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EX-99.2 - EX-99.2 - OLD SECOND BANCORP INC | osbc-20200722ex99202aaa7.htm |
8-K - 8-K - OLD SECOND BANCORP INC | osbc-20200722x8k.htm |
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(NASDAQ:OSBC) | Exhibit 99.1 | |
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Contact: | Bradley S. Adams | For Immediate Release |
| Chief Financial Officer | July 22, 2020 |
| (630) 906-5484 | |
Old Second Reports Second Quarter Net Income of $9.2 million, or $0.31 per Diluted Share
AURORA, IL, July 22, 2020 – Old Second Bancorp, Inc. (the “Company,” “we,” “us,” and “our”) (NASDAQ: OSBC), the parent company of Old Second National Bank (the “Bank”), today announced financial results for the second quarter of 2020. Our net income was $9.2 million, or $0.31 per diluted share, for the second quarter of 2020, compared to net income of $275,000, or $0.01 per diluted share, for the first quarter of 2020, and net income of $9.3 million, or $0.31 per diluted share, for the second quarter of 2019. Net income for the second quarter of 2020 includes a ($0.05) per diluted share impact of additional provisions for credit losses for loans and unfunded commitments due to changes in economic conditions and market interest rates related to the COVID-19 pandemic.
Operating Results
1
● | Noninterest expense was $18.9 million for the second quarter of 2020, a decrease of $2.1 million, or 10.0%, compared to $21.0 million for the first quarter of 2020, and a decrease of $1.2 million, or 6.1%, from $20.1 million for the second quarter of 2019. The decrease compared to the linked quarter and the year over year quarter was primarily attributable to decreases in salaries and employee benefits, computer and data processing, advertising, and other real estate owned expenses. |
● | The provision for income taxes expense was $3.1 million for the second quarter of 2020, compared to a net benefit of $281,000 for the first quarter of 2020, and $3.0 million of provision expense for the second quarter of 2019. The increase in tax expense for the linked quarter was due to an increase of $12.4 million in pretax income compared to the first quarter of 2020. |
● | During the second quarter of 2020, we repurchased 145,932 shares of our common stock at a weighted average price of $6.97 per share pursuant to our stock repurchase program. |
● | On July 21, 2020, our Board of Directors declared a cash dividend of $0.01 per share payable on August 10, 2020, to stockholders of record as of July 31, 2020. |
COVID-19 Operational Update
During this unprecedented time, the health and safety of our customers and employees remain our top priority.
● | We established client assistance programs, including offering commercial, consumer, and mortgage loan payment deferrals for certain clients. We also suspended late fees for consumer loans through June 30, 2020, and, although consumer late fees have been reinstated, we will continue to re-evaluate late fee assessments based on the ongoing COVID-19 pandemic. |
● | We paused new foreclosure and repossession actions through June 30, 2020, and will continue to re-evaluate based on the borrower’s financial status and capability of repayment. |
● | We are participating in the Coronavirus Aid, Relief and Economic Security Act (“CARES” Act). As of June 30, 2020, we had processed 669 loan applications for the SBA Paycheck Protection Program (“PPP loans”), representing a total of $133.9 million. We remain ready to continue to fund eligible client requests through the remaining time period approved by Congress. |
President and Chief Executive Officer Jim Eccher said “I want to thank our employees for their dedication and hard work under extremely difficult circumstances over the past several months. Their efforts to promote the safe operation of the Bank while continuing to meet the financial needs of our communities has been nothing short of extraordinary. Old Second remains committed to providing the resources to allow for the safest experience possible for our customers and employees while we continue to work with our customers who have been directly impacted by the pandemic.”
Eccher continued, “The credit environment remains uncertain given the economic damage resulting from the pandemic. Recent economic data and decisive government action provide some basis for optimism but significant uncertainty remains regarding the ultimate impact of the pandemic on the local, national and global economies. I believe Old Second is well positioned to capitalize upon opportunities with substantial capital flexibility and strong liquidity. Bottom line results this quarter were strong in the context of the economy and significantly lower interest rates across all maturities. Old Second earned $9.2 million despite adding an additional $2.1 million to the loss reserve for loans and unfunded commitments during the quarter. Deposit growth was excellent and spread income trends held up well despite a decline in the margin resulting from our participation in the Paycheck Protection Program and a large increase in liquidity.”
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Capital Ratios
| Minimum Capital | | Well Capitalized | | | | | | | | | | ||
| Adequacy with | | Under Prompt | | | | | | | | | | ||
| Capital Conservation | | Corrective Action | | June 30, | | March 31, | | June 30, | |||||
| Buffer, if applicable1 | | Provisions2 | | 2020 | | 2020 | | 2019 | |||||
The Company | | | | | | | | | | | | | | |
Common equity tier 1 capital ratio | 7.00 | % | | N/A | | | 11.31 | % | | 10.85 | % | | 10.26 | % |
Total risk-based capital ratio | 10.50 | % | | N/A | | | 13.63 | % | | 13.09 | % | | 13.70 | % |
Tier 1 risk-based capital ratio | 8.50 | % | | N/A | | | 12.39 | % | | 11.93 | % | | 12.83 | % |
Tier 1 leverage ratio | 4.00 | % | | N/A | | | 10.06 | % | | 10.57 | % | | 10.85 | % |
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The Bank | | | | | | | | | | | | | | |
Common equity tier 1 capital ratio | 7.00 | % | | 6.50 | % | | 13.46 | % | | 12.89 | % | | 13.96 | % |
Total risk-based capital ratio | 10.50 | % | | 10.00 | % | | 14.71 | % | | 14.07 | % | | 14.83 | % |
Tier 1 risk-based capital ratio | 8.50 | % | | 8.00 | % | | 13.46 | % | | 12.89 | % | | 13.96 | % |
Tier 1 leverage ratio | 4.00 | % | | 5.00 | % | | 10.86 | % | | 11.36 | % | | 11.96 | % |
1 Amounts are shown inclusive of a capital conservation buffer of 2.50%. Under the Federal Reserve’s Small Bank Holding Company Policy Statement, the Company is not subject to the minimum capital adequacy and capital conservation buffer capital requirements at the holding company level, unless otherwise advised by the Federal Reserve (such capital requirements are applicable only at the Bank level). Although the minimum regulatory capital requirements are not applicable to the Company, we calculate these ratios for our own planning and monitoring purposes.
2 The prompt corrective action provisions are only applicable at the Bank level.
● | The ratios shown above exceed levels required to be considered “well capitalized.” |
Asset Quality & Earning Assets
● | Nonperforming loans totaled $20.2 million at June 30, 2020, compared to $21.8 million at March 31, 2020, and $12.7 million at June 30, 2019. 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 were 1.0% at June 30, 2020, compared to 1.1% at March 31, 2020, and 0.7% at June 30, 2019. Our adoption of CECL on January 1, 2020, resulted in a change in the accounting for purchased credit impaired (“PCI”) loans, which are now considered purchased credit deteriorated (“PCD”) loans under CECL. Prior to January 1, 2020, past due and nonaccrual loan excluded PCI loans, even if contractually past due or if we did not expect to receive payment in full, as we were accreting interest income over the expected life of the loans. PCD loans acquired in our acquisition of ABC Bank totaled $11.1 million, net of purchase accounting adjustments, at June 30, 2020. PCD loans that meet the definition of nonperforming are now included in nonperforming disclosures. |
● | OREO assets totaled $5.1 million at June 30, 2020, compared to $5.0 million at March 31, 2020, and $5.7 million at June 30, 2019. We recorded write-downs of $60,000 in the second quarter of 2020, compared to $158,000 in the first quarter of 2020 and $196,000 in the second quarter of 2019. Nonperforming assets, as a percent of total loans plus OREO, were 1.2% at June 30, 2020, 1.4% at March 31, 2020, and 1.0% June 30, 2019. |
● | Total loans were $2.05 billion at June 30, 2020, reflecting an increase of $95.1 million compared to March 31, 2020, and an increase of $149.4 million compared to June 30, 2019. Growth in the year over year period was due primarily to an increase in our commercial portfolio stemming from PPP loan originations of $133.9 million, as well as organic growth in our leases and real estate-commercial portfolios. Average loans (including loans held-for-sale) for the second quarter of 2020 were $2.05 billion, reflecting an increase of $106.8 million from the first quarter of 2020 and an increase of $154.8 million from the second quarter of 2019. |
