SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

ý         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2001

 

OR

 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For transition period from ____________ to ______________

 

Commission file number 005-57237

 

 

FIRST OTTAWA BANCSHARES, INC.

(Exact name of Registrant as specified in its charter)

 

 

Indicate by check mark whether the Registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                 Yes  ý  No  o

 

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock as of the latest practicable date:  As of November 14, 2001 the Registrant had outstanding 662,281 shares of common stock, $1.00 par value per share.

 

FIRST OTTAWA BANCSHARES, INC.

Form 10-Q Quarterly Report

 

Table of Contents

 

PART I
Item 1.	Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of  Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures about Market Risk
PART II
Item 1.	Legal Proceedings
Item 2.	Changes in Securities
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K
Item 7.	Signatures

 

FIRST OTTAWA BANCSHARES, INC. and Subsidiary

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

		September 30,			December 31,
		2001			2000
ASSETS
Cash and cash equivalents		$	7,565		$	6,971
Certificates of deposit		3,000			-
Securities available-for-sale		104,657			92,445
Loans held for sale		136			693
Loans, less allowance for loan losses of $1,181 and $1,108		109,696			115,811
Bank premises and equipment, net		2,607			2,497
Interest receivable and other assets		5,510			6,590
Total assets		$	233,171		$	225,007
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Demand – non-interest-bearing		$	22,677		$	20,538
NOW accounts		22,540			26,220
Money market accounts		8,079			8,941
Savings		16,161			16,794
Time, $100,000 and over		19,369			25,170
Other time		75,610			75,790
Total deposits		164,436			173,453
Federal funds purchased		8,300			-
Securities sold under agreements to repurchase		28,250			24,638
FHLB advances		4,000			-
Interest payable and other liabilities		2,962			4,333
Total liabilities		207,948			202,424
Shareholders' equity
Common stock - $1 par value, 750,000 shares authorized and issued		750			750
Additional paid-in capital		4,000			4,000
Retained earnings		23,835			23,052
Treasury stock, at cost, 87,719 shares		(5,000		)	(5,000		)
Accumulated other comprehensive income (loss)		1,638			(219		)
Total shareholders' equity		25,223			22,583
Total liabilities and shareholders' equity		$	233,171		$	225,007

 

See accompanying notes to condensed consolidated financial statements.

 

FIRST OTTAWA BANCSHARES, INC. and Subsidiary

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)

(Unaudited)

 

 

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2001			2000			2001			2000
Interest income
Loans (including fee income)		$	2,344		$	2,619		$	7,209		$	7,888
Securities
Taxable		984			920			2,825			2,786
Exempt from federal income tax		365			418			1,176			1,291
Federal funds sold and other interest– bearing deposits		20			31			134			31
Total interest income		3,713			3,988			11,344			11,996
Interest expense
NOW account deposits		101			134			311			420
Money market deposit accounts		57			89			190			295
Savings deposits		81			91			243			285
Time deposits		1,343			1,509			4,213			4,265
Repurchase agreements		291			351			904			796
FHLB advances		45			-			75			-
Federal funds purchased		12			27			42			275
Total interest expense		1,930			2,201			5,978			6,336
NET INTEREST INCOME		1,783			1,787			5,366			5660
Provision for loan losses		60			90			240			270
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		1,723			1,697			5,126			5,390
Noninterest income
Service charges on deposit accounts		194			182			620			531
Trust and farm management fee income		108			90			324			270
Other fees and commissions		125			164			343			422
Gain (loss) on loan sales		74			(5		)	188			(18		)
Securities gains (losses), net		111			14			121			11
Total noninterest income		612			445			1,596			1,216
Noninterest expenses
Salaries and employee benefits		979			889			2,845			2,629
Occupancy and equipment expense		210			189			621			604
Data processing expense		122			127			386			386
Supplies		22			40			97			107
Advertising and promotions		33			41			84			127
Professional fees		83			65			253			191
Other expenses		258			265			809			795
Total noninterest expenses		1,707			1,616			5,095			4,839
INCOME BEFORE INCOME TAXES		628			526			1,627			1,767
Provision for income taxes		106			45			182			199
NET INCOME		$	522		$	481		$	1,445		$	1,568
Comprehensive income		$	1,450		$	1,416		$	3,302		$	1,822
Earnings per share		$	0.79		$	0.73		$	2.18		$	2.34
Average shares outstanding		662,281			662,281			662,281			668,708

 

See accompanying notes to condensed consolidated financial statements.

