SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ____________
Commission file number 0-10537
A. Full title of the plan and the address of the plan if different from that of the issuer named below
Old Second Bancorp Inc. Employees 401(k) Savings Plan and Trust
B. Name of the issuer of the securities held pursuant to the plan and the address of its principal
executive office:
Old Second Bancorp, Inc.
37South River Street, Aurora, Illinois 60506
(Address of principal executive offices, including zip)
(630) 892-0202
(Registrant’s telephone number, including Area Code)
Financial Statements and Supplemental Schedule
Old Second Bancorp Inc. Employees 401(k) Savings
Plan and Trust
Years ended December 31, 2000 and 1999
with Report of Independent Auditors
EIN 36-3143493
Plan #003
Old Second Bancorp Inc. Employees
401(k) Savings Plan and Trust
Financial Statements
and Supplemental Schedule
Years ended December 31, 2000 and 1999
Contents
Report of Independent Auditors
Employee Benefits Committee
Old Second Bancorp, Inc. Employees
401(k) Savings Plan and Trust
We have audited the accompanying statements of assets available for benefits of Old Second Bancorp, Inc. Employees 401(k) Savings Plan and Trust as of December 31, 2000 and 1999, and the related statements of changes in assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for benefits of the Plan at December 31, 2000 and 1999, and the changes in its assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held at end of year as of December 31, 2000, is presented for purposes of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
Ernst & Young LLP
April 13, 2001
Statements of Assets Available for Benefits
| December 31 | ||
| 2000 | 1999 | |
| Assets | ||
| Cash | $– | $13,355 |
| Investments | 8,228,646 | 8,117,742 |
| Participant contribution receivable | 40,564 | 25,380 |
| Employer contribution receivable | 23,090 | 29,394 |
| Dividends and interest receivable | 11,601 | 10,232 |
| Assets available for benefits | $8,303,901 | $8,196,103 |
See accompanying notes.
Statements of Changes in Assets Available for Benefits
| Year ended December 31 | ||
| 2000 | 1999 | |
| Additions | ||
| Participant contributions | $754,570 | $588,577 |
| Employer contributions | 229,383 | 190,910 |
| Rollover contributions | 49,741 | 86,189 |
| Dividend and interest income | 108,095 | 57,936 |
| Net realized and unrealized appreciation (depreciation) in fair value of investments | (118,106) | 910,378 |
| 1,023,683 | 1,833,990 | |
| Deductions | ||
| Benefit payments | 915,885 | 590,069 |
| Net increase | 107,798 | 1,243,921 |
| Assets available for benefits: | ||
| Beginning of year | 8,196,103 | 6,952,182 |
| End of year | $8,303,901 | $8,196,103 |
See accompanying notes.
Years ended December 31, 2000 and 1999
1. Description of the Plan
The following is a brief description of the Old Second Bancorp, Inc. Employees 401(k) Savings Plan & Trust (the Plan). Participants should refer to the Plan agreement or the summary plan description for a more complete description of the Plan’s provisions.
General
The Plan is a defined-contribution plan that was established to provide deferred compensation benefits to eligible employees. Under the Plan, all nonunion employees of Old Second Bancorp, Inc. and certain of its affiliates (collectively, the Company) who have met certain eligibility requirements may elect to participate in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 1997, the Plan was amended to permit participation by any employee, both salaried and nonsalaried, who meets the eligibility requirements, other than any employee who is a member of a collective bargaining unit under which retirement benefits were the subject of good faith bargaining. Eligible employees previously excluded from the Plan solely due to having been paid on a hourly basis rather than a salary basis, shall, effective January 1, 1997, be credited with eligible service, benefit service, and vesting service (as defined) to the extent the employee would have been credited for such services had his or her employment with an affiliated company (as defined) been as a salaried employee rather than as an employee paid on an hourly basis.