● | Available-for-sale securities totaled $447.4 million at June 30, 2020, compared to $449.7 million at March 31, 2020, and $492.1 million at June 30, 2019. Total securities available-for-sale decreased $2.3 million from the linked quarter due to maturities and paydowns of $19.4 million, purchases of $6.7 million and unrealized mark to market gains of $11.0 million. A decline of $44.6 million was realized in the year over year quarter due primarily to security maturities and paydowns recorded in the third quarter of 2019 and first quarter of 2020. |
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Net Interest Income
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Analysis of Average Balances, | |||||||||||||||||||||||
Tax Equivalent Income / Expense and Rates | |||||||||||||||||||||||
(Dollars in thousands - unaudited) | |||||||||||||||||||||||
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| Quarters Ended | ||||||||||||||||||||||
| June 30, 2020 | | March 31, 2020 | | June 30, 2019 | ||||||||||||||||||
| Average | | Income / | | Rate | | Average | | Income / | | Rate | | Average | | Income / | | Rate | ||||||
| Balance | | Expense | | % | | Balance | | Expense | | % | | Balance | | Expense | | % | ||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | |
Interest earning deposits with financial institutions | $ | 153,532 | | $ | 42 | | 0.11 | | $ | 27,989 | | $ | 75 | | 1.08 | | $ | 19,053 | | $ | 111 | | 2.34 |
Securities: | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | 247,868 | | | 1,694 | | 2.75 | | | 273,429 | | | 2,163 | | 3.18 | | | 229,263 | | | 2,223 | | 3.89 |
Non-taxable (TE)1 | | 204,840 | | | 1,767 | | 3.47 | | | 202,289 | | | 1,842 | | 3.66 | | | 290,743 | | | 2,710 | | 3.74 |
Total securities (TE)1 | | 452,708 | | | 3,461 | | 3.07 | | | 475,718 | | | 4,005 | | 3.39 | | | 520,006 | | | 4,933 | | 3.80 |
Dividends from FHLBC and FRBC | | 9,917 | | | 123 | | 4.99 | | | 9,917 | | | 125 | | 5.07 | | | 11,317 | | | 156 | | 5.53 |
Loans and loans held-for-sale1, 2 | | 2,052,060 | | | 22,460 | | 4.40 | | | 1,945,383 | | | 23,636 | | 4.89 | | | 1,897,324 | | | 24,958 | | 5.28 |
Total interest earning assets | | 2,668,217 | | | 26,086 | | 3.93 | | | 2,459,007 | | | 27,841 | | 4.55 | | | 2,447,700 | | | 30,158 | | 4.94 |
Cash and due from banks | | 30,594 | | | - | | - | | | 32,549 | | | - | | - | | | 33,618 | | | - | | - |
Allowance for credit losses on loans | | (30,747) | | | - | | - | | | (23,507) | | | - | | - | | | (19,435) | | | - | | - |
Other noninterest bearing assets | | 187,305 | | | - | | - | | | 172,712 | | | - | | - | | | 174,075 | | | - | | - |
Total assets | $ | 2,855,369 | | | | | | | $ | 2,640,761 | | | | | | | $ | 2,635,958 | | | | | |
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Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | $ | 457,772 | | $ | 129 | | 0.11 | | $ | 422,065 | | $ | 233 | | 0.22 | | $ | 442,430 | | $ | 373 | | 0.34 |
Money market accounts | | 279,873 | | | 85 | | 0.12 | | | 280,828 | | | 236 | | 0.34 | | | 288,698 | | | 262 | | 0.36 |
Savings accounts | | 359,358 | | | 171 | | 0.19 | | | 322,618 | | | 166 | | 0.21 | | | 313,822 | | | 124 | | 0.16 |
Time deposits | | 439,735 | | | 1,442 | | 1.32 | | | 448,763 | | | 1,766 | | 1.58 | | | 422,975 | | | 1,641 | | 1.56 |
Interest bearing deposits | | 1,536,738 | | | 1,827 | | 0.48 | | | 1,474,274 | | | 2,401 | | 0.66 | | | 1,467,925 | | | 2,400 | | 0.66 |
Securities sold under repurchase agreements | | 45,882 | | | 23 | | 0.20 | | | 47,825 | | | 116 | | 0.98 | | | 44,184 | | | 147 | | 1.33 |
Other short-term borrowings | | 8,396 | | | 34 | | 1.63 | | | 23,069 | | | 109 | | 1.90 | | | 93,369 | | | 574 | | 2.47 |
Junior subordinated debentures | | 25,773 | | | 283 | | 4.42 | | | 47,200 | | | 1,364 | | 11.62 | | | 57,704 | | | 931 | | 6.47 |
Senior notes | | 44,310 | | | 673 | | 6.11 | | | 44,284 | | | 673 | | 6.11 | | | 44,196 | | | 672 | | 6.10 |
Notes payable and other borrowings | | 26,551 | | | 165 | | 2.50 | | | 14,762 | | | 130 | | 3.54 | | | 13,101 | | | 107 | | 3.28 |
Total interest bearing liabilities | | 1,687,650 | | | 3,005 | | 0.72 | | | 1,651,414 | | | 4,793 | | 1.17 | | | 1,720,479 | | | 4,831 | | 1.13 |
Noninterest bearing deposits | | 854,324 | | | - | | - | | | 676,755 | | | - | | - | | | 645,580 | | | - | | - |
Other liabilities | | 39,613 | | | - | | - | | | 28,490 | | | - | | - | | | 19,586 | | | - | | - |
Stockholders' equity | | 273,782 | | | - | | - | | | 284,102 | | | - | | - | | | 250,313 | | | - | | - |
Total liabilities and stockholders' equity | $ | 2,855,369 | | | | | | | $ | 2,640,761 | | | | | | | $ | 2,635,958 | | | | | |
Net interest income (GAAP) | | | | $ | 22,707 | | | | | | | $ | 22,658 | | | | | | | $ | 24,754 | | |
Net interest margin (GAAP) | | | | | | | 3.42 | | | | | | | | 3.71 | | | | | | | | 4.06 |
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Net interest income (TE)1 | | | | $ | 23,081 | | | | | | | $ | 23,048 | | | | | | | $ | 25,327 | | |
Net interest margin (TE)1 | | | | | | | 3.48 | | | | | | | | 3.77 | | | | | | | | 4.15 |
Core net interest margin (TE - excluding PPP loans)1 | | | | | | | 3.51 | | | | | | | | N/A | | | | | | | | N/A |
Interest bearing liabilities to earning assets | | 63.25 | % | | | | | | | 67.16 | % | | | | | | | 70.29 | % | | | | |
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1 Tax equivalent (TE) basis is calculated using a marginal tax rate of 21% in 2020 and 2019. See the discussion entitled “Non-GAAP Presentations” below and the table on page 17 that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
2 Interest income from loans is shown on a tax equivalent basis, which is a non-GAAP financial measure as discussed in the table on page 17, and includes fees of $718,000 for the second quarter of 2020, $294,000 for the first quarter of 2020, and $184,000 for the second quarter of 2019. Nonaccrual loans are included in the above stated average balances.
Net interest income (TE) was $23.1 million for the second quarter of 2020, which reflects a decrease of $33,000 compared to the first quarter of 2020, and a decrease of $2.2 million compared to the second quarter of 2019. The tax equivalent adjustment for the second quarter of 2020 was $374,000, compared to $390,000 for the first quarter of 2020, and $572,000 for the second quarter of 2019. Average interest earning assets increased $209.2 million to $2.67 billion for the second quarter of 2020, compared to the first quarter of 2020, primarily due to PPP loan growth. Average interest earning assets increased $220.5 million in the second quarter of 2020, compared to the second quarter of 2019. Average loans, including loans held-for-sale, increased $106.8 million for the second quarter of 2020, compared to the first quarter of 2020, and increased $154.7 million compared to the second quarter of 2019. Growth in volumes of earning assets for the second quarter of 2020, compared to the first quarter of 2020 and the second quarter of 2019, was more than offset
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by a decline in yields. The yield on average earning assets decreased 62 basis points in the second quarter of 2020, compared to the first quarter of 2020, and decreased 101 basis points compared to the second quarter of 2019, primarily due to the lowering of interest rates by the Federal Reserve in the first quarter of 2020 in response to the COVID-19 pandemic, $133.9 million of PPP loans issued at 1.00% in the second quarter of 2020, and interest rate reductions in the second half of 2019.
Total securities income was $3.5 million in the second quarter of 2020, a decrease of $544,000 compared to the first quarter of 2020, and a decrease of $1.5 million compared to the second quarter of 2019, due primarily to reductions in yields and volumes. Security sales and paydowns in the second quarter of 2020 totaled $19.4 million, which were partially offset by a $6.7 million purchase of a tax anticipation warrant. Our overall yield on tax equivalent municipal securities was 3.47% for the second quarter of 2020, compared to 3.66% for the first quarter of 2020, and 3.74% for the second quarter of 2019. Taxable security yields also declined in the second quarter of 2020, resulting in a decrease to the overall tax equivalent yield for the total securities portfolio of 32 basis points from March 31, 2020, and 73 basis points from June 30, 2019.
Average interest bearing liabilities increased $36.2 million in the second quarter of 2020, compared to the first quarter of 2020, driven by a $62.5 million increase in average interest bearing deposits, and partially offset by a $14.7 million decrease in average short-term borrowings and a $21.4 million decrease in average junior subordinated debentures. Average interest bearing liabilities decreased $32.8 million in the second quarter of 2020, compared to the second quarter of 2019, primarily driven by an $85.0 million decrease in other short-term borrowings, and a $31.9 million decrease in junior subordinated debentures, partially offset by a $68.8 million increase in interest bearing deposits. The cost of interest bearing liabilities for the second quarter of 2020 decreased by 45 basis points from the first quarter of 2020, and decreased 41 basis points from the second quarter of 2019. Growth in our average noninterest bearing demand deposits of $208.7 million in the year over year quarter has assisted us in controlling our cost of funds stemming from average interest bearing deposits, which totaled 0.48% for the second quarter of 2020, and 0.66% for both the first quarter of 2020 and the second quarter of 2019.
