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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
COMMISSION FILE NUMBER: 005-57237
FIRST OTTAWA BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-4331185
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
701-705 LASALLE STREET 61350
OTTAWA, ILLINOIS (ZIP Code)
(Address of Principal Executive Offices)
(815) 434-0044
(Registrant Telephone Number,
including Area Code)
SECURITIES REGISTERED UNDER SECTION 12(b) OF
THE EXCHANGE ACT:
None
SECURITIES REGISTERED UNDER SECTION 12(g) OF
THE EXCHANGE ACT:
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class)
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 past 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 in response 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 this Form 10-K.
The aggregate market value of the voting shares held by non-affiliates of
the Registrant is $30,439,368 as of March 24, 2000. Solely for the purpose of
this computation, it has been assumed that executive officers and directors of
the Registrant are "affiliates" and that the last price known to management was
a sale of 4,900 shares on March 23, 2000 at $57.00 per share.
663,627 shares of common stock were outstanding as of March 24, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Parts II and IV are incorporated by reference from the
Registrant's 1999 Annual Report to Stockholders; and a portion of Part III is
incorporated by reference from the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held May 17, 2000.
Except for those portions of the 1999 Annual Report incorporated by
reference, the Annual Report is not deemed filed as part of this Report.
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INDEX
PART I PAGE NO.
- ------- --------
Item 1 Business 1
Item 2 Properties 17
Item 3 Legal Proceedings 18
Item 4 Submission of Matters to a Vote of Security Holders 18
PART II
- -------
Item 5 Market for the Registrant's Common Equity and
Related Stockholder Matters 19
Item 6 Selected Financial Data 19
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 19
Item 7A Quantitative and Qualitative Disclosures about Market Risk 19
Item 8 Financial Statements and Supplementary Data 19
Item 9 Changes in and Disagreements on
Accounting and Financial Disclosure 20
PART III
- --------
Item 10 Directors and Executive Officers of the Registrant 21
Item 11 Executive Compensation 21
Item 12 Security Ownership of Certain Beneficial Owners
and Management 21
Item 13 Certain Relationships and Related Transactions 21
PART IV
- -------
Item 14 Exhibits, Financial Statement Schedules and 22
Reports on Form 8-K
PART I
ITEM 1. BUSINESS.
First Ottawa Bancshares, Inc. ("Bancshares") is a community-based bank
holding company. Bancshares and its wholly-owned subsidiary, First National Bank
of Ottawa (the "Bank"), are together referred to as "the Company." Bancshares
was organized during 1999 and on October 1, 1999 exchanged 100% of its common
stock for 100% of the Bank's common stock. This exchange was accounted for as an
internal reorganization. All references to the combined Company, unless
otherwise indicated, at or before October 1, 1999, refer to the Bank. As of
December 31, 1999, the Company had total assets of $240 million, total deposits
of $184 million, loans and loans held for sale, net of unearned income, of $129
million and total Stockholders' equity of $26 million. For the year ended
December 31, 1999, the Company had interest income of $16 million and net income
of $2.2 million, which amounted to net income per share of $2.87.
The Company conducts a general banking business embracing most of the
services, both commercial and consumer, which banks may lawfully provide,
including the following principal services: the acceptance of deposits for
demand, savings, and time accounts and the servicing of such accounts;
commercial, agricultural, consumer, and real estate lending, including
installment loans, personal lines of credit, and overdraft protection; trust
operations; farm management; safe deposit operations; and an extensive variety
of additional services tailored to the needs of individual customers, including
the sale of traveler's checks, cashier's checks, and foreign currency and other
special services. Loans, both commercial and consumer, are provided on either a
secured or unsecured basis to corporations, partnerships, and individuals.
Commercial lending covers such areas as business, industry, capital,
agriculture, inventory, and real estate, with the latter including residential
properties. Consumer loans are made for a variety of purposes including
automobile purchases, recreational vehicle purchases, consumer goods,
installment loans, and other types of loans.
The Company is located in the City of Ottawa, Illinois (population 17,500)
in LaSalle County in Illinois. A substantial portion of the Company's business
is significantly dependent upon the economic conditions in this market area.
LaSalle County is the second largest county by area in the state of Illinois.
Ottawa is located in northeastern Illinois approximately 80 miles southwest of
Chicago and approximately 65 miles north of Bloomington. Ottawa may be accessed
by Interstate 80; U.S. Route 6; State Routes 23 and 71; and recently completed
Interstate 39, which is located 11 miles west of Ottawa. The City is also
serviced by two railroads and the Ottawa Airport.
Ottawa is the county seat of LaSalle County. Accordingly, many county,
state, and other governmental offices are located in Ottawa.
1
LaSalle County has a diverse economy with a balance in agriculture,
transportation and industry. Grain terminals on the Illinois Deep Waterway at
Ottawa provide a direct distribution point for agricultural products to overseas
markets via the Gulf of Mexico and the St. Lawrence Seaway. LaSalle County
annually ranks in the top 10 counties in Illinois for corn and soybean
production. LaSalle County, the site of the largest producer of silica sand in
the United States, has a diverse manufacturing sector which includes, in
addition to the production of silica sand, the manufacture of residential glass,
automotive and industrial belts and equipment, electronic typewriters and
computer printers, plastics, office supplies, and rubber products. Many of these
companies conduct business in national and, in some instances, international
markets.
The Ottawa area is continuing to expand. Many developments have had a
significant impact on the area economy, including a new County Office Building
on the north edge of Ottawa and several new and expanded shopping center
projects.
LENDING ACTIVITIES. The Company relies on interest income from lending
activities as a major source of revenue. The Company has a community bank focus
- -- serving the credit needs of the local community. Because of this local focus,
the Company has a flexible process for handling loan requests rather than being
tied to rigid standards. The discussions below regarding lending policies
reflect general guidelines and may vary on a case-by-case basis depending on the
borrower's credit history and the type and size of loan. During the approval
process for loans it originates, the Company assesses both the applicant's
ability to repay the loan and the value of any collateral securing the loan. The
Company verifies the applicant's ability to repay the loan by using credit
reports, financial statements, confirmations, and other items, including
appraisals.
