##### Table of Contents









UNITED STATES


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


For the fiscal year ended December 31, 2004


Commission file number 0-14468





FIRST OAK BROOK BANCSHARES, INC.


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

1400 Sixteenth Street, Oak Brook, IL 60523 - Telephone
Number (630) 571-1050


Securities registered pursuant to Section 12(b) of the
Act:




Securities Registered Pursuant to Section 12(g) of the
Act:


Common Stock, $2.00 par value


Preferred Share Purchase Rights





X


X


X




Documents incorporated by reference












---










Form 10-K Table of Contents


|                                            |  |                                                                                                                      |    |        |    | 
|------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | -- | ------ | -- | 
|                                            |  |                                                                                                                      |    | Page   |   
|                                            |  |                                                                                                                      |    | Number |   
|                                            |  |                                                                                                                      |    |        |   
|PART I                                     
|                                           
|Item 1                                      |  | Business and Statistical Disclosure by Bank
    Holding Companies                                                    |    |        | 3  | 
|Item 2                                      |  | Properties                                                                                                           |    |        | 10 | 
|Item 3                                      |  | Legal Proceedings                                                                                                    |    |        | 11 | 
|Item 4                                      |  | Submission of Matters to a Vote of Security
    Holders                                                              |    |        | 11 | 
|PART II                                    
|                                           
|Item 5                                      |  | Market for Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities |    |        | 12 | 
|Item 6                                      |  | Selected Financial Data                                                                                              |    |        | 14 | 
|Item 7                                      |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operation                             |    |        | 16 | 
|Item 7A                                     |  | Quantitative and Qualitative Disclosures
    about Market Risks                                                      |    |        | 52 | 
|Item 8                                      |  | Consolidated Financial Statements and
    Supplementary Data                                                         |    |        | 53 | 
|Item 9                                      |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |    |        | 85 | 
|Item 9A                                     |  | Controls and Procedures                                                                                              |    |        | 85 | 
|Item 9B                                     |  | Other Information                                                                                                    |    |        | 85 | 
|PART III                                   
|                                           
|Item 10                                     |  | Directors and Executive Officers of the
    Registrant                                                               |    |        | 85 | 
|Item 11                                     |  | Executive Compensation                                                                                               |    |        | 85 | 
|Item 12                                     |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Shareholder Matters                   |    |        | 86 | 
|Item 13                                     |  | Certain Relationships and Related
    Transactions                                                                   |    |        | 86 | 
|Item 14                                     |  | Principal Accountant Fees and Services                                                                               |    |        | 86 | 
|PART IV                                    
|                                           
|Item 15                                     |  | Exhibits and Financial Statement
    Schedules                                                                       |    |        | 86 | 
|Signatures                                  |  |                                                                                                                      | 89 |       
|Form of Stock Option Agreement             
|Form of Restricted Stock Unit              
|Form of Agreement Regarding Confidentiality
|Subsidiaries                               
|Consent of KPMG LLP                        
|Certification Pursuant to Section 302 - CEO
|Certification Pursuant to Section 302 - CFO
|Certification Pursuant to Section 906      
|Certification Pursuant to Section 906 - CFO



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##### Table of Contents






PART I







|        |                                                                  
|------- | -----------------------------------------------------------------
|ITEM 1. | Business and Statistical Disclosure by Bank Holding
    Companies

General










| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | FOBB Statutory Trust I, FOBB Statutory Trust II and FOBB
    Statutory Trust III: These subsidiaries were created in
    2000, 2002 and 2003, respectively, for the purpose of raising
    capital through participation in pooled trust preferred
    offerings. In accordance with new accounting guidelines, the
    statutory trust subsidiaries were deconsolidated on
    January 1, 2004. See Note 1 to the Companys
    financial statements under Item 8 of this Form 10-K
    for more information.
|
| | First Oak Brook Capital Markets, Inc.
    (FOBCM): FOBCM was incorporated in April 2004
    and in January 2005, obtained approval to operate as a
    broker/dealer member of the National Association of Securities
    Dealers, Inc. (NASD). During the second quarter of
    2005, FOBCM will assume the current securities transaction
    activities of the investment sales center of the Bank and will
    be able to engage in expanded securities trading and
    underwriting activities.      





| |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Oak Real Estate Development Corporation: This subsidiary
    was formed in 2000 to acquire, develop and rehabilitate single
    family and multifamily properties in Illinois.                                                                                                                                                                                                                                                
|
| | West Erie, LLC: This subsidiary was formed in 2002 solely
    to develop and market a luxury condominium project acquired by
    the Bank and held in Other Real Estate Owned. See Asset
    Quality in Item 7 of this Form 10-K for more
    information.                                                                                                                                                                  
|
| | OBB Real Estate Holdings, LLC and OBB Real Estate
    Investments, LLC: OBB Real Estate Holdings, LLC, a
    wholly-owned subsidiary of the Bank, owns substantially all the
    shares of OBB Real Estate Investments, LLC. These subsidiaries
    were formed in October 2003 as part of an initiative to enhance
    earnings by reducing expenses and to provide alternative methods
    of raising capital in the future.



3



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800-536-3000. www.obb.com






Competition






4



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Available Information


www.firstoakbrook.com.


Regulation and Supervision


General




Bank Holding Company Regulation




Minimum Capital Requirements.




| |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Tier 1, or core, capital consists of the sum
    of: common shareholders equity; qualifying noncumulative
    perpetual preferred stock; qualifying cumulative perpetual
    preferred stock (subject to some limitations); and minority
    interests in the common equity accounts of consolidated
    subsidiaries, less goodwill and specified intangible assets.                                                      
|
| | Tier 2, or supplementary, capital consists of
    the sum of: the allowance for loan losses; perpetual preferred
    stock and related surplus; hybrid capital instruments;
    unrealized holding gains on equity securities; perpetual debt
    and mandatory convertible debt securities; term subordinated
    debt, including related surplus; and intermediate-term preferred
    stock, including related securities.



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Acquisitions.




Interstate Banking and Branching Legislation.


Ownership Limitations.


Dividends.




6



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Bank Regulation






Dividends.




Federal Reserve System.


7



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Standards for Safety and Soundness.


Prompt Corrective Action.




Insurance of Deposit Accounts.


8



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Community Reinvestment.




Bank Secrecy Act; USA PATRIOT Act.


Compliance with Consumer Protection Laws.


9



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Enforcement Actions.






Impact of the Gramm-Leach-Bliley Act.













|        |           
|------- | ----------
|ITEM 2. | Properties



10



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|        |                  
|------- | -----------------
|ITEM 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|ITEM 4. | Submission Of Matters To A Vote Of Security Holders



11



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PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|ITEM 5. | Market For Registrants Common Equity, Related
    Shareholder Matters and Issuer Purchases of Equity
    Securities

FOBB


Stock
Data(1)


|                   |  |           |     |  |           |   |      |       |  |   |              |  |         |               |       |  |           |   |       |  |  |   |       | 
|------------------ |  | --------- | --- |  | --------- | - | ---- | ----- |  | - | ------------ |  | ------- | ------------- | ----- |  | --------- | - | ----- |  |  | - | ----- | 
|                   |  | Per Share |    
|                   |  |           |    
|                   |  | Diluted   |     |  |          
|                   |  | Net       |     |  | Dividends |   |      | Book  |  |   |              |  | Quarter |              
|Quarter Ended      |  | Earnings  |     |  | Paid      |   |      | Value |  |   | Low Price(2) |  |         | High Price(2) |       |  | End Price |  
|                   |  |           |     |  |           |   |      |       |  |   |              |  |         |               |       |  |           |  
|December 31, 2004  |  | $         | .49 |  |           | $ | .16  |       |  | $ | 13.33        |  |         | $             | 31.09 |  |           | $ | 33.47 |  |  | $ | 32.41 | 
|September 30, 2004 |  |           | .46 |  |           |   | .16  |       |  |   | 13.11        |  |         |               | 29.40 |  |           |   | 31.29 |  |  |   | 30.84 | 
|June 30, 2004      |  |           | .48 |  |           |   | .16  |       |  |   | 11.73        |  |         |               | 28.25 |  |           |   | 31.99 |  |  |   | 30.30 | 
|March 31, 2004     |  |           | .48 |  |           |   | .14  |       |  |   | 13.09        |  |         |               | 29.55 |  |           |   | 33.70 |  |  |   | 30.51 | 
|December 31, 2003  |  |           | .47 |  |           |   | .14  |       |  |   | 12.12        |  |         |               | 26.00 |  |           |   | 32.00 |  |  |   | 30.01 | 
|September 30, 2003 |  |           | .47 |  |           |   | .107 |       |  |   | 11.88        |  |         |               | 22.55 |  |           |   | 27.00 |  |  |   | 24.78 | 
|June 30, 2003      |  |           | .47 |  |           |   | .107 |       |  |   | 12.65        |  |         |               | 19.84 |  |           |   | 21.99 |  |  |   | 21.99 | 
|March 31, 2003     |  |           | .46 |  |           |   | .095 |       |  |   | 11.73        |  |         |               | 18.95 |  |           |   | 20.88 |  |  |   | 20.26 | 






|    |                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------
|(1) | Common Stock data has been restated to give effect to the
    three-for-two stock split effective in August 2003.
|(2) | The prices shown represent the high and low closing sales prices
    for the quarter.                            

12



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Issuer Purchases of Equity Securities




|                  |         |              |        |  |                |                     |                     |                 |                    |                  |                    |  |  |  |         |  | 
|----------------- | ------- | ------------ | ------ |  | -------------- | ------------------- | ------------------- | --------------- | ------------------ | ---------------- | ------------------ |  |  |  | ------- |  | 
|                  |         |              |        |  |                | Total Number        |                     |                 | Maximum Number     |                 
|                  |         |              |        |  |                | of Shares Purchased |                     |                 | of Shares that may |                 
|                  |         | Total Number |        |  |                |                     | as Part of Publicly |                 |                    | yet be Purchased |                   
|                  |         | of Shares    |        |  | Average Price  |                     |                     | Announced Plans |                    |                  | under the Plans or | 
|Period            |         | Purchased(2) |        |  | Paid per Share |                     |                     | or Programs(2)  |                    |                  | Programs(1)        | 
|                  |         |              |        |  |                |                     |                     |                 |                    |                  |                    | 
|October 1, 2004   |         |              |        |  |                |                     |                     |                 |                    |                  |                    |  |  |  |         | 
|                  | through |              |        |  |                |                     |                     |                 |                    |                  |                    |  |  |  |         |  | 
|October 31, 2004  |         |              | 11,653 |  |                | $                   | 30.84               |                 |                    |                  | 11,653             |  |  |  | 116,237 | 
|November 1, 2004  |         |              |        |  |                |                     |                     |                 |                    |                  |                    |  |  |  |         | 
|                  | through |              |        |  |                |                     |                     |                 |                    |                  |                    |  |  |  |         |  | 
|November 30, 2004 |         |              |       |  |                |                     |                    |                 |                    |                  |                   |  |  |  | 116,237 | 
|December 1, 2004  |         |              |        |  |                |                     |                     |                 |                    |                  |                    |  |  |  |         | 
|                  | through |              |        |  |                |                     |                     |                 |                    |                  |                    |  |  |  |         |  | 
|December 31, 2004 |         |              |       |  |                |                     |                    |                 |                    |                  |                   |  |  |  | 116,237 | 
|                  |         |              |        |  |                |                     |                     |                 |                    |                  |                    | 
|Total             |         |              | 11,653 |  |                | $                   | 30.84               |                 |                    |                  | 11,653             |  |  |  | 116,237 | 






|    |                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In 2000, the Board of Directors approved a stock repurchase
    program which authorizes the Company to repurchase up to 300,000
    shares of common stock through January 2006 (as extended in
    August 2003 and again in January 2005). At December 31,
    2004, there are 116,237 shares remaining available for
    repurchases under this program.
|(2) | Does not include shares tendered to pay withholding tax or the
    exercise price of an option.                                                                                                                                                                                                                                                            

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|        |                        
|------- | -----------------------
|ITEM 6. | Selected Financial Data



Earnings Summary and Selected Consolidated Financial Data


|                                                    |          |                                          |           |       |      |   |           |       |  |   |           |       |  |      |           |       |  |   |           |       | 
|--------------------------------------------------- | -------- | ---------------------------------------- | --------- | ----- | ---- | - | --------- | ----- |  | - | --------- | ----- |  | ---- | --------- | ----- |  | - | --------- | ----- | 
|                                                    |          | At and for the years ended December 31,  |          
|                                                    |          |                                          |          
|                                                    |          | 2004                                     |           |       | 2003 |   |           | 2002  |  |   | 2001      |       |  | 2000 |          
|                                                    |          |                                          |           |       |      |   |           |       |  |   |           |       |  |      |          
|                                                    |          | (Dollars in thousands except share data) |          
|Statement of Income Data                            |          |                                          |           |       |      |   |           |       |  |   |           |       |  |      |           |       |  |   |           |      
|Net interest income                                 |          | $                                        | 53,411    |       |      | $ | 51,231    |       |  | $ | 47,448    |       |  | $    | 38,916    |       |  | $ | 33,205    |      
|Provision for loan losses                           |          |                                          | 500       |       |      |   | 1,600     |       |  |   | 14,650    |       |  |      | 1,550     |       |  |   | 900       |      
|Net interest income after provision for loan losses |          |                                          | 52,911    |       |      |   | 49,631    |       |  |   | 32,798    |       |  |      | 37,366    |       |  |   | 32,305    |      
|Other income                                        |          |                                          | 18,532    |       |      |   | 18,435    |       |  |   | 17,450    |       |  |      | 14,442    |       |  |   | 10,482    |      
|Other expenses                                      |          |                                          | 43,732    |       |      |   | 41,503    |       |  |   | 35,741    |       |  |      | 31,928    |       |  |   | 27,117    |      
|Income before income taxes                          |          |                                          | 27,711    |       |      |   | 26,563    |       |  |   | 14,507    |       |  |      | 19,880    |       |  |   | 15,670    |      
|Income tax expense                                  |          |                                          | 8,639     |       |      |   | 8,128     |       |  |   | 4,006     |       |  |      | 6,232     |       |  |   | 4,621     |      
|Net income                                          |          | $                                        | 19,072    |       |      | $ | 18,435    |       |  | $ | 10,501    |       |  | $    | 13,648    |       |  | $ | 11,049    |      
|Common Stock
    Data(1)                            |          |                                          |           |       |      |   |           |       |  |   |           |       |  |      |           |       |  |   |           |      
|Basic earnings per share                            |          | $                                        | 1.95      |       |      | $ | 1.92      |       |  | $ | 1.10      |       |  | $    | 1.44      |       |  | $ | 1.15      |      
|Diluted earnings per share                          |          |                                          | 1.91      |       |      |   | 1.87      |       |  |   | 1.08      |       |  |      | 1.41      |       |  |   | 1.13      |      
|Cash dividends paid per share                       |          |                                          | .62       |       |      |   | .449      |       |  |   | .35       |       |  |      | .30       |       |  |   | .29       |      
|Book value per share                                |          |                                          | 13.33     |       |      |   | 12.12     |       |  |   | 11.44     |       |  |      | 10.29     |       |  |   | 9.09      |      
|Closing price of Common Stock per share             |          |                                          |           |       |      |   |           |       |  |   |           |       |  |      |           |       |  |   |           |      
|                                                    | High     |                                          |           | 33.70 |      |   |           | 32.00 |  |   |           | 22.97 |  |      |           | 17.00 |  |   |           | 12.25 | 
|                                                    | Low      |                                          |           | 28.25 |      |   |           | 18.95 |  |   |           | 16.03 |  |      |           | 11.63 |  |   |           | 9.00  | 
|                                                    | Year-End |                                          |           | 32.41 |      |   |           | 30.01 |  |   |           | 20.95 |  |      |           | 16.10 |  |   |           | 11.75 | 
|Dividends paid per share to closing price           |          |                                          | 1.9       | %     |      |   | 1.5       | %     |  |   | 1.7       | %     |  |      | 1.9       | %     |  |   | 2.4       | %    
|Closing price to diluted earnings per share         |          |                                          | 16.97     | x     |      |   | 16.05     | x     |  |   | 19.5      | x     |  |      | 11.4      | x     |  |   | 10.4      | x    
|Market capitalization                               |          | $                                        | 318,292   |       |      | $ | 290,518   |       |  | $ | 199,050   |       |  | $    | 152,402   |       |  | $ | 111,844   |      
|Period end shares outstanding                       |          |                                          | 9,820,811 |       |      |   | 9,680,711 |       |  |   | 9,501,196 |       |  |      | 9,465,947 |       |  |   | 9,518,618 |      
|Volume of shares traded                             |          |                                          | 2,183,927 |       |      |   | 2,276,351 |       |  |   | 3,318,996 |       |  |      | 2,318,964 |       |  |   | 3,769,329 |      

14



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|                                                          |  |                                          |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|--------------------------------------------------------- |  | ---------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | - |  | ---- | --------- | - |  | - | --------- | -
|                                                          |  | At and for the years ended December 31,  |          
|                                                          |  |                                          |          
|                                                          |  | 2004                                     |           |   | 2003 |   |           | 2002 |  |   | 2001      |   |  | 2000 |          
|                                                          |  |                                          |           |   |      |   |           |      |  |   |           |   |  |      |          
|                                                          |  | (Dollars in thousands except share data) |          
|Year-End Balance Sheet Data                               |  |                                          |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Total assets                                              |  | $                                        | 2,082,524 |   |      | $ | 1,847,815 |      |  | $ | 1,597,496 |   |  | $    | 1,386,551 |   |  | $ | 1,249,272 |  
|Loans, net of unearned discount                           |  |                                          | 1,071,655 |   |      |   | 915,678   |      |  |   | 912,081   |   |  |      | 916,645   |   |  |   | 825,020   |  
|Allowance for loan losses                                 |  |                                          | 8,546     |   |      |   | 8,369     |      |  |   | 7,351     |   |  |      | 6,982     |   |  |   | 5,682     |  
|Investment securities                                     |  |                                          | 841,077   |   |      |   | 783,471   |      |  |   | 507,485   |   |  |      | 327,389   |   |  |   | 319,985   |  
|Demand deposits                                           |  |                                          | 265,251   |   |      |   | 250,101   |      |  |   | 247,806   |   |  |      | 211,939   |   |  |   | 221,552   |  
|Total deposits                                            |  |                                          | 1,714,536 |   |      |   | 1,458,502 |      |  |   | 1,264,731 |   |  |      | 1,077,966 |   |  |   | 978,226   |  
|FHLB of Chicago borrowings                                |  |                                          | 161,418   |   |      |   | 161,500   |      |  |   | 102,000   |   |  |      | 86,000    |   |  |   | 81,000    |  
|Junior subordinated notes issued to capital
    trusts(2) |  |                                          | 23,713    |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   |          |  
|Trust Preferred Capital Securities
    (2)                |  |                                          |          |   |      |   | 23,000    |      |  |   | 18,000    |   |  |      | 6,000     |   |  |   | 6,000     |  
|Shareholders equity                                      |  |                                          | 133,787   |   |      |   | 120,892   |      |  |   | 111,942   |   |  |      | 99,552    |   |  |   | 87,606    |  
|Financial Ratios                                          |  |                                          |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Return on average assets                                  |  |                                          | .96       | % |      |   | 1.11      | %    |  |   | .71       | % |  |      | 1.04      | % |  |   | .90       | %
|Return on average equity                                  |  |                                          | 15.21     |   |      |   | 15.79     |      |  |   | 10.03     |   |  |      | 14.47     |   |  |   | 13.58     |  
|Net interest margin                                       |  |                                          | 2.89      |   |      |   | 3.36      |      |  |   | 3.44      |   |  |      | 3.26      |   |  |   | 2.99      |  
|Net interest spread                                       |  |                                          | 2.56      |   |      |   | 2.97      |      |  |   | 2.89      |   |  |      | 2.38      |   |  |   | 1.95      |  
|Dividend payout ratio                                     |  |                                          | 32.70     |   |      |   | 25.75     |      |  |   | 32.98     |   |  |      | 21.29     |   |  |   | 25.45     |  
|Consolidated Capital Ratios                               |  |                                          |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Average equity to average total assets                    |  |                                          | 6.30      | % |      |   | 7.05      | %    |  |   | 7.06      | % |  |      | 7.22      | % |  |   | 6.63      | %
|Tier 1 capital ratio                                      |  |                                          | 11.57     |   |      |   | 12.52     |      |  |   | 11.06     |   |  |      | 10.03     |   |  |   | 9.75      |  
|Total capital ratio                                       |  |                                          | 12.20     |   |      |   | 13.26     |      |  |   | 11.73     |   |  |      | 10.72     |   |  |   | 10.35     |  
|Capital leverage ratio                                    |  |                                          | 7.47      |   |      |   | 8.11      |      |  |   | 7.74      |   |  |      | 7.42      |   |  |   | 7.47      |  
|Asset Quality Ratios                                      |  |                                          |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Nonperforming loans to total loans outstanding            |  |                                          | .01       | % |      |   | .06       | %    |  |   | .16       | % |  |      | .19       | % |  |   | .05       | %
|Nonperforming assets to total assets                      |  |                                          | .49       |   |      |   | .91       |      |  |   | .60       |   |  |      | .14       |   |  |   | .05       |  
|Nonperforming assets to total capital                     |  |                                          | 7.59      |   |      |   | 13.88     |      |  |   | 8.58      |   |  |      | 1.89      |   |  |   | .67       |  
|Allowance for loan losses to total loans outstanding      |  |                                          | .80       |   |      |   | .91       |      |  |   | .81       |   |  |      | .76       |   |  |   | .69       |  
|Net charge-offs to average loans                          |  |                                          | .03       |   |      |   | .07       |      |  |   | 1.54      |   |  |      | .03       |   |  |   | .01       |  
|Allowance for loan losses to nonperforming loans          |  |                                          | 57.74     | x |      |   | 15.44     | x    |  |   | 5.09      | x |  |      | 4.03      | x |  |   | 12.94     | x






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Common Stock data has been restated to give effect to the
    three-for-two stock split effective in August 2003.                                                                                                                                                                                                                                                                                                                                  
|(2) | The Company deconsolidated three statutory trust subsidiaries on
    January 1, 2004 upon adoption of FASB Interpretation
    No. 46R, Consolidation of Variable Interest
    Entities. As a result, the Company reported junior
    subordinated notes issued to capital trusts in lieu of trust
    preferred capital securities. See Note 8 to the
    Companys financial statements under Item 8 of this
    Form 10-K for more information.

