Old Second Bancorp, Inc. · NASDAQ:OSBC
Old Second Bancorp — Shareholder Meeting (April 2008)
56 slides from Old Second Bancorp's shareholder meeting presentation, Apr 15, 2008
Slide 1: Welcome to the Old Second Bancorp, Inc. 2008 Annual Meeting
Welcome to the Old Second Bancorp, Inc. 2008 Annual Meeting
Slide 2: Call to order
Call to order
Slide 3: Senior management contacts
William B. Skoglund J. Douglas Cheatham Chairman, President & CEO Chief Financial Officer Old Second Bancorp, Inc. Old Second Bancorp, Inc. 630-906-5483 630-906-5484 James L. Eccher Stewart Beach Chief Operating Officer/ Exec. VP Wealth Management President & CEO Old Second National Bank Old Second
Slide 4: Introduction of Directors/Others
Introduction of Directors/Others
Slide 5: Bancorp Board Members
Bancorp Board Members William B. Skoglund J. Douglas Cheatham James L. Eccher Edward Bonifas Marvin Fagel Barry Finn William Kane Mary Krasner John Ladowicz Kenneth Lindgren D. Chet McKee William Meyer Gerald Palmer James Schmitz
Slide 6: Special thanks to retiring Board Members
Special thanks to retiring Board Members Jesse Maberry Walter Alexander
Slide 7: Appointed Proxies for Management
Appointed Proxies for Management James Benson Jesse Maberry Townsend L. Way, Jr.
Slide 8: Quorum Represented/Notice of Meeting; Inspectors of Election
Quorum Represented/Notice of Meeting Inspectors of Election Robin Hodgson Gayle Copenhaver D. Chet McKee
Slide 9: Minutes-2007 Annual Meeting
Minutes-2007 Annual Meeting
Slide 10: Election of Directors
Election of Directors Marvin Fagel Barry Finn William Kane John Ladowicz Kenneth Lindgren
Slide 11: Approve the 2008 Equity Incentive Plan
Approve the adoption of the Old Second Bancorp, Inc. 2008 Equity Incentive Plan
Slide 12: Ratification/Approval of Grant Thornton, LLP
Ratification/Approval of Grant Thornton, LLP
Slide 13: Forward-looking Statements
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. Forw
Slide 14: Economic Report Stewart Beach
Economic Report Stewart Beach
Slide 15: Real Gross Domestic Product
Real Gross Domestic Product -2 -1 0 1 2 3 4 5 6 7 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Bureau of Economic Analysis
Slide 16: Housing Starts
Housing Starts 50 Years Ending February 2008 Housing Starts Beginning Date Ending Date Duration Years Percent Change 1 4/1958 3/1959 0.92 46.75% 2 3/1959 2/1961 1.92 -29.77% 3 2/1961 10/1963 2.67 49.22% 4 10/1963 12/1966 3.17 -46.07% 5 12/1966 3/1969 2.25 80.21% 6 3/1969 1/1970 0.83 -27.69% 7 1/1970
Slide 17: Home Sales - Existing & New
Home Sales - Existing & New 25 Years Ending February 2008 Existing Home Sales Beginning Date Ending Date Duration Years Percent Change 1 2/1983 4/1984 1.17 23.05% 2 4/1984 10/1984 0.50 -11.37% 3 10/1984 12/1986 2.17 46.79% 4 12/1986 12/1990 4.00 -28.02% 5 5/1991 11/1991 0.50 -12.29% 6 11/1991 12/199
Slide 18: Labor Market
LABOR MARKET -100 0 100 200 300 400 3/31/2005 9/30/2005 3/31/2006 9/30/2006 3/31/2007 9/30/2007 4.0 4.2 4.4 4.6 4.8 5.0 5.2 5.4 Jobs Added Unemployment Rate Labor Market
Slide 19: Consumer Price Index
CONSUMER PRICE INDEX CPI and Core CPI - % YOY Headline - 4.3 Core - 2.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 3/31/2003 9/30/2003 3/31/2004 9/30/2004 3/31/2005 9/30/2005 3/31/2006 9/30/2006 3/31/2007 9/30/2007 Consumer Price Index Headline CPI Core CPI
Slide 20: Commodities
Commodities OIL SPOT PRICE - WEST TEXAS INTERMEDIATE 120 110 100 90 80 70 60 50 40 30 20 3/31/2003 1/30/2004 11/30/2004 9/30/2005 7/31/2006 5/01/2007 COPPER SPOT PRICE 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 3/31/2003 1/30/2004 11/30/2004 9/30/2005 7/31/2006 5/31/2007 GOLD SPOT PRICE 200 300
Slide 21: The Strength of the U.S. Dollar
The Strength of the U.S. Dollar 8 Years Ending February 2008 U.S. Dollars Per Euro Beginning Date Ending Date Duration Years Percent Change 1 2/2000 5/2001 1.25 -12.56% 2 5/2001 9/2001 0.33 7.62% 3 9/2001 12/2001 0.25 -7.99% 4 12/2001 5/2003 1.42 40.54% 5 5/2003 8/2003 0.25 -6.63% 6 8/2003 12/2004 1
Slide 22: U.S. Government Yield Curves
U.S. Government Yield Curves The Last Twelve Months 5.2% 5.0% 4.8% 4.6% 4.4% 4.2% 4.0% 3.8% 3.6% 3.4% 3.2% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% 1.8% 5.2% 5.0% 4.8% 4.6% 4.4% 4.2% 4.0% 3.8% 3.6% 3.4% 3.2% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% 1.8% March 2007 April 2007 May 2007 June 2007 July 2007 August 2007 Sept.
