|
|
|
|
|
|
(NASDAQ:OSBC) | Exhibit 99.1 | |
|
|
|
Contact: | J. Douglas Cheatham | For Immediate Release |
| Chief Financial Officer | October 21, 2015 |
| (630) 906-5484 |
|
Old Second Reports Third Quarter 2015 Net Income of $3.9 million
AURORA, IL, October 21, 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 third quarter of 2015. The Company reported net income of $3.9 million for the third quarter of 2015, compared to net income of $2.9 million in the third quarter of 2014. The Company’s net income available to common stockholders of $3.6 million, or $0.12 per diluted share for the third quarter of 2015, compared to $1.9 million, or $0.06 per diluted share, in the third quarter of 2014. The 2014 per share information 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. Third quarter 2015 per share information reflects subsequent redemption and the final redemption in 2015 of the Company's remaining Series B Stock.
Operating Results
· | Third quarter 2015 net income before taxes increased by $1.7 million, or 35.7%, from the third quarter of 2014 but decreased 4.0% from the second quarter of 2015. When compared to the third quarter of 2014, the quarter reflects slightly improved net interest income, lower noninterest expense and a loan loss reserve release of $2.1 million offset by lower noninterest income. The net income decrease from the second quarter of 2015 was driven by reduced revenues largely offset by lower noninterest expense. Third quarter 2015 noninterest income reflects a $1.1 million writedown on the now closed branch in Batavia, Illinois. Noteworthy linked quarter expense decreases are found in other real estate owned (“OREO”) expense, resulting from decreased valuation reserve expense, reductions in bonus accrual, lower commissions on residential mortgage origination and moderation in healthcare costs. Third quarter 2015 net income available to common stockholders of $3.6 million compares to $3.4 million for the second quarter of 2015. Results for 2015 reflect lower preferred stock dividends as a result of management’s decision to redeem an additional portion of the outstanding Series B Stock in 2015. |
· | Noninterest expense of $16.2 million for the third quarter of 2015 was 11.4% lower than the results in the third quarter of 2014. OREO expense, net for the third quarter of 2015 declined 51.3% from the third quarter of 2014. |
· | 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. This redemption was completed in the third quarter with a redemption price of 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
|
|
|
|
|
|
|
|
|
| September 30, |
| June 30, |
| March 31, | |||
| 2015 |
| 2015 |
| 2015 | |||
The Bank's common equity tier 1 capital ratio | 15.94 | % |
| 17.49 | % |
| 16.88 | % |
The Company's common equity tier 1 capital ratio | 10.26 | % |
| 9.82 | % |
| 9.44 | % |
The Bank's total capital ratio | 17.10 | % |
| 18.75 | % |
| 18.14 | % |
The Company's total capital ratio | 15.36 | % |
| 17.10 | % |
| 17.28 | % |
The Company's tier 1 leverage capital ratio | 8.46 | % |
| 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”. |
All ratios have been adjusted to correctly account for the Company’s derivative holdings and bank owned life insurance as risk weighted assets under the regulatory capital rules in effect on January 1, 2015. This resulted in immaterial changes in the capital ratios of the Bank and the Company. The change in risk weighted assets and change in ratios has no impact on the Company’s historical financial statements or stockholders’ equity, which were stated in accordance with generally accepted accounting principles.
Asset Quality & Earning Assets
· | Nonperforming loans declined to $18.5 million at September 30, 2015, from $19.3 million at June 30, 2015, as nonaccrual loans were reduced. |
· | OREO assets decreased in the third quarter to end at $24.5 million at September 30, 2015, compared to $32.0 million at June 30, 2015. New additions to the OREO portfolio in third quarter were modest. Valuation writedowns continued with a quarterly expense of $1.1 million. |
· | Loans decreased from year end 2014 and are $26.0 million lower compared to June 30, 2015. Third quarter 2015 average loans (including loans held-for-sale) decreased by $8.1 million from the second quarter of 2015, but increased $7.3 million compared to the third quarter of last year. |
· | Securities held-to-maturity at amortized cost total $250.0 million at September 30, 2015. This total compares to $253.4 million at June 30, 2015. September 30, 2015, available-for-sale securities at fair value totaled $408.8 million, which is an increase from $399.8 million at June 30, 2015, and $385.5 at December 31, 2014. |
· | Management review of the loan portfolio concluded that a loan loss reserve release of $2.1 million was appropriate in the third quarter. Loan loss reserve releases were taken in three quarters last year and also in the second quarter of 2015. Management implemented changes in the process used to determine the required loan loss reserve to update the Bank’s reserve methodology. |
2
Net Interest Income1
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
(In thousands - unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarters Ended | ||||||||||||||||||||||
| September 30, 2015 |
| June 30, 2015 |
| September 30, 2014 | ||||||||||||||||||
| Average |
|
|
|
| Rate |
| Average |
|
|
|
| Rate |
| Average |
|
|
|
| Rate | |||
| Balance |
| Interest |
| % |
| Balance |
| Interest |
| % |
| Balance |
| Interest |
| % | ||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits with financial institutions | $ | 18,563 |
| $ | 12 |
| 0.25 |
| $ | 29,880 |
| $ | 19 |
| 0.25 |
| $ | 38,603 |
| $ | 25 |
| 0.25 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
| 642,413 |
|
