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(NASDAQ:OSBC) | Exhibit 99.1 | |
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Contact: | Bradley S. Adams | For Immediate Release |
| Chief Financial Officer | October 23, 2019 |
| (630) 906-5484 |
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Old Second Reports Third Quarter 2019 Net Income of $12.2 million
AURORA, IL, October 23, 2019 – Old Second Bancorp, Inc. (the “Company,” “we,” “us,” and “our”) (NASDAQ: OSBC), the parent company of Old Second National Bank (the “Bank”), today announced financial results for the third quarter of 2019. Our net income was $12.2 million, or $0.40 per diluted share, for the third quarter of 2019, compared to net income of $9.3 million, or $0.31 per diluted share, in the second quarter of 2019, and net income of $9.6 million, or $0.32 per diluted share, for the third quarter of 2018.
Operating Results
· | Third quarter 2019 net income was $12.2 million, reflecting an increase in earnings of $2.9 million from the second quarter of 2019, and an increase in earnings of $2.5 million from the third quarter of 2018. Third quarter 2019 financial results were positively impacted by pretax securities gains, net, of $3.5 million compared to $986,000 in the second quarter of 2019 and $13,000 in the third quarter of 2018. Securities gains, net, were partially offset by mark to market losses on mortgage servicing rights (“MSRs”) in each of the periods presented. |
· | Net interest and dividend income was $24.8 million for the third quarter of 2019, an increase of $26,000, or 0.1%, from $24.8 million for the second quarter of 2019, and an increase of $1.0 million, or 4.4%, from the third quarter of 2018. Net interest and dividend income in the third quarter of 2019 was favorably impacted by loan growth over the past year. |
· | Noninterest income was $11.9 million for the third quarter of 2019, an increase of $3.8 million, or 46.5%, compared to $8.1 million for the second quarter of 2019, and an increase of $4.1 million, or 52.7%, compared to $7.8 million for the third quarter of 2018. Noninterest income for the third quarter of 2019 was positively impacted by an increase in securities gains, net, of $2.5 million, as well as growth in net gain on sales of mortgage loans of $911,000, compared to the second quarter of 2019. Noninterest income for the third quarter of 2019 increased $3.5 million due to securities gains, net, as well as growth in net gain on sales of mortgage loans of $1.1 million, compared to the third quarter of 2018. |
· | Noninterest expense was $20.0 million for the third quarter of 2019, a decrease of $172,000, or 0.9%, compared to $20.1 million for the second quarter of 2019, and an increase of $1.2 million, or 6.6%, from $18.7 million for the third quarter of 2018. The decrease in noninterest expense in the third quarter of 2019, compared to the second quarter of 2019, was primarily attributable to decreases in FDIC insurance, other real estate expense, net, and other expense, which was partially offset by increases in salaries and employee benefits and occupancy, furniture and equipment expense. The increase in noninterest expense in the third quarter of 2019, compared to the third quarter of 2018, was primarily attributable to higher salaries and employee benefits expense, occupancy, furniture and equipment expense and computer and data processing expense. |
· | The provision for income taxes totaled $4.0 million for the third quarter of 2019, compared to $3.0 million for the second quarter of 2019 and $3.2 million for the third quarter of 2018. The linked quarter increase of $993,000 was primarily due to an increase of $3.9 million in pretax income in the third quarter of 2019, compared to the second quarter of 2019. The $835,000 increase in provision for income taxes for the year over year quarter was primarily due to the $3.4 million increase in pretax income in the second quarter of 2019 compared to the third quarter of 2018. |
1
· | On October 15, 2019, our Board of Directors declared a cash dividend of $0.01 per share payable on November 4, 2019, to stockholders of record as of October 25, 2019. |
Capital Ratios
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| Minimum Capital |
| To Be Well |
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| Adequacy with |
| Capitalized |
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| Capital Conservation |
| Under Prompt |
| September 30, |
| June 30, |
| September 30, | |||||
| Buffer if applicable1 |
| Corrective Action2 |
| 2019 |
| 2019 |
| 2018 | |||||
The Company |
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Common equity tier 1 capital ratio | 7.00 | % |
| N/A |
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| 10.89 | % |
| 10.26 | % |
| 9.12 | % |
Total risk-based capital ratio | 10.50 | % |
| N/A |
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| 14.34 | % |
| 13.70 | % |
| 12.57 | % |
Tier 1 risk-based capital ratio | 8.50 | % |
| N/A |
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| 13.45 | % |
| 12.83 | % |
| 11.67 | % |
Tier 1 leverage ratio | 4.00 | % |
| N/A |
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| 11.54 | % |
| 10.85 | % |
| 9.72 | % |
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The Bank |
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Common equity tier 1 capital ratio | 7.00 | % |
| 6.50 | % |
| 14.83 | % |
| 13.96 | % |
| 13.26 | % |
Total risk-based capital ratio | 10.50 | % |
| 10.00 | % |
| 15.72 | % |
| 14.83 | % |
| 14.16 | % |
Tier 1 risk-based capital ratio | 8.50 | % |
| 8.00 | % |
| 14.83 | % |
| 13.96 | % |
| 13.26 | % |
Tier 1 leverage ratio | 4.00 | % |
| 5.00 | % |
| 12.68 | % |
| 11.96 | % |
| 11.05 | % |
1 Amounts are shown inclusive of a capital conservation buffer of 2.50%. Under the Federal Reserve’s Small Bank Holding Company Policy Statement, the Company is not subject to the minimum capital adequacy and capital conservation buffer capital requirements at the holding company level, unless otherwise advised by the Federal Reserve (such capital requirements are applicable only at the Bank level). Although the minimum regulatory capital requirements are not applicable to the Company, we calculate these ratios for our own planning and monitoring purposes.
2 The prompt corrective action provisions are only applicable at the Bank level.
· | The ratios shown above exceed levels required to be considered “well capitalized.” |
Asset Quality & Earning Assets
· | Nonperforming loans totaled $13.4 million at September 30, 2019, compared to $12.7 million at June 30, 2019, and $11.8 million at September 30, 2018. 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 0.7% both at September 30, 2019 and June 30, 2019, and 0.6% at September 30, 2018. Purchased credit impaired (“PCI”) loans acquired in our acquisition of ABC Bank totaled $9.1 million, net of purchase accounting adjustments, at September 30, 2019. We do not consider PCI loans, which showed evidence of deteriorated credit quality at acquisition, to be nonperforming assets if their cash flows and the timing of such cash flows continue to be estimable and probable of collection. |
· | OREO assets totaled $4.7 million at September 30, 2019, compared to $5.7 million at June 30, 2019, $7.2 million at December 31, 2018, and $7.0 million at September 30, 2018. Writedowns of $203,000 were recorded in the third quarter of 2019, compared to $196,000 in the second quarter of 2019 and $119,000 in the third quarter of 2018. Nonperforming assets, as a percent of total loans plus OREO, were 1.0% at September 30, 2019, June 30, 2019, and September 30, 2018, and 1.2% at December 31, 2018. |
· | Total loans were $1.90 billion at September 30, 2019, reflecting a decrease of $3.1 million compared to June 30, 2019, an increase of $2.8 million compared to December 31, 2018, and an increase of $64.9 million compared to September 30, 2018, due primarily to growth in the commercial, leases, and real estate-commercial portfolios. Average loans (including loans held-for-sale) for the third quarter of 2019 were $1.90 billion, reflecting a decrease of $1.9 million from the second quarter of 2019 and an increase of $52.9 million from the third quarter of 2018. Growth in the year over year period is primarily due to organic growth in our leasing, commercial, and real estate-commercial portfolios, as well as select portfolio loan purchases. |
· | Available-for-sale securities totaled $488.4 million at September 30, 2019, compared to $492.1 million at June 30, 2019, $541.2 million at December 31, 2018, and $542.3 million at September 30, 2018. Pretax security gains, net, of $3.5 million were recorded in the third quarter of 2019, compared to $986,000 in the second quarter of 2019, and $13,000 in the third quarter of 2018. |
2
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INCOME / EXPENSE AND RATES
(Dollars in thousands - unaudited)
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| Quarters Ended | ||||||||||||||||||||||
| September 30, 2019 |
| June 30, 2019 |
| September 30, 2018 | ||||||||||||||||||
| Average |
| Income / |
| Rate |
| Average |
| Income / |
| Rate |
| Average |
| Income / |
| Rate | ||||||
| Balance |
| Expense |
| % |
| Balance |
| Expense |
| % |
| Balance |
| Expense |
| % | ||||||
Assets |
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Interest earning deposits with financial institutions | $ | 21,425 |
| $ | 119 |
| 2.20 |
| $ | 19,053 |
| $ | 111 |
| 2.34 |
| $ | 17,975 |
| $ | 84 |
| 1.85 |
Securities: |
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Taxable |
| 260,842 |
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| 2,296 |
| 3.49 |
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| 229,263 |
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| 2,223 |
| 3.89 |
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| 268,015 |
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| 2,491 |
| 3.69 |
Non-taxable (TE)2 |
| 233,208 |
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| 2,176 |
| 3.70 |
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| 290,743 |
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| 2,710 |
| 3.74 |
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| 274,282 |
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| 2,612 |
| 3.78 |
Total securities (TE)2 |
| 494,050 |
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| 4,472 |
| 3.59 |
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| 520,006 |
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| 4,933 |
| 3.80 |
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| 542,297 |
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| 5,103 |
| 3.73 |
Dividends from FHLBC and FRBC |
| 10,398 |
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| 154 |
| 5.88 |
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| 11,317 |
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| 156 |
| 5.53 |
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| 8,905 |
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| 121 |
| 5.39 |
Loans and loans held-for-sale 1, 2 |
| 1,895,454 |
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| 25,159 |
| 5.27 |
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| 1,897,324 |
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| 24,958 |
| 5.28 |
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| 1,842,561 |
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| 23,421 |
| 5.04 |
Total interest earning assets |
| 2,421,327 |
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| 29,904 |
| 4.90 |
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| 2,447,700 |
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| 30,158 |
| 4.94 |
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| 2,411,738 |
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| 28,729 |
| 4.73 |
Cash and due from banks |
| 34,315 |
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| - |
| - |
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| 33,618 |
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| - |
| - |
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| 34,608 |
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| - |
| - |
Allowance for loan and lease losses |
| (19,452) |
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| - |
