<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                   FORM 10-K

               Annual Report Pursuant to Section 13 or 15(d) of
                      The Securities Exchange Act of 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
    For the fiscal year ended     December 31, 1998
                              ------------------------------

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
    For the transition period from __________ to ___________

    Commission file number 0-14468.
                           --------

                       First Oak Brook Bancshares, Inc.
             -----------------------------------------------------
            (Exact name of registrant as specified in its charter)

            Delaware                                   36-3220778
-------------------------------                   -------------------
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                    Identification No.)

1400 Sixteenth Street, Oak Brook, Illinois                     60523
-------------------------------------------                  ---------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code (630) 571-1050
                                                   --------------

Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----

Securities registered pursuant to Section 12(g) of the Act:
                      Class A Common Stock ($2 par value)

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 and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  X   No ___
                                        ---        

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S)229.405 of this chapter) 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. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 19, 1999 was:  $82,145,467 based upon the last sales
price of the registrant's Class A Common stock at $18.25 per share as reported
by the National Association of Securities Dealers Automated Quotation System.

The number of shares outstanding of each of the registrant's classes of common
stock as of March 19, 1999: 2,933,583 shares of Common Stock and 3,675,583
shares of Class A Common Stock.

Documents incorporated by reference:  Portions of the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1998, and Proxy Statement
for its 1999 Annual Meeting of Shareholders to be filed on or about April 1,
1999 are incorporated by reference into Parts I., II. and III. hereof, to the
extent indicated in the Form 10-K Cross-Reference Index.

                        
<PAGE>
 
                        Form 10-K Cross-Reference Index

          Certain information required to be included in Form 10-K is also
          included in the 1998 Annual Report to Shareholders or in the Proxy
          Statement used in connection with the 1999 Annual Meeting of
          Shareholders to be held on May 4, 1999. The following Cross-Reference
          Index shows the page location in the 1998 Annual Report or in the
          Proxy Statement of only that information which is to be incorporated
          by reference into Form 10-K. All other sections of the 1998 Annual
          Report or the Proxy Statement are not required in Form 10-K and should
          not be considered a part thereof.

<TABLE>
<CAPTION>
                                                                                      1998       1998         1999
                                                                                      FORM      ANNUAL        PROXY
Item No.                          Part I                                              10-K      REPORT      STATEMENT
                                                                                     ---------------------------------
<S>                                                                                  <C>        <C>         <C>
1.      Business...................................................................   2-11
           Statistical Disclosure by Bank Holding Companies........................             14-30
2.      Properties.................................................................  11-12

3.      Legal Proceedings..........................................................     12

4.      Submission of Matters to a Vote of Security Holders........................     12

                                  Part II

5.      Market for Registrant's Common Equity
           and Related Stockholder Matters.........................................     13

6.      Selected Financial Data....................................................                14

7.      Management's Discussion and Analysis of
           Financial Condition and Results of Operation............................             14-30

7a.     Quantitative and Qualitative Disclosures about
           Market Risk.............................................................                24

8.      Financial Statements and Supplementary Data................................             31-48

9.      Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure.....................................     13

                                  Part III

10.     Directors and Executive Officers of the Registrant.........................                            6-7

11.     Executive Compensation.....................................................                          10-13

12.     Security Ownership of Certain Beneficial
           Owners and Management...................................................                            3-4

13.     Certain Relationships and Related Transactions.............................                              7

                                  Part IV

14.     Exhibits, Financial Statement Schedules
           and Reports on Form 8-K.................................................  15-17

        Signatures.................................................................     18
</TABLE>
<PAGE>
 
                                    PART I

ITEM 1.  BUSINESS

General
-------

First Oak Brook Bancshares, Inc. (the Company) was organized under Delaware law
on March 3, 1983, as a bank holding company under the Bank Holding Company Act
of 1956, as amended. The Company owns all of the outstanding capital stock of
Oak Brook Bank (the Bank), Oak Brook, Illinois, which is an Illinois state-
chartered bank. The bank has nine locations in DuPage County and two locations
in Cook County. Another branch is scheduled to open in LaGrange, Illinois in the
third quarter of 1999. The Company employs 293 full-time equivalent employees.

The Company has two classes of common stock, Class A Common stock and Common
stock. The Common stock is convertible into Class A Common at any time on a one-
for-one basis. The Company has authorized shares of Class A Common and Common
stock of 10,000,000 and 6,000,000, respectively.

On July 21, 1998, the Company's Board declared a 100% stock dividend on Common
and Class A Common Stock which was distributed on September 3, 1998 to
shareholders of record on August 20, 1998. All share and per share amounts
reflect this stock split effected in the form of a dividend.

As of December 31, 1998, the Company had total assets of $1,009,275,000; loans
of $631,987,000 deposits of $777,802,000, and shareholders' equity of
$77,061,000.

The business of the Company consists primarily of the ownership, supervision and
control of its subsidiary bank. The Company provides its subsidiary bank with
advice, counsel and specialized services in various fields of banking policy and
strategic planning. The Company also engages in negotiations designed to lead to
the acquisition of other banks and closely related businesses.

