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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, 2000
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 $27,148,881 as of March 23, 2001. 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 100 shares on February 23, 2001 at $51.00 per share.
662,281 shares of common stock were outstanding as of March 23, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Parts II and IV are incorporated by reference from the
Registrant's 2000 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 16, 2001.
Except for those portions of the 2000 Annual Report incorporated by
reference, the Annual Report is not deemed filed as part of this Report.
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INDEX
PAGE NO.
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PART I
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
Reports on Form 8-K....................................................................22
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, 2000, the Company had total assets of $225 million,
total deposits of $173 million, loans and loans held for sale, net of unearned
income, of $117 million and total stockholders' equity of $23 million. For the
year ended December 31, 2000, the Company had interest income of $16 million and
net income of $2.1 million, which amounted to net income per share of $3.14.
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:
o the acceptance of deposits for demand, savings, and
time accounts and the servicing of such accounts;
o commercial, agricultural, consumer, and real estate
lending, including installment loans, personal lines
of credit, and overdraft protection;
o trust operations;
o farm management;
o safe deposit operations;
o 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:
o business
o industry
o capital
o agriculture
o inventory
o real estate, including residential properties
Consumer loans are made for a variety of purposes including to finance the
purchase of homes, automobiles, recreational vehicles and consumer goods, and
for other personal, family or household purposes.
1
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 and 39; U.S. Route 6; and State Routes 23 and 71.
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.
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.
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 Assistant Vice Presidents, Vice Presidents, the Senior
Vice President, Executive Vice Presidents and the President of the Bank) which
approves loans of up to $500,000. All loans between $500,000 and $1,000,000 are
sent to the Directors' Loan Committee for approval. The Directors' 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 $1,000,000 are reviewed and approved by the
Board of Directors. The Board of Directors also is responsible for directing and
supervising the Directors' 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 $117 million at December 31, 2000,
representing 68% of the Company's
2
total deposits at that date. The Company's loan portfolio at December 31,
2000 included $56 million for real estate purposes, $45 million for consumer
purposes, and $16 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 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.
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Real estate loans................. $ 56,109 $ 59,560 $ 58,136 $ 57,491 $ 56,766
Commercial and
agricultural loans.............. 16,266 15,222 15,013 12,910 12,581
Installment loans, net of
unearned income................. 39,441 48,751 41,898 46,776 39,361
Home equity lines of credit....... 5,143 4,219 3,812 4,286 2,718
------------ ------------ ------------ ------------ -------------
Total loans.................. 116,959 127,752 118,859 121,463 111,426
Deferred loan fees................ (40) (46) (58) (37) (34)
------------ ------------ ------------ ------------ -------------
Loans, net of deferred
loan fees.................. 116,919 127,706 118,801 121,426 111,392
Allowance for loan losses......... (1,108) (1,059) (1,029) (800) (779)
------------ ------------ ------------ ------------ -------------
Loans, net................... $ 115,811 $ 126,647 $ 117,772 $ 120,626 $ 110,613
============ ============ ============ ============ =============
Loans held for sale............... $ 693 $ 1,738 $ 563 $ - $ -
============ ============ ============ ============ =============
3
Maturities (based on contractual terms) of the Company's
commercial and construction loan portfolio at December 31, 2000 are summarized
below:
ONE YEAR ONE TO OVER
OR LESS FIVE YEARS FIVE YEARS TOTAL
---------- ----------- ----------- -----------
Commercial and agricultural................. $ 9,239 $ 4,871 $ 1,150 $ 15,260
Real estate - construction.................. 1,006 - - 1,006
---------- ----------- ----------- -----------
Total................................... $ 10,245 $ 4,871 $ 1,150 $ 16,266
========== =========== =========== ===========
At December 31, 2000, of the total loans that mature in more than one
year, $87.9 million, or 80.7%, bear interest at fixed rates and $21.0 million,
or 19.3%, 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 $45 million at December 31, 2000, or
approximately 38% of the Company's total loan portfolio. Approximately 86% of
the Company's consumer loans are automobile loans, and of these loans,
approximately 87.9% 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, 2000, the Company had 20 consumer loans
totaling $158,000 that were past due in excess of 90 days. The past due consumer
loans totaled $1.2 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. Unsecured consumer loans are granted to borrowers based upon
satisfactory income, indebtedness levels, credit records and experience.
4
COMMERCIAL, AGRICULTURAL, AND REAL ESTATE LENDING. Eight of the
Company's ten lending officers service most of the commercial, agricultural, and
real estate loans. Three loan officers principally service 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, 2000, the Company's
commercial and agricultural non-real estate loans totaled $16 million or
approximately 14% 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,
2000, the Company had 4 commercial non-real-estate loans totaling $18,000 past
due in excess of 90 days. There were no agricultural non-real-estate loans at
December 31, 2000 that were past due in excess of 90 days.
