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8-K Filing
Old Second Bancorp (OSBC) 8-KFinancial Statements and Exhibits
Filed: 25 Jul 18, 4:14pm
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(NASDAQ:OSBC) | Exhibit 99.1 | |
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Contact: | Bradley S. Adams | For Immediate Release |
| Chief Financial Officer | July 25, 2018 |
| (630) 906-5484 |
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Old Second Reports Second Quarter 2018 Net Income of $6.3 million
AURORA, IL, July 25, 2018 – Old Second Bancorp, Inc. (the “Company” or “Old Second”) (NASDAQ: OSBC), the parent company of Old Second National Bank (the “Bank”), today announced financial results for the second quarter of 2018. The Company’s net income was $6.3 million, or $0.21 per diluted share, for the second quarter of 2018, compared to net income of $9.5 million, or $0.31 per diluted share, in the first quarter of 2018, and net income of $5.1 million, or $0.17 per diluted share, for the second quarter of 2017.
On April 20, 2018, the Company completed its previously announced acquisition of Greater Chicago Financial Corp., and its wholly-owned bank subsidiary, ABC Bank. In connection with the merger, Greater Chicago Financial Corp merged with and into the Company, with the Company as the surviving company in the merger. Immediately following the merger, ABC Bank, an Illinois state-chartered bank and wholly owned subsidiary of Greater Chicago Financial Corp., merged with and into the Bank, with the Bank as the surviving bank. ABC Bank loans purchased, net of purchase accounting adjustments, totaled $227.6 million, and deposits, net of purchase accounting adjustments, totaled $248.5 million. Data conversion activities were substantially completed by June 30, 2018, resulting in acquisition related costs of $2.5 million after tax, or $0.08 per diluted share, for the second quarter.
Operating Results
· | The Company’s second quarter 2018 net income was $6.3 million, reflecting a reduction in earnings of $3.2 million from the first quarter of 2018, and an increase in earnings of $1.1 million from the second quarter of 2017. |
· | Adjusted net income, a non-GAAP financial measure, was $8.7 million, or $0.29 per diluted share, for the second quarter of 2018, compared to $8.1 million, or $0.27 per diluted share, for the first quarter of 2018. |
o | Second quarter 2018 adjusted net income excluded $2.5 million in costs, after tax, related to our acquisition of ABC Bank. |
o | First quarter 2018 adjusted net income excluded a $1.0 million BOLI death claim, $596,000 of insurance proceeds, after tax, recovered on a previously charged off credit that was taken as a release to the provision for loan losses, and $203,000 in costs, after tax, related to our acquisition of ABC Bank. |
See the discussion entitled “Non-GAAP Presentations” below and the tables on pages 14-15 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
· | Net interest and dividend income was $23.2 million for the second quarter of 2018, reflecting an increase of $3.6 million, or 18.5%, from the $19.6 million recorded in the first quarter of 2018, and an increase of $4.6 million, or 24.5%, over the second quarter of 2017. Net interest income in the second quarter of 2018 was favorably impacted by the rising interest rate environment, as well as $1.1 million of purchase accounting accretion, $946,000 of which related to the Company’s acquisition of ABC Bank, compared to $141,000 of purchase accounting accretion in the first quarter of 2018, and $495,000 in the second quarter of 2017. Purchase accounting accretion income realized prior to the second quarter of 2018 was due to the Company’s purchase of the Chicago branch of Talmer Bank and Trust in late 2016. |
1
· | The Company recorded a provision for loan and lease losses of $1.5 million in the second quarter of 2018. A release of the provision for loan and lease losses of $722,000 was recorded in the first quarter of 2018, compared to provision expense of $750,000 in the second quarter of 2017. |
· | Noninterest income was $8.5 million for both the second and first quarters of 2018, compared to $7.3 million in the second quarter of 2017. Noninterest income in the second quarter of 2018 reflects $312,000 of security gains, net, as well as growth in trust income and service charges on deposits compared to the first quarter of 2018. The first quarter of 2018 reflected a $1.0 million death benefit received on a BOLI claim, as well as an increase in the mortgage servicing rights mark to market adjustment. |
· | Noninterest expense was $22.3 million for the second quarter of 2018 which reflects an increase of $4.9 million, or 28.4%, as compared to the first quarter of 2018, and an increase of $4.3 million, or 23.9%, from the second quarter of 2017. The increase in noninterest expense in the second quarter of 2018 compared to the first quarter of 2018 and the second quarter of 2017 is primarily due to increases in salaries and employee benefits costs, as well as computer and data processing expenses stemming from costs incurred related to the Company’s acquisition of ABC Bank. The year over year increase was partially offset by a decrease in OREO related costs due to a decline in OREO assets. |
· | On July 17, 2018, the Company’s Board of Directors declared a cash dividend of $0.01 per share payable on August 6, 2018, to stockholders of record as of July 27, 2018. |
Capital Ratios
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| June 30, |
| March 31, |
| June 30, | |||
| Well-Capitalized |
| 2018 |
| 2018 |
| 2017 | ||||
The Company |
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Common equity tier 1 capital ratio | N/A |
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| 8.49 | % |
| 9.82 | % |
| 8.55 | % |
Total risk-based capital ratio | N/A |
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| 11.87 | % |
| 13.58 | % |
| 12.14 | % |
Tier 1 risk-based capital ratio | N/A |
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| 10.99 | % |
| 12.63 | % |
| 11.06 | % |
Tier 1 leverage ratio | N/A |
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| 9.37 | % |
| 10.44 | % |
| 9.09 | % |
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The Bank |
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Common equity tier 1 capital ratio | 6.50 | % |
| 12.62 | % |
| 13.56 | % |
| 12.46 | % |
Total risk-based capital ratio | 10.00 | % |
| 13.51 | % |
| 14.51 | % |
| 13.30 | % |
Tier 1 risk-based capital ratio | 8.00 | % |
| 12.62 | % |
| 13.56 | % |
| 12.46 | % |
Tier 1 leverage ratio | 5.00 | % |
| 10.75 | % |
| 11.19 | % |
| 10.23 | % |
· | The ratios shown above exceed levels required to be considered “well capitalized.” |
Asset Quality & Earning Assets
· | Nonperforming loans totaled $11.9 million at June 30, 2018, compared to $12.8 million at March 31, 2018, and $15.6 million at June 30, 2017. Credit metrics continue to be relatively stable regarding nonperforming loan levels, and management is carefully monitoring loans considered to be in a classified status. Nonperforming loans as a percent of total loans were 0.6% as of June 30, 2018, 0.8% as of March 31, 2018, and 1.0% as of June 30, 2017. Purchase credit impaired (“PCI”) loans from the Company’s acquisition of ABC Bank totaled $11.2 million, net of purchase accounting adjustments, as of June 30, 2018. |
· | OREO assets totaled $8.9 million as of June 30, 2018, compared to $7.1 million at March 31, 2018, and $11.7 million at June 30, 2017. Valuation writedowns of $254,000 were recorded in the second quarter of 2018, compared to $112,000 in the first quarter of 2018 and $392,000 in the second quarter of 2017. Nonperforming assets as a percent of total loans plus OREO decreased to 1.1% as of June 30, 2018, as compared to 1.2% as of March 31, 2018 and 1.8% as of June 30, 2017. |
· | Total loans were $1.85 billion at June 30, 2018, reflecting an increase of $247.4 million compared to March 31, 2018, and an increase of $309.5 million compared to June 30, 2017, primarily due to the Company’s acquisition of ABC Bank, which included $227.6 million of loans recorded, net of purchase accounting adjustments. Average loans (including loans held-for-sale) for the second quarter of 2018 were $1.81 billion, reflecting an increase of $206.1 million from quarterly average loans for the first quarter of 2018, and an increase of $299.9 million from quarterly average loans for the second quarter of 2017. |
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· | Available-for-sale securities at fair value totaled $543.6 million at June 30, 2018, compared to $550.9 million at March 31, 2018, and $568.2 million at June 30, 2017. Pretax net gains of $312,000 on the sale of securities were realized in the second quarter of 2018, compared to pretax net security gains of $35,000 in the first quarter of 2018 and pretax net security losses of $131,000 in the second quarter of 2017. |
Net Interest Income
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
(Dollars in thousands - unaudited)
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| Quarters Ended | ||||||||||||||||||||||
| June 30, 2018 |
| March 31, 2018 |
| June 30, 2017 | ||||||||||||||||||
| Average |
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| Rate |
| Average |
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| Rate |
| Average |
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| Rate | |||
| Balance |
| Interest |
| % |
| Balance |
| Interest |
| % |
| Balance |
| Interest |
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Assets |
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Interest bearing deposits with financial institutions | $ | 19,161 |
| $ | 97 |
| 2.03 |
| $ | 13,819 |
| $ | 49 |
| 1.44 |
| $ | 11,938 |
| $ | 31 |
| 1.03 |
Securities: |
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Taxable |
| 268,591 |
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| 2,392 |
| 3.57 |
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| 269,330 |
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| 2,170 |
| 3.27 |
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| 361,504 |
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| 2,607 |
| 2.88 |
Non-taxable (TE) |
| 286,611 |
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| 2,676 |
| 3.74 |
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| 279,831 |
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| 2,609 |
| 3.78 |
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| 225,182 |
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| 2,536 |
| 4.50 |
Total securities |
| 555,202 |
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| 5,068 |
| 3.66 |
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| 549,161 |
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| 4,779 |
| 3.53 |
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| 586,686 |
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| 5,143 |
| 3.51 |
Dividends from FHLBC and FRBC |
| 8,619 |
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| 111 |
| 5.17 |
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| 8,920 |
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| 106 |
| 4.82 |
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| 7,699 |
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| 92 |
| 4.78 |
Loans and loans held-for-sale 1, 2 |
| 1,809,077 |
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| 22,552 |
| 5.00 |
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| 1,602,947 |
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| 18,767 |
| 4.75 |
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| 1,509,188 |
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| 17,445 |
| 4.57 |
Total interest earning assets |
| 2,392,059 |
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| 27,828 |
| 4.67 |
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| 2,174,847 |
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| 23,701 |
| 4.42 |
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| 2,115,511 |
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| 22,711 |
| 4.26 |
Cash and due from banks |
| 36,720 |
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| - |
| - |
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| 29,776 |
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| - |
| - |
