Old Second Bancorp, Inc. · NASDAQ:OSBC
Old Second Bancorp — Keefe, Bruyette & Woods Community Bank Investor Conference 2023
21 slides from Old Second Bancorp's conference presentation, Aug 8, 2023
Slide 1: Keefe, Bruyette & Woods Community Bank Investor Conference
Keefe, Bruyette & Woods Community Bank Investor Conference August 8-9, 2023 James Eccher Chairman, President & CEO Bradley Adams EVP, Chief Financial Officer
Slide 2: Forward-Looking Statements
PAGE 2 Forward-Looking Statements CAUTIONARY NOTE REGARDING FORWARD‐LOOKING STATEMENTS This presentation and other publicly available documents of the Company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including, but not limited to, managem
Slide 3: Forward-Looking Statements (continued)
PAGE 3 Forward-Looking Statements (continued) • adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors and those vendors performing a service on the Company’s behalf; • the impact of any claims
Slide 4: Creating the Leading Community Bank in Chicago
PAGE 4 Creating the Leading Community Bank in Chicago Chicago MSA Footprint as of 06/30/2023 Enhanced Scale In Attractive Markets $5.9B $4.0B $4.7B Assets Gross Loans Deposits Improved Profitability & Operating Efficiency 1.68% 25.41% 0.19% Return on Return on Cost of Tangible Common Assets Deposits
Slide 5: Historical Financial Highlights
PAGE 5 Historical Financial Highlights Deposit Composition Q2-2023 YTD June 2019 2020 2021 2022 2023 CD’s 10% Total Assets ($000) 2,635,545 3,040,837 6,212,189 5,888,317 5,883,942 Total Net Loans ($000) 1,911,023 2,000,996 3,376,523 3,820,129 3,960,211 NOW 12% Non Total Deposits ($000) 2,126,749 2,5
Slide 6: Top Tier Community Bank Franchise
PAGE 6 Top Tier Community Bank Franchise Premier Deposit Franchise YTD Cost of Deposits Deposit Beta(1) Uninsured Deposits(2) Retail Deposits(3) 0.19% 2.1% 16.0% 63.4% 97th Percentile 98th Percentile 74th Percentile 86th Percentile Well-Positioned Balance Sheet Strong Financial Performance Loans / D
Slide 7: Transformation with Higher Interest Rates
PAGE 7 Transformation with Higher Interest Rates Financial Performance Since Q2’21(1) Strategic Actions 68% • Disciplined interest rate risk management avoiding excess Change in (5%) duration at trough in rates Core EPS • Preserve and grow granular, Median mature deposit base as a core strength • Co
Slide 8: Prudently Managed & Well-Positioned Balance Sheet
PAGE 8 Prudently Managed & Well-Positioned Balance Sheet Change in Yields & Costs Over Time Strategic Actions Prior Rate Cycle Current Rate Cycle • Short duration, commercial banking 225 bps 500 bps focused loan book • Modest organic loan growth in 2020 Old Second Spread Old Second Spread Outperform
Slide 9: Stable, Low-Cost Deposit Base
PAGE 9 Stable, Low-Cost Deposit Base Core Strength Deposit Franchise Performance Composition of Deposits Long-term customer relationship focus drives strong core deposit base • Retail checking average age of 14 years • Commercial checking average age of 12 years • Public funds account average age of
Slide 10: Credit Quality Overview
PAGE 10 Credit Quality Overview Classified Assets/ Capital (1) $700,000 25.00% 18.36% 20.04% • Loan quality has remained strong over the last several years entering into the 12.04% 19.23% 20.46% 17.79% current economic environment as a result of conservative underwriting and $600,000 20.00% experien
Slide 11: Management Track Record of Creating Shareholder Value
PAGE 11 Management Track Record of Creating Shareholder Value Total Share Price Performance Source: SNL Financial, FactSet. Financial data as of quarter ended March 31, 2023. Market data as of May 1, 2023. Note: Community Bank group includes publicly-traded banks with $5-10bn in assets.
