Market Overview

Old Second Bancorp, Inc. Announces Third Quarter Results

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AURORA, Ill.--(BUSINESS WIRE)--

Old Second Bancorp, Inc. (the “Company” or “Old Second”) (NASDAQ: OSBC), parent company of Old Second National Bank (the “Bank”), today announced results of operations for the third quarter of 2012. The Company reported a net income of $120,000, compared to a net loss of $1.4 million in the third quarter of 2011. The Company's net loss available to common shareholders of $1.1 million, or $0.08 per diluted share, for the quarter compared to a net loss available to common shareholders of $2.6 million, or $0.18 per diluted share, in the third quarter of 2011.

Old Second also announced that its principle banking subsidiary, Old Second National Bank, recorded net income of $1.8 million in third quarter and a net income of $3.4 million for the first nine months of 2012.

The Company did not record a provision for loan losses for the third quarter of 2012 compared to a $3.0 million provision in the third quarter of 2011. The allowance for loan losses was 38.05% of nonperforming loans as of September 30, 2012 an increase from 35.79% as of June 30, 2012 and a decline from 42.95% a year earlier.

“Our third quarter results reflect continued payback on our diligent work to improve asset quality as we progress toward overall sustainable profitability,” said Bill Skoglund, Chairman and CEO. “As total loans decreased 2.4% in third quarter, we successfully worked with problem loan situations so that loans classified as problem loans (nonaccrual and troubled debt restructurings) dropped by 25% since December 31, 2011 (down 7.4% since June 30, 2012).”

“We continue to also be greatly encouraged as our nonperforming assets decreased to levels not seen at any quarter end since June 2009. Total nonperforming assets decreased 16.5% to $193.9 million at September 30, 2012 from $232.2 million at December 31, 2011 reflecting great work by our people, commitment to our organization from loyal customers, improved but still difficult market conditions for distressed asset dispositions and prudent property valuation writedowns in a better but still stressed overall market. We will continue to expand existing strategies and pursue new workout or remediation opportunities to reduce problem credit exposures.”

“Recognizing our need and obligation to maintain and grow capital, we are pleased to continue to exceed the Bank capital ratio objectives we established in our agreement with the Office of the Comptroller of the Currency. At September 30, 2012 the Bank's leverage ratio was 9.66% up 31 basis points from June 30, 2012 and 91 basis points above the established 8.75% objective. The Bank's total capital ratio was 14.06%, up 81 basis points from June 30, 2012 and 281 basis points above the 11.25% agreed objective.”

2012 Financial Highlights/Overview

Earnings

  • Third quarter net income before taxes of $120,000 compared to a net loss before taxes of $1.4 million in the same quarter of 2011.
  • Third quarter net loss to common stockholders of $1.1 million compared to a net loss to common stockholders of $2.6 million in the same quarter of 2011.
  • The tax-equivalent net interest margin was 3.44% during the third quarter of 2012 compared to 3.63% in the same quarter of 2011, and reflected a decrease of 21 basis points compared to the second quarter of 2012.
  • Noninterest income of $31.2 million was $4.4 million higher in the first nine months of 2012 than in the same period in 2011 reflecting higher mortgage loan sales and securities gains.
  • Noninterest expenses of $71.9 million were $173,000 or 0.2% higher in the first nine months of 2012 than in the same period in 2011 reflecting increased expenses in salaries and benefits, with some of the increase related to incentive based compensation and OREO while reduced expenses in many categories including, most notably FDIC insurance, legal fees and occupancy related expenses helped defray these increases.

Capital

  September 30, 2011   December 31, 2011   September 30, 2012
The Bank's leverage capital ratio 9.52% 9.34% 9.66%
The Bank's total capital ratio 12.98% 12.97% 14.06%
The Company's leverage capital ratio 5.18% 4.98% 4.88%
The Company's total capital ratio 12.37% 12.38% 12.90%

The Company's tangible common equity to tangible assets

0.15% (0.08)% (0.25)%
 
  • Bank leverage capital ratio increased to 9.66% from 9.34% at December 31, 2011.
  • Bank total capital ratio increased to 14.06% from 12.97% at December 31, 2011.
  • Company leverage ratio decreased to 4.88% from 4.98% at December 31, 2011.
  • Company total capital ratio increased to 12.90% from 12.38% at December 31, 2011.
  • Company tangible common equity to tangible assets decreased from (0.08)% at December 31, 2011 to (0.25)% in the third quarter of 2012.