Ten loan officers have the authority to handle all lending activities of
the Company. Each lending officer has authority to approve extensions of credit
up to their individual lending limit. The Company has an Officers Loan Committee
(consisting of Vice Presidents, the Senior Vice President, the Executive Vice
President and the President of the Bank) which approves loans of up to $150,000.
All loans between $150,000 and $500,000 are sent to the Director's Loan
Committee for approval. The Director's Loan Committee is also responsible for
monitoring concentration of credits, problem and past due loans, and charge-offs
of uncollectible loans; formulating recommendations for the Board of Directors
regarding loan policy modifications, loan classifications, and charge-offs; and
establishing interest rate and fee guidelines. All loans in excess of $500,000
are reviewed and approved by the Board of Directors. The Board of Directors also
is responsible for directing and supervising the Director's Loan Committee,
policy review, and oversight of the loan and investment functions of the
Company. The Board of Directors also monitors the adequacy of the Company's loan
loss reserves.
LOAN PORTFOLIO COMPOSITION. The Company's gross loan portfolio, including
loans held for sale, totaled $129 million at December 31, 1999, representing 70%
of the Company's total deposits at that date. The Company's loan portfolio at
December 31, 1999 included $60 million for real estate purposes, $53 million for
consumer purposes, and $15 million for commercial and agricultural purposes.
Certain risks, including the risk of non-payment, are associated with each
type of loan. The primary risks associated with consumer loans relate to the
borrower, such as the risk of a borrower's unemployment as a result of
deteriorating economic conditions or the amount and nature of a borrower's other
existing indebtedness, and the value of the collateral securing the
2
loan if the Company must take possession of the collateral. Consumer loans also
have risks associated with concentrations of loans in a single type of loan. The
primary risks associated with commercial loans are the experience and quality of
the borrower's management, the business climate, and the impact of economic
factors. With respect to agricultural loans, the primary risks are weather,
market conditions, and, like commercial loans, the quality of the borrower's
management. Risks associated with real estate loans include concentrations of
loans in a loan type such as commercial or agricultural and fluctuating land
values.
The Company's strategy in addressing and managing these types of risks is
to follow its loan policies and underwriting practices, which include (i)
granting loans on a sound and collectible basis; (ii) investing funds profitably
for the benefit of the stockholders and the protection of depositors; (iii)
serving the legitimate needs of the community and the Company's general market
area while maintaining a balance between maximum yield and minimum risk; (iv)
ensuring that primary and secondary sources of repayment are adequate in
relation to amount of the loan; (v) developing and maintaining adequate
diversification of the loan portfolio as a whole and of the loans within each
loan category; (vi) ensuring that each loan is properly documented and, if
appropriate, secured or guaranteed by government agencies; and (vii) developing
and applying adequate collections procedures.
All table amounts throughout the Form 10-K are in thousands except share and per
share data.
The following table presents the components of the Company's loan portfolio
as of December 31 for each year shown.
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Real estate loans $ 59,560 $ 58,136 $ 57,491 $ 56,766 $ 48,023
Commercial and
agricultural loans 15,222 15,013 12,910 12,581 14,782
Installment loans, net of
unearned income 48,751 41,898 46,776 39,361 31,301
Home equity lines of credit 4,219 3,812 4,286 2,718 -
------------ ------------ ------------ ------------ -------------
Total loans 127,752 118,859 121,463 111,426 94,106
Deferred loan fees (46) (58) (37) (34) (38)
------------ ------------ ------------ ------------ -------------
Loans, net of deferred
loan fees 127,706 118,801 121,426 111,392 94,068
Allowance for loan losses (1,059) (1,029) (800) (779) (667)
------------ ------------ ------------ ------------ -------------
Loans, net $ 126,647 $ 117,772 $ 120,626 $ 110,613 $ 93,401
============ ============ ============ ============ =============
Loans held for sale $ 1,738 $ 563 $ - $ - $ -
============ ============ ============ ============ =============
3
For years prior to 1996, the amount of home equity lines of credit are not
separately available but are included with real estate loans.
Maturities (based on contractual terms) of the Company's commercial and
construction loan portfolio at December 31, 1999 are summarized below:
One Year One to Over
or Less Five Years Five Years Total
----------- ----------- ----------- -----------
Commercial and agricultural $ 7,743 $ 5,226 $ 1,752 $ 14,721
Real estate - construction 501 - - 501
----------- ----------- ----------- -----------
Total $ 8,244 $ 5,226 $ 1,752 $ 15,222
=========== =========== =========== ===========
At December 31, 1999, of the total loans that mature in more than one year,
$77.5 million, or 88.6%, bear interest at fixed rates and $9.9 million, or
11.4%, bear interest at variable rates.
CONSUMER LOANS. Generally, three of the Company's ten lending officers
process consumer installment loans. The Company makes consumer loans for various
purposes, including personal, family, and nonbusiness reasons such as automobile
loans and recreational vehicle loans, on both a direct and indirect basis.
Consumer loans totaled approximately $53 million at December 31, 1999, or
approximately 41% of the Company's total loan portfolio. Approximately 90% of
the Company's consumer loans are automobile loans, and of these loans,
approximately 81% are made indirectly by the Company through automobile dealers.
The Company's consumer loans are fixed-rate loans with final maturities of five
years or less. At December 31, 1999, the Company had 41 consumer loans totaling
$283,000 that were past due in excess of 90 days. The past due consumer loans
totaled $1.6 million.
In approving consumer loans, lending officers consider the borrower's past
credit history, the borrower's ability to repay the debt, the collateral
offered, and local economic conditions that could affect the borrower's income.
Loans being originated for new borrowers must be accompanied by a completed
application dated and signed by the borrower, giving the details of the loan
request. Total debts, along with the gross monthly income of the borrower, are
required to be shown on the application. A brief cash flow analysis is performed
by the loan officer showing the amount of the borrower's income available for
debt service based on current debts plus the new loan request. Generally, debt
service to gross income should not exceed 40%. New credit reports are obtained
on all borrowers with each loan request. The value of collateral on loans
secured by used automobiles is generally determined by using industry-accepted
used car guides. In connection with used automobile loans, the Company generally
requires a 90% loan-to-value ratio; however, depending upon various factors,
including the credit experience of the Company with the borrower, the Company
may extend credit in excess of the value of the used automobile. A loan-to-value
ratio of 90% of sticker price is generally required for new automobile loans.
