SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act
of 1934 (Fee Required)
For the fiscal year ended December 31, 1995
or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act
of 1934 (No Fee Required)
For the Transition Period From __________ to __________.
Commission file number 0-10537
Old Second Bancorp, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 36-3143493
(State of Incorporation) (I.R.S. Employer I.D. No.)
37 South River Street, Aurora, Illinois 60507
(Address of principal executive offices) (Zip Code)
(708) 892-0202
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Yes
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes X No
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant. The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to
the date of filing:
$108,107,590 as of March 21, 1996
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
2,350,165 shares of no par value common stock at March 21, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the December 31, 1995 Annual Report to Stockholders and the
Registrant's Proxy Statement dated February 9, 1996, have been incorporated
by reference in Parts I, II and III of the Annual Report on Form 10-K, to
the extent indicated herein.
Index to Exhibits is in Part IV on pages 19 and 20.
This Form 10-K consists of 79 pages.
Page 1
Part I
Item 1. Business
OLD SECOND BANCORP, INC.
Old Second Bancorp, Inc. ("Bancorp") was organized on
September 8, 1981 by the directors of The Old Second National Bank of
Aurora ("Old Second"). Bancorp was incorporated under the laws of the
State of Delaware on September 18, 1981.
Bancorp is a multi-bank holding company which at December 31, 1995,
had seven subsidiary banks, as follows: The Old Second National Bank of
Aurora, The Old Second Community Bank of North Aurora, The Old Second
Community Bank of Aurora, The Yorkville National Bank, Burlington Bank,
Kane County Bank and Trust and Bank of Sugar Grove.
The directors of Bancorp are the same as the directors of Old Second.
The directors receive no fees for Bancorp meetings. Bancorp has no
salaried employees. The officers of Bancorp are also officers of Old
Second.
Bancorp derives its income principally through the lending and
investing activities of its subsidiaries.
EXECUTIVE OFFICERS OF THE REGISTRANT
Shown below are the names and ages of the executive officers of
Bancorp with an indication of all positions and offices held with
Bancorp:
Old Second Bancorp,
Name Age Inc. Offices (1)
James E. Benson 65 Chairman, Chief Executive
Officer, and Director
R. J. Carlson 60 President, Chief Operating
Officer, Chief Financial
Officer, Secretary and
Director
William B. Skoglund 45 Vice President, Assistant
Secretary and Director
George Starmann III 52 Vice President and
Director
<FN>
<F1>
(1) Offices with Bancorp have been held since the formation of Bancorp in
1981, with the following exceptions: James E. Benson was appointed
Chairman in 1992. R. J. Carlson was appointed Chief Operating Officer
in 1995, promoted from Vice-President to President in 1992 and elected
to the Board of Directors in January of 1987. William B. Skoglund
was appointed as an Officer and elected as a Director in March of 1992.
George Starmann III was appointed as Vice-President in 1994 and elected as
a Director in March 1995. Officers are appointed annually by the Board of
Directors.
</FN>
Page 2
OLD SECOND BANCORP SUBSIDIARIES
The Old Second National Bank of Aurora is located at 37 South River
Street, Aurora, Illinois. The Old Second is the successor to a bank that
was founded in 1871, and is incorporated under the laws of the United
States. Old Second offers complete banking and trust services for retail,
commercial, industrial, and public entity customers in Aurora and the
surrounding area. Services include loans to all customer segments,
checking, savings and time deposits; lock box service and safe deposit
boxes; trust and other fiduciary services to commercial customers and
individuals and other customer services. Non-FDIC insured mutual funds,
stocks, bonds, securities and annuities are provided by Elan Investment
Services, Inc., a registered broker/dealer and member of NASD and SIPC. Old
Second has two offsite Automated Teller Machines, and its customers can use
certain other financial institutions' offsite teller machines to complete
deposit, withdrawal, transfer, and other banking transactions. Old Second
is subject to vigorous competition from other banks and many savings and
loan associations, as well as credit unions and other financial
institutions. Within the Aurora banking market, which is approximated by
the southern two-thirds of Kane County and the northern one-third of
Kendall County, there are in excess of 20 other banks.
In December of 1986, Old Second National Bank opened a full-service
banking facility at the corner of Wilson Street and Randall Road in
Batavia, Illinois. In July of 1991, the Fox Valley Center branch was opened
at 4080 Fox Valley Center Drive, Aurora, Illinois. A third branch was opened
at 555 Redwood Drive, Aurora, Illinois on January 4, 1993. In 1995, a
new trust office was opened at 321 James Street in Geneva. Old Second also
leased space in 1995 from Kane County Bank located at 111 North Main Street
in Elburn, Illinois and assumed that bank's trust operations under the Old
Second name.
