UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant To Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934
For the quarterly period ended March 31, 1996
Commission file No. 0-10537
Old Second Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-3143493
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
37 South River Street, Aurora, Illinois 60507
(Address of principal executive offices) (Zip Code)
(708) 892-0202
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
to such filing requirements for the past 91 days.
Yes [X] No[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable
date.
2,350,165 shares of no par value common stock are outstanding
as of May 9, 1996.
There are no exhibits with this Form 10-Q.
Page 1 of 9 Pages
<PAGE>
<TABLE>
Part I - Financial Information
Item 1 - Financial Statements
OLD SECOND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
March 31, December 31,
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
------
Cash and Due from Banks, Non-
Interest Bearing $ 34,816 $ 42,047
Interest Bearing Deposits With Banks 400 400
Federal Funds Sold 43,025 42,800
------- -------
Total Cash and Cash Equivalents 78,241 85,247
Available for Sale Securities 253,234 253,899
Loans 394,587 399,505
Less:Allowance For Possible Loan Losses 5,876 5,676
Unearned Income 486 502
------- -------
Loans, Net 388,225 393,327
Bank Premises and Equipment, Net 14,672 14,602
Other Assets 14,258 13,655
------- -------
TOTAL ASSETS $748,630 $760,730
======= =======
LIABILITIES
-----------
Deposits:
Demand $ 94,407 $100,169
Savings 271,258 271,769
Time 293,044 297,353
------- -------
Total Deposits 658,709 669,291
Securities Sold Under Agreements
to Repurchase 3,337 6,554
Other Short-Term Borrowings 3,673 2,585
Note Payable 40 40
Other Liabilities 6,987 6,842
------- -------
Total Liabilities 672,746 685,312
------- -------
STOCKHOLDERS' EQUITY
--------------------
Preferred Stock, no par value, 300,000 shares
authorized, none issued
Common Stock, no par value
shares authorized:
at 3/31/96 6,000,000
at 3/31/95 3,500,000
shares issued: 2,350,165 15,377 15,377
Retained Earnings 60,544 58,533
Net Unrealized Gain (Loss) on Investments (37) 1,508
------- -------
Total Stockholders' Equity 75,884 75,418
------- -------
TOTAL LIABILITIES&STOCKHOLDERS' EQUITY $748,630 $760,730
======= =======
<FN>
See accompanying notes.
</TABLE>
Page 2
<PAGE>
<TABLE>
OLD SECOND BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------ ------
<S> <C> <C>
INTEREST INCOME:
---------
Loans $ 8,977 $ 8,186
Investment Securities:
Taxable 3,017 2,994
Exempt From Federal Income Tax 953 956
Federal Funds Sold 538 322
Interest Bearing Deposits 5 6
------ ------
Total Interest Income 13,490 12,464
------ ------
INTEREST EXPENSE:
----------------
Savings Deposits 1,819 1,819
Time Deposits 4,221 3,399
Securities Sold Under Agreements
To Repurchase 44 10
Other Short-Term Borrowings 22 59
Note Payable 1 1
------ ------
Total Interest Expense 6,107 5,288
------ ------
Net Interest Income 7,383 7,176
Provision for Possible
Loan Losses 139 40
------ ------
Net Interest Income After
Provision for Possible Loan Losses 7,244 7,136
OTHER INCOME:
------------
Trust Fees 976 739
Service Charges on Deposit Accounts 638 596
Other Income 345 269
------ ------
Total Other Income 1,959 1,604
------ ------
OTHER EXPENSES:
--------------
Salaries and Employee Benefits 3,087 3,041
Net Occupancy of Bank Premises 400 386
Furniture and Equipment 604 474
FDIC Insurance 6 348
Marketing 236 182
Stationery and Supplies 195 144
Goodwill Amortization 129 129
Other 934 1,045
------ ------
Total Other Expenses 5,591 5,749
------ ------
Income Before Income Taxes 3,612 2,991
Income Tax Expense 1,132 862
------ ------
Net Income $2,480 $2,129
====== ======
Per Share Amounts:
-----------------
Net Income $1.06 $0.91
Dividends Declared 0.20 0.20
Average Shares Outstanding 2,350,165 2,350,165
<FN>
See accompanying notes.
