OLD SECOND BANCORP INC - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - OLD SECOND BANCORP INC	osbc-20160420x8k.htm



(NASDAQ:OSBC)		Exhibit 99.1

Contact:	J. Douglas Cheatham	For Immediate Release
	Chief Financial Officer	April 20, 2016
	(630) 906-5484

Old Second Reports First Quarter 2016 Net Income of $3.3 million

AURORA, IL, April 20, 2016 – Old Second Bancorp, Inc. (the “Company” or “Old Second”) (NASDAQ: OSBC), parent company of Old Second National Bank (the “Bank”), today announced financial results for the first quarter of 2016. The Company reported net income of $3.3 million for the first quarter of 2016, compared to net income of $3.5 million in the first quarter of 2015. The Company’s net income available to common stockholders of $3.3 million, or $0.11 per diluted share for the first quarter of 2016, compared to $2.7 million, or $0.09 per diluted share, in the first quarter of 2015.

Operating Results

On April 19, 2016, the Registrant’s board of directors declared a cash dividend of 1 cent per share payable on May 9, 2016, to stockholders of record as of April 29, 2016.

First quarter 2016 net income available to common stockholders increased by $647,000, or 24.2%, from the first quarter of 2015 and decreased approximately 13.3% from the fourth quarter of 2015. When compared to the first quarter of 2015, the quarter reflects slightly higher net interest income, lower residential mortgage banking income, lower compensation costs and other real estate owned (“OREO”) expenses.

Noninterest expense of $16.3 million for the first quarter of 2016 was $889,000 or 5.2% lower than the results in the first quarter of 2015. OREO expense, net for the first quarter of 2016 declined $614,000, or 45.4% from the first quarter of 2015.

Capital Ratios


	March 31,		December 31,		March 31,
	2016		2015		2015
The Bank's common equity tier 1 capital ratio	14.37	%	14.10	%	16.88	%
The Company's common equity tier 1 capital ratio	10.15	%	10.55	%	9.44	%
The Bank's total capital ratio	15.49	%	15.23	%	18.14	%
The Company's total capital ratio	15.58	%	15.56	%	17.28	%
The Company's tier 1 leverage capital ratio	8.72	%	8.69	%	9.82	%

The Bank ratios shown above exceed levels required to be considered “well capitalized”.

Asset Quality & Earning Assets

Nonperforming loans declined to $14.0 million at March 31, 2016, from $14.6 million at December 31, 2015, as nonaccrual loans were reduced.

OREO assets decreased in the first quarter to end at $17.7 million on March 31, 2016 compared to $19.1 million at December 31, 2015. Valuation writedowns continued in the first quarter with a quarterly expense of $451,000 compared to $251,000 in the fourth quarter of 2015.

Total loans at March 31, 2016 were $1.14 billion, reflecting an increase of $5.1 million when compared to December 31, 2015. First quarter 2016 average loans (including loans held-for-sale) were $1.14 billion, reflecting an increase of $1.6 million from the fourth quarter of 2015 and a decrease of $19.5 million when compared to the first quarter of 2015.

Securities held-to-maturity at amortized cost total $246.0 million at March 31, 2016. This total compares to $247.7 million at December 31, 2015, and $257.3 million at March 31, 2015. March 31, 2016, available-for-sale securities at fair value totaled $500.9 million, which is an increase of $44.8 million from $456.1 million at December 31, 2015, and $399.3 million at March 31, 2015.

Management review of the loan portfolio concluded that neither a loan loss reserve release nor a loan loss provision was appropriate in the first quarter of 2016.

Net Interest Income1

ANALYSIS OF AVERAGE BALANCES,

TAX EQUIVALENT INTEREST AND RATES

(In thousands - unaudited)