At December 31, 1995, Old Second had 196 full-time employees,
including 51 officers, and 68 part-time employees.
The Old Second Community Bank of North Aurora is located at 200 West
John Street in the Village of North Aurora. The Old Second Community Bank
of Aurora is located at 1350 North Farnsworth Avenue, Aurora, Illinois.
Yorkville National Bank is located at 102 E. Van Emmon Street, Yorkville,
Illinois. In September of 1988, Yorkville National Bank opened a Teller
Facility in the Countryside Shopping Center at the corner of Routes 34 and
47 in Yorkville, Illinois. Burlington Bank was acquired and is located
at 194 S. Main Street, Burlington, Illinois. Kane County Bank and Trust
Company is located at 122 North Main Street, Elburn, Illinois. Kane County
Bank and Trust Company has a branch facility located at 40W422 Route 64 in
Wasco, Illinois. In June of 1995, Bank of Sugar Grove was acquired and is
located at Cross Street at Illinois Route 47, Sugar Grove, Illinois.
Page 3
These Banks offer banking services for retail, commercial, industrial,
and public entity customers in the Aurora, North Aurora, Yorkville,
Burlington, Elburn, Wasco and Sugar Grove communities and surrounding
areas. Services include loans to all customer segments, checking, savings
and time deposits, and other customer services. With the exception of
Yorkville's main banking facility, these Banks have onsite 24 hour
Automated Teller Machines where as Yorkville has one offsite Automated Teller
Machine. Their customers can use certain other financial institutions'
offsite teller machines to complete deposit, withdrawal, transfer, and other
banking transactions as well.
The banks are subject to vigorous competition from other banks and
many savings and loan associations, as well as credit unions and other
financial institutions in the area. Within the Yorkville National Bank
banking market, which is approximated by the southern one-third of Kane and
all of Kendall County, there are approximately 10 other banks or banking
facilities and several savings and loan associations.
At December 31, 1995, The Old Second Community Bank of North Aurora
had 23 employees, and The Old Second Community Bank of Aurora had
24 employees. The Yorkville National Bank had 44 employees,
Burlington Bank had 13 employees, Kane County Bank and Trust had 24
employees and Bank of Sugar Grove had 24 employees.
The only industry segment in which Bancorp and its subsidiaries are
engaged is banking, and there are no foreign operations.
Page 4
ADDITIONAL STATISTICAL INFORMATION - OLD SECOND BANCORP, INC.
The following table presents additional statistical information about
Bancorp and its subsidiary banks, their operations and financial condition.
Unless otherwise indicated, all tables have been restated to reflect the
acquisition of Bank of Sugar Grove which was accounted for as a
pooling-of-interests.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
AVERAGE BALANCE SHEETS
The condensed consolidated averages of Bancorp and its subsidiary
banks for the periods indicated are presented below, in thousands of
dollars:
Years Ended
December 31,
1995 1994 1993
---- ---- ----
ASSETS
Cash and due from banks $ 31,413 $ 33,903 $ 30,593
Interest bearing deposits
with banks 477 1,036 2,000
Federal funds sold 36,893 29,779 26,684
------- ------- -------
Total Cash and Cash
Equivalents 68,783 64,718 59,277
Investment Securities:
Taxable 187,494 182,437 169,367
Non Taxable 70,345 67,423 62,473
Loans, net 369,765 336,886 315,705
Bank Premises and Equipment, net 14,160 14,262 14,568
Other assets 12,217 13,526 14,151
------- ------- -------
Total Assets $722,764 $679,252 $635,541
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 91,889 $ 90,119 $ 81,279
Savings 265,632 274,214 255,033
Time 284,563 240,842 227,782
------- ------- -------
Total Deposits 642,084 605,175 564,094
Securities sold under agreement
to repurchase 3,688 1,705 1,002
Notes payable 48 585 3,377
Other short - term borrowings 3,041 3,069 3,236
Other liabilities 5,141 4,135 4,591
------- ------- -------
Total Liabilities 654,002 614,669 576,300
Stockholders' Equity 68,762 64,583 59,241
------- ------- -------
Total Liabilities and
Stockholders' Equity $722,764 $679,252 $635,541
======= ======= =======
The average balance sheets were calculated using daily averages.