Boats, mobile homes, recreational vehicles, and similar items generally require
a loan-to-value ratio of 70% to 80% of the current market value of the
collateral.
4
Unsecured consumer loans are granted to borrowers based upon satisfactory
income, indebtedness levels, and credit records and experience.
COMMERCIAL, AGRICULTURAL, AND REAL ESTATE LENDING. Six of the Company's ten
lending officers service most of the commercial, agricultural, and real estate
loans. One loan officer principally services commercial loans, two officers
principally service agricultural loans, and three officers principally service
residential mortgage loans. However, because of the Company's flexible lending
practices, any of the loan officers may service loans in the commercial,
agricultural, and real estate areas.
COMMERCIAL AND AGRICULTURAL. At December 31, 1999, the Company's commercial
and agricultural non-real estate loans totaled $15 million or approximately 12%
of the total loan portfolio of the Company. The primary lending area of the
Company is within a five-mile radius of the Company's offices. The majority of
agricultural and commercial non-real estate loans are written for one to five
years, may bear interest at a fixed or variable rate and are amortized over a
15-year to 20-year period. The fixed rate generally is established by the
Company's Real Estate Department after considering the cost of funds to the
Company as well as the rates of competing institutions. The variable rate is
generally based upon the national prime rate as disclosed in THE WALL STREET
JOURNAL. Principal and interest payments on commercial loans generally are
required monthly; whereas, payments on agricultural loans vary greatly from
monthly, quarterly, semi-annually, and annually. At December 31, 1999, the
Company had eight commercial non-real-estate loans totaling $49,000 past due in
excess of 90 days. There were no past due agricultural non-real-estate loans at
December 31, 1999.
All commercial and agricultural borrowers, both existing and new, are
required by policy to have a current financial statement no older than one year.
Borrowers also are required to provide the Company with recent tax returns and
pro forma projections. Using certain computer programs and the data supplied by
borrowers, the loan officers produce additional financial information utilized
in analyzing the loans and the borrowers. The general nature of the collateral
securing the Company's commercial and agricultural loans consists of equipment,
farm products, crops, inventory, chattel paper, accounts receivable, and general
intangibles. The Company's loan-to-value ratio with respect to agricultural and
commercial non-real-estate loans averages 66 2/3% to 75% of the value of the
collateral securing the loan.
REAL ESTATE LENDING. The Company's primary real estate lending consists of
residential loans with a small portion in agricultural and commercial real
estate loans. Real estate loans at December 31, 1999 totaled approximately $60
million or approximately 47% of the Company's total loan portfolio. All
borrowers requesting a real estate loan are required to submit an application
which is reviewed by the lending officer. A credit investigation is performed
and an analysis of the borrower's ability to repay is conducted. Subsequently,
an inspection and appraisal of the real property is conducted to determine
whether or not the property is of sufficient value to meet the Company's
suggested maximum loan-to-value ratio of 80% to 85% of the lesser of the
appraised value or the purchase price of the property securing the loan. Under
certain federal guaranteed loan programs utilized by the Company, the maximum
loan-to-value ratio is higher. With respect to loans secured by commercial or
industrial real estate, the Company analyzes the potential for environmental
liability concerns and, depending upon the
5
circumstances, the Company may require additional information or testing.
Commercial and agricultural real estate loans are generally originated under the
same policies and procedures as discussed above for commercial and agricultural
non-real-estate loans.
The Company's residential real estate loans consist of 15-year and 20-year
fixed-rate and variable-rate loans with amortization periods equal to the
maturity of the loan. The Company's fixed-rate loans with biweekly payments
account for approximately 43% of all the residential real estate loans of the
Company. The biweekly loan program amortizes 25-year loans in approximately 18.9
years. The Company occasionally originates 25-year and 30-year fixed-rate loans
which are sold into the secondary market through Federal Home Loan Mortgage
Corporation ("Freddie Mac"). These loans are underwritten to meet all Freddie
Mac requirements. The Company retains all servicing rights on loans sold into
the secondary market, and at December 31, 1999, mortgage loans serviced for the
secondary market totaled approximately $14.7 million.
At December 31, 1999, the Company had 18 real estate mortgage loans
totaling $1.2 million past due in excess of 90 days.
INTEREST RATES AND FEES. Interest rates and fees charged on the Company's
loans are affected primarily by the market demand for loans and the supply of
money available for lending purposes. These factors are affected by, among other
things, general economic conditions and the policies of the federal government,
including the Federal Reserve Board, legislative tax policies, and governmental
budgetary matters.
NON-PERFORMING LOANS. When a borrower fails to make a required payment on a
loan and does not cure the delinquency within 30 days, the loan is classified as
delinquent. In this event, the normal procedure followed by the Company is to
make contact with the borrower at prescribed intervals in an effort to bring the
loan to a current status. In most cases, delinquencies are cured promptly, but,
if not, the Company normally records a notice of default, subject to any
required prior notice to the borrower, and commences foreclosure proceedings
when loan payments are 120 days past due.
At December 31, 1999, the Company had 218 loans delinquent for 30 to 90
days in an aggregate principal amount of $3.1 million and representing 2.4% of
the total loan portfolio. At December 31, 1999, the Company had 70 loans
totaling $1.5 million delinquent for more than 90 days.
6
It is the Company's policy to discontinue the accrual of interest income on
any loan when, in accordance with banking regulations or in the opinion of
management, there is reasonable doubt as to the collectibility of interest or
principal. Interest on these loans is credited to income only when the
collection of principal has been reasonably assured and only to the extent
interest payments are received. If management feels collection of both interest
and principal is probable, the loan is not transferred to nonaccrual status. At
December 31, 1999, there were four loans totaling $397,000 on nonaccrual status.
As a result of economic conditions and other factors beyond the Company's
control, the Company's future loss and delinquency experience cannot be
predicted.