The Bank is engaged in the general retail and commercial banking business. The
services offered include demand, savings, and time deposits, corporate cash
management services, and commercial and personal lending products. In addition,
related products and services are offered including discount brokerage and
foreign currency sales. The Bank has a full service investment management and
trust department.

The Bank originates the following types of loans: commercial, real estate (land
acquisition and construction, commercial mortgages, residential mortgages and
home equity lines), indirect auto and consumer loans.  The extension of credit
inherently involves certain levels and types of risk (general economic

                                       2
<PAGE>
 
conditions, industry and concentration risk, interest rate risk, and credit and
default risk) which the Company manages through the establishment of lending,
credit and asset/liability management policies and procedures.

Loans originated comply with the Bank's loan policies and governmental rules,
regulations and laws. While the Bank's loan policy varies for different loan
products, the policy generally covers such items as: percentages to be advanced
against collateral, blanket or specific liens, insurance requirements, maximum
terms, down payment requirements, debt-to-income ratio, credit history and other
matters of credit concern.

The Bank's loan policy grants limited loan approval authority to designated loan
officers. Where a credit request exceeds the loan officer's approval authority,
approval by a senior lending officer and/or bank loan committee is required. The
loan policy also sets forth those credit requests that, either because of the
amount and/or type, require the approval of the bank loan committee.

The chart that follows sets forth the credit risks, loan origination procedures,
underwriting standards and lien position generally associated with the Bank's
lending in each major loan category. The major loan categories are commercial
loans; commercial real estate, construction and land acquisition loans;
residential real estate, including purchase money, refinance and home equity
loans; indirect auto loans; and consumer loans, including direct auto loans,
check credit and student loans. These loans are made generally in the Chicago
Metropolitan area and are generally secured by collateral located in the Chicago
Metropolitan area.

The chart sets forth the information generally considered in approving each
category of loans.  The collateral stated for each category is the collateral
generally required for these loans.  Each loan is reviewed on its own merits and
the information set forth in the chart does not necessarily apply to each loan
within a category.  The lien position (if any) and collateral documentation for
commercial loans and commercial real estate loans are structured specifically
for each loan.

                                       3
<PAGE>
 
<TABLE> 
<CAPTION> 
====================================================================================================================================
          LOAN TYPE
        YEAR END BAL.     PRINCIPAL                SIGNIFICANT                              MAJOR
           (000'S)        CREDIT                 LOAN ORIGINATION                        UNDERWRITING
      % OF GROSS LOANS    RISKS                    DOCUMENTATION                          STANDARDS                  LIEN POSITION
====================================================================================================================================
<S>                    <C>               <C>                                    <C>                                 <C> 
Commercial             Borrower default  Personal financial statements of       Determination of eligible and       Unsecured:
-Working capital       Industry change    guarantors                             ineligible receivables              Companies  with
-Term                  General economic  Personal tax returns of guarantors     Advances generally not to exceed     significant net
                        conditions       Business financial statements, or tax   80% of eligible collateral          worth relative
BALANCE      $108,685                     returns (if applicable)               Annual credit review                 to debt and
 %               17.2%                   Cash flow projections                  Debt to tangible net worth normally  solid
                                         Credit history                          less than 4 to 1                    operating  
                                         Mercantile reports                     Assessment of company's cash flow    history   
                                         Supplier references                     -net annual cash flow should be    Secured:  
                                         Customer references                      120% of the total estimated        Blanket first 
                                         If applicable                            annual debt service (with a        lien on key   
                                         -Collateral valuation floor)             100% floor)                        business      
                                         -Accounts receivable and accounts      Maximum length of term loans         assets        
                                          payable listing and aging              generally 7 years                   (unmonitored  
                                         -Machinery, furniture, fixtures and    Personal guaranties of controlling   or with       
                                          equipment, inventory lists             owners of smaller closely held      limited       
                                         -Pre-loan audit                         companies (full or partial)         monitoring)   
                                                                                Periodic monitoring of accounts     Secured:  
                                                                                 receivable                          Specific      
                                                                                Periodic audit for asset based       first lien on 
                                                                                 loans                               assets being
                                                                                Loan covenant restrictions           financed      
                                                                                -Other borrowings                    (including    
                                                                                -Payment of dividends                leases)       
                                                                                -Limit on owner withdrawals                        
                                                                                -Sale of company
                                                                                -Capital expenditures
                                                                                -Debt to net worth limits
                                                                                -Minimum tangible net worth
                                                                                Evidence of insurance

------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL             Borrower default  Personal financial statements of       Loans to appraised value generally  Secured:
REAL ESTATE            Industry change   guarantors                              not to exceed 80% (with a ceiling  First
                       General economic  Personal tax returns of guarantors      of 85%)                            mortgages 
BALANCE     $114,373    conditions       Business financial statements, or tax  Assessment of property's cash flow  Assignment
%               18.1%                     returns (if applicable)                -net annual cash flow should be     of rents/
                                         Cash flow projections                   120% of the total estimated         leases 
                                         Credit history                          annual debt service (with a 100%   Security
                                         Lender references                       floor)                              agreement on
                                         Appraisals                             Personal guaranties of controlling   fixtures 
                                         Environmental assessments               owners (full or partial)           Environmental
                                         Credit history of key tenants          Evidence of insurance                indemnity
                                         Financial information on key tenants   Tax and insurance escrows (if        agreement    
                                         Review of leases                        applicable)
                                         Market trends and conditions
 
