Click here to close now.



Welcome!

News Feed Item

Old Second Reports First Quarter Net Income of $2.2 million.

Successful capital raise (over 15 million common shares) completed in April.

AURORA, Ill., April 23, 2014 /PRNewswire/ -- 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 2014.  The Company reported net income of $2.2 million for the first quarter 2014, compared to a net income of $5.5 million in the first quarter of 2013.  The Company's net income available to common stockholders of $630,000 or $0.04 per diluted share, for the quarter, compared to a net income available to common stockholders of $4.2 million, or $0.30 per diluted share, in the first quarter of 2013.

Chairman Bill Skoglund remarked "First quarter results reflect further measured progress on several key improvement objectives.  Importantly, our loan portfolio shows a second consecutive quarterly increase while nonperforming assets declined since year end.  Over the past year, OREO dropped sharply from $65.7 million at March 31, 2013, to $40.2 million at March 31, 2014.  Over the same period, nonaccrual loans declined from $64.9 million to $36.7 million.  Core profitability shows continued strength in an economy that continues to be uneven in its recovery.  Capital ratios remain strong and in excess of goals established by our Board of Directors.  Our community banking approach has been skillfully executed by our staff.  Our loyal customers and the communities we serve have recognized and realized benefit from our services." 

Mr. Skoglund continued "The Board and I are proud of Old Second and the great employees who do things every day to serve our customers and communities.  We completed our public offering of common stock earlier this month and expect the proceeds will position Old Second for greater growth.  The economy will continue to be challenging and our competitors are skillful but with additional capital, we are excited for 2014.  We will continue to work hard to reduce problem assets.  As business leader confidence grows with the recovery, we will also strive to grow loan earning assets with additional improvement in core profitability."

The public offering was registered with the Securities and Exchange Commission.  The Company's board of directors determined on April 3, 2014, that it was in the best interests of Company shareholders to sell common stock in the offering at $4.40 per share.  Old Second completed the sale of 15,525,000 shares at this price.  Net proceeds from the offering of over $64.0 million will be used to pay the accrued but unpaid interest on trust preferred securities, the accumulated but unpaid dividends on preferred stock and to repurchase certain shares of preferred stock.  Remaining proceeds will be used for general corporate purposes.

On April 21, 2014, the Company paid the accumulated unpaid interest on trust preferred securities and terminated the deferral period.  The interest will not be immediately paid by the indenture trustees to the holders of such trust preferred securities.  Instead, the indenture trustees will hold the interest payments in irrevocable deposit accounts.  The interest will be paid by the trustees on the next applicable payment dates under the indentures to the holders of the securities on the record dates set forth in the appropriate indenture.

On April 15, 2014, the Company declared a dividend of approximately $15.8 million on its Series B Fixed Rate Cumulative Perpetual Preferred Stock (the "Series B Stock") payable to Series B Stockholders of record on May 1, 2014,  the dividend will be paid on May 15, 2014.

The Company is currently in the process of repurchasing some of the Series B Stock from certain holders under privately negotiated agreements.  As previously disclosed, the repurchase price for such Series B Stock equals 94.75% of the liquidation value of the Series B Stock, or $947.50 per share, provided that the holders of shares enter into agreements to forbear payment of dividends due and to waive any rights to such dividend upon repurchase.  The Company is also repurchasing all shares of Series B Stock held by officers and directors of the Company on the same terms.  The Company will not pay any holder of the Series B Stock whose shares are being repurchased by the Company such holder's pro rata share of the declared dividend on the Series B Stock.

Financial Highlights/Overview

First quarter net income before taxes of $3.4 million compared to income before taxes of $5.5 million in the same quarter of 2013.