| 3,471 |
| 2.16 |
|
| 635,469 |
|
| 3,372 |
| 2.12 |
|
| 600,386 |
|
| 3,586 |
| 2.39 |
Non-taxable (TE) |
| 19,318 |
|
| 187 |
| 3.87 |
|
| 29,424 |
|
| 251 |
| 3.41 |
|
| 12,237 |
|
| 169 |
| 5.52 |
Total securities |
| 661,731 |
|
| 3,658 |
| 2.21 |
|
| 664,893 |
|
| 3,623 |
| 2.18 |
|
| 612,623 |
|
| 3,755 |
| 2.45 |
Dividends from Reserve Bank and FHLBC stock |
| 8,271 |
|
| 76 |
| 3.68 |
|
| 8,409 |
|
| 77 |
| 3.66 |
|
| 9,085 |
|
| 78 |
| 3.43 |
Loans and loans held-for-sale1 |
| 1,144,413 |
|
| 13,415 |
| 4.59 |
|
| 1,152,485 |
|
| 13,566 |
| 4.66 |
|
| 1,137,137 |
|
| 13,429 |
| 4.62 |
Total interest earning assets |
| 1,832,978 |
|
| 17,161 |
| 3.68 |
|
| 1,855,667 |
|
| 17,285 |
| 3.69 |
|
| 1,797,448 |
|
| 17,287 |
| 3.78 |
Cash and due from banks |
| 28,999 |
|
| - |
| - |
|
| 29,153 |
|
| - |
| - |
|
| 32,459 |
|
| - |
| - |
Allowance for loan losses |
| (18,607) |
|
| - |
| - |
|
| (20,546) |
|
| - |
| - |
|
| (24,492) |
|
| - |
| - |
Other noninterest bearing assets |
| 211,646 |
|
| - |
| - |
|
| 219,239 |
|
| - |
| - |
|
| 230,232 |
|
| - |
| - |
Total assets | $ | 2,055,016 |
|
|
|
|
|
| $ | 2,083,513 |
|
|
|
|
|
| $ | 2,035,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW accounts | $ | 347,754 |
| $ | 76 |
| 0.09 |
| $ | 334,694 |
| $ | 73 |
| 0.09 |
| $ | 321,968 |
| $ | 68 |
| 0.08 |
Money market accounts |
| 291,663 |
|
| 71 |
| 0.10 |
|
| 296,872 |
|
| 71 |
| 0.10 |
|
| 299,846 |
|
| 70 |
| 0.09 |
Savings accounts |
| 250,031 |
|
| 38 |
| 0.06 |
|
| 254,243 |
|
| 39 |
| 0.06 |
|
| 238,528 |
|
| 37 |
| 0.06 |
Time deposits |
| 404,896 |
|
| 799 |
| 0.78 |
|
| 410,066 |
|
| 771 |
| 0.75 |
|
| 437,597 |
|
| 1,073 |
| 0.97 |
Interest bearing deposits |
| 1,294,344 |
|
| 984 |
| 0.30 |
|
| 1,295,875 |
|
| 954 |
| 0.30 |
|
| 1,297,939 |
|
| 1,248 |
| 0.38 |
Securities sold under repurchase agreements |
| 31,466 |
|
| 1 |
| 0.01 |
|
| 31,234 |
|
| - |
| - |
|
| 27,266 |
|
| 1 |
| 0.01 |
Other short-term borrowings |
| 14,674 |
|
| 5 |
| 0.13 |
|
| 22,638 |
|
| 7 |
| 0.12 |
|
| 12,174 |
|
| 4 |
| 0.13 |
Junior subordinated debentures |
| 58,378 |
|
| 1,072 |
| 7.35 |
|
| 58,378 |
|
| 1,071 |
| 7.34 |
|
| 58,378 |
|
| 1,072 |
| 7.35 |
Subordinated debt |
| 45,000 |
|
| 205 |
| 1.78 |
|
| 45,000 |
|
| 202 |
| 1.78 |
|
| 45,000 |
|
| 199 |
| 1.73 |
Notes payable and other borrowings |
| 500 |
|
| 1 |
| 0.78 |
|
| 500 |
|
| - |
| - |
|
| 500 |
|
| 4 |
| 3.13 |
Total interest bearing liabilities |
| 1,444,362 |
|
| 2,268 |
| 0.62 |
|
| 1,453,625 |
|
| 2,234 |
| 0.61 |
|
| 1,441,257 |
|
| 2,528 |
| 0.70 |
Noninterest bearing deposits |
| 431,052 |
|
| - |
| - |
|
| 435,093 |
|
| - |
| - |
|
| 389,246 |
|
| - |
| - |
Other liabilities |
| 9,782 |
|
| - |
| - |
|
| 10,962 |
|
| - |
| - |
|
| 11,416 |
|
| - |
| - |
Stockholders' equity |
| 169,820 |
|
| - |
| - |
|
| 183,833 |
|
| - |
| - |
|
| 193,728 |
|
| - |
| - |
Total liabilities and stockholders' equity | $ | 2,055,016 |
|
|
|
|
|
| $ | 2,083,513 |
|
|
|
|
|
| $ | 2,035,647 |
|
|
|
|
|
Net interest income (TE) |
|
|
| $ | 14,893 |
|
|
|
|
|
| $ | 15,051 |
|
|
|
|
|
| $ | 14,759 |
|
|
Net interest income (TE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to total earning assets |
|
|
|
|
|
| 3.22 |
|
|
|
|
|
|
| 3.25 |
|
|
|
|
|
|
| 3.26 |
Interest bearing liabilities to earning assets |
| 78.80 | % |
|
|
|
|
|
| 78.33 | % |
|
|
|
|
|
| 80.18 | % |
|
|
|
|
1 Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 13 and includes fees of $459,000, $463,000 and $600,000 for the third quarter of 2015, the second quarter of 2015 and the third 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 decreased $132,000. Quarterly average earning assets decreased $22.7 million from the second quarter of 2015 for a total of $1.83 billion, while yield on earning assets was essentially unchanged. Year over year third quarter average loans, including loans held-for-sale, increased.
3
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3rd Qtr 2015 |
| ||
|
| Three Months Ended |
| Percent Change From |
| |||||||||
(in thousands) |
| 3rd Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 2nd Qtr |
| 3rd Qtr |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
| |||
Trust income |
| $ | 1,444 |
| $ | 1,596 |
| $ | 1,483 |
| (9.5) |
| (2.6) |
|
Service charges on deposits |
|
| 1,766 |
|
| 1,779 |
|
| 1,838 |
| (0.7) |
| (3.9) |
|
Residential mortgage banking revenue |
|
| 1,275 |
|
| 2,476 |
|
| 1,340 |
| (48.5) |
| (4.9) |
|
Securities (loss) gains, net |
|
| (57) |
|
| (12) |
|
| 1,231 |
| (375.0) |
| (104.6) |
|
Increase in cash surrender value of bank-owned life insurance |
|
| 203 |
|
| 283 |
|
| 304 |
| (28.3) |
| (33.2) |
|
Debit card interchange income |
|
| 1,004 |
|
| 1,050 |
|
| 1,011 |
| (4.4) |
| (0.7) |
|
Loss on disposal and transfer of fixed assets |
|
| (1,143) |
|
| - |
|
| (121) |
| N/A |
| N/A |
|
Other income |
|
| 1,156 |
|
| 1,092 |
|
| 1,237 |
| 5.9 |
| (6.5) |
|
Total noninterest income |
| $ | 5,648 |
| $ | 8,264 |
| $ | 8,323 |
| (31.7) |
| (32.1) |
|
As shown above, noninterest income experienced no noteworthy linked quarter improvements in the third quarter. The Company continued to experience good mortgage loan origination results in the quarter by operating effectively in a favorable market environment. However, valuation adjustments in the third quarter detracted from total residential mortgage banking revenue. Cash surrender value of bank-owned life insurance decreased on a linked quarter basis in light of market declines in investment value. Other noninterest income for the third quarter of 2015 is impacted by the impairment charge related to the closing of a Bank branch in Batavia, Illinois. Year over year quarterly noninterest income is down 31.7% with all categories essentially unchanged, reduced or down sharply.
