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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from____________to___________
Commission File Number 333-133831
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
UnionBancorp, Inc. 401(k) Profit Sharing Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
UnionBancorp, Inc.
122 West Madison Street
Ottawa, Illinois 61350
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REQUIRED INFORMATION
The following financial statements and schedules of the UnionBancorp,
Inc. 401(k) Profit Sharing Plan (the "Plan"), prepared in accordance with the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), are filed
herewith. Crowe Chizek and Company LLC, the current independent auditors for the
Plan, audited the financial statements and schedules of the Plan as of and for
the fiscal years ended December 31, 2005 and 2004. The consent of Crowe Chizek
and Company LLC is attached as Exhibit 23.1 to this Form 11-K.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
Ottawa, Illinois
FINANCIAL STATEMENTS
December 31, 2005 and 2004
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
Ottawa, Illinois
FINANCIAL STATEMENTS
December 31, 2005 and 2004
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM................... 1
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS...................... 2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS............ 3
NOTES TO FINANCIAL STATEMENTS........................................ 4
SUPPLEMENTAL SCHEDULE
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)...... 10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator of
UnionBancorp, Inc. 401(k) Profit Sharing Plan
Ottawa, Illinois
We have audited the accompanying statements of net assets available for benefits
of the UnionBancorp, Inc. 401(k) Profit Sharing Plan (the Plan) as of December
31, 2005 and 2004, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2005. These financial statements
are the responsibility of the Plan's Administrator. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2005 and 2004, and the changes in net assets available for benefits
for the year ended December 31, 2005, in conformity with U.S. generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audit of the basic 2005 financial statements and, in
our opinion, is fairly stated in all material respects in relation to the basic
2005 financial statements taken as a whole.
/s/ Crowe Chizek and Company LLC
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Crowe Chizek and Company LLC
Oak Brook, Illinois
June 27, 2006
1.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2005 and 2004
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2005 2004
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ASSETS
Investments (Note 4) $ 5,667,466 $ 5,036,415
Cash 200 2,174
Dividends receivable -- 10,880
------------ ------------
Total assets 5,667,666 5,049,469
LIABILITIES
Accrued expenses 10,593 9,441
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 5,657,073 $ 5,040,028
============ ============
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See accompanying notes to financial statements.
2.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2005
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Additions to net assets attributed to
Investment income
Net appreciation in fair value of investments (Note 4) $ 195,924
Interest 7,220
Dividends 57,760
------------
260,904
Contributions
Participant wage deferrals 617,589
Rollovers 4,852
Employer 411,311
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1,033,752
Total additions 1,294,656
Deductions from net assets attributed to
Benefits paid to participants 637,394
Administrative expenses 40,217
------------
Total deductions 677,611
------------
Net increase 617,045
Net assets available for benefits
Beginning of year 5,040,028
------------
End of year $ 5,657,073
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See accompanying notes to financial statements.
3.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
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NOTE 1 - DESCRIPTION OF THE PLAN
The following brief description of the UnionBancorp, Inc. 401(k) Profit Sharing
Plan (the Plan) is provided for general information purposes only. Participants
should refer to the plan agreement for a more complete description of the Plan's
provisions.
General: The Plan is a defined contribution plan covering employees of
UnionBancorp, Inc. (the Company) and certain of its subsidiaries, including
UnionBank, UnionBank/West, UnionBank/Central, UnionBank/Northwest, and
UnionFinancial Services and Trust Company. The Plan was established effective
January 1, 1998 and covers all employees who have completed six months of
service and are aged 20 1/2 or older. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
The administrator of the Plan is UnionBancorp, Inc. (the Administrator) and the
trustee of the Plan is UnionBank (the Trustee), which is a subsidiary of the
Administrator. The Trustee is the custodian of the Plan's assets, with the
exception of the UnionBancorp, Inc. common stock, for which the Northern Trust
Company is the custodian.
