SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1999 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
__________ to __________
Commission file number 000-24478.
DEARBORN BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Michigan 38-3073622
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
22290 Michigan Avenue, Dearborn, MI 48124
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(Address of principal executive office) (Zip code)
(313) 274-1000
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(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(d) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ------------------------
None None
Securities registered pursuant to section 12(g) of the Act:
Common Stock
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 _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 1, 2000: Common Stock, $14,183,832.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of March 1, 2000: Common Stock, 2,417,829 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1999 Annual Report to Stockholders of Registrant are
incorporated in Parts I, II and IV of this report. Portions of the definitive
Proxy Statement of the Registrant dated April 14, 2000, to be filed pursuant
to Regulation 14A, are incorporated by reference in Part III of this report.
DEARBORN BANCORP, INC.
FORM 10-K
PART I
Forward Looking Statements
The following discussion contains forward-looking statements that are based
on management's beliefs, assumptions, current expectations, estimates and
projections about the financial services industry, the economy, and about the
Corporation and Bank. Words such as "anticipates", "believes", "estimates",
"expects", "forecasts", "intends", "is likely", "plans", "projects",
variations of such words and similar expressions are intended to identify
such forward- looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions
("Future Factors") that are difficult to predict with regard to timing,
extent, likelihood and degree of occurrence. Therefore, actual results and
outcomes may materially differ from what may be expressed or forecasted in
such forward-looking statements. The Corporation undertakes no obligation to
update, amend or clarify forward-looking statements, whether as a result of
new information, future events (whether anticipated or unanticipated), or
otherwise.
Future Factors include changes in interest rates and interest rate
relationships; demand for products and services; the degree of competition by
traditional and non-traditional competitors; changes in banking regulation;
changes in tax laws; changes in prices, levies and assessments; the impact of
technological advances; governmental and regulatory policy changes; the
outcomes of contingencies; trends in customer behavior as well as their
ability to repay loans; and changes in the national and local economy. These
are representative of the Future Factors that could cause a difference
between an ultimate actual outcome and a preceding forward-looking statement.
Item 1. Business
Dearborn Bancorp, Inc. (the "Corporation"), a Michigan corporation, is a bank
holding corporation owning all the common stock of the Community Bank of
Dearborn (the "Bank"), a Michigan banking corporation which commenced
business on February 28, 1994. The Bank is the only commercial bank
headquartered in Dearborn, Michigan and conducts business primarily in
western Wayne County, Michigan.
Background
The liberalization of Michigan's branch banking laws, together
with the expansion of interstate banking, has led to substantial
consolidation of the banking industry in Michigan, including within the
county in which the Bank is located. In the past, several of the financial
institutions within the primary market area of the Bank have either been
acquired by or merged with larger financial institutions or out-of-state
financial institutions. In some cases, when these consolidations occurred,
local boards of directors were dissolved and local management relocated or in
some cases terminated and has, in some cases, resulted in policy and credit
decisions being centralized away from local management.
In the opinion of the Corporation's management, this situation has
created a favorable opportunity for a local commercial bank with local
management and directors. Management of the Corporation believes that such a
bank attracts those customers who wish to conduct business with a locally
managed institution that demonstrates an active interest in their business
and personal financial affairs. The Corporation believes that a locally
managed institution, in many cases, will be able to deliver more timely
responses to customer requests, provide customized financial products and
services and offer customers the personal attention of the Bank's senior
banking officers. The Bank seeks to take advantage of this opportunity by
emphasizing in its marketing plan the Bank's local management and the Bank's
ties and commitment to its market area.
The Corporation was incorporated as a Michigan business
corporation on September 30, 1992. The Corporation was formed to acquire all
of the Bank's issued and outstanding stock and to engage in the business of a
bank holding corporation under the Bank Holding Company Act of 1956, as
amended (the "Act").
The executive offices of the Corporation and the Bank are located
at 22290 Michigan Avenue, Dearborn, Michigan 48124, telephone number (313)
274-1000.