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3rd Qtr 2015 |
| ||
|
| Three Months Ended |
| Percent Change From |
| |||||||||
(in thousands) |
| 3rd Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 2nd Qtr |
| 3rd Qtr |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
| |||
Salaries |
| $ | 6,843 |
| $ | 7,292 |
| $ | 7,141 |
| (6.2) |
| (4.2) |
|
Bonus |
|
| 238 |
|
| 454 |
|
| 475 |
| (47.6) |
| (49.9) |
|
Benefits and other |
|
| 1,179 |
|
| 1,403 |
|
| 1,240 |
| (16.0) |
| (4.9) |
|
Total salaries and employee benefits |
|
| 8,260 |
|
| 9,149 |
|
| 8,856 |
| (9.7) |
| (6.7) |
|
Occupancy expense, net |
|
| 1,156 |
|
| 1,094 |
|
| 1,143 |
| 5.7 |
| 1.1 |
|
Furniture and equipment expense |
|
| 1,110 |
|
| 1,065 |
|
| 989 |
| 4.2 |
| 12.2 |
|
FDIC insurance |
|
| 373 |
|
| 377 |
|
| 649 |
| (1.1) |
| (42.5) |
|
General bank insurance |
|
| 308 |
|
| 310 |
|
| 371 |
| (0.6) |
| (17.0) |
|
Amortization of core deposit intangible asset |
|
| - |
|
| - |
|
| 154 |
| N/A |
| (100.0) |
|
Advertising expense |
|
| 434 |
|
| 353 |
|
| 291 |
| 22.9 |
| 49.1 |
|
Debit card interchange expense |
|
| 379 |
|
| 400 |
|
| 418 |
| (5.3) |
| (9.3) |
|
Legal fees |
|
| 279 |
|
| 420 |
|
| 332 |
| (33.6) |
| (16.0) |
|
Other real estate owned expense, net |
|
| 977 |
|
| 2,388 |
|
| 2,007 |
| (59.1) |
| (51.3) |
|
Other expense |
|
| 2,968 |
|
| 3,371 |
|
| 3,134 |
| (12.0) |
| (5.3) |
|
Total noninterest expense |
| $ | 16,244 |
| $ | 18,927 |
| $ | 18,344 |
| (14.2) |
| (11.4) |
|
Efficiency ratio (defined below) |
|
| 73.73 | % |
| 70.44 | % |
| 73.51 | % |
|
|
|
|
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 decreased on a linked quarter basis reflecting reduced bonus accrual expense, lower levels of residential mortgage commission expense, improved but still elevated OREO expense and reduced other
4
noninterest expense. Expenses were flat or down in the third quarter 2015 compared to the same period in 2014 for most categories. Third quarter 2015 total noninterest expense was 11.4% lower than the third quarter 2014 total.
Earning Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2015 |
| ||
|
| Major Classification of Loans as of |
| Percent Change From |
| |||||||||
(in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
| |||
Commercial |
| $ | 120,036 |
| $ | 123,372 |
| $ | 106,592 |
| (2.7) |
| 12.6 |
|
Real estate - commercial |
|
| 609,937 |
|
| 612,379 |
|
| 600,649 |
| (0.4) |
| 1.5 |
|
Real estate - construction |
|
| 23,461 |
|
| 32,157 |
|
| 41,936 |
| (27.0) |
| (44.1) |
|
Real estate - residential |
|
| 354,106 |
|
| 365,989 |
|
| 365,602 |
| (3.2) |
| (3.1) |
|
Consumer |
|
| 4,005 |
|
| 3,854 |
|
| 3,142 |
| 3.9 |
| 27.5 |
|
Overdraft |
|
| 423 |
|
| 408 |
|
| 1,198 |
| 3.7 |
| (64.7) |
|
Lease financing receivables |
|
| 9,697 |
|
| 8,571 |
|
| 8,398 |
| 13.1 |
| 15.5 |
|
Other |
|
| 10,345 |
|
| 11,391 |
|
| 12,757 |
| (9.2) |
| (18.9) |
|
|
|
| 1,132,010 |
|
| 1,158,121 |
|
| 1,140,274 |
| (2.3) |
| (0.7) |
|
Net deferred loan costs |
|
| 902 |
|
| 762 |
|
| 608 |
| 18.4 |
| 48.4 |
|
|
| $ | 1,132,912 |
| $ | 1,158,883 |
| $ | 1,140,882 |
| (2.2) |
| (0.7) |
|
Third quarter loan production did not improve from recent trends leading to an overall decrease of $26.0 million in total loans from June 30, 2015. Volume decreases for the quarter are seen in most portfolio segments, most notably in real estate. Management continued to emphasize loan quality and transactions in our core market area that the Company expects will develop as long-term relationship opportunities.
The investment portfolio ended the third quarter of 2015 at $658.9 million, an increase from $653.3 million at June 30, 2015. Available-for-sale purchases during the quarter totaled $33.2 million, $23.2 million of which were asset-backed securities collateralized by student loans, and a $10.0 million tax anticipation warrant issued by a local school district. During the third quarter there were sales totaling $14.1 million, which included a $1.2 million corporate bond, a $9.4 million asset-backed security and the $3.4 million mortgage-backed security. These sales generated a realized loss of $57,000 for the quarter.
Asset Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As Of |
| Percent Change From | |||||||||
|
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, | |||
|
| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 | |||
Nonaccrual loans |
| $ | 18,224 |
| $ | 18,976 |
| $ | 31,508 |
| (4.0) |
| (42.2) |
Nonperforming troubled debt restructured loans accruing interest |
|
| 307 |
|
| 308 |
|
| 107 |
| (0.3) |
| 186.9 |
Loans past due 90 days or more and still accruing interest |
|
| - |
|
| - |
|
| 44 |
| - |
| (100.0) |
Total nonperforming loans |
|
| 18,531 |
|
| 19,284 |
|
| 31,659 |
| (3.9) |
| (41.5) |
Other real estate owned |
|
| 24,451 |
|
| 31,964 |
|
| 40,877 |
| (23.5) |
| (40.2) |
Total nonperforming assets |
| $ | 42,982 |
| $ | 51,248 |
| $ | 72,536 |
| (16.1) |
| (40.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-89 days past due loans |
| $ | 3,358 |
| $ | 5,296 |
| $ | 1,541 |
|
|
|
|
Nonaccrual loans to total loans |
|
| 1.6 | % |
| 1.6 | % |
| 2.8 | % |
|
|
|
Nonperforming loans to total loans |
|
| 1.6 | % |
| 1.7 | % |
| 2.8 | % |
|
|
|
Nonperforming assets to total loans plus OREO |
|
| 3.7 | % |
| 4.3 | % |
| 6.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
| $ | 16,613 |
| $ | 18,321 |
| $ | 23,330 |
|
|
|
|
Allowance for loan losses to loans |
|
| 1.5 | % |
| 1.6 | % |
| 2.0 | % |
|
|
|
Allowance for loan losses to nonaccrual loans |
|
| 91.2 | % |
| 96.5 | % |
| 74.0 | % |
|
|
|
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 $18.5 million at September 30, 2015, compared to $19.3 million at June 30, 2015, on reductions in nonaccrual loans.