Page 5
Analysis of Net Interest Earnings
The following table shows information regarding average interest-earning
assets and interest-bearing liabilities, by categories and the related
interest income or expense for the periods indicated, in thousands of
dollars:
Years Ended
December 31,
AVERAGE BALANCES 1995 1994 1993
---- ---- ----
Interest-earning assets:
- -----------------------
Interest-bearing deposits
with banks $ 477 $ 1,036 $ 2,000
Investment Securities:
Taxable 187,494 182,437 169,367
Non Taxable 70,345 67,423 62,473
Federal funds sold 36,893 29,779 26,684
Loans, net: 369,765 336,886 315,705
------- ------- -------
Total interest-earning
assets $664,974 $617,561 $576,229
======= ======= =======
Interest-bearing liabilities:
- ----------------------------
Savings deposits $265,632 $274,214 $255,033
Time deposits 284,563 240,842 227,782
Securities sold under
agreement to repurchase 3,688 1,705 1,002
Notes payable 48 585 3,377
Other 3,041 3,069 3,236
------- ------- -------
Total interest-bearing
liabilities $556,972 $520,415 $490,430
======= ======= =======
Interest earned on earning assets:
- ---------------------------------
Interest-bearing deposits
with banks $ 22 $ 37 $ 65
Investment Securities:
Taxable 12,161 11,611 11,169
Non Taxable 4,013 3,788 3,908
Federal funds sold 2,131 1,234 794
Loans, net 34,239 28,740 27,553
------ ------ ------
Total interest earned
on earning assets $ 52,566 $ 45,410 $ 43,489
====== ====== ======
Interest paid on liabilities:
- ----------------------------
Savings deposits $ 7,753 $ 7,061 $ 7,207
Time deposits 15,980 11,097 10,610
Securities sold under
agreement to repurchase 142 49 32
Notes payable 4 47 272
Other 190 125 103
------- ------ ------
Total interest paid on
interest-bearing liabilities $ 24,069 $ 18,379 $ 18,224
======= ====== ======
Page 6
Average Yields, Average Rates and Net Yields
The following table shows average yields and average rates, by
type of asset or liability and in total, for the periods indicated
as well as the yield on earning assets:
Years Ended
December 31,
1995 1994 1993
---- ---- ----
Average rates earned:
- --------------------
Interest-bearing deposits
with banks 4.59% 3.57% 3.25%
Investment Securities:
Taxable 6.49 6.36 6.59
Non Taxable * 5.70 5.62 6.26
Federal funds sold 5.78 4.14 2.98
Loans, net ** 9.26 8.53 8.73
---- ---- ----
Average Yield on earning assets* 7.90% 7.35% 7.55%
==== ==== ====
Average rates paid:
- ------------------
Savings deposits 2.92 2.57 2.83
Time deposits 5.62 4.61 4.66
Securities sold under
agreement to repurchase 3.84 2.87 3.19
Notes payable 8.75 8.03 8.05
Other 6.26 4.07 3.18
---- ---- ----
Average rate paid on interest-
bearing liabilities 4.32% 3.53% 3.72%
==== ==== ====
Net yield on interest-earning
assets* 4.29% 4.38% 4.38%
==== ==== ====
<FN>
* Interest income and yield on tax-exempt securities are not
reflected in the tables on a tax-equivalent basis. Net yield on
interest-earning assets is net interest divided by total average
interest-earning assets.
** Principal balances on nonaccruing loans, if any, are included in
net loans on the average balance sheets. There were no out-of-
period adjustments or foreign activities for any reportable
period.
