Old Second Bancorp(US:OSBC)2021-08-06 19:57Dividends and Mergers - The Company declared a cash dividend of $0.05 per share, totaling $1.4 million, payable on August 9, 2021[34]. - The Company announced a merger agreement with West Suburban Bancorp, Inc., where each West Suburban shareholder will receive 42.413 shares of the Company's common stock and $271.15 in cash per share[35][36]. - The merger transaction is expected to close in the fourth quarter of 2021, pending regulatory approvals and shareholder approvals[37]. Investment Portfolio - As of June 30, 2021, the total securities available-for-sale amounted to $579.948 million, with gross unrealized gains of $24.111 million and losses of $1.370 million[43]. - The investment portfolio includes $109.3 million in asset-backed securities backed by student loans under the Federal Family Education Loan program, with a guarantee from the U.S. Department of Education of at least 97%[46]. - The weighted average yield of total securities available-for-sale is 2.16% as of June 30, 2021[45]. - The amortized cost of U.S. Treasury securities was $4.016 million with a fair value of $4.086 million as of June 30, 2021[43]. - The Company’s investment portfolio reflects liquidity needs, loan demand, and interest income objectives, with adjustments made as necessary[38]. - As of June 30, 2021, the Company had invested $32.957 million in securities from Towd Point Mortgage Trust, with a fair value of $34.661 million[47]. - The total unrealized losses on securities available-for-sale were $102.349 million, with 24 securities in an unrealized loss position[47]. - For the three months ended June 30, 2021, the Company reported proceeds from sales of securities at $8.202 million, with net realized gains of $2, compared to a net loss of $24 in the same period of 2020[50]. Loans and Credit Quality - Total loans as of June 30, 2021, amounted to $1.903 billion, a decrease from $2.035 billion at December 31, 2020[51]. - The allowance for credit losses on loans was $28.639 million as of June 30, 2021, down from $33.855 million at the end of 2020[51]. - Real estate-related loans represented 73.2% of the loan portfolio as of June 30, 2021[53]. - Securities valued at $324.1 million were pledged to secure deposits and borrowings, a decrease from $335.8 million at year-end 2020[50]. - The Company held $70.2 million in Paycheck Protection Program (PPP) loans as of June 30, 2021[51]. - No credit losses were determined to be present as of June 30, 2021, indicating no credit quality deterioration noted[47]. - The allowance for credit losses (ACL) for loans as of June 30, 2021, was $28,639,000, down from $30,967,000 at the beginning of the period, reflecting a decrease of $2,263,000[54]. - The provision for credit losses for the three months ended June 30, 2021, included a charge-off of $301,000 and recoveries of $236,000[54]. - The total ACL on loans excludes $2,200,000 of allowance for unfunded commitments as of June 30, 2021[56]. - The total collateral dependent loans as of June 30, 2021, amounted to $33,990,000, with an allocated ACL of $4,550,000[57]. - Total past due loans amounted to $19.964 million, with 90 days or greater past due loans at $8.567 million, as of June 30, 2021[58]. - Nonaccrual loans totaled $22.784 million as of June 30, 2021, compared to $22.280 million on December 31, 2020[60]. - The company recognized $28,000 of interest on nonaccrual loans during the three months ended June 30, 2021[60]. - Loans classified as substandard indicate a distinct possibility of loss if deficiencies are not corrected, impacting overall credit quality[62]. - The company categorizes loans into credit risk categories based on financial information and economic trends, with quarterly reviews for classified risk ratings[61]. Financial Performance - The Company had a net income of $8.8 million for the three months ended June 30, 2021, resulting in basic earnings per share of $0.30, compared to $9.2 million and $0.31 for the same period in 2020[99]. - The weighted-average common shares outstanding decreased to 28,849,015 for the three months ended June 30, 2021, from 29,637,567 in the prior year[99]. - The effective tax rate applied to net realized gains was 0.0% for the three months ended June 30, 2021[50]. - Net interest and dividend income for Q2 2021 was $22.0 million, down from $22.7 million in Q2 2020, primarily due to a $1.5 million decline in interest income from loans[163]. - Noninterest income for Q2 2021 was $7.9 million, down from $10.7 million in Q2 2020, primarily due to a $3.5 million decrease in mortgage banking revenue[163]. - The provision for credit losses resulted in a $3.5 million net benefit in Q2 2021, compared to a provision of $2.1 million in Q2 2020, driven by a reserve release[163]. - For the six months ended June 30, 2021, net income was $20.7 million, or $0.70 per diluted share, compared to $9.5 million, or $0.31 per diluted share, for the same period in 2020[174]. - Net interest and dividend income for the six months ended June 30, 2021, was $45.5 million, relatively flat compared to $45.4 million for the same period in 2020[175]. Capital and Regulatory Compliance - The Company maintained a Tier 1 leverage capital ratio above 8% and a total risk-based capital ratio above 12% as of June 30, 2021, exceeding regulatory requirements[100]. - The Bank's total capital ratio was 16.33%, an increase of 133 basis points from December 31, 2020, exceeding the 12.00% objective[101]. - The Company is expected to no longer be considered a "small bank holding company" in March 2022 due to total assets exceeding $3.0 billion[103]. - The Bank must maintain a capital conservation buffer of 2.50% above the new regulatory minimum capital requirements to avoid additional limitations on capital distributions[108]. - The cumulative amount not recognized in regulatory capital due to the CECL transition adjustment was $4.5 million as of June 30, 2021[107]. - The Company exceeded the general minimum regulatory requirements to be considered "well capitalized" under current capital ratios[106]. Asset Quality and Nonperforming Loans - Asset quality remained stable, with nonperforming loans as a percentage of total loans at 1.2% as of June 30, 2021, compared to 1.1% at December 31, 2020[169]. - Nonperforming loans increased slightly to $23.1 million as of June 30, 2021, from $23.0 million at December 31, 2020, with a nonperforming loans ratio of 1.2%[220]. - The allowance for credit losses was $28.6 million, representing 1.5% of total loans as of June 30, 2021[224]. - Total nonperforming assets decreased by 2.0% to $25.0 million as of June 30, 2021, compared to $25.5 million at December 31, 2020[224]. Other Financial Metrics - Total deposits increased to $2,682,001,000 as of June 30, 2021, compared to $2,537,073,000 at the end of 2020, reflecting a growth of approximately 5.7%[81]. - Total assets increased to $3,238,832 million as of June 30, 2021, compared to $3,097,905 million in the previous quarter, reflecting a growth of 4.6%[193]. - The average balance of interest earning deposits with financial institutions was $499,555 million, yielding an interest expense of $137 million at a rate of 0.11%[193]. - Total securities (tax equivalent) increased to $614,066 million, with an interest income of $3,426 million at a rate of 2.24%[193]. - The total fair value of loans held-for-sale was $6,814,000 as of June 30, 2021[115].