5
Classified loans include nonaccrual, performing troubled debt restructurings and all other loans considered substandard, as shown below. The increase in classified loans is essentially limited to one large relationship. Management review of the loan portfolio concluded that a loan loss reserve release of $2.1 million was appropriate in the third quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2015 |
| ||
|
| Classified loans as of |
| Percent Change From |
| |||||||||
(in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| 2015 |
| 2014 |
| |||
Real estate-construction |
| $ | 3,803 |
| $ | 3,952 |
| $ | 4,298 |
| (3.8) |
| (11.5) |
|
Real estate-residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
|
| 806 |
|
| 975 |
|
| 3,407 |
| (17.3) |
| (76.3) |
|
Owner occupied |
|
| 7,179 |
|
| 7,051 |
|
| 7,797 |
| 1.8 |
| (7.9) |
|
Revolving and junior liens |
|
| 3,599 |
|
| 3,292 |
|
| 3,675 |
| 9.3 |
| (2.1) |
|
Real estate-commercial, nonfarm |
|
| 7,354 |
|
| 3,705 |
|
| 24,768 |
| 98.5 |
| (70.3) |
|
Real estate-commercial, farm |
|
| 1,272 |
|
| 1,272 |
|
| - |
| - |
| - |
|
Commercial |
|
| 616 |
|
| 698 |
|
| 4,251 |
| (11.7) |
| (85.5) |
|
Other |
|
| 1 |
|
| 1 |
|
| 1 |
| - |
| - |
|
|
| $ | 24,630 |
| $ | 20,946 |
| $ | 48,197 |
| 17.6 |
| (48.9) |
|
Net Charge-off Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Charge-offs, net of recoveries | Three Months Ended | |||||||||||||
(in thousands) | September 30, |
| % of |
| June 30, |
| % of |
| September 30, |
| % of | |||
| 2015 |
| Total |
| 2015 |
| Total |
| 2014 |
| Total | |||
Real estate-construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilder | $ | (9) |
| 2.3 |
| $ | (47) |
| (8.4) |
| $ | - |
| - |
Land |
| (4) |
| 1.0 |
|
| (2) |
| (0.4) |
|
| - |
| - |
Commercial speculative |
| (190) |
| 48.5 |
|
| - |
| - |
|
| - |
| - |
All other |
| (1) |
| 0.3 |
|
| (11) |
| (2.0) |
|
| (2) |
| (0.4) |
Total real estate-construction |
| (204) |
| 52.1 |
|
| (60) |
| (10.8) |
|
| (2) |
| (0.4) |
Real estate-residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
| (10) |
| 2.6 |
|
| (104) |
| (18.6) |
|
| 59 |
| 11.2 |
Owner occupied |
| 163 |
| (41.6) |
|
| (25) |
| (4.5) |
|
| (108) |
| (20.5) |
Revolving and junior liens |
| (3) |
| 0.8 |
|
| (115) |
| (20.5) |
|
| 328 |
| 62.4 |
Total real estate-residential |
| 150 |
| (38.2) |
|
| (244) |
| (43.6) |
|
| 279 |
| 53.1 |
Real estate-commercial, nonfarm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner general purpose |
| 20 |
| (5.1) |
|
| 709 |
| 126.6 |
|
| 237 |
| 45.1 |
Owner special purpose |
| (126) |
| 32.1 |
|
| 109 |
| 19.5 |
|
| 49 |
| 9.3 |
Non-owner general purpose |
| (9) |
| 2.3 |
|
| (915) |
| (163.4) |
|
| (419) |
| (79.7) |
Non-owner special purpose |
| (139) |
| 35.5 |
|
| 163 |
| 29.1 |
|
| 255 |
| 48.5 |
Retail properties |
| - |
| - |
|
| - |
| - |
|
| (455) |
| (86.5) |
Total real estate-commercial, nonfarm |
| (254) |
| 64.8 |
|
| 66 |
| 11.8 |
|
| (333) |
| (63.3) |
Real estate-commercial, farm |
| - |
| - |
|
| - |
| - |
|
| - |
| - |
Commercial |
| (112) |
| 28.50 |
|
| 775 |
| 138.4 |
|
| 506 |
| 96.2 |
Other |
| 28 |
| (7.2) |
|
| 23 |
| 4.2 |
|
| 76 |
| 14.4 |
Net (recovery)/charge-off | $ | (392) |
| 100.0 |
| $ | 560 |
| 100.0 |
| $ | 526 |
| 100.0 |
Net recoveries for the quarter reflect continuing management attention to credit quality.
Deposits
Total deposits were $1.72 billion at September 30, 2015. That amount reflects an increase from total deposits of $1.71 billion at June 30, 2015, and an increase from $1.69 billion at year end 2014. Demand /Savings / NOW / Money Market balances were essentially unchanged in the third quarter while time deposits or certificates of deposit reflect a modest increase for the period.
6
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 September 30, 2015, the Bank had $35.0 million outstanding under FHLBC advances compared to $20.0 million outstanding in advances at June 30, 2015. Management borrowed overnight funds under the advance program virtually every day in the third 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.
In August, the Bank entered into an interest rate swap as a cash flow hedge with an effective date of June 15, 2017. The Bank will pay the counterparty a fixed rate and receive a floating rate based on three month LIBOR. Management concluded that it would be advantageous to enter this transaction given that the Company has trust preferred securities that will change from fixed rate to floating rate on June 15, 2017. The cash flow hedge has a maturity date of June 15, 2037.
Capital
|
|
|
|
|
|
|
|
|
| September 30, |
| June 30, |
| March 31, | |||
| 2015 |
| 2015 |
| 2015 | |||
The Company's common equity tier 1 capital ratio | 10.26 | % |
| 9.82 | % |
| 9.44 | % |
(minimum 4.5% for adequately capitalized) |
|
|
|
|
|
|
|
|
The Company's tier 1 capital ratio | 11.96 | % |
| 14.21 | % |
| 13.65 | % |
(minimum 6.0% for adequately capitalized) |
|
|
|
|
|
|
|
|
The Company's total capital ratio | 15.36 | % |
| 17.10 | % |
| 17.28 | % |
(minimum 8.0% for adequately capitalized) |
|
|
|
|
|
|
|
|
The Company's tier 1 leverage capital ratio | 8.46 | % |
| 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 September 30, 2015, the Bank’s common equity tier 1 capital ratio of 15.94% and total capital ratio of 17.10% 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.
7
Conference Call
The Company will also host an earnings call on Thursday, October 22, 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 November 5, 2015, by dialing 877-660-6853, using Conference ID #: 13621280.
