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(NASDAQ:OSBC) | Exhibit 99.1 | |
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Contact: | J. Douglas Cheatham | For Immediate Release |
| Chief Financial Officer | July 22, 2015 |
| (630) 906-5484 |
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Old Second Reports Second Quarter 2015 Net Income of $4.1 million
AURORA, IL, July 22, 2015 – Old Second Bancorp, Inc. (the “Company” or “Old Second”) (NASDAQ: OSBC), parent company of Old Second National Bank (the “Bank”), today announced financial results for the second quarter of 2015. The Company reported net income of $4.1 million for the second quarter of 2015, compared to net income of $2.0 million in the second quarter of 2014. The Company’s net income available to common stockholders of $3.4 million, or $0.12 per diluted share for the second quarter of 2015, compared to $7.5 million, or $0.26 per diluted share, in the second quarter of 2014. This reflects a redemption of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the “Series B Stock”) that was completed in the second quarter of 2014, which resulted in a $6.8 million of increase to net income available to common stockholders in that quarter.
Operating Results
· | Second quarter 2015 net income before taxes increased by $3.5 million, or 113.3%, from the second quarter of 2014 and $1.2 million, or 21.3%, from the first quarter of 2015. When compared to the second quarter of 2014, the quarter reflects improved net interest income, improved noninterest income, essentially unchanged noninterest expense and a larger loan loss reserve release. The net income increase from the first quarter of 2015 was driven by improved revenues and a $2.3 million loan loss reserve release. Noteworthy linked quarter expense increases are found in other real estate owned (“OREO”) expense, resulting from increased valuation reserve expense, and in the other noninterest expense category. Second quarter 2015 net income available to common stockholders of $3.4 million compares to $2.7 million for first quarter 2015 and $7.5 million for the second quarter of 2014. Results for 2015 reflect lower preferred stock dividends as a result of management’s determination to redeem an additional portion of the outstanding preferred stock in the first quarter of 2015. |
· | Noninterest expenses of $18.9 million for the second quarter of 2015 were essentially unchanged from the second quarter of 2014. Noninterest expenses for the second quarter of 2015 were 10.3% higher compared to the first quarter of 2015 as decreases or modest increases in many categories were offset by linked quarter increases in several other categories, most notably a $1.5 million increase in OREO valuation expenses. |
· | In June, the Bank announced that a branch in Batavia, Illinois would be closed as of September 30, 2015. Management expects that closing this location will not have a material impact on future Bank performance. Another existing branch, also in Batavia, is located near the branch that will be closed. |
· | On July 14, 2015, the Company provided notice that it was redeeming the remaining 31,553 issued and outstanding shares of the Company’s Series B stock. The effective date for the redemption is August 14, 2015, and the redemption price will be the stated liquidation value of $1,000 per share, together with any accrued and unpaid dividends accumulated to, but excluding, the redemption date |
1
Capital Ratios
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| June 30, |
| March 31, | ||
| 2015 |
| 2015 | ||
The Bank's common equity tier 1 capital ratio | 17.42 | % |
| 16.91 | % |
The Company's common equity tier 1 capital ratio | 9.78 | % |
| 9.46 | % |
The Bank's total capital ratio | 18.68 | % |
| 18.17 | % |
The Company's total capital ratio | 17.04 | % |
| 17.30 | % |
The Company's tier 1 leverage capital ratio | 10.02 | % |
| 9.82 | % |
· | All ratios presented are based on the regulatory capital rules in effect on January 1, 2015. The Bank ratios shown above exceed levels required to be considered “well capitalized”. |
Asset Quality & Earning Assets
· | Nonperforming loans declined by $4.1 million to $19.3 million at June 30, 2015, from $23.4 million at March 31, 2015. The largest component of nonperforming loans, nonaccrual loans, decreased $4.1 million in second quarter to $19.0 million at June 30, 2015. These reductions were primarily the result of the Company's sale of $6.9 million of nonaccrual loans, |
· | OREO assets moved only slightly in 2015 from $32.0 million at December 31, 2014, (but down from $41.5 million at December 31, 2013) to end unchanged at $32.0 million at June 30, 2015. New additions to the OREO portfolio in second quarter were modest. Valuation writedowns continued with an expense of $2.1 million in the quarter. |
· | Loans were essentially unchanged from year end 2014 but increased $7.8 million from March 31, 2015. Second quarter 2015 average loans (including loans held-for-sale) decreased by $9.0 million from the first quarter of 2015 and but increased $31.6 million compared to the second quarter of last year. The management directed loan sale discussed above reduced loans by an additional $2.2 million beyond the $6.9 million in nonaccrual reduction mentioned above. |
· | Securities held-to-maturity at amortized cost total $253.4 million at June 30, 2015. The end of the second quarter of 2015 total compares to $259.7 million securities held-to-maturity at amortized cost at year end 2014. At June 30, 2015, available-for-sale securities at fair value totaled $399.8 million, which is an increase from $385.5 million at December 31, 2014. |
· | Management review of the loan portfolio concluded that a loan loss reserve release of $2.3 million was appropriate in the second quarter. |
2
Net Interest Income1
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
(In thousands - unaudited)
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| Quarters Ended | ||||||||||||||||||||||
| June 30, 2015 |
| March 31, 2015 |
| June 30, 2014 | ||||||||||||||||||
| Average |
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| Rate |
| Average |
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| Rate |
| Average |
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| Rate | |||
| Balance |
| Interest |
| % |
| Balance |
| Interest |
| % |
| Balance |
| Interest |
| % | ||||||
Assets |
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Interest bearing deposits with financial institutions | $ | 29,880 |
| $ | 19 |
| 0.25 |
| $ | 18,022 |
| $ | 12 |
| 0.27 |
| $ | 30,333 |
| $ | 20 |
| 0.26 |
Securities: |
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Taxable |
| 635,469 |
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| 3,372 |
| 2.12 |
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| 615,299 |
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| 3,375 |
| 2.19 |
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| 628,766 |
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| 3,352 |
| 2.13 |
Non-taxable (TE) |
| 29,424 |
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| 251 |
| 3.41 |
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| 23,518 |
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| 217 |
| 3.69 |
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| 23,613 |
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| 182 |
| 3.08 |
Total securities |
| 664,893 |
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| 3,623 |
| 2.18 |
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| 638,817 |
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| 3,592 |
| 2.25 |
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| 652,379 |
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| 3,534 |
| 2.17 |
Dividends from Reserve Bank and FHLBC stock |
| 8,409 |
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| 77 |
| 3.66 |
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| 9,058 |
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| 77 |
| 3.40 |
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| 10,292 |
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| 78 |
| 3.03 |
Loans and loans held-for-sale1 |
| 1,152,485 |
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| 13,566 |
| 4.66 |
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| 1,161,444 |
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| 13,289 |
| 4.58 |
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| 1,120,918 |
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| 13,104 |
| 4.62 |
Total interest earning assets |
| 1,855,667 |
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| 17,285 |
| 3.69 |
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| 1,827,341 |
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| 16,970 |
| 3.71 |
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| 1,813,922 |
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| 16,736 |
| 3.66 |
Cash and due from banks |
| 29,153 |
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| - |
| - |
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| 31,744 |
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| - |
| - |
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| 36,827 |
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| - |
| - |
Allowance for loan losses |
| (20,546) |
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| - |
| - |
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| (21,605) |
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| - |
| - |
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| (25,146) |
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| - |
| - |
Other noninterest bearing assets |
| 219,239 |
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| - |
| - |
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| 218,544 |
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| - |
| - |
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| 233,369 |
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| - |
| - |
Total assets | $ | 2,083,513 |
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| $ | 2,056,024 |
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| $ | 2,058,972 |
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Liabilities and Stockholders' Equity |
