Dear Fellow Stockholder:
You are
cordially invited to attend the annual meeting
of stockholders of First Ottawa Bancshares, Inc.
to be held at the offices of First Ottawa
Bancshares, Inc., located at 701-705 LaSalle
Street, Ottawa, Illinois 61350, on Wednesday,
May 20, 2009 at 3:00 p.m., local time.
The annual
meeting will be held for the purposes of
electing persons to serve as Class I directors
and transacting such other business as may
properly come before the meeting. We recommend
you vote your shares “FOR” the director
nominees.
We encourage you
to attend the meeting in person. Whether or
not you plan to attend, however, please
read the enclosed proxy statement and then
complete, sign and date the enclosed proxy card
and return it in the accompanying postage-paid
return envelope as promptly as possible.
This will save us additional expense in
soliciting proxies and will ensure that your
shares are represented at the annual meeting.
The 2008 annual
report to stockholders, including financial
statements, is furnished with the enclosed
notice of meeting and proxy statement.
Sincerely,
JOACHIM J. BROWN
President and Chief Executive Officer
NOTICE OF
ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON MAY 20, 2009
NOTICE IS HEREBY
GIVEN that the annual meeting of stockholders of
First Ottawa Bancshares, Inc. will be held at
our offices located at 701-705 LaSalle Street,
Ottawa, Illinois 61350, on Wednesday, May 20,
2009 at 3:00 p.m., local time, for the following
purposes:
1.
to elect three Class I directors for
a term of three years; and
2.
to transact such other business as may properly
be brought before the annual meeting or any
adjournments or postponements of the meeting.
Only
stockholders of record at the close of business
on March 25, 2009 will be entitled to notice of,
and to vote at, the annual meeting. If
there are an insufficient number of votes for a
quorum the meeting may be adjourned or postponed
to permit us to continue to solicit proxies.
By order of the board of directors,
Cheryl D. Gage
Corporate Secretary
Ottawa, Illinois
PLEASE DATE,
SIGN AND RETURN THE PROXY CARD FOR THE COMPANY’S
ANNUAL MEETING PROMPTLY IN THE ENCLOSED,
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
FIRST OTTAWA BANCSHARES, INC.
PROXY STATEMENT
ANNUAL MEETING OF
STOCKHOLDERS
MAY 20, 2009
This proxy statement is furnished in connection
with the solicitation of proxies on behalf of
the board of directors of First Ottawa
Bancshares, Inc. to be used at the annual
meeting of stockholders to be held on May 20,
2009, and at any adjournment or postponement of
the meeting. First Ottawa Bancshares,
Inc., a Delaware corporation, is the holding
company for The First National Bank of Ottawa, a
national banking association located in Ottawa,
Illinois. This proxy statement is first
being mailed to First Ottawa’s stockholders on
or about April 9, 2009. As used in this
proxy statement, the term “First Ottawa” refers
to First Ottawa Bancshares, Inc. and its
consolidated subsidiaries, unless the context
indicates otherwise.
The following information regarding the meeting
and the voting process is presented in a
question and answer format.
Why am I receiving this proxy statement and
proxy card?
You are receiving a proxy statement and proxy
card from us because on March 25, 2009, the
record date for the annual meeting, you owned
shares of our common stock. This proxy
statement describes the matters that will be
presented for consideration by the stockholders
at our annual meeting. It also gives you
information concerning these matters to assist
you in making an informed decision.
When you sign the enclosed proxy card, you
appoint the proxy holder as your representative
at the meeting. The proxy holder will vote
your shares as you have instructed in the proxy
card, thereby ensuring that your shares will be
voted whether or not you attend the meeting.
Even if you plan to attend the meeting, you
should complete, sign and return your proxy card
in advance of the meeting just in case your
plans change.
If you have signed and returned the proxy card
and an issue comes up for a vote at the meeting
that is not identified on the card, the proxy
holder will vote your shares, pursuant to your
proxy, in accordance with his or her judgment.
What matters will be voted on at the meeting?
You are being asked to vote on the election of
three Class I directors of First Ottawa for a
term expiring in 2012.
How do I vote?
You may vote either by mail or in person at the
meeting. To vote by mail, complete and
sign the enclosed proxy card and mail it in the
enclosed pre-addressed envelope. No
postage is required if mailed in the United
States. If you mark your proxy card to
indicate how you want your shares voted, your
shares will be voted as you instruct.
If you sign and return your proxy card, but do
not mark the card to provide voting
instructions, the shares represented by your
proxy card will be voted “FOR” all three of the
nominees named in this proxy statement.
If you want to vote in person, please come to
the meeting. We will distribute written
ballots to any stockholder who wants to vote at
the meeting. Please note, however, that if
your shares are held in the name of your broker
(or in what is usually referred to as “street
name”), you will need to obtain a proxy from
your broker to vote in person at the meeting.
What does it mean if I receive more than one
proxy card?
It means that you have multiple holdings
reflected in our stock transfer records and/or
in accounts with stockbrokers. Please sign
and return ALL proxy cards to ensure that
all of your shares are voted.
If I hold shares in the name of a broker,
who votes my shares?
If you received this proxy statement from your
broker, your broker should have given you
instructions for directing how your broker
should vote your shares. It will then be
your broker’s responsibility to vote your shares
for you in the manner you direct.
Under
the rules of various national and regional
securities exchanges, brokers may generally vote
on routine matters, such as the election of
directors, but cannot vote on non-routine
matters, such as an amendment to the certificate
of incorporation or the adoption or amendment of
a stock option plan, unless they have received
voting instructions from the person for whom
they are holding shares. If there is a
non-routine matter presented to stockholders at
a meeting and your broker does not receive
instructions from you on how to vote on that
matter, your broker will return the proxy card
to us, indicating that he or she does not have
the authority to vote on that matter. This
is generally referred to as a “broker non-vote”
and may affect the outcome of the voting on
those matters.
While
the matters to be voted upon at the 2009 annual
meeting should be within the brokers’ discretion
to vote, whether or not you give your broker
direction, we encourage you to provide
directions to your broker as to how you want
your shares voted on all matters to be brought
before the meeting. You should do this by
carefully following the instructions your broker
gives you concerning its procedures. This
ensures that your shares will be voted at the
meeting.
What if I change my mind after I return my
proxy card?
If you hold your shares in your own name, you
may revoke your proxy and change your vote at
any time before the polls close at the meeting.