15



---



##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 7. | Managements Discussion And Analysis Of Financial
    Condition And Results Of Operation



EXECUTIVE SUMMARY










|                           |  |      |            |   |      |   |            |      |  |   |            |  
|-------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                           |  | 2004 |            |   | 2003 |   |            | 2002 | 
|                           |  |      |            |   |      |   |            |      | 
|Net income                 |  | $    | 19,072,000 |   |      | $ | 18,435,000 |      |  | $ | 10,501,000 |  
|Basic earnings per share   |  | $    | 1.95       |   |      | $ | 1.92       |      |  | $ | 1.10       |  
|Diluted earnings per share |  | $    | 1.91       |   |      | $ | 1.87       |      |  | $ | 1.08       |  
|Return on average assets   |  |      | .96        | % |      |   | 1.11       | %    |  |   | .71        | %
|Return on average equity   |  |      | 15.21      | % |      |   | 15.79      | %    |  |   | 10.03      | %

16



---



##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Assets at year-end grew to $2.083 billion, up 13% over 2003.                                                                                                                                                                                                                                                                                       
|
| |  | Equity increased to $133.8 million, up 11% over 2003.                                                                                                                                                                                                                                                                                              
|
| |  | Loans grew to a record $1.072 billion, up 17% over 2003.                                                                                                                                                                                                                                                                                           
|
| |  | Deposits were a record $1.715 billion, up 18% over 2003.                                                                                                                                                                                                                                                                                           
|
| |  | Cash dividends paid per share increased 38% over 2003.                                                                                                                                                                                                                                                                                             
|
| |  | FOBB share price increased 8% to $32.41 per share at year end.                                                                                                                                                                                                                                                                                     
|
| |  | Net income increased 3% in 2004. Net income in 2003 was up $7.9
    million from 2002. The Companys 2002 net income was
    depressed due to a large loan loss from fraud on a construction
    loan. See Asset Quality.                                                                                                                        
|
| |  | Net interest income increased $2.2 million. Volume of
    average earning assets increased $327.1 million, average
    investments rose $224.1 million and average loans rose
    $100.1 million.                                                                                                                                                  
|
| |  | Net interest margin went down 47 basis points to 2.89%. Margin
    compression was primarily due to a change in the mix of earning
    assets and having a balance sheet that is liability sensitive,
    lower prepayment penalties than in 2003, competitive pressures
    on loan and deposit pricing and the flattening of the yield
    curve.
|
| |  | Treasury management fees went down $1,102,000 primarily due to
    the loss of one significant customer in June 2003.                                                                                                                                                                                                                              
|
| |  | Trust fees rose $481,000 due to a $115.8 million increase
    in discretionary assets under management as compared to
    December 31, 2003.                                                                                                                                                                                                       
|
| |  | Gain on mortgages sold was $242,000, down $762,000 from 2003,
    due to an overall mortgage market slowdown.                                                                                                                                                                                                                                      
|
| |  | The sale of covered call options provided income of
    $1.1 million, down slightly from 2003.                                                                                                                                                                                                                                                     
|
| |  | The provision for loan losses was $500,000, down from
    $1.6 million in 2003, due to improved asset quality.
    Nonperforming loans totaled $148,000 and the Management Watch
    list (including commitments and excluding OREO) declined to
    $259,000 at December 31, 2004, down from $9.2 million
    at December 31, 2003.               
|
| |  | Other Real Estate Owned (OREO) dropped to
    $9.9 million at year-end 2004 as compared to $16.1 million
    at year-end 2003.                                                                                                                                                                                                                   



Application of Critical Accounting Policies




17



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##### Table of Contents









| |                          
| | -------------------------
| | Allowance for Loan Losses











| |   |                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Monthly reports prepared by the Banks management and
    reviewed by the loan committee which contain information on the
    overall characteristics of the loan portfolio, including
    delinquencies, nonaccruals and specific analysis of potential
    problem loans that require special attention (i.e.
    Management Watch list);
|
| |  | Examinations of the loan portfolio of the Bank by Federal and
    State regulatory agencies, including Shared National Credit
    reviews of syndicated loans;                                                                                                                                                                               
|
| |  | Reviews by third-party credit review consultants.                                                                                                                                                                                                                                                                                            



18



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##### Table of Contents





| |             
| | ------------
| | Income Taxes





RESULTS OF OPERATIONS


Net Interest Income




19



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##### Table of Contents





Average Balances and Effective Interest Rates


|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |      |      | 
|------------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------------------- | --------- | --------- | ------- | - | ------ | ------ | ------ |  | -------- | ---- | ---- | ------- | --------- | --------- | ------- | -------- | ------ | ------- | ------ |  | ------- | ---- | ---- | ------ | --------- | ------- | ------- | - | ------ | ------ | ------ |  | ---- | ---- | ---- | 
|                                                        |                                                                                    | 2004                       |           |           | 2003    |   |        | 2002   |       
|                                                        |                                                                                    |                            |           |           |         |   |        |        |       
|                                                        |                                                                                    |                            |           | Interest  |         |   |        |        |        |  | Interest |      |      |         |           |           |         | Interest |        |         |       
|                                                        |                                                                                    | Average                    |           |           | Income/ |   |        | Yield/ |        |  | Average  |      |      | Income/ |           |           | Yield/  |          |        | Average |        |  | Income/ |      |      | Yield/ |          
|                                                        |                                                                                    | Balance                    |           |           | Expense |   |        | Rates  |        |  | Balance  |      |      | Expense |           |           | Rates   |          |        | Balance |        |  | Expense |      |      | Rates  |          
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|                                                        |                                                                                    | (Dollars in thousands)     |          
|Assets                                                  |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |     
|Earning assets:                                         |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |     
|Fed funds sold and interest-bearing deposits with banks |                                                                                    | $                          | 48,622    |           |         | $ | 691    |        |        |  | 1.42     | %    |      | $       | 45,678    |           |         | $        | 500    |         |        |  | 1.09    | %    |      | $      | 60,755    |         |         | $ | 1,001  |        |        |  | 1.65 | %   
|Investment securities:                                  |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |     
|                                                        | Taxable securities                                                                 |                            |           | 789,842   |         |   |        | 34,618 |        |  |          | 4.38 |      |         |           | 570,662   |         |          |        | 26,796  |        |  |         | 4.70 |      |        |           | 376,096 |         |   |        | 20,752 |        |  |      | 5.52 |     
|                                                        | Tax exempt
    securities(1)                                                       |                            |           | 42,501    |         |   |        | 2,290  |        |  |          | 5.39 |      |         |           | 37,551    |         |          |        | 2,356   |        |  |         | 6.27 |      |        |           | 41,808  |         |   |        | 2,728  |        |  |      | 6.53 |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|Total investment
    securities(2)                      |                                                                                    |                            | 832,343   |           |         |   | 36,908 |        |        |  | 4.43     |      |      |         | 608,213   |           |         |          | 29,152 |         |        |  | 4.79    |      |      |        | 417,904   |         |         |   | 23,480 |        |        |  | 5.62 |     
|Loans:(1)(3)                                            |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |     
|                                                        | Commercial(1)                                                                      |                            |           | 95,176    |         |   |        | 4,228  |        |  |          | 4.44 |      |         |           | 88,386    |         |          |        | 4,666   |        |  |         | 5.28 |      |        |           | 96,093  |         |   |        | 6,222  |        |  |      | 6.47 |     
|                                                        | Syndicated                                                                         |                            |           | 31,625    |         |   |        | 1,429  |        |  |          | 4.52 |      |         |           | 39,347    |         |          |        | 1,898   |        |  |         | 4.82 |      |        |           | 41,655  |         |   |        | 2,043  |        |  |      | 4.90 |     
|                                                        | Construction, land acquisition and development                                     |                            |           | 62,946    |         |   |        | 3,748  |        |  |          | 5.95 |      |         |           | 56,084    |         |          |        | 3,579   |        |  |         | 6.38 |      |        |           | 95,777  |         |   |        | 5,609  |        |  |      | 5.86 |     
|                                                        | Commercial mortgage                                                                |                            |           | 244,400   |         |   |        | 15,726 |        |  |          | 6.43 |      |         |           | 227,233   |         |          |        | 16,030  |        |  |         | 7.05 |      |        |           | 227,188 |         |   |        | 16,139 |        |  |      | 7.10 |     
|                                                        | Residential mortgage                                                               |                            |           | 104,865   |         |   |        | 5,325  |        |  |          | 5.08 |      |         |           | 92,732    |         |          |        | 5,380   |        |  |         | 5.80 |      |        |           | 102,555 |         |   |        | 6,909  |        |  |      | 6.74 |     
|                                                        | Home equity                                                                        |                            |           | 145,539   |         |   |        | 5,700  |        |  |          | 3.92 |      |         |           | 131,934   |         |          |        | 5,207   |        |  |         | 3.95 |      |        |           | 116,593 |         |   |        | 5,475  |        |  |      | 4.70 |     
|                                                        | Indirect vehicle:                                                                  |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |      |     
|                                                        |                                                                                    | Auto                       |           |           | 253,292 |   |        |        | 10,384 |  |          |      | 4.10 |         |           |           | 212,962 |          |        |         | 11,366 |  |         |      | 5.34 |        |           |         | 209,801 |   |        |        | 13,854 |  |      |      | 6.60 | 
|                                                        |                                                                                    | Harley Davidson motorcycle |           |           | 45,038  |   |        |        | 2,730  |  |          |      | 6.06 |         |           |           | 33,232  |          |        |         | 2,254  |  |         |      | 6.78 |        |           |         | 25,939  |   |        |        | 1,980  |  |      |      | 7.63 | 
|                                                        | Consumer                                                                           |                            |           | 7,765     |         |   |        | 474    |        |  |          | 6.10 |      |         |           | 8,669     |         |          |        | 540     |        |  |         | 6.23 |      |        |           | 10,811  |         |   |        | 760    |        |  |      | 7.03 |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|Total loans, net of unearned discount                   |                                                                                    |                            | 990,646   |           |         |   | 49,744 |        |        |  | 5.02     |      |      |         | 890,579   |           |         |          | 50,920 |         |        |  | 5.72    |      |      |        | 926,412   |         |         |   | 58,991 |        |        |  | 6.37 |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|Total earning assets/ interest income                   |                                                                                    | $                          | 1,871,611 |           |         | $ | 87,343 |        |        |  | 4.67     | %    |      | $       | 1,544,470 |           |         | $        | 80,572 |         |        |  | 5.22    | %    |      | $      | 1,405,071 |         |         | $ | 83,472 |        |        |  | 5.94 | %   
|Cash and due from banks                                 |                                                                                    |                            | 36,771    |           |         |   |        |        |        |  |          |      |      |         | 39,898    |           |         |          |        |         |        |  |         |      |      |        | 42,428    |         |         |   |        |        |        |  |      |     
|Other assets                                            |                                                                                    |                            | 90,102    |           |         |   |        |        |        |  |          |      |      |         | 79,429    |           |         |          |        |         |        |  |         |      |      |        | 46,183    |         |         |   |        |        |        |  |      |     
|Allowance for loan losses                               |                                                                                    |                            | (8,703    | )         |         |   |        |        |        |  |          |      |      |         | (8,204    | )         |         |          |        |         |        |  |         |      |      |        | (10,035   | )       |         |   |        |        |        |  |      |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|                                                        |                                                                                    | $                          | 1,989,781 |           |         |   |        |        |        |  |          |      |      | $       | 1,655,593 |           |         |          |        |         |        |  |         |      |      | $      | 1,483,647 |         |         |   |        |        |        |  |      |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|                                                       
|Liabilities and Shareholders Equity                    |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |     
|Interest-bearing liabilities:                           |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |           |         |         |   |        |        |        |  |      |     
|                                                        | Savings deposits and NOW accounts                                                  |                            | $         | 281,964   |         |   | $      | 3,149  |        |  |          | 1.12 | %    |         | $         | 214,120   |         |          | $      | 2,163   |        |  |         | 1.01 | %    |        | $         | 144,650 |         |   | $      | 1,710  |        |  |      | 1.18 | %   
|                                                        | Money market accounts                                                              |                            |           | 141,234   |         |   |        | 1,811  |        |  |          | 1.28 |      |         |           | 132,964   |         |          |        | 1,534   |        |  |         | 1.15 |      |        |           | 153,379 |         |   |        | 3,062  |        |  |      | 2.00 |     
|                                                        | Time deposits                                                                      |                            |           | 928,822   |         |   |        | 21,167 |        |  |          | 2.28 |      |         |           | 732,738   |         |          |        | 17,899  |        |  |         | 2.44 |      |        |           | 654,877 |         |   |        | 22,380 |        |  |      | 3.42 |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|                                                        | Total interest-bearing deposits                                                    |                            |           | 1,352,020 |         |   |        | 26,127 |        |  |          | 1.93 | %    |         |           | 1,079,822 |         |          |        | 21,596  |        |  |         | 2.00 | %    |        |           | 952,906 |         |   |        | 27,152 |        |  |      | 2.85 | %   
|                                                        | Securities sold under agreements to repurchase and other
    short-term borrowings |                            |           | 41,651    |         |   |        | 450    |        |  |          | 1.08 |      |         |           | 78,779    |         |          |        | 829     |        |  |         | 1.05 |      |        |           | 94,350  |         |   |        | 1,596  |        |  |      | 1.69 |     
|                                                        | FHLB of Chicago borrowings                                                         |                            |           | 161,940   |         |   |        | 5,197  |        |  |          | 3.21 |      |         |           | 99,679    |         |          |        | 5,051   |        |  |         | 5.07 |      |        |           | 91,241  |         |   |        | 5,390  |        |  |      | 5.91 |     
|                                                        | Junior subordinated notes issued to capital trusts                                 |                            |           | 23,713    |         |   |        | 1,526  |        |  |          | 6.44 |      |         |           |          |         |          |        |        |        |  |         |     |      |        |           |        |         |   |        |       |        |  |      |     |     
|                                                        | Trust Preferred Capital Securities                                                 |                            |           |          |         |   |        |       |        |  |          |     |      |         |           | 18,178    |         |          |        | 1,228   |        |  |         | 6.76 |      |        |           | 12,214  |         |   |        | 981    |        |  |      | 8.03 |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|Total interest-bearing liabilities/interest expense     |                                                                                    | $                          | 1,579,324 |           |         | $ | 33,300 |        |        |  | 2.11     | %    |      | $       | 1,276,458 |           |         | $        | 28,704 |         |        |  | 2.25    | %    |      | $      | 1,150,711 |         |         | $ | 35,119 |        |        |  | 3.05 | %   
|Noninterest-bearing demand deposits                     |                                                                                    |                            | 271,259   |           |         |   |        |        |        |  |          |      |      |         | 246,525   |           |         |          |        |         |        |  |         |      |      |        | 216,100   |         |         |   |        |        |        |  |      |     
|Other liabilities                                       |                                                                                    |                            | 13,797    |           |         |   |        |        |        |  |          |      |      |         | 15,846    |           |         |          |        |         |        |  |         |      |      |        | 12,130    |         |         |   |        |        |        |  |      |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|Total liabilities                                       |                                                                                    | $                          | 1,864,380 |           |         |   |        |        |        |  |          |      |      | $       | 1,538,829 |           |         |          |        |         |        |  |         |      |      | $      | 1,378,941 |         |         |   |        |        |        |  |      |     
|Shareholders equity                                    |                                                                                    |                            | 125,401   |           |         |   |        |        |        |  |          |      |      |         | 116,764   |           |         |          |        |         |        |  |         |      |      |        | 104,706   |         |         |   |        |        |        |  |      |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|                                                        |                                                                                    | $                          | 1,989,781 |           |         |   |        |        |        |  |          |      |      | $       | 1,655,593 |           |         |          |        |         |        |  |         |      |      | $      | 1,483,647 |         |         |   |        |        |        |  |      |     
|                                                        |                                                                                    |                            |           |           |         |   |        |        |        |  |          |      |      |         |           |           |         |          |        |         |        |  |         |      |      |        |          
|Net interest income/net interest
    spread(4)          |                                                                                    |                            |           |           |         | $ | 54,043 |        |        |  | 2.56     | %    |      |         |           |           |         | $        | 51,868 |         |        |  | 2.97    | %    |      |        |           |         |         | $ | 48,353 |        |        |  | 2.89 | %   
|Net interest margin
    (5)                             |                                                                                    |                            |           |           |         |   |        |        |        |  | 2.89     | %    |      |         |           |           |         |          |        |         |        |  | 3.36    | %    |      |        |           |         |         |   |        |        |        |  | 3.44 | %   






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Tax equivalent basis. Interest income and average yield on tax
    exempt loans and investment securities include the effects of
    tax equivalent adjustments using a tax rate of 35% in 2004, 2003
    and 2002. See the following table for reconciliation to GAAP.                                                                                                                                                                                    
|(2) | Investment securities are shown at their respective carrying
    values. Based on the amortized cost, the average balance and
    weighted-average tax equivalent yield of total investment
    securities was $832,987 and 4.43% in 2004; $599,081 and 4.87% in
    2003; and $409,278 and 5.75% in 2002.                                                                                                                                                 
|(3) | Total average nonaccrual loans of $252, $275 and $8,835 for the
    years ended December 31, 2004, 2003 and 2002, respectively,
    are included in the average balance. The majority of average
    nonaccrual loans for 2002 were construction loans which
    represented $8,794 of the total nonaccrual balance. The yield on
    construction loans would have been 6.45% for the year ended
    December 31, 2002 had nonaccrual loans been excluded.
|(4) | Total yield on average earning assets, less total rate paid on
    average interest-bearing liabilities.                                                                                                                                                                                                                                                                                                                                                   
|(5) | Net interest income on a tax equivalent basis divided by average
    earning assets.                                                                                                                                                                                                                                                                                                                                                                       

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|                               |  |                          |       |  |                          |   |       |      |  |   |       |  |  |      |       |  |      |   |       |  |  |   |       | 
|------------------------------ |  | ------------------------ | ----- |  | ------------------------ | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  | ---- | - | ----- |  |  | - | ----- | 
|                               |  | Years ended December 31, |       |  | Years ended December 31, |  
|                               |  |                          |       |  |                          |  
|                               |  | 2004                     |       |  | 2003                     |   |       | 2002 |  |   | 2004  |  |  | 2003 |       |  | 2002 |  
|                               |  |                          |       |  |                          |   |       |      |  |   |       |  |  |      |       |  |      |  
|                               |  | (Dollars in thousands)   |      
|                               |  | Tax-exempt securities    |       |  | Commercial loans         |  
|GAAP Income                    |  | $                        | 1,711 |  |                          | $ | 1,787 |      |  | $ | 1,907 |  |  | $    | 4,175 |  |      | $ | 4,598 |  |  | $ | 6,138 | 
|Tax equivalent adjustment      |  | $                        | 579   |  |                          | $ | 569   |      |  | $ | 821   |  |  | $    | 53    |  |      | $ | 68    |  |  | $ | 84    | 
|                               |  |                          |       |  |                          |   |       |      |  |   |       |  |  |      |       |  |      |  
|Tax equivalent interest income |  | $                        | 2,290 |  |                          | $ | 2,356 |      |  | $ | 2,728 |  |  | $    | 4,228 |  |      | $ | 4,666 |  |  | $ | 6,222 | 
|                               |  |                          |       |  |                          |   |       |      |  |   |       |  |  |      |       |  |      |  



| |                 
| | ----------------
| | 2004 versus 2003









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The yield on average earning assets decreased 55 basis
    points to 4.67% while the cost of interest-bearing liabilities
    decreased 14 basis points to 2.11% for 2004. The Federal
    Reserve reduced the Fed funds rate by 25 basis points in
    June 2003. The Fed funds rate stayed constant until June 2004,
    at which time the Federal Reserve began raising rates gradually
     doing so five times for an aggregate increase of
    125 basis points by December 2004. Margin compression was
    partially the result of being liability sensitive (liabilities
    reprice more quickly than assets) as interest rates rose,
    competitive pressures on loan and deposit pricing and the
    flattening of the yield curve.                                                                                                                                                                                                                                                                                                                                                 
|
| |  | The decrease in the yield on average earning assets is due
    primarily to growth in lower yielding asset categories
    (investments and indirect auto loans). The investment portfolio
    yield was compressed partially as a result of the overall
    shortening of the contractual maturity of the portfolio to
    6.3 years at December 31, 2004 from 7.8 years at
    December 31, 2003 and a reduction in accretion income. In
    addition, the Company experienced an overall decrease in loan
    fees of $685,000 (representing a seven basis point decline
    in the yield on average earning assets) in 2004 as compared to
    2003 primarily due to a decrease in prepayment penalties and
    contingent fee arrangements. Although loan fees are amortized to
    income over the loan period as a normal part of the business,
    the additional fees associated with the prepayment of loans are
    less predictable and, during periods of higher prepayment
    activity, can result in a spike in earnings since these fees are
    recorded in income when received.
|
| |  | The decrease in the cost of average interest-bearing liabilities
    is due primarily to growth in public fund time deposits which
    typically have a lower cost and shorter terms than promotional
    rate retail time deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total average earning assets increased $327.1 million, or
    21%, as compared to 2003. The Companys average securities
    portfolio increased by $224.1 million, or 37%, and consists
    of increases in U.S. Government agency securities
    ($218.8 million), corporate and other securities
    ($13.0 million), and state and municipal obligations
    ($4.6 million), offset by a decrease in U.S. Treasury
    securities ($12.2 million). See Investment
    Securities for further analysis.
|
| |  | Average loans for 2004 increased $100.1 million, or 11%, as
    compared to 2003. The increase primarily consists of increases
    in indirect vehicle loans ($52.1 million), commercial
    mortgage loans ($17.2 mil-                                                                                                                                                                                                                                                                                     

21



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | lion), home equity loans ($13.6 million), residential
    mortgage loans ($12.1 million), and construction loans
    ($6.9 million). See Loans for further analysis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Average interest-bearing liabilities increased
    $302.9 million, or 24%, as compared to 2003. Average
    interest-bearing deposits increased $272.2 million
    primarily due to growth in time deposits ($196.1 million),
    savings and NOW accounts ($67.8 million) and money market
    accounts ($8.3 million). Time deposits were augmented by a
    $107.5 million average increase in public funds, while
    savings and NOW growth was spurred by the promotion of higher
    rate products. The overall increase in average deposits includes
    an increase of $78.4 million from the three branches opened
    in 2003.                                                                                                
|
| |  | Average securities sold under agreements to repurchase and other
    short-term borrowings decreased $37.1 million due primarily
    to a $39.2 million average decrease in commercial and term
    repurchase agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Average Federal Home Loan Bank (FHLB) of Chicago
    borrowings increased $62.3 million due primarily to the
    advance of an additional $75 million floating rate
    borrowing on December 30, 2003 as part of a balance sheet
    arbitrage initiated to lock in a favorable spread. See
    Investment Securities for further analysis.                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | As a result of the deconsolidation of the three statutory trust
    subsidiaries, the Company reported an average of
    $23.713 million in junior subordinated notes issued to
    capital trusts for 2004 in lieu of the $18.178 million of
    average trust preferred capital securities recorded for 2003.
    The average increase in the reported liability of
    $5.5 million is due primarily to the $5 million
    participation in a pooled trust preferred offering in the fourth
    quarter of 2003 and the $713,000 of the Companys equity in
    the unconsolidated subsidiaries which is now included in Other
    Assets. See Notes 1 and 8 to the Companys financial
    statements under Item 8 of this Form 10-K.
|
| |  | Average demand deposits increased $24.7 million due
    primarily to new customer volume and increased balances from
    existing treasury management customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



| |                 
| | ----------------
| | 2003 versus 2002







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The yield on average earning assets decreased 72 basis
    points to 5.22%, while the cost of deposits and other borrowed
    funds decreased 80 basis points to 2.25% for 2003. The Federal
    Reserve reduced interest rates by 50 basis points late in
    2002 and another 25 basis points late in June 2003,
    resulting in an average prime rate for 2003 of 4.12% as compared
    to 4.68% for 2002. Although the Company uses various indexes
    (including prime) to price loans, this decrease in prime was
    indicative of the general falling interest rate environment.                                                                                                                     
|
| |  | As a result of the low interest rate environment, the expected
    margin compression was partially offset by increases in loan
    fees of $1,033,000 in 2003 as compared to 2002. Although loan
    fee income is a normal part of the business, the fees associated
    with the prepayment of loans and contingent fee arrangements are
    less predictable and can result in a spike in earnings since
    these fees are recorded in income when received. The margin was
    also boosted by accretion income of $196,000 on security calls.
    Since the Companys policy is to accrete discounts to
    maturity, any remaining discount on a called security is
    immediately accreted to income.

22



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total average earning assets increased $139.4 million, or
    10%, as compared to 2002. The Companys average securities
    portfolio increased by $190.3 million, or 46%, and
    consisted of increases in U.S. Government agency securities
    ($136.2 million), U.S. Treasury securities
    ($31.2 million), and corporate and other securities
    ($23.9 million), offset by a decrease in municipal
    securities ($1.0 million). The increase in corporate and
    other securities was primarily due to the purchase of
    $30.0 million of FHLB of Chicago stock. See
    Investment Securities for further analysis.                                                                                                                                                                                                                                   
|
| |  | Average loans for 2003 decreased $35.8 million, or 4%, as
    compared to 2002. The decrease was primarily attributable to
    high payoffs resulting in decreases in construction loans
    ($39.7 million), commercial loans ($10.0 million), and
    residential mortgage loans ($9.8 million), offset by growth
    in home equity loans ($15.3 million) and indirect vehicle
    loans ($10.5 million). Payoffs slowed and loan demand
    picked up towards the end of 2003, recouping most of the
    decrease experienced earlier in the year. The yield on loans
    dropped 65 basis points as compared to 2002. See
    Loans for further analysis.                                                                                                                                                                                                         
|
| |  | Average Fed funds sold and interest-bearing deposits with banks
    decreased $15.1 million due to a decrease in short-term
    debt, and cash flows from deposit growth and loan repayments
    being invested in U.S. Government agency securities rather than
    in the Fed funds market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Average interest-bearing liabilities increased
    $125.7 million, or 11%, as compared to 2002. Average
    interest-bearing deposits increased $126.9 million
    primarily due to growth in time deposits ($77.9 million)
    and in savings and NOW accounts ($69.5 million), offset by
    a decrease in money market accounts ($20.4 million). Time
    deposits were augmented by a $55.8 million average increase
    in public funds and a $13.4 million average increase in
    brokered CDs; savings and NOW growth was spurred by the
    promotion of higher rate products and the increase in 2003
    includes average deposits of $34.2 million from the
    Countryside office (opened in January 2003), $5.4 million
    from the Graue Mill office (opened in May 2003), and
    $2.5 million from the St. Charles office (opened in October
    2003).
|
| |  | Average short-term debt decreased $15.6 million due
    primarily to an $8.8 million average decrease in the
    treasury, tax and loan note and a $7.9 million average
    decrease in commercial repurchase agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Average Federal Home Loan Bank (FHLB) of Chicago
    borrowings increased $8.4 million due primarily to advances
    obtained late in 2002 to finance the buildout of 60 W. Erie,
    carried in OREO (60 W. Erie). See
    Asset Quality.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Average Trust Preferred Capital Securities (TRUPS)
    increased $6.0 million through a $12 million participation
    in a pooled trust preferred offering late in the second quarter
    of 2002 and a $5 million participation in the fourth
    quarter of 2003. See Note 8 to the Companys financial
    statements under Item 8 of this Form 10-K for more
    information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Average demand deposits increased $30.4 million due
    primarily to new customer volume.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

23



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##### Table of Contents







Analysis of Net Interest Income Changes


|                                           |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |   |        |        |   |   |        |        |  
|------------------------------------------ | ---------------------------------------------------------------------------------- | ---------------------- | ------ | ----- | -------------- | - | ------ | ------ | - | - | --------- | ------ | - | ------- | ----- | ------ | ----- | - | ------ | ------ | - | - | ------ | ------ | -
|                                           |                                                                                    | 2004 Over 2003         |        |       | 2003 Over 2002 |  
|                                           |                                                                                    |                        |        |       |                |  
|                                           |                                                                                    | Volume(1)              |        |       | Rate(1)        |   |        | Total  |   |   | Volume(1) |        |   | Rate(1) |       |        | Total |  
|                                           |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |  
|                                           |                                                                                    | (Dollars in thousands) |       
|Increase (decrease) in interest income:    |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |   |        |        |   |   |        |       
|                                           | Fed funds sold and interest-bearing deposits with banks                            |                        | $      | 41    |                |   | $      | 150    |   |   | $         | 191    |   |         | $     | (213   | )     |   | $      | (288   | ) |   | $      | (501   | )
|                                           | Taxable securities                                                                 |                        |        | 9,692 |                |   |        | (1,870 | ) |   |           | 7,822  |   |         |       | 9,447  |       |   |        | (3,403 | ) |   |        | 6,044  |  
|                                           | Tax exempt
    securities(2)                                                       |                        |        | 293   |                |   |        | (359   | ) |   |           | (66    | ) |         |       | (270   | )     |   |        | (102   | ) |   |        | (372   | )
|                                           | Loans, net of unearned
    discount(2,3)                                           |                        |        | 5,428 |                |   |        | (6,604 | ) |   |           | (1,176 | ) |         |       | (2,218 | )     |   |        | (5,853 | ) |   |        | (8,071 | )
|                                           |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |  
|Total interest income                      |                                                                                    | $                      | 15,454 |       |                | $ | (8,683 | )      |   | $ | 6,771     |        |   | $       | 6,746 |        |       | $ | (9,646 | )      |   | $ | (2,900 | )     
|                                           |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |  
|Increase (decrease) in interest expense:   |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |   |        |        |   |   |        |       
|                                           | Savings deposits and NOW accounts                                                  |                        | $      | 740   |                |   | $      | 246    |   |   | $         | 986    |   |         | $     | 732    |       |   | $      | (279   | ) |   | $      | 453    |  
|                                           | Money market accounts                                                              |                        |        | 100   |                |   |        | 177    |   |   |           | 277    |   |         |       | (366   | )     |   |        | (1,162 | ) |   |        | (1,528 | )
|                                           | Time deposits                                                                      |                        |        | 4,538 |                |   |        | (1,270 | ) |   |           | 3,268  |   |         |       | 2,437  |       |   |        | (6,918 | ) |   |        | (4,481 | )
|                                           | Securities sold under agreements to repurchase and other
    short-term borrowings |                        |        | (400  | )              |   |        | 21     |   |   |           | (379   | ) |         |       | (233   | )     |   |        | (534   | ) |   |        | (767   | )
|                                           | FHLB of Chicago borrowings                                                         |                        |        | 2,440 |                |   |        | (2,294 | ) |   |           | 146    |   |         |       | 470    |       |   |        | (809   | ) |   |        | (339   | )
|                                           | Junior subordinated notes issued to capital
    trusts(4)                          |                        |        | 359   |                |   |        | (61    | ) |   |           | 298    |   |         |       | 422    |       |   |        | (175   | ) |   |        | 247    |  
|                                           |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |  
|Total interest expense                     |                                                                                    | $                      | 7,777  |       |                | $ | (3,181 | )      |   | $ | 4,596     |        |   | $       | 3,462 |        |       | $ | (9,877 | )      |   | $ | (6,415 | )     
|                                           |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |  
|Increase (decrease) in net interest income |                                                                                    | $                      | 7,677  |       |                | $ | (5,502 | )      |   | $ | 2,175     |        |   | $       | 3,284 |        |       | $ | 231    |        |   | $ | 3,515  |       
|                                           |                                                                                    |                        |        |       |                |   |        |        |   |   |           |        |   |         |       |        |       |  






|    |                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The change in interest due to both rate and volume has been
    allocated proportionately.                                                                                                                                                                                                                                                       
|(2) | Tax equivalent basis. Tax exempt loans and investment securities
    include the effects of tax equivalent adjustments using a tax
    rate of 35% in 2004, 2003 and 2002.                                                                                                                                                                       
|(3) | Includes nonaccrual loans.                                                                                                                                                                                                                                                                                                                       
|(4) | Shows junior subordinated notes issued to capital trusts at
    December 31, 2004 compared to Trust Preferred Capital
    Securities at December 31, 2003 due to deconsolidation of
    statutory trusts on January 1, 2004. See Notes 1 and 8 to
    the Companys financial statements under Item 8 of
    this Form 10-K for more information.

