Old Second Reports Second Quarter 2017 Net Income of $5.5 Million

AURORA, IL / ACCESSWIRE / July 26, 2017 / 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 second quarter of 2017. The Company’s net income was $5.5 million, or $0.18 per diluted share, for the second quarter of 2017, as compared to $3.8 million, or $0.13 per diluted share, for the second quarter of 2016.

Operating Results

On July 18, 2017, the Company’s Board of Directors declared a cash dividend of $0.01 per share payable on August 7, 2017, to stockholders of record as of July 28, 2017.
Second quarter 2017 net income was $5.5 million, reflecting an increase of $1.6 million, or 41.9%, from the second quarter of 2016 and an increase of $885,000, or 19.4%, from the first quarter of 2017.
Net interest and dividend income totaled $19.0 million for the second quarter of 2017 and reflects an increase of $3.6 million, or 23.6%, over the second quarter of 2016. Net interest and dividend income for the second quarter of 2017 reflected an increase of $1.3 million, or 7.3%, from the $17.7 million recorded in the first quarter of 2017. Net interest income continued to be favorably impacted in the second quarter of 2017 due to the Company’s fourth quarter 2016 acquisition of $221.0 million of loans from the purchase of the Chicago branch of Talmer Bank and Trust. Purchase accounting accretion income realized in the second quarter of 2017 totaled $495,000, as compared to $0 in the second quarter of 2016 and $355,000 in the first quarter of 2017.
A provision for loan losses expense of $750,000 was recorded in the second quarter of 2017. No provision for loan losses was recorded in the second quarter of 2016 or the first quarter of 2017.
Noninterest income was $7.3 million for the second quarter of 2017, which reflects growth of $40,000, or 0.5%, over the second quarter of 2016, and an increase of $289,000, or 4.1%, as compared to the first quarter of 2017. These variances were primarily due to an increase in trust revenue stemming from growth in customer volume; in addition, changes in the valuation of mortgage servicing rights and net gains on the sales of mortgages resulted in favorable variances for the quarter.
Noninterest expense of $18.0 million for the second quarter of 2017 increased $1.3 million, or 7.7%, from the second quarter of 2016. An increase in salaries and employee benefits was reflected due to certain one-time costs incurred as well as nine additional full-time equivalent employees.. Noninterest expense of $18.0 million remained the same in the second quarter of 2017 as compared to the first quarter of 2017.

Capital Ratios

June 30,

December 31,

June 30,

2017

2016

2016

The Bank’s common equity tier 1 capital ratio

12.46
%

12.53
%

14.67
%
The Company’s common equity tier 1 capital ratio

8.55
%

8.76
%

10.30
%
The Bank’s total capital ratio

13.30
%

13.45
%

15.74
%
The Company’s total capital ratio

12.14
%

12.29
%

15.03
%
The Company’s tier 1 leverage ratio

9.09
%

8.90
%

8.94
%
The ratios shown above exceed levels required to be considered “well capitalized.”

Asset Quality & Earning Assets

Nonperforming loans ended at $15.6 million at June 30, 2017, compared to $16.0 million at December 31, 2016, and $18.4 million at June 30, 2016. Credit metrics continue to be relatively stable regarding nonperforming loan levels, and management is carefully monitoring loans considered to be in a classified status. Nonperforming loans as a percent of total loans decreased to 1.0% as of June 30, 2017, from 1.1% as of December 31, 2016, and 1.6% as of June 30, 2016.
OREO assets totaled $11.7 million as of June 30, 2017, which is a $192,000 reduction compared to $11.9 million at December 31, 2016. Valuation writedowns continued in the second quarter of 2017 with a quarterly expense of $392,000 compared to $489,000 in the second quarter of 2016 and $265,000 in the fourth quarter of 2016. Nonperforming assets as a percent of total loans plus OREO decreased to 1.8% as of June 30, 2017, as compared to 2.9% as of June 30, 2016, and 1.9% as of December 31, 2016.
Total loans at June 30, 2017, were $1.54 billion, reflecting an increase of $60.8 million when compared to December 31, 2016. Average loans (including loans held-for-sale) for the second quarter of 2017 were $1.51 billion, reflecting an increase of $118.7 million from the fourth quarter of 2016 and an increase of $359.1 million when compared to the second quarter of 2016.
As of June 30, 2017, available-for-sale securities at fair value totaled $568.2 million, as compared to $531.8 million at December 31, 2016, and $764.6 million at June 30, 2016. The decline in securities year over year was used to fund the Talmer branch acquisition and organic loan growth. Net losses of $131,000 pretax on the sale of securities were realized for the second quarter of 2017, as compared to no losses in the second quarter of 2016, and $193,000 in the fourth quarter of 2016.

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 and therefore the reader should not place undue reliance on such forward-looking statements. 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 host an earnings call on Thursday, July 27, 2017, 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 August 3, 2017, by dialing 877-481-4010, using Conference ID: 15977.

Contact:

Bradley S. Adams
Chief Financial Officer
(630) 906-5484

SOURCE: Old Second Bancorp, Inc.

ReleaseID: 469541