You may do this by:
·
signing another proxy with a later
date and returning that proxy to:
Cheryl D. Gage
First Ottawa Bancshares, Inc.
701-705 LaSalle Street
P.O. Box 657
Ottawa, Illinois 61350;
·
sending notice to us at the same
address that you are revoking your proxy; or
·
voting in person at the meeting.
If you hold your shares in the name of your
broker and desire to revoke your proxy, you will
need to contact your broker directly.
How many votes do we need to hold the annual
meeting?
A majority of the shares that are outstanding
and entitled to vote as of the record date must
be present in person or by proxy at the meeting
in order to hold the meeting and conduct
business.
Shares are counted as present at the meeting if
the stockholder either:
·
is present in person at the
meeting; or
·
has properly submitted a signed
proxy card or other proxy.
On March 25, 2009, the record date, there were
644,999 shares of common stock issued and
outstanding. Therefore, at least 322,500
shares need to be present at the annual meeting.
What happens if a nominee is unable to stand
for re-election?
The board may, by resolution, provide for a
lesser number of directors or designate a
substitute nominee. In the latter case,
shares represented by proxies may be voted for a
substitute nominee. You cannot vote for
more than three nominees. The board has no
reason to believe any nominee will be unable to
stand for re-election.
What options do I have in voting on each of
the proposals?
You may vote “FOR” or “withhold authority to
vote for” each nominee for director.
Abstentions will be considered in determining
the presence of a quorum, but will not affect
the vote required for the election of directors.
How many votes may I cast?
Generally, you are entitled to cast one vote for
each share of stock you owned on the record
date. The proxy card included with this
proxy statement indicates the number of shares
owned by an account attributable to you.
How many votes are needed for approval of
each proposal?
The three individuals receiving the highest
number of votes cast “FOR” their election will
be elected as directors of First Ottawa.
All other matters that arise at the annual
meeting must receive the affirmative vote of a
majority of the shares present in person or by
proxy at the meeting and entitled to vote unless
otherwise provided by Delaware law or First
Ottawa’s certificate of incorporation or bylaws.
Broker non-votes and abstentions will not be
counted as entitled to vote, but will count for
purposes of determining whether a quorum is
present on the matter.
Where do I find the voting results of the
meeting?
If available, we will announce voting results at
the meeting. The voting results will also
be disclosed in our Form 10-Q for the quarter
ended June 30, 2009.
Who bears the cost of soliciting proxies?
We will bear the
cost of soliciting proxies. In addition to
solicitations by mail, officers, directors or
employees of First Ottawa or its bank subsidiary
may solicit proxies in person or by telephone.
These persons will not receive any special or
additional compensation for soliciting proxies.
We may reimburse brokerage houses and other
custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding
proxy and solicitation materials to
stockholders.
Important Notice Regarding the Availability
of Proxy Materials for the Stockholder Meeting
to be Held on May 20, 2009.
Full copies of
the proxy statement, the proxy card and other
materials for the annual meeting are available
on the internet at
www.firstottawa.com/proxy.htm. Stockholders
will receive a full set of these materials
through the
mail from us or
from their brokers.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table
sets forth certain information with respect to the
beneficial ownership of our common stock at
March 25, 2009, by each person known by us to be the
beneficial owner of more than 5% of our outstanding
common stock, by each director or nominee, by each
executive officer named in the summary compensation
table (which can be found later in this proxy
statement), and by all directors and all executive
officers of First Ottawa as a group.
Beneficial ownership has been determined for this
purpose in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended
(the “Exchange Act”), under which a person is deemed
to be the beneficial owner of securities if he or
she has or shares voting power or investment power
with respect to such securities or has the right to
acquire beneficial ownership of such securities
within 60 days of March 25, 2009.
|
|
Amount and Nature
of Beneficial Ownership(1)
|
|
|
Directors, Nominees and Named Executive
Officers
|
|
|
|
Bradley J.
Armstrong(3) |
3,070
|
* |
|
Joachim J.
Brown(4) |
11,625 |
1.8% |
|
John L.
Cantlin(5) |
4,342 |
* |
|
Patrick D.
Fayhee(6) |
4,914 |
* |
|
Patty P.
Godfrey(7) |
28,938 |
4.5% |
|
Thomas E.
Haeberle(8) |
15,954 |
2.5% |
|
Donald J.
Harris(9) |
7,560 |
1.2% |
|
Thomas P.
Rooney(10) |
5,875 |
* |
|
William J.
Walsh(11) |
21,091 |
3.3% |
|
Brian P.
Zabel(12) |
1,050 |
* |
|
|
|
|
|
Directors,
Nominees and Executive Officers as a Group
(14 persons)
|
116,684
|
17.2% |
|
5% Stockholder |
|
|
|
|
|
|
|
Erika L.
Schmidt(13) |
50,114 |
7.8% |
*
Less than one percent.
(1)
Except as otherwise indicated in the notes to
this table, each person named in the table has sole
voting and investment power over the number of
shares of common stock listed opposite his or her
name.
(2)
Based upon shares of common stock issued and
outstanding at March 25, 2009.
(3)
Includes 1,350 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009.
(4)
Includes 7,500 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009.
(5)
Includes 1,100 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009. 3,122 shares are pledged as security for
indebtedness.
(6)
Includes 3,950 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009. Also includes 964 shares held jointly
with his spouse, over which Mr. Fayhee shares voting
and investment power with his spouse. 390
shares are pledged as security for indebtedness.
(7)
Includes 689 shares of common stock issuable
upon exercise of options that are exercisable
currently or within 60 days of March 25, 2009.
Also includes 24,786 shares held in trusts, over
which Ms. Godfrey shares voting and investment power
with her spouse. Also includes 600 shares held
jointly with her children, over which she has sole
investment power and shared voting power, and 2,863
shares held by her spouse, over which she has no
voting or investment power.
(8)
Includes 1,100 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009. Also includes 100 shares held in a
custodial capacity for the benefit of his minor
daughter, over which he has sole investment and
voting power. 14,754 of the shares held
individually are pledged as security for
indebtedness.
(9)
Includes 5,450 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009. Also includes 1,108 shares held jointly
with his spouse, over which Mr. Harris shares voting
and investment power. 857 shares are pledged as
security for indebtedness.
(10)
Includes 1,350 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009. Also includes 4,525 shares held in a
trust, over which Dr. Rooney has sole voting and
investment power.