The nonperforming assets of the Company as of December 31 are indicated
below:
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Non-accrual loans $ 397 $ 299 $ 653 $ 465 $ 98
Loans ninety days past due and
still accruing interest 1,543 1,140 349 330 87
Other real estate owned 113 94 43 - -
--------- --------- --------- --------- ---------
Total nonperforming assets $ 2,053 $ 1,533 $ 1,045 $ 795 $ 185
========= ========= ========= ========= =========
Nonperforming loans as a percentage
of total loans, net of unearned
income and deferred loan fees 1.52% 1.21% .83% .71% .20%
Nonperforming assets as a percentage
of total assets .85 .62 .43 .34 .08
Nonperforming loans as a percentage
of the allowance for loan losses 183.19 139.84 125.25 102.10 27.74
The effect of nonaccrual loans upon interest income is not deemed to be
material by management. Loans are placed in nonaccrual status when 90 days past
due, unless they are fully secured and in the process of collection. At December
31, 1999, there were no other loans classified as problem loans that were not
included above. At December 31, 1999, there were no other assets classified as
problem assets other than the loans shown above. Management alsomaintains a
loans requiring attention report that includes loans greater than 60 days
delinquent or other loans as deemed necessary by the Company's internal loan
review or the loan committee. The total of loans requiring attention as of
December 31, 1999 was $2,591,332.
ALLOWANCE FOR LOSSES ON LOANS. The Company maintains an allowance for loan
losses, which includes losses relating to particular identified assets, if
appropriate, and an unallocated portion. The allowance for loan losses is
established through a charge to operations at the time loan value, in the
judgment of management, becomes impaired. As noted in the previous table,
nonperforming assets increased by $520,000 in 1999 after increasing by $488,000
during 1998.
7
Management considered this information along with other portfolio trends in
concluding on the adequacy of the allowance for loan losses at December 31,
1999. The allowance for loan losses is an amount that management believes will
be adequate to absorb losses on existing loans, based upon an analysis of the
loan portfolio, including such factors as prior loan loss experience, economic
conditions affecting the area's economy, regulatory considerations and other
factors which management believes deserve consideration. At December 31, 1999,
the balance in the allowance was $1.1 million, or .83% of gross loans
outstanding. Management has concluded that the allowance for loan losses is
adequate at December 31, 1999.
SUMMARY OF LOAN LOSS EXPERIENCE
The allowance for loan losses is maintained by management at a level
considered adequate to cover losses that are currently anticipated based upon
past loss experience, general economic conditions, information about specific
borrower situations, including their financial position and collateral values,
and other factors and estimates which are subject to change over time.
Loan loss experience for the five years ended December 31, 1999 is
summarized as follows:
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Balance at beginning of year $ 1,029 $ 800 $ 779 $ 667 $ 614
Charge-offs
Commercial 121 123 221 20 64
Installment 351 231 341 163 86
--------- --------- --------- --------- ---------
Total charge-offs 472 354 562 183 150
Recoveries
Commercial 21 19 33 39 16
Installment 97 104 70 76 67
--------- --------- --------- --------- ---------
Total recoveries 118 123 103 115 83
--------- --------- --------- --------- ---------
Net charge-offs 354 231 459 68 67
Provision 384 460 480 180 120
--------- --------- --------- --------- ---------
Balance at end of year $ 1,059 $ 1,029 $ 800 $ 779 $ 667
========= ========= ========= ========= =========
Net charge-offs to average
total loans .29% .19% .40% .07% .08%
Allowance for loan losses to
total loans at year-end .83 .87 .66 .70 .71
8
The Company's allocation of the allowance for loan losses as of
December 31 is presented below:
-------1999------ -------1998----- -----1997------- -------1996------- -------1995--------
Percent Percent Percent Percent Percent
of Total of Total of Total of Total of Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
------- -------- ------ ------- ------ -------- ------- --------- ------ ----------
Real estate
loans $ 175 46.62% $ 184 48.91% $ 192 47.33% $ 135 50.94% $ 166 51.03%
Commercial
and agricultural
loans 458 11.92 371 12.63 240 10.63 318 11.30 208 15.71
Installment loans 328 41.46 333 38.46 342 42.04 248 37.76 191 33.26
Unallocated 98 N/A 141 N/A 26 N/A 78 N/A 102 N/A
------- ------- ------ ------- ------ ------- ------- -------- ------- ----------
Balance at
end of year $ 1,059 100.00% $1,029 100.00% $ 800 100.00% $ 779 100.00% $ 667 100.00%
======= ======= ====== ======= ====== ======== ======= ========= ======= ==========
INVESTMENT ACTIVITIES
The investment policies of the Company as established by the Board of
Directors attempt to provide and maintain liquidity, generate a favorable return
on investments without incurring undue interest rate and credit risk, and
complement the Company's lending activities. The policies provide the authority
to invest in United States Treasury and federal agency securities,
mortgage-backed securities, municipal securities, and equity securities.
Approximately $39 million of the United States government agency notes held at
December 31, 1999 are callable at the option of the issuer, which present
prepayment risk to the Company.
As of December 31, 1999, the Company had approximately $4,840,000 invested in
LaSalle County, Illinois municipal bonds.
9
SECURITIES PORTFOLIO
The following table shows the maturity distribution of the
available-for-sale securities portfolio and the weighted average yield of the
portfolio at December 31, 1999. The carrying amounts of the portfolio at
December 31, 1999 are found in Note 2 to the financial statements included in
the Annual Report to Stockholders.
Weighted One to Weighted Five Weighted
One Year Average Five Average to Ten Average
or Less Yield Years Yield Years Yield
---------- -------- ---------- -------- ----------- ---------
U.S. Treasury securities $ 3,995 4.94% $ 7,939 5.44% $ - -%
U.S. Government agencies 1,065 6.00 10,213 6.25 28,922 6.44
States and political subdivisions 2,017 6.80 16,351 8.44 7,393 7.99
Mortgage-backed securities and
collateralized obligations (1) 19 8.02 4,219 8.23 814 6.24
Equity securities 193 N/A - - - -
---------- -------- ---------- -------- ----------- -------
Total securities $ 7,289 5.63% $ 38,722 7.20% $ 37,129 6.74%
========== ======== ========== ======== =========== =======
Over Weighted Weighted
Ten Average Average
Years Yield Total Yield
-------- -------- ------ --------
U.S. Treasury securities $ - -% $ 11,934 5.27%
U.S. Government agencies - - 40,200 6.38
States and political subdivisions 6,843 7.31 32,604 7.98
Mortgage-backed securities and
collateralized obligations (1) - - 5,052 7.90
Equity securities - - 193 N/A
---------- ------- ---------- --------
Total securities $ 6,843 7.31% $ 89,983 6.89%
========== ======= ========== ========
(1) Mortgage-backed securities reflect the contractual maturity of the related
instrument.
