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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X Annual report pursuant to Section 13 or 15(d) of the Securities
- ------- Exchange Act of 1934 for the fiscal year ended
December 31, 1998 or
Transition report pursuant to Section 13 or 15(d) of the
- ------- Securities Exchange Act of 1934 for the transition period from
__________ to __________
Commission file number 000-24478.
DEARBORN BANCORP, INC.
----------------------
(Exact name of registrant as specified in its charter)
Michigan 38-3073622
-------- ----------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
22290 Michigan Avenue, Dearborn, MI 48124
---------------------------------------------
(Address of principal executive office) (Zip code)
(313) 274-1000
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(d) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
None None
Securities registered pursuant to section 12(g) of the Act:
Common Stock
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ___ X ___ No _________
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 1, 1999: Common Stock, $22,560,830.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of March 1, 1999: Common Stock, 2,473,295 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1998 Annual Report to Stockholders of Registrant are
incorporated in Parts I, II and IV of this report. Portions of the definitive
Proxy Statement of the Registrant dated April 16, 1999, to be filed pursuant
to Regulation 14A, are incorporated by reference in Part III of this report.
DEARBORN BANCORP, INC.
FORM 10-K
PART I
Item 1. Business
Dearborn Bancorp, Inc. (the "Company"), a Michigan corporation, is a bank
holding company owning all the common stock of the Community Bank of Dearborn
(the "Bank"), a Michigan banking corporation which commenced business on
February 28, 1994. The Bank is the only commercial bank headquartered in
Dearborn, Michigan and conducts business primarily in western Wayne County,
Michigan.
Background
The liberalization of Michigan's branch banking laws, together with
the expansion of interstate banking, has led to substantial consolidation of
the banking industry in Michigan, including within the county in which the
Bank is located. In the past, several of the financial institutions within
the primary market area of the Bank have either been acquired by or merged
with larger financial institutions or out-of-state financial institutions. In
some cases, when these consolidations occurred, local boards of directors
were dissolved and local management relocated or in some cases terminated and
has, in some cases, resulted in policy and credit decisions being centralized
away from local management.
In the opinion of the Company's management, this situation has
created a favorable opportunity for a local commercial bank with local
management and directors. Management of the Company believes that such a bank
attracts those customers who wish to conduct business with a locally managed
institution that demonstrates an active interest in their business and
personal financial affairs. The Company believes that a locally managed
institution, in many cases, will be able to deliver more timely responses to
customer requests, provide customized financial products and services and
offer customers the personal attention of the Bank's senior banking officers.
The Bank seeks to take advantage of this opportunity by emphasizing in its
marketing plan the Bank's local management and the Bank's ties and commitment
to its market area.
The Company was incorporated as a Michigan business corporation on
September 30, 1992. The Company was formed to acquire all of the Bank's
issued and outstanding stock and to engage in the business of a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "Act").
The executive offices of the Company and the Bank are located at
22290 Michigan Avenue, Dearborn, Michigan 48124, telephone number (313)
274-1000.
Business of the Company
The primary purpose of the Company is the ownership of the Bank. In
the future, the Company may form or acquire other subsidiaries as permitted
under the Act and the regulations of the Federal Reserve. There are no plans,
agreements, understandings or negotiations, either written or oral, at the
present time for any acquisitions by the Company.
Business of the Bank
The Bank, through its main office and two branch offices, emphasizes
and offers highly personalized service to its customers.
The customer service officers are well-trained, experienced bank
officers who fill the needs of the customers and handle the requests of their
customers in a professional manner. The management of the Company and the
Bank believe that it is important to the success of the Bank's strategy to
create long-term relationships between customers and Bank employees. The
Bank's senior management holds regular staff information meetings so that all
employees are given information regarding the Bank's plans and objectives,
and employees are offered the opportunity to make suggestions to improve the
Bank's performance. The management of the Bank believes that this approach
creates a commitment by all employees to the Bank's success.
2
The Bank offers a wide range of financial products and services.
These include checking accounts, savings accounts, money market accounts,
certificates of deposit, business checking, direct deposit, loan services
(commercial, consumer, real estate mortgages), travelers' checks, cashiers'
checks, wire transfers, safety deposit boxes, collection services and night
depository services. The Bank does not have a trust department.
