Slide 1: Old Second Bancorp presentation, August 20, 2008
1 Bill Skoglund Doug Cheatham Chairman, President & CEO Chief Financial Officer 630-906-5483 630-906-5484 August 20, 2008
Slide 2: Forward-looking Statements and Non-GAAP Disclosures
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 • $3.0 Billion in Assets • $2.2 Billion in Loans • $2.4 Billion in Deposits • Wealth Management Group with over $1.2 Billion Under Management: *Rapidly Growing with over $4.6 Million in Revenue *High Margin Business with a 53.8% P
Slide 4: Branch locations map
Plainfield Huntley Monee Manhattan Bolingbrook Crete New Lenox Sugar Grove Frankfort Aurora Naperville Joliet Shorewood Elgin 4
Slide 5: Northeastern Illinois Counties by Population Growth
5 Northeastern Illinois Planning Commission 6 Counties by Population Growth 10.4% 561,507 5,938,248 5,376,741 Cook 10.9% 98,164 1,002,325 904,161 DuPage 73% 189,746 449,823 260,077 McHenry 31% 199,959 844,315 644,356 Lake 71% 288,227 692,346 404,119 Kane 121% 605,512 1,107,778 502,266 Will % Growth
Slide 6: Financial Highlights
6 Financial Highlights Change 2006 2007 +0.01% 0.02% 0.03% Net charge-offs to avg. loans +0.19% 0.13% 0.32% Nonperforming loans / loans +0.84% 15.29% 16.13% Return on equity -0.29% 3.34% 3.05% Net interest margin +8.0% $1.75 $1.89 Diluted earnings per share +1.3% $23,656 $23,972 Net income (Thousand
Slide 7: Year to Date Financial Highlights
7 Year to Date Financial Highlights Change 6/30/07 6/30/08 +0.05% 0.0% 0.05% Net charge-offs to avg. loans +1.08% 0.28% 1.36% Nonperforming loans / loans -1.32% 14.91% 13.59% Return on equity +0.23% 3.09% 3.32% Net interest margin +8.0% $0.88 $0.95 Diluted earnings per share +12.3% $11,474 $12,886 N
Slide 8: 2007/2008 Initiatives
8 2007/2008 Initiatives • Heritage Acquisition • Capital Management • Tender offer (Stock buy-back) • Trust preferred • Joliet/Elgin Expansion • Cost Reductions • Pension • Headcount • Closed 3 branches • Consolidated charters • Centralized operations • Mortgage offices closed, merged into branches
Slide 9: HeritageBanc Year-End Financial Results
9 2006 2007 Percent Change Total Assets $324,150 $348,127 7.4% Total Net Loans $249,328 $283,278 13.6% Total Deposits $280,562 $293,211 4.5% ROE (Bank only-Sub-S Tax Adj.) 15.60% 14.30% ROA Sub-S Tax Adj. 1.22% 1.15% Non-Accrual Loans 0 0 Loans Past Due> 90 Days 50 0 Year-End Financial Results ($ in
Slide 10: Selected Chicago Area Banks as of June 30, 2008
10 Selected Chicago Area Banks as of June 30, 2008 Balance Sheet Profitability (LTM) LTM CO/ NPLs/ EPS Eff. Assets Avg Lns Loans Growth ROE NIM Ratio ($b) (%) (%) (%) (%) (%) (%) AMCORE Financial, Inc. 5.2 0.66 4.43 NM -10.37 3.10 71.94 Corus Bankshares, Inc. 9.0 1.00 18.97 -85.52 3.19 2.33 27.68 Fi
Slide 11: Midwest Banks $1 to $5 billion as of June 30, 2008
11 Midwest Banks $1 to $5 billion as of June 30, 2008 Balance Sheet LTM Profitability LTM CO/ NPLs/ EPS Eff. Assets Avg Lns Loans Growth ROE NIM Ratio ($b) (%) (%) (%) (%) (%) (%) Old Second Bancorp, Inc. 3.0 0.05 1.36 13.95 15.25 3.18 62.97 Average 2.3 0.50 1.91 -10.12 7.26 3.44 63.67 Median 2.1 0.