(11)
Includes 1,040 shares of common stock
issuable upon exercise of options that are
exercisable currently or within 60 days of March 25,
2009.
(12)
Includes 50 shares of common stock issuable
upon exercise of options that are exercisable
currently or within 60 days of March 25, 2009.
900 shares are pledged as security for indebtedness.
(13)
The mailing address for Erika L. Schmidt is
c/o First Ottawa Bancshares, Inc., 701-705 LaSalle
Street, Ottawa, Illinois 61350. Includes
47,614 shares held by Lura Enterprises, LLC, of
which Ms. Schmidt is the managing member, and over
which Ms. Schmidt has sole voting and investment
power.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires our
officers and directors, and persons who beneficially
own more than ten percent of our common stock, to
file an initial report of their ownership of our
securities on Form 3 and to file reports of changes
in their ownership of our securities on Form 4 or
Form 5. These filings must be made with the
Securities and Exchange Commission. Officers,
directors and greater than ten percent stockholders
are required by federal securities regulations to
furnish us with copies of all Section 16(a) forms
they file. Based solely on our review of the
copies of such forms furnished to us and, if
appropriate, representations made to us by any
reporting person concerning whether a Form 5 was
required to be filed for 2008 we are not aware of
any failures to comply with the filing requirements
of Section 16(a) during 2008.
ELECTION OF
DIRECTORS
Our directors are divided into three classes having
staggered terms of three years. Stockholders
will be entitled to elect three Class I directors
for a term expiring in 2012. We have no
knowledge that any nominee will refuse or be unable
to serve, but if any nominee is unavailable for
election, the holders of the proxies reserve the
right to substitute another person of their choice
as a nominee when voting at the meeting.
The following table contains certain information
with respect to each person who has been nominated
for election as a director or is a continuing
director, including the year each became a director
of First Ottawa or of The First National Bank of
Ottawa and his or her position with us. Each
director of First Ottawa also serves as a director
of The First National Bank of Ottawa. Ms.
Godfrey, a current director in Class II, has
indicated that she will be retiring from our board
of directors, pursuant to provisions in our bylaws
regarding mandatory retirement, effective at the
board meeting to be held in May of 2009. At that
time, Ms. Godfrey has indicated that she will also
retire from the board of directors of The First
National Bank of Ottawa and its subsidiary, First
Ottawa Financial Corporation.
Our board of directors recommends that you vote
your shares “FOR” all nominees. Unless
authority to vote for the nominees is withheld, the
shares represented by the enclosed proxy card, if
executed and returned, will be voted “FOR” the
election of the nominees proposed by the board of
directors.
|
NOMINEES
|
|
Name
(Age) |
Director Since |
Positions with First Ottawa or
The First National Bank of Ottawa
|
|
CLASS I
(Term to
Expire in 2012)
|
|
|
|
Bradley J.
Armstrong
(Age 47) |
1999 |
Director and
Vice Chairman of First Ottawa and The First
National Bank of Ottawa |
|
Donald J.
Harris
(Age 55) |
2000 |
Executive
Vice President, Chief Operating Officer and
Director of First Ottawa and The First
National Bank of Ottawa |
|
Brian P.
Zabel
(Age 33) |
2008 |
Director of
First Ottawa and The First National Bank of
Ottawa |
|
CONTINUING DIRECTORS |
|
Name
(Age) |
Director Since |
Positions with First Ottawa or
The First National Bank of Ottawa
|
|
CLASS II
(Term
Expires 2010)
|
|
|
|
Joachim J.
Brown
(Age 60) |
1999 |
President,
Chief Executive Officer and Director of
First Ottawa and The First National Bank of
Ottawa |
|
John L.
Cantlin
(Age 60) |
1999 |
Director of
First Ottawa and The First National Bank of
Ottawa |
|
Patty P.
Godfrey
(Age 72) |
2000 |
Director of
First Ottawa and The First National Bank of
Ottawa |
|
CLASS III
(Term to
Expire in 2011) |
|
|
|
Thomas E.
Haeberle
(Age 58) |
1997 |
Director of
First Ottawa and The First National Bank of
Ottawa |
|
Thomas P.
Rooney
(Age 56) |
1999 |
Director and
Chairman of First Ottawa and The First
National Bank of Ottawa |
|
William J.
Walsh
(Age 70) |
1977 |
Director of
First Ottawa and The First National Bank of
Ottawa |
The business experience of each of the nominees and
continuing directors for the past five years is as
follows:
Bradley J.
Armstrong
has been President of Armstrong & Associates, Inc.,
a registered investment advisory firm located in
Ottawa, and Branch Manager of LPL Financial Services
since 1987.
Joachim J.
Brown
has been the President and Chief Executive Officer
of First Ottawa and The First National Bank of
Ottawa since we first employed him in 1999.
John L.
Cantlin
has been a partner at John L. Cantlin & Associates,
a law firm with offices in Ottawa and Earlville,
Illinois, since 1977.
Patty P.
Godfrey
worked as a real estate broker with Haeberle and
Associates, Inc., a real estate brokerage office,
from 1978 to 2006. Since 2006, she has
continued to work as a real estate broker in a
self-employed capacity.
Thomas E.
Haeberle
has been the owner and President of Haeberle and
Associates, Inc., a real estate brokerage office,
since 1978.
Donald J.
Harris
has been the Executive Vice President and Chief
Operating Officer of First Ottawa and The First
National Bank of Ottawa since 1999. We have
employed him since 1979.
Thomas P.
Rooney
has been an oral and maxillofacial surgeon with
offices in Ottawa, Peru and Morris, Illinois since
1987. Dr. Rooney is on the staff of five area
hospitals between Morris and Princeton, Illinois.
William J.
Walsh
has been the President of the Bill Walsh Automotive
Group, the parent company for various automobile
dealerships and leasing companies, since 1964.
Brian P. Zabel
is a
certified public accountant and has been the
owner and President of Brian Zabel & Associates, PC,
an accounting firm, since 2003. Prior to 2003,
Mr. Zabel worked as a certified public accountant
for TJ Smith & Associates.
In
addition, the following individuals serve as
executive officers of First Ottawa or The First
National Bank of Ottawa:
Mark D. Dunavan,
age 53, is the Chief Trust Officer of The First
National Bank of Ottawa. We have employed him since
1978.
Vincent G.
Easi,
age 47, is the Chief Financial Officer of First
Ottawa and The First National Bank of Ottawa.