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       4
<PAGE>
 
<TABLE>
<CAPTION>
====================================================================================================================================
     LOAN TYPE         
   YEAR END BAL.        PRINCIPAL                  SIGNIFICANT                               MAJOR                   
      (000'S)            CREDIT                 LOAN ORIGINATION                         UNDERWRITING                  LIEN 
  % OF GROSS LOANS        RISKS                   DOCUMENTATION                            STANDARDS                 POSITION 
====================================================================================================================================
<S>                 <C>               <C>                                    <C>                                    <C>
Construction        Project           Personal financial statements of       Land acquisition loan to value         Secured:
and Land             completion        guarantors                             generally not to exceed 50% (with     First
Acquisition         Borrower default  Personal tax returns of guarantors      a ceiling of 65%)                     mortgages
                    Industry change   Business financial statements or tax   Land development loan to value         Assignment
BALANCE  $ 41,640                      returns (if applicable)                generally not to exceed 75%            of rents/
 %            6.6%                    Cash flow projections                  Construction loan to value generally    leases   
                                      Credit history                          not to exceed 75% (with a ceiling     Assignment of
                                      Industry experience and reputation      of 85%) of retail value                unit sale   
                                      Contractor references                  Assessment of project cash flow         contracts   
                                      Lender references                      Disbursement escrows                   Assignment of
                                      Market trends and conditions           Personal guaranties (full or partial)   plans,      
                                      Project feasibility                    Evidence of insurance                   specifications
                                      -Market acceptance                     Inspection                              construction  
                                      -Project marketing strategy                                                    and service   
                                      -Engineering review                    Residential subdivision projects        contracts     
                                      Appraisals                             -Minimum unit release                  Assignment of  
                                      Environmental assessments               requirements for accelerated          developers    
                                                                              payback                               rights        
                                      Review of other current projects by    -Interest reserves (if applicable)     Environmental  
                                       developer                                                                     indemnity     
                                                                                                                     agreement     

------------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL         Borrower default  Application (including financials)     Debt to income generally not to        Secured:       
REAL ESTATE         -Reduction of     Verification of employment and income   exceed 39% gross annual income         -First        
                     income           Verification of deposits (excluding    Principal/interest/taxes/insurance       mortgages    
                    -Excessive debt    home equity)                           generally less than 28% of gross                    
BALANCE  $117,438   -Future death,    Collateral appraisal, generally two     annual income                                        
%           18.6%    disability or     appraisals for property values in     Loan to value                                         
                     divorce           excess of $500,000                    -Generally not to exceed 80% for                     
                    Decline in market Credit history                          loans under $500,000                                
                     value            Flood hazard certification             -Generally not to exceed 70%                         
                    Completion of                                             for loans greater than $500,000                     
                     construction                                            Insurance (flood, hazard)                             
                                                                             Two year job history or employment                    
                                                                              in related field                                    
                                                                             No serious prior derogatory credit                    
                                                                              history                                              
                                                                             No current delinquencies                              
                                                                                                                                   
                                                                             Secondary market loans (in addition                   
                                                                              to above):                                           
                                                                             -Loan to value generally not to                       
                                                                              exceed 95%                                           
                                                                             -Loan to values which exceed 80%                      
                                                                              require private mortgage insurance                   
                                                                             -Investor approval                                    
 
HOME EQUITY
 
BALANCE  $73,149    Same as above     Same as above                          Same as above                           -Primarily
%           11.5%                                                                                                     Second      
                                                                                                                      mortgages

------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                       5

<PAGE>
 
<TABLE> 
<CAPTION> 
====================================================================================================================================

          LOAN TYPE
        YEAR END BAL.           PRINCIPAL                     SIGNIFICANT                                MAJOR
           (000'S)               CREDIT                    LOAN ORIGINATION                          UNDERWRITING
       % OF GROSS LOANS          RISKS                      DOCUMENTATION                             STANDARDS     
====================================================================================================================================
<S>                             <C>                <C>                                     <C> 
Indirect Auto                   Borrower default   Application (with financials)           Debt to income ratio generally not to 
                                -Reduction of      Verification of employment               exceed 39% of gross annual           
BALANCE        $165,341          income             Credit history                          income                               
     %             26.1%        -Excessive debt    Evidence of insurance                   No serious prior derogatory credit    
                                -Future death,                                              history
                                 disability or                                             No current delinquencies
                                 divorce                                                   Stable employment and residence
                                Collateral value                                           Established credit, unless down
                                 decline                                                    payment * 25%
                                Casualty
 
                                Dealer             New dealerships are submitted for       New cars-
                                -Business decline   credit approval                         -invoice up to $18,000, will
                                -Industry decline  -Review dealers trade and references      finance  up to  $500 over invoice
                                -General           -Review dealer financial statements      -invoice over $18,000, will finance
                                 economic          -Mercantile report                        up to $1,000 over invoice
                                 conditions        -Annual review                          Used cars (generally not older than
                                -Fraud             -Signed dealer agreement                 4 years)-loans limited to 100% of
                                                                                            NADA loan value