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NOW accounts | $ | 334,694 |
| $ | 73 |
| 0.09 |
| $ | 338,385 |
| $ | 72 |
| 0.09 |
| $ | 309,380 |
| $ | 65 |
| 0.08 |
Money market accounts |
| 296,872 |
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| 71 |
| 0.10 |
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| 298,324 |
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| 70 |
| 0.10 |
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| 309,843 |
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| 83 |
| 0.11 |
Savings accounts |
| 254,243 |
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| 39 |
| 0.06 |
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| 245,005 |
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| 37 |
| 0.06 |
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| 242,512 |
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| 40 |
| 0.07 |
Time deposits |
| 410,066 |
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| 771 |
| 0.75 |
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| 418,615 |
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| 807 |
| 0.78 |
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| 457,818 |
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| 1,210 |
| 1.06 |
Interest bearing deposits |
| 1,295,875 |
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| 954 |
| 0.30 |
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| 1,300,329 |
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| 986 |
| 0.31 |
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| 1,319,553 |
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| 1,398 |
| 0.42 |
Securities sold under repurchase agreements |
| 31,234 |
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| - |
| - |
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| 23,437 |
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| 1 |
| 0.02 |
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| 25,224 |
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| - |
| - |
Other short-term borrowings |
| 22,638 |
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| 7 |
| 0.12 |
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| 25,722 |
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| 8 |
| 0.12 |
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| 8,681 |
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| 3 |
| 0.14 |
Junior subordinated debentures |
| 58,378 |
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| 1,071 |
| 7.34 |
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| 58,378 |
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| 1,072 |
| 7.35 |
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| 58,378 |
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| 1,388 |
| 9.51 |
Subordinated debt |
| 45,000 |
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| 202 |
| 1.78 |
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| 45,000 |
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| 197 |
| 1.75 |
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| 45,000 |
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| 198 |
| 1.74 |
Notes payable and other borrowings |
| 500 |
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| - |
| - |
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| 500 |
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| 4 |
| 3.20 |
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| 500 |
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| 4 |
| 3.16 |
Total interest bearing liabilities |
| 1,453,625 |
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| 2,234 |
| 0.61 |
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| 1,453,366 |
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| 2,268 |
| 0.63 |
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| 1,457,336 |
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| 2,991 |
| 0.82 |
Noninterest bearing deposits |
| 435,093 |
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| - |
| - |
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| 405,933 |
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| - |
| - |
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| 389,926 |
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| - |
| - |
Other liabilities |
| 10,962 |
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| - |
| - |
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| 11,734 |
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| - |
| - |
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| 19,210 |
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| - |
| - |
Stockholders' equity |
| 183,833 |
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| - |
| - |
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| 184,991 |
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| - |
| - |
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| 192,500 |
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| - |
| - |
Total liabilities and stockholders' equity | $ | 2,083,513 |
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| $ | 2,056,024 |
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| $ | 2,058,972 |
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Net interest income (TE) |
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| $ | 15,051 |
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| $ | 14,702 |
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| $ | 13,745 |
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Net interest income (TE) |
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to total earning assets |
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| 3.25 |
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| 3.26 |
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| 3.04 |
Interest bearing liabilities to earning assets |
| 78.33 | % |
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| 79.53 | % |
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| 80.34 | % |
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1 Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 13 and includes fees of $463,000, $486,000 and $563,000 for the second quarter of 2015, the first quarter of 2015 and the second quarter of 2014, respectively. Nonaccrual loans are included in the above stated average balances.
Note: Tax equivalent basis is calculated using a marginal tax rate of 35%.
Net interest and dividend income on a linked quarter basis increased $338,000. Quarterly average earning assets increased $28.3 million from the first quarter of 2015 for a total of $1.86 billion, while yield on earning assets was essentially unchanged. Management continued to emphasize asset quality in all securities purchases and the year over year quarterly average total securities increased a modest amount. Similarly, year over year second quarter average loans, including loans held-for-sale, increased $31.6 million.
3
Noninterest Income
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| 2nd Qtr 2015 |
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| Three Months Ended |
| Percent Change From |
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(In thousands) |
| 2nd Qtr |
| 1st Qtr |
| 2nd Qtr |
| 1st Qtr |
| 2nd Qtr |
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| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
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Trust income |
| $ | 1,596 |
| $ | 1,486 |
| $ | 1,677 |
| 7.4 |
| (4.8) |
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Service charges on deposits |
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| 1,779 |
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| 1,541 |
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| 1,796 |
| 15.4 |
| (0.9) |
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Residential mortgage banking revenue |
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| 2,476 |
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| 1,659 |
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| 1,257 |
| 49.2 |
| 97.0 |
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Securities (loss) gains, net |
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| (12) |
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| (109) |
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| 295 |
| 89.0 |
| (104.1) |
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Increase in cash surrender value of bank-owned life insurance |
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| 283 |
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| 354 |
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| 366 |
| (20.1) |
| (22.7) |
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Debit card interchange income |
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| 1,050 |
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| 959 |
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| 930 |
| 9.5 |
| 12.9 |
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Other income |
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| 1,092 |
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| 2,083 |
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| 1,160 |
| (47.6) |
| (5.9) |
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Total noninterest income |
| $ | 8,264 |
| $ | 7,973 |
| $ | 7,481 |
| 3.6 |
| 10.5 |
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As shown above, noninterest income experienced no noteworthy linked quarter improvements in the second quarter except for residential mortgage banking revenue. The Company experienced strong mortgage loan origination results in the quarter by operating effectively in a favorable market environment. On a year to date basis, 2015 closed mortgage loan volume is approximately double 2014 volume. First quarter other noninterest income includes a nonrecurring incentive payment of $917,000 from a service provider in a long term mutually productive relationship with Old Second and reflects the death benefit realized on a life insurance policy held by the Bank. Year over year noninterest income increased approximately 10.5% on residential mortgage revenue and improved debit card interchange income.
