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, 1997
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.
2,937,484 shares of no par value common stock are outstanding
as of May 9, 1997.
There are no exhibits with this Form 10-Q.
Page 1 of 11 Pages
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<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,
1997 1996
<S> --------- ---------
ASSETS <C> <C>
------
Cash and Due from Banks $ 27,890 $ 38,298
Interest Bearing Deposits with Banks 200 200
Federal Funds Sold 35,400 40,175
------- -------
Total Cash and Cash Equivalents 63,490 78,673
Available for Sale Securities 253,143 276,607
Loans 461,801 446,382
Less:Allowance For Possible Loan Losses 6,600 6,403
Unearned Income 384 390
------- -------
Loans, Net 454,817 439,589
Bank Premises and Equipment, Net 15,423 15,477
Other Assets 18,078 17,455
------- -------
TOTAL ASSETS $804,951 $827,801
======= =======
LIABILITIES
-----------
Deposits:
Demand $101,386 $111,512
Savings 280,113 294,505
Time 326,848 326,635
------- -------
Total Deposits 708,347 732,652
Securities Sold Under Agreements
to Repurchase 2,617 1,838
Other Short-term Borrowings 3,807 4,401
Note Payable 0 20
Other Liabilities 7,706 7,531
------- -------
Total Liabilities 722,477 746,442
------- -------
STOCKHOLDERS' EQUITY
--------------------
Preferred Stock, no par value, 300,000 shares
authorized, none issued
Common Stock, no par value
shares authorized: 6,000,000
shares issued: 2,937,484 15,377 15,377
Retained Earnings 67,455 65,628
Net Unrealized Gain (Loss) on Investments (358) 354
------- -------
Total Stockholders' Equity 82,474 81,359
------- -------
TOTAL LIABILITIES&STOCKHOLDERS' EQUITY $804,951 $827,801
======= =======
<FN>
See accompanying notes.
</TABLE>
Page 2
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<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,
------------------
1997 1996
<S> ------ ------
INTEREST INCOME: <C> <C>
---------
Loans $ 9,919 $ 8,977
Investment Securities:
Taxable 3,215 3,017
Exempt From Federal Income Tax 815 953
Federal Funds Sold 418 538
Interest Bearing Deposits 5 5
------ ------
Total Interest Income 14,372 13,490
------ ------
INTEREST EXPENSE:
----------------
Savings Deposits 1,830 1,819
Time Deposits 4,599 4,221
Other Borrowings 74 67
------ ------
Total Interest Expense 6,503 6,107
------ ------
Net Interest Income 7,869 7,383
Provision for Possible
Loan Losses 195 139
------ ------
Net Interest Income After
Provision for Possible Loan Losses 7,674 7,244
OTHER INCOME:
------------
Trust Fees 1,019 976
Service Charges on Deposit Accounts 696 638
Other Income 290 345
------ ------
Total Other Income 2,005 1,959
------ ------
OTHER EXPENSES:
--------------
Salaries and Employee Benefits 3,427 3,087
Net Occupancy of Bank Premises 423 400
Furniture and Equipment 692 604
FDIC Insurance 18 6
Marketing 201 236
Stationery and Supplies 189 195
Amortization of Intangible Assets 169 129
Other 1,090 934
------ ------
Total Other Expenses 6,209 5,591
------ ------
Income Before Income Taxes 3,470 3,612
Income Tax Expense 1,055 1,132
------ ------
Net Income $2,415 $2,480
====== ======
Per Share Amounts:
-----------------
Net Income $ .82 $0.84
Dividends Declared 0.20 0.16
Average Shares Outstanding 2,937,484 2,937,706
<FN>
See accompanying notes.
</TABLE>
Page 3
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<TABLE>
OLD SECOND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
<S> ----- -----
CASH FLOWS FROM OPERATING ACTIVITIES: <C> <C>
-------------------------------------
Interest Received $14,231 $13,788
Interest Paid (6,595) (6,318)
Paid to Suppliers and Employees (6,472) (5,652)
Trust Fees Received 1,019 976
Income Taxes Paid (160) 0
Service Charges Received on Deposit
Accounts 696 638
Other Income Received 290 345
------ ------
Net Cash Provided By Operating Activities 3,009 3,777
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
Net (Increase) Decrease in Loans (15,423) 4,963
Purchases of Available for Sale
Securities (13,468) (15,836)
Proceeds from Maturities of Available
for Sale Securities 35,717 14,020
Capital Expenditures (354) (382)
Other, Net 396 24
------ ------
Net Cash Provided by Investing Activities 6,868 2,789
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
Net Decrease in Deposits (24,305) (10,582)
Net Increase (Decrease) in
Other Short-term Borrowings 185 (2,129)
Decrease in Note Payable (20) 0
Dividends Paid (881) (823)
Other, Net (39) (38)
------ ------
Net Cash Used in Financing Activities (25,060) (13,572)
------ ------
Net Decrease in Cash
& Cash Equivalents (15,183) (7,006)
Cash & Cash Equivalents
at Beginning of Period 78,673 85,247
------ ------
Cash & Cash Equivalents at End of Period$63,490 $78,241
====== ======
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $2,415 $2,480
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 408 312
Provision for Possible Loan Losses 195 139
Increase in Taxes Payable 895 1,132
Increase in Interest Receivable (201) 343
Decrease in Interest Payable (91) (211)
Net Premium Amortization
(Discount Accretion) 59 (45)
Amortization of Intangible Assets 169 129
Decrease in Accrued Expenses (675) (452)
(Increase)Decrease in Prepaid Expenses (165) (50)
----- -----
Total Adjustments (594) (1,297)
----- -----
Net Cash Provided by
Operating Activities $3,009 $3,777
===== =====
<FN>
See accompanying notes.