Asset Quality/Balance Sheet Overview

  • Nonperforming loans declined $33.1 million or 23.8% during the first nine months of 2012 to $105.8 million as of September 30, 2012 from $138.9 million as of December 31, 2011. Our September 30, 2012 lower level of nonperforming loans as measured at quarter end was the lowest since December 31, 2008.
  • There was no provision for loan loss expense for the quarter ended September 30, 2012, compared to $3.0 million in the same period in 2011 and $200,000 in the second quarter of 2012.
  • Loans that were classified as performing but 30 to 89 days past due and still accruing interest decreased to $5.4 million at September 30, 2012 from $6.4 million at June 30, 2012 and $12.1 million at December 31, 2011.
  • Securities available-for-sale increased $104.8 million during 2012 to $412.3 million at September 30, 2012 from $307.6 million at December 31, 2011 (all numbers rounded) with no significant impact on the current liquidity profile. At $135.1 million or 32.8% of the total portfolio, asset-backed securities are the largest component of the portfolio.
  • 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. Management also presents an efficiency ratio that is non-GAAP. The efficiency ratio is calculated by dividing adjusted noninterest expense by the sum of net interest income on a tax equivalent basis and adjusted noninterest income. Management believes this measure provides investors with information regarding the Company's operating efficiency and how management evaluates performance internally. Consistent with industry practice, management also disclosed the tangible common equity to tangible assets and the Tier 1 common equity to risk weighted assets in the discussion immediately above and in the following tables. 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, please review our filings with the Securities and Exchange Commission.
 
 
 
Financial Highlights (unaudited)
In thousands, except share data   As of and for the   As of and for the
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Summary Statements of Operations:
Net interest and dividend income $ 14,635 $ 15,922 $ 45,429 $ 48,933
Provision for loan losses - 3,000 6,284 7,500
Noninterest income 10,348 8,508 31,208 26,846
Noninterest expense 24,863 22,820 71,949 71,776
Provision for income taxes - - - -
Net income (loss) 120 (1,390 ) (1,596 ) (3,497 )
Net loss available to common stockholders (1,135 ) (2,580 ) (5,312 ) (7,021 )
 
Key Ratios (annualized):
Return on average assets 0.02 % (0.28 %) (0.11 %) (0.23 %)
Return to common stockholders on average assets (0.23 %) (0.52 %) (0.36 %) (0.46 %)
Return on average equity 0.69 % (6.84 %) (2.96 %) (5.81 %)
Return on average common equity 239.29 % (100.92 %) (900.46 %) (91.98 %)
Net interest margin (non-GAAP tax equivalent)1 3.44 % 3.63 % 3.52 % 3.57 %
Efficiency ratio (non-GAAP tax equivalent)1 73.01 % 70.79 % 70.76 % 73.06 %
Tangible common equity to tangible assets2 (0.25 %) 0.15 % (0.25 %) 0.15 %
Tier 1 common equity to risk weighted assets2 (0.17 %) 0.22 % (0.17 %) 0.22 %
Company total capital to risk weighted assets 3 12.90 % 12.37 % 12.90 % 12.37 %
Company tier 1 capital to risk weighted assets 3 6.45 % 6.39 % 6.45 % 6.39 %
Company tier 1 capital to average assets 4.88 % 5.18 % 4.88 % 5.18 %
Bank total capital to risk weighted assets 3 14.06 % 12.98 % 14.06 % 12.98 %
Bank tier 1 capital to risk weighted assets 3 12.79 % 11.70 % 12.79 % 11.70 %
Bank tier 1 capital to average assets 9.66 % 9.52 % 9.66 % 9.52 %
 