| - |
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| (19,435) |
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| - |
| - |
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| (19,696) |
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| - |
| - |
Other noninterest bearing assets |
| 172,250 |
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| - |
| - |
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| 174,075 |
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| - |
| - |
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| 191,296 |
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| - |
| - |
Total assets | $ | 2,608,440 |
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| $ | 2,635,958 |
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| $ | 2,617,946 |
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Liabilities and Stockholders' Equity |
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NOW accounts | $ | 420,437 |
| $ | 334 |
| 0.32 |
| $ | 442,430 |
| $ | 373 |
| 0.34 |
| $ | 444,790 |
| $ | 301 |
| 0.27 |
Money market accounts |
| 282,797 |
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| 269 |
| 0.38 |
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| 288,698 |
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| 262 |
| 0.36 |
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| 319,492 |
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| 250 |
| 0.31 |
Savings accounts |
| 308,483 |
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| 121 |
| 0.16 |
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| 313,822 |
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| 124 |
| 0.16 |
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| 300,519 |
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| 91 |
| 0.12 |
Time deposits |
| 420,429 |
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| 1,672 |
| 1.58 |
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| 422,975 |
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| 1,641 |
| 1.56 |
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| 467,933 |
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| 1,568 |
| 1.33 |
Interest bearing deposits |
| 1,432,146 |
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| 2,396 |
| 0.66 |
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| 1,467,925 |
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| 2,400 |
| 0.66 |
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| 1,532,734 |
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| 2,210 |
| 0.57 |
Securities sold under repurchase agreements |
| 40,342 |
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| 135 |
| 1.33 |
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| 44,184 |
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| 147 |
| 1.33 |
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| 46,850 |
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| 140 |
| 1.19 |
Other short-term borrowings |
| 75,310 |
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| 429 |
| 2.26 |
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| 93,369 |
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| 575 |
| 2.47 |
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| 55,119 |
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| 311 |
| 2.24 |
Junior subordinated debentures |
| 57,716 |
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| 933 |
| 6.41 |
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| 57,704 |
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| 931 |
| 6.47 |
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| 57,669 |
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| 930 |
| 6.40 |
Senior notes |
| 44,222 |
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| 682 |
| 6.12 |
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| 44,196 |
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| 672 |
| 6.10 |
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| 44,121 |
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| 672 |
| 6.04 |
Notes payable and other borrowings |
| 10,973 |
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| 89 |
| 3.22 |
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| 13,101 |
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| 107 |
| 3.28 |
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| 20,768 |
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| 173 |
| 3.30 |
Total interest bearing liabilities |
| 1,660,709 |
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| 4,664 |
| 1.11 |
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| 1,720,479 |
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| 4,832 |
| 1.13 |
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| 1,757,261 |
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| 4,436 |
| 1.00 |
Noninterest bearing deposits |
| 651,863 |
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| - |
| - |
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| 645,580 |
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| - |
| - |
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| 625,982 |
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| - |
| - |
Other liabilities |
| 30,329 |
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| - |
| - |
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| 19,586 |
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| - |
| - |
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| 20,142 |
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| - |
| - |
Stockholders' equity |
| 265,539 |
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| - |
| - |
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| 250,313 |
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| - |
| - |
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| 214,561 |
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| - |
| - |
Total liabilities and stockholders' equity | $ | 2,608,440 |
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| $ | 2,635,958 |
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| $ | 2,617,946 |
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Net interest income (GAAP) |
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| $ | 24,780 |
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| $ | 24,754 |
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| $ | 23,740 |
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Net interest margin (GAAP) |
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| 4.06 |
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| 4.06 |
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| 3.91 |
Net interest income (TE) 2 |
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| $ | 25,240 |
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| $ | 25,326 |
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| $ | 24,293 |
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Net interest margin (TE) 2 |
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| 4.14 |
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| 4.15 |
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| 4.00 |
Interest bearing liabilities to earning assets |
| 68.59 | % |
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| 70.29 | % |
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| 72.86 | % |
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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 $295,000 for the third quarter of 2019, $184,000 for the second quarter of 2019, and $197,000 for the third quarter of 2018. Nonaccrual loans are included in the above stated average balances.
2 Tax equivalent (TE) basis is calculated using a marginal tax rate of 21% in 2019 and 2018. See the discussion entitled “Non-GAAP Presentations” below and the table on page 15 that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
Net interest income (TE) was $25.2 million for the third quarter of 2019, which reflects a decrease of $86,000 compared to the second quarter of 2019, and an increase of $947,000 compared to the third quarter of 2018. The tax equivalent adjustment for the third quarter of 2019 was $460,000, compared to $572,000 for the second quarter of 2019, and $553,000 for the third quarter of 2018. Average interest earning assets declined $26.4 million to $2.42 billion for the third quarter of 2019, compared to the second quarter of 2019, primarily due to sales of non-taxable securities and loan paydowns. Average interest earnings assets grew $9.6 million in the third quarter of 2019, compared to the third quarter of 2018, primarily due to organic loan growth in the year over year period, as well as a home equity loan (“HELOC”) portfolio purchase of $20.7 million in the fourth quarter of 2018. Average loans, including loans held-for-sale, declined $1.9 million for the third quarter of 2019, compared to the second quarter of 2019, and grew $52.9 million compared to the third quarter of 2018. The yield on average earning assets decreased four basis points in the third quarter of 2019, compared to the second quarter of 2019, but increased 17 basis points compared to the third quarter of 2018, primarily due to growth in loan volumes over the past year as well as a change
3
in loan product mix to higher yielding commercial loans, partially offset by a reduction in lower yielding real estate-residential loans.
Total securities income was $4.5 million in the third quarter of 2019, a decrease of $461,000 compared to the second quarter of 2019, and a decrease of $631,000 compared to the third quarter of 2018, due primarily to reductions in yields and volumes. Security sales of $57.2 million were made in the third quarter of 2019, primarily in the nontaxable municipals sector, which resulted in pretax security gains, net, of $3.5 million. Our overall yield on tax equivalent municipal securities was 3.70% for the third quarter of 2019, 3.74% for the second quarter of 2019, and 3.78% for the third quarter of 2018. The overall tax equivalent yield for the total securities portfolio declined 21 basis points from June 30, 2019 to September 30, 2019, and 14 basis points from September 30, 2018 to September 30, 2019.
Average interest bearing liabilities decreased $59.8 million in the third quarter of 2019, compared to the second quarter of 2019, primarily driven by a $35.8 million decrease in interest bearing deposits and an $18.1 million decrease in other short-term borrowings, due to a decrease in funding needs as a result of net loan paydowns. Average interest bearing liabilities decreased $96.6 million in the third quarter of 2019, compared to the third quarter of 2018, primarily driven by a $100.6 million reduction in interest bearing deposits, partially offset by a $20.2 million increase in other short term borrowings. The cost of interest bearing liabilities for the third quarter of 2019 decreased by two basis points from the second quarter of 2019, and increased by eleven basis points from the third quarter of 2018. Growth in average demand deposits of $6.3 million in the third quarter of 2019, compared to the second quarter of 2019, and of $25.9 million in the year over year period, has assisted us in controlling our cost of funds stemming from average interest bearing deposits, which totaled 0.66% for both the second and third quarters of 2019 and totaled 0.57% for the third quarter of 2018.
For the third quarter of 2019, average other short-term borrowings, which consisted solely of FHLBC advances, totaled $75.3 million, compared to $93.4 million for the second quarter of 2019, and $55.1 million for the third quarter of 2018. Average rates paid on short-term FHLBC advances have increased from 2.24% in the third quarter of 2018 to 2.47% for the second quarter of 2019, and moderated to 2.26% for the third quarter of 2019, reflecting the fluctuations in the interest rate environment. There was no material change in the rates or volume of our junior subordinated debt issuances and senior debt issuance in the linked quarter or year over year periods. Average notes payable and other borrowings included long-term FHLBC advances acquired in our acquisition of ABC Bank in April 2018, of $11.0 million for the third quarter of 2019, $13.1 million for the second quarter of 2019, and $20.8 million for the third quarter of 2018.
