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 (No Fee Required)
For the fiscal year ended December 31, 1996
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)
(630) 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:
$127,046,183 as of February 28, 1997
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
2,937,484 shares of No par value common stock at February 28, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the December 31, 1996 Annual Report to Stockholders and the
Registrant's Proxy Statement dated February 10, 1997, 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 21 and 22.
This Form 10-K consists of 81 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, 1996,
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 66 Chairman, Chief Executive
Officer, and Director
R. J. Carlson 61 President, Chief Operating
Officer, Chief Financial
Officer, Secretary and
Director
William B. Skoglund 46 Vice President, Assistant
Secretary and Director
George Starmann III 53 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 promoted from Vice-President to
President in 1992 and was 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. 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 LPL Financial
Services, Inc., a registered broker/dealer and member NASD, SIPC. Old
Second has two offsite Automatic 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.
Old Second has full-service branches located at: 1991 West Wilson
Street, Batavia; 4080 Fox Valley Center Drive, Aurora; 555 Redwood Drive,
Aurora. Another full-service banking facility, located in Oswego, Illinois,
is to be opened in the early part of 1997. Old Second has trust offices at
37 South River Street in Aurora, Illinois, 321 James Street in Geneva,
Illinois and 111 North Main Street in Elburn, Illinois.
At December 31, 1996, Old Second had 193 full-time employees,
including 57 officers, and 72 part-time employees.
The Old Second Community Bank of North Aurora is located at 200 West
John Street, North Aurora, Illinois. The Old Second Community Bank of
Aurora is located at 1350 North Farnsworth Avenue, Aurora, Illinois.
Yorkville National Bank is located at 102 East Van Emmon Street, Yorkville,
Illinois, with a branch located at 408 East Countryside Parkway, Yorkville.
In 1996, Yorkville opened a branch in the Super Wal-Mart in Plano, Illinois
and acquired the Ottawa Banking Center located in Ottawa, Illinois.
Burlington Bank is located at 194 South Main Street, Burlington, Illinois.
Kane County Bank and Trust Company is located at 122 North Main Street,
Elburn, Illinois, with a branch facility located at 40W422 Route 64 in
Wasco, Illinois. Bank of Sugar Grove is located on 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, Batavia, Oswego, North Aurora,
Yorkville, Plano, Ottawa, 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 Automatic Teller Machines, whereas 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 includes portions of Kane and LaSalle and all of
Kendall counties, there are approximately 16 other banks or banking
facilities and several savings and loan associations.
At December 31, 1996, The Old Second Community Bank of North Aurora
had about 22 employees, and The Old Second Community Bank of Aurora had
about 23 employees. The Yorkville National Bank had about 58 employees,
Burlington Bank had 13 employees, Kane County Bank and Trust had about 26
employees and Bank of Sugar Grove had about 22 employees.
The only industry segment in which Bancorp and its subsidiaries are
engaged in 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.
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,
1996 1995 1994
ASSETS
Cash and due from banks $31,269 $31,413 $33,903
Interest bearing deposits
with banks 301 477 1,036
Federal funds sold 39,356 36,893 29,779
Total Cash and Cash
Equivalents 70,926 68,783 64,718
Investment securities:
Taxable 186,512 187,494 182,437
Non taxable 68,276 70,345 67,423
Loans, net 403,860 369,765 336,886
Bank premises and equipment, net 14,779 14,160 14,262
Other assets 13,394 12,217 13,526
------- ------- -------
Total Assets $757,747 $722,764 $679,252
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demands $ 94,657 $ 91,889 $ 90,119
Savings 275,363 265,632 274,214
Time 298,183 284,563 240,842
------- ------- -------
Total Deposits 668,203 642,084 605,175
Securities sold under agreements
to repurchase 3,632 3,688 1,705
Notes payable 25 45 585
Other short-term borrowings 2,180 3,044 3,069
Other 6,248 5,141 4,135