All commercial and agricultural borrowers, both existing and new, are
required by policy to have a 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, which is
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, 2000 totaled
approximately $56 million or approximately 48% 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 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.
5
The Company originates residential real estate loans for its
portfolio and sale into the secondary market. The Company originates 15-year,
20-year and 30-year fixed and variable rate loans. Fixed rate loans are
primarily sold on the secondary market and are underwritten to agency standards.
The Company also originates government loans such as FHA and VA, which are also
sold on the secondary market. At December 31, 2000, mortgage loans serviced for
the secondary market totaled approximately $15.0 million.
At December 31, 2000, the Company had 20 real estate mortgage loans
totaling $2.0 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. If a delinquency is not promptly cured, 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, 2000, the Company had 171 loans delinquent for 30 to
90 days in an aggregate principal amount of $4.3 million and representing 3.6%
of the total loan portfolio. At December 31, 2000, the Company had 44 loans
totaling $2.2 million delinquent for more than 90 days and still accruing
interest.
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, 2000, there were 11 loans totaling $467,000 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:
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Non-accrual loans....................... $ 467 $ 397 $ 299 $ 653 $ 465
Loans ninety days past due and
still accruing interest............... 2,177 1,543 1,140 349 330
Other real estate owned................. 169 113 94 43 -
--------- --------- --------- --------- ---------
Total nonperforming assets.............. $ 2,813 $ 2,053 $ 1,533 $ 1,045 $ 795
========= ========= ========= ========= =========
Nonperforming loans as a percentage
of total loans, net of unearned
income and deferred loan fees......... 2.26% 1.52% 1.21% .83% .71%
Nonperforming assets as a percentage
of total assets....................... 1.25 .85 .62 .43 .34
Nonperforming loans as a percentage
of the allowance for loan losses...... 238.63 183.19 139.84 125.25 102.10
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, 2000, there were no other loans classified as problem loans that
were not included above. At December 31, 2000, there were no other assets
classified as problem assets other than the loans shown above. Management also
maintains 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, 2000 was $6,855,508.
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 $760,000 in 2000 after increasing by $520,000
during 1999.
7
Management considered this information along with other portfolio trends in
concluding on the adequacy of the allowance for loan losses at December 31,
2000. 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, 2000, the balance in the allowance was $1.1 million, or .95% of
gross loans outstanding. Management has concluded that the allowance for loan
losses is adequate at December 31, 2000.
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, 2000 is
summarized as follows:
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Balance at beginning of year............ $ 1,059 $ 1,029 $ 800 $ 779 $ 667
Charge-offs
Real Estate......................... 135 - - - -
Commercial.......................... 39 121 123 221 20
Installment......................... 341 351 231 341 163
--------- --------- --------- --------- ---------
Total charge-offs.............. 515 472 354 562 183
Recoveries
Commercial.......................... 27 21 19 33 39
Installment......................... 177 97 104 70 76
--------- --------- --------- --------- ---------
Total recoveries............... 204 118 123 103 115
--------- --------- --------- --------- ---------
Net charge-offs......................... 311 354 231 459 68
Provision............................... 360 384 460 480 180
--------- --------- --------- --------- ---------
Balance at end of year.................. $ 1,108 $ 1,059 $ 1,029 $ 800 $ 779
========= ========= ========= ========= =========
Net charge-offs to average
total loans........................... .25% .29% .19% .40% .07%
Allowance for loan losses to
total loans at year-end............... .95 .83 .87 .66 .70
8
The Company's allocation of the allowance for loan losses as of
December 31 is presented below:
-------2000------ -------1999----- -----1998------- -------1997------- -------1996--------
---- ---- ---- ---- ----
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 $ 378 47.97% $ 175 46.62% $ 184 48.91% $ 192 47.33% $ 135 50.94%
Commercial
and agricultural
loans 291 13.91 458 11.92 371 12.63 240 10.63 318 11.30
Installment loans 297 38.12 328 41.46 333 38.46 342 42.04 248 37.76
Unallocated 142 N/A 98 N/A 141 N/A 26 N/A 78 N/A
------- ------- ------ ------- ------ ------- ------- -------- ------- ----------
Balance at
end of year $ 1,108 100.00% $1,059 100.00% $1,029 100.00% $ 800 100.00% $ 779 100.00%
======= ======= ====== ======= ====== ======== ======= ========= ======= ==========
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 $41 million of the $45.7 million United States government
agency notes held at December 31, 2000 are callable at the option of the issuer,
which present prepayment risk to the Company.
As of December 31, 2000, the Company had approximately $6,225,000
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, 2000. The carrying amounts of the portfolio at
December 31, 2000 are found in Note 2 to the financial statements included in
the Annual Report to Stockholders.