</FN>
Loan fees included in the above interest income computations are as
follows, in thousands:
Years ended December 31,
1995 $648
1994 $600
1993 $665
Page 7
Changes in Interest Income and Expense
The following table shows the dollar amount of changes in interest income
and expense, by major categories of assets and liabilities, attributable
to changes in volume or rate or both, for the periods indicated, in
thousands of dollars:
1995 Compared to 1994
Increase (Decrease) Due To
--------------------------
Volume (1) Rate (1) Net
--------- ------- ---
Interest income:
Interest-bearing deposits
with banks $ (26) $ 11 $ (15)
Investment securities:
Taxable 328 222 550
Non Taxable 167 58 225
Federal funds sold 411 486 897
Loans, net 3,044 2,455 5,499
----- ----- -----
Net increase $ 3,924 $ 3,232 $ 7,156
----- ----- -----
Interest expense:
Savings deposits $ (250) $ 942 $ 692
Time deposits 2,455 2,428 4,883
Securities sold under agreement
to repurchase 76 17 93
Notes Payable (45) 2 (43)
Other (2) 67 65
----- ----- -----
Net increase $ 2,234 $ 3,456 $ 5,690
----- ----- -----
Increase (decrease)
in net interest margin $ 1,690 $( 224) $ 1,466
----- ----- -----
1994 Compared to 1993
Increase (Decrease) Due To
--------------------------
Volume (1) Rate (1) Net
--------- ------- ---
Interest income:
Interest-bearing deposits
with banks $ (34) $ 6 $ ( 28)
Investment securities:
Taxable 840 (398) 442
Non Taxable 276 (396) (120)
Federal funds sold 128 312 440
Loans, net 1,804 (617) 1,187
----- ----- -----
Net increase (decrease) $ 3,014 $(1,093) $ 1,921
----- ----- -----
Interest expense:
Savings deposits $ 494 $ (640) $ (146)
Time deposits 609 (122) 487
Securities sold under agreement
to repurchase 20 (3) 17
Notes Payable (218) (7) (225)
Other (7) 29 22
----- ----- -----
Net increase (decrease) $ 898 $ (743) $ 155
----- ----- -----
Increase (decrease)
in net interest margin $ 2,116 $ (350) $ 1,766
----- ----- -----
1) The change in interest due to both rate and volume has been allocated
to change due to volume and change due to rate in proportion to the
the relationship of the absolute dollar amounts of the change in each.
Page 8
Interest Rate Repricing Gaps
The management of interest rate sensitivity is accomplished by monitoring the
maturities and repricing opportunities of interest-earning assets and
interest-bearing liabilities. Amounts are positioned into rate maturity
periods based upon contractual or historical experience of frequency of
repricing the respective assets and liabilities. The following table
summarizes the interest rate repricing gaps for selected maturity periods as
of December 31, 1995:
OLD SECOND BANCORP, INC.
(In thousands) Rate Maturity Period
--------------------
0-90 91-180 181-365 Over 1
Days Days Days Year Total
------------------------------------------------
INTEREST-EARNING ASSETS:
- -----------------------
Interest-earning
deposits $ 400 $ 400
Federal funds sold 42,800 42,800
Investment securities
at amortized cost 30,740 $ 14,943 $ 24,697 $181,054 251,434
Loans, net 151,045 26,561 45,998 169,723 393,327
------- ------- ------- ------- -------
Total interest-earning
assets $224,985 $ 41,504 $ 70,695 $350,777 $687,961
------- ------- ------- ------- -------
INTEREST-BEARING
- ----------------
LIABILITIES:
- -----------
Money market, savings
and NOW accounts $166,287 $105,482 $271,769
Time deposits 83,887 $ 48,791 $ 54,813 109,862 297,353
Other borrowed funds 9,179 9,179
------- ------- ------- ------- -------
Total interest-
bearing liabilities $259,353 $ 48,791 $ 54,813 $215,344 $578,301
------- ------- ------- ------- -------
Period gap $(34,368) $ (7,287) $ 15,882 $135,433
------- ------- ------- -------
Cumulative gap $(34,368) $(41,655) $(25,773) $109,660
------- ------- ------- -------
Total interest-earning assets exceeded interest-bearing liabilities by
$109,660,000 at December 31, 1995. This difference was funded through
noninterest-bearing liabilities and stockholders' equity. The above table
shows that total interest-bearing liabilities maturing or repricing within
one year exceed interest-earning assets maturing or repricing by
$25,773,000. Theoretically, in a period of rising interest rates, it is
preferable to have a positive gap (interest-earning assets in excess of
interest-bearing liabilities) because more interest-earning assets should
mature or reprice within a given time period than interest-bearing
liabilities to increase interest income in excess of the increase in interest
expense. Conversely, theoretically, in a period of declining interest rates,
it is preferable to be in a negative gap position (interest-bearing
liabilities in excess of interest-earning assets) because more interest-
bearing liabilities should mature or reprice to lower interest expense in
excess of the decline in interest income. Because assets and liabilities do
not reprice in exactly the same manner as interest levels change, the above
table should not be viewed as a sole indicator of how the Bancorp will be
affected by changes in interest rates.
Page 9
INVESTMENT PORTFOLIO
The required information for book value and maturities of investment
securities appears in Note D on page 14 and 15 of the Annual Report to
Stockholders and is incorporated by reference in this Annual Report on Form
10-K.