10
DEPOSITS
The principal deposit services offered by the Company are demand,
savings, and time deposit accounts and programs, which include interest-bearing
and non-interest-bearing demand deposits and individual retirement accounts. The
Company has had a stable deposit base. Management believes that this stability
is due to the Company's emphasis on being a locally owned and operated bank and
by providing quality, personalized service to its customers.
The following shows the Company's average balances and rates paid
during the years shown.
For the Years Ended December 31,
--------------------------------------------------------------------------------------------
1999 1998 1997
----------------------------- ---------------------------- ----------------------------
Percent Percent Percent
Average of Average of Average of
Balance Deposits Rate Balance Deposits Rate Balance Deposits Rate
------- -------- ---- ------- -------- ---- ------- -------- ----
Noninterest-
bearing
demand
deposits $ 20,686 10.8% -% $ 20,533 10.6% -% $ 19,433 10.2% -%
Interest-bearing
demand deposits 41,941 21.8 2.58 37,554 19.4 2.53 35,357 18.5 2.30
Savings accounts 19,710 10.3 2.47 19,594 10.1 2.52 20,413 10.7 2.51
Time deposits
accounts 109,682 57.1 5.41 115,824 59.9 5.66 115,838 60.6 5.79
---------- ------- -------- ---------- ------- ------ ---------- ------ -------
$ 192,019 100.0% 4.38% $ 193,505 100.0% 4.62% $ 191,041 100.0% 4.68%
========== ======= ======== ========== ======= ======= ========== ====== =======
The distribution of the major components of deposits as of December
31, 1999 and 1998 is summarized in the balance sheets included in the 1999
consolidated financial statements, which consolidated financial statements are
incorporated herein by reference. The following is a maturity distribution of
time certificates of deposit of $100,000 or more at December 31, 1999:
Balance Percentage
------- ----------
Maturity
Three months or less $ 11,935 51.7%
Over three months to six months 2,343 10.2
Over six months to one year 3,190 13.8
Over one year 5,605 24.3
----------- -------
Total $ 23,073 100.0%
=========== =======
11
BORROWINGS: The Company's other available sources of funds include financing
arrangements for securities sold under agreements to repurchase, federal funds
purchased lines, and Federal Home Loan Bank borrowings. Physical control is
maintained for all securities sold under repurchase agreements. Information
concerning securities sold under agreements to repurchase is summarized as
follows:
1999 1998 1997
---- ---- ----
Balance at December 31 $ 18,665 $ 15,046 $ 8,209
Weighted average interest rate
during the year 4.51% 4.88% 4.66%
Weighted average interest rate at the
end of the year
Maximum month-end balance $ 18,665 $ 15,046 $ 9,059
Average balance for the year 11,690 11,000 7,034
TRUST
The Company's trust department primarily services LaSalle County and
surrounding counties. At December 31, 1999, the trust department had 324 trust
accounts under management, 283 of which were discretionary accounts. The trust
department provides a full complement of asset management services for personal
trusts, estates, and agencies. The trust department had assets under management
of approximately $55.1 million at December 31, 1999, of which $45.5 million was
in discretionary accounts.
The Company, in conjunction with its trust department, also provides
farm management services. At December 31, 1999, the department managed 50 farms.
The department manages or directs approximately 9,000 acres of farmland in
LaSalle County, Illinois and surrounding counties.
COMPETITION. The Company has active competition in all product and
service areas in which it presently engages. The Company not only competes for
commercial and individual deposits, loans, and trust business with other LaSalle
County, Illinois banks, but also with savings and loan associations, credit
unions, and other financial service companies located in and around LaSalle
County. There are approximately 15 commercial banks and 6 savings institutions
with offices in LaSalle County, Illinois. The principal methods of competition
in the banking and financial services industry are quality of services to the
customer; ease of access to services; and pricing of services, including
interest rates paid on deposits, interest rates charged on borrowings, and fees
charged for fiduciary services.
REGULATION AND SUPERVISION. Banking is a complex, highly regulated
industry. The primary goals of the bank regulatory scheme are to maintain a safe
and sound banking system and to facilitate the conduct of monetary policy. In
furtherance of those goals, Congress has created several largely autonomous
regulatory agencies and enacted much legislation that governs banks, bank
holding companies, and the banking industry. Descriptions of and references to
the statutes and regulations below are brief summaries and do not purport to be
complete. The descriptions are qualified in their entirety by reference to the
specific statutes and regulations discussed.
12
THE COMPANY
As a bank holding company under the BHC Act, the Company is registered
with, and is subject to, regulation by the Federal Reserve. Among other things,
applicable statutes and regulations require the Company to file annual and other
reports with and furnish information to the Federal Reserve, which may make
inspections of the Company.
The BHC Act provides that a bank holding company must obtain the prior
approval of the Federal Reserve to acquire more than 5 percent of the voting
stock or substantially all the assets of any bank or bank holding company. The
Company currently has no formal agreement or commitments about any such
transaction. In addition, the BHC Act restricts the Bank's extension of credit
to the Company. The BHC Act also provides that, with certain exceptions, a bank
holding company may not (i) engage in any activities other than those of banking
or managing or controlling banks and other authorized subsidiaries or (ii) own
or control more than 5 percent of the voting shares of any company that is not a
bank, including any foreign company. A bank holding company is permitted,
however, to acquire shares of any company, the activities of which the Federal
Reserve, after due notice and opportunity for hearing, has determined to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. The Federal Reserve's regulations state specific activities
that are permissible under that exception. The Company does not currently have
any agreements or commitments to engage in any nonbanking activities.