Business Strategy
Grow Through Branch Expansion. Since commencing operations, the Bank's growth
has been accomplished through internal growth. The internal growth of the
Bank has been aided by the opening of two additional offices. The Dearborn
Heights office opened on December 20, 1995 and as of December 31, 1998 had
$20.3 million in total deposits, while the Plymouth Township office opened on
August 11, 1997 and as of December 31, 1998 had $9.4 million in total
deposits. In 1999, the Bank intends to open an office in Canton Township.
Emphasize Community Banking. The Bank strives to maintain a strong commitment
to community banking. The Bank's goal is to attract small to medium-sized
businesses and individuals as customers who wish to conduct business with a
local commercial bank that demonstrates an active interest in their business
and personal affairs. Management believes that the Bank is better able than
its larger competitors to deliver more timely responses to customer requests,
provide customized financial products and services and offer customers the
personal attention of senior banking officers.
Expand Lending in the Company's Primary Market. The Company's initial lending
philosophy concentrated on single family residential lending but has grown to
include a more diverse group of loan products. The Company's loan portfolio
currently consists of residential loans, indirect consumer loans with a
select list of local automobile dealers, commercial real estate loans, small
business commercial loans and other consumer loans. Management intends to
maintain its emphasis on these loan products.
Grow Through Selected Acquisitions. Although the Company will continue to
pursue internal growth at the Bank, management believes that greater growth
opportunities may be found in acquisitions of community banks or branches in
Michigan to enhance the Company's markets. As part of its normal business
operations, management maintains contact with financial institutions to
discuss various acquisition possibilities. However, the Company has made no
bank or branch acquisitions to date, and it presently has no agreements,
commitments, understandings or arrangements to acquire any other banks or
branches, and there is no assurance that the Company will be successful in
its acquisition strategy.
Marketing Plan
The Bank's marketing plan focuses on the concepts of corporate
citizenship and personal interaction within the communities the Bank serves
through promotion of, and active participation in, a number of civic
organizations and ongoing community activities. Management believes that
these efforts establish the identity and philosophy of the Bank within the
communities it serves and allow Bank officers and employees to personally
interact with local business leaders and members of the public. The marketing
plan also emphasizes direct sales calls by Bank officers and specific
telemarketing programs involving the Bank's branch managers and customer
service representatives.
The Bank has two primary target markets: consumer financial
services, with an emphasis on individual deposit accounts, single family
residential lending and indirect automobile lending; and business financial
services, with an emphasis on small- to medium-sized businesses.
Community Club. At inception, the Bank established a "Community
Club" which has become an important marketing tool to increase the Bank's
total deposits. The Community Club is targeted at individuals over the age of
50. As of December 31, 1998, the Community Club had over 1,600 members who
accounted for total deposits of $46.4 million, or 48% of the Bank's total
deposits.
3
Among other things, membership in the Community Club entitles the
customer to increased personal attention and service by Bank staff and a 1/4%
premium on new certificate of deposit accounts with a minimum $1,000 balance
and one year maturity. The Bank also hosts local community events,
educational seminars and travel programs which have been well received by the
Community Club members. Management believes that the success of the Community
Club and the Bank's continued efforts to expand the benefits of the program
will foster an increase in the number of Community Club members and deposit
accounts.
Business Financial Services The Bank's business marketing efforts
are directed by senior management, including Messrs. Ross, Cuttle and Wolber
with Mr. Wolber assigned as sales manager, whose duties include administering
and coordinating the business development efforts of the Bank.
Each Bank officer, in addition to each branch manager, is
responsible for creating new business opportunities for the Bank. The
targeted list of new business customers represents a mix of industrial,
manufacturing, professional and retail clients with an emphasis on businesses
with annual sales of $10 million or less.
The Bank has developed an aggressive telemarketing program for new
business. Businesses are identified through listings provided by the various
Chambers of Commerce, local phone directories and other sources targeted to
the communities the Bank serves. Initial sales calls are introductory in
nature with follow-up calls made to determine whether a meeting can be
arranged with the targeted company to discuss the Bank's products and
services. The Bank believes this strategy has been and will continue to be
successful in generating new business for the Bank.
In addition to its telemarketing program, the Bank's officers
maintain contact with local attorneys, accountants and other representatives
in the local community that may be in a position to refer business to the
Bank. The Bank also encourages and supports its officers and employees to
join and participate in various community organizations and events.
