Message From the Commissioneridfpr.com/Banks/AGENCY/annlrpt/2003AnnualReport.pdfsavings banks, savings and loan associations, mortgage bankers and brokers, real estate brokers and

MMeessssaaggee FFrroomm tthhee CCoommmmiissssiioonneerr

To the Governor and the Illinois Legislature: It is my privilege to submit the Illinois Office of Banks and Real Estate's (OBRE) Annual Report for fiscal year ended 06/30/03 in conformity to statutory requirements of 20 ILCS 5/25 and 20 ILCS 3205/6(f). The primary purpose of the Annual Report is to provide a general overview of OBRE’s condition. This report and additional information about OBRE can be found at http:/www.obre.state.il.us. This Annual Report highlights last year’s achievements, but more importantly it will provide a clear vision for the future of OBRE. I am pleased to report that the condition of the Illinois financial system remains

safe and sound. In terms of total assets, banks chartered in Illinois exceeded $152 billion, trust companies reached $2.3 trillion, foreign bank offices topped at $33 billion, and the thrift industry approached $8 billion. Through OBRE on-site examinations and off-site monitoring programs, I find that the examination team’s technical expertise is aligned with the demands of the economic environment in which they function. The housing market in Illinois continues to be very strong in spite of a sluggish national economy. During the last fiscal year, OBRE issued in excess of 8,500 new real estate licenses and renewed over 57,000 licenses. OBRE’s licensure capabilities continue to be enhanced, further increasing its efficiency and effectiveness. I will ensure that OBRE vigorously and diligently enforces the Acts and Rules to maintain the integrity of the industries that fall under its jurisdiction. I will demand a high level of accountability to protect the interests of the citizens of the State of Illinois. OBRE is reviewing and evaluating workflows, work schedules, and implementing improved policies and procedures in an effort to maximize productivity. In addition, OBRE will continue to use innovative technologies to improve operational efficiency. I welcome any comments you may have about this report or any specific OBRE activities.

D. Lorenzo Padrón Commissioner

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OOBBRREE DDiirreeccttoorryy Office Information: 500 East Monroe Street 310 South Michigan Avenue Suite 300 Suite 2130 Springfield, IL 62701-1509 Chicago, IL 60604-4278 Main Phone (217) 782-3000 Main Phone (312) 793-3000 Main Fax (217) 524-5941 Main Fax (312) 793-7097 TDD (217) 524-6644 TDD (312) 793-0291 CONSUMER SERVICES TOLL FREE HOTLINE (877) 793-3470 WEB ADDRESS: www.obre.state.il.us State Officers: D. Lorenzo Padrón, Commissioner ............................................................(312) 793-1418

David S. Rodríguez, First Deputy Commissioner .......................................(312) 793-4127

Dan S. Karnatz, Deputy Commissioner .....................................................(312) 793-1477

Anne S. Zickus, Deputy Commissioner .....................................................(312) 793-5818 Assistant Commissioners: Scott D. Clarke, Bureau of Banks and Trust Companies ...........................(217) 785-2900

Vacant, Bureau of Real Estate Professions................................................(312) 793-8892

Vacant, Bureau of Residential Finance ......................................................(217) 782-6169

Robert C. Thompson, Bureau of Administration .........................................(217) 782-8636 Executive Staff: Steven Ginsburg, General Counsel ...........................................................(312) 793-4120 Jeff Riley, Legislative Liaison .....................................................................(312) 793-4044 John Bucari, Director, Community Relations .............................................(217) 785-9655 David Espinoza, Manager, Consumer Services ........................................(312) 793-0985 Clare Thorpe, Public Information Officer ....................................................(217) 785-2903

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DDiirreeccttoorryy CCoonntt..

Bureau of Banks and Trust Companies Management: Michael Morehead, Chief Legal Counsel ...................................................(217) 557-9066 Marc Edwards, Director, Commercial Bank Supervision - Springfield .......(217) 785-2844 Ric Brunskill, Director, Commercial Bank Supervision - Chicago ..............(312) 793-6602 Craig Volk, Director, International Bank Supervision .................................(312) 793-4121 Joe Bartolomucci, Assistant Director, Fiduciary Activities ........................ (217) 524-5370 Tom Kaufmann, Assistant Director, Information Systems .........................(217) 524-9188 Kenneth Hanson, Administrator, Pawnbroker Regulation ..........................(312) 793-2253 Bureau of Residential Finance Management: Robert Stearn, Senior Counsel, Thrift Division ..........................................(312) 793-1454 Roger Copley, Director, Thrift Division .......................................................(312) 793-1456 Alan Anderson, Senior Counsel, Mortgage Banking Division ....................(312) 793-1435 Arleatha Kelly, Director, Mortgage Banking Division .................................(312) 793-1419 Bureau of Real Estate Professions Management: Mary Anne Benden, Chief of Prosecutions .................................................(312) 793-8704 Michael Brown, Director, Appraisal Division ..............................................(312) 793-7254 Young Brockhouse, Manager, Licensing and Education Division ..............(217) 785-9300 Bureau of Administration Management: Linda Harrod, Director, Fiscal Division .......................................................(217) 785-4236 Marcy Trowbridge, Personnel Manager, Human Resources Division ........(217) 785-2273 DiAnne Boyer, Training Manager, Human Resources Division .................(217) 782-1191 Dominic Greco, Assistant Director, Information Systems Division .............(217) 524-4674

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TTaabbllee ooff CCoonntteennttss Agency Structure Office of the Commissioner

Organizational Chart .................................. 5

Strategic Direction ..................................... 6

State of the Economy ............................. 7 - 8 Bureau of Banks and Trust Companies Structure...................................................... 9

De Novo Activity ....................................... 9

Diligent Supervision ................................ 10

Off-Site Monitoring Program ................... 10

Enforcement Actions Issued .................... 10

Strengthen Foreign Banks......................... 11

Pawnbroker Regulation ............................ 11

Pawnshop Enforcement ........................... 11 Bureau of Residential Finance

Structure ................................................... 12

Off-Site Monitoring Program ................... 12

Enforcement Actions Issued ............. 12 - 13

Management Visitation Program .............. 13

Mortgage Banking Enforcement .............. 13

Monitoring Activities for the Mortgage Banking Industry .................................... 13 Bureau of Real Estate Professions

Structure.................................................... 14

Increase in Salespersons Licenses............. 14

New Appraisal Education Program........... 15

Real Estate Complaints Decreased in Fiscal Year 2003 ............................................... 15

Licensing of Home Inspectors ................. 15

Structure ....................................................16

Community Outreach ...............................16

Consumer Services ...................................16

2003 Legislation Affecting OBRE ... 17 - 18 Bureau of Administration

Mission .....................................................19

Human Resources Activities......................19

Commitment to Training ..........................19

e-Government ............................................19

Computer Security .....................................19 Board Reports and Membership Lists Bureau of Banks and Trust Companies Boards and Committees................... 20 - 22

Bureau of Real Estate Professions Boards and Council ..................................... 23 - 28

Bureau of Residential Finance Boards.............................................. 28 - 30

Performance Measurements & Financial Statements Summary Sheet ................................. 31 - 33

Balance Sheets ................................. 34 - 40

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AAggeennccyy SSttrruuccttuurree The Illinois Office of Banks and Real Estate (OBRE) oversees the regulation and licensure of State chartered banks, trust companies, ATMs not owned by financial institutions, check printers, pawnbrokers, savings banks, savings and loan associations, mortgage bankers and brokers, real estate brokers and salespersons, appraisers, auctioneers, home inspectors, leasing agents, and timeshare companies. OBRE is authorized a headcount of 265 employees and operates from headquarters located in Springfield and Chicago, with five remote offices located in Belleville, Champaign, Effingham, Jacksonville, and Peoria. OBRE is comprised of the Office of the Commissioner and four bureaus.

COMMISSIONER

First Deputy Commissioner Deputy Commissioners

Legal Department

Advisory Boards and Committees

Legislative Affairs

Community Relations

BUREAU OF BANKS & TRUST COMPANIES

BUREAU OF REAL ESTATE PROFESSIONS

Enforcement Division

Appraisal Administration Division

Auction Division

Specialized Activities Supervision Division

Commercial Bank Supervision Division

Springfield

Commercial Bank Supervision Division

Chicago

International Bank Supervision Division

Mortgage Banking Division

Pawnbroker Regulation

Thrift Division

BUREAU OF RESIDENTIAL FINANCE

Licensing and Education Division

BUREAU OF ADMINISTRATION

Information Systems Division

Fiscal Division

Human Resources Division

Real Estate Division

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SSttrraatteeggiicc DDiirreeccttiioonn Mission

To protect and educate the public and promote confidence in the regulated industries through administration of statutory responsibilities in an efficient, professional, responsive, and innovative manner. Vision

OBRE envisions a safe and sound financial system, efficient and honest regulated industries, and a knowledgeable public that enjoys the benefits of the regulatory system. OBRE supports this vision by continuing exemplary service through its traditional core functions of licensure, regulation, and supervision.

OBRE envisions its role as a financial and business entity regulator where it will: Make the State's regulatory and licensure framework under OBRE’s jurisdiction the most attractive

and competitive to all entities in order to attract and retain new businesses to Illinois. Ensure responsiveness to the consumers of services offered by its regulated industries through proven

problem resolutions. Lead efforts to counsel and educate consumers about high risk home loans.

In order to carry out its vision, OBRE will: Utilize technological advancements including Web-based applications, e-payments, and streamlined

business processes to deliver the most up-to-date services to the public and to its regulated industries. Foster a working climate that maximizes the potential for employee growth and initiative, and ensures

that management and employees understand, support, and advance the concept of a performance-based culture. Maintain, through training and other educational initiatives, the highest level of professionalism and

regulatory knowledge for all employees. Priorities

Create a more productive and efficient work force - OBRE will conduct an organizational analysis, which will include review and evaluation of workflows and work schedules, implementation of improved policies and procedures, and the use of innovative technologies to improve operational efficiencies and maximize productivity.

Ensure safety and soundness of banking system - OBRE will conduct all statutory examinations within the established time frames, and produce examinations at a quality level equivalent to federal agency standards, in conformity with its reciprocal examination agreements. OBRE will enhance consumers’ confidence by timely acknowledgement, processing, evaluating, and acting on all consumer complaints according to the gravity of each case.

Efficient and effective licensure and enforcement - OBRE will issue all licenses in a timely fashion; it will diligently and vigorously enforce the Acts and Rules pursuant to exam findings.

Cost containment - OBRE will analyze agency spending to develop opportunities to eliminate waste; it will impose fines in lieu of long-term suspensions to allow for recovery of administrative cost.

Attractive Illinois charter - OBRE will anticipate the evolving trends in the financial services industry and the needs of its regulated entities; it will recommend legislation to ensure that its regulatory framework reflects the changing reality of the marketplace; it will also maintain the cost of regulation of State chartered institutions lower than the cost of its federal counter parts.

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SSttaattee ooff tthhee EEccoonnoommyy During fiscal year 2003, the Illinois economy experienced a slower level of growth. The U.S. Department of Labor, Bureau of Labor Statistics reported that the Illinois unemployment rate decreased slightly from 6.5% in June 2002, to 6.4% in June 2003. The June 2003 rate also equaled the national average.

