Old Second Bancorp Inc. (OSBC, Financial) filed Quarterly Report for the period ended 2010-09-30.
Old Second Bancorp Inc. has a market cap of $26.7 million; its shares were traded at around $1.92 with and P/S ratio of 0.1. OSBC is in the portfolios of Arnold Schneider of Schneider Capital Management, Steven Cohen of SAC Capital Advisors.
Management remains vigilant in assessing asset quality including the loan portfolio quality, estimating loan loss provision and charging-off loans. The Company recorded $11.8 million and $75.7 million provision for loan losses in the third quarter and first nine months of 2010, respectively. This compared to a $9.7 million and $66.6 million provision for loan losses for the same periods in 2009. In response to difficult capital market conditions including higher levels of nonperforming loans in 2010, management remains focused on asset quality and capital preservation as discussed in the below ongoing capital initiatives.
· Make permanent the $250 thousand limit for federal deposit insurance and increase the cash limit of Securities Investor Protection Corporation protection from $100 thousand to $250 thousand and provide unlimited federal deposit insurance until January 1, 2013 for non-interest bearing demand transaction accounts at all insured depository institutions;
The net loss for the third quarter of 2010 was $88,000, or $0.09 loss per diluted share, as compared with $1.5 million in net income, or $0.03 earnings per diluted share, in the third quarter of 2009. The net loss for the first nine months of 2010 was $32.0 million or $2.52 loss per diluted share, as compared to $56.0 million in net loss, or $4.26 of loss per diluted share in the first nine months of 2009. The Company recognized a pre-tax goodwill impairment charge of $57.6 million in the second quarter of 2009, which was partially offset by a $22.0 million tax benefit as described in Notes 2 and 7 of the financial statements included in this quarterly report. The Company recorded a $75.7 million provision for loan losses in the first nine months of 2010, which included an addition of $11.8 million in the third quarter. Net loan charge-offs totaled $72.0 million in the first nine months of 2010, which included $24.6 million of net charge-offs in the third quarter. The provision for loan losses in the first nine months of 2009 was $66.6 million, which included an addition of $9.7 million in the third quarter of 2009. Net loan charge-offs totaled $49.8 million in the first nine months of 2009, which included $26.2 million of net charge-offs in the third quarter of 2009. The net loss available to common stockholders was $1.2 million and $35.4 million, respectively, for the third quarter and first nine months of 2010. This compared to net income available to common shareholders of $351,000 and a net loss of $59.1 million, respectively, for the same periods in 2009.
Net interest income decreased $4.4 million, from $64.9 million in the first nine months of 2009, to $60.5 million in the first nine months of 2010. Average earning assets decreased $413.8 million, or 15.6%, from September 30, 2009 to September 30, 2010, as asset quality remained the focus of management and new loan originations continued to be limited. Year to date average loans decreased $291.3 million, which was primarily due to a lower level of demand from qualified borrowers in the Banks market vicinity combined with charge-off activity. Management also continued to reduce securities available for sale in the third quarter of 2010, which significantly reduced both borrowings and deposits that had previously provided funding for those assets. Management continues to emphasize relationship banking versus attracting or retaining customers with a single transaction focus that have no other demonstrated deposit product or other financial services need. This approach resulted in a decrease in average interest bearing liabilities of $337.9 million, or 14.7%, in the first nine months of 2010 while simultaneously improving capital ratios. The net interest margin (tax-equivalent basis), expressed as a percentage of average earning assets, increased from 3.39% in the first nine months of 2009 to 3.67% in the first nine months of 2010. The average tax-equivalent yield on earning assets decreased from 5.17% in the first nine months of 2009 to 4.90%, or 27 basis points, in the first nine months of 2010. At the same time, however, the cost of funds on interest bearing liabilities decreased from 2.13% to 1.49%, or 64 basis points. The decrease in the level of average earning assets in 2010, principally loans, contributed to decreased interest income as did the higher level of nonaccrual loans. At the same time, the general decrease in interest rates, particularly rates on time certificate of deposits, lowered interest expense to a
Net interest income decreased $1.6 million from $21.0 million in the third quarter of 2009 to $19.5 million in the third quarter of 2010. Consistent with the above trend, average earning assets decreased $393.5, or 15.4%, from $2.55 billion in the third quarter of 2009, to $2.16 billion in the third quarter of September 2010 due in part to the general lack of demand from qualified borrowers. Net charge-offs also decreased average loans, but the pace of this activity decreased by $1.6 million in the same period comparison. Average interest bearing liabilities decreased $306.0 million, or 13.9%, during the same period. The net interest margin (tax-equivalent basis), expressed as a percentage of average earning assets, increased from 3.39% in the third quarter of 2009 to 3.60% in the third quarter of 2010. The average tax-equivalent yield on earning assets decreased from 5.02% in the third quarter of 2009 to 4.78% in the third quarter of 2010, or 24 basis points. The cost of interest-bearing liabilities also decreased from 1.98% to 1.42%, or 56 basis points, in the same period. Consistent with the year to date margin trend, the decrease in earning assets coupled with higher nonaccrual loan levels decreased interest income. At the same time, however, the repricing of interest bearing assets and liabilities in a lower interest rate environment helped to offset that decrease.