We have employed him since 2001.
Patrick D.
Fayhee,
age 55, is an Executive Vice President and Chief
Lending Officer of The First National Bank of
Ottawa. We have employed him since 2001.
Cheryl D.
Gage,
age 52,
is the Corporate Secretary of First Ottawa and The
First National Bank of Ottawa. We have
employed her since 1975.
Steven M.
Gonzalo,
age 41, is an
Executive Vice President and the Chief Technology
Officer for The First National Bank of Ottawa.
We have employed him since 2001.
Corporate Governance and the Board of Directors
General
Currently, we have
nine directors serving on our board, each of whom,
with the exception of Messrs. Brown and Harris, are,
in the judgment of the board, “independent” as that
term is defined by the NASDAQ Stock Market, Inc.
(“NASDAQ”). Messrs. Brown and Harris are not
considered to be independent because of their
positions as executive officers. Ms. Godfrey,
a current director, has indicated that she will be
retiring from our board of directors, pursuant to
provisions in our bylaws regarding mandatory
retirement, effective at the board meeting to be
held in May of 2009.
Each of our
directors serves for a three-year term and until his
or her successor has been duly elected and
qualified. The board of directors of First
Ottawa also serves as the board of directors of The
First National Bank of Ottawa and its subsidiary,
First Ottawa Financial Corporation. Effective
at the board meeting to be held in May of 2009, Ms.
Godfrey has indicated that she will also retire from
the board of directors of The First National Bank of
Ottawa and its subsidiary, First Ottawa Financial
Corporation.
Generally, the board
oversees our business and monitors the performance
of our management. In accordance with our corporate
governance procedures, the board does not involve
itself in the day-to-day operations of First Ottawa,
which are monitored by our executive officers and
management. Our directors fulfill their duties
and responsibilities by attending regular meetings
of the board, and through committee membership,
which is discussed below.
Our board
held 15 meetings during 2008. Each of the
directors participated in at least 75% of the
meetings of the board and of the committees of which
he or she is a member. Additionally, the
independent members of the board of directors met in
executive session outside the presence of management
and the non-independent directors 10 times during
2008. While we do not have a specific policy
regarding attendance at the annual meeting of
stockholders, all directors are expected to attend
the meeting. All of the current directors and
nominees attended last year’s annual meeting.
Our board has
several standing committees, including an
Audit/Compliance Committee, a Nominating and
Corporate Governance Committee and a Compensation
Committee.
Audit/Compliance Committee
The
Audit/Compliance Committee is currently comprised of
Ms. Godfrey, Dr. Rooney, Mr. Walsh and Mr. Zabel.
Each member of the Audit/Compliance Committee is, in
the judgment of the board, “independent” as that
term is defined by the rules of NASDAQ and the rules
and regulations of the Securities and Exchange
Commission. Ms. Godfrey, who has indicated
that she will be retiring from our board of
directors, will no longer serve on the
Audit/Compliance Committee following the board
meeting in May of 2009. The board of directors may,
in its discretion, determine to add additional
members to the Audit/Compliance Committee at any
time.
The
board has designated Mr. Zabel as the “audit
committee financial expert,” as such term is defined
by the regulations of the Securities and Exchange
Commission. The board’s determination was
based upon Mr. Zabel’s level of knowledge and
experience regarding financial matters and his
professional experience as a certified public
accountant. The board also believes that each
of the other committee members possesses the
necessary skills and qualifications to critically
analyze the Company’s financial statements and
financial reporting process and to perform the other
duties required of service on the committee.
The functions
performed by the Audit/Compliance Committee include,
but are not limited to, the following:
·
overseeing our accounting and financial reporting;
·
selecting, appointing and overseeing our independent
auditors, including the pre-approval of all
engagements and fee arrangements;
·
reviewing actions by management on recommendations
of the independent auditors and internal auditors;
·
meeting with management, the internal auditors and
the independent auditors to review the effectiveness
of our system of internal controls and internal
audit procedures; and
·
reviewing reports of bank regulatory agencies and
monitoring management’s compliance with
recommendations contained in those reports.
To
promote independence of the audit function, the
Audit/Compliance Committee consults separately and
jointly with the independent auditors, the internal
auditors and management.
The
Audit/Compliance
Committee has adopted a written charter, which sets
forth the committee’s duties, responsibilities and
functions, and which is available on our website at
www.firstottawa.com. The
Audit/Compliance
Committee met
seven times during 2008.
Compensation Committee
The
Compensation Committee is currently comprised of Mr.
Armstrong, Ms. Godfrey, Mr. Haeberle and Dr. Rooney.
Each member of the Compensation Committee is, in the
judgment of the board, “independent” as that term is
defined by the rules of NASDAQ, an “outside”
director pursuant to Section 162(m) of the Internal
Revenue Code and a “non-employee” director under
Section 16 of the Exchange Act. Ms. Godfrey,
who has indicated that she will be retiring from our
board of directors, will no longer serve on the
Compensation Committee following the board meeting
in May of 2009. The board of directors may, in
its discretion, determine to add additional members
to the Compensation Committee at any time.
The
Compensation Committee advises our board of
directors on matters of management, organization and
succession, recommends persons for appointment to
key employee positions and sets the compensation of
our officers and key employees. The
Compensation Committee has adopted a written
charter, which sets forth the committee’s duties,
responsibilities and functions, and which is
available on our website at
www.firstottawa.com. The Compensation
Committee met
twice during 2008.
Nominating
and Corporate Governance Committee
The Nominating and
Corporate Governance Committee is currently
comprised of Messrs. Brown, Cantlin, Haeberle and
Walsh. With the exception of Mr. Brown, each
member of the Nominating and Corporate Governance
Committee is, in the judgment of the board,
“independent” as that term is defined by the rules
of NASDAQ. The committee nominates persons for
election as directors of First Ottawa and makes
recommendations to our board of directors regarding
the structure and membership of the various
committees, including the Nominating
and Corporate Governance Committee
itself. The
committee
will consider nominees recommended by stockholders
if such recommendations comply with our bylaws (as
discussed below). The Nominating and Corporate
Governance Committee has adopted a written charter,
which sets forth the committee’s duties,
responsibilities and functions, and which is
available on our
website at www.firstottawa.com. The Nominating
and Corporate Governance Committee met
six
times during
2008.