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| 39,425 |
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| - |
| - |
Allowance for loan and lease losses |
| (18,494) |
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| - |
| - |
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| (18,263) |
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| - |
| - |
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| (15,779) |
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| - |
| - |
Other noninterest bearing assets |
| 176,608 |
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| - |
| - |
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| 166,507 |
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| - |
| - |
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| 189,928 |
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| - |
| - |
Total assets | $ | 2,586,893 |
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| $ | 2,352,867 |
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| $ | 2,329,085 |
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Liabilities and Stockholders' Equity |
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NOW accounts | $ | 443,586 |
| $ | 238 |
| 0.22 |
| $ | 429,301 |
| $ | 176 |
| 0.17 |
| $ | 432,248 |
| $ | 107 |
| 0.10 |
Money market accounts |
| 317,775 |
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| 193 |
| 0.24 |
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| 275,334 |
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| 109 |
| 0.16 |
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| 280,482 |
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| 86 |
| 0.12 |
Savings accounts |
| 298,240 |
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| 70 |
| 0.09 |
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| 266,363 |
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| 59 |
| 0.09 |
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| 265,066 |
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| 40 |
| 0.06 |
Time deposits |
| 460,909 |
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| 1,444 |
| 1.26 |
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| 382,422 |
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| 1,175 |
| 1.25 |
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| 392,779 |
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| 1,025 |
| 1.05 |
Interest bearing deposits |
| 1,520,510 |
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| 1,945 |
| 0.51 |
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| 1,353,420 |
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| 1,519 |
| 0.46 |
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| 1,370,575 |
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| 1,258 |
| 0.37 |
Securities sold under repurchase agreements |
| 44,655 |
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| 104 |
| 0.93 |
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| 40,275 |
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| 79 |
| 0.80 |
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| 35,652 |
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| 4 |
| 0.05 |
Other short-term borrowings |
| 58,199 |
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| 276 |
| 1.90 |
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| 87,444 |
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| 329 |
| 1.53 |
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| 58,572 |
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| 146 |
| 0.99 |
Junior subordinated debentures |
| 57,657 |
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| 927 |
| 6.45 |
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| 57,645 |
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| 927 |
| 6.52 |
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| 57,609 |
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| 1,059 |
| 7.35 |
Senior notes |
| 44,096 |
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| 672 |
| 6.11 |
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| 44,071 |
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| 672 |
| 6.18 |
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| 43,995 |
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| 672 |
| 6.11 |
Notes payable and other borrowings |
| 19,795 |
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| 95 |
| 1.92 |
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| - |
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| - |
| - |
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| - |
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| - |
| - |
Total interest bearing liabilities |
| 1,744,912 |
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| 4,019 |
| 0.92 |
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| 1,582,855 |
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| 3,526 |
| 0.90 |
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| 1,566,403 |
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| 3,139 |
| 0.80 |
Noninterest bearing deposits |
| 618,765 |
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| - |
| - |
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| 554,624 |
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| - |
| - |
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| 557,265 |
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| - |
| - |
Other liabilities |
| 15,679 |
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| - |
| - |
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| 13,969 |
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| - |
| - |
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| 18,047 |
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| - |
| - |
Stockholders' equity |
| 207,537 |
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| - |
| - |
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| 201,419 |
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| - |
| - |
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| 187,370 |
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| - |
| - |
Total liabilities and stockholders' equity | $ | 2,586,893 |
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| $ | 2,352,867 |
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| $ | 2,329,085 |
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Net interest income (TE) 2 |
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| $ | 23,809 |
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| $ | 20,175 |
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| $ | 19,572 |
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Net interest margin (TE) 2 |
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| 3.99 |
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| 3.76 |
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| 3.71 |
Interest bearing liabilities to earning assets |
| 72.95 | % |
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| 72.78 | % |
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| 74.04 | % |
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1 Interest income from loans is shown on a tax equivalent basis, which is a non-GAAP financial measure as discussed in the table on page 15, and includes fees of $233,000, $182,000 and $573,000 for the second quarter of 2018, the first quarter of 2018, and the second quarter of 2017, respectively. Nonaccrual loans are included in the above stated average balances.
2 Tax equivalent basis is calculated using a marginal tax rate of 21% in 2018 and 35% in 2017. See the discussion entitled “Non-GAAP Presentations” below and the tables on page 15 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
Tax equivalent net interest income was $23.8 million for the quarter ended June 30, 2018, which reflects an increase of $3.6 million compared to the first quarter of 2018, and growth of $4.2 million compared to the second quarter of 2017. The tax equivalent adjustment for the second quarter of 2018 was $567,000, compared to the tax equivalent adjustments of $559,000 for the first quarter of 2018, and $911,000 for the second quarter of 2017, reflecting the reduction of the federal tax rate in 2018 due to the “Tax Cuts and Jobs Act” which was effective as of January 1, 2018, and lowered the Federal corporate income tax rate to 21%. Growth in interest earning assets in the
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second quarter was primarily due to the Company’s acquisition of ABC Bank, as discussed above, which resulted in $227.6 million of loans recorded, net of purchase accounting adjustments. Quarterly average earning assets increased $217.2 million from the first quarter of 2018 to $2.39 billion for the quarter ended June 30, 2018, while yield on earning assets increased 25 basis points over the same period. Average loan growth, including loans held-for-sale, was $206.1 million for the quarter ended June 30, 2018, compared to the quarter ended March 31, 2018, while the year over year growth in second quarter average loans, including loans held-for-sale, was $299.9 million. The net interest margin increased in the second quarter of 2018 primarily due to the ABC Bank purchase accounting accretion of $946,000. In addition to the ABC Bank acquisition in the second quarter of 2018, the year over year growth was primarily due to organic loan growth over the last twelve months, driven by commercial portfolio originations, as well as two home equity loan (“HELOC”) portfolio purchases, which included $20.0 million of HELOCs purchased in the first quarter of 2018, and $17.4 million of HELOCs purchased in June 2017.
Tax equivalent securities income increased $289,000 in the second quarter of 2018 compared to the first quarter of 2018, but declined by $75,000 in the second quarter of 2018 compared to the second quarter of 2017, due primarily to the reduction in the federal income tax rates noted above. The Company’s securities portfolio has been repositioned in the last year into higher yielding tax exempt securities, while lower yielding securities were sold or called. The securities portfolio acquired with the Company’s acquisition of ABC Bank was immediately liquidated as the holdings were not considered consistent with the Company’s investment strategies; this liquidation resulted in cash inflows of approximately $72.1 million. The rising interest rate environment drove a 30 basis point increase for taxable securities income in the second quarter of 2018, compared to the first quarter of 2018, and a 69 basis point increase from the like 2017 quarter.
The cost of interest bearing liabilities for the second quarter of 2018 increased by two basis points from the first quarter of 2018, and increased by twelve basis points from the second quarter of 2017. Growth in interest bearing liabilities in the second quarter was primarily due to the acquisition of ABC Bank, as discussed above, which resulted in $248.5 million of deposits recorded, net of the time deposit purchase accounting adjustment. Total average deposits increased $167.1 million during the second quarter of 2018 compared to the first quarter of 2018 in all categories due to the ABC Bank acquisition. Continued growth in demand deposits in the year over year period has assisted the Company in controlling the cost of funds stemming from average interest bearing deposits. The slight increase in the overall cost of funds is due to higher balances on interest bearing deposits as well as the rising rate environment.
For the quarter ended June 30, 2018, average other short-term borrowings, which are primarily FHLBC advances, decreased by $29.2 million compared to the quarter ended March 31, 2018, and by $373,000 compared to the quarter ended June 30, 2017. The junior subordinated debt issuances reflected a reduced cost of funds in both the quarter ended June 30, 2018 and March 31, 2018, compared to the quarter ended June 30, 2017, as the interest rate on the Company’s Capital Trust II converted on June 15, 2017, from fixed to floating rate at three month LIBOR plus 150 basis points. The cost of the senior notes issuance remained relatively steady for the three quarters presented. Finally, the second quarter 2018 average for the notes payable and other borrowings category included $19.8 million of long-term FHLBC advances acquired with the Company’s acquisition of ABC Bank.