A bank holding company may also acquire shares of a company which
furnishes or performs services for a bank holding company and acquire shares of
the kinds and in the amounts eligible for investment by national banking
associations. The Board of Directors of the Company at this time has no plans
for these investments.
THE BANK
The Bank is subject to various requirements and restrictions under
federal and state laws, and to regulation, supervision, and regular examination
by the Comptroller. The Bank is subject to the Comptroller's power to enforce
compliance with applicable banking statutes and regulations. These requirements
and restrictions include requirements to maintain reserves against deposits,
restrictions on the nature and amount of loans and the interest charged thereon,
and restrictions relating to investments and other activities of the Bank. In
1999, President Clinton signed the Gramm-Leach-Bliley Act which makes
substantial changes in the permitted relationships between banks, securities
firms, insurance companies and their holding companies. The statute is too new
to be able to fully evaluate its effects on the Company and the Bank. However,
the Company believes most of the direct effects of the statute will be minimal
because it primarily affects the operations of much larger institutions.
DIVIDENDS. The Bank may generally pay dividends on its stock as long as
their payment complies with applicable law and regulations. A national bank may
not pay dividends from its stated capital. Additionally, if losses have been
sustained at any time by a national bank equal to or exceeding its undivided
profits then on hand, it can pay no dividend, and all dividends must be paid out
of net profits then on hand, after deducting expenses, including losses and
provisions for loan losses. The payment of dividends out of net profits of a
national
13
bank is further limited by a provision of the National Bank Act that prohibits
it from declaring a dividend on its shares of its stock until 10 percent of its
net profits are transferred to the surplus each time dividends are declared,
unless the transfer would increase the bank's surplus to an amount greater than
its capital. In addition, the prior approval of the Comptroller is required if
the total of all dividends declared by a national bank in any calendar year
exceeds the total of its net profits for that year combined with its net profits
for the two preceding years, less any required transfers to surplus or to funds
to retire any preferred stock. Additionally, under 12 U.S.C. ss.1818, the
Comptroller has the right to prohibit the payment of dividends by a national
bank if the payment is deemed to be an unsafe and unsound banking practice.
TRANSACTIONS WITH AFFILIATES. The Federal Reserve Act, as amended by
the Competitive Equality Banking Act of 1987, prohibits the Bank from engaging
in specified transactions (including, for example, loans) with certain
affiliates unless the terms and conditions of the transactions are substantially
the same or at least as favorable to the Bank as those prevailing at the time
for comparable transactions with or involving other non-affiliated entities. In
the absence of comparable transactions, any transaction between a bank and its
affiliates must be on terms and under circumstances, including credit standards,
that in good faith would be offered or would apply to non-affiliated companies.
In addition, certain transactions, referred to as "covered transactions,"
between the Bank and its affiliates may not exceed 10 percent of the Bank's
capital and surplus per affiliate and an aggregate of 20 percent of its capital
and surplus for covered transactions with all affiliates. Certain transactions
with affiliates, such as loans, also must be secured by collateral of specific
types and amounts. Finally, the Bank may not purchase low-quality assets from an
affiliate. The Company is an affiliate of the Bank.
LOANS TO INSIDERS. Federal law also constrains the types and amounts of
loans that any bank may make to its executive officers, directors, and principal
shareholders. Among other things, the loans must be approved by the Bank's Board
of Directors in advance and must be on terms and conditions as favorable to the
Bank as those available to unrelated persons.
REGULATION OF LENDING ACTIVITIES. Loans made by the Bank are also
subject to numerous federal and state laws and regulations, including
truth-in-lending statutes, the Federal Consumer Credit Protection Act, the Equal
Credit Opportunity Act, the Real Estate Settlement Procedures Act, and
adjustable rate mortgage disclosure requirements. Remedies to the borrower and
penalties to the Bank are provided for the Bank's failure to comply with these
laws and regulations, whose scope and requirements have expanded significantly
in recent years.
GOVERNMENTAL MONETARY POLICIES. The commercial banking business is
affected not only by general economic conditions but also by the monetary
policies of the Federal Reserve. Changes in the discount rate on member bank
borrowings, control of borrowings, control of borrowings at the "discount
window," open market operations, the imposition of and changes in reserve
requirements against member banks, deposits and assets of foreign branches, the
imposition of and changes in reserve requirements against certain borrowings by
banks and their affiliates, and the limits on interest rates which member banks
may pay on time and savings deposits are some of the instruments of monetary
policy available to the Federal Reserve. Those policies influence significantly
the overall growth of bank loans, investments,
14
deposits, and interest rates charged on loans or paid on time and savings
deposits. Any future monetary policies and their effect on the Bank's business
and earnings, therefore, cannot be predicted accurately.
CAPITAL ADEQUACY. In 1983, Congress enacted the International Lending
Supervision Act, which, among other things, directed the Comptroller to
establish minimum levels of capital for national banks and to require national
banks to achieve and maintain adequate capital. Pursuant to this authority, the
Comptroller has promulgated capital-adequacy regulations to which all national
banks, such as the Bank, are subject.
The Comptroller's capital-adequacy regulations are based upon a
risk-based capital determination, whereby a bank's capital adequacy is
determined in light of the risk, both on- and off-balance sheet, in the bank's
assets. Different categories of assets are assigned risk weightings and, based
thereon, are counted at a percentage (from 0 to 100 percent) of their book
value. The regulations divide capital between Tier 1 capital, or core capital,
and Tier 2 capital, or supplemental capital. Tier I capital consists primarily
of common stock, noncumulative perpetual preferred stock, related surplus, and
minority interests in consolidated subsidiaries. Goodwill and certain other
intangibles are excluded from Tier 1 capital. Tier 2 capital consists of varying
percentages of the allowance for loan and lease losses, all other types of
preferred stock not included in Tier 1 capital, hybrid capital instruments, and
term-subordinated debt. Investments in and loans to unconsolidated banking and
finance subsidiaries that constitute capital of those subsidiaries are excluded
from capital. The sum of Tier 1 and Tier 2 capital constitutes qualifying total
capital. The Tier 1 component must comprise at least 50 percent of qualifying
total capital.