	Quarters Ended
	March 31, 2016						December 31, 2015						March 31, 2015
	Average					Rate	Average					Rate	Average					Rate
	Balance			Interest		%	Balance			Interest		%	Balance			Interest		%
Assets
Interest bearing deposits with financial institutions	$	15,513		$	19	0.48	$	13,859		$	12	0.34	$	18,022		$	12	0.27
Securities:
Taxable		702,949			4,211	2.40		674,690			3,819	2.26		615,299			3,375	2.19
Non-taxable (TE)		30,747			275	3.58		17,090			179	4.19		23,518			217	3.69
Total securities		733,696			4,486	2.45		691,780			3,998	2.31		638,817			3,592	2.25
Dividends from Reserve Bank and FHLBC stock		8,518			84	3.94		8,451			76	3.60		9,058			77	3.40
Loans and loans held-for-sale1		1,141,897			13,110	4.54		1,140,308			13,057	4.48		1,161,444			13,289	4.58
Total interest earning assets		1,899,624			17,699	3.70		1,854,398			17,143	3.64		1,827,341			16,970	3.71
Cash and due from banks		27,813			-	-		28,781			-	-		31,744			-	-
Allowance for loan losses		(16,257)			-	-		(16,598)			-	-		(21,605)			-	-
Other noninterest bearing assets		197,257			-	-		202,015			-	-		217,668			-	-
Total assets	$	2,108,437					$	2,068,596					$	2,055,148

Liabilities and Stockholders' Equity
NOW accounts	$	380,157		$	84	0.09	$	360,786		$	79	0.09	$	338,385		$	72	0.09
Money market accounts		280,338			68	0.10		284,209			70	0.10		298,324			70	0.10
Savings accounts		255,058			39	0.06		248,952			38	0.06		245,005			37	0.06
Time deposits		407,743			822	0.81		409,353			824	0.80		418,615			807	0.78
Interest bearing deposits		1,323,296			1,013	0.31		1,303,300			1,011	0.31		1,300,329			986	0.31
Securities sold under repurchase agreements		35,776			1	0.01		26,569			1	0.01		23,437			1	0.02
Other short-term borrowings		27,802			19	0.27		24,837			10	0.16		25,722			8	0.12
Junior subordinated debentures		57,549			1,084	7.53		57,538			1,072	7.45		57,502			1,072	7.46
Subordinated debt		45,000			239	2.10		45,000			210	1.83		45,000			197	1.75
Notes payable and other borrowings		500			2	1.58		500			2	1.57		500			4	3.20
Total interest bearing liabilities		1,489,923			2,358	0.63		1,457,744			2,306	0.63		1,452,490			2,268	0.63
Noninterest bearing deposits		450,521			-	-		445,083			-	-		405,933			-	-
Other liabilities		11,033			-	-		10,488			-	-		11,734			-	-
Stockholders' equity		156,960			-	-		155,281			-	-		184,991			-	-
Total liabilities and stockholders' equity	$	2,108,437					$	2,068,596					$	2,055,148
Net interest income (TE)				$	15,341					$	14,837					$	14,702
Net interest income (TE)
to total earning assets						3.25						3.17						3.26
Interest bearing liabilities to earning assets		78.43	%					78.61	%					79.49	%

1 Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 13 and includes fees of $542,000, $430,000 and $486,000 for the first quarter of 2016, the fourth quarter of 2015 and the first quarter of 2015, respectively. Nonaccrual loans are included in the above stated average balances.

Note: Tax equivalent basis is calculated using a marginal tax rate of 35%.

Net interest and dividend income on a linked quarter basis increased $471,000. Quarterly average earning assets increased $45.2 million from the fourth quarter of 2015 for a total of $1.90 billion, while yield on earning assets increased 6 basis points. Year over year first quarter average loans, including loans held-for-sale, decreased $19.5 million.

Noninterest Income


							1st Qtr 2016
	Three Months Ended						Percent Change From
(in thousands)	1st Qtr		4th Qtr		1st Qtr		4th Qtr	1st Qtr
	2016		2015		2015		2015	2015
Trust income	$	1,369	$	1,427	$	1,486	(4.1)	(7.9)
Service charges on deposits		1,559		1,734		1,541	(10.1)	1.2
Residential mortgage banking revenue		785		1,759		1,659	(55.4)	(52.7)
Securities loss, net		(61)		-		(109)	N/A	44.0
Increase in cash surrender value of bank-owned life insurance		285		381		480	(25.2)	(40.6)
Debit card interchange income		947		1,015		959	(6.7)	(1.3)
Loss on disposal and transfer of fixed assets		-		24		-	N/A	N/A
Other income		1,391		1,069		1,957	30.1	(28.9)
Total noninterest income	$	6,275	$	7,409	$	7,973	(15.3)	(21.3)

As shown above, of the noninterest income categories, residential mortgage banking income was the largest decrease on both a linked quarter and year over year basis mainly from the decrease in mortgage servicing income. Also, cash surrender value of bank-owned life insurance was lower as a result of the first quarter market declines in investment value. Other income for the first quarter of 2015 includes a nonrecurring incentive payment of $917,000 from a service provider in a long term mutually productive relationship and a death benefit realized on a life insurance policy.