The net interest margin (TE) increased 23 basis points for the second quarter of 2018 compared to the first quarter of 2018, ending at 3.99% compared to 3.76%, respectively, due primarily to purchase accounting accretion stemming from the Company’s acquisition of ABC Bank as well as the rising interest rate environment. The growth in the yield on average earning assets more than offset the increase in the cost of funds for the second quarter of 2018 compared to the first quarter of 2018. The net interest margin (TE) in the second quarter of 2018 was 28 basis points higher than the like quarter one year ago.
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| 2nd Qtr 2018 |
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Noninterest Income |
| Quarters Ended |
| Percent Change From |
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(dollars in thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, |
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| 2018 |
| 2018 |
| 2017 |
| 2018 |
| 2017 |
| |||
Trust income |
| $ | 1,645 |
| $ | 1,495 |
| $ | 1,638 |
| 10.0 |
| 0.4 |
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Service charges on deposits |
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| 1,769 |
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| 1,592 |
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| 1,615 |
| 11.1 |
| 9.5 |
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Residential mortgage banking revenue |
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Secondary mortgage fees |
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| 195 |
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| 162 |
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| 223 |
| 20.4 |
| (12.6) |
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Mortgage servicing rights mark to market (loss) gain |
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| (105) |
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| 305 |
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| (429) |
| N/M |
| N/M |
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Mortgage servicing income |
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| 627 |
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| 452 |
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| 444 |
| 38.7 |
| 41.2 |
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Net gain on sales of mortgage loans |
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| 1,240 |
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| 917 |
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| 1,473 |
| 35.2 |
| (15.8) |
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Total residential mortgage banking revenue |
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| 1,957 |
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| 1,836 |
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| 1,711 |
| 6.6 |
| 14.4 |
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Securities gain (loss), net |
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| 312 |
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| 35 |
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| (131) |
| 791.4 |
| 338.2 |
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Increase in cash surrender value of BOLI |
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| 351 |
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| 248 |
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| 350 |
| 41.5 |
| 0.3 |
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Death benefit realized on BOLI |
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| - |
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| 1,026 |
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| - |
| N/M |
| N/M |
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Debit card interchange income |
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| 1,132 |
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| 1,012 |
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| 1,081 |
| 11.9 |
| 4.7 |
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Gain on disposal and transfer of fixed assets |
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| - |
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| - |
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| 12 |
| N/M |
| N/M |
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Other income |
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| 1,366 |
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| 1,261 |
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| 1,041 |
| 8.3 |
| 31.2 |
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Total noninterest income |
| $ | 8,532 |
| $ | 8,505 |
| $ | 7,317 |
| 0.3 |
| 16.6 |
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N/M - Not meaningful.
The increase in noninterest income in the second quarter of 2018 compared to both the first quarter of 2018 and the second quarter of 2017 was driven primarily by increases in trust income, service charges on deposits, an increase in the cash surrender value of BOLI, and total residential mortgage banking revenue. Securities gain (loss), net, experienced the most significant positive fluctuation, as a percentage of total change on both a linked quarter and year over year basis, as the Company repositioned its securities portfolio over the past year. The Company realized gains in securities in the second quarter of 2018 and the first quarter of 2018, compared to losses in the second quarter of 2017. Total residential mortgage banking revenue increased from the prior linked quarter as mortgage servicing income and gain on sales of mortgage loans continue to increase in the rising rate environment. The increase in other income in the second quarter of 2018, as compared to the prior linked quarter, was primarily attributable to commercial interest rate swap fees of $187,000.
5
Noninterest Expense
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| 2nd Qtr 2018 |
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Noninterest Expense |
| Quarters Ended |
| Percent Change From |
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(dollars in thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, |
| |||
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| 2018 |
| 2018 |
| 2017 |
| 2018 |
| 2017 |
| |||
Salaries |
| $ | 9,703 |
| $ | 7,335 |
| $ | 7,972 |
| 32.3 |
| 21.7 |
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Officers incentive |
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| 740 |
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| 787 |
|
| 854 |
| (6.0) |
| (13.3) |
|
Benefits and other |
|
| 1,912 |
|
| 2,085 |
|
| 1,719 |
| (8.3) |
| 11.2 |
|
Total salaries and employee benefits |
|
| 12,355 |
|
| 10,207 |
|
| 10,545 |
| 21.0 |
| 17.2 |
|
Occupancy, furniture and equipment expense |
|
| 1,652 |
|
| 1,558 |
|
| 1,462 |
| 6.0 |
| 13.0 |
|
Computer and data processing |
|
| 2,741 |
|
| 1,344 |
|
| 1,112 |
| 103.9 |
| 146.5 |
|
FDIC insurance |
|
| 165 |
|
| 156 |
|
| 165 |
| 5.8 |
| - |
|
General bank insurance |
|
| 299 |
|
| 251 |
|
| 264 |
| 19.1 |
| 13.3 |
|
Amortization of core deposit intangible asset |
|
| 97 |
|
| 21 |
|
| 25 |
| 361.9 |
| 288.0 |
|
Advertising expense |
|
| 492 |
|
| 341 |
|
| 452 |
| 44.3 |
| 8.8 |
|
Debit card interchange expense |
|
| 301 |
|
| 281 |
|
| 399 |
| 7.1 |
| (24.6) |
|
Legal fees |
|
| 286 |
|
| 159 |
|
| 184 |
| 79.9 |
| 55.4 |
|
Other real estate owned expense, net |
|
| 429 |
|
| 173 |
|
| 539 |
| 148.0 |
| (20.4) |
|
Other expense |
|
| 3,469 |
|
| 2,863 |
|
| 2,839 |
| 21.2 |
| 22.2 |
|
Total noninterest expense |
| $ | 22,286 |
| $ | 17,354 |
| $ | 17,986 |
| 28.4 |
| 23.9 |
|
Efficiency ratio (GAAP) |
|
| 69.16 | % |
| 63.41 | % |
| 66.73 | % |
|
|
|
|
Adjusted efficiency ratio (non-GAAP)1 |
|
| 57.88 | % |
| 60.50 | % |
| 62.95 | % |
|
|
|
|
N/M - Not meaningful.
1 The adjusted efficiency ratio shown in the table above is a non-GAAP financial measure calculated as noninterest expense, excluding OREO expenses, amortization of core deposits and acquisition related costs 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. See the discussion entitled “Non-GAAP Presentations” below and the table on page 15 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
Noninterest expense for the second quarter of 2018 increased $4.9 million, or 28.4%, compared to the first quarter of 2018 and increased $4.3 million, or 23.9%, compared to the second quarter of 2017. The linked quarter increase is primarily attributable to ABC Bank acquisition-related costs, which included $1.2 million of salaries and employee benefit expense, $1.6 million of computer and data processing expense, $114,000 of legal expense, and $76,000 of core deposit intangible amortization. The year over year variance is also primarily attributable to ABC Bank acquisition-related costs, including salaries and employee benefits expense, computer and data processing expense, amortization of core deposit intangibles, and legal fees. Partially offsetting the year over year increases noted was a reduction in OREO expense, net, as the OREO portfolio balances have declined over the past twelve months.