 

FIRST OTTAWA BANCSHARES, INC. and Subsidiary

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Nine Months ended September 30, 2001 and 2000

(In thousands, except per share data)

(Unaudited)

 

		Common Stock			Additional Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Share- holders' Equity
Balance at January 1, 2000		$	750		$	4,000		$	22,947		$	-		$	(1,714	)	$	25,983
Net income		-			-			1,568			-			-			1,568
Unrealized net loss on securities available-for-sale, net of reclassifications and tax effects		-			-			-			-			254			254
Comprehensive income		-			-			-			-			-			1,822
Cash dividends declared ($1 per share)		-			-			(662		)	-			-			(662		)
Purchase of 87,719 treasury shares		-			-			-			(5,000		)	-			(5,000		)
Balance at September 30, 2000		$	750		$	4,000		$	23,853		$	(5,000	)	$	(1,460	)	$	22,143
Balance at January 1, 2001		$	750		$	4,000		$	23,052		$	(5,000	)	$	(219	)	$	22,583
Net income		-			-			1,445			-			-			1,445
Unrealized net gain on securities available-for-sale, net of reclassifications and tax effects		-			-			-			-			1,857			1,857
Comprehensive income		-			-			-			-			-			3,302
Cash dividends declared ($1 per share)		-			-			(662		)	-			-			(662		)
Balance at September 30, 2001		$	750		$	4,000		$	23,835		$	(5,000	)	$	1,638		$	25,223

 

See accompanying notes to condensed consolidated financial statements.

 

FIRST OTTAWA BANCSHARES, INC. and Subsidiary

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months ended September 30, 2001 and 2000

(In thousands)

(Unaudited)

 

		2001		2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$1,445		$1,568
Adjustments to reconcile net income to net cash from operating activities
Change in deferred loan fees		(5	)	(1	)
Provision for loan losses		240		270
Depreciation and amortization		212		220
Premium amortization on securities, net		15		36
Net real estate loans originated for sale		745		1,263
Loss (gain) on loan sales		(188	)	18
(Gain) on sale of securities available-for-sale		(121	)	(11	)
Loss on sale of other real estate owned		15		18
Change in interest receivable and other assets		111		(1,038	)
Change in interest payable and other liabilities		(46	)	132
Net cash from operating activities		2,423		2,475
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available-for-sale		4,651		2,452
Proceeds from maturities of securities		36,854		1,640
Purchases of securities available-for-sale		(50,798	)	(1,027	)
Purchases of certificates of deposit		(3,000	)	-
Net change in loans receivable		5,688		6,538
Proceeds from sale of other real estate owned		190		50
Proceeds from sale of bank premises		-		15
Property and equipment expenditures		(322	)	(168	)
Net cash from investing activities		(6,737	)	9,500
CASH FLOWS FROM FINANCING ACTIVITIES
Change in deposits		(9,017	)	(5,806	)
Change in federal funds purchased		8,300		(7,130	)
Borrowings from FHLB		4,000		-
Change in securities sold under agreements to repurchase		3,612		8,107
Purchase of treasury stock		-		(5,000	)
Dividends paid		(1,987	)	(2,162	)
Net cash from financing activities		4,908		(11,991	)
Change in cash and cash equivalents		594		(16	)
Cash and cash equivalents at beginning of period		6,971		13,243
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$7,565		$13,227

 

See accompanying notes to condensed consolidated financial statements.

 

FIRST OTTAWA BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINACIAL STATEMENTS

(Table dollars in thousands)

September 30, 2001 and 2000

 

NOTE 1 – BASIS OF PRESENTATION

 

The consolidated financial statements include First Ottawa Bancshares, Inc. (“Bancshares”) and its wholly owned subsidiaries, First National Bank of Ottawa (“the Bank”) and First Ottawa Financial Corporation. The accounting policies followed in the preparation of the interim condensed consolidated financial statements are consistent with those used in the preparation of annual consolidated financial statements.  The interim condensed consolidated financial statements reflect all normal and recurring adjustments, which are necessary, in the opinion of management, for a fair statement of results for the interim periods presented.  Results for the nine months ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for the interim financial period and with the instructions to Form 10-Q.  Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

During 2001, First Ottawa Bancshares, Inc. (Company) organized a wholly-owned subsidiary, First Ottawa Financial Corporation, to sell insurance and investment products.  There was no significant activity at this subsidiary through September 30, 2001.

