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(NASDAQ:OSBC) | Exhibit 99.1 | |
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Contact: | J. Douglas Cheatham | For Immediate Release |
| Chief Financial Officer | October 19, 2016 |
| (630) 906-5484 |
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Old Second Reports Third Quarter 2016 Net Income of $3.5 million
AURORA, IL, October 19, 2016 – 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 2016. The Company reported net income of $3.5 million for the third quarter of 2016, compared to net income of $3.9 million in the third quarter of 2015. The Company’s net income available to common stockholders was $3.5 million, or $0.12 per diluted share, for the third quarter of 2016, compared to $3.6 million, or $0.12 per diluted share, in the third quarter of 2015.
Operating Results
· | On October 18, 2016, the Company’s Board of Directors declared a cash dividend of 1 cent per share payable on November 7, 2016, to stockholders of record as of October 28, 2016. |
· | Third quarter 2016 net income available to common stockholders was $3.5 million, reflecting a decrease of $86,000, or 2.4%, from the third quarter of 2015 and a decrease of $346,000, or 9.0%, from the second quarter of 2016. |
· | Net interest and dividend income totaled $15.3 million for the third quarter of 2016 and reflects an increase of $543,000, or 3.7%, over the third quarter of 2015. Net interest and dividend income for the third quarter of 2016 reflected no significant change from the second quarter of 2016. |
· | No release of loan loss reserves was recorded in the third quarter of 2016, as compared to a $2.1 million reserve release in the like 2015 quarter. No additional provision or release has been recorded to the reserve in the 2016 full year period. |
· | Noninterest income was $6.6 million for the third quarter of 2016, which reflects growth of $946,000, or 16.7%, over the third quarter of 2015 primarily due to increases in residential mortgage banking income and a one-time fixed asset write-down taken in the third quarter of 2015. Noninterest income was $683,000, or 9.4%, less in the third quarter of 2016 as compared to the second quarter of 2016, primarily due to net losses on security sales incurred in the third quarter in anticipation of the funding requirements for the Company’s pending acquisition of the Chicago branch of Talmer Bank and Trust, which is expected to close in the fourth quarter of 2016. |
· | Finally, noninterest expense of $16.6 million for the third quarter of 2016 increased $338,000, or 2.1%, from the third quarter of 2015 stemming from increases in compensation costs, employee compliance training and compliance related audit fees. Noninterest expense was slightly lower in the third quarter of 2016 as compared to the second quarter of 2016, primarily due to reduced OREO related expenses in the third quarter as OREO balances continue to decline. |
1
Capital Ratios
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| September 30, |
| December 31, |
| September 30, | |||
| 2016 |
| 2015 |
| 2015 | |||
The Bank's common equity tier 1 capital ratio | 15.22 | % |
| 14.10 | % |
| 15.94 | % |
The Company's common equity tier 1 capital ratio | 10.68 | % |
| 10.55 | % |
| 10.26 | % |
The Bank's total capital ratio | 16.24 | % |
| 15.23 | % |
| 17.10 | % |
The Company's total capital ratio | 15.42 | % |
| 15.56 | % |
| 15.36 | % |
The Company's tier 1 leverage ratio | 9.32 | % |
| 8.69 | % |
| 8.46 | % |
· | The ratios shown above exceed levels required to be considered “well capitalized.” |
Asset Quality & Earning Assets
· | Nonperforming loans ended at $17.4 million at September 30, 2016, compared to $14.6 million at December 31, 2015, and $18.5 million at September 30, 2015. Nonperforming loans are level for the quarter, but increased for the year to date 2016 period primarily due to two commercial real estate relationships. Each lost one large tenant in the second quarter. Both borrowers continue to aggressively pursue new tenants, and one borrower has noted that refinancing is in process with another institution. |
· | OREO assets decreased in the third quarter to end at $14.1 million on September 30, 2016, compared to $19.1 million at December 31, 2015, and $24.5 million at September 30, 2015. Valuation writedowns continued in the third quarter of 2016 with a quarterly expense of $365,000 compared to $1.1 million in the third quarter of 2015. |
· | Total loans at September 30, 2016, were $1.20 billion, reflecting an increase of $69.1 million when compared to December 31, 2015, and an increase of $69.9 million as compared to September 30, 2015. Average loans (including loans held-for-sale) for the third quarter of 2016 were $1.19 billion, reflecting an increase of $51.3 million from the fourth quarter of 2015 and an increase of $47.2 million when compared to the third quarter of 2015. Loan growth in the 2016 period stems primarily from commercial and industrial loan originations. |
· | September 30, 2016, available-for-sale securities at fair value totaled $531.1 million, as compared to $764.6 million at June 30, 2016. This reduction of $233.5 million for the quarter reflects the sale of securities to satisfy anticipated funding requirements for the acquisition of the Talmer branch. Total earning assets were also down slightly since June 30, 2016, for this same reason, which negatively impacted net interest margin and also resulted in pretax net security losses of $2.0 million for the third quarter of 2016. |
Management review of the loan portfolio concluded that neither a loan loss reserve release nor a loan loss provision was appropriate in the third quarter of 2016. The third quarter of 2015 reflected a loan loss reserve release of $2.1 million. For the 2016 full year period, there have been no additional loan loss reserves or releases of loan loss provisions recorded.
