Old Second Bancorp, Inc. · NASDAQ:OSBC
Old Second Bancorp — Investor Presentation (May 2015)
31 slides from Old Second Bancorp's investor presentation, May 12, 2015
Slide 1: Old Second Bancorp, Inc. Investor Presentation May 2015
Old Second Bancorp, Inc. Investor Presentation May 2015
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements In addition to historical information, this presentation contains forward-looking statements, which are subject to certain risk and uncertainties. Forward-looking statements include information concerning possible or assumed future results of Old
Slide 3: Corporate Overview
Old Second Corporate Overview
Slide 4: Corporate Profile
Established in 1871 and headquartered in Aurora, IL Deposit market share leader in Aurora Community; #2 in Kendall County and in Kane County $2.1 billion in assets $1.2 billion in gross loans $1.7 billion in deposits 25 locations Corporate Profile Source: SNL Financial, Management and Company filing
Slide 5: Recent Achievements
Continued reduction problem loans & assets without bulk sales Improved net interest margin, efficiency and expense control Fiscal 2014 reflected year over year net loan growth Sustained improvement in deposit mix driven by customer loyalty Demonstrated ability to dividend from the Bank to continue T
Slide 6: Positive Operating Momentum
Positive Operating Momentum
Slide 7: Commercial Loan Originations
Commercial Loan Originations Balance sheet stability allows renewed focus on new loan relationship generation Hired 8 new lenders in the past 2 years to bolster new business generation efforts Recently hired a very experienced Chief Credit Officer Source: Management. Total Commercial Loan Originatio
Slide 8: Loan Growth Returning
Loan Growth Returning 2014 capital raise provided catalyst for return to organic loan growth C&I and CRE balances grew approximately 26% and 7%, respectively in 2014 Q1 2015 reflected year over year loan growth of 3.5% Source: Company filings. Excludes loans held for sale. (1) Includes: Consumer, Ov
Slide 9: Cost of Deposits
Cost of Deposits Long term customer relationship focus drives strong core deposit base Strong local market position provides pricing power Cost of deposits of less than 25 bps Cost of Deposits (%) Source: Company filings. Deposit Composition Trends ($M) 2.40% 1.67% 1.08% 0.89% 0.57% 0.45% 0.31% 0.23
Slide 10: Classified Loans by Loan Type
Classified Loans by Loan Type (1) Source: Company filings. Classified loans are defined as loans rated substandard or worse, which closely reflects our regulator’s definition. Bank subsidiary level. Classified Asset Trends Classified Assets / Tier 1 Capital + Reserves (2) 132% 27% 0% 20% 40% 60% 80%
Slide 11: Recent Balance Sheet Trends
Capital levels and continued credit improvement allow for a return to consistent loan growth and the opportunity for continued TARP repurchases Source: Company filings. Note: Net Loans includes loans held for sale. Recent Balance Sheet Trends 14.3% 14.7% 15.2% 15.2% 15.2% 17.7% 17.6% 17.7% 17.3% $1,
Slide 12: Net Interest Margin
Net Interest Margin Source: Company filings. Note: AEA = “Average Earning Assets”. 3.13% 3.19% 3.26% 3.79% 3.76% 3.71% 0.70% 0.61% 0.50% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Q1 2014 2014Y Q1 2015 Net Interest Margin Yield on Earning Assets Cost of Funds/AEA
Slide 13: Continued Success in Controlling Noninterest Expense
Continued Success in Controlling Noninterest Expense Source: Company filings. Note: OREO expense (net) equals OREO expense less lease revenue from OREO and net gain on sale of OREO. $69 $63 Q1 15 annualized $98 $93 $90 $83 $74 $18 $17 $74 $73 $72 $72 $67 $17 $16 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $
Slide 14: Core Earnings Improvement
Core Earnings Improvement Revenue Drivers Maintain loan growth & NIM momentum Fee income streams Expense Reduction Drivers Reduced FDIC insurance expense Bank insurance premiums Legacy credit costs OREO maintenance expense and reduced valuation adjustments Branch rationalization Balance sheet growth
Slide 15: Performance Summary
2014 Pre-tax income improvement of 34% over 2013 driven by both margin and expense control Net interest margin improvement continues NPAs continued to decline; strengthened reserve position Capital position bolstered through Q2 2014 common equity raise Positioned for continued TARP redemptions over
