Slide 1: Old Second Bancorp
1 Old Second Bancorp Bill Skoglund Chairman 630-906-5483 James Eccher COO 630-966-2425 Doug Cheatham CFO 630-906-5484 NASDAQ; OSBC
Slide 2: Forward-looking statements
2 Forward-looking statements In addition to historical information, this presentation contains forward-looking statements, which are subject to certain risks and uncertainties. Forward-looking statements include information concerning possible or assumed future results of Old Second’s operations. Fo
Slide 3: Profile
3 Profile Established in 1871 and Headquartered in Aurora, Illinois Deposit Market Share Leader in Kane and Kendall Counties (Illinois) $1.94 Billion in Assets $1.37 Billion in Loans $1.74 Billion in Deposits Wealth Management Group manages over $1 Billion in assets 28 Locations 82 ATM Locations
Slide 4: Branch Footprint
Branch Footprint =) Chicago
Slide 5: Performance Summary
5 Performance Summary (Dollars in Thousands, Except Per Share Data) 2011 2010 2009 Assets $1,941,418 $2,123,921 $2,596,657 Loans $1,368,985 $1,690,129 $2,062,826 Deposits $1,740,781 $1,908,528 $2,206,277 Provision for loan losses $8,887 $89,668 $96,715 Net interest margin 3.54% 3.64% 3.47% Net incom
Slide 6: Noninterest Expenses
6 Noninterest Expenses * Excludes goodwill impairment. $87 $101 $98 $78 $74 $73 $ - $20 $40 $60 $80 $100 $120 2009* 2010 2011 Millions Noninterest Expenses Excluding OREO
Slide 7: Employee Costs
7 Employee Costs 618 492 0 100 200 300 400 500 600 700 2008 2011 Number of Employees (FTE)
Slide 8: Core Earnings (Pre-tax, Pre-Credit Costs)
8 Core Earnings (Pre-tax, Pre-Credit Costs) (Dollars in Thousands) Net income available to common shareholders ($11,228) Provision for loan losses $8,887 OREO expense, net of OREO income $19,410 Legal fees (primarily credit related) $4,118 Core earnings $21,187
Slide 9: Capital Ratios Old Second Bancorp, Inc.
9 Capital Ratios Old Second Bancorp, Inc. 12/31/08 12/31/09 12/31/10 12/31/11 Total risk based capital 10.76% 13.26% 11.46% 12.38% Tier 1 risk-based capital 7.66% 9.96% 6.09% 6.21% Leverage capital 6.50% 8.48% 4.74% 4.98% Tangible capital 4.33% 7.36% 3.70% 3.58% Tangible common equity 4.33% 4.69% 0.
Slide 10: Capital Ratios Old Second National Bank
10 Capital Ratios Old Second National Bank 12/31/08 12/31/09 12/31/10 12/31/11 Total risk based capital 11.54% 11.57% 11.63% 12.97% Tier 1 risk-based capital 10.29% 10.30% 10.34% 11.70% Leverage capital 8.72% 8.89% 8.10% 9.34% Tangible capital 8.47% 9.66% 8.65% 9.18% See non-GAAP disclosures contain
Slide 11: Liquidity as of December 31, 2011
11 Liquidity as of December 31, 2011 (In Thousands) Total Availability Used or Pledged Unused Capacity Overnight funds $45,224 $0 $45,224 Federal Home Loan Bank of Chicago 48,436 3,052 45,384 Federal Reserve Secured Borrowing 186,690 0 186,690 Securities Portfolio 321,664 91,515 230,149 Total $602,0
Slide 12: Loan Portfolio Mix
12 Loan Portfolio Mix (In Millions) 2010 2011 Commercial & Industrial $ 174 $ 100 Real Estate - Commercial 821 705 Real Estate - Construction 129 71 Real Estate - Residential 558 477 Other 8 16 $ 1,690 $ 1,369 Commercial & Industrial 10% RE Commercial 48% RE Construction 8% RE Residential 33% Other
Slide 13: Nonperforming Assets
13 Nonperforming Assets $0 $50 $100 $150 $200 $250 $300 $350 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Millions Nonperforming Assets Nonperforming Loans
Slide 14: Commercial Real Estate Composition
14 Commercial Real Estate Composition As of December 31, 2011 % of CRE Portfolio % of Segment NPL 30-89 Owner Occupied 51% 9% 0.28% Non-Owner Occupied 40% 7% 0.17% Strip Malls 9% 27% 0.0% Average Loan Size is approximately $200,000 Less than 4% of it is located in areas outside of NE Illinois Primar
Slide 15: Commercial Real Estate Total Portfolio/Nonperforming/Charge-Offs
15 Commercial Real Estate Total Portfolio/Nonperforming/Charge-Offs
Slide 16: Credit Quality Summary
16 Credit Quality Summary Problems concentrated primarily in special purpose CRE and Retail Strip C&D Exposure declining rapidly Classified assets reduced by 40% in 2011 Valuations stabilizing/increasing in multi-family and industrial CRE BID/ASK spreads on distressed assets narrowing Substantially