Provision for Loan Losses




24



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##### Table of Contents







Summary of Other Income




|                                                             |                           |                        |        |       |      |   |        |          |  |   |         |       |  |         |     |    |  |  |     |    | 
|------------------------------------------------------------ | ------------------------- | ---------------------- | ------ | ----- | ---- | - | ------ | -------- |  | - | ------- | ----- |  | ------- | --- | -- |  |  | --- | -- | 
|                                                             |                           |                        |        |       |      |   |        | % Change | 
|                                                             |                           |                        |        |       |      |   |        |          | 
|                                                             |                           | 2004                   |        |       | 2003 |   |        | 2002     |  |   | 04-03 |       |  | 03-02 |    
|                                                             |                           |                        |        |       |      |   |        |          |  |   |         |       |  |         |    
|                                                             |                           | (Dollars in thousands) |        |       |      |   |       
|Service charges on deposit accounts
    Treasury management |                           | $                      | 4,499  |       |      | $ | 5,601  |          |  | $ | 6,162   |       |  |         | (20 | )% |  |  | (9  | )%
|                                                             | Retail and small business |                        |        | 1,272 |      |   |        | 1,259    |  |   |         | 1,214 |  |         |     | 1  |  |  |     | 4  | 
|Investment management and trust fees                         |                           |                        | 2,621  |       |      |   | 2,140  |          |  |   | 1,701   |       |  |         | 22  |    |  |  | 26  |   
|Merchant credit card processing fees                         |                           |                        | 5,978  |       |      |   | 4,849  |          |  |   | 4,813   |       |  |         | 23  |    |  |  | 1   |   
|Gain on mortgages sold, net                                  |                           |                        | 242    |       |      |   | 1,004  |          |  |   | 814     |       |  |         | (76 | )  |  |  | 23  |   
|Income from bank owned life insurance                        |                           |                        | 847    |       |      |   | 829    |          |  |   | 184     |       |  |         | 2   |    |  |  | 351 |   
|Income from sale of covered call options                     |                           |                        | 1,110  |       |      |   | 1,167  |          |  |   | 395     |       |  |         | (5  | )  |  |  | 195 |   
|Income from revenue sharing agreement                        |                           |                        |       |       |      |   |       |          |  |   | 450     |       |  |         |    |    |  |  |    |   
|Securities dealer income                                     |                           |                        | 224    |       |      |   | 64     |          |  |   |        |       |  |         | 250 |    |  |  |    |   
|Other operating income                                       |                           |                        | 1,398  |       |      |   | 1,305  |          |  |   | 1,403   |       |  |         | 7   |    |  |  | (7  | ) 
|Investment securities gains, net                             |                           |                        | 341    |       |      |   | 217    |          |  |   | 314     |       |  |         | 57  |    |  |  | (31 | ) 
|                                                             |                           |                        |        |       |      |   |        |          |  |   |         |       |  |         |    
|Total                                                        |                           | $                      | 18,532 |       |      | $ | 18,435 |          |  | $ | 17,450  |       |  |         | 1   | %  |  |  | 6   | % 
|                                                             |                           |                        |        |       |      |   |        |          |  |   |         |       |  |         |    



| |                 
| | ----------------
| | 2004 versus 2003







25



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##### Table of Contents

















2003 versus 2002




26



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27



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##### Table of Contents



Summary of Other Expenses




|                                         |                                                                 |                        |        |      |      |   |        |          |   |   |         |      |   |         |     |   |  |  |     |   | 
|---------------------------------------- | --------------------------------------------------------------- | ---------------------- | ------ | ---- | ---- | - | ------ | -------- | - | - | ------- | ---- | - | ------- | --- | - |  |  | --- | - | 
|                                         |                                                                 |                        |        |      |      |   |        | % Change |  
|                                         |                                                                 |                        |        |      |      |   |        |          |  
|                                         |                                                                 | 2004                   |        |      | 2003 |   |        | 2002     |   |   | 04-03 |      |   | 03-02 |    
|                                         |                                                                 |                        |        |      |      |   |        |          |   |   |         |      |   |         |    
|                                         |                                                                 | (Dollars in thousands) |        |      |      |   |       
|Salaries and employee benefits           |                                                                 | $                      | 23,959 |      |      | $ | 23,346 |          |   | $ | 19,610  |      |   |         | 3   | % |  |  | 19  | %
|Occupancy expense                        |                                                                 |                        | 3,389  |      |      |   | 2,893  |          |   |   | 2,188   |      |   |         | 17  |   |  |  | 32  |  
|Equipment expense                        |                                                                 |                        | 2,100  |      |      |   | 1,979  |          |   |   | 1,870   |      |   |         | 6   |   |  |  | 6   |  
|Data processing                          |                                                                 |                        | 1,884  |      |      |   | 1,828  |          |   |   | 1,727   |      |   |         | 3   |   |  |  | 6   |  
|Professional fees                        |                                                                 |                        | 931    |      |      |   | 1,309  |          |   |   | 1,766   |      |   |         | (29 | ) |  |  | (26 | )
|Postage, stationery and supplies         |                                                                 |                        | 1,043  |      |      |   | 1,132  |          |   |   | 1,116   |      |   |         | (8  | ) |  |  | 1   |  
|Advertising and business development     |                                                                 |                        | 2,102  |      |      |   | 1,778  |          |   |   | 1,641   |      |   |         | 18  |   |  |  | 8   |  
|Merchant credit card interchange expense |                                                                 |                        | 4,824  |      |      |   | 3,799  |          |   |   | 3,717   |      |   |         | 27  |   |  |  | 2   |  
|Provision for other real estate owned    |                                                                 |                        | 1,217  |      |      |   | 1,415  |          |   |   |        |      |   |         | (14 | ) |  |  |    |  
|FDIC assessment                          |                                                                 |                        | 224    |      |      |   | 201    |          |   |   | 189     |      |   |         | 11  |   |  |  | 6   |  
|Other operating expenses                 |                                                                 |                        | 2,059  |      |      |   | 1,823  |          |   |   | 1,917   |      |   |         | 13  |   |  |  | (5  | )
|                                         |                                                                 |                        |        |      |      |   |        |          |   |   |         |      |   |         |    
|Total                                    |                                                                 | $                      | 43,732 |      |      | $ | 41,503 |          |   | $ | 35,741  |      |   |         | 5   | % |  |  | 16  | %
|                                         |                                                                 |                        |        |      |      |   |        |          |   |   |         |      |   |         |    
|Expense ratios:                          |                                                                 |                        |        |      |      |   |        |          |   |   |         |      |   |         |     |   |  |  |     |  
|                                         | Operating expenses as a percentage of average assets            |                        |        | 2.2  | %    |   |        | 2.5      | % |   |         | 2.4  | % |         |     |   |  |  |     |   | 
|                                         | Net overhead expenses as a percentage of average earning assets |                        |        | 1.4  |      |   |        | 1.5      |   |   |         | 1.3  |   |         |     |   |  |  |     |   | 
|                                         | Efficiency ratio                                                |                        |        | 60.8 |      |   |        | 59.6     |   |   |         | 55.1 |   |         |     |   |  |  |     |   | 

2004 versus 2003








28



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2003 versus 2002


















29



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##### Table of Contents



Income Tax Expense








FINANCIAL CONDITION


Liquidity












| |   |                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Fed funds lines aggregating $225 million with seven
    correspondent banks, subject to continued good financial
    standing of the Bank. As of December 31, 2004, all
    $225 million was available for use under these lines.                                                                                                      
|
| |  | Reverse repurchase agreement lines aggregating $400 million
    with four brokerage firms subject to the pledge of specific
    collateral and continued good financial standing of the Bank. As
    of December 31, 2004, all $400 million was available
    for use under these lines, subject to the availability of
    collateral.

30



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##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | An investment security is pledged towards a reverse repurchase
    agreement at the time the Bank enters into such agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Advances from the FHLB of Chicago subject to the pledge of
    specific collateral and ownership of sufficient FHLB of Chicago
    stock. As of December 31, 2004, advances totaled
    $161.4 million and approximately $8.7 million remained
    available to the Bank under the FHLB of Chicago agreements
    without the pledge of additional collateral. The Bank has
    pledged substantially all residential mortgage loans and
    specifically listed multi-family mortgage loans and agency
    securities towards the advances. Additional advances can be
    obtained subject to the availability of collateral.
|
| |  | The Bank has a borrowing line of approximately
    $206.2 million at the discount window of the Federal
    Reserve Bank, subject to the availability of collateral. The
    Bank has pledged substantially all construction loans and the
    majority of commercial mortgage loans against this line. The
    line was unused at December 31, 2004.                                                                                                                                                                                                                                                                          







| |   |                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company has cash, short-term investments and other
    marketable securities totaling $12.1 million at
    December 31, 2004.                                                                                     
|
| |  | The Company has an unsecured revolving credit arrangement for
    $15 million. The line was unused at December 31, 2004.
    The line was renewed through April 1, 2005 and is
    anticipated to be renewed annually.

Interest Rate Sensitivity






31



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##### Table of Contents



|                                                                        |  |                        |    |   |        |   |     |        |  |   |         |    |  |         |      |    |  |   |        |   
|----------------------------------------------------------------------- |  | ---------------------- | -- | - | ------ | - | --- | ------ |  | - | ------- | -- |  | ------- | ---- | -- |  | - | ------ | --
|                                                                        |  | 2004                   |   
|                                                                        |  |                        |   
|                                                                        |  | -100 bp                |    |   | -25 bp |   |     | +25 bp |  |   | +100 bp |    |  | +200 bp |     
|                                                                        |  |                        |    |   |        |   |     |        |  |   |         |    |  |         |     
|                                                                        |  | (Dollars in thousands) |   
|Annual net interest income change from an immediate change in
    rates |  | $                      | 13 |   |        | $ | (80 | )      |  | $ | (57     | )  |  | $       | (840 | )  |  | $ | (1,922 | ) 
|Percent change                                                          |  |                        |   | % |        |   | (.2 | )%     |  |   | (.1     | )% |  |         | (1.7 | )% |  |   | (3.9   | )%

|                                                                        |  |                        |        |    |        |   |      |        |  |   |         |   |  |         |     |   |  |   |     |  
|----------------------------------------------------------------------- |  | ---------------------- | ------ | -- | ------ | - | ---- | ------ |  | - | ------- | - |  | ------- | --- | - |  | - | --- | -
|                                                                        |  | 2003                   |       
|                                                                        |  |                        |       
|                                                                        |  | -100 bp                |        |    | -25 bp |   |      | +25 bp |  |   | +100 bp |   |  | +200 bp |    
|                                                                        |  |                        |        |    |        |   |      |        |  |   |         |   |  |         |    
|                                                                        |  | (Dollars in thousands) |       
|Annual net interest income change from an immediate change in
    rates |  | $                      | (1,177 | )  |        | $ | (246 | )      |  | $ | 184     |   |  | $       | 265 |   |  | $ | 500 |  
|Percent change                                                          |  |                        | (2.3   | )% |        |   | (.5  | )%     |  |   | .4      | % |  |         | .5  | % |  |   | 1.0 | %







32



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##### Table of Contents





Interest Rate Sensitive Position


|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |         |         |           |  |   |           |           | 
|------------------------------------ | ------------------------------------------------------- | ---------------------- | -------- | ------- | ----------- | - | -------- | ------------ | --------- | - | ----------- | ------- | --------- | ----- | ------- | ------- | --------- |  | - | --------- | --------- | 
|                                     |                                                         | 1-90 days              |          |         | 91-180 days |   |          | 181-365 days |           |   | Over 1 year |         |           | Total |        
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|                                     |                                                         | (Dollars in thousands) |         
|Rate sensitive assets:               |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |         |         |           |  |   |          
|                                     | Fed funds sold and interest-bearing deposits with banks |                        | $        | 51,479  |             |   | $        |             |           |   | $           |        |           |       | $       |        |           |  | $ | 51,479    |          
|                                     | Taxable securities                                      |                        |          | 15,113  |             |   |          | 3,195        |           |   |             | 5,380   |           |       |         | 777,357 |           |  |   | 801,045   |          
|                                     | Tax exempt securities                                   |                        |          | 2,420   |             |   |          | 520          |           |   |             | 5,281   |           |       |         | 31,811  |           |  |   | 40,032    |          
|                                     | Loans, net of unearned discount                         |                        |          | 446,903 |             |   |          | 67,451       |           |   |             | 116,082 |           |       |         | 441,219 |           |  |   | 1,071,655 |          
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|                                     |                                                         | Total                  |          | $       | 515,915     |   |          | $            | 71,166    |   |             | $       | 126,743   |       |         | $       | 1,250,387 |  |   | $         | 1,964,211 | 
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|                                     |                                                         | Cumulative total       |          | $       | 515,915     |   |          | $            | 587,081   |   |             | $       | 713,824   |       |         | $       | 1,964,211 |  |   |           |           | 
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|Rate sensitive liabilities:          |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |         |         |           |  |   |          
|                                     | Savings deposits and NOW accounts                       |                        | $        | 291,028 |             |   | $        |             |           |   | $           |        |           |       | $       |        |           |  | $ | 291,028   |          
|                                     | Money market accounts                                   |                        |          | 166,777 |             |   |          |             |           |   |             |        |           |       |         |        |           |  |   | 166,777   |          
|                                     | Time deposits                                           |                        |          | 324,933 |             |   |          | 250,717      |           |   |             | 210,148 |           |       |         | 205,682 |           |  |   | 991,480   |          
|                                     | Borrowings                                              |                        |          | 157,110 |             |   |          | 6,006        |           |   |             | 5,018   |           |       |         | 50,074  |           |  |   | 218,208   |          
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|                                     |                                                         | Total                  |          | $       | 939,848     |   |          | $            | 256,723   |   |             | $       | 215,166   |       |         | $       | 255,756   |  |   | $         | 1,667,493 | 
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|                                     |                                                         | Cumulative total       |          | $       | 939,848     |   |          | $            | 1,196,571 |   |             | $       | 1,411,737 |       |         | $       | 1,667,493 |  |   |           |           | 
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|Cumulative gap                       |                                                         | $                      | (423,933 | )       |             | $ | (609,490 | )            |           | $ | (697,913    | )       |           | $     | 296,718 |         |           |  |   |          
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        
|Cumulative gap to total assets ratio |                                                         |                        | (20.36   | )%      |             |   | (29.27   | )%           |           |   | (33.51      | )%      |           |       | 14.25%  |         |           |  |   |          
|                                     |                                                         |                        |          |         |             |   |          |              |           |   |             |         |           |       |        

Off-Balance Sheet Arrangements and Other Contractual
Obligations and Commitments


Off-Balance Sheet
Arrangements




Contractual
Obligations




33



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##### Table of Contents





|                                      |  |                        |        |  |             |   |        |            |  |   |              |  |  |       |        |  |  |   |         | 
|------------------------------------- |  | ---------------------- | ------ |  | ----------- | - | ------ | ---------- |  | - | ------------ |  |  | ----- | ------ |  |  | - | ------- | 
|                                      |  | Less than              |        |  | One to      |   |        | Three to   |  |   |              |  | 
|                                      |  | one year               |        |  | three years |   |        | five years |  |   | Over 5 years |  |  | Total |       
|                                      |  |                        |        |  |             |   |        |            |  |   |              |  |  |       |       
|                                      |  | (Dollars in thousands) |       
|Long term borrowings                  |  | $                      | 42,500 |  |             | $ | 22,000 |            |  | $ | 96,918       |  |  | $     | 23,713 |  |  | $ | 185,131 | 
|Operating lease obligations           |  |                        | 469    |  |             |   | 985    |            |  |   | 827          |  |  |       | 355    |  |  |   | 2,636   | 
|Employment benefit
    obligations(1) |  |                        | 22     |  |             |   | 648    |            |  |   | 199          |  |  |       | 3,325  |  |  |   | 4,194   | 
|Purchase obligations                  |  |                        | 455    |  |             |   | 400    |            |  |   |             |  |  |       |       |  |  |   | 855     | 
|                                      |  |                        |        |  |             |   |        |            |  |   |              |  |  |       |       
|                                      |  | $                      | 43,446 |  |             | $ | 24,033 |            |  | $ | 97,944       |  |  | $     | 27,393 |  |  | $ | 192,816 | 
|                                      |  |                        |        |  |             |   |        |            |  |   |              |  |  |       |       






|    |                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Balances represent the current actuarial calculation of present
    value of potential payout on the supplemental pension agreements
    assuming payout begins when fully vested. This total also
    includes the liability for the executive deferred compensation
    plan assuming retirement at age 72.

Commitments








|                                      |                                                      |                        |         |        |              |   |        |               |  |   |                 |        |  |   |         |         | 
|------------------------------------- | ---------------------------------------------------- | ---------------------- | ------- | ------ | ------------ | - | ------ | ------------- |  | - | --------------- | ------ |  | - | ------- | ------- | 
|                                      |                                                      | Less than              |         |        |              |   |        |               | 
|                                      |                                                      | one year               |         |        | One to three |   |        | Three to five |  |   | Over five years |       
|                                      |                                                      |                        |         |        |              |   |        |               |  |   |                 |       
|                                      |                                                      | (Dollars in thousands) |        
|Commercial loans                      |                                                      | $                      | 42,350  |        |              | $ | 9,111  |               |  | $ | 4,259           |        |  | $ | 8       |        
|Syndicated loans                      |                                                      |                        |        |        |              |   | 6,164  |               |  |   | 53,333          |        |  |   | 3,079   |        
|Real estate:                          |                                                      |                        |         |        |              |   |        |               |  |   |                 |        |  |   |         |        
|                                      | Construction, land acquisition and development loans |                        |         | 45,443 |              |   |        | 30,851        |  |   |                 | 12,874 |  |   |         |        | 
|                                      | Commercial mortgage                                  |                        |         | 250    |              |   |        | 713           |  |   |                 |       |  |   |         | 388     | 
|                                      | Home equity loans                                    |                        |         | 1,162  |              |   |        | 11,207        |  |   |                 | 30,886 |  |   |         | 112,781 | 
|                                      | Residential mortgage                                 |                        |         | 127    |              |   |        |              |  |   |                 |       |  |   |         |        | 
|Check credit                          |                                                      |                        | 727     |        |              |   |       |               |  |   |                |        |  |   |        |        
|Consumer                              |                                                      |                        | 35      |        |              |   |       |               |  |   |                |        |  |   |        |        
|Performance standby letters of credit |                                                      |                        | 8,183   |        |              |   | 3,851  |               |  |   |                |        |  |   |        |        
|Financial standby letters of credit   |                                                      |                        | 1,905   |        |              |   | 307    |               |  |   | 2,788           |        |  |   | 1,922   |        
|                                      |                                                      |                        |         |        |              |   |        |               |  |   |                 |       
|Total commitments                     |                                                      | $                      | 100,182 |        |              | $ | 62,204 |               |  | $ | 104,140         |        |  | $ | 118,178 |        
|                                      |                                                      |                        |         |        |              |   |        |               |  |   |                 |       

34



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##### Table of Contents



Investment Securities




|                                           |  |                        |         |  |      |   |         |      |  |   |         | 
|------------------------------------------ |  | ---------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                           |  | December 31,           |        
|                                           |  |                        |        
|                                           |  | 2004                   |         |  | 2003 |   |         | 2002 | 
|                                           |  |                        |         |  |      |   |         |      | 
|                                           |  | (Dollars in thousands) |        
|U.S. Treasury                              |  | $                      | 20,101  |  |      | $ | 61,745  |      |  | $ | 26,436  | 
|U.S. Government agencies                   |  |                        | 673,227 |  |      |   | 558,501 |      |  |   | 382,274 | 
|Agency mortgage-backed securities          |  |                        | 44,940  |  |      |   | 47,384  |      |  |   | 5,111   | 
|Agency collateralized mortgage obligations |  |                        | 183     |  |      |   | 190     |      |  |   | 335     | 
|State and municipal obligations            |  |                        | 43,697  |  |      |   | 40,768  |      |  |   | 42,144  | 
|Corporate and other securities             |  |                        | 58,929  |  |      |   | 74,883  |      |  |   | 51,185  | 
|                                           |  |                        |         |  |      |   |         |      | 
|Total investment portfolio                 |  | $                      | 841,077 |  |      | $ | 783,471 |      |  | $ | 507,485 | 
|                                           |  |                        |         |  |      |   |         |      | 





U.S. Treasury securities:


U.S. Government agencies and mortgage-backed securities:




State and municipal obligations:


35



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##### Table of Contents





Corporate and other securities:








|                                 |                    |                        |           |          |           |             |           |          |          
|-------------------------------- | ------------------ | ---------------------- | --------- | -------- | --------- | ----------- | --------- | -------- | ---------
|                                 |                    | Callable               |           | Callable |           | Callable in |           | Callable
|                                 |                    | in                     |           | in       |           | 2007 and    |           | in      
|                                 |                    | 2005                   |           | 2006     |           | Beyond      |           | Total   
|                                 |                    |                        |           |          |           |             |           |         
|                                 |                    | (Dollars in thousands)
|U.S. Government agencies:        |                    |                        |           |          |           |             |           |         
|                                 | Total callable     |                        | $549,919  |          | $81,043   |             | $20,488   |          | $651,450 
|                                 | In-the-money calls |                        | $285,595  |          | $19,515   |             | $20,488   |          | $325,598 
|                                 | Coupon range       |                        | 2.3%-6.0% |          | 4.4%-5.4% |             | 5.0%-6.0% |          | 2.3%-6.0%
|State and municipal obligations: |                    |                        |           |          |           |             |           |         
|                                 | Total callable     |                        | $4,638    |          | $1,335    |             | $2,805    |          | $8,778   
|                                 | In-the-money calls |                        | $3,878    |          | $1,335    |             | $2,477    |          | $7,690   
|                                 | Coupon range       |                        | 2.4%-6.4% |          | 5.7%-7.5% |             | 3.4%-5.5% |          | 2.4%-7.5%
|Corporate and other securities:  |                    |                        |           |          |           |             |           |         
|                                 | Total callable     |                        | $6,116    |          | $9,923    |             | $13,666   |          | $29,705  
|                                 | In-the-money calls |                        | $1,116    |          | $4,261    |             | $10,687   |          | $16,064  
|                                 | Coupon range       |                        | 3.2%-4.7% |          | 2.4%-9.0% |             | 2.9%-8.4% |          | 2.4%-9.0%



2003




36



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##### Table of Contents





U.S. Treasury securities:


U.S. Government agencies and mortgage-backed securities:


State and municipal obligations:


Corporate and other securities:




Analysis of Investment
Portfolio(1)


|                           |  |                        |        |  |                 |  |      |                     |  |   |                  |  |  |        |      |   |          |   |        |        |  |  |       |   |  |        |        |  |       |  |      |   |  |   |         |  |  |  |      |  
|-------------------------- |  | ---------------------- | ------ |  | --------------- |  | ---- | ------------------- |  | - | ---------------- |  |  | ------ | ---- | - | -------- | - | ------ | ------ |  |  | ----- | - |  | ------ | ------ |  | ----- |  | ---- | - |  | - | ------- |  |  |  | ---- | -
|                           |  | U.S. Treasury          |        |  | U.S. Government |  |      | State and Municipal |  |   | Corporate and    |  |  |       
|                           |  | Securities             |        |  | Agencies(2)     |  |      | Obligations         |  |   | Other Securities |  |  | Total  |     
|                           |  |                        |        |  |                 |  |      |                     |  |   |                  |  |  |        |     
|                           |  | Amount                 |        |  | Yield           |  |      | Amount              |  |   | Yield            |  |  | Amount |      |   | Yield(3) |   |        | Amount |  |  | Yield |   |  | Amount |        |  | Yield | 
|                           |  |                        |        |  |                 |  |      |                     |  |   |                  |  |  |        |      |   |          |   |        |        |  |  |       |   |  |        |        |  |       | 
|                           |  | (Dollars in thousands) |        |  |                 |  |     
|Maturities:                |  |                        |        |  |                 |  |      |                     |  |   |                  |  |  |        |      |   |          |   |        |        |  |  |       |   |  |        |        |  |       |  |      |   |  |   |         |  |  |  |      |  
|Within 1 year              |  | $                      |       |  |                 |  |     | %                   |  | $ | 5,064            |  |  |        | 4.55 | % |          | $ | 8,337  |        |  |  | 3.57  | % |  | $      |       |  |       |  |     | % |  | $ | 13,401  |  |  |  | 3.94 | %
|15 years                  |  |                        |       |  |                 |  |     |                     |  |   | 280,282          |  |  |        | 3.46 |   |          |   | 24,626 |        |  |  | 4.55  |   |  |        | 2,566  |  |       |  | 6.59 |   |  |   | 307,474 |  |  |  | 3.57 |  
|510 years                 |  |                        | 20,101 |  |                 |  | 3.80 |                     |  |   | 432,691          |  |  |        | 4.51 |   |          |   | 10,685 |        |  |  | 3.88  |   |  |        | 1,985  |  |       |  | 4.08 |   |  |   | 465,462 |  |  |  | 4.46 |  
|After 10 years             |  |                        |       |  |                 |  |     |                     |  |   | 313              |  |  |        | 3.03 |   |          |   | 49     |        |  |  | 4.95  |   |  |        | 25,340 |  |       |  | 6.82 |   |  |   | 25,702  |  |  |  | 6.77 |  
|Other
    Securities(4)    |  |                        |       |  |                 |  |     |                     |  |   |                 |  |  |        |     |   |          |   |       |        |  |  |      |   |  |        | 29,038 |  |       |  |     |   |  |   | 29,038  |  |  |  |     |  
|                           |  |                        |        |  |                 |  |      |                     |  |   |                  |  |  |        |      |   |          |   |        |        |  |  |       |   |  |        |        |  |       | 
|                           |  | $                      | 20,101 |  |                 |  | 3.80 | %                   |  | $ | 718,350          |  |  |        | 4.10 | % |          | $ | 43,697 |        |  |  | 4.20  | % |  | $      | 58,929 |  |       |  | 6.61 | % |  | $ | 841,077 |  |  |  | 4.18 | %
|                           |  |                        |        |  |                 |  |      |                     |  |   |                  |  |  |        |      |   |          |   |        |        |  |  |       |   |  |        |        |  |       | 
|Average months to maturity |  |                        | 100    |  |                 |  |      |                     |  |   | 70               |  |  |        |      |   |          |   | 44     |        |  |  |       |   |  |        | 270    |  |       |  |      |   |  |   | 76      |  |  |  |      |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts listed in the table are at carrying value and the yield
    is calculated based on amortized cost.                                                                                                                                                                                                                                                                                                                                                                    
|(2) | Included in U.S. Government agencies are agency mortgage-backed
    securities (MBS) and agency collateralized mortgage
    obligations (CMOs). Given the amortizing nature of
    MBS and CMOs, the maturities presented in the table are based on
    their estimated average lives at December 31, 2004. The
    estimated average lives may differ from actual principal cash
    flows since cash flows include prepayments and scheduled
    principal amortization.
|(3) | Yields on state and municipal obligations include the effects of
    tax equivalent adjustments using a tax rate of 35%.                                                                                                                                                                                                                                                                                                                                                      
|(4) | Other securities include FHLB of Chicago stock, FNMA perpetual
    preferred stock, money market funds, and corporate equity
    securities which have no stated maturity date; other securities
    are not included in the average months to maturity or the
    average yield.                                                                                                                                                                                             

37



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##### Table of Contents



Loans


|                  |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |         |         |  |   |         |         | 
|----------------- | ---------------------------------------------- | ---------------------- | --------- | --------- | ---- | - | ------- | ------- |  | - | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                  |                                                | December 31,           |          
|                  |                                                |                        |          
|                  |                                                | 2004                   |           |           | 2003 |   |         | 2002    |  |   | 2001    |         |  | 2000 |        
|                  |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |        
|                  |                                                | (Dollars in thousands) |          
|Commercial        |                                                | $                      | 116,653   |           |      | $ | 95,761  |         |  | $ | 96,681  |         |  | $    | 100,975 |         |  | $ | 101,024 |        
|Syndicated        |                                                |                        | 34,958    |           |      |   | 33,088  |         |  |   | 39,285  |         |  |      | 45,716  |         |  |   | 35,290  |        
|Real estate:      |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |         |         |  |   |         |        
|                  | Construction, land acquisition and development |                        |           | 75,833    |      |   |         | 40,493  |  |   |         | 60,805  |  |      |         | 102,594 |  |   |         | 46,082  | 
|                  | Commercial mortgage                            |                        |           | 247,840   |      |   |         | 234,967 |  |   |         | 245,099 |  |      |         | 213,689 |  |   |         | 181,380 | 
|                  | Residential mortgage                           |                        |           | 109,097   |      |   |         | 101,133 |  |   |         | 100,840 |  |      |         | 105,168 |  |   |         | 127,794 | 
|                  | Home equity                                    |                        |           | 151,873   |      |   |         | 139,926 |  |   |         | 123,531 |  |      |         | 112,877 |  |   |         | 102,841 | 
|Indirect vehicle: |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |         |         |  |   |         |        
|                  | Auto                                           |                        |           | 276,411   |      |   |         | 226,877 |  |   |         | 206,568 |  |      |         | 205,298 |  |   |         | 213,940 | 
|                  | Harley Davidson motorcycle                     |                        |           | 51,560    |      |   |         | 35,957  |  |   |         | 29,552  |  |      |         | 19,013  |  |   |         | 5,408   | 
|Consumer          |                                                |                        | 7,443     |           |      |   | 7,487   |         |  |   | 9,731   |         |  |      | 11,353  |         |  |   | 11,399  |        
|                  |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |        
|                  |                                                | $                      | 1,071,668 |           |      | $ | 915,689 |         |  | $ | 912,092 |         |  | $    | 916,683 |         |  | $ | 825,158 |        
|Less:             |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |         |         |  |   |         |        
|                  | Unearned discount                              |                        |           | 13        |      |   |         | 11      |  |   |         | 11      |  |      |         | 38      |  |   |         | 138     | 
|                  | Allowance for loan losses                      |                        |           | 8,546     |      |   |         | 8,369   |  |   |         | 7,351   |  |      |         | 6,982   |  |   |         | 5,682   | 
|                  |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |        
|                  | Loans, net                                     |                        | $         | 1,063,109 |      |   | $       | 907,309 |  |   | $       | 904,730 |  |      | $       | 909,663 |  |   | $       | 819,338 | 
|                  |                                                |                        |           |           |      |   |         |         |  |   |         |         |  |      |        

2004










38



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2003






39



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40



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Maturity Distribution of Selected Loans


|                          |                                                |                        |         |        |             |   |         |             |  |   |          |         |  |       |        |        |  |   |         |         | 
|------------------------- | ---------------------------------------------- | ---------------------- | ------- | ------ | ----------- | - | ------- | ----------- |  | - | -------- | ------- |  | ----- | ------ | ------ |  | - | ------- | ------- | 
|                          |                                                | One year               |         |        | One to five |   |         | Five to ten |  |   | Over ten |         |  |      
|                          |                                                | or less(1)             |         |        | years       |   |         | years       |  |   | years    |         |  | Total |       
|                          |                                                |                        |         |        |             |   |         |             |  |   |          |         |  |       |       
|                          |                                                | (Dollars in thousands) |        
|Commercial and Syndicated |                                                | $                      | 43,536  |        |             | $ | 93,983  |             |  | $ | 9,580    |         |  | $     | 4,512  |        |  | $ | 151,611 |        
|Real estate:              |                                                |                        |         |        |             |   |         |             |  |   |          |         |  |       |        |        |  |   |         |        
|                          | Construction, land acquisition and development |                        |         | 47,405 |             |   |         | 28,428      |  |   |          |        |  |       |        |       |  |   |         | 75,833  | 
|                          | Commercial mortgage                            |                        |         | 11,293 |             |   |         | 183,913     |  |   |          | 46,676  |  |       |        | 5,958  |  |   |         | 247,840 | 
|                          | Residential mortgage                           |                        |         | 877    |             |   |         | 30,159      |  |   |          | 6,961   |  |       |        | 71,100 |  |   |         | 109,097 | 
|                          | Home equity                                    |                        |         | 1,706  |             |   |         | 41,751      |  |   |          | 108,416 |  |       |        |       |  |   |         | 151,873 | 
|                          |                                                |                        |         |        |             |   |         |             |  |   |          |         |  |       |       
|                          |                                                | $                      | 104,817 |        |             | $ | 378,234 |             |  | $ | 171,633  |         |  | $     | 81,570 |        |  | $ | 736,254 |        
|                          |                                                |                        |         |        |             |   |         |             |  |   |          |         |  |       |       






|    |                       
|--- | ----------------------
|(1) | Includes demand notes.



|                          |                                                |                        |         |         |          |   |         |         |  |   |         |         | 
|------------------------- | ---------------------------------------------- | ---------------------- | ------- | ------- | -------- | - | ------- | ------- |  | - | ------- | ------- | 
|                          |                                                | Fixed                  |         |         | Variable |   |         |        
|                          |                                                | Rate                   |         |         | Rate     |   |         | Total   | 
|                          |                                                |                        |         |         |          |   |         |         | 
|                          |                                                | (Dollars in thousands) |        
|Commercial and Syndicated |                                                | $                      | 26,871  |         |          | $ | 81,204  |         |  | $ | 108,075 |        
|Real estate:              |                                                |                        |         |         |          |   |         |         |  |   |         |        
|                          | Construction, land acquisition and development |                        |         | 1,837   |          |   |         | 26,591  |  |   |         | 28,428  | 
|                          | Commercial mortgage                            |                        |         | 161,066 |          |   |         | 75,481  |  |   |         | 236,547 | 
|                          | Residential mortgage                           |                        |         | 84,916  |          |   |         | 23,304  |  |   |         | 108,220 | 
|                          | Home equity                                    |                        |         | 1,444   |          |   |         | 148,723 |  |   |         | 150,167 | 
|                          |                                                |                        |         |         |          |   |         |         | 
|                          |                                                | $                      | 276,134 |         |          | $ | 355,303 |         |  | $ | 631,437 |        
|                          |                                                |                        |         |         |          |   |         |         | 

The
Wall Street Journals


Allowance for Loan Losses






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42



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Summary of Loan Loss Experience


|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |         |      |   |      |         |      |   |      |  
|------------------------------------------------------------------------------------------------------------ | ------------------------------------- | ---------------------------------------------------- | ----------------- | ---- | ---- | ---- | ------- | ---- | --- | ------ | ------- | ---- | ------- | ------- | ------- | ---- | - | ---- | ------- | ---- | - | ---- | -
|                                                                                                             |                                       | 2004                                                 |                   |      | 2003 |      |         | 2002 |     |        | 2001    |      |         | 2000    |        
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|                                                                                                             |                                       | (Dollars in thousands)                               |                  
|Average loans for the year, net of unearned discount and
    allowance for loan losses                       |                                       | $                                                    | 990,646           |      |      | $    | 882,375 |      |     | $      | 916,377 |      |         | $       | 863,681 |      |   | $    | 772,992 |     
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|Allowance for loan losses, beginning of the year                                                             |                                       | $                                                    | 8,369             |      |      | $    | 7,351   |      |     | $      | 6,982   |      |         | $       | 5,682   |      |   | $    | 4,828   |     
|Charge-offs during the
    year:(1)                                                                          |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |         |      |   |      |         |     
|                                                                                                             | Real estate:                          |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |         |      |   |      |         |      |  
|                                                                                                             |                                       | Construction, land acquisition and development loans |                   |      | (64  | )    |         |      |    |        |         |      | (13,963 | )       |         |      |  |      |         |      |  |     
|                                                                                                             |                                       | Commercial mortgage loans                            |                   |      | (28  | )    |         |      |    |        |         |      |        |         |         |      |  |      |         |      |  |     
|                                                                                                             |                                       | Home equity loans                                    |                   |      | (15  | )    |         |      |    |        |         |      |        |         |         |      |  |      |         |      |  |     
|                                                                                                             | Commercial loans                      |                                                      |                   | (76  | )    |      |         |     |     |        |         |     |         |         |         | (7   | ) |      |         | (40  | )
|                                                                                                             | Syndicated loans                      |                                                      |                   |     |      |      |         | (815 | )   |        |         |     |         |         |         |     |   |      |         |     |  
|                                                                                                             | Indirect vehicle loans                |                                                      |                   | (486 | )    |      |         | (478 | )   |        |         | (533 | )       |         |         | (304 | ) |      |         | (150 | )
|                                                                                                             | Overdraft loans and uncollected funds |                                                      |                   | (5   | )    |      |         | (5   | )   |        |         | (11  | )       |         |         | (3   | ) |      |         | (4   | )
|                                                                                                             | Consumer loans                        |                                                      |                   | (9   | )    |      |         | (8   | )   |        |         | (4   | )       |         |         | (9   | ) |      |         | (16  | )
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|                                                                                                             |                                       |                                                      | Total charge-offs |      |      | (683 | )       |      |     | (1,306 | )       |      |         | (14,511 | )       |      |   | (323 | )       |      |   | (210 | )
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|Recoveries during the
    year:(1)                                                                           |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |         |      |   |      |         |     
|                                                                                                             | Real estate:                          |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |         |      |   |      |         |      |  
|                                                                                                             |                                       | Construction, land acquisition and development loans |                   |      | 15   |      |         |      | 492 |        |         |      |        |         |         |      |  |      |         |      |  |     
|                                                                                                             |                                       | Home equity loans                                    |                   |      | 15   |      |         |      |    |        |         |      |        |         |         |      |  |      |         |      |  |     
|                                                                                                             | Commercial loans                      |                                                      |                   | 1    |      |      |         | 1    |     |        |         | 44   |         |         |         |     |   |      |         | 75   |  
|                                                                                                             | Indirect vehicle loans                |                                                      |                   | 272  |      |      |         | 215  |     |        |         | 161  |         |         |         | 41   |   |      |         | 32   |  
|                                                                                                             | Overdraft loans and uncollected funds |                                                      |                   | 50   |      |      |         |     |     |        |         | 1    |         |         |         | 1    |   |      |         | 1    |  
|                                                                                                             | Consumer loans                        |                                                      |                   | 7    |      |      |         | 16   |     |        |         | 24   |         |         |         | 31   |   |      |         | 56   |  
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|                                                                                                             |                                       |                                                      | Total recoveries  |      |      | 360  |         |      |     | 724    |         |      |         | 230     |         |      |   | 73   |         |      |   | 164  |  
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|Net charge-offs during the year                                                                              |                                       |                                                      | (323              | )    |      |      | (582    | )    |     |        | (14,281 | )    |         |         | (250    | )    |   |      | (46     | )   
|Provision for loan losses                                                                                    |                                       |                                                      | 500               |      |      |      | 1,600   |      |     |        | 14,650  |      |         |         | 1,550   |      |   |      | 900     |     
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|Allowance for loan losses, end of year                                                                       |                                       | $                                                    | 8,546             |      |      | $    | 8,369   |      |     | $      | 7,351   |      |         | $       | 6,982   |      |   | $    | 5,682   |     
|                                                                                                             |                                       |                                                      |                   |      |      |      |         |      |     |        |         |      |         |         |        
|Ratio of net charge-offs to average loans outstanding                                                        |                                       |                                                      | .03               | %    |      |      | .07     | %    |     |        | 1.54    | %    |         |         | .03     | %    |   |      | .01     | %   
|Allowance for loan losses as a percent of loans outstanding, net
    of unearned discount at end of the year |                                       |                                                      | .80               | %    |      |      | .91     | %    |     |        | .81     | %    |         |         | .76     | %    |   |      | .69     | %   
|Ratio of allowance for loan losses to nonperforming loans                                                    |                                       |                                                      | 57.74             | x    |      |      | 15.44   | x    |     |        | 5.09    | x    |         |         | 4.03    | x    |   |      | 12.94   | x   






|    |                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | There have been no losses or recoveries in residential mortgage
    loan portfolio and no recoveries in the commercial mortgage and
    syndicated loan portfolios over the past five years.



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Allocation of Allowance for Loan Losses


|                                         |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |       |       |      |       |       |       |      |       | 
|---------------------------------------- | ---------------------- | ---------------------------------------------------- | --------------- | ----- | ---- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | ---- | ----- | 
|                                         |                        | December 31,                                         |                
|                                         |                        |                                                      |                
|                                         |                        | 2004                                                 |                 |       | 2003 |       |       | 2002  |      |       | 2001  |       |      | 2000  |      
|                                         |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |      
|                                         |                        | (Dollars in thousands)                               |                
|Allocation of allowance for loan losses: |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |       |       |      |       |       |      
|                                         | Commercial loans       |                                                      | $               | 821   |      |       | $     | 951   |      |       | $     | 1,125 |      |       | $     | 887   |      |       | $     | 626   |     
|                                         | Syndicated loans       |                                                      |                 | 567   |      |       |       | 582   |      |       |       | 2,531 |      |       |       | 810   |      |       |       | 143   |     
|                                         | Real estate:           |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |       |       |      |       |       |       |     
|                                         |                        | Construction, land acquisition and development loans |                 |       | 332  |       |       |       | 42   |       |       |       | 64   |       |       |       | 257  |       |       |       | 210  |      
|                                         |                        | Commercial mortgage loans                            |                 |       | 381  |       |       |       | 386  |       |       |       | 740  |       |       |       | 413  |       |       |       | 83   |      
|                                         |                        | Residential mortgage loans                           |                 |       | 71   |       |       |       | 75   |       |       |       | 100  |       |       |       | 56   |       |       |       | 57   |      
|                                         |                        | Home equity loans                                    |                 |       | 45   |       |       |       | 46   |       |       |       | 47   |       |       |       | 44   |       |       |       | 116  |      
|                                         | Indirect vehicle loans |                                                      |                 | 1,521 |      |       |       | 1,319 |      |       |       | 1,233 |      |       |       | 1,241 |      |       |       | 1,104 |     
|                                         | Consumer loans         |                                                      |                 | 39    |      |       |       | 42    |      |       |       | 47    |      |       |       | 54    |      |       |       | 82    |     
|                                         | Unallocated            |                                                      |                 | 4,769 |      |       |       | 4,926 |      |       |       | 1,464 |      |       |       | 3,220 |      |       |       | 3,261 |     
|                                         |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |      
|                                         |                        |                                                      | Total allowance |       | $    | 8,546 |       |       | $    | 8,369 |       |       | $    | 7,351 |       |       | $    | 6,982 |       |       | $    | 5,682 | 
|                                         |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |      
|Percentage of loans to gross loans:      |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |       |       |      |       |       |      
|                                         | Commercial             |                                                      |                 | 10.9  | %    |       |       | 10.5  | %    |       |       | 10.6  | %    |       |       | 11.0  | %    |       |       | 12.2  | %   
|                                         | Syndicated             |                                                      |                 | 3.3   |      |       |       | 3.6   |      |       |       | 4.3   |      |       |       | 5.0   |      |       |       | 4.3   |     
|                                         | Real estate:           |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |       |       |      |       |       |       |     
|                                         |                        | Construction, land acquisition and development       |                 |       | 7.1  |       |       |       | 4.4  |       |       |       | 6.6  |       |       |       | 11.2 |       |       |       | 5.6  |      
|                                         |                        | Commercial mortgage                                  |                 |       | 23.1 |       |       |       | 25.7 |       |       |       | 26.9 |       |       |       | 23.3 |       |       |       | 22.0 |      
|                                         |                        | Residential mortgage                                 |                 |       | 10.2 |       |       |       | 11.0 |       |       |       | 11.1 |       |       |       | 11.5 |       |       |       | 15.5 |      
|                                         |                        | Home equity                                          |                 |       | 14.2 |       |       |       | 15.3 |       |       |       | 13.5 |       |       |       | 12.3 |       |       |       | 12.4 |      
|                                         | Indirect vehicle       |                                                      |                 | 30.6  |      |       |       | 28.7  |      |       |       | 25.9  |      |       |       | 24.5  |      |       |       | 26.6  |     
|                                         | Consumer               |                                                      |                 | 0.6   |      |       |       | 0.8   |      |       |       | 1.1   |      |       |       | 1.2   |      |       |       | 1.4   |     
|                                         |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |      
|                                         |                        |                                                      | 100.0           | %     |      |       | 100.0 | %     |      |       | 100.0 | %     |      |       | 100.0 | %     |      |       | 100.0 | %    
|                                         |                        |                                                      |                 |       |      |       |       |       |      |       |       |       |      |       |      





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Asset Quality






|                                               |                            |                        |       |        |      |   |        |        |  |   |       |       |  |      |       |       |  |   |     |     | 
|---------------------------------------------- | -------------------------- | ---------------------- | ----- | ------ | ---- | - | ------ | ------ |  | - | ----- | ----- |  | ---- | ----- | ----- |  | - | --- | --- | 
|                                               |                            | December 31,           |      
|                                               |                            |                        |      
|                                               |                            | 2004                   |       |        | 2003 |   |        | 2002   |  |   | 2001  |       |  | 2000 |      
|                                               |                            |                        |       |        |      |   |        |        |  |   |       |       |  |      |      
|                                               |                            | (Dollars in thousands) |      
|Nonaccruing loans                              |                            | $                      |      |        |      | $ | 293    |        |  | $ | 821   |       |  | $    | 1,295 |       |  | $ | 121 |    
|Loans which are past due 90 days or more       |                            |                        | 148   |        |      |   | 249    |        |  |   | 623   |       |  |      | 437   |       |  |   | 318 |    
|                                               |                            |                        |       |        |      |   |        |        |  |   |       |       |  |      |      
|                                               | Total nonperforming loans  |                        |       | 148    |      |   |        | 542    |  |   |       | 1,444 |  |      |       | 1,732 |  |   |     | 439 | 
|Other real estate owned                        |                            |                        | 9,857 |        |      |   | 16,130 |        |  |   | 7,944 |       |  |      |      |       |  |   |    |    
|Repossessed vehicles                           |                            |                        | 145   |        |      |   | 106    |        |  |   | 217   |       |  |      | 146   |       |  |   | 152 |    
|                                               |                            |                        |       |        |      |   |        |        |  |   |       |       |  |      |      
|                                               | Total nonperforming assets |                        | $     | 10,150 |      |   | $      | 16,778 |  |   | $     | 9,605 |  |      | $     | 1,878 |  |   | $   | 591 | 
|                                               |                            |                        |       |        |      |   |        |        |  |   |       |       |  |      |      
|Nonperforming loans to total loans outstanding |                            |                        | .01   | %      |      |   | .06    | %      |  |   | .16   | %     |  |      | .19   | %     |  |   | .05 | %  
|Nonperforming assets to total assets           |                            |                        | .49   | %      |      |   | .91    | %      |  |   | .60   | %     |  |      | .14   | %     |  |   | .05 | %  
|Nonperforming assets to total capital          |                            |                        | 7.6   | %      |      |   | 13.88  | %      |  |   | 8.58  | %     |  |      | 1.89  | %     |  |   | .67 | %  



OREO










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|                                         |                        |                        |        |       |      |                   |        |                 |  |   |         |       | 
|---------------------------------------- | ---------------------- | ---------------------- | ------ | ----- | ---- | ----------------- | ------ | --------------- |  | - | ------- | ----- | 
|                                         |                        |                        |        |       |      | Since Acquisition |       
|                                         |                        | 2004                   |        |       | 2003 |                   |        | (November 2002) | 
|                                         |                        |                        |        |       |      |                   |        |                 | 
|                                         |                        | (Dollars in thousands) |       
|Beginning Balance                        |                        | $                      | 16,130 |       |      | $                 | 7,944  |                 |  | $ |        |      
|Transfer of net realizable value to OREO |                        |                        |       |       |      |                   |       |                 |  |   | 3,606   |      
|Funding towards project                  |                        |                        | 2,386  |       |      |                   | 12,135 |                 |  |   | 18,859  |      
|Sales proceeds, net                      |                        |                        | (7,538 | )     |      |                   | (2,534 | )               |  |   | (10,072 | )    
|Provision for OREO                       |                        |                        | (1,217 | )     |      |                   | (1,415 | )               |  |   | (2,632  | )    
|                                         |                        |                        |        |       |      |                   |        |                 | 
|                                         | Balance at December 31 |                        | $      | 9,761 |      |                   | $      | 16,130          |  |   | $       | 9,761 | 
|                                         |                        |                        |        |       |      |                   |        |                 | 





Repossessed Autos




Potential Problem
Loans




Deposits




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Average Deposits and Rate by Type


|                                    |  |                        |           |  |      |  |      |        |  |   |           |  |  |        |      |   |      |   |           |  |  |  |      |  
|----------------------------------- |  | ---------------------- | --------- |  | ---- |  | ---- | ------ |  | - | --------- |  |  | ------ | ---- | - | ---- | - | --------- |  |  |  | ---- | -
|                                    |  | 2004                   |           |  | 2003 |  |      | 2002   | 
|                                    |  |                        |           |  |      |  |      |        | 
|                                    |  | Amount                 |           |  | Rate |  |      | Amount |  |   | Rate      |  |  | Amount |      |   | Rate |  
|                                    |  |                        |           |  |      |  |      |        |  |   |           |  |  |        |      |   |      |  
|                                    |  | (Dollars in thousands) |          
|Noninterest-bearing demand deposits |  | $                      | 271,259   |  |      |  |     | %      |  | $ | 246,525   |  |  |        |     | % |      | $ | 216,100   |  |  |  |     | %
|Savings deposits and NOW accounts   |  |                        | 281,964   |  |      |  | 1.12 |        |  |   | 214,120   |  |  |        | 1.01 |   |      |   | 144,650   |  |  |  | 1.18 |  
|Money market accounts               |  |                        | 141,234   |  |      |  | 1.28 |        |  |   | 132,964   |  |  |        | 1.15 |   |      |   | 153,379   |  |  |  | 2.00 |  
|Time deposits                       |  |                        | 928,822   |  |      |  | 2.28 |        |  |   | 732,738   |  |  |        | 2.44 |   |      |   | 654,877   |  |  |  | 3.42 |  
|                                    |  |                        |           |  |      |  |      |        |  |   |           |  |  |        |      |   |      |  
|Total                               |  | $                      | 1,623,279 |  |      |  | 1.61 | %      |  | $ | 1,326,347 |  |  |        | 1.63 | % |      | $ | 1,169,006 |  |  |  | 2.32 | %
|                                    |  |                        |           |  |      |  |      |        |  |   |           |  |  |        |      |   |      |  







|                               |       |                        |         |         | 
|------------------------------ | ----- | ---------------------- | ------- | ------- | 
|                               |       | Amount                 |        
|                               |       |                        |        
|                               |       | (Dollars in thousands) |        
|Three months or less           |       | $                      | 259,103 |        
|Over three through six months  |       |                        | 159,769 |        
|Over six through twelve months |       |                        | 108,653 |        
|Over twelve months             |       |                        | 87,114  |        
|                               |       |                        |        
|                               | Total |                        | $       | 614,639 | 
|                               |       |                        |        

Borrowings








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Capital Resources






| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | maintain sufficient capital to support the risk characteristics
    of the Company and the Bank; and                                                                                                        
|
| |  | maintain capital ratios which meet and exceed the
    well-capitalized regulatory capital ratio guidelines
    for the Bank, thereby minimizing regulatory intervention and
    lowering FDIC assessments.