Noninterest Expense
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| 2nd Qtr 2015 |
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| Three Months Ended |
| Percent Change From |
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(In thousands) |
| 2nd Qtr |
| 1st Qtr |
| 2nd Qtr |
| 1st Qtr |
| 2nd Qtr |
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| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
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Salaries |
| $ | 7,292 |
| $ | 7,157 |
| $ | 7,128 |
| 1.9 |
| 2.3 |
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Bonus |
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| 454 |
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| 417 |
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| 592 |
| 8.9 |
| (23.3) |
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Benefits and other |
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| 1,403 |
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| 1,681 |
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| 1,463 |
| (16.5) |
| (4.1) |
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Total salaries and employee benefits |
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| 9,149 |
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| 9,255 |
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| 9,183 |
| (1.1) |
| (0.4) |
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Occupancy expense, net |
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| 1,094 |
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| 1,271 |
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| 1,185 |
| (13.9) |
| (7.7) |
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Furniture and equipment expense |
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| 1,065 |
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| 1,001 |
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| 984 |
| 6.4 |
| 8.2 |
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FDIC insurance |
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| 377 |
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| 273 |
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| 627 |
| 38.1 |
| (39.9) |
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General bank insurance |
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| 310 |
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| 357 |
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| 343 |
| (13.2) |
| (9.6) |
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Amortization of core deposit intangible asset |
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| - |
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| - |
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| 511 |
| N/A |
| (100.0) |
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Advertising expense |
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| 353 |
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| 205 |
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| 459 |
| 72.2 |
| (23.1) |
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Debit card interchange expense |
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| 400 |
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| 352 |
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| 412 |
| 13.6 |
| (2.9) |
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Legal fees |
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| 420 |
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| 223 |
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| 409 |
| 88.3 |
| 2.7 |
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Other real estate owned expense, net |
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| 2,388 |
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| 1,352 |
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| 1,650 |
| 76.6 |
| 44.7 |
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Other expense |
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| 3,371 |
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| 2,864 |
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| 3,289 |
| 17.7 |
| 2.5 |
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Total noninterest expense |
| $ | 18,927 |
| $ | 17,153 |
| $ | 19,052 |
| 10.3 |
| (0.7) |
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Efficiency ratio (defined below) |
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| 70.44 | % |
| 68.77 | % |
| 79.95 | % |
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The efficiency ratio shown in the table above is calculated as noninterest expense excluding core deposit intangible amortization and OREO expenses divided by the sum of net interest income on a fully tax equivalent basis, total noninterest income less net gains and losses on securities and with a tax equivalent adjustment on the increase in cash surrender value of bank-owned life insurance.
Noninterest expense increased on a linked quarter basis primarily on sharply higher OREO valuation expense. Expenses were flat or down in the second quarter 2015 compared to the same period in 2014 for most categories, excluding total OREO expense, net reflecting the 2015 valuation expense. Second quarter 2015 total
4
noninterest expense was essentially unchanged from second quarter 2014 with 2015 reflecting no expense from the now fully amortized core deposit intangible asset.
Earning Assets
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| June 30, 2015 |
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| Major Classification of Loans as of |
| Percent Change From |
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(In thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, |
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| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
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Commercial |
| $ | 123,372 |
| $ | 114,241 |
| $ | 106,752 |
| 8.0 |
| 15.6 |
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Real estate - commercial |
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| 612,379 |
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| 608,267 |
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| 599,796 |
| 0.7 |
| 2.1 |
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Real estate - construction |
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| 32,157 |
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| 39,430 |
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| 32,265 |
| (18.4) |
| (0.3) |
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Real estate - residential |
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| 365,989 |
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| 363,967 |
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| 368,592 |
| 0.6 |
| (0.7) |
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Consumer |
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| 3,854 |
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| 3,495 |
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| 3,064 |
| 10.3 |
| 25.8 |
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Overdraft |
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| 408 |
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| 368 |
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| 381 |
| 10.9 |
| 7.1 |
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Lease financing receivables |
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| 8,571 |
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| 8,651 |
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| 8,722 |
| (0.9) |
| (1.7) |
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Other |
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| 11,391 |
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| 11,945 |
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| 12,700 |
| (4.6) |
| (10.3) |
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| 1,158,121 |
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| 1,150,364 |
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| 1,132,272 |
| 0.7 |
| 2.3 |
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Net deferred loan costs |
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| 762 |
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| 705 |
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| 475 |
| 8.1 |
| 60.4 |
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| $ | 1,158,883 |
| $ | 1,151,069 |
| $ | 1,132,747 |
| 0.7 |
| 2.3 |
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Modest second quarter loan production combined with management decisions to sell loans and loan relationships resulted in a net increase of $7.8 million in total loans from March 31, 2015. Volume increases for the quarter are seen in most portfolio segments, most notably in Commercial. Management continued to emphasize loan quality and transactions in our core market area that the Company expects will develop as long-term relationship opportunities. Management believes that this approach builds relationships with core clients, reduces portfolio runoff and creates potential long term business development beneficial to both the Company and the client.
Commercial relationship managers continue to focus on building the loan pipeline with opportunities after a long period of runoff. Management believes that the competitive landscape within the Chicago market is challenging and that it may remain so for a prolonged period.
The investment portfolio ended the second quarter of 2015 at $653.3 million, a decrease from $656.6 million at March 31, 2015. There were no purchases or sales to the held-to-maturity portion of the portfolio during the second quarter. Maturities or calls in the quarter came to a total of $20.4 million, which included $20.0 million in tax anticipation warrants and a municipal bond. Only minor other changes were made in the composition of securities in the available-for-sale portfolio.
Net realized losses on sales were $12,000 during the second quarter of 2015, down from net realized losses of $109,000 in the first quarter of 2015.
5
Asset Quality
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| As Of |
| Percent Change From | |||||||||
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| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, | |||
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| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 | |||
Nonaccrual loans |
| $ | 18,976 |
| $ | 23,048 |
| $ | 28,498 |
| (17.7) |
| (33.4) |
Nonperforming troubled debt restructured loans accruing interest |
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| 308 |
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| 309 |
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| 242 |
| (0.3) |
| 27.3 |
Loans past due 90 days or more and still accruing interest |
|
| - |
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| - |
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| 179 |
| - |
| (100.0) |
Total nonperforming loans |
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| 19,284 |
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| 23,357 |
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| 28,919 |
| (17.4) |
| (33.3) |
Other real estate owned |
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| 31,964 |
|
| 35,461 |
|
| 39,232 |
| (9.9) |
| (18.5) |
Total nonperforming assets |
| $ | 51,248 |
| $ | 58,818 |
| $ | 68,151 |
| (12.9) |
| (24.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-89 days past due loans |
| $ | 5,296 |
| $ | 6,321 |
| $ | 3,493 |
|
|
|
|
Nonaccrual loans to total loans |
|
| 1.6 | % |
| 2.0 | % |
| 2.5 | % |
|
|
|
Nonperforming loans to total loans |
|
| 1.7 | % |
| 2.0 | % |
| 2.6 | % |
|
|
|
Nonperforming assets to total loans plus OREO |
|
| 4.3 | % |
| 5.0 | % |
| 5.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
| $ | 18,321 |
| $ | 21,181 |
| $ | 23,856 |
|
|
|
|
Allowance for loan losses to loans |
|
| 1.6 | % |
| 1.8 | % |
| 2.1 | % |
|
|
|
Allowance for loan losses to nonaccrual loans |
|
| 96.5 | % |
| 91.9 | % |
| 83.7 | % |
|
|
|
Nonperforming loans consist of nonaccrual loans, nonperforming restructured accruing loans and loans 90 days or greater past due but still accruing. Total nonperforming loans were $19.3 million at June 30, 2015, compared to $23.4 million at March 31, 2015.
