SEC Info℠

Home

Search

My Interests

Help

Sign In

Please Sign In

Taylor Capital Group Inc – ‘424B1’ on 8/12/05

On:  Friday, 8/12/05, at 6:03am ET   ·   Accession #:  1193125-5-165676   ·   File #:  333-126864

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

 Text Wildcards:  ? (any letter/digit),  * (many).  Search Logic:  for Documents:  & (and),  | (or);  for Text:  | (anywhere),  "(&)" (near).  Details... 

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/12/05  Taylor Capital Group Inc          424B1                  1:623K                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus                                          HTML    406K 

Table of Contents

Filed Pursuant to Rule 424(b)(1)

Registration No. 333-126864

PROSPECTUS

1,500,000 Shares

TAYLOR CAPITAL GROUP, INC.

Common Stock

We are offering 1,000,000 shares of our common stock and the selling stockholder is offering 500,000 shares of our common stock. The public offering price is $36.30 per share.

Our common stock is currently quoted and traded on The Nasdaq National Market under the symbol “TAYC”. The last reported sale price of our common stock on The Nasdaq National Market on August 11, 2005 was $36.86 per share.

Investing in our common stock involves risks. See “ Risk Factors” beginning on page 6 to read about factors you should consider before you make your investment decision.

We have granted the underwriters a 30-day option to purchase up to 150,000 additional shares of common stock at the public offering price less the underwriting discount to cover over-allotments, if any.

These securities are not savings accounts, deposit accounts or other obligations of a bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

Neither the Securities and Exchange Commission nor any state securities commission or regulatory authority has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to purchasers on or about August 17, 2005.

KEEFE, BRUYETTE & WOODS

STIFEL, NICOLAUS & COMPANY

INCORPORATED

RYAN BECK & CO.

The date of this prospectus is August 11, 2005

Table of Contents

The premier bank for closely-held businesses in the Chicago metropolitan area and the people who own and manage them.

Table of Contents

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

You should rely only on the information contained or incorporated by reference in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with additional or different information. We and the selling stockholder are offering to sell shares of common stock, and soliciting offers to buy shares of common stock, only in jurisdictions where offers and sales are permitted. You should assume that the information contained in this prospectus and in the documents incorporated by reference in this prospectus is accurate only as of their respective dates, regardless of the time of delivery of this prospectus or of any sales of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since those dates. It is important for you to read and consider all information contained and incorporated by reference in this prospectus in making your investment decision. You should also read and consider the information in the documents to which we have referred you in the section of this prospectus entitled “Where You Can Find Additional Information.”

In this prospectus, we rely on and refer to information and statistics regarding the banking industry in the United States and the banking market in the Chicago metropolitan area. We obtained this market data from independent publications or other publicly available information. Although we believe these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information.

As used in this prospectus, the terms “we,” “us,” “our,” and “Taylor Capital” refer to Taylor Capital Group, Inc. and its consolidated subsidiaries (unless the context indicates another meaning).

Table of Contents

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere or incorporated by reference in this prospectus. This summary does not contain all of the information you should consider in making your investment decision. You should read carefully this entire prospectus, including the information set forth in “Risk Factors” and our consolidated financial statements and the related notes and other information appearing elsewhere or incorporated by reference in this prospectus. Unless otherwise noted, all information in this prospectus assumes that the underwriters will not exercise the option to purchase from us additional shares of common stock to cover over-allotments.

Our Company

We are a bank holding company headquartered in Rosemont, Illinois, a suburb of Chicago. We derive substantially all of our revenue from our wholly-owned subsidiary, Cole Taylor Bank. Cole Taylor Bank has served the Chicago metropolitan area for over 75 years. As of March 31, 2005, Cole Taylor Bank was the eighth largest commercial bank headquartered in the Chicago metropolitan area based on assets. We provide a range of products and services primarily to closely-held businesses in the Chicago metropolitan area and the people who own and manage them. At June 30, 2005, we had total assets of approximately $3.1 billion, deposits of approximately $2.4 billion, and stockholders’ equity of approximately $172.7 million.

Our primary business is commercial banking. As of June 30, 2005, approximately 88% of our loan portfolio was comprised of commercial loans. Our targeted commercial lending customers are closely-held, Chicago-area businesses in industries such as manufacturing, wholesale and retail distribution, transportation, construction contracting and professional services. Our commercial lending activities primarily consist of providing loans for working capital, business expansion or acquisition, owner-occupied commercial real estate financing, revolving lines of credit and stand-by and commercial letters of credit.

Our real estate lending activities primarily consist of providing loans to professional homebuilders, condominium and commercial real estate developers and investors. Our real estate development customers typically seek acquisition, development and construction loans and stand-by letters of credit. The majority of our development and construction lending is for residential home development, primarily in the Chicago metropolitan area, although we will lend to our existing homebuilder customers in connection with development projects outside of the Chicago metropolitan market. Our real estate investment customers typically seek term financing on selected income producing properties, including multi-family, retail, office and industrial properties.

In addition to our lending activities, we offer corporate cash management services, tax-deferred exchange and corporate trust services to our commercial and municipal customers. Our cash management services, which include internet balance reporting, automated clearing house products, lock-box processing, controlled disbursement, and account reconciliation, help our commercial banking customers meet their cash management needs.