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Branch Expansion


800-536-3000 www.obb.com












Condensed Quarterly Earnings Summary


|                           |  |                        |        |  |         |   |        |         |  |   |         |  |  |         |        |  |         |   |        |         |  |   |         |  |  |   |        |  |  |   |        | 
|-------------------------- |  | ---------------------- | ------ |  | ------- | - | ------ | ------- |  | - | ------- |  |  | ------- | ------ |  | ------- | - | ------ | ------- |  | - | ------- |  |  | - | ------ |  |  | - | ------ | 
|                           |  | 2004                   |        |  | 2003    |  
|                           |  |                        |        |  |         |  
|                           |  | Fourth                 |        |  | Third   |   |        | Second  |  |   | First   |  |  | Fourth  |        |  | Third   |   |        | Second  |  |   | First   | 
|                           |  | Quarter                |        |  | Quarter |   |        | Quarter |  |   | Quarter |  |  | Quarter |        |  | Quarter |   |        | Quarter |  |   | Quarter | 
|                           |  |                        |        |  |         |   |        |         |  |   |         |  |  |         |        |  |         |   |        |         |  |   |         | 
|                           |  | (Dollars in thousands) |       
|Interest income            |  | $                      | 22,752 |  |         | $ | 22,731 |         |  | $ | 20,856  |  |  | $       | 20,372 |  |         | $ | 19,937 |         |  | $ | 19,635  |  |  | $ | 20,079 |  |  | $ | 20,284 | 
|Interest expense           |  |                        | 9,492  |  |         |   | 8,963  |         |  |   | 7,591   |  |  |         | 7,254  |  |         |   | 7,020  |         |  |   | 6,582   |  |  |   | 7,295  |  |  |   | 7,807  | 
|                           |  |                        |        |  |         |   |        |         |  |   |         |  |  |         |        |  |         |   |        |         |  |   |         | 
|Net interest income        |  | $                      | 13,260 |  |         | $ | 13,768 |         |  | $ | 13,265  |  |  | $       | 13,118 |  |         | $ | 12,917 |         |  | $ | 13,053  |  |  | $ | 12,784 |  |  | $ | 12,477 | 
|Provision for loan losses  |  |                        |       |  |         |   |       |         |  |   | 250     |  |  |         | 250    |  |         |   | 250    |         |  |   | 350     |  |  |   | 250    |  |  |   | 750    | 
|Other income               |  |                        | 4,389  |  |         |   | 4,846  |         |  |   | 4,731   |  |  |         | 4,566  |  |         |   | 4,157  |         |  |   | 4,422   |  |  |   | 5,133  |  |  |   | 4,723  | 
|Other expense              |  |                        | 10,688 |  |         |   | 11,971 |         |  |   | 10,670  |  |  |         | 10,403 |  |         |   | 10,346 |         |  |   | 10,534  |  |  |   | 10,901 |  |  |   | 9,722  | 
|                           |  |                        |        |  |         |   |        |         |  |   |         |  |  |         |        |  |         |   |        |         |  |   |         | 
|Income before income taxes |  | $                      | 6,961  |  |         | $ | 6,643  |         |  | $ | 7,076   |  |  | $       | 7,031  |  |         | $ | 6,478  |         |  | $ | 6,591   |  |  | $ | 6,766  |  |  | $ | 6,728  | 
|Income tax expense         |  |                        | 2,021  |  |         |   | 2,077  |         |  |   | 2,275   |  |  |         | 2,266  |  |         |   | 1,809  |         |  |   | 1,955   |  |  |   | 2,182  |  |  |   | 2,182  | 
|                           |  |                        |        |  |         |   |        |         |  |   |         |  |  |         |        |  |         |   |        |         |  |   |         | 
|Net Income                 |  | $                      | 4,940  |  |         | $ | 4,566  |         |  | $ | 4,801   |  |  | $       | 4,765  |  |         | $ | 4,669  |         |  | $ | 4,636   |  |  | $ | 4,584  |  |  | $ | 4,546  | 
|                           |  |                        |        |  |         |   |        |         |  |   |         |  |  |         |        |  |         |   |        |         |  |   |         | 
|Diluted earnings per share |  | $                      | .49    |  |         | $ | .46    |         |  | $ | .48     |  |  | $       | .48    |  |         | $ | .47    |         |  | $ | .47     |  |  | $ | .47    |  |  | $ | .46    | 
|                           |  |                        |        |  |         |   |        |         |  |   |         |  |  |         |        |  |         |   |        |         |  |   |         | 

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Impact of Pending Accounting Standards








FORWARD LOOKING STATEMENTS




51



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ITEM 7A.     Quantitative And
Qualitative Disclosures About Market Risks




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Item 8.     Consolidated
Financial Statements and Supplementary Data


CONSOLIDATED BALANCE SHEETS


|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |   |           |         |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | --------------------------- | --------- | --------- | ------- | - | --------- | ------- | ------- | 
|                                                                                                                                                                                                      |                                                                                                                       | December 31,                |          
|                                                                                                                                                                                                      |                                                                                                                       |                             |          
|                                                                                                                                                                                                      |                                                                                                                       | 2004                        |           |           | 2003    |  
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|                                                                                                                                                                                                      |                                                                                                                       | (Dollars in thousands)      |          
|Assets                                                                                                                                                                                                |                                                                                                                       |                             |           |           |         |   |           |        
|Cash and due from banks                                                                                                                                                                               |                                                                                                                       | $                           | 34,273    |           |         | $ | 46,308    |        
|Fed funds sold and interest-bearing deposits with banks                                                                                                                                               |                                                                                                                       |                             | 51,479    |           |         |   | 20,008    |        
|Investment securities:                                                                                                                                                                                |                                                                                                                       |                             |           |           |         |   |           |        
|                                                                                                                                                                                                      | Securities held-to-maturity, at amortized cost (fair value of
    $35,525 and $13,742 in 2004 and 2003, respectively) |                             |           | 35,469    |         |   |           | 13,426  |        
|                                                                                                                                                                                                      | Securities available-for-sale, at fair value                                                                          |                             |           | 805,608   |         |   |           | 770,045 |        
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|                                                                                                                                                                                                      |                                                                                                                       | Total investment securities |           |           | 841,077 |   |           |         | 783,471 | 
|Loans, net of unearned discount                                                                                                                                                                       |                                                                                                                       |                             | 1,071,655 |           |         |   | 915,678   |        
|Less-allowance for loan losses                                                                                                                                                                        |                                                                                                                       |                             | (8,546    | )         |         |   | (8,369    | )      
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|                                                                                                                                                                                                      | Net loans                                                                                                             |                             |           | 1,063,109 |         |   |           | 907,309 |        
|Other real estate owned                                                                                                                                                                               |                                                                                                                       |                             | 9,857     |           |         |   | 16,130    |        
|Premises and equipment, net                                                                                                                                                                           |                                                                                                                       |                             | 34,561    |           |         |   | 33,461    |        
|Bank owned life insurance                                                                                                                                                                             |                                                                                                                       |                             | 24,858    |           |         |   | 21,011    |        
|Other assets                                                                                                                                                                                          |                                                                                                                       |                             | 23,310    |           |         |   | 20,117    |        
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|Total Assets                                                                                                                                                                                          |                                                                                                                       | $                           | 2,082,524 |           |         | $ | 1,847,815 |        
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|Liabilities and Shareholders Equity                                                                                                                                                                  |                                                                                                                       |                             |           |           |         |   |           |        
|Noninterest-bearing demand deposits                                                                                                                                                                   |                                                                                                                       | $                           | 265,251   |           |         | $ | 250,101   |        
|Interest-bearing deposits:                                                                                                                                                                            |                                                                                                                       |                             |           |           |         |   |           |        
|                                                                                                                                                                                                      | Savings deposits and NOW accounts                                                                                     |                             |           | 291,028   |         |   |           | 275,075 |        
|                                                                                                                                                                                                      | Money market accounts                                                                                                 |                             |           | 166,777   |         |   |           | 123,222 |        
|                                                                                                                                                                                                      | Time deposits:                                                                                                        |                             |           |           |         |   |           |         |        
|                                                                                                                                                                                                      |                                                                                                                       | Under $100,000              |           |           | 376,841 |   |           |         | 357,775 | 
|                                                                                                                                                                                                      |                                                                                                                       | $100,000 and over           |           |           | 614,639 |   |           |         | 452,329 | 
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|Total interest-bearing deposits                                                                                                                                                                       |                                                                                                                       |                             | 1,449,285 |           |         |   | 1,208,401 |        
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|Total deposits                                                                                                                                                                                        |                                                                                                                       |                             | 1,714,536 |           |         |   | 1,458,502 |        
|Fed funds purchased and securities sold under agreements to
    repurchase                                                                                                                            |                                                                                                                       |                             | 25,285    |           |         |   | 54,487    |        
|Treasury, tax and loan demand notes                                                                                                                                                                   |                                                                                                                       |                             | 7,792     |           |         |   | 15,423    |        
|Federal Home Loan Bank of Chicago borrowings                                                                                                                                                          |                                                                                                                       |                             | 161,418   |           |         |   | 161,500   |        
|Junior subordinated notes issued to capital trusts                                                                                                                                                    |                                                                                                                       |                             | 23,713    |           |         |   | -         |        
|Trust Preferred Capital Securities                                                                                                                                                                    |                                                                                                                       |                             | -         |           |         |   | 23,000    |        
|Other liabilities                                                                                                                                                                                     |                                                                                                                       |                             | 15,993    |           |         |   | 14,011    |        
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|Total Liabilities                                                                                                                                                                                     |                                                                                                                       |                             | 1,948,737 |           |         |   | 1,726,923 |        
|Shareholders Equity:                                                                                                                                                                                 |                                                                                                                       |                             |           |           |         |   |           |        
|Preferred Stock, no par value, authorized 100,000 shares,
    issued none                                                                                                                           |                                                                                                                       |                             |          |           |         |   |          |        
|Common Stock, $2 par value, authorized16,000,000 shares in
    2004 and 2003, issued 10,924,868 shares in 2004 and 2003,
    outstanding 9,820,811 shares in 2004 and 9,680,711 shares
    in 2003 |                                                                                                                       |                             | 21,850    |           |         |   | 21,850    |        
|Surplus                                                                                                                                                                                               |                                                                                                                       |                             | 7,751     |           |         |   | 5,765     |        
|Accumulated other comprehensive income, net of tax                                                                                                                                                    |                                                                                                                       |                             | 432       |           |         |   | 1,463     |        
|Retained earnings                                                                                                                                                                                     |                                                                                                                       |                             | 114,897   |           |         |   | 102,062   |        
|Less cost of shares in treasury, 1,104,057 common shares in 2004
    and 1,244,157 common shares in 2003                                                                                              |                                                                                                                       |                             | (11,143   | )         |         |   | (10,248   | )      
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|Total Shareholders Equity                                                                                                                                                                            |                                                                                                                       |                             | 133,787   |           |         |   | 120,892   |        
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  
|Total Liabilities and Shareholders Equity                                                                                                                                                            |                                                                                                                       | $                           | 2,082,524 |           |         | $ | 1,847,815 |        
|                                                                                                                                                                                                      |                                                                                                                       |                             |           |           |         |  



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CONSOLIDATED STATEMENTS OF INCOME


|                                                    |                                                                            |                                            |        |        |        |   |        |        |        |   |        |        |        | 
|--------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                    |                                                                            | Years Ended December 31,                   |       
|                                                    |                                                                            |                                            |       
|                                                    |                                                                            | 2004                                       |        |        | 2003   |   |        | 2002   |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|                                                    |                                                                            | (Dollars in thousands                      |       
|                                                    |                                                                            | except per share amounts)                  |       
|Interest income:                                    |                                                                            |                                            |        |        |        |   |        |        |        |   |        |       
|                                                    | Loans                                                                      |                                            | $      | 49,691 |        |   | $      | 50,852 |        |   | $      | 58,907 |       
|                                                    | Investment securities:                                                     |                                            |        |        |        |   |        |        |        |   |        |        |       
|                                                    |                                                                            | U.S. Treasury and U.S. Government agencies |        |        | 30,064 |   |        |        | 23,465 |   |        |        | 18,767 | 
|                                                    |                                                                            | State and municipal obligations            |        |        | 1,953  |   |        |        | 2,036  |   |        |        | 2,053  | 
|                                                    |                                                                            | Other securities                           |        |        | 4,312  |   |        |        | 3,082  |   |        |        | 1,839  | 
|                                                    | Fed funds sold and interest-bearing deposits with banks                    |                                            |        | 691    |        |   |        | 500    |        |   |        | 1,001  |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Total interest income                               |                                                                            |                                            | 86,711 |        |        |   | 79,935 |        |        |   | 82,567 |       
|Interest expense:                                   |                                                                            |                                            |        |        |        |   |        |        |        |   |        |       
|                                                    | Savings deposits and NOW accounts                                          |                                            |        | 3,149  |        |   |        | 2,163  |        |   |        | 1,710  |       
|                                                    | Money market accounts                                                      |                                            |        | 1,811  |        |   |        | 1,534  |        |   |        | 3,062  |       
|                                                    | Time deposits                                                              |                                            |        | 21,167 |        |   |        | 17,899 |        |   |        | 22,380 |       
|                                                    | Fed funds purchased and securities sold under agreements to
    repurchase |                                            |        | 403    |        |   |        | 797    |        |   |        | 1,411  |       
|                                                    | Treasury, tax and loan demand notes                                        |                                            |        | 47     |        |   |        | 32     |        |   |        | 185    |       
|                                                    | Federal Home Loan Bank of Chicago borrowings                               |                                            |        | 5,197  |        |   |        | 5,051  |        |   |        | 5,390  |       
|                                                    | Junior subordinated notes issued to capital trusts                         |                                            |        | 1,526  |        |   |        |       |        |   |        |       |       
|                                                    | Trust Preferred Capital Securities                                         |                                            |        |       |        |   |        | 1,228  |        |   |        | 981    |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Total interest expense                              |                                                                            |                                            | 33,300 |        |        |   | 28,704 |        |        |   | 35,119 |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Net interest income                                 |                                                                            |                                            | 53,411 |        |        |   | 51,231 |        |        |   | 47,448 |       
|Provision for loan losses                           |                                                                            |                                            | 500    |        |        |   | 1,600  |        |        |   | 14,650 |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Net interest income after provision for loan losses |                                                                            |                                            | 52,911 |        |        |   | 49,631 |        |        |   | 32,798 |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Other income:                                       |                                                                            |                                            |        |        |        |   |        |        |        |   |        |       
|                                                    | Service charges on deposit accounts:                                       |                                            |        |        |        |   |        |        |        |   |        |        |       
|                                                    |                                                                            | Treasury management                        |        |        | 4,499  |   |        |        | 5,601  |   |        |        | 6,162  | 
|                                                    |                                                                            | Retail and small business                  |        |        | 1,272  |   |        |        | 1,259  |   |        |        | 1,214  | 
|                                                    | Investment management and trust fees                                       |                                            |        | 2,621  |        |   |        | 2,140  |        |   |        | 1,701  |       
|                                                    | Merchant credit card processing fees                                       |                                            |        | 5,978  |        |   |        | 4,849  |        |   |        | 4,813  |       
|                                                    | Gain on mortgages sold, net                                                |                                            |        | 242    |        |   |        | 1,004  |        |   |        | 814    |       
|                                                    | Income from bank owned life insurance                                      |                                            |        | 847    |        |   |        | 829    |        |   |        | 184    |       
|                                                    | Income from sale of covered call options                                   |                                            |        | 1,110  |        |   |        | 1,167  |        |   |        | 395    |       
|                                                    | Income from revenue sharing agreement                                      |                                            |        |       |        |   |        |       |        |   |        | 450    |       
|                                                    | Securities dealer income                                                   |                                            |        | 224    |        |   |        | 64     |        |   |        |       |       
|                                                    | Other operating income                                                     |                                            |        | 1,398  |        |   |        | 1,305  |        |   |        | 1,403  |       
|                                                    | Investment securities gains, net                                           |                                            |        | 341    |        |   |        | 217    |        |   |        | 314    |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Total other income                                  |                                                                            |                                            | 18,532 |        |        |   | 18,435 |        |        |   | 17,450 |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Other expenses:                                     |                                                                            |                                            |        |        |        |   |        |        |        |   |        |       
|                                                    | Salaries and employee benefits                                             |                                            |        | 23,959 |        |   |        | 23,346 |        |   |        | 19,610 |       
|                                                    | Occupancy expense                                                          |                                            |        | 3,389  |        |   |        | 2,893  |        |   |        | 2,188  |       
|                                                    | Equipment expense                                                          |                                            |        | 2,100  |        |   |        | 1,979  |        |   |        | 1,870  |       
|                                                    | Data processing                                                            |                                            |        | 1,884  |        |   |        | 1,828  |        |   |        | 1,727  |       
|                                                    | Professional fees                                                          |                                            |        | 931    |        |   |        | 1,309  |        |   |        | 1,766  |       
|                                                    | Postage, stationery and supplies                                           |                                            |        | 1,043  |        |   |        | 1,132  |        |   |        | 1,116  |       
|                                                    | Advertising and business development                                       |                                            |        | 2,102  |        |   |        | 1,778  |        |   |        | 1,641  |       
|                                                    | Merchant credit card interchange expense                                   |                                            |        | 4,824  |        |   |        | 3,799  |        |   |        | 3,717  |       
|                                                    | Provision for other real estate owned                                      |                                            |        | 1,217  |        |   |        | 1,415  |        |   |        |       |       
|                                                    | Other operating expenses                                                   |                                            |        | 2,283  |        |   |        | 2,024  |        |   |        | 2,106  |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Total other expenses                                |                                                                            |                                            | 43,732 |        |        |   | 41,503 |        |        |   | 35,741 |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Income before income taxes                          |                                                                            |                                            | 27,711 |        |        |   | 26,563 |        |        |   | 14,507 |       
|Income tax expense                                  |                                                                            |                                            | 8,639  |        |        |   | 8,128  |        |        |   | 4,006  |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Net income                                          |                                                                            | $                                          | 19,072 |        |        | $ | 18,435 |        |        | $ | 10,501 |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Basic earnings per share                            |                                                                            | $                                          | 1.95   |        |        | $ | 1.92   |        |        | $ | 1.10   |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       
|Diluted earnings per share                          |                                                                            | $                                          | 1.91   |        |        | $ | 1.87   |        |        | $ | 1.08   |       
|                                                    |                                                                            |                                            |        |        |        |   |        |        |       



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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   |         |        |  
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ---------- | --- | ----- | - | ----------- | ------- | ------------- | - | ------ | -------- |  | -------- | -------- | ------ | ----- | ------------- | ------- | ------ |  | - | ------- | - |  | - | ------- | ------ | -
|                                                                            |                                                                                                                                                | Common Stock                                |            |     |       |   | Accumulated |         |               |   |        |          |  |         
|                                                                            |                                                                                                                                                |                                             |            |     |       |   | Other       |         |               |   |        |          |  | Total    |         
|                                                                            |                                                                                                                                                |                                             |            | Par |       |   |             |         | Comprehensive |   |        | Retained |  |          | Treasury |        |       | Shareholders |        
|                                                                            |                                                                                                                                                | Shares                                      |            |     | Value |   |             | Surplus |               |   | Income |          |  | Earnings |          |        | Stock |               |         | Equity | 
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|                                                                            |                                                                                                                                                | (Dollars in thousands except share amounts) |           
|Balance at December 31, 2001                                                |                                                                                                                                                |                                             | 10,924,868 |     |       | $ | 21,850      |         |               | $ | 4,595  |          |  | $        | 3,437    |        |       | $             | 81,336  |        |  | $ | (11,666 | ) |  | $ | 99,552  |       
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Comprehensive income, net of tax                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   |         |       
|                                                                            | Net income                                                                                                                                     |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         | 10,501 |  |   |         |   |  |   |         | 10,501 |  
|                                                                            | Unrealized holding gain during the year of $5,293, net of
    reclassification adjustment for realized gain included in net
    income of $207 |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          | 5,086  |       |               |         |        |  |   |         |   |  |   |         | 5,086  |  
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Total comprehensive income                                                  |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   | 15,587  |       
|Dividends declared                                                          |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               | (3,463  | )      |  |   |         |   |  |   | (3,463  | )     
|Issuance of notes receivable on exercised options                           |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | (300   | )        |  |          |          |        |       |               |         |        |  |   |         |   |  |   | (300    | )     
|Reissuance of treasury stock                                                |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | 61     |          |  |          |          |        |       |               |         |        |  |   | 41      |   |  |   | 102     |       
|Exercise of stock options (including tax benefit and share
    repurchases) |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | 230    |          |  |          |          |        |       |               |         |        |  |   | 234     |   |  |   | 464     |       
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Balance at December 31, 2002                                                |                                                                                                                                                |                                             | 10,924,868 |     |       | $ | 21,850      |         |               | $ | 4,586  |          |  | $        | 8,523    |        |       | $             | 88,374  |        |  | $ | (11,391 | ) |  | $ | 111,942 |       
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Comprehensive income, net of tax                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   |         |       
|                                                                            | Net income                                                                                                                                     |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         | 18,435 |  |   |         |   |  |   |         | 18,435 |  
|                                                                            | Unrealized holding loss during the year of $6,919, plus
    reclassification adjustment for realized gain included in net
    income of $141   |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          | (7,060 | )     |               |         |        |  |   |         |   |  |   |         | (7,060 | )
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Total comprehensive income                                                  |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   | 11,375  |       
|Dividends declared                                                          |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               | (4,747  | )      |  |   |         |   |  |   | (4,747  | )     
|Payment of note receivable on exercised options                             |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | 100    |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   | 100     |       
|Reissuance of treasury stock                                                |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | 123    |          |  |          |          |        |       |               |         |        |  |   | 88      |   |  |   | 211     |       
|Exercise of stock options (including tax benefit and share
    repurchases) |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | 956    |          |  |          |          |        |       |               |         |        |  |   | 1,204   |   |  |   | 2,160   |       
|Purchase of treasury stock (7,500 common shares)                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   | (149    | ) |  |   | (149    | )     
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Balance at December 31, 2003                                                |                                                                                                                                                |                                             | 10,924,868 |     |       | $ | 21,850      |         |               | $ | 5,765  |          |  | $        | 1,463    |        |       | $             | 102,062 |        |  | $ | (10,248 | ) |  | $ | 120,892 |       
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Comprehensive income, net of tax                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   |         |       
|                                                                            | Net income                                                                                                                                     |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         | 19,072 |  |   |         |   |  |   |         | 19,072 |  
|                                                                            | Unrealized holding loss during the year of $809, plus
    reclassification adjustment for realized gain included in net
    income of $222     |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          | (1,031 | )     |               |         |        |  |   |         |   |  |   |         | (1,031 | )
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Total comprehensive income                                                  |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   |         |   |  |   | 18,041  |       
|Dividends declared                                                          |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               | (6,237  | )      |  |   |         |   |  |   | (6,237  | )     
|Reissuance of treasury stock                                                |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | 177    |          |  |          |          |        |       |               |         |        |  |   | 86      |   |  |   | 263     |       
|Exercise of stock options (including tax benefit and share
    repurchases) |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   | 1,809  |          |  |          |          |        |       |               |         |        |  |   | (12     | ) |  |   | 1,797   |       
|Purchase of treasury stock (32,353 common shares)                           |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        |  |   | (969    | ) |  |   | (969    | )     
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 
|Balance at December 31, 2004                                                |                                                                                                                                                |                                             | 10,924,868 |     |       | $ | 21,850      |         |               | $ | 7,751  |          |  | $        | 432      |        |       | $             | 114,897 |        |  | $ | (11,143 | ) |  | $ | 133,787 |       
|                                                                            |                                                                                                                                                |                                             |            |     |       |   |             |         |               |   |        |          |  |          |          |        |       |               |         |        | 