------------------------------------------------------------------------------------------------------------------------------------
CONSUMER                        Borrower default   Application (with financials)           Debt to income ratio generally not to 
AUTO (DIRECT)                   -Reduction of      Verification of employment               exceed 39% of gross annual           
                                 income            Credit history                           income                              
BALANCE        $  3,386         -Excessive debt    Evidence of insurance                   No serious prior derogatory credit   
 %                   .5%        -Future death,                                              history
                                 disability or                                             No current delinquencies
                                 divorce                                                   Stable employment and residence
                                Collateral value                                           Established credit, unless down
                                 decline                                                    payment * 25%
                                Casualty
                                                                                           New cars -
                                                                                            -invoice up to $18,000, will
                                                                                             finance  up to  $500 over invoice 
                                                                                            -invoice over $18,000, will finance
                                                                                             up to  $1,000 over invoice 
                                                                                           Used cars (generally not older than
                                                                                            4 years)-loans limited to 100% of
                                                                                            NADA loan value
 
STUDENT                         Loss of            Application                             Compliance with government           
                                 Government                                                 standards                           
BALANCE        $  5,803          guaranty
%                    .9%      
 
 
OTHER
                                Various            Various                                 Various                              
BALANCE        $  2,804  
%                    .5%      

------------------------------------------------------------------------------------------------------------------------------------


<CAPTION> 
===============================================================
          LOAN TYPE          
        YEAR END BAL.        
           (000'S)           
       % OF GROSS LOANS          LIEN POSITION
===============================================================
<S>                             <C>  
Indirect Auto                   Secured, recorded lien
                                 on title
BALANCE        $165,341         Single interest
     %             26.1%         insurance
                             
---------------------------------------------------------------
CONSUMER                        Secured, recorded lien
AUTO (DIRECT)                    on title
                                Single interest
BALANCE        $  3,386          insurance
 %                   .5%     
                             
STUDENT                         Unsecured,
                                 Government guaranty
BALANCE        $  5,803      
%                    .9%     
                             
                             
OTHER                        
                                Various
BALANCE        $  2,804      
%                    .5%     
---------------------------------------------------------------
</TABLE>

*  Greater than

                                       6
<PAGE>
 
Competition
-----------

The Company and its subsidiary bank operate primarily in DuPage County,
Illinois, with nine locations, and two locations in Cook County, Illinois, one
of which is located in western Cook County and the other on Chicago's North
Shore.

At June 30, 1998, the Company's eight DuPage County, Illinois, offices (Glen
Ellyn was not opened until September 1998) held $656.9 million in deposits for
an approximate 5.8% market share in relation to the total deposits in DuPage
County commercial banks. The Company's two offices in Cook County, Illinois,
contained $85.5 million in deposits for an approximate .1% market share of Cook
County. The Company's offices are part of the Chicago banking market, as defined
by the Federal Reserve Bank of Chicago, consisting of Cook, DuPage and Lake
Counties, which at June 30, 1998, had $111.5 billion in deposits.

The Company's subsidiary bank is located in a highly competitive market facing
competition for deposits, loans and other financial services from many financial
intermediaries, including banks, savings and loan associations, finance
companies, credit unions, mortgage companies, retailers, stockbrokers, insurance
companies, mutual funds and investment companies, many of which have greater
assets and resources than the Company.

Regulation and Supervision
--------------------------

General
-------

The Company is a bank holding company subject to the restrictions and
regulations adopted under the Bank Holding Company Act of 1956, as amended (the
BHCA), and interpreted by the Board of Governors of the Federal Reserve System
(the Federal Reserve Board), and the Company is also subject to Federal
Securities Laws and Delaware Law. The BHCA requires every bank holding company
to obtain the prior approval of the Federal Reserve Board before acquiring
direct or indirect ownership or control of 5% or more of the voting shares of
any bank or bank holding company. However, no acquisition may be approved if it
is prohibited by applicable state law. The Company is examined by the Federal
Reserve Bank of Chicago.

The subsidiary bank is subject to extensive governmental regulation and periodic
regulatory reporting requirements. The regulations by various governmental
entities, as well as Federal and State laws of general application affect the
Company and the subsidiary bank in many ways including but not limited to:
requirements to maintain reserves against deposits, payment of Federal Deposit
Insurance Corporation insurance, restrictions on investments, establishment of
lending limits and payment of dividends. The subsidiary bank is primarily
supervised and examined by the Illinois Office of Banks and Real Estate and the
Federal Deposit Insurance Corporation (FDIC).

The Federal Reserve Bank examines and supervises bank holding companies pursuant
to risk-based capital adequacy guidelines. These guidelines establish a uniform
capital framework that is sensitive to risk factors, including off-balance sheet
exposures, for all federally supervised banking organizations. This can

                                       7
<PAGE>
 
impact a bank holding company's ability to pay dividends and expand its business
through the acquisition of subsidiaries if capital falls below the levels
established by these guidelines. As of December 31, 1998 the Company's Tier 1,
total risk-based capital and leverage ratios were in excess of minimum
regulatory guidelines and the subsidiary bank's capital ratios also exceed the
FDIC criteria for "well capitalized" banks. See the Company's Annual Report at
page 43 for a more detailed discussion of the Risk Based Assessment System and
the impact upon the Company and its subsidiary bank.