Weighted Average Yield of Investment Securities
The weighted average yield for each range of maturities of available-
for-sale securities is shown below as of December 31, 1995:
Maturing
------------------------------------------
Within From 1 To From 5 To After
1 Year 5 Years 10 Years 10 Years
U.S. Treasury and
U.S. Government
Agency Obligations 6.86% 6.41% 6.97% 6.61%
State & Political
Subdivisions 6.80 6.15 5.46 5.96
Mortgage Backed
Obligations 5.61 5.56
Other 8.05
Note: Yields on tax-exempt obligations are not computed on a tax
equivalent basis.
Page 10
LOAN PORTFOLIO
Classification of Loans
The following table shows the classification of loans in thousands of
dollars, on the dates indicated:
December 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Commercial,
financial, and
agricultural $141,480 $126,788 $120,734 $105,284 $ 88,172
Real estate:
Construction 24,783 25,486 21,345 19,284 14,026
Mortgage 189,906 161,270 159,370 155,121 128,402
Installment 43,336 43,475 35,804 37,604 42,525
------- ------- ------- ------- -------
Total $399,505 $357,019 $337,253 $317,293 $273,125
======= ======= ======= ======= =======
The following table shows the percentage of total loans represented by each
classification of loans on the dates indicated:
December 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Commercial,
financial, and
agricultural 35.4% 35.5% 35.8% 33.2% 32.3%
Real estate:
Construction 6.2 7.1 6.3 6.1 5.1
Mortgage 47.5 45.2 47.3 48.9 47.0
Installment 10.9 12.2 10.6 11.8 15.6
----- ----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
Maturities of Loans and Sensitivity to Changes in Interest Rates
The following table is a summary of maturities of loans by certain
categories at December 31, 1995 in thousands of dollars:
Due after
Due in 1 1 year
year or through Due after
less 5 years 5 years Total
------- ------- -------- -----
Commercial, financial,
and agricultural $82,659 $47,102 $11,719 $141,480
Real estate construction 17,199 7,584 0 24,783
Commercial, financial, and agricultural loans due after one year in the
amount of $31,353,000 at December 31, 1995 have floating or adjustable
interest rates. Such loans with fixed rates totaled $27,468,000. Real
estate construction loans due after one year in the amount of $6,316,000
have floating or adjustable interest rates. Such loans with fixed rates
totaled $1,268,000. Floating or adjustable interest rate loans are those
on which the interest rate can be adjusted to changes in the prime rate or
other rate changes. Fixed rate loans are those on which the interest rate
cannot be changed for the term of the loan.
Page 11
Risk Elements
Nonaccrual, past due and restructured loans include, respectively,
loans on which no interest is currently being accrued, accruing loans
which are past due 90 days or more as to principal or interest
payments and loans neither in nonaccrual status nor 90 days delinquent
status on which the terms of maturity or interest rate have been
renegotiated to provide a reduction or deferral of interest or
principal payments, due to a deterioration in the financial position
of the borrower. It is management's general policy to discontinue the
accrual of interest on a loan when it is past due 90 days with regard
to either interest or principal payments. At any given date,
Bancorp's subsidiaries may have various loans outstanding, which are
accruing interest, are not contractually past due more than 90 days,
and are not renegotiated, but which, in management's opinion, may not
be repaid according to original terms; these are shown below as
"potential loan problems". Management periodically reviews these
loan accounts and is of the opinion that, although some restructuring
of loan terms may be required, no material loss of principal will occur.
The following is a summary of loans described above at the dates
indicated, in thousands of dollars:
December 31,
-----------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Nonaccrual, past due and
restructured loans
a) Nonaccrual $3,763 $2,167 $4,428 $3,816 $1,246
b) Past Due 56 521 473 998 1,872
c) Restructured 58 69 86 230 95
Potential Loan Problems(1) 5,198 4,389 2,188 8,969 3,878
<FN>
<F1>
(1)Loans in this category represent those which have been periodically
delinquent as to the payment of principal and interest and are vulnerable
to current adverse economic conditions. The collateral position of
Bancorp's subsidiaries on these loans mitigates the amount of loss exposure
when viewed in their entirety. There were no foreign outstandings or loan
concentrations at the dates indicated. Amounts for Potential Loan Problems
for 1993, 1992, and 1991 have not been restated for the inclusion of Bank of
Sugar Grove.