LABOR FORCE AND UNEMPLOYMENT LEVEL

June-03Total Labor Force 6,404,476Total Unemployed 407,754Unemployment Rate 6.4%

The U.S. Department of Labor also reported that Illinois initial jobless claims for June 2003 were 198,687 versus 209,124 for June 2002. This indicates economic activity is beginning to improve in Illinois. Average weekly hours of manufacturing workers decreased from 41.4 in June 2002 to 40.4 in June 2003. As employment levels improve, financial institutions experience increased demand for products and services. The U.S. Department of Commerce, Bureau of Economic Analysis, reported total personal income for Illinois increased slightly from June 2002 to June 2003. The change in income and a comparison to national income changes are detailed below:

NET PERSONAL INCOME TOTALS AND CHANGES FROM

JUNE 2002 TO JUNE 2003 U.S. Illinois

June-03 9,129,313 423,805June-02 8,881,691 420,863Change 247,622 2,942

% Change 2.788% 1.033% While income increased year over year, Illinois' increase lagged behind the national average. Illinois is in the bottom quintile for growth in personal income. The Purchasing Managers' Survey rating for the second quarter of fiscal year 2003 was 51 versus a rating of 58 for

second quarter of fiscal year 2002. A rating of 50 or above indicates industrial expansion. While a rating of 51 is positive, it is a much lower level of activity than June 2002. Reduced economic activity lowers demand for loans and services offered by financial institutions. The Illinois Department of Commerce and Economic Opportunity reports retail sales for the State at $134.9 million for the four quarters ended June 30, 2003. This is a decrease of 0.86% from June 2002. Nationally retail sales grew 1.2% for the same time period. The Illinois agriculture sector was an exception to the slow economic growth. The U.S. Department of Agriculture reported that net farm income was on track to increase approximately 33% from calendar year 2002 to 2003. Illinois Ag Banks financial condition and income are greatly dependent on the financial health of the agriculture sector. An Ag Bank is a Bank that has more than 25% of total loans in agriculture. Low interest rates during the fiscal year ended June 30, 2003, stimulated demand for loans and contributed to economic growth. Commercial banks added to net income with gains on sales of assets (securities and loans). The Federal Deposit Insurance Corporation (FDIC) reported cost of funds for Illinois commercial banks decreased from 2.28% at June 30, 2002, to 1.76% at June 30, 2003. The same report stated that non-interest income to average assets increased from 1.79% at June 30, 2002, to 1.83% at June 30, 2003. Thrift assets continued to grow at a steady pace. Industry assets increased at an annual rate of 5.5%, rising to $8.0 billion by June 30, 2003. A favorable rate environment, improving economic conditions, and strong loan demand, fueled growth. Funding was derived primarily through deposit growth and, to a lesser extent, borrowings. Though industry consolidation has reduced the overall number of thrift institutions, asset growth is strong. At June 30, 2003, the industry employed over 2,000 people in Illinois.

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The following tables provided by the FDIC detail comparative performance:

COMMERCIAL PERFORMANCE SUMMARY ($ millions)

June-02 June-03Number of Banks 509 502Net Income $807 $819Total Assets $139,626 $152,674Total Deposits $104,719 $114,520Equity Capital $11,765 $12,807Equity Capital Ratio 8.43% 8.39%Yield on Earning Assets 5.57% 4.90%Cost of Funds 2.28% 1.76%Net Interest Margin 3.29% 3.14%Return on Assets 1.17% 1.11%Return on Equity 14.11% 13.07%

THRIFT PERFORMANCE SUMMARY ($ millions)

June-02 June-03Number of Thrifts 56 54Net Income $29 $29Total Assets $7,601 $8,017Total Deposits $6,084 $6,402Equity Capital $915 $965Equity Capital Ratio 12.03% 12.04%Yield on Earning Assets 6.47% 5.69%Cost of Funds 3.18% 2.42%Net Interest Margin 3.29% 3.26%Return on Assets 0.78% 0.73%Return on Equity 6.53% 6.00% Asset quality and capital are strong. Loan performance and charge-off data provide little indication of any major credit concerns. Troubled assets represented a modest 0.62% of assets. Loan charge-offs remain at a manageable rate of 0.21% of loans. Industry capital also remains strong at over 8% for commerical banks and over 12.0% for thrifts. While net interest margins have decreased year over year,

increased non-interest income has offset some of the lost income. The non-interest income has been provided primarily from mortgage refinancing and sales of financial products. The mortgage banking industry experienced rapid growth in the year ended June 30, 2003. Mortgage originations increased 48% from June 30, 2003, over the previous year. Low interest rates contributed to a very high level of refinancing of existing mortgages. For the four quarters ended June 30, 2003, refinancing comprised 67.2% of all mortgage originations. The Illinois housing sector remained strong in 2003. The U.S. Department of Commerce reported that Illinois building permits for housing increased 3.68% from June 2002 to June 2003. For the same period Standard & Poor's McGraw-Hill reported that contracts for future construction of residential property increased 9.0% in Illinois. Existing home sales increased 4.5% from the second quarter of 2002 to the second quarter of 2003. Historically, low interest rates were mainly responsible for driving home sales activity. The benchmark 30-year mortgage sank to a four-decade low of 5.21% in June of 2003. The 10-year US Treasury Bond, a pricing benchmark for 30-year mortgage rates, dropped 1.30% from June 2002 to June 2003. Low interest rates and home financing activity allowed overall profitability to remain favorable for all Illinois financial and professional entities. Home loan activity, including refinancing of existing mortgages, have provided a substantial level of fee income to Illinois financial institutions. This activity has also provided increased activity for the ancillary services of real estate, mortgage banking, appraisers, and home inspectors.

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BBuurreeaauu ooff BBaannkkss aanndd TTrruusstt CCoommppaanniieess The bureau is responsible for regulating and supervising State chartered banks, Illinois branches of foreign banks, trust companies and data processing centers. Additionally, the bureau is responsible for the licensure and regulation of pawnbrokers. The Commercial Bank Supervision Divisions regulate State chartered banks for the benefit of the public. Responsibilities include chartering, supervising, and examining banks to assess safety and soundness and assure that the banks operate in compliance with applicable laws and regulations.

STATE CHARTERED BANKS as of 06/30/03

Total Assets Year Number in Billions 2003 ...........................502 ...........................$152 2002 ...........................509 ...........................$147 2001 ...........................517 ...........................$149 2000 ...........................519 ...........................$143 1999 ...........................518 ...........................$143 The International Bank Supervision Division is responsible for state certification of foreign banking offices and for licensing foreign representative offices. This includes granting certificates of authority or licenses, supervising, and examining these institutions to assess safety and soundness to assure that these banks operate in compliance with applicable laws and regulations.

FOREIGN BANKING OFFICES as of 06/30/03

Total Assets Year Number in Billions 2003 ............................17 ..............................$33 2002 ............................18 ..............................$42 2001 ............................25 ..............................$44 2000 ............................28 ..............................$47 1999 ............................31 ..............................$52 The Specialized Activities Supervision Division has two primary responsibilities: (1) to supervise, regulate, and examine State chartered trust companies and (2) to examine and regulate

data processing operations of State banks and trust companies.

TRUST COMPANIES as of 06/30/03

Total Assets Year Number in Trillion 2003 ........................... 211 ............................ $2.3 2002 ........................... 216 ............................ $2.3 2001 ........................... 231 ............................ $2.2 2000 ........................... 232 ............................ $2.2 1999 ........................... 233 ............................ $1.9 De Novo Activity The trend toward charter consolidation is a result of various factors, including the ability for banks to acquire branches in different geographical regions and thereby expand their business and customer base. Some banks consolidate to cut expenses and in some cases to offer more products and services to their customers. The chart below demonstrates an 18-year charter consolidation trend and identifies the continued increase in assets in the Illinois banking industry. While the number of banks has decreased, the total assets have risen sharply.

STATE CHARTERED CONSOLIDATIONS as of 06/30/03

Bank Total Assets Year Charters in Billions 1985 ........................... 836 ............................. $55 1990 ........................... 752 ............................. $75 1995 ........................... 626 ........................... $118 2000 ........................... 519 ........................... $143 2003 ........................... 502 ........................... $152 The Commissioner issued two De Novo bank charters in fiscal year 2003, three banks with national charters converted to State charters, and one national bank charter converted to a State savings bank. Despite a decrease in the total number of banks from 509 in 2002 to 502 in 2003, Illinois continues to have the greatest number of State chartered banks in the nation; it also has the third highest total assets of foreign banking corporations operating in the country.

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Diligent Supervision Diligent and vigorous examination, supervision, and enforcement become increasingly important in a time where slow economic growth and the complexities of the financial markets cause stress on the financial industry. Increased competition among financial providers and economic difficulties faced by consumers place increased capital, profitability, and liquidity challenges on the banking industry. The number of institutions requiring regulatory attention remained steady and increased slightly in fiscal year 2003. This is evidenced by the fact that the number of institutions with a composite rating of 3, 4, or 5 increased from 33 in 2002 to 34 in 2003 and there was a 25% increase in the number of institutions that entered into a corrective agreement with OBRE in fiscal year 2003. OBRE also entered into 20 Memoranda of Understanding with banks in 2003, an increase of 15 from 2002. A number of institutions are operating under corrective action plans to bring deficient financial and operational conditions into a safe and sound condition. Continued efforts and resources are needed to monitor these financial institutions. Additionally, resources are required to service other entities showing deteriorating conditions. OBRE’s primary goal is the maintenance of a strong State banking system. OBRE will continue to diligently supervise Illinois State chartered institutions in an effort to maintain the public’s confidence that the bank’s deposits are safe and secure. Off-Site Monitoring Program The Bureau of Banks and Trust Companies launched its Off-Site Monitoring Program in fiscal year 2003. The purpose of this program is to monitor the activities and financial condition of State chartered banks, foreign bank offices, and trust companies between examination cycles.

Using various sources of data (Uniform Bank Performance Reports, Quarterly Call Reports, Off-site telephone calls, etc.), the Off-Site Monitoring Program identifies financial weaknesses and risks that may trigger a targeted examination or increased supervisory activity. During the first six months of the program, three financial institutions were scheduled for visitations based on the information discovered through the Off-Site Monitoring initiative. This program is successful, in that, it identifies weaknesses at financial institutions between examination cycles and allows OBRE to promptly address limiting the risk exposure to the financial institution and consumer of Illinois. The Off-Site Monitoring Program is not intended to replace the On-Site Examination Process. However, information gathered through this program helps identify potential risks earlier than the regular examination cycle. Early detection of these risks helps ensure that weaknesses can be addressed in a timely manner, and potentially limit the overall risk exposure to financial institutions. This program assists OBRE in carrying out its mission to protect the public and to promote confidence in Illinois’ regulated industries. Enforcement Actions Issued Overall, banks have weathered the economic storms of fiscal year 2003 and have prospered. Banks were able to steer a profitable course through a time of slow economic growth by establishing and following loan policies, having problem loan identification systems, and having systems in place to ensure compliance with internal policies and banking law. Nonetheless, the Bureau of Banks and Trust Companies issued 41 enforcement actions in fiscal year 2003. This increase can be attributed to an aggressive effort to issue enforcement actions when needed as well as to bring to a resolution those institutions that are experiencing difficulties.