2
Net Interest Income1
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
(Dollars in thousands - unaudited)
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| Quarters Ended | ||||||||||||||||||||||
| September 30, 2016 |
| December 31, 2015 |
| September 30, 2015 | ||||||||||||||||||
| 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 | $ | 50,054 |
| $ | 64 |
| 0.50 |
| $ | 13,859 |
| $ | 12 |
| 0.34 |
| $ | 18,563 |
| $ | 12 |
| 0.25 |
Securities: |
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Taxable |
| 624,844 |
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| 3,954 |
| 2.53 |
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| 674,690 |
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| 3,819 |
| 2.26 |
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| 642,413 |
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| 3,471 |
| 2.16 |
Non-taxable (TE) |
| 35,046 |
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| 277 |
| 3.16 |
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| 17,090 |
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| 179 |
| 4.19 |
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| 19,318 |
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| 187 |
| 3.87 |
Total securities |
| 659,890 |
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| 4,231 |
| 2.56 |
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| 691,780 |
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| 3,998 |
| 2.31 |
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| 661,731 |
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| 3,658 |
| 2.21 |
Dividends from Reserve Bank and FHLBC stock |
| 7,918 |
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| 83 |
| 4.19 |
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| 8,451 |
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| 76 |
| 3.60 |
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| 8,271 |
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| 76 |
| 3.68 |
Loans and loans held-for-sale1 |
| 1,191,574 |
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| 13,567 |
| 4.46 |
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| 1,140,308 |
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| 13,057 |
| 4.48 |
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| 1,144,413 |
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| 13,415 |
| 4.59 |
Total interest earning assets |
| 1,909,436 |
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| 17,945 |
| 3.70 |
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| 1,854,398 |
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| 17,143 |
| 3.64 |
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| 1,832,978 |
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| 17,161 |
| 3.68 |
Cash and due from banks |
| 41,344 |
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| - |
| - |
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| 28,781 |
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| - |
| - |
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| 28,999 |
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| - |
| - |
Allowance for loan losses |
| (15,767) |
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| - |
| - |
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| (16,598) |
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| - |
| - |
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| (18,607) |
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| - |
| - |
Other noninterest bearing assets |
| 190,213 |
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| - |
| - |
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| 202,015 |
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| - |
| - |
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| 210,793 |
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| - |
| - |
Total assets | $ | 2,125,226 |
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| $ | 2,068,596 |
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| $ | 2,054,163 |
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Liabilities and Stockholders' Equity |
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NOW accounts | $ | 384,588 |
| $ | 89 |
| 0.09 |
| $ | 360,786 |
| $ | 79 |
| 0.09 |
| $ | 347,754 |
| $ | 76 |
| 0.09 |
Money market accounts |
| 265,135 |
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| 64 |
| 0.10 |
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| 284,209 |
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| 70 |
| 0.10 |
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| 291,663 |
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| 71 |
| 0.10 |
Savings accounts |
| 257,808 |
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| 40 |
| 0.06 |
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| 248,952 |
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| 38 |
| 0.06 |
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| 250,031 |
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| 38 |
| 0.06 |
Time deposits |
| 401,999 |
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| 931 |
| 0.92 |
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| 409,353 |
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| 824 |
| 0.80 |
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| 404,896 |
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| 799 |
| 0.78 |
Interest bearing deposits |
| 1,309,530 |
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| 1,124 |
| 0.34 |
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| 1,303,300 |
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| 1,011 |
| 0.31 |
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| 1,294,344 |
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| 984 |
| 0.30 |
Securities sold under repurchase agreements |
| 31,892 |
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| 1 |
| 0.01 |
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| 26,569 |
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| 1 |
| 0.01 |
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| 31,466 |
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| 1 |
| 0.01 |
Other short-term borrowings |
| 22,174 |
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| 22 |
| 0.39 |
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| 24,837 |
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| 10 |
| 0.16 |
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| 14,674 |
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| 5 |
| 0.13 |
Junior subordinated debentures |
| 57,573 |
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| 1,084 |
| 7.53 |
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| 57,538 |
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| 1,072 |
| 7.45 |
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| 57,525 |
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| 1,072 |
| 7.45 |
Subordinated debt |
| 45,000 |
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| 245 |
| 2.13 |
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| 45,000 |
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| 210 |
| 1.83 |
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| 45,000 |
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| 205 |
| 1.78 |
Notes payable and other borrowings |
| 500 |
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| 2 |
| 1.57 |
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| 500 |
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| 2 |
| 1.57 |
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| 500 |
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| 1 |
| 0.78 |
Total interest bearing liabilities |
| 1,466,669 |
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| 2,478 |
| 0.67 |
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| 1,457,744 |
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| 2,306 |
| 0.63 |
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| 1,443,509 |
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| 2,268 |
| 0.62 |
Noninterest bearing deposits |
| 472,599 |
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| - |
| - |
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| 445,083 |
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| - |
| - |
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| 431,052 |
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| - |
| - |
Other liabilities |
| 15,539 |
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| - |
| - |
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| 10,488 |
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| - |
| - |
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| 9,782 |
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| - |
| - |
Stockholders' equity |
| 170,419 |
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| - |
| - |
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| 155,281 |
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| - |
| - |
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| 169,820 |
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| - |
| - |
Total liabilities and stockholders' equity | $ | 2,125,226 |
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| $ | 2,068,596 |
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| $ | 2,054,163 |
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Net interest income (TE) |
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| $ | 15,467 |
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| $ | 14,837 |
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| $ | 14,893 |
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Net interest income (TE) |
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to total earning assets |
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| 3.22 |
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| 3.17 |
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| 3.22 |
Interest bearing liabilities to earning assets |
| 76.81 | % |
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| 78.61 | % |
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| 78.75 | % |
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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 $700,000, $430,000 and $459,000 for the third quarter of 2016, the fourth quarter of 2015 and the third quarter of 2015, respectively. Nonaccrual loans are included in the above stated average balances. Tax equivalent basis is calculated using a marginal tax rate of 35%.
Interest and dividend income increased $802,000 for the quarter ended September 30, 2016 as compared to the quarter ended December 31, 2015, and increased $784,000 as compared to the third quarter of 2015. Quarterly average earning assets increased $55.0 million from the last quarter of 2015 to a total of $1.91 billion for the period ended September 30, 2016, while yield on earning assets increased 6 basis points. Year over year third quarter average loans, including loans held-for-sale, increased $47.2 million, while total average earning assets increased $76.5 million for the same period. This increase was driven by loan growth and more favorable rates earned on securities retained, as lower yielding securities were sold in the third quarter of 2016 in preparation for the Talmer branch acquisition. The cost of funds increased by 4 basis points from the fourth quarter of 2015 and by 5 basis points from the third quarter of 2015. Total average interest bearing liabilities have increased in all periods presented due to growth in NOW accounts, and to a lesser extent, savings accounts and securities sold under repurchase agreements. For the quarter ended September 30, 2016, average other short-term borrowings decreased by $2.7 million compared to the fourth quarter of 2015, but increased $7.5 million as compared to September 30, 2015.
3
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| 3rd Qtr 2016 |
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| Three Months Ended |
| Percent Change From |
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(dollars in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
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| 2016 |
| 2016 |
| 2015 |
| 2016 |
| 2015 |
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Trust income |
| $ | 1,403 |
| $ | 1,502 |
| $ | 1,444 |
| (6.6) |
| (2.8) |
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Service charges on deposits |
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| 1,756 |
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| 1,646 |
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| 1,766 |
| 6.7 |
| (0.6) |
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Residential mortgage banking revenue |
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| 2,789 |
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| 1,611 |
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| 1,275 |
| 73.1 |
| 118.7 |
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Securities loss, net |
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| (1,959) |
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| - |
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| (57) |
| N/M |
| N/M |
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Increase in cash surrender value of bank-owned life insurance |
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| 383 |
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| 319 |
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| 236 |
| 20.1 |
| 62.3 |
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Debit card interchange income |
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| 1,013 |
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| 1,049 |
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| 1,004 |
| (3.4) |
| 0.9 |
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Loss on disposal and transfer of fixed assets |
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| - |
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| - |
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| (1,143) |
| N/M |
| N/M |
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Other income |
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| 1,209 |
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| 1,150 |
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| 1,123 |
| 5.1 |
| 7.7 |
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Total noninterest income |
| $ | 6,594 |
| $ | 7,277 |
| $ | 5,648 |
| (9.4) |
| 16.7 |
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N/M equals Not Meaningful
Of the noninterest income categories, residential mortgage banking income experienced the largest fluctuations on both a linked quarter and year over year basis, as shown above, primarily due to increases in the net gains on sales of mortgage loans, as well as the variability of mortgage servicing rights valuations. In the third quarter of 2015, a one-time writedown of $1.1 million was recorded on a fixed asset upon transfer to OREO status. Also, cash surrender value of bank-owned life insurance increased as a result of investment value growth over all periods presented. Finally in the third quarter of 2016, net security losses of $2.0 million were realized to satisfy anticipated funding requirements for the Talmer branch acquisition. Excluding these items, the three quarters presented have minimal variation.