</FN>
Following is information regarding interest income for the year ended
December 31, 1995 for domestic loans which are on a nonaccrual basis or
restructured as of December 31, 1995, in thousands of dollars:
Gross interest income that would have been
included in income for 1995 if the loans
had been current in accordance with their
original terms $250
Gross interest income included in income on
these loans for 1995 $102
Page 12
SUMMARY OF LOAN LOSS EXPERIENCE
Loan loss experience for the indicated periods in thousands of dollars is
summarized as follows:
Years Ended December 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Average loans net of $375,459 $341,739 $319,949 $304,247 $269,821
unearned income ======= ======= ======= ======= =======
Allowance for possible loan
losses:
Balance at beginning of
period $ 5,753 $ 4,471 $ 4,598 $ 3,802 $ 3,284
Additions (deductions):
Allowance of bank
acquired 0 0 0 441 162
Loans charged- off (751) (633) (2,197) (946) (1,513)
Recoveries 371 1,360 578 581 163
------- ------- ------- ------- -------
Net (charge-offs)
recoveries (380) 727 (1,619) (365) (1,350)
Provision charged to
operating expense 303 555 1,492 720 1,706
------- ------- ------- ------- -------
Balance at end of period $ 5,676 $ 5,753 $ 4,471 $ 4,598 $ 3,802
======= ======= ======= ======= =======
Allowance for possible loan
losses by category:
Commercial, financial and
agricultural $ 3,298 $ 3,368 $ 2,612 $ 2,660 $ 2,200
Real Estate:
Construction 150 150 100 125 100
Mortgage 860 900 713 730 600
Installment 1,183 1,150 870 881 714
Unallocated 185 185 176 202 188
------- ------- ------- ------- -------
Total $ 5,676 $ 5,753 $ 4,471 $ 4,598 $ 3,802
Ratio of net (charge-offs)
recoveries to average loans
outstanding for the period (.10)% .21% (.51)% (.12)% (.50)%
======= ======= ======= ======= =======
Charge-offs:
Commercial, financial and
agricultural $ 454 $ 474 $ 1,577 $ 710 $ 1,082
Real Estate:
Construction 80
Mortgage 134 53 438
Installment 163 106 182 236 351
------- ------- ------- ------- -------
Total charge-offs 751 633 2,197 946 1,513
------- ------- ------- ------- -------
Recoveries:
Commercial, financial and
agricultural 298 726 342 378 76
Real Estate:
Construction 13
Mortgage 1 425 170 124 16
Installment 72 209 66 66 71
------- ------- ------- ------- -------
Total recoveries 371 1,360 578 581 163
------- ------- ------- ------- -------
Net (charge-offs)
recoveries $ (380) $ 727 $(1,619) $ (365) $ (1,350)
======= ======= ======= ======= =======
The amount of additions to the allowance for possible loan losses charged to
operating expense for the periods indicated was based on a variety of factors,
including actual charge-offs during the year, historical loss experience,
industry guidelines and an evaluation of current and prospective economic
conditions in the market area, and a review of the loans currently
outstanding.
Page 13
Average Deposits by Classification
The following table sets forth the classification of average
deposits for the indicated periods, in thousands of dollars:
Years Ended
December 31,
------------
1995 1994 1993
---- ---- ----
Demand deposits non-interest $ 91,889 90,119 81,279
bearing
Interest bearing checking 99,066 96,909 80,942
Savings deposits 166,566 177,305 174,091
Time Deposits 284,563 240,842 227,782
------- ------- -------
Total $ 642,084 605,175 564,094
======= ======= =======
Average Rates Paid on Interest Bearing Deposits
The following table sets forth the rates paid on interest
bearing deposits for the periods indicated:
Years Ended
December 31,
------------
1995 1994 1993
---- ---- ----
Interest bearing checking 2.55% 2.29% 2.66%
Savings deposits 3.14 2.73 2.90
Time deposits 5.62 4.61 4.66
---- ---- ----
Total 4.70% 3.81% 3.90%
===== ===== =====
Maturities of Time Deposits of $100,000 or more
The following table sets forth the maturity of Time Deposits
of $100,000 or more, in thousands of dollars, at the date indicated:
December 31,
1995
-----------
Maturing within 3 months $ 29,388
After 3 but within 6 months 8,451
After 6 but within 12 months 6,432
After 12 months 14,774
------
Total $ 59,045
======
Return on Equity and Assets
The following table presents certain ratios relating to
equity and assets:
Years Ended
December 31,
-----------
1995 1994 1993
---- ---- ----
Return on total average assets 1.22% 1.07% 1.10%
Return on average stockholders equity 12.83% 11.30% 11.83%
Dividend payout ratio 24.36% 26.42% 24.60%
Average equity to average assets ratio 9.51% 9.51% 9.32%
Page 14
Item 2. Properties
Except for certain teller machine locations, Old Second Bancorp
subsidiaries own 13 bank locations. Old Second National Bank leases
space for the Trust office in Geneva. Old Second's main banking office
located at 37 South River Street, Aurora, Illinois has a total
of approximately 82,000 square feet. The original, five story, 30,000
square foot building was built in 1925, and a two story, 24,000 square
foot addition was constructed in 1982. A 28,000 square foot building
adjacent to the main bank is used for a ten lane drive-in bank facility
and banking offices. Parking facilities are provided for approximately
100 cars. Old Second leases to others about 13,700 square feet of
building space and utilizes the remainder for its own operations.
