FOBB First Oak Brook Bancshares (MM)

First Oak Brook Bancshares, Inc. (NASDAQ:FOBB): 2006 Second Quarter Earnings (Unaudited) FIRST OAK BROOK BANCSHARES, INC., (NASDAQ:FOBB) announced net income for the second quarter of 2006 of $3.573 million, down from $4.455 million for the second quarter of 2005. Diluted earnings per share (EPS) were $0.35 for the second quarter of 2006 compared to $0.45 for the second quarter of 2005, down 22%. Earnings for the second quarter of 2006 included a one-time gain on the sale of artwork of $2.498 million ($1.624 million after tax). Net interest income was $11.322 million for the second quarter of 2006 compared to $13.023 million for the second quarter of 2005. The decrease in net interest income resulted from a 53 basis point decrease in the net interest margin to 2.09%, partially offset by a 9% increase in average earning assets. The growth in average earning assets included an increase in average loans of $247.1 million, partially offset by a decrease in average investments of $46.1 million. The decline in the margin was primarily the consequence of interest rates rising faster on deposits than on loans and investments. The Company recorded a provision for loan losses of $180,000 in the second quarter of 2006. No provision was recorded in the second quarter of 2005. Other income, excluding securities gains and losses, increased 57% primarily as a result of the following: -- Other operating income - up $2,442,000, or 490%, primarily due to a one-time gain on the sale of artwork of $2,498,000. -- Merchant credit card processing fees - up $420,000, or 20%. The increase is primarily due to increased volume and new customer growth. Merchant volume rose 18% to $117.2 million at June 30, 2006 from $99.5 million at June 30, 2005. Merchant outlets totaled 647 at June 30, 2006 as compared to 628 at June 30, 2005. (Related merchant credit card interchange expense was up $370,000, or 22%, as noted below.) -- Investment management and trust fees - up $94,000, or 12%. The increase is due to increases in discretionary assets under management which rose to $886.6 million, up from $772.2 million at June 30, 2005. Total trust assets under administration rose to $1.132 billion, up from $978.1 million at June 30, 2005. -- Gain on mortgages sold - up $130,000, primarily due to increased mortgage originations arising from the "Guaranteed Best Rate" program. Mortgages originated, including mortgages sold and mortgages held in the portfolio, rose 14% to $36.9 million at June 30, 2006 from $32.5 million at June 30, 2005. -- Income from sale of covered call options - down $58,000. -- Treasury management fees - down $175,000, primarily due to higher earnings credit rates (ECRs) being paid on commercial checking account balances. Treasury management clients retain the option to pay for Bank services in cash fees or by maintaining deposits in their checking accounts, or a combination of both. As rates rise, so do the ECRs offered to clients on their checking balances, reducing the amounts clients have to make up in cash fees. Total treasury management revenues from both fees and balances are up $73,000 from the comparable period. Other expenses rose 19% for 2006 primarily as a result of the following: -- Merchant credit card interchange expense - up $370,000, or 22%, primarily due to increased volume. -- Salaries and employee benefits - up $1,153,000, or 18%, primarily due to higher compensation costs (including estimated incentive compensation) and an increase in average full-time equivalent (FTE) employees. -- Occupancy and equipment - up $208,000, or 15%, primarily due to branch expansion. The Bank opened four branches in 2005 (one in March and three in October) and one in May 2006, bringing the total branches to 22. -- Professional fees - up $196,000, or 71%, primarily due to merger related advisory fees, general corporate matters, and ongoing costs arising from lawsuits related to the previously disclosed 60 W. Erie loan fraud discovered in 2002. -- Other operating expenses - up $199,000, or 35%, primarily due to loss accruals and increased directors' fees for meetings related to the pending merger with MB Financial, Inc. Six Month Earnings (Unaudited) Net income for the first six months of 2006 was $6.995 million, down from $8.735 million for the first six months of 2005. Diluted EPS were $0.69 for the first six months of 2006 compared to $0.88 for the