Contributions: Each year, participants may contribute up to the maximum allowed
under Internal Revenue Code (IRC) Sections 402(g) and 415 of their annual
compensation. The Company can make a discretionary contribution, subject to
certain limitations under applicable federal income tax laws and regulations, on
an annual basis. The Company's discretionary contribution is allocated to
participant accounts on the last day of the year based on the ratio of each
participant's eligible compensation for the year to total eligible compensation
for the year. The Company's discretionary matching contribution is allocated to
participant accounts on the last day of the year based on each participant's
voluntary contributions. The employer contributed 4% of eligible wages for the
2005 plan year.
Participant Accounts: Each participant's account is credited with that
employee's contributions and an allocation of plan earnings. Employer
contributions are allocated to participant accounts in proportion to employee
contributions or employee compensation, as provided in the plan document. Plan
earnings are allocated to participant accounts in proportion to the
participant's account balance to total account balances in each investment. The
benefit to which a participant is entitled is the benefit that can be provided
from the participant's account.
Upon termination of a participant, the portion of the employer contribution
account not vested will be forfeited and allocated to eligible participants as
of the last day of the plan year for which the terminated participant receives a
distribution.
Retirement, Death, and Disability: A participant is entitled to 100% of his or
her account balance upon attainment of early retirement age (55) and completion
of six years of service or attainment of normal retirement age (65), death, or
disability.
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(Continued)
4.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
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NOTE 1 - DESCRIPTION OF THE PLAN (Continued)
Vesting: Participants are immediately vested in their voluntary contributions
and any employer safe-harbor contributions, plus actual earnings thereon. In the
event that the Company makes matching contributions in excess of safe-harbor
contributions, a participant would be 100% vested after six years of service for
plan years beginning after December 31, 2001 in accordance with the table below.
Years of Service Percent Vested
---------------- --------------
Less than two 0%
Two 20
Three 40
Four 60
Five 80
Six 100
Prior to December 31, 2001, participants were 100% vested after seven years.
Payment of Benefits: Upon retirement, death, disability, or other termination of
employment with the Company, participants or designated beneficiaries may
receive distributions of their vested accounts in lump-sum amounts.
Loan Provisions: Participants may borrow up to 50% of their vested account
balance up to a maximum of $50,000. Loan transactions are treated as a transfer
from the investment fund to the participant notes fund. Loan terms range from
one to five years except for the purchase of a primary residence, which may be
for a reasonable period of time. Loans are secured by the balance in the
participant's account and bear interest at a rate commensurate with the local
prevailing rates as determined quarterly by the plan administrator. Interest
rates on loans outstanding at December 31, 2005 range from 5.0% to 10.5%.
Principal and interest are paid ratably through semi-monthly payroll deductions,
and repayments are reinvested into the participant's account according to the
current investment election.
Investment Options: Upon enrollment in the Plan, a participant may direct
contributions in the investment options made available by the Administrator. The
employee may elect to direct these contributions in multiples of 10%. Employer
contributions are allocated in the same percentages that the employee has
elected. The investment options are derived from a combination of various mutual
funds, a money market fund, and UnionBancorp, Inc. common stock. Plan
participants are allowed to reallocate funds between investment options on a
daily basis.
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(Continued)
5.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
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NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
Accounting Method: The Plan uses the accrual basis of accounting based on
accounting principles generally accepted in the United States of America.
Estimates: The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Investments: Investments in mutual funds are stated at quoted market prices. The
fair value of money market accounts is the amount payable on demand at the
reporting date. Investments in common stock are stated at fair value. The fair
value of common stock is determined by a quoted market price. Purchases and
sales of investments are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Income from other investments is recorded as
earned. Participant loans are carried at their remaining balance, which
approximates fair value.
Risks and Uncertainties: The Plan provides for various investment options in
mutual funds and employer stock. The underlying investment securities are
exposed to various risks, such as interest rate, market, and credit risks. Due
to the level of risk associated with certain investment securities and the level
of uncertainty related to changes in the value of investment securities, it is
at least reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect the
amounts reported in the statement of net assets available for benefits and the
participants' individual account balances.