</TABLE>
Page 3
<PAGE>
<TABLE>
OLD SECOND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
For the Three Months
Ended March 31,
1996 1995
----- -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
Interest Received $13,788 $12,602
Interest Paid (6,318) (5,101)
Paid to Suppliers and Employees (5,652) (5,910)
Trust Fees Received 976 739
Income Taxes Paid 0 37
Service Charges Received on Deposit
Accounts 638 596
Increase in Mortgages Held for Resale (2,363) (404)
Other Income Received 345 269
------ ------
Net Cash Provided By Operating Activities 1,414 2,828
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
Net (Increase) Decrease in Loans 7,326 (10,581)
Purchases of Available for Sale
Securities (15,836) (7,564)
Proceeds from Maturities of Available
for Sale Securities 14,020 11,630
Purchases of Held to Maturity Securities (2,000)
Proceeds from Maturities of Held to
Maturity Securities 534
Capital Expenditures (382) (146)
Other, Net 24 876
------ ------
Net Cash Provided by (Used in) 5,152 (7,251)
Investing Activities ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
Net Decrease in Deposits (10,582) (12,916)
Decrease in Other Short-term Borrowings (2,129) (5,846)
Decrease in Notes Payable 0 (40)
Dividends Paid (823) (643)
Other, Net (38) (23)
------ ------
Net Cash Used in Financing Activities (13,572) (19,468)
------ ------
Net Decrease in Cash
& Cash Equivalents (7,006) (23,891)
Cash & Cash Equivalents
at Beginning of Period 85,247 78,751
------ ------
Cash & Cash Equivalents at End of Period$78,241 $54,860
====== ======
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $2,480 $2,129
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 312 316
Provision for Possible Loan Losses 139 40
Increase in Taxes Payable 1,132 899
(Increase)Decrease in
Interest Receivable 343 (94)
Increase(Decrease) in Interest Payable (211) 188
Net Premium Amortization or
(Discount Accretion) (45) 228
Goodwill Amortization 129 129
Increase in Mortgages Held
for Resale (2,363) (404)
Decrease in Accrued Expenses (452) (214)
Increase in Prepaid Expenses (50) (389)
----- -----
Total Adjustments (1,066) 699
----- -----
Net Cash Provided by
Operating Activities $1,414 $2,828
===== =====
<FN>
See accompanying notes.
</TABLE>
Page 4
<PAGE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed in the preparation of interim
financial statements are consistent with those used in the
preparation of annual financial information. The interim
financial statements reflect all adjustments, which are normal
and recurring in nature, necessary in the opinion of management
to a fair statement of results for the interim periods presented.
Results for the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 1996.
NOTE 2 - ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
LONG-LIVED ASSETS TO BE DISPOSED OF
Effective January 1, 1996, the Corporation adopted Financial
Accounting Standards Number 121 "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of".
Adoption of this standard did not have a material effect on the
Corporation's financial position or results of operations.
NOTE 3 - ACCOUNTING FOR STOCK BASED COMPENSATION
As of January 1, 1996, the Corporation adopted Financial Accounting
Standards Number 123 "Accounting for Stock Based Compensation",
which applies to the Corporation's Long-Term Incentive Plan.
Adoption of this standard did not have any effect on the
Corporation's financial position or results of operations because
the Corporation has elected to adopt only the disclosure
requirements of the standard and will continue to account for stock
based compensation as it has in the past under the provision of
Accounting Principles Board Opinion No. 25.
Page 5
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 2
OLD SECOND BANCORP, INC. AND SUBSIDIARIES
MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion analyzes the consolidated financial
condition and results of operations of Old Second Bancorp, Inc.
and its subsidiaries.
FINANCIAL CONDITION
Total Assets at March 31, 1996 of $748,630,000 were down 1.6% from
the 1995 year-end total of $760,730,000. Net Loans were down
$5,102,000 (1.3%).