Per Share Data:
Basic loss per share ($0.08 ) ($0.18 ) ($0.37 ) ($0.49 )
Diluted loss per share ($0.08 ) ($0.18 ) ($0.37 ) ($0.49 )
Dividends declared per share $ 0.00 $ 0.00 $ 0.00 $ 0.00
Common book value per share ($0.06 ) $ 0.55 ($0.06 ) $ 0.55
Tangible common book value per share ($0.33 ) $ 0.20 ($0.33 ) $ 0.20
Ending number of shares outstanding 14,084,328 14,034,991 14,084,328 14,034,991
Average number of shares outstanding 14,084,328 14,034,991 14,070,783 14,004,599
Diluted average shares outstanding 14,210,928 14,217,216 14,206,017 14,225,022
 
End of Period Balances:
Loans $ 1,208,289 $ 1,423,957 $ 1,208,289 $ 1,423,957
Deposits 1,696,934 1,728,034 1,696,934 1,728,034
Stockholders' equity 70,741 78,278 70,741 78,278
Total earning assets 1,671,523 1,714,809 1,671,523 1,714,809
Total assets 1,903,400 1,940,704 1,903,400 1,940,704
 
Average Balances:
Loans $ 1,222,829 $ 1,483,109 $ 1,286,462 $ 1,569,422
Deposits 1,713,137 1,746,854 1,737,247 1,832,242
Stockholders' equity 69,600 80,649 72,026 80,479
Total earning assets 1,702,675 1,751,347 1,730,932 1,843,264
Total assets 1,922,561 1,959,914 1,947,917 2,043,061
 

1 Tabular disclosures of the tax equivalent calculation including the net interest margin and efficiency ratio for the quarters ending September 30, 2012, and 2011, respectively, are presented on page 20.

2 The information to reconcile GAAP measures and the ratios of Tier 1 capital, total capital, tangible common equity or Tier 1 common equity, as applicable, to average total assets, risk-weighted assets or tangible assets, as applicable, are presented on page 21.

3 The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Those agencies define the basis for these calculations including the prescribed methodology for the calculation of the amount of risk-weighted assets.

       
 
Financial Highlights, continued
In thousands, except share data
(unaudited) (unaudited)
Three Months Ended Nine Months Ended
Asset Quality September 30, September 30,
2012 2011 2012 2011
 
Charge-offs $ 2,682 $ 10,898 $ 23,934 $ 30,977
Recoveries   2,653     1,732     5,910     7,021  
Net charge-offs $ 29   $ 9,166   $ 18,024   $ 23,956  
Provision for loan losses - 3,000 6,284 7,500
Allowance for loan losses to loans 3.33 % 4.20 % 3.33 % 4.20 %
 
(unaudited) (audited)
As of As of
September 30, December 31,
2012 2011 2011
Nonaccrual loans1 $ 92,722 $ 122,111 $ 126,786
Restructured loans 11,518 13,596 11,839
Loans past due 90 days   1,572     3,634     318  
Nonperforming loans 105,812 139,341 138,943
Other real estate owned   88,093     100,554     93,290  
Nonperforming assets $ 193,905   $ 239,895   $ 232,233  
 
(1) Includes $11.3 million,$15.8 million and $16.2 million in nonaccrual restructured loans at
September 30, 2012, September 30, 2011, and December 31, 2011, respectively.
 