Consumer Financial Services. The Bank originates residential real
estate loans primarily through its retail branch facilities. Branch managers
and mortgage loan originators develop new residential mortgage applications
from several sources including real estate brokers, insurance agents,
accountants, attorneys, existing residential mortgage customers and other
customers of the Bank. An extensive telemarketing effort generates potential
customers as a result of these contacts. Additionally, the Bank has developed
targeted real estate newsletters that are mailed to an existing data base
composed of those referral sources. The Bank also maintains an active role in
several local real estate boards offering product training to members.
The Bank, as a result of its secondary market operations, is able to
offer a variety of loan products that serve the needs of first time home
buyers by providing five percent down payment loans and loans with no points.
Customers desiring to construct new homes are able to obtain financing as a
result of the Bank's construction loan program that is offered in addition to
the permanent loan. Non-conforming loans, which are larger residential loans,
are also provided through the Bank's secondary marketing efforts. The Bank
also provides loans that it holds in its own portfolio on those transactions
that evidence excellent credit quality and income but are unable to be sold
in the secondary market for other reasons.
The Bank originates indirect consumer loans primarily from its main
office in Dearborn, Michigan. A consumer loan officer purchases loans from a
select list of automobile dealers located in the Metropolitan Detroit Area
through an extensive direct calling program. The Bank intends to target
additional automobile dealers in its market area in an effort to broaden and
diversify its indirect consumer loan portfolio.
Management believes that cross-selling of the Bank's products and
services to its existing customers is vital to expanding account
relationships, generating additional sales opportunities and increasing fee
income.
4
Loan Policy
As a routine part of the Bank's business, the Bank makes loans to
individuals and businesses located within the Bank's market area. The loan
policy of the Bank states that the function of the lending operation is
twofold: to provide a means for the investment of funds at a profitable rate
of return with an acceptable degree of risk, and to meet the credit needs of
the responsible businesses and individuals who are customers of the Bank.
However, the Board of Directors of the Bank recognizes that in the normal
business of lending, some losses on loans will be inevitable and should be
considered a part of the normal cost of doing business. Under the loan
policy, only the President and Chief Lending Officer currently have lending
authority.
The Bank's loan policy anticipates that priorities in extending
loans will change from time to time as interest rates, market conditions and
competitive factors change. The policy sets forth guidelines on a
nondiscriminatory basis for lending in accordance with applicable laws and
regulations. The policy describes various criteria in granting loans,
including the ability to pay; the character of the customer; evidence of
financial responsibility; purpose of the loan; knowledge of collateral and
its value; terms of repayment; source of repayment; payment history; and
economic conditions.
The loan policy specifies lending limits for certain officers up to
a maximum of $50,000 for unsecured loans and $100,000 for secured loans, with
loans from $100,000 to $1,000,000 requiring approval by a loan committee.
Larger loans up to the legal maximum authorized by law requires the approval
of the Board of Directors of the Bank.
The loan policy also limits the amount of funds that may be loaned
against specified types of collateral including: listed securities - 70% loan
to value; U.S. Government securities - 90% loan to value; and insured bank
deposits - 100% loan to value. As to loans secured principally by real
estate, the policy requires appraisal of the property offered as collateral
by licensed independent appraisers. The loan policy also provides general
guidelines as to collateral, provides for environmental reviews, contains
specific limitations with respect to loans to employees, executive officers
and directors, provides for problem loan identification, establishes a policy
for the maintenance of a loan loss reserve, provides for loan reviews and
sets forth policies for mortgage lending and other matters relating to the
Bank's lending business.
Lending Practices
Commercial loans. The Bank's commercial lending group originates
commercial loans primarily in the western Wayne County area of southeastern
Michigan. Commercial loans are originated by the officer group with the
assistance of the President and the Executive Vice President, who have over
57 years of combined commercial lending experience. Loans are originated for
general business purposes, including working capital, accounts receivable
financing, machinery and equipment acquisition, and commercial real estate
financing including new construction and land development.