2
Business of the Corporation
The primary purpose of the Corporation is the ownership of the
Bank. In the future, the Corporation may form or acquire other subsidiaries
as permitted under the Act and the regulations of the Federal Reserve. There
are no plans, agreements, understandings or negotiations, either written or
oral, at the present time for any acquisitions by the Corporation.
Business of the Bank
The Bank, through its main office and two branch offices,
emphasizes and offers highly personalized service to its customers.
The customer service officers are well-trained, experienced bank
officers who fill the needs of the customers and handle the requests of their
customers in a professional manner. The management of the Corporation and the
Bank believe that it is important to the success of the Bank's strategy to
create long-term relationships between customers and Bank employees. The
Bank's senior management holds regular staff information meetings so that all
employees are given information regarding the Bank's plans and objectives,
and employees are offered the opportunity to make suggestions to improve the
Bank's performance. The management of the Bank believes that this approach
creates a commitment by all employees to the Bank's success.
The Bank offers a wide range of financial products and services.
These include checking accounts, savings accounts, money market accounts,
certificates of deposit, business checking, direct deposit, loan services
(commercial, consumer, real estate mortgages), travelers' checks, cashiers'
checks, wire transfers, safety deposit boxes, collection services and night
depository services. The Bank does not have a trust department.
Business Strategy
Growth Through Branch Expansion. Since commencing operations, the Bank's
growth has been accomplished through internal growth. The internal growth of
the Bank has been aided by the opening of two additional offices. The
Dearborn Heights office opened on December 20, 1995 and as of December 31,
1999 had $22.2 million in total deposits, while the Plymouth Township office
opened on August 11, 1997 and as of December 31, 1999 had $16.1 million in
total deposits. In 2000, the Bank intends to open an office in Canton
Township.
Emphasize Community Banking. The Bank strives to maintain a strong commitment
to community banking. The Bank's goal is to attract small to medium-sized
businesses and individuals as customers who wish to conduct business with a
local commercial bank that demonstrates an active interest in their business
and personal affairs. Management believes that the Bank is better able than
its larger competitors to deliver more timely responses to customer requests,
provide customized financial products and services and offer customers the
personal attention of senior banking officers.
Expand Lending in the Corporation's Primary Market. The Corporation's initial
lending philosophy concentrated on single family residential lending but has
grown to include a more diverse group of loan products. The Corporation's
loan portfolio currently consists of residential loans, indirect consumer
loans with a select list of local automobile dealers, commercial real estate
loans, small business commercial loans and other consumer loans. Management
intends to maintain its emphasis on these loan products.
Grow Through Selected Acquisitions. Although the Corporation will continue to
pursue internal growth at the Bank, management believes that greater growth
opportunities may be found in acquisitions of community banks or branches in
Michigan to enhance the Corporation's markets. As part of its normal business
operations, management maintains contact with financial institutions to
discuss various acquisition possibilities. However, the Corporation has made
no bank or branch acquisitions to date, and it presently has no agreements,
commitments, understandings or arrangements to acquire any other banks or
branches, and there is no assurance that the Corporation will be successful
in its acquisition strategy.
3
Marketing Plan
The Bank's marketing plan focuses on the concepts of corporate
citizenship and personal interaction within the communities the Bank serves
through promotion of, and active participation in, a number of civic
organizations and ongoing community activities. Management believes that
these efforts establish the identity and philosophy of the Bank within the
communities it serves and allow Bank officers and employees to personally
interact with local business leaders and members of the public. The marketing
plan also emphasizes direct sales calls by Bank officers and specific
telemarketing programs involving the Bank's branch managers and customer
service representatives.
The Bank has two primary target markets: consumer financial
services, with an emphasis on individual deposit accounts, single family
residential lending and indirect automobile lending; and business financial
services, with an emphasis on small- to medium-sized businesses.