Classified loans include nonaccrual, performing troubled debt restructurings and all other loans considered substandard, which also decreased in the quarter as shown below. A substantial decrease in classified loans during second quarter came from a management decision to sell a loan relationship. This sale reduced nonaccrual loans by $6.9 million and substandard loans by $2.2 million for a total reduction in classified loans of $9.1 million. Management review of the loan portfolio concluded that a loan loss reserve release of $2.3 million was appropriate in the second quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2015 |
| ||
|
| Classified loans as of |
| Percent Change From |
| |||||||||
(In thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
| |||
Real estate-construction |
| $ | 3,952 |
| $ | 3,973 |
| $ | 4,330 |
| (0.5) |
| (8.7) |
|
Real estate-residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
|
| 975 |
|
| 1,175 |
|
| 5,312 |
| (17.0) |
| (81.6) |
|
Owner occupied |
|
| 7,051 |
|
| 7,529 |
|
| 5,841 |
| (6.3) |
| 20.7 |
|
Revolving and junior liens |
|
| 3,292 |
|
| 3,234 |
|
| 3,097 |
| 1.8 |
| 6.3 |
|
Real estate-commercial, nonfarm |
|
| 3,705 |
|
| 14,203 |
|
| 19,634 |
| (73.9) |
| (81.1) |
|
Real estate-commercial, farm |
|
| 1,272 |
|
| 1,370 |
|
| - |
| (7.2) |
| - |
|
Commercial |
|
| 698 |
|
| 4,936 |
|
| 312 |
| (85.9) |
| 123.7 |
|
Other |
|
| 1 |
|
| 1 |
|
| 1 |
| - |
| - |
|
|
| $ | 20,946 |
| $ | 36,421 |
| $ | 38,527 |
| (42.5) |
| (45.6) |
|
6
Net Charge-off Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Charge-offs, net of recoveries | Three Months Ended | |||||||||||||
(In thousands) | June 30, |
| % of |
| March 31, |
| % of |
| June 30, |
| % of | |||
| 2015 |
| Total |
| 2015 |
| Total |
| 2014 |
| Total | |||
Real estate-construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilder | $ | (47) |
| (8.4) |
| $ | - |
| - |
| $ | (130) |
| (21.0) |
Land |
| (2) |
| (0.4) |
|
| (3) |
| (0.7) |
|
| - |
| - |
Commercial speculative |
| - |
| - |
|
| - |
| - |
|
| (226) |
| (36.5) |
All other |
| (11) |
| (2.0) |
|
| (1) |
| (0.2) |
|
| (6) |
| (1.0) |
Total real estate-construction |
| (60) |
| (10.8) |
|
| (4) |
| (0.9) |
|
| (362) |
| (58.5) |
Real estate-residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
| (104) |
| (18.6) |
|
| (11) |
| (2.4) |
|
| (13) |
| (2.1) |
Owner occupied |
| (25) |
| (4.5) |
|
| 67 |
| 14.7 |
|
| 96 |
| 15.5 |
Revolving and junior liens |
| (115) |
| (20.5) |
|
| 338 |
| 74.1 |
|
| 206 |
| 33.2 |
Total real estate-residential |
| (244) |
| (43.6) |
|
| 394 |
| 86.4 |
|
| 289 |
| 46.6 |
Real estate-commercial, nonfarm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner general purpose |
| 709 |
| 126.6 |
|
| 495 |
| 108.6 |
|
| 182 |
| 29.4 |
Owner special purpose |
| 109 |
| 19.5 |
|
| (4) |
| (0.9) |
|
| 347 |
| 56.0 |
Non-owner general purpose |
| (915) |
| (163.4) |
|
| (326) |
| (71.5) |
|
| 145 |
| 23.4 |
Non-owner special purpose |
| 163 |
| 29.1 |
|
| - |
| - |
|
| - |
| - |
Retail properties |
| - |
| - |
|
| - |
| - |
|
| (1) |
| (0.2) |
Total real estate-commercial, nonfarm |
| 66 |
| 11.8 |
|
| 165 |
| 36.2 |
|
| 673 |
| 108.6 |
Real estate-commercial, farm |
| - |
| - |
|
| - |
| - |
|
| - |
| - |
Commercial |
| 775 |
| 138.4 |
|
| (109) |
| (23.9) |
|
| (32) |
| (5.1) |
Other |
| 23 |
| 4.20 |
|
| 10 |
| 2.2 |
|
| 52 |
| 8.4 |
Total | $ | 560 |
| 100.0 |
| $ | 456 |
| 100.0 |
| $ | 620 |
| 100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management attention to credit quality continued as reflected in the continued strong net charge-off experience illustrated above.
Deposits
Total deposits ended at $1.71 billion on June 30, 2015. That amount reflects a decrease from total deposits of $1.74 billion at March 31, 2015 but an increase from $1.69 billion at year end 2014. Time deposits or certificates of deposit continued to decline as seen in many previous periods. Savings / NOW / Money Market balances declined in the second quarter while demand balances were essentially unchanged.
Borrowings
The Bank’s borrowing at the Federal Home Loan Bank of Chicago (the “FHLBC”) requires the Bank to be a member and invest in the stock of the FHLBC. As of June 30, 2015, the Bank had $20.0 million outstanding under FHLBC advances compared to $30.0 million outstanding in advances at March 31, 2015. Management borrowed overnight funds under the advance program virtually every day in second quarter.
The Company is also indebted on $58.4 million of junior subordinated debentures related to the trust preferred securities issued by its two statutory trust subsidiaries, Old Second Capital Trust I and Old Second Capital Trust II. In April, 2014, the Company concluded a successful capital raise and used some of the proceeds to pay interest accrued but previously unpaid on the trust preferred securities and, as of the date hereof, the Company continues to be current on the payments due on these securities.
7
Capital
|
|
|
|
|
|
| June 30, |
| March 31, | ||
| 2015 |
| 2015 | ||
The Company's common equity tier 1 capital ratio | 9.78 | % |
| 9.46 | % |
(minimum 4.5% for adequately capitalized) |
|
|
|
|
|
The Company's tier 1 capital ratio | 14.15 | % |
| 13.68 | % |
(minimum 6.0% for adequately capitalized) |
|
|
|
|
|
The Company's total capital ratio | 17.04 | % |
| 17.30 | % |
(minimum 8.0% for adequately capitalized) |
|
|
|
|
|
The Company's tier 1 leverage capital ratio | 10.02 | % |
| 9.82 | % |
(minimum 4.0% for adequately capitalized) |
|
|
|
|
|
All ratios presented are based on the regulatory capital rules of Basel III, which took effect on January 1, 2015. As of June 30, 2015, the Bank’s common equity tier 1 capital ratio of 17.42% and total capital ratio of 18.68% exceeded the minimum capital ratios to be deemed “well capitalized”.