(unaudited) (audited)
Major Classifications of Loans As of As of
September 30, December 31,
2012 2011 2011
Commercial $ 81,438 $ 107,589 $ 98,099
Real estate - commercial 621,715 730,554 704,492
Real estate - construction 48,606 77,958 71,436
Real estate - residential 436,837 489,985 477,200
Installment 3,167 4,187 3,789
Overdraft 613 409 457
Lease financing receivables 3,229 2,223 2,087
Other   12,677     11,242     11,498  
1,208,282 1,424,147 1,369,058
Net deferred loan costs (fees)   7     (190 )   (73 )
$ 1,208,289   $ 1,423,957   $ 1,368,985  
 
(unaudited) (audited)
Major Classifications of Deposits As of As of
September 30, December 31,
2012 2011 2011
Noninterest bearing $ 381,111 $ 347,154 $ 361,963
Savings 211,452 191,721 196,870
NOW accounts 265,215 258,216 275,957
Money market accounts 321,614 287,228 288,508
Certificates of deposits of less than $100,000 323,464 408,236 390,530
Certificates of deposits of $100,000 or more   194,078     235,479     226,953  
$ 1,696,934   $ 1,728,034   $ 1,740,781  
 
 
 
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
   
(unaudited) (audited)
September 30, December 31,
2012 2011
Assets
Cash and due from banks $ 38,185 $ 2,692
Interest bearing deposits with financial institutions   34,056     48,257  
Cash and cash equivalents 72,241 50,949
Securities available-for-sale 412,346 307,564
Federal Home Loan Bank and Federal Reserve Bank stock 11,800 14,050
Loans held-for-sale 5,032 12,806
Loans 1,208,289 1,368,985
Less: allowance for loan losses   40,257     51,997  
Net loans 1,168,032 1,316,988
Premises and equipment, net 48,509 50,477
Other real estate owned, net 88,093 93,290
Mortgage servicing rights, net 3,603 3,487
Core deposit and other intangible asset, net 3,813 4,678
Bank-owned life insurance (BOLI) 53,841 52,595
Other assets   36,090     34,534  
Total assets $ 1,903,400   $ 1,941,418  
 
Liabilities
Deposits:
Noninterest bearing demand $ 381,111 $ 361,963
Interest bearing:
Savings, NOW, and money market 798,281 761,335
Time   517,542     617,483  

Total deposits

1,696,934 1,740,781
Securities sold under repurchase agreements 1,738 901
Junior subordinated debentures 58,378 58,378
Subordinated debt 45,000 45,000
Notes payable and other borrowings 500 500
Other liabilities   30,109     21,856  
Total liabilities 1,832,659 1,867,416
 
Stockholders' Equity
Preferred stock 71,611 70,863
Common stock 18,729 18,628
Additional paid-in capital 66,118 65,999
Retained earnings 11,795 17,107
Accumulated other comprehensive loss (2,556 ) (3,702 )
Treasury stock   (94,956 )   (94,893 )
Total stockholders' equity   70,741     74,002  
Total liabilities and stockholders' equity $ 1,903,400   $ 1,941,418  
 
 
 
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share data)
       