------- ------- -------
Total Liabilities 680,288 654,002 614,669
Stockholders' Equity 77,459 68,762 64,583
Total Liabilities and
Stockholders' Equity $757,747 $722,764 $679,252
======= ======= =======
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 1996 1995 1994
Interest-earning assets:
Interest bearing deposits
with banks $ 301 $ 477 $ 1,036
Investment securities:
Taxable 186,512 187,494 182,437
Non taxable 68,276 70,345 67,423
Federal funds sold 39,356 36,893 29,779
Loans, net: 403,860 369,765 336,886
------- ------- -------
Total interest-earning
assets $698,305 $664,974 $617,561
======= ======= =======
Interest-bearing liabilities:
Savings deposits $275,363 $265,632 $274,214
Time deposits 298,183 284,563 240,842
Securities sold under
agreements to repurchase 3,632 3,688 1,705
Notes payable 25 45 585
Other 2,180 3,044 3,069
------- ------- -------
Total interest-bearing
liabilities $579,383 $556,972 $520,415
======= ======= =======
Interest earned on earning assets:
Interest bearing deposits
with banks $ 22 $ 22 $ 37
Investment securities:
Taxable 12,083 12,161 11,611
Non taxable 3,745 4,013 3,788
Federal funds sold 2,093 2,131 1,234
Loans, net 36,631 34,239 28,740
------ ------ ------
Total interest earned
on interest-earning assets $ 54,574 $ 52,566 $ 45,410
====== ====== ======
Interest paid on liabilities
Savings deposits $ 7,405 $ 7,753 $ 7,061
Time deposits 16,960 15,980 11,097
Securities sold under
agreements to repurchase 180 142 49
Notes payable 2 4 47
Other 108 190 125
------ ------ ------
Total interest paid on
interest-bearing liabilities $ 24,655 $ 24,069 $ 18,379
====== ====== ======
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,
1996 1995 1994
Average rates earned:
Interest bearing deposits
with banks 7.31% 4.59% 3.57%
Investment securities:
Taxable 6.48 6.49 6.36
Non taxable * 5.49 5.70 5.62
Federal funds sold 5.32 5.78 4.14
Loans, net ** 9.07 9.26 8.53
---- ---- ----
Average yield on earning assets* 7.82% 7.90% 7.35%
==== ==== ====
Average rates paid:
Savings deposits 2.69 2.92 2.57
Time deposits 5.69 5.62 4.61
Securities sold under
agreements to repurchase 4.96 3.84 2.87
Notes payable 8.00 8.75 8.03
Other 4.95 6.26 4.07
---- ---- ----
Average rate paid on interest-
bearing liabilities 4.26% 4.32% 3.53%
==== ==== ====
Net yield on interest-earning
assets* 4.28% 4.29% 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,
1996 $731
1995 $648
1994 $600
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:
1996 Compared to 1995
Increase (Decrease) Due To
Interest income: Volume (1) Rate(1) Net
Interest bearing deposits
with banks $ (13) $ 13 $ 0
Investment securities:
Taxable (64) (14) (78)
Non taxable (113) (155) (268)
Federal funds sold 131 (169) (38)
Loans, net 3,092 (700) 2,392
----- ----- -----
Net increase (decrease) $ 3,033 $(1,025) $ 2,008
Interest expense:
Savings deposits $ 262 $ (610) $ (348)
Time deposits 775 205 980
Securities sold under agreements
to repurchase (3) 41 38
Notes payable (2) 0 (2)
Other (43) (39) (82)
----- --- -----
Net increase (decrease) $ 989 $ (403) $ 586
Increase (decrease) ----- --- -----
in net interest margin $ 2,044 $ (622) $ 1,422
----- --- -----
1995 Compared to 1994
Increase (Decrease) Due To
Interest income: Volume (1) Rate(1) Net
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 agreements
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
----- --- -----
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, 1996:
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 $ 200 $ 200
Federal funds sold 40,175 40,175
Investment securities 43,507 $ 6,570 $ 13,970 $212,560 276,607
Loans, net 161,802 28,576 39,220 209,991 439,589
------- ------ ------ ------- -------
Total interest-earning
assets $245,684 $ 35,146 $ 53,190 $422,551 $756,571
======= ====== ====== ======= =======
INTEREST-BEARING
LIABILITIES:
Money market, savings
and NOW accounts $ 187,233 $107,272 $294,505
Time deposits 84,420 $ 52,343 $ 38,006 151,866 326,635
Other borrowed funds 5,983 276 6,259
------- ------ ------ ------- -------
Total interest-
bearing liabilities $ 277,636 $ 52,619 $ 38,006 $259,138 $627,399
------- ------ ------ ------- -------
Period gap $( 31,952) $ (17,473) $ 15,184 $163,413 $129,172
------ ------ ------ ------- -------
Cumulative gap $( 31,952) $( 49,425) $( 34,241) $129,172
------ ------ ------ -------
Total interest-earning assets exceeded interest-bearing liabilities by
$129,172,000 at December 31, 1996. 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 $34,241,000.