Noninterest Expense
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| 3rd Qtr 2016 |
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| Three Months Ended |
| Percent Change From |
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(dollars in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
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| 2016 |
| 2016 |
| 2015 |
| 2016 |
| 2015 |
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Salaries |
| $ | 7,205 |
| $ | 6,999 |
| $ | 6,843 |
| 2.9 |
| 5.3 |
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Bonus |
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| 521 |
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| 452 |
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| 238 |
| 15.3 |
| 118.9 |
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Benefits and other |
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| 1,288 |
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| 1,363 |
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| 1,179 |
| (5.5) |
| 9.2 |
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Total salaries and employee benefits |
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| 9,014 |
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| 8,814 |
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| 8,260 |
| 2.3 |
| 9.1 |
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Occupancy expense, net |
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| 1,120 |
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| 1,009 |
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| 1,156 |
| 11.0 |
| (3.1) |
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Furniture and equipment expense |
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| 1,144 |
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| 1,078 |
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| 1,110 |
| 6.1 |
| 3.1 |
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FDIC insurance |
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| 228 |
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| 362 |
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| 373 |
| (37.0) |
| (38.9) |
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General bank insurance |
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| 269 |
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| 272 |
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| 308 |
| (1.1) |
| (12.7) |
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Advertising expense |
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| 430 |
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| 435 |
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| 434 |
| (1.1) |
| (0.9) |
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Debit card interchange expense |
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| 363 |
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| 620 |
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| 379 |
| (41.5) |
| (4.2) |
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Legal fees |
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| 242 |
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| 191 |
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| 279 |
| 26.7 |
| (13.3) |
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Other real estate owned expense, net |
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| 426 |
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| 879 |
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| 977 |
| (51.5) |
| (56.4) |
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Other expense |
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| 3,346 |
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| 3,040 |
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| 2,968 |
| 10.1 |
| 12.7 |
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Total noninterest expense |
| $ | 16,582 |
| $ | 16,700 |
| $ | 16,244 |
| (0.7) |
| 2.1 |
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Efficiency ratio (defined below) |
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| 66.69 | % |
| 68.92 | % |
| 73.66 | % |
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The efficiency ratio shown in the table above is calculated as noninterest expense, excluding 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 includes a tax equivalent adjustment on the increase in cash surrender value of bank-owned life insurance.
Noninterest expense decreased $118,000, or 1%, on a linked quarter basis. This is primarily due to an increase in net gains upon sale of OREO, and other OREO related expenses which continue to be less than levels
4
experienced in the prior year. Major expense categories were generally flat or down in the third quarter of 2016 compared to the second quarter of 2016 and the third quarter of 2015, with the exception of salaries and employee benefits, due to increased headcount and costs of retirement benefits. FDIC insurance expense was reduced in the third quarter of 2016 and incorporates the FDIC small bank rate change effective July 1, 2016. Other expense was slightly higher in the third quarter of 2016 due to increased costs of employee compliance training, and compliance related audit fees.
Earning Assets
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| September 30, 2016 |
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| Major Classification of Loans as of |
| Percent Change From |
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(dollars in thousands) |
| September 30, |
| December 31, |
| September 30, |
| December 31, |
| September 30, |
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| 2016 |
| 2015 |
| 2015 |
| 2015 |
| 2015 |
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Commercial |
| $ | 169,824 |
| $ | 130,362 |
| $ | 120,036 |
| 30.3 |
| 41.5 |
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Real estate - commercial |
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| 617,280 |
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| 605,721 |
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| 609,937 |
| 1.9 |
| 1.2 |
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Real estate - construction |
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| 28,786 |
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| 19,806 |
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| 23,461 |
| 45.3 |
| 22.7 |
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Real estate - residential |
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| 357,846 |
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| 351,007 |
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| 354,106 |
| 1.9 |
| 1.1 |
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Consumer |
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| 3,325 |
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| 4,216 |
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| 4,005 |
| (21.1) |
| (17.0) |
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Overdraft |
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| 403 |
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| 483 |
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| 423 |
| (16.6) |
| (4.7) |
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Lease financing receivables |
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| 14,210 |
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| 10,953 |
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| 9,697 |
| 29.7 |
| 46.5 |
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Other |
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| 10,114 |
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| 10,130 |
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| 10,345 |
| (0.2) |
| (2.2) |
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| 1,201,788 |
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| 1,132,678 |
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| 1,132,010 |
| 6.1 |
| 6.2 |
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Net deferred loan costs |
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| 1,064 |
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| 1,037 |
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| 902 |
| 2.6 |
| 18.0 |
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Total loans |
| $ | 1,202,852 |
| $ | 1,133,715 |
| $ | 1,132,912 |
| 6.1 |
| 6.2 |
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Total loans increased by $69.1 million at the end of the third quarter of 2016 as compared to year end 2015. Growth in commercial and industrial loans for the first three quarters of 2016 drove the total loans increase, with more restrained growth experienced in the real estate-commercial, real estate-construction, and lease financing receivables portfolios for the year to date and year over year periods.
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| September 30, 2016 |
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| Securities Portfolio As of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| September 30, |
| December 31, |
| September 30, |
| December 31, |
| September 30, |
| |||
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| 2016 |
| 2015 |
| 2015 |
| 2015 |
| 2015 |
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Securities available-for-sale, at fair value |
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U.S. Treasury |
| $ | - |
| $ | 1,509 |
| $ | 1,515 |
| N/M |
| N/M |
|
U.S. government agencies |
|
| 1,503 |
|
| 1,556 |
|
| 1,577 |
| (3.4) |
| (4.7) |
|
U.S. government agency mortgage-backed |
|
| 43,723 |
|
| 1,996 |
|
| 2,034 |
| 2,090.5 |
| 2,049.6 |
|
States and political subdivisions |
|
| 22,254 |
|
| 30,526 |
|
| 23,170 |
| (27.1) |
| (4.0) |
|
Corporate bonds |
|
| 10,730 |
|
| 29,400 |
|
| 29,580 |
| (63.5) |
| (63.7) |
|
Collateralized mortgage obligations |
|
| 204,390 |
|
| 66,920 |
|
| 70,877 |
| 205.4 |
| 188.4 |
|
Asset-backed securities |
|
| 140,173 |
|
| 231,908 |
|
| 187,096 |
| (39.6) |
| (25.1) |
|
Collateralized loan obligations |
|
| 108,284 |
|
| 92,251 |
|
| 92,987 |
| 17.4 |
| 16.5 |
|
Total securities available-for-sale |
| $ | 531,057 |
| $ | 456,066 |
| $ | 408,836 |
| 16.4 |
| 29.9 |
|
Securities held-to-maturity, at amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government agency mortgage-backed |
| $ | - |
| $ | 36,505 |
| $ | 36,746 |
| N/M |
| N/M |
|
Collateralized mortgage obligations |
|
| - |
|
| 211,241 |
|
| 213,298 |
| N/M |
| N/M |
|
Total securities held-to-maturity |
| $ | - |
| $ | 247,746 |
| $ | 250,044 |
| N/M |
| N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities |
| $ | 531,057 |
| $ | 703,812 |
| $ | 658,880 |
| (24.5) |
| (19.4) |
|
The investment portfolio ended the third quarter of 2016 at $531.0 million, a decrease of $172.8 million from $703.8 million at December 31, 2015, and down from $658.9 million a year ago. The decline is primarily due to security sales driven by the funding needs anticipated for the Talmer branch acquisition. During the third quarter of 2016 the sales of securities resulted in pretax net losses of $2.0 million. The securities held-to-maturity portfolio was reclassified to available-for-sale in the second quarter of 2016, to allow for portfolio restructuring and to fund loan growth. This reclassification of $244.8 million was approved by the Board of Directors, and will preclude any holdings of securities held-to-maturity for a two-year period.