(unaudited) (unaudited)
Three Months Ended Year to Date
September 30, September 30,
2012 2011 2012 2011
Interest and Dividend Income
Loans, including fees $ 16,193 $ 19,800 $ 51,476 $ 61,765
Loans held-for-sale 68 72 201 198
Securities, taxable 1,868 928 5,222 2,691
Securities, tax exempt 98 114 303 383
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock 77 73 228 216
Federal funds sold - - - 1
Interest bearing deposits with financial institutions   29     58     89     197  
Total interest and dividend income 18,333 21,045 57,519 65,451
Interest Expense
Savings, NOW, and money market deposits 253 327 807 1,275
Time deposits 1,973 3,436 6,920 11,220
Securities sold under repurchase agreements 1 - 2 -
Other short-term borrowings - - 4 -
Junior subordinated debentures 1,243 1,155 3,660 3,401
Subordinated debt 223 201 684 610
Notes payable and other borrowings   5     4     13     12  
Total interest expense   3,698     5,123     12,090     16,518  
Net interest and dividend income 14,635 15,922 45,429 48,933
Provision for loan losses   -     3,000     6,284     7,500  
Net interest and dividend income after provision for loan losses 14,635 12,922 39,145 41,433
Noninterest Income
Trust income 1,489 1,657 4,603 5,156
Service charges on deposits 1,982 2,157 5,706 6,021
Secondary mortgage fees 350 269 957 732
Mortgage servicing loss, net of changes in fair value (155 ) (328 ) (365 ) (221 )
Net gain on sales of mortgage loans 2,504 1,314 7,509 3,667
Securities gains, net 513 (63 ) 1,306 588
Increase in cash surrender value of bank-owned life insurance 425 233 1,246 1,130
Debit card interchange income 788 775 2,661 2,259
Lease revenue from other real estate owned 840 1,060 2,930 2,537
Net gain on sales of other real estate owned 20 297 398 933
Other income   1,592     1,137     4,257     4,044  
Total noninterest income 10,348 8,508 31,208 26,846
Noninterest Expense
Salaries and employee benefits 8,963 7,985 26,835 25,494
Occupancy expense, net 1,242 1,273 3,684 3,928
Furniture and equipment expense 1,078 1,405 3,416 4,340
FDIC insurance 1,029 1,032 3,058 3,884
General bank insurance 851 845 2,538 2,496
Amortization of core deposit and other intangible asset 420 276 865 711
Advertising expense 400 311 982 731
Debit card interchange expense 388 394 1,183 1,091
Legal fees 760 924 2,215 2,907
Other real estate expense 6,545 5,353 17,987 16,618
Other expense   3,187     3,022     9,186     9,576  
Total noninterest expense   24,863     22,820     71,949     71,776  
Income (loss) before income taxes 120 (1,390 ) (1,596 ) (3,497 )
Income taxes   -     -     -     -  
Net Income (loss) 120 (1,390 ) $ (1,596 ) $ (3,497 )
Preferred stock dividends and accretion   1,255     1,190     3,716     3,524  
Net loss available to common stockholders $ (1,135 ) $ (2,580 ) $ (5,312 ) $ (7,021 )
 
Basic loss per share $ (0.08 ) $ (0.18 ) $ (0.37 ) $ (0.49 )
Diluted loss per share (0.08 ) (0.18 ) (0.37 ) (0.49 )
Dividends declared per share - - - -
 
 
 
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
Three Months ended September 30, 2012, and 2011
(Dollar amounts in thousands - unaudited)
           
2012 2011
Average Average
Balance Interest Rate Balance Interest Rate
Assets
Interest bearing deposits $ 46,138 $ 29 0.25 % $ 91,178 $ 58 0.25 %
Securities:
Taxable 404,855 1,868 1.85 144,581 928 2.57
Non-taxable (tax equivalent)   9,518     151 6.35   12,172     176 5.78

Total securities

414,373 2,019 1.95 156,753 1,104 2.82
Dividends from FRB and FHLB stock 11,984 77 2.57 14,050 73 2.08
Loans and loans held-for-sale 1   1,230,180     16,279 5.18   1,489,366     19,899 5.23
Total interest earning assets 1,702,675 18,404 4.24 1,751,347 21,134 4.73
Cash and due from banks 31,850 - - 32,264 - -
Allowance for loan losses (40,823 ) - - (65,660 ) - -
Other noninterest bearing assets   228,859     - -   241,963     - -
Total assets $ 1,922,561   $ 1,959,914  
 
Liabilities and Stockholders' Equity
NOW accounts $ 270,908 $ 65 0.10 % $ 259,505 $ 95 0.15 %
Money market accounts 321,762 137 0.17 285,712 164 0.23
Savings accounts 213,927 51 0.09 193,267 68 0.14
Time deposits   526,314     1,973 1.49   663,613     3,436 2.05
Interest bearing deposits 1,332,911 2,226 0.66 1,402,097 3,763 1.06
Securities sold under repurchase agreements 7,164 1 0.06 1,930 - -
Other short-term borrowings 652 - - 2,865 - -
Junior subordinated debentures 58,378 1,243 8.52 58,378 1,155 7.91
Subordinated debt 45,000 223 1.94 45,000 201 1.75
Notes payable and other borrowings   500     5 3.91   500     4 3.13
Total interest bearing liabilities 1,444,605 3,698 1.02 1,510,770 5,123 1.35
Noninterest bearing deposits 380,226 - - 344,757 - -
Other liabilities 28,130 - - 23,738 - -
Stockholders' equity   69,600     - -   80,649     - -
Total liabilities and stockholders' equity $ 1,922,561   $ 1,959,914  
Net interest income (tax equivalent) $ 14,706 $ 16,011
Net interest income (tax equivalent)
to total earning assets 3.44 % 3.63 %
Interest bearing liabilities to earning assets   84.84 %   86.26 %
 