 

 

NOTE 2 – CAPITAL RATIOS

 

At the end of the period the Company’s and Bank’s capital ratios were the same and were:

 

		September 30, 2001					December 31, 2000
		Amount			Ratio		Amount			Ratio
Total capital (to risk-weighted  assets)		$	24,542		19.1	%	$	23,910		18.8	%
Tier I capital (to risk-weighted assets)		23,361			18.1	%	22,609			17.8
Tier I capital (to average assets)		23,361			10.4	%	22,609			10.0

 

 

At September 30, 2001, the Company and the Bank were categorized as well capitalized and management is not aware of any conditions or events since the most recent notification that would change the Company's or Bank's categories.

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

 

In 2001, new accounting guidance was issued that will, beginning in 2002, revise the accounting for goodwill and intangible assets.  Intangible assets with indefinite lives and goodwill will no longer be amortized, but will periodically be reviewed for impairment and written down if impaired.  Additional disclosures about intangible assets and goodwill may be required.  An initial goodwill impairment test is required during the first six months of 2002.  The Company does not expect this new guidance to have a material effect on the financial statements.

 

FIRST OTTAWA BANCSHARES, INC. AND SUBSIDIARY

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis is intended as a review of significant factors affecting the financial condition and results of operations of the Company for the periods indicated.  The discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes.  In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties.  The Company’s actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed elsewhere in this report.

 

CONSOLIDATED FINANCIAL CONDITION

Total assets at September 30, 2001 were $233.2 million contrasted to $225.0 million at December 31, 2000, an increase of $8.2 million, or 3.6%.  This increase was the result of an increase in cash and due from banks, securities available for sale, and certificates of deposit held at other financial institutions, partially offset by reductions in interest receivable and other assets, and loans. Federal Funds purchased totaled $8.3 million at September 30, 2001, and a 9 month fixed rate advance of $4 million from the Federal Home Loan Bank was acquired. Interest receivable and other assets declined $1.1 million due primarily to a decrease in deferred taxes payable of $1 million.  Loans declined by $6.1 million primarily as a result of an enhanced commitment to asset quality and partially as a reflection of loan repayments exceeding new loan demand that met the credit standards of the Company.

 

The Company has entered into a contract to purchase real estate in Morris, Illinois with the intention of establishing a full service branch facility in that community. An extensive remodeling project of the main banking facility was commenced in the third quarter, with an estimated completion date prior to the end of the second quarter of 2002.

 

Total equity was $25.2 million at September 30, 2001 compared to $22.6 million at December 31, 2000.  This increase was the result of $800,000 additional retained earnings and an increase of $1.8 million in the Company’s investment portfolio due to declining interest rates.

 

The Company's Board of Directors has adopted a resolution authorizing the repurchase of up to $200,000 of the Company's common stock from time to time in open market or privately negotiated transactions.  The timing of the purchases and the actual number of common shares purchased will depend on market conditions.  This stock repurchase program will be implemented at the Company's discretion and will expire December 31, 2001.

 

CONSOLIDATED RESULTS OF OPERATIONS

Net income for the third quarter of 2001 was $523,000, or $.79 per share, an 8.7% increase compared to $481,000, or $.73 per share, in the third quarter of 2000.  The increase in net income for the quarter was primarily a result of an increase in non-interest income of $167,000, partially offset by an increase of $91,000 in non-interest expense.  The increase in non-interest expense

resulted from increases in salaries and benefits expense of $90,000, occupancy and equipment expense of $21,000 and professional fees of $19,000, and was partially offset by a reduction in data processing, supplies, advertising and other expense.

