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Old Second Reports Third Quarter 2016 Net Income of $3.5 million

AURORA, IL / ACCESSWIRE / October 19, 2016 / Old Second Bancorp, Inc. (the "Company" or "Old Second") (OSBC), parent company of Old Second National Bank (the "Bank"), today announced financial results for the third quarter of 2016. The Company reported net income of $3.5 million for the third quarter of 2016, compared to net income of $3.9 million in the third quarter of 2015. The Company's net income available to common stockholders was $3.5 million, or $0.12 per diluted share, for the third quarter of 2016, compared to $3.6 million, or $0.12 per diluted share, in the third quarter of 2015.

Operating Results

  • On October 18, 2016, the Company's Board of Directors declared a cash dividend of 1 cent per share payable on November 7, 2016, to stockholders of record as of October 28, 2016.
  • Third quarter 2016 net income available to common stockholders was $3.5 million, reflecting a decrease of $86,000, or 2.4%, from the third quarter of 2015 and a decrease of $346,000, or 9.0%, from the second quarter of 2016.
  • Net interest and dividend income totaled $15.3 million for the third quarter of 2016 and reflects an increase of $543,000, or 3.7%, over the third quarter of 2015. Net interest and dividend income for the third quarter of 2016 reflected no significant change from the second quarter of 2016.
  • No release of loan loss reserves was recorded in the third quarter of 2016, as compared to a $2.1 million reserve release in the like 2015 quarter. No additional provision or release has been recorded to the reserve in the 2016 full year period.
  • Noninterest income was $6.6 million for the third quarter of 2016, which reflects growth of $946,000, or 16.7%, over the third quarter of 2015 primarily due to increases in residential mortgage banking income and a one-time fixed asset write-down taken in the third quarter of 2015. Noninterest income was $683,000, or 9.4%, less in the third quarter of 2016 as compared to the second quarter of 2016, primarily due to net losses on security sales incurred in the third quarter in anticipation of the funding requirements for the Company's pending acquisition of the Chicago branch of Talmer Bank and Trust, which is expected to close in the fourth quarter of 2016.
  • Finally, noninterest expense of $16.6 million for the third quarter of 2016 increased $338,000, or 2.1%, from the third quarter of 2015 stemming from increases in compensation costs, employee compliance training and compliance related audit fees. Noninterest expense was slightly lower in the third quarter of 2016 as compared to the second quarter of 2016, primarily due to reduced OREO related expenses in the third quarter as OREO balances continue to decline.


Capital Ratios

September 30,

December 31,

September 30,

2016

2015

2015

The Bank's common equity tier 1 capital ratio

15.22%


14.10%


15.94%


The Company's common equity tier 1 capital ratio

10.68%


10.55%


10.26%


The Bank's total capital ratio

16.24%


15.23%


17.10%


The Company's total capital ratio

15.42%


15.56%


15.36%


The Company's tier 1 leverage ratio

9.32%


8.69%


8.46%


  • The ratios shown above exceed levels required to be considered "well capitalized."

Asset Quality & Earning Assets

  • Nonperforming loans ended at $17.4 million at September 30, 2016, compared to $14.6 million at December 31, 2015, and $18.5 million at September 30, 2015. Nonperforming loans are level for the quarter, but increased for the year to date 2016 period primarily due to two commercial real estate relationships. Each lost one large tenant in the second quarter. Both borrowers continue to aggressively pursue new tenants, and one borrower has noted that refinancing is in process with another institution.
  • OREO assets decreased in the third quarter to end at $14.1 million on September 30, 2016, compared to $19.1 million at December 31, 2015, and $24.5 million at September 30, 2015. Valuation writedowns continued in the third quarter of 2016 with a quarterly expense of $365,000 compared to $1.1 million in the third quarter of 2015.
  • Total loans at September 30, 2016, were $1.20 billion, reflecting an increase of $69.1 million when compared to December 31, 2015, and an increase of $69.9 million as compared to September 30, 2015. Average loans (including loans held-for-sale) for the third quarter of 2016 were $1.19 billion, reflecting an increase of $51.3 million from the fourth quarter of 2015 and an increase of $47.2 million when compared to the third quarter of 2015. Loan growth in the 2016 period stems primarily from commercial and industrial loan originations.
  • September 30, 2016, available-for-sale securities at fair value totaled $531.1 million, as compared to $764.6 million at June 30, 2016. This reduction of $233.5 million for the quarter reflects the sale of securities to satisfy anticipated funding requirements for the acquisition of the Talmer branch. Total earning assets were also down slightly since June 30, 2016, for this same reason, which negatively impacted net interest margin and also resulted in pretax net security losses of $2.0 million for the third quarter of 2016.

Management review of the loan portfolio concluded that neither a loan loss reserve release nor a loan loss provision was appropriate in the third quarter of 2016. The third quarter of 2015 reflected a loan loss reserve release of $2.1 million. For the 2016 full year period, there have been no additional loan loss reserves or releases of loan loss provisions recorded.

Non-GAAP Presentations: Management has historically 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.

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, October 20, 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 October 27, 2016, by dialing 877-481-4010, using Conference ID: 10094.

Contact:

J. Douglas Cheatham
Chief Financial Officer
(630) 906-5484

SOURCE: Old Second Bancorp, Inc.