Weighted One to Weighted Five Weighted Over Weighted Weighted
One Year Average Five Average to Ten Average Ten Average Average
or Less Yield Years Yield Years Yield Years Yield Total Yield
------- -------- ------- -------- ------- -------- ------- -------- ------- --------
U.S. Treasury securities $ 4,502 5.18% $ 3,545 5.77% $ - -% $ - -% $ 8,047 5.44%
U.S. Government agencies 1,377 6.02 17,942 6.29 26,374 6.48 - - 45,693 6.39
States and political subdivisions 5,502 8.99 15,457 7.90 5,596 8.06 6,592 7.38 33,147 8.00
Mortgage-backed securities and
collateralized obligations (1) - - 4,252 8.19 36 9.61 - - 4,288 8.20
Equity securities 1,270 N/A - - - - - - 1,270 N/A
------- ----- ------- ----- ------- ----- ------ ----- ------- -----
Total securities $12,651 7.12% $41,196 7.05% $32,006 6.76% $6,592 7.38% $92,445 6.98%
======= ===== ======= ===== ======= ===== ====== ===== ======= =====
(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,
-----------------------------------------------------------------------------------------
2000 1999 1998
-------------------------- ---------------------------- ----------------------------
Percent Percent Percent
Average of Average of Average of
Balance Deposits Rate Balance Deposits Rate Balance Deposits Rate
------- -------- ---- ------- -------- ---- ------- -------- ----
Noninterest-
bearing
demand
deposits $ 20,284 11.3% -% $ 20,686 10.8% -% $ 20,533 10.6% -%
Interest-bearing
demand deposits 38,056 21.2 2.46 41,941 21.8 2.58 37,554 19.4 2.53
Savings accounts 17,928 10.0 2.05 19,710 10.3 2.47 19,594 10.1 2.52
Time deposits
accounts 103,171 57.5 5.61 109,682 57.1 5.41 115,824 59.9 5.66
-------- ------- -------- -------- ------ ----- -------- ------ ------
$179,439 100.0% 4.45% $192,019 100.0% 4.38% $193,505 100.0% 4.62%
======== ======= ======== ======== ====== ===== ======== ====== ======
The distribution of the major components of deposits as of December
31, 2000 and 1999 is summarized in the balance sheets included in the 2000
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, 2000:
Balance Percentage
----------- ----------
Maturity
Three months or less $ 6,823 27.1%
Over three months to six months 6,254 24.8
Over six months to one year 2,116 8.4
Over one year 9,977 39.7
----------- -------
Total $ 25,170 100.0%
=========== =======
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:
2000 1999 1998
-------- -------- --------
Balance at December 31 $24,638 $18,665 $15,046
Weighted average interest rate
during the year 6.06% 4.51% 4.88%
Weighted average interest rate at the
end of the year 6.05% 5.43% 4.52%
Maximum month-end balance $26,772 $18,665 $15,046
Average balance for the year 19,111 11,690 11,000
TRUST
The Company's trust department primarily services LaSalle County
and surrounding counties. At December 31, 2000, the trust department had 329
trust accounts under management, 292 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 $50.2 million at December 31, 2000, of
which $45.2 million was in discretionary accounts.
The Company, in conjunction with its trust department, also
provides farm management services. At December 31, 2000, the department
managed 45 farms. The department manages or directs approximately 8,109 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
BANCSHARES
As a bank holding company under the BHC Act, Bancshares is
registered with, and is subject to, regulation by the Federal Reserve. Among
other things, applicable statutes and regulations require Bancshares to file
annual and other reports with and furnish information to the Federal Reserve,
which may make inspections of Bancshares.
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. Bancshares currently has no formal agreement or commitments about
any such transaction. In addition, the BHC Act restricts the Bank's extension
of credit to Bancshares. 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, unless the
Federal Reserve, after due notice and opportunity for hearing, has determined
its activities 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.
Bancshares 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 Bancshares at this time has no plans
for these investments.
A bank holding company may also engage in a broader range of
financial and other activities than are permissible for bank holding
companies by electing to become a financial holding company. The Board of
Directors of Bancshares at this time has no plans to exercise this election.
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.
DIVIDENDS. The Bank may generally pay dividends on its stock as long
as their payment complies with applicable laws 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 bank is further limited by a provision of the
National Bank Act that prohibits it from
13
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. Section 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 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 some state laws and regulations, including
the Truth-in-Lending Act, the Federal Consumer Credit Protection Act, the
Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate
Settlement Procedures Act, and the Comptroller's adjustable rate mortgage
regulations. 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.
SUBSIDIARIES. National banks are authorized under federal law and
the Comptroller's regulations to engage in specified activities through
operating subsidiaries. The Bank has formed an operating subsidiary for the
purpose of entering into an agreement with an unaffiliated third party to
provide securities brokerage services to the Bank's customers. Such services
are subject to banking agency standards governing the sale of retail
nondeposit investment products. In addition, securities brokers are subject
to federal and state registration, supervision and examination requirements.
