Old Second Reports First Quarter 2017 Net Income of $4.6 Million

AURORA, IL / ACCESSWIRE / April 26, 2017 / Old Second Bancorp, Inc. (the "Company" or "Old Second") (NASDAQ: OSBC), parent company of Old Second National Bank (the "Bank"), today announced financial results for the first quarter of 2017. The Company's net income was $4.6 million, or $0.15 per diluted share, for the first quarter of 2017, as compared to $3.3 million, or $0.11 per diluted share, in the first quarter of 2016.

Operating Results

• On April 18, 2017, the Company's Board of Directors declared a cash dividend of 1 cent per share payable on May 8, 2017, to stockholders of record as of April 28, 2017.
• First quarter 2017 net income was $4.6 million, reflecting an increase of $1.3 million, or 37.6%, from the first quarter of 2016 and a decrease of $446,000, or 8.9%, from the fourth quarter of 2016.
• Net interest and dividend income totaled $17.7 million for the first quarter of 2017 and reflects an increase of $2.5 million, or 16.3%, over the first quarter of 2016. Net interest and dividend income for the first quarter of 2017 reflected an increase of $192,000, or 1.1%, from the $17.5 million recorded in the fourth quarter of 2016. Net interest income continued to be favorably impacted in the first quarter of 2017 due to the Company's acquisition of the Chicago branch of Talmer Bank and Trust, which closed on October 28, 2016. The Talmer branch purchase resulted in an increase to the loan portfolio of approximately $221.0 million. Purchase accounting accretion income realized in the first quarter of 2017 totaled $355,000, as compared to $0 in the first quarter of 2016 and $604,000 in the fourth quarter of 2016.
• No provision for loan and lease losses expense was recorded in the first quarter of 2017 or the first quarter of 2016. Provision for loan and lease losses of $750,000 was recorded in the fourth quarter of 2016, which was the only provision expense recorded in 2016.
• Noninterest income was $7.0 million for the first quarter of 2017, which reflects growth of $753,000, or 12.0%, over the first quarter of 2016, but a decrease of $1.4 million, or 16.6%, as compared to the fourth quarter of 2016. These variances were primarily due to changes in the valuation of mortgage servicing rights.
• Noninterest expense of $18.1 million for the first quarter of 2017 increased $1.8 million, or 11.0%, from the first quarter of 2016, driven by certain one-time costs incurred related to salaries and employee benefits. Noninterest expense was $839,000, or 4.9% higher in the first quarter of 2017 as compared to the fourth quarter of 2016.

Capital Ratios

• The ratios shown above exceed levels required to be considered "well capitalized."

Asset Quality & Earning Assets

• Nonperforming loans ended at $12.5 million at March 31, 2017, compared to $14.0 million at March 31, 2016, and $16.0 million at December 31, 2016. Credit metrics continue to be relatively stable regarding nonperforming loan levels, and management is carefully monitoring loans considered to be in a classified status. Nonperforming loans as a percent of total loans decreased to 0.8% as of March 31, 2017, from 1.1% as of December 31, 2016, and 1.2% as of March 31, 2016.
• OREO assets totaled $13.5 million as of March 31, 2017, which is a reduction compared to $17.7 million at March 31, 2016. OREO assets increased slightly from the December 31, 2016, total of $11.9 million. This increase was largely due to the transfer of one credit from nonaccrual to OREO, as part of the ongoing collection process. Valuation writedowns continued in the first quarter of 2017 with a quarterly expense of $318,000 compared to $451,000 in the first quarter of 2016 and $265,000 in the fourth quarter of 2016. Nonperforming assets as a percent of total loans plus OREO decreased to 1.7% as of March 31, 2017, as compared to 2.8% as of March 31, 2016, and 1.9% as of December 31, 2016.
• Total loans at March 31, 2017, were $1.49 billion, reflecting an increase of $349.2 million when compared to March 31, 2016; this growth was driven primarily by the $221.0 million acquired with the Talmer branch purchase, and additional organic portfolio growth of $128.2 million, primarily in the commercial loan portfolio. Average loans (including loans held-for-sale) for the first quarter of 2017 were $1.49 billion, reflecting an increase of $345.3 million from the first quarter of 2016 and an increase of $96.7 million when compared to the fourth quarter of 2016.
• As of March 31, 2017, available-for-sale securities at fair value totaled $611.1 million, as compared to $531.8 million at December 31, 2016, and $500.9 million at March 31, 2016. The securities portfolio changed significantly during 2016, as all securities were moved to an available for sale status in the second quarter of 2016, which allowed the sale of investments to acquire funds used for the Talmer branch acquisition in the fourth quarter of 2016. Net losses of $136,000 pretax on the sale of securities were realized for the first quarter of 2017, as compared to net losses of $61,000 in the first quarter of 2016, and $193,000 in the fourth quarter of 2016.

Non-GAAP Presentations:

Management has historically disclosed certain non-GAAP ratios to evaluate and measure the Company's performance, including a net interest margin calculation. The net interest margin is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Management believes this measure provides investors with information regarding balance sheet profitability.

Forward-Looking Statements:

This report may contain forward-looking statements. Forward-looking statements are identifiable by the inclusion of such qualifications as expects, intends, believes, may, likely or other indications that the particular statements are not based upon facts but are rather based upon the Company's beliefs as of the date of this release. Actual events and results may differ significantly from those described in such forward-looking statements, due to changes in the economy, interest rates or other factors and therefore the reader should not place undue reliance on such forward-looking statements. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. For additional information concerning the Company and its business, including other factors that could materially affect the Company's financial results or cause actual results to differ substantially from those discussed or implied in forward-looking statements contained in this release, please review our filings with the Securities and Exchange Commission.

Conference Call

The Company will host an earnings call on Thursday, April 27, 2017, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Investors may listen to the Company's earnings call via telephone by dialing 877-407-8035. Investors should call into the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.

A replay of the earnings call will be available until 11:59 p.m. Eastern Time (10:59 p.m. Central Time) on May 4, 2017, by dialing 877-481-4010, using Conference ID: 10298.

Contact:

James L. Eccher
President, Chief Executive Officer
(630) 966-2433

SOURCE: Old Second Bancorp, Inc.

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