We cross-sell products and services to the owners and managers of our commercial customers designed to help them meet their personal financial goals. Our product offerings currently include personal customized credit and investment management services. Through third-party providers, we also offer insurance products and brokerage services.

We offer deposit products such as checking, savings and money market accounts, time deposits and repurchase agreements to our commercial and community-based customers, typically individuals and small businesses, located near our 11 banking centers. We believe we can serve our community-based customers by offering competitive credit and deposit products and automated delivery channels such as automated teller machines, telephone and internet banking.

1

Table of Contents

Our Strategy

Our strategy to build stockholder value is based on a focused plan to be the premier bank for closely-held businesses in the Chicago metropolitan area and the people who own and manage them. Providing commercial banking services to this market niche has been an integral part of Cole Taylor Bank’s strategy since it was founded in 1929. We plan to continue our success by further leveraging the following competitive strengths:

2

Table of Contents

THE OFFERING

The number of shares of our common stock outstanding immediately after this offering is based on the number of shares outstanding as of June 30, 2005. This number does not take into account:

3

Table of Contents

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth summary consolidated financial data that is qualified in its entirety by and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited consolidated financial statements and the related notes incorporated by reference in this prospectus. The summary consolidated financial data presented below as of and for the years ended December 31, 2004 and 2003 and for the year ended December 31, 2002 is derived from our audited consolidated financial statements incorporated by reference in this prospectus. The summary consolidated financial data as of and for the years ended December 31, 2001 and 2000 and as of December 31, 2002 is derived from our audited consolidated financial statements, which are not incorporated by reference in this prospectus. The summary consolidated financial data for the six-month periods ended June 30, 2005 and 2004 is derived from our unaudited consolidated financial statements incorporated by reference in this prospectus. In the opinion of management, our unaudited consolidated financial statements for the six months ended June 30, 2005 and 2004 include all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods. Ratios are annualized for the six months ended June 30, 2005 and 2004. Results from interim or past periods are not necessarily indicative of results that may be expected for any future period. All share and per share information for all periods presented has been adjusted for a three-for-two split of our common stock that was effected as a dividend to stockholders of record as of October 2, 2002.

4

Table of Contents

5

Table of Contents

RISK FACTORS

An investment in our common stock involves a number of risks. You should read carefully and consider the following risks as well as the other information included or incorporated by reference in this prospectus, including our consolidated financial statements and the notes to those financial statements, before making an investment decision. Our business, financial condition, results of operations and prospects could be materially adversely affected by any of these risks. The trading price of our common stock could decline due to any of these risks, and you could lose all or part of your investment.

Risks Related to Our Business

Fluctuations in interest rates could reduce our profitability.

We are subject to interest rate risk. We realize income primarily from the difference between interest earned on loans and investments and the interest paid on deposits and borrowings. We expect that we will periodically experience imbalances in the interest rate sensitivities of our assets and liabilities and the relationships of various interest rates to each other. Over any defined period of time, our interest-earning assets may be more sensitive to changes in market interest rates than our interest-bearing liabilities, or vice versa. In addition, the individual market interest rates underlying our loan and deposit products (e.g., LIBOR and prime) may not change to the same degree over a given time period. In any event, if market interest rates should move contrary to our position, our earnings may be negatively affected. In addition, loan volume and quality and deposit volume and mix can be affected by market interest rates. Changes in levels of market interest rates could materially adversely affect our net interest spread, asset quality, origination volume and overall profitability.

As of June 30, 2005, our internal financial models indicated an exposure to our net interest income from both declining or static (flat) rates. If market interest rates were to remain static and we experienced no change in the volume and mix of our earning assets or funding liabilities, we expect that our earning asset yields would likely remain flat and our liability rates would likely increase, resulting in a reduced net interest spread. Our net interest income would also likely decline if rates were to fall. We estimate that, as of June 30, 2005, our net interest income at risk for year one in a falling rate scenario of 200 basis points would be approximately $7.1 million, or 6.86%, lower than our net interest income in a rates unchanged scenario. Computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan and security prepayments, deposit decay and pricing and reinvestment strategies and should not be relied upon as indicative of actual results.

We principally manage interest rate risk by managing our volume and mix of our earning assets and funding liabilities. In a changing interest rate environment, we may not be able to manage this risk effectively. If we are unable to manage interest rate risk effectively, our business, financial condition and results of operations could be materially harmed.

Our wholesale funding sources may prove insufficient to replace deposits at maturity and support our future growth.

We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. As we continue to grow, we are likely to become more dependent on these sources, which include brokered and out-of-local-market certificates of deposit, broker/dealer repurchase agreements, federal funds purchased and Federal Home Loan Bank, or FHLB, advances. At June 30, 2005, we had approximately $484.1 million of brokered deposits, $146.0 million of out-of-local-market certificates of deposit and $75.0 million of FHLB advances outstanding. At June 30, 2005, we had no broker/dealer repurchase agreements. Adverse operating results or changes in industry conditions could lead to an inability to replace these additional funding sources at maturity. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at

6

Table of Contents

acceptable interest rates. Finally, if we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In this case, our operating margins and profitability would be adversely affected.

Our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio.