55



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CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |          |   |          |         |          |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------ | -------- | -------- | -------- | - | -------- | ------- | -------- | - | -------- | ------- | -------- | -
|                                                     |                                                                                       | Years Ended December 31,                                     |         
|                                                     |                                                                                       |                                                              |         
|                                                     |                                                                                       | 2004                                                         |          |          | 2003     |   |          | 2002    |         
|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |         
|                                                     |                                                                                       | (Dollars in thousands)                                       |         
|Cash flows from operating activities:                |                                                                                       |                                                              |          |          |          |   |          |         |          |   |          |        
|                                                     | Net income                                                                            |                                                              | $        | 19,072   |          |   | $        | 18,435  |          |   | $        | 10,501  |         
|                                                     | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                              |          |          |          |   |          |         |          |   |          |         |         
|                                                     |                                                                                       | Depreciation and amortization                                |          |          | 2,868    |   |          |         | 2,577    |   |          |         | 2,337    |  
|                                                     |                                                                                       | Discount accretion                                           |          |          | (759     | ) |          |         | (818     | ) |          |         | (511     | )
|                                                     |                                                                                       | Premium amortization                                         |          |          | 890      |   |          |         | 757      |   |          |         | 779      |  
|                                                     |                                                                                       | Provision for loss on other real estate owned                |          |          | 1,217    |   |          |         | 1,415    |   |          |         |         |  
|                                                     |                                                                                       | Provision for loan losses                                    |          |          | 500      |   |          |         | 1,600    |   |          |         | 14,650   |  
|                                                     |                                                                                       | Deferred taxes                                               |          |          | 54       |   |          |         | 183      |   |          |         | 631      |  
|                                                     |                                                                                       | Investment securities gains, net                             |          |          | (341     | ) |          |         | (217     | ) |          |         | (314     | )
|                                                     |                                                                                       | (Gains) losses on sales of premises and equipment            |          |          | (30      | ) |          |         | (25      | ) |          |         | 5        |  
|                                                     |                                                                                       | Trading securities transactions, net                         |          |          | 4        |   |          |         |         |   |          |         |         |  
|                                                     |                                                                                       | Origination of real estate loans for sale                    |          |          | (16,636  | ) |          |         | (77,906  | ) |          |         | (76,250  | )
|                                                     |                                                                                       | Proceeds from sales of real estate loans originated for sale |          |          | 16,585   |   |          |         | 82,067   |   |          |         | 80,303   |  
|                                                     |                                                                                       | Gain on sales of mortgage loans originated for sale          |          |          | (282     | ) |          |         | (1,481   | ) |          |         | (1,280   | )
|                                                     |                                                                                       | Increase in cash surrender value of life insurance           |          |          | (847     | ) |          |         | (827     | ) |          |         | (184     | )
|                                                     |                                                                                       | FHLB of Chicago stock dividends                              |          |          | (2,064   | ) |          |         | (986     | ) |          |         | (312     | )
|                                                     |                                                                                       | Decrease from revenue sharing agreement                      |          |          |         |   |          |         |         |   |          |         | (28      | )
|                                                     |                                                                                       | Increase in other assets                                     |          |          | (3,492   | ) |          |         | (230     | ) |          |         | (1,699   | )
|                                                     |                                                                                       | Increase (decrease) in other liabilities                     |          |          | 4,179    |   |          |         | 2,845    |   |          |         | (3,395   | )
|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |         
|Net cash provided by operating activities            |                                                                                       |                                                              | 20,918   |          |          |   | 27,389   |         |          |   | 25,233   |        
|Cash flows from investing activities:                |                                                                                       |                                                              |          |          |          |   |          |         |          |   |          |        
|                                                     | Securities held-to-maturity:                                                          |                                                              |          |          |          |   |          |         |          |   |          |         |         
|                                                     |                                                                                       | Purchases                                                    |          |          | (35,520  | ) |          |         | (6,829   | ) |          |         | (5,193   | )
|                                                     |                                                                                       | Proceeds from maturities, calls and paydowns                 |          |          | 13,378   |   |          |         | 3,444    |   |          |         | 5,402    |  
|                                                     | Securities available-for-sale:                                                        |                                                              |          |          |          |   |          |         |          |   |          |         |         
|                                                     |                                                                                       | Purchases                                                    |          |          | (767,544 | ) |          |         | (634,417 | ) |          |         | (427,543 | )
|                                                     |                                                                                       | Proceeds from maturities, calls and paydowns                 |          |          | 494,386  |   |          |         | 177,903  |   |          |         | 154,024  |  
|                                                     |                                                                                       | Proceeds from sales                                          |          |          | 238,205  |   |          |         | 173,456  |   |          |         | 102,509  |  
|                                                     | Increase in loans                                                                     |                                                              |          | (156,478 | )        |   |          | (7,653  | )        |   |          | (17,560 | )       
|                                                     | Purchases of premises and equipment, net of disposals                                 |                                                              |          | (3,912   | )        |   |          | (9,463  | )        |   |          | (5,393  | )       
|                                                     | Investment in bank owned life insurance                                               |                                                              |          | (3,000   | )        |   |          | (5,000  | )        |   |          | (15,000 | )       
|                                                     | Proceeds from sales of other real estate owned, net                                   |                                                              |          | 7,538    |          |   |          | 2,534   |          |   |          |        |         
|                                                     | Additional capitalized costs of other real estate owned                               |                                                              |          | (2,386   | )        |   |          | (12,135 | )        |   |          | (4,338  | )       
|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |         
|Net cash used in investing activities                |                                                                                       |                                                              | (215,333 | )        |          |   | (318,160 | )       |          |   | (213,092 | )      
|Cash flows from financing activities:                |                                                                                       |                                                              |          |          |          |   |          |         |          |   |          |        
|                                                     | Increase in noninterest-bearing demand deposits                                       |                                                              |          | 15,150   |          |   |          | 2,295   |          |   |          | 35,867  |         
|                                                     | Increase in interest-bearing deposit accounts                                         |                                                              |          | 240,884  |          |   |          | 191,476 |          |   |          | 150,898 |         
|                                                     | Decrease in short-term borrowing obligations                                          |                                                              |          | (36,833  | )        |   |          | (14,727 | )        |   |          | (17,376 | )       
|                                                     | Proceeds from FHLB of Chicago borrowings                                              |                                                              |          | 20,920   |          |   |          | 85,000  |          |   |          | 21,000  |         
|                                                     | Repayment of FHLB of Chicago borrowings                                               |                                                              |          | (21,002  | )        |   |          | (25,500 | )        |   |          | (5,000  | )       
|                                                     | Proceeds from Trust Preferred Capital Securities                                      |                                                              |          |         |          |   |          | 5,000   |          |   |          | 12,000  |         
|                                                     | Purchase of treasury stock                                                            |                                                              |          | (969     | )        |   |          | (149    | )        |   |          |        |         
|                                                     | Exercise of stock options, net                                                        |                                                              |          | 76       |          |   |          | 1,169   |          |   |          | 399     |         
|                                                     | Payment (issuance) of notes receivable on exercised options                           |                                                              |          |         |          |   |          | 100     |          |   |          | (300    | )       
|                                                     | Issuance of common stock for employee stock purchase plan                             |                                                              |          | 251      |          |   |          | 211     |          |   |          | 102     |         
|                                                     | Cash dividends                                                                        |                                                              |          | (6,027   | )        |   |          | (4,298  | )        |   |          | (3,319  | )       
|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |         
|Net cash provided by financing activities            |                                                                                       |                                                              | 212,450  |          |          |   | 240,577  |         |          |   | 194,271  |        
|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |         
|Net increase (decrease) in cash and cash equivalents |                                                                                       |                                                              | 18,035   |          |          |   | (50,194  | )       |          |   | 6,412    |        
|Cash and cash equivalents at beginning of year       |                                                                                       |                                                              | 66,316   |          |          |   | 116,510  |         |          |   | 110,098  |        
|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |         
|Cash and cash equivalents at end of year             |                                                                                       | $                                                            | 84,351   |          |          | $ | 66,316   |         |          | $ | 116,510  |        
|                                                     |                                                                                       |                                                              |          |          |          |   |          |         |         
|Supplemental disclosures:                            |                                                                                       |                                                              |          |          |          |   |          |         |          |   |          |        
|                                                     | Interest paid                                                                         |                                                              | $        | 29,705   |          |   | $        | 33,399  |          |   | $        | 40,097  |         
|                                                     | Income taxes paid                                                                     |                                                              |          | 7,825    |          |   |          | 7,300   |          |   |          | 5,000   |         
|                                                     | Transfer of loans to other real estate owned                                          |                                                              |          | 96       |          |   |          |        |          |   |          | 3,606   |         
|                                                     | Transfer of auto loans to repossessed autos                                           |                                                              |          | 415      |          |   |          | 794     |          |   |          | 1,464   |         



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|        |                                           
|------- | ------------------------------------------
|Note 1. | Summary of Significant Accounting Policies

Principles of Consolidation:


Nature of Operations:


Use of Estimates:


Investment Securities:








Loans:


Loan Fees and Related Costs:


57



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




Allowance for Loan Losses:








Premises and Equipment:


Other Real Estate Owned:


Brokered Deposits:


Derivative Financial Instruments:


58



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


Income Taxes:


Earnings Per Share:


Stock-Based Compensation:


Comprehensive Income:


Cash and Cash Equivalents:


Reclassifications:


New Accounting Standards:






59



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)












|        |                        
|------- | -----------------------
|Note 2. | Cash and Due from Banks



60



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|        |                      
|------- | ---------------------
|Note 3. | Investment Securities



|     |                                |                                            |  |   |            |  |  |            |       |  |            |   |        |   |  |   |         | 
|---- | ------------------------------ | ------------------------------------------ |  | - | ---------- |  |  | ---------- | ----- |  | ---------- | - | ------ | - |  | - | ------- | 
|     |                                | Amortized                                  |  |   | Unrealized |  |  | Unrealized |       |  |           
|     |                                | Cost                                       |  |   | Gains      |  |  | Losses     |       |  | Fair Value |  
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|     |                                | (Dollars in thousands)                     | 
|2004 |                                |                                            |  |   |            |  |  |            |       |  |            |   |        |   |  |  
|     | Securities available-for-sale: |                                            |  |   |            |  |  |            |       |  |            |   |        |   |  |   |        
|     |                                | U.S. Treasury                              |  | $ | 20,525     |  |  | $          |      |  |            | $ | (424   | ) |  | $ | 20,101  | 
|     |                                | U.S. Government agencies                   |  |   | 674,191    |  |  |            | 1,533 |  |            |   | (2,497 | ) |  |   | 673,227 | 
|     |                                | Agency mortgage-backed securities          |  |   | 29,837     |  |  |            | 139   |  |            |   | (29    | ) |  |   | 29,947  | 
|     |                                | State and municipal obligations            |  |   | 23,193     |  |  |            | 837   |  |            |   | (126   | ) |  |   | 23,904  | 
|     |                                | Corporate and other
    securities(1)      |  |   | 57,198     |  |  |            | 1,848 |  |            |   | (617   | ) |  |   | 58,429  | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|     |                                | Total securities available-for-sale        |  | $ | 804,944    |  |  | $          | 4,357 |  |            | $ | (3,693 | ) |  | $ | 805,608 | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|     | Securities held-to-maturity:   |                                            |  |   |            |  |  |            |       |  |            |   |        |   |  |   |        
|     |                                | Agency mortgage-backed securities          |  | $ | 15,176     |  |  | $          |      |  |            | $ | (22    | ) |  | $ | 15,154  | 
|     |                                | State and municipal obligations            |  |   | 19,793     |  |  |            | 275   |  |            |   | (197   | ) |  |   | 19,871  | 
|     |                                | Corporate and other
    securities(1)      |  |   | 500        |  |  |            |      |  |            |   |       |   |  |   | 500     | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|     |                                | Total securities held-to-maturity          |  | $ | 35,469     |  |  | $          | 275   |  |            | $ | (219   | ) |  | $ | 35,525  | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|2003 |                                |                                            |  |   |            |  |  |            |       |  |            |   |        |   |  |  
|     | Securities available-for-sale: |                                            |  |   |            |  |  |            |       |  |            |   |        |   |  |   |        
|     |                                | U.S. Treasury                              |  | $ | 63,658     |  |  | $          | 88    |  |            | $ | (2,001 | ) |  | $ | 61,745  | 
|     |                                | U.S. Government agencies                   |  |   | 557,357    |  |  |            | 5,996 |  |            |   | (4,852 | ) |  |   | 558,501 | 
|     |                                | Agency mortgage-backed securities          |  |   | 47,392     |  |  |            | 103   |  |            |   | (140   | ) |  |   | 47,355  | 
|     |                                | Agency collateralized mortgage obligations |  |   | 173        |  |  |            | 17    |  |            |   |       |   |  |   | 190     | 
|     |                                | State and municipal obligations            |  |   | 26,679     |  |  |            | 1,352 |  |            |   | (160   | ) |  |   | 27,871  | 
|     |                                | Corporate and other
    securities(1)      |  |   | 72,361     |  |  |            | 2,082 |  |            |   | (60    | ) |  |   | 74,383  | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|     |                                | Total securities available-for-sale        |  | $ | 767,620    |  |  | $          | 9,638 |  |            | $ | (7,213 | ) |  | $ | 770,045 | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|     | Securities held-to-maturity:   |                                            |  |   |            |  |  |            |       |  |            |   |        |   |  |   |        
|     |                                | Agency mortgage-backed securities          |  | $ | 29         |  |  | $          | 2     |  |            | $ |       |   |  | $ | 31      | 
|     |                                | State and municipal obligations            |  |   | 12,897     |  |  |            | 377   |  |            |   | (63    | ) |  |   | 13,211  | 
|     |                                | Corporate and other
    securities(1)      |  |   | 500        |  |  |            |      |  |            |   |       |   |  |   | 500     | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  
|     |                                | Total securities held-to-maturity          |  | $ | 13,426     |  |  | $          | 379   |  |            | $ | (63    | ) |  | $ | 13,742  | 
|     |                                |                                            |  |   |            |  |  |            |       |  |            |  




|    |                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Corporate and other securities include Trust Preferred Capital
    Securities (TRUPS), FHLB of Chicago stock, FNMA
    perpetual preferred stock, corporate debt and equity securities,
    foreign bonds and money market funds.





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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


|                                      |  |                        |         |  |                     |   |        |       |  |   |            |  |  |       |        |   |            |   |         |  |  |   |        |  
|------------------------------------- |  | ---------------------- | ------- |  | ------------------- | - | ------ | ----- |  | - | ---------- |  |  | ----- | ------ | - | ---------- | - | ------- |  |  | - | ------ | -
|                                      |  | Less than 12 months    |         |  | 12 months or longer |   |        | Total | 
|                                      |  |                        |         |  |                     |   |        |       | 
|                                      |  | Fair                   |         |  | Unrealized          |   |        | Fair  |  |   | Unrealized |  |  | Fair  |        |   | Unrealized |  
|                                      |  | Value                  |         |  | Losses              |   |        | Value |  |   | Losses     |  |  | Value |        |   | Losses     |  
|                                      |  |                        |         |  |                     |   |        |       |  |   |            |  |  |       |        |   |            |  
|                                      |  | (Dollars in thousands) |        
|U.S. Treasury                         |  | $                      | 20,101  |  |                     | $ | (424   | )     |  | $ |           |  |  | $     |       |   |            | $ | 20,101  |  |  | $ | (424   | )
|U.S. Government agencies              |  |                        | 244,514 |  |                     |   | (1,200 | )     |  |   | 39,171     |  |  |       | (1,297 | ) |            |   | 283,685 |  |  |   | (2,497 | )
|Agency mortgage-backed securities     |  |                        | 24,080  |  |                     |   | (24    | )     |  |   | 143        |  |  |       | (27    | ) |            |   | 24,223  |  |  |   | (51    | )
|State and municipal obligations       |  |                        | 14,040  |  |                     |   | (192   | )     |  |   | 2,184      |  |  |       | (131   | ) |            |   | 16,224  |  |  |   | (323   | )
|Corporate and other securities        |  |                        | 6,599   |  |                     |   | (617   | )     |  |   |           |  |  |       |       |   |            |   | 6,599   |  |  |   | (617   | )
|                                      |  |                        |         |  |                     |   |        |       |  |   |            |  |  |       |        |   |            |  
|Total temporarily impaired securities |  | $                      | 309,334 |  |                     | $ | (2,457 | )     |  | $ | 41,498     |  |  | $     | (1,455 | ) |            | $ | 350,832 |  |  | $ | (3,912 | )
|                                      |  |                        |         |  |                     |   |        |       |  |   |            |  |  |       |        |   |            |  





|                               |                                                      |                        |         |         |            |   |         |         | 
|------------------------------ | ---------------------------------------------------- | ---------------------- | ------- | ------- | ---------- | - | ------- | ------- | 
|                               |                                                      | December 31, 2004      |        
|                               |                                                      |                        |        
|                               |                                                      | Amortized              |         |         |           
|                               |                                                      | Cost                   |         |         | Fair Value |  
|                               |                                                      |                        |         |         |            |  
|                               |                                                      | (Dollars in thousands) |        
|Securities available-for-sale: |                                                      |                        |         |         |            |   |         |        
|                               | Due in one year or less                              |                        | $       | 9,452   |            |   | $       | 9,565   | 
|                               | Due after one year through five years                |                        |         | 281,395 |            |   |         | 281,844 | 
|                               | Due after five years through ten years               |                        |         | 460,589 |            |   |         | 459,508 | 
|                               | Due in over ten years                                |                        |         | 23,952  |            |   |         | 25,653  | 
|                               | Other securities with no stated maturity
    date(1) |                        |         | 29,556  |            |   |         | 29,038  | 
|                               |                                                      |                        |         |         |            |  
|                               |                                                      | $                      | 804,944 |         |            | $ | 805,608 |        
|                               |                                                      |                        |         |         |            |  
|Securities held-to-maturity:   |                                                      |                        |         |         |            |   |         |        
|                               | Due in one year or less                              |                        | $       | 3,836   |            |   | $       | 3,835   | 
|                               | Due after one year through five years                |                        |         | 25,630  |            |   |         | 25,749  | 
|                               | Due after five years through ten years               |                        |         | 5,954   |            |   |         | 5,890   | 
|                               | Due in over ten years                                |                        |         | 49      |            |   |         | 51      | 
|                               |                                                      |                        |         |         |            |  
|                               |                                                      | $                      | 35,469  |         |            | $ | 35,525  |        
|                               |                                                      |                        |         |         |            |  




|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes FHLB of Chicago stock, FNMA perpetual preferred stock,
    equity securities and money market funds, which have no stated
    maturity.

62



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)










|        |      
|------- | -----
|Note 4. | Loans



|                  |                                                |                        |         |           |      |   |        |         | 
|----------------- | ---------------------------------------------- | ---------------------- | ------- | --------- | ---- | - | ------ | ------- | 
|                  |                                                | 2004                   |         |           | 2003 |  
|                  |                                                |                        |         |           |      |  
|                  |                                                | (Dollars in thousands) |        
|Commercial        |                                                | $                      | 116,653 |           |      | $ | 95,761 |        
|Syndicated        |                                                |                        | 34,958  |           |      |   | 33,088 |        
|Real estate      |                                                |                        |         |           |      |   |        |        
|                  | Construction, land acquisition and development |                        |         | 75,833    |      |   |        | 40,493  | 
|                  | Commercial mortgage                            |                        |         | 247,840   |      |   |        | 234,967 | 
|                  | Residential mortgage                           |                        |         | 109,097   |      |   |        | 101,133 | 
|                  | Home equity                                    |                        |         | 151,873   |      |   |        | 139,926 | 
|Indirect vehicle |                                                |                        |         |           |      |   |        |        
|                  | Auto                                           |                        |         | 276,398   |      |   |        | 226,866 | 
|                  | Harley Davidson motorcycle                     |                        |         | 51,560    |      |   |        | 35,957  | 
|Consumer          |                                                |                        | 7,443   |           |      |   | 7,487  |        
|                  |                                                |                        |         |           |      |  
|                  | Total loans, net of unearned discount          |                        | $       | 1,071,655 |      |   | $      | 915,678 | 
|                  |                                                |                        |         |           |      |  





|                             |  |                        |       |   |      |   |        |      |  |   |         |  
|---------------------------- |  | ---------------------- | ----- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                             |  | 2004                   |       |   | 2003 |   |        | 2002 | 
|                             |  |                        |       |   |      |   |        |      | 
|                             |  | (Dollars in thousands) |      
|Balance at beginning of year |  | $                      | 8,369 |   |      | $ | 7,351  |      |  | $ | 6,982   |  
|Provision for loan losses    |  |                        | 500   |   |      |   | 1,600  |      |  |   | 14,650  |  
|Recoveries                   |  |                        | 360   |   |      |   | 724    |      |  |   | 230     |  
|Charge-offs                  |  |                        | (683  | ) |      |   | (1,306 | )    |  |   | (14,511 | )
|                             |  |                        |       |   |      |   |        |      | 
|Balance at end of year       |  | $                      | 8,546 |   |      | $ | 8,369  |      |  | $ | 7,351   |  
|                             |  |                        |       |   |      |   |        |      | 

63



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|        |                       
|------- | ----------------------
|Note 5. | Premises and Equipment



|                                                          |  |                        |         |   |      |   |         |  
|--------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                          |  | 2004                   |         |   | 2003 |  
|                                                          |  |                        |         |   |      |  
|                                                          |  | (Dollars in thousands) |        
|Land                                                      |  | $                      | 8,861   |   |      | $ | 6,872   |  
|Buildings and improvements                                |  |                        | 31,054  |   |      |   | 30,373  |  
|Leasehold improvements                                    |  |                        | 1,442   |   |      |   | 1,429   |  
|Data processing equipment, office equipment and furniture |  |                        | 17,584  |   |      |   | 19,121  |  
|                                                          |  |                        |         |   |      |  
|                                                          |  |                        | 58,941  |   |      |   | 57,795  |  
|Less accumulated depreciation and amortization            |  |                        | (24,380 | ) |      |   | (24,334 | )
|                                                          |  |                        |         |   |      |  
|Premises and equipment, net                               |  | $                      | 34,561  |   |      | $ | 33,461  |  
|                                                          |  |                        |         |   |      |  



|                    |  |                        |       | 
|------------------- |  | ---------------------- | ----- | 
|                    |  | (Dollars in thousands) |      
|                    |  |                        |      
|2005                |  | $                      | 469   | 
|2006                |  |                        | 498   | 
|2007                |  |                        | 487   | 
|2008                |  |                        | 428   | 
|2009                |  |                        | 399   | 
|2010 and thereafter |  |                        | 355   | 
|                    |  |                        |      
|                    |  | $                      | 2,636 | 
|                    |  |                        |      





|     |  |                        |     | 
|---- |  | ---------------------- | --- | 
|     |  | (Dollars in thousands) |    
|     |  |                        |    
|2005 |  | $                      | 186 | 
|2006 |  |                        | 175 | 
|     |  |                        |    
|     |  | $                      | 361 | 
|     |  |                        |    



64



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|        |                        
|------- | -----------------------
|Note 6. | Other Real Estate Owned









|        |         
|------- | --------
|Note 7. | Deposits



|                    |       |                        |         |         | 
|------------------- | ----- | ---------------------- | ------- | ------- | 
|                    |       | (Dollars in thousands) |        
|                    |       |                        |        
|2005                |       | $                      | 785,798 |        
|2006                |       |                        | 183,264 |        
|2007                |       |                        | 14,349  |        
|2008                |       |                        | 4,424   |        
|2009                |       |                        | 3,629   |        
|2010 and thereafter |       |                        | 16      |        
|                    |       |                        |        
|                    | Total |                        | $       | 991,480 | 
|                    |       |                        |        





|        |           
|------- | ----------
|Note 8. | Borrowings



Short-term borrowings




65



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                               |  |                        |        |   |      |   |        |      |  |   |         |  
|---------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                               |  | 2004                   |        |   | 2003 |   |        | 2002 | 
|                                               |  |                        |        |   |      |   |        |      | 
|                                               |  | (Dollars in thousands) |       
|Fed funds purchased                            |  | $                      |       |   |      | $ |       |      |  | $ |        |  
|Securities sold under agreements to repurchase |  |                        | 25,285 |   |      |   | 54,487 |      |  |   | 71,602  |  
|Treasury, tax and loan demand notes            |  |                        | 7,792  |   |      |   | 15,423 |      |  |   | 13,035  |  
|                                               |  |                        |        |   |      |   |        |      | 
|Total                                          |  | $                      | 33,077 |   |      | $ | 69,910 |      |  | $ | 84,637  |  
|                                               |  |                        |        |   |      |   |        |      | 
|Average during the year                        |  | $                      | 41,651 |   |      | $ | 78,779 |      |  | $ | 94,350  |  
|Maximum month-end balance                      |  |                        | 63,644 |   |      |   | 94,607 |      |  |   | 218,099 |  
|Average rate at year-end                       |  |                        | 1.73   | % |      |   | 0.74   | %    |  |   | 1.35    | %
|Average rate during the year                   |  |                        | 1.08   | % |      |   | 1.05   | %    |  |   | 1.69    | %