Slide 23: Credit Spreads (Ten Year Maturities)
CREDIT SPREADS (TEN YEAR MATURITIES) - % 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3/31/2003 1/30/2004 11/30/2004 9/30/2005 7/31/2006 5/31/2007 AAA AA A BBB Credit Spreads
Slide 24: 2008 Outlook
1 2008 Outlook • Yield curve to remain steep in ‘08 Fed Funds will decrease from 2.25 to 1.75%. Prime from 5.25% to 4.75% 10 year Treasury range ? S&P 500 Flat, give or take • Oil to average over $100.00 a barrel • GDP flat (first 2 quarters negative)
Slide 25: Management Reports Doug Cheatham
Management Reports Doug Cheatham
Slide 26: America's Most Trustworthy Bank
America’s Most Trustworthy Bank Forbes.com Special Report - March 27, 2008 America’s Most Trustworthy Companies • Old Second Bancorp is the highest rated bank. • Analysis was performed by Audit Integrity, Inc. • The study ranks accounting and corporate governance of public companies. • Highly-rated
Slide 27: Financial Highlights
2 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% $23.7 $24.0 Net income* 2.5% $2,063 $2
Slide 28: Loan Mix
Loan Mix 14% 12% 5% 35% 6% 10% 1% 17% Commercial & Industrial Commercial Real Estate Residential Construction Other Constr. and Development Residential - Owner Occupied Residential - Other Home Equity Lines Consumer 5% 34% 4% 10% 15% 1% 14% 17% 2006 2007 as of period-end
Slide 29: Net Charge-Offs
Net Charge-Offs -0.05% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 OSBC Peer The peer group consists of the Midwest banks of $1 billion to $5 billion. to Average Loans
Slide 30: Non-Performing Loans
Non-Performing Loans 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 OSBC Peer The peer group consists of the Midwest banks of $1 billion to $5 billion. to Loans
Slide 31: Deposit Mix
Deposit Mix 14% 22% 19% 28% 12% 5% Noninterest-bearing Savings NOW Accounts Money Market CD’s less than $100,000 CD’s $100,000 or more 13% 27% 19% 12% 24% 5% 2006 2007 as of period-end
Slide 32: 2007 Initiatives
2007 Initiatives • Heritage Acquisition • Capital Management • Tender offer (Stock buy-back) • Trust preferred • Joliet/Elgin Expansion • Cost Reductions • Pension • Headcount • Closed 3 branches • Consolidated charters • Centralized operations • Mortgage offices closed, merged into branches • New t
Slide 33: Management Reports Jim Eccher
Management Reports Jim Eccher
Slide 34: Year-End Financial Results (HeritageBanc)
3 2006 2007 Percent Change Total Assets 324,150 348,127 7.4% Total Net Loans 249,328 283,278 13.6% Total Deposits 280,562 293,211 4.5% ROE (Bank only-Sub-S Tax Adj.) 15.60% 14.30% ROA Sub-S Tax Adj. 1.22% 1.15% Non-Accrual Loans 0 0 Loans Past Due> 90 Days 50 0 Year-End Financial Results ($ in Thous
Slide 35: Branch locations map
4 New Lenox Frankfort Aurora Chicago Heights Mokena Future site Construction in progress
Slide 36: 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 37: Municipalities Expected to Gain the Most
Municipalities Expected to Gain the Most 30,712 Shorewood 30,928 Joliet (Will) 31,440 Crete 32,227 Bolingbrook 36,420 Manhattan 38,705 Huntley 39,738 Naperville 44,880 Monee 48,017 Aurora (excl. Kendall) 52,706 Plainfield (Will) 56,827 Frankfort 58,833 Sugar Grove 67,929 Elgin 83,954 New Lenox 364,8
Slide 38: Branch map of expansion markets
6 Plainfield Huntley Monee Manhattan Bolingbrook Crete New Lenox Sugar Grove Frankfort Aurora Naperville Joliet Shorewood Elgin Future site Construction in progress
Slide 39: Kane County Deposit Market Share