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Strengthen Foreign Banks In November of 1998, state banking departments responsible for foreign bank supervision signed two agreements with each other and with the federal banking agencies to develop a coordinated supervisory program for U.S. offices of foreign banks. The State Coordination Agreement and the State/Federal Coordination Agreement provide foreign banks operating in more than one state the same supervisory efficiencies available to domestic commercial banks. OBRE participated in an interstate coordination meeting to strengthen the supervision of foreign banks. The meeting aimed to further develop the coordination process regarding the operation of foreign banks in the United States and formalize the home/host state relationship; it resulted in an agreement by all participants on three significant issues: 1) the development of an interstate coordination checklist to be used by all states; 2) the development of a consolidated list of state and federal examination contacts for each foreign banking organization which is currently maintained in the Banking Organization National Desktop (BOND) System; 3) the commitment to a set schedule of meetings for the International Regulatory Task Force to be held at three or more annual events sponsored by the Conference of State Bank Supervisors (the International Banking Conference, the Annual Meeting, and the International Dialogue Conference). Illinois has one of the largest concentrations of foreign bank assets in the United States. Pawnbroker Regulation The Pawnbroker Regulation Section is responsible for licensing pawnbrokers operating in Illinois. This section also conducts investigations of pawnshops following consumer

inquiries and gathers information about the pawn industry in Illinois via the Annual Disclosure Report that each licensee is required to submit. During the fiscal year ending June 30, 2003, the Commissioner issued four new pawnshop licenses, 17 pawnshops closed, while 12 pawnshops changed in control of ownership.

PAWNSHOPS as of 06/30/03

Year ........................................................ Number 2003 ............................................................... 208 2002 ............................................................... 223 2001 ............................................................... 220 2000 ............................................................... 219 For the fifth straight year, OBRE did not increase the regulatory fees for pawnbrokers. The industry’s overall compliance with the Pawnbroker Regulation Act and the Administrative Rules has helped keep the cost of regulation stable. Pawnshop Enforcement The total amount of late filing fees and civil monetary penalties assessed against pawnshops from July 1, 2002 through June 30, 2003 totaled $6,100. The Commissioner assessed civil monetary penalties against several pawnshops that failed to renew their pawnshop license before the renewal deadline. In total, 12 pawnshops failed to mail the application for license renewal to OBRE before the registration deadline. OBRE took enforcement action against 13 pawnshops that failed to file the Annual Disclosure Report for calendar year 2002 in a timely manner, in violation of 38 Illinois Administrative Code, Section 360.210(a). A pawnshop must file its annual report to OBRE no later than 30 calendar days following the end of each calendar year.

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BBuurreeaauu ooff RReessiiddeennttiiaall FFiinnaannccee The bureau regulates and charters the thrift industry [savings banks and savings and loans associations] and regulates the residential mortgage banking industry to provide effective and efficient supervision. The Thrift Division is responsible for the supervision, regulation, and examination of Illinois chartered savings banks and savings and loan associations. Of the 54 regulated institutions, 37 are mutually owned by local communities and specialize in residential lending.

SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS as of 06/30/03

# of # of Total Assets Year Sav Bks S & L in Billions 2003 ..................... 48.............6.....................$8.0 2002 ..................... 50.............6.....................$7.6 2001 ..................... 50.............6.....................$7.0 2000 ..................... 51.............7.....................$6.9 1999 ..................... 53.............8.....................$6.8 The legislative mandate of the Mortgage Banking Division is to regulate, examine, and supervise those entities that broker, fund, originate, service, and/or purchase residential mortgage loans. This mandated regulation of residential mortgage lending is to benefit the citizens of the State of Illinois by ensuring availability of residential mortgage funding, to benefit responsible providers of residential mortgage loans and services, and to avoid requirements inconsistent with legitimate and responsible business practices in the residential mortgage lending industry.

MORTGAGE BROKERS/BANKERS as of 06/30/03

Year Number 2003 ............................................................1,764 2002 ............................................................1,617 2001 ............................................................1,317 2000 ............................................................1,411 1999 ............................................................1,297

Off-Site Monitoring Program The Thrift Division began its Off-Site Monitoring Program in March of 2000. Each examiner is assigned a group of savings banks and savings and loans, which are monitored quarterly using information provided by the banks and an Interest Rate Risk Assessment performed by OBRE. The examiner prepares a Quarterly Off-Site Analysis, which is submitted to OBRE’s management team for review. This information is then shared with the institution. The analysis identifies inherent risk in portfolio lenders. These lenders make up a significant portion of the industry. Additionally, the thrift management team monitors any institution that has a weakness in any of the six essential components of an institution’s financial condition and operations components. Changes to the rating list are made based on examiner’s findings or when improvements in the weakness are noted. The off-site monitoring program has allowed us to more closely monitor the financial condition of the thrift industry between examinations. The program has enhanced our ability to keep abreast of changes in the investment and funding activities of specific institutions and the industry. Enforcement Actions Issued State chartered thrifts benefited from the current refinancing boom, increasing earnings for the majority of these institutions. The high demand for home mortgages combined with the lower interest rates paid on deposit accounts increased these institutions net interest margins reflecting significant growth and profitability for the industry during an economic downturn. Industry earnings performance for 2003 has been strong, with net income increasing 10% over the previous year. Net income was reported at $58 million for the fiscal year ended June 30,

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2003, representing a 0.73% annualized return on average assets (ROA). Net interest margins (NIM) compressed nationally and in Illinois during 2003 as the continuing low rate environment caused asset yields to drop more rapidly than funding costs. Overall, the industry NIM stood at 3.26 % for Illinois at June 30, 2003, as compared to 3.29% at June 30, 2002. Nationally, the industry NIM decreased to 3.53 % at June 30, 2003 from 3.75 % a year earlier. Enforcement actions are taken against thrift institutions that have demonstrated weaknesses in any area of its operations lending to a composite rating of 3 or higher on a scale of 1 to 5. A rating of 5 is indicative of an institution in danger of default. The small number of institutions with adverse ratings shows the strength of the thrift industry in Illinois. The average capital level for Illinois thrifts is 12%, compared to 9.4% nationally. Thrifts are evaluated using the same components that are used to evaluate the commercial banking industry.

THRIFT COMPOSITE RATINGS as of 06/30/03

Rating Number 1 .......................................................................19 2 .......................................................................30 3 .........................................................................5 4 .........................................................................0 5 .........................................................................0 The number of thrifts institutions requiring increased supervisory attention has remained constant during the current fiscal year. Due to close monitoring and strong demands for compliance, two thrift institutions improved their conditions and therefore enforcement actions were rescinded. Management Visitation Program OBRE continues to maintain communication with its regulated entities to ensure accessibility as a regulator, to help respond to questions and

concerns on financial matters, and to provide information on important regulatory issues. The primary focus of this program is to keep management in touch with the business and orientation of the industry and to keep the industry informed of government initiatives. This program has strengthened the relationship between OBRE and the regulated institutions. The higher degree of dialog is beneficial in a regulated environment and has contributed to a greater understanding of the role of OBRE as a resource as well as a regulator. Mortgage Banking Enforcement Statutory and regulatory enforcement are major priorities in protecting Illinois residents from dishonest, unfair, and inefficiently operated residential lenders licensed by OBRE. To that extent, the Mortgage Banking Division will aggressively seek to revoke the licenses of the most egregious violators of statutes and regulations. From January 2003 through June 2003, the number of supervisory meetings, resulting in office visits by licensees, has increased from four to 21 visits (525% increase). From January 2003 through June 2003, the Mortgage Banking Division issued a total of 37 enforcement actions against licensees. At the conclusion of the fiscal year, OBRE increased its enforcement powers against licensees in legislation (Senate Bill 1784) pending before the Governor, including an enhanced consumer protection law against predatory lending. Mortgage Activities for the Mortgage Banking Industry The Off-Site Monitoring Program is initiated from repeat examination violations, egregious examination issues, or issues triggered from an unusual or suspicious activity. Off-Site Monitoring is a systematic review of various internal and external documents, which allows OBRE to track the licensees’ activity until satisfactory resolution is achieved.

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BBuurreeaauu ooff RReeaall EEssttaattee PPrrooffeessssiioonnss The bureau is responsible for the licensing and regulation of real estate brokers; salespersons; leasing agents; auctioneers; appraisers; home inspectors; and real estate schools, instructors, and courses. In addition, the bureau is responsible for the registration and regulation of timeshare companies and land sales projects developed or marketed in Illinois. The bureau is formed by two divisions: Licensing and Enforcement. The mission of the Licensing Division is to timely and accurately evaluate and process license applications to ensure that applicants are qualified. The mission of the Enforcement Division is to investigate allegations of misconduct by real estate professions practitioners and prosecute violators. The charts below show the rapid growth of the real estate industries during the last five years. REAL ESTATE BROKERS AND SALESPERSONS

as of 06/30/03 Year Brokers Salespersons 2003 ..................... 27,687 .........................49,532 2002 ..................... 25,393 .........................43,247 2001 ..................... 27,059 .........................36,327 2000 ..................... 25,492 .........................43,217 1999 ..................... 26,990 .........................37,643

REAL ESTATE APPRAISERS as of 06/30/03

Year Number 2003 ............................................................5,984 2002 ............................................................5,052 2001 ............................................................5,270 2000 ............................................................4,655 1999 ............................................................4,805

AUCTION PROFESSIONALS as of 06/30/03

Year Number 2003 ............................................................1,553 2002 ............................................................1,510 2001 ............................................................1,365 2000 ............................................................1,685

TIMESHARE & LAND SALES REGISTRATIONS as of 06/30/03

Year Number 2003 ............................................................... 679 2002 ............................................................... 536 2001 ............................................................... 443 2000 ............................................................... 284 1999 ............................................................... 191

Increase in Salespersons Licenses

Over the last five years, the bureau experienced rapid growth in the number of real estate brokers and salesperson licenses issued. During the last fiscal year, an additional 13,205 real estate salespersons licenses were issued. This represents an increase of 36%. There are three factors that may have contributed to this increase.

Real estate regulatory bodies typically

see an increase in licenses issued as the unemployment rate rises.

Historically, low interest rates during

2003, led to the strong housing sector in Illinois. Illinois building permits, home sales, and future construction of residential property all increased in fiscal year 2003. When the housing market flourishes, the demand for real estate salespersons increases.

A streamlined licensing process at

OBRE contributed to an increase in the number of real estate licenses.

There are over 70 OBRE approved real estate pre-license education providers. The pre-license providers have approximately 250 licensed branches that provide education. After completing the pre-license course requirements, applicants take the examination at one of 10 OBRE approved testing centers located throughout Illinois. The results of this streamlined system is that most applicants receive their license within eight business days. *Began licensing the auction industry in 2000.