Like all financial institutions, we maintain an allowance for loan losses to provide for loans in our portfolio that may not be repaid in their entirety. We believe that our allowance for loan losses is maintained at a level adequate to absorb probable losses inherent in our loan portfolio as of the corresponding balance sheet date. However, our allowance for loan losses may not be sufficient to cover actual loan losses, and future provisions for loan losses could materially adversely affect our operating results.

In evaluating the adequacy of our allowance for loan losses, we consider numerous quantitative factors, including our historical charge-off experience, growth of our loan portfolio, changes in the composition of our loan portfolio and the volume of delinquent and criticized loans. In addition, we use information about specific borrower situations, including their financial position and estimated collateral values under various liquidation scenarios, to estimate the risk and amount of loss for those borrowers. Finally, we also consider many qualitative factors, including general and economic business conditions, duration of the current business cycle, the impact of competition on our underwriting terms, current general market collateral valuations, trends apparent in any of the factors we take into account and other matters, which are by nature more subjective and fluid. Our estimates of the risk of loss and amount of loss on any loan are complicated by the significant uncertainties surrounding our borrowers’ abilities to successfully execute their business models through changing economic environments, competitive challenges and other factors. Because of the degree of uncertainty and susceptibility of these factors to change, our actual losses may vary from our current estimates.

As a business bank, our loan portfolio is comprised primarily of commercial loans to businesses. These loans are typically larger in amount than loans to individual consumers and generally are viewed as having more risk of default than residential real estate loans or other secured consumer loans. Larger commercial loans also can cause greater volatility in reported credit quality performance measures, such as total impaired or nonperforming loans. For example, our current credit risk rating and loss estimate with respect to a single sizeable loan can have a material impact on our reported impaired loans and related loss exposure estimates. Because our loan portfolio contains a significant number of commercial and commercial real estate loans with relatively large balances, the deterioration of any one or a few of these loans may cause a significant increase in uncollectible loans that could have an adverse impact on our results of operations and financial condition.

In addition, federal and state regulators periodically review our allowance for loan losses and may require us to increase our allowance for loan losses by recognizing additional provisions for loan losses charged to expense, or to decrease our allowance for loan losses by recognizing loan charge-offs, net of recoveries. Any such additional provisions for loan losses or charge-offs, as required by these regulatory agencies, could have a material adverse effect on our financial condition and results of operations.

Our business is subject to the conditions of the local economy in which we operate.

Our success is dependent to a significant extent upon economic conditions in the Chicago metropolitan area, where substantially all of our loans are originated. For example, our small- and middle-market business and commercial real estate customers in the Chicago metropolitan area could be significantly affected by a local recession or economic downturn, which may result in an increase of defaults on outstanding loans and reduced demand for future loans, both of which could adversely affect us. Adverse changes in the economy of the Chicago metropolitan area could also impair our ability to gather deposits and could otherwise have a negative effect on our business, including the demand for new loans, the ability of customers to repay loans and the value of the collateral securing loans. Furthermore, as of June 30, 2005, 71% of our loan portfolio involves loans that are to some degree secured by real estate properties located primarily within the Chicago metropolitan area. In the event that real estate values in the Chicago area decline, the value of this collateral would be impaired.

7

Table of Contents

Competition from financial institutions and other financial services providers may adversely affect our growth and profitability.

We operate in a highly competitive industry and experience intense competition from other financial institutions in our market. We compete with these institutions in making loans, attracting deposits and recruiting and retaining talented people. Many of our competitors are well-established, larger financial institutions. We have observed that the competition in our market for making commercial loans has resulted in more competitive pricing and credit structure as well as intense competition for skilled commercial lending officers. These trends could have a material adverse effect on our ability to grow and remain profitable. Significant discounting of interest rates offered on loans negatively impacts interest income and can therefore adversely impact net interest income. More liberal credit structures can expose a financial institution to higher losses from lending activities. An inability to recruit and retain skilled commercial loan officers poses a significant barrier to retaining and growing our customer base.

While we believe we can and do successfully compete with other financial institutions in our market, we may face a competitive disadvantage as a result of our smaller size and lack of geographic diversification. Although our competitive strategy is to provide a distinctly superior customer and employee experience, we can give no assurance this strategy will be successful.

We are dependent upon the services of our senior management team.

Our future success and profitability is substantially dependent upon the management and banking abilities of our senior executives, including Jeffrey and Bruce Taylor, the two most senior officers of our company and Cole Taylor Bank. We have not entered into employment or non-competition agreements with Jeffrey or Bruce Taylor or any other officers of our company or Cole Taylor Bank, and can provide no assurance that we will be able to retain these key people or prevent them from competing with us should we lose their services. The unexpected loss of the services of any one of these key people could materially harm our business. In addition, any changes in key personnel and their responsibilities may be disruptive to our operations and could have a material adverse effect on our business, financial condition and results of operations.

Our business strategy is dependent on our ability to attract, develop and retain highly skilled and experienced personnel in our customer relationship positions.

Our competitive strategy is to provide each of our commercial customers with a highly skilled relationship manager that will serve as the customer’s key point of contact with us. Our business model is to provide our customers with seasoned relationship managers that can deliver greater value to our customers than our competitors. Achieving the status of a “trusted advisor” for our customers also requires that we minimize relationship manager turnover and provide stability to the customer relationship. Competition for experienced personnel is intense, and we have no existing non-competition agreements with our key personnel, including our relationship managers. Therefore, we cannot assure you that we will be able to successfully attract and retain such personnel or prevent them from competing with us should we lose their services.