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% 1.55%
Slide 40: Kendall County Deposit Market Share
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% 16.38
Slide 41: Will County Deposit Market Share
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 20
Slide 42: Management Reports Bill Skoglund
Management Reports Bill Skoglund
Slide 43: Selected Chicago Area Banks
7 Selected Chicago Area Banks as of 12/31/07 Balance Sheet Market Profitability LTM CO/ NPLs/ Total Return EPS Eff. Assets Avg Lns Loans 1 Year 3 Year 5 Year Growth ROE NIM Ratio Company Name ($b) (%) (%) (%) (%) (%) (%) (%) (%) (%) AMCORE Financial, Inc. 5.2 0.42 NA -39.0 -26.9 11.1 -35.60 7.32 3.3
Slide 44: Midwest Banks $1 to $5 billion
Midwest Banks $1 to $5 billion as of 12/31/07 Balance Sheet Market Profitability LTM CO/ NPLs/ Total Return EPS Eff. Assets Avg Lns Loans 1 Year 3 Year 5 Year Growth ROE NIM Ratio ($b) (%) (%) (%) (%) (%) (%) (%) (%) (%) Old Second Bancorp, Inc. 2.7 0.03 0.28 -5.8 -16.2 62.6 8.00 16.13 3.05 64.49 Av
Slide 45: Stock Comparison
Stock Comparison 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 OSBC Nasdaq Banks S&P 500 61.54% 49.76% 21.72%
Slide 46: Stock Comparison
8 Stock Comparison -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep -07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 OSBC Nasdaq Banks S&P 500 -0.91% -22.45% -7.44%
Slide 47: 2008 objectives/main issues
2008 objectives/main issues • Credit quality • Earnings per share growth and ROE • Growth in loans and deposits • Heritage acquisition • Cost efficiencies • Other
Slide 48: Net Charge-Offs
Net Charge-Offs The peer group consists of the Midwest banks of $1 billion to $5 billion. to Average Loans -0.05% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 OSBC Peer
Slide 49: Top reasons
9 Top 10 reasons 1. Good markets. 2. Strong credit culture/experienced lenders. 3. Relationship banking. Not just transactions. 4. Know customers. 5. Know markets. What works/what doesn’t. 6. Loan review--recognize problems early. Good workout staff. 7. No subprime/option ARMs, other exotic products
Slide 50: 2008 objectives/main issues
2008 objectives/main issues • Credit quality • Earnings per share growth and ROE • Growth in loans and deposits • Heritage acquisition • Cost efficiencies • Other
Slide 51: Earnings per share growth and Return on Equity
Earnings per share growth and Return on Equity • Last yr. EPS +8%. ROE 16.13% • All cost cuttings not fully in place in 2007 • Heritage needs to be accretive • Margin should improve • Net charge-offs should be manageable
Slide 52: 2008 objectives/main issues
2008 objectives/main issues • Credit quality • Earnings per share growth and ROE • Growth in loans and deposits • Heritage acquisition • Cost efficiencies • Other
Slide 53: 2008 objectives/main issues
2008 objectives/main issues • Credit quality • Earnings per share growth and ROE • Growth in loans and deposits • Heritage acquisition • Cost efficiencies • Other
Slide 54: 2008 objectives/main issues
2008 objectives/main issues • Credit quality • Earnings per share growth and ROE • Growth in loans and deposits • Heritage acquisition • Cost efficiencies • Other
Slide 55: 2008 objectives/main issues
2008 objectives/main issues • Credit quality • Earnings per share growth and ROE • Growth in loans and deposits • Heritage acquisition • Cost efficiencies • Other
Slide 56: Questions
Questions
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