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New Appraisal Education Program The Appraisal Division worked in cooperation with approved education providers to institute a more effective educational program that complies with state and federal appraisal standards. These standards are in place so that appraisers are sufficiently trained in an effort to assure competency and independent judgment according to uniform professional standards and ethics. All approved pre-license education courses must meet federal and state standards to complete a pathway to licensure. All licensed education providers must offer an OBRE approved curriculum. The enhanced appraisal education program creates greater consumer protection in Illinois. OBRE has experienced a noticeable decrease in the number of complaints filed against appraisers. In fiscal year 2002, there were 311 complaints filed against appraisers, compared to 233 complaints filed with OBRE in fiscal year 2003, representing a decrease in complaints of 25%. Real Estate Complaints Decrease in Fiscal Year 2003 Consumer complaints filed against entities licensed under the Real Estate License Act of 2000 decreased 30% in fiscal year 2003. The primary reason for this decrease was the continued growth of the Real Estate Professions Examination Program. The Real Estate Professions Examination Program was instituted in fiscal year 2002 in an effort to strengthen compliance with the Real Estate License Act of 2000 and to reduce the number of complaints filed with OBRE against licensees. Examiners conducted 1,387 exams in fiscal year 2002 and

conducted nearly 2,100 compliance examinations in fiscal year 2003. Simultaneously, complaints against real estate licensees decreased from 1,286 in fiscal year 2002 to a three-year low of 898 as of June 30, 2003. The industry continues to support this program as a proactive method of assuring compliance with real estate laws and rules. Licensing of Home Inspectors OBRE began licensing home inspectors on January 1, 2003, as a result of Public Act 92-239, the Home Inspection License Act. The Home Inspection License Act was created in order to evaluate the competency of persons and entities engaged in the business of home inspections, and to protect the public by licensing those engaged in the business. The Act provides that any individual, corporation, limited liability company, or partnership practicing as a home inspector is required to be licensed. Any person wishing to obtain a home inspector license must be at least 21 years of age, have earned a high school diploma (or GED), pass a state examination, and submit applications and fees for licensure. As of June 30, 2003, OBRE had licensed 895 home inspectors in Illinois.

HOME INSPECTOR LICENSEES as of 06/30/03

Home Inspector ............................................. 895 Home Inspector Entity................................... 240 Home Inspector Education Provider ............... 23 Home Inspector Pre-license Course ................ 30 Home Inspector CE Course ............................... 1 Total .......................................................... 1,189

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The Office of the Commissioner is comprised of the Division of Community Relations, the Legal Department, and the Legislative Affairs Section. The Division of Community Relations coordinates programs to keep the public informed and protected and provides consumers and communities with public information. The Consumer Services Section handles all inquiries and complaints brought against OBRE regulated and licensed entities. The Law Department advises, interprets, and drafts various rules, regulations, and statutes that pertain to the financial industry, the residential finance industries, and the real estate professions. The Legislative Affairs Section is responsible for creating OBRE’s legislation and administrative rules, as well as acting as its primary contact for legislative constituent inquiries. Community Outreach The Community Relations Division continued its mission to educate and inform the public, as it reached over 7,100 people at 65 events in 33 counties conducting presentations or attending fairs and festivals throughout Illinois. The division served as a foundation to the Governor’s Task Force on Financial Literacy, to address the development of money skills for adults, and students in high school and middle school.

The Task Force also prepared the first known document in the United States, which outlines the basic requirements for a school-age financial literacy curriculum. The Core Content document, found on the OBRE’s Web site, is a coordination of the Illinois State Board of Education’s

mandates and the essentials of financial education as perceived by the Task Force. Consumer Services The Consumer Services Division continued to experience a high volume of consumer inquiries and complaints with over 3,200 calls and complaints during the past fiscal year. The division delivered timely customer service and satisfaction on numerous consumer inquiries and complaints on all OBRE regulated entities. By responding to all inquiries and complaints within five business days from the date received, consumers can be assured the highest level of service in a timely manner. The chart below details the number of inquiries received by the Consumer Services Division over the past three years.

INQUIRES RECEIVED (as of 06/30/03)

Profession FY01 FY02 FY03 Banks and Trust Companies

190 272 289

Pawnbrokers 34 8 0 Savings and Loans 3 6 6 Mortgage Banking 1,786 1,565 1,450 Real Estate 931 1,286 898 Appraisal 207 311 233 Auctioneers 184 99 89 Timeshare and Land Sales

7 9 22

Home Inspectors N/A N/A 24 Non-Regulated Referrals

327 366 273

Total 3,669 3,922 3,284

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2003 Legislation Affecting OBRE OBRE completed a successful 2003 Spring Legislative Session. The General Assembly approved OBRE’s only legislative agenda item along with a number of important consumer protection and industry-related bills including the High Risk Home Loan Act, an OBRE supervisory information disclosure bill, and new legislation dealing with identity theft and financial crime. Listed below is a summary of key legislation passed by the Illinois General Assembly and signed into law by Governor Rod. R. Blagojevich in 2003 that affected OBRE and the industries it regulates. High Risk Home Loan Act Public Act 93-561 [Senate Bill 1784 (Link/Currie)] Public Act 93-561 creates the High-Risk Home Loan Act, which codifies and expands anti-predatory lending rules promulgated in 2001. The bill provides statutory authority for individual consumers and the Illinois Attorney General to take alleged predatory lending cases to court under the Illinois Consumer Fraud and Deceptive Practices Act. Public Act 93-561 amends the Illinois Fairness in Lending Act to define and prohibit “equity stripping” and “loan-flipping” by financial institutions. The bill strengthens the OBRE’s jurisdiction over residential mortgage licensees by requiring the registration of loan officers, increases the maximum fine that may be imposed from $10,000 to $25,000, and increase net worth and bonding requirements. Effective January 1, 2004. State Finance-Administration Act Public Act 93-25 [Senate Bill 874 (Trotter/Madigan)] Public Act 93-25 creates the fiscal year 2004 Budget Implementation Act by amending various departmental acts in order to implement the fiscal year 2004 state finance-administration budget. Effective immediately.

State Finance-Revenues Act Public Act 93-32 [Senate Bill 1903 (Welch/Madigan)] Public Act 93-32 creates the fiscal year 2004 Budget Implementation (State Finance-Revenues) Act. The bill makes changes relating to State finance and revenues that are necessary to implement in the State's fiscal year 2004 budget. Makes transfers from various funds into the General Revenue Fund, other Funds, and amends numerous Acts by increasing specified fees, charges, taxes, and penalties. The Act also changes the disposition of specified fees, charges, taxes, and penalties. Effective immediately, except specified provisions have other effective dates. ATM Point-of-Sale Surcharge Public Act 93-136 [House Bill 1150 (Fritchey/Link)] Public Act 93-136 amends the Electronic Fund Transfer Act by deleting language that previously exempted point-of-sale terminals from disclosure, access, and advertising requirements. With passage of Public Act 93-136, point-of-sale terminals must comply with all surcharge disclosure requirements, access ability requirements, and limitations on proprietary advertising previously applied to ATM terminal providers. Effective January 1, 2004. Criminal Code/Identity Theft Public Act 93-195 [House Bill 2188 (Nekritz/Schoenberg)] Public Act 93-195 amends the Criminal Code of 1961 by creating a private right to initiate a law enforcement investigation related to identity theft. The victim of identity theft is also granted the right to seek a judicial determination of innocence when another party has been arrested or convicted of a criminal offense under the victim’s name. Public Act 93-195 also amends the Consumer Fraud and Deceptive Business Practices Act to require that credit card issuers verify the accuracy of application information prior to the issuance of a credit card. In addition, if credit providers use a consumer credit report and receive information

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that a person applying for credit has been the victim of identity theft, that credit provider is prohibited from extending credit unless they have taken reasonable steps to verify the identity of the applicant. These new verification provisions do not apply to an existing open-end credit plan. Effective January 1, 2004. Credit Card and Debit Card Account Disclosure Public Act 93-231 [House Bill 259 (Fritchey/Silverstein)] Public Act 93-231 amends the Consumer Fraud and Deceptive Practices Act by requiring that all credit and debit card receipts be printed or produced in a manner that identifies the account only by the last four digits assigned to the particular account. In addition, the receipt must not contain the expiration date of the card. An exception is provided if the only means of producing the card receipt is by handwriting or by imprinting the actual card. Effective January 1, 2005. State Funds Reinvestment Requirement Public Act 93-251 [House Bill 277 (Washington/Link)] Public Act 93-251 amends the Deposit of State Moneys Act and the Public Funds Investment Act. The new statutory language provides the State Treasurer, and any public agency, the authority to consider a financial institution’s commitment to the local community when making a decision whether to deposit state or public funds. The Treasurer or Public Funds Administrator may now consider publicly available information, including historical financial institution CRA ratings. In addition, consideration may be given to any change in ownership, management or business policies and practices that may affect the financial institution’s level of community commitment. The statute specifically provides that neither the State Treasurer nor any public agency shall be authorized to conduct an examination or investigation of the financial institution and they shall only consider publicly available information. Effective January 1, 2004.

Savings Banks and Savings and Loans Exams Public Act 93-271 [House Bill 3663 (Lyons/Lightford)] Amends the Illinois Savings and Loan Act of 1985 and the Savings Bank Act to provide guidelines for OBRE and institutions in disclosing confidential supervisory information. Describes "confidential supervisory information" (CSI) and states that CSI is the exclusive property of OBRE. It details under what circumstances OBRE may disclose CSI, under what circumstances a bank may disclose CSI, and that disclosure to OBRE or other regulators does not act as a waiver of any legal privilege the bank may have. Public Act 93-271 states that notwithstanding any other provision of the proposal, CSI is the property of OBRE and shall be privileged from disclosure except as provided in the proposal. The bill provides procedures to follow if CSI is sought pursuant to a subpoena and makes knowing or willful violations of the disclosure standards punishable by OBRE with a civil money penalty of up to $1,000. Effective immediately. ATM Reverse PIN Sends Alarm Public Act 93-273 [Senate Bill 562 (Link/Mathias)] Public Act 93-273 amends the Electronic Fund Transfer Act to allow terminal operators discretionary authority to implement a “reverse PIN alarm system.” In case of an emergency or an instance of a forced attempt to withdraw funds, by entering the customer’s PIN in reverse order. Effective January 1, 2004. Illinois Financial Crimes Law Public Act 93-440 [Senate Bill 1053 (Cullerton/O’Brien)] Public Act 93-440 creates a specific section of the Criminal Code of 1961 devoted to new criminal offenses and penalties for crimes against a financial institution. New State criminal offenses include misappropriation of financial institution property, loan fraud, financial institution robbery, conspiracy to commit a financial crime and concealment of collateral. Effective July 5, 2003.

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The mission of the bureau is to provide internal support to OBRE. The bureau consists of the Fiscal, Human Resources, and Information Systems Divisions. Human Resources Activities During fiscal year 2003, the Early Retirement Incentive (ERI) significantly impacted OBRE and created increased workload for the Human Resources Division. A total of 36 employees, accounting for 11% of the OBRE total headcount, opted for the ERI. OBRE lost a cumulative 794 years of job experience as a direct result. The Human Resources Division worked with OBRE management to clarify job assignments and consolidate positions. OBRE responded by changing the organizational structure and work assignments to ensure continuing operation in a productive manner. Commitment to Training During fiscal year 2003, the OBRE Training Section provided staff with over 9,000 hours of educational development. OBRE employees participated in specific training sessions to aid their understanding in specialized areas and changes in State and Federal laws and regulations. Examples of such specialized training include: Certified Bank Auditor, Certified Financial Analyst, Certified Information Systems Auditor, Certified Fiduciary and Investment Risk Specialist, Certified Risk Professional, Certified Fraud Examiner, etc. e-Government In keeping with its e-Government initiative, OBRE developed the concept of the CLEAR System, (Credentialing Licensing Enforcement And Regulation). A key goal of OBRE’s e-Government initiatives was to build a consolidated electronic data processing system, allowing all OBRE information to share a common platform and be accessible to all users.