We may not be able to execute our growth strategy.

Our future success depends on our achieving growth in commercial banking relationships that result in increased commercial loans outstanding at yields that are profitable to us. Achieving our growth targets requires us to attract customers that currently bank at other financial institutions in our market, thereby increasing our share of the market. Our strategy is to provide a local, high-touch relationship servicing experience that we believe is attractive to customers in our marketplace. We cannot assure you that we will be able to expand our market presence or that any such expansion will not adversely affect our results of operations.

Our strategy for future growth also may place a significant strain on our management, personnel, systems and resources. Maintaining strong credit quality while growing our loan portfolio is critical to achieving and sustaining profitable growth. We cannot assure you that we will manage our growth effectively. If we fail to do so, our business could be materially harmed.

8

Table of Contents

Our business may be adversely affected by the highly regulated environment in which we operate.

We are subject to extensive federal and state regulation and supervision, which is primarily for the protection of depositors and customers rather than for the benefit of investors. As a bank holding company, we are subject to regulation and supervision primarily by the Federal Reserve. Cole Taylor Bank, as an Illinois-chartered member bank, is subject to regulation and supervision by the Illinois Department of Financial and Professional Regulation and by the Federal Reserve. We must undergo periodic examinations by our regulators, who have extensive discretion and power to prevent or remedy unsafe or unsound practices or violations of law by banks and bank holding companies. Our failure to comply with state and federal regulations can lead to, among other things, termination or suspension of our licenses, rights of rescission for borrowers, class action lawsuits and administrative enforcement actions. We cannot assure you that we will be able to fully comply with these regulations. Recently enacted, proposed and future legislation and regulations have had, and will continue to have, a significant impact on the financial services industry. Regulatory or legislative changes could cause us to change or limit some of our loan products or the way we operate our business and could adversely affect our profitability.

Our business is subject to the vagaries of domestic and international economic conditions and other factors, many of which are beyond our control and could significantly harm our business.

Our business is directly affected by domestic and international factors that are beyond our control, including economic, political and market conditions, broad trends in industry and finance, legislative and regulatory changes, competition, changes in government monetary and fiscal policies, consolidation within our customer base and within our industry and inflation. For example, a significant decline in general economic conditions, such as recession, increased unemployment and other factors beyond our control, would significantly impact our business. A deterioration in economic conditions may result in a decrease in demand for commercial credit and a decline in real estate and other asset values. Delinquencies, foreclosures and losses generally increase during economic slowdowns and recessions, and we therefore expect that our servicing costs and credit losses would increase during such periods. Alternatively, increases in the level of interest rates could negatively impact the real estate market resulting in reduced real estate development activity and reduced debt service coverage.

We are subject to certain operational risks, including, but not limited to, data processing system failures and errors and customer or employee fraud.

There have been a number of highly publicized cases involving fraud or other misconduct by employees of financial services firms in recent years. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information. Employee errors and misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence.

We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. Should our internal controls fail to prevent or detect an occurrence, or if an occurrence is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition or results of operations. Our losses relating to these operational risks were less than $400,000 for each of the years ended December 31, 2004, 2003 and 2002 and have related primarily to non-employee initiated theft or fraud involving either loan or deposit accounts.

We are subject to security risks relating to our internet banking activities that could damage our reputation and our business.

Security breaches in our internet banking activities could expose us to possible liability and damage our reputation. Any compromise of our security also could deter customers from using our internet banking services

9

Table of Contents

that involve the transmission of confidential information. We rely on standard internet security systems to provide the security and authentication necessary to effect secure transmission of data. These precautions may not protect our systems from compromises or breaches of our security measures that could result in damage to our reputation and our business.

Risks Related to an Investment in Our Common Stock

The Taylor family, which may have interests that differ from or conflict with those of other stockholders, currently owns a majority of our common stock. After this offering, the Taylor family will continue to own in excess of 40% of our outstanding common stock and they will continue to be able to strongly influence fundamental matters affecting our business.

The Taylor family, which includes Jeffrey W. Taylor, Bruce W. Taylor, Cindy Taylor Robinson and certain trusts for their benefit and the benefit of certain of their family members, in the aggregate, beneficially owns or controls in excess of 53% of our outstanding common stock. Members of the Taylor family are selling 500,000 shares of our common stock in this offering. Immediately after we complete this offering, the Taylor family will, in the aggregate, still own or control more than 40% of our outstanding common stock. As a result, while the Taylor family will no longer own a majority of our outstanding common stock, if they act together, they will continue to have the ability to strongly influence any matter submitted to our stockholders for approval, including amending our charter, approving mergers or similar transactions and electing our directors.