first six months of 2005, down 22%. Earnings for the first six months of 2006 included a gain on the sale of artwork of $2.498 million ($1.624 million after tax). Earnings also reflect an income adjustment totaling $1.034 million ($672,000 after tax) related to the conversion of merchant credit card processing fees and trust fees from the cash basis to the accrual basis of accounting. Merchant credit card processing and trust fees had historically been recorded on a one-month lag, and as a result of the income adjustment, an additional month of income for these items is included in the first six months of 2006. Excluding the gain and income adjustment, diluted EPS were $0.47 per share for the first six months of 2006. Net interest income was $22.786 million for the first six months of 2006 compared to $25.838 million for the first six months of 2005. The decrease in net interest income resulted from a 53 basis point decrease in the net interest margin to 2.13%, partially offset by a 10% increase in average earning assets. The growth in average earning assets included an increase in average loans of $246.1 million, partially offset by a decrease in average investments of $50.9 million. The Company recorded a provision for loan losses of $360,000 in the first six months of 2006. No provision was recorded in the first six months of 2005. Other income, excluding securities gains and losses, increased 45% primarily as a result of the following: -- Other operating income - up $2,475,000, or 291%, primarily due to a gain on the sale of artwork during the second quarter of $2,498,000. -- Merchant credit card processing fees - up $1,678,000, which includes the income adjustment of $768,000. Without the income adjustment, merchant fees would have increased $910,000, or 25%. The increase is primarily due to increased volume and new customer growth. Merchant volume rose 20% to $216.5 million at June 30, 2006 from $179.7 million at June 30, 2005. (Related merchant credit card interchange expense was up $729,000, or 24%, as noted below.) -- Investment management and trust fees - up $464,000, which includes the income adjustment of $266,000. Without the income adjustment, investment management and trust fees would have increased $198,000, or 13%. -- Gain on mortgages sold - up $220,000, primarily due to increased mortgage originations arising from the "Guaranteed Best Rate" program. Mortgages originated, including mortgages sold and mortgages held in the portfolio, rose 13% to $57.6 million at June 30, 2006 from $51.1 million at June 30, 2005. -- Income from sale of covered call options - down $240,000, or 78%, to $66,000 in 2006 compared to $306,000 in 2005. -- Treasury management fees - down $381,000, or 20%, primarily due to higher earnings credit rates (ECRs) being paid on commercial checking account balances. Total treasury management revenues from both fees and balances are up $121,000 from the comparable period. Other expenses rose 14% for 2006 primarily as a result of the following: -- Merchant credit card interchange expense - up $729,000, or 24%, primarily due to increased volume. -- Salaries and employee benefits - up $1,414,000, or 11%, primarily due to higher compensation costs and an increase in average full-time equivalents (FTE). -- Occupancy and equipment - up $460,000, or 16%, primarily due to branch expansion. -- Professional fees - up $216,000, or 37%, primarily due to merger related advisory fees, general corporate matters, and ongoing costs arising from lawsuits related to the previously disclosed 60 W. Erie loan fraud discovered in 2002. -- Data processing fees - up $144,000, or 15%, primarily due to additional fees related to branch expansion and merchant volume growth. -- Other operating expenses - up $205,000, or 19%, primarily due to loss accruals and increased directors' fees for meetings related to the merger. Chief Executive Officer's Comments Richard M. Rieser, Jr., Company CEO said, "This has been an extremely exciting quarter with the announcement on May 2, 2006 of the proposed merger between First Oak Brook Bancshares, Inc. and MB Financial, Inc. Our companies complement each other extremely well and I am very excited about the future opportunities for the combined company, which at $8.3 billion in projected assets will be a 'top ten' bank in Chicago. "The shareholder meetings are set for August 1, 2006, and we are working with MB Financial in completing