Working capital loans are often structured as a line of credit and
are reviewed periodically in connection with the borrower's year end
financial reporting. These loans generally are secured by all of the assets
of the borrower, a personal guaranty of the owners and have an interest rate
plus a margin tied to the national prime rate. Loans for machinery and
equipment purposes typically have a maturity of five to seven years and are
fully amortizing. Commercial real estate loans are usually written with a
five year maturity and are amortized over a fifteen year period. Commercial
real estate loans may have an interest rate that is fixed to maturity or
float with a margin over the prime rate or a U.S. Treasury index.
The Bank evaluates all aspects of a commercial loan transaction in
order to minimize credit and interest rate risk. Underwriting includes an
assessment of management, products, markets, cash flow, capital, income and
collateral. The analysis includes a review of historical and projected
financial results. Appraisals are obtained by licensed independent appraisers
who are well known to the Bank on transactions involving real estate and, in
some cases, equipment.
5
Commercial real estate lending involves more risk than residential
lending, because loan balances are greater and repayment is dependent upon
the borrower's operation. The Bank attempts to minimize risk associated with
these transactions by limiting its exposure to existing well-known customers
and new customers with an established profitable history. Risk is further
reduced by limiting the concentration of credit to any one borrower as well
as the type of commercial real estate financed.
Single-Family Residential Real Estate Loans. The Bank originates
residential real estate loans in its market area according to secondary
market underwriting standards. These loans provide borrowers with a fixed
interest rate with terms up to thirty years. Loans are sold on a servicing
released basis in the secondary market with all interest rate risk and credit
risk passed to the purchaser. The Bank from time to time may elect to
underwrite certain residential real estate loans to be held in it's own loan
portfolio. These loans are generally underwritten with the same standards
that apply to the secondary market. The majority of the portfolio loans have
an interest rate that is indexed to the one-year treasury rate and adjust
annually.
Consumer Loans. The Bank originates consumer loans for a wide
variety of personal financial requirements. Consumer loans include home
equity lines of credit, new and used automobiles, boat loans and overdraft
protection for checking account customers. The Bank also purchases retail
installment loans from a select list of automobile dealerships located in the
Bank's primary market.
Consumer loans generally have shorter terms and higher interest
rates than residential mortgage loans and, except for home equity lines of
credit, usually involve more credit risk than mortgage loans because of the
type and nature of the collateral. While the Bank does not utilize a formal
credit scoring system, the Bank believes its loans are underwritten
carefully, with a strong emphasis on the amount of the down payment, credit
quality, employment stability, and monthly income. These loans are generally
repaid on a monthly repayment schedule with the source of repayment tied to
the borrower's periodic income. In addition, consumer lending collections are
dependent on the borrower's continuing financial stability, and are thus
likely to be adversely affected by job loss, illness and personal bankruptcy.
In many cases, repossessed collateral for a defaulted consumer loan will not
provide an adequate source of repayment of the outstanding loan balance
because of depreciation of the underlying collateral. The Bank believes that
the generally higher yields earned on consumer loans compensate for the
increased credit risk associated with such loans and that consumer loans are
important to its efforts to serve the credit needs of the communities and
customers that it serves.
Allowance for Loan Losses. An allowance for loan losses is
maintained at a level that management of the Bank considers adequate to
provide for potential losses in the loan portfolio. Allowances for loan
losses are based upon the Bank's experience and estimates of the net
realizable value of collateral in each loan portfolio. The Board of Directors
and senior management review the allowance quarterly. The Bank's evaluation
takes into consideration experience, the level of classified assets,
non-performing loans, the current level of the allowance as it relates to the
total loan portfolio, projected charge-offs, current economic conditions,
recent regulatory examinations and other factors.
Employees
As of March 1, 1999, the Bank had 38 employees, including 14
officers and 24 customer service, operations and other support persons.
Management believes that the Bank's relations with its employees are
excellent.
6
Competition
The Company and the Bank face strong competition for deposits, loans
and other financial services from numerous banks, savings banks, thrifts,
credit unions and other financial institutions as well as other entities
which provide financial services, including consumer finance companies,
securities brokerage firms, mortgage brokers, insurance companies, mutual
funds, and other lending sources and investment alternatives. Some of the
financial institutions and financial services organizations with which the
Bank competes are not subject to the same degree of regulation as the Bank.