In February 2003, the Mortgage Banking Division became the first division to begin using the CLEAR System. OBRE completed the data conversion from the Foundation System. Following the conversion, the CLEAR system processed all business activity for the division. By June, three areas in the Bureau of Banks and Trusts Companies, maintaining business data on non-traditional systems, converted to the CLEAR system. These industries were Pawnbrokers, Non-financial ATM’s (Automated Teller Machines), and Check Printers. These conversions brought the data into a centralized system and established the groundwork for the conversion of other areas of the Bureau of Banks and Trusts Companies into the CLEAR system. The Bureau of Real Estate Professions converted its data from the Regulation and Enforcement System to the CLEAR system during the month of June and began processing in July of 2003. Computer Security As the threat of viruses, spam e-mail, and hackers continue to plague all institutions, the Information Systems Division continues to research and implement the latest advancements as well as upgrade and maintain its existing network security devices to safeguard OBRE’s data. McAfee ASAP continues to serve as the virus protection package for OBRE. In a typical month, OBRE receives 16,000 spam messages. This represents nearly 45% of all e-mail received from the Internet. OBRE currently uses two firewall appliances to protect its networks from intrusion by hackers along with the sensitive data that is contained on the system. Maintaining, upgrading, and managing information systems security and resources continues to be a high level priority for the Information Systems Division.

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BBooaarrdd RReeppoorrttss aanndd MMeemmbbeerrsshhiipp LLiisstt Bureau of Banks and Trust Companies State Banking Board of Illinois:

The State Banking Board of Illinois was created to provide a supervisory and review function over rules proposed by the Commissioner in such areas as chartering, conversions, consolidations, changes of location, voluntary dissolutions, and reports related to examinations; to serve as a source of legislative and administrative proposals; and to hold hearings in connection with orders of removal issued by the Commissioner, making a determination approving, modifying or disapproving such orders. The Governor with advice and consent of Illinois Senate appoints members of the Board: 205 ILCS 5/78. Members: Chairman D. Lorenzo Padrón, Commissioner, Illinois Office of Banks and Real Estate

Class A Members (Public Members) Term Expires Spiro G. Zarkos, Chicago ................................ ...........................................................12/31/2004

Attorney, Kaplan Papadakis & Gournis, P.C. Originally appointed on 11/18/02

Lee J. Plummer, Jerseyville ..........................................................................................12/31/2004

Attorney and Title Insurance Salesperson Member, Illinois Bank Examiners’ Education Foundation Originally appointed on 09/10/98

Asif Yusuf , Westchester ..............................................................................................12/31/2003

Real Estate Broker and Hotel Owner Originally appointed on 03/14/00

Everett G. Rand, Chicago .............................................................................................12/31/2003

Manager, Midway Airport, Concession Operation Originally appointed 03/21/00

Class B Members (0 - 20 Million Asset Bank) Mark G. Field, The Farmers Bank of Liberty ..............................................................12/31/2004

Chairman, President, and CEO Former President, Community Bankers Association of Illinois Member, Illinois Bank Examiners’ Education Foundation Originally appointed on 03/26/97

Gary N. Edwards, State Bank of Lima ........................................................................12/31/2003

President and CEO Originally appointed on 03/03/97

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Class B Members (20 - 50 Million Asset Bank) Two Vacant Seats Class B Members (50 - 125 Million Asset Bank) Joy French Becker, Farmers State Bank & Trust Company of Jacksonville................12/31/2004

President Originally appointed on 03/26/97

Class B Members (125 - 250 Million Asset Bank) A. Dean Decker, Central Trust & Savings Bank of Geneseo ......................................12/31/2004

President and CEO Member, Illinois Bank Examiners’ Education Foundation Originally appointed on 08/10/93

Class B Members (250 - 1 Billion Asset Bank) Thomas L. Bugielski, Founders Bank of Worth ..........................................................12/31/2005

President and CEO President, Illinois Bankers Association Originally appointed on 08/27/98

Class B Members (Over 1 Billion Asset Bank) Paul V. Reagan, Harris Trust and Savings Bank of Chicago .......................................12/31/2003

Senior Vice President and US General Counsel Originally appointed on 03/03/97

Class B Members (Over 1 Billion Asset - Foreign Bank Office Representative) Vacant Seat ..................................................................................................................12/31/2003 Class C Members (Banking Industry At-Large Members) Merlin E. Karlock, Municipal Trust & Savings Bank of Bourbonnais ........................12/31/2004

Chairman and CEO Originally appointed on 05/01/2002

Courtney C. Shea, LaSalle National Bank of Chicago .................................................12/31/2004

Senior Vice President, Governmental Services Former Member, Securities Advisory Committee at Secretary of State Originally appointed on 11/18/02

Illinois Bank Examiners' Education Foundation:

The Illinois Bank Examiners’ Education Foundation was created to provide a means through which funds may be raised, invested, and disbursed for continuing education and professional training of bank examination group of the Office of Banks and Real Estate. A Board of Trustees governs the foundation and funds are invested and disbursed through the Illinois Bank Examiners’ Education Fund. The Governor with advice and consent of Illinois Senate appoints members of the Board: 20 ILCS 3210/5.

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Members:

Chairman D. Lorenzo Padrón, Commissioner, Illinois Office of Banks and Real Estate Public Members Term Expires Lee J. Plummer, Attorney and Title Insurance Salesperson , Jerseyville ................... 12/31/2004 Industry Members Mark G. Field, Chairman, President and CEO , The Farmers Bank of Liberty .......... 12/31/2004 A. Dean Decker, President and CEO , Central Trust & Savings Bank, Geneseo ........12/31/2004

ILLINOIS BANK EXAMINERS’ EDUCATION FOUNDATION

BALANCE SHEET As of As of 06/30/2003 06/30/2002 Change ASSETS: INVESTMENTS $1,400,430.89 $1,323,583.58 $78,847.31 ACCOUNTS RECEIVABLE 6,936.82 46,828.84 (39,892.02) TOTAL ASSETS $1,407,367.71 $1,370,412.42 $36,955.29 LIABILITIES: ACCOUNTS PAYABLE 0.00 0.00 0.00 FUND EQUITY: RETAINED EARNINGS $1,407,367.71 $1,370,412.42 $36,955.29 TOTAL LIABILITIES AND FUND EQUITY $1,407,367.71 $1,370,412.42 $36,955.29

ILLINOIS BANK EXAMINERS’ EDUCATION FOUNDATION

STATEMENT OF REVENUES & EXPENSES Fiscal Year 03 Fiscal Year 02 Change REVENUES: FEES & CONTRIBUTIONS $0.00 $0.00 $0.00 INTEREST ON INVESTMENTS 56,277.53 74,328.88 (18,051.35) TOTAL REVENUES $56,277.53 $74,328.88 $(18,051.35) EXPENSES: TRAINING PROGRAMS $19,287.24 $33,622.29 $14,335.05 MISCELLANEOUS 35.00 55.00 (20.00) TOTAL EXPENSES $19,322.24 $33,677.29 $(14,355.05) NET INCOME: $36,955.29 $40,651.59 $(3,696.30)

ILLINOIS BANK EXAMINERS’ EDUCATION FOUNDATION

FUND ACTIVITY Fiscal Year 03 Fiscal Year 02 Change BEGINNING BALANCE, JULY 1 $1,323,583.58 $1,268,340.10 $55,242.48 ADDITIONS: FEES & CONTRIBUTIONS $0.00 $0.00 $0.00 INTEREST ON INVESTMENTS 96,169.55 88,920.77 7,248.78 TRANSFERS-IN 0.00 0.00 0.00 TOTAL ADDITIONS $96,169.55 $88,920.77 $7,248.78 REDUCTIONS: EXPENDITURES $19,322.24 $33,677.29 $(14,355.05) TRANSFERS-OUT 0.00 0.00 0.00 TOTAL REDUCTIONS $19,322.24 $33,677.29 $(14,355.05) ENDING BALANCE, JUNE 30 $1,400,430.89 $1,323,583.58 $76,847.31

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Bureau of Real Estate Professions Real Estate Administration and Disciplinary Board:

The Real Estate Administration and Disciplinary Board (READ) is primarily responsible for reviewing complaints against real estate licensees and hearing formal evidentiary cases to make recommendations for disciplinary action to the Commissioner. Board members are appointed by the Governor, with due consideration to the recommendations provided by the real estate brokerage industry: 225 ILCS 454/25-10

*Members: Chairman (Non-Voting Member) Vacant, Director, Real Estate Division, Illinois Office of Banks and Real Estate Public Members(Consumer Interests) Term Expires John Davidson, Springfield……………………………………………………………10/01/2005

Retired Chiropractic Physician Past Member and Chairman, Board of Sangamon County Board of Supervisors Illinois State Senator, from 1973 to 1993

Patrick Sharpe, West Dundee ......................................................................................10/01/2006

Vice President, Barrier Dynamics, LLC Served as Sales Representative in aerospace and related industries Served as Sales Manager for ventilating service company

Real Estate Broker/Salesperson Members Term Expires Alex LaBelle, [CRB, CRS, GRI], LaGrange ...............................................................10/01/2003

Licensed Broker Associate, Smothers Realty Group Past President, IAR Member, NAR’s Board of Directors; Member, NAR’s Federal Housing Policy Committee

Ron Ladley, [GRI] Springfield ....................................................................................10/01/2005

Partner, Illinois First Realty Director and Owner, National Academy of Real Estate Member, Government Affairs and Policy Committee, IAR Real Estate Instructor Consultant, Hershey Publications Real Estate Text

Judith McConville, [GRI] Ottawa ................................................................................10/01/2006

Managing Broker, Coldwell Banker Honig-Bell Member, LaSalle County Board of Review Member, Past Treasurer, and President, IAR Member of Board and Chairs Advisory Committee, IAR

Carol Shields, [CRB, CRS, GRI] Pekin ......................................................................10/01/2006

Licensed Broker and Real Estate Consultant, Prudential Midwest Real Estate Two terms Past President, Pekin Area Association of Realtors Chair of Governmental Affairs Committee, Pekin Area Association of Realtors Past President, IAR

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Toni Sherman, [ABR, CRS, GRI], Lombard ...............................................................10/01/2006

Licensed Broker Associate, Coldwell Banker Past President of Realtors Association, West/South Suburban Chicagoland 2003 President, IAR Chair, Executive Committee and Board of Directors, IAR

Arlen Speckman, [CRB, CRS, GRI], Kankakee ..........................................................10/01/2005

Broker Owner, Speckman Realty Past President, Kankakee County Association of Realtors Past President, IAR

Real Estate Education Advisory Council:

The Real Estate Education Advisory Council of the Office of Banks and Real Estate is responsible for approving all schools, instructors, curriculum, and courses for approved real estate education required by the Real Estate License Act of 2000. It makes recommendations to the Office of Banks and Real Estate concerning policy and administrative rules for real estate education. Additionally, it may refer schools and instructors to the Real Estate Administration and Disciplinary Board for discipline. The Governor appoints council: 225 ILCS 454/30-10

Members: Chairman (Non-Voting Member) Vacant, Director, Real Estate Division, Illinois Office of Banks and Real Estate