8
Old Second Bancorp, Inc. and Subsidiaries
(In thousands, except share data)
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
| |
|
| September 30, |
| December 31, | ||
|
| 2015 |
| 2014 | ||
Assets |
|
|
|
|
|
|
Cash and due from banks |
| $ | 35,443 |
| $ | 30,101 |
Interest bearing deposits with financial institutions |
|
| 18,329 |
|
| 14,096 |
Cash and cash equivalents |
|
| 53,772 |
|
| 44,197 |
Securities available-for-sale, at fair value |
|
| 408,836 |
|
| 385,486 |
Securities held-to-maturity, at amortized cost |
|
| 250,044 |
|
| 259,670 |
Federal Home Loan Bank and Federal Reserve Bank stock |
|
| 8,271 |
|
| 9,058 |
Loans held-for-sale |
|
| 3,899 |
|
| 5,072 |
Loans |
|
| 1,132,912 |
|
| 1,159,332 |
Less: allowance for loan losses |
|
| 16,613 |
|
| 21,637 |
Net loans |
|
| 1,116,299 |
|
| 1,137,695 |
Premises and equipment, net |
|
| 39,701 |
|
| 42,335 |
Other real estate owned |
|
| 24,451 |
|
| 31,982 |
Mortgage servicing rights, net |
|
| 5,470 |
|
| 5,462 |
Bank-owned life insurance (BOLI) |
|
| 57,647 |
|
| 56,807 |
Deferred tax assets, net |
|
| 65,150 |
|
| 70,141 |
Other assets |
|
| 16,054 |
|
| 13,882 |
Total assets |
| $ | 2,049,594 |
| $ | 2,061,787 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 430,810 |
| $ | 400,447 |
Interest bearing: |
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 878,226 |
|
| 865,103 |
Time |
|
| 411,443 |
|
| 419,505 |
Total deposits |
|
| 1,720,479 |
|
| 1,685,055 |
Securities sold under repurchase agreements |
|
| 27,074 |
|
| 21,036 |
Other short-term borrowings |
|
| 35,000 |
|
| 45,000 |
Junior subordinated debentures |
|
| 58,378 |
|
| 58,378 |
Subordinated debt |
|
| 45,000 |
|
| 45,000 |
Notes payable and other borrowings |
|
| 500 |
|
| 500 |
Other liabilities |
|
| 9,520 |
|
| 12,655 |
Total liabilities |
|
| 1,895,951 |
|
| 1,867,624 |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
Preferred stock |
|
| - |
|
| 47,331 |
Common stock |
|
| 34,423 |
|
| 34,365 |
Additional paid-in capital |
|
| 115,773 |
|
| 115,332 |
Retained earnings |
|
| 110,376 |
|
| 100,697 |
Accumulated other comprehensive loss |
|
| (10,963) |
|
| (7,713) |
Treasury stock |
|
| (95,966) |
|
| (95,849) |
Total stockholders’ equity |
|
| 153,643 |
|
| 194,163 |
Total liabilities and stockholders’ equity |
| $ | 2,049,594 |
| $ | 2,061,787 |
9
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (unaudited) |
| (unaudited) | ||||||||
|
| Three Months Ended |
| Nine Months Ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2015 |
| 2014 |
| 2015 |
| 2014 | ||||
Interest and dividend income |
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 13,353 |
| $ | 13,362 |
| $ | 40,038 |
| $ | 39,346 |
Loans held-for-sale |
|
| 38 |
|
| 38 |
|
| 153 |
|
| 92 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 3,471 |
|
| 3,586 |
|
| 10,218 |
|
| 10,440 |
Tax exempt |
|
| 122 |
|
| 110 |
|
| 426 |
|
| 376 |
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock |
|
| 76 |
|
| 78 |
|
| 230 |
|
| 232 |
Interest bearing deposits with financial institutions |
|
| 12 |
|
| 25 |
|
| 43 |
|
| 60 |
Total interest and dividend income |
|
| 17,072 |
|
| 17,199 |
|
| 51,108 |
|
| 50,546 |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 185 |
|
| 175 |
|
| 547 |
|
| 562 |
Time deposits |
|
| 799 |
|
| 1,073 |
|
| 2,377 |
|
| 3,604 |
Other short-term borrowings |
|
| 6 |
|
| 5 |
|
| 22 |
|
| 10 |
Junior subordinated debentures |
|
| 1,072 |
|
| 1,072 |
|
| 3,215 |
|
| 3,847 |
Subordinated debt |
|
| 205 |
|
| 199 |
|
| 604 |
|
| 593 |
Notes payable and other borrowings |
|
| 1 |
|
| 4 |
|
| 5 |
|
| 12 |
Total interest expense |
|
| 2,268 |
|
| 2,528 |
|
| 6,770 |
|
| 8,628 |
Net interest and dividend income |
|
| 14,804 |
|
| 14,671 |
|
| 44,338 |
|
| 41,918 |
Loan loss reserve release |
|
| (2,100) |
|
| - |
|
| (4,400) |
|
| (2,000) |
Net interest and dividend income after provision for loan losses |
|
| 16,904 |
|
| 14,671 |
|
| 48,738 |
|
| 43,918 |
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,444 |
|
| 1,483 |
|
| 4,526 |
|
| 4,619 |
Service charges on deposits |
|
| 1,766 |
|
| 1,838 |
|
| 5,086 |
|
| 5,354 |
Secondary mortgage fees |
|
| 190 |
|
| 174 |
|
| 715 |
|
| 441 |
Mortgage servicing (loss) gain, net of changes in fair value |
|
| (274) |
|
| 252 |
|
| 18 |
|
| 269 |
Net gain on sales of mortgage loans |
|
| 1,359 |
|
| 914 |
|
| 4,677 |
|
| 2,614 |
Securities (loss) gain, net |
|
| (57) |
|
| 1,231 |
|
| (178) |
|
| 1,457 |
Increase in cash surrender value of bank-owned life insurance |
|
| 203 |
|
| 304 |
|
| 840 |
|
| 1,028 |
Debit card interchange income |
|
| 1,004 |
|
| 1,011 |
|
| 3,013 |
|
| 2,771 |
Loss on disposal and transfer of fixed assets |
|
| (1,143) |
|
| (121) |
|
| (1,143) |
|
| (121) |
Other income |
|
| 1,156 |
|
| 1,237 |
|
| 4,331 |
|
| 3,693 |
Total noninterest income |
|
| 5,648 |
|
| 8,323 |
