|Old Second Reports Fourth Quarter Net Income of $3.0 million.
Net interest income increased on a linked quarter basis continuing the trend seen throughout 2014. Net interest income increased 3.3% year over year.
Improved credit quality reflected in a $1.3 million loan loss reserve release in the quarter.
Year over year noninterest expense decreased $9.5 million across several categories most notably legal fees, general bank insurance and reduced expense on other real estate owned (OREO) properties.
Loans increased $18.5 million in the 4th quarter while OREO assets declined $8.9 million. Loans increased 5.3% from year end 2013.
AURORA, IL, January 21, 2015 – Old Second Bancorp, Inc. (the “Company” or “Old Second”) (NASDAQ: OSBC), parent company of Old Second National Bank (the “Bank”), today announced financial results for the fourth quarter of 2014 and the year ended December 31, 2014. The Company reported net income of $3.0 million for the fourth quarter of 2014, compared to net income of $213,000 in the fourth quarter of 2013. The Company’s net income available to common stockholders of $1.9 million, or $0.06 per diluted share, for the quarter, compared to a net loss available to common stockholders of $1.1 million, or $0.08 per diluted share, in the fourth quarter of 2013. The full year 2014 net income available to common stockholders of $11.9 million is down from $76.8 million in 2013. The full year 2013 included a tax benefit of $70.0 million in the third quarter primarily from the reversal of a significant portion of the valuation allowance against deferred tax assets.
- Fourth quarter 2014 net income before taxes increased by $4.8 million from the fourth quarter of 2013 and $116,000 from the third quarter of 2014. The increase from the fourth quarter of 2013 was driven by sharply higher gains on securities sales (a loss item in 2013), improved debit card interchange income reflecting an improving trend seen over recent quarters, and lower noninterest expense, notably legal fees and amortization expense on the core deposit intangible asset which was fully amortized in the third quarter. The small linked quarter increase reflects improved net interest income and the 4th quarter 2014 loan loss reserve release offset by reduced levels in many noninterest income categories most notably net gains on securities sales.
- Fourth quarter 2014 net income available to common stockholders was $1.9 million compared to a net loss of $1.1 million for the fourth quarter 2013. On a linked quarter basis, fourth quarter net income available to common stockholders is essentially unchanged from the 2014 third quarter of 2014.
- The tax-equivalent net interest margin was 3.35% during the fourth quarter of 2014 compared to 3.13% in the same quarter of 2013.
- Fourth quarter 2014 noninterest income of $7.1 million was $3.2 million higher than the fourth quarter of 2013 and $1.2 million lower than the third quarter of 2014. The year over year quarterly comparison reflects $262,000 in net gains on securities sales compared to a $4.1 million net loss on securities sales in the 2013 period and debit card interchange income of $1.0 million, or $142,000 greater than in 2013. On a linked quarter basis, reductions in service charges, residential mortgage banking, and a large decrease in securities gains lead to the reductions in noninterest income.
- Noninterest expenses of $18.8 million were 6.5% lower in the fourth quarter compared to the fourth quarter 2013. Expenses declined across several expense lines, notably FDIC insurance expense, amortization of core deposit expense, and legal fees. Fourth quarter expenses were up 2.3% compared to the third quarter 2014 as increases in other real estate owned (“OREO”) expenses and salaries and benefits outweigh decreased core deposit amortization expense.
- On December 30, 2014, the Company provided notice that it was redeeming approximately one-third of the issued and outstanding shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”). The effective date for the redemption is January 31, 2015, and the redemption price will be the stated liquidation value of $1,000 per share, together with any accrued and unpaid dividends accumulated to, but excluding, the redemption date. As of December 30, 2014, there were 47,331 shares of the Series B Preferred Stock outstanding, and redeeming one-third of the Series B Preferred Stock will result in the redemption of approximately 15,778 shares of Series B Preferred Stock. Following the redemption, approximately 31,553 shares of the Series B Preferred Stock will remain outstanding.