  • Year over year net income before tax declined on reduced net interest income, a smaller loan loss reserve release, a decline in securities sales gain and sharply lower residential mortgage banking revenue.  Reduced noninterest expense year over year in FDIC deposit insurance, general banking insurance and OREO valuation expenses provided benefit in 2014 compared to 2013.  First quarter income before taxes improved from the $32,000 loss in the fourth quarter of 2013.  Fourth quarter results reflect management action in December, 2013 after Volcker rule release leading to a $4.1 million loss on collateralized debt obligation ("CDO") sales.
  • The tax-equivalent net interest margin was 3.13% during the first quarter of 2014 compared to 3.18% in the same quarter of 2013.  The first quarter of 2014 margin was unchanged from the fourth quarter of 2013.
  • Noninterest income of $6.3 million was $3.7 million lower for the quarter ended March 31, 2014, compared to first quarter 2013.  Operating categories were flat or down year over year, most notably residential mortgage banking revenue.  First quarter 2013 results incorporate benefit from the clawback of restricted stock and securities sales gains not matched in any manner in first quarter 2014.  On a linked quarter basis and excluding the loss on CDO sales recorded in 2013 fourth quarter, first quarter 2014 core noninterest income was lower than fourth quarter of 2013.
  • Noninterest expenses of $17.5 million were 16.3% lower for the quarter ended March 31, 2014, compared to 2013, reflecting overall expense control and reduced expenses in most categories.  Occupancy expense increased $202,000 or 15.8% compared to first quarter 2013 on winter related expenses while advertising expenses are up $137,000 or 82.5%.  Notable reductions are found in FDIC insurance expense, OREO expenses (primarily from sharply reduced valuation expense) and general bank insurance.  All categories flat or down on a linked quarter comparison except occupancy expense on weather related expenses.

Capital Ratios  Increased period end risk-based assets on higher loans, securities and changes in loan / securities portfolios composition toward higher risk weight instruments impact risk-based ratios.


March 31,


December 31,


March 31,


2014


2013


2013

The Bank's leverage capital ratio

11.12%


10.97%


9.94%

The Bank's total risk-based capital ratio

17.83%


18.04%


15.79%

The Company's leverage capital ratio

7.29%


6.96%


5.11%

The Company's total risk-based capital ratio

15.87%


15.88%


14.33%

The Company's tangible common equity to tangible assets

3.68%


3.67%


0.05%

Asset Quality & Earning Assets

  • Nonperforming loans declined by $1.2 million during the first quarter of 2014 to $38.6 million at March 31, 2014, from $39.8 million at December 31, 2013.  Nonperforming loan activity continued to reflect successful negotiations with guarantors, loan upgrades to accruing status and movement of selected credits to OREO.
  • OREO declined from $41.5 million at December 31, 2013, to $40.2 million at March 31, 2014.  OREO dispositions totaling $5.6 million in the first quarter 2014 were somewhat offset by new OREO of $4.7 million.
  • Loans increased $10.0 million in the same period on continued realization of opportunities previously identified in the commercial lending pipeline development.  Period end commercial loans and real estate commercial loans outstanding each grew in excess of 3% during the quarter.
  • Securities held-to-maturity at amortized cost of $264.3 million at March 31, 2014, reflected one purchase in the quarter.  The end of first quarter total compares to $256.6 million held-to-maturity at year end 2013.  First quarter available-for-sale purchases included local school district tax anticipation warrants, corporate bonds and asset-backed investments backed by student loan obligations largely guaranteed by the U.S. Department of Education.  The first quarter purchase made in the held-to-maturity portfolio was a collateralized mortgage obligation.  First quarter sales were made from available-for-sale corporate bonds, asset-backed investments largely guaranteed by the U.S. Department of Education and collateralized mortgage obligations. Securities available-for-sale at fair value increased $28.0 million reflecting net purchase activity during the first quarter of 2014.

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 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.

SOURCE Old Second Bancorp, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that Fusion, a leading provider of cloud services, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry's single source for the cloud. Fusion's advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including clou...
As someone who has been dedicated to automation and Application Release Automation (ARA) technology for almost six years now, one of the most common questions I get asked regards Platform-as-a-Service (PaaS). Specifically, people want to know whether release automation is still needed when a PaaS is in place, and why. Isn't that what a PaaS provides? A solution to the deployment and runtime challenges of an application? Why would anyone using a PaaS then need an automation engine with workflow ...
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
Your business relies on your applications and your employees to stay in business. Whether you develop apps or manage business critical apps that help fuel your business, what happens when users experience sluggish performance? You and all technical teams across the organization – application, network, operations, among others, as well as, those outside the organization, like ISPs and third-party providers – are called in to solve the problem.
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
@DevOpsSummit taking place June 7-9, 2016 at Javits Center, New York City, and Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 18th International @CloudExpo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @DevOpsSummit at Cloud Expo New York Call for Papers is now open.
SYS-CON Events announced today that VAI, a leading ERP software provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. VAI (Vormittag Associates, Inc.) is a leading independent mid-market ERP software developer renowned for its flexible solutions and ability to automate critical business functions for the distribution, manufacturing, specialty retail and service sectors. An IBM Premier Business Part...
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, will discuss how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved effi...
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies adopt disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevO...
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...