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 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 investment
securities is shown below as of December 31, 1996:
Maturing
Within From 1 To From 5 To After
1 Year 5 Years 10 Years 10 Years
U.S. Government
and agency
obligations 5.75% 6.34% 6.78% 6.22%
States & political
subdivisions 6.31 5.95 5.25 6.33
Collateralized
mortgage oblig. 5.26 4.89
Other 7.64
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,
1996 1995 1994 1993 1992
Commercial,
financial, and
agricultural $129,678 $124,607 $126,788 $120,734 $105,284
Real estate-
construction 34,600 28,998 25,486 21,345 19,284
Real estate-
mortgage 234,985 202,564 161,270 159,370 155,121
Installment 47,119 43,336 43,475 35,804 37,604
------- ------- ------- ------- -------
Total $446,382 $399,505 $357,019 $337,253 $317,293
======= ======= ======= ======= =======
The following table shows the percentage of total loans represented by each
classification of loans on the dates indicated:
December 31,
1996 1995 1994 1993 1992
Commercial,
financial, and
agricultural 29.0% 31.2% 35.5% 35.8% 33.2%
Real estate-
construction 7.8 7.3 7.1 6.3 6.1
Real estate-
mortgage 52.6 50.7 45.2 47.3 48.9
---- ---- ---- ---- ----
Installment 10.6 10.8 12.2 10.6 11.8
----- ----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
Page 11
LOAN PORTFOLIO (continued)
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, 1996 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 $75,760 $42,975 $10,943 $129,678
Real estate construction 26,891 7,709 34,600
Commercial, financial, and agricultural loans due after one year in the
amount of $27,306,000 at December 31, 1996 have floating or adjustable
interest rates. Such loans with fixed rates totaled $26,612,000. Real
estate construction loans due after one year in the amount of $4,924,000
have floating or adjustable interest rates. Such loans with fixed rates
totaled $2,785,000. 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 12
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 day 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
accounts which are currently in its portfolio 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,
1996 1995 1994 1993 1992
Nonaccrual, past due and
restructured loans
a) Nonaccrual $2,342 $3,763 $2,167 $4,428 $3,816
b) Past Due 261 56 521 473 998
c) Restructured 0 58 69 86 230
Potential Loan Problems(1) 7,334 5,198 4,389 2,188 8,969
<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 ofBancorp'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 and 1992
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, 1996 for domestic loans which are on a nonaccrual basis or
restructured as of December 31, 1996, in thousands of dollars:
Gross interest income that would have been
included in income for 1996 if the loans
had been current in accordance with their
original terms $296
Gross interest income included in income on
these loans for 1996 $ 45
Page 13
SUMMARY OF LOAN LOSS EXPERIENCE
Loan loss experience for the indicated periods in thousands of dollars is
summarized as follows:
Years Ended December 31,
1996 1995 1994 1993 1992
Average loans net of
unearned income $409,453 $375,459 $341,739 $319,949 $304,247
======= ======= ======= ======= =======
Allowance for possible loan
losses:
Balance at beginning of
period $ 5,676 $ 5,753 $ 4,471 $ 4,598 $ 3,802
Additions (deductions):
Allowance of bank
acquired 0 0 0 0 441
Loans charged off (355) (751) (633) (2,197) (946)
Recoveries 369 371 1,360 578 581
------- ------- ------- ------- -------
Net (charge-offs)
recoveries 14 (380) 727 (1,619) (365)
Provision charged to
operating expense 713 303 555 1,492 720
------- ------- ------- ------- -------
Balance at end of period $ 6,403 $ 5,676 $ 5,753 $ 4,471 $ 4,598
======= ======= ======= ======= =======
Allowance for possible loan
losses by category:
Commercial, financial and
agricultural $ 3,768 $ 3,298 $ 3,333 $ 2,325 $ 2,625
Real estate-construction 170 150 165 100 160
Real estate-mortgage 972 860 825 675 750
Installment 1,313 1,183 1,190 820 865
Unallocated 180 185 240 176 218
------- ------- ------- ------- -------
Total $ 6,403 $ 5,676 $ 5,753 $ 4,096 $ 4,618
Ratio of net (charge-offs)
recoveries to average loans
outstanding for the period 0 % (.10)% .21% (.51)% (.12)%
===== ====== ====== ====== ======
Page 14
SUMMARY OF LOAN LOSS EXPERIENCE (continued)
Charge-offs:
Commercial, financial and
agricultural $ 168 $ 455 $ 474 $ 1,577 $ 710
Real estate-construction
Real estate-mortgage 78 134 53 438
Installment 109 162 106 182 236
------- ------- ------- ------- -------
Total charge-offs 355 751 633 2,197 946
------- ------- ------- ------- -------
Recoveries:
Commercial, financial and
agricultural 304 298 726 342 378
Real estate-construction 13
Real estate-mortgage 1 425 170 124