Director Nominations and Qualifications
Pursuant to its charter, the Nominating and
Corporate Governance Committee evaluates all
potential nominees for election, including incumbent
directors, nominees suggested by incumbent directors
or officers and any stockholder nominees, in the
same manner. The committee meets as necessary
to consider whether incumbent directors and any
other potential nominees brought to the committee’s
attention are qualified to be nominated for director
and who it will nominate. Generally, the
committee believes that, at a minimum, its nominees
should possess certain qualities, including the
highest personal and professional ethics, integrity
and values, a sufficient educational and
professional background and experience, demonstrated
leadership skills, sound judgment, a strong sense of
service to the communities which we serve, exemplary
management and communications skills, as well as an
ability to meet the standards and duties set forth
in our code of business conduct and ethics. It
is also expected that directors should be willing to
devote sufficient time to carrying out their duties
and responsibilities effectively, and that they
should be committed to serving on the board for an
extended period of time.
The
committee also evaluates potential nominees to
determine if they have any conflicts of interest
that may interfere with their ability to serve as
effective board members and to determine whether
they are “independent” in accordance with NASDAQ
requirements to ensure that at least a majority of
the directors will, at all times, be independent.
The committee did not retain any third party to
assist it in identifying candidates for the upcoming
meeting of stockholders, although it may in the
future if the committee believes it is necessary.
The committee evaluated the incumbent directors
whose terms expire in 2009 and determined that they
should be nominated for re-election as directors.
Stockholder Communication with the Board,
Nomination and Proposal Procedures
General Communications with the Board.
Stockholders may contact First Ottawa’s board of
directors by contacting Cheryl D. Gage, our
Corporate Secretary, at First Ottawa Bancshares,
Inc., 701-705 LaSalle Street, P.O. Box 657, Ottawa,
Illinois 61350, or at (815) 434-0044. Ms. Gage will
generally forward communications directly to the
Chairman of the Board, except for communications
that are primarily commercial in nature or related
to an improper or irrelevant topic.
Nominations of Directors. For a
stockholder nominee to be considered for inclusion
in our proxy statement, the nominating stockholder
must file a written notice of the proposed director
nomination with our Corporate Secretary at least 120
days prior to the anniversary date that the previous
year’s proxy statement was mailed to stockholders.
Nominations must include the full name and address
of the proposed nominee and a brief description of
the proposed nominee’s business experience for at
least the previous five years. All submissions
must be accompanied by the written consent of the
proposed nominee to be named as a nominee and to
serve as a director if elected. The committee
may request additional information in order to make
a determination as to whether to nominate the person
for director. A stockholder may otherwise
nominate an individual for election as a director by
complying with the provisions of our bylaws, which
provide that such nominations may be made so long as
they are received by our Corporate Secretary, in
writing, on a form provided for such purpose, not
less than ten days prior to the annual meeting.
Other Stockholder Proposals. For all
other stockholder proposals related to our annual
meeting of stockholders to be held in 2010, such
proposals must be received by our Corporate
Secretary, at the above address, no later than
December 10, 2009, to be considered for inclusion in
our proxy statement and form of proxy relating to
that meeting, and no later than February 23, 2010 in
order for the proposal to be considered at the
meeting (but not included in the proxy statement or
form of proxy for such meeting). Any
stockholder proposal which is received after those
dates or which otherwise fails to meet the
requirements for stockholder proposals established
by regulations of the Securities and Exchange
Commission will neither be included in the proxy
statement or form of proxy nor be considered at the
meeting.
Code of Business Conduct and Ethics
We have a
code of business conduct and ethics in place that
applies to all of our directors and employees.
The code sets forth the standard of ethics that we
expect all of our directors and employees to follow,
including our Chief Executive Officer and Chief
Financial Officer. The code of business
conduct and ethics is posted on our website at
www.firstottawa.com. We intend to satisfy the
disclosure requirements under Item 5.05(c) of Form
8-K regarding any amendment to or waiver of the code
with respect to our Chief Executive Officer and
Chief Financial Officer, and persons performing
similar functions, by posting such information on
our website.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following
table sets forth information concerning the
compensation of our Chief Executive Officer, Chief
Operating Officer and Chief Lending Officer, who
served in such capacities during 2008 and 2007:
|
Name and
principal position |
Year |
Salary
($)(1) |
Option
Awards
($)(2) |
Non-Equity Incentive Plan Compensation
($)(3) |
Change
in pension value and nonqualified
deferred compensation earnings
($)(6) |
All
other compensation
($)(7) |
Total
($) |
|
(a) |
(b) |
(c) |
(f) |
(g) |
(h) |
(i) |
(j) |
|
Joachim J. Brown
President & Chief Executive Officer |
2008
2007
|
$262,217
235,531
|
$18,176
14,508
|
$24,143
29,823
|
$4,072
2,318 |
$19,717
19,300
|
$328,325
301,480 |
|
Donald J. Harris
Executive Vice President &
Chief Operating Officer |
2008
2007 |
141,169
139,074
|
11,920
9,644 |
13,581
16,776
|
20,144
2,207 |
8,156
7,829
|
194,970
175,530 |
|
Patrick D. Fayhee
Executive Vice President &
Chief Lending Officer |
2008
2007
|
139,183
135,280
|
11,839
9,481
|
28,902(4)
33,377(5)
|
2,291
1,159
|
7,883
7,527
|
190,098
186,824 |
(1)
Salary includes fees received for serving on the
board of directors of First Ottawa and The First
National Bank of Ottawa for Mr. Brown and Mr.
Harris.
(2)
The amount reflected is the cost recognized by First
Ottawa in 2008 or 2007 under FAS 123R for all stock
grants to the executive whether or not granted in
such year. In 2008, First Ottawa granted
options to purchase 2,000, 1,300 and 1,300 shares of
common stock to Messrs. Brown, Harris and Fayhee,
respectively, at an option exercise price of $78.13.
In 2007, First Ottawa granted options to purchase
2,000, 1,300 and 1,300 shares of common stock to
Messrs. Brown, Harris and Fayhee, respectively, at
an option exercise price of $77.00. All of the
options granted in 2008 and 2007 become exercisable
in four equal portions on the first, second, third
and fourth anniversaries of the date of grant.