Upon the successful completion of this offering, our charter and by-laws will be amended as described in the section of this prospectus captioned “Description of Capital Stock — General.” Many of these amendments will have the effect of granting stockholders greater authority and influence in the conduct of our business; however, it is important to understand that the Taylor family will continue to exercise significant influence with respect to any matter that might be presented for stockholder approval, including pursuant to these amendments, and will continue to have the right to nominate up to three candidates for election to our Board of Directors and will own a sufficient number of shares of common stock to demand that we call a special meeting of stockholders. In any matter that might require stockholder approval, including at a special meeting of stockholders called at the demand of the Taylor family, the Taylor family may have interests that differ from or conflict with yours and those of other stockholders. The concentration of ownership of our common stock among the Taylor family, their resulting right to demand that we call a special meeting of stockholders and our inability, absent the unanimous approval of our board, to authorize an issuance of capital stock pending any such special meeting, if called, may adversely affect our efforts to raise additional capital in the future if the Taylor family does not support such a transaction. Furthermore, the concentration of ownership of our common stock among the Taylor family may delay or discourage others from initiating potential merger, takeover or other change in control transactions. As a result, the market price of our common stock could be adversely affected. Conversely, the decision by the Taylor family to sell or liquidate their position in us for any reason could have the effect of further altering the level of influence that the Taylor family has over our business.

Jeffrey Taylor and Bruce Taylor serve as members of our Board of Directors and Cole Taylor Bank’s Board of Directors and as both our and Cole Taylor Bank’s highest ranking officers. Melvin Pearl, a member of the Board of Directors, serves as trustee of certain Taylor family trusts. These persons may experience conflicts of interest in the execution of their duties on our behalf and on behalf of Cole Taylor Bank. We cannot assure you that these conflicts would be resolved in a manner favorable to us or Cole Taylor Bank.

Future sales of common stock by existing stockholders may have an adverse impact on the market price of our common stock.

Sales of a substantial number of shares of our common stock in the public market following this offering, or the perception that large sales could occur, could cause the market price of our common stock to decline or limit our future ability to raise capital through an offering of equity securities. After completion of this offering, there

10

Table of Contents

will be 10,761,061 shares of our common stock outstanding. All of the shares of common stock sold in this offering will be freely tradable without restriction or further registration under the federal securities laws unless purchased by our “affiliates” within the meaning of Rule 144 under the Securities Act. Approximately 5,118,816 of the remaining shares of outstanding common stock, representing approximately 47.6% of the outstanding common stock upon completion of this offering, will be “restricted securities” under the Securities Act, subject to restrictions on the timing, manner and volume of sales of those shares. Substantially all of these shares are held by the Taylor family. In connection with this offering, we entered into a registration rights agreement that entitles the Taylor family to certain demand and “piggyback” registration rights. Our directors and executive officers and the selling stockholder have agreed for a period of 90 days after the date of the underwriting agreement, to not, without the prior written consent of Keefe, Bruyette & Woods, Inc., directly or indirectly, offer to sell, sell or otherwise dispose of any shares of our common stock, other than shares sold in this offering. This “lock-up” period may be extended under certain circumstances.

As of June 30, 2005, there were 873,668 shares of our common stock reserved for issuance upon the exercise of outstanding options and 136,033 shares reserved for issuance pursuant to future grants under our incentive compensation plan. On the first day of each calendar year during the term of our incentive compensation plan, the number of shares reserved for issuance under the plan is increased by a number of shares equal to the excess of 3.0% of the aggregate number of shares outstanding as of December 31 of the immediately preceding calendar year, over the number of shares remaining available for awards at that time. Subject to applicable vesting requirements and exercise with respect to options, these shares are available for sale in the open market.

The trading history of our common stock is characterized by low trading volume. The value of your investment may be subject to sudden decreases due to the volatility of the price of our common stock.

Our common stock trades on The Nasdaq National Market. Over the past three months, the average daily trading volume of our common stock was approximately 12,000 shares. We cannot predict the extent to which investor interest in us will lead to a more active trading market in our common stock or how liquid that market might become. A public trading market having the desired characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace of willing buyers and sellers of our common stock at any given time, which presence is dependent upon the individual decisions of investors, over which we have no control.

The market price of our common stock may be highly volatile and subject to wide fluctuations in response to numerous factors, including, but not limited to, the factors discussed in other risk factors and the following:

These factors may adversely affect the trading price of our common stock, regardless of our actual operating performance, and could prevent you from selling your common stock at or above the public offering price. In addition, the stock markets, from time to time, experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operating performance of companies. These broad fluctuations may adversely affect the market price of our common stock, regardless of our trading performance.

11

Table of Contents

In the past, stockholders often have brought securities class action litigation against a company following periods of volatility in the market price of their securities. We may be the target of similar litigation in the future, which could result in substantial costs and divert management’s attention and resources.

As a holding company, we are dependent on receiving dividends from Cole Taylor Bank in order to pay dividends and other obligations, and there are restrictions on Cole Taylor Bank’s ability to pay dividends to us.

We are a holding company, and we conduct no business operations. Our principal asset is the outstanding capital stock of Cole Taylor Bank. As a result, we must rely on payments from Cole Taylor Bank to meet our obligations. Our current loan agreement restricts the amount of dividends that Cole Taylor Bank can pay to us. Specifically, Cole Taylor Bank is restricted under our loan agreement from paying annual cash dividends in a calendar year to us in excess of 60% of that year’s annual net income. Dividend payments from Cole Taylor Bank are also subject to Illinois law and to regulatory limitations, generally based on capital levels and current and retained earnings, imposed by various regulatory agencies. As of June 30, 2005, Cole Taylor Bank could declare and pay $62.1 million of dividends to us without the approval of regulatory authorities. The ability of Cole Taylor Bank to pay dividends, however, is always subject to regulatory restrictions if paying dividends would impair its profitability, financial condition or other cash flow requirements. Although Cole Taylor Bank is considered “well-capitalized” under Federal Reserve guidelines, we cannot assure you that it will continue to meet the criteria under Illinois law or these regulatory guidelines, in which case it may be required to stop paying or reduce the amount of dividends paid to us.

