Old Second Bancorp, Inc. · NASDAQ:OSBC
Old Second Bancorp — D.A. Davidson 26th Annual Financial Institutions Conference 2024
30 slides from Old Second Bancorp's conference presentation, May 2024
Slide 1: D.A. Davidson 26th Annual Financial Institutions Conference
D.A. Davidson 26th Annual Financial Institutions Conference May 8-10, 2024 James Eccher Chairman, President & CEO Bradley Adams EVP, Chief Operating Officer & 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) • the impact of any claims or legal actions, including any effect on our reputation; • losses incurred in connection with repurchases and indemnification payments related to mortgages; • the soundness of other financial institutions and other counter-par
Slide 4: Creating the Leading Community Bank in Chicago
PAGE 4 Creating the Leading Community Bank in Chicago Chicago MSA Footprint as of 03/31/2024 Enhanced Scale In Attractive Markets $5.6B $4.0B $4.6B Assets Gross Loans Deposits Improved Profitability & Operating Efficiency 1.51% 17.80% 0.71% Return on Return on Average Tangible Cost of Average Common
Slide 5: Historical Financial Highlights
PAGE 5 Historical Financial Highlights Deposit Composition Q1-2024 YTD March 2020 2021 2022 2023 2024 CD’s Total Assets ($000) 3,040,837 6,212,189 5,888,317 5,722,799 5,616,072 13% Total Net Loans ($000) 2,000,996 3,376,523 3,820,129 3,998,689 3,925,298 Non Total Deposits ($000) 2,537,073 5,466,232
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) 0.71% 9.1% 24.9% 63.1% 97th Percentile 97th Percentile 79th Percentile 80th 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 31% • Disciplined interest rate risk management avoiding excess Change in (9%) duration at trough in rates Core EPS • Preserve and grow granular, Median // mature deposit base as a core strength •
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 Old Second Spread 525 bps Old Second Spread focused loan book 225 bps Outperformance of 51bps(1) Outperformance of 17
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 80.0% 90.0% drives strong core deposit base • Retail checking account average age of 80.0 14 years 70.0 • Commercial checking account average age of 12 years
Slide 10: Credit Quality Overview
PAGE 10 Credit Quality Overview Classified Assets/ Capital (1) 23.51% 21.33% $700,000 18.36% 20.04% 25.00% 17.79% 21.66% • Old Second remains proactive on refreshing collateral valuations and continually 20.46% 19.23% stress tests maturing credits under renewal interest rates. Based on ongoing $600,
Slide 11: Management Track Record of Creating Shareholder Value
PAGE 11 Management Track Record of Creating Shareholder Value Total Share Price Performance 250.0% Performance Summary (CAGR) Community 225.0 OSBC Banks Share Price 10.8% 1.9% 200.0 TBVPS 8.9 5.8 175.0 161.3% 150.0 125.0 100.0 75.0 50.0 25.0 16.5% 0.0 (25.0) Source: SNL Financial, FactSet. Financial
Slide 12: Consolidated Capital Ratio Trends
PAGE 12 (1) Refer to Appendix 3: Non-GAAP Financial Measures Consolidated Capital Ratio Trends Source: Company filings. Leverage Ratio (%) Total Risk-based Capital Ratio (%) 12.00% 20.00% 10.47% 14.79% 10.00% 15.00% 8.00% 6.00% 10.00% 4.00% 5.00% 2.00% 0.00% 0.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 13: Bank Capital Ratio Trends
PAGE 13 Source: Company filings. Bank Capital Ratio Trends Leverage Ratio (%) Total Risk-based Capital Ratio (%) 12.00% 10.89% 18.00% 16.00% 10.00% 14.03% 14.00% 8.00% 12.00% 8.00% 12.00% 6.00% 10.00% 8.00% 4.00% 6.00% 2.00% 4.00% 0.00% 2.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0.00%
Slide 14: Appendix 1: Loan Portfolio Disclosures
Appendix 1: Loan Portfolio Disclosures As of March 31,2024
Slide 15: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 15 Loan Portfolio Composition (in millions) Home Equity 2% Portfolio Segment Outstanding Classified Allowance C&D 1-4 Family 4% Construction & Land Development $169 $7 0.64% 7% Non-Owner Occupied CRE $1,018 $43 1.58% Multifamily Non-Owner Owner-Occupied CRE $7
Slide 16: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 16 Criticized Loans (in millions) $350 8.00% $300 7.00% 6.00% $250 5.00% $200 4.00% $150 3.00% $100 2.00% $50 1.00% $- 0.00% Office CRE Healthcare Other Criticized Loans/ Total Loans