For the second quarter of 2020, average other short-term borrowings, which consisted solely of FHLBC advances, totaled $8.4 million, compared to $23.1 million for the first quarter of 2020, and $93.4 million for the second quarter of 2019. Average rates paid on short-term FHLBC advances decreased from 2.47% in the second quarter of 2019 to 1.90% in the first quarter of 2020, and to 1.63% in the second quarter of 2020, reflecting the falling interest rate environment. In March 2020, we redeemed our trust preferred securities issued by Old Second Capital Trust I and related junior subordinated debentures, which resulted in a payment of $33.0 million, including accrued interest. The redemption was funded with cash on hand and a $20.0 million term note issued at one month Libor plus 1.75%, with principal and interest payable over the next three years, included within notes payable and other borrowings. Due to the redemption, we recognized the remaining unamortized deferred issuance costs of $635,000 recorded on the junior subordinated debentures in March 2020, increasing our cost of funds by 15 basis points for the first quarter of 2020.
Our net interest margin (TE) decreased 29 basis points to 3.48% for the second quarter of 2020, compared to 3.77% for the first quarter of 2020, and decreased 67 basis points compared to 4.15% for the second quarter of 2019. Our core net interest margin (TE), a non-GAAP financial measure that excludes the impact of our PPP loans, was 3.51% for the second quarter of 2020, compared to 3.77% and 4.15% for the first quarter of 2020 and second quarter of 2019, respectively. The reductions were due primarily to falling interest rates and the redemption of our junior subordinated debentures late in the first quarter of 2020, noted above. See the discussion entitled “Non-GAAP Presentations” in the table on page 17 that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
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Noninterest Income
| | | | | | | | | | | 2nd Quarter 2020 | | ||
Noninterest Income | | Three Months Ended | | Percent Change From | | |||||||||
(Dollars in thousands) | | June 30, | | March 31, | | June 30, | | March 31, | | June 30, | | |||
|
| 2020 |
| 2020 |
| 2019 |
| 2020 |
| 2019 |
| |||
Trust income | | $ | 1,664 | | $ | 1,532 | | $ | 1,739 | | 8.6 | | (4.3) | |
Service charges on deposits | | | 1,120 | | | 1,726 | | | 1,959 | | (35.1) | | (42.8) | |
Residential mortgage banking revenue | | | | | | | | | | | | | | |
Secondary mortgage fees | | | 505 | | | 270 | | | 203 | | 87.0 | | 148.8 | |
Mortgage servicing rights mark to market loss | | | (445) | | | (2,134) | | | (1,137) | | 79.1 | | 60.9 | |
Mortgage servicing income | | | 458 | | | 468 | | | 491 | | (2.1) | | (6.7) | |
Net gain on sales of mortgage loans | | | 4,631 | | | 2,246 | | | 1,163 | | 106.2 | | 298.2 | |
Total residential mortgage banking revenue | | | 5,149 | | | 850 | | | 720 | | 505.8 | | 615.1 | |
Securities (losses) gains, net | | | - | | | (24) | | | 986 | | 100.0 | | (100.0) | |
Change in cash surrender value of BOLI | | | 532 | | | (49) | | | 320 | | N/M | | 66.3 | |
Death benefit realized on BOLI | | | 59 | | | - | | | - | | N/M | | N/M | |
Card related income | | | 1,311 | | | 1,287 | | | 1,552 | | 1.9 | | (15.5) | |
Other income | | | 860 | | | 1,000 | | | 867 | | (14.0) | | (0.8) | |
Total noninterest income | | $ | 10,695 | | $ | 6,322 | | $ | 8,143 | | 69.2 | | 31.3 | |
N/M - Not meaningful.
Noninterest income increased $4.4 million, or 69.2%, in the second quarter of 2020, compared to the first quarter of 2020, and increased $2.6 million, or 31.3%, compared to the second quarter of 2019. These increases were primarily driven by $4.6 million in net gain on sales of mortgage loans and a reduction in the mark to market losses on MSRs in the second quarter of 2020, compared to both the prior quarter and year over year quarter. The cash surrender value of BOLI increased in the second quarter of 2020 by $581,000 compared to the first quarter of 2020, and increased $212,000 compared to the second quarter of 2019.
The noted increases were partially offset by a reduction in service charges on deposits, as overdraft and bounce fees declined due to a decrease in customer transactional activity as a result of the COVID-19 pandemic, resulting in a decrease of $606,000 in the second quarter of 2020, compared to the linked quarter, and a decrease of $839,000 year over year. The year over year increase in noninterest income was also offset by a $986,000 decrease in securities gains, net, and a $241,000 decrease in card related income.
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Noninterest Expense
| | | | | | | | | | | 2nd Quarter 2020 | | ||
Noninterest Expense | | Three Months Ended | | Percent Change From | | |||||||||
(Dollars in thousands) | | June 30, | | March 31, | | June 30, | | March 31, | | June 30, | | |||
|
| 2020 |
| 2020 |
| 2019 |
| 2020 |
| 2019 |
| |||
Salaries | | $ | 8,588 | | $ | 9,761 | | $ | 9,004 | | (12.0) | | (4.6) | |
Officers incentive | | | 968 | | | 958 | | | 893 | | 1.0 | | 8.4 | |
Benefits and other | | | 1,786 | | | 2,199 | | | 1,690 | | (18.8) | | 5.7 | |
Total salaries and employee benefits | | | 11,342 | | | 12,918 | | | 11,587 | | (12.2) | | (2.1) | |
Occupancy, furniture and equipment expense | | | 1,935 | | | 2,301 | | | 1,925 | | (15.9) | | 0.5 | |
Computer and data processing | | | 1,247 | | | 1,335 | | | 1,524 | | (6.6) | | (18.2) | |
FDIC insurance | | | 155 | | | 57 | | | 116 | | 171.9 | | 33.6 | |
General bank insurance | | | 237 | | | 246 | | | 236 | | (3.7) | | 0.4 | |
Amortization of core deposit intangible asset | | | 124 | | | 128 | | | 121 | | (3.1) | | 2.5 | |
Advertising expense | | | 57 | | | 109 | | | 381 | | (47.7) | | (85.0) | |
Card related expense | | | 514 | | | 532 | | | 474 | | (3.4) | | 8.4 | |
Legal fees | | | 176 | | | 131 | | | 243 | | 34.4 | | (27.6) | |
Other real estate owned expense, net | | | 143 | | | 237 | | | 248 | | (39.7) | | (42.3) | |
Other expense | | | 2,966 | | | 3,008 | | | 3,271 | | (1.4) | | (9.3) | |
Total noninterest expense | | $ | 18,896 | | $ | 21,002 | | $ | 20,126 | | (10.0) | | (6.1) | |
Efficiency ratio (GAAP)1 | | | 55.13 | % | | 66.28 | % | | 59.78 | % | | | | |
Adjusted efficiency ratio (non-GAAP)2 | | | 54.28 | % | | 65.48 | % | | 58.62 | % | | | | |
1 The efficiency ratio shown in the table above is a GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits and OREO expenses, divided by the sum of net interest income and total noninterest income less any BOLI death benefit recorded, net gains or losses on securities and mark to market gains or losses on MSRs.
2 The adjusted efficiency ratio shown in the table above is a non-GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits and OREO expenses, divided by the sum of net interest income on a fully tax equivalent basis, total noninterest income less net gains or losses on securities and mark to market gains or losses on MSRs, and includes a tax equivalent adjustment on the change in cash surrender value of BOLI. See the discussion entitled “Non-GAAP Presentations” below and the table on page 17 that provides a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.
Noninterest expense for the second quarter of 2020 decreased $2.1 million, or 10.0%, compared to the first quarter of 2020, and decreased $1.2 million, or 6.1%, compared to the second quarter of 2019. The linked quarter decrease is primarily attributable to a $1.6 million decrease in salaries and employee benefits stemming from an increase in deferrals of new loan origination costs related to PPP loans, a $366,000 decrease in occupancy, furniture and equipment expense, a $98,000 decrease in other real estate owned expense primarily due to valuation write-downs on properties in the first quarter of 2020, and a $52,000 reduction in advertising expense. These reductions were partially offset by an increase of $98,000 in FDIC insurance and $45,000 in legal fees.
The year over year decrease in noninterest expense is primarily attributable to a $245,000 decrease in salaries and employee benefits, a $277,000 decrease in computer and data processing expense, a $324,000 decrease in advertising expense, a $105,000 decrease in other real estate owned expense due to property valuation write-downs, and a $305,000 decrease in other expense. The decrease in other expense was mainly attributable to reductions in consulting and management fees and other marketing expenses. Partially offsetting the year over year decreases was a $39,000 increase in FDIC insurance and a $40,000 increase in card related expense.