Earning Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2018 |
| ||
Loans |
| As of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2018 |
| 2018 |
| 2017 |
| 2018 |
| 2017 |
| |||
Commercial |
| $ | 299,536 |
| $ | 281,134 |
| $ | 256,760 |
| 6.5 |
| 16.7 |
|
Leases |
|
| 66,687 |
|
| 66,344 |
|
| 70,138 |
| 0.5 |
| (4.9) |
|
Real estate - commercial |
|
| 808,264 |
|
| 713,422 |
|
| 706,103 |
| 13.3 |
| 14.5 |
|
Real estate - construction |
|
| 115,486 |
|
| 91,479 |
|
| 93,661 |
| 26.2 |
| 23.3 |
|
Real estate - residential |
|
| 404,908 |
|
| 309,376 |
|
| 282,117 |
| 30.9 |
| 43.5 |
|
Home equity line of credit ("HELOC") |
|
| 127,986 |
|
| 129,234 |
|
| 116,052 |
| (1.0) |
| 10.3 |
|
Other1 |
|
| 13,969 |
|
| 9,845 |
|
| 14,138 |
| 41.9 |
| (1.2) |
|
Total loans, excluding deferred loan costs and PCI |
|
| 1,836,836 |
|
| 1,600,834 |
|
| 1,538,969 |
| 14.7 |
| 19.4 |
|
Net deferred loan costs |
|
| 1,112 |
|
| 978 |
|
| 678 |
| 13.7 |
| 64.0 |
|
Total loans, excluding PCI |
|
| 1,837,948 |
|
| 1,601,812 |
|
| 1,539,647 |
| 14.7 |
| 19.4 |
|
PCI loans, net of purchase accounting adjustments |
|
| 11,214 |
|
| - |
|
| - |
| N/M |
| N/M |
|
Total loans |
| $ | 1,849,162 |
| $ | 1,601,812 |
| $ | 1,539,647 |
| 15.4 |
| 20.1 |
|
1 Other class includes consumer and overdrafts.
6
Total loans increased by $247.4 million at the end of the second quarter of 2018 compared to March 31, 2018, and increased $309.5 million year over year. The majority of the increase is due to $227.6 million of loans recorded, net of purchase accounting adjustments, from the Company’s acquisition of ABC Bank. In addition, the Company has made select lease and HELOC purchases and experienced organic loan growth in the year over year period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2018 |
| ||
Securities |
| As of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2018 |
| 2018 |
| 2017 |
| 2018 |
| 2017 |
| |||
Securities available-for-sale, at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
| $ | 3,876 |
| $ | 3,895 |
| $ | - |
| (0.5) |
| N/M |
|
U.S. government agencies |
|
| 12,216 |
|
| 12,730 |
|
| - |
| (4.0) |
| N/M |
|
U.S. government agency mortgage-backed |
|
| 13,407 |
|
| 13,844 |
|
| 20,846 |
| (3.2) |
| (35.7) |
|
States and political subdivisions |
|
| 276,112 |
|
| 285,540 |
|
| 225,518 |
| (3.3) |
| 22.4 |
|
Corporate bonds |
|
| 700 |
|
| 703 |
|
| 12,616 |
| (0.4) |
| (94.5) |
|
Collateralized mortgage obligations |
|
| 61,432 |
|
| 63,744 |
|
| 100,913 |
| (3.6) |
| (39.1) |
|
Asset-backed securities |
|
| 109,263 |
|
| 110,870 |
|
| 140,385 |
| (1.4) |
| (22.2) |
|
Collateralized loan obligations |
|
| 66,638 |
|
| 59,616 |
|
| 67,949 |
| 11.8 |
| (1.9) |
|
Total securities available-for-sale |
| $ | 543,644 |
| $ | 550,942 |
| $ | 568,227 |
| (1.3) |
| (4.3) |
|
N/M - Not meaningful.
The investment portfolio was $543.6 million as of June 30, 2018, a decrease of $7.3 million from $550.9 million as of March 31, 2018, and a decrease of $24.6 million from June 30, 2017. Since late 2016, the Company has liquidated select collateralized mortgage obligations, mortgage-backed securities, corporate bonds and asset-backed securities to reposition the Company’s securities portfolio in favor of high quality state and municipal securities. These continued sales resulted in $312,000 of net security gains for the second quarter of 2018, compared to net gains of $35,000 in the first quarter of 2018 and $131,000 of net losses in the second quarter of 2017. The resultant security purchases with the funds from security sales and deposit growth impacted the net interest margin favorably as the funds were invested in higher yielding assets. In addition, there were a significant number of collateralized loan obligations (“CLOs”) called during 2017 due to tightening contractual spreads of the securities. However, similar CLOs were purchased; therefore, the overall size of the CLO portfolio was not materially changed year over year.
Asset Quality
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| June 30, 2018 | ||
Nonperforming assets |
| As of |
| Percent Change From | |||||||||
(dollars in thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, | |||
|
| 2018 |
| 2018 |
| 2017 |
| 2018 |
| 2017 | |||
Nonaccrual loans |
| $ | 9,421 |
| $ | 11,059 |
| $ | 14,683 |
| (14.8) |
| (35.8) |
Nonperforming troubled debt restructured loans accruing interest |
|
| 1,300 |
|
| 1,332 |
|
| 935 |
| (2.4) |
| 39.0 |
Loans past due 90 days or more and still accruing interest |
|
| 1,153 |
|
| 401 |
|
| - |
| 187.5 |
| N/M |
Total nonperforming loans |
|
| 11,874 |
|
| 12,792 |
|
| 15,618 |
| (7.2) |
| (24.0) |
Other real estate owned |
|
| 8,912 |
|
| 7,063 |
|
| 11,724 |
| 26.2 |
| (24.0) |
Total nonperforming assets |
| $ | 20,786 |
| $ | 19,855 |
| $ | 27,342 |
| 4.7 |
| (24.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans, net of purchase accounting adjustments |
| $ | 11,214 |
| $ | - |
| $ | - |
| N/M |
| N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-89 days past due loans |
| $ | 9,617 |
| $ | 3,001 |
| $ | 6,088 |
|
|
|
|
Nonaccrual loans to total loans |
|
| 0.5 | % |
| 0.7 | % |
| 1.0 | % |
|
|
|
Nonperforming loans to total loans |
|
| 0.6 | % |
| 0.8 | % |
| 1.0 | % |
|
|
|
Nonperforming assets to total loans plus OREO |
|
| 1.1 | % |
| 1.2 | % |
| 1.8 | % |
|
|
|
Purchased credit-impaired loans to total loans |
|
| 0.6 | % |
| - | % |
| - | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
| $ | 19,321 |
| $ | 18,188 |
| $ | 15,836 |
|
|
|
|
Allowance for loan losses to total loans |
|
| 1.0 | % |
| 1.1 | % |
| 1.0 | % |
|
|
|
Allowance for loan losses to nonaccrual loans |
|
| 205.1 | % |
| 164.5 | % |
| 107.9 | % |
|
|
|
N/M - Not meaningful.
7
Nonperforming loans consist of nonaccrual loans, performing restructured accruing loans and loans 90 days or more past due but still accruing interest. Nonperforming loans to total loans was 0.6% in the second quarter of 2018, 0.8% in the first quarter of 2018, and 1.0% in the second quarter of 2017. Nonperforming assets to total loans plus OREO decreased to 1.1% from 1.2% in the first quarter of 2018, and from 1.8% in the second quarter of 2017, as a result of loan growth over the last year, as well as continued OREO liquidations and write-downs recorded in 2017 and 2018. Finally, the allowance for loan and lease losses to total loans was 1.0% as of June 30, 2018, which is a decrease from 1.1% the first quarter 2018 and no change from the 1.0% in the second quarter of 2017.
Purchase credit impaired (“PCI”) loans, as well as non-purchase credit impaired loans, were recorded in the second quarter of 2018 related to the Company’s acquisition of ABC Bank. The following table details the accretable discount on all of the Company’s purchased loans as of June 30, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accretable Discount - Non-PCI Loans |
| Accretable Discount - PCI Loans |
| Non-Accretable Discount - PCI Loans |
| Total | ||||
Beginning balance, April 1, 2018 |
| $ | 694 |
| $ | - |
| $ | - |
| $ | 694 |
Purchases |
|
| 3,182 |
|
| 1,551 |
|
| 6,536 |
|
| 11,269 |
Accretion |
|
| (881) |
|
| (176) |
|
| - |
|
| (1,057) |
Transfer1 |
|
| - |
|
| (2) |
|
| (133) |
|
| (135) |
Ending balance, June 30, 2018 |
| $ | 2,995 |
| $ | 1,373 |
| $ | 6,403 |
| $ | 10,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Transfer was due to loans moved to OREO.
The allowance for loan and lease losses excludes the remaining purchase accounting credit marks recorded on the ABC Bank and Talmer branch purchased loans; the expected total remaining accretable discount on the purchased loans was $4.4 million as of June 30, 2018, compared to $694,000 as of March 31, 2018 and the non-accretable discount on PCI loans was $6.4 million as of June 30, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2018 |
| ||
Classified loans |
| As of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| June 30, |
| March 31, |
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2018 |
| 2018 |
| 2017 |
| 2018 |
| 2017 |
| |||
Commercial |
| $ | 393 |
| $ | - |
| $ | 255 |
| N/M |
| N/M |
|
Leases |
|
| 539 |
|
| 610 |
|
| 460 |
| (11.6) |
| 17.2 |
|
Real estate-commercial, nonfarm |
|
| 12,362 |
|
| 6,098 |
|
| 7,494 |
| 102.7 |
| 65.0 |
|
Real estate-commercial, farm |
|
| 1,248 |
|
| 2,439 |
|
| 1,305 |
| (48.8) |
| (4.4) |
|
Real estate-construction |
|
| 366 |
|
| 371 |
|
| 397 |
| (1.3) |
| (7.8) |
|
Real estate-residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
|
| 1,029 |
|
| 436 |
|
| 843 |
| 136.0 |
| 22.1 |
|
Multifamily |
|
| 3,302 |
|
| - |
|
| 4,824 |
| N/M |
| N/M |
|
Owner occupied |
|
| 5,428 |
|
| 5,476 |
|
| 4,935 |
| (0.9) |
| 10.0 |
|
HELOC |
|
| 1,633 |
|
| 2,038 |
|
| 1,963 |
| (19.9) |
| (16.8) |
|
Other1 |
|
| 18 |
|
| 18 |
|
| 9 |
| - |
| N/M |
|
Total classified loans, excluding PCI |
|
| 26,318 |
|
| 17,486 |
|
| 22,485 |
| 50.5 |
| 17.0 |
|
PCI loans, net of purchase accounting adjustments |
|
| 11,214 |
|
| - |
|
| - |
| N/M |
| N/M |
|
Total classified loans |
| $ | 37,532 |
| $ | 17,486 |
| $ | 22,485 |
| 114.6 |
| 66.9 |
|
N/M - Not meaningful.