Federal Deposit Insurance
-------------------------

Under Federal law, the FDIC has authority to impose special assessments on
insured depository institutions, to repay FDIC borrowings from the United States
Treasury or other sources, and to establish semi-annual assessment rates for
Bank Insurance Fund (BIF) member banks to maintain the BIF at the designated
reserve ratio required by law. Effective January 1, 1999 the FDIC Assessment
Rate Schedule for BIF members ranged from zero for "well capitalized"
institutions to $.27 per $100 for "undercapitalized" institutions as set forth
in the following table:

                                   BIF RATES

<TABLE>
<CAPTION>
               --------------------------------------------------------
                  Capital               Supervisory Subgroup
                                      ---------------------------------
                   Group               A              B         C 
               --------------------------------------------------------
               <S>                    <C>            <C>       <C> 
                Well capitalized        0 cents       3 cents  10 cents
                Adequate                3            10        24
                Under capitalized      17            24        27
</TABLE>

The Funds Act also authorized the Financing Corporation (FICO) to levy annual
assessments of BIF-assessable deposits to service FICO bond obligations. On
January 4, 1999 the Company's subsidiary bank was assessed $44,253 for its
semiannual FICO payment. The BIF assessment must equal 1/5 of the FICO
assessment rate that is applied to deposits assessable by the Savings
Association Insurance Fund (SAIF). The annual assessment rates for FICO were
determined from the September 30, 1998 call reports and for BIF institutions the
rate was 1.22c per $100.

The subsidiary bank is not restricted by the limitations on Brokered Deposits
and can pass-through the $100,000 FDIC insurance coverage to each participant in
or beneficiary of a qualified employee benefit plan.

                                       8
<PAGE>
 
The Riegle/Neal Interstate Banking and Branching Efficiency Act of 1994 (The
----------------------------------------------------------------------------
Interstate Banking Act)
-----------------------

The Interstate Banking Act allowed "adequately capitalized" and "adequately
managed" bank holding companies to acquire banks in any state as of September
29, 1995. The Act also allows interstate merger transactions.
The Interstate Banking Act amends Section (d) of the Bank Holding Company Act of
1956 authorizing the Federal Reserve to approve a bank holding company's
application to acquire either control or substantial assets of a bank located
outside of the bank holding company's home state regardless of whether the
acquisition would be prohibited by state law. The Federal Reserve may approve
these transactions only for "adequately capitalized" and "adequately managed"
bank holding companies.

The Interstate Banking Act also amended the Federal Deposit Insurance Act to
allow responsible agencies to approve merger transactions between insured banks
with different home states regardless of whether the transaction is prohibited
under state law. Through interstate merger transactions, banks are able to
acquire branches of out of state banks by converting their offices into branches
of the resulting bank. The Act provides that it will be the exclusive means for
bank holding companies to obtain interstate branches. In these transactions, the
resulting bank must remain "adequately capitalized" and "adequately managed"
upon completion of the merger. The Act also states that a home state may enact a
law preventing these transactions; Illinois allows these transactions.

Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA")
------------------------------------------------------------------------------

The FIRREA has broadened the regulatory powers of federal bank regulatory
agencies. One of the provisions of FIRREA contains a "cross-guarantee" provision
which could impose liability on the Company for losses incurred by the FDIC in
connection with assistance provided to or the failure of any of the Company's
insured depository institutions. The U.S. Court of Appeals Second Circuit
recently upheld the FDIC's power to charge losses from a bank failure to another
bank in the same corporate organization. The Company, under Federal Reserve
Board policy, is a source of financial strength to its subsidiary bank and is
expected to commit resources to support the subsidiary bank. As a result, the
Company could be required to commit resources to its subsidiary bank in
circumstances where it might not do so absent such policies.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
--------------------------------------------------------------------------

The FDICIA significantly expanded the regulatory and enforcement powers of
federal banking regulators. FDICIA gives federal banking regulators
comprehensive directions to promptly direct or require the correction of
problems of inadequately capitalized banks in a manner that is least costly to
the Federal Deposit Insurance Fund. The degree of corrective regulatory
involvement in the operations and management of banks and their holding
companies will be largely determined by the actual or anticipated 

                                       9
<PAGE>
 
capital position of the institution. See the Company's Annual Report pages 29
and 43 detailing the Company's capital position.

FDICIA also directs federal banking regulatory agencies to issue new safety and
soundness standards governing operational and managerial activities of banks and
their holding companies particularly in regard to internal controls, loan
documentation, credit underwriting, interest rate exposure, asset growth,
executive compensation and market risk sensitivity.

Year 2000
---------

See "Year 2000 Compliance" on pages 29 & 30, inclusive, of the Company's 1998
Annual Report to Shareholders, which is Incorporated herein by reference.