the holding company merger, which we expect to occur in the third quarter. At the same time, our bank merger teams are working diligently toward a bank integration date before year-end. "We have stayed focused during this process, growing the loan portfolio $138 million since year end while shrinking the investment portfolio as planned. "In addition, we successfully sold 23 pieces of artwork with a basis of $1.1 million from our corporate art collection for a $2.5 million gain, helping boost second quarter earnings." Assets and Equity at June 30, 2006 (Unaudited) Total assets were a record $2.362 billion at June 30, 2006, up 6% from $2.229 billion at December 31, 2005 and up 10% from $2.150 billion at June 30, 2005. Shareholders' equity was $134.9 million at June 30, 2006 compared to $134.6 million at December 31, 2005 and $136.3 million at June 30, 2005. Book value per share was $13.41 at June 30, 2006 compared to $13.68 at December 31, 2005, down due to an increase in outstanding shares resulting from exercised options. Equity includes an accumulated other comprehensive loss of $14.911 million at June 30, 2006 related to a decline in value of the Company's investment portfolio, compared to $7.607 million of other comprehensive loss at December 31, 2005. Other comprehensive income or loss rises or falls with increases or decreases in the market value of that portion of the investment portfolio which is classified as available-for-sale. Oak Brook Bank's capital ratios met the "well capitalized" criteria of the FDIC. "Well capitalized" status reduces regulatory burdens and lessens FDIC insurance assessments. Asset Quality (Unaudited) Net charge-offs at June 30, 2006 totaled $148,000 compared to $30,000 at June 30, 2005. In 2006, charge-offs of $391,000 and recoveries of $243,000 relate primarily to the Company's indirect vehicle portfolio. In 2005, charge-offs of $242,000 related primarily to the Company's indirect vehicle loan portfolio; recoveries totaled $212,000, of which $126,000 related to the Company's indirect vehicle portfolio, $32,000 was restitution from the 60 W. Erie loan fraud and $39,000 was a recovery on a commercial loan charged off in 2002. As of June 30, 2006, the Company's allowance for loan losses stood at $9.02 million, or .62% of loans outstanding, compared to $8.81 million, or .67% of loans outstanding, at December 31, 2005. At June 30, 2006, nonperforming loans (including nonaccrual loans of $292,000 and loans past due greater than 90 days of $823,000) were $1,115,000, compared to $797,000 at December 31, 2005. At June 30, 2006, nonperforming assets totaled $1,298,000, up from $900,000 at December 31, 2005. Nonperforming assets include nonperforming loans of $1,115,000 and repossessed vehicles held for sale of $183,000. There was no balance in OREO at June 30, 2006 due to the completed sales of all 24 units and 53 parking spaces at the 60 W. Erie condominium project. The Company is maintaining a warranty reserve to pay for any known or anticipated obligations at 60 W. Erie. The Bank remains the plaintiff in a number of civil lawsuits brought against various individuals and entities which arose as a result of the fraud perpetrated by original developers of this property. The amount and timing of any recoveries from the government-mandated restitution or the civil lawsuits cannot be ascertained at this time. Expanding Branch Network Oak Brook Bank currently operates 22 banking offices, 17 in the western suburbs of Chicago, three in the northern suburbs of Chicago, one at Huron and Dearborn Streets in downtown Chicago, and its newly opened office in the southwest suburb of Homer Glen. In addition, the Bank operates an Internet branch at www.obb.com. The Bank has announced the planned opening of one additional office in Oak Lawn (expected to open in late 2006) also in the south suburbs of Chicago. The Bank continues to evaluate branch expansion opportunities in the greater Chicago area. Shareholder Information The Company's common stock trades on the Nasdaq Stock Market(R) under the symbol FOBB. The Company is holding a special meeting of shareholders on August 1, 2006 to consider and approve the Agreement and Plan of Merger with MB Financial, Inc. Eighteen firms make a market in the Company's Common stock. The following seven firms provide research coverage: Howe Barnes Investments, Inc.; Sandler, O'Neill & Partners; Stifel Nicolaus & Co.; Keefe, Bruyette & Woods, Inc.; FTN Financial Securities Corp.; A.G. Edwards; and Sidoti & Co. At our Web site www.firstoakbrook.com you will find shareholder information including this press release, other documents related to the proposed merger between First Oak Brook Bancshares, Inc. and MB Financial, Inc., and electronic mail boxes. You will also have the option of directly linking to additional financial information filed by the Company with the SEC. The consolidated balance sheets, income statements, and selected financial data are enclosed. Forward-Looking Statements This release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and this statement is included for purposes of invoking these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, can generally be identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain and actual results may differ materially from the results projected in forward-looking statements due to various factors. These risks and uncertainties include, but are not limited to the following: the requisite shareholder and regulatory approvals necessary to complete the proposed merger with MB Financial, Inc. might not be obtained, fluctuations in market rates of interest and loan and deposit pricing; a deterioration of general economic conditions in the Company's market areas; legislative or regulatory changes; adverse developments in our loan or investment portfolios; the assessment of the provision and reserve for loan losses; significant increases in competition or changes in depositor preferences or loan demand, difficulties in identifying attractive branch sites or other expansion opportunities, or unanticipated delays in regulatory approval or construction buildout and difficulties in attracting and retaining qualified personnel. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update publicly any of these statements in light of future events except as may be required in subsequent periodic reports filed with the Securities and Exchange Commission. First Oak Brook Acquisition On May 1, 2006, MB Financial, Inc., Chicago, IL (MBFI), agreed to acquire the Company in a stock and cash merger valued at approximately $372 million, exclusive of stock options. Upon completion of the proposed merger, MBFI, on a proforma basis will have assets of $8.4. MBFI will be operating from 62 offices, and will become a "top ten" bank in the Chicago market. In the transaction, the Company's shareholders will receive, in exchange for each share of First Oak Brook common stock they hold, consideration with a value equal to the sum of (1) 0.8304 multiplied by the average of the closing prices of MBFI's common stock for the five consecutive trading days ending on the trading day before the date of completion of the merger and (2) $7.36. Each First Oak Brook shareholder will be entitled to elect to receive their merger consideration in the form of MBFI's common stock, cash or a combination of both, subject to limitations and prorations such that the aggregate merger consideration will be paid approximately 80% in MBFI's common stock and approximately 20% in cash. The total number of shares MBFI will issue and the total amount of cash MBFI will pay in the transaction are approximately 8.4 million shares and $74.0 million, respectively, subject to adjustment as provided in the merger agreement. The transaction is currently expected to be completed in the third quarter of 2006, subject to the customary closing conditions, the receipt of all regulatory approvals, the approval of MBFI stockholders of the issuance of the shares of MBFI's common stock in the transaction, and the approval of the shareholders of First Oak Brook. Additional Information About the Proposed Merger with MB Financial, Inc. MB Financial, Inc. has filed a registration statement on Form S-4 with the Securities and Exchange Commission (the "SEC") in connection with the proposed merger of MB Financial, Inc. and First Oak Brook. The registration statement includes a joint proxy statement of MB Financial and First Oak Brook that also constitutes a prospectus of MB Financial, which was sent to the stockholders of MB Financial and First Oak Brook on or about June 26, 2006. Stockholders are advised to read the joint proxy statement/prospectus because it contains important information about MB Financial, First Oak Brook and the proposed transaction. In addition, these documents and other documents