Community Club. At inception, the Bank established a "Community
Club" which has become an important marketing tool to increase the Bank's
total deposits. The Community Club is targeted at individuals over the age of
50. As of December 31, 1999, the Community Club had over 1,800 members who
accounted for total deposits of $52.8 million, or 44% of the Bank's total
deposits.
Among other things, membership in the Community Club entitles the
customer to increased personal attention and service by Bank staff and a 1/4%
premium on new certificate of deposit accounts with a minimum $1,000 balance
and one year maturity. The Bank also hosts local community events,
educational seminars and travel programs which have been well received by the
Community Club members. Management believes that the success of the Community
Club and the Bank's continued efforts to expand the benefits of the program
will foster an increase in the number of Community Club members and deposit
accounts.
Business Financial Services. The Bank's business marketing efforts
are directed by senior management, including Messrs. Ross, Cuttle, Musson,
Rautio and Wolber with Mr. Wolber assigned as sales manager, whose duties
include administering and coordinating the business development efforts of
the Bank.
Each Bank officer, in addition to each branch manager, is
responsible for creating new business opportunities for the Bank. The
targeted list of new business customers represents a mix of industrial,
manufacturing, professional and retail clients with an emphasis on businesses
with annual sales of $10 million or less.
The Bank has developed an aggressive telemarketing program for new
business. Businesses are identified through listings provided by the various
Chambers of Commerce, local phone directories and other sources targeted to
the communities the Bank serves. Initial sales calls are introductory in
nature with follow-up calls made to determine whether a meeting can be
arranged with the targeted company to discuss the Bank's products and
services. The Bank believes this strategy has been and will continue to be
successful in generating new business for the Bank.
In addition to its telemarketing program, the Bank's officers
maintain contact with local attorneys, accountants and other representatives
in the local community that may be in a position to refer business to the
Bank. The Bank also encourages and supports its officers and employees to
join and participate in various community organizations and events.
Consumer Financial Services. The Bank originates residential real
estate loans primarily through its retail branch facilities. Branch managers
and mortgage loan originators develop new residential mortgage applications
from several sources including real estate brokers, insurance agents,
accountants, attorneys, existing residential mortgage customers and other
customers of the Bank. An extensive telemarketing effort generates potential
customers as a result of these contacts. Additionally, the Bank has developed
targeted real estate newsletters that are mailed to an existing database
composed of those referral sources. The Bank also maintains an active role in
several local real estate boards offering product training to members.
4
The Bank, as a result of its secondary market operations, is able
to offer a variety of loan products that serve the needs of first time home
buyers by providing five percent down payment loans and loans with no points.
Customers desiring to construct new homes are able to obtain financing as a
result of the Bank's construction loan program that is offered in addition to
the permanent loan. Non-conforming loans, which are larger residential loans,
are also provided through the Bank's secondary marketing efforts. The Bank
also provides loans that it holds in its own portfolio on those transactions
that evidence excellent credit quality and income but are unable to be sold
in the secondary market for other reasons.
The Bank originates indirect consumer loans primarily from its
main office in Dearborn, Michigan. A consumer loan officer purchases loans
from a select list of automobile dealers located in the Metropolitan Detroit
Area through an extensive direct calling program. The Bank intends to target
additional automobile dealers in its market area in an effort to broaden and
diversify its indirect consumer loan portfolio.
Management believes that cross-selling of the Bank's products and
services to its existing customers is vital to expanding account
relationships, generating additional sales opportunities and increasing fee
income.
Loan Policy
As a routine part of the Bank's business, the Bank makes loans to
individuals and businesses located within the Bank's market area. The loan
policy of the Bank states that the function of the lending operation is
twofold: to provide a means for the investment of funds at a profitable rate
of return with an acceptable degree of risk, and to meet the credit needs of
the responsible businesses and individuals who are customers of the Bank.
However, the Board of Directors of the Bank recognizes that in the normal
business of lending, some losses on loans will be inevitable and should be
considered a part of the normal cost of doing business. Under the loan
policy, only the President, Loan Administration Officer and Senior Lender
currently have lending authority.