Other Laws and Regulations
--------------------------

Proposals that change the laws and regulations governing banks, bank holding
companies and other financial institutions are discussed in Congress, the state
legislatures and before the various bank regulatory agencies. Banks are subject
to a number of federal and state laws and regulations which have a material
impact on their business. These include, among others, state usury laws,
consumer protection laws and regulations, (e.g., the Truth in Lending Act, the
Equal Credit Opportunity Act, the Expedited Funds Availability Act, the
Community Reinvestment Act, the Truth in Savings Act), as well as the electronic
funds transfer laws, Bank Secrecy Act, environmental laws and privacy laws.

                                      10
<PAGE>
 
Statistical Disclosure by Bank Holding Companies
------------------------------------------------

See "Management Discussion and Analysis" on pages 14 through 30, inclusive, of
the Company's 1998 Annual Report to Shareholders, which is incorporated herein
by reference for the statistical disclosure by bank holding companies.

ITEM 2.  PROPERTIES

The Company's offices are located in Oak Brook, Illinois. The subsidiary bank
and its branches conduct business in both owned and leased premises. The Company
believes its facilities are suitable and adequate to operate its banking
business. For information concerning lease obligations, see Note 5 of the Notes
to Consolidated Financial Statements and lease exhibits previously filed and
incorporated by reference.

The Company and Oak Brook Bank occupy space in an eight-year old, three-story,
100,000 square foot, modern office building located at 1400 Sixteenth Street,
Oak Brook, Illinois, which is owned and operated by Oak Brook Bank. The first
                              -----
and second floors and portions of the third floor and lower level are occupied
by Oak Brook Bank. The Company leases a small portion from Oak Brook Bank. A
portion of the third floor is rented to third parties.

During 1998, Oak Brook Bank purchased property in the western Cook County suburb
of LaGrange, Illinois. Development of the site began in 1999 for the
construction of a new branch expected to open during the third quarter of 1999.
The brick building will be approximately 4,100 square feet.

In addition, Oak Brook Bank operates the following branches:

     Addison - A 26 year old, 14,500 square foot, two-story brick, colonial
     -------
     building including a full basement and attached drive-up facility in
     Addison, Illinois. The second floor is rented to third parties. This
     facility and real estate are owned by Oak Brook Bank and was originally the
                                  -----
     Heritage Bank of Addison, acquired September, 1974.

     Aurora - A one year old Federalist style building, 4,400 square feet, brick
     ------                                                                     
     with a slate roof and accentuated by a clock tower in Aurora, Illinois.
     This facility and real estate are owned by Oak Brook Bank. Opened in
                                       -----                              
     January, 1999.

     Bensenville -  Approximately 2,000 square feet of leased space in a modern,
     -----------                                       ------                   
     two-story glass building in Bensenville, Illinois. The current lease
     expires in 2001 and has three additional 5-year renewal options. Opened in
     May, 1986.

     Broadview -  A 45 year old, 6,955 square foot, one-story brick building in
     ---------                                                                 
     Broadview, Illinois. This facility and real estate are owned by Oak Brook
                                                            -----             
     Bank. Originally Liberty Bank acquired in March, 1989.

     Broadview Drive-up - Oak Brook Bank also owns a detached one-story drive-up
     ------------------                       ----                              
     facility across the street from the Broadview location.

                                      11
<PAGE>
 
     Burr Ridge - Approximately 6,600 square feet of leased space in a one-story
     ----------                                      ------
     contemporary building located in Burr Ridge, Illinois. A portion of this
     space is used for record storage. The current lease expires in 1999 and has
     five additional 3-year renewal options. Opened in October, 1988.

     Glen Ellyn - A new cape cod cottage style building, 1,100 square feet and
     ----------                                                               
     constructed of stone and stucco. The facility includes a drive-up and is
     owned by Oak Brook Bank. Opened in September, 1998.
     -----                                               

     Glenview - Approximately 1,800 square feet of leased space in a strip
     --------                                      ------                 
     shopping center in Glenview, Illinois. The current lease expires in 2002
     with an option to cancel in 1999. Opened in March, 1990.

     Lisle -  Approximately 1,300 square feet of leased space in a neighborhood
     -----                                       ------                        
    shopping center in a primarily residential section of Lisle, Illinois. A
    detached drive-up automated teller machine is also operated at this
    location. The current lease expires in 2000 and has one additional 3-year
    renewal option. Opened in October, 1985.

     Naperville - A 2,400 square foot, two-story contemporary Palladian-style
     ----------                                                                
     building with a full basement and attached drive-up facility in Naperville,
     Illinois. This facility is owned by Oak Brook Bank. Opened in June, 1988.
                                -----                                          
    
     Warrenville - Approximately 4,400 square feet of leased space on the first
     -----------                                      ------                   
     floor of a two-story tudor-style building with a full basement and attached
     drive-up facility in Warrenville, Illinois. The current lease expires in
     2003. Originally Warrenville Bank & Trust, acquired April, 1983.

ITEM 3.  LEGAL PROCEEDINGS

The Company and its subsidiary bank were not subject to any material pending or
threatened legal actions as of December 31, 1998. No such actions have arisen
subsequent to year-end.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of shareholders during the fourth
quarter of this year.

                                      12
<PAGE>
 
                                    PART II
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Class A Common Stock is listed on The Nasdaq Stock Market(R). See
"Stock Performance and Dividend Information" on page 1 and "Corporate and
Shareholder Information" on the inside back cover of the Company's 1998 Annual
Report to Shareholders which is incorporated herein by reference.