</TABLE>
Page 4
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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, 1997 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 1997.
NOTE 2 - ACCOUNTING FOR EARNING PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 128 "Earnings
Per Share" which prescribes the calculation of earnings per share
for both interim and annual financial statements. Adoption of this
standard is required for periods ending after December 15, 1997 and
is not expected to have a material effect on the Corporation's
earnings per share computation.
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, 1997 of $804,951,000 were down 2.8% from
the 1996 year-end total of $827,801,000. Total investment
securities of $253,143,000 were down $23,464,000 (8.5%) whereas net loans
of $454,817,000 were up $15,228,000 (3.5%).
Total deposits of $708,347,000 were down 3.3% from the 1996
year-end total of $732,652,000 and includes declines of $10,126,000
in demand and $14,392,000 in savings deposits.
Total stockholders' equity of $82,474,000 increased by $1,115,000
from the 1996 year-end total of $81,359,000. The increase resulted
from additional retained earnings of $1,827,000 offset by a decline
of $712,000 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, 1997 and
1996.
Net interest income for the three months ended March 31, 1997 of
$7,869,000 was up $486,000 (6.6%) over the like period of 1996.
Total interest income for the three months of $14,372,000 was
higher than 1996 by $882,000 (6.5%). Total interest expense of
$6,503,000 for the three months increased $396,000 (6.4%) from the
same period in 1996.
Total other income for the three months ending March 31, 1997 of
$2,005,000 was up $46,000 (2.35%) from the same period a year ago.
Trust fees increased $43,000 (4.4%) for the quarter compared to 1996
while service charges on deposit accounts increased $58,000 (9.09%).
Other income decreased $55,000 (15.9%) from the like time period in
1996 primarily due to a decline in secondary mortgage fees which were
higher in 1996 as customers took advantage of declining interest rates.
Total other expenses for the three months of 1997 increased
$618,000 (11.0%) from the same period in 1996 due primarily to additional
costs of establishing new locations and the costs related to the pending
acquisition of Maple Park Bancshares. Salaries and employee benefits
were up $340,000 (11.0%). Furniture and equipment increased
$88,000 (14.5%), while marketing and stationery and supplies
decreased $35,000 (14.8%) and $6,000 (3.1%), respectively. FDIC
insurance expense increased $12,000 and other expenses were up
$156,000 (16.7%) from the same period in 1996.
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.
Page 8
<PAGE>
Net cash provided by operating activities was $3,009,000 and
$3,777,000 for the three months ended March 31, 1997 and 1996,
respectively.
Net cash provided by investing activities was $6,868,000 for the
three months in 1997; in 1996 net cash provided in investing
activities totaled $2,789,000. 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 offset by increased
investment securities purchase and proceeds activity.
Cash flows from financing activities are primarily attributable
to changes in deposit levels, short-term borrowings and notes
payable, and the payment of dividends to stockholders.
For the three months, net cash of $25,060,000 and $13,572,000 was
used in financing activities for 1997 and 1996, respectively.
A decrease in deposits generated cash outflows of $24,305,000 and
$10,582,000 for the three months of 1997 and 1996, respectively.
Page 9
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
A. The annual meeting of stockholders of Old Second Bancorp,
Inc. was held on March 11, 1997.
B. The following matters were voted upon at this annual meeting
and the results of such votes are provided below:
Ratification and approval of the selection of Ernst &
Young LLP as the Corporation's independent auditors
for the year of 1997.
For 2,505,698 Against 4,992 Abstentions 5,092
The election of three directors to serve for a term
of three years each.
Ronald Carlson For 2,493,183 Against 10,500 Abstentions 12,099
Gary McCarter For 2,497,587 Against 6,096 Abstentions 12,099
D. Chet McKee For 2,489,570 Against 13,953 Abstentions 12,259
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.
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: 05/14/97
Page 11
OLD SECOND BANCORP, INC.
37 SOUTH RIVER STREET
AURORA ILLINOIS 60507
Page 11
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 27890
<INT-BEARING-DEPOSITS> 200
<FED-FUNDS-SOLD> 35400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 253143
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 461417
<ALLOWANCE> 6600
<TOTAL-ASSETS> 804951
<DEPOSITS> 708347
<SHORT-TERM> 6424
<LIABILITIES-OTHER> 7706
<LONG-TERM> 0
<COMMON> 15377
0
0
<OTHER-SE> 67097
<TOTAL-LIABILITIES-AND-EQUITY> 804951
<INTEREST-LOAN> 9919
<INTEREST-INVEST> 4030
<INTEREST-OTHER> 423
<INTEREST-TOTAL> 14372
<INTEREST-DEPOSIT> 6429
<INTEREST-EXPENSE> 6503
<INTEREST-INCOME-NET> 7869
<LOAN-LOSSES> 195
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6209
<INCOME-PRETAX> 3470
<INCOME-PRE-EXTRAORDINARY> 2415
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2415
<EPS-PRIMARY> .82
<EPS-DILUTED> .84
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