|
| 21,885 |
|
| 22,125 |
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 8,260 |
|
| 8,856 |
|
| 26,664 |
|
| 27,140 |
Occupancy expense, net |
|
| 1,156 |
|
| 1,143 |
|
| 3,521 |
|
| 3,809 |
Furniture and equipment expense |
|
| 1,110 |
|
| 989 |
|
| 3,176 |
|
| 2,956 |
FDIC insurance |
|
| 373 |
|
| 649 |
|
| 1,023 |
|
| 1,555 |
General bank insurance |
|
| 308 |
|
| 371 |
|
| 975 |
|
| 1,203 |
Amortization of core deposit |
|
| - |
|
| 154 |
|
| - |
|
| 1,177 |
Advertising expense |
|
| 434 |
|
| 291 |
|
| 992 |
|
| 1,053 |
Debit card interchange expense |
|
| 379 |
|
| 418 |
|
| 1,131 |
|
| 1,208 |
Legal fees |
|
| 279 |
|
| 332 |
|
| 922 |
|
| 998 |
Other real estate expense, net |
|
| 977 |
|
| 2,007 |
|
| 4,717 |
|
| 4,665 |
Other expense |
|
| 2,968 |
|
| 3,134 |
|
| 9,203 |
|
| 9,148 |
Total noninterest expense |
|
| 16,244 |
|
| 18,344 |
|
| 52,324 |
|
| 54,912 |
Income before income taxes |
|
| 6,308 |
|
| 4,650 |
|
| 18,299 |
|
| 11,131 |
Provision for income taxes |
|
| 2,384 |
|
| 1,726 |
|
| 6,747 |
|
| 3,984 |
Net income |
| $ | 3,924 |
| $ | 2,924 |
| $ | 11,552 |
| $ | 7,147 |
Preferred stock dividends and accretion of discount |
|
| 339 |
|
| 1,065 |
|
| 1,873 |
|
| 3,985 |
Dividends waived upon preferred stock redemption |
|
| - |
|
| - |
|
| - |
|
| (5,433) |
Gain on preferred stock redemption |
|
| - |
|
| - |
|
| - |
|
| (1,348) |
Net income available to common stockholders |
| $ | 3,585 |
| $ | 1,859 |
| $ | 9,679 |
| $ | 9,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.12 |
| $ | 0.06 |
| $ | 0.33 |
| $ | 0.41 |
Diluted earnings per share |
|
| 0.12 |
|
| 0.06 |
|
| 0.33 |
|
| 0.41 |
|
|
|
|
|
|
|
|
|
Ending common shares outstanding |
| 29,478,429 |
| 29,442,508 |
| 29,478,429 |
| 29,442,508 |
Weighted-average common shares outstanding |
| 29,478,429 |
| 29,442,508 |
| 29,474,833 |
| 23,905,205 |
Diluted average common shares outstanding |
| 29,746,429 |
| 29,767,508 |
| 29,724,234 |
| 24,127,635 |
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 |
| 3rd Qtr | |||||||
Cash and due from banks |
| $ | 29,901 |
| $ | 36,827 |
| $ | 32,459 |
| $ | 31,314 |
| $ | 31,744 |
| $ | 29,153 |
| $ | 28,999 |
Interest bearing deposits with financial institutions |
|
| 23,775 |
|
| 30,333 |
|
| 38,603 |
|
| 19,643 |
|
| 18,022 |
|
| 29,880 |
|
| 18,563 |
Cash and cash equivalents |
|
| 53,676 |
|
| 67,160 |
|
| 71,062 |
|
| 50,957 |
|
| 49,766 |
|
| 59,033 |
|
| 47,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale, at fair value |
|
| 371,229 |
|
| 388,309 |
|
| 348,791 |
|
| 368,944 |
|
| 380,180 |
|
| 409,600 |
|
| 410,083 |
Securities held-to-maturity, at amortized cost |
|
| 263,765 |
|
| 264,070 |
|
| 263,832 |
|
| 261,775 |
|
| 258,637 |
|
| 255,293 |
|
| 251,648 |
Federal Home Loan Bank and Federal Reserve Bank stock |
|
| 10,292 |
|
| 10,292 |
|
| 9,085 |
|
| 9,058 |
|
| 9,058 |
|
| 8,409 |
|
| 8,271 |
Loans held-for-sale |
|
| 2,344 |
|
| 2,829 |
|
| 3,758 |
|
| 4,065 |
|
| 4,782 |
|
| 7,880 |
|
| 3,789 |
Loans |
|
| 1,104,065 |
|
| 1,118,089 |
|
| 1,133,379 |
|
| 1,141,297 |
|
| 1,156,662 |
|
| 1,144,605 |
|
| 1,140,624 |
Less : allowance for loan losses |
|
| 27,102 |
|
| 25,146 |
|
| 24,492 |
|
| 23,231 |
|
| 21,605 |
|
| 20,546 |
|
| 18,607 |
Net loans |
|
| 1,076,963 |
|
| 1,092,943 |
|
| 1,108,887 |
|
| 1,118,066 |
|
| 1,135,057 |
|
| 1,124,059 |
|
| 1,122,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
| 45,972 |
|
| 45,575 |
|
| 45,116 |
|
| 42,516 |
|
| 42,306 |
|
| 41,937 |
|
| 41,572 |
Other real estate owned |
|
| 39,971 |
|
| 39,094 |
|
| 38,757 |
|
| 39,566 |
|
| 32,392 |
|
| 34,637 |
|
| 29,049 |
Mortgage servicing rights, net |
|
| 5,569 |
|
| 5,527 |
|
| 5,522 |
|
| 5,468 |
|
| 5,202 |
|
| 5,416 |
|
| 5,776 |
Core deposit intangible, net |
|
| 916 |
|
| 399 |
|
| 23 |
|
| - |
|
| - |
|
| - |
|
| - |
Bank-owned life insurance (BOLI) |
|
| 55,551 |
|
| 55,894 |
|
| 56,262 |
|
| 56,566 |
|
| 56,927 |
|
| 57,283 |
|
| 57,561 |
Deferred tax assets, net |
|
| 75,387 |
|
| 74,082 |
|
| 71,937 |
|
| 71,628 |
|
| 69,936 |
|
| 67,657 |
|
| 66,174 |
Other assets |
|
| 12,990 |
|
| 12,798 |
|
| 12,615 |
|
| 11,985 |
|
| 11,781 |
|
| 12,309 |
|
| 11,514 |
Total other assets |
|
| 236,356 |
|
| 233,369 |
|
| 230,232 |
|
| 227,729 |
|
| 218,544 |
|
| 219,239 |
|
| 211,646 |
Total assets |
| $ | 2,014,625 |
| $ | 2,058,972 |
| $ | 2,035,647 |
| $ | 2,040,594 |
| $ | 2,056,024 |
| $ | 2,083,513 |
| $ | 2,055,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 373,711 |
| $ | 389,926 |
| $ | 389,246 |
| $ | 400,001 |
| $ | 405,933 |
| $ | 435,093 |
| $ | 431,052 |
Interest bearing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 852,709 |
|
| 861,735 |
|
| 860,342 |
|
| 857,666 |
|
| 881,714 |
|
| 885,809 |
|
| 889,448 |
Time |
|
| 468,138 |
|
| 457,818 |
|
| 437,597 |
|
| 421,584 |
|
| 418,615 |
|
| 410,066 |
|
| 404,896 |
Total deposits |