5
Asset Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2016 | ||
|
| As of |
| Percent Change From | |||||||||
(dollars in thousands) |
| September 30, |
| December 31, |
| September 30, |
| December 31, |
| September 30, | |||
|
| 2016 |
| 2015 |
| 2015 |
| 2015 |
| 2015 | |||
Nonaccrual loans |
| $ | 16,736 |
| $ | 14,389 |
| $ | 18,224 |
| 16.3 |
| (8.2) |
Nonperforming troubled debt restructured loans accruing interest |
|
| 161 |
|
| 165 |
|
| 307 |
| (2.4) |
| (47.6) |
Loans past due 90 days or more and still accruing interest |
|
| 483 |
|
| 65 |
|
| - |
| 643.1 |
| - |
Total nonperforming loans |
|
| 17,380 |
|
| 14,619 |
|
| 18,531 |
| 18.9 |
| (6.2) |
Other real estate owned |
|
| 14,144 |
|
| 19,141 |
|
| 24,451 |
| (26.1) |
| (42.2) |
Total nonperforming assets |
| $ | 31,524 |
| $ | 33,760 |
| $ | 42,982 |
| (6.6) |
| (26.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-89 days past due loans |
| $ | 3,386 |
| $ | 3,652 |
| $ | 3,358 |
|
|
|
|
Nonaccrual loans to total loans |
|
| 1.4 | % |
| 1.3 | % |
| 1.6 | % |
|
|
|
Nonperforming loans to total loans |
|
| 1.4 | % |
| 1.3 | % |
| 1.6 | % |
|
|
|
Nonperforming assets to total loans plus OREO |
|
| 2.6 | % |
| 2.9 | % |
| 3.7 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
| $ | 14,983 |
| $ | 16,223 |
| $ | 16,613 |
|
|
|
|
Allowance for loan losses to loans |
|
| 1.3 | % |
| 1.4 | % |
| 1.5 | % |
|
|
|
Allowance for loan losses to nonaccrual loans |
|
| 89.5 | % |
| 112.7 | % |
| 91.2 | % |
|
|
|
Nonperforming loans consist of nonaccrual loans, nonperforming restructured accruing loans and loans 90 days or greater past due but still accruing. The nonperforming loan increase in 2016 was due to two relationships secured by commercial real estate which each lost one large tenant in the second quarter of 2016. Both borrowers have indicated they are aggressively pursuing new tenants, and one borrower has noted that refinancing is in process with another institution.
Classified loans include nonaccrual, performing troubled debt restructurings and all other loans considered substandard, as shown below. Classified loans increased by $3.04 million, or 12.0%, from year end 2015; this increase is due to the two relationships, as discussed above. Management review of the loan portfolio concluded neither a loan loss provision nor a reserve release was appropriate in the third quarter of 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2016 |
| ||
|
| Classified loans as of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| September 30, |
| December 31, |
| September 30, |
| December 31, |
| September 30, |
| |||
|
| 2016 |
| 2015 |
| 2015 |
| 2015 |
| 2015 |
| |||
Real estate-construction |
| $ | 254 |
| $ | 83 |
| $ | 3,803 |
| 206.0 |
| (93.3) |
|
Real estate-residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
|
| 1,171 |
|
| 1,136 |
|
| 806 |
| 3.1 |
| 45.3 |
|
Owner occupied |
|
| 6,432 |
|
| 7,079 |
|
| 7,179 |
| (9.1) |
| (10.4) |
|
Revolving and junior liens |
|
| 3,078 |
|
| 3,055 |
|
| 3,599 |
| 0.8 |
| (14.5) |
|
Real estate-commercial, nonfarm |
|
| 13,220 |
|
| 10,568 |
|
| 7,354 |
| 25.1 |
| 79.8 |
|
Real estate-commercial, farm |
|
| 1,801 |
|
| 1,272 |
|
| 1,272 |
| 41.6 |
| 41.6 |
|
Commercial |
|
| 2,302 |
|
| 2,029 |
|
| 616 |
| 13.5 |
| 273.7 |
|
Other |
|
| 1 |
|
| 1 |
|
| 1 |
| - |
| - |
|
Total classified loans |
| $ | 28,259 |
| $ | 25,223 |
| $ | 24,630 |
| 12.0 |
| 14.7 |
|
6
Net Charge-off Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Charge-offs, net of recoveries | Three Months Ended | |||||||||||||
(dollars in thousands) | September 30, |
| % of |
| June 30, |
| % of |
| September 30, |
| % of | |||
| 2016 |
| Total |
| 2016 |
| Total |
| 2015 |
| Total | |||
Real estate-construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilder | $ | (7) |
| (0.8) |
| $ | (5) |
| (1.2) |
| $ | (9) |
| 2.3 |
Land |
| (2) |
| (0.2) |
|
| - |
| - |
|
| (4) |
| 1.0 |
Commercial speculative |
| - |
| - |
|
| - |
| - |
|
| (190) |
| 48.5 |
All other |
| (42) |
| (5.0) |
|
| (1) |
| (0.2) |
|
| (1) |
| 0.3 |
Total real estate-construction |
| (51) |
| (6.0) |
|
| (6) |
| (1.4) |
|
| (204) |
| 52.1 |
Real estate-residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
| (16) |
| (1.9) |
|
| (23) |
| (5.4) |
|
| (10) |
| 2.6 |
Owner occupied |
| (75) |
| (8.9) |
|
| 74 |
| 17.5 |
|
| 163 |
| (41.6) |
Revolving and junior liens |
| 112 |
| 13.3 |
|
| (170) |
| (40.1) |
|
| (3) |
| 0.8 |
Total real estate-residential |
| 21 |
| 2.5 |
|
| (119) |
| (28.0) |
|
| 150 |
| (38.2) |
Real estate-commercial, nonfarm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner general purpose |
| - |
| - |
|
| (106) |
| (25.0) |
|
| 20 |
| (5.1) |
Owner special purpose |
| (3) |
| (0.4) |
|
| (5) |
| (1.2) |
|
| (126) |
| 32.1 |
Non-owner general purpose |
| 132 |
| 15.7 |
|
| 314 |
| 74.1 |
|
| (9) |
| 2.3 |
Non-owner special purpose |
| 636 |
| 75.8 |
|
| - |
| - |
|
| (139) |
| 35.5 |
Retail properties |
| - |
| - |
|
| 342 |
| 80.7 |
|
| - |
| - |
Total real estate-commercial, nonfarm |
| 765 |
| 91.1 |
|
| 545 |
| 128.6 |
|
| (254) |
| 64.8 |
Real estate-commercial, farm |
| - |
| - |
|
| - |
| - |
|
| - |
| - |
Commercial |
| 66 |
| 7.9 |
|
| - |
| - |
|
| (112) |
| 28.6 |
Other |
| 38 |
| 4.5 |
|
| 4 |
| 0.8 |
|
| 28 |
| (7.3) |
Net charge-off / (recovery) | $ | 839 |
| 100.0 |
| $ | 424 |
| 100.0 |
| $ | (392) |
| 100.0 |
Gross charge-offs for the quarter ending September 30, 2016, were $1.2 million compared to $576,000 for the quarter ending September 30, 2015. Gross recoveries for the quarter ending September 30, 2016, were $358,000 compared to $968,000 for the quarter ending September 30, 2015.
Deposits
Total deposits were $1.78 billion at September 30, 2016, which reflects an increase from total deposits of $1.76 billion at December 31, 2015. Demand, savings, and NOW balances increased by $46.6 million during in the first nine months of 2016 while money market deposits declined by $20.2 million and time deposits or certificates of deposit reflect a decrease of $8.1 million for the 2016 year to date period.