1 Other class includes consumer and overdrafts.
Classified loans include nonaccrual, performing troubled debt restructurings, PCI loans, and all other loans considered substandard, as shown above. Classified loans totaled $45.3 million as of June 30, 2018, an increase of $27.8 million, or 159.1%, from the prior quarter, and an increase of $22.8 million, or 101.5%, from the like quarter of 2017. The $11.2 million of PCI loans stems from the Company’s acquisition of ABC Bank.
8
Net Charge-off Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Charge-offs, net of recoveries | Quarters Ended | |||||||||||||
(dollars in thousands) | June 30, |
| % of |
| March 31, |
| % of |
| June 30, |
| % of | |||
| 2018 |
| Total 2 |
| 2018 |
| Total 2 |
| 2017 |
| Total 2 | |||
Commercial | $ | (77) |
| (24.3) |
| $ | (1) |
| 0.1 |
| $ | 1 |
| 0.2 |
Leases |
| 8 |
| 2.5 |
|
| 5 |
| (0.3) |
|
| - |
| - |
Real estate-commercial, nonfarm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner general purpose |
| 27 |
| 8.5 |
|
| (41) |
| 2.8 |
|
| (1) |
| (0.2) |
Owner special purpose |
| - |
| - |
|
| (21) |
| 1.4 |
|
| (6) |
| (0.9) |
Non-owner general purpose |
| (20) |
| (6.3) |
|
| (313) |
| 21.6 |
|
| (39) |
| (6.0) |
Non-owner special purpose |
| 476 |
| 150.2 |
|
| (1) |
| 0.1 |
|
| - |
| - |
Retail properties |
| - |
| - |
|
| (87) |
| 6.0 |
|
| 4 |
| 0.6 |
Total real estate-commercial, nonfarm |
| 483 |
| 152.4 |
|
| (463) |
| 31.9 |
|
| (42) |
| (6.5) |
Real estate-construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilder |
| - |
| - |
|
| 2 |
| (0.1) |
|
| (1) |
| (0.2) |
Land |
| (2) |
| (0.6) |
|
| (4) |
| 0.3 |
|
| (48) |
| (7.3) |
Commercial speculative |
| - |
| - |
|
| (18) |
| 1.2 |
|
| - |
| - |
All other |
| 2 |
| 0.6 |
|
| 1 |
| (0.1) |
|
| (11) |
| (1.7) |
Total real estate-construction |
| - |
| - |
|
| (19) |
| 1.3 |
|
| (60) |
| (9.2) |
Real estate-residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
| (63) |
| (19.9) |
|
| (30) |
| 2.1 |
|
| (16) |
| (2.4) |
Multifamily |
| (11) |
| (3.5) |
|
| (175) |
| 12.1 |
|
| 129 |
| 19.7 |
Owner occupied |
| (26) |
| (8.2) |
|
| (766) |
| 52.9 |
|
| 723 |
| 110.4 |
Total real estate-residential |
| (100) |
| (31.6) |
|
| (971) |
| 67.1 |
|
| 836 |
| 127.7 |
HELOC |
| (26) |
| (8.2) |
|
| (20) |
| 1.4 |
|
| (109) |
| (16.6) |
Other1 |
| 29 |
| 9.2 |
|
| 20 |
| (1.5) |
|
| 29 |
| 4.4 |
Net charge-offs / (recoveries) | $ | 317 |
| 100.0 |
| $ | (1,449) |
| 100.0 |
| $ | 655 |
| 100.0 |
1 Other class includes consumer and overdrafts.
2 Represents the percentage of net charge-offs attributable to each category of loans.
Gross charge-offs for the quarter ended June 30, 2018, were $699,000 compared to $(25,000) for the quarter ended March 31, 2018, and $1.1 million for June 30, 2017. Gross recoveries were $382,000 for the quarter ended June 30, 2018, compared to $1.4 million for the quarter ended March 31, 2018 and $411,000 for the like quarter of 2017. A charge-off adjustment was recorded in the first quarter of 2018 stemming from unearned loan fee accrual reversals from prior periods, resulting in a minimal negative gross charge-off for the first quarter. Continued recoveries are indicative of the ongoing aggressive efforts by management to effectively manage and resolve prior charge-offs.
Deposits
Total deposits were $2.16 billion at June 30, 2018, which reflects an increase of $199.8 million compared to March 31, 2018. Demand deposits increased by $38.0 million and money markets, savings, and NOW accounts also increased by $60.3 million for the quarter, while time deposit balances increased by $101.5 million. Total time deposits or certificates of deposit reflected an increase of $91.0 million from June 2017. Growth in all deposit categories was driven by the Company’s acquisition of ABC Bank, which resulted in additional deposits recorded in the second quarter of 2018 of $248.5 million.
Borrowings
As of June 30, 2018, the Bank had $76.6 million outstanding in other short-term borrowings, which were primarily FHLBC advances, compared to $45.0 million in FHLBC advances outstanding as of March 31, 2018, and $75.0 million of FHLBC advances outstanding as of June 30, 2017.
The Company is indebted on senior notes totaling $44.1 million, net of deferred issuance costs, as of June 30, 2018. The Company is also indebted on $57.7 million of junior subordinated debentures, net of deferred issuance costs, which are 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 Trust II issuance converted from fixed to floating rate at
9
three month LIBOR plus 150 basis points on June 15, 2017. Upon conversion to a floating rate, a cash flow hedge was initiated which resulted in the total interest rate paid on the debt of 4.34% for the second quarter of 2018, inclusive of debt issuance costs. This compared to the Trust II issuance fixed rate paid prior to June 15, 2017, of 6.77%.
Non-GAAP Presentations: Management has disclosed in this earnings release certain non-GAAP financial measures to evaluate and measure the Company’s performance, including adjusted net income, adjusted earnings per share, the presentation of net interest income and net interest margin on a fully taxable equivalent, and efficiency ratio calculations. Management believes the adjusted earnings per share data is more informative for the user if the per share impact of certain activity is excluded for quarterly comparative purposes. 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 has disclosed the efficiency ratio including and excluding certain items, which is discussed in the noninterest expense presentation on page 6. These non-GAAP financial measures should not be considered as a substitute for GAAP financial measures, and we strongly encourage investors to review the GAAP financial measures included in this earnings release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this earnings release with other companies’ non-GAAP financial measures having the same or similar names. The tables on page 15 provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
Forward-Looking Statements: This earnings release contains forward-looking statements. Forward looking statements can be identified by words such as “anticipated,” “expects,” “intends,” “believes,” “may,” “likely,” “will” or other that indicate future periods. Such forward-looking statements are subject to risks, uncertainties, and other factors, including a downturn in the economy, particularly in the Company’s markets, volatile credit and financial markets both domestic and foreign, potential deterioration in real estate values, regulatory changes and excessive loan losses, as well as additional risks and uncertainties contained in the “Risk Factors” and forward-looking statements disclosure contained in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, any or all of which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Conference Call
The Company will host an earnings call on Thursday, July 26, 2018, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Investors may listen to the Company’s earnings call via telephone by dialing 877-407-8035. Investors should call into the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.
A replay of the earnings call will be available until 11:59 p.m. Eastern Time (10:59 p.m. Central Time) on August 2, 2018, by dialing 877-481-4010, using Conference ID: 33651.
