AURORA, IL / ACCESSWIRE / April 21, 2021 / Old Second Bancorp, Inc. (the "Company," "we," "us," and "our") (NASDAQ:OSBC), the parent company of Old Second National Bank (the "Bank"), today announced financial results for the first quarter of 2021. Our net income was $11.9 million, or $0.40 per diluted share, for the first quarter of 2021, compared to net income of $8.0 million, or $0.27 per diluted share, for the fourth quarter of 2020, and net income of $275,000, or $0.01 per diluted share, for the first quarter of 2020. Net income for the first quarter of 2021 reflects a reversal of provision for credit losses of $3.0 million pre-tax, compared to no provision expense recorded in the fourth quarter of 2020, and an $8.0 million pre-tax provision recorded in the first quarter of 2020. Mortgage banking income totaled $5.7 million in the first quarter of 2021, which reflected a $2.7 million increase from the fourth quarter of 2020, and a $4.9 million increase from the first quarter of 2020, primarily due to mark to market gains on mortgage servicing rights ("MSRs") of $1.1 million in the first quarter of 2021, compared to mark to market losses of $1.3 million and $2.1 million in the fourth quarter of 2020 and the first quarter of 2020, respectively.
On April 20, 2021, our board of directors approved a 400% increase to the quarterly dividend, from $0.01 per common share to $0.05 per common share, to be paid to stockholders of record on April 30, 2021, payable May 10, 2021.
Operating Results:
First quarter 2021 net income was $11.9 million, reflecting an increase in earnings of $3.8 million from the fourth quarter of 2020, and an increase of $11.6 million from the first quarter of 2020.
President and Chief Executive Officer Jim Eccher said "First quarter results in 2021 were very positive as we continued the momentum from 2020. As we continue to navigate the challenges of the pandemic, we posted solid financial results, delivered strong operating leverage, grew deposits and continued to build our capital position. Credit trends continued to improve and we accordingly reduced our loan loss reserves as the vast majority of our clients have weathered the pandemic and have returned to original payment terms. While we do expect the possibility of losses, the severity levels predicted in our model have materially improved. I believe Old Second remains conservatively positioned to meet the challenges of the coming year, as our expenses remain well-controlled, our business is well diversified and underwriting has remained disciplined and consistent. I would like to thank our employees for their continued hard work in delivering a solid quarter while delivering exceptional customer service during these challenging times."
Eccher continued, "We are happy to announce that on April 20, 2021, the Board of Directors declared a quarterly dividend of $0.05 per share of common stock to stockholders of record on April 30, 2021, payable May 10, 2021. We are very pleased to provide our stockholders with this 400% increase in their quarterly dividend, compared to the previous quarter. We believe this increase reflects our strong financial results and regulatory capital positions for the quarter, the strength of our balance sheet and our belief that asset quality trends are continuing to improve. In addition, during the first quarter of 2021, we repurchased 455,134 shares, or 1.6% of shares outstanding, at a weighted average price of $12.31 per share pursuant to our stock repurchase program."
COVID-19 Update:
Capital Ratios
Minimum Capital | Well Capitalized | ||||||||||||||
Adequacy with | Under Prompt | ||||||||||||||
Capital Conservation | Corrective Action | March 31, | December 31, | March 31, | |||||||||||
Buffer, if applicable1 | Provisions2 | 2021 | 2020 | 2020 | |||||||||||
The Company | |||||||||||||||
Common equity tier 1 capital ratio | 7.00% | N/A | 12.45% | 11.94% | 10.85% | ||||||||||
Total risk-based capital ratio | 10.50% | N/A | 14.76% | 14.26% | 13.09% | ||||||||||
Tier 1 risk-based capital ratio | 8.50% | N/A | 13.55% | 13.01% | 11.93% | ||||||||||
Tier 1 leverage ratio | 4.00% | N/A | 10.02% | 10.21% | 10.57% | ||||||||||
The Bank | |||||||||||||||
Common equity tier 1 capital ratio | 7.00% | 6.50% | 14.62% | 13.75% | 12.89% | ||||||||||
Total risk-based capital ratio | 10.50% | 10.00% | 15.83% | 15.00% | 14.07% | ||||||||||
Tier 1 risk-based capital ratio | 8.50% | 8.00% | 14.62% | 13.75% | 12.89% | ||||||||||
Tier 1 leverage ratio | 4.00% | 5.00% | 10.78% | 10.74% | 11.36% | ||||||||||
1 Amounts are shown inclusive of a capital conservation buffer of 2.50%. Under the Federal Reserve's Small Bank Holding Company Policy Statement, the Company is not subject to the minimum capital adequacy and capital conservation buffer capital requirements at the holding company level, unless otherwise advised by the Federal Reserve (such capital requirements are applicable only at the Bank level). Although the minimum regulatory capital requirements are not applicable to the Company, we calculate these ratios for our own planning and monitoring purposes.
2 The prompt corrective action provisions are only applicable at the Bank level.
Asset Quality & Earning Assets
Non-GAAP Presentations: Management has disclosed in this earnings release certain non-GAAP financial measures to evaluate and measure our performance, including the presentation of net interest income and net interest margin on a fully taxable equivalent basis, our efficiency ratio calculations and core net interest margin on a taxable equivalent basis. The net interest margin fully taxable equivalent is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Consistent with industry practice, management has disclosed the efficiency ratio including and excluding certain items, which is discussed in the noninterest expense presentation on page 7. Our core net interest margin on a taxable equivalent basis excludes the impact of our PPP loans.
We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe these measures provide investors with information regarding balance sheet profitability, and we believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.
These non-GAAP financial measures should not be considered as a substitute for GAAP financial measures, and we strongly encourage investors to review the GAAP financial measures included in this earnings release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this earnings release with other companies' non-GAAP financial measures having the same or similar names.
Forward-Looking Statements: This earnings release and statements by our management may contain forward-looking statements within the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by words such as "anticipate," "expect," "intend," "believe," "may," "likely," "will" or other statements that indicate future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the economic outlook, the adequacy of our allowance and our belief that we are conservatively positioned to meet the challenges of the coming year, as well as statements regarding asset quality trends and the anticipated timing of our receipt of funds for PPP loan forgiveness. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements, (1) the strength of the United States economy in general and the strength of the local economies in which we conduct our operations may be different than expected, including, but not limited to, due to the negative impacts and disruptions resulting from the global coronavirus, ("COVID-19") pandemic, on the economies and communities we serve, which has had and may continue to have an adverse impact on our business, operations and performance, and could continue to have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole, both domestically and globally; (2) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (3) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act, or the "CARES Act"; (4) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on us; and (5) changes in interest rates, which may affect our net income, prepayment penalty income, mortgage banking income, and other future cash flows, or the market value of our assets, including our investment securities. Additional risks and uncertainties are contained in the "Risk Factors" and forward-looking statements disclosure in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The inclusion of this forward-looking information should not be construed as a representation by us or any person that future events, plans, or expectations contemplated by us will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Conference Call
We will host an earnings call on Thursday, April 22, 2021, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Investors may listen to our earnings call via telephone by dialing 877-407-9124. Investors should call into the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.
A replay of the earnings call will be available until 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on April 29, 2021, by dialing 877-4
SOURCE: Old Second Bancorp Inc.