Installment 65 72 209 66 66
------- ------- ------- ------- -------
Total recoveries 369 371 1,360 578 581
------- ------- ------- ------- -------
Net (charge-offs)
recoveries $ 14 $ (380) $ 727 $(1,619) $ (365)
======= ======= ======= ======= =======
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 15
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,
1996 1995 1994
Demand deposits non-interest
bearing $ 94,657 91,889 90,119
Interest bearing checking 105,069 99,066 96,909
Savings deposits 170,294 166,566 177,305
Time Deposits 298,183 284,563 240,842
------- ------- -------
Total $ 668,203 642,084 605,175
======= ======= =======
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,
1996 1995 1994
Interest bearing checking 2.22% 2.55% 2.29%
Savings deposits 2.98 3.14 2.73
Time deposits 5.69 5.62 4.61
---- ---- ----
Total 4.25% 4.31% 3.53%
==== ==== ====
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,
1996
Maturing within 3 months $ 26,829
After 3 but within 6 months 12,366
After 6 but within 12 months 5,843
After 12 months 21,828
------
Total $ 66,866
======
Page 16
Return on Equity and Assets
The following table presents certain ratios relating to equity
and assets:
Years Ended
December 31,
1996 1995 1994
Return on total average assets 1.27% 1.22% 1.07%
Return on average stockholders' equity 12.43% 12.83% 11.30%
Dividend payout ratio 26.34% 24.36% 26.42%
Average equity to average assets ratio 10.22% 9.51% 9.51%
Page 17
Item 2. Properties
Except for certain teller machine locations, Old Second Bancorp
subsidiaries own 14 bank locations. Old Second National Bank leases space for
the Trust office in Geneva. Yorkville National Bank leases space for a branch
in the new Super Wal-Mart in Plano, Illinois.
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-up bank facility and
banking offices. Parking facilities are provided for approximately one hundred
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 its 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 1996.
Page 18
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 1996 and 1995 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, 1996 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 report
thereon of Ernst & Young LLP dated January 16, 1997, 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.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Page 19
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 20
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, 1996 and 1995 34 8
Consolidated Statements of Income
for the years ended December 31,
1996, 1995, and 1994 35 9
Consolidated Statements of Cash Flows
for the years ended December 31,
1996, 1995, and 1994 36 10
Consolidated Statements of Changes
in Stockholders' Equity for the
years ended December 31, 1996,
1995, and 1994 37 11
Notes to Consolidated Financial
Statements 38-49 12-23
Report of Independent Accountants 50 24
(2) Financial Statement Schedules
No schedules are included as they are not required.
(3) Exhibits
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 21
(a)(3) Exhibits (Continued) Reference
Form 10-K Annual Report
Annual Report to Stockholders
(page) (page)
13.1 Old Second Bancorp, Inc. - 1996 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. 26-55
22.1 Subsidiaries of the Registrant 56
23.1 Consents of Independent Accountants 57-58
25.1 Audit Opinion of Independent Accountant 59
27.1 Financial Data Schedule 60
99.1 Old Second Bancorp, Inc. 1997 Proxy
Statement 61-80
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 1996.
Page 22
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)
Date March 27, 1997 By /s/ James E. Benson
James E. Benson- Chairman,
Chief Executive Officer,
and Director
Date March 28, 1997 By /s/ Ronald J. Carlson
Ronald J. Carlson -
President, Chief Financial
Officer, Secretary and Director
Page 23
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
Walter Alexander - Director
March 27, 1997 /s/ James E. Benson
James E. Benson - Chairman
Chief Executive Officer,
and Director
March 28, 1997 /s/ Ronald J. Carlson
Ronald J. Carlson-President,
Chief Financial Officer,
Secretary and Director
Marvin Fagel - Director
Joanne Hansen - Director
March 27, 1997 /s/ Kenneth F. Lindgren
Kenneth F. Lindgren - Director
March 27, 1997 /s/ Jesse Maberry
Jesse Maberry - Director
Gary McCarter - Director
Page 24
SIGNATURES, continued
Date SIGNATURE AND TITLE
D. Chet McKee - Director
March 27, 1997 /s/ William J. Meyer
William J. Meyer - Director
March 27, 1997 /s/ Alan J. Rassi
Alan J. Rassi - Director
Larry A. Schuster - Director
March 27, 1997 /s/ William B. Skoglund
William B. Skoglund -
Vice President, Assistant
Secretary, and Director
March 27, 1997 /s/ George Starmann III
George Starmann III
Vice President and Director
Page 25