10
Old Second Bancorp, Inc. and Subsidiaries
(In thousands)
|
|
|
|
|
|
|
|
| (unaudited) |
|
|
| |
|
| June 30, |
| December 31, | ||
|
| 2018 |
| 2017 | ||
Assets |
|
|
|
|
|
|
Cash and due from banks |
| $ | 34,161 |
| $ | 37,444 |
Interest bearing deposits with financial institutions |
|
| 31,147 |
|
| 18,389 |
Cash and cash equivalents |
|
| 65,308 |
|
| 55,833 |
Securities available-for-sale, at fair value |
|
| 543,644 |
|
| 541,439 |
Federal Home Loan Bank Chicago ("FHLBC") and Federal Reserve Bank Chicago ("FRBC") stock |
|
| 9,093 |
|
| 10,168 |
Loans held-for-sale |
|
| 5,206 |
|
| 4,067 |
Loans |
|
| 1,849,162 |
|
| 1,617,622 |
Less: allowance for loan and lease losses |
|
| 19,321 |
|
| 17,461 |
Net loans |
|
| 1,829,841 |
|
| 1,600,161 |
Premises and equipment, net |
|
| 42,532 |
|
| 37,628 |
Other real estate owned |
|
| 8,912 |
|
| 8,371 |
Mortgage servicing rights, net |
|
| 7,812 |
|
| 6,944 |
Goodwill and core deposit intangible |
|
| 22,074 |
|
| 8,922 |
Bank-owned life insurance ("BOLI") |
|
| 61,159 |
|
| 61,764 |
Deferred tax assets, net |
|
| 27,812 |
|
| 25,356 |
Other assets |
|
| 26,355 |
|
| 22,776 |
Total assets |
| $ | 2,649,748 |
| $ | 2,383,429 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 620,807 |
| $ | 572,404 |
Interest bearing: |
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 1,058,295 |
|
| 967,750 |
Time |
|
| 482,749 |
|
| 382,771 |
Total deposits |
|
| 2,161,851 |
|
| 1,922,925 |
Securities sold under repurchase agreements |
|
| 54,038 |
|
| 29,918 |
Other short-term borrowings |
|
| 76,625 |
|
| 115,000 |
Junior subordinated debentures |
|
| 57,662 |
|
| 57,639 |
Senior notes |
|
| 44,108 |
|
| 44,058 |
Notes payable and other borrowings |
|
| 23,496 |
|
| - |
Other liabilities |
|
| 22,154 |
|
| 13,539 |
Total liabilities |
|
| 2,439,934 |
|
| 2,183,079 |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
Common stock |
|
| 34,717 |
|
| 34,626 |
Additional paid-in capital |
|
| 118,082 |
|
| 117,742 |
Retained earnings |
|
| 157,796 |
|
| 142,959 |
Accumulated other comprehensive (loss) income |
|
| (4,487) |
|
| 1,479 |
Treasury stock |
|
| (96,294) |
|
| (96,456) |
Total stockholders’ equity |
|
| 209,814 |
|
| 200,350 |
Total liabilities and stockholders’ equity |
| $ | 2,649,748 |
| $ | 2,383,429 |
11
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (unaudited) |
| (unaudited) |
| ||||||||
|
| Quarters Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
|
| 2018 |
| 2017 |
| 2018 |
| 2017 |
| ||||
Interest and dividend income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 22,512 |
| $ | 17,385 |
| $ | 41,248 |
| $ | 33,994 |
|
Loans held-for-sale |
|
| 35 |
|
| 37 |
|
| 55 |
|
| 61 |
|
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 2,392 |
|
| 2,607 |
|
| 4,562 |
|
| 5,570 |
|
Tax exempt |
|
| 2,114 |
|
| 1,648 |
|
| 4,175 |
|
| 2,560 |
|
Dividends from FHLBC and FRBC stock |
|
| 111 |
|
| 92 |
|
| 217 |
|
| 177 |
|
Interest bearing deposits with financial institutions |
|
| 97 |
|
| 31 |
|
| 146 |
|
| 54 |
|
Total interest and dividend income |
|
| 27,261 |
|
| 21,800 |
|
| 50,403 |
|
| 42,416 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 501 |
|
| 233 |
|
| 845 |
|
| 456 |
|
Time deposits |
|
| 1,444 |
|
| 1,025 |
|
| 2,619 |
|
| 2,004 |
|
Securities sold under repurchase agreements |
|
| 104 |
|
| 4 |
|
| 183 |
|
| 6 |
|
Other short-term borrowings |
|
| 276 |
|
| 146 |
|
| 605 |
|
| 252 |
|
Junior subordinated debentures |
|
| 927 |
|
| 1,059 |
|
| 1,854 |
|
| 2,143 |
|
Senior notes |
|
| 672 |
|
| 672 |
|
| 1,344 |
|
| 1,345 |
|
Notes payable and other borrowings |
|
| 95 |
|
| - |
|
| 95 |
|
| - |
|
Total interest expense |
|
| 4,019 |
|
| 3,139 |
|
| 7,545 |
|
| 6,206 |
|
Net interest and dividend income |
|
| 23,242 |
|
| 18,661 |
|
| 42,858 |
|
| 36,210 |
|
Provision for loan and lease losses |
|
| 1,450 |
|
| 750 |
|
| 728 |
|
| 750 |
|
Net interest and dividend income after provision for loan and lease losses |
|
| 21,792 |
|
| 17,911 |
|
| 42,130 |
|
| 35,460 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,645 |
|
| 1,638 |
|
| 3,140 |
|
| 3,096 |
|
Service charges on deposits |
|
| 1,769 |
|
| 1,615 |
|
| 3,361 |
|
| 3,233 |
|
Secondary mortgage fees |
|
| 195 |
|
| 223 |
|
| 357 |
|
| 399 |
|
Mortgage servicing rights mark to market loss |
|
| (105) |
|
| (429) |
|
| 200 |
|
| (562) |
|
Mortgage servicing income |
|
| 627 |
|
| 444 |
|
| 1,079 |
|
| 879 |
|
Net gain on sales of mortgage loans |
|
| 1,240 |
|
| 1,473 |
|
| 2,157 |
|
| 2,620 |
|
Securities gains (losses), net |
|
| 312 |
|
| (131) |
|
| 347 |
|
| (267) |
|
Increase in cash surrender value of BOLI |
|
| 351 |
|
| 350 |
|
| 599 |
|
| 709 |
|
Death benefit realized on bank-owned life insurance |
|
| - |
|
| - |
|
| 1,026 |
|
| - |
|
Debit card interchange income |
|
| 1,132 |
|
| 1,081 |
|
| 2,144 |
|
| 2,056 |
|
Losses on disposal and transfer of fixed assets, net |
|
| - |
|
| 12 |
|
| - |
|
| 10 |
|
Other income |
|
| 1,366 |
|
| 1,041 |
|
| 2,627 |
|
| 2,172 |
|
Total noninterest income |
|
| 8,532 |
|
| 7,317 |
|
| 17,037 |
|
| 14,345 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 12,355 |
|
| 10,545 |
|
| 22,562 |
|
| 21,118 |
|
Occupancy, furniture and equipment |
|
| 1,652 |
|
| 1,462 |
|
| 3,210 |
|
| 3,028 |
|
Computer and data processing |
|
| 2,741 |
|
| 1,112 |
|
| 4,085 |
|
| 2,202 |
|
FDIC insurance |
|
| 165 |
|
| 165 |
|
| 321 |
|
| 313 |
|
General bank insurance |
|
| 299 |
|
| 264 |
|
| 550 |
|
| 534 |
|
Amortization of core deposit intangible |
|
| 97 |
|
| 25 |
|
| 118 |
|
| 50 |
|
Advertising expense |
|
| 492 |
|
| 452 |
|
| 833 |
|
| 838 |
|
Debit card interchange expense |
|
| 301 |
|
| 399 |
|
| 582 |
|
| 748 |
|
Legal fees |
|
| 286 |
|
| 184 |
|
| 445 |
|
| 288 |
|
Other real estate expense, net |
|
| 429 |
|
| 539 |
|
| 602 |
|
| 1,248 |
|
Other expense |
|
| 3,469 |
|
| 2,839 |
|
| 6,332 |
|
| 5,673 |
|
Total noninterest expense |
|
| 22,286 |
|
| 17,986 |
|
| 39,640 |
|
| 36,040 |
|
Income before income taxes |
|
| 8,038 |
|
| 7,242 |
|
| 19,527 |
|
| 13,765 |
|
Provision for income taxes |
|
| 1,777 |
|
| 2,096 |
|
| 3,777 |
|
| 4,192 |
|
Net income available to common stockholders |
| $ | 6,261 |
| $ | 5,146 |
| $ | 15,750 |
| $ | 9,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.21 |
| $ | 0.17 |
| $ | 0.53 |
| $ | 0.32 |
|
Diluted earnings per share |
|
| 0.21 |
|
| 0.17 |
|
| 0.52 |
|
| 0.32 |
|
|
|
|
|
|
|
|
|
|
Ending common shares outstanding |
| 29,747,078 |
| 29,627,086 |
| 29,747,078 |
| 29,627,086 |
Weighted-average basic shares outstanding |
| 29,747,078 |
| 29,587,095 |
| 29,703,508 |
| 29,573,881 |
Weighted-average diluted shares outstanding |
| 30,337,282 |
| 30,015,905 |
| 30,253,440 |
| 29,976,544 |
12
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Average Balance