Noninterest Expense


										1st Qtr 2016
	Three Months Ended									Percent Change From
(in thousands)	1st Qtr			4th Qtr			1st Qtr			4th Qtr	1st Qtr
	2016			2015			2015			2015	2015
Salaries	$	6,901		$	6,881		$	7,157		0.3	(3.6)
Bonus		676			211			417		220.4	62.1
Benefits and other		1,449			1,305			1,681		11.0	(13.8)
Total salaries and employee benefits		9,026			8,397			9,255		7.5	(2.5)
Occupancy expense, net		1,229			1,228			1,271		0.1	(3.3)
Furniture and equipment expense		958			1,254			1,001		(23.6)	(4.3)
FDIC insurance		203			311			273		(34.7)	(25.6)
General bank insurance		298			298			357		-	(16.5)
Advertising expense		347			348			205		(0.3)	69.3
Debit card interchange expense		203			383			352		(47.0)	(42.3)
Legal fees		161			253			223		(36.4)	(27.8)
Other real estate owned expense, net		738			474			1,352		55.7	(45.4)
Other expense		3,101			3,151			2,864		(1.6)	8.3
Total noninterest expense	$	16,264		$	16,097		$	17,153		1.0	(5.2)
Efficiency ratio (defined below)		71.12	%		69.59	%		68.77	%

The efficiency ratio shown in the table above is calculated as noninterest expense, excluding OREO expenses, 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 with a tax equivalent adjustment on the increase in cash surrender value of bank-owned life insurance.

Noninterest expense increased $167,000 on a linked quarter basis primarily as a result of an increase in salaries and employee benefits. Major expense categories were generally flat or down in the first quarter of 2016 compared to the same period in 2015 most notably in debit card interchange expense and OREO expense.

Earning Assets


							March 31, 2016
	Major Classification of Loans as of						Percent Change From
(in thousands)	March 31,		December 31,		March 31,		December 31,	March 31,
	2016		2015		2015		2015	2015
Commercial	$	138,426	$	130,362	$	114,241	6.2	21.2
Real estate - commercial		598,943		605,721		608,267	(1.1)	(1.5)
Real estate - construction		20,331		19,806		39,430	2.7	(48.4)
Real estate - residential		351,849		351,007		363,967	0.2	(3.3)
Consumer		2,663		4,216		3,495	(36.8)	(23.8)
Overdraft		383		483		368	(20.7)	4.1
Lease financing receivables		12,681		10,953		8,651	15.8	46.6
Other		12,488		10,130		11,945	23.3	4.5
		1,137,764		1,132,678		1,150,364	0.4	(1.1)
Net deferred loan costs		1,074		1,037		705	3.6	52.3
	$	1,138,838	$	1,133,715	$	1,151,069	0.5	(1.1)

Total loans increased by $5.1 million in the first quarter of 2016 despite $14.6 million in unexpected loan payoffs from two large customers. Growth in commercial and industrial loans for the quarter is offset by decreases in other categories, most notably in commercial - real estate. Total loans were down $12.2 million from March 31, 2015.


							March 31, 2016
(in thousands)	Securities Portfolio As of						Percent Change From
	March 31,		December 31,		March 31,		December 31,	March 31,
Securities available-for-sale, at fair value	2016		2015		2015		2015	2015

U.S. Treasury	$	1,503	$	1,509	$	1,525	(0.4)	(1.4)
U.S. government agencies		1,539		1,556		1,611	(1.1)	(4.5)
U.S. government agency mortgage-backed		2,079		1,996		-	4.2	-
States and political subdivisions		40,950		30,526		33,746	34.1	21.3
Corporate bonds		30,089		29,400		33,004	2.3	(8.8)
Collateralized mortgage obligations		67,312		66,920		68,093	0.6	(1.1)
Asset-backed securities		252,645		231,908		168,256	8.9	50.2
Collateralized loan obligations		104,795		92,251		93,017	13.6	12.7
Total securities available-for-sale	$	500,912	$	456,066	$	399,252	9.8	25.5
Securities held-to-maturity, at amortized cost
U.S. government agency mortgage-backed	$	36,470	$	36,505	$	37,135	(0.1)	(1.8)
Collateralized mortgage obligations		209,482		211,241		220,197	(0.8)	(4.9)
Total securities held-to-maturity	$	245,952	$	247,746	$	257,332	(0.7)	(4.4)