Non-GAAP Presentations: Management has traditionally disclosed certain non-GAAP ratios to evaluate and measure the Company’s performance, including a net interest margin calculation. The net interest margin is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Management believes this measure provides investors with information regarding balance sheet profitability. Consistent with industry practice, management also disclosed other non-GAAP measures in the discussion above and in the following tables. The efficiency ratio is discussed in the noninterest expense presentation on page 4. The tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
Forward Looking Statements: This report may contain forward-looking statements. Forward looking statements are identifiable by the inclusion of such qualifications as expects, intends, believes, may, likely or other indications that the particular statements are not based upon facts but are rather based upon the Company’s beliefs as of the date of this release. Actual events and results may differ significantly from those described in such forward-looking statements, due to changes in the economy, interest rates or other factors. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. For additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results or cause actual results to differ substantially from those discussed or implied in forward looking statements contained in this release, please review our filings with the Securities and Exchange Commission.
��
Conference Call
The Company will also host an earnings call on Thursday, July 23, 2015, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Investors may listen to the Company’s earnings call via telephone by dialing 877-407-8035. Investors should call into the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.
A replay of the earnings call will be available until 11:59 p.m. Eastern Time (10:59 p.m. Central Time) on August 6, 2015, by dialing 877-660-6853, using Conference ID #: 13613523.
8
Old Second Bancorp, Inc. and Subsidiaries
(In thousands, except share data)
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
| |
|
| June 30, |
| December 31, | ||
|
| 2015 |
| 2014 | ||
Assets |
|
|
|
|
|
|
Cash and due from banks |
| $ | 29,164 |
| $ | 30,101 |
Interest bearing deposits with financial institutions |
|
| 9,352 |
|
| 14,096 |
Cash and cash equivalents |
|
| 38,516 |
|
| 44,197 |
Securities available-for-sale, at fair value |
|
| 399,836 |
|
| 385,486 |
Securities held-to-maturity, at amortized cost |
|
| 253,419 |
|
| 259,670 |
Federal Home Loan Bank and Federal Reserve Bank stock |
|
| 8,271 |
|
| 9,058 |
Loans held-for-sale |
|
| 6,208 |
|
| 5,072 |
Loans |
|
| 1,158,883 |
|
| 1,159,332 |
Less: allowance for loan losses |
|
| 18,321 |
|
| 21,637 |
Net loans |
|
| 1,140,562 |
|
| 1,137,695 |
Premises and equipment, net |
|
| 41,696 |
|
| 42,335 |
Other real estate owned |
|
| 31,964 |
|
| 31,982 |
Mortgage servicing rights, net |
|
| 5,884 |
|
| 5,462 |
Bank-owned life insurance (BOLI) |
|
| 57,444 |
|
| 56,807 |
Deferred tax assets, net |
|
| 65,473 |
|
| 70,141 |
Other assets |
|
| 15,780 |
|
| 13,882 |
Total assets |
| $ | 2,065,053 |
| $ | 2,061,787 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 432,773 |
| $ | 400,447 |
Interest bearing: |
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 877,587 |
|
| 865,103 |
Time |
|
| 403,192 |
|
| 419,505 |
Total deposits |
|
| 1,713,552 |
|
| 1,685,055 |
Securities sold under repurchase agreements |
|
| 32,415 |
|
| 21,036 |
Other short-term borrowings |
|
| 20,000 |
|
| 45,000 |
Junior subordinated debentures |
|
| 58,378 |
|
| 58,378 |
Subordinated debt |
|
| 45,000 |
|
| 45,000 |
Notes payable and other borrowings |
|
| 500 |
|
| 500 |
Other liabilities |
|
| 9,967 |
|
| 12,655 |
Total liabilities |
|
| 1,879,812 |
|
| 1,867,624 |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
Preferred stock |
|
| 31,553 |
|
| 47,331 |
Common stock |
|
| 34,423 |
|
| 34,365 |
Additional paid-in capital |
|
| 115,651 |
|
| 115,332 |
Retained earnings |
|
| 106,791 |
|
| 100,697 |
Accumulated other comprehensive loss |
|
| (7,211) |
|
| (7,713) |
Treasury stock |
|
| (95,966) |
|
| (95,849) |
Total stockholders’ equity |
|
| 185,241 |
|
| 194,163 |
Total liabilities and stockholders’ equity |
| $ | 2,065,053 |
| $ | 2,061,787 |
9
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (unaudited) |
| (unaudited) | ||||||||
|
| Three Months Ended |
| Six Months Ended | ||||||||
|
| June 30, |
| June 30, | ||||||||
|
| 2015 |
| 2014 |
| 2015 |
| 2014 | ||||
Interest and dividend income |
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 13,467 |
| $ | 13,046 |
| $ | 26,685 |
| $ | 25,984 |
Loans held-for-sale |
|
| 72 |
|
| 29 |
|
| 115 |
|
| 54 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 3,372 |
|
| 3,352 |
|
| 6,747 |
|
| 6,854 |
Tax exempt |
|
| 163 |
|
| 118 |
|
| 304 |
|
| 266 |
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock |
|
| 77 |
|
| 78 |
|
| 154 |
|
| 154 |
Interest bearing deposits with financial institutions |
|
| 19 |
|
| 20 |
|
| 31 |
|
| 35 |
Total interest and dividend income |