Our net interest margin (TE) decreased one basis point to 4.14% for the third quarter of 2019, compared to 4.15% for the second quarter of 2019 due primarily to a decrease in loan yields resulting from the falling interest rate environment, which decreased income from average earning assets more significantly than expenses related to average interest bearing liabilities. Our net interest margin (TE) in the third quarter of 2019 was 14 basis points higher than the third quarter of 2018, due primarily to loan growth and increases in loan yields resulting from a higher yielding product mix in commercial loans compared to residential loans, which resulted in increased income from average earning assets at a more significant rate than the increase in expenses on average interest bearing liabilities.
Noninterest Income
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| 3rd Quarter 2019 |
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Noninterest Income |
| 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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| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
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Trust income |
| $ | 1,730 |
| $ | 1,739 |
| $ | 1,644 |
| (0.5) |
| 5.2 |
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Service charges on deposits |
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| 2,020 |
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| 1,959 |
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| 1,923 |
| 3.1 |
| 5.0 |
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Residential mortgage banking revenue |
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Secondary mortgage fees |
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| 282 |
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| 203 |
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| 199 |
| 38.9 |
| 41.7 |
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Mortgage servicing rights mark to market (loss) |
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| (946) |
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| (1,137) |
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| (11) |
| 16.8 |
| N/M |
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Mortgage servicing income |
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| 460 |
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| 491 |
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| 471 |
| (6.3) |
| (2.3) |
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Net gain on sales of mortgage loans |
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| 2,074 |
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| 1,163 |
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| 965 |
| 78.3 |
| 114.9 |
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Total residential mortgage banking revenue |
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| 1,870 |
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| 720 |
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| 1,624 |
| 159.7 |
| 15.1 |
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Securities gain, net |
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| 3,463 |
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| 986 |
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| 13 |
| 251.2 |
| N/M |
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Increase in cash surrender value of BOLI |
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| 267 |
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| 320 |
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| 347 |
| (16.6) |
| (23.1) |
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Debit card interchange income |
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| 1,124 |
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| 1,166 |
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| 1,135 |
| (3.6) |
| (1.0) |
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Other income |
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| 1,459 |
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| 1,253 |
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| 1,128 |
| 16.4 |
| 29.3 |
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Total noninterest income |
| $ | 11,933 |
| $ | 8,143 |
| $ | 7,814 |
| 46.5 |
| 52.7 |
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N/M - Not meaningful.
4
Noninterest income increased $3.8 million, or 46.5%, in the third quarter of 2019, compared to the second quarter of 2019, primarily driven by a $2.5 million increase in securities gains, net, and a $1.2 million increase in total residential mortgage banking revenue, which included a decrease in mark to market losses on mortgage servicing rights and increases in net gain on sales of mortgage loans, as mortgage banking volumes grew due to falling interest rates in the third quarter of 2019.
Noninterest income increased $4.1 million, or 52.7%, in the year over year, primarily driven by a $3.5 million increase in securities gains, net. Growth in the year over year period was also noted in trust income of $86,000, service charges on deposits of $97,000, total residential mortgage banking revenue of $246,000, and other income of $331,000. The increase in other income for the third quarter of 2019, compared to the third quarter of 2018, was primarily attributable to an increase in ATM fees of $62,000, master card contract incentive fees of $80,000, commercial interest rate swap fees of $71,000, and gain on the sale of fixed assets of $29,000.
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3rd Quarter 2019 |
| ||
Noninterest Expense |
| Three Months Ended |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| |||
Salaries |
| $ | 9,460 |
| $ | 9,004 |
| $ | 8,509 |
| 5.1 |
| 11.2 |
|
Officers incentive |
|
| 923 |
|
| 893 |
|
| 820 |
| 3.4 |
| 12.6 |
|
Benefits and other |
|
| 1,679 |
|
| 1,690 |
|
| 1,836 |
| (0.7) |
| (8.6) |
|
Total salaries and employee benefits |
|
| 12,062 |
|
| 11,587 |
|
| 11,165 |
| 4.1 |
| 8.0 |
|
Occupancy, furniture and equipment expense |
|
| 2,235 |
|
| 1,925 |
|
| 1,782 |
| 16.1 |
| 25.4 |
|
Computer and data processing |
|
| 1,490 |
|
| 1,524 |
|
| 1,247 |
| (2.2) |
| 19.5 |
|
FDIC insurance |
|
| (114) |
|
| 116 |
|
| 162 |
| (198.3) |
| (170.4) |
|
General bank insurance |
|
| 270 |
|
| 236 |
|
| 230 |
| 14.4 |
| 17.4 |
|
Amortization of core deposit intangible asset |
|
| 157 |
|
| 121 |
|
| 136 |
| 29.8 |
| 15.4 |
|
Advertising expense |
|
| 360 |
|
| 381 |
|
| 492 |
| (5.5) |
| (26.8) |
|
Debit card interchange expense |
|
| 279 |
|
| 233 |
|
| 320 |
| 19.7 |
| (12.8) |
|
Legal fees |
|
| 111 |
|
| 243 |
|
| 243 |
| (54.3) |
| (54.3) |
|
Other real estate owned expense, net |
|
| 26 |
|
| 248 |
|
| (370) |
| (89.5) |
| (107.0) |
|
Other expense |
|
| 3,078 |
|
| 3,512 |
|
| 3,304 |
| (12.4) |
| (6.8) |
|
Total noninterest expense |
| $ | 19,954 |
| $ | 20,126 |
| $ | 18,711 |
| (0.9) |
| 6.6 |
|
Efficiency ratio (GAAP)1 |
|
| 59.46 | % |
| 61.91 | % |
| 60.06 | % |
|
|
|
|
Adjusted efficiency ratio (non-GAAP)2 |
|
| 58.53 | % |
| 60.66 | % |
| 59.11 | % |
|
|
|
|
1 The efficiency ratio shown in the table above is a GAAP financial measure calculated as noninterest expense, excluding OREO expenses and amortization of core deposits, divided by the sum of net interest income and total noninterest income less net gains and losses on securities and any BOLI death benefit recorded.
2 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 BOLI. See the discussion entitled “Non-GAAP Presentations” below and the table on page 15 that provides a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.
Noninterest expense for the third quarter of 2019 decreased $172,000, or 0.9%, compared to the second quarter of 2019, and increased $1.2 million, or 6.6%, compared to the second quarter of 2018. The linked quarter decrease is primarily attributable to a $230,000 decrease in FDIC insurance due to an assessment credit , a $222,000 decrease in other real estate expense, net, and a $434,000 decrease in other expense, which was partially offset by a $475,000 increase in salaries and employee benefits expense and a $310,000 increase in occupancy, furniture and equipment expense. Other expense decreased in the third quarter of 2019, compared to the second quarter of 2019, due to reductions in audit fees, consulting and management fees, and fraud losses. The increases in salaries and employee benefits was due to additional staffing in the commercial lending area late in the second quarter of 2019, and seasonal repairs and maintenance on bank owned properties.
The year over year increase in noninterest expense is primarily attributable to the growth in our commercial lending team and repairs and maintenance on bank owned properties, which resulted in higher costs in salaries and employee benefits and higher occupancy, furniture and equipment expense. Partially offsetting the year over year increases were decreases to FDIC insurance, advertising expense, legal fees, and other expense.