Total securities	$	746,864	$	703,812	$	656,584	6.1	13.7

The investment portfolio ended the first quarter of 2016 at $746.9 million, an increase of $43.1 million from $703.8 million at December 31, 2015 and up from $656.6 million from a year ago 2015. Available-for-sale purchases during the first quarter included additional asset-backed securities as well as municipals and collateralized loan obligations. During the first quarter there were sales that resulted in a realized loss of $61,000 for the quarter.

Asset Quality

In Thousands


										March 31, 2016
	As of									Percent Change From
	March 31,			December 31,			March 31,			December 31,	March 31,
	2016			2015			2015			2015	2015
Nonaccrual loans	$	13,655		$	14,389		$	23,048		(5.1)	(40.8)
Nonperforming troubled debt restructured loans accruing interest		163			165			309		(1.2)	(47.2)
Loans past due 90 days or more and still accruing interest		223			65			-		243.1	-
Total nonperforming loans		14,041			14,619			23,357		(4.0)	(39.9)
Other real estate owned		17,745			19,141			35,461		(7.3)	(50.0)
Total nonperforming assets	$	31,786		$	33,760		$	58,818		(5.8)	(46.0)

30-89 days past due loans	$	3,565		$	3,652		$	6,321
Nonaccrual loans to total loans		1.2	%		1.3	%		2.0	%
Nonperforming loans to total loans		1.2	%		1.3	%		2.0	%
Nonperforming assets to total loans plus OREO		2.7	%		2.9	%		5.0	%

Allowance for loan losses	$	16,246		$	16,223		$	21,181
Allowance for loan losses to loans		1.4	%		1.4	%		1.8	%
Allowance for loan losses to nonaccrual loans		119.0	%		112.7	%		91.9	%

Nonperforming loans consist of nonaccrual loans, nonperforming restructured accruing loans and loans 90 days or greater past due but still accruing. Total nonperforming loans were $14.0 million at March 31, 2016 compared to $14.6 million at December 31, 2015.

Classified loans include nonaccrual, performing troubled debt restructurings and all other loans considered substandard, as shown below. While decreased by $786,000 or 3.1% from year end 2015, classified loans also decreased $12.0 million or 32.9% from March 31, 2015. Management review of the loan portfolio concluded neither a loan loss provision nor a reserve release was appropriate in the fourth quarter.


							March 31, 2016
	Classified loans as of						Percent Change From
(in thousands)	March 31,		December 31,		March 31,		December 31,	March 31,
	2016		2015		2015		2015	2015
Real estate-construction	$	261	$	83	$	3,973	214.5	(93.4)
Real estate-residential:
Investor		1,109		1,136		1,175	(2.4)	(5.6)
Owner occupied		6,755		7,079		7,529	(4.6)	(10.3)
Revolving and junior liens		2,959		3,055		3,234	(3.1)	(8.5)
Real estate-commercial, nonfarm		10,978		10,568		14,203	3.9	(22.7)
Real estate-commercial, farm		-		1,272		1,370	(100.0)	(100.0)
Commercial		2,374		2,029		4,936	17.0	(51.9)
Other		1		1		1	-	-
	$	24,437	$	25,223	$	36,421	(3.1)	(32.9)