NOTE 3 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA and its related regulations. In the
event of the Plan's termination, participants will become 100% vested in their
accounts.
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(Continued)
6.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
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NOTE 4 - INVESTMENTS
The following table presents the fair value of plan investments as of December
31, 2005 and 2004 that represent 5% or more of the Plan's net assets.
2005 2004
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Investments at fair value
Money market funds
Federated Automated Cash Management Fund $ 909,331 $ 920,736
Mutual funds
Federated Kaufmann Fund 554,268 428,228
Federated Capital Appreciation Fund 382,166 397,295
Federated Growth Allocation Portfolio -- 330,078
Federated Mid-Cap Fund 380,340 290,966
American Balanced Fund 465,950 444,994
American Euro Pacific Growth 392,070 --
Common stock
UnionBancorp, Inc. common stock (23,975 and 21,001
shares at December 31, 2005 and 2004) 510,668 446,271
During the year ended December 31, 2005, the Plan's investments (including
investments bought, sold, and held during the year) appreciated (depreciated) in
fair value as follows:
Mutual funds $ (80,010)
Common stock 275,934
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Net change in fair value $ 195,924
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For the plan year ended December 31, 2005, the Plan's investments earned
dividends and interest of $57,760 and $7,220, respectively.
NOTE 5 - PARTIES-IN-INTEREST TRANSACTIONS
Parties in interest are defined under DOL regulations as any fiduciary of the
Plan, any party rendering service to the Plan, the employer, and certain others.
Fees in the amount of $34,760 and $5,457 were paid to UnionFinancial Services
and Trust Company and Federated Retirement Plan Services for trustee and plan
recordkeeping services, respectively. Professional fees for the audit of the
Plan and other administrative costs of the Plan were paid by the Company. At
December 31, 2005 and 2004, all plan assets were considered to be
party-in-interest investments, exclusive of the Plan's investment in American
Funds. The value of these investments at December 31, 2005 and 2004 was
$4,382,878 and $4,129,994, respectively.
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(Continued)
7.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
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NOTE 6 - TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to
individuals who have elected to withdraw from the Plan but have not been paid as
of the Plan's year end. Amounts allocated to these participants were $118,870
and $130,062 at December 31, 2005 and 2004, respectively.
NOTE 7 - TAX STATUS
The Internal Revenue Service (IRS) has determined and informed the Company by
letter dated November 19, 2001 that the Non-Standardized Profit Sharing Plan
(Prototype) upon which the Company's plan is based is designed in accordance
with applicable sections of the (IRC).
In May of 2006, the Department of Labor (DOL) notified the Plan trustee of
possible ERISA violations pertaining to certain administrative expenses paid by
the Plan to the Plan trustee from 2000 through 2005 which may have been in
excess of amounts allowable under ERISA. The Company and the Plan believe the
administrative expenses that were paid by the Plan to the trustee during these
years were determined in good faith, and the trustee is in process of gathering
supporting records of the costs it incurred in servicing the Plan over this
period to present to the DOL. However, if the DOL subsequently concludes that
the Plan paid fees to the trustee in excess of allowable amounts, the Company
intends to fully reimburse the Plan and Plan participants, in accordance with
ERISA and IRS regulations, for any amounts owed to the Plan pertaining to this
matter. No receivable has been reflected in the Plan's 2005 financial statements
pertaining to this matter, as it is not yet certain whether the DOL will
conclude that any amount is owed to the Plan. Further, the range of any
potential reimbursement to the Plan is not yet reasonably estimable. If it is
ultimately determined by the DOL that excessive administrative expenses were
charged to the Plan, this would constitute a prohibited transaction and would be
considered an operational deficiency in the Plan's compliance with the
applicable qualification section of the IRC. The Company and the Plan's
management intend to fully correct any operational deficiency in accordance with
the provision of the IRC, such that the Plan will maintain its qualified status.