|
| 1,694,558 |
|
| 1,709,479 |
|
| 1,687,185 |
|
| 1,679,251 |
|
| 1,706,262 |
|
| 1,730,968 |
|
| 1,725,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
| 24,539 |
|
| 25,224 |
|
| 27,266 |
|
| 27,298 |
|
| 23,437 |
|
| 31,234 |
|
| 31,466 |
Other short-term borrowings |
|
| 4,111 |
|
| 8,681 |
|
| 12,174 |
|
| 24,946 |
|
| 25,722 |
|
| 22,638 |
|
| 14,674 |
Junior subordinated debentures |
|
| 58,378 |
|
| 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 |
|
| 45,000 |
Notes payable and other borrowings |
|
| 500 |
|
| 500 |
|
| 500 |
|
| 500 |
|
| 500 |
|
| 500 |
|
| 500 |
Other liabilities |
|
| 38,966 |
|
| 19,210 |
|
| 11,416 |
|
| 12,177 |
|
| 11,734 |
|
| 10,962 |
|
| 9,782 |
Total liabilities |
|
| 1,866,052 |
|
| 1,866,472 |
|
| 1,841,919 |
|
| 1,847,550 |
|
| 1,871,033 |
|
| 1,899,680 |
|
| 1,885,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
| 72,991 |
|
| 54,947 |
|
| 47,331 |
|
| 47,331 |
|
| 36,637 |
|
| 31,553 |
|
| 15,091 |
Common stock |
|
| 18,840 |
|
| 33,104 |
|
| 34,365 |
|
| 34,365 |
|
| 34,414 |
|
| 34,419 |
|
| 34,422 |
Additional paid-in capital |
|
| 66,241 |
|
| 111,279 |
|
| 115,220 |
|
| 115,263 |
|
| 115,413 |
|
| 115,553 |
|
| 115,692 |
Retained earnings |
|
| 93,508 |
|
| 96,002 |
|
| 98,256 |
|
| 99,553 |
|
| 102,050 |
|
| 105,208 |
|
| 108,858 |
Accumulated other comprehensive loss |
|
| (7,177) |
|
| (6,982) |
|
| (5,594) |
|
| (7,618) |
|
| (7,558) |
|
| (6,935) |
|
| (8,277) |
Treasury stock |
|
| (95,830) |
|
| (95,850) |
|
| (95,850) |
|
| (95,850) |
|
| (95,965) |
|
| (95,965) |
|
| (95,966) |
Total stockholders' equity |
|
| 148,573 |
|
| 192,500 |
|
| 193,728 |
|
| 193,044 |
|
| 184,991 |
|
| 183,833 |
|
| 169,820 |
Total liabilities and stockholder's equity |
| $ | 2,014,625 |
| $ | 2,058,972 |
| $ | 2,035,647 |
| $ | 2,040,594 |
| $ | 2,056,024 |
| $ | 2,083,513 |
| $ | 2,055,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Earning Assets |
| $ | 1,775,470 |
| $ | 1,813,922 |
| $ | 1,797,448 |
| $ | 1,804,782 |
| $ | 1,827,341 |
| $ | 1,855,667 |
| $ | 1,832,978 |
Total Interest Bearing Liabilities |
|
| 1,453,375 |
|
| 1,457,336 |
|
| 1,441,257 |
|
| 1,435,372 |
|
| 1,453,366 |
|
| 1,453,625 |
|
| 1,444,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(In thousands, except share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2014 |
| 2015 | |||||||||||||||||
|
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr | |||||||
Interest and Dividend Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 12,938 |
| $ | 13,046 |
| $ | 13,362 |
| $ | 13,580 |
| $ | 13,218 |
| $ | 13,467 |
| $ | 13,353 |
Loans held-for-sale |
|
| 25 |
|
| 29 |
|
| 38 |
|
| 41 |
|
| 43 |
|
| 72 |
|
| 38 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 3,502 |
|
| 3,352 |
|
| 3,586 |
|
| 3,691 |
|
| 3,375 |
|
| 3,372 |
|
| 3,471 |
Tax exempt |
|
| 148 |
|
| 118 |
|
| 110 |
|
| 96 |
|
| 141 |
|
| 163 |
|
| 122 |
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock |
|
| 76 |
|
| 78 |
|
| 78 |
|
| 77 |
|
| 77 |
|
| 77 |
|
| 76 |
Interest bearing deposits with financial institutions |
|
| 15 |
|
| 20 |
|
| 25 |
|
| 13 |
|
| 12 |
|
| 19 |
|
| 12 |
Total interest and dividend income |
|
| 16,704 |
|
| 16,643 |
|
| 17,199 |
|
| 17,498 |
|
| 16,866 |
|
| 17,170 |
|
| 17,072 |
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 199 |
|
| 188 |
|
| 175 |
|
| 176 |
|
| 179 |
|
| 183 |
|
| 185 |
Time deposits |
|
| 1,321 |
|
| 1,210 |
|
| 1,073 |
|
| 896 |
|
| 807 |
|
| 771 |
|
| 799 |
Other short-term borrowings |
|
| 2 |
|
| 3 |
|
| 5 |
|
| 9 |
|
| 9 |
|
| 7 |
|
| 6 |
Junior subordinated debentures |
|
| 1,387 |
|
| 1,388 |
|
| 1,072 |
|
| 1,072 |
|
| 1,072 |
|
| 1,071 |
|
| 1,072 |
Subordinated debt |
|
| 196 |
|
| 198 |
|
| 199 |
|
| 199 |
|
| 197 |
|
| 202 |
|
| 205 |
Notes payable and other borrowings |
|
| 4 |
|
| 4 |
|
| 4 |
|
| 4 |
|
| 4 |
|
| - |
|
| 1 |
Total interest expense |
|
| 3,109 |
|
| 2,991 |
|
| 2,528 |
|
| 2,356 |
|
| 2,268 |
|
| 2,234 |
|
| 2,268 |
Net interest and dividend income |
|
| 13,595 |
|
| 13,652 |
|
| 14,671 |
|
| 15,142 |
|
| 14,598 |
|
| 14,936 |
|
| 14,804 |
Loan loss reserve release |
|
| (1,000) |
|
| (1,000) |
|
| - |
|
| (1,300) |
|
| - |
|
| (2,300) |
|
| (2,100) |
Net interest and dividend income after provision for loan losses |
|
| 14,595 |
|
| 14,652 |
|
| 14,671 |
|
| 16,442 |
|
| 14,598 |
|
| 17,236 |
|
| 16,904 |
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,459 |
|
| 1,677 |
|
| 1,483 |
|
| 1,579 |
|
| 1,486 |
|
| 1,596 |
|
| 1,444 |
Service charges on deposits |
|
| 1,720 |
|
| 1,796 |
|
| 1,838 |
|
| 1,725 |
|
| 1,541 |
|
| 1,779 |
|
| 1,766 |
Secondary mortgage fees |
|
| 112 |
|
| 155 |
|
| 174 |
|
| 180 |
|
| 244 |
|
| 281 |
|
| 190 |
Mortgage servicing (loss) gain, net of changes in fair value |
|
| (47) |
|
| 64 |
|
| 252 |
|
| (60) |
|
| (208) |
|
| 500 |
|
| (274) |