Many of the financial institutions and financial services organizations
aggressively compete for business in the Bank's market area. Most of these
competitors have been in business for many years, have established customer
bases, are larger, have substantially higher lending limits than the Bank,
and are able to offer certain services that the Bank does not currently
provide, including more extensive branch networks, trust services, and
international banking services. In addition, most of these entities have
greater capital resources than the Bank, which, among other things, may allow
them to price their services at levels more favorable to the customer and to
provide larger credit facilities than could the Bank. Additionally, recent
effective legislation regarding interstate branching and banking may increase
competition in the future from out-of-state banks.
Supervision and Regulation
The Company is a registered bank holding company and subject to the
supervision of the Federal Reserve System ("Federal Reserve"). The Company is
required to file with the Federal Reserve annual reports and such other
information as the Federal Reserve may require under the Bank Holding Company
Act of 1956, as amended (the "Act"). The Company and the Bank are each
subject to examination by the Federal Reserve.
The Act requires every bank holding company to obtain prior approval
of the Federal Reserve before it may merge with or consolidate into another
bank holding company, acquire substantially all assets of any bank, or
acquire ownership or control of any voting shares of any bank, if after such
acquisition, it would own or control, directly or indirectly, more that 5% of
the voting shares of such bank holding company or bank. The Federal Reserve
may in its discretion approve the acquisition by the Company the voting
shares or substantially all assets of a bank located in Michigan and, subject
to certain restrictions, located in any other state.
The Act also prohibits a bank holding company, with certain
exceptions, from acquiring direct or indirect ownership or control of more
than 5% of the voting shares of any company that is not a bank, and from
engaging in any business other than that of banking, managing and controlling
banks and their subsidiaries. Holding companies may engage in, and may own
shares of companies engaged in, certain businesses found by the Federal
Reserve to be closely related to banking or the management or control of
banks. Under current regulations of the Federal Reserve, a holding company
and its non-bank subsidiaries are permitted to engage in investment
management, sales and consumer finance, equipment leasing, data processing,
discount securities brokerage, mortgage banking and brokerage, and other
activities. These activities are subject to certain limitation imposed by the
regulations.
Transactions between the Company and the Bank are subject to various
restrictions imposed by state and federal law. Such transactions include
loans and other extensions of credit, purchases of securities, any payments
of fees and other distributions. Federal law places restrictions on the
amount and nature of loans to executive officers, directors and controlling
persons of banks insured by the Federal Deposit Insurance Corporation and
holding companies controlling such banks.
The Bank is a state chartered bank and subject to regulation and
examination by the Michigan Financial Institutions Bureau. The Bank also is
subject to certain provisions of the Federal Deposit Insurance Act and
regulations issued under that act. The regulations affect many activities of
the Bank, including the permissible types and amounts of loans, investments,
capital adequacy, branching, interest rates payable on deposits, required
reserves, and the safety and soundness of the Bank's practices. The Bank is
not a member bank of the Federal Reserve System and is regulated and examined
by the Federal Deposit Insurance Corporation.
A summary of consolidated net interest income, consolidated net
interest income volume / rate analysis, rate sensitivity analysis / gap
analysis and capital ratios is set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the 1998 Annual Report to Stockholders and is incorporated herein by
reference.
7
Item 2. Properties
The main office of the Company and the Bank is located in a single
story building containing 8,400 square feet at 22290 Michigan Avenue,
Dearborn, Michigan which is owned by the Company and leased to the Bank.
The Bank's Dearborn Heights, Michigan branch office is located in a
single story commercial/retail office building at 24935 W. Warren Avenue,
which is also owned by the Company. Approximately 79% of the 3,240 square
foot building is leased to the Bank and the remaining space is leased to a
non-affiliated tenant.
The Bank's branch office located at 44623 Five Mile, Plymouth
Township, Michigan, contains 1,595 square feet in leased space in a retail
shopping center anchored by a regional grocery store.
Item 3. Legal Proceedings
From time to time, the Company and its subsidiary are parties to
various legal proceedings incidental to their business. At December 31, 1998,
there were no legal proceedings which management anticipates would have a
material adverse effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of 1998.
Executive Officers of the Company and Bank
Set forth below are the names and ages of the executive officers of
the Company and the Bank, positions held and the years from which
held. There are no family relationships among such persons.
John E. Demmer, 75
Chairman of the Board, Dearborn Bancorp, Inc. and Community Bank of
Dearborn
Chairman of the Board and Director of the Company since 1992.