5
Earning Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2019 |
| ||
Loans |
| As of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| |||
Commercial |
| $ | 333,664 |
| $ | 337,848 |
| $ | 306,407 |
| (1.2) |
| 8.9 |
|
Leases |
|
| 108,152 |
|
| 98,379 |
|
| 70,661 |
| 9.9 |
| 53.1 |
|
Real estate - commercial |
|
| 826,780 |
|
| 825,091 |
|
| 804,184 |
| 0.2 |
| 2.8 |
|
Real estate - construction |
|
| 91,066 |
|
| 93,079 |
|
| 112,873 |
| (2.2) |
| (19.3) |
|
Real estate - residential |
|
| 388,511 |
|
| 393,547 |
|
| 393,598 |
| (1.3) |
| (1.3) |
|
HELOC |
|
| 126,309 |
|
| 128,673 |
|
| 122,022 |
| (1.8) |
| 3.5 |
|
Other1 |
|
| 14,140 |
|
| 13,533 |
|
| 12,969 |
| 4.5 |
| 9.0 |
|
Total loans, excluding deferred loan costs and PCI |
|
| 1,888,622 |
|
| 1,890,150 |
|
| 1,822,714 |
| (0.1) |
| 3.6 |
|
Net deferred loan costs |
|
| 2,054 |
|
| 1,959 |
|
| 1,348 |
| 4.8 |
| 52.4 |
|
Total loans, excluding PCI |
|
| 1,890,676 |
|
| 1,892,109 |
|
| 1,824,062 |
| (0.1) |
| 3.7 |
|
PCI loans, net of purchase accounting adjustments |
|
| 9,135 |
|
| 10,834 |
|
| 10,887 |
| (15.7) |
| (16.1) |
|
Total loans |
| $ | 1,899,811 |
| $ | 1,902,943 |
| $ | 1,834,949 |
| (0.2) |
| 3.5 |
|
1 Other class includes consumer and overdrafts.
Total loans decreased by $3.1 million at September 30, 2019, compared to June 30, 2019, and increased $64.9 million for the year over year period. The majority of the year over year increase is due to organic growth in our commercial loan, lease, and real estate-commercial loan portfolios.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2019 |
| ||
Securities |
| As of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| |||
Securities available-for-sale, at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
| $ | 4,038 |
| $ | 4,025 |
| $ | 3,854 |
| 0.3 |
| 4.8 |
|
U.S. government agencies |
|
| 9,143 |
|
| 9,812 |
|
| 11,703 |
| (6.8) |
| (21.9) |
|
U.S. government agency mortgage-backed |
|
| 16,940 |
|
| 16,999 |
|
| 14,766 |
| (0.3) |
| 14.7 |
|
States and political subdivisions |
|
| 238,727 |
|
| 251,295 |
|
| 272,264 |
| (5.0) |
| (12.3) |
|
Collateralized mortgage obligations |
|
| 64,121 |
|
| 64,867 |
|
| 64,960 |
| (1.2) |
| (1.3) |
|
Asset-backed securities |
|
| 83,182 |
|
| 82,725 |
|
| 109,173 |
| 0.6 |
| (23.8) |
|
Collateralized loan obligations |
|
| 72,271 |
|
| 62,357 |
|
| 65,618 |
| 15.9 |
| 10.1 |
|
Total securities available-for-sale |
| $ | 488,422 |
| $ | 492,080 |
| $ | 542,338 |
| (0.7) |
| (9.9) |
|
Our securities portfolio was $488.4 million as of September 30, 2019, a decrease of $3.7 million from $492.1 million as of June 30, 2019, and a decrease of $53.9 million from September 30, 2018. The portfolio composition has remained relatively static over the past year, with exceptions noted in states and political subdivisions and asset-backed securities due to sales, calls or maturities in those portfolios. Security sales recorded in the third quarter of 2019 resulted in net securities gains of $3.5 million, compared to $986,000 of net securities gains in the second quarter of 2019, and $13,000 of net security gains in the third quarter of 2018. The $3.5 million gain on sale recorded in the third quarter of 2019 was driven by the sale of approximately $57.2 million of tax exempt municipal securities, as the spread risk on these assets had increased considerably due to historically tight spreads in the sector. The security sales occurred to reduce the exposure related to this risk; these sale proceeds were partially used to purchase taxable municipal bonds, which had spread levels near their historic average.
6
Asset Quality
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| September 30, 2019 | ||
Nonperforming assets |
| As of |
| Percent Change From | |||||||||
(dollars in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, | |||
|
| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 | |||
Nonaccrual loans |
| $ | 11,852 |
| $ | 11,089 |
| $ | 9,981 |
| 6.9 |
| 18.8 |
Performing troubled debt restructured loans accruing interest |
|
| 1,532 |
|
| 1,570 |
|
| 1,719 |
| (2.4) |
| (10.9) |
Loans past due 90 days or more and still accruing interest |
|
| 18 |
|
| - |
|
| 79 |
| - |
| (77.2) |
Total nonperforming loans |
|
| 13,402 |
|
| 12,659 |
|
| 11,779 |
| 5.9 |
| 13.8 |
Other real estate owned |
|
| 4,682 |
|
| 5,668 |
|
| 6,964 |
| (17.4) |
| (32.8) |
Total nonperforming assets |
| $ | 18,084 |
| $ | 18,327 |
| $ | 18,743 |
| (1.3) |
| (3.5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans, net of purchase accounting adjustments |
| $ | 9,135 |
| $ | 10,834 |
| $ | 10,887 |
| (15.7) |
| (16.1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-89 days past due loans |
| $ | 7,937 |
| $ | 8,888 |
| $ | 16,802 |
|
|
|
|
Nonaccrual loans to total loans |
|
| 0.6 | % |
| 0.6 | % |
| 0.5 | % |
|
|
|
Nonperforming loans to total loans |
|
| 0.7 | % |
| 0.7 | % |
| 0.6 | % |
|
|
|
Nonperforming assets to total loans plus OREO |
|
| 0.9 | % |
| 1.0 | % |
| 1.0 | % |
|
|
|
Purchased credit-impaired loans to total loans |
|
| 0.5 | % |
| 0.6 | % |
| 0.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses |
| $ | 19,651 |
| $ | 19,372 |
| $ | 19,328 |
|
|
|
|
Allowance for loan and lease losses to total loans |
|
| 1.0 | % |
| 1.0 | % |
| 1.1 | % |
|
|
|
Allowance for loan and lease losses to nonaccrual loans |
|
| 165.8 | % |
| 174.7 | % |
| 193.7 | % |
|
|
|
Nonperforming loans consist of nonaccrual loans, performing troubled debt restructured loans accruing interest and loans 90 days or more past due and still accruing interest. We do not consider PCI loans, which showed evidence of deteriorated credit quality at acquisition, to be nonperforming assets as long as their cash flows and the timing of such cash flows continue to be estimable and probable of collection. Nonperforming loans to total loans was 0.7% in both the second and third quarters of 2019 and 0.6% for the third quarter of 2018. Nonperforming assets to total loans plus OREO ended at 0.9% in the third quarter of 2019 compared to 1.0% in both the second quarter of 2019 and the third quarter of 2018, reflecting stable nonperforming metrics as loan portfolio growth occurred over the last year, as well as continued OREO liquidations over the past year and write-downs recorded in 2019 and 2018. Our allowance for loan and lease losses to total loans was 1.0% as of both September 30, 2019 and June 30, 2019, and 1.1% as of September 30, 2018.
The following table details the accretable discount on all of our purchased loans for the quarters ended September 30, 2019.
7
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased Accounting Accretion |
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
| Accretable Discount- Non-PCI Loans |
| Accretable Discount- PCI Loans |
| Non-Accretable Discount- PCI Loans |
| Total | ||||
Beginning balance, July 1, 2019 |
| $ | 1,216 |
| $ | 931 |
| $ | 5,500 |
| $ | 7,647 |
Accretion |
|
| (217) |
|
| (218) |
|
| (606) |
|
| (1,041) |
Transfer |
|
| - |
|
| 1 |
|
| (1) |
|
| - |
Ending balance, September 30, 2019 |
| $ | 999 |
| $ | 714 |
| $ | 4,893 |
| $ | 6,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
| Accretable Discount - Non-PCI Loans |
| Accretable Discount - PCI Loans |
| Non-Accretable Discount - PCI Loans |
| Total | ||||
Beginning balance, April 1, 2019 |
| $ | 1,502 |
| $ | 1,085 |
| $ | 5,969 |
| $ | 8,556 |
Accretion |
|
| (286) |
|
| (108) |
|
| - |
|
| (394) |
Charge-offs |
|
| - |
|
| (48) |
|
| (467) |
|
| (515) |
Transfer |
|
| - |
|
| 2 |
|
| (2) |
|
| - |
Ending balance, June 30, 2019 |
| $ | 1,216 |
| $ | 931 |
| $ | 5,500 |
| $ | 7,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows classified assets by segment for the following periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2019 |
| ||
Classified loans |
| As of |
| Percent Change From |
| |||||||||
(dollars in thousands) |
| September 30, |
| June 30, |
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| |||
Commercial |
| $ | 8,079 |
| $ | 7,704 |
| $ | 353 |
| 4.9 |
| N/M |
|
Leases |
|
| 74 |
|
| 125 |
|
| - |
| (40.8) |
| N/M |
|
Real estate-commercial, nonfarm |
|
| 12,525 |
|
| 19,186 |
|
| 21,008 |
| (34.7) |
| (40.4) |
|
Real estate-commercial, farm |
|
| 1,210 |
|
| 1,210 |
|
| 1,241 |
| - |
| (2.5) |
|
Real estate-construction |
|
| 264 |
|
| 273 |
|
| 282 |
| (3.3) |
| (6.4) |
|
Real estate-residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
|
| 984 |
|
| 1,029 |
|
| 1,103 |
| (4.4) |
| (10.8) |
|
Multi-Family |
|
| 430 |
|
| 493 |
|
| 3,177 |
| (12.8) |
| (86.5) |
|
Owner occupied |
|
| 3,766 |
|
| 3,773 |
|
| 5,022 |
| (0.2) |
| (25.0) |
|
HELOC |
|
| 1,985 |
|
| 2,078 |
|
| 1,829 |
| (4.5) |
| 8.5 |
|
Other1 |
|
| 22 |
|
| 24 |
|
| 55 |
| (8.3) |
| (60.0) |
|
Total classified loans, excluding PCI |
|
| 29,339 |
|
| 35,895 |
|
| 34,070 |
| (18.3) |
| (13.9) |
|
PCI loans, net of purchase accounting adjustments |
|
| 9,135 |
|
| 10,834 |
|
| 10,887 |
| (15.7) |
| (16.1) |
|
Total classified loans |
| $ | 38,474 |
| $ | 46,729 |
| $ | 44,957 |
| (17.7) |
| (14.4) |
|
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 $38.5 million as of September 30, 2019, a decrease of $8.3 million, or 17.7%, from the prior linked quarter, and a decrease of $6.5 million, or 14.4%, from the third quarter of 2018. The $9.1 million of PCI loans as of September 30, 2019, $10.8 million as of June 30, 2019, and $10.9 million as of September 30, 2018, stems from our acquisition of ABC Bank in 2018.