READ Board Members Term Expires Alex LaBelle, [CRB, CRS, GRI], Smothers Realty Group, LaGrange .......................10/01/2003 Ron Ladley, [GRI], Illinois First Realty, Springfield ..................................................10/01/2005 Carol Shields, [CRB, CRS, GRI], Prudential Midwest Real Estate, Pekin .................10/01/2006 Trade Organization Member (Not on the READ Board Member) Hubert Cioromski, Troy Real Estate, Chicago .............................................................10/01/2006

President-Elect, Realtor’s Association of Northwest Chicago Member, Plaza Bank Board of Directors; Member, Polish American Congress in

Washington D.C. Member, NAR and Chicago Association of Realtors

Pre-License or Continuing Education School Member Wayne Edwards, Jr., Illinois Association of Realtors, Springfield ..............................10/01/2003

Director, Professional Development, IAR Past Executive Vice President, Capital Area Association of Realtors

Higher Education Institution Member One Vacant Seat

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Illinois Real Estate Appraisal Board:

The Real Estate Appraisal Board’s powers and duties include conducting hearings on charges against licensees for violations under the Real Estate Appraiser Licensing Act and reporting findings on the charges to the Office of Banks and Real Estate; and making recommendations to the Office of Banks and Real Estate on rules and procedures to implement the provisions and policies of the Act. Board Members are appointed by the Governor, with due consideration to recommendations from the real estate appraisal and financial institutions industries: 225 ILCS 458/25-10 Members:

Chairman Term Expires Andrew Brorsen, Kankakee..........................................................................................06/30/2005 Vice Chairman Audrey Davis, Chicago ................................................................................................06/30/2006 Non-Voting, Ex-Officio Member Mike Brown, Director, Appraisal Division, Illinois Office of Banks and Real Estate Public Members Robert L. Kruse, Chicago ............................................................................................06/30/2006

Chief of Administrative Services, Board of Review of Cook County Licensed Real Estate Salesperson

Financial Institution Member Larry Harshbarger, Decatur .........................................................................................06/30/2005

Senior Vice President and Branch Manager, Prairie State Bank and Trust Past Member, Board of Directors, Illinois Bankers Association Past Chairman, State Membership, American Bankers Association

General Real Estate Appraiser Members TJ Tim McCarthy, Tinley Park ....................................................................................06/30/2004

Owner, Chief Appraiser, TJ McCarthy & Associates SRA Designation, Appraisal Institute IFA Designation, National Association of Independent Fee Appraisers

Andrew Brorsen, Kankakee .........................................................................................06/30/2005

President, Brorsen Appraisal Service, P.C. Member, NAR Member, Illinois Coalition of Appraisal Professionals

Audrey Davis, Chicago ................................................................................................06/30/2006

Partner, Urban Real Estate Research Past Director of Real Estate System, Cook County Assessor’s Office MAI Designation, Appraisal Institute

Robert Gorman, East Hazel Crest ................................................................................06/30/2005

Licensed Appraiser in Illinois, Indiana, Wisconsin, Michigan, and Georgia

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MAI Designation, Appraisal Institute Christopher Kachiroubas, Addison ..............................................................................06/30/2006

Elected Addison Township Assessor 1993, 1997, and 2001 Member, American Institute of Real Estate Appraisers Past President, Assessors Association of DuPage County

Joseph Krass, Bensenville ...........................................................................................06/30/2004

Licensed Real Estate Broker Past President and Senior Member, National Association of Independent Fee Appraisers Past President , Council of Appraisal and Property Professional Societies Representative, Association of Regulatory Officials

Real Estate Broker/Appraiser Member Gerald Perlow, Chicago ...............................................................................................06/30/2004

Appraiser, Realtor and Property Management Consultant Former Instructor and Director, Real Estate Institute Member, Real Estate Education Foundation, IAR, and NAR

I. Mac Boyd, Arcola ....................................................................................................06/30/2006

Former Officer, Champaign National Bank President, Boyd Real Estate, Inc. Member, American Society of Farm Managers and Rural Appraisers

Illinois Auction Advisory Board:

The Illinois Auction Advisory Board (IAAB) is comprised of seven members appointed by the Commissioner. IAAB advises the Office of Banks and Real Estate on matters of licensing and education of auctioneers and makes recommendations to the Commissioner on disciplinary matters that require a formal evidentiary hearing. The Commissioner appoints the Illinois Auction Advisory Board Members, with due consideration to recommendations from the auction industry: 225 ILCS 407/30-30

Members: Chairman, Ex-Officio Member Vacant, Director, Auction Division, Illinois Office of Banks and Real Estate Public Member (Consumer Interests) Term Expires Myrna Madigan, Tuscola……………………………………………………………... 01/01/2004

President, Farm Business Consultants, Inc. Member and Past President, Tuscola Rotary Club Instructor, Parkland Jr. College and Moultrie-Douglas University of Illinois

Real Estate Member Judith McConville, Ottawa ..........................................................................................01/01/2003

Managing Broker, Coldwell Banker Honig-Bell Member, LaSalle County Board of Review Member, Past Treasurer, and President, IAR Member, IAR

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Auction Members Rick Levin, Chicago ....................................................................................................01/01/2004

Real Estate Broker and Auctioneer Founder and President, Rick Levin & Associates, Inc. Member, NAR, IAR, NAA, ISAA and Home Builders Association of Greater Chicagoland Co-Founder and Board Member, Kevin Kaplan Foundation

Alva R. McDowell, Mulberry Grove ...........................................................................01/01/2004

Field Representative and Order Buyer, Farmers Livestock Marketing Association Member, NAA Auction Market Representative, Board of Governors Illinois Beef Association

Terry Dunning, Chicago ............................................................................................01/01/2003 President, Dunning’s Real Estate Auction Treasurer, National Auctioneers Foundation Past President, NAA; Inducted into NAA Hall of Fame Past President, ISAA; Inducted into ISAA Hall of Fame

Ray E. Doerr, Vergennes ........................................................................................01/01/2003 Founder and Manager, Doerr Auction and Realty, Inc. Member, ISAA; Inducted into ISAA Hall of Fame

Illinois Home Inspector Advisory Board: The Illinois Home Inspector Advisory Board (IHIAB) is comprised of seven appointed by the Commissioner. The IHIAB advises the Office of Banks and Real Estate on matters of licensing and education of home inspectors and makes recommendations to the Commissioner on disciplinary matters that require a formal evidentiary hearing. The Commissioner appoints IHIAB board members, with due consideration to recommendations of the home inspector and real estate industries: 225 ILCS 458/25-10

Members: Public Member Term Expires Harry Kudesh, Chicago ............................................................................................01/01/2006

Assistant Jury Administrator, Circuit Court of Cook County Former Director, North River Commission

Real Estate Broker Member Rita Starkey, Chicago Heights .................................................................................01/01/2007

Real Estate Broker, ReMax South Suburban Member, Governmental Affairs and Professional Standards Committees, IAR Member, Chicago Heights Fair Housing Committee and Planning and Zoning Committee

Home Inspector Members Robert L. Claus, Oswego ..........................................................................................01/01/2007

Vice President of Operations and Technical Services, The BrickKicker Company President, Northern Illinois Chapter of ASHI

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Jack Fehlandt, Streamwood ......................................................................................01/01/2007

Home Inspector and Owner, Mr. Perfection, Inc. Member, ASHI and Society of Professional Real Estate Inspectors

Dana L. Strumpher, Springfield ...............................................................................01/01/2006

Home Inspector and Owner, Amerispec Home Inspection Service Affiliate Member, Capital Area Association of Realtors Chairman, Public Relations Committee and Chapter Representative, ASHI Council of

Representatives Frank C. Johnson, Jr., Antioch .................................................................................01/01/2007

Home Inspector and Owner, The BrickKicker Company Instructor, continuing education for home inspectors, IAR

Allan Monat, Northbrook .........................................................................................01/01/2006

Owner, Metro Real Estate Inspections Instructor, continuing education for home inspectors, IAR Member, NAHI

Bureau of Residential Finance Illinois Residential Mortgage Board:

The mission of the Illinois Residential Mortgage Board (IRMB) is to assist the Commissioner by submitting recommendations for the efficient administration of the Residential Mortgage License Act of 1987 and perform other duties as prescribed by the Commissioner. Board Members are appointed by the Commissioner: 205 ILCS 635/1-5 Members: Chairman Michael Seng, Chicago .............................................................................................01/31/2004 Public Interest Member Term Expires Michael Seng, Chicago .............................................................................................01/31/2004

Professor and Executive Director, Fair Housing Legal Clinic, John Marshall Law School; Co-Executive Director, Fair Housing Legal Support Center

Vice President, Chicago Chapter, The Fulbright Alumni Association Member, Board of Advisors, Illinois Division, American Civil Liberties Union

*Explanation of real estate industry acronyms: IAR – Illinois Association of Realtors, NAR – National Association of Realtor, NAA – National Auctioneers Association, ISAA –Illinois State Auctioneers Association, NAHI – National Association of Home Inspector, and ASHI –American Society of Home Inspectors

29

Betty Gutierrez, Chicago ..........................................................................................01/31/2004

Director of Residential Services, Greater Southwest Development Corporation Chair of Education Committee; Co-Chair Housing Community, Southwest Organizing

Project Board Member, Neighborhood Housing Services

Phyllis Kay Washington, Decatur .............................................................................01/31/2004

Sales Associate, J.B. Ellis Realtors First Vice President, National Association for the Advancement of Colored People, Decatur

Branch Member, City of Decatur Planning Commission Member, Board of Directors, Community Investment Corporation of Decatur

Mortgage Banking Members Brian Israel, Rolling Meadows .................................................................................01/31/2004

Vice President and Director of Special Projects, Harris Bank’s Consumer Lending Group Past Secretary/Treasurer, Vice President, and President, Illinois Mortgage Bankers

Association Member, Federal Home Loan Mortgage Corporation Community Lender Advisory Board

Broker Trade Associations Members Charles Eck, Schaumburg ........................................................................................01/31/2004

President, Lincoln Mortgage and Funding Corporation Past President and Vice President, National Association of Mortgage Bankers Past Board Member, Illinois Association of Mortgage Brokers

Illinois Board of Savings Institutions:

The mission of the Illinois Board of Savings Institutions (IBSI) is to hold public and private hearings to consider and act upon appeals from any order, decision or action of the Commissioner. The IBSI also advises the Governor on legislation proposed to amend the Illinois Savings and Loan Act or any other related acts. The Governor appoints board: 205 ILCS 105/7-20 Members: Chairman Term Expires Kathleen Marinangel, McHenry Savings Bank, McHenry........................................01/17/2005 Public Interest Members Gordon Taylor, Jr., Macomb ....................................................................................01/17/2005

Associate Vice President, Alumni Programs, Western Illinois University Chair of Executive Committee on National Education, Alumni Trust Past Member, Illinois Board of Finance Planning and Management; Past Member US Small

Business Administration Advisory Council

30

Scott Hodes, Chicago ...............................................................................................01/15/2003

Senior Partner and Member, Executive Committee, Ross and Hardies Director, Foundation of Federal Bar Association Member, State of Illinois Savings Boards Legislative Counsel, Investment Company Institute

John Owens, Palos Heights ......................................................................................01/15/2003

Former CPS, served 31 years as an auditor specializing in Savings and Loan/Savings Bank field

Former Executive Vice President, Adams Cohen Former Senior Advisor, Robert W. Baird and Company

Charles Hill, Sr. Chicago ..........................................................................................01/15/2003

President and CEO, Charles Hill and Associates, Inc. Executive Vice President, DHR International Past Executive Vice President, Federal Home Loan Bank of Chicago Board Member, Guaranty Bank and Illinois Financial Institutions Board

Thrift Industry Members Carol Radtke, Security Bank, Springfield ................................................................01/17/2005

Senior Vice President and CFO, Security Bank Past President and CEO, Litchfield Community Savings Past Vice President and CFO, Jacksonville Savings Banks Member, Governor’s Savings Institutions Board since 1995

Steven Rosenbaum, Prospect Federal Savings Bank, Worth ...................................01/15/2003

President and CEO, Prospect Federal Savings Bank Chairman-Elect, Illinois League of Financial Institutions Past Chairman, Chicagoland Association of Financial Institutions Member, Mutual Institutions Committee of America’s Community Bankers

Kathleen Marinangel, McHenry Savings Bank, McHenry........................................01/17/2005

President, CEO, Co-Owner and Chairman of the Board of Directors, McHenry Savings Bank Member, Board of Directors, Illinois League of Financial Institutions Member, Illinois Board of Savings Institutions Past Advisor, Thrift Institutions Advisory Council Past Advisor, Federal Reserve Board

31

During fiscal years 2001 – 2003, OBRE had five strategic priorities that aligned with the OBRE’s vision and mission. In addition, OBRE tracked 24 Bureau of Banks and Trust goals, 28 Bureau of Residential Finance goals, 19 Bureau of Real Estate Professions goals, and nine Consumer Services goals. Shown below are nine regulatory goals that most resemble OBRE’s performance during fiscal year 2003.