The Bank's loan policy anticipates that priorities in extending
loans will change from time to time as interest rates, market conditions and
competitive factors change. The policy sets forth guidelines on a
nondiscriminatory basis for lending in accordance with applicable laws and
regulations. The policy describes various criteria in granting loans,
including the ability to pay; the character of the customer; evidence of
financial responsibility; purpose of the loan; knowledge of collateral and
its value; terms of repayment; source of repayment; payment history; and
economic conditions.
The loan policy specifies lending limits for certain officers up
to a maximum of $50,000 for unsecured loans and $100,000 for secured loans,
with loans from $100,000 to $1,000,000 requiring approval by a loan
committee. Larger loans up to the legal maximum authorized by law require the
approval of the Board of Directors of the Bank.
The loan policy also limits the amount of funds that may be loaned
against specified types of collateral including: listed securities - 80% loan
to value; U.S. Government securities - 90% loan to value; and insured bank
deposits - 100% loan to value. As to loans secured principally by real
estate, the policy requires appraisal of the property offered as collateral
by licensed independent appraisers. The loan policy also provides general
guidelines as to collateral, provides for environmental reviews, contains
specific limitations with respect to loans to employees, executive officers
and directors, provides for problem loan identification, establishes a policy
for the maintenance of a loan loss reserve, provides for loan reviews and
sets forth policies for mortgage lending and other matters relating to the
Bank's lending business.
Lending Practices
Commercial loans. The Bank's commercial lending group originates
commercial loans primarily in the western Wayne County area of southeastern
Michigan. Commercial loans are originated by the officer group with the
assistance of the Messrs. Ross, Cuttle and Musson, who have over 79 years of
combined commercial lending experience. Loans are originated for general
business purposes, including working capital, accounts receivable financing,
machinery and equipment acquisition, and commercial real estate financing
including new construction and land development.
5
Working capital loans are often structured as a line of credit and
are reviewed periodically in connection with the borrower's year-end
financial reporting. These loans generally are secured by all of the assets
of the borrower, a personal guaranty of the owners and have an interest rate
plus a margin tied to the national prime rate. Loans for machinery and
equipment purposes typically have a maturity of five to seven years and are
fully amortizing. Commercial real estate loans are usually written with a
five-year maturity and are amortized over a fifteen-year period. Commercial
real estate loans may have an interest rate that is fixed to maturity or
float with a margin over the prime rate or a U.S. Treasury index.
The Bank evaluates all aspects of a commercial loan transaction in
order to minimize credit and interest rate risk. Underwriting includes an
assessment of management, products, markets, cash flow, capital, income and
collateral. The analysis includes a review of historical and projected
financial results. Appraisals are obtained by licensed independent appraisers
who are well known to the Bank on transactions involving real estate and, in
some cases, equipment.
Commercial real estate lending involves more risk than residential
lending, because loan balances are greater and repayment is dependent upon
the borrower's operation. The Bank attempts to minimize risk associated with
these transactions by limiting its exposure to existing well-known customers
and new customers with an established profitable history. Risk is further
reduced by limiting the concentration of credit to any one borrower as well
as the type of commercial real estate financed.
Single-Family Residential Real Estate Loans. The Bank originates
residential real estate loans in its market area according to secondary
market underwriting standards. These loans provide borrowers with a fixed
interest rate with terms up to thirty years. Loans are sold on a servicing
released basis in the secondary market with all interest rate risk and credit
risk passed to the purchaser. The Bank from time to time may elect to
underwrite certain residential real estate loans to be held in it's own loan
portfolio. These loans are generally underwritten with the same standards
that apply to the secondary market. The majority of the portfolio loans have
an interest rate that is indexed to the one-year treasury rate and adjusts
annually.
Consumer Loans. The Bank originates consumer loans for a wide
variety of personal financial requirements. Consumer loans include home
equity lines of credit, new and used automobiles, boat loans and overdraft
protection for checking account customers. The Bank also purchases retail
installment loans from a select list of automobile dealerships located in the
Bank's primary market.