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Earning Assets
| | | | | | | | | | | June 30, 2020 | | ||
Loans | | As of | | Percent Change From | | |||||||||
(dollars in thousands) | | June 30, | | March 31, | | June 30, | | March 31, | | June 30, | | |||
|
| 2020 |
| 2020 |
| 2019 |
| 2020 |
| 2019 |
| |||
Commercial | | $ | 441,642 | | $ | 364,626 | | $ | 337,848 | | 21.1 | | 30.7 | |
Leases | | | 133,293 | | | 126,237 | | | 98,379 | | 5.6 | | 35.5 | |
Commercial real estate - Investor | | | 525,714 | | | 503,905 | | | 476,906 | | 4.3 | | 10.2 | |
Commercial real estate - Owner occupied | | | 343,982 | | | 349,595 | | | 348,185 | | (1.6) | | (1.2) | |
Construction | | | 83,939 | | | 78,159 | | | 93,079 | | 7.4 | | (9.8) | |
Residential real estate - Investor | | | 69,421 | | | 69,429 | | | 68,990 | | (0.0) | | 0.6 | |
Residential real estate - Owner occupied | | | 126,303 | | | 129,982 | | | 132,793 | | (2.8) | | (4.9) | |
Multifamily | | | 197,521 | | | 195,297 | | | 191,764 | | 1.1 | | 3.0 | |
HELOC | | | 89,170 | | | 93,165 | | | 96,821 | | (4.3) | | (7.9) | |
HELOC - Purchased | | | 26,467 | | | 30,880 | | | 31,852 | | (14.3) | | (16.9) | |
Other1 | | | 14,884 | | | 15,929 | | | 13,533 | | (6.6) | | 10.0 | |
Total loans, excluding deferred loan costs and PCI | | | 2,052,336 | | | 1,957,204 | | | 1,890,150 | | 4.9 | | 8.6 | |
Net deferred loan costs | | | - | | | - | | | 1,959 | | - | | (100.0) | |
Total loans, excluding PCI2 | | | 2,052,336 | | | 1,957,204 | | | 1,892,109 | | 4.9 | | 8.5 | |
PCI loans, net of purchase accounting adjustments | | | - | | | - | | | 10,834 | | - | | (100.0) | |
Total loans | | $ | 2,052,336 | | $ | 1,957,204 | | $ | 1,902,943 | | 4.9 | | 7.9 | |
1 Other class includes consumer and overdrafts.
2 As a result of our adoption of the new CECL accounting standard effective January 1, 2020, loans formerly referred to as PCI loans are considered PCD loans under CECL for all periods presented after December 31, 2019, and are included in the amounts above based on loan type.
Total loans increased by $95.1 million at June 30, 2020, compared to March 31, 2020, and increased $149.4 million for the year over year period. Growth in the year over year period was primarily due to PPP loan originations of $133.9 million, recorded within commercial loans, as well as organic growth in our commercial, leases and commercial real estate-investor loan portfolios. As required by CECL, the balance (or amortized cost basis) of PCD loans are carried on a gross basis (rather than net of the associated credit loss estimate), and the expected credit losses for PCD loans are estimated and separately recognized as part of the allowance for credit losses. Accordingly, at January 1, 2020, $2.5 million of purchase accounting adjustments related to PCD loans were reclassified to the allowance for credit losses from loans, resulting in an increase to total PCD loans.
| | | | | | | | | | | June 30, 2020 | ||
Securities | | As of | | Percent Change From | |||||||||
(dollars in thousands) | | June 30, | | March 31, | | June 30, | | March 31, | | June 30, | |||
|
| 2020 |
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||
Securities available-for-sale, at fair value | | | | | | | | | | | | | |
U.S. Treasury | | $ | 4,147 | | $ | 4,152 | | $ | 4,025 | | (0.1) | | 3.0 |
U.S. government agencies | | | 7,276 | | | 7,723 | | | 9,812 | | (5.8) | | (25.8) |
U.S. government agency mortgage-backed | | | 16,779 | | | 17,255 | | | 16,999 | | (2.8) | | (1.3) |
States and political subdivisions | | | 250,364 | | | 255,095 | | | 251,295 | | (1.9) | | (0.4) |
Collateralized mortgage obligations | | | 56,113 | | | 53,403 | | | 64,867 | | 5.1 | | (13.5) |
Asset-backed securities | | | 80,026 | | | 77,727 | | | 82,725 | | 3.0 | | (3.3) |
Collateralized loan obligations | | | 32,731 | | | 34,339 | | | 62,357 | | (4.7) | | (47.5) |
Total securities available-for-sale | | $ | 447,436 | | $ | 449,694 | | $ | 492,080 | | (0.5) | | (9.1) |
| | | | | | | | | | | | | |
Our securities portfolio totaled $447.4 million as of June 30, 2020, a decrease of $2.3 million from $449.7 million as of March 31, 2020, and a decrease of $44.6 million from June 30, 2019. The decrease in the portfolio during the second quarter of 2020 was due to $19.4 million of security maturities and paydowns, partially offset by unrealized mark to market gains of $11.0 million, as well as a $6.7 million tax anticipation warrant purchase. No security sales were recorded in the second quarter of 2020; $24,000 of net security losses were recorded in the first quarter of 2019, and $986,000 of net security gains were recorded in the second quarter of 2019.
8
Asset Quality
| | | | | | | | | | | June 30, 2020 | ||
Nonperforming assets | | As of | | Percent Change From | |||||||||
(dollars in thousands) | | June 30, | | March 31, | | June 30, | | March 31, | | June 30, | |||
|
| 2020 |
| 2020 |
| 2019 |
| 2020 | | 2019 | |||
Nonaccrual loans | | $ | 18,343 | | $ | 19,497 | | $ | 11,089 | | (5.9) | | 65.4 |
Performing troubled debt restructured loans accruing interest | |
| 978 | |
| 934 | |
| 1,570 | | 4.7 | | (37.7) |
Loans past due 90 days or more and still accruing interest | |
| 840 | |
| 1,406 | |
| - | | (40.3) | | N/M |
Total nonperforming loans | |
| 20,161 | |
| 21,837 | |
| 12,659 | | (7.7) | | 59.3 |
Other real estate owned | |
| 5,082 | |
| 5,049 | |
| 5,668 | | 0.7 | | (10.3) |
Total nonperforming assets | | $ | 25,243 | | $ | 26,886 | | $ | 18,327 | | (6.1) | | 37.7 |
| | | | | | | | | | | | | |
PCD loans, net of purchase accounting adjustments1 | | $ | 11,096 | | $ | 10,999 | | $ | 10,834 | | 0.9 | | 2.4 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
30-89 days past due loans and still accruing interest | | $ | 11,330 | | $ | 17,738 | | $ | 8,888 | | | | |
Nonaccrual loans to total loans | | | 0.9 | % | | 1.0 | % | | 0.6 | % | | | |
Nonperforming loans to total loans | | | 1.0 | % | | 1.1 | % | | 0.7 | % | | | |
Nonperforming assets to total loans plus OREO | | | 1.2 | % | | 1.4 | % | | 1.0 | % | | | |
Purchased credit-deteriorated loans to total loans | | | 0.5 | % | | 0.6 | % | | 0.6 | % | | | |
| | | | | | | | | | | | | |
Allowance for credit losses | | $ | 31,273 | | $ | 30,045 | | $ | 19,372 | | | | |
Allowance for credit losses to total loans | | | 1.5 | % | | 1.5 | % | | 1.0 | % | | | |
Allowance for credit losses to nonaccrual loans | | | 170.5 | % | | 154.1 | % | | 174.7 | % | | | |
N/M - Not meaningful.
1 In 2020, due to the adoption of CECL, PCD loans are included in total nonperforming assets, if their risk rating at period end so indicates. For 2019 periods presented, PCI loans are not included within total nonperforming assets as these loans had an accretable yield.
Nonperforming loans consist of nonaccrual loans, performing troubled debt restructured loans accruing interest and loans 90 days or more past due and still accruing interest. We historically excluded PCI loans meeting nonperforming criteria from our nonperforming disclosures as long as their cash flows and the timing of such cash flows continued to be estimable and probable of collection. As a result of CECL implementation on January 1, 2020, PCI loans became PCD loans. PCD loans that meet the definition of nonperforming are now included in our nonperforming disclosures. Nonperforming loans to total loans was 1.0% for the second quarter of 2020, 1.1% for the first quarter of 2020, and 0.7% for the second quarter of 2019. Nonperforming assets to total loans plus OREO remained relatively stable and ended at 1.2% for the second quarter of 2020, compared to 1.4% for the first quarter of 2020, and 1.0% for the second quarter of 2019, as our loan portfolio grew year over year, and we continued OREO liquidations and recorded write-downs. Our allowance for credit losses to total loans was 1.5% as of both June 30, 2020 and March 31, 2020, and 1.0% as of June 30, 2019.