Net Charge-off Summary


Loan Charge-offs, net of recoveries	Three Months Ended
(in thousands)	March 31,		% of	December 31,		% of	March 31,		% of
	2016		Total	2015		Total	2015		Total
Real estate-construction
Homebuilder	$	(4)	17.4	$	(3)	(0.8)	$	-	-
Land		-	-		(2)	(0.5)		(3)	(0.7)
Commercial speculative		-	-		(1)	(0.3)		-	-
All other		(1)	4.3		-	-		(1)	(0.2)
Total real estate-construction		(5)	21.7		(6)	(1.6)		(4)	(0.9)
Real estate-residential
Investor		(6)	26.1		97	24.9		(11)	(2.4)
Owner occupied		(23)	100.0		(91)	(23.3)		67	14.7
Revolving and junior liens		66	(287.0)		258	66.2		338	74.1
Total real estate-residential		37	(160.9)		264	67.8		394	86.4
Real estate-commercial, nonfarm
Owner general purpose		(58)	252.2		(2)	(0.5)		495	108.6
Owner special purpose		(4)	17.4		(4)	(1.0)		(4)	(0.9)
Non-owner general purpose		(19)	82.6		87	22.3		(326)	(71.5)
Non-owner special purpose		-	-		-	-		-	-
Retail properties		-	-		-	-		-	-
Total real estate-commercial, nonfarm		(81)	352.2		81	20.8		165	36.2
Real estate-commercial, farm		-	-		-	-		-	-
Commercial		20	(87.0)		(12)	(3.1)		(109)	(23.9)
Other		6	(26.0)		63	16.1		10	2.2
Net (recovery)/charge-off	$	(23)	100.0	$	390	100.0	$	456	100.0

Gross charge-offs for the quarter ending March 31, 2016 were $375,000 compared to $1.3 million for the quarter ending March 31, 2015. Gross recoveries for the quarter ending March 31, 2016 were $398,000 compared to $808,000 for the quarter ending March 31, 2015.

Deposits

Total deposits were $1.80 billion at March 31, 2016. That amount reflects an increase from total deposits of $1.76 billion at December 31, 2015. Demand /Savings / NOW / Money Market balances experienced increases of $21.1 million in volume during in the first quarter of 2016 while time deposits or certificates of deposit reflect a decrease of $2.7 million for the period.

Borrowings

The Bank’s borrowing at the Federal Home Loan Bank of Chicago (the “FHLBC”) requires the Bank to be a member and invest in the stock of the FHLBC. As of March 31, 2016, the Bank had $20.0 million outstanding under FHLBC advances compared to $15.0 million in advances at December 31, 2015.

The Company is also indebted on $57.6 million of junior subordinated debentures related to the trust preferred securities issued by its two statutory trust subsidiaries, Old Second Capital Trust I and Old Second Capital Trust II. As of the date hereof, the Company continues to be current on the payments due on these securities. The carrying value was reduced by the amortization of the issuance costs in 2016 after adopting ASU 2015-03 applied on a retrospective basis.

Capital


	March 31,		December 31,		March 31,
	2016		2015		2015
The Company's common equity tier 1 capital ratio	10.15	%	10.55	%	9.44	%
(minimum 4.5% for adequately capitalized)
The Company's tier 1 capital ratio	12.43	%	12.30	%	13.65	%
(minimum 6.0% for adequately capitalized)
The Company's total capital ratio	15.58	%	15.56	%	17.28	%
(minimum 8.0% for adequately capitalized)
The Company's tier 1 leverage capital ratio	8.72	%	8.69	%	9.82	%
(minimum 4.0% for adequately capitalized)

As of December 31, 2016, the Bank’s common equity tier 1 capital ratio of 14.37% and total capital ratio of 15.49% exceeded the minimum capital ratios to be deemed “well capitalized”.

Non-GAAP Presentations: Management has traditionally disclosed certain non-GAAP ratios to evaluate and measure the Company’s performance, including a net interest margin calculation. 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 also disclosed other non-GAAP measures in the discussion above and in the following tables. The efficiency ratio is discussed in the noninterest expense presentation on page 4. The tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Forward Looking Statements: This report may contain forward-looking statements. Forward looking statements are identifiable by the inclusion of such qualifications as expects, intends, believes, may, likely or other indications that the particular statements are not based upon facts but are rather based upon the Company’s beliefs as of the date of this release. Actual events and results may differ significantly from those described in such forward-looking statements, due to changes in the economy, interest rates or other factors. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. For additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results or cause actual results to differ substantially from those discussed or implied in forward looking statements contained in this release, please review our filings with the Securities and Exchange Commission.

Conference Call

The Company will also host an earnings call on Thursday, April 21, 2016, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Investors may listen to the Company’s earnings call via telephone by dialing 877-407-8035. Investors should call into the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.

A replay of the earnings call will be available until 11:59 p.m. Eastern Time (10:59 p.m. Central Time) on May 5, 2016, by dialing 877-660-6853, using Conference ID #: 13633545.