relating to the merger filed by MB Financial and First Oak Brook can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing MB Financial's website at www.mbfinancial.com under the tab "Investor Relations" and then under "SEC Filings" or by accessing First Oak Brook's website at www.firstoakbrook.com under the tab "SEC Filings." Alternatively, these documents can be obtained free of charge from MB Financial upon written request to MB Financial, Inc., Secretary, 6111 North River Road, Rosemont, Illinois 60018 or by calling (847) 653-1992, or from First Oak Brook, upon written request to First Oak Brook Bancshares, Inc., Rosemarie Bouman, 1400 Sixteenth Street, Oak Brook, Illinois 60523, or by calling (630) 571-1050, extension 258. This press release shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. -0- *T FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Unaudited) June 30, December 31, June 30, 2006 2005 2005 -------------------------------------- (Dollars in thousands) Assets Cash and due from banks $41,781 $37,445 $35,427 Fed funds sold and interest- bearing deposits with other banks 12,498 3,316 41,409 Investment securities: Held-to-maturity, at amortized cost 34,399 33,118 37,554 Available-for-sale, at fair value 702,819 738,277 711,027 Trading, at fair value 901 924 907 Non-marketable securities - FHLB stock 15,615 20,378 19,941 ------------ ------------ ------------ Total investment securities 753,734 792,697 769,429 Loans: Commercial 121,173 130,772 130,808 Syndicated 89,209 63,272 64,389 Construction 150,336 122,689 111,675 Commercial mortgage 320,030 279,018 258,145 Residential mortgage 140,854 130,819 125,643 Home equity 169,203 158,279 158,546 Indirect auto 354,538 333,863 303,386 Indirect Harley Davidson 85,255 71,341 65,673 Other consumer 20,273 22,211 8,548 ------------ ------------ ------------ Total loans, net of unearned income 1,450,871 1,312,264 1,226,813 Allowance for loan losses (9,024) (8,812) (8,516) ------------ ------------ ------------ Net loans 1,441,847 1,303,452 1,218,297 Other real estate owned, net of valuation reserve - 15 936 Premises and equipment, net of accumulated depreciation 41,948 40,684 37,024 Bank owned life insurance 26,351 25,853 25,349 Other assets 44,245 25,830 21,989 ------------ ------------ ------------ Total assets $2,362,404 $2,229,292 $2,149,860 ============ ============ ============ FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Unaudited) June 30, December 31, June 30, 2006 2005 2005 -------------------------------------- (Dollars in thousands) Liabilities Noninterest-bearing demand deposits $262,953 $278,667 $279,506 Interest-bearing deposits: Savings deposits and NOW accounts 251,364 258,683 258,112 Money market accounts 251,490 267,060 210,446 Time deposits: Under $100,000 508,780 493,443 423,505 $100,000 and over 639,756 585,829 643,153 ------------ ------------ ------------ Total interest-bearing deposits 1,651,390 1,605,015 1,535,216 ------------ ------------ ------------ Total deposits 1,914,343 1,883,682 1,814,722 Fed funds purchased and securities sold under agreements to repurchase 80,784 31,531 24,370 Treasury, tax and loan demand notes 4,459 6,472 5,478 FHLB of Chicago borrowings 173,873 133,888 128,903 Junior subordinated notes issued to capital trusts 23,713 23,713 23,713 Other liabilities 30,318 15,419 16,388 ------------ ------------ ------------ Total liabilities 2,227,490 2,094,705 2,013,574 Shareholders' equity: Preferred stock - - - Common stock 21,850 21,850 21,850 Surplus 10,818 9,021 8,186 Accumulated other comprehensive loss (14,911) (7,607) (632) Retained earnings 127,848 124,455 120,104 Less: cost of shares in treasury (10,691) (13,132) (13,222) ------------ ------------ ------------ Total shareholders' equity 134,914 134,587 136,286 ------------ ------------ ------------ Total liabilities and shareholders' equity $2,362,404 $2,229,292 $2,149,860 ============ ============ ============ FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months ended Six months ended (In thousands except June 30, % June 30, % per share data) 2006 2005 Change 2006 2005 Change ------------------------ ----------------------- Interest and dividend income: Loans $22,021 $15,713 40 $41,480 $29,575 40 Investment securities: U.S. Treasuries and Government sponsored enterprises 7,658 7,456 3 15,275 15,079 1 State and municipal obligations 445 439 1 863 864 (0) Corporate and other securities 616 