Our ability to pay dividends on our common stock is limited by a number of restrictions.

While we have historically paid cash dividends on our common stock, we cannot assure you that we will pay dividends on our common stock in the future. The declaration and payment of dividends on our common stock is dependent on our earnings and financial condition, our ability to meet our liquidity and capital requirements, the general economic and regulatory climate, our ability to satisfy any equity or debt obligations senior to our common stock, and other matters deemed relevant by our Board of Directors. If we stop paying or reduce the amount of dividends, the price of our common stock could be materially adversely affected.

We may be required to seek approval from the Federal Reserve before paying dividends.    If our capital falls below minimum capital guidelines for bank holding companies set by the Federal Reserve, we will be required to seek prior approval from the Federal Reserve before we may pay any dividends on our common stock. Absent this approval, our ability to declare and pay dividends would be restricted.

Our current loan agreement limits our ability to pay dividends.    Our current loan agreement also restricts our ability to pay dividends if certain events of default exist or would result from paying the dividend. Our loan agreement requires compliance with certain defined financial covenants relating to Cole Taylor Bank, including covenants related to regulatory capital, return on average assets, nonperforming assets and holding company leverage. Our loan agreement also restricts the amount of dividends that we can pay to stockholders and the amount of dividends that Cole Taylor Bank can pay to us. We are restricted from paying annual cash dividends to common stockholders during a calendar year in excess of 25% of that year’s annual net income, while Cole Taylor Bank is restricted from paying annual cash dividends in a calendar year to us in excess of 60% of that year’s annual net income.

The terms of our trust preferred securities restrict our ability to pay dividends.    Payments of the distributions on the trust preferred securities of TAYC Capital Trust I and TAYC Capital Trust II, our wholly owned Delaware statutory trusts, are fully and unconditionally guaranteed by us. The junior subordinated debentures that we have issued to our subsidiary trusts are senior to our shares of common stock. As a result, we must make required payments on the junior subordinated debentures before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, interest and principal obligations under the junior subordinated debentures must be satisfied before any distributions can be made on our common

12

Table of Contents

stock. We may defer the payment of interest on each of the junior subordinated debentures for a period not to exceed 20 consecutive quarters, provided that the deferral period does not extend beyond the stated maturity. During such deferral period, distributions on the corresponding trust preferred securities will also be deferred and our ability to pay dividends to the holders of shares of our common stock will be restricted.

We will retain broad discretion in using the net proceeds from this offering, and may not use the proceeds effectively.

We intend to use the net proceeds of this offering for general corporate purposes, which may include our working capital needs and investments in our subsidiary bank to support our continued growth. However, we have not designated the amount of net proceeds we will use for any particular purpose. Accordingly, our management will retain broad discretion to allocate the net proceeds of this offering. The net proceeds may be applied in ways with which you and other investors in the offering may not agree. Moreover, our management may use the proceeds for corporate purposes that may not increase our market value or make us profitable. In addition, it may take us some time to effectively deploy the proceeds from this offering. Until the proceeds are effectively deployed, our return on equity and earnings per share may be negatively impacted. Management’s failure to use the net proceeds of this offering effectively could have an adverse effect on our business, financial condition and results of operations.

Provisions of our amended and restated certificate of incorporation, by-laws and Delaware law, as well as state and federal banking regulations, could delay or prevent a takeover of us by a third party.

Our amended and restated certificate of incorporation and by-laws and Delaware law could delay, defer or prevent a third party from acquiring us, despite the possible benefit to our stockholders, or otherwise adversely affect the price of our common stock. For example, our by-laws contain advance notice requirements for nominations for election to our Board of Directors and for proposing matters that stockholders may act on at stockholder meetings. In addition, we are subject to Delaware laws, including one that prohibits us from engaging in a business combination with any interested stockholder for a period of three years from the date the person became an interested stockholder unless certain conditions are met. These provisions may discourage potential takeover attempts, discourage bids for our common stock at a premium over market price or adversely affect the market price of, and the voting and other rights of the holders of, our common stock. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors other than the candidates nominated by our Board.

Any individual, acting alone or with other individuals, who is seeking to acquire, directly or indirectly, 10% or more of our outstanding common stock must comply with the Change in Bank Control Act, which requires prior notice to the Federal Reserve for any acquisition. Any entity that wants to acquire 5% or more of our outstanding common stock, or otherwise to control us, may need to obtain the prior approval of the Federal Reserve under the Bank Holding Company Act of 1956, as amended. As a result, prospective investors in our common stock need to be aware of and to comply with those requirements, to the extent applicable. Approval may also be required by the Illinois Department of Financial and Professional Regulation.