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(Continued)
8.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
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NOTE 8 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements at December 31, 2005 and 2004 to the Form 5500:
2005 2004
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Net assets available for benefits per the financial statements $ 5,657,073 $ 5,040,028
Amounts allocated to withdrawing participants (118,870) --
------------ ------------
Net assets available for benefits per the Form 5500 $ 5,538,203 $ 5,040,028
============ ============
The following is a reconciliation of 2005 benefits paid to participants per the
financial statements to benefits paid to participants per the 2005 Form 5500:
Benefits paid to participants per the financial statements $ 637,394
Amounts allocated to withdrawing participants at December, 31 2005 118,870
------------
Benefits paid to participants per the Form 5500 $ 756,264
============
NOTE 9 - SUBSEQUENT EVENTS
Effective January 1, 2006, employees are eligible to participate in the Plan
after three months of service.
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(Continued)
9.
SUPPLEMENTAL SCHEDULE
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2005
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Name of Plan Sponsor: UnionBancorp, Inc.
Employer Identification Number: 36-3145350
Three Digit Plan Number: 002
(c)
Description of
Investment, Including
Maturity Date,
(b) Rate of Interest, (e)
Identity of Issue, Borrower, Collateral, Par, (d) Current
(a) Lessor, or Similar Party or Maturity Value Cost** Value
--- ------------------------ ----------------------------------------- ------- -------------
Money Market Funds
------------------
* Federated Securities
Corporation Automated Cash Management Fund $ 909,331
* Federated Securities
Corporation Stock Liquidity Fund 16,416
Mutual Funds
------------
* Federated Securities
Corporation Growth Allocation Portfolio 228,134
* Federated Securities
Corporation Total Return Bond Fund 227,709
* Federated Securities
Corporation Managed Conservative Allocation Portfolio 6,738
* Federated Securities
Corporation Mini-Cap Fund 186,349
* Federated Securities
Corporation Mid-Cap Fund 380,340
* Federated Securities
Corporation Max-Cap Fund 220,245
* Federated Securities
Corporation Capital Appreciation Fund 382,166
* Federated Securities
Corporation Mid Cap Growth Strategies Fund 218,897
* Federated Securities
Corporation Kaufmann Fund 554,268
* Federated Securities
Corporation Stock Trust Fund 223,570
* Federated Securities
Corporation Communications Technology Fund 138,753
* Federated Securities
Corporation US Govt 2-5 Instl SS Fund 52,251
American Funds Growth Fund of America 262,511
American Funds Washington Mutual Inv 164,057
American Funds Euro Pacific Growth 392,070
American Funds American Balanced Fund 465,950
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10.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2005
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Name of Plan Sponsor: UnionBancorp, Inc.
Employer Identification Number: 36-3145350
Three Digit Plan Number: 002
(c)
Description of
Investment, Including
Maturity Date,
(b) Rate of Interest, (e)
Identity of Issue, Borrower, Collateral, Par, (d) Current
(a) Lessor, or Similar Party or Maturity Value Cost** Value
--- ------------------------ ------------------------- ------- -------------
Common Stock
------------
* UnionBancorp, Inc. 23,975 shares $ 510,668
Participant Loans
-----------------
* Participant loans Interest rates 127,043
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Total investments $ 5,667,466
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* Party in interest.
** Not applicable for participant-directed investments.
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11.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
UNIONBANCORP, INC.
401(k) PROFIT SHARING PLAN
Date: June 28, 2006 By: /s/ SCOTT A. YEOMAN
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Scott A. Yeoman
President and
Chief Executive Officer
UNIONBANCORP, INC. 401(k) PROFIT SHARING PLAN
EXHIBIT INDEX
TO
ANNUAL REPORT ON FORM 11-K
Exhibit
No. Description
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23.1 Consent of Crowe Chizek and Company LLC