(3)
First Ottawa provides bonuses to executives, payable
out of an annual bonus pool, to provide incentives
to such executives to continuously improve earnings
and improve stockholder value. The bonus pool
is an amount equal to 11% of the bank’s after tax
profit, excluding securities gains and losses, after
a tax adjustment and after the cash flow necessary
for payment of the holding company’s dividend to its
stockholders. The executive officers’ bonus
pool is divided among the executive officers based
on a specific formula approved by the Compensation
Committee. The formula awards 40% of the pool to
the Chief Executive Officer, 22.5% of the pool to
each of the Chief Lending Officer and Chief
Operating Officer and the remaining 15% to other
executive officers. For 2008 and 2007,
respectively, the total amounts in this pool were
$60,358 and $74,558.
(4)
Includes additional compensation incentives in the
amount of $15,321 in 2008, contributed to a rabbi
trust.
(5)
Includes additional compensation incentives in the
amount of $16,601 in 2007, contributed to a rabbi
trust.
(6)
Includes payments made pursuant to the Supplemental
Nonqualified Retirement Plan to each of the
executives. First Ottawa’s executive officers
receive benefits pursuant to this Supplemental
Nonqualified Retirement Plan that will pay them a
monthly benefit over 120 months commencing at the
termination of their respective service. The
benefit amount allocated to each is based upon
earnings of a pool of bank-owned life insurance
policies, adjusted for a cost of funds factor.
The return on all of the insurance policies subject
to this plan, is divided into two pools, one for
bank directors, and one for executive officers,
excluding those officers that are also directors.
In 2008 and 2007, respectively, $17,308 and $9,272
was allocated to executive officers in connection
with this plan. Also includes an increase in
the defined benefit lump sum value for Mr. Harris
for 2008 of $16,072 and a decrease in the defined
benefit lump sum value for Mr. Harris for 2007 of
$111.
(7)
Includes an automobile allowance for Mr. Brown of
$7,200. Also includes matching and
discretionary allocations under our 401(k) plan for
Messrs. Brown, Harris and Fayhee in the amounts of
$11,500, $7,147 and $6,959, respectively, for 2008,
and $11,250, $6,986 and $6,764, respectively, for
2007. Also includes insurance premiums for
Messrs. Brown, Harris and Fayhee in the amounts of
$1,017, $1,009 and $924, respectively, for 2008, and
$850, $843 and $763, respectively, for 2007.
Outstanding Equity Awards at Fiscal Year-End
The following
table sets forth information concerning the
exercisable and unexercisable stock options at
December 31, 2008 held by the individuals named in
the summary compensation table:
|
|
Option
Awards |
|
Name |
Number of
securities underlying unexercised options
(#)
Exercisable(1) |
Number of
securities underlying unexercised options
(#)
Unexercisable(1) |
Option
exercise price
($) |
Option
expiration date(1) |
|
(a) |
(b) |
(c) |
(e) |
(f) |
|
Joachim J. Brown |
1,500
1,500
1,125
1,000
500
0 |
0
0
375
1,000
1,500
2,000 |
$56.00
62.00
70.00
76.00
77.00
78.13 |
6/10/2013
5/11/2014
3/8/2015
3/7/2016
3/13/2017
3/12/2018 |
|
Donald J. Harris |
1,000
1,500
750
650
325
0 |
0
0
250
650
975
1,300 |
56.00
62.00
70.00
76.00
77.00
78.13 |
6/10/2013
5/11/2014
3/8/2015
3/7/2016
3/13/2017
3/12/2018 |
|
Patrick D. Fayhee |
1,000
750
650
325
0 |
0
250
650
975
1,300 |
62.00
70.00
76.00
77.00
78.13 |
5/11/2014
3/8/2015
3/7/2016
3/13/2017
3/12/2018 |
(1)
Options become exercisable in four equal portions on
the first, second, third and fourth anniversaries of
the date of grant.
Employment Agreements
In November,
2002, we entered into an employment agreement with
Joachim J. Brown to serve as President and Chief
Executive Officer of First Ottawa and The First
National Bank of Ottawa. In 2008, certain
provisions of Mr. Brown’s employment agreement were
amended in order to bring such provisions into
compliance with the applicable provisions of Section
409A of the Internal Revenue Code of 1986, as
amended (and guidance issued thereunder). The
agreement provided for an initial two-year term, and
the agreement will renew for an additional one-year
term on each anniversary of its original effective
date (so that, as of each anniversary date of the
effective date, the agreement will always have a
two-year term), unless otherwise terminated.
The agreement has not been terminated. The
agreement specifies a minimum annual salary of
$193,000 and provides for increases based on base
salary levels at comparable financial institutions.
The agreement also provides that Mr. Brown will
receive a monthly automobile allowance as well as be
entitled to participate in any stock incentive plans
we establish. Pursuant to the agreement, Mr.
Brown’s annual salary is inclusive of director’s
fees for serving on the board of directors of First
Ottawa and The First National Bank of Ottawa.
On June 9,
2005, First National Bank of Ottawa entered into
separate employment agreements with each of Donald
Harris and Patrick Fayhee to serve as Chief
Operating Officer and Chief Lending Officer,
respectively. In 2008, certain provisions of
these employment agreements were amended in order to
bring such provisions into compliance with the
applicable provisions of Section 409A of the
Internal Revenue Code of 1986, as amended (and
guidance issued thereunder). Each agreement
provides for an initial two-year term. Each
agreement will renew for an additional one-year term
on each anniversary of its original effective date
(so that, as of each anniversary date of the
effective date, the agreement will always have a
two-year term), unless terminated upon 90 days
notice. Each agreement specifies a minimum
annual salary and provides for increases based on
base salary levels at comparable financial
institutions. Mr. Fayhee’s agreement provides
that he is eligible for certain special incentives
in connection with business development,
profitability, or loan pricing and provides
additional compensation in connection with loan
pricing. Each agreement also provides that the
respective officers will be included in our
Supplemental Executive Retirement Plan and each is
entitled, at the discretion of our board of
directors, to participate in any stock incentive
plans we establish.
Agreements Providing for Termination or Change of
Control Payments
Other than as provided in the employment agreements
for Messrs. Brown, Harris and Fayhee, and except as
provided in accordance with the terms of our 2002
Stock Incentive Plan, no named executive officer
will be entitled to any payments or benefits as a
result of a termination of employment, the
occurrence of a change in control or as a result of
a termination of employment in connection with a
change in control.
All employees, including the named executive
officers, who receive stock options under our 2002
Stock Incentive Plan will immediately vest in any
unvested stock options held by such employee upon
the occurrence of a change of control. Any
such options, the vesting of which is accelerated
upon the occurrence of a change in control, shall
remain exercisable in accordance with their terms.