 

During the nine months ended September 30, 2001, net income was $1,445,000, or $ 2.18 per share, compared to $1,568,000, or $2.34 per share during the first nine months of 2000.  This 7.8% decrease in net income for the nine month period is primarily due to a $294,000 decrease in net interest income, or 5.2%, and an increase in non-interest expense of $256,000, or 5.3%, partially offset by a decrease in income tax expense of $17,000, or 8.5%, and an increase in non-interest income of $380,000, or 31.3%. The annualized return on average assets was .86% in 2001 compared to .92% in 2000.   The return on average equity decreased to 8.05% in 2001 from 9.65% in 2000.

 

NET INTEREST INCOME

Net interest income was $1,783,000 and $1,787,000 during the three months ended September 30, 2001 and 2000.  Total interest income declined to $3,713,000 for the three months ended September 30, 2001 from $3,988,000 for the same period ended September 30, 2000.  This decrease was primarily the result of a decrease in interest income from loans to $2,344,000 for the three months ended September 30, 2001 from $2,619,000 for the same period a year earlier, an 10.5% decrease.   This decrease was partially mitigated by a similar decline in interest expense, to $1,930,000 for the three months ended September 30, 2001 from $2,201,000 for the same period ended September 30, 2000, a 12.3% decrease.

 

Net interest income for the nine months ended September 30, 2001 and 2000 was $5,366,000 and $5,660,000, respectively.  The Company’s net interest margin was 3.79% for the nine months ended September 30, 2001 and 3.97% a year earlier.  The yield on average earning assets decreased to 7.59% or the nine months ended September 30, 2001 from 7.74% for the same period ended September 30, 2000, a .21% decline.  This decrease was offset by a corresponding decrease in the interest paid as a ratio of average earning assets declined to 83.9% from 85.6% for the nine months ended September 30, 2000, a 1.7% decrease.

 

PROVISION FOR LOAN LOSSES

The provision for loan losses increased by $60,000 in the third quarter of 2001 and by $90,000 in  2000.  The decrease in the provision for the three months ended September 30, 2001, was due to the decrease in nonperforming loans and an overall decrease in the gross loan portfolio. As of September 30, 2001, the allowance for loan losses totaled $1,181,000, or 1.06% of total loans which is an increase from .95% as of December 31, 2000.  Nonaccrual loans increased from $467,000 at December 31, 2000 to $483,000 at September 30, 2001.  Nonperforming loans, including nonaccrual loans, decreased $752,000 to $1,892,000 over the same period.  The amounts of the provision and allowance for loan losses are influenced by current economic conditions, actual loss experience, industry trends and other factors, including real estate values in the Company’s market area and management’s assessment of current collection risks within the loan portfolio.

 

NONINTEREST INCOME

The Company’s non-interest income totaled $612,000 for the three months ended September 30, 2001 compared to $445,000 for the same period in 2000, an increase of $166,000.  Service charges on deposit accounts increased $12,000, or 6.6%, to $194,000. Trust and farm management fee income increased $18,000 due to modest growth in trust relationships and estates under administration.  Other fees and commissions increased $40,000 to $199,000 largely due to an increase in mortgage banking income.

 

For the nine months ended September 30, 2001, non-interest income increased $380,000 to $1,596,000.  Service charges on deposit accounts increased $89,000, or 16.8%, trust and farm management fee income increased $54,000, or 20.0%, and other fees and commissions increased $127,000 for the reasons previously discussed.

 

NONINTEREST EXPENSE

The Company’s non-interest expenses increased to $1,707,000 for the three months ended September 30, 2001 from $1,616,000 for the same period in 2000.  Salaries and benefits increased $90,000, or 10.1%, to $979,000.  Increases in occupancy and equipment expense of $21,000, and $18,000 in professional fees were offset to some extent by declines in advertising and promotional expense of $8,000 supplies expense of $18,000, data processing expense of $5,000, and other expenses of $7,000.

 

For the nine months ended September 30, 2001, non-interest expenses increased $256,000 to $5,095,000, or 5.3%, compared to the year earlier period.  Salaries and benefits increased $216,000, or 8.2%, to $2,845,000.  Occupancy and equipment expense, Supplies expense, data processing, advertising and promotion expense, and other expense declined $22,000 in total due to a disciplined approach to cost controls.   Professional fees increased by $62,000.  The increase in professional fees is primarily due to more extensive outsourcing of formerly in-house functions.