Under the structure contemplated by the Bank, the third party, and not the
Bank's subsidiary, will be securities-registered and be responsible for
compliance with all applicable laws and regulations.
14
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, 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, 2000, the Bank's Core Capital Ratio was 17.8
percent, and its Risk- Based Capital Ratio was 18.8 percent. In addition,
national banks generally must achieve and maintain a Leverage Ratio of at
least 4 percent. As of December 31, 2000, the Bank's Leverage Ratio was 10.0
percent.
CAPITAL CLASSIFICATION. Banks are subject to certain restrictions on
activities depending on their level of capital. For this purpose, banks are
divided into five different capital categories.
15
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, 2000.
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. 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 million, (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.
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, 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 "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
16
subject to "substantial supervisory concern" if it poses a substantial
probability of loss to the Bank Insurance Fund of the FDIC (the "BIF").
OPERATING STANDARDS. The Bank is subject to banking agency standards
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 Bank is
also subject to standards governing asset quality and earnings. The Bank's
failure to abide by the operating standards described in this paragraph would
be noted in the course of an examination of the Bank by federal banking
agencies, and the Bank would be required to develop a plan to achieve
compliance with the standards.
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. MOREOVER, THE COMPANY
CANNOT PREDICT WHAT NEW LEGISLATION OR REGULATIONS MIGHT BE ADOPTED OR THEIR
EFFECTS.
EMPLOYEES. As of December 31, 2000, the Company had 78 employees,
consisting of 68 full-time employees and 10 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 expired on March 30, 2000 and the Company purchased
1,346 shares, representing approximately 0.20% of its outstanding common
shares for an aggregate purchase price of $76722.
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 branches are located at 601 State Street,
Ottawa, Illinois and 2771 North Columbus Street, Ottawa, Illinois.
17
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, 2000.
18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
See page 34 of the 2000 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 2000 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 2000 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 2000 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 33 of the 2000
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, 2000 and 1999 12
Consolidated Statements of Income for the years ended
December 31, 2000, 1999, and 1998 13
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 2000, 1999, and 1998 14
19
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999, and 1998 15
Notes to the Consolidated Financial Statements 16
Parent Company Only Financial Statements 32
The portions of the 2000 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 16, 2001 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 16,
2001 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 16, 2001 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 16, 2001 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 (incorporated by reference to
Exhibit 2.1 to First Ottawa's Annual Report on Form 10-K for
the year ended December 31, 1999)
3(i) Certificate of Incorporation of First Ottawa Bancshares, Inc.
(incorporated by reference to Exhibit 3(i) to First Ottawa's
Annual Report on Form 10-K for the year ending December 31,
1999)
3(ii).1 By-laws of First Ottawa Bancshares, Inc. as adopted September
13, 2000
3(ii).2 Amendment No. 1 to By-laws of First Ottawa Bancshares, Inc.
dated March 14, 2001
*10.1 Employment Agreement for J. Brown (incorporated by reference
to Exhibit 10.1 to First Ottawa's Annual Report on Form 10-K
for the year ending December 31, 1999)
13.1 2000 Annual Report to Stockholders
21.1 Subsidiaries
24.1 Power of Attorney
(b) Reports on Form 8-K: None
* 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, 2001 By: /S/ Joachim Brown
Joachim Brown -----------------
President
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/ March 30, 2001
Chief Executive Officer
Bradley J. Armstrong* Director March 30, 2001
John L. Cantlin* Director March 30, 2001
Eugene P. Daugherity* Director March 30, 2001
Patty P. Godfrey* Director March 30, 2001
Thomas E. Haeberle* Director March 30, 2001
Donald J. Harris* Director and Executive March 30, 2001
Vice President/Chief
Operating Officer
Erika S. Kuiper* Director March 30, 2001
Thomas P. Rooney* Director March 30, 2001
William J. Walsh* Director March 30, 2001
*By: /S/ Joachim Brown Individually and as March 30, 2001
------------------- Attorney-in-Fact
Joachim Brown
EXHIBIT INDEX
============================= ========================================================== ===========================
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE*
------ ----------- -------------
============================= ========================================================== ===========================
3(ii).1 By-laws of First Ottawa Bancshares, Inc.
============================= ========================================================== ===========================
3(ii).2 Amendment No. 1 to By-laws of First Ottawa Bancshares,
Inc.
============================= ========================================================== ===========================
13.1 2000 Annual Report to Shareholders
============================= ========================================================== ===========================
21.1 Subsidiaries
============================= ========================================================== ===========================
24.1 Power of Attorney
============================= ========================================================== ===========================
* Appears only in manually signed copy
E-1