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)


	(Unaudited)
	March 31,		December 31,
	2016		2015
Assets
Cash and due from banks	$	27,168	$	26,975
Interest bearing deposits with financial institutions		9,481		13,363
Cash and cash equivalents		36,649		40,338
Securities available-for-sale, at fair value		500,912		456,066
Securities held-to-maturity, at amortized cost		245,952		247,746
Federal Home Loan Bank and Federal Reserve Bank stock		8,518		8,518
Loans held-for-sale		6,184		2,849
Loans		1,138,838		1,133,715
Less: allowance for loan losses		16,246		16,223
Net loans		1,122,592		1,117,492
Premises and equipment, net		39,151		39,612
Other real estate owned		17,745		19,141
Mortgage servicing rights, net		5,052		5,847
Bank-owned life insurance (BOLI)		59,334		59,049
Deferred tax assets, net		64,505		64,552
Other assets		14,701		15,818
Total assets	$	2,121,295	$	2,077,028

Liabilities
Deposits:
Noninterest bearing demand	$	461,764	$	442,639
Interest bearing:
Savings, NOW, and money market		929,742		908,598
Time		405,188		407,849
Total deposits		1,796,694		1,759,086
Securities sold under repurchase agreements		33,852		34,070
Other short-term borrowings		20,000		15,000
Junior subordinated debentures		57,555		57,543
Subordinated debt		45,000		45,000
Notes payable and other borrowings		500		500
Other liabilities		10,945		9,900
Total liabilities		1,964,546		1,921,099

Stockholders’ Equity
Common stock		34,427		34,427
Additional paid-in capital		116,087		115,918
Retained earnings		117,531		114,209
Accumulated other comprehensive loss		(15,330)		(12,659)
Treasury stock		(95,966)		(95,966)
Total stockholders’ equity		156,749		155,929
Total liabilities and stockholders’ equity	$	2,121,295	$	2,077,028

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except share data)


	(unaudited)
	Three Months Ended
	March 31,
	2016		2015
Interest and dividend income
Loans, including fees	$	13,058	$	13,218
Loans held-for-sale		28		43
Securities:
Taxable		4,211		3,375
Tax exempt		179		141
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock		84		77
Interest bearing deposits with financial institutions		19		12
Total interest and dividend income		17,579		16,866
Interest expense
Savings, NOW, and money market deposits		191		179
Time deposits		822		807
Other short-term borrowings		20		9
Junior subordinated debentures		1,084		1,072
Subordinated debt		239		197
Notes payable and other borrowings		2		4
Total interest expense		2,358		2,268
Net interest and dividend income		15,221		14,598
Loan loss reserve release		-		-
Net interest and dividend income after provision for loan losses		15,221		14,598
Noninterest income
Trust income		1,369		1,486
Service charges on deposits		1,559		1,541
Secondary mortgage fees		193		244
Mortgage servicing loss, net of changes in fair value		(620)		(208)
Net gain on sales of mortgage loans		1,212		1,623
Securities loss, net		(61)		(109)
Increase in cash surrender value of bank-owned life insurance		285		480
Debit card interchange income		947		959
Other income		1,391		1,957
Total noninterest income		6,275		7,973
Noninterest expense
Salaries and employee benefits		9,026		9,255
Occupancy expense, net		1,229		1,271
Furniture and equipment expense		958		1,001
FDIC insurance		203		273
General bank insurance		298		357
Advertising expense		347		205
Debit card interchange expense		203		352
Legal fees		161		223
Other real estate expense, net		738		1,352
Other expense		3,101		2,864
Total noninterest expense		16,264		17,153
Income before income taxes		5,232		5,418
Provision for income taxes		1,910		1,919
Net income	$	3,322	$	3,499
Preferred stock dividends and accretion of discount		-		824
Net income available to common stockholders	$	3,322	$	2,675

Basic earnings per share	$	0.11	$	0.09
Diluted earnings per share		0.11		0.09


Ending common shares outstanding	29,483,429	29,470,929
Weighted-average basic shares outstanding	29,483,429	29,470,297
Weighted-average diluted shares outstanding	29,805,770	29,673,880

Old Second Bancorp, Inc. and Subsidiaries

Quarterly Consolidated Average Balance

(In thousands, except share data, unaudited)