Bureau of Banks and Trust Companies

100% 100% 100%

0%10%20%30%40%50%60%70%80%90%

100%

FY02 Actual FY03 Target FY03 Actual

Examinations accepted by federal counterparts

0% 80% 100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY02 Actual FY03 Target FY03 Actual

Newly-chartered banks that chose a state vs. national charter

99.5% 100.0% 98.8%

90.0%

91.0%

92.0%

93.0%

94.0%

95.0%

96.0%

97.0%

98.0%

99.0%

100.0%

FY02 Actual FY03 Target FY03 Actual

Required bank examinations performed

865 900687

0

100

200

300

400

500

600

700

800

900

FY02 Actual FY03 Target FY03 Actual

Residential mortgage examinations conducted

70

8 18

0

10

20

30

40

50

60

70

FY02 Actual FY03 Target FY03 Actual

Residential mortgage special exams conducted

2527 26

20

21

22

23

24

25

26

27

FY02 Actual FY03 Target FY03 Actual

Required thrift examinations performed

90% 90% 86%

50%

55%

60%

65%

70%

75%

80%

85%

90%

FY02 Actual FY03 Target FY03 Actual

Real estate license applications processed within 8 business days

61% 100%50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY02 Actual FY03 Target FY03 Actual

Cases investigated within 105 days

77.5% 80.0% 70.5%

50%

55%

60%

65%

70%

75%

80%

85%

90%

FY02 Actual FY03 Target FY03 Actual

Complaints resolved within 105 business days

Performance Measurements Performance Measurements

Cases investigated within 105 days

Cases resolved within 105 days

Real estate license applications proc-essed within 8 business days

Residential mortgage examinations conducted

Residential mortgage special exams conducted

Required thrift examinations performed

Required bank examinations performed

Newly-chartered banks that chose a state vs. national charter

Examinations accepted by federal counterparts

Bureau of Real Estate Professions

Bureau of Residential Finance

31

32

FFinancial Statements inancial Statements OBRE assesses a fee to the regulated industries to ensure that funds are available in the State Treasury to cover operating expenditures. Thus, the cost of maintaining the OBRE is paid entirely by the institu-tions and licensees that it regulates and supervises. No general revenue funds are expended by OBRE. The charts below show OBRE employment history and annual expenditures for the fiscal year 1996 through 2003.

267 268 268 270 268 265283

256

200210220230240250260270280290

# EMP

1996 1997 1998 1999 2000 2001 2002 2003

OBRE HEADCOUNT HISTORYOBRE HEADCOUNT HISTORY

20.6 21.4 22.9 24.1 25.9 27.0 28.6 29.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1996 1997 1998 1999 2000 2001 2002 2003

ANNUAL EXPENDITURES ($ in Millions) ANNUAL EXPENDITURES (in Millions)

32

33

FY02 Revenues by Fund ($ in Millions)

The following charts are a comparative representation for fiscal years 2002 and 2003 revenues by funds, expenditures by funds, and expenditures by cost category.

$19.6$4.8

$4.7

$0.1$2.4 $0.7Banks

Thrifts

Real Estate

Appraisers

Pawnbrokers

Auction

FY03 Revenues by Fund ($ in Millions)

$20.9

$5.2

$4.7

$0.1$0.4 $0.5 Banks

Thrifts

Real Estate

Appraisers

Pawnbrokers

HomeInspectors

$18.1

$1.2

$4.3

$0.1 $0.3

$4.5

Banks

T hrifts

Real Estate

Appraisers

Pawnbrokers

Auction

FY02 Expenditures by Fund ($ in Millions)

$19.1

$0.1 $0.2

$4.7

$0.2

$4.3$0.9

Banks

T hrifts

Real Estate

Appraisers

Pawnbrokers

Auction

HomeInspectors

FY03 Expenditures by Fund ($ in Millions)

FY02 Expenditures by category

77%

10%

5%

4% 4%Personnel

Contractual

EDP

Travel

Other

79%

9%

5%

4%3%

P ersonnel

Cont ractual

EDP

T ravel

Other

(FY03 revenue for Auction was negligible)

FY03 Expenditures by category

33

34

As of As of % 6/30/2003 6/30/2002 CHANGE ASSETS: Bank & Trust Company Fund - Central Account $2,510,522 $2,477,713 1.32 Bank & Trust Company Fund - Corporate Fiduciary Receivership Account 732,345 428,109 71.07 Bank & Trust Company Fund - Petty Cash Account 200 200 0.00 Deposits in Clearing Accounts 267,117 7,263 3577.77 Accounts Receivable 5,283,174 5,006,052 5.54 Allowance for Uncollectable Accounts 0 0 N/A Furniture and Equipment (Net of Accumulated Depreciation) 535,572 1,086,085 -50.69 Total Assets $9,328,929 $9,005,422 3.59 LIABILITIES: Credit Due Banks $1,166,334 $0 N/A Accounts Payable 809,737 1,318,711 -38.60 Accrued Sick & Vacation Payable 2,116,785 2,538,049 -16.60 Total Liabilities $4,092,856 $3,856,760 6.12 ACCOUNTABILITIES: Retained Earnings ($854,984) ($726,550) -17.68 State Banks' Equity in Bank & Trust Fund 5,431,219 5,431,219 0.00 Corporate Fiduciaries' Equity in Corporate Fiduciary Receivership Account 659,838 443,993 48.61 Total Accountabilities $5,236,073 $5,148,662 1.70 Total Liabilities and Accountabilities $9,328,929 $9,005,422 3.59

FUND STATEMENTS

FOR THE 12 MONTHS ENDED 6/30/03 AND 6/30/02 % FY03 FY02 CHANGE OPERATING REVENUES: Bank Examination Fees (Quarterly fees based on assets) $16,100,741 $14,892,540 8.11 Bank Equity Fees 0 0 N/A Bank Miscellaneous Fees (Charter changes, applications, etc.) 43,400 467,222 -90.71 Corporate Fiduciary Regulatory Fees (Based on time spent on examination) 1,845,164 1,779,068 3.72 Corporate Fiduciary Miscellaneous Fees 9,700 10,200 -4.90 Corporate Fiduciary Receivership Fees 392,740 244,549 60.60 EDP/Info Sys Application Fees 2,466,294 2,144,851 14.99 Interest Income 51,145 87,170 -41.33 Other Miscellaneous Fees 11,455 12,414 -7.73 Total Revenues $20,920,639 $19,638,014 6.53 OPERATING EXPENSES: Personal Services $11,686,434 $10,842,506 7.78 Retirement-State paid employee contributions 428,290 416,517 2.83 Retirement-State contributions 1,208,891 1,089,456 10.96 Social Security 864,510 801,927 7.80 Group Insurance 1,636,245 1,574,893 3.90 Contractual Services 1,244,989 1,270,304 -1.99 Legal 65,419 100,000 -34.58 Travel 862,120 902,330 -4.46 Commodities 50,672 71,576 -29.20 Printing 44,951 28,221 59.28 Equipment 10,698 58,478 -81.71 Electronic Data Processing 832,533 920,392 -9.55 Telecommunications 229,191 245,702 -6.72 Operation of Automotive Equipment 8,645 5,612 54.05 Refunds 850 3,000 -71.67 Corporate Fiduciary Receivership 176,895 15,332 1053.76 Miscellaneous 295,903 1,730,508 -82.90 Total Expenses. $19,647,235 $20,076,754 -2.14 Revenues Less Expenses $1,273,404 ($438,740) 390.24

Banks and Trust Companies Fund—Balance Sheet

34

35

As of As of % 6/30/2003 6/30/2002 CHANGE ASSETS: Pawnbroker Regulation Fund $335,849 $311,104 7.95 Deposits in Clearing Accounts 3,000 450 566.67 Accounts Receivable. 2,000 0 N/A Allowance for Uncollectable Accounts 0 0 N/A Furniture and Equipment (Net of Accumulated Depreciation 16 401 -96.09 Total Assets $340,864 $311,955 9.27 LIABILITIES: Accounts Payable $7,660 $13,039 -41.25 Accrued Sick & Vacation Payable 20,726 13,295 55.89 Total Liabilities $28,386 $26,334 7.79 ACCOUNTABILITIES: Retained Earnings $312,478 $285,621 9.40 Total Accountabilities 312,478 285,621 9.40 Total Liabilities and Accountabilities $340,864 $311,955 9.27

FUND STATEMENTS FOR THE 12 MONTHS ENDED 6/30/03 AND 6/30/02

% FY03 FY02 CHANGE OPERATING REVENUES: Licenses and Fines $133,400 $139,800 -4.58 Miscellaneous Fees 10,950 5,100 114.71 Total Revenues $144,350 $144,900 -0.38 OPERATING EXPENSES: Personal Services $64,296 $77,955 -17.52 Personal Services Per-Diem 0 0 N/A Retirement-State paid employee contributions 2,575 3,125 -17.61 Retirement-State contributions 6,644 7,843 -15.29 Social Security 4,787 5,885 -18.66 Group Insurance 10,172 7,989 27.33 Contractual Services 13,701 11,859 15.53 Travel 1,908 4,013 -52.45 Commodities 321 1,319 -75.64 Printing 1,259 0 N/A Equipment 0 0 N/A Electronic Data Processing 3,733 3,542 5.40 Telecommunications 665 577 15.34 Federal Real Estate Appraisal Fees 0 0 N/A Refunds 0 0 N/A Miscellaneous 0 0 N/A Total Expenses $110,062 $124,107 -11.32 Revenues Less Expenses $34,288 $20,793 64.90