Consumer loans generally have shorter terms and higher interest
rates than residential mortgage loans and, except for home equity lines of
credit, usually involve more credit risk than mortgage loans because of the
type and nature of the collateral. While the Bank does not utilize a formal
credit scoring system, the Bank believes its loans are underwritten
carefully, with a strong emphasis on the amount of the down payment, credit
quality, employment stability, and monthly income. These loans are generally
repaid on a monthly repayment schedule with the source of repayment tied to
the borrower's periodic income. In addition, consumer lending collections are
dependent on the borrower's continuing financial stability, and are thus
likely to be adversely affected by job loss, illness and personal bankruptcy.
In many cases, repossessed collateral for a defaulted consumer loan will not
provide an adequate source of repayment of the outstanding loan balance
because of depreciation of the underlying collateral. The Bank believes that
the generally higher yields earned on consumer loans compensate for the
increased credit risk associated with such loans and that consumer loans are
important to its efforts to serve the credit needs of the communities and
customers that it serves.
Allowance for Loan Losses. An allowance for loan losses is
maintained at a level that management of the Bank considers adequate to
provide for potential losses in the loan portfolio. Allowances for loan
losses are based upon the Bank's experience and estimates of the net
realizable value of collateral in each loan portfolio. The Board of Directors
and senior management review the allowance quarterly. The Bank's evaluation
takes into consideration experience, the level of classified assets,
non-performing loans, the current level of the allowance as it relates to the
total loan portfolio, projected charge-offs, current economic conditions,
recent regulatory examinations and other factors.
6
Employees
As of March 1, 2000, the Bank had 42 employees, including 15
officers and 27 customer service, operations and other support persons.
Management believes that the Bank's relations with its employees are
excellent.
Competition
The Bank faces strong competition for deposits, loans and other
financial services from numerous banks, savings banks, thrifts, credit unions
and other financial institutions as well as other entities which provide
financial services, including consumer finance companies, securities
brokerage firms, mortgage brokers, insurance companies, mutual funds, and
other lending sources and investment alternatives. Some of the financial
institutions and financial services organizations with which the Bank
competes are not subject to the same degree of regulation as the Bank. Many
of the financial institutions and financial services organizations
aggressively compete for business in the Bank's market area. Most of these
competitors have been in business for many years, have established customer
bases, are larger, have substantially higher lending limits than the Bank,
and are able to offer certain services that the Bank does not currently
provide, including more extensive branch networks, trust services, and
international banking services. In addition, most of these entities have
greater capital resources than the Bank, which, among other things, may allow
them to price their services at levels more favorable to the customer and to
provide larger credit facilities than could the Bank. Additionally, recent
effective legislation regarding interstate branching and banking may increase
competition in the future from out-of-state banks.
Supervision and Regulation
The Corporation is a registered bank holding company and subject
to the supervision of the Federal Reserve System ("Federal Reserve"). The
Corporation is required to file with the Federal Reserve annual reports and
such other information as the Federal Reserve may require under the Bank
Holding Company Act of 1956, as amended (the "Act"). The Corporation and the
Bank are each subject to examination by the Federal Reserve.
The Act requires every bank holding company to obtain prior
approval of the Federal Reserve before it may merge with or consolidate into
another bank holding company, acquire substantially all assets of any bank,
or acquire ownership or control of any voting shares of any bank, if after
such acquisition, it would own or control, directly or indirectly, more that
5% of the voting shares of such bank holding company or bank. The Federal
Reserve may in its discretion approve the acquisition by the Corporation of
the voting shares or substantially all assets of a bank located in Michigan
and, subject to certain restrictions, located in any other state.