9
The following table shows classified assets by segment for the following periods.
| | | | | | | | | | | June 30, 2020 | | ||
Classified loans | | As of | | Percent Change From | | |||||||||
(dollars in thousands) | | June 30, | | March 31, | | June 30, | | March 31, | | June 30, | | |||
|
| 2020 |
| 2020 |
| 2019 |
| 2020 |
| 2019 | | |||
Commercial | | $ | 8,627 | | $ | 11,260 | | $ | 7,704 | | (23.4) | | 12.0 | |
Leases | | | 254 | | | 264 | | | 125 | | (3.8) | | 103.2 | |
Commercial real estate - Investor | | | 5,445 | | | 6,073 | | | 8,791 | | (10.3) | | (38.1) | |
Commercial real estate - Owner occupied | | | 9,432 | | | 10,504 | | | 11,605 | | (10.2) | | (18.7) | |
Construction | | | 2,318 | | | 2,414 | | | 273 | | (4.0) | | 749.1 | |
Residential real estate - Investor | | | 1,454 | | | 1,452 | | | 1,029 | | 0.1 | | 41.3 | |
Residential real estate - Owner occupied | | | 4,270 | | | 4,568 | | | 3,773 | | (6.5) | | 13.2 | |
Multifamily | | | 5,562 | | | 5,374 | | | 493 | | 3.5 | | N/M | |
HELOC | | | 1,690 | | | 1,628 | | | 1,894 | | 3.8 | | (10.8) | |
HELOC - Purchased | | | 113 | | | 114 | | | 184 | | (0.9) | | (38.6) | |
Other1 | | | 353 | | | 349 | | | 24 | | 1.1 | | N/M | |
Total classified loans, excluding PCI loans2 | | | 39,518 | | | 44,000 | | | 35,895 | | (10.2) | | 10.1 | |
PCI loans, net of purchase accounting adjustments | | | - | | | - | | | 10,834 | | N/M | | (100.0) | |
Total classified loans | | $ | 39,518 | | $ | 44,000 | | $ | 46,729 | | (10.2) | | (15.4) | |
N/M - Not meaningful.
1 Other class includes consumer and overdrafts.
2 For purposes of this table, for the three months ended June 30, 2019, classified loan amounts excluded $10.8 million of PCD loans, net of purchase accounting adjustments, formerly purchased credit impaired loans, even if contractually past due or if we did not expect to receive payment in full, as we were accreting interest income over the expected life of the loans.
Classified loans include nonaccrual, performing troubled debt restructurings, PCD loans (formerly PCI loans, as applicable), and all other loans considered substandard. Classified loans totaled $39.5 million as of June 30, 2020, a decrease of $4.5 million, or 10.2%, from the prior linked quarter, and a decrease of $7.2 million, or 15.4%, from the second quarter of 2019. All PCD loans stem from our acquisition of ABC Bank in 2018.
Allowance for Credit Losses on Loans and Unfunded Commitments
At June 30, 2020, our allowance for credit losses (“ACL”) on loans totaled $31.3 million, and our ACL on unfunded commitments, included in other liabilities, totaled $5.0 million. This increased ACL from year-end 2019 was driven by the $8.0 million of provision expense in the first quarter of 2020, and by the adoption of CECL on January 1, 2020, in which we recognized an increase in our ACL on outstanding loans of $5.9 million and an increase in our ACL on unfunded commitments of $1.7 million as a cumulative effect adjustment from change in accounting policies. During the second quarter of 2020, we recorded $1.4 million of ACL related to loans, and $734,000 of additional ACL related to unfunded commitments. The growth in the ACL for unfunded commitments in the second quarter of 2020, compared to the prior quarter, was primarily related to commercial unfunded commitments, with an increase in the funding rate assumptions based on our analysis of the last 12 months of utilization. The total increase in the ACL during 2020 reflects forecasted credit deterioration due to the COVID-19 pandemic and the resultant recession. Our ACL on loans to total loans was 1.5% as of both June 30, 2020 and March 31, 2020, compared to 1.0% at both December 31, 2019 and June 30, 2019. The ACL on unfunded commitments totaled $5.0 million as of June 30, 2020, compared to $4.2 million as of March 31, 2020.
10
Net Charge-off Summary
Loan Charge-offs, net of recoveries | Quarters Ended | |||||||||||||
(dollars in thousands) | June 30, | | % of | | March 31, | | % of | | June 30, | | % of | |||
| 2020 | | Total 2 | | 2020 | | Total 2 | | 2019 | | Total 2 | |||
Commercial | $ | (2) | | (1.2) | | $ | 85 | | 7.6 | | $ | 61 | | 15.5 |
Leases | | - | | - | | | - | | - | | | - | | - |
Commercial real estate - Investor | | (14) | | (8.4) | | | (8) | | (0.7) | | | (12) | | (3.0) |
Commercial real estate - Owner occupied | | 292 | | 174.9 | | | 1,108 | | 98.8 | | | 42 | | 10.7 |
Construction | | - | | - | | | - | | - | | | (1) | | (0.3) |
Residential real estate - Investor | | (2) | | (1.2) | | | (20) | | (1.8) | | | (3) | | (0.8) |
Residential real estate - Owner occupied | | (66) | | (39.5) | | | (23) | | (2.0) | | | (11) | | (2.8) |
Multifamily | | - | | - | | | - | | - | | | - | | - |
HELOC | | (53) | | (31.7) | | | (58) | | (5.2) | | | 38 | | 9.6 |
HELOC - Purchased | | - | | - | | | - | | - | | | 229 | | 58.20 |
Other 1 | | 12 | | 7.1 | | | 38 | | 3.4 | | | 51 | | 12.9 |
Net charge-offs / (recoveries) | $ | 167 | | 100.0 | | $ | 1,122 | | 100.0 | | $ | 394 | | 100.0 |
| | | | | | | | | | | | | | |
N/M - Not meaningful.
1 Other class includes consumer and overdrafts.
2 Represents the percentage of net charge-offs attributable to each category of loans.
Gross charge-offs for the second quarter of 2020 were $406,000, compared to $1.4 million for the first quarter of 2020, and $474,000 for the second quarter of 2019. Gross recoveries were $239,000 for the second quarter of 2020, compared to $279,000 for the first quarter of 2020 and $80,000 for the second quarter of 2019. Continued recoveries are indicative of the ongoing aggressive efforts by management to effectively manage and resolve prior charge-offs.
Deposits
Total deposits were $2.45 billion at June 30, 2020, an increase of $255.7 million compared to March 31, 2020, resulting from net increases in demand deposits of $188.0 million, savings, NOW and money market accounts of $89.7 million, partially offset by a decrease in time deposits of $22.1 million. Total deposits increased $373.5 million in the year over year period driven primarily by growth in demand deposits of $257.7 million, and savings, NOW and money market accounts of $109.7 million.
Borrowings
As of June 30, 2020, we had $8.3 million in other short-term borrowings compared to $6.4 million as of March 31, 2020, and $87.1 million as of June 30, 2019. Due to growth in deposits, our need for short-term funding in 2020 has declined year over year.
We are indebted on senior notes totaling $44.3 million, net of deferred issuance costs, as of June 30, 2020. We are also indebted on $25.8 million of junior subordinated debentures, net of deferred issuance costs, which is related to the trust preferred securities issued by our statutory trust subsidiary, Old Second Capital Trust II. On March 2, 2020, we redeemed the trust preferred securities issued by Old Second Capital Trust I and related junior subordinated debentures, which resulted in a decrease in junior subordinated debentures of $32.0 million. Notes payable and other borrowings totaled $25.5 million as of June 30, 2020, and is comprised of $19.0 million outstanding on a $20.0 million term note we originated to facilitate the redemption of our trust preferred securities issued by Old Second Capital Trust I and related junior subordinated debentures, and $6.5 million of a long-term FHLBC advance acquired in our ABC Bank acquisition that matures on February 2, 2026.
Non-GAAP Presentations: Management has disclosed in this earnings release certain non-GAAP financial measures to evaluate and measure our performance, including the presentation of net interest income and net interest margin on a fully taxable equivalent basis, our efficiency ratio calculations and core net interest margin on a taxable equivalent basis. The net interest margin fully taxable equivalent 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. Consistent with industry practice, management has disclosed the efficiency ratio including and excluding certain items, which is discussed in the noninterest expense presentation on page 7. Our core net interest margin on a taxable equivalent basis excludes the impact of our PPP loans. These non-GAAP financial
11
measures should not be considered as a substitute for GAAP financial measures, and we strongly encourage investors to review the GAAP financial measures included in this earnings release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this earnings release with other companies’ non-GAAP financial measures having the same or similar names. The tables on page 17 provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.
Forward-Looking Statements: This earnings release and statements by our management may contain forward-looking statements within the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by words such as “anticipated,” “expects,” “intends,” “believes,” “may,” “likely,” “will” or other statements that indicate future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the economic outlook and our belief that we are well-positioned to capitalize on opportunities with substantial capital flexibility and strong liquidity. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements, (1) the strength of the United States economy in general and the strength of the local economies in which we conduct our operations may be different than expected, including, but not limited to, due to the negative impacts and disruptions resulting from the recent outbreak of the novel coronavirus, or COVID-19, on the economies and communities we serve, which may have an adverse impact on the our business, operations and performance, and could have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole, both domestically and globally; (2) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (3) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act”; (4) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on us; and (5) changes in interest rates, which may affect our net income, prepayment penalty income, mortgage banking income, and other future cash flows, or the market value of our assets, including our investment securities. Additional risks and uncertainties are contained in the “Risk Factors” and forward-looking statements disclosure in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The inclusion of this forward-looking information should not be construed as a representation by us or any person that future events, plans, or expectations contemplated by us will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Conference Call
We will host an earnings call on Thursday, July 23, 2020, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Investors may listen to our earnings call via telephone by dialing 844-369-8770. 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 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on July 30, 2020, by dialing 877-481-4010, using Conference ID: 35557.