Slide 17: Deposits 2010 vs 2011
17 2010 $1,908,528 Deposits 2011 $1,740,781 Difference: 2011 from 2010 (in millions) % Change Noninterest Bearing 31.1 9.4% Savings/NOW/MMA (20.8) -2.7% CDs (149.9) -19.6% Brokered CDs (28.2) -96.8 Net (167.8) -8.8% 42% 17% 41% 35% 21% 44% Non Interest Bearing Savings/NOW/MMA CDs
Slide 18: All Households Length of Relationship
18 All Households Length of Relationship
Slide 19: Deposit Market Share
19 Deposit Market Share KANE COUNTY 2011 Rank Institution 2011 Total Deposits in Markets ($000) 2011 Total Market Share (%) 1 Old Second 1,225,102 14.42 2 JP Morgan Chase 1,002,918 11.80 3 Harris (BMO Financial) 927,224 10.91 4 Fifth Third 649,049 7.64 KENDALL COUNTY 2011 Rank Institution 2011 Total
Slide 20: Residential Banking Highlights
20 Residential Banking Highlights 2011 Mortgage Banking Income of $6.2 million Closed $235 million in first mortgages Increased Market Share in Kane County from 3.31% to 4.48% ranked #3 Increased Market Share in Kendall County from 2.97% to 3.43% ranked #4 Increased Market Share in DeKalb County fro
Slide 21: Wealth Management Highlights
21 Wealth Management Highlights 2011 Over $1 Billion under management Pre-Tax income up 7% over last two years Pre-Tax gross profit margin remains high at 49% One of the largest Wealth Management groups in Western Suburbs of Chicago
Slide 22: Main Goals in 2011: 1. Increase Capital Ratios
22 4 Main Goals in 2011 1. Increase Capital Ratios Achieved regulatory Current Ratios Required Total 12.97% 11.25% Leverage 9.34% 8.75%
Slide 23: Main Goals in 2011: 2. Reduce nonperforming & problem loans
23 4 Main Goals in 2011 2. Reduce nonperforming & problem loans 2011 2010 Difference Non-accruals 127 212 (85) Problem loans accruing 106 178 (72) 233 390 (157) Total problems down over 40% OREO: $93 million
Slide 24: Main Goals in 2011: 3. Maintain/Improve Liquidity
24 4 Main Goals in 2011 3. Maintain/Improve Liquidity Limited borrowings Very small amount brokered or non-core accounts Securities up from $149 million to $308 million
Slide 25: Main Goals in 2011: 4. Return to profitability
25 4 Main Goals in 2011 4. Return to profitability Nominal profit at Bank Bancorp net income » $113 million loss in 2010 » $11 million loss in 2011
Slide 26: Main Goals in 2012: 1. Reduce problem loans further
26 4 Main Goals in 2012 1. Reduce problem loans further New workout section fully staffed Not as many new problems Values stabilizing in some types of real estate More potential buyers
Slide 27: Main Goals in 2012: 2. Start growing loans/deposits
27 4 Main Goals in 2012 2. Start growing loans/deposits Loans down 19% in 2011 Capital preservation strategy New capital stabilization strategy Problems moved away from lenders Economy slowly improving
Slide 28: Main Goals in 2012: 3. Consistent profitability
28 4 Main Goals in 2012 3. Consistent profitability 2011 expenses need to be reduced OREO $24 million Allowance of Loan Losses $8.9 million Bank Insurance $3.3 million Legal $4.1 million TOTAL $40 million Watch expenses; Grow fee income; Sources like mortgage, wealth management, and other potential
Slide 29: Main Goals in 2012: 4. Maintain and grow capital
29 4 Main Goals in 2012 4. Maintain and grow capital Continue to exceed regulatory capital thresholds DTA recovery possible with lower problems, consistent profitability Additional capital when available and less dilutive
Slide 30: Appendix: Non-GAAP Disclosures
30 Appendix: Non-GAAP Disclosures This presentation contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). These measures include net interest margin on a fully tax equivalent basis;
Slide 31: Appendix: Non-GAAP Disclosures
31 Appendix: Non-GAAP Disclosures The following table presents a reconciliation of total stockholders equity to tangible stockholders equity (in thousands): Tangible common equity December 31, 2009 December 31, 2010 December 31, 2011 Total stockholder's equity as reported $ 197,208 $ 83,958 $ 74,002