		2015								2016
Assets	1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		1st Qtr
Cash and due from banks	$	31,744	$	29,153	$	28,999	$	28,781	$	27,813
Interest bearing deposits with financial institutions		18,022		29,880		18,563		13,859		15,513
Cash and cash equivalents		49,766		59,033		47,562		42,640		43,326

Securities available-for-sale, at fair value		380,180		409,600		410,083		442,909		486,924
Securities held-to-maturity, at amortized cost		258,637		255,293		251,648		248,871		246,772
Federal Home Loan Bank and Federal Reserve Bank stock		9,058		8,409		8,271		8,451		8,518
Loans held-for-sale		4,782		7,880		3,789		3,465		2,912
Loans		1,156,662		1,144,605		1,140,624		1,136,843		1,138,985
Less : allowance for loan losses		21,605		20,546		18,607		16,598		16,257
Net loans		1,135,057		1,124,059		1,122,017		1,120,245		1,122,728

Premises and equipment, net		42,306		41,937		41,572		39,767		39,416
Other real estate owned		32,392		34,637		29,049		22,760		18,760
Mortgage servicing rights, net		5,202		5,416		5,776		5,596		5,347
Bank-owned life insurance (BOLI)		58,139		58,264		58,566		58,797		59,178
Deferred tax assets, net		69,936		67,657		66,174		65,916		65,210
Other assets		9,693		10,463		9,656		9,179		9,346
Total other assets		217,668		218,374		210,793		202,015		197,257
Total assets	$	2,055,148	$	2,082,648	$	2,054,163	$	2,068,596	$	2,108,437

Liabilities
Deposits:
Noninterest bearing demand	$	405,933	$	435,093	$	431,052	$	445,083	$	450,521
Interest bearing:
Savings, NOW, and money market		881,714		885,809		889,448		893,947		915,553
Time		418,615		410,066		404,896		409,353		407,743
Total deposits		1,706,262		1,730,968		1,725,396		1,748,383		1,773,817

Securities sold under repurchase agreements		23,437		31,234		31,466		26,569		35,776
Other short-term borrowings		25,722		22,638		14,674		24,837		27,802
Junior subordinated debentures		57,502		57,513		57,525		57,538		57,549
Subordinated debt		45,000		45,000		45,000		45,000		45,000
Notes payable and other borrowings		500		500		500		500		500
Other liabilities		11,734		10,962		9,782		10,488		11,033
Total liabilities		1,870,157		1,898,815		1,884,343		1,913,315		1,951,477

Stockholders' equity
Preferred stock		36,637		31,553		15,091		-		-
Common stock		34,414		34,419		34,422		34,426		34,427
Additional paid-in capital		115,413		115,553		115,692		115,827		115,945
Retained earnings		102,050		105,208		108,858		112,584		116,231
Accumulated other comprehensive loss		(7,558)		(6,935)		(8,277)		(11,590)		(13,677)
Treasury stock		(95,965)		(95,965)		(95,966)		(95,966)		(95,966)
Total stockholders' equity		184,991		183,833		169,820		155,281		156,960
Total liabilities and stockholder's equity	$	2,055,148	$	2,082,648	$	2,054,163	$	2,068,596	$	2,108,437

Total Earning Assets	$	1,827,341	$	1,855,667	$	1,832,978	$	1,854,398	$	1,899,624
Total Interest Bearing Liabilities		1,452,490		1,452,760		1,443,509		1,457,744		1,489,923

Old Second Bancorp, Inc. and Subsidiaries

Quarterly Consolidated Statements of Income

(In thousands, except share data, unaudited)