Item 3. Legal Proceedings
In the normal course of business, Old Second Bancorp, Inc. and its
subsidiary Banks are party to several legal proceedings, none of which are
expected to have a materially adverse effect on financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of stockholders during the fourth
quarter of fiscal 1995.
Page 15
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Common Stock of Bancorp, has been traded in the over-the-counter
market on the NASDAQ National Market System under the symbol OSBC since
November 11, 1993. Prior to that date, there was no established public
trading market for Bancorp's Common Stock. However, the stock was quoted on
the over-the-counter market even though there was relatively little trading
activity in the stock. Information regarding the number of stockholders and
market price for Bancorp's Common Stock for 1995 and 1994 appears on page 25
of the Annual Report to Stockholders and is incorporated by reference in this
Annual Report on Form 10-K.
Information regarding dividends declared on the Common Stock of Bancorp is
described in the Capital and Dividends' portion of Management's Discussion on
page 6 of the Annual Report to Stockholders and is incorporated by reference in
this Annual Report on Form 10-K.
Information regarding dividend restrictions regarding Bancorp is
described in Note M on page 19 of the Annual Report to Stockholders and is
incorporated by reference in this Annual Report on Form 10-K.
Item 6. Selected Financial Data
"Selected Consolidated Financial Data" for the five years ended December
31, 1995 appears on page 7 of the Annual Report to Stockholders and is
incorporated by reference in this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" appears on pages 4 through 6 of the Annual Report to
Stockholders and is incorporated by reference in this Annual Report on Form
10-K.
Item 8. Financial Statements and Supplementary Data
The Consolidated Financial Statements and Related Notes, and the reports
thereon of Ernst & Young, LLP dated January 17, 1996 and
Coopers & Lybrand L.L.P. dated January 13, 1995, appear on pages 8 through 24
of the Annual Report to Stockholders and are incorporated by reference in this
Annual Report on Form 10-K.
Page 16
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On February 3, 1995, the Corporation notified its previous independent
accountants, Coopers & Lybrand, L.L.P. ("Coopers & Lybrand") that Coopers &
Lybrand would not be retained as the Company's independent accountants for
the 1995 fiscal year. The decision to change independent accountants was
recommended by the Corporation's Audit Committee and approved by the
Board of Directors.
Coopers & Lybrand's report on the Corporation's financial statements
during the two most recent fiscal years in which Coopers & Lybrand was
retained contained no adverse opinion or a disclaimer of opinions, and was
not qualified or modified as to uncertainty, audit scope, or accounting
principles. During those two fiscal years, there were no disagreements
between the Corporation and Coopers & Lybrand on any matters of accounting
principles, financial statement disclosure or auditing scope or procedure.
None of the "reportable events" described under Item 304(a)(1)(v) of
Regulation S-K promulgated under the Securities Exchange Act of 1934
("Regulation S-K") occurred during those two fiscal years. In addition,
during those two fiscal years, the Corporation did not consult Ernst &
Young regarding any of the matters or events set forth in Item 304(a)(2)(i)
and (ii) of Regulation S-K.
Page 17
Part III
Item 10. Directors and Executive Officers of the Registrant
The required information for directors of the Registrant is shown on pages
5 through 8, under "Election of Directors" in the Registrant's Proxy Statement
and is incorporated by reference in this Annual Report on Form 10-K. The
required information for executive officers of the Registrant is included in
Part I of this Form 10-K.