13

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under “Prospectus Summary,” “Risk Factors” and elsewhere in this prospectus and in the documents we incorporate by reference in this prospectus constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These forward-looking statements reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “could” and “estimate” and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities in 2005 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation: the effect on our profitability if interest rates fluctuate as well as the effect of any imbalances in the interest rate sensitivities of our assets and liabilities; the possibility that our wholesale funding sources may prove insufficient to replace deposits at maturity and support our growth; the risk that our allowance for loan losses may prove insufficient to absorb probable losses in our loan portfolio; possible volatility in loan charge-offs and recoveries between periods; the effectiveness of our hedging transactions and their impact on our future results of operations; the risks associated with implementing our business strategy and managing our growth effectively; changes in economic conditions in our marketplace and general conditions in the U.S. economy, interest rates, deposit flows, loan demand, competition, legislation or regulatory and accounting principles, policies or guidelines, as well as other economic, competitive, governmental, regulatory and technological factors impacting our operations.

For further information about these and other risks, uncertainties and factors, please review the disclosure included in this prospectus under the caption “Risk Factors.”

You should not place undue reliance on any forward-looking statements. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements or risk factors, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus.

14

Table of Contents

USE OF PROCEEDS

We estimate that the net proceeds we will receive from our sale of 1,000,000 shares of our common stock in this offering will be approximately $33.7 million, or approximately $38.8 million if the underwriters’ over-allotment option is exercised in full. In each case, this reflects deduction of the underwriting discount and estimated offering expenses. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholder.

We intend to use the net proceeds of this offering for general corporate purposes, which may include our working capital needs and investments in our subsidiary bank to support our continued growth.

Until utilization of the net proceeds, we will invest them temporarily in short-term investments. The precise amount and timing of our use of the net proceeds will depend on market conditions and our growth, among other factors.

15

Table of Contents

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2005. Our capitalization is presented on a historical basis and on an as adjusted basis to give effect to the sale of 1,000,000 shares of common stock offered by us in this offering, less the underwriting discount and estimated offering expenses, at a public offering price of $36.30 per share, and assuming the underwriters’ over-allotment option is not exercised. This table should be read in conjunction with the documents incorporated by reference (or to be incorporated by reference) in this prospectus, including our Annual Report on Form 10-K for our fiscal year ended December 31, 2004 and our Quarterly Report on Form 10-Q for our fiscal quarter ended June 30, 2005.

16

Table of Contents

PRICE RANGE OF OUR COMMON STOCK

Our common stock trades on The Nasdaq National Market under the symbol “TAYC”. The high and low sales price of our common stock for the periods indicated is set forth below:

As of August 11, 2005, the last reported sale of our common stock on The Nasdaq National Market was $36.86.

As of June 30, 2005, there were 63 stockholders of record of our common stock, based upon securities position listings furnished to us by our transfer agent. We believe the number of beneficial owners is greater than the number of record holders because a large portion of our common stock is held of record through brokerage firms in “street name”.

17

Table of Contents

DIVIDEND INFORMATION

The following table sets forth, for each quarter in 2005, 2004 and 2003, the dividends per share declared on our common stock:

Holders of our common stock are entitled to receive any cash dividends that may be declared by our Board of Directors. Since 1997, we have paid regular cash dividends on our common stock. The declaration and payment of dividends on our common stock is at the discretion of our Board of Directors and is dependent on our earnings and financial condition, our ability to meet our liquidity and capital requirements, the general economic and regulatory climate, our ability to satisfy any equity or debt obligations senior to our common stock, and other matters deemed relevant by our Board of Directors.

It is our intention to continue to pay cash dividends on our common stock to the extent permitted by our loan agreement, applicable banking regulations and the terms of our outstanding trust preferred securities. If our capital falls below minimum capital guidelines for bank holding companies set by the Federal Reserve, we will be required to seek prior approval from the Federal Reserve before we may pay any dividends on our common stock. Absent this approval, our ability to declare and pay dividends would be restricted.

Our current loan agreement restricts our ability to pay dividends if certain events of default exist or would result from paying the dividend. Our loan agreement requires compliance with certain defined financial covenants relating to Cole Taylor Bank, including covenants related to regulatory capital, return on average assets, nonperforming assets and holding company leverage. Our loan agreement also restricts the amount of dividends that we can pay to stockholders and the amount of dividends that Cole Taylor Bank can pay to us. We are restricted from paying annual cash dividends to common stockholders during a calendar year in excess of 25% of that year’s annual net income, while Cole Taylor Bank is restricted from paying annual cash dividends in a calendar year to us in excess of 60% of that year’s annual net income.

Payments of the distributions on the trust preferred securities of TAYC Capital Trust I and TAYC Capital Trust II, our wholly owned Delaware statutory trusts, are fully and unconditionally guaranteed by us. The junior subordinated debentures that we have issued to our subsidiary trusts are senior to our shares of common stock. As a result, we must make required payments on the junior subordinated debentures before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the interest and principal obligation under the junior subordinated debentures must be satisfied before any distributions can be made on our common stock. We may defer the payment of interest on each of the junior subordinated debentures for a period not to exceed 20 consecutive quarters, provided that the deferral period does not extend beyond the stated maturity. During such deferral period, distributions on the corresponding trust preferred securities will also be deferred and our ability to pay dividends to the holders of shares of our common stock will be restricted.

In addition, as a holding company, we ultimately are dependent upon Cole Taylor Bank to provide funding for our operating expenses, debt service and dividends.