Net gain on sales of mortgage loans |
|
| 662 |
|
| 1,038 |
|
| 914 |
|
| 980 |
|
| 1,623 |
|
| 1,695 |
|
| 1,359 |
Securities (losses) gains, net |
|
| (69) |
|
| 295 |
|
| 1,231 |
|
| 262 |
|
| (109) |
|
| (12) |
|
| (57) |
Increase in cash surrender value of bank-owned life insurance |
|
| 358 |
|
| 366 |
|
| 304 |
|
| 369 |
|
| 354 |
|
| 283 |
|
| 203 |
Debit card interchange income |
|
| 830 |
|
| 930 |
|
| 1,011 |
|
| 1,035 |
|
| 959 |
|
| 1,050 |
|
| 1,004 |
Loss on disposal and transfer of fixed assets |
|
| - |
|
| - |
|
| (121) |
|
| - |
|
| - |
|
| - |
|
| (1,143) |
Other income |
|
| 1,296 |
|
| 1,160 |
|
| 1,237 |
|
| 1,021 |
|
| 2,083 |
|
| 1,092 |
|
| 1,156 |
Total noninterest income |
|
| 6,321 |
|
| 7,481 |
|
| 8,323 |
|
| 7,091 |
|
| 7,973 |
|
| 8,264 |
|
| 5,648 |
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 9,101 |
|
| 9,183 |
|
| 8,856 |
|
| 9,027 |
|
| 9,255 |
|
| 9,149 |
|
| 8,260 |
Occupancy expense, net |
|
| 1,481 |
|
| 1,185 |
|
| 1,143 |
|
| 1,154 |
|
| 1,271 |
|
| 1,094 |
|
| 1,156 |
Furniture and equipment expense |
|
| 983 |
|
| 984 |
|
| 989 |
|
| 1,016 |
|
| 1,001 |
|
| 1,065 |
|
| 1,110 |
FDIC insurance |
|
| 279 |
|
| 627 |
|
| 649 |
|
| 615 |
|
| 273 |
|
| 377 |
|
| 373 |
General bank insurance |
|
| 489 |
|
| 343 |
|
| 371 |
|
| 358 |
|
| 357 |
|
| 310 |
|
| 308 |
Amortization of core deposit |
|
| 512 |
|
| 511 |
|
| 154 |
|
| - |
|
| - |
|
| - |
|
| - |
Advertising expense |
|
| 303 |
|
| 459 |
|
| 291 |
|
| 225 |
|
| 205 |
|
| 353 |
|
| 434 |
Debit card interchange expense |
|
| 378 |
|
| 412 |
|
| 418 |
|
| 423 |
|
| 352 |
|
| 400 |
|
| 379 |
Legal fees |
|
| 257 |
|
| 409 |
|
| 332 |
|
| 335 |
|
| 223 |
|
| 420 |
|
| 279 |
Other real estate expense, net |
|
| 1,008 |
|
| 1,650 |
|
| 2,007 |
|
| 2,252 |
|
| 1,352 |
|
| 2,388 |
|
| 977 |
Other expense |
|
| 2,725 |
|
| 3,289 |
|
| 3,134 |
|
| 3,362 |
|
| 2,864 |
|
| 3,371 |
|
| 2,968 |
Total noninterest expense |
|
| 17,516 |
|
| 19,052 |
|
| 18,344 |
|
| 18,767 |
|
| 17,153 |
|
| 18,927 |
|
| 16,244 |
Income before income taxes |
|
| 3,400 |
|
| 3,081 |
|
| 4,650 |
|
| 4,766 |
|
| 5,418 |
|
| 6,573 |
|
| 6,308 |
Provision for income taxes |
|
| 1,198 |
|
| 1,060 |
|
| 1,726 |
|
| 1,777 |
|
| 1,919 |
|
| 2,444 |
|
| 2,384 |
Net income |
|
| 2,202 |
|
| 2,021 |
|
| 2,924 |
|
| 2,989 |
|
| 3,499 |
|
| 4,129 |
|
| 3,924 |
Preferred stock dividends and accretion of discount |
|
| 1,572 |
|
| 1,348 |
|
| 1,065 |
|
| 1,077 |
|
| 824 |
|
| 710 |
|
| 339 |
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 |
| $ | 3,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.04 |
| $ | 0.26 |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.09 |
| $ | 0.12 |
| $ | 0.12 |
Diluted earnings per share |
|
| 0.04 |
|
| 0.26 |
|
| 0.06 |
|
| 0.06 |
|
| 0.09 |
|
| 0.12 |
|
| 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 |
| |||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| |||
Net Interest Margin |
|
|
|
|
|
|
|
|
|
|
Interest income (GAAP) |
| $ | 17,072 |
| $ | 17,170 |
| $ | 17,199 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 24 |
|
| 27 |
|
| 29 |
|
Securities |
|
| 65 |
|
| 88 |
|
| 59 |
|
Interest income - TE |
|
| 17,161 |
|
| 17,285 |
|
| 17,287 |
|
Interest expense (GAAP) |
|
| 2,268 |
|
| 2,234 |
|
| 2,528 |
|
Net interest income -TE |
| $ | 14,893 |
| $ | 15,051 |
| $ | 14,759 |
|
Net interest income (GAAP) |
| $ | 14,804 |
| $ | 14,936 |
| $ | 14,671 |
|
Average interest earning assets |
| $ | 1,832,978 |
| $ | 1,855,667 |
| $ | 1,797,448 |
|
Net interest margin (GAAP) |
|
| 3.20 | % |
| 3.23 | % |
| 3.24 | % |
Net interest margin - TE |
|
| 3.22 | % |
| 3.25 | % |
| 3.26 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| ||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2015 |
| 2015 |
| 2014 |
| |||
Efficiency Ratio |
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
| $ | 16,244 |
| $ | 18,927 |
| $ | 18,344 |
|
Less amortization of core deposit, net |
|
| - |
|
| - |
|
| 154 |
|
Less other real estate expense, net |
|
| 977 |
|
| 2,388 |
|
| 2,007 |
|
Adjusted noninterest expense |
|
| 15,267 |
|
| 16,539 |
|
| 16,183 |
|
Net interest income (GAAP) |
|
| 14,804 |
|
| 14,936 |
|
| 14,671 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 24 |
|
| 27 |
|
| 29 |
|
Securities |
|
| 65 |
|
| 88 |
|
| 59 |
|
Net interest income (TE) |
|
| 14,893 |
|
| 15,051 |
|
| 14,759 |
|
Noninterest income |
|
| 5,648 |
|
| 8,264 |
|
| 8,323 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Increase in cash surrender value of BOLI - (TE) |
|
| 109 |
|
| 152 |
|
| 164 |
|
Noninterest income - (TE) |
|
| 5,757 |
|
| 8,416 |
|
| 8,487 |
|
Less securities (losses) gain, net |
|
| (57) |
|
| (12) |
|
| 1,231 |
|
Adjusted noninterest income, plus net interest income (TE) |
| $ | 20,707 |
| $ | 23,479 |
| $ | 22,015 |
|
Efficiency ratio |
|
| 73.73 | % |
| 70.44 | % |
| 73.51 | % |
13