Every national bank must maintain a certain ratio of Tier 1 capital to
risk-weighted assets (a "Core Capital Ratio") and a ratio of Tier 1 plus Tier 2
capital to risk-weighted assets (a "Risk-Based Capital Ratio"). All banks must
achieve and maintain a minimum Core Capital Ratio of at least 4 percent and a
minimum Risk-Based Capital Ratio of 8 percent.
As of December 31, 1999, the Bank's Core Capital Ratio was 20.8
percent, and its Risk-Based Capital Ratio was 20.1 percent. In addition,
national banks generally must achieve and maintain a Leverage Ratio of at least
4 percent. As of December 31, 1999, the Bank's Leverage Ratio was 11.7 percent.
THE FDIC IMPROVEMENT ACT. The FDIC Improvement Act of 1991, enacted on
December 19, 1991 ("FDICIA"), makes many reforms addressing the safety and
soundness of the deposit insurance system, supervision of domestic and foreign
depository institutions, and improvement of accounting standards. This statute
also limits deposit insurance coverage, implements changes in consumer
protection laws, and calls for least-cost resolution and prompt regulatory
action for troubled institutions.
FDICIA requires every national bank with total assets over $500,000,000
to have an annual independent audit of its financial statements by a certified
public accountant to verify that the financial statements are presented in
accordance with generally accepted accounting principles and comply with other
disclosure requirements prescribed by the Comptroller.
15
FDICIA also places certain restrictions on activities of banks
depending on their level of capital. FDICIA divides banks into five different
categories, depending on their level of capital.
Under regulations adopted by the Comptroller, a bank is "well
capitalized" if it has a total Risk-Based Capital Ratio of 10 percent or more, a
Core Capital Ratio of 6 percent or more, and a Leverage Ratio of 5 percent or
more, and the bank is not subject to an order or capital directive to meet and
maintain a certain capital level. A bank is "adequately capitalized" if it has a
total Risk- Based Capital Ratio of 8 percent or more, a Core Capital Ratio of 4
percent or more, and a Leverage Ratio of 4 percent or more (unless it receives
the highest composite rating at its most recent examination and is not
experiencing or anticipating significant growth, in which instance it must
maintain a Leverage Ratio of 3 percent or more). A bank is "undercapitalized" if
it has a total Risk-Based Capital Ratio of less than 8 percent, a Core Capital
Ratio of less than 4 percent, or a Leverage Ratio of less than 4 percent. A bank
is "significantly undercapitalized" if it has a Risk-Based Capital Ratio of less
than 6 percent, a Core Capital Ratio of less than 3 percent, and a Leverage
Ratio of less than 3 percent. A bank is "critically undercapitalized" if it has
a Leverage Ratio of 2 percent or less. In addition, the Comptroller may
downgrade a bank's classification (but not to "critically undercapitalized")
based on other considerations even if the Bank meets the capital guidelines.
According to these guidelines, the Bank was classified as "well capitalized" as
of December 31, 1999.
A bank's capital classification affects the frequency of its
examinations, impacts its ability to engage in certain activities, and affects
the deposit insurance premiums it pays. Under FDICIA, the Comptroller must
conduct a full-scope, on-site examination of every national bank at least once
every 12 months. An exception to this rule is made, however, for national banks
(i) with assets of less than $100,000,000, (ii) categorized as "well
capitalized," (iii) found to be well managed with an outstanding composite
rating, and (iv) not subject to a change in control during the last 12 months;
these banks will be examined by the Comptroller once every 18 months.
Under FDICIA, banks may be restricted in their ability to accept
brokered deposits, depending on their capital classification. "Well-capitalized"
banks are permitted to accept brokered deposits, but all banks that are not well
capitalized cannot accept those deposits. The FDIC may, on a case-by-case basis,
permit banks that are adequately capitalized to accept brokered deposits if it
determines that the deposits would not constitute an unsafe or unsound practice
for the bank.
In addition, under FDICIA, the FDIC can assess insurance premiums on a
bank's deposits at a variable rate depending on the probability that the deposit
insurance fund will incur a loss for the bank. (Under prior law, the deposit
insurance assessment was a flat rate, regardless of the likelihood of loss.) In
this regard, the FDIC has issued regulations for a transitional risk-based
deposit assessment that determines the deposit insurance assessment rates on the
basis of the bank's capital classification and supervisory evaluations. Each of
these categories has three subcategories, resulting in nine assessment risk
classifications. The three subcategories about capital are "well capitalized,"
"adequately capitalized," and "less than adequately capitalized" (includes
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized" banks). The three subcategories for supervisory concerns are
16
"healthy," "supervisory concern," and "substantial supervisory concern." A bank
is deemed "healthy" if it is financially sound with only a few minor weaknesses.
A bank is deemed subject to "supervisory concern" if it has weaknesses that, if
not corrected, could result in significant deterioration of the bank and
increased risk to the Bank Insurance Fund. A bank is deemed subject to
"substantial supervisory concern" if it poses a substantial probability of loss
to the Bank Insurance Fund of the FDIC (the "BIF").
The federal banking agencies have established guidelines, effective
August 9, 1995, which prescribe standards for depository institutions relating
to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth, and
management compensation. The agencies may require an institution which fails to
meet these standards to submit a compliance plan. The agencies are also
currently proposing standards for asset quality and earnings. The Company cannot
predict what effect these guidelines will have on the Bank.
Management of the Company and the Bank cannot predict any other
legislation or regulations and their effects.
THE FOREGOING SUMMARIZES SOME OF THE RELEVANT LAWS, RULES, AND
REGULATIONS GOVERNING NATIONAL BANKS AND BANK HOLDING COMPANIES, BUT DOES NOT
PURPORT TO BE A COMPLETE SUMMARY OF ALL APPLICABLE LAWS, RULES, AND REGULATIONS
GOVERNING BANKS AND BANK HOLDING COMPANIES.
EMPLOYEES. As of December 31, 1999, the Company had 96 employees,
consisting of 84 full-time employees and 12 part-time employees. None of the
employees are subject to a collective bargaining agreement, and management
believes it has excellent relations with its staff.