66



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


FHLB of Chicago
borrowings




|                         |  |                        |         |  |      |  |      |        |  |   |         |  |  |  |      |  
|------------------------ |  | ---------------------- | ------- |  | ---- |  | ---- | ------ |  | - | ------- |  |  |  | ---- | -
|                         |  | 2004                   |         |  | 2003 | 
|                         |  |                        |         |  |      | 
|Maturity                 |  | Amount                 |         |  | Rate |  |      | Amount |  |   | Rate    | 
|                         |  |                        |         |  |      |  |      |        |  |   |         | 
|                         |  | (Dollars in thousands) |        
|January 7, 2004          |  | $                      |        |  |      |  |     | %      |  | $ | 6,000   |  |  |  | 5.49 | %
|February 9, 2004         |  |                        |        |  |      |  |     |        |  |   | 5,000   |  |  |  | 6.76 |  
|February 17, 2004        |  |                        |        |  |      |  |     |        |  |   | 5,000   |  |  |  | 1.63 |  
|November 1, 2004         |  |                        |        |  |      |  |     |        |  |   | 5,000   |  |  |  | 2.24 |  
|February 7, 2005         |  |                        | 1,500   |  |      |  | 5.74 |        |  |   | 1,500   |  |  |  | 5.74 |  
|February 19, 2005        |  |                        | 10,000  |  |      |  | 5.97 |        |  |   | 10,000  |  |  |  | 5.97 |  
|February 22, 2005        |  |                        | 5,000   |  |      |  | 2.13 |        |  |   | 5,000   |  |  |  | 2.13 |  
|March 21,
    2005(1)    |  |                        | 5,000   |  |      |  | 6.53 |        |  |   | 5,000   |  |  |  | 6.53 |  
|March 21,
    2005(1)    |  |                        | 5,000   |  |      |  | 6.20 |        |  |   | 5,000   |  |  |  | 6.20 |  
|March 21, 2005           |  |                        | 5,000   |  |      |  | 7.14 |        |  |   | 5,000   |  |  |  | 7.14 |  
|May 3, 2005              |  |                        | 6,000   |  |      |  | 4.37 |        |  |   | 6,000   |  |  |  | 4.37 |  
|October 31, 2005         |  |                        | 5,000   |  |      |  | 2.75 |        |  |   | 5,000   |  |  |  | 2.75 |  
|March 1, 2006            |  |                        | 10,000  |  |      |  | 2.05 |        |  |   |        |  |  |  |     |  
|April 3, 2006            |  |                        | 10,000  |  |      |  | 2.03 |        |  |   |        |  |  |  |     |  
|February 5, 2007         |  |                        | 2,000   |  |      |  | 5.83 |        |  |   | 2,000   |  |  |  | 5.83 |  
|January 12, 2008         |  |                        | 15,000  |  |      |  | 5.23 |        |  |   | 15,000  |  |  |  | 5.23 |  
|February 19, 2008        |  |                        | 6,000   |  |      |  | 6.04 |        |  |   | 6,000   |  |  |  | 6.04 |  
|December 30,
    2008(2) |  |                        | 75,000  |  |      |  | 2.67 |        |  |   | 75,000  |  |  |  | 1.29 |  
|November 2,
    2009(3)  |  |                        | 918     |  |      |  | 4.22 |        |  |   |        |  |  |  |     |  
|                         |  |                        |         |  |      |  |      |        |  |   |         | 
|Total/ Average rate      |  | $                      | 161,418 |  |      |  | 3.65 | %      |  | $ | 161,500 |  |  |  | 3.27 | %
|                         |  |                        |         |  |      |  |      |        |  |   |         | 




|    |                                                                                                   
|--- | --------------------------------------------------------------------------------------------------
|(1) | Callable March 20, 2004 and quarterly thereafter until
    maturity.                              
|(2) | Interest floats quarterly at 3-month LIBOR plus 12 basis
    points. Prepayable without penalties.
|(3) | Advance requires amortizing principal payments monthly.                                           





Junior subordinated notes
issued to capital trusts




67



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)








|                            |                   |                |                |                    |                |  |                         |                |                         |  |               |                  | 
|--------------------------- | ----------------- | -------------- | -------------- | ------------------ | -------------- |  | ----------------------- | -------------- | ----------------------- |  | ------------- | ---------------- | 
|                            |                   | FOBB Statutory |                |                    | FOBB Statutory |  |                         | FOBB Statutory |                        
|                            |                   | Trust I        |                |                    | Trust II       |  |                         | Trust III      |                        
|                            |                   |                |                |                    |                |  |                         |                |                        
|Junior Subordinated Notes:  |                   |                |                |                    |                |  |                         |                |                         |  |               |                 
|                            | Principal balance |                |                | $6,186             |                |  |                         | $12,372        |                         |  |               | $5,155           | 
|                            | Stated maturity   |                |                | September 2030 (1) |                |  |                         | June 2032(2)   |                         |  |               | January 2034 (2) | 
|Trust Preferred Securities: |                   |                |                |                    |                |  |                         |                |                         |  |               |                 
|                            | Face value        |                |                | $6,000             |                |  |                         | $12,000        |                         |  |               | $5,000           | 
|                            | Interest rate     |                |                | 10.6%              |                |  | 90-day LIBOR plus 3.45% |                | 90-day LIBOR plus 2.80%
|                           
|Issuance date               |                   |                | September 2000 |                    |                |  | June 2002               |                |                         |  | December 2003 |                 
|Distribution date           |                   |                | Semi-annually  |                    |                |  | Quarterly               |                |                         |  | Quarterly     |                 




|    |                                                                                                   
|--- | --------------------------------------------------------------------------------------------------
|(1) | Non-callable for ten years, after which the securities have a
    declining ten year premium call.
|(2) | Non-callable for five years, after which callable at par.                                         

Note 9.     Income Taxes




|                         |  |                        |       |  |      |   |       |      |  |   |       | 
|------------------------ |  | ---------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                         |  | 2004                   |       |  | 2003 |   |       | 2002 | 
|                         |  |                        |       |  |      |   |       |      | 
|                         |  | (Dollars in thousands) |      
|Current provision        |  | $                      | 8,585 |  |      | $ | 7,945 |      |  | $ | 3,375 | 
|Deferred provision       |  |                        | 54    |  |      |   | 183   |      |  |   | 631   | 
|                         |  |                        |       |  |      |   |       |      | 
|Total income tax expense |  | $                      | 8,639 |  |      | $ | 8,128 |      |  | $ | 4,006 | 
|                         |  |                        |       |  |      |   |       |      | 

68



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                |                                                   |                                      |   |       |       |  |   |       |       | 
|------------------------------- | ------------------------------------------------- | ------------------------------------ | - | ----- | ----- |  | - | ----- | ----- | 
|                                |                                                   | 2004                                 |   |       | 2003  | 
|                                |                                                   |                                      |   |       |       | 
|                                |                                                   | (Dollars in                          |  
|                                |                                                   | thousands)                           |  
|Gross deferred tax assets:      |                                                   |                                      |   |       |       |  |   |      
|                                | Book over tax loan loss reserve                   |                                      | $ | 2,991 |       |  | $ | 2,929 |      
|                                | Other real estate owned loss reserve              |                                      |   | 627   |       |  |   |      |      
|                                | Retirement plan                                   |                                      |   | 637   |       |  |   | 510   |      
|                                | Deferred compensation plans                       |                                      |   | 1,275 |       |  |   | 922   |      
|                                | State net operating loss carryforward             |                                      |   | 896   |       |  |   | 237   |      
|                                | Other                                             |                                      |   | 36    |       |  |   | 20    |      
|                                |                                                   |                                      |   |       |       | 
|                                |                                                   | Total gross deferred tax assets      |   |       | 6,462 |  |   |       | 4,618 | 
|                                | Less valuation allowance                          |                                      |   | (896  | )     |  |   | (237  | )    
|                                |                                                   |                                      |   |       |       | 
|                                |                                                   | Deferred tax assets                  |   |       | 5,566 |  |   |       | 4,381 | 
|Gross deferred tax liabilities: |                                                   |                                      |   |       |       |  |   |      
|                                | Unrealized gains on securities available-for-sale |                                      |   | 232   |       |  |   | 848   |      
|                                | Accretion of discount on securities               |                                      |   | 167   |       |  |   | 116   |      
|                                | Depreciation                                      |                                      |   | 1,308 |       |  |   | 899   |      
|                                | Book over tax basis of land                       |                                      |   | 241   |       |  |   | 241   |      
|                                | FHLB of Chicago stock dividends                   |                                      |   | 1,478 |       |  |   | 756   |      
|                                | Deferred loan costs                               |                                      |   | 600   |       |  |   | 596   |      
|                                | Prepaid expenses                                  |                                      |   | 268   |       |  |   | 215   |      
|                                |                                                   |                                      |   |       |       | 
|                                |                                                   | Total gross deferred tax liabilities |   | $     | 4,294 |  |   | $     | 3,671 | 
|                                |                                                   |                                      |   |       |       | 
|                                |                                                   | Net deferred tax asset               |   | $     | 1,272 |  |   | $     | 710   | 
|                                |                                                   |                                      |   |       |       | 



69



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                  |                                                                                                       |                          |       |      |      |   |       |      |   |   |       |      |  
|--------------------------------- | ----------------------------------------------------------------------------------------------------- | ------------------------ | ----- | ---- | ---- | - | ----- | ---- | - | - | ----- | ---- | -
|                                  |                                                                                                       | Years ended December 31, |      
|                                  |                                                                                                       |                          |      
|                                  |                                                                                                       | 2004                     |       |      | 2003 |   |       | 2002 |  
|                                  |                                                                                                       |                          |       |      |      |   |       |      |  
|                                  |                                                                                                       | (Dollars in thousands)   |      
|Tax expense at statutory rate     |                                                                                                       | $                        | 9,699 |      |      | $ | 9,297 |      |   | $ | 5,077 |     
|Decrease in taxes resulting from: |                                                                                                       |                          |       |      |      |   |       |      |   |   |       |     
|                                  | Income from state and municipal obligations and certain loans
    not subject to Federal income taxes |                          |       | (588 | )    |   |       | (624 | ) |   |       | (675 | )
|                                  | Effect of marginal tax rate                                                                           |                          |       |     |      |   |       |     |   |   |       | (100 | )
|                                  | Bank owned life insurance                                                                             |                          |       | (296 | )    |   |       | (290 | ) |   |       | (64  | )
|                                  | Other miscellaneous, net                                                                              |                          |       | (176 | )    |   |       | (255 | ) |   |       | (232 | )
|                                  |                                                                                                       |                          |       |      |      |   |       |      |  
|Total income tax expense          |                                                                                                       | $                        | 8,639 |      |      | $ | 8,128 |      |   | $ | 4,006 |     
|                                  |                                                                                                       |                          |       |      |      |   |       |      |  

Note 10.     Shareholders
Equity






Note 11.     Regulatory Capital








70



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                         |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |    |  
|---------------------------------------- | -------------- | ---------------------- | - | ---------- | ----------- | ---------------------- |  | ---------------- | - |  | ----- | ------- |  | ------ |  | - | ----- |  | - | ------- |  |  |  | -- | -
|                                         |                |                        |   |            |             | Capital Required To Be | 
|                                         |                |                        |   |            |             |                        | 
|                                         |                |                        |   | Adequately |             |                        | 
|                                         |                | Actual                 |   |            | Capitalized |                        |  | Well Capitalized |  
|                                         |                |                        |   |            |             |                        |  |                  |  
|                                         |                | Amount                 |   |            | Ratio       |                        |  | Amount           |   |  | Ratio |         |  | Amount |  |   | Ratio | 
|                                         |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       | 
|                                         |                | (Dollars in thousands) |  
|As of December 31, 2004:                 |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|Total Capital (to Risk Weighted Assets)  |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|                                         | Consolidated   |                        | $ | 164,566    |             |                        |  | 12.20            | % |  | $     | 107,883 |  |        |  | 8 | %     |  | $ | 134,853 |  |  |  | 10 | %
|                                         | Oak Brook Bank |                        |   | 150,547    |             |                        |  | 11.24            |   |  |       | 107,119 |  |        |  | 8 |       |  |   | 133,898 |  |  |  | 10 |  
|Tier 1 Capital (to Risk Weighted Assets) |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|                                         | Consolidated   |                        | $ | 156,019    |             |                        |  | 11.57            | % |  | $     | 53,941  |  |        |  | 4 | %     |  | $ | 80,912  |  |  |  | 6  | %
|                                         | Oak Brook Bank |                        |   | 142,000    |             |                        |  | 10.61            |   |  |       | 53,559  |  |        |  | 4 |       |  |   | 80,339  |  |  |  | 6  |  
|Tier 1 Capital (to Average Assets)       |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|                                         | Consolidated   |                        | $ | 156,019    |             |                        |  | 7.47             | % |  | $     | 83,537  |  |        |  | 4 | %     |  | $ | 104,421 |  |  |  | 5  | %
|                                         | Oak Brook Bank |                        |   | 142,000    |             |                        |  | 6.82             |   |  |       | 83,238  |  |        |  | 4 |       |  |   | 104,048 |  |  |  | 5  |  
|As of December 31, 2003:                 |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|Total Capital (to Risk Weighted Assets)  |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|                                         | Consolidated   |                        | $ | 150,798    |             |                        |  | 13.26            | % |  | $     | 90,990  |  |        |  | 8 | %     |  | $ | 113,738 |  |  |  | 10 | %
|                                         | Oak Brook Bank |                        |   | 138,657    |             |                        |  | 12.26            |   |  |       | 90,513  |  |        |  | 8 |       |  |   | 113,142 |  |  |  | 10 |  
|Tier 1 Capital (to Risk Weighted Assets) |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|                                         | Consolidated   |                        | $ | 142,429    |             |                        |  | 12.52            | % |  | $     | 45,495  |  |        |  | 4 | %     |  | $ | 68,243  |  |  |  | 6  | %
|                                         | Oak Brook Bank |                        |   | 130,288    |             |                        |  | 11.52            |   |  |       | 45,257  |  |        |  | 4 |       |  |   | 67,885  |  |  |  | 6  |  
|Tier 1 Capital (to Average Assets)       |                |                        |   |            |             |                        |  |                  |   |  |       |         |  |        |  |   |       |  |   |         |  |  |  |   
|                                         | Consolidated   |                        | $ | 142,429    |             |                        |  | 8.11             | % |  | $     | 70,271  |  |        |  | 4 | %     |  | $ | 87,838  |  |  |  | 5  | %
|                                         | Oak Brook Bank |                        |   | 130,288    |             |                        |  | 7.44             |   |  |       | 70,002  |  |        |  | 4 |       |  |   | 87,502  |  |  |  | 5  |  

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


Note 12.     Earnings Per Share




|                                                                                 |                                                 |      |            |         |      |   |            |         |  |   |            |         | 
|-------------------------------------------------------------------------------- | ----------------------------------------------- | ---- | ---------- | ------- | ---- | - | ---------- | ------- |  | - | ---------- | ------- | 
|                                                                                 |                                                 | 2004 |            |         | 2003 |   |            | 2002    | 
|                                                                                 |                                                 |      |            |         |      |   |            |         | 
|Net income                                                                       |                                                 | $    | 19,072,000 |         |      | $ | 18,435,000 |         |  | $ | 10,501,000 |        
|                                                                                 |                                                 |      |            |         |      |   |            |         | 
|Denominator for basic earnings per share-weighted average shares
    outstanding |                                                 |      | 9,763,936  |         |      |   | 9,618,815  |         |  |   | 9,504,638  |        
|Effect of dilutive securities:                                                   |                                                 |      |            |         |      |   |            |         |  |   |            |        
|                                                                                 | Stock options issued to employees and directors |      |            | 241,365 |      |   |            | 255,343 |  |   |            | 260,949 | 
|                                                                                 |                                                 |      |            |         |      |   |            |         | 
|Denominator for diluted earnings per share                                       |                                                 |      | 10,005,301 |         |      |   | 9,874,158  |         |  |   | 9,765,587  |        
|                                                                                 |                                                 |      |            |         |      |   |            |         | 
|Earnings per share:                                                              |                                                 |      |            |         |      |   |            |         |  |   |            |        
|                                                                                 | Basic                                           |      |            | $1.95   |      |   | $          | 1.92    |  |   | $          | 1.10    | 
|                                                                                 | Diluted                                         |      |            | $1.91   |      |   | $          | 1.87    |  |   | $          | 1.08    | 
|                                                                                 |                                                 |      |            |         |      |   |            |         | 



Note 13.     Contingencies




Note 14.     Stock-Based
Compensation








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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                         |  |         |          |           |       |   |       |         |           |  |          |   |  |           |       |  |       |  |         |   |  |   |       | 
|---------------------------------------- |  | ------- | -------- | --------- | ----- | - | ----- | ------- | --------- |  | -------- | - |  | --------- | ----- |  | ----- |  | ------- | - |  | - | ----- | 
|                                         |  | 2004    |          |           | 2003  |   |       | 2002    |          
|                                         |  |         |          |           |       |   |       |         |          
|                                         |  |         |          | Weighted- |       |   |       |         | Weighted- |  |          |   |  | Weighted- |      
|                                         |  |         |          | Average   |       |   |       |         | Average   |  |          |   |  | Average   |      
|                                         |  |         |          | Exercise  |       |   |       |         | Exercise  |  |          |   |  | Exercise  |      
|                                         |  | Options |          |           | Price |   |       | Options |           |  | Price    |   |  | Options   |       |  | Price | 
|                                         |  |         |          |           |       |   |       |         |           |  |          |   |  |           |       |  |       | 
|Outstanding at the beginning of the year |  |         | 719,262  |           |       | $ | 12.64 |         |           |  | 830,267  |   |  | $         | 10.81 |  |       |  | 728,325 |   |  | $ | 9.49  | 
|Granted                                  |  |         | 96,000   |           |       |   | 32.73 |         |           |  | 90,750   |   |  |           | 20.51 |  |       |  | 140,732 |   |  |   | 18.43 | 
|Exercised                                |  |         | (222,770 | )         |       |   | 9.18  |         |           |  | (189,605 | ) |  |           | 7.87  |  |       |  | (30,601 | ) |  |   | 13.39 | 
|Forfeited                                |  |         | (5,820   | )         |       |   | 16.49 |         |           |  | (12,150  | ) |  |           | 20.58 |  |       |  | (8,189  | ) |  |   | 14.00 | 
|                                         |  |         |          |           |       |   |       |         |           |  |          |   |  |           |       |  |       | 
|Outstanding at the end of the year       |  |         | 586,672  |           |       | $ | 17.21 |         |           |  | 719,262  |   |  | $         | 12.64 |  |       |  | 830,267 |   |  | $ | 10.81 | 
|                                         |  |         |          |           |       |   |       |         |           |  |          |   |  |           |       |  |       | 
|Exercisable at the end of the year       |  |         | 349,662  |           |       | $ | 12.63 |         |           |  | 478,622  |   |  | $         | 10.39 |  |       |  | 579,767 |   |  | $ | 8.96  | 
|                                         |  |         |          |           |       |   |       |         |           |  |          |   |  |           |       |  |       | 





|                |  |                     |         |                  |                     |  |     |                  |  |   |             |  |  |                  |         |  |  |   |       | 
|--------------- |  | ------------------- | ------- | ---------------- | ------------------- |  | --- | ---------------- |  | - | ----------- |  |  | ---------------- | ------- |  |  | - | ----- | 
|                |  | Options Outstanding |         |                  | Options Exercisable | 
|                |  |                     |         |                  |                     | 
|                |  |                     |         | Weighted-Average |                     |  |     |                  | 
|                |  | Number              |         |                  | Remaining           |  |     | Weighted-Average |  |   | Number      |  |  | Weighted-Average |        
|Range of        |  | Outstanding         |         |                  | Contractual Life    |  |     | Exercise Price   |  |   | Exercisable |  |  | Exercise Price   |        
|Exercise Prices |  |                     |         |                  |                     |  |     |                  |  |   |             |  |  |                  |        
|$ 5.92  10.00  |  |                     | 77,300  |                  |                     |  | 1.5 | years            |  | $ | 7.27        |  |  |                  | 77,300  |  |  | $ | 7.27  | 
|10.01  15.00   |  |                     | 215,972 |                  |                     |  | 4.7 |                  |  |   | 12.18       |  |  |                  | 188,912 |  |  |   | 12.25 | 
|15.01  20.00   |  |                     | 107,850 |                  |                     |  | 6.7 |                  |  |   | 17.80       |  |  |                  | 60,450  |  |  |   | 17.64 | 
|20.01  25.00   |  |                     | 89,550  |                  |                     |  | 8.1 |                  |  |   | 20.58       |  |  |                  | 23,000  |  |  |   | 20.70 | 
|25.01  30.00   |  |                     | 21,000  |                  |                     |  | 9.4 |                  |  |   | 29.77       |  |  |                  |        |  |  |   |      | 
|30.01  33.70   |  |                     | 75,000  |                  |                     |  | 9.1 |                  |  |   | 33.56       |  |  |                  |        |  |  |   |      | 
|                |  |                     |         |                  |                     |  |     |                  |  |   |             |  |  |                  |        
|Total           |  |                     | 586,672 |                  |                     |  | 5.9 |                  |  | $ | 17.21       |  |  |                  | 349,662 |  |  | $ | 12.63 | 
|                |  |                     |         |                  |                     |  |     |                  |  |   |             |  |  |                  |        







73



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|                              |                                                 |      |   |        |      |  |   |        |   |  |   |         |  
|----------------------------- | ----------------------------------------------- | ---- | - | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|                              |                                                 | 2004 |   |        | 2003 |  |   | 2002   |  
|                              |                                                 |      |   |        |      |  |   |        |  
|Incentive Compensation Plan:  |                                                 |      |   |        |      |  |   |        |   |  |   |        
|                              | Total number of options granted during the year |      |   | 96,000 |      |  |   | 90,750 |   |  |   | 140,732 |  
|                              | Risk-free interest rate                         |      |   | 3.79   | %    |  |   | 3.38   | % |  |   | 3.47    | %
|                              | Expected life, in years                         |      |   | 6.32   |      |  |   | 6.48   |   |  |   | 6.16    |  
|                              | Expected volatility                             |      |   | 28.1   | %    |  |   | 28.5   | % |  |   | 31.2    | %
|                              | Expected dividend yield                         |      |   | 2.2    | %    |  |   | 3.0    | % |  |   | 3.0     | %
|                              | Estimated fair value per option                 |      | $ | 8.92   |      |  | $ | 5.16   |   |  | $ | 4.79    |  
|Employee Stock Purchase Plan: |                                                 |      |   |        |      |  |   |        |   |  |   |        
|                              | Risk-free interest rate                         |      |   | 2.04   | %    |  |   | 1.07   | % |  |   | 1.31    | %
|                              | Expected life, in years                         |      |   | 0.5    |      |  |   | 0.5    |   |  |   | 0.5     |  
|                              | Expected volatility                             |      |   | 23.7   | %    |  |   | 25.0   | % |  |   | 24.6    | %



|                                                                                                   |                              |                          |            |          |      |   |            |          |      |   |            |          |      | 
|-------------------------------------------------------------------------------------------------- | ---------------------------- | ------------------------ | ---------- | -------- | ---- | - | ---------- | -------- | ---- | - | ---------- | -------- | ---- | 
|                                                                                                   |                              | Years ended December 31, |           
|                                                                                                   |                              |                          |           
|                                                                                                   |                              | 2004                     |            |          | 2003 |   |            | 2002     |     
|                                                                                                   |                              |                          |            |          |      |   |            |          |     
|Net income as reported                                                                             |                              | $                        | 19,072,000 |          |      | $ | 18,435,000 |          |      | $ | 10,501,000 |         
|Deduct stock-based compensation expense determined under fair
    value based methods, net of tax: |                              |                          |            |          |      |   |            |          |      |   |            |         
|                                                                                                   | Incentive compensation plan  |                          |            | (326,000 | )    |   |            | (249,000 | )    |   |            | (215,000 | )   
|                                                                                                   | Employee stock purchase plan |                          |            | (27,000  | )    |   |            | (21,000  | )    |   |            | (2,000   | )   
|                                                                                                   |                              |                          |            |          |      |   |            |          |     
|Pro forma net income                                                                               |                              | $                        | 18,719,000 |          |      | $ | 18,165,000 |          |      | $ | 10,284,000 |         
|                                                                                                   |                              |                          |            |          |      |   |            |          |     
|Earnings per share as reported:                                                                    |                              |                          |            |          |      |   |            |          |      |   |            |         
|                                                                                                   |                              | Basic                    |            | $        | 1.95 |   |            | $        | 1.92 |   |            | $        | 1.10 | 
|                                                                                                   |                              | Diluted                  |            | $        | 1.91 |   |            | $        | 1.87 |   |            | $        | 1.08 | 
|Pro forma earnings per share:                                                                      |                              |                          |            |          |      |   |            |          |      |   |            |         
|                                                                                                   |                              | Basic                    |            | $        | 1.92 |   |            | $        | 1.89 |   |            | $        | 1.08 | 
|                                                                                                   |                              | Diluted                  |            | $        | 1.87 |   |            | $        | 1.84 |   |            | $        | 1.05 | 



|         |                       
|-------- | ----------------------
|Note 15. | Employee Benefit Plans





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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)








|         |                           
|-------- | --------------------------
|Note 16. | Related Party Transactions







|         |                                                                      
|-------- | ---------------------------------------------------------------------
|Note 17. | Commitments and Financial Instruments With Off Balance Sheet
    Risk