See Notes 8, 12 and 13 of the Notes to Consolidated Financial Statements on
pages 42 through 45, inclusive, of the Company's 1998 Annual Report to
Shareholders which is incorporated herein by reference.


ITEM 6.  SELECTED FINANCIAL DATA

See "Earnings Summary and Selected Consolidated Financial Data" on page 14 of
the Company's 1998 Annual Report to Shareholders, which is incorporated herein
by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

See "Management Discussion and Analysis" on pages 14 through 30, inclusive, of
the Company's 1998 Annual Report to Shareholders, which is incorporated herein
by reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

See "Interest Rate Sensitivity" on page 24 of the Company's 1998 Annual Report
to shareholders, which is incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements and related notes are on pages 31 through
48, inclusive, of the Company's 1998 Annual Report to Shareholders, which is
incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable. Information relating to this Item was previously reported on the
Company's Form 8-K filed on July 28, 1998.

                                      13
<PAGE>
 
                                    PART III
                                        
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

See "Directors and Executive Officers" on pages 6 and 7 of the Company's Proxy
Statement to be filed on or before April 1, 1999, which is incorporated herein
by reference.

ITEM 11.  EXECUTIVE COMPENSATION

See "Summary Compensation Table" and footnotes, "Five Year Performance
Comparison" and "Aggregated Option Exercises and Year-End Option Values Table"
and "Option Grants Table" on pages 10 through 13, inclusive, of the Company's
Proxy Statement to be filed on or before April 1, 1999, which is incorporated
herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See "Information Concerning Security Ownership of Certain Beneficial Owners and
Management" on pages 3 and 4 of the Company's Proxy Statement to be filed on or
before April 1, 1999, which is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "Certain Transactions" on page 7 of the Company's Proxy Statement to be
filed on or before April 1, 1999, which is incorporated herein by reference.

                                      14
<PAGE>
 
                                    PART IV
                                        
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                                                                 ANNUAL REPORT
                                                                      PAGE
                                                                      ----

(a)  1. The following financial statements are
        filed as part of this report:
 
        Annual Report to Shareholders -
          Report of Independent Auditors                                 31
          Consolidated Balance Sheets - December 31, 1998
            and 1997                                                     32
          Consolidated Statements of Income for each of
            the three years in the period ended
            December 31, 1998                                            33
          Consolidated Statements of Changes in
            Shareholders' Equity for each of the three
            years in the period ended December 31, 1998                  34
          Consolidated Statements of Cash Flows for each
            of the three years in the period ended
            December 31, 1998                                            35
          Notes to Consolidated Financial Statements                  36-48

     2. Financial statement schedules:  Other than the opinion of the
            predecessor independent auditor, filed as Exhibit 99 
            hereto, all schedules are omitted as they are not 
            applicable or information is included in the
            consolidated financial statements or the notes 
            thereto.

(b)  The following Reports on Form 8-K were filed during the last 
     quarter of the period covered by this report: None

(c)  The following exhibits are included herein:

       Exhibit (3)     Articles of Incorporation including Amendments thereto
                       and By Laws of First Oak Brook Bancshares, Inc. (Exhibit
                       3 to the Company's Form 10-Q Quarterly Report for the
                       period ended June 30, 1998, incorporated herein by
                       reference).


       Exhibit (10.1)  Loan Agreement between First Oak Brook Bancshares, Inc.
                       and LaSalle National Bank dated December 1, 1991 as
                       amended. (Exhibit 10.1 to the Company's Form 10-Q
                       Quarterly Report for the period ended June 30, 1998,
                       incorporated herein by reference).

       Exhibit (10.2)  Lease Agreement between First Oak Brook Bancshares, Inc.
                       and Oak Brook Bank dated November 8, 1991. (Exhibit 10.2
                       to the Company's Form 10-K Annual Report for the year
                       ended December 31, 1994, incorporated herein by
                       reference).

                                      15
<PAGE>
 
       Exhibit (10.3)  First Oak Brook Bancshares, Inc. Executive Deferred
                       Compensation Plan effective November 1, 1997. (Exhibit
                       10.3 to the Company's Form 10-K Annual Report for the
                       year ended December 31, 1997, incorporated herein by
                       reference).

       Exhibit (10.4)  First Oak Brook Bancshares, Inc. Employees' Stock Bonus
                       Plan as amended and restated effective July 19, 1994.
                       (Exhibit 10.4 to the Company's Form 10-K Annual Report
                       for the year ended December 31, 1994, incorporated herein
                       by reference).

       Exhibit (10.5)  First Oak Brook Bancshares, Inc. Amended and Restated
                       1987 Stock Option Plan effective September 21, 1987.
                       (Exhibit 10.5 to the Company's Form 10-K Annual Report
                       for the year ended December 31, 1994, incorporated herein
                       by reference).

       Exhibit (10.6)  Lease Agreement between Oak Brook Bank, not personally,
                       but solely as Trustee under Trust Agreement dated August
                       1, 1989 and known as Trust Number 2200 and Life Investors
                       Insurance Co. of America, an Iowa Corporation, for Suite
                       300 of the Oak Brook Bank Building. (Exhibit 10.6 to the
                       Company's Form 10-K Annual Report for the year ended
                       December 31, 1994, incorporated herein by reference).