1.   Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 20 and includes fees of $498,000 and $448,000 for the third quarter of 2012 and 2011, respectively. Nonaccrual loans are included in the above stated average balances.
 
Note: Tax equivalent basis is calculated using a marginal tax rate of 35%.
 
 
 
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
Nine Months ended September 30, 2012, and 2011
(Dollar amounts in thousands - unaudited)
           
2012 2011
Average Average
Balance Interest Rate Balance Interest Rate
Assets
Interest bearing deposits $ 48,871 $ 89 0.24 % $ 105,618 $ 197 0.25 %
Federal funds sold - - - 713 1 0.18
Securities:
Taxable 365,549 5,222 1.90 134,596 2,691 2.67
Non-taxable (tax equivalent)   10,417     467 5.98   13,364     590 5.89
Total securities 375,966 5,689 2.02 147,960 3,281 2.96
Dividends from FRB and FHLB stock 12,562 228 2.42 13,934 216 2.07
Loans and loans held-for-sale 1   1,293,533     51,741 5.26   1,575,039     62,024 5.19
Total interest earning assets 1,730,932 57,747 4.39 1,843,264 65,719 4.70
Cash and due from banks 27,528 - - 34,023 - -
Allowance for loan losses (46,824 ) - - (73,201 ) - -
Other noninterest bearing assets   236,281     - -   238,975     - -
Total assets $ 1,947,917   $ 2,043,061  
 
Liabilities and Stockholders' Equity
NOW accounts $ 275,712 $ 204 0.10 % $ 265,126 $ 347 0.17 %
Money market accounts 311,046 438 0.19 297,603 670 0.30
Savings accounts 211,331 165 0.10 191,256 258 0.18
Time deposits   565,183     6,920 1.64   724,219     11,220 2.07
Interest bearing deposits 1,363,272 7,727 0.76 1,478,204 12,495 1.13
Securities sold under repurchase agreements 4,502 2 0.06 1,911 - -
Other short-term borrowings 4,635 4 0.11 2,900 - -
Junior subordinated debentures 58,378 3,660 8.36 58,378 3,401 7.77
Subordinated debt 45,000 684 2.00 45,000 610 1.79
Notes payable and other borrowings   500     13 3.42   500     12 3.16
Total interest bearing liabilities 1,476,287 12,090 1.09 1,586,893 16,518 1.39
Noninterest bearing deposits 373,975 - - 354,038 - -
Other liabilities 25,629 - - 21,651 - -
Stockholders' equity   72,026     - -   80,479     - -
Total liabilities and stockholders' equity $ 1,947,917   $ 2,043,061  
Net interest income (tax equivalent) $ 45,657 $ 49,201
Net interest income (tax equivalent)
to total earning assets 3.52 % 3.57 %
Interest bearing liabilities to earning assets   85.29 %   86.09 %
 
1.   Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 20 and includes fees of $1.4 million and $1.7 million for the first nine months of 2012 and 2011, respectively. Nonaccrual loans are included in the above stated average balances.
 
Note: Tax equivalent basis is calculated using a marginal tax rate of 35%.
 