	2015								2016
	1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		1st Qtr
Interest and Dividend Income
Loans, including fees	$	13,218	$	13,467	$	13,353	$	12,997	$	13,058
Loans held-for-sale		43		72		38		36		28
Securities:
Taxable		3,375		3,372		3,471		3,819		4,211
Tax exempt		141		163		122		116		179
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock		77		77		76		76		84
Interest bearing deposits with financial institutions		12		19		12		12		19
Total interest and dividend income		16,866		17,170		17,072		17,056		17,579
Interest Expense
Savings, NOW, and money market deposits		179		183		185		187		191
Time deposits		807		771		799		824		822
Other short-term borrowings		9		7		6		11		20
Junior subordinated debentures		1,072		1,071		1,072		1,072		1,084
Subordinated debt		197		202		205		210		239
Notes payable and other borrowings		4		-		1		2		2
Total interest expense		2,268		2,234		2,268		2,306		2,358
Net interest and dividend income		14,598		14,936		14,804		14,750		15,221
Loan loss reserve release		-		(2,300)		(2,100)		-		-
Net interest and dividend income after provision for loan losses		14,598		17,236		16,904		14,750		15,221
Noninterest Income
Trust income		1,486		1,596		1,444		1,427		1,369
Service charges on deposits		1,541		1,779		1,766		1,734		1,559
Secondary mortgage fees		244		281		190		192		193
Mortgage servicing (loss) gain, net of changes in fair value		(208)		500		(274)		469		(620)
Net gain on sales of mortgage loans		1,623		1,695		1,359		1,098		1,212
Securities losses, net		(109)		(12)		(57)		-		(61)
Increase in cash surrender value of bank-owned life insurance		480		299		235		381		285
Debit card interchange income		959		1,050		1,004		1,015		947
Loss on disposal and transfer of fixed assets		-		-		(1,143)		24		-
Other income		1,957		1,076		1,124		1,069		1,391
Total noninterest income		7,973		8,264		5,648		7,409		6,275
Noninterest Expense
Salaries and employee benefits		9,255		9,149		8,260		8,397		9,026
Occupancy expense, net		1,271		1,094		1,156		1,228		1,229
Furniture and equipment expense		1,001		1,065		1,110		1,254		958
FDIC insurance		273		377		373		311		203
General bank insurance		357		310		308		298		298
Advertising expense		205		353		434		348		347
Debit card interchange expense		352		400		379		383		203
Legal fees		223		420		279		253		161
Other real estate expense, net		1,352		2,388		977		474		738
Other expense		2,864		3,371		2,968		3,151		3,101
Total noninterest expense		17,153		18,927		16,244		16,097		16,264
Income before income taxes		5,418		6,573		6,308		6,062		5,232
Provision for income taxes		1,919		2,444		2,384		2,229		1,910
Net income		3,499		4,129		3,924		3,833		3,322
Preferred stock dividends and accretion of discount		824		710		339		-
Net income available to common stockholders	$	2,675	$	3,419	$	3,585	$	3,833	$	3,322

Basic earnings per share	$	0.09	$	0.12	$	0.12	$	0.13	$	0.11
Diluted earnings per share		0.09		0.12		0.12		0.13		0.11

The table below provides a reconciliation of each non-GAAP tax equivalent measure to the most comparable GAAP measure for the periods indicated:


	Three Months Ended
	March 31,			December 31,			March 31,
	2016			2015			2015
Net Interest Margin
Interest income (GAAP)	$	17,579		$	17,056		$	16,866
Taxable-equivalent adjustment:
Loans		24			24			28
Securities		96			63			76
Interest income - TE		17,699			17,143			16,970
Interest expense (GAAP)		2,358			2,306			2,268
Net interest income -TE	$	15,341		$	14,837		$	14,702
Net interest income (GAAP)	$	15,221		$	14,750		$	14,598
Average interest earning assets	$	1,899,624		$	1,854,398		$	1,827,341
Net interest margin (GAAP)		3.22	%		3.16	%		3.24	%
Net interest margin - TE		3.25	%		3.17	%		3.26	%


		Three Months Ended
	March 31,			December 31,			March 31,
	2016			2015			2015
Efficiency Ratio
Noninterest expense	$	16,264		$	16,097		$	17,153
Less other real estate expense, net		738			474			1,352
Adjusted noninterest expense		15,526			15,623			15,801
Net interest income (GAAP)		15,221			14,750			14,598
Taxable-equivalent adjustment:
Loans		24			24			28
Securities		96			63			76
Net interest income (TE)		15,341			14,837			14,702
Noninterest income		6,275			7,409			7,973
Taxable-equivalent adjustment:
Increase in cash surrender value of BOLI - (TE)		153			205			191
Noninterest income - (TE)		6,428			7,614			8,164
Less securities (losses) gain, net		(61)			-			(109)
Adjusted noninterest income, plus net interest income (TE)	$	21,830		$	22,451		$	22,975
Efficiency ratio		71.12	%		69.59	%		68.77	%

Attached files

Stock widget

Investing forum

OLD SECOND BANCORP INC Reports