In the case of a termination of employment by the
company without “cause,” a named executive officer
will be entitled to receive his base salary as in
effect on the date of termination for the remainder
of the term of his employment agreement. The
maximum term provided under each of the employment
agreements is two years. No other payments or
benefits will be due to the named executive officers
pursuant to their employment agreements in
connection with a termination without cause.
Under the employment agreements, “cause” is defined
to mean an executive officer’s: conviction for (or
plea of “no contest” to) a felony or crime involving
moral turpitude; commission of an act involving
self-dealing, fraud or personal profit that is
harmful to First Ottawa; material failure to perform
duties under his employment agreement; and breach of
any material provision of his employment agreement.
In the case of a termination, for any reason, within
90 days of a change of control, a named executive
officer will be, pursuant to his employment
agreement, entitled to receive the following:
·
payment, in a single lump sum, of a
severance benefit equal to two times the sum of (i)
his annual base salary as of the date of termination
(which amount shall be no less than his base salary
immediately preceding the change of control), and
(ii) the average of his cash bonus paid with respect
to the two years immediately preceding the date of
the change of control; and
·
at the expense of First Ottawa or any
successor, COBRA premiums for 18 months following
termination of employment, consistent with the
executive officer’s elections under COBRA and his
right to continuation benefits thereunder.
Upon
a change in control, executive officers may be
subject to certain excise taxes under Section 280G
of the Internal Revenue Code. Pursuant to the
employment agreements, any cash severance payments
due to the executive officers will, if necessary, be
reduced to one dollar below the maximum limitation
for imposition of the excise tax in order to avoid
the application of any such excise tax.
In exchange for entering into the employment
agreements, each of the named executive officers
agreed to be bound by a 12-month restrictive
covenant, which will be effective throughout the
geographic area within a 20 mile radius from any
facility of First Ottawa’s or any facility of a
company which First Ottawa plans to acquire or merge
with during the 12-month period following the
executive officer’s termination. The
restrictive covenant will prohibit the executive
officers from competing with First Ottawa for the
12-month period.
DIRECTOR
COMPENSATION
General
In 2008, each
director received an annual retainer of $6,000 and
an additional amount for each board meeting attended
(with one permitted absence). Fees for monthly
board meetings in 2008 were $500 per meeting in
January and February and $700 per meeting
thereafter. In addition, each director
received $500 for attending the annual stockholder
meeting on May 21, 2008, and an additional $500 for
the annual organization meeting on May 21, 2008.
Director Zabel, who became a director on January 14,
2008, was not paid a fee of $500 for the January
board meeting. We do not compensate directors
for their attendance at committee meetings or
special meetings. In 2008, each non-employee
director of First Ottawa was also granted options to
purchase 400 shares of our common stock for serving
on the board of directors. These options vest
ratably over a four-year period.
The following
table provides information on 2008 compensation for
non-employee directors who served during 2008.
|
Name |
Fees
earned or paid in cash
($) |
Option
awards
($)(1) (2) |
Change
in pension value and nonqualified
deferred compensation earnings
($)(3)(4) |
All
other compensation
($)(5) |
Total
($) |
|
(a) |
(b) |
(d) |
(f) |
(g) |
(h) |
|
Bradley
J. Armstrong |
$15,000 |
$3,586 |
$4,072 |
$145 |
$22,803 |
|
John L.
Cantlin |
15,000 |
3,586 |
4,747 |
136 |
23,469 |
|
Patty P.
Godfrey |
15,000 |
3,586 |
4,629 |
195 |
23,410 |
|
Thomas
E. Haeberle |
15,000 |
3,586 |
4,072 |
136 |
22,794 |
|
Thomas
P. Rooney |
15,000 |
3,586 |
5,967 |
132 |
24,685 |
|
William
J. Walsh |
15,000 |
3,586 |
4,072 |
49 |
22,707 |
|
Brian P.
Zabel |
14,500 |
345 |
4,072 |
49 |
18,966 |
(1)
The amount reflected is the cost recognized by First
Ottawa in 2008 under FAS 123R for all stock option
grants to the director whether or not granted in
2008.
(2)
Options become exercisable in four equal portions on
the first, second, third and fourth anniversaries of
the date of grant.
(3)
Includes payments made pursuant to the Supplemental
Nonqualified Retirement Plan.
(4)
Includes payments made pursuant to the First Ottawa
Deferred Compensation Plan for Mr. Cantlin, Ms.
Godfrey and Dr. Rooney.
Deferred
director fees under the Deferred Compensation Plan
are credited annually with an above market interest
rate equal to 130% of the average annual rate of
five-year treasury bills.
(5)
Includes insurance premiums and the taxable economic
value of any Split Dollar Life Insurance benefit.
Supplemental Nonqualified Retirement Arrangements
The First National Bank of Ottawa adopted
Supplemental Nonqualified Retirement Arrangements in
2004. Each of the directors of First Ottawa is
also a director of The First National Bank of Ottawa
and is therefore a participant in the arrangements.
Under the arrangements, each director will receive a
monthly benefit over 120 months commencing at
termination of service. The benefit amount is
based upon earnings of a pool of bank-owned life
insurance policies, over the respective director’s
remaining service period with the bank, adjusted for
a cost-of-funds factor.
In connection
with the adoption of the plan, we terminated the
Director Supplemental Retirement Plan dated
September 26, 2000. A portion of the accrued
benefits was forfeited, and a portion was assumed
under the new plan.
Director Split Dollar Life Insurance Plan
The First
National Bank of Ottawa adopted the Split Dollar
Life Insurance Plan in 2004. The plan covers
certain directors of the First National Bank of
Ottawa. Under the plan, if a covered director
dies while serving on the bank’s board, he or she
will receive 80% of the net amount at risk (death
benefit less cash surrender value) of a certain
specifically designated bank-owned life insurance
policy, if any, on that director’s life.
First Ottawa
Bancshares, Inc. Deferred Compensation Plan
During 2005, we
amended and restated the First Ottawa Bancshares,
Inc. Deferred Compensation Plan. The deferred
compensation plan benefits both directors and
certain executive officers. Under the plan,
directors may defer up to 100% of their fees.