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, 2016, the Bank had no advances outstanding under the FHLBC as compared to $15.0 million in advances at December 31, 2015.
The Company is also indebted on $57.6 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. The carrying value was reduced by the amortization of the issuance costs in 2016 after adopting ASU 2015-03 applied on a retrospective basis.
7
Capital
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, |
| September 30, | |||
| 2016 |
| 2015 |
| 2015 | |||
The Company's common equity tier 1 capital ratio | 10.68 | % |
| 10.55 | % |
| 10.26 | % |
(minimum 4.5% for adequately capitalized) |
|
|
|
|
|
|
|
|
The Company's tier 1 capital ratio | 13.25 | % |
| 12.30 | % |
| 11.96 | % |
(minimum 6.0% for adequately capitalized) |
|
|
|
|
|
|
|
|
The Company's total capital ratio | 15.42 | % |
| 15.56 | % |
| 15.36 | % |
(minimum 8.0% for adequately capitalized) |
|
|
|
|
|
|
|
|
The Company's tier 1 leverage ratio | 9.32 | % |
| 8.69 | % |
| 8.46 | % |
(minimum 4.0% for adequately capitalized) |
|
|
|
|
|
|
|
|
As of September 30, 2016, the Bank’s common equity tier 1 capital ratio of 15.22% and total capital ratio of 16.24% exceeded the minimum capital ratios to be deemed “well capitalized.”
Non-GAAP Presentations: Management has historically 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, October 20, 2016, 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 October 27, 2016, by dialing 877-481-4010, using Conference ID: 10094.
8
Old Second Bancorp, Inc. and Subsidiaries
(In thousands)
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
| |
|
| September 30, |
| December 31, | ||
|
| 2016 |
| 2015 | ||
Assets |
|
|
|
|
|
|
Cash and due from banks |
| $ | 29,203 |
| $ | 26,975 |
Interest bearing deposits with financial institutions |
|
| 160,744 |
|
| 13,363 |
Cash and cash equivalents |
|
| 189,947 |
|
| 40,338 |
Securities available-for-sale, at fair value |
|
| 531,057 |
|
| 456,066 |
Securities held-to-maturity, at amortized cost |
|
| - |
|
| 247,746 |
Federal Home Loan Bank and Federal Reserve Bank stock |
|
| 7,918 |
|
| 8,518 |
Loans held-for-sale |
|
| 3,750 |
|
| 2,849 |
Loans |
|
| 1,202,852 |
|
| 1,133,715 |
Less: allowance for loan losses |
|
| 14,983 |
|
| 16,223 |
Net loans |
|
| 1,187,869 |
|
| 1,117,492 |
Premises and equipment, net |
|
| 39,092 |
|
| 39,612 |
Other real estate owned |
|
| 14,144 |
|
| 19,141 |
Mortgage servicing rights, net |
|
| 5,075 |
|
| 5,847 |
Bank-owned life insurance (BOLI) |
|
| 60,036 |
|
| 59,049 |
Deferred tax assets, net |
|
| 55,536 |
|
| 64,552 |
Other assets |
|
| 18,327 |
|
| 15,818 |
Total assets |
| $ | 2,112,751 |
| $ | 2,077,028 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 473,477 |
| $ | 442,639 |
Interest bearing: |
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 904,137 |
|
| 908,598 |
Time |
|
| 399,768 |
|
| 407,849 |
Total deposits |
|
| 1,777,382 |
|
| 1,759,086 |
Securities sold under repurchase agreements |
|
| 46,606 |
|
| 34,070 |
Other short-term borrowings |
|
| - |
|
| 15,000 |
Junior subordinated debentures |
|
| 57,579 |
|
| 57,543 |
Subordinated debt |
|
| 45,000 |
|
| 45,000 |
Notes payable and other borrowings |
|
| 500 |
|
| 500 |
Other liabilities |
|
| 14,057 |
|
| 9,900 |
Total liabilities |
|
| 1,941,124 |
|
| 1,921,099 |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
Common stock |
|
| 34,533 |
|
| 34,427 |
Additional paid-in capital |
|
| 116,468 |
|
| 115,918 |
Retained earnings |
|
| 124,283 |
|
| 114,209 |
Accumulated other comprehensive loss |
|
| (7,437) |
|
| (12,659) |
Treasury stock |
|
| (96,220) |
|
| (95,966) |
Total stockholders’ equity |
|
| 171,627 |
|
| 155,929 |
Total liabilities and stockholders’ equity |
| $ | 2,112,751 |
| $ | 2,077,028 |
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, | ||||||||
|
| 2016 |
| 2015 |
| 2016 |
| 2015 | ||||
Interest and dividend income |
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 13,496 |
| $ | 13,353 |
| $ | 39,593 |
| $ | 40,038 |
Loans held-for-sale |
|
| 48 |
|
| 38 |
|
| 115 |
|
| 153 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 3,954 |
|
| 3,471 |
|
| 12,547 |
|
| 10,218 |
Tax exempt |
|
| 180 |
|
| 122 |
|
| 579 |
|
| 426 |
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock |
|
| 83 |
|
| 76 |
|
| 251 |
|
| 230 |
Interest bearing deposits with financial institutions |
|
| 64 |
|
| 12 |
|
| 98 |
|
| 43 |
Total interest and dividend income |
|
| 17,825 |
|
| 17,072 |
|
| 53,183 |
|
| 51,108 |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 193 |
|
| 185 |
|
| 577 |
|
| 547 |
Time deposits |
|
| 931 |
|
| 799 |
|
| 2,622 |
|
| 2,377 |
Other short-term borrowings |
|
| 23 |
|
| 6 |
|
| 69 |
|
| 22 |
Junior subordinated debentures |
|
| 1,084 |
|
| 1,072 |
|
| 3,251 |
|
| 3,215 |
Subordinated debt |
|
| 245 |
|
| 205 |
|
| 727 |
|
| 604 |
Notes payable and other borrowings |
|
| 2 |
|
| 1 |
|
| 6 |
|
| 5 |
Total interest expense |
|
| 2,478 |
|
| 2,268 |
|
| 7,252 |
|
| 6,770 |
Net interest and dividend income |
|
| 15,347 |
|
| 14,804 |
|
| 45,931 |
|
| 44,338 |
Loan loss reserve release |
|
| - |
|
| (2,100) |
|
| - |
|
| (4,400) |