18

Table of Contents

MANAGEMENT

Executive Officers and Directors

The following table sets forth information concerning our executive officers:

Our directors consist of Jeffrey W. Taylor, Bruce W. Taylor and the following persons:

Jeffrey W. Taylor has served as Chairman of the Board, Chief Executive Officer and a director of our company since its inception in 1997 and Chairman of Cole Taylor Bank since 1994. Mr. Taylor served as a director of Cole Taylor Financial Group (“CTFG”) from its inception in 1984 until February 1997. From February 1994 until February 1997, Mr. Taylor served as Chairman and Chief Executive Officer of CTFG. From 1990 to February 1994, Mr. Taylor served as Vice Chairman of CTFG and Chairman and Chief Executive Officer of Cole Taylor Bank. Mr. Taylor served as Vice Chairman of Banking Strategy from April 1990 until the end of 1990. Mr. Taylor began his career with Cole Taylor Bank in 1978 as Associate General Counsel and has held several management positions with Cole Taylor Bank since that time. Mr. Taylor is the brother of Bruce W. Taylor.

Bruce W. Taylor has served as President and as a director of our company since its inception in 1997 and President and Chief Executive Officer of Cole Taylor Bank since 1994. He also has served as Chief Financial Officer of our company and Cole Taylor Bank from March 2004 through December 2004. Mr. Taylor served as a director of CTFG from its inception in 1984 until 1997. From 1994 until 1997, Mr. Taylor served as President of CTFG in addition to President and Chief Executive Officer of Cole Taylor Bank. From 1991 to February 1994, Mr. Taylor served as Vice Chairman of CTFG and President and Chief Operating Officer of Cole Taylor Bank. Mr. Taylor began working for Cole Taylor Bank in 1979 and has held several management positions with Cole Taylor Bank since that time. In 2005, Mr. Taylor was elected as a director of MTL Insurance Company, a life insurance company headquartered in Oak Brook, Illinois. Mr. Taylor is the brother of Jeffrey W. Taylor.

Daniel C. Stevens was appointed Chief Financial Officer of our company effective January 4, 2005. Prior to joining Taylor Capital Group, Mr. Stevens was the chief financial officer for UMB Financial, an $8 billion asset

19

Table of Contents

financial services company headquartered in Kansas City, from 2001 to December 2004. From 1999 to 2000, Mr. Stevens served as chief financial officer for Euronet Worldwide, a financial software and transaction processing services company headquartered in Kansas.

Committee Composition

Our Board of Directors has established three standing committees: an Audit and Examining Committee comprised solely of independent directors, a Compensation Committee and a Corporate Governance and Nominating Committee. We currently are deemed to be a “controlled company” within the meaning of Marketplace Rule 4350(c)(5) of The Nasdaq Stock Market due to the voting power held by the Taylor family and their affiliates. We have therefore relied on the “controlled company” exemption under the Nasdaq rules as an exemption from the requirements that (a) the compensation of our executive officers be determined by a compensation committee comprised solely of independent directors, and (b) director nominees be selected, or recommended for our Board of Director’s selection, by a nominating committee comprised solely of independent directors.

Upon consummation of this offering, we will no longer qualify as a “controlled company” within the meaning of the Nasdaq rules. In connection with this offering, our Board of Directors will take steps so that our Corporate Governance and Nominating Committee and Compensation Committee will be comprised solely of independent directors.

20

Table of Contents

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding beneficial ownership of our common stock as of June 30, 2005 by (1) each stockholder known by us to be the beneficial owner of more than five percent of the outstanding shares of our common stock, (2) each of our directors, (3) our Chief Executive Officer and each of the next two most highly compensated officers during the year ended December 31, 2004, (4) all of our directors and executive officers as a group, and (5) the Taylor Voting Trust U/A/D 11/30/98, of which each of Jeffrey W. Taylor, our Chairman and Chief Executive Officer, Bruce W. Taylor, our President and director, and Cindy Taylor Robinson, the sister of Jeffrey W. Taylor and Bruce W. Taylor, serves as a trustee, in its capacity as the selling stockholder. The information presented in the table is based upon the most recent filings with the Securities and Exchange Commission (“SEC”) by such persons or upon information otherwise provided by such persons to us.

Beneficial ownership is determined according to the rules of the SEC and generally includes any shares over which a person possesses sole or shared voting or investment power as well as any shares that such person has the right to acquire on or before August 29, 2005 (60 days after June 30, 2005), through the exercise of options or other rights. Except as otherwise indicated, we believe that the beneficial owners of common stock listed below have sole investment and voting power with respect to the shares described below.

The applicable percentage ownership for each person listed below is based upon 9,761,061 shares of common stock outstanding as of June 30, 2005. The following table also lists applicable percentage ownership based on 10,761,061 shares of common stock outstanding after completion of this offering. Shares of common stock subject to options currently exercisable or exercisable on or before August 29, 2005 are deemed outstanding for the purpose of calculating the percentage ownership of the person holding those options, but are not treated as outstanding for the purpose of calculating the percentage ownership of any other person. Unless otherwise noted, the address for each holder of more than five percent of our common stock listed below is: c/o Taylor Capital Group, Inc., 9550 West Higgins Road, Rosemont, Illinois 60018.