       Exhibit (10.7)  Lease Agreement between Oak Brook Bank, not personally,
                       but solely as Trustee under Trust Agreement dated August
                       1, 1989 and known as Trust Number 2200 and CB Commercial
                       Real Estate Group, Inc., a Delaware Corporation, for
                       Suite 301 of the Oak Brook Bank Building. (Exhibit 10.7
                       to the Company's Form 10-K Annual Report for the year
                       ended December 31, 1994, incorporated herein by
                       reference).

       Exhibit (10.8)  License Agreement, between Jack Henry & Associates, Inc.
                       and First Oak Brook Bancshares, Inc. dated March 10,
                       1993. (Exhibit 10.8 to the Company's Form 10-K Annual
                       Report for the year ended December 31, 1994, incorporated
                       herein by reference).

                                      16
<PAGE>
 
       Exhibit (10.9)  Form of Transitional Employment Agreement for Eugene P.
                       Heytow, Richard M. Rieser, Jr. and Frank M. Paris.

       Exhibit (10.10) Form of Transitional Employment Agreement for Senior
                       Officers.

       Exhibit (10.11) Form of Agreement Regarding Post-Employment Restrictive
                       Covenants for Eugene P. Heytow, Richard M. Rieser, Jr.
                       and Frank M. Paris. (Exhibit 10.11 to the Company's Form
                       10-K Annual Report for the year ended December 31, 1994,
                       incorporated herein by reference).

       Exhibit (10.12) Form of Supplemental Pension Benefit Agreement for Eugene
                       P. Heytow. (Exhibit 10.12 to the Company's Form 10-K
                       Annual Report for the year ended December 31, 1994,
                       incorporated herein by reference).

       Exhibit (10.13) Form of Supplemental Pension Benefit Agreement for
                       Richard M. Rieser, Jr. (Exhibit 10.13 to the Company's
                       Form 10-K Annual Report for the year ended December 31,
                       1994, incorporated herein by reference).

       Exhibit (10.14) Senior Executive Insurance Plan. (Exhibit 10.14 to the
                       Company's Form 10-K Annual Report for the year ended
                       December 31, 1995, incorporated herein by reference).

       Exhibit (10.15) First Oak Brook Bancshares, Inc. Performance Bonus Plan
                       amended and restated effective May 7, 1996. (Exhibit
                       10.15 to the Company's Form 10-K Annual Report for the
                       year ended December 31, 1996, incorporated herein by
                       reference).

       Exhibit (13)    Annual Report to Shareholders.

       Exhibit (21)    Subsidiary of the Registrant.

       Exhibit (23.1)  Consent of KPMG LLP.

       Exhibit (23.2)  Consent of Ernst and Young LLP.
 
       Exhibit (27)    Financial Data Schedule.
 
       Exhibit (99)    Ernst & Young LLP Opinion.
 
 Exhibits 10.9 through 10.15 are management contracts or compensatory plans or
arrangements required to be filed as an Exhibit to this Form 10-K pursuant to
Item 14(c) hereof.

                                      17

<PAGE>
 
                                   SIGNATURES
                                        
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                              FIRST OAK BROOK BANCSHARES, INC.
                              --------------------------------
                                         (Registrant)

                              BY:   /S/ EUGENE P. HEYTOW
                                    --------------------------
                                    (Eugene P. Heytow, Chairman of the
                                    Board and Chief Executive Officer)

                              DATE:   March 19, 1999
                                   --------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                         Title                      Date
---------                         -----                      ----
<S>                               <C>                        <C>
/S/ EUGENE P. HEYTOW              Chairman of the Board      March 19, 1999
----------------------------                              
    Eugene P. Heytow              and Chief Executive       
                                  Officer                   
                                                          
/S/ FRANK M. PARIS                Vice Chairman of           March 19, 1999
----------------------------                              
    Frank M. Paris                the Board                 
                                                          
/S/ RICHARD M. RIESER,Jr.         President,                 March 19, 1999
----------------------------                              
    Richard M. Rieser, Jr.        Assistant Secretary,      
                                  and Director              
                                                          
/S/ MIRIAM LUTWAK FITZGERALD      Director                   March 19, 1999
----------------------------                              
    Miriam Lutwak Fitzgerald                                
                                                          
/S/ GEOFFREY R. STONE             Director                   March 19, 1999
---------------------------                               
    Geoffrey R. Stone                                     
                                                          
/S/ MICHAEL L. STEIN              Director                   March 19, 1999
---------------------------                               
    Michael L. Stein                                      
                                                          
/S/ STUART I. GREENBAUM           Director                   March 19, 1999
---------------------------                               
    Stuart I. Greenbaum                                   
                                                          
/S/ ROBERT WROBEL                 Director                   March 19, 1999
---------------------------                               
    Robert Wrobel                                         
                                                          
/S/ ROSEMARIE BOUMAN              Vice President and         March 19, 1999
---------------------------                               
    Rosemarie Bouman              Chief Financial Officer   
</TABLE>
 
                                      18