Net interest and dividend income after release for loan losses |
|
| 15,347 |
|
| 16,904 |
|
| 45,931 |
|
| 48,738 |
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,403 |
|
| 1,444 |
|
| 4,274 |
|
| 4,526 |
Service charges on deposits |
|
| 1,756 |
|
| 1,766 |
|
| 4,961 |
|
| 5,086 |
Secondary mortgage fees |
|
| 322 |
|
| 190 |
|
| 795 |
|
| 715 |
Mortgage servicing gain / (loss), net of changes in fair value |
|
| 290 |
|
| (274) |
|
| (641) |
|
| 18 |
Net gain on sales of mortgage loans |
|
| 2,177 |
|
| 1,359 |
|
| 5,031 |
|
| 4,677 |
Securities loss, net |
|
| (1,959) |
|
| (57) |
|
| (2,020) |
|
| (178) |
Increase in cash surrender value of bank-owned life insurance |
|
| 383 |
|
| 236 |
|
| 987 |
|
| 1,015 |
Debit card interchange income |
|
| 1,013 |
|
| 1,004 |
|
| 3,009 |
|
| 3,013 |
Loss on disposal and transfer of fixed assets, net |
|
| - |
|
| (1,143) |
|
| (1) |
|
| (1,143) |
Other income |
|
| 1,209 |
|
| 1,123 |
|
| 3,751 |
|
| 4,156 |
Total noninterest income |
|
| 6,594 |
|
| 5,648 |
|
| 20,146 |
|
| 21,885 |
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 9,014 |
|
| 8,260 |
|
| 26,854 |
|
| 26,664 |
Occupancy expense, net |
|
| 1,120 |
|
| 1,156 |
|
| 3,358 |
|
| 3,521 |
Furniture and equipment expense |
|
| 1,144 |
|
| 1,110 |
|
| 3,180 |
|
| 3,176 |
FDIC insurance |
|
| 228 |
|
| 373 |
|
| 793 |
|
| 1,023 |
General bank insurance |
|
| 269 |
|
| 308 |
|
| 839 |
|
| 975 |
Advertising expense |
|
| 430 |
|
| 434 |
|
| 1,212 |
|
| 992 |
Debit card interchange expense |
|
| 363 |
|
| 379 |
|
| 1,186 |
|
| 1,131 |
Legal fees |
|
| 242 |
|
| 279 |
|
| 594 |
|
| 922 |
Other real estate expense, net |
|
| 426 |
|
| 977 |
|
| 2,043 |
|
| 4,717 |
Other expense |
|
| 3,346 |
|
| 2,968 |
|
| 9,487 |
|
| 9,203 |
Total noninterest expense |
|
| 16,582 |
|
| 16,244 |
|
| 49,546 |
|
| 52,324 |
Income before income taxes |
|
| 5,359 |
|
| 6,308 |
|
| 16,531 |
|
| 18,299 |
Provision for income taxes |
|
| 1,860 |
|
| 2,384 |
|
| 5,865 |
|
| 6,747 |
Net income |
| $ | 3,499 |
| $ | 3,924 |
| $ | 10,666 |
| $ | 11,552 |
Preferred stock dividends and accretion of discount |
|
| - |
|
| 339 |
|
| - |
|
| 1,873 |
Net income available to common stockholders |
| $ | 3,499 |
| $ | 3,585 |
| $ | 10,666 |
| $ | 9,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.12 |
| $ | 0.12 |
| $ | 0.36 |
| $ | 0.33 |
Diluted earnings per share |
|
| 0.12 |
|
| 0.12 |
|
| 0.36 |
|
| 0.33 |
|
|
|
|
|
|
|
|
|
Ending common shares outstanding |
| 29,554,716 |
| 29,478,429 |
| 29,554,716 |
| 29,478,429 |
Weighted-average basic shares outstanding |
| 29,554,716 |
| 29,478,429 |
| 29,524,796 |
| 29,474,833 |
Weighted-average diluted shares outstanding |
| 29,838,182 |
| 29,746,429 |
| 29,828,430 |
| 29,724,234 |
10
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Average Balance
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
|
| 2015 |
|
| 2016 | |||||||||||||||
Assets |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr | |||||||
Cash and due from banks |
| $ | 31,744 |
| $ | 29,153 |
| $ | 28,999 |
| $ | 28,781 |
| $ | 27,813 |
| $ | 28,597 |
| $ | 41,344 |
Interest bearing deposits with financial institutions |
|
| 18,022 |
|
| 29,880 |
|
| 18,563 |
|
| 13,859 |
|
| 15,513 |
|
| 12,048 |
|
| 50,054 |
Cash and cash equivalents |
|
| 49,766 |
|
| 59,033 |
|
| 47,562 |
|
| 42,640 |
|
| 43,326 |
|
| 40,645 |
|
| 91,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale, at fair value |
|
| 380,180 |
|
| 409,600 |
|
| 410,083 |
|
| 442,909 |
|
| 486,924 |
|
| 684,179 |
|
| 624,844 |
Securities held-to-maturity, at amortized cost |
|
| 258,637 |
|
| 255,293 |
|
| 251,648 |
|
| 248,871 |
|
| 246,772 |
|
| 80,899 |
|
| 35,046 |
Federal Home Loan Bank and Federal Reserve Bank stock |
|
| 9,058 |
|
| 8,409 |
|
| 8,271 |
|
| 8,451 |
|
| 8,518 |
|
| 7,431 |
|
| 7,918 |
Loans held-for-sale |
|
| 4,782 |
|
| 7,880 |
|
| 3,789 |
|
| 3,465 |
|
| 2,912 |
|
| 4,238 |
|
| 5,295 |
Loans |
|
| 1,156,662 |
|
| 1,144,605 |
|
| 1,140,624 |
|
| 1,136,843 |
|
| 1,138,985 |
|
| 1,145,892 |
|
| 1,186,279 |
Less: allowance for loan losses |
|
| 21,605 |
|
| 20,546 |
|
| 18,607 |
|
| 16,598 |
|
| 16,257 |
|
| 16,415 |
|
| 15,767 |
Net loans |
|
| 1,135,057 |
|
| 1,124,059 |
|
| 1,122,017 |
|
| 1,120,245 |
|
| 1,122,728 |
|
| 1,129,477 |
|
| 1,170,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
| 42,306 |
|
| 41,937 |
|
| 41,572 |
|
| 39,767 |
|
| 39,416 |
|
| 39,143 |
|
| 39,191 |
Other real estate owned |
|
| 32,392 |
|
| 34,637 |
|
| 29,049 |
|
| 22,760 |
|
| 18,760 |
|
| 16,906 |
|
| 14,888 |
Mortgage servicing rights, net |
|
| 5,202 |
|
| 5,416 |
|
| 5,776 |
|
| 5,596 |
|
| 5,347 |
|
| 5,151 |
|
| 4,822 |
Bank-owned life insurance (BOLI) |
|
| 58,139 |
|
| 58,264 |
|
| 58,566 |
|
| 58,797 |
|
| 59,178 |
|
| 59,459 |
|
| 59,787 |
Deferred tax assets, net |
|
| 69,936 |
|
| 67,657 |
|
| 66,174 |
|
| 65,916 |
|
| 65,210 |
|
| 61,768 |
|
| 57,692 |
Other assets |
|
| 9,693 |
|
| 10,463 |
|
| 9,656 |
|
| 9,179 |
|
| 9,346 |
|
| 10,469 |
|
| 13,833 |
Total other assets |
|
| 217,668 |
|
| 218,374 |
|
| 210,793 |
|
| 202,015 |
|
| 197,257 |
|
| 192,896 |
|
| 190,213 |
Total assets |
| $ | 2,055,148 |
| $ | 2,082,648 |
| $ | 2,054,163 |
| $ | 2,068,596 |