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Old Second Bancorp Inc. has a market cap of $26.7 million; its shares were traded at around $1.92 with and P/S ratio of 0.1. OSBC is in the portfolios of Arnold Schneider of Schneider Capital Management, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Weakness continues in the financial system and economy generally and continues to affect real estate market credit costs in the Companys market areas as nonperforming loans increased from $189.7 as of December 31, 2009, to $228.4 million as of September 30, 2010. Despite a higher level of nonperforming loans as compared to the prior year-end, there was incremental improvement in that nonperforming loans decreased $14.5 million, or 6.0%, from June 30, 2010. Likewise, the net loss prior to preferred stock dividends and accretion for the second quarter of 2010 was $23.4 million, whereas the net loss prior to preferred dividends and accretion in the third quarter of 2010 decreased to $88,000. The linked quarter loan loss provision expense decreased from $44.6 million to $11.8 million, respectively, during those same periods. The third quarter net loss available to common shareholders as of September 30, 2010 was $1.2 million. This result compares with net income prior to preferred stock dividends and accretion of $1.5 million and net income available to common shareholders of $351,000 in the third quarter of 2009. The net loss available to common stockholders was $35.4 million in the nine months ended September 30, 2010, and the net loss available to common stockholders was $59.1 million in the first nine months of 2009, which also included a $35.6 million tax affected noncash charge to earnings for goodwill impairment.Management remains vigilant in assessing asset quality including the loan portfolio quality, estimating loan loss provision and charging-off loans. The Company recorded $11.8 million and $75.7 million provision for loan losses in the third quarter and first nine months of 2010, respectively. This compared to a $9.7 million and $66.6 million provision for loan losses for the same periods in 2009. In response to difficult capital market conditions including higher levels of nonperforming loans in 2010, management remains focused on asset quality and capital preservation as discussed in the below ongoing capital initiatives.
· Make permanent the $250 thousand limit for federal deposit insurance and increase the cash limit of Securities Investor Protection Corporation protection from $100 thousand to $250 thousand and provide unlimited federal deposit insurance until January 1, 2013 for non-interest bearing demand transaction accounts at all insured depository institutions;
The net loss for the third quarter of 2010 was $88,000, or $0.09 loss per diluted share, as compared with $1.5 million in net income, or $0.03 earnings per diluted share, in the third quarter of 2009. The net loss for the first nine months of 2010 was $32.0 million or $2.52 loss per diluted share, as compared to $56.0 million in net loss, or $4.26 of loss per diluted share in the first nine months of 2009. The Company recognized a pre-tax goodwill impairment charge of $57.6 million in the second quarter of 2009, which was partially offset by a $22.0 million tax benefit as described in Notes 2 and 7 of the financial statements included in this quarterly report. The Company recorded a $75.7 million provision for loan losses in the first nine months of 2010, which included an addition of $11.8 million in the third quarter. Net loan charge-offs totaled $72.0 million in the first nine months of 2010, which included $24.6 million of net charge-offs in the third quarter. The provision for loan losses in the first nine months of 2009 was $66.6 million, which included an addition of $9.7 million in the third quarter of 2009. Net loan charge-offs totaled $49.8 million in the first nine months of 2009, which included $26.2 million of net charge-offs in the third quarter of 2009. The net loss available to common stockholders was $1.2 million and $35.4 million, respectively, for the third quarter and first nine months of 2010. This compared to net income available to common shareholders of $351,000 and a net loss of $59.1 million, respectively, for the same periods in 2009.
Net interest income decreased $4.4 million, from $64.9 million in the first nine months of 2009, to $60.5 million in the first nine months of 2010. Average earning assets decreased $413.8 million, or 15.6%, from September 30, 2009 to September 30, 2010, as asset quality remained the focus of management and new loan originations continued to be limited. Year to date average loans decreased $291.3 million, which was primarily due to a lower level of demand from qualified borrowers in the Banks market vicinity combined with charge-off activity. Management also continued to reduce securities available for sale in the third quarter of 2010, which significantly reduced both borrowings and deposits that had previously provided funding for those assets. Management continues to emphasize relationship banking versus attracting or retaining customers with a single transaction focus that have no other demonstrated deposit product or other financial services need. This approach resulted in a decrease in average interest bearing liabilities of $337.9 million, or 14.7%, in the first nine months of 2010 while simultaneously improving capital ratios. The net interest margin (tax-equivalent basis), expressed as a percentage of average earning assets, increased from 3.39% in the first nine months of 2009 to 3.67% in the first nine months of 2010. The average tax-equivalent yield on earning assets decreased from 5.17% in the first nine months of 2009 to 4.90%, or 27 basis points, in the first nine months of 2010. At the same time, however, the cost of funds on interest bearing liabilities decreased from 2.13% to 1.49%, or 64 basis points. The decrease in the level of average earning assets in 2010, principally loans, contributed to decreased interest income as did the higher level of nonaccrual loans. At the same time, the general decrease in interest rates, particularly rates on time certificate of deposits, lowered interest expense to a
Net interest income decreased $1.6 million from $21.0 million in the third quarter of 2009 to $19.5 million in the third quarter of 2010. Consistent with the above trend, average earning assets decreased $393.5, or 15.4%, from $2.55 billion in the third quarter of 2009, to $2.16 billion in the third quarter of September 2010 due in part to the general lack of demand from qualified borrowers. Net charge-offs also decreased average loans, but the pace of this activity decreased by $1.6 million in the same period comparison. Average interest bearing liabilities decreased $306.0 million, or 13.9%, during the same period. The net interest margin (tax-equivalent basis), expressed as a percentage of average earning assets, increased from 3.39% in the third quarter of 2009 to 3.60% in the third quarter of 2010. The average tax-equivalent yield on earning assets decreased from 5.02% in the third quarter of 2009 to 4.78% in the third quarter of 2010, or 24 basis points. The cost of interest-bearing liabilities also decreased from 1.98% to 1.42%, or 56 basis points, in the same period. Consistent with the year to date margin trend, the decrease in earning assets coupled with higher nonaccrual loan levels decreased interest income. At the same time, however, the repricing of interest bearing assets and liabilities in a lower interest rate environment helped to offset that decrease.
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