8
Net Charge-off Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Charge-offs, net of recoveries | Quarters Ended | |||||||||||||
(dollars in thousands) | September 30, |
| % of |
| June 30, |
| % of |
| September 30, |
| % of | |||
| 2019 |
| Total 2 |
| 2019 |
| Total 2 |
| 2018 |
| Total 2 | |||
Commercial | $ | 10 |
| 3.7 |
| $ | 61 |
| 15.5 |
| $ | (25) |
| 357.1 |
Leases |
| 47 |
| 17.3 |
|
| - |
| - |
|
| - |
| - |
Real estate-commercial, nonfarm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner general purpose |
| - |
| - |
|
| 42 |
| 10.7 |
|
| (6) |
| 85.7 |
Owner special purpose |
| - |
| - |
|
| - |
| - |
|
| 192 |
| (2,742.9) |
Non-owner general purpose |
| 147 |
| 54.2 |
|
| (12) |
| (3.0) |
|
| (22) |
| 314.3 |
Non-owner special purpose |
| - |
| - |
|
| - |
| - |
|
| - |
| - |
Retail properties |
| - |
| - |
|
| - |
| - |
|
| - |
| - |
Total real estate-commercial, nonfarm |
| 147 |
| 54.2 |
|
| 30 |
| 7.7 |
|
| 164 |
| (2,342.9) |
Real estate-construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilder |
| - |
| - |
|
| - |
| - |
|
| - |
| - |
Land |
| - |
| - |
|
| - |
| - |
|
| (23) |
| 328.6 |
Commercial speculative |
| - |
| - |
|
| (2) |
| (0.5) |
|
| - |
| - |
All other |
| 7 |
| 2.6 |
|
| 1 |
| 0.3 |
|
| (9) |
| 128.6 |
Total real estate-construction |
| 7 |
| 2.6 |
|
| (1) |
| (0.2) |
|
| (32) |
| 457.2 |
Real estate-residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor |
| (6) |
| (2.2) |
|
| (3) |
| (0.8) |
|
| (18) |
| 257.1 |
Multi-Family |
| - |
| - |
|
| - |
| - |
|
| (11) |
| 157.1 |
Owner occupied |
| (13) |
| (4.8) |
|
| (11) |
| (2.8) |
|
| (54) |
| 771.4 |
Total real estate-residential |
| (19) |
| (7.0) |
|
| (14) |
| (3.6) |
|
| (83) |
| 1,185.6 |
HELOC |
| (2) |
| (0.7) |
|
| 267 |
| 67.8 |
|
| (90) |
| 1,285.7 |
Other1 |
| 81 |
| 29.9 |
|
| 51 |
| 12.8 |
|
| 59 |
| (842.9) |
Net charge-offs / (recoveries) | $ | 271 |
| 100.0 |
| $ | 394 |
| 100.0 |
| $ | (7) |
| 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 September 30, 2019 were $397,000, compared to $474,000 for the quarter ended June 30, 2019, and $372,000 for the quarter ended September 30, 2018. Gross recoveries were $126,000 for the quarter ended September 30, 2019, compared to $80,000 for the quarter ended June 30, 2019 and $379,000 for the third quarter of 2018. Continued recoveries are indicative of the ongoing aggressive efforts by management to effectively manage and resolve prior charge-offs.
Deposits
Total deposits were $2.07 billion at September 30, 2019, which reflects a decrease of $3.3 million compared to June 30, 2019, stemming from net decreases in savings, and NOW accounts of $20.4 million, partially offset by an increase in demand deposits of $10.5 million and time deposits of $5.5 million. Total deposits decreased $57.9 million in the year over year period reflecting aggregate decreases in money market, NOW accounts and time deposits of $86.3 million, partially offset by aggregate increases in demand deposits and savings accounts of $28.4 million.
Borrowings
As of September 30, 2019, we had $84.0 million outstanding in other short-term borrowings compared to $87.1 million as of June 30, 2019, and $81.9 million as of September 30, 2018.
We are indebted on senior notes totaling $44.2 million, net of deferred issuance costs, as of September 30, 2019. We are 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 our two statutory trust subsidiaries, Old Second Capital Trust I and Old Second Capital Trust II. Notes payable and other borrowings is comprised of $8.9 million of long-term FHLBC advances acquired in our ABC Bank acquisition, with terms ranging from December 29, 2020 to February 2, 2026.
9
Non-GAAP Presentations: Management has disclosed in this earnings release certain non-GAAP financial measures to evaluate and measure our performance, including the presentation of net interest income and net interest margin on a fully taxable equivalent basis and our efficiency ratio calculations. 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 5. 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 financial 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 our 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 our 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 us or any person that future events, plans, or expectations contemplated by us will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Conference Call
We will host an earnings call on Thursday, October 24, 2019, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Investors may listen to our earnings call via telephone by dialing 844-407-9500. 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 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on October 31, 2019, by dialing 877-481-4010, using Conference ID: 53745.
10
Old Second Bancorp, Inc. and Subsidiaries
(In thousands)
|
|
|
|
|
|
|
|
| (unaudited) |
|
|
| |
|
| September 30, |
| December 31, | ||
|
| 2019 |
| 2018 | ||
Assets |
|
|
|
|
|
|
Cash and due from banks |
| $ | 42,671 |
| $ | 38,599 |
Interest earning deposits with financial institutions |
|
| 11,366 |
|
| 16,636 |
Cash and cash equivalents |
|
| 54,037 |
|
| 55,235 |
Securities available-for-sale, at fair value |
|
| 488,422 |
|
| 541,248 |
Federal Home Loan Bank Chicago ("FHLBC") and Federal Reserve Bank Chicago ("FRBC") stock |
|
| 10,711 |
|
| 13,433 |
Loans held-for-sale |
|
| 5,592 |
|
| 2,984 |
Loans |
|
| 1,899,811 |
|
| 1,897,027 |
Less: allowance for loan and lease losses |
|
| 19,651 |
|
| 19,006 |
Net loans |
|
| 1,880,160 |
|
| 1,878,021 |
Premises and equipment, net |
|
| 42,900 |
|
| 42,439 |
Other real estate owned |
|
| 4,682 |
|
| 7,175 |
Mortgage servicing rights, net |
|
| 5,361 |
|
| 7,357 |
Goodwill and core deposit intangible |
|
| 21,404 |
|
| 21,814 |
Bank-owned life insurance ("BOLI") |
|
| 62,589 |
|
| 61,544 |
Deferred tax assets, net |
|
| 12,691 |
|
| 21,280 |
Other assets |
|
| 25,766 |
|
| 23,473 |
Total assets |
| $ | 2,614,315 |
| $ | 2,676,003 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 643,355 |
| $ | 618,830 |
Interest bearing: |
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 1,004,501 |
|
| 1,040,668 |
Time |
|
| 426,635 |
|
| 457,175 |
Total deposits |
|
| 2,074,491 |
|
| 2,116,673 |
Securities sold under repurchase agreements |
|
| 48,870 |
|
| 46,632 |
Other short-term borrowings |
|
| 84,000 |
|
| 149,500 |
Junior subordinated debentures |
|
| 57,722 |
|
| 57,686 |
Senior notes |
|
| 44,244 |
|
| 44,158 |