Slide 16: Loan Portfolio Update
Old Second Loan Portfolio Update
Slide 17: Loan Portfolio Mix
(Dollars in Thousands) March 31, 2015 CRE: Owner Occupied $ 307,646 26.7% CRE: Non-Owner Occupied & Other 300,621 26.1% R.E. – Residential 363,967 31.6% Commercial 114,241 9.9% R.E. – Construction 39,430 3.4% Consumer & Other 25,164 2.2% Gross Loans $1,151,069 Source: Company filings. Loan Portfolio
Slide 18: Nonperforming Asset Trends
Nonperforming Asset Trends Nonperforming Loans by Type (1) Source: Company filings. Nonperforming loans include nonaccrual loans, loans 90+ days past due and still accruing and accruing TDRs. Other Real Estate Owned $102 $35 $0 $20 $40 $60 $80 $100 $120 In Millions
Slide 19: Significant Credit Cost Improvement
Significant Credit Cost Improvement Provision & OREO Expense ($M) Net Charge-offs ($M) Source: Company filings. Note: OREO expense (net) equals OREO expense less lease revenue from OREO and net gain on sale of OREO. $89.7 $8.9 $6.3 ($8.6) ($3.3) $0.0 $24.0 $19.4 $18.7 $10.7 $6.9 $1.4 ($20.0) $0.0 $2
Slide 20: Allowance for Loan Losses & Nonperforming Loans
Allowance for Loan Losses & Nonperforming Loans ($M) (1) Source: Company filings. Nonperforming loans include nonaccrual loans, loans 90+ days past due and still accruing and accruing TDRs. NPL Coverage Trends
Slide 21: Summary
Old Second Summary
Slide 22: 2015 Objectives
Generate moderate loan growth Improve efficiency Accelerate core profitability improvement Increase fee income streams Continue TARP repurchase transactions Remain focused on credit remediation 2015 Objectives
Slide 23: Investment Highlights
Right size community banking franchise Strong market share in premier Chicagoland markets Attractive, long-term core deposit franchise Strong, profitable Wealth Management Group with >$1 billion in assets under management Greatly improved credit metrics Increased loan production and continued loan g
Slide 24: Appendix
Old Second Appendix
Slide 25: Consolidated Capital Ratios
Consolidated Capital Ratios Leverage Ratio (%) Total Risk-based Capital Ratio (%) Tier 1 Risk-based Capital Ratio (%) Tangible Common Equity / Tangible Assets (%) Source: Company filings. 9.82% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 17.3% 0.0% 5.0% 10.0% 15.0% 20.0
Slide 26: Bank Capital Ratios
Source: Company filings. Leverage Ratio (%) Total Risk-based Capital Ratio (%) Tier 1 Risk-based Capital Ratio (%) Tangible Common Equity / Tangible Assets (%) Bank Capital Ratios 16.9% 0.0% 5.0% 10.0% 15.0% 20.0% Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 18.2% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% Q4 12 Q2 13 Q4 13
Slide 27: Diverse Revenue Streams
$29M $34M $31M $26M Total Fee Revenues: 31.1% 36.4% 36.0% 31.4% % of Total Revenues: Source: Company filings. Note: Fee revenue equals total noninterest income less securities gains/losses, increase in cash surrender value of BOLI, death benefit realized on BOLI and litigation and other non-recurrin
Slide 28: Footprint Demographics
Aurora, IL is the second largest city in Illinois, outside of Chicago Strong demographics and household income metrics, with unemployment rates below average for the Chicago MSA Market growth expected to continue to outpace local averages Counties of Operation Population Change: 2010–2015 Median HH
Slide 29: Strong Long Term Customer Relationships
All Deposit Households – Length of Relationship Source: Management. Strong Long Term Customer Relationships 6.0% 8.5% 9.4% 16.0% 60.1% Less than 1 yr 1-2 yrs 3-5 yrs 6-9 yrs 10+ yrs
Slide 30: Non-GAAP Financial Measures
Source: Company filings. Non-GAAP Financial Measures As of and for the As of and for the Year Ended Quarter Ended December 31, March 31, ($ in thousands, except per share data) 2012 2013 2014 2014 2015 Tier 1 capital Total equity 72,552 $ 147,692 $ 194,163 $ 149,488 $ 181,840 $ Tier 1 adjustments Tr
Slide 31: Non-GAAP Financial Measures
Source: Company filings. Non-GAAP Financial Measures As of and for the As of and for the Year Ended Quarter Ended December 31, March 31, ($ in thousands, except per share data) 2012 2013 2014 2014 2015 Tier 1 common equity Tangible common equity (2,593) $ 73,573 $ 146,832 $ 75,832 $ 150,287 $ Tier 1
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