The Act also prohibits a bank holding company, with certain
exceptions, from acquiring direct or indirect ownership or control of more
than 5% of the voting shares of any company that is not a bank, and from
engaging in any business other than that of banking, managing and controlling
banks and their subsidiaries. Holding companies may engage in, and may own
shares of companies engaged in, certain businesses found by the Federal
Reserve to be closely related to banking or the management or control of
banks. Under current regulations of the Federal Reserve, a holding company
and its non-bank subsidiaries are permitted to engage in investment
management, sales and consumer finance, equipment leasing, data processing,
discount securities brokerage, mortgage banking and brokerage, and other
activities. These activities are subject to certain limitation imposed by the
regulations.
Transactions between the Corporation and the Bank are subject to
various restrictions imposed by state and federal law. Such transactions
include loans and other extensions of credit, purchases of securities, any
payments of fees and other distributions. Federal law places restrictions on
the amount and nature of loans to executive officers, directors and
controlling persons of banks insured by the Federal Deposit Insurance
Corporation and holding companies controlling such banks.
7
The Bank is a state chartered bank and subject to regulation and
examination by the Michigan Financial Institutions Bureau. The Bank also is
subject to certain provisions of the Federal Deposit Insurance Act and
regulations issued under that act. The regulations affect many activities of
the Bank, including the permissible types and amounts of loans, investments,
capital adequacy, branching, interest rates payable on deposits, required
reserves, and the safety and soundness of the Bank's practices. The Bank is
not a member bank of the Federal Reserve System and is regulated and examined
by the Federal Deposit Insurance Corporation.
A summary of consolidated net interest income, consolidated net
interest income volume / rate analysis, rate sensitivity analysis / gap
analysis and capital ratios is set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the 1999 Annual Report to Stockholders and is incorporated herein by
reference.
Item 2. Properties
The main office of the Corporation and the Bank is located in a
single story building containing 8,400 square feet at 22290 Michigan Avenue,
Dearborn, Michigan which is owned by the Corporation and leased to the Bank.
The Bank's Dearborn Heights, Michigan branch office is located in
a single story commercial/retail office building at 24935 W. Warren Avenue,
which is also owned by the Corporation. Approximately 79% of the 3,240 square
foot building is leased to the Bank and the remaining space is leased to a
non-affiliated tenant.
The Bank's branch office located at 44623 Five Mile, Plymouth
Township, Michigan, contains 1,595 square feet in leased space in a retail
shopping center anchored by a regional grocery store.
The Bank has a commitment to purchase property at 1325 N. Canton
Center, Canton Township, Michigan and will be constructing a 6,000 square
foot branch office. Approximately 50% of the 6,000 square feet will be leased
to a non-affiliated tenant.
Item 3. Legal Proceedings
From time to time, the Corporation and its subsidiary are parties
to various legal proceedings incidental to their business. At December 31,
1999, there were no legal proceedings which management anticipates would have
a material adverse effect on the Corporation.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of 1999.
Executive Officers of the Corporation and Bank
Set forth below are the names and ages of the executive officers
of the Corporation and the Bank, positions held and the years from
which held. There are no family relationships among such persons.
John E. Demmer, 76
Chairman of the Board, Dearborn Bancorp, Inc. and Community Bank
of Dearborn
Chairman of the Board and Director of the Corporation since 1992.
Chairman of the Board and Director of the Bank since 1993.
Chairman of the Board and Chief Executive Officer of Jack Demmer
Ford, Inc. since 1994.
8
Richard Nordstrom, 72
Vice Chairman, Dearborn Bancorp, Inc.
Vice Chairman and Director of the Corporation since 1998.
President and Director of the Corporation from 1992 to 1997.
Director of the Bank since 1993. Chairman of the Board of
Nordstrom Samson Associates from 1960 to 1996.
Michael J. Ross, 49
President, Dearborn Bancorp, Inc.
President and Chief Executive Officer, Community Bank of Dearborn
President and Director of the Corporation since 1998. Vice
President and Director of the Corporation from 1993 to 1997.
President, Chief Executive Officer, and Director of the Bank since
1993.