Notes payable and other borrowings |
|
| 8,856 |
|
| 15,379 |
Other liabilities |
|
| 26,111 |
|
| 16,894 |
Total liabilities |
|
| 2,344,294 |
|
| 2,446,922 |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
Common stock |
|
| 34,825 |
|
| 34,720 |
Additional paid-in capital |
|
| 120,291 |
|
| 119,081 |
Retained earnings |
|
| 204,486 |
|
| 175,463 |
Accumulated other comprehensive income (loss) |
|
| 6,371 |
|
| (4,079) |
Treasury stock |
|
| (95,952) |
|
| (96,104) |
Total stockholders’ equity |
|
| 270,021 |
|
| 229,081 |
Total liabilities and stockholders’ equity |
| $ | 2,614,315 |
| $ | 2,676,003 |
11
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (unaudited) |
| (unaudited) |
| |||||||
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | |||||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| ||||
Interest and dividend income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 25,109 |
| $ | 23,377 |
| $ | 74,132 |
| $ | 64,625 |
|
Loans held-for-sale |
|
| 47 |
|
| 39 |
|
| 100 |
|
| 94 |
|
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 2,296 |
|
| 2,491 |
|
| 6,933 |
|
| 7,053 |
|
Tax exempt |
|
| 1,719 |
|
| 2,064 |
|
| 5,958 |
|
| 6,239 |
|
Dividends from FHLBC and FRBC stock |
|
| 154 |
|
| 121 |
|
| 459 |
|
| 338 |
|
Interest bearing deposits with financial institutions |
|
| 119 |
|
| 84 |
|
| 344 |
|
| 230 |
|
Total interest and dividend income |
|
| 29,444 |
|
| 28,176 |
|
| 87,926 |
|
| 78,579 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 724 |
|
| 642 |
|
| 2,254 |
|
| 1,487 |
|
Time deposits |
|
| 1,672 |
|
| 1,568 |
|
| 4,931 |
|
| 4,187 |
|
Securities sold under repurchase agreements |
|
| 135 |
|
| 140 |
|
| 431 |
|
| 323 |
|
Other short-term borrowings |
|
| 429 |
|
| 311 |
|
| 1,611 |
|
| 916 |
|
Junior subordinated debentures |
|
| 933 |
|
| 930 |
|
| 2,791 |
|
| 2,784 |
|
Senior notes |
|
| 682 |
|
| 672 |
|
| 2,026 |
|
| 2,016 |
|
Notes payable and other borrowings |
|
| 89 |
|
| 173 |
|
| 312 |
|
| 268 |
|
Total interest expense |
|
| 4,664 |
|
| 4,436 |
|
| 14,356 |
|
| 11,981 |
|
Net interest and dividend income |
|
| 24,780 |
|
| 23,740 |
|
| 73,570 |
|
| 66,598 |
|
Provision for loan and lease losses |
|
| 550 |
|
| - |
|
| 1,450 |
|
| 728 |
|
Net interest and dividend income after provision for loan and lease losses |
|
| 24,230 |
|
| 23,740 |
|
| 72,120 |
|
| 65,870 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,730 |
|
| 1,644 |
|
| 4,955 |
|
| 4,784 |
|
Service charges on deposits |
|
| 2,020 |
|
| 1,923 |
|
| 5,841 |
|
| 5,284 |
|
Secondary mortgage fees |
|
| 282 |
|
| 199 |
|
| 621 |
|
| 556 |
|
Mortgage servicing rights mark to market (loss) gain |
|
| (946) |
|
| (11) |
|
| (2,902) |
|
| 189 |
|
Mortgage servicing income |
|
| 460 |
|
| 471 |
|
| 1,408 |
|
| 1,550 |
|
Net gain on sales of mortgage loans |
|
| 2,074 |
|
| 965 |
|
| 3,999 |
|
| 3,122 |
|
Securities gains, net |
|
| 3,463 |
|
| 13 |
|
| 4,476 |
|
| 360 |
|
Increase in cash surrender value of BOLI |
|
| 267 |
|
| 347 |
|
| 1,045 |
|
| 946 |
|
Death benefit realized on BOLI |
|
| - |
|
| - |
|
| - |
|
| 1,026 |
|
Debit card interchange income |
|
| 1,124 |
|
| 1,135 |
|
| 3,277 |
|
| 3,279 |
|
Other income |
|
| 1,459 |
|
| 1,128 |
|
| 3,838 |
|
| 3,755 |
|
Total noninterest income |
|
| 11,933 |
|
| 7,814 |
|
| 26,558 |
|
| 24,851 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 12,062 |
|
| 11,165 |
|
| 35,261 |
|
| 33,727 |
|
Occupancy, furniture and equipment |
|
| 2,235 |
|
| 1,782 |
|
| 6,149 |
|
| 4,992 |
|
Computer and data processing |
|
| 1,490 |
|
| 1,247 |
|
| 4,346 |
|
| 5,332 |
|
FDIC insurance |
|
| (114) |
|
| 162 |
|
| 176 |
|
| 483 |
|
General bank insurance |
|
| 270 |
|
| 230 |
|
| 756 |
|
| 780 |
|
Amortization of core deposit intangible |
|
| 157 |
|
| 136 |
|
| 410 |
|
| 254 |
|
Advertising expense |
|
| 360 |
|
| 492 |
|
| 975 |
|
| 1,325 |
|
Debit card interchange expense |
|
| 279 |
|
| 320 |
|
| 659 |
|
| 902 |
|
Legal fees |
|
| 111 |
|
| 243 |
|
| 480 |
|
| 688 |
|
Other real estate expense, net |
|
| 26 |
|
| (370) |
|
| 324 |
|
| 232 |
|
Other expense |
|
| 3,078 |
|
| 3,304 |
|
| 9,738 |
|
| 9,636 |
|
Total noninterest expense |
|
| 19,954 |
|
| 18,711 |
|
| 59,274 |
|
| 58,351 |
|
Income before income taxes |
|
| 16,209 |
|
| 12,843 |
|
| 39,404 |
|
| 32,370 |
|
Provision for income taxes |
|
| 4,036 |
|
| 3,201 |
|
| 9,485 |
|
| 6,978 |
|
Net income |
| $ | 12,173 |
| $ | 9,642 |
| $ | 29,919 |
| $ | 25,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.41 |
| $ | 0.32 |
| $ | 1.00 |
| $ | 0.85 |
|
Diluted earnings per share |
|
| 0.40 |
|
| 0.32 |
|
| 0.98 |
|
| 0.84 |
|
Dividends declared per share |
|
| 0.01 |
|
| 0.01 |
|
| 0.03 |
|
| 0.03 |
|
|
|
|
|
|
|
|
|
|
Ending common shares outstanding |
| 29,903,154 |
| 29,747,078 |
| 29,903,154 |
| 29,747,078 |
Weighted-average basic shares outstanding |
| 29,899,063 |
| 29,747,078 |
| 29,880,511 |
| 29,718,191 |
Weighted-average diluted shares outstanding |
| 30,438,333 |
| 30,383,891 |
| 30,390,965 |
| 30,297,294 |
12
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Average Balance
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| 2019 | ||||||||||||||||
Assets |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr | |||||||
Cash and due from banks |
| $ | 29,776 |
| $ | 36,720 |
| $ | 34,608 |
| $ | 34,915 |
| $ | 33,749 |
| $ | 33,618 |
| $ | 34,315 |
Interest earning deposits with financial institutions |
|
| 13,819 |
|
| 19,161 |
|
| 17,975 |
|
| 19,142 |
|
| 18,842 |
|
| 19,053 |
|
| 21,425 |
Cash and cash equivalents |
|
| 43,595 |
|
| 55,881 |
|
| 52,583 |
|
| 54,057 |
|
| 52,591 |
|
| 52,671 |
|
| 55,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale, at fair value |
|
| 549,161 |
|
| 555,202 |
|
| 542,297 |
|
| 538,882 |
|
| 513,491 |
|
| 520,006 |
|
| 494,050 |
FHLBC and FRBC stock |
|
| 8,920 |
|
| 8,619 |
|
| 8,905 |
|
| 10,758 |
|
| 11,463 |
|
| 11,317 |
|
| 10,398 |
Loans held-for-sale |
|
| 2,353 |
|
| 2,868 |
|
| 3,220 |
|
| 2,617 |
|
| 1,853 |
|
| 2,870 |
|
| 4,462 |
Loans |
|
| 1,600,594 |
|
| 1,806,209 |
|
| 1,839,341 |
|
| 1,855,283 |
|
| 1,893,659 |
|
| 1,894,454 |
|
| 1,890,992 |
Less: allowance for loan and lease losses |
|
| 18,263 |
|
| 18,494 |
|
| 19,696 |
|
| 19,247 |
|
| 19,235 |
|
| 19,435 |
|
| 19,452 |
Net loans |
|
| 1,582,331 |
|
| 1,787,715 |
|
| 1,819,645 |
|
| 1,836,036 |
|
| 1,874,424 |
|
| 1,875,019 |
|
| 1,871,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
| 37,472 |
|
| 41,796 |
|
| 42,651 |
|