|
| 17,170 |
|
| 16,643 |
|
| 34,036 |
|
| 33,347 |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 183 |
|
| 188 |
|
| 362 |
|
| 387 |
Time deposits |
|
| 771 |
|
| 1,210 |
|
| 1,578 |
|
| 2,531 |
Other short-term borrowings |
|
| 7 |
|
| 3 |
|
| 16 |
|
| 5 |
Junior subordinated debentures |
|
| 1,071 |
|
| 1,388 |
|
| 2,143 |
|
| 2,775 |
Subordinated debt |
|
| 202 |
|
| 198 |
|
| 399 |
|
| 394 |
Notes payable and other borrowings |
|
| - |
|
| 4 |
|
| 4 |
|
| 8 |
Total interest expense |
|
| 2,234 |
|
| 2,991 |
|
| 4,502 |
|
| 6,100 |
Net interest and dividend income |
|
| 14,936 |
|
| 13,652 |
|
| 29,534 |
|
| 27,247 |
Loan loss reserve release |
|
| (2,300) |
|
| (1,000) |
|
| (2,300) |
|
| (2,000) |
Net interest and dividend income after provision for loan losses |
|
| 17,236 |
|
| 14,652 |
|
| 31,834 |
|
| 29,247 |
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,596 |
|
| 1,677 |
|
| 3,082 |
|
| 3,136 |
Service charges on deposits |
|
| 1,779 |
|
| 1,796 |
|
| 3,320 |
|
| 3,516 |
Secondary mortgage fees |
|
| 281 |
|
| 155 |
|
| 525 |
|
| 267 |
Mortgage servicing gain, net of changes in fair value |
|
| 500 |
|
| 64 |
|
| 292 |
|
| 17 |
Net gain on sales of mortgage loans |
|
| 1,695 |
|
| 1,038 |
|
| 3,318 |
|
| 1,700 |
Securities (loss) gain, net |
|
| (12) |
|
| 295 |
|
| (121) |
|
| 226 |
Increase in cash surrender value of bank-owned life insurance |
|
| 283 |
|
| 366 |
|
| 637 |
|
| 724 |
Debit card interchange income |
|
| 1,050 |
|
| 930 |
|
| 2,009 |
|
| 1,760 |
Other income |
|
| 1,092 |
|
| 1,160 |
|
| 3,175 |
|
| 2,456 |
Total noninterest income |
|
| 8,264 |
|
| 7,481 |
|
| 16,237 |
|
| 13,802 |
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 9,149 |
|
| 9,183 |
|
| 18,404 |
|
| 18,284 |
Occupancy expense, net |
|
| 1,094 |
|
| 1,185 |
|
| 2,365 |
|
| 2,666 |
Furniture and equipment expense |
|
| 1,065 |
|
| 984 |
|
| 2,066 |
|
| 1,967 |
FDIC insurance |
|
| 377 |
|
| 627 |
|
| 650 |
|
| 906 |
General bank insurance |
|
| 310 |
|
| 343 |
|
| 667 |
|
| 832 |
Amortization of core deposit |
|
| - |
|
| 511 |
|
| - |
|
| 1,023 |
Advertising expense |
|
| 353 |
|
| 459 |
|
| 558 |
|
| 762 |
Debit card interchange expense |
|
| 400 |
|
| 412 |
|
| 752 |
|
| 790 |
Legal fees |
|
| 420 |
|
| 409 |
|
| 643 |
|
| 666 |
Other real estate expense, net |
|
| 2,388 |
|
| 1,650 |
|
| 3,740 |
|
| 2,658 |
Other expense |
|
| 3,371 |
|
| 3,289 |
|
| 6,235 |
|
| 6,014 |
Total noninterest expense |
|
| 18,927 |
|
| 19,052 |
|
| 36,080 |
|
| 36,568 |
Income before income taxes |
|
| 6,573 |
|
| 3,081 |
|
| 11,991 |
|
| 6,481 |
Provision for income taxes |
|
| 2,444 |
|
| 1,060 |
|
| 4,363 |
|
| 2,258 |
Net income |
| $ | 4,129 |
| $ | 2,021 |
| $ | 7,628 |
| $ | 4,223 |
Preferred stock dividends and accretion of discount |
|
| 710 |
|
| 1,348 |
|
| 1,534 |
|
| 2,920 |
Dividends waived upon preferred stock redemption |
|
| - |
|
| (5,433) |
|
| - |
|
| (5,433) |
Gain on preferred stock redemption |
|
| - |
|
| (1,348) |
|
| - |
|
| (1,348) |
Net income available to common stockholders |
| $ | 3,419 |
| $ | 7,454 |
| $ | 6,094 |
| $ | 8,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.12 |
| $ | 0.26 |
| $ | 0.21 |
| $ | 0.38 |
Diluted earnings per share |
|
| 0.12 |
|
| 0.26 |
|
| 0.21 |
|
| 0.38 |
10
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Average Balance
(In thousands, except share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
|
|
| 2014 |
|
| 2015 | ||||||||||||
Assets |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr | ||||||
Cash and due from banks |
| $ | 29,901 |
| $ | 36,827 |
| $ | 32,459 |
| $ | 31,314 |
| $ | 31,744 |
| $ | 29,153 |
Interest bearing deposits with financial institutions |
|
| 23,775 |
|
| 30,333 |
|
| 38,603 |
|
| 19,643 |
|
| 18,022 |
|
| 29,880 |
Cash and cash equivalents |
|
| 53,676 |
|
| 67,160 |
|
| 71,062 |
|
| 50,957 |
|
| 49,766 |
|
| 59,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale, at fair value |
|
| 371,229 |
|
| 388,309 |
|
| 348,791 |
|
| 368,944 |
|
| 380,180 |
|
| 409,600 |
Securities held-to-maturity, at amortized cost |
|
| 263,765 |
|
| 264,070 |
|
| 263,832 |
|
| 261,775 |
|
| 258,637 |
|
| 255,293 |
Federal Home Loan Bank and Federal Reserve Bank stock |
|
| 10,292 |
|
| 10,292 |
|
| 9,085 |
|
| 9,058 |
|
| 9,058 |
|
| 8,409 |
Loans held-for-sale |
|
| 2,344 |
|
| 2,829 |
|
| 3,758 |
|
| 4,065 |
|
| 4,782 |
|
| 7,880 |
Loans |
|
| 1,104,065 |
|
| 1,118,089 |
|
| 1,133,379 |
|
| 1,141,297 |
|
| 1,156,662 |
|
| 1,144,605 |
Less : allowance for loan losses |
|
| 27,102 |
|
| 25,146 |
|
| 24,492 |
|
| 23,231 |
|
| 21,605 |
|
| 20,546 |
Net loans |
|
| 1,076,963 |
|
| 1,092,943 |
|
| 1,108,887 |
|
| 1,118,066 |
|
| 1,135,057 |
|
| 1,124,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
| 45,972 |
|
| 45,575 |
|
| 45,116 |
|
| 42,516 |
|
| 42,306 |
|
| 41,937 |
Other real estate owned |
|
| 39,971 |
|
| 39,094 |
|
| 38,757 |
|
| 39,566 |
|
| 32,392 |
|
| 34,637 |
Mortgage servicing rights, net |
|
| 5,569 |
|
| 5,527 |
|
| 5,522 |
|
| 5,468 |
|
| 5,202 |
|
| 5,416 |
Core deposit intangible, net |
|
| 916 |
|
| 399 |
|
| 23 |
|
| - |
|
| - |
|
| - |