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 |
| 2018 | |||||||||||||
Assets |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr | ||||||
Cash and due from banks |
| $ | 33,585 |
| $ | 39,425 |
| $ | 31,028 |
| $ | 30,972 |
| $ | 29,776 |
| $ | 36,720 |
Interest bearing deposits with financial institutions |
|
| 12,121 |
|
| 11,938 |
|
| 11,685 |
|
| 13,147 |
|
| 13,819 |
|
| 19,161 |
Cash and cash equivalents |
|
| 45,706 |
|
| 51,363 |
|
| 42,713 |
|
| 44,119 |
|
| 43,595 |
|
| 55,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale, at fair value |
|
| 563,897 |
|
| 586,686 |
|
| 548,432 |
|
| 524,909 |
|
| 549,161 |
|
| 555,202 |
FHLBC and FRBC stock |
|
| 7,614 |
|
| 7,699 |
|
| 8,339 |
|
| 8,842 |
|
| 8,920 |
|
| 8,619 |
Loans held-for-sale |
|
| 2,670 |
|
| 3,616 |
|
| 3,244 |
|
| 2,744 |
|
| 2,353 |
|
| 2,868 |
Loans |
|
| 1,484,556 |
|
| 1,505,572 |
|
| 1,550,229 |
|
| 1,596,928 |
|
| 1,600,594 |
|
| 1,806,209 |
Less: allowance for loan and lease losses |
|
| 16,292 |
|
| 15,779 |
|
| 16,478 |
|
| 17,002 |
|
| 18,263 |
|
| 18,494 |
Net loans |
|
| 1,468,264 |
|
| 1,489,793 |
|
| 1,533,751 |
|
| 1,579,926 |
|
| 1,582,331 |
|
| 1,787,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
| 38,917 |
|
| 38,395 |
|
| 38,098 |
|
| 37,825 |
|
| 37,472 |
|
| 41,796 |
Other real estate owned |
|
| 13,464 |
|
| 12,596 |
|
| 10,688 |
|
| 8,601 |
|
| 7,884 |
|
| 7,951 |
Mortgage servicing rights, net |
|
| 6,543 |
|
| 6,464 |
|
| 6,464 |
|
| 6,821 |
|
| 7,347 |
|
| 7,697 |
Goodwill and core deposit intangible |
|
| 9,005 |
|
| 8,981 |
|
| 8,956 |
|
| 8,932 |
|
| 8,911 |
|
| 9,035 |
Bank-owned life insurance ("BOLI") |
|
| 60,446 |
|
| 60,806 |
|
| 61,165 |
|
| 61,527 |
|
| 61,273 |
|
| 60,920 |
Deferred tax assets, net |
|
| 52,747 |
|
| 48,459 |
|
| 45,635 |
|
| 41,335 |
|
| 26,739 |
|
| 26,825 |
Other assets |
|
| 11,714 |
|
| 14,227 |
|
| 14,900 |
|
| 16,443 |
|
| 16,881 |
|
| 22,384 |
Total other assets |
|
| 192,836 |
|
| 189,928 |
|
| 185,906 |
|
| 181,484 |
|
| 166,507 |
|
| 176,608 |
Total assets |
| $ | 2,280,987 |
| $ | 2,329,085 |
| $ | 2,322,385 |
| $ | 2,342,024 |
| $ | 2,352,867 |
| $ | 2,586,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 525,454 |
| $ | 557,265 |
| $ | 551,768 |
| $ | 556,010 |
| $ | 554,624 |
| $ | 618,765 |
Interest bearing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 969,609 |
|
| 977,796 |
|
| 958,926 |
|
| 958,808 |
|
| 970,998 |
|
| 1,059,601 |
Time |
|
| 394,388 |
|
| 392,779 |
|
| 389,037 |
|
| 383,011 |
|
| 382,422 |
|
| 460,909 |
Total deposits |
|
| 1,889,451 |
|
| 1,927,840 |
|
| 1,899,731 |
|
| 1,897,829 |
|
| 1,908,044 |
|
| 2,139,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
| 29,805 |
|
| 35,652 |
|
| 32,800 |
|
| 27,664 |
|
| 40,275 |
|
| 44,655 |
Other short-term borrowings |
|
| 56,111 |
|
| 58,572 |
|
| 72,065 |
|
| 84,728 |
|
| 87,444 |
|
| 58,199 |
Junior subordinated debentures |
|
| 57,597 |
|
| 57,609 |
|
| 57,621 |
|
| 57,633 |
|
| 57,645 |
|
| 57,657 |
Senior Notes |
|
| 43,978 |
|
| 43,995 |
|
| 44,021 |
|
| 44,046 |
|
| 44,071 |
|
| 44,096 |
Subordinated debt |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Notes payable and other borrowings |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 19,795 |
Other liabilities |
|
| 25,061 |
|
| 18,047 |
|
| 19,395 |
|
| 26,037 |
|
| 13,969 |
|
| 15,679 |
Total liabilities |
|
| 2,102,003 |
|
| 2,141,715 |
|
| 2,125,633 |
|
| 2,137,937 |
|
| 2,151,448 |
|
| 2,379,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
| 34,451 |
|
| 34,577 |
|
| 34,626 |
|
| 34,626 |
|
| 34,647 |
|
| 34,717 |
Additional paid-in capital |
|
| 116,747 |
|
| 117,077 |
|
| 117,340 |
|
| 117,607 |
|
| 117,734 |
|
| 117,793 |
Retained earnings |
|
| 131,631 |
|
| 136,384 |
|
| 142,657 |
|
| 148,863 |
|
| 147,309 |
|
| 155,553 |
Accumulated other comprehensive loss |
|
| (7,692) |
|
| (4,310) |
|
| (1,415) |
|
| (553) |
|
| (1,871) |
|
| (4,232) |
Treasury stock |
|
| (96,243) |
|
| (96,358) |
|
| (96,456) |
|
| (96,456) |
|
| (96,400) |
|
| (96,294) |
Total stockholders' equity |
|
| 178,894 |
|
| 187,370 |
|
| 196,752 |
|
| 204,087 |
|
| 201,419 |
|
| 207,537 |
Total liabilities and stockholders' equity |
| $ | 2,280,897 |
| $ | 2,329,085 |
| $ | 2,322,385 |
| $ | 2,342,024 |
| $ | 2,352,867 |
| $ | 2,586,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Earning Assets |
| $ | 2,070,858 |
| $ | 2,115,511 |
| $ | 2,121,929 |
| $ | 2,146,570 |
| $ | 2,174,847 |
| $ | 2,392,059 |
Total Interest Bearing Liabilities |
|
| 1,507,510 |
|
| 1,522,408 |
|
| 1,510,449 |
|
| 1,555,890 |
|
| 1,582,855 |
|
| 1,744,912 |
13
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(In thousands, except per share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 |
| 2018 | ||||||||||||||
|
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr | ||||||
Interest and Dividend Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 16,609 |
| $ | 17,385 |
| $ | 18,208 |
| $ | 18,535 |
| $ | 18,732 |
| $ | 22,512 |
Loans held-for-sale |
|
| 24 |
|
| 37 |
|
| 34 |
|
| 28 |
|
| 24 |
|
| 35 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 2,963 |
|
| 2,607 |
|
| 2,424 |
|
| 2,208 |
|
| 2,170 |
|
| 2,392 |
Tax exempt |
|
| 912 |
|
| 1,648 |
|
| 1,628 |
|
| 1,751 |
|
| 2,061 |
|
| 2,114 |
Dividends from FHLB and FRBC stock |
|
| 85 |
|
| 92 |
|
| 94 |
|
| 99 |
|
| 106 |
|
| 111 |
Interest bearing deposits with financial institutions |
|
| 23 |
|
| 31 |
|
| 37 |
|
| 43 |
|
| 49 |
|
| 97 |
Total interest and dividend income |
|
| 20,616 |
|
| 21,800 |
|
| 22,425 |
|
| 22,664 |
|
| 23,142 |
|
| 27,261 |
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 223 |
|
| 233 |
|
| 239 |
|
| 255 |
|
| 344 |
|
| 501 |
Time deposits |
|
| 979 |
|
| 1,025 |
|
| 1,077 |
|
| 1,146 |
|
| 1,175 |
|
| 1,444 |
Securities sold under repurchase agreements |
|
| 2 |
|
| 4 |
|
| 4 |
|
| 7 |
|
| 79 |
|
| 104 |
Other short-term borrowings |
|
| 106 |
|
| 146 |
|
| 220 |
|
| 269 |
|
| 329 |
|
| 276 |
Junior subordinated debentures |
|
| 1,084 |
|
| 1,059 |
|
| 930 |
|
| 929 |
|
| 927 |
|
| 927 |
Senior notes |
|
| 673 |
|
| 672 |
|
| 672 |
|
| 672 |
|
| 672 |
|
| 672 |
Notes payable and other borrowings |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 95 |
Total interest expense |
|
| 3,067 |
|
| 3,139 |
|
| 3,142 |
|
| 3,278 |
|
| 3,526 |
|
| 4,019 |
Net interest and dividend income |
|
| 17,549 |
|
| 18,661 |
|
| 19,283 |
|
| 19,386 |
|
| 19,616 |
|
| 23,242 |
Provision (release) for loan and lease losses |
|
| - |
|
| 750 |
|
| 300 |
|
| 750 |
|
| (722) |
|
| 1,450 |
Net interest and dividend income after provision (release) for loan and lease losses |
|
| 17,549 |
|
| 17,911 |
|
| 18,983 |
|
| 18,636 |
|
| 20,338 |
|
| 21,792 |
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,458 |
|
| 1,638 |
|
| 1,468 |
|
| 1,639 |
|
| 1,495 |