Total Deposits of $658,709,000 were down 1.6% from the 1995
year-end total of $669,291,000. Time Deposits decreased
$4,309,000 (1.5%) and Demand Deposits are down $5,762,000 (5.8%).
Securities Sold Under Agreements to Repurchase decreased $3,217,000
while Other Short-Term Borrowings were up $1,088,000.
Total Stockholders' Equity of $75,884,000 increased by $466,000
from the 1995 year-end total of $75,418,000. The increase resulted
from additional retained earnings of $2,011,000 offset by a decline
of $1,545,000 in the Net Unrealized Gain (Loss) on Investments.
RESULTS OF OPERATIONS
Operating results include net income for Old Second Bancorp, Inc.
and its subsidiaries for the three months ended March 31, 1996 and
1995.
Net Interest Income for the three months ended March 31, 1996 of
$7,383,000 was up $207,000 (2.9%) over the like period of 1995.
Total Interest Income for the three months of $13,490,000 was
higher than 1995 by $1,026,000 (8.2%). Total Interest Expense of
$6,107,000 for the three months increased $819,000 (15.9%) from the
same period in 1995.
Total Other Income for the three months ending March 31, 1996 of
$1,959,000 was up $355,000 (22.1%) from the same period a year ago.
Trust Fees increased $237,000 (32.1%) for the quarter. Service
Charges on Deposit Accounts increased $42,000 (7.1%). Other Income
increased $76,000 (28.3%) from the like time period in 1995.
Total Other Expenses for the three months of 1996 decreased
$158,000 (2.7%) from the same period in 1995. Salaries and Employee
Benefits were up $46,000 (1.5%). Furniture and Equipment, Marketing
and Stationary and Supplies increased $130,000, $54,000 and $51,000,
respectively. FDIC expense decreased $342,000 (98.3%) due to the
rate reduction on insurance premiums and Other Expenses were down
$111,000 from the same period in 1995.
Page 6
<PAGE>
LIQUIDITY
Liquidity is generally defined as the ability to meet cash flow
requirements. For a bank, meeting cash flow requirements means
having funds available to satisfy customer credit needs as well
as having funds available to meet depositor withdrawal requests.
For the Corporation, liquidity means having funds available to
pay cash dividends, debt service and operating expenses. Liquid
assets consist primarily of non-interest bearing and interest
bearing deposits, overnight federal funds sold and unpledged
investment securities. The Consolidated Statements of Cash Flows
included with the financial statements herein set forth the cash
flows from operating, investing and financing activities for the
various time periods.
Net cash provided by operating activities was $1,414,000 and
$2,828,000 for the three months ended March 31, 1996 and 1995,
respectively. The decrease in cash flows from operating
activities was primarily attributable to increased activity in
Mortgages Held for Resale for the three months in 1996 as compared
to the same period in 1995.
Net cash provided by investing activities was $5,152,000 for the
three months in 1996; in 1995 net cash used in investing activities
totaled $7,251,000. The primary components of cash flows from
investing activities are funding and repayment of customer loans
and purchases and sales of investment securities. The increase in
cash flows from investing activities was primarily attributable
to the net decrease in loans partially offset by increased
investment securities purchase activity.
Cash flows from financing activities are primarily attributable
to changes in deposit levels, short-term borrowings and the
payment of dividends to stockholders. For the three months,
net cash of $13,572,000 and $19,468,000 was used in financing
activities for 1996 and 1995, respectively. A decrease in deposits
generated cash outflows of $10,582,000 and $12,916,000 for the
three months of 1996 and 1995, respectively. Short-Term Borrowings
resulted in cash outflows of $2,129,000 and $5,846,000 for the
three months ended March 31, 1996 and 1995, respectively.
Page 7
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
because of the absence of conditions under which they are
required.
Page 8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
OLD SECOND BANCORP, INC.
/s/ R J CARLSON
By: R.J. Carlson,
President, Chief Financial Officer,
Chief Operating Officer, Secretary
and Director
Date: 05/15/96
OLD SECOND BANCORP, INC.
37 SOUTH RIVER STREET
AURORA ILLINOIS 60507
Page 9