Bank-owned life insurance (BOLI) |
|
| 55,551 |
|
| 55,894 |
|
| 56,262 |
|
| 56,566 |
|
| 56,927 |
|
| 57,283 |
Deferred tax assets, net |
|
| 75,387 |
|
| 74,082 |
|
| 71,937 |
|
| 71,628 |
|
| 69,936 |
|
| 67,657 |
Other assets |
|
| 12,990 |
|
| 12,798 |
|
| 12,615 |
|
| 11,985 |
|
| 11,781 |
|
| 12,309 |
Total other assets |
|
| 236,356 |
|
| 233,369 |
|
| 230,232 |
|
| 227,729 |
|
| 218,544 |
|
| 219,239 |
Total assets |
| $ | 2,014,625 |
| $ | 2,058,972 |
| $ | 2,035,647 |
| $ | 2,040,594 |
| $ | 2,056,024 |
| $ | 2,083,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 373,711 |
| $ | 389,926 |
| $ | 389,246 |
| $ | 400,001 |
| $ | 405,933 |
| $ | 435,093 |
Interest bearing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 852,709 |
|
| 861,735 |
|
| 860,342 |
|
| 857,666 |
|
| 881,714 |
|
| 885,809 |
Time |
|
| 468,138 |
|
| 457,818 |
|
| 437,597 |
|
| 421,584 |
|
| 418,615 |
|
| 410,066 |
Total deposits |
|
| 1,694,558 |
|
| 1,709,479 |
|
| 1,687,185 |
|
| 1,679,251 |
|
| 1,706,262 |
|
| 1,730,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
| 24,539 |
|
| 25,224 |
|
| 27,266 |
|
| 27,298 |
|
| 23,437 |
|
| 31,234 |
Other short-term borrowings |
|
| 4,111 |
|
| 8,681 |
|
| 12,174 |
|
| 24,946 |
|
| 25,722 |
|
| 22,638 |
Junior subordinated debentures |
|
| 58,378 |
|
| 58,378 |
|
| 58,378 |
|
| 58,378 |
|
| 58,378 |
|
| 58,378 |
Subordinated debt |
|
| 45,000 |
|
| 45,000 |
|
| 45,000 |
|
| 45,000 |
|
| 45,000 |
|
| 45,000 |
Notes payable and other borrowings |
|
| 500 |
|
| 500 |
|
| 500 |
|
| 500 |
|
| 500 |
|
| 500 |
Other liabilities |
|
| 38,966 |
|
| 19,210 |
|
| 11,416 |
|
| 12,177 |
|
| 11,734 |
|
| 10,962 |
Total liabilities |
|
| 1,866,052 |
|
| 1,866,472 |
|
| 1,841,919 |
|
| 1,847,550 |
|
| 1,871,033 |
|
| 1,899,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
| 72,991 |
|
| 54,947 |
|
| 47,331 |
|
| 47,331 |
|
| 36,637 |
|
| 31,553 |
Common stock |
|
| 18,840 |
|
| 33,104 |
|
| 34,365 |
|
| 34,365 |
|
| 34,414 |
|
| 34,419 |
Additional paid-in capital |
|
| 66,241 |
|
| 111,279 |
|
| 115,220 |
|
| 115,263 |
|
| 115,413 |
|
| 115,553 |
Retained earnings |
|
| 93,508 |
|
| 96,002 |
|
| 98,256 |
|
| 99,553 |
|
| 102,050 |
|
| 105,208 |
Accumulated other comprehensive loss |
|
| (7,177) |
|
| (6,982) |
|
| (5,594) |
|
| (7,618) |
|
| (7,558) |
|
| (6,935) |
Treasury stock |
|
| (95,830) |
|
| (95,850) |
|
| (95,850) |
|
| (95,850) |
|
| (95,965) |
|
| (95,965) |
Total stockholders' equity |
|
| 148,573 |
|
| 192,500 |
|
| 193,728 |
|
| 193,044 |
|
| 184,991 |
|
| 183,833 |
Total liabilities and stockholder's equity |
| $ | 2,014,625 |
| $ | 2,058,972 |
| $ | 2,035,647 |
| $ | 2,040,594 |
| $ | 2,056,024 |
| $ | 2,083,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Earning Assets |
| $ | 1,775,470 |
| $ | 1,813,922 |
| $ | 1,797,448 |
| $ | 1,804,782 |
| $ | 1,827,341 |
| $ | 1,855,667 |
Total Interest Bearing Liabilities |
|
| 1,453,375 |
|
| 1,457,336 |
|
| 1,441,257 |
|
| 1,435,372 |
|
| 1,453,366 |
|
| 1,453,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Statements of Operations
(In thousands, except share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2014 |
| 2015 | ||||||||||||||
|
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr | ||||||
Interest and Dividend Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 12,938 |
| $ | 13,046 |
| $ | 13,362 |
| $ | 13,580 |
| $ | 13,218 |
| $ | 13,467 |
Loans held-for-sale |
|
| 25 |
|
| 29 |
|
| 38 |
|
| 41 |
|
| 43 |
|
| 72 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 3,502 |
|
| 3,352 |
|
| 3,586 |
|
| 3,691 |
|
| 3,375 |
|
| 3,372 |
Tax exempt |
|
| 148 |
|
| 118 |
|
| 110 |
|
| 96 |
|
| 141 |
|
| 163 |
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock |
|
| 76 |
|
| 78 |
|
| 78 |
|
| 77 |
|
| 77 |
|
| 77 |
Interest bearing deposits with financial institutions |
|
| 15 |
|
| 20 |
|
| 25 |
|
| 13 |
|
| 12 |
|
| 19 |
Total interest and dividend income |
|
| 16,704 |
|
| 16,643 |
|
| 17,199 |
|
| 17,498 |
|
| 16,866 |
|
| 17,170 |
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 199 |
|
| 188 |
|
| 175 |
|
| 176 |
|
| 179 |
|
| 183 |
Time deposits |
|
| 1,321 |
|
| 1,210 |
|
| 1,073 |
|
| 896 |
|
| 807 |
|
| 771 |
Other short-term borrowings |
|
| 2 |
|
| 3 |
|
| 5 |
|
| 9 |
|
| 9 |
|
| 7 |
Junior subordinated debentures |
|
| 1,387 |
|
| 1,388 |
|
| 1,072 |
|
| 1,072 |
|
| 1,072 |
|
| 1,071 |
Subordinated debt |
|
| 196 |
|
| 198 |
|
| 199 |
|
| 199 |
|
| 197 |
|
| 202 |
Notes payable and other borrowings |
|
| 4 |
|
| 4 |
|
| 4 |
|
| 4 |
|
| 4 |
|
| - |
Total interest expense |
|
| 3,109 |
|
| 2,991 |
|
| 2,528 |
|
| 2,356 |
|
| 2,268 |
|
| 2,234 |
Net interest and dividend income |
|
| 13,595 |
|
| 13,652 |
|
| 14,671 |
|
| 15,142 |
|
| 14,598 |
|
| 14,936 |
Loan loss reserve release |
|
| (1,000) |
|
| (1,000) |
|
| - |
|
| (1,300) |
|
| - |
|
| (2,300) |
Net interest and dividend income after provision for loan losses |
|
| 14,595 |
|
| 14,652 |
|
| 14,671 |
|
| 16,442 |
|
| 14,598 |
|
| 17,236 |
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,459 |
|
| 1,677 |
|
| 1,483 |
|
| 1,579 |
|
| 1,486 |
|
| 1,596 |
Service charges on deposits |
|