| $ | 2,108,437 |
| $ | 2,139,765 |
| $ | 2,125,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 405,933 |
| $ | 435,093 |
| $ | 431,052 |
| $ | 445,083 |
| $ | 450,521 |
| $ | 472,450 |
| $ | 472,599 |
Interest bearing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 881,714 |
|
| 885,809 |
|
| 889,448 |
|
| 893,947 |
|
| 915,553 |
|
| 920,389 |
|
| 907,531 |
Time |
|
| 418,615 |
|
| 410,066 |
|
| 404,896 |
|
| 409,353 |
|
| 407,743 |
|
| 402,912 |
|
| 401,999 |
Total deposits |
|
| 1,706,262 |
|
| 1,730,968 |
|
| 1,725,396 |
|
| 1,748,383 |
|
| 1,773,817 |
|
| 1,795,751 |
|
| 1,782,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
| 23,437 |
|
| 31,234 |
|
| 31,466 |
|
| 26,569 |
|
| 35,776 |
|
| 37,433 |
|
| 31,892 |
Other short-term borrowings |
|
| 25,722 |
|
| 22,638 |
|
| 14,674 |
|
| 24,837 |
|
| 27,802 |
|
| 28,187 |
|
| 22,174 |
Junior subordinated debentures |
|
| 57,502 |
|
| 57,513 |
|
| 57,525 |
|
| 57,538 |
|
| 57,549 |
|
| 57,561 |
|
| 57,573 |
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 |
|
| 11,734 |
|
| 10,962 |
|
| 9,782 |
|
| 10,488 |
|
| 11,033 |
|
| 12,511 |
|
| 15,539 |
Total liabilities |
|
| 1,870,157 |
|
| 1,898,815 |
|
| 1,884,343 |
|
| 1,913,315 |
|
| 1,951,477 |
|
| 1,976,943 |
|
| 1,954,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
| 36,637 |
|
| 31,553 |
|
| 15,091 |
|
| - |
|
| - |
|
| - |
|
| - |
Common stock |
|
| 34,414 |
|
| 34,419 |
|
| 34,422 |
|
| 34,426 |
|
| 34,427 |
|
| 34,505 |
|
| 34,533 |
Additional paid-in capital |
|
| 115,413 |
|
| 115,553 |
|
| 115,692 |
|
| 115,827 |
|
| 115,945 |
|
| 116,065 |
|
| 116,365 |
Retained earnings |
|
| 102,050 |
|
| 105,208 |
|
| 108,858 |
|
| 112,584 |
|
| 116,231 |
|
| 119,640 |
|
| 123,771 |
Accumulated other comprehensive loss |
|
| (7,558) |
|
| (6,935) |
|
| (8,277) |
|
| (11,590) |
|
| (13,677) |
|
| (11,241) |
|
| (8,030) |
Treasury stock |
|
| (95,965) |
|
| (95,965) |
|
| (95,966) |
|
| (95,966) |
|
| (95,966) |
|
| (96,147) |
|
| (96,220) |
Total stockholders' equity |
|
| 184,991 |
|
| 183,833 |
|
| 169,820 |
|
| 155,281 |
|
| 156,960 |
|
| 162,822 |
|
| 170,419 |
Total liabilities and stockholder's equity |
| $ | 2,055,148 |
| $ | 2,082,648 |
| $ | 2,054,163 |
| $ | 2,068,596 |
| $ | 2,108,437 |
| $ | 2,139,765 |
| $ | 2,125,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Earning Assets |
| $ | 1,827,341 |
| $ | 1,855,667 |
| $ | 1,832,978 |
| $ | 1,854,398 |
| $ | 1,899,624 |
| $ | 1,934,687 |
| $ | 1,909,436 |
Total Interest Bearing Liabilities |
|
| 1,452,490 |
|
| 1,452,760 |
|
| 1,443,509 |
|
| 1,457,744 |
|
| 1,489,923 |
|
| 1,491,982 |
|
| 1,466,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(In thousands, except share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2015 |
| 2016 | |||||||||||||||||
|
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr | |||||||
Interest and Dividend Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 13,218 |
| $ | 13,467 |
| $ | 13,353 |
| $ | 12,997 |
| $ | 13,058 |
| $ | 13,039 |
| $ | 13,496 |
Loans held-for-sale |
|
| 43 |
|
| 72 |
|
| 38 |
|
| 36 |
|
| 28 |
|
| 39 |
|
| 48 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 3,375 |
|
| 3,372 |
|
| 3,471 |
|
| 3,819 |
|
| 4,211 |
|
| 4,382 |
|
| 3,954 |
Tax exempt |
|
| 141 |
|
| 163 |
|
| 122 |
|
| 116 |
|
| 179 |
|
| 220 |
|
| 180 |
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock |
|
| 77 |
|
| 77 |
|
| 76 |
|
| 76 |
|
| 84 |
|
| 84 |
|
| 83 |
Interest bearing deposits with financial institutions |
|
| 12 |
|
| 19 |
|
| 12 |
|
| 12 |
|
| 19 |
|
| 15 |
|
| 64 |
Total interest and dividend income |
|
| 16,866 |
|
| 17,170 |
|
| 17,072 |
|
| 17,056 |
|
| 17,579 |
|
| 17,779 |
|
| 17,825 |
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 179 |
|
| 183 |
|
| 185 |
|
| 187 |
|
| 191 |
|
| 193 |
|
| 193 |
Time deposits |
|
| 807 |
|
| 771 |
|
| 799 |
|
| 824 |
|
| 822 |
|
| 869 |
|
| 931 |
Other short-term borrowings |
|
| 9 |
|
| 7 |
|
| 6 |
|
| 11 |
|
| 20 |
|
| 26 |
|
| 23 |
Junior subordinated debentures |
|
| 1,072 |
|
| 1,071 |
|
| 1,072 |
|
| 1,072 |
|
| 1,084 |
|
| 1,083 |
|
| 1,084 |
Subordinated debt |
|
| 197 |
|
| 202 |
|
| 205 |
|
| 210 |
|
| 239 |
|
| 243 |
|
| 245 |
Notes payable and other borrowings |
|
| 4 |
|
| - |
|
| 1 |
|
| 2 |
|
| 2 |
|
| 2 |
|
| 2 |
Total interest expense |
|
| 2,268 |
|
| 2,234 |
|
| 2,268 |
|
| 2,306 |
|
| 2,358 |
|
| 2,416 |
|
| 2,478 |
Net interest and dividend income |
|
| 14,598 |
|
| 14,936 |
|
| 14,804 |
|
| 14,750 |
|
| 15,221 |
|
| 15,363 |
|
| 15,347 |
Loan loss reserve release |
|
| - |
|
| (2,300) |
|
| (2,100) |
|
| - |
|
| - |
|
| - |
|
| - |
Net interest and dividend income after release for loan losses |
|
| 14,598 |
|
| 17,236 |
|
| 16,904 |
|
| 14,750 |
|
| 15,221 |
|
| 15,363 |
|
| 15,347 |
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,486 |
|
| 1,596 |
|
| 1,444 |
|
| 1,427 |
|
| 1,369 |
|
| 1,502 |
|
| 1,403 |
Service charges on deposits |
|
| 1,541 |
|
| 1,779 |
|
| 1,766 |
|
| 1,734 |
|
| 1,559 |
|
| 1,646 |
|
| 1,756 |
Secondary mortgage fees |
|
| 244 |
|
| 281 |
|
| 190 |
|
| 192 |
|
| 193 |
|
| 280 |
|
| 322 |
Mortgage servicing (loss) / gain, net of changes in fair value |
|
| (208) |
|
| 500 |
|
