) Other operating expense 546 527 4 1,636 1,599 2 -------- -------- -------- -------- Total other expense 12,071 11,971 1 35,124 33,044 6 -------- -------- -------- -------- Income before income taxes 5,816 6,643 (12) 18,565 20,750 (11) Income tax expense 1,752 2,077 (16) 5,766 6,618 (13) -------- -------- -------- -------- Net income $4,064 $4,566 (11) $12,799 $14,132 (9) ======== ======== ======== ======== Diluted earnings per share $0.41 $0.46 (11) $1.28 $1.41 (9) ======== ======== ======== ======== (a) Percentage change information not meaningful. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED) Three months ended September 30, % (In thousands except per share data) 2005 2004 Change ---------------------------------- AVERAGE BALANCES: Loans, net of unearned income $1,232,761 $1,027,441 20 Investment securities 789,183 886,452 (11) Earning assets 2,061,302 1,975,845 4 Total assets 2,174,043 2,091,967 4 Demand deposits 273,226 282,370 (3) Total deposits 1,821,105 1,734,660 5 Interest bearing liabilities 1,747,926 1,674,294 4 Shareholders' equity 135,950 123,516 10 COMMON STOCK DATA: Earnings per share: Basic 0.41 0.47 (13) Diluted 0.41 0.46 (11) Weighted average shares outstanding: Basic 9,859,509 9,790,318 1 Diluted 9,987,090 10,016,879 0 Cash dividends paid per share $0.18 $0.16 13 Market price at period end $30.29 $30.84 (2) Book value per share $13.50 $13.11 3 Price to book ratio 2.24x 2.35x (5) Price to earnings ratio (1) 17.11x 16.40x 4 Period end shares outstanding 9,840,223 9,762,847 1 FINANCIAL RATIOS Return on average assets (2) 0.74% 0.87% (15) Return on average shareholders' equity (2) 11.86% 14.71% (19) Overhead ratio (2) 1.29% 1.43% (10) Efficiency ratio (2) 66.81% 64.31% 4 Net interest margin on average earning assets (2), (3) 2.48% 2.81% (12) Net interest spread (2), (3) 2.00% 2.48% (19) Dividend payout ratio (2) 43.46% 34.39% 26 Nine months ended September 30, % (In thousands except per share data) 2005 2004 Change ---------------------------------- AVERAGE BALANCES: Loans, net of unearned income $1,159,704 $978,667 18 Investment securities 815,981 811,976 0 Earning assets 2,007,978 1,839,809 9 Total assets 2,121,152 1,958,881 8 Demand deposits 273,824 271,365 1 Total deposits 1,767,382 1,593,708 11 Interest bearing liabilities 1,698,282 1,551,590 9 Shareholders' equity 133,664 123,177 9 COMMON STOCK DATA: Earnings per share: Basic 1.30 1.45 (10) Diluted 1.28 1.41 (9) Weighted average shares outstanding: Basic 9,834,117 9,749,714 1 Diluted 9,980,075 9,998,843 (0) Cash dividends paid per share $0.52 $0.46 13 Market price at period end Book value per share Price to book ratio Price to earnings ratio (1) Period end shares outstanding FINANCIAL RATIOS Return on average assets (2) 0.81% 0.96% (16) Return on average shareholders' equity (2) 12.80% 15.33% (17) Overhead ratio (2) 1.32% 1.37% (4) Efficiency ratio (2) 65.20% 60.86% 7 Net interest margin on average earning assets (2), (3) 2.60% 2.95% (12) Net interest spread (2), (3) 2.16% 2.63% (18) Dividend payout ratio (2) 41.36% 33.10% 25 ----------------------- (1) Calculated using the end of period market price divided by the last twelve months diluted earnings of $1.77 per share in 2005 and $1.89 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 September 30, 2005 and 2004 includes a tax equivalent adjustment of $144 and $168, respectively. Tax equivalent interest income for the nine months ended September 30, 2005 and 2004 includes a tax equivalent adjustment of $418 and $469, respectively. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED) September 30, December 31, September 30, (Dollars in thousands) 2005 2004 2004 ------------------------------------------ CAPITAL RATIOS Company Consolidated (minimum for "well capitalized"): Tier 1 capital ratio (6%) $162,888 $156,019 $152,434 10.49% 11.57% 11.47% Total risk-based capital ratio (10%) $171,622 $164,566 $161,234 11.06% 12.20% 12.13% Capital leverage ratio (5%) $162,888 $156,019 $152,434 7.44% 7.47% 7.22% Oak Brook Bank: Tier 1 capital ratio (6%) $150,262 $142,000 $139,046 9.76% 10.61% 10.52% Total risk-based capital ratio (10%) $158,996 $150,547 $147,846 10.33% 11.24% 11.19% Capital leverage ratio (5%) $150,262 $142,000 $139,046 6.91% 6.82% 6.61% TRUST ASSETS Discretionary assets under management $803,602 $751,046 $665,328 Total assets under administration 1,008,477 944,318 845,436 ASSET QUALITY RATIOS Nonperforming loans $295 $148 $252 Nonperforming assets (1) 1,324 10,150 11,511 Nonperforming loans to total loans 0.02% 0.01% 0.02% Nonperforming assets to total assets 0.06% 0.49% 0.55% Net charge-offs to average loans (annualized) 0.00% 0.03% 0.01% Allowance for loan losses to total loans 0.69% 0.80% 0.86% Allowance for loan losses 29.61x 57.74x 34.92x to 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 (1) (15) Indirect vehicle loans (286) (338) Consumer loans (5) (12) -------------- -------------- Total charge-offs (293) (365) -------------- -------------- Recoveries during the period: Commercial loans 39 1 Construction, land acquisition and development loans 32 15 Home equity - 15 Indirect vehicle loans 210 208 Consumer loans 20 57 -------------- -------------- Total recoveries 301 296 -------------- -------------- Net recoveries (charge- offs) during the period 8 (69) Provision for loan losses 180 500 -------------- -------------- Allowance for loan losses at September 30 $8,734 $8,800 ============== ============== (1) Includes nonperforming loans, OREO and repossessed vehicles. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME (UNAUDITED) 2005 2004 -------------------------- ----------------------------------- Third Second First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Quarter Quarter -------- -------- -------- -------- -------- -------- -------- (In thousands except per share data) Interest income $26,266 $24,681 $22,874 $22,752 $22,731 $20,856 $20,372 Interest expense 13,548 11,658 10,059 9,492 8,963 7,591 7,254 -------- -------- -------- -------- -------- -------- -------- Net interest income 12,718 13,023 12,815 13,260 13,768 13,265 13,118 Provision for loan losses 180 - - - - 250 250 Other income 5,349 5,226 4,738 4,389 4,846 4,731 4,566 Other expense 12,071 11,735 11,318 10,688 11,971 10,670 10,403 -------- -------- -------- -------- -------- -------- -------- Income before income taxes 5,816 6,514 6,235 6,961 6,643 7,076 7,031 Income tax expense 1,752 2,059 1,955 2,021 2,077 2,275 2,266 -------- -------- -------- -------- -------- -------- -------- Net income $4,064 $4,455 $4,280 $4,940 $4,566 $4,801 $4,765 ======== ======== ======== ======== ======== ======== ======== Basic earnings per share $0.41 $0.45 $0.43 $0.50 $0.47 $0.49 $0.49 ======== ======== ======== ======== ======== ======== ======== Diluted earnings per share $0.41 $0.45 $0.43 $0.49 $0.46 $0.48 $0.48 ======== ======== ======== ======== ======== ======== ======== ROA (1) 0.74% 0.84% 0.84% 0.94% 0.87% 1.00% 1.04% ROE (1) 11.86% 13.54% 13.04% 14.88% 14.71% 15.86% 15.42% Net interest margin (1) 2.48% 2.62% 2.70% 2.72% 2.81% 2.98% 3.08% ----------------------- (1) Annualized ratio. *T