12
Old Second Bancorp, Inc. and Subsidiaries
(In thousands)
| | (unaudited) | | | | |
| | June 30, | | December 31, | ||
|
| 2020 |
| 2019 | ||
Assets | | | | | | |
Cash and due from banks | | $ | 32,424 | | $ | 34,096 |
Interest earning deposits with financial institutions | | | 225,065 | | | 16,536 |
Cash and cash equivalents | | | 257,489 | | | 50,632 |
Securities available-for-sale, at fair value | | | 447,436 | | | 484,648 |
Federal Home Loan Bank Chicago ("FHLBC") and Federal Reserve Bank Chicago ("FRBC") stock | | | 9,917 | | | 9,917 |
Loans held-for-sale | | | 9,416 | | | 3,061 |
Loans | | | 2,052,336 | | | 1,930,812 |
Less: allowance for credit losses on loans | | | 31,273 | | | 19,789 |
Net loans | | | 2,021,063 | | | 1,911,023 |
Premises and equipment, net | | | 44,536 | | | 44,354 |
Other real estate owned | | | 5,082 | | | 5,004 |
Mortgage servicing rights, net | | | 4,479 | | | 5,935 |
Goodwill and core deposit intangible | | | 21,023 | | | 21,275 |
Bank-owned life insurance ("BOLI") | | | 61,763 | | | 61,763 |
Deferred tax assets, net | | | 13,242 | | | 11,459 |
Other assets | | | 36,990 | | | 26,474 |
Total assets | | $ | 2,932,436 | | $ | 2,635,545 |
| | | | | | |
Liabilities | | | | | | |
Deposits: | | | | | | |
Noninterest bearing demand | | $ | 890,636 | | $ | 669,795 |
Interest bearing: | | | | | | |
Savings, NOW, and money market | | | 1,133,283 | | | 1,015,285 |
Time | | | 427,398 | | | 441,669 |
Total deposits | | | 2,451,317 | | | 2,126,749 |
Securities sold under repurchase agreements | | | 52,088 | | | 48,693 |
Other short-term borrowings | | | 8,250 | | | 48,500 |
Junior subordinated debentures | | | 25,773 | | | 57,734 |
Senior notes | | | 44,323 | | | 44,270 |
Notes payable and other borrowings | | | 25,541 | | | 6,673 |
Other liabilities | | | 42,628 | | | 25,062 |
Total liabilities | | | 2,649,920 | | | 2,357,681 |
| | | | | | |
Stockholders’ Equity | | | | | | |
Common stock | | | 34,957 | | | 34,854 |
Additional paid-in capital | | | 121,437 | | | 120,657 |
Retained earnings | | | 218,856 | | | 213,723 |
Accumulated other comprehensive income | | | 6,422 | | | 4,562 |
Treasury stock | | | (99,156) | | | (95,932) |
Total stockholders’ equity | | | 282,516 | | | 277,864 |
Total liabilities and stockholders’ equity | | $ | 2,932,436 | | $ | 2,635,545 |
13
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except share data)
| | | (unaudited) | | (unaudited) | | |||||||
| | Three Months Ended June 30, | | Six Months Ended June 30, | | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 |
| ||||
Interest and dividend income | | | | | | | | | | | | | |
Loans, including fees | | $ | 22,347 | | $ | 24,924 | | $ | 45,944 | | $ | 49,023 | |
Loans held-for-sale | | | 110 | | | 31 | | | 146 | | | 53 | |
Securities: | | | | | | | | | | | | | |
Taxable | | | 1,694 | | | 2,223 | | | 3,857 | | | 4,637 | |
Tax exempt | | | 1,396 | | | 2,141 | | | 2,851 | | | 4,239 | |
Dividends from FHLBC and FRBC stock | | | 123 | | | 156 | | | 248 | | | 305 | |
Interest bearing deposits with financial institutions | | | 42 | | | 111 | | | 117 | | | 225 | |
Total interest and dividend income | | | 25,712 | | | 29,586 | | | 53,163 | | | 58,482 | |
Interest expense | | | | | | | | | | | | | |
Savings, NOW, and money market deposits | | | 385 | | | 759 | | | 1,020 | | | 1,530 | |
Time deposits | | | 1,442 | | | 1,641 | | | 3,208 | | | 3,259 | |
Securities sold under repurchase agreements | | | 23 | | | 147 | | | 139 | | | 296 | |
Other short-term borrowings | | | 34 | | | 575 | | | 143 | | | 1,182 | |
Junior subordinated debentures | | | 283 | | | 931 | | | 1,647 | | | 1,858 | |
Senior notes | | | 673 | | | 672 | | | 1,346 | | | 1,344 | |
Notes payable and other borrowings | | | 165 | | | 107 | | | 295 | | | 223 | |
Total interest expense | | | 3,005 | | | 4,832 | | | 7,798 | | | 9,692 | |
Net interest and dividend income | | | 22,707 | | | 24,754 | | | 45,365 | | | 48,790 | |
Provision for credit losses | | | 2,129 | | | 450 | | | 10,113 | | | 900 | |
Net interest and dividend income after provision for credit losses | | | 20,578 | | | 24,304 | | | 35,252 | | | 47,890 | |
Noninterest income | | | | | | | | | | | | | |
Trust income | | | 1,664 | | | 1,739 | | | 3,196 | | | 3,225 | |
Service charges on deposits | | | 1,120 | | | 1,959 | | | 2,846 | | | 3,821 | |
Secondary mortgage fees | | | 505 | | | 203 | | | 775 | | | 339 | |
Mortgage servicing rights mark to market loss | | | (445) | | | (1,137) | | | (2,579) | | | (1,956) | |
Mortgage servicing income | | | 458 | | | 491 | | | 926 | | | 948 | |
Net gain on sales of mortgage loans | | | 4,631 | | | 1,163 | | | 6,877 | | | 1,925 | |
Securities gains (losses) , net | | | - | | | 986 | | | (24) | | | 1,013 | |
Change in cash surrender value of BOLI | | | 532 | | | 320 | | | 483 | | | 778 | |
Death benefit realized on BOLI | | | 59 | | | - | | | 59 | | | - | |
Card related income | | | 1,311 | | | 1,552 | | | 2,598 | | | 2,837 | |
Other income | | | 860 | | | 867 | | | 1,860 | | | 1,695 | |
Total noninterest income | | | 10,695 | | | 8,143 | | | 17,017 | | | 14,625 | |
Noninterest expense | | | | | | | | | | | | | |
Salaries and employee benefits | | | 11,342 | | | 11,587 | | | 24,260 | | | 23,199 | |
Occupancy, furniture and equipment | | | 1,935 | | | 1,925 | | | 4,236 | | | 3,914 | |
Computer and data processing | | | 1,247 | | | 1,524 | | | 2,582 | | | 2,856 | |
FDIC insurance | | | 155 | | | 116 | | | 212 | | | 290 | |
General bank insurance | | | 237 | | | 236 | | | 483 | | | 486 | |
Amortization of core deposit intangible | | | 124 | | | 121 | | | 252 | | | 253 | |
Advertising expense | | | 57 | | | 381 | | | 166 | | | 615 | |
Card related expense | | | 514 | | | 474 | | | 1,046 | | | 829 | |
Legal fees | | | 176 | | | 243 | | | 307 | | | 369 | |
Other real estate expense, net | | | 143 | | | 248 | | | 380 | | | 298 | |
Other expense | | | 2,966 | | | 3,271 | | | 5,974 | | | 6,211 | |
Total noninterest expense | | | 18,896 | | | 20,126 | | | 39,898 | | | 39,320 | |
Income before income taxes | | | 12,377 | | | 12,321 | | | 12,371 | | | 23,195 | |
Provision for income taxes | | | 3,139 | | | 3,043 | | | 2,858 | | | 5,449 | |
Net income | | $ | 9,238 | | $ | 9,278 | | $ | 9,513 | | $ | 17,746 | |
| | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.31 | | $ | 0.31 | | $ | 0.32 | | $ | 0.59 | |
Diluted earnings per share | | | 0.31 | | | 0.31 | | | 0.31 | | | 0.58 | |
Dividends declared per share | | | 0.01 | | | 0.01 | | | 0.02 | | | 0.02 | |
Ending common shares outstanding | | 29,589,341 | | 29,896,529 | | 29,589,341 | | 29,896,529 |
Weighted-average basic shares outstanding | | 29,637,567 | | 29,896,231 | | 29,783,665 | | 29,871,081 |
Weighted-average diluted shares outstanding | | 30,194,007 | | 30,389,892 | | 30,342,306 | | 30,366,889 |
14
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Average Balance
(In thousands, unaudited)
| | | 2019 | | 2020 | | |||||||||||||