|
| 1,645 |
Service charges on deposits |
|
| 1,618 |
|
| 1,615 |
|
| 1,722 |
|
| 1,765 |
|
| 1,592 |
|
| 1,769 |
Secondary mortgage fees |
|
| 176 |
|
| 223 |
|
| 195 |
|
| 182 |
|
| 162 |
|
| 195 |
Mortgage servicing rights mark to market (loss) gain |
|
| (133) |
|
| (429) |
|
| (194) |
|
| (46) |
|
| 305 |
|
| (105) |
Mortgage servicing income |
|
| 435 |
|
| 444 |
|
| 451 |
|
| 448 |
|
| 452 |
|
| 627 |
Net gain on sales of mortgage loans |
|
| 1,147 |
|
| 1,473 |
|
| 1,095 |
|
| 1,088 |
|
| 917 |
|
| 1,240 |
Securities (loss) gain, net |
|
| (136) |
|
| (131) |
|
| 102 |
|
| 639 |
|
| 35 |
|
| 312 |
Increase in cash surrender value of BOLI |
|
| 359 |
|
| 350 |
|
| 362 |
|
| 361 |
|
| 248 |
|
| 351 |
Death benefit realized on bank-owned life insurance |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,026 |
|
| - |
Debit card interchange income |
|
| 975 |
|
| 1,081 |
|
| 1,075 |
|
| 1,069 |
|
| 1,012 |
|
| 1,132 |
(Loss) gain on disposal and transfer of fixed assets |
|
| (2) |
|
| 12 |
|
| - |
|
| - |
|
| - |
|
| - |
Other income |
|
| 1,131 |
|
| 1,041 |
|
| 1,567 |
|
| 1,039 |
|
| 1,261 |
|
| 1,366 |
Total noninterest income |
|
| 7,028 |
|
| 7,317 |
|
| 7,843 |
|
| 8,184 |
|
| 8,505 |
|
| 8,532 |
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 10,573 |
|
| 10,545 |
|
| 10,049 |
|
| 8,913 |
|
| 10,207 |
|
| 12,355 |
Occupancy, furniture and equipment |
|
| 1,566 |
|
| 1,462 |
|
| 1,482 |
|
| 1,441 |
|
| 1,558 |
|
| 1,652 |
Computer and data processing |
|
| 1,090 |
|
| 1,112 |
|
| 1,081 |
|
| 1,104 |
|
| 1,344 |
|
| 2,741 |
FDIC insurance |
|
| 148 |
|
| 165 |
|
| 199 |
|
| 146 |
|
| 156 |
|
| 165 |
General bank insurance |
|
| 270 |
|
| 264 |
|
| 246 |
|
| 251 |
|
| 251 |
|
| 299 |
Amortization of core deposit intangible |
|
| 25 |
|
| 25 |
|
| 24 |
|
| 22 |
|
| 21 |
|
| 97 |
Advertising expense |
|
| 386 |
|
| 452 |
|
| 255 |
|
| 412 |
|
| 341 |
|
| 492 |
Debit card interchange expense |
|
| 349 |
|
| 399 |
|
| 285 |
|
| 296 |
|
| 281 |
|
| 301 |
Legal fees |
|
| 104 |
|
| 184 |
|
| 162 |
|
| 200 |
|
| 159 |
|
| 286 |
Other real estate expense, net |
|
| 709 |
|
| 539 |
|
| 680 |
|
| 237 |
|
| 173 |
|
| 429 |
Other expense |
|
| 2,834 |
|
| 2,839 |
|
| 2,455 |
|
| 3,169 |
|
| 2,863 |
|
| 3,469 |
Total noninterest expense |
|
| 18,054 |
|
| 17,986 |
|
| 16,918 |
|
| 16,191 |
|
| 17,354 |
|
| 22,286 |
Income before income taxes |
|
| 6,523 |
|
| 7,242 |
|
| 9,908 |
|
| 10,629 |
|
| 11,489 |
|
| 8,038 |
Provision for income taxes |
|
| 2,096 |
|
| 2,096 |
|
| 1,831 |
|
| 13,141 |
|
| 2,000 |
|
| 1,777 |
Net income (loss) |
| $ | 4,427 |
| $ | 5,146 |
| $ | 8,077 |
| $ | (2,512) |
| $ | 9,489 |
| $ | 6,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
| $ | 0.15 |
| $ | 0.17 |
| $ | 0.27 |
| $ | (0.08) |
| $ | 0.32 |
| $ | 0.17 |
Diluted earnings (loss) per share |
|
| 0.15 |
|
| 0.17 |
|
| 0.27 |
|
| (0.08) |
|
| 0.31 |
|
| 0.17 |
14
Reconciliation of Non-GAAP Financial Measures
The tables below provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the periods indicated. Dollar amounts below in thousands, except per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarters Ended | ||||||||||||||||
|
| June 30, 2018 |
| March 31, 2018 |
| June 30, 2017 | ||||||||||||
|
| Amount |
| Per share |
| Amount |
| Per Share |
| Amount |
| Per Share | ||||||
Adjusted Net Income and adjusted diluted earnings per share (EPS), excluding certain items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
| $ | 6,261 |
| $ | 0.21 |
| $ | 9,489 |
| $ | 0.31 |
| $ | 5,146 |
| $ | 0.17 |
(Less) / Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of BOLI death claim |
|
| - |
|
| - |
|
| (1,026) |
|
| (0.03) |
|
| - |
|
| - |
Provision for loan loss release due to insurance recovery, after tax |
|
| - |
|
| - |
|
| (596) |
|
| (0.02) |
|
| - |
|
| - |
Acquisition related costs, after tax |
|
| 2,468 |
|
| 0.08 |
|
| 203 |
|
| 0.01 |
|
| - |
|
| - |
Adjusted net income, excluding certain items |
| $ | 8,729 |
| $ | 0.29 |
| $ | 8,070 |
| $ | 0.27 |
| $ | 5,146 |
| $ | 0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarters Ended |
|
| Six Months Ended |
| |||||||||||
|
| June 30, |
| March 31, |
| June 30, |
|
| June 30, |
| |||||||
|
| 2018 |
| 2018 |
| 2017 |
|
| 2018 |
| 2017 |
| |||||
Net Interest Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (GAAP) |
| $ | 27,261 |
| $ | 23,142 |
| $ | 21,800 |
|
| $ | 50,403 |
| $ | 42,416 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 5 |
|
| 11 |
|
| 23 |
|
|
| 16 |
|
| 45 |
|
Securities |
|
| 562 |
|
| 548 |
|
| 888 |
|
|
| 1,110 |
|
| 1,379 |
|
Interest income (TE) |
|
| 27,828 |
|
| 23,701 |
|
| 22,711 |
|
|
| 51,529 |
|
| 43,840 |
|
Interest expense (GAAP) |
|
| 4,019 |
|
| 3,526 |
|
| 3,139 |
|
|
| 7,545 |
|
| 6,206 |
|
Net interest income (TE) |
| $ | 23,809 |
| $ | 20,175 |
| $ | 19,572 |
|
| $ | 43,984 |
| $ | 37,634 |
|
Net interest income (GAAP) |
| $ | 23,242 |
| $ | 19,616 |
| $ | 18,661 |
|
| $ | 42,858 |
| $ | 36,210 |
|
Average interest earning assets |
| $ | 2,392,059 |
| $ | 2,174,847 |
| $ | 2,115,511 |
|
| $ | 2,284,054 |
| $ | 2,093,308 |
|
Net interest margin (GAAP) |
|
| 3.90 | % |
| 3.66 | % |
| 3.54 | % |
|
| 3.78 | % |
| 3.49 | % |
Net interest margin (TE) |
|
| 3.99 | % |
| 3.76 | % |
| 3.71 | % |
|
| 3.88 | % |
| 3.63 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarters Ended |
| ||||||
|
| June 30, |
| March 31, |
| June 30, |
| |||
|
| 2018 |
| 2018 |
| 2017 |
| |||
Efficiency Ratio |
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
| $ | 22,286 |
| $ | 17,354 |
| $ | 17,986 |
|
Less amortization of core deposit |
|
| 97 |
|
| 21 |
|
| 25 |
|
Less other real estate expense, net |
|
| 429 |
|
| 173 |
|
| 539 |
|
Less transition related executive costs |
|
| - |
|
| - |
|
| 294 |
|
Less acquisition related costs |
|
| 3,168 |
|
| 246 |
|
| - |
|
Adjusted noninterest expense |
|
| 18,592 |
|
| 16,914 |
|
| 17,128 |
|
Net interest income (GAAP) |
|
| 23,242 |
|
| 19,616 |
|
| 18,661 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 5 |
|
| 11 |
|
| 23 |
|
Securities |
|
| 562 |
|
| 548 |
|
| 888 |
|
Net interest income (TE) |
|
| 23,809 |
|
| 20,175 |
|
| 19,572 |
|
Noninterest income |
|
| 8,532 |
|
| 8,505 |
|
| 7,317 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Increase in cash surrender value of BOLI (TE) |
|
| 93 |
|
| 339 |
|
| 188 |
|
Noninterest income (TE) |
|
| 8,625 |
|
| 8,844 |
|
| 7,505 |
|
Less death benefit related to BOLI |
|
| - |
|
| 1,026 |
|
| - |
|
Less securities gain (loss), net |
|
| 312 |
|
| 35 |
|
| (131) |
|
Adjusted noninterest income, plus net interest income (TE) |
| $ | 32,122 |
| $ | 27,958 |
| $ | 27,208 |
|
Efficiency ratio (GAAP) |
|
| 69.16 | % |
| 63.41 | % |
| 66.73 | % |
Adjusted efficiency ratio (non-GAAP) |
|
| 57.88 | % |
| 60.50 | % |
| 62.95 | % |
15