| 1,720 |
|
| 1,796 |
|
| 1,838 |
|
| 1,725 |
|
| 1,541 |
|
| 1,779 |
Secondary mortgage fees |
|
| 112 |
|
| 155 |
|
| 174 |
|
| 180 |
|
| 244 |
|
| 281 |
Mortgage servicing (loss) gain, net of changes in fair value |
|
| (47) |
|
| 64 |
|
| 252 |
|
| (60) |
|
| (208) |
|
| 500 |
Net gain on sales of mortgage loans |
|
| 662 |
|
| 1,038 |
|
| 914 |
|
| 980 |
|
| 1,623 |
|
| 1,695 |
Securities (losses) gains, net |
|
| (69) |
|
| 295 |
|
| 1,231 |
|
| 262 |
|
| (109) |
|
| (12) |
Increase in cash surrender value of bank-owned life insurance |
|
| 358 |
|
| 366 |
|
| 304 |
|
| 369 |
|
| 354 |
|
| 283 |
Debit card interchange income |
|
| 830 |
|
| 930 |
|
| 1,011 |
|
| 1,035 |
|
| 959 |
|
| 1,050 |
Other income |
|
| 1,296 |
|
| 1,160 |
|
| 1,116 |
|
| 1,021 |
|
| 2,083 |
|
| 1,092 |
Total noninterest income |
|
| 6,321 |
|
| 7,481 |
|
| 8,323 |
|
| 7,091 |
|
| 7,973 |
|
| 8,264 |
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 9,101 |
|
| 9,183 |
|
| 8,856 |
|
| 9,027 |
|
| 9,255 |
|
| 9,149 |
Occupancy expense, net |
|
| 1,481 |
|
| 1,185 |
|
| 1,143 |
|
| 1,154 |
|
| 1,271 |
|
| 1,094 |
Furniture and equipment expense |
|
| 983 |
|
| 984 |
|
| 989 |
|
| 1,016 |
|
| 1,001 |
|
| 1,065 |
FDIC insurance |
|
| 279 |
|
| 627 |
|
| 649 |
|
| 615 |
|
| 273 |
|
| 377 |
General bank insurance |
|
| 489 |
|
| 343 |
|
| 371 |
|
| 358 |
|
| 357 |
|
| 310 |
Amortization of core deposit |
|
| 512 |
|
| 511 |
|
| 154 |
|
| - |
|
| - |
|
| - |
Advertising expense |
|
| 303 |
|
| 459 |
|
| 291 |
|
| 225 |
|
| 205 |
|
| 353 |
Debit card interchange expense |
|
| 378 |
|
| 412 |
|
| 418 |
|
| 423 |
|
| 352 |
|
| 400 |
Legal fees |
|
| 257 |
|
| 409 |
|
| 332 |
|
| 335 |
|
| 223 |
|
| 420 |
Other real estate expense, net |
|
| 1,008 |
|
| 1,650 |
|
| 2,007 |
|
| 2,252 |
|
| 1,352 |
|
| 2,388 |
Other expense |
|
| 2,725 |
|
| 3,289 |
|
| 3,134 |
|
| 3,362 |
|
| 2,864 |
|
| 3,371 |
Total noninterest expense |
|
| 17,516 |
|
| 19,052 |
|
| 18,344 |
|
| 18,767 |
|
| 17,153 |
|
| 18,927 |
Income before income taxes |
|
| 3,400 |
|
| 3,081 |
|
| 4,650 |
|
| 4,766 |
|
| 5,418 |
|
| 6,573 |
Provision for income taxes |
|
| 1,198 |
|
| 1,060 |
|
| 1,726 |
|
| 1,777 |
|
| 1,919 |
|
| 2,444 |
Net income |
|
| 2,202 |
|
| 2,021 |
|
| 2,924 |
|
| 2,989 |
|
| 3,499 |
|
| 4,129 |
Preferred stock dividends and accretion of discount |
|
| 1,572 |
|
| 1,348 |
|
| 1,065 |
|
| 1,077 |
|
| 824 |
|
| 710 |
Dividends waived upon preferred stock redemption |
|
| - |
|
| (5,433) |
|
| - |
|
| - |
|
| - |
|
| - |
Gain on preferred stock redemption |
|
| - |
|
| (1,348) |
|
| - |
|
| - |
|
| - |
|
| - |
Net income available to common stockholders |
| $ | 630 |
| $ | 7,454 |
| $ | 1,859 |
| $ | 1,912 |
| $ | 2,675 |
| $ | 3,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.04 |
| $ | 0.26 |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.09 |
| $ | 0.12 |
Diluted earnings per share |
|
| 0.04 |
|
| 0.26 |
|
| 0.06 |
|
| 0.06 |
|
| 0.09 |
|
| 0.12 |
12
The table below provides a reconciliation of each non-GAAP tax equivalent measure to the most comparable GAAP measure for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| |||||||
|
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| |||
Net Interest Margin |
|
|
|
|
|
|
|
|
|
|
Interest income (GAAP) |
| $ | 17,170 |
| $ | 16,866 |
| $ | 16,643 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 27 |
|
| 28 |
|
| 29 |
|
Securities |
|
| 88 |
|
| 76 |
|
| 64 |
|
Interest income - TE |
|
| 17,285 |
|
| 16,970 |
|
| 16,736 |
|
Interest expense (GAAP) |
|
| 2,234 |
|
| 2,268 |
|
| 2,991 |
|
Net interest income -TE |
| $ | 15,051 |
| $ | 14,702 |
| $ | 13,745 |
|
Net interest income (GAAP) |
| $ | 14,936 |
| $ | 14,598 |
| $ | 13,652 |
|
Average interest earning assets |
| $ | 1,855,667 |
| $ | 1,827,341 |
| $ | 1,813,922 |
|
Net interest margin (GAAP) |
|
| 3.23 | % |
| 3.24 | % |
| 3.02 | % |
Net interest margin - TE |
|
| 3.25 | % |
| 3.26 | % |
| 3.04 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| ||||||
|
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| |||
Efficiency Ratio |
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
| $ | 18,927 |
| $ | 17,153 |
| $ | 19,052 |
|
Less amortization of core deposit, net |
|
| - |
|
| - |
|
| 511 |
|
Less other real estate expense, net |
|
| 2,388 |
|
| 1,352 |
|
| 1,650 |
|
Adjusted noninterest expense |
|
| 16,539 |
|
| 15,801 |
|
| 16,891 |
|
Net interest income (GAAP) |
|
| 14,936 |
|
| 14,598 |
|
| 13,652 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 27 |
|
| 28 |
|
| 29 |
|
Securities |
|
| 88 |
|
| 76 |
|
| 64 |
|
Net interest income (TE) |
|
| 15,051 |
|
| 14,702 |
|
| 13,745 |
|
Noninterest income |
|
| 8,264 |
|
| 7,973 |
|
| 7,481 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Increase in cash surrender value of BOLI - (TE) |
|
| 152 |
|
| 191 |
|
| 197 |
|
Noninterest income - (TE) |
|
| 8,416 |
|
| 8,164 |
|
| 7,678 |
|
Less securities (losses) gain, net |
|
| (12) |
|
| (109) |
|
| 295 |
|
Adjusted noninterest income, plus net interest income (TE) |
| $ | 23,479 |
| $ | 22,975 |
| $ | 21,128 |
|
Efficiency ratio |
|
| 70.44 | % |
| 68.77 | % |
| 79.95 | % |
13