Assets |
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr |
| ||||||
Cash and due from banks | | $ | 33,749 | | $ | 33,618 | | $ | 34,315 | | $ | 34,417 | | $ | 32,549 | | $ | 30,594 | |
Interest earning deposits with financial institutions | | | 18,842 | | | 19,053 | | | 21,425 | | | 27,720 | | | 27,989 | | | 153,532 | |
Cash and cash equivalents | | | 52,591 | | | 52,671 | | | 55,740 | | | 62,137 | | | 60,538 | | | 184,126 | |
| | | | | | | | | | | | | | | | | | | |
Securities available-for-sale, at fair value | | | 513,491 | | | 520,006 | | | 494,050 | | | 485,802 | | | 475,718 | | | 452,708 | |
FHLBC and FRBC stock | | | 11,463 | | | 11,317 | | | 10,398 | | | 9,763 | | | 9,917 | | | 9,917 | |
Loans held-for-sale | | | 1,853 | | | 2,870 | | | 4,462 | | | 3,441 | | | 3,623 | | | 13,978 | |
Loans | | | 1,893,659 | | | 1,894,454 | | | 1,890,992 | | | 1,899,849 | | | 1,941,760 | | | 2,038,082 | |
Less: allowance for credit losses on loans | | | 19,235 | | | 19,435 | | | 19,452 | | | 20,063 | | | 23,507 | | | 30,747 | |
Net loans | | | 1,874,424 | | | 1,875,019 | | | 1,871,540 | | | 1,879,786 | | | 1,918,253 | | | 2,007,335 | |
| | | | | | | | | | | | | | | | | | | |
Premises and equipment, net | | | 42,270 | | | 42,271 | | | 42,754 | | | 43,614 | | | 44,613 | | | 44,658 | |
Other real estate owned | | | 6,779 | | | 6,012 | | | 5,427 | | | 4,961 | | | 5,127 | | | 5,040 | |
Mortgage servicing rights, net | | | 7,334 | | | 6,551 | | | 5,578 | | | 5,447 | | | 5,053 | | | 4,451 | |
Goodwill and core deposit intangible | | | 21,747 | | | 21,618 | | | 21,476 | | | 21,337 | | | 21,208 | | | 21,084 | |
Bank-owned life insurance ("BOLI") | | | 61,661 | | | 62,124 | | | 62,445 | | | 62,259 | | | 61,873 | | | 61,790 | |
Deferred tax assets, net | | | 20,878 | | | 16,458 | | | 13,750 | | | 12,738 | | | 9,682 | | | 13,511 | |
Other assets | | | 21,098 | | | 19,041 | | | 20,820 | | | 22,893 | | | 25,156 | | | 36,771 | |
Total other assets | | | 181,767 | | | 174,075 | | | 172,250 | | | 173,249 | | | 172,712 | | | 187,305 | |
Total assets | | $ | 2,635,589 | | $ | 2,635,958 | | $ | 2,608,440 | | $ | 2,614,178 | | $ | 2,640,761 | | $ | 2,855,369 | |
| | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | |
Noninterest bearing demand | | $ | 625,423 | | $ | 645,580 | | $ | 651,863 | | $ | 678,136 | | $ | 676,755 | | $ | 854,324 | |
Interest bearing: | | | | | | | | | | | | | | | | | | | |
Savings, NOW, and money market | | | 1,055,563 | | | 1,044,950 | | | 1,011,717 | | | 1,010,948 | | | 1,025,511 | | | 1,097,003 | |
Time | | | 445,076 | | | 422,975 | | | 420,429 | | | 437,236 | | | 448,763 | | | 439,735 | |
Total deposits | | | 2,126,062 | | | 2,113,505 | | | 2,084,009 | | | 2,126,320 | | | 2,151,029 | | | 2,391,062 | |
| | | | | | | | | | | | | | | | | | | |
Securities sold under repurchase agreements | | | 45,157 | | | 44,184 | | | 40,342 | | | 45,146 | | | 47,825 | | | 45,882 | |
Other short-term borrowings | | | 98,328 | | | 93,369 | | | 75,310 | | | 28,772 | | | 23,069 | | | 8,396 | |
Junior subordinated debentures | | | 57,692 | | | 57,704 | | | 57,716 | | | 57,728 | | | 47,200 | | | 25,773 | |
Senior Notes | | | 44,171 | | | 44,196 | | | 44,222 | | | 44,258 | | | 44,284 | | | 44,310 | |
Notes payable and other borrowings | | | 15,273 | | | 13,101 | | | 10,973 | | | 8,768 | | | 14,762 | | | 26,551 | |
Other liabilities | | | 13,750 | | | 19,586 | | | 30,329 | | | 28,026 | | | 28,490 | | | 39,613 | |
Total liabilities | | | 2,400,433 | | | 2,385,645 | | | 2,342,901 | | | 2,339,018 | | | 2,356,659 | | | 2,581,587 | |
| | | | | | | | | | | | | | | | | | | |
Stockholders' equity | | | | | | | | | | | | | | | | | | | |
Common stock | | | 34,775 | | | 34,825 | | | 34,825 | | | 34,845 | | | 34,900 | | | 34,957 | |
Additional paid-in capital | | | 119,051 | | | 119,381 | | | 120,076 | | | 120,517 | | | 120,829 | | | 121,253 | |
Retained earnings | | | 180,398 | | | 188,453 | | | 199,228 | | | 209,942 | | | 215,467 | | | 216,183 | |
Accumulated other comprehensive (loss) income | | | (3,102) | | | 3,705 | | | 7,417 | | | 5,806 | | | 9,131 | | | 219 | |
Treasury stock | | | (95,966) | | | (96,051) | | | (96,007) | | | (95,950) | | | (96,225) | | | (98,830) | |
Total stockholders' equity | | | 235,156 | | | 250,313 | | | 265,539 | | | 275,160 | | | 284,102 | | | 273,782 | |
Total liabilities and stockholders' equity | | $ | 2,635,589 | | $ | 2,635,958 | | $ | 2,608,440 | | $ | 2,614,178 | | $ | 2,640,761 | | $ | 2,855,369 | |
| | | | | | | | | | | | | | | | | | | |
Total Earning Assets | | $ | 2,439,308 | | $ | 2,447,700 | | $ | 2,421,327 | | $ | 2,426,575 | | $ | 2,459,007 | | $ | 2,668,217 | |
Total Interest Bearing Liabilities | | | 1,761,260 | | | 1,720,479 | | | 1,660,709 | | | 1,632,856 | | | 1,651,414 | | | 1,687,650 | |
15
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Statements of Income
(In thousands, except per share data, unaudited)
| | | | | | | | | | | | | | | | | | |
| | 2019 | | 2020 | ||||||||||||||
|
| 1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr | ||||||
Interest and Dividend Income | | | | | | | | | | | | | | | | | | |
Loans, including fees | | $ | 24,099 | | $ | 24,924 | | $ | 25,109 | | $ | 23,587 | | $ | 23,597 | | $ | 22,347 |
Loans held-for-sale | | | 22 | | | 31 | | | 47 | | | 33 | | | 36 | | | 110 |
Securities: | | | | | | | | | | | | | | | | | | |
Taxable | | | 2,414 | | | 2,223 | | | 2,296 | | | 2,323 | | | 2,163 | | | 1,694 |
Tax exempt | | | 2,098 | | | 2,141 | | | 1,719 | | | 1,467 | | | 1,455 | | | 1,396 |
Dividends from FHLB and FRBC stock | | | 149 | | | 156 | | | 154 | | | 143 | | | 125 | | | 123 |
Interest bearing deposits with financial institutions | | | 114 | | | 111 | | | 119 | | | 115 | | | 75 | | | 42 |
Total interest and dividend income | | | 28,896 | | | 29,586 | | | 29,444 | | | 27,668 | | | 27,451 | | | 25,712 |
Interest Expense | | | | | | | | | | | | | | | | | | |
Savings, NOW, and money market deposits | | | 771 | | | 759 | | | 724 | | | 706 | | | 635 | | | 385 |
Time deposits | | | 1,618 | | | 1,641 | | | 1,672 | | | 1,805 | | | 1,766 | | | 1,442 |
Securities sold under repurchase agreements | | | 149 | | | 147 | | | 135 | | | 146 | | | 116 | | | 23 |
Other short-term borrowings | | | 607 | | | 575 | | | 429 | | | 144 | | | 109 | | | 34 |
Junior subordinated debentures | | | 927 | | | 931 | | | 933 | | | 933 | | | 1,364 | | | 283 |
Senior notes | | | 672 | | | 672 | | | 682 | | | 673 | | | 673 | | | 673 |
Notes payable and other borrowings | | | 116 | | | 107 | | | 89 | | | 72 | | | 130 | | | 165 |
Total interest expense | | | 4,860 | | | 4,832 | | | 4,664 | | | 4,479 | | | 4,793 | | | 3,005 |
Net interest and dividend income | | | 24,036 | | | 24,754 | | | 24,780 | | | 23,189 | | | 22,658 | | | 22,707 |
Provision for credit losses | | | 450 | | | 450 | | | 550 | | | 150 | | | 7,984 | | | 2,129 |