 
 

The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent. (Dollar amounts in thousands- unaudited)

  Three Months Ended   Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Net Interest Margin
Interest income (GAAP) $ 18,333 $ 21,045 $ 57,519 $ 65,451
Taxable equivalent adjustment:
Loans 18 27 64 61
Securities   53     62     164     207  
Interest income (TE) 18,404 21,134 57,747 65,719
Interest expense (GAAP)   3,698     5,123     12,090     16,518  
Net interest income (TE) $ 14,706   $ 16,011   $ 45,657   $ 49,201  
Net interest income (GAAP) $ 14,635   $ 15,922   $ 45,429   $ 48,933  
Average interest earning assets $ 1,702,675 $ 1,751,347 $ 1,730,932 $ 1,843,264
Net interest margin (GAAP) 3.42 % 3.61 % 3.51 % 3.55 %
Net interest margin (TE) 3.44 % 3.63 % 3.52 % 3.57 %
 
 
Efficiency Ratio
Noninterest expense $ 24,863 $ 22,820 $ 71,949 $ 71,776
Less amortization of core deposit and
other intangible asset 420 276 865 711
Less other real estate expense   6,545     5,353     17,987     16,618  
Adjusted noninterest expense 17,898 17,191 53,097 54,447
Net interest income (GAAP) 14,635 15,922 45,429 48,933
Taxable-equivalent adjustment:
Loans 18 27 64 61
Securities   53     62     164     207  
Net interest income (TE) 14,706 16,011 45,657 49,201
Noninterest income 10,348 8,508 31,208 26,846
Less litigation related income 6 - 125 -
Less securities gain (loss) , net 513 (63 ) 1,306 588
Less gain on sale of OREO   20     297     398     933  
Adjusted noninterest income, plus net
interest income (TE) 24,515 24,285 75,036 74,526
Efficiency ratio 73.01 % 70.79 % 70.76 % 73.06 %
 
 
 
  (unaudited)   (unaudited)
As of September 30, December 31,
2012   2011 2011
(dollars in thousands)
Tier 1 capital
Total stockholders' equity $ 70,741 $ 78,278 $ 74,002
Tier 1 adjustments:
Trust preferred securities 24,432 27,128 25,901
Cumulative other comprehensive loss 2,556 3,107 3,702
Disallowed intangible assets (3,813 ) (4,814 ) (4,678 )
Disallowed deferred tax assets - (2,175 ) (2,592 )
Other   (360 )   (360 )   (349 )
Tier 1 capital $ 93,556   $ 101,164   $ 95,986  
 
Total capital
Tier 1 capital $ 93,556 $ 101,164 $ 95,986
Tier 2 additions:
Allowable portion of allowance for loan losses 18,399 20,288 19,736

Additional trust preferred securities disallowed for tier 1 capital

32,193 29,497 30,724
Subordinated debt 45,000 45,000 45,000
Tier 2 additions subtotal 95,592 94,785 95,460
Allowable Tier 2 93,556 94,785 95,460
Other Tier 2 capital components   (6 )   (7 )   (7 )
Total capital $ 187,106   $ 195,942   $ 191,439  
 
Tangible common equity
Total stockholders' equity $ 70,741 $ 78,278 $ 74,002
Less: Preferred equity 71,611 70,622 70,863
Intangible assets   3,813     4,814     4,678  
Tangible common equity $ (4,683 ) $ 2,842   $ (1,539 )
 
Tier 1 common equity
Tangible common equity $ (4,683 ) $ 2,842 $ (1,539 )
Tier 1 adjustments:
Cumulative other comprehensive loss 2,556 3,107 3,702
Other   (360 )   (2,535 )   (2,941 )
Tier 1 common equity $ (2,487 ) $ 3,414   $ (778 )
 
Tangible assets
Total assets $ 1,903,400 $ 1,940,704 $ 1,941,418
Less:
Intangible assets   3,813     4,814     4,678  
Tangible assets $ 1,899,587   $ 1,935,890   $ 1,936,740  
 
Total risk-weighted assets
On balance sheet $ 1,409,071 $ 1,533,543 $ 1,511,815
Off balance sheet   40,958     49,902     34,824  
Total risk-weighted assets $ 1,450,029   $ 1,583,445   $ 1,546,639  
 
Average assets
Total average assets for leverage $ 1,918,388 $ 1,952,565 $ 1,925,953

Old Second Bancorp, Inc.
J. Douglas Cheatham, Chief Financial Officer, (630) 906-5484

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