822 (25) 1,298 1,660 (22) Fed funds sold and interest-bearing deposits with other banks 239 251 (5) 849 377 125 --------- -------- -------- -------- Total interest and dividend income 30,979 24,681 26 59,765 47,555 26 Interest expense: Savings deposits and NOW accounts 1,350 869 55 2,555 1,724 48 Money market accounts 2,127 1,047 103 4,309 1,688 155 Time deposits 12,538 7,812 60 23,263 14,377 62 Fed funds purchased and securities sold under agreements to repurchase 1,076 223 383 1,351 418 223 Treasury, tax and loan demand notes 75 63 19 112 74 51 FHLB of Chicago borrowings 1,921 1,157 66 4,272 2,523 69 Junior subordinated notes issued to capital trusts 570 487 17 1,117 913 22 --------- -------- -------- -------- Total interest expense 19,657 11,658 69 36,979 21,717 70 --------- -------- -------- -------- Net interest income 11,322 13,023 (13) 22,786 25,838 (12) Provision for loan losses 180 - (a) 360 - (a) --------- -------- -------- -------- Net interest income after provision for loan losses 11,142 13,023 (14) 22,426 25,838 (13) FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months ended Six months ended (In thousands except June 30, % June 30, % per share data) 2006 2005 Change 2006 2005 Change ------------------------ ----------------------- Other income: Service charges on deposit accounts: Treasury management 734 909 (19) 1,485 1,866 (20) Retail and small business 325 317 3 638 582 10 Investment management and trust fees 856 762 12 1,960 1,496 31 Merchant credit card processing fees 2,476 2,056 20 5,385 3,707 45 Gains on mortgages sold, net 317 187 70 495 275 80 Increase in cash surrender value of bank owned life insurance 251 247 2 498 491 1 Income from sale of covered call options - 58 (100) 66 306 (78) Securities dealer income 92 57 61 171 92 86 Other operating income 2,940 498 490 3,326 851 291 Net investment securities gains (losses) - 135 (a) (71) 298 (a) --------- -------- -------- -------- Total other income 7,991 5,226 53 13,953 9,964 40 Other expenses: Salaries and employee benefits 7,444 6,291 18 14,202 12,788 11 Occupancy 1,030 859 20 2,100 1,735 21 Equipment 594 557 7 1,168 1,073 9 Data processing 589 494 19 1,127 983 15 Professional fees 472 276 71 798 582 37 Postage, stationery and supplies 334 282 18 622 523 19 Advertising and business development 706 706 0 1,271 1,217 4 Merchant credit card interchange 2,070 1,700 22 3,791 3,062 24 Other operating expense 769 570 35 1,295 1,090 19 --------- -------- -------- -------- Total other expense 14,008 11,735 19 26,374 23,053 14 --------- -------- -------- -------- Income before income taxes 5,125 6,514 (21) 10,005 12,749 (22) Income tax expense 1,552 2,059 (25) 3,010 4,014 (25) --------- -------- -------- -------- Net income $3,573 $4,455 (20) $6,995 $8,735 (20) ========= ======== ======== ======== Diluted earnings per share $0.35 $0.45 (22) $0.69 $0.88 (22) ========= ======== ======== ======== (a) Percentage change information not meaningful. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED) (In thousands Three months ended Six months ended except per June 30, % June 30, % share data) 2006 2005 Change 2006 2005 Change ----------------------------- ----------------------------- AVERAGE BALANCES: Loans, net of unearned income $1,410,622 $1,163,565 21 $1,368,715 $1,122,570 22 Investment securities 768,902 814,973 (6) 778,701 829,603 (6) Earning assets 2,199,390 2,014,411 9 2,183,934 1,980,874 10 Total assets 2,325,337 2,125,483 9 2,306,081 2,094,268 10 Demand deposits 259,485 277,098 (6) 266,299 274,129 (3) Total deposits 1,876,662 1,779,878 5 1,867,678 1,740,076 7 Interest bearing liabil- ities 1,912,631 1,701,787 12 1,889,038 1,673,048 13 Shareholders' equity 134,995 131,946 2 134,862 132,503 2 COMMON STOCK DATA: Earnings per share: Basic 0.36 0.45 (20) 0.70 0.89 (21) Diluted 0.35 0.45 (22) 0.69 0.88 (22) Weighted average shares outstanding: Basic 10,061,868 9,802,540 3 9,982,115 9,821,210 2 Diluted 10,136,048 9,946,913 2 10,073,723 9,976,629 1 Cash dividends paid per share $0.18 $0.18 0 $0.36 $0.34 6 Market price at period end $37.00 $28.22 31 Tangible book value per share $13.41 $13.68 (2) Price to 2.76x 2.06x book ratio 34 Price to 25.00x 15.42x earnings ratio (1) 62 Period end shares outstand- ing 10,061,377 9,794,170 3 FINANCIAL RATIOS Return on average assets (2) 0.62% 0.84% (26) 0.61% 0.84% (27) Return on average shareholders' equity (2) 10.62% 13.54% (22) 10.46% 13.29% (21) Overhead