Deferred director fees are credited annually with an
interest rate of 130% of the average annual rate of
five-year treasury bills. A participating director
will receive distribution of his or her benefits as
of his or her retirement, or upon age 65, if
properly elected in accordance with the requirements
of the Internal Revenue Code, unless such benefits
are paid out earlier due to the participant’s death
or a change of control (as defined in the plan).
During 2008, three of our directors participated in
the Deferred Compensation Plan.
Stockholder Return Performance Graph
The incorporation by reference of this proxy
statement into any document filed with the
Securities and Exchange Commission by First Ottawa
shall not be deemed to include the following graph
and related information unless it is specifically
stated to be incorporated by reference into such
document.
The
following graph shows a comparison of cumulative
total returns for First Ottawa, the NASDAQ Stock
Market and an index of Midwestern bank stocks which
are quoted on the OTC-Bulletin Board and on Pink
Sheets. The cumulative total stockholder
return computations assume the investment of $100 on
December 31, 2003 and the reinvestment of all
dividends. Figures for First Ottawa’s common
stock represent inter-dealer quotations, without
retail markups, mark downs or commissions and do not
necessarily represent actual transactions. The graph
was prepared at our request by SNL Financial LC,
Charlottesville, Virginia.
AUDIT COMMITTEE REPORT
The incorporation
by reference of this proxy statement into any
document filed with the Securities and Exchange
Commission by First Ottawa shall not be deemed to
include the following report unless the report is
specifically stated to be incorporated by reference
into such document.
The Audit/Compliance
Committee assists the board of directors in carrying
out its oversight responsibilities for our financial
reporting process, audit process and internal
controls. The Audit/Compliance Committee also
reviews the audited financial statements and
recommends to the board that they be included in our
annual report on Form 10-K. Each of the
members of the Audit/Compliance Committee is
“independent” as defined by NASDAQ and the
Securities and Exchange Commission.
The
Audit/Compliance
Committee
has reviewed and discussed our audited financial
statements for the fiscal year ended December 31,
2008 with our management and BKD, LLP, our
independent auditors. The committee has also
discussed with BKD the matters required to be
discussed by SAS 61 (Codification for Statements on
Auditing Standards) as well as received and
discussed the written disclosures and the letter
from BKD required by Independence Standards Board
Statement No. 1 (Independence Discussions with Audit
Committees). Based on the review and
discussions with management and BKD, the committee
has recommended to the board that the audited
financial statements be included in our annual
report on Form 10-K for the fiscal year ending
December 31, 2008, for filing with the Securities
and Exchange Commission.
Submitted by:
Patty P. Godfrey
Thomas P. Rooney
William J. Walsh
Brian Zabel
Members of the Audit/Compliance Committee
TRANSACTIONS WITH MANAGEMENT
Directors and officers of First Ottawa and The First
National Bank of Ottawa, and their associates, were
customers of and had transactions with us during
2008 and 2007. Additional transactions may be
expected to take place in the future. All
outstanding loans, commitments to loan, transactions
in repurchase agreements and certificates of deposit
and depository relationships, in the opinion of
management, were made in the ordinary course of
business, on substantially the same terms, including
interest rates and collateral, as those prevailing
at the time for comparable transactions with other
persons and did not involve more than the normal
risk of collectibility or present other unfavorable
features. All such loans are approved by the
subsidiary bank’s board of directors in accordance
with the bank’s regulatory requirements.
Additionally, the Audit/Compliance Committee
considers other non-lending transactions between a
director and First Ottawa, including its
subsidiaries, to ensure that such transactions do
not affect a director’s independence.
John L. Cantlin, a
director, is a partner of the law firm of John L.
Cantlin & Associates, Ottawa, Illinois, which is one
of several law firms that we routinely retain for
various legal matters involving First Ottawa, such
as foreclosures and collections.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
The Audit/Compliance Committee of the board has
appointed BKD, LLP to perform the audit of our
consolidated financial statements for the year
ending December 31, 2009. Representatives from BKD
are expected to be present at the annual meeting
and
will have an opportunity to make a statement, if
they so desire, as well as to respond to appropriate
questions that may be asked by stockholders.
Accountant Fees
Audit Fees.
The aggregate fees and expenses billed to us by BKD
in connection with the 2008 audit of our annual
financial statements and the review of our financial
statements included in our quarterly reports on Form
10‑Q for 2008 totaled $75,977. The aggregate
fees and expenses billed to us by BKD for similar
services in 2007 totaled $65,619.
Audit-Related
Fees.
There were no fees or expenses billed to us by BKD
for other audit-related services for 2008 or 2007.
Tax Fees.
The aggregate fees and expenses billed to us by BKD
for the preparation of tax returns for 2008 totaled
$8,425 and for 2007 totaled $5,215.
All Other Fees.
No fees were billed to us by BKD for other services
in 2008 or 2007.
The
Audit/Compliance Committee, after consideration of
the matter, does not believe that the rendering of
these services by BKD was incompatible with
maintaining BKD’s independence as our principal
accountants.
Pre-Approval
Among other things, the Audit/Compliance Committee
is responsible for appointing, setting compensation
for and overseeing the work of the independent
accountants. The Audit/Compliance Committee’s
policy is to pre-approve all audit and permissible
non-audit services provided by the independent
accountants. These services include audit and
audit-related services, tax services and other
services. The independent accountants and
management are required to periodically report to
the Audit/Compliance Committee regarding the extent
of services provided by the independent accountants
in accordance with this pre-approval policy, and the
fees for the services performed to date. The
Audit/Compliance Committee may also pre-approve
particular services on a case-by-case basis that the
committee has not already specifically approved.
The
Audit/Compliance Committee has adopted a
pre-approval policy relating to requiring the
committee’s approval of all audit, audit-related,
tax and other fees for services provided by First
Ottawa’s independent accountants.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of our annual report to stockholders for the
year ended December 31, 2008 (including financial
statements) accompanies this proxy statement.
The annual report is not incorporated into this
proxy statement and is not considered
proxy-soliciting material. Stockholders may obtain
additional
printed copies of our annual report on Form
10-K for the year ended December 31, 2008, as filed
with the Securities and Exchange Commission, without
charge upon written request. Any exhibits listed in
the Form 10-K will also be furnished upon written
request at our expense. Any such request should be
directed to Cheryl D. Gage, First Ottawa Bancshares,
Inc., 701-705 LaSalle Street, P.O. Box 657, Ottawa,
Illinois 61350.
By order of the
board of directors,
Joachim J. Brown
President and Chief
Executive Officer
Ottawa, Illinois
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
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