Jeffrey L. Karafa, 35
Vice President, Treasurer and Secretary, Dearborn Bancorp, Inc.
Vice President, CFO, Cashier and Secretary, Community Bank of
Dearborn
Vice President and Treasurer of the Corporation since 1998.
Secretary of the Corporation since 1999. Vice President, CFO and
Cashier of the Bank since 1996. Secretary of the Bank since 1999.
Assistant Vice President of the Bank from 1994 to 1996.
Donald G. Karcher, 70
Vice President, Dearborn Bancorp, Inc.
Vice President and Director of the Corporation since 1992.
Director of the Bank since 1993. Chairman of the Board of Karcher
Agency, Inc. since 1994.
Timothy J. Cuttle, 53
Executive Vice President, Loan Administration, Community Bank of
Dearborn
Executive Vice President of the Bank since 1996. Senior Vice
President of Huntington Banks of Michigan from 1990 to 1995.
Brian A. Mamo, 32
Vice President, Commercial Loan Officer, Community Bank of
Dearborn
Vice President of the Bank since 1998. Commercial Relationship
Officer of Citizens Bank from 1997 to 1998. Director of
Administration and Controller of TGI-VMS from 1995 to 1997.
Commercial Loan Officer of the former NBD Bank from 1989 to 1995.
Warren R. Musson, 43
Vice President, Senior Lender, Community Bank of Dearborn
Vice President of the Bank since 1999. Senior Vice President and
Senior Loan Officer of Peoples State Bank from 1993 to 1999.
H. Kristene Rautio, 52
Vice President, Branch Administration, Community Bank of Dearborn
Vice President of the Bank since 1999. Relationship Manager,
Private Client Services of the former First of America Bank from
1997 to 1999. Branch Sales Manager of the former First of America
Bank from 1996 to 1997. Retail Sales Manager of the former First
of America Bank from 1994 to 1996.
Jeffrey J. Wolber, 44
Vice President, Sales and Product Manager, Community Bank of
Dearborn
Vice President of the Bank since 1994.
9
PART II
Item 5. Market for Registrant's Common Equity, and Related Stockholder
Matters
The information required by this item appears in the Corporation's
1999 Annual Report to Stockholders under the caption "Dearborn Bancorp, Inc.,
Common Stock" and is incorporated by reference herein.
Item 6. Selected Financial Data
The information required by this item appears in the Corporation's
1999 Annual Report to Stockholders under the caption "Summary of Selected
Financial Data" and is incorporated by reference herein.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this item appears in the Corporation's
1999 Annual Report to Stockholders under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and is
incorporated by reference herein.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The Registrant is not required to provide this information as the
Registrant meets the definition of a small business issuer.
Item 8. Financial Statements and Supplementary Data
The financial statements included in the Corporation's 1999 Annual
Report to Stockholders are incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Corporation has dismissed its former principal accountants,
Grant Thornton LLP of Southfield, Michigan, and engaged Crowe Chizek and
Company, LLP of Grand Rapids, Michigan as its principal accountants. The
change was made effective October 29, 1999.
During the two most recent fiscal years of the Corporation and
each subsequent interim period preceding December 31, 1999, there were no
disagreements with the former accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of the
former accountants would have caused them to make reference in connection
with their report to the subject matter of the disagreements.
The reports of the former principal accountants on the financial
statements of the Corporation for either of the past two years contained no
adverse opinion or disclosure of opinion, nor was either qualified or
modified as to uncertainty, audit scope, or accounting principles.
The decision to change accountants was approved by the Board of
Directors of the Corporation.
10
PART III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the caption "Information about
Directors and Nominees for Directors" in the definitive Proxy Statement of
the Corporation dated April 14, 2000 is incorporated by reference herein.
Reference is made to Part I of this report for information as to
executive officers of the Corporation and Bank.