Item 11. Executive Compensation
The required information for executive compensation of the Registrant is
shown on pages 9 through 15 under "Executive Compensation" in the Registrant's
Proxy Statement and is incorporated by reference in the Annual Report on Form
10-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The required information for security ownership of certain beneficial
owners and management of the registrant is shown on pages 3 and 4 under "Voting
Securities and Principal Holders Thereof" in the Registrant's Proxy Statement
and is incorporated by reference in this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions
The required information for Certain Relationships and Related
Transactions is shown on page 18 in the Registrant's Proxy Statement and is
incorporated by reference in this Annual Report on Form 10-K.
Page 18
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)(1) Financial Statements Reference
Form 10-K Annual Report
Incorporated by reference in Part Annual Report to Stockholders
II, Item 8 of this report: (page) (page)
Consolidated Balance Sheets as of
December 31, 1995 and 1994 32 8
Consolidated Statements of Income
for the years ended December 31,
1995, 1994, and 1993 33 9
Consolidated Statements of Cash Flows
for the years ended December 31, 1995,
1994, and 1993 34 10
Consolidated Statements of Changes
in Stockholders' Equity for the
years ended December 31, 1995,
1994, and 1993 35 11
Notes to Consolidated Financial
Statements 36-46 12-22
Reports of Independent Accountants 47-48 23-24
(2) Financial Statement Schedules
No schedules are included as they are not required.
(3) Exhibits
3.2 The Registrant hereby incorporates
by reference its By-Laws as filed
as exhibits to its Registration Statement
on Form S-14 (File No.2-75588) which was filed
with the Securities and Exchange Commission on
January 22, 1982.
Page 19
(a)(3) Exhibits (Continued) Reference
Form 10-K Annual Report
Annual Report to Stockholders
(page) (page)
13.1 Old Second Bancorp, Inc. - 1995 Annual
Report to Stockholders is furnished for
the information of the Commission and is
not deemed to be "filed as a part of this
10-K," except for portions incorporated
herein. 24-54
22.1 Subsidiaries of the Registrant 55
23.1 Consents of Independent Accountants 56-57
27.1 Financial Data Schedule 58
99.1 Old Second Bancorp, Inc. 1996 Proxy
Statement 59-79
Other exhibits are omitted because of the absence of conditions
under which they are required.
(b) Reports on Form 8-K:
There were no Form 8-K reports filed during the fourth quarter
of 1995.
Page 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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.
(Registrant)
March 22, 1996 By /s/ James E. Benson
Date____________________ _________________________
James E. Benson- Chairman,
Chief Executive Officer,
and Director
March 22, 1996 By /s/ Ronald J. Carlson
Date____________________ __________________________
Ronald J. Carlson
President, Chief Financial
Officer, Chief Operating
Officer, Secretary and
Director
Page 21
SIGNATURES, Continued
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
Date SIGNATURE AND TITLE
March 22, 1996 /s/ Walter Alexander
____________________ ______________________________
Walter Alexander - Director
March 22, 1996 /s/ James E. Benson
____________________ ______________________________
James E. Benson - Chairman
Chief Executive Officer,
and Director
March 22, 1996 /s/ Ronald J. Carlson
____________________ ______________________________
Ronald J. Carlson-President,
Chief Financial Officer,
Chief Operating Officer,
Secretary and Director
March 22, 1996 /s/ Marvin Fagel
____________________ ______________________________
Marvin Fagel - Director
March 22, 1996 /s/ Joanne Hansen
____________________ ______________________________
Joanne Hansen - Director
March 22, 1996 /s/ Kenneth Lindgren
____________________ _____________________________
Kenneth Lindgren - Director
March 22, 1996 /s/ Jesse Maberry
____________________ ______________________________
Jesse Maberry - Director
March 22, 1996 /s/ Gary McCarter
____________________ ______________________________
Gary McCarter - Director
Page 22
SIGNATURES, continued
Date SIGNATURE AND TITLE
March 22, 1996 /s/ D. Chet McKee
____________________ ______________________________
D. Chet McKee - Director
March 22, 1996 /s/ William J. Meyer
____________________ ______________________________
William J. Meyer - Director
March 22, 1996 /s/ Alan J. Rassi
____________________ ______________________________
Alan J. Rassi - Director
March 22, 1996 /s/ Larry A. Schuster
____________________ ______________________________
Larry A. Schuster - Director
March 22, 1996 /s/ William B. Skoglund
____________________ ______________________________
William B. Skoglund -
Vice President, Assistant
Secretary, and Director
March 22, 1996 /s/ George Starmann III
____________________ ______________________________
George Starmann III
Vice President and Director
Page 23