First Oak Brook Bancshares (NASDAQ:FOBB)
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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