Item 11. Executive Compensation
The information set forth under the caption "Executive
Compensation" in the definitive Proxy Statement of the Corporation dated
April 14, 2000 is incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the caption "Security Ownership"
in the definitive Proxy Statement of the Corporation dated April 14, 2000 is
incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Related Transactions"
in the definitive Proxy Statement of the Corporation dated April 14, 2000 is
incorporated by reference herein.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
The following financial statements of the Corporation appear
in the Corporation's 1999 Annual Report to Stockholders and
are incorporated by reference in item 8.
Report of Independent Auditors
Consolidated Balance Sheets as of December 21, 1999 and 1998
Consolidated Statements of Income for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
No schedules are required under this item.
11
(3) Exhibits
The Exhibits marked with one asterisk below were filed as
Exhibits to the Registration Statement of the Registrant on
Form S-18 (Registration Number 33-55808) are incorporated
herein by reference. The Exhibit marked with two asterisks
below was filed as an Exhibit to the Form 10-K Report of the
Registrant for the fiscal year ended December 31, 1993 is
incorporated herein by reference. The Exhibit marked with
three asterisks below was filed as an Exhibit to the Form
10-K Report of the Registrant for the fiscal year ended
December 31, 1995 is incorporated herein by reference. The
Exhibit marked with four asterisks below was filed as an
Exhibit to the Form 10-Q Report of the Registrant for the
quarter ended June 30, 1997 is incorporated herein by
reference. The Exhibit numbers in brackets being those in
such Registration Statements, Form 10-K or Form 10-Q
Reports.
(3)(a)**** Articles of Incorporation of Registrant, As
Amended. [3(a)]
(3)(b)*** By-Laws of the Registrant, As Amended. [3(b)]
(10)(a)* Letter re employment of Michael J. Ross by
Registrant. [10(a)]
(10)(b)**** 1994 Stock Option Plan, As Amended. [10(b)]
(13) 1999 Annual Report to Stockholders. [13]
(21)** Subsidiaries of the Registrant. [21]
(23) Opinion of Grant Thornton LLP. [23]
(27) Financial Data Schedule. [27]
(b) Reports on Form 8-K
The Corporation filed a Form 8-K on October 29, 1999
regarding Changes in Registrant's Certifying Accountant.
12
Form 10-K 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, on March 1,
2000.
Dearborn Bancorp, Inc.
By /s/ John E. Demmer
--------------------------------------
(John E. Demmer, Chairman of the Board)
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 indicated on
March 1, 2000.
/s/ John E. Demmer
- -------------------------- Chairman of the Board, Chief Executive Officer
(John E. Demmer) and Director (Principal Executive Officer)
/s/ Jeffrey L. Karafa
- -------------------------- Vice President, Treasurer and Secretary
(Jeffrey L. Karafa) (Principal Financial and Accounting Officer)
/s/ Wilber M. Brucker, Jr.
- -------------------------- Director
(Wilber M. Brucker, Jr.)
/s/ Margaret I. Campbell
- -------------------------- Director
(Margaret I. Campbell)
/s/ Michael V. Dorian, Jr.
- -------------------------- Director
(Michael V. Dorian, Jr.)
/s/ David Himick
- -------------------------- Director
(David Himick)
/s/ Bradley F. Keller
- -------------------------- Director
(Bradley F. Keller)
/s/ Donald G. Karcher
- -------------------------- Director
(Donald G. Karcher)
/s/ Jeffrey G. Longstreth
- -------------------------- Director
(Jeffrey G. Longstreth)
/s/ Richard Nordstrom
- -------------------------- Vice Chairman and Director
(Richard Nordstrom)
/s/ Michael J. Ross
- -------------------------- President and Director
(Michael J. Ross)
/s/ Robert C. Schwyn
- -------------------------- Director
(Dr. Robert C. Schwyn)
/s/ Ronnie J. Story
- -------------------------- Director
(Ronnie J. Story)
23
Dearborn Bancorp, Inc.
Exhibit Index
1999 Annual Report to Stockholders. [13]
Opinion of Grant Thornton LLP. [23]
Financial Data Schedule. [27]