| (274) |
|
| 469 |
|
| (620) |
|
| (311) |
|
| 290 |
Net gain on sales of mortgage loans |
|
| 1,623 |
|
| 1,695 |
|
| 1,359 |
|
| 1,098 |
|
| 1,212 |
|
| 1,642 |
|
| 2,177 |
Securities losses, net |
|
| (109) |
|
| (12) |
|
| (57) |
|
| - |
|
| (61) |
|
| - |
|
| (1,959) |
Increase in cash surrender value of bank-owned life insurance |
|
| 480 |
|
| 299 |
|
| 236 |
|
| 381 |
|
| 285 |
|
| 319 |
|
| 383 |
Debit card interchange income |
|
| 959 |
|
| 1,050 |
|
| 1,004 |
|
| 1,015 |
|
| 947 |
|
| 1,049 |
|
| 1,013 |
(Loss) / gain on disposal and transfer of fixed assets |
|
| - |
|
| - |
|
| (1,143) |
|
| 24 |
|
| - |
|
| - |
|
| - |
Other income |
|
| 1,957 |
|
| 1,076 |
|
| 1,123 |
|
| 1,069 |
|
| 1,391 |
|
| 1,150 |
|
| 1,209 |
Total noninterest income |
|
| 7,973 |
|
| 8,264 |
|
| 5,648 |
|
| 7,409 |
|
| 6,275 |
|
| 7,277 |
|
| 6,594 |
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 9,255 |
|
| 9,149 |
|
| 8,260 |
|
| 8,397 |
|
| 9,026 |
|
| 8,814 |
|
| 9,014 |
Occupancy expense, net |
|
| 1,271 |
|
| 1,094 |
|
| 1,156 |
|
| 1,228 |
|
| 1,229 |
|
| 1,009 |
|
| 1,120 |
Furniture and equipment expense |
|
| 1,001 |
|
| 1,065 |
|
| 1,110 |
|
| 1,254 |
|
| 958 |
|
| 1,078 |
|
| 1,144 |
FDIC insurance |
|
| 273 |
|
| 377 |
|
| 373 |
|
| 311 |
|
| 203 |
|
| 362 |
|
| 228 |
General bank insurance |
|
| 357 |
|
| 310 |
|
| 308 |
|
| 298 |
|
| 298 |
|
| 272 |
|
| 269 |
Advertising expense |
|
| 205 |
|
| 353 |
|
| 434 |
|
| 348 |
|
| 347 |
|
| 435 |
|
| 430 |
Debit card interchange expense |
|
| 352 |
|
| 400 |
|
| 379 |
|
| 383 |
|
| 203 |
|
| 620 |
|
| 363 |
Legal fees |
|
| 223 |
|
| 420 |
|
| 279 |
|
| 253 |
|
| 161 |
|
| 191 |
|
| 242 |
Other real estate expense, net |
|
| 1,352 |
|
| 2,388 |
|
| 977 |
|
| 474 |
|
| 738 |
|
| 879 |
|
| 426 |
Other expense |
|
| 2,864 |
|
| 3,371 |
|
| 2,968 |
|
| 3,151 |
|
| 3,101 |
|
| 3,040 |
|
| 3,346 |
Total noninterest expense |
|
| 17,153 |
|
| 18,927 |
|
| 16,244 |
|
| 16,097 |
|
| 16,264 |
|
| 16,700 |
|
| 16,582 |
Income before income taxes |
|
| 5,418 |
|
| 6,573 |
|
| 6,308 |
|
| 6,062 |
|
| 5,232 |
|
| 5,940 |
|
| 5,359 |
Provision for income taxes |
|
| 1,919 |
|
| 2,444 |
|
| 2,384 |
|
| 2,229 |
|
| 1,910 |
|
| 2,095 |
|
| 1,860 |
Net income |
|
| 3,499 |
|
| 4,129 |
|
| 3,924 |
|
| 3,833 |
|
| 3,322 |
|
| 3,845 |
|
| 3,499 |
Preferred stock dividends and accretion of discount |
|
| 824 |
|
| 710 |
|
| 339 |
|
| - |
|
| - |
|
| - |
|
| - |
Net income available to common stockholders |
| $ | 2,675 |
| $ | 3,419 |
| $ | 3,585 |
| $ | 3,833 |
| $ | 3,322 |
| $ | 3,845 |
| $ | 3,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.09 |
| $ | 0.12 |
| $ | 0.12 |
| $ | 0.13 |
| $ | 0.11 |
| $ | 0.13 |
| $ | 0.12 |
Diluted earnings per share |
|
| 0.09 |
|
| 0.12 |
|
| 0.12 |
|
| 0.13 |
|
| 0.11 |
|
| 0.13 |
|
| 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 |
|
| Nine Months Ended |
| |||||||||||
|
| September 30, |
| December 31, |
| September 30, |
|
| September 30, |
| |||||||
|
| 2016 |
| 2015 |
| 2015 |
|
| 2016 |
| 2015 |
| |||||
Net Interest Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (GAAP) |
| $ | 17,825 |
| $ | 17,056 |
| $ | 17,072 |
|
| $ | 53,183 |
| $ | 51,108 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 23 |
|
| 24 |
|
| 24 |
|
|
| 70 |
|
| 79 |
|
Securities |
|
| 97 |
|
| 63 |
|
| 65 |
|
|
| 312 |
|
| 229 |
|
Interest income (TE) |
|
| 17,945 |
|
| 17,143 |
|
| 17,161 |
|
|
| 53,565 |
|
| 51,416 |
|
Interest expense (GAAP) |
|
| 2,478 |
|
| 2,306 |
|
| 2,268 |
|
|
| 7,252 |
|
| 6,770 |
|
Net interest income (TE) |
| $ | 15,467 |
| $ | 14,837 |
| $ | 14,893 |
|
| $ | 46,313 |
| $ | 44,646 |
|
Net interest income (GAAP) |
| $ | 15,347 |
| $ | 14,750 |
| $ | 14,804 |
|
| $ | 45,931 |
| $ | 44,338 |
|
Average interest earning assets |
| $ | 1,909,436 |
| $ | 1,854,398 |
| $ | 1,832,978 |
|
| $ | 1,914,564 |
| $ | 1,838,682 |
|
Net interest margin (GAAP) |
|
| 3.20 | % |
| 3.16 | % |
| 3.20 | % |
|
| 3.20 | % |
| 3.22 | % |
Net interest margin (TE) |
|
| 3.22 | % |
| 3.17 | % |
| 3.22 | % |
|
| 3.23 | % |
| 3.25 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| ||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2016 |
| 2016 |
| 2015 |
| |||
Efficiency Ratio |
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
| $ | 16,582 |
| $ | 16,700 |
| $ | 16,244 |
|
Less other real estate expense, net |
|
| 426 |
|
| 879 |
|
| 977 |
|
Adjusted noninterest expense |
|
| 16,156 |
|
| 15,821 |
|
| 15,267 |
|
Net interest income (GAAP) |
|
| 15,347 |
|
| 15,363 |
|
| 14,804 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 23 |
|
| 23 |
|
| 24 |
|
Securities |
|
| 97 |
|
| 119 |
|
| 65 |
|
Net interest income (TE) |
|
| 15,467 |
|
| 15,505 |
|
| 14,893 |
|
Noninterest income |
|
| 6,594 |
|
| 7,277 |
|
| 5,648 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Increase in cash surrender value of BOLI (TE) |
|
| 206 |
|
| 172 |
|
| 127 |
|
Noninterest income (TE) |
|
| 6,800 |
|
| 7,449 |
|
| 5,775 |
|
Less securities loss, net |
|
| (1,959) |
|
| - |
|
| (57) |
|
Adjusted noninterest income, plus net interest income (TE) |
| $ | 24,226 |
| $ | 22,954 |
| $ | 20,725 |
|
Efficiency ratio |
|
| 66.69 | % |
| 68.92 | % |
| 73.66 | % |
13