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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                      |                                                      |                        |         |         |      |   |         |         | 
|------------------------------------- | ---------------------------------------------------- | ---------------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                      |                                                      | 2004                   |         |         | 2003 |  
|                                      |                                                      |                        |         |         |      |  
|                                      |                                                      | (Dollars in thousands) |        
|Commercial loans                      |                                                      | $                      | 55,728  |         |      | $ | 50,064  |        
|Syndicated loans                      |                                                      |                        | 62,576  |         |      |   | 41,958  |        
|Real estate:                          |                                                      |                        |         |         |      |   |         |        
|                                      | Construction, land acquisition and development loans |                        |         | 89,168  |      |   |         | 41,034  | 
|                                      | Commercial mortgage                                  |                        |         | 1,351   |      |   |         | 855     | 
|                                      | Home equity loans                                    |                        |         | 156,036 |      |   |         | 134,031 | 
|                                      | Residential mortgage                                 |                        |         | 127     |      |   |         | 127     | 
|Check credit                          |                                                      |                        | 727     |         |      |   | 766     |        
|Consumer                              |                                                      |                        | 35      |         |      |   | 114     |        
|Performance standby letters of credit |                                                      |                        | 12,034  |         |      |   | 8,656   |        
|Financial standby letters of credit   |                                                      |                        | 6,922   |         |      |   | 4,082   |        
|                                      |                                                      |                        |         |         |      |  
|Total commitments                     |                                                      | $                      | 384,704 |         |      | $ | 281,687 |        
|                                      |                                                      |                        |         |         |      |  





|         |                                    
|-------- | -----------------------------------
|Note 18. | Fair Value of Financial Instruments





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cash and cash equivalents: The carrying amounts reported
    on the balance sheet for cash and due from banks, Fed funds sold
    and interest-bearing deposits with banks approximate fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Investment securities: Fair values for investment
    securities are based on quoted market prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Loans: For variable rate loans that reprice frequently
    and with no significant change in credit risk, fair values are
    based on carrying amounts. The fair value for all other loans is
    estimated using discounted cash flow analyses, which uses
    interest rates currently being offered for similar loans of
    similar credit quality. The fair value does not include
    potential premiums available in a portfolio sale.                                                                                                                                                                                                                  
|
| | Cash surrender value of Bank Owned Life Insurance
    (BOLI): The cash surrender value of BOLI is
    carried at cost which approximates fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Accrued interest receivable: The carrying amounts of
    accrued interest receivable approximate fair value as it is
    short-term in nature and does not present unanticipated credit
    concerns.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | Deposit liabilities: The fair values for certain deposits
    (e.g., noninterest-bearing demand deposits, savings deposits,
    NOW and money market accounts) are, by definition, equal to the
    amount payable on demand. The fair value estimates do not
    include the intangible value of the existing customer base. The
    carrying amounts for variable rate money market accounts
    approximate their fair values. Fair values for time deposits are
    estimated using a discounted cash flow calculation that applies
    interest rates currently being offered on time deposits to a
    schedule of aggregated expected monthly maturities.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Short-term debt: The carrying amounts of Fed funds
    purchased, overnight repurchase agreements and treasury, tax and
    loan demand notes approximate their fair values. At
    December 31, 2003, the fair values of term repurchase
    agreements were estimated using a discounted cash flow
    calculation that utilizes interest rates currently being offered
    for similar maturities. There were no term repurchase agreements
    at December 31, 2004.
|
| | FHLB of Chicago borrowings: The fair value of the FHLB of
    Chicago borrowings is estimated using a discounted cash flow
    calculation that utilizes interest rates currently being offered
    for similar maturities.                                                                                                                                                                                                                                             
|
| | Trust Preferred Capital Securities: The fair value of the
    TRUPS is estimated using a discounted cash flow calculation that
    utilizes interest rates currently being offered for similar
    maturities.                                                                                                                                                                                                                                                          
|
| | Accrued interest payable: The carrying amounts of accrued
    interest payable approximate fair value as it is short-term in
    nature.                                                                                                                                                                                                                                                                                                                                
|
| | Off-balance sheet instruments: Fair values for the
    Companys off-balance sheet instruments (letters of credit
    and lending commitments) are generally based on fees currently
    charged to enter into similar agreements.                                                                                                                                                                                                                                      
|
| | Limitations: The assumptions and estimates used in the
    fair value determination process are subjective in nature and
    involve uncertainties and significant judgment and, therefore,
    fair values cannot be determined with precision. Changes in
    assumptions could significantly affect these estimated values.                                                                                                                                          



|                              |                                       |          |   |                        |            |  |          |           |  |  |            |         |  |  |   |         | 
|----------------------------- | ------------------------------------- | -------- | - | ---------------------- | ---------- |  | -------- | --------- |  |  | ---------- | ------- |  |  | - | ------- | 
|                              |                                       | 2004     |   |                        | 2003       | 
|                              |                                       |          |   |                        |            | 
|                              |                                       | Carrying |   |                        |            |  | Carrying |           |  | 
|                              |                                       | Amount   |   |                        | Fair Value |  |          | Amount    |  |  | Fair Value |        
|                              |                                       |          |   |                        |            |  |          |           |  |  |            |        
|                              |                                       |          |   | (Dollars in thousands) |            |  |         
|Financial Assets              |                                       |          |   |                        |            |  |          |           |  |  |            |         |  |  |   |        
|                              | Cash and cash equivalents             |          | $ | 85,752                 |            |  | $        | 85,752    |  |  | $          | 66,316  |  |  | $ | 66,316  | 
|                              | Investment securities                 |          |   | 841,077                |            |  |          | 841,133   |  |  |            | 783,471 |  |  |   | 783,787 | 
|                              | Loans                                 |          |   | 1,071,655              |            |  |          | 1,068,058 |  |  |            | 915,678 |  |  |   | 917,368 | 
|                              | Cash surrender value of BOLI          |          |   | 24,858                 |            |  |          | 24,858    |  |  |            | 21,011  |  |  |   | 21,011  | 
|                              | Accrued interest receivable           |          |   | 10,884                 |            |  |          | 10,884    |  |  |            | 8,416   |  |  |   | 8,416   | 
|Financial Liabilities         |                                       |          |   |                        |            |  |          |           |  |  |            |         |  |  |   |        
|                              | Time deposits                         |          |   | 991,480                |            |  |          | 989,816   |  |  |            | 810,104 |  |  |   | 812,725 | 
|                              | Other deposits                        |          |   | 723,056                |            |  |          | 723,056   |  |  |            | 648,398 |  |  |   | 648,398 | 
|                              | Short-term debt                       |          |   | 33,077                 |            |  |          | 33,077    |  |  |            | 69,910  |  |  |   | 69,897  | 
|                              | FHLB of Chicago borrowings            |          |   | 161,418                |            |  |          | 162,388   |  |  |            | 161,500 |  |  |   | 165,020 | 
|                              | Trust Preferred Capital Securities    |          |   | 23,713                 |            |  |          | 24,641    |  |  |            | 23,000  |  |  |   | 23,540  | 
|                              | Accrued interest payable              |          |   | 5,187                  |            |  |          | 5,187     |  |  |            | 3,310   |  |  |   | 3,310   | 
|Off-balance sheet commitments |                                       |          |   |                        |            |  |          |           |  |  |            |         |  |  |   |        
|                              | Performance standby letters of credit |          |   |                       |            |  |          | 120       |  |  |            |        |  |  |   | 87      | 
|                              | Financial standby letters of credit   |          |   |                       |            |  |          | 69        |  |  |            |        |  |  |   | 41      | 
|                              | Home equity                           |          |   |                       |            |  |          | 132       |  |  |            |        |  |  |   | 121     | 
|                              | Check credit                          |          |   |                       |            |  |          | 19        |  |  |            |        |  |  |   | 20      | 

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|         |                                          
|-------- | -----------------------------------------
|Note 19. | Parent Company Only Financial Information



Balance Sheets (Parent Company Only)


|                                     |                                                      |                                            |   |         |         |  |   |         |         | 
|------------------------------------ | ---------------------------------------------------- | ------------------------------------------ | - | ------- | ------- |  | - | ------- | ------- | 
|                                     |                                                      | December 31,                               |  
|                                     |                                                      |                                            |  
|                                     |                                                      | 2004                                       |   |         | 2003    | 
|                                     |                                                      |                                            |   |         |         | 
|                                     |                                                      | (Dollars in thousands)                     |  
|Assets                              
|                                     | Cash and cash equivalents on deposit with subsidiary |                                            | $ | 7,782   |         |  | $ | 10,262  |        
|                                     | Investment in subsidiaries                           |                                            |   | 143,550 |         |  |   | 132,267 |        
|                                     | Securities available-for-sale, at fair value         |                                            |   | 4,325   |         |  |   | 3,398   |        
|                                     | Due from subsidiaries                                |                                            |   | 3,464   |         |  |   | 837     |        
|                                     | Equipment, net                                       |                                            |   | 88      |         |  |   | 87      |        
|                                     | Other assets                                         |                                            |   | 3,702   |         |  |   | 1,983   |        
|                                     |                                                      |                                            |   |         |         | 
|                                     |                                                      | Total Assets                               |   | $       | 162,911 |  |   | $       | 148,834 | 
|                                     |                                                      |                                            |   |         |         | 
|                                    
|Liabilities and Shareholders equity
|                                     | Junior subordinated notes issued to capital trusts   |                                            | $ | 23,713  |         |  | $ |        |        
|                                     | Trust Preferred Capital Securities                   |                                            |   |        |         |  |   | 23,000  |        
|                                     | Other liabilities                                    |                                            |   | 5,411   |         |  |   | 4,942   |        
|                                     |                                                      |                                            |   |         |         | 
|                                     |                                                      | Total Liabilities                          |   |         | 29,124  |  |   |         | 27,942  | 
|                                     | Shareholders Equity                                 |                                            |   | 133,787 |         |  |   | 120,892 |        
|                                     |                                                      |                                            |   |         |         | 
|                                     |                                                      | Total Liabilities and Shareholders Equity |   | $       | 162,911 |  |   | $       | 148,834 | 
|                                     |                                                      |                                            |   |         |         | 

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


Statements of Income (Parent Company Only)


|                                                                                      |                                                                |                          |        |        |        |   |        |        |        |   |        |        |        | 
|------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------------------------ | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                                      |                                                                | Years Ended December 31, |       
|                                                                                      |                                                                |                          |       
|                                                                                      |                                                                | 2004                     |        |        | 2003   |   |        | 2002   |       
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       
|                                                                                      |                                                                | (Dollars in thousands)   |       
|Income:                                                                               |                                                                |                          |        |        |        |   |        |        |        |   |        |       
|                                                                                      | Dividends from subsidiaries                                    |                          | $      | 9,324  |        |   | $      | 8,946  |        |   | $      | 10,692 |       
|                                                                                      | Other income                                                   |                          |        | 1,324  |        |   |        | 1,130  |        |   |        | 1,007  |       
|                                                                                      | Investment securities gains, net                               |                          |        |       |        |   |        | 288    |        |   |        | 233    |       
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       
|                                                                                      |                                                                | Total income             |        |        | 10,648 |   |        |        | 10,364 |   |        |        | 11,932 | 
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       
|Expenses:                                                                             |                                                                |                          |        |        |        |   |        |        |        |   |        |       
|                                                                                      | Interest on short-term debt                                    |                          |        |       |        |   |        |       |        |   |        | 4      |       
|                                                                                      | Interest on junior subordinated notes issued to capital trusts |                          |        | 1,526  |        |   |        |       |        |   |        |       |       
|                                                                                      | Interest on Trust Preferred Capital Securities                 |                          |        |       |        |   |        | 1,247  |        |   |        | 998    |       
|                                                                                      | Other expenses                                                 |                          |        | 3,422  |        |   |        | 3,541  |        |   |        | 2,216  |       
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       
|                                                                                      |                                                                | Total expenses           |        |        | 4,948  |   |        |        | 4,788  |   |        |        | 3,218  | 
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       
|Income before income taxes and equity in undistributed net
    income of subsidiaries |                                                                |                          | 5,700  |        |        |   | 5,576  |        |        |   | 8,714  |       
|                                                                                      | Income tax benefit                                             |                          |        | 1,271  |        |   |        | 1,187  |        |   |        | 683    |       
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       
|Income before equity in undistributed net income of subsidiaries                      |                                                                |                          | 6,971  |        |        |   | 6,763  |        |        |   | 9,397  |       
|                                                                                      | Equity in undistributed net income of subsidiaries             |                          |        | 12,101 |        |   |        | 11,672 |        |   |        | 1,104  |       
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       
|Net income                                                                            |                                                                | $                        | 19,072 |        |        | $ | 18,435 |        |        | $ | 10,501 |       
|                                                                                      |                                                                |                          |        |        |        |   |        |        |       

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


Statements of Cash Flows (Parent Company Only)


|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |        |         |   |       |        |        |  
|------------------------------------- | ---------------------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------ | ------ | ------- | - | ------ | ------ | ------- | - | ----- | ------ | ------ | -
|                                      |                                                      | Years Ended December 31,                                                              |                                                            
|                                      |                                                      |                                                                                       |                                                            
|                                      |                                                      | 2004                                                                                  |                                                             |        | 2003   |         |   | 2002   |       
|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |       
|                                      |                                                      | (Dollars in thousands)                                                                |                                                             |        |       
|Cash flows from operating activities: |                                                      |                                                                                       |                                                             |        |        |         |   |        |        |         |   |      
|                                      |                                                      | Net income                                                                            |                                                             | $      | 19,072 |         |   | $      | 18,435 |         |   | $     | 10,501 |       
|                                      |                                                      | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                             |        |        |         |   |        |        |         |   |       |        |       
|                                      |                                                      |                                                                                       | Depreciation                                                |        |        | 32      |   |        |        | 26      |   |       |        | 16     |  
|                                      |                                                      |                                                                                       | Discount accretion                                          |        |        |        |   |        |        | 7       |   |       |        |       |  
|                                      |                                                      |                                                                                       | Premium amortization                                        |        |        | 24      |   |        |        |        |   |       |        |       |  
|                                      |                                                      |                                                                                       | Investment securities gains, net                            |        |        |        |   |        |        | (288    | ) |       |        | (233   | )
|                                      |                                                      |                                                                                       | Stock dividend                                              |        |        |        |   |        |        |        |   |       |        | (8     | )
|                                      |                                                      |                                                                                       | Increase in other assets                                    |        |        | (324    | ) |        |        | (620    | ) |       |        | (247   | )
|                                      |                                                      |                                                                                       | Increase (decrease) in other liabilities                    |        |        | 1,971   |   |        |        | 2,093   |   |       |        | (799   | )
|                                      |                                                      |                                                                                       | (Increase) decrease in due from subsidiaries                |        |        | (2,627  | ) |        |        | 22      |   |       |        | (779   | )
|                                      |                                                      |                                                                                       | Equity in undistributed net income of subsidiaries          |        |        | (12,101 | ) |        |        | (11,672 | ) |       |        | (1,104 | )
|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |       
|                                      | Net cash provided by operating activities            |                                                                                       |                                                             | 6,047  |        |         |   | 8,003  |        |         |   | 7,347 |       
|                                      | Cash flows from investing activities:                |                                                                                       |                                                             |        |        |         |   |        |        |         |   |       |       
|                                      |                                                      |                                                                                       | Purchases of available-for-sale securities                  |        |        | (1,642  | ) |        |        | (5,042  | ) |       |        | (1,164 | )
|                                      |                                                      |                                                                                       | Sales of available-for-sale securities                      |        |        | 817     |   |        |        | 3,313   |   |       |        | 570    |  
|                                      |                                                      |                                                                                       | Purchases of equipment                                      |        |        | (33     | ) |        |        | (38     | ) |       |        |       |  
|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |       
|                                      | Net cash used in investing activities                |                                                                                       |                                                             | (858   | )      |         |   | (1,767 | )      |         |   | (594  | )     
|                                      | Cash flows from financing activities:                |                                                                                       |                                                             |        |        |         |   |        |        |         |   |       |       
|                                      |                                                      |                                                                                       | Decrease in short-term debt                                 |        |        |        |   |        |        |        |   |       |        | (1,225 | )
|                                      |                                                      |                                                                                       | Proceeds from Trust Preferred Capital Securities            |        |        |        |   |        |        | 5,000   |   |       |        | 12,000 |  
|                                      |                                                      |                                                                                       | Exercise of stock options                                   |        |        | 76      |   |        |        | 1,169   |   |       |        | 399    |  
|                                      |                                                      |                                                                                       | Payment (issuance) of notes receivable on exercised options |        |        |        |   |        |        | 100     |   |       |        | (300   | )
|                                      |                                                      |                                                                                       | Issuance of common stock for employee stock purchase plan   |        |        | 251     |   |        |        | 211     |   |       |        | 102    |  
|                                      |                                                      |                                                                                       | Purchase of treasury stock                                  |        |        | (969    | ) |        |        | (149    | ) |       |        |       |  
|                                      |                                                      |                                                                                       | Cash dividends                                              |        |        | (6,027  | ) |        |        | (4,298  | ) |       |        | (3,319 | )
|                                      |                                                      |                                                                                       | Capital contribution to subsidiary                          |        |        | (1,000  | ) |        |        | (4,156  | ) |       |        | (8,372 | )
|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |       
|                                      | Net cash used in financing activities                |                                                                                       |                                                             | (7,669 | )      |         |   | (2,123 | )      |         |   | (715  | )     
|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |       
|                                      | Net (decrease) increase in cash and cash equivalents |                                                                                       |                                                             | (2,480 | )      |         |   | 4,113  |        |         |   | 6,038 |       
|                                      | Cash and cash equivalents at beginning of year       |                                                                                       |                                                             | 10,262 |        |         |   | 6,149  |        |         |   | 111   |       
|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |       
|                                      | Cash and cash equivalents at end of year             |                                                                                       | $                                                           | 7,782  |        |         | $ | 10,262 |        |         | $ | 6,149 |       
|                                      |                                                      |                                                                                       |                                                             |        |        |         |   |        |       

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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING






81



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





















82



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















83



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84



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 9. | Changes In And Disagreements With Accountants On
    Accounting And Financial Disclosure






ITEM 9A.     Controls and
Procedures









ITEM 9B.     Other
Information







PART III





ITEM 10.     Directors And
Executive Officers Of The Registrant








Code of Ethics


www.firstoakbrook.com





ITEM 11.     Executive
Compensation




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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|ITEM 12. | Security Ownership Of Certain Beneficial Owners And
    Management And Related Shareholder Matters








ITEM 13.     Certain
Relationships And Related Transactions







ITEM 14.     Principal Accountant
Fees and Services







PART IV





ITEM 15.     Exhibits and
Financial Statement Schedules




|    |                            
|--- | ---------------------------
|(a) | 1.     FINANCIAL STATEMENTS



|                                                                                                                                     |  |  |  | 
|------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|Consolidated Balance Sheets December 31, 2004 and 2003                                                                              |  |  |  | 
|Consolidated Statements of Income for each of the three years in
    the period ended December 31, 2004                              |  |  |  | 
|Consolidated Statements of Changes in Shareholders Equity
    for each of the three years in the period ended
    December 31, 2004 |  |  |  | 
|Consolidated Statements of Cash Flows for each of the three
    years in the period ended December 31, 2004                          |  |  |  | 
|Notes to Consolidated Financial Statements                                                                                           |  |  |  | 
|Independent Auditors Report                                                                                                         |  |  |  | 

2.     FINANCIAL
STATEMENT SCHEDULES




| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | All schedules have been included in the consolidated financial
    statements or the notes thereto or are either not applicable or
    not significant.

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(b) EXHIBITS




|                |  |                                                                                                                                                                                                                                                                                                     
|--------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit (3.1)   |  | Restated Certificate of Incorporation of the Company
    (Exhibit 3.1 to the Companys Amendment No. 1 to
    Registration Statement on Form 8-A filed May 6, 1999,
    incorporated herein by reference).                                                                                          
|Exhibit (3.2)   |  | Amended and Restated By-Laws of the Company as amended through
    January 27, 2004 (Exhibit 3.2 to the Companys
    Form 10-Q Quarterly report for the period ended
    March 31, 2004, incorporated herein by reference).                                                                        
|Exhibit (4.1)   |  | Form of Common Stock Certificate (Exhibit 4.1 to the
    Companys Form 10-Q Quarterly Report for the period
    ended June 30, 1999, incorporated herein by reference).                                                                                                                            
|Exhibit (4.2)   |  | Rights Agreement, dated as of May 4, 1999 between the
    Company and Oak Brook Bank, as Rights Agent (Exhibit 4.1 to
    the Companys Registration Statement on Form 8-A filed
    May 21, 1999, incorporated herein by reference).                                                               
|Exhibit (4.3)   |  | Certificate of Designations Preferences and Rights of
    Series A Preferred Stock (Exhibit A to
    Exhibit 4.1 to the Companys Registration Statement on
    Form 8-A filed May 21, 1999, incorporated herein by
    reference).                                                                 
|Exhibit (4.4)   |  | Form of Rights Certificate (Exhibit B to Exhibit 4.1
    to the Companys Registration Statement on Form 8-A
    filed May 21, 1999, incorporated herein by reference).                                                                                                                             
|Exhibit (10.1)  |  | Twelfth Amendment to Revolving Credit Agreement between First
    Oak Brook Bancshares, Inc. and LaSalle Bank National Association
    dated April 1, 2004. (Exhibit 10.1 to the
    Companys Form 10-Q Quarterly Report for the period
    ended June 30, 2004, incorporated herein by reference).
|Exhibit (10.2)  |  | 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 (10.3)  |  | First Oak Brook Bancshares, Inc. 2001 Stock Incentive Plan
    effective January 23, 2001. (Appendix A to the
    Companys Proxy and Notice of Annual Meeting of
    Shareholders filed April 2, 2001, incorporated herein by
    reference).                                                      
|Exhibit (10.4)  |  | 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).                                 
|Exhibit (10.5)  |  | Form of Transitional Employment Agreement for Eugene P. Heytow,
    Richard M. Rieser, Jr. and Frank M. Paris. (Exhibit 10.9 to
    the Companys Form 10-K Annual Report for the year
    ended December 31, 1998, incorporated herein by reference).                                              
|Exhibit (10.6)  |  | Form of Transitional Employment Agreement for Senior Officers.
    (Exhibit 10.10 to the Companys Form 10-K Annual
    Report for the year ended December 31, 1998, incorporated
    herein by reference).                                                                                         
|Exhibit (10.7)  |  | 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 (10.8)  |  | 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 (10.9)  |  | 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 (10.10) |  | 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).                                                                                                                           

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|                |  |                                                                                                                                                                                                                                                  
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit (10.11) |  | First Oak Brook Bancshares, Inc. Annual Performance Bonus Plan
    effective January 1, 2001. (Appendix B to the
    Companys Proxy and Notice of Annual Meeting of
    Shareholders filed April 2, 2001, incorporated herein by
    reference).
|Exhibit (10.12) |  | First Oak Brook Bancshares, Inc. Directors Stock Plan
    (Form S-8 filed October 25, 1999, incorporated herein
    by reference).                                                                                                               
|Exhibit (10.13) |  | First Oak Brook Bancshares, Inc. Incentive Compensation Plan
    (Appendix A to the Companys Proxy and Notice of
    Annual Meeting of Shareholders filed March 30, 2004,
    incorporated herein by reference.)                                
|Exhibit (10.14) |  | Form of Stock Option Agreement under the Companys
    Incentive Compensation Plan.*                                                                                                                                                             
|Exhibit (10.15) |  | Form of Restricted Stock Unit Award Agreement under the
    Companys Incentive Compensation Plan.*                                                                                                                                              
|Exhibit (10.16) |  | Form of Agreement Regarding Confidentiality, Non-Solicitation of
    Customers and Employees and Prohibited Conduct.*                                                                                                                            
|Exhibit (10.17) |  | Form of Retirement Agreement for Eugene P. Heytow
    (Exhibit 99.1 to the Companys Form 8-K Current
    Report filed March 9, 2005, incorporated herein by
    reference.)                                                                     
|Exhibit (21)    |  | Subsidiaries of the Registrant.*                                                                                                                                                                                                                 
|Exhibit (23)    |  | Consent of KPMG LLP.*                                                                                                                                                                                                                            
|Exhibit (31.1)  |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 of Eugene P. Heytow, Chief Executive Officer.*                                                                                                                       
|Exhibit (31.2)  |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 of Rosemarie Bouman, Chief Financial Officer.*                                                                                                                       
|Exhibit (32.1)  |  | Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 of Eugene P. Heytow, Chief Executive Officer.*                                                                                                                       
|Exhibit (32.2)  |  | Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 of Rosemarie Bouman, Chief Financial Officer.*                                                                                                                       



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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 10, 2005                             



| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

|                                                         |  |                                                    |  |                |  | 
|-------------------------------------------------------- |  | -------------------------------------------------- |  | -------------- |  | 
|Signature                                                |  | Title                                              |  | Date          
|                                                         |  |                                                    |  |               
|                                                        
|                                                        
|/s/ Eugene P. HeytowEugene P. Heytow                     |  | Chairman of the Board  and Chief Executive Officer |  | March 10, 2005
|                                                        
|/s/ Frank M. ParisFrank M. Paris                         |  | Vice Chairman of the Board                         |  | March 10, 2005
|                                                        
|                                                        
|/s/ Richard M. Rieser,
    Jr.Richard M. Rieser, Jr.     |  | President, Assistant Secretary, and  Director      |  | March 10, 2005
|                                                        
|/s/ Miriam Lutwak
    FitzgeraldMiriam Lutwak Fitzgerald |  | Director                                           |  | March 10, 2005
|                                                        
|/s/ Geoffrey R. StoneGeoffrey R. Stone                   |  | Director                                           |  | March 10, 2005
|                                                        
|/s/ Michael L. SteinMichael L. Stein                     |  | Director                                           |  | March 10, 2005
|                                                        
|/s/ Stuart I. GreenbaumStuart I. Greenbaum               |  | Director                                           |  | March 10, 2005
|                                                        
|/s/ John W. BallantineJohn W. Ballantine                 |  | Director                                           |  | March 10, 2005
|                                                        
|/s/ Charles J. GriesCharles J. Gries                     |  | Director                                           |  | March 10, 2005
|                                                        
|                                                        
|/s/ Rosemarie BoumanRosemarie Bouman                     |  | Vice President and Chief  Financial Officer        |  | March 10, 2005
|                                                        
|/s/ Jill D. WachholzJill D. Wachholz                     |  | Chief Accounting Officer                           |  | March 10, 2005

89