Slide 12: Consolidated Capital Ratio Trends
PAGE 12 (1) Refer to Appendix 2: Non-GAAP Financial Measures Consolidated Capital Ratio Trends Source: Company filings. Leverage Ratio (%) Total Risk-based Capital Ratio (%) 14.00% 20.00% 12.00% 13.16% 8.96% 10.00% 15.00% 8.00% 10.00% 6.00% 4.00% 5.00% 2.00% 0.00% 0.00% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 13: Bank Capital Ratio Trends
PAGE 13 Source: Company filings. Bank Capital Ratio Trends Leverage Ratio (%) Total Risk-based Capital Ratio (%) 14.00% 18.00% 16.00% 12.83% 12.00% 9.70% 14.00% 10.00% 12.00% 8.00% 10.00% 12.00% 8.00% 6.00% 8.00% 4.00% 6.00% 2.00% 4.00% 0.00% 2.00% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q 2
Slide 14: Appendix 1: Supplemental Financial Data
Appendix 1: Supplemental Financial Data As of June 30,2023
Slide 15: Equity and Risk Based Capital Measures
PAGE 15 Equity and Risk Based Capital Measures Years Ended 2019 2020 2021 2022 Q2 2023 ($ in thousands, except per share data) Tier 1 capital Total equity before non-CECL adjustments and deductions (1) $ 277,864 $ 312,741 $ 505,825 $ 463,994 $ 515,857 Tier 1 adjustments: Trust preferred securities a
Slide 16: Equity and Risk Based Capital Measures
PAGE 16 Equity and Risk Based Capital Measures Years Ended 2019 2020 2021 2022 Q2 2023 ($ in thousands, except per share data) Tier 1 common equity Tangible common equity (1) $ 256,589 $ 291,960 $ 403,188 $ 364,083 $ 417,273 Tier 1 adjustments: Cumulative other comprehensive loss (4,562) (14,762) (8
Slide 17: Appendix 2: Non-GAAP Reconciliations
Appendix 2: Non-GAAP Reconciliations As of June 30, 2023
Slide 18: Appendix 2: Non-GAAP Financial Measures
PAGE 18 Appendix 2: Non-GAAP Financial Measures YTD June 2019 2020 2021 2022 2023 Net Income-GAAP $ 39,455 $ 27,825 $ 20,044 $ 67,405 $ 49,169 Reconcilation to Adjusted Net Income: Income before income taxes (GAAP) 51,857 $ 37,408 $ 27,867 $ 91,549 $ 66,986 Pre-tax income adjustments: Provision for
Slide 19: Appendix 2: Non-GAAP Financial Measures
PAGE 19 Appendix 2: Non-GAAP Financial Measures Net Interest Margin Tax Equivalent Non-GAAP Reconciliation YTD June 2019 2020 2021 2022 2023 Interest income (GAAP) $ 115,594 $ 104,215 $ 105,165 $ 216,473 $ 144,045 Taxable-equivalent adjustment: Non-GAAP Financial Measures Loans 14 12 15 23 17 Securi
Slide 20: Appendix 2: Non-GAAP Financial Measures
PAGE 20 Appendix 2: Non-GAAP Financial Measures Efficiency Ratio Non-GAAP Reconciliation GAAP Non-GAAP YTD June YTD June 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Noninterest expense $ 79,102 $ 81,417 $ 103,782 $ 151,173 $ 70,752 $ 79,102 $ 81,417 $ 103,782 $ 151,173 $ 70,752 Less amortizati
Slide 21: Appendix 2: Non-GAAP Financial Measures
PAGE 21 Appendix 2: Non-GAAP Financial Measures Tangible Common Equity Non-GAAP Reconciliations Years Ended 2019 2020 2021 2022 YTD June 2023 Total equity $ 277,864 $ 307,087 $ 502,027 $ 461,141 $ 513,955 Less: Goodwill and intangible assets 21,275 20,781 102,636 100,156 98,914 Tangible common equit
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