 

LIQUIDITY AND CAPITAL RESOURCES

The Company’s primary sources of funds are deposits and proceeds from principal and interest payments on loans and securities.  While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition.  The Company generally manages the pricing of its deposits to be competitive and to increase core deposit relationships.

 

Liquidity management is both a daily and long-term responsibility of management.  The Company adjusts its investments in liquid assets based upon management’s assessment of (i) expected loan demand, (ii) expected deposit flows, (iii) yields available on interest-earning deposits and securities, and (iv) the objectives of its asset/liability management program.  Excess liquid assets are invested generally in interest-earning overnight deposits and short- and intermediate-term U.S. government and agency obligations.

 

The Company’s most liquid assets are cash and short-term investments.  The levels of these assets are dependent on the Company’s operating, financing, lending, and investing activities during any given year.  At September 30, 2001, cash and short-term investments totaled $7.6 million.  The Company has other sources of liquidity if a need for additional funds arises, including securities maturing within one year and the repayment of loans.  The Company may also utilize the sale of securities available-for-sale, federal funds lines of credit from correspondent banks and advances from the Federal Home Loan Bank.

 

IMPACT OF INFLATION AND CHANGING PRICES

The financial statements and related data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.  The primary impact of inflation on the operations of the Company is reflected in increased operating costs.  Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature.  As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation.  Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

 

SAFE HARBOR STATEMENT

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions.  Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identifiable by use of the words such as "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions.  The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse effect on the operations and future prospects of the Company and the Bank include, but are not limited to, changes in interest rates; general economic conditions; the legislative/regulatory situation; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market area; and accounting principles, policies, and guidelines.  These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements.  Further information concerning the Company and its business, including additional factors that could materially affect the Company's financial results, is included in the Company's filings with the Securities and Exchange Commission.

FIRST OTTAWA BANCSHARES, INC. AND SUBSIDIARY

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

ITEM 3:   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company's overall interest rate sensitivity is demonstrated by net income analysis and "Gap" analysis.  Net income analysis measures the change in net income in the event of hypothetical changes in interest rates.  This analysis assesses the risk of change in net income in the event of sudden and sustained 2.0% increases and decreases in market interest rates.  The tables below present the Company's projected changes in annualized net income for the various rate shock levels at September 30, 2001 and September 30, 2000.

		2001 Net Income
		Amount			Change			Change
		(Dollars in Thousands)
+200 bp		$	1,840		$	(116	)	(6.0	)%
Base		1,956			-			-
–200 bp		2,051			95			4.8	%

 

		2000 Net Income
		Amount			Change			Change
		(Dollars in Thousands)
+200 bp		$	1,908		$	(94	)	(4.7	)%
Base		2,002			-			-
–200 bp		2,096			94			4.7	%

 

As shown above, at September 30, 2001, the effect of an immediate 200 basis point increase in interest rates would decrease the Company's net income by 6.0% or approximately $116,000.  The effect of an immediate 200 basis point decrease in rates would increase the Company's net interest income by 4.8% or approximately $95,000.  Overall net income sensitivity has increased from September 30, 2000 to September 30, 2001.

 

PART II

 

ITEM 1.           LEGAL PROCEEDINGS

 

There are no material pending legal proceedings to which the Company or its subsidiary are a party other than ordinary routine litigation incidental to their respective businesses.

 

ITEM 2.           CHANGES IN SECURITIES

 

None

 

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

 

None

 

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

 

None

 

ITEM 5.           OTHER INFORMATION

 

The Company's Board of Directors has adopted a resolution authorizing the repurchase of up to $200,000 of the Company's common stock from time to time in open market or privately negotiated transactions.  The timing of the purchases and the actual number of common shares purchased will depend on market conditions.  This stock repurchase program will be implemented at the Company's discretion and will expire December 31, 2001.

 

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

 

Exhibits

 

None

 

Reports on Form 8-K

 

None

 

SIGNATURES

 

Pursuant to the requirements 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 OTTAWA BANCSHARES, INC.
				(Registrant)
November 14, 2001				/S/ JOACHIM J. BROWN
				Joachim J. Brown
				President (Principal Executive Officer)
November 14, 2001				/S/ DONALD J. HARRIS
				Donald J. Harris
				Executive Vice President, Cashier, and Trust Officer
				(Principal Financial Officer)