Contributions
Under provisions of the Plan, participants enter into agreements wherein each participant may elect a reduction in compensation from 1% to 10%, not to exceed the Internal Revenue Code (IRC) limit, representing the employee’s pretax contribution to the Plan. Effective July 1, 2000, participants’ reduction in compensation increased to 12%.
Maximum contribution limits of less than 10% (12% effective July 1, 2000) of compensation may apply for certain highly compensated employees. In addition, each participant may elect to make additional voluntary after-tax contributions subject to certain limitations as specified by the Plan. Quarterly, the Company contributes an amount on behalf of each participant equal to 66 2/3% of the salary reduction contributions made in the Plan year, but not to exceed 2% of the participant’s compensation.
Payment of Benefits
Upon termination of service, disability, retirement, or death, each participant or beneficiary may elect to receive accumulated benefits. The benefit may be paid as a lump-sum amount or a series of installment payments, as determined by the participant or beneficiary. Under certain circumstances, participants may receive a hardship distribution prior to termination upon approval of the plan administrator.
Income Allocation
Under provisions of the Plan, each participant must direct the trustee to invest the balance of their account in participation units in the Old Second Bancorp, Inc. Common Stock Fund, and/or in certain common trust funds established and maintained by the trustee for the collective investment of funds held in qualified employee benefit plans, and/or certain mutual funds, and/or certain money market fund vehicles. Income, gains, and losses realized from such directed investments are charged or credited to the account of the directing participant based on the proportionate value of all active accounts (other than accounts with segregated investments) as of the last valuation date less withdrawals since the last valuation date.
Vesting
Participants are always fully vested in their employee and rollover contributions and earnings thereon. Each participant acquires a fully vested and nonforfeitable right to their account balance attributable to employer contributions and earnings thereon upon their date of eligibility for the Employer contribution, i.e., the anniversary date of completion of two years of service.
Participant Loans
Participants may borrow from their accounts a maximum of the lesser of $50,000 or 50% of their vested account balance. Loan terms range from one to five years, except in the case of a loan for the purpose of acquiring a primary residence. The term of such loan shall be determined by the Company. The loans are secured by the balance in the participant’s account and bear a reasonable rate of interest as determined by the Company. Principal and interest is paid ratably through semi-monthly payroll deductions.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to provisions of ERISA. Upon Plan termination, all participants become fully vested in their account balances.
2. Summary of Accounting Policies
The following is a summary of significant accounting policies followed by the Plan.
Valuation of Investments
Investments in the Old Second National Bank of Aurora Common Trust Funds for Corporate Retirement Plans and the Benchmark Diversified Asset Portfolio are carried at the quoted market value of the underlying assets held in the funds. The registered investment companies are valued at quoted market prices. Common stock of Old Second Bancorp, Inc. is valued at the last reported bid price. Participant loans are valued at cost, which approximates fair value. Purchases and sales of investments are reflected on a trade-date basis. Dividend income is recorded on the ex-dividend date. Interest is recorded on an accrual basis.
Administrative Expenses
Administrative expenses of the Plan are paid directly by the Company.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the plan administrator to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
3. Investments
The fair value of the Plan’s investments (including investments bought, sold, and held during the year) appreciated (depreciated) as follows:
| Year ended December 31 | ||
| 2000 | 1999 | |
| Common Collective Trust Funds | $85,688 | $967,886 |
| Common Stock | (88,404) | (57,508) |
| Registered investment companies | (115,390) | – |
| $(118,106) | $910,378 | |
The following investments represent 5% or more of the fair value of the Plan’s net assets:
| December 31 | ||
| 2000 | 1999 | |
| Benchmark Diversified Asset Portfolio | $476,837 | $– |
| Old Second National Bank of Aurora Common Trust Fund for Corporate Retirement Plans: | ||
| Diversified Equity Fund | 3,900,807 | 4,192,190 |
| Bond Fund | 1,255,521 | 1,164,689 |
| Government Securities Fund | 701,581 | 931,657 |
| Old Second Bancorp, Inc. Common Stock | 1,432,054 | 1,431,012 |
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated February 19, 1992, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt.
Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)
December 31, 2000
| Identity of Issuer/Description | Shares | Current Value |
| Old Second National Bank of Aurora Common Trust Funds for Corporate Retirement Plans | ||
| Stock Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 18,312 shares | $18,312 |
| Employee Benefit Diversified Equity Portfolio Fund* | 85,698 shares | 3,183,091 |
| 3,201,403 | ||
| Bond Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 3,049 shares | 3,049 |
| Employee Benefit Bond Fund* | 9,026 shares | 1,007,140 |
| 1,010,189 | ||
| Money Market Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 382,658 shares | 382,658 |
| Government Securities Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 3,680 shares | 3,680 |
| Employee Benefit Government Securities Fund* | 15,408 shares | 658,501 |
| 662,181 | ||
| Old Second Bancorp, Inc., Common Stock Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 22 shares | 22 |
| Old Second Bancorp, Inc. Common Stock* | 60,297 shares | 1,432,054 |
| 1,432,076 | ||
| Small Cap Stock Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 110 shares | 110 |
| Franklin Strategic Series Small Cap Growth Fund | 886 shares | 35,046 |
| 35,156 |
| Identity of Issuer/Description | Shares | Current Value |
| Index Stock Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 431 shares | $431 |
| Vanguard Index Trust 500 Portfolio Fund | 859 shares | 104,638 |
| 105,069 | ||
| International Stock Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 105 shares | 105 |
| Morgan Stanley International Equity Fund | 1,934 shares | 34,576 |
| 34,681 | ||
| Aggressive Growth Stock Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 167 shares | 167 |
| Twentieth Century Ultra Fund | 5,403 shares | 174,893 |
| 175,060 | ||
| Science & Technology Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 111 shares | 111 |
| T Rowe Price Science & Technology Fund | 1,851 shares | 65,824 |
| 65,935 | ||
| Value Stock Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 2,566 shares | 2,566 |
| Legg Mason Navigator Value Trust Fund | 322 shares | 18,691 |
| 21,257 |
| Identity of Issuer/Description | Shares | Current Value |
| Conservative Model Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 5,463 shares | $5,463 |
| Employee Benefit Bond Fund* | 566 shares | 63,155 |
| Employee Benefit Diversified Equity Portfolio Fund* | 440 shares | 16,343 |
| Employee Benefit Government Securities Fund* | 489 shares | 20,899 |
| 105,860 | ||
| Balanced Model Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 9,310 shares | 9,310 |
| Employee Benefit Bond Fund* | 455 shares | 50,770 |
| Employee Benefit Diversified Equity Portfolio Fund* | 2,050 shares | 76,143 |
| Employee Benefit Government Securities Fund* | 361 shares | 15,428 |
| 151,651 | ||
| Growth Model Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 10,709 shares | 10,709 |
| Employee Benefit Bond Fund* | 327 shares | 36,487 |
| Employee Benefit Diversified Equity Portfolio Fund* | 2,655 shares | 98,615 |
| Employee Benefit Government Securities Fund* | 158 shares | 6,753 |
| 152,564 | ||
| Aggressive Model Fund | ||
| Northern Trust Benchmark Diversified Asset Portfolio | 40,144 shares | 40,144 |
| Employee Benefit Bond Fund* | 878 shares | 97,969 |
| Employee Benefit Diversified Equity Portfolio Fund* | 14,178 shares | 526,615 |
| 664,728 | ||
| Loan Fund | ||
| Participant Loans, 8.5%-10% interest rates | 28,178 | |
| $8,228,646 |
*Represents a party in interest to the Plan.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| OLD SECOND BANCORP, INC. | ||||
| BY: | /s/ William B. Skoglund | |||
| William B. Skoglund | ||||
| President and Chief Executive Officer | ||||
| BY: | /s/ J. Douglas Cheatham | |||
| J. Douglas Cheatham | ||||
| Senior Vice President and Chief Financial Officer | ||||
| DATE: June 27, 2001 | ||||