Slide 17: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 17 Loan Portfolio Composition by Origination (in millions) Purchased Portfolio Segment Outstanding Classified Multifamily $134 - Construction $49 - Information, Finance $58 - Manufacturing C&I $42 $10 Purchased Industrial CRE $48 - Organic 11% 89% Office CRE $
Slide 18: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 18 Non-Owner Occupied CRE Portfolio Composition (in millions) Property Type Outstanding LTV Classified Allowance Other Retail $297 56% $3 0.69% Hotel 11% Industrial $233 53% - 0.65% 5% Retail 32% Office $229 60% $27 4.41% Mixed Use 7% Mixed Use $72 67% $13 1.5
Slide 19: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 19 Non-Owner Occupied Office CRE Portfolio Composition (in millions) Texas Colorado 4% 3% Location Outstanding LTV Classified Allowance Michigan Illinois $206 60% $27 4.85% 5% Chicago $43 75% $13 3.66% Illinois - Chicago 18% Suburban $163 56% $14 5.16% Oklahom
Slide 20: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 20 Owner-Occupied CRE Portfolio Composition (in millions) Wholesale Trade Industry Outstanding Classified Allowance 6% Manufacturing Health Care, Social Services $307 $48 2.87% 9% Other Other Services $80 $3 0.33% 21% Retail Trade $71 $6 0.70% Retail Trade Man
Slide 21: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 21 Commercial & Industrial Portfolio Composition (in millions) Commercial & Industrial Outstanding Classified Manufacturing $298 $11 Other (under $50 Construction Construction $177 - Real Estate, million) 14% Leasing 14% 4% Wholesale Trade $145 $1 Information,
Slide 22: Q1 2024 Loan Portfolio Disclosures
Q1 2024 Loan Portfolio Disclosures PAGE 22 Net Charge-offs (Recoveries) (in thousands) Portfolio 6/30/2023 (Q) 9/30/2023 (Q) 12/31/2023 (Q) 3/31/2024 (Q) 3/31/2024 (TTM) Construction & Land Development - ($100) - - ($100) Non-Owner Occupied CRE $51 $6,754 $4,951 ($67) $11,689 Office CRE - $6,754 $4,
Slide 23: Appendix 2: Supplemental Financial Data
Appendix 2: Supplemental Financial Data As of March 31,2024
Slide 24: Equity and Risk Based Capital Measures
PAGE 24 Equity and Risk Based Capital Measures Years Ended 2020 2021 2022 2023 Q1 2024 ($ in thousands, except per share data) Tier 1 capital Total equity before non-CECL adjustments and deductions (1) $ 312,741 $ 505,825 $ 463,994 $ 579,182 $ 597,110 Tier 1 adjustments: Trust preferred securities a
Slide 25: Equity and Risk Based Capital Measures
PAGE 25 Equity and Risk Based Capital Measures Years Ended 2020 2021 2022 2023 Q1 2024 ($ in thousands, except per share data) Tier 1 common equity Tangible common equity (1) $ 291,960 $ 403,188 $ 364,083 $ 484,940 $ 503,370 Tier 1 adjustments: Cumulative other comprehensive loss (14,762) (8,768) 93
Slide 26: Appendix 3: Non-GAAP Reconciliations
Appendix 3: Non-GAAP Reconciliations As of March 31, 2024
Slide 27: Appendix 3: Non-GAAP Financial Measures
PAGE 27 Appendix 3: Non-GAAP Financial Measures YTD March 2020 2021 2022 2023 2024 Net Income-GAAP $ 27,825 $ 20,044 $ 67,405 $ 91,729 $ 21,312 Reconcilation to Adjusted Net Income: Income before income taxes (GAAP) $ 37,408 $ 27,867 $ 91,549 $ 124,408 $ 28,543 Pre-tax income adjustments: Provision
Slide 28: Appendix 3: Non-GAAP Financial Measures
PAGE 28 Appendix 3: Non-GAAP Financial Measures Net Interest Margin Tax Equivalent Non-GAAP Reconciliation YTD March 2020 2021 2022 2023 2024 Interest income (GAAP) $ 104,215 $ 105,165 $ 216,473 $ 291,970 $ 73,330 Taxable-equivalent adjustment: Non-GAAP Financial Measures Loans 12 15 23 39 11 Securi
Slide 29: Appendix 3: Non-GAAP Financial Measures
PAGE 29 Appendix 3: Non-GAAP Financial Measures Efficiency Ratio Non-GAAP Reconciliation GAAP Non-GAAP YTD March YTD March 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Noninterest expense $ 81,417 $ 103,782 $ 151,173 $ 145,201 $ 38,241 $ 81,417 $ 103,782 $ 151,173 $ 145,201 $ 38,241 580 Less am
Slide 30: Appendix 3: Non-GAAP Financial Measures
PAGE 30 Appendix 3: Non-GAAP Financial Measures Tangible Common Equity Non-GAAP Reconciliations Years Ended YTD March 2020 2021 2022 2023 2024 Total equity $ 307,087 $ 502,027 $ 461,141 $ 577,281 $ 596,159 Less: Goodwill and intangible assets 20,781 102,636 100,156 97,695 97,115 Tangible common equi
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