Chairman of the Board and Director of the Bank since 1993.
Chairman of the Board and Chief Executive Officer of Jack Demmer
Ford, Inc. since 1994. President and Chief Executive Officer of Jack
Demmer Ford, Inc. from 1957 to 1994.
Richard Nordstrom, 71
Vice Chairman, Dearborn Bancorp, Inc.
Vice Chairman and Director of the Company since 1998. President and
Director of the Company from 1992 to 1997. Director of the Bank
since 1993. Chairman of the Board of Nordstrom Samson Associates
from 1960 to 1996.
Michael J. Ross, 48
President, Dearborn Bancorp, Inc.
President and Chief Executive Officer, Community Bank of Dearborn
President and Director of the Company since 1998. Vice President and
Director of the Company from 1993 to 1997. President, Chief
Executive Officer, and Director of the Bank since 1993.
Jeffrey L. Karafa, 34
Vice President and Treasurer, Dearborn Bancorp, Inc.
Vice President and Cashier, Community Bank of Dearborn
Vice President and Treasurer of the Company since 1998. Vice
President and Cashier of the Bank since 1996. Assistant Vice
President of the Bank from 1994 to 1996. Second Vice President of
Michigan National Bank from 1992 to 1994.
8
Donald G. Karcher, 69
Vice President, Dearborn Bancorp, Inc.
Vice President and Director of the Company since 1992. Director of
the Bank since 1993. Chairman of the Board of Karcher Agency, Inc.
since 1994. President of Karcher Agency, Inc. from 1965 to 1994.
Wilber M. Brucker, Jr., 73
Secretary, Dearborn Bancorp, Inc. and Community Bank of Dearborn
Secretary and Director of the Company since 1992. Secretary and
Director of the Bank since 1993. Of Counsel, Law Firm of Riley and
Roumell from 1989 to 1995.
Timothy J. Cuttle, 53
Executive Vice President, Community Bank of Dearborn
Executive Vice President and Chief Lending Officer of the Bank since
1996. Senior Vice President of Huntington Banks of Michigan from
1990 to 1995.
Brian A. Mamo, 31
Vice President, Community Bank of Dearborn
Vice President of the Bank since 1998. Commercial Relationship
Officer of Citizens Bank from 1997 to 1998. Director of
Administration and Controller of TGI-VMS from 1995 to 1997.
Commercial Loan Officer of NBD Bank from 1989 to 1995.
Jeffrey J. Wolber, 43
Vice President, Community Bank of Dearborn
Vice President of the Bank since 1994.
PART II
Item 5. Market for Registrant's Common Equity, and Related Stockholder
Matters
The information required by this item appears in the Corporation's
1998 Annual Report to Stockholders under the caption "Dearborn Bancorp, Inc.,
Common Stock" and is incorporated by reference herein.
Item 6. Selected Financial Data
The information required by this item appears in the Corporation's
1998 Annual Report to Stockholders under the caption "Summary of Selected
Financial Data" and is incorporated by reference herein.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this item appears in the Corporation's
1998 Annual Report to Stockholders under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and is
incorporated by reference herein.
9
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Options Grants During 1998
The following table sets forth information on stock options
granted during 1998 under the Company's Stock Option Plan to the only officer
of the Bank named in the Summary Compensation Table. No stock options were
exercised during 1998.
Individual Grants
- -------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Rates of Stock Price
Appreciation for Option Term (3)
--------------------------------
Percent of
Number of Total Options
Securities Granted to
Underlying Employees
Options During 1998 Exercise Price Expiration
Name Granted (1) Per Share (2) Date 5% 10%
---- ---------- ------------- -------------- ---------- -- ---
Michael J. Ross 10,200 31 $12.74 01/20/08 $81,867 $206,617
(1) The Company granted options aggregating 39,500 shares to officers and
key employees during 1998.
(2) The exercise price may be paid at the discretion of the Stock Option
Plan Committee by delivery of already-owned shares.
(3) As required by rules of the Securities and Exchange Commission,
potential values stated are based on the prescribed assumption that the
Company's Common Stock will appreciate in value from the date of grant
to the end of the option term at annualized rates of 5% and 10% (total
appreciation of 63% and 159%) respectively, and therefore are not
intended to forecast possible future appreciation, if any, in the price
of the Company's Common Stock.