TENDER OFFER. On December 6, 1999, the Company commenced a tender
offer ("the Offer") to acquire up to 87,719 common shares at $57 per share. The
Offer expired on January 20, 2000 and the Company purchased 86,373 shares,
representing approximately 11.51% of its outstanding common shares for an
aggregate purchase price of $4,923,261. On March 6, 2000, the Company commenced
a tender offer (the "Odd-lot Officer") to acquire up to 1,346 common shares at
$57.00 per share from stockholders who own fewer than 100 shares. The Odd-lot
Offer is scheduled to expire on March 30, 2000. As of March 24, 2000, 1,400
shares had been tendered pursuant to the Odd-lot Offer.
ITEM 2. PROPERTIES.
The Company's main office is located at 701-705 LaSalle Street,
Ottawa, Illinois. The building is comprised of approximately 15,000 square feet.
The main office building is a two-story structure constructed principally of
masonry which was opened in 1865. The Company also operates three branch office
facilities. A limited service branch, which contains eight drive-in lanes, is
located at 300 West Madison Street, Ottawa, Illinois, and two full-service
17
branches are located at 601 State Street, Ottawa, Illinois and 2771 North
Columbus Street, Ottawa, Illinois.
The Company believes that its facilities are adequate to serve its
present needs. The main banking office and branch offices are owned by the
Company in fee and are unencumbered.
ITEM 3. LEGAL PROCEEDINGS.
The Company is from time to time a party to legal proceedings in the
ordinary course of business that are incident to the business of banking. The
Company is not engaged in any legal proceedings of a material nature at the
present time.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1999.
18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
See page 32 of the 1999 Annual Report to Stockholders (filed as
Exhibit 13.1 of this report) which is incorporated herein by reference.
ITEM 6 SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Consolidated
Financial Data" on page 1 of the 1999 Annual Report to Stockholders (filed as
Exhibit 13.1 of this report) is incorporated herein by reference.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 2
through 10 of the 1999 Annual Report to Stockholders (filed as Exhibit 13.1 of
this report) is incorporated herein by reference.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the caption "Quantitative and
Qualitative Disclosures about Market Risk" on page 8 of the 1999 Annual Report
to Stockholders (filed as Exhibit 13.1 of this report) is incorporated herein by
reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Registrant and the
Independent Auditors' Report as set forth on pages 11 through 31 of the 1999
Annual Report to Stockholders (filed as Exhibit 13.1 of this report) are
incorporated herein by reference:
Annual Report to
Stockholders Page
Independent Auditors' Report 11
Consolidated Balance Sheets as of December 31, 1999 and 1998 12
Consolidated Statements of Income for the years ended
December 31, 1999, 1998, and 1997 13
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1999, 1998, and 1997 14
19
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998, and 1997 15
Notes to the Consolidated Financial Statements 16
Parent Company Only Financial Statements 30
The portions of the 1999 Annual Report to Stockholders which are not
specifically incorporated by reference as a part of this Form 10-K are not
deemed to be a part of this report.
ITEM 9 CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AT THE REGISTRANT.
The information set forth under the captions "Information Regarding
Nominees and Executive Officers" and "Section 16 Beneficial Ownership Reporting
Compliance" of the Registrant's Proxy Statement, relating to the May 17, 2000
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information set forth under the caption "Executive Compensation"
of the Registrant's Proxy Statement, relating to the May 17, 2000 Annual Meeting
of Stockholders is incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" of the Registrant's Proxy Statement,
relating to the May 17, 2000 Annual Meeting of Stockholders is incorporated
herein by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Certain Relationships
and Related Transactions" of the Registrant's Proxy Statement, relating to the
May 17, 2000 Annual Meeting of Stockholders is incorporated herein by reference.
21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
All financial statements of the Registrant are incorporated herein by
reference as set forth under Item 8, Part II of this report on Form
10-K.
2. FINANCIAL STATEMENT SCHEDULES Not applicable.
3. EXHIBITS (Numbered in accordance with Item 601 of Regulation S-K)
The following exhibits are filed as part of this report:
2.1 Agreement to Merge dated September 23, 1999 between Ottawa
Interim Bank, National Association (In Organization) and
The First National Bank of Ottawa
3(i) Certificate of Incorporation of First Ottawa Bancshares, Inc.
3(ii) By-Laws of First Ottawa Bancshares, Inc.
*10.1 Employment Agreement dated as of October 27, 1999 for J. Brown
13.1 1999 Annual Report to Stockholders
21.1 Subsidiaries
24.1 Power of Attorney
* Indicates management contract or compensation plan or arrangement.
22
SIGNATURE
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FIRST OTTAWA BANCSHARES, INC.
(Registrant)
Date: March 30, 2000 By: /s/ Joachim Brown
-----------------
Joachim Brown
President/Chief
Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature Title Date
- --------- ----- ----
Joachim Brown* Director and President/Chief March 30, 2000
Executive Officer (Principal
Executive and Financial Officer)
Bradley J. Armstrong* Director March 30, 2000
John L. Cantlin* Director March 30, 2000
Eugene P. Daugherity* Director March 30, 2000
Thomas F. Godfrey* Director March 30, 2000
Thomas E. Haeberle* Director March 30, 2000
Howard E. Jameson* Director March 30, 2000
Erika S. Kuiper* Director March 30, 2000
Thomas P. Rooney* Director March 30, 2000
William J. Walsh* Director March 30, 2000
Donald J. Harris* Executive Vice President, March 30, 2000
Cashier and Trust Officer
(Principal Accounting Officer)
*By: /s/ Joachim Brown Individually and as March 30, 2000
-----------------------
Joachim Brown Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE*
------ ----------- --------------
2.1 Agreement to Merge dated September 23, 1999 between
Ottawa Interim Bank, National Association (In Organization)
and The First National Bank of Ottawa
3(i) Certificate of Incorporation of First Ottawa Bancshares,
Inc.
3(ii) By-Laws of First Ottawa Bancshares, Inc.
10.1 Employment Agreement dated as of October 27, 1999 for J. Brown
13.1 1999 Annual Report to Stockholders
21.1 Subsidiaries
24.1 Power of Attorney
E-1