ratio (2) 1.10% 1.30% (15) 1.15% 1.33% (14) Efficiency ratio (2) 72.53% 64.31% 13 71.79% 64.39% 11 Net interest margin on average earning assets (2, 3) 2.09% 2.62% (20) 2.13% 2.66% (20) Net interest spread (2, 3) 1.56% 2.19% (29) 1.60% 2.25% (29) Dividend payout ratio (2) 51.16% 39.26% 30 51.50% 40.39% 28 -------- (1) Calculated using the end of period market price divided by the last twelve months diluted earnings of $1.48 per share in 2006 and $1.83 per share in 2005. (2) Annualized ratio. (3) Tax equivalent basis. The net interest margin calculations include the effects of tax equivalent adjustments for tax exempt loans and investment securities using a tax rate of 35% in 2006 and 2005. Tax equivalent interest income for the three months ended June 30, 2006 and 2005 includes a tax equivalent adjustment of $152 and $140, respectively. Tax equivalent interest income for the six months ended June 30, 2006 and 2005 includes a tax equivalent adjustment of $290 and $274, respectively. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED) June 30, December 31, June 30, (Dollars in thousands) 2006 2005 2005 -------------------------------------- CAPITAL RATIOS Company Consolidated $172,824 $165,180 $159,560 Tier 1 capital ratio 9.90% 10.23% 10.64% $181,849 $173,992 $168,077 Total risk-based capital ratio 10.41% 10.77% 11.20% $172,824 $165,180 $159,560 Capital leverage ratio 7.34% 7.36% 7.45% Oak Brook Bank (minimum for "well capitalized"): $169,558 $152,688 $147,517 Tier 1 capital ratio (6%) 9.81% 9.51% 9.91% $178,583 $161,500 $156,034 Total risk-based capital ratio (10%) 10.33% 10.06% 10.48% $169,558 $152,688 $147,517 Capital leverage ratio (5%) 7.23% 6.85% 6.93% TRUST ASSETS Discretionary assets under management $886,559 $832,816 $772,153 Total assets under administration 1,131,751 1,057,098 978,053 ASSET QUALITY RATIOS Nonperforming loans $1,115 $797 $161 Nonperforming assets (1) 1,298 900 1,190 Nonperforming loans to total loans 0.08% 0.06% 0.01% Nonperforming assets to total assets 0.05% 0.04% 0.06% Net charge-offs to average loans (annualized) 0.02% 0.01% 0.01% Allowance for loan losses to total loans 0.62% 0.67% 0.69% Allowance for loan losses to 8.09x 11.06x 52.90x nonperforming loans ROLLFORWARD OF ALLOWANCE FOR LOAN LOSSES Balance at January 1 $8,812 $8,546 Charge-offs during the period: Commercial loans - (1) Indirect vehicle loans (389) (237) Consumer loans (2) (4) ------------- ------------ Total charge-offs (391) (242) ------------- ------------ Recoveries during the period: Commercial loans - 39 Construction, land acquisition and development loans - 32 Indirect vehicle loans 241 126 Consumer loans 2 15 ------------- ------------ Total recoveries 243 212 ------------- ------------ Net (charge-offs) recoveries during the period (148) (30) Provision for loan losses 360 - ------------- ------------ Allowance for loan losses at June 30 $9,024 $8,516 ============= ============ (1) Includes nonperforming loans, OREO and repossessed vehicles. FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME (UNAUDITED) 2006 2005 ----------------- ----------------------------------- Second First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Quarter -------- -------- -------- -------- -------- -------- (In thousands except per share data) Interest income $30,979 $28,786 $28,233 $26,266 $24,681 $22,874 Interest expense 19,657 17,322 15,431 13,548 11,658 10,059 -------- -------- -------- -------- -------- -------- Net interest income 11,322 11,464 12,802 12,718 13,023 12,815 Provision for loan losses 180 180 180 180 - - Other income 7,991 5,962 4,891 5,349 5,226 4,738 Other expense 14,008 12,366 12,026 12,071 11,735 11,318 -------- -------- -------- -------- -------- -------- Income before income taxes 5,125 4,880 5,487 5,816 6,514 6,235 Income tax expense 1,552 1,458 1,653 1,752 2,059 1,955 -------- -------- -------- -------- -------- -------- Net income $3,573 $3,422 $3,834 $4,064 $4,455 $4,280 ======== ======== ======== ======== ======== ======== Basic earnings per share $0.36 $0.35 $0.39 $0.41 $0.45 $0.43 ======== ======== ======== ======== ======== ======== Diluted earnings per share $0.35 $0.34 $0.38 $0.41 $0.45 $0.43 ======== ======== ======== ======== ======== ======== ROA (1) 0.62% 0.61% 0.69% 0.74% 0.84% 0.84% ROE (1) 10.62% 10.30% 11.45% 11.86% 13.54% 13.04% Net interest margin (1) 2.09% 2.17% 2.44% 2.48% 2.62% 2.70% ----------------- (1) Annualized ratio. *T