AURORA, IL / ACCESSWIRE / October 18, 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 third quarter of 2017. The Company's net income was $8.1 million, or $0.27 per diluted share, for the third quarter of 2017, as compared to $5.1 million, or $0.17 per diluted share, for the second quarter of 2017, and $3.5 million, or $0.12 per diluted share, for the third quarter of 2016.
Operating Results
- Third quarter 2017 net income was $8.1 million, reflecting an increase of $2.9 million, or 57.0%, from the second quarter of 2017, and an increase of $4.6 million, or 130.8%, from the third quarter of 2016. A nonrecurring income tax benefit of $1.6 million was recorded in the third quarter of 2017, stemming from the State of Illinois tax rate increase effective July 1, 2017, which increased the Company's deferred tax asset. Excluding this nonrecurring item, third quarter earnings were $6.5 million, or $0.22 per share on a fully diluted basis.
- Net interest and dividend income was $19.3 million for the third quarter of 2017, reflecting an increase of $622,000, or 3.3%, from the $18.7 million recorded in the second quarter of 2017, and an increase of $3.9 million, or 25.6%, over the third quarter of 2016. Net interest income continued to be favorably impacted in the third 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 third quarter of 2017 totaled $265,000, as compared to $495,000 in the second quarter of 2017 and $0 in the third quarter of 2016.
- A provision for loan losses expense of $300,000 and $750,000 was recorded in the third quarter of 2017 and the second quarter 2017, respectively. No provision for loan losses was recorded in the third quarter of 2016.
- Noninterest income was $7.8 million for the third quarter of 2017, which reflects growth of $526,000, or 7.2%, as compared to the second quarter of 2017, and an increase of $1.2 million, or 18.9%, over the third quarter of 2016. Growth was primarily driven by commercial swap fee income and decreases in security losses.
- Noninterest expense of $16.9 million in the third quarter of 2017 reflected a decrease of $1.1 million, or 5.9%, as compared to the second quarter of 2017, but an increase of $336,000, or 2.0%, from the third quarter of 2016. The variance in the current year linked quarter expense reflects certain one-time costs incurred in the second quarter of 2017, and the year over year variance is primarily due to an increased employee headcount associated with the Talmer branch acquisition in the fourth quarter of 2016.
- On October 17, 2017, the Company's Board of Directors declared a cash dividend of $0.01 per share payable on November 6, 2017, to stockholders of record as of October 27, 2017.
Capital Ratios
| September 30, | June 30, | September 30, | ||||||||||
| 2017 | 2017 | 2016 | ||||||||||
| The Bank's common equity tier 1 capital ratio | 12.67 | % | 12.46 | % | 15.22 | % | ||||||
| The Company's common equity tier 1 capital ratio | 8.88 | % | 8.55 | % | 10.68 | % | ||||||
| The Bank's total capital ratio | 13.52 | % | 13.30 | % | 16.24 | % | ||||||
| The Company's total capital ratio | 12.46 | % | 12.14 | % | 15.42 | % | ||||||
| The Company's tier 1 leverage ratio | 9.69 | % | 9.09 | % | 9.32 | % | ||||||
- The ratios shown above exceed levels required to be considered "well capitalized."
Asset Quality & Earning Assets
- Nonperforming loans ended at $16.3 million at September 30, 2017, compared to $15.6 million at June 30, 2017, and $17.4 million at September 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 remained the same at 1.0% for September 30, 2017, and June 30, 2017, and was 1.4% as of September 30, 2016.
- OREO assets totaled $9.0 million as of September 30, 2017, which is a $2.7 million reduction compared to $11.7 million at June 30, 2017. Valuation writedowns continued in the third quarter of 2017 with a quarterly expense of $920,000 compared to $392,000 in the second quarter of 2017 and $365,000 in the third quarter of 2016. Nonperforming assets as a percent of total loans plus OREO decreased to 1.6% as of September 30, 2017, as compared to 1.8% as of June 30, 2017 and 2.6% as of September 30, 2016.
- Total loans at September 30, 2017, were $1.59 billion, reflecting an increase of $54.5 million when compared to June 30, 2017. Average loans (including loans held-for-sale) for the third quarter of 2017 were $1.55 billion, reflecting an increase of $44.3 million from quarterly average loans for the second quarter of 2017 and an increase of $361.9 million when compared to the third quarter of 2016.
- As of September 30, 2017, available-for-sale securities at fair value totaled $533.5 million, as compared to $568.2 million at June 30, 2017, and $531.1 million at September 30, 2016. The decline in securities from second quarter of 2017 was used to fund organic loan growth. Net gains of $102,000 pretax on the sale of securities were realized for the third quarter of 2017, as compared to losses of $131,000 in the second quarter of 2017 and $2.0 million in the third 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, October 19, 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 October 26, 2017, by dialing 877-481-4010, using Conference ID: 20352.
Contact:
Bradley S. Adams
Chief Financial Officer
(630) 906-5484
SOURCE: Old Second Bancorp, Inc.