| 42,731 |
|
| 42,270 |
|
| 42,271 |
|
| 42,754 |
Other real estate owned |
|
| 7,884 |
|
| 7,951 |
|
| 7,801 |
|
| 7,159 |
|
| 6,779 |
|
| 6,012 |
|
| 5,427 |
Mortgage servicing rights, net |
|
| 7,347 |
|
| 7,697 |
|
| 7,915 |
|
| 8,130 |
|
| 7,334 |
|
| 6,551 |
|
| 5,578 |
Goodwill and core deposit intangible |
|
| 8,911 |
|
| 9,035 |
|
| 21,990 |
|
| 21,879 |
|
| 21,747 |
|
| 21,618 |
|
| 21,476 |
Bank-owned life insurance ("BOLI") |
|
| 61,273 |
|
| 60,920 |
|
| 61,283 |
|
| 61,616 |
|
| 61,661 |
|
| 62,124 |
|
| 62,445 |
Deferred tax assets, net |
|
| 26,739 |
|
| 26,825 |
|
| 27,680 |
|
| 25,531 |
|
| 20,878 |
|
| 16,458 |
|
| 13,750 |
Other assets |
|
| 16,881 |
|
| 22,384 |
|
| 21,976 |
|
| 20,309 |
|
| 21,098 |
|
| 19,041 |
|
| 20,820 |
Total other assets |
|
| 166,507 |
|
| 176,608 |
|
| 191,296 |
|
| 187,355 |
|
| 181,767 |
|
| 174,075 |
|
| 172,250 |
Total assets |
| $ | 2,352,867 |
| $ | 2,586,893 |
| $ | 2,617,946 |
| $ | 2,629,705 |
| $ | 2,635,589 |
| $ | 2,635,958 |
| $ | 2,608,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing demand |
| $ | 554,624 |
| $ | 618,765 |
| $ | 625,982 |
| $ | 634,611 |
| $ | 625,423 |
| $ | 645,580 |
| $ | 651,863 |
Interest bearing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market |
|
| 970,998 |
|
| 1,059,601 |
|
| 1,064,801 |
|
| 1,045,744 |
|
| 1,055,563 |
|
| 1,044,950 |
|
| 1,011,717 |
Time |
|
| 382,422 |
|
| 460,909 |
|
| 467,933 |
|
| 461,677 |
|
| 445,076 |
|
| 422,975 |
|
| 420,429 |
Total deposits |
|
| 1,908,044 |
|
| 2,139,275 |
|
| 2,158,716 |
|
| 2,142,032 |
|
| 2,126,062 |
|
| 2,113,505 |
|
| 2,084,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
| 40,275 |
|
| 44,655 |
|
| 46,850 |
|
| 44,628 |
|
| 45,157 |
|
| 44,184 |
|
| 40,342 |
Other short-term borrowings |
|
| 87,444 |
|
| 58,199 |
|
| 55,119 |
|
| 83,588 |
|
| 98,328 |
|
| 93,369 |
|
| 75,310 |
Junior subordinated debentures |
|
| 57,645 |
|
| 57,657 |
|
| 57,669 |
|
| 57,681 |
|
| 57,692 |
|
| 57,704 |
|
| 57,716 |
Senior Notes |
|
| 44,071 |
|
| 44,096 |
|
| 44,121 |
|
| 44,146 |
|
| 44,171 |
|
| 44,196 |
|
| 44,222 |
Notes payable and other borrowings |
|
| - |
|
| 19,795 |
|
| 20,768 |
|
| 17,987 |
|
| 15,273 |
|
| 13,101 |
|
| 10,973 |
Other liabilities |
|
| 13,969 |
|
| 15,679 |
|
| 20,142 |
|
| 17,108 |
|
| 13,750 |
|
| 19,586 |
|
| 30,329 |
Total liabilities |
|
| 2,151,448 |
|
| 2,379,356 |
|
| 2,403,385 |
|
| 2,407,170 |
|
| 2,400,433 |
|
| 2,385,645 |
|
| 2,342,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
| 34,647 |
|
| 34,717 |
|
| 34,717 |
|
| 34,717 |
|
| 34,775 |
|
| 34,825 |
|
| 34,825 |
Additional paid-in capital |
|
| 117,734 |
|
| 117,793 |
|
| 118,366 |
|
| 118,800 |
|
| 119,051 |
|
| 119,381 |
|
| 120,076 |
Retained earnings |
|
| 147,309 |
|
| 155,553 |
|
| 162,486 |
|
| 172,363 |
|
| 180,398 |
|
| 188,453 |
|
| 199,228 |
Accumulated other comprehensive loss |
|
| (1,871) |
|
| (4,232) |
|
| (4,714) |
|
| (7,204) |
|
| (3,102) |
|
| 3,705 |
|
| 7,417 |
Treasury stock |
|
| (96,400) |
|
| (96,294) |
|
| (96,294) |
|
| (96,141) |
|
| (95,966) |
|
| (96,051) |
|
| (96,007) |
Total stockholders' equity |
|
| 201,419 |
|
| 207,537 |
|
| 214,561 |
|
| 222,535 |
|
| 235,156 |
|
| 250,313 |
|
| 265,539 |
Total liabilities and stockholders' equity |
| $ | 2,352,867 |
| $ | 2,586,893 |
| $ | 2,617,946 |
| $ | 2,629,705 |
| $ | 2,635,589 |
| $ | 2,635,958 |
| $ | 2,608,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Earning Assets |
| $ | 2,174,847 |
| $ | 2,392,059 |
| $ | 2,411,738 |
| $ | 2,426,682 |
| $ | 2,439,308 |
| $ | 2,447,700 |
| $ | 2,421,327 |
Total Interest Bearing Liabilities |
|
| 1,582,855 |
|
| 1,744,912 |
|
| 1,757,261 |
|
| 1,755,451 |
|
| 1,761,260 |
|
| 1,720,479 |
|
| 1,660,709 |
13
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(In thousands, except per share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| 2019 |
| |||||||||||||||||
|
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| |||||||
Interest and Dividend Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
| $ | 18,732 |
| $ | 22,512 |
| $ | 23,377 |
| $ | 24,144 |
| $ | 24,099 |
| $ | 24,924 |
| $ | 25,109 |
|
Loans held-for-sale |
|
| 24 |
|
| 35 |
|
| 39 |
|
| 33 |
|
| 22 |
|
| 31 |
|
| 47 |
|
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 2,170 |
|
| 2,392 |
|
| 2,491 |
|
| 2,524 |
|
| 2,414 |
|
| 2,223 |
|
| 2,296 |
|
Tax exempt |
|
| 2,061 |
|
| 2,114 |
|
| 2,064 |
|
| 2,102 |
|
| 2,098 |
|
| 2,141 |
|
| 1,719 |
|
Dividends from FHLB and FRBC stock |
|
| 106 |
|
| 111 |
|
| 121 |
|
| 131 |
|
| 149 |
|
| 156 |
|
| 154 |
|
Interest bearing deposits with financial institutions |
|
| 49 |
|
| 97 |
|
| 84 |
|
| 104 |
|
| 114 |
|
| 111 |
|
| 119 |
|
Total interest and dividend income |
|
| 23,142 |
|
| 27,261 |
|
| 28,176 |
|
| 29,038 |
|
| 28,896 |
|
| 29,586 |
|
| 29,444 |
|
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market deposits |
|
| 344 |
|
| 501 |
|
| 642 |
|
| 670 |
|
| 771 |
|
| 759 |
|
| 724 |
|
Time deposits |
|
| 1,175 |
|
| 1,444 |
|
| 1,568 |
|
| 1,643 |
|
| 1,618 |
|
| 1,641 |
|
| 1,672 |
|
Securities sold under repurchase agreements |
|
| 79 |
|
| 104 |
|
| 140 |
|
| 138 |
|
| 149 |
|
| 147 |
|
| 135 |
|
Other short-term borrowings |
|
| 329 |
|
| 276 |
|
| 311 |
|
| 512 |
|
| 607 |
|
| 575 |
|
| 429 |
|
Junior subordinated debentures |
|
| 927 |
|
| 927 |
|
| 930 |
|
| 933 |
|
| 927 |
|
| 931 |
|
| 933 |
|
Senior notes |
|
| 672 |
|
| 672 |
|
| 672 |
|
| 672 |
|
| 672 |
|
| 672 |
|
| 682 |
|
Notes payable and other borrowings |
|
| - |
|
| 95 |
|
| 173 |
|
| 130 |
|
| 116 |
|
| 107 |
|
| 89 |
|
Total interest expense |
|
| 3,526 |
|
| 4,019 |
|
| 4,436 |
|
| 4,698 |
|
| 4,860 |
|
| 4,832 |
|
| 4,664 |
|
Net interest and dividend income |
|
| 19,616 |
|
| 23,242 |
|
| 23,740 |
|
| 24,340 |
|
| 24,036 |
|
| 24,754 |
|
| 24,780 |
|
(Release) provision for loan and lease losses |
|
| (722) |
|
| 1,450 |
|
| - |
|
| 500 |
|
| 450 |
|
| 450 |
|
| 550 |
|
Net interest and dividend income after (release) provision for loan and lease losses |
|
| 20,338 |
|
| 21,792 |
|
| 23,740 |
|
| 23,840 |
|
| 23,586 |
|
| 24,304 |
|
| 24,230 |
|
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
| 1,495 |
|
| 1,645 |
|
| 1,644 |
|
| 1,633 |
|
| 1,486 |
|
| 1,739 |
|
| 1,730 |
|
Service charges on deposits |
|
| 1,592 |
|
| 1,769 |
|
| 1,923 |
|
| 2,044 |
|
| 1,862 |
|
| 1,959 |
|
| 2,020 |
|
Secondary mortgage fees |
|
| 162 |
|
| 195 |
|
| 199 |
|
| 140 |
|
| 136 |
|
| 203 |
|
| 282 |
|
