Old Second Bancorp, Inc. Announces First Quarter Net Income of $5.5 million
Continues to maintain strong capital ratios, prudent asset quality management
and expense control.
Successful loan workout program resolves several sizable problem assets.
Significant recoveries of charged off loans substantiate loan loss reserve
AURORA, Ill., April 24, 2013
AURORA, Ill., April 24, 2013 /PRNewswire/ --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
first quarter of 2013. The Company reported a net income of $5.5 million,
compared to a net loss of $3.0 million in the first quarter of 2012. The
Company's net income available to common shareholders of $4.2 million, or
$0.30 per diluted share, for the quarter compared to a net loss available to
common shareholders of $4.2 million, or $0.30 per diluted share, in the first
quarter of 2012.
Bill Skoglund, Chairman and CEO said "First quarter results depict a once
again profitable organization transitioning through an improving but still
challenging marketplace. Our businesses are working through difficult issues
in an environment of historically low interest rates while facing intense
competition from both smaller scale community banking entities as well as much
larger financial entities. We also continue to make great progress in putting
legacy asset quality issues behind us."
"Nonperforming loans (nonaccrual and other troubled relationships) dropped by
44.3% year over year and 15.5% since December 31, 2012. Our continuing
portfolio of other real estate owned properties has benefited from improving
market conditions as property valuation decreases have somewhat moderated.
Our Bank and Company regulatory capital ratios remained strong with the Bank
leverage ratio at 9.94% for March 31 under a very liquid balance sheet
profile. Our lending teams continue to make progress on stabilizing total
loans and building pipelines in the quarter although loan volume is down since
year-end 2012. While it will take additional time to work through remaining
past asset quality issues as the economic environment slowly improves, we have
an organization wide commitment to realizing our core earnings potential for
The Company's release of $2.5 million from its loan loss reserve for the first
quarter of 2013 benefited earnings and compares to a $6.1 million provision in
the first quarter of 2012. The allowance for loan losses was 55.33% of
nonperforming loans as of March 31, 2013, an increase from 46.73% as of
December 31, 2012, and compared to 37.95% a year earlier. Old Second further
improved its overall asset quality by maintaining an elevated level of
investment securities while improving overall portfolio duration under its
2013 Financial Highlights/Overview
oFirst quarter net income before taxes of $5.5 million compared to a net
loss before taxes of $3.0 million in the same quarter of 2012.
oFirst quarter net income available to common stockholders of $4.2 million
compared to a net loss to common stockholders of $4.2 million in the same
quarter of 2012.
oThe tax-equivalent net interest margin was 3.18% during the first quarter
of 2013 compared to 3.48% in the same quarter of 2012, and reflected an
increase of 1 basis point compared to the fourth quarter of 2012.
oNoninterest income of $10.6 million was $132,000 higher for the quarter
ended March 31, 2013, as compared to 2012, reflecting higher gains on
securities sold and recapture of expense previously recorded on restricted
oNoninterest expenses of $21.5 million were $925,000 or 4.1% lower in the
quarter ended March 31, 2013 than in the same period in 2012, reflecting
overall expense control and reduced expenses in most categories most
notably in other real estate owned ("OREO") expenses and legal fees.
March 31, December 31, Basis Point
2013 2012 Change
The Bank's leverage capital ratio 9.94% 9.67% 0.27%
The Bank's total capital ratio 15.56% 14.86% 0.70%
The Company's leverage capital ratio 5.11% 4.85% 0.26%
The Company's total capital ratio 14.13% 13.62% 0.51%
The Company's tangible common 0.05% (0.13)% 0.18%
equity to tangible assets
Asset Quality & Earning Assets Review
oNonperforming loans declined $12.8 million (15.5%) during the first
quarter of 2013 to $69.8 million as of March 31, 2013, from $82.6 million
as of December 31, 2012. Our March 31, 2013, lower level of nonperforming
loans as measured at quarter-end was the lowest since September 30, 2008.
Nonperforming loans declined primarily because of successful negotiations
by our staff with guarantors and movement to OREO, as well as loans being
upgraded to accruing status.
oLoans that were classified as performing but 30 to 89 days past due and
still accruing interest decreased to $10.9 million at March 31, 2013, from
$12.9 million at December 31, 2012, and increased from $7.4 million at
March 31, 2012.
oOREO declined from $72.4 million at December 31, 2012, to $65.7 million at
March 31, 2013. Property dispositions totaling $11.7 million were offset
by new OREO and improvements to existing OREO of $7.0 million. Valuation
write-downs of properties held for sale reduced the reported total by $2.1
million with related expense recognized.
oSecurities available-for-sale decreased $4.1 million during 2013 to $575.7
million from $579.9 million at December 31, 2012. At $220.7 million
(38.3% of the portfolio) and $131.7 million (22.9% of total) asset-backed
securities and collateralized mortgage-backed securities were the largest
components of the portfolio as of March 31, 2013. Asset-backed securities
were heavily oriented to those backed by student loan debt under a
guarantee from the U.S. Department of Education.
For full earnings information, please visit the Investor Relations page at
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.
SOURCE Old Second Bancorp, Inc.
Contact: J. Douglas Cheatham, Chief Financial Officer, (630) 906-5484
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