Pawnbroker Regulation Fund—Balance Sheet

35

36

As of As of % 6/30/2003 6/30/2002 CHANGE ASSETS: Savings and Residential Finance Regulatory Fund $3,928,538 $5,669,523 -30.71 Deposits in Clearing Accounts 95,298 119,289 -20.11 Accounts Receivable 294,432 255,439 15.27 Allowance for Uncollectable Accounts 0 0 N/A Furniture and Equipment (Net of Accumulated Depreciation) 616,331 404,527 52.36 Total Assets $4,934,598 $6,448,778 -23.48 LIABILITIES: Accounts Payable $812,701 $790,140 2.86 Accrued Sick & Vacation Payable 390,596 520,752 -24.99 Total Liabilities $1,203,297 $1,310,892 - 8.21 ACCOUNTABILITIES: Retained Earnings $3,731,301 $5,137,886 -27.38 Total Accountabilities $3,731,301 $5,137,886 -27.38 Total Liabilities and Accountabilities $4,934,598 $6,448,778 -23.48

FUND STATEMENTS FOR THE 12 MONTHS ENDED 6/30/03 AND 6/30/02

% FY03 FY02 CHANGE OPERATING REVENUES: Mortgage Banking Full Service Office Fees $223,950 $179,850 24.52 Mortgage Banking Examination Fees 184,982 182,450 1.39 Mortgage Banking Fees 3,505,800 3,151,200 11.25 Savings and Loan Examination Fees 234,940 196,433 19.60 Savings and Loan Supervisory Fees 924,830 909,504 1.69 Interest Income 39,435 0 N/A Miscellaneous Fees 63,455 150,342 -57.79 Total Revenues $5,177,392 $4,769,779 8.55 OPERATING EXPENSES: Personal Services $2,708,732 $2,596,935 4.30 Retirement-State paid employee contributions 96,267 97,321 -1.08 Retirement-State contributions 282,952 261,124 8.36 Social Security 196,744 191,557 2.71 Group Insurance 359,099 368,592 -2.58 Contractual Services 576,936 638,433 -9.63 Travel 137,550 155,117 -11.32 Commodities 30,682 31,256 -1.84 Printing 46,001 37,327 23.24 Equipment 28,151 52,155 -46.02 Electronic Data Processing 234,258 229,813 1.93 Telecommunications 45,439 38,442 18.20 Operation of Automotive Equipment 3,479 4,548 -23.52 Board Meeting Expenses 728 811 -10.23 Refunds 0 500 -100.00 Miscellaneous 1,967,114 129,588 1417.98 Total Expenses $6,714,133 $4,833,520 38.91 Revenues Less Expenses ($1,536,741) ($63,741) -2310.91

Savings and Residential Finance Regulatory Fund—Balance Sheet

36

37

As of As of % 6/30/2003 6/30/2002 CHANGE ASSETS: Real Estate License Administration Fund $4,231,874 $4,856,235 -12.86 Petty Cash 0 0 N/A Deposits in Clearing Accounts 165,899 87,450 89.71 Accounts Receivable 155,109 12,921 1100.44 Allowance for Uncollectable Accounts 0 0 N/A Furniture and Equipment (Net of Accumulated Depreciation) 692,678 347,388 99.40 Total Assets $5,245,561 $5,303,994 -1.10 LIABILITIES: Accounts Payable $913,929 $719,556 27.01 Accrued Sick & Vacation Payable 330,013 323,222 2.10 Total Liabilities $1,243,942 $1,042,778 19.29 ACCOUNTABILITIES: Retained Earnings $4,001,619 $4,261,216 -6.09 Total Accountabilities $4,001,619 $4,261,216 -6.09 Total Liabilities and Accountabilities $5,245,561 $5,303,994 -1.10

FUND STATEMENTS FOR THE 12 MONTHS ENDED 6/30/03 AND 6/30/02

% FY03 FY02 CHANGE OPERATING REVENUES: Licenses and Fees $4,566,471 $4,472,517 2.10 Interest Income 81,171 187,645 -56.74 Other Miscellaneous Fees 5,558 7,001 -20.61 Total Revenues $4,653,200 4,667,163 -0.30 OPERATING EXPENSES: Personal Services $2,429,872 $2,350,465 3.38 Personal Services Per-Diem 48,000 57,250 -16.16 Retirement-State paid employee contributions 89,519 88,627 1.01 Retirement-State contributions 250,588 236,172 6.10 Social Security 173,959 171,998 1.14 Group Insurance 375,493 367,228 2.25 Contractual Services 583,282 671,976 -13.20 Travel 94,588 92,908 1.81 Commodities 21,647 31,127 -30.46 Printing 39,506 35,497 11.29 Equipment 23,446 48,221 -51.38 Electronic Data Processing 222,286 207,556 7.10 Telecommunications 58,848 58,944 -0.16 Operation of Automotive Equipment 9,181 17,146 -46.46 Refunds 2,645 4,002 -33.91 Miscellaneous 483,147 625,320 -22.74 Total Expenses $4,906,006 $5,064,436 -3.13 Revenues Less Expenses ($252,806) ($397,272) 36.36

Real Estate License Administration Fund—Balance Sheet

37

38

As of As of % 6/30/2003 6/30/2002 CHANGE ASSETS: Appraisal Administration Fund $1,230,393 $3,871,726 -68.22 Deposits in Clearing Accounts 34,957 14,750 137.00 Accounts Receivable 12,500 13,250 -5.66 Allowance for Uncollectable Accounts 0 0 N/A Furniture and Equipment (Net of Accumulated Depreciation) 26,555 24,138 10.01 Total Assets $1,304,405 $3,923,864 -66.76 LIABILITIES: Accounts Payable $58,919 $93,194 -36.78 Accrued Sick & Vacation Payable 58,954 89,553 -34.17 Total Liabilities $117,873 $182,747 -35.50 ACCOUNTABILITIES: Retained Earnings $1,186,532 $3,741,117 -68.28 Total Accountabilities $1,186,532 $3,741,117 -68.28 Total Liabilities and Accountabilities $1,304,405 $3,923,864 -66.76

FUND STATEMENTS FOR THE 12 MONTHS ENDED 6/30/03 AND 6/30/02

% OPERATING REVENUES: FY03 FY02 CHANGE Licenses and Fines $434,266 $2,381,314 -81.76 Miscellaneous Fees 25 813 -96.87 Total Revenues $434,291 $2,382,127 -81.77 OPERATING EXPENSES: Personal Services $506,814 $481,175 5.33 Personal Services Per-Diem 28,000 29,250 -4.27 Retirement-State paid employee contributions. 18,169 19,082 -4.79 Retirement-State contributions, 175 48,350 9.98 Social Security 38,926 41,102 -5.29 Group Insurance 83,395 77,796 7.20 Contractual Services 115,533 178,948 -35.44 Travel 11,361 14,701 -22.72 Commodities 3,586 8,795 -59.23 Printing 466 2,381 -80.44 Equipment 2,591 2,223 16.56 Electronic Data Processing 34,228 46,139 -25.82 Telecommunications 7,739 6,558 18.01 Federal Real Estate Appraisal Fees 17,750 224,575 -92.10 Refunds 500 687 -27.22 Miscellaneous 2,097,244 24,057 8617.81 Total Expenses $3,019,475 $1,205,819 150.41 Revenues Less Expenses ($2,585,183) $1,176,308 -319.77

Appraisal Administration Fund—Balance Sheet

38

39

As of As of % 6/30/2003 6/30/2002 CHANGE ASSETS: Auction Regulation Fund $50,074 $302,603 -83.45 Deposits in Clearing Accounts 900 1,650 -45.45 Accounts Receivable 53 0 N/A Allowance for Uncollectable Accounts 0 0 N/A Furniture and Equipment (Net of Accumulated Depreciation) 28,243 25,453 10.96 Total Assets $79,269 $329,706 -75.96 LIABILITIES: Accounts Payable $37,387 $51,499 -27.40 Accrued Sick & Vacation Payable 197 20,844 -99.05 Total Liabilities $37,584 $72,343 -48.05 ACCOUNTABILITIES: Retained Earnings $41,686 $257,362 -83.80 Total Accountabilities $41,686 $257,362 -83.80 Total Liabilities and Accountabilities $79,269 $329,706 -75.96

FUND STATEMENTS FOR THE 12 MONTHS ENDED 6/30/03 AND 6/30/02

% FY03 FY02 CHANGE OPERATING REVENUES: Licenses and Other Fees $41,650 $665,245 -93.74 Interest Income 3,318 8,296 -60.00 Total Revenues $44,968 $673,541 -93.32 OPERATING EXPENSES: Personal Services $96,509 $125,354 -23.01 Personal Services Per-Diem 11,750 21,750 -45.98 Retirement-State paid employee contributions 3,100 5,015 -38.19 Retirement-State contributions 9,962 12,587 -20.86 Social Security 7,093 9,017 -21.34 Group Insurance 14,537 23,100 -37.07 Contractual Services 44,221 41,698 6.05 Travel. 4,869 1,942 150.65 Commodities 1,334 2,074 -35.69 Printing 5,363 1,925 178.58 Equipment 0 231 -100.00 Electronic Data Processing 24,737 19,880 24.43 Telecommunications 6,914 6,986 -1.03 Federal Real Estate Appraisal Fees 0 0 N/A Refunds 0 0 N/A Miscellaneous 50,903 35,000 45.44 Total Expenses $281,292 $306,560 -8.24 Revenues Less Expenses ($236,324) $366,981 -164.40

Auction Regulation Fund—Balance Sheet

39

40

As of

6/30/2003 ASSETS: Home Inspector Administration Fund $473,795 Deposits in Clearing Accounts 21,500 Accounts Receivable 460 Allowance for Uncollectable Accounts 0 Furniture and Equipment (Net of Accumulated Depreciation) 3,981 Total Assets $499,737 LIABILITIES: Accounts Payable $162,441 Accrued Sick & Vacation Payable 13,058 Total Liabilities $175,499 ACCOUNTABILITIES: Retained Earnings $324,237 Total Accountabilities $324,237 Total Liabilities and Accountabilities $499,737

FUND STATEMENTS FOR THE 6 MONTHS ENDED 6/30/03

FY03 OPERATING REVENUES: Licenses and Fees $522,025 Interest Income 4,477 Other Miscellaneous Fees 50 Total Revenues $526,552 OPERATING EXPENSES: Personal Services $106,131 Personal Services Per-Diem 13,741 Retirement-State paid employee contributions 3,926 Retirement-State contributions 10,955 Social Security 7,832 Group Insurance 26,216 Contractual Services 5,787 Travel 1,577 Commodities 409 Printing 0 Equipment 0 Electronic Data Processing 10,749 Telecommunications 1,536 Operation of Automotive Equipment 0 Refunds 400 Miscellaneous 0 Total Expenses $189,257 Revenue Less Expenses $337,295 * The administration of the Home Inspection Act became effective on 01/01/03. Consequently the figures shown reflect fiscal year 2003 only and are prepared for informational purposes only.

Home Inspector Administration Fund—Balance Sheet*

40

41

Printed by the Authority of the State of Illinois Printed by Rudin Printing

Number of copies – 1,000 Cost - $6,483.20

NOTE: Requests for copies of this publication should be directed to the Office of Banks and Real Estate, Attention: Public Information Office, 500 East Monroe Street, Suite 5C, Spring-field, Illinois 62701-1509. Phone Number (217) 785-2903 and TDD Number (217) 524-6644.

ISSN 1077-4912