Mortgage servicing rights mark to market gain (loss) |
|
| 305 |
|
| (105) |
|
| (11) |
|
| (923) |
|
| (819) |
|
| (1,137) |
|
| (946) |
|
Mortgage servicing income |
|
| 452 |
|
| 627 |
|
| 471 |
|
| 389 |
|
| 457 |
|
| 491 |
|
| 460 |
|
Net gain on sales of mortgage loans |
|
| 917 |
|
| 1,240 |
|
| 965 |
|
| 669 |
|
| 762 |
|
| 1,163 |
|
| 2,074 |
|
Securities gains, net |
|
| 35 |
|
| 312 |
|
| 13 |
|
| - |
|
| 27 |
|
| 986 |
|
| 3,463 |
|
Increase in cash surrender value of BOLI |
|
| 248 |
|
| 351 |
|
| 347 |
|
| 38 |
|
| 458 |
|
| 320 |
|
| 267 |
|
Death benefit realized on BOLI |
|
| 1,026 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
Debit card interchange income |
|
| 1,012 |
|
| 1,132 |
|
| 1,135 |
|
| 1,141 |
|
| 987 |
|
| 1,166 |
|
| 1,124 |
|
Other income |
|
| 1,261 |
|
| 1,366 |
|
| 1,128 |
|
| 1,371 |
|
| 1,126 |
|
| 1,253 |
|
| 1,459 |
|
Total noninterest income |
|
| 8,505 |
|
| 8,532 |
|
| 7,814 |
|
| 6,502 |
|
| 6,482 |
|
| 8,143 |
|
| 11,933 |
|
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 10,207 |
|
| 12,355 |
|
| 11,165 |
|
| 10,435 |
|
| 11,612 |
|
| 11,587 |
|
| 12,062 |
|
Occupancy, furniture and equipment |
|
| 1,558 |
|
| 1,652 |
|
| 1,782 |
|
| 1,922 |
|
| 1,989 |
|
| 1,925 |
|
| 2,235 |
|
Computer and data processing |
|
| 1,344 |
|
| 2,741 |
|
| 1,247 |
|
| 1,413 |
|
| 1,332 |
|
| 1,524 |
|
| 1,490 |
|
FDIC insurance |
|
| 156 |
|
| 165 |
|
| 162 |
|
| 170 |
|
| 174 |
|
| 116 |
|
| (114) |
|
General bank insurance |
|
| 251 |
|
| 299 |
|
| 230 |
|
| 259 |
|
| 250 |
|
| 236 |
|
| 270 |
|
Amortization of core deposit intangible |
|
| 21 |
|
| 97 |
|
| 136 |
|
| 133 |
|
| 132 |
|
| 121 |
|
| 157 |
|
Advertising expense |
|
| 341 |
|
| 492 |
|
| 492 |
|
| 242 |
|
| 234 |
|
| 381 |
|
| 360 |
|
Debit card interchange expense |
|
| 281 |
|
| 301 |
|
| 320 |
|
| 38 |
|
| 147 |
|
| 233 |
|
| 279 |
|
Legal fees |
|
| 159 |
|
| 286 |
|
| 243 |
|
| 147 |
|
| 126 |
|
| 243 |
|
| 111 |
|
Other real estate expense, net |
|
| 173 |
|
| 429 |
|
| (370) |
|
| 165 |
|
| 50 |
|
| 248 |
|
| 26 |
|
Other expense |
|
| 2,863 |
|
| 3,469 |
|
| 3,304 |
|
| 3,853 |
|
| 3,148 |
|
| 3,512 |
|
| 3,078 |
|
Total noninterest expense |
|
| 17,354 |
|
| 22,286 |
|
| 18,711 |
|
| 18,777 |
|
| 19,194 |
|
| 20,126 |
|
| 19,954 |
|
Income before income taxes |
|
| 11,489 |
|
| 8,038 |
|
| 12,843 |
|
| 11,565 |
|
| 10,874 |
|
| 12,321 |
|
| 16,209 |
|
Provision for income taxes |
|
| 2,000 |
|
| 1,777 |
|
| 3,201 |
|
| 2,945 |
|
| 2,406 |
|
| 3,043 |
|
| 4,036 |
|
Net income |
| $ | 9,489 |
| $ | 6,261 |
| $ | 9,642 |
| $ | 8,620 |
| $ | 8,468 |
| $ | 9,278 |
| $ | 12,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
| $ | 0.32 |
| $ | 0.21 |
| $ | 0.32 |
| $ | 0.29 |
| $ | 0.28 |
| $ | 0.31 |
| $ | 0.41 |
|
Diluted earnings (loss) per share |
|
| 0.31 |
|
| 0.21 |
|
| 0.32 |
|
| 0.28 |
|
| 0.28 |
|
| 0.31 |
|
| 0.40 |
|
Dividends paid per share |
|
| 0.01 |
|
| 0.01 |
|
| 0.01 |
|
| 0.01 |
|
| 0.01 |
|
| 0.01 |
|
| 0.01 |
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
| Quarters Ended |
| |||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2019 |
| 2019 |
| 2018 |
| |||
Net Interest Margin |
|
|
|
|
|
|
|
|
|
|
Interest income (GAAP) |
| $ | 29,444 |
| $ | 29,586 |
| $ | 28,176 |
|
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
| 3 |
|
| 3 |
|
| 5 |
|
Securities |
|
| 457 |
|
| 569 |
|
| 548 |
|
Interest income (TE) |
|
| 29,904 |
|
| 30,158 |
|
| 28,729 |
|
Interest expense (GAAP) |
|
| 4,664 |
|
| 4,832 |
|
| 4,436 |
|
Net interest income (TE) |
| $ | 25,240 |
| $ | 25,326 |
| $ | 24,293 |
|
Net interest income (GAAP) |
| $ | 24,780 |
| $ | 24,754 |
| $ | 23,740 |
|
Average interest earning assets |
| $ | 2,421,327 |
| $ | 2,447,700 |
| $ | 2,411,738 |
|
Net interest margin (GAAP) |
|
| 4.06 | % |
| 4.06 | % |
| 3.91 | % |
Net interest margin (TE) |
|
| 4.14 | % |
| 4.15 | % |
| 4.00 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
| GAAP |
| Non-GAAP |
| |||||||||||||||||||||||||||||||||
|
|
| Three Months Ended |
|
| Three Months Ended |
| |||||||||||||||||||||||||||||||
|
| September 30, |
| June 30, |
| September 30, |
| September 30, |
| June 30, |
| September 30, |
| |||||||||||||||||||||||||
|
| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2019 |
| 2018 |
| |||||||||||||||||||||||||
Efficiency Ratio / Adjusted Efficiency Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Noninterest expense |
| $ | 19,954 |
| $ | 20,126 |
| $ | 18,711 |
| $ | 19,954 |
| $ | 20,126 |
| $ | 18,711 |
| |||||||||||||||||||
Less amortization of core deposit |
|
| 157 |
|
| 121 |
|
| 136 |
|
| 157 |
|
| 121 |
|
| 136 |
| |||||||||||||||||||
Less other real estate expense, net |
|
| 26 |
|
| 248 |
|
| (370) |
|
| 26 |
|
| 248 |
|
| (370) |
| |||||||||||||||||||
Less acquisition related costs |
|
| N/A |
|
| N/A |
|
| N/A |
|
| - |
|
| - |
|
| (82) |
| |||||||||||||||||||
Noninterest expense less adjustments |
| $ | 19,771 |
| $ | 19,757 |
| $ | 18,945 |
| $ | 19,771 |
| $ | 19,757 |
| $ | 19,027 |
| |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net interest income |
| $ | 24,780 |
| $ | 24,754 |
| $ | 23,740 |
| $ | 24,780 |
| $ | 24,754 |
| $ | 23,740 |
| |||||||||||||||||||
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Loans |
|
| N/A |
|
| N/A |
|
| N/A |
|
| 3 |
|
| 3 |
|
| 5 |
| |||||||||||||||||||
Securities |
|
| N/A |
|
| N/A |
|
| N/A |
|
| 457 |
|
| 569 |
|
| 548 |
| |||||||||||||||||||
Net interest income including adjustments |
|
| 24,780 |
|
| 24,754 |
|
| 23,740 |
|
| 25,240 |
|
| 25,326 |
|
| 24,293 |
| |||||||||||||||||||
Noninterest income |
|
| 11,933 |
|
| 8,143 |
|
| 7,814 |
|
| 11,933 |
|
| 8,143 |
|
| 7,814 |
| |||||||||||||||||||
Less securities gain, net |
|
| 3,463 |
|
| 986 |
|
| 13 |
|
| 3,463 |
|
| 986 |
|
| 13 |
| |||||||||||||||||||
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Increase in cash surrender value of BOLI |
|
| N/A |
|
| N/A |
|
| N/A |
|
| 71 |
|
| 85 |
|
| 92 |
| |||||||||||||||||||
Noninterest income (less) / including adjustments |
|
| 8,470 |
|
| 7,157 |
|
| 7,801 |
|
| 8,541 |
|
| 7,242 |
|
| 7,893 |
| |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net interest income including adjustments plus noninterest income (less) / including adjustments |
| $ | 33,250 |
| $ | 31,911 |
| $ | 31,541 |
| $ | 33,781 |
| $ | 32,568 |
| $ | 32,186 |
| |||||||||||||||||||
Efficiency ratio / Adjusted efficiency ratio |
|
| 59.46 | % |
| 61.91 | % |
| 60.06 | % |
| 58.53 | % |
| 60.66 | % |
| 59.11 | % | |||||||||||||||||||
15