Slide 12: Loan Mix as of June 30, 2008
12 Loan Mix as of June 30, 2008 (Unaudited) 11.9% 33.6% 23.6% 7.4% 1.8% 21.7% Commercial and Industrial Commercial Real Estate Construction & Development Residential Real Estate 2nd Mortgages and HELOC’s Consumer
Slide 13: Construction and Development Mix
13 Construction and Development Mix Total Loans 78.3% 8.7% 1.2% 0.5% 2.7% 2.2% 21.7% 6.4% Other loan types combined 1-4 Family Spec/Models/Lots 1-4 Family Pre-Sold 1-4 Family Land Hold Commercial Construction Commercial Spec/Lots Commercial Land Hold Construction and Development Loans as of June 30,
Slide 14: Commercial Real Estate Mix
14 Commercial Real Estate Mix Total Loans 66.4% 20.2% 13.4% 33.6% Other loan types combined Owner Occupied Non-Owner Occupied Commercial Real Estate as of June 30, 2008 (Unaudited)
Slide 15: Residential Real Estate Mix
15 Residential Real Estate Mix Total Loans 69.0% 18.1% 5.5% 7.4% 31.0% Other loan types combined 1-4 Family Homes 5 or More Family Homes Second Mortgages Residential Real Estate as of June 30, 2008 (Unaudited)
Slide 16: Net Charge-Offs to Average Loans
16 Net Charge-Offs -0.10% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Q208 OSBC Peer The peer group consists of the Midwest banks of $1 billion to $5 billion. to Average Loans
Slide 17: Non-Performing Loans to Loans
17 Non-Performing Loans 0.00% 0.50% 1.00% 1.50% 2.00% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Q208 OSBC Peer The peer group consists of the Midwest banks of $1 billion to $5 billion. to Loans
Slide 18: Top reasons for High Credit Quality
18 Top 10 reasons for High Credit Quality 1. Good markets. 2. Strong credit culture/experienced lenders. 3. Relationship banking. Not just transactions. 4. Know the customers. 5. Know the markets. What works/what doesn’t. 6. Loan review--recognize problems early. Good workout staff. 7. No subprime/o
Slide 19: Deposit Mix as of June 30, 2008
19 Deposit Mix as of June 30, 2008 13% 5% 13% 24% 27% 18% Noninterest bearing Savings NOW Accounts Money market accounts CD’s less than $100,000 CD’s $100,000 or more
Slide 20: Kane County Deposit Market Share
20 Old Second Kane County 9.77% 10.54% 9.49% 9.70% 11.30% 13.41% 15.98% 5/3 4.11% 8.28% 8.75% 10.14% 17.86% % Mkt 2006 4.14% 1.70% 8.55% 10.54% 18.44% % Mkt 2005 4.37% 1.67% 8.64% 11.61% 17.97% % Mkt 2004 4.81% 1.59% 9.48% 10.59% 17.34% % Mkt 2003 5.00% 1.68% 8.82% 10.49% 17.21% % Mkt 2002 5.52% 1.5
Slide 21: Kendall County Deposit Market Share
21 Old Second Kendall County Deposit Market Share 15.83% 14.52% 14.36% 13.77% 13.38% 12.79% 12.42% Castle 6.48% 7.41% 8.44% 11.95% 33.10% % Mkt 2006 6.15% 7.68% 8.79% 14.27% 33.46% % Mkt 2005 6.06% 7.52% 9.89% 15.49% 32.39% % Mkt 2004 6.69% 7.54% 11.57% 15.93% 30.21% % Mkt 2003 8.09% 7.29% 12.15% 16
Slide 22: Will County Deposit Market Share
22 1.33% 1.06% .76% .66% .45% .36% Heritage** 14.52% 18.71% 18.40% 18.73% 17.31% 18.55% 19.86% 1st MidW .34% 3.18% 4.61% 7.53% 24.98% % Mkt 2006 .13% 2.79% 4.66% 7.44% 27.39% % Mkt 2005 N/A 2.56% 4.36% 7.83% 29.17% % Mkt 2004 N/A 2.41% 4.47% 8.08% 19.63% % Mkt 2003 N/A 2.27% 4.30% 8.54% 21.16% % Mkt
Slide 23: 2008 objectives/main issues
23 • Credit quality • Earnings per share growth and ROE • Growth in loans and deposits • Heritage acquisition • Cost efficiencies • Other 2008 objectives/main issues