Net interest and dividend income after provision for credit losses | | | 23,586 | | | 24,304 | | | 24,230 | | | 23,039 | | | 14,674 | | | 20,578 |
Noninterest Income | | | | | | | | | | | | | | | | | | |
Trust income | | | 1,486 | | | 1,739 | | | 1,730 | | | 1,700 | | | 1,532 | | | 1,664 |
Service charges on deposits | | | 1,862 | | | 1,959 | | | 2,020 | | | 1,874 | | | 1,726 | | | 1,120 |
Secondary mortgage fees | | | 136 | | | 203 | | | 282 | | | 151 | | | 270 | | | 505 |
Mortgage servicing rights mark to market (loss) gain | | | (819) | | | (1,137) | | | (946) | | | 240 | | | (2,134) | | | (445) |
Mortgage servicing income | | | 457 | | | 491 | | | 460 | | | 473 | | | 468 | | | 458 |
Net gain on sales of mortgage loans | | | 762 | | | 1,163 | | | 2,074 | | | 1,113 | | | 2,246 | | | 4,631 |
Securities gains (losses), net | | | 27 | | | 986 | | | 3,463 | | | 35 | | | (24) | | | - |
Change in cash surrender value of BOLI | | | 458 | | | 320 | | | 267 | | | 370 | | | (49) | | | 532 |
Death benefit realized on BOLI | | | - | | | - | | | - | | | 872 | | | - | | | 59 |
Card related income | | | 1,285 | | | 1,552 | | | 1,595 | | | 1,428 | | | 1,287 | | | 1,311 |
Other income | | | 828 | | | 867 | | | 988 | | | 986 | | | 1,000 | | | 860 |
Total noninterest income | | | 6,482 | | | 8,143 | | | 11,933 | | | 9,242 | | | 6,322 | | | 10,695 |
Noninterest Expense | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 11,612 | | | 11,587 | | | 12,062 | | | 11,608 | | | 12,918 | | | 11,342 |
Occupancy, furniture and equipment | | | 1,989 | | | 1,925 | | | 2,235 | | | 2,140 | | | 2,301 | | | 1,935 |
Computer and data processing | | | 1,332 | | | 1,524 | | | 1,490 | | | 1,285 | | | 1,335 | | | 1,247 |
FDIC insurance | | | 174 | | | 116 | | | (114) | | | - | | | 57 | | | 155 |
General bank insurance | | | 250 | | | 236 | | | 270 | | | 246 | | | 246 | | | 237 |
Amortization of core deposit intangible | | | 132 | | | 121 | | | 157 | | | 129 | | | 128 | | | 124 |
Advertising expense | | | 234 | | | 381 | | | 360 | | | 250 | | | 109 | | | 57 |
Card related expense | | | 355 | | | 474 | | | 531 | | | 596 | | | 532 | | | 514 |
Legal fees | | | 126 | | | 243 | | | 111 | | | 195 | | | 131 | | | 176 |
Other real estate expense, net | | | 50 | | | 248 | | | 26 | | | 99 | | | 237 | | | 143 |
Other expense | | | 2,940 | | | 3,271 | | | 2,826 | | | 3,280 | | | 3,008 | | | 2,966 |
Total noninterest expense | | | 19,194 | | | 20,126 | | | 19,954 | | | 19,828 | | | 21,002 | | | 18,896 |
Income (loss) before income taxes | | | 10,874 | | | 12,321 | | | 16,209 | | | 12,453 | | | (6) | | | 12,377 |
Provision for (benefit from) income taxes | | | 2,406 | | | 3,043 | | | 4,036 | | | 2,917 | | | (281) | | | 3,139 |
Net income | | $ | 8,468 | | $ | 9,278 | | $ | 12,173 | | $ | 9,536 | | $ | 275 | | $ | 9,238 |
| | | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.28 | | $ | 0.31 | | $ | 0.41 | | $ | 0.32 | | $ | 0.01 | | $ | 0.31 |
Diluted earnings per share | | | 0.28 | | | 0.31 | | | 0.40 | | | 0.31 | | | 0.01 | | | 0.31 |
Dividends paid per share | | | 0.01 | | | 0.01 | | | 0.01 | | | 0.01 | | | 0.01 | | | 0.01 |
16
Reconciliation of Non-GAAP Financial Measures
The tables below provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the periods indicated. Dollar amounts below in thousands:
| | Quarters Ended | | |||||||
| | June 30, | | March 31, | | June 30, | | |||
|
| 2020 |
| 2020 | | 2019 | | |||
Net Interest Margin | | | | | | | | | | |
Interest income (GAAP) | | $ | 25,712 | | $ | 27,451 | | $ | 29,586 | |
Taxable-equivalent adjustment: | | | | | | | | | | |
Loans | | | 3 | | | 3 | | | 3 | |
Securities | | | 371 | | | 387 | | | 569 | |
Interest income (TE) | | | 26,086 | | | 27,841 | | | 30,158 | |
Interest expense (GAAP) | | | 3,005 | | | 4,793 | | | 4,832 | |
Net interest income (TE) | | $ | 23,081 | | $ | 23,048 | | $ | 25,326 | |
Paycheck Protection Program ("PPP") loan - interest and fee income | | | 603 | | | NA | | | NA | |
Net interest income (TE) - excluding PPP loans | | $ | 22,478 | | | NA | | | NA | |
Net interest income (GAAP) | | $ | 22,707 | | $ | 22,658 | | $ | 24,754 | |
Average interest earning assets | | $ | 2,668,217 | | $ | 2,459,007 | | $ | 2,447,700 | |
Average PPP loans | | $ | 90,447 | | | N/A | | | N/A | |
Average interest earning assets, excluding PPP loans | | $ | 2,577,770 | | | N/A | | | N/A | |
Net interest margin (GAAP) | | | 3.42 | % | | 3.71 | % | | 4.06 | % |
Net interest margin (TE) | | | 3.48 | % | | 3.77 | % | | 4.15 | % |
Core net interest margin (TE - excluding PPP loans) | | | 3.51 | % | | N/A | | | N/A | |
| | | | | | | | | | | | | | | | | | | |
| | GAAP | | Non-GAAP | | ||||||||||||||
| | | Three Months Ended | | | Three Months Ended | | ||||||||||||
| | June 30, | | March 31, | | June 30, | | June 30, | | March 31, | | June 30, | | ||||||
| | 2020 | | 2020 | | 2019 | | 2020 | | 2020 | | 2019 | | ||||||
Efficiency Ratio / Adjusted Efficiency Ratio | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Noninterest expense | | $ | 18,896 | | $ | 21,002 | | $ | 20,126 | | $ | 18,896 | | $ | 21,002 | | $ | 20,126 | |
Less amortization of core deposit | | | 124 | | | 128 | | | 121 | | | 124 | | | 128 | | | 121 | |
Less other real estate expense, net | | | 143 | | | 237 | | | 248 | | | 143 | | | 237 | | | 248 | |
Noninterest expense less adjustments | | $ | 18,629 | | $ | 20,637 | | $ | 19,757 | | $ | 18,629 | | $ | 20,637 | | $ | 19,757 | |
| | | | | | | | | | | | | | | | | | | |
Net interest income | | $ | 22,707 | | $ | 22,658 | | $ | 24,754 | | $ | 22,707 | | $ | 22,658 | | $ | 24,754 | |
Taxable-equivalent adjustment: | | | | | | | | | | | | | | | | | | | |
Loans | | | N/A | | | N/A | | | N/A | | | 3 | | | 3 | | | 3 | |
Securities | | | N/A | | | N/A | | | N/A | | | 371 | | | 387 | | | 569 | |
Net interest income including adjustments | | | 22,707 | | | 22,658 | | | 24,754 | | | 23,081 | | | 23,048 | | | 25,326 | |
Noninterest income | | | 10,695 | | | 6,322 | | | 8,143 | | | 10,695 | | | 6,322 | | | 8,143 | |
Less death benefit related to BOLI | | | 59 | | | - | | | - | | | 59 | | | - | | | - | |
Less securities (losses) gains, net | | | - | | | (24) | | | 986 | | | - | | | (24) | | | 986 | |
Less MSRs mark to market (loss) gain | | | (445) | | | (2,134) | | | (1,137) | | | (445) | | | (2,134) | | | (1,137) | |
Taxable-equivalent adjustment: | | | | | | | | | | | | | | | | | | | |
Change in cash surrender value of BOLI | | | N/A | | | N/A | | | N/A | | | 157 | | | (13) | | | 85 | |
Noninterest income (less) / including adjustments | | | 11,081 | | | 8,480 | | | 8,294 | | | 11,238 | | | 8,467 | | | 8,379 | |
| | | | | | | | | | | | | | | | | | | |
Net interest income including adjustments plus noninterest income (less) / including adjustments | | $ | 33,788 | | $ | 31,138 | | $ | 33,048 | | $ | 34,319 | | $ | 31,515 | | $ | 33,705 | |
Efficiency ratio / Adjusted efficiency ratio | | | 55.13 | % | | 66.28 | % | | 59.78 | % | | 54.28 | % | | 65.48 | % | | 58.62 | % |
17