Item 8. Financial Statements and Supplementary Data
The financial statements included in the Corporation's 1998 Annual
Report to Stockholders are incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There are no changes in or disagreements with accountants on
accounting and financial disclosure.
10
PART III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the caption "Information about
Directors and Nominees for Directors" in the definitive Proxy Statement of
the Corporation dated April 16, 1999 is incorporated by reference herein.
Reference is made to Part I of this report for information as to
executive officers of the Corporation and Bank.
Item 11. Executive Compensation
The information set forth under the caption "Executive Compensation"
in the definitive Proxy Statement of the Corporation dated April 16, 1999 is
incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the caption "Security Ownership" in
the definitive Proxy Statement of the Corporation dated April 16, 1999 is
incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Related Transactions"
in the definitive Proxy Statement of the Corporation dated April 16, 1999 is
incorporated by reference herein.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
The following financial statements of the Corporation
appear on the indicated pages of the Corporation's 1998
Annual Report to Stockholders and are incorporated by
reference in item 8.
Report of Independent Certified Public Accountants
on 1998 and 1997 consolidated financial statements
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
11
(2) Financial Statement Schedules
No schedules are required under this item.
(3) Exhibits
The Exhibits marked with one asterisk below were filed as
Exhibits to the Registration Statement of the Registrant on
Form S-18 (Registration Number 33-55808) are incorporated
herein by reference. The Exhibit marked with two asterisks
below was filed as an Exhibit to the Form 10-K Report of
the Registrant for the fiscal year ended December 31, 1993
is incorporated herein by reference. The Exhibit marked
with three asterisks below was filed as an Exhibit to the
Form 10-K Report of the Registrant for the fiscal year
ended December 31, 1995 is incorporated herein by
reference. The Exhibit marked with four asterisks below was
filed as an Exhibit to the Form 10-Q Report of the
Registrant for the quarter ended June 30, 1997 is
incorporated herein by reference. The Exhibit numbers in
brackets being those in such Registration Statements, Form
10-K or Form 10-Q Reports.
(3)(a)* Articles of Incorporation of Registrant. [3(a)]
(3)(a)**** Articles of Incorporation of Registrant, As
Amended. [3(a)]
(3)(b)*** By-Laws of the Registrant, As Amended. [3(b)]
(10)(a)* Letter re employment of Michael J. Ross by
Registrant. [10(a)]
(10)(b) 1994 Stock Option Plan, As Amended.
(13) 1998 Annual Report to Stockholders.
(21)** Subsidiaries of the Registrant. [21]
(23) Consent of McEndarffer, Hoke & Bernhard, P.C.
(b) Reports on Form 8-K
The Corporation filed no reports on Form 8-K during the
quarter ended December 31, 1998.
12
Form 10-K Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 1,
1999.
Dearborn Bancorp, Inc.
/s/ John E. Demmer
By ___________________________________________
(John E. Demmer, Chairman of the Board)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on March 1, 1999.
/s/ John E. Demmer
__________________________ Chairman of the Board, Chief Executive Officer and Director
(John E. Demmer) (Principal Executive Officer)
/s/ Jeffrey L. Karafa
__________________________ Vice President and Treasurer
(Jeffrey L. Karafa) (Principal Financial and Accounting Officer)
/s/ Wilber M. Brucker, Jr.
__________________________ Secretary
(Wilber M. Brucker, Jr.) and Director
/s/ Margaret I. Campbell
__________________________ Director
(Margaret I. Campbell)
/s/ Michael V. Dorian
__________________________ Director
(Michael V. Dorian)
/s/ David Himick
__________________________ Director
(David Himick)
/s/ Bradley F. Keller
__________________________ Director
(Bradley F. Keller)
/s/ Jeffrey G. Longstreth
__________________________ Director
(Jeffrey G. Longstreth)
/s/ Richard Nordstrom
__________________________ Vice Chairman
(Richard Nordstrom) and Director
/s/ Michael J. Ross
__________________________ President
(Michael J. Ross) and Director
/s/ Robert C. Schwyn
__________________________ Director
(Dr. Robert C. Schwyn)
/s/ Ronnie J. Story
__________________________ Director
(Ronnie J. Story)
13