Old Second Bancorp, Inc. (the “Company” or “Old Second”) (NASDAQ: OSBC), parent company of Old Second National Bank (the “Bank”), today announced results of operations for the third quarter of 2011. The Company reported a net loss of $1.4 million, compared to a net loss of $88,000 in the third quarter of 2010. The Company’s pretax loss of $1.4 million for the third quarter of 2011 compared to a $1.2 million pretax loss for the third quarter of 2010. The Company’s net loss available to common shareholders of $2.6 million, or $0.18 per diluted share, for the third quarter of 2011, compared to a net loss available to common shareholders of $1.2 million, or $0.09 per diluted share, in the third quarter of 2010.

The Company’s $3.0 million provision for loan losses for the third quarter of 2011 compared favorably to the $11.8 million provision in the third quarter of 2010. The allowance for loan losses was 42.95% of nonperforming loans as of September 30, 2011, compared to 29.84% a year earlier and 36.81% as of June 30, 2011.

“We are very pleased to announce that we continue to exceed the capital ratio objectives that we agreed to with the OCC,” said Bill Skoglund, Chairman and CEO. “As of September 30, 2011, the Bank’s leverage ratio was 9.52%, up 142 basis points from December 31, 2010, and 77 basis points above the objective the Bank had agreed with the OCC to maintain of 8.75%. The Bank’s total capital ratio was 12.98%, up 135 basis points from December 31, 2010, and 173 basis points above the objective of 11.25%.”

“Consecutive quarterly declines in nonperforming assets are encouraging,” continued Skoglund. “While uncertainty remains in the broader economy, we have seen signs of stabilization in commercial real estate values in our market area, which we believe will be a key to our continuing improvement. Also, our long standing and valued customers continue to allow us to work with them to achieve their long term financial objectives.”

2011 Financial Highlights/Overview

Earnings
  • Third quarter net loss before taxes of $1.4 million compared to a net loss before taxes of $1.2 million in the same quarter of 2010.
  • Third quarter net loss to common stockholders of $2.6 million compared to a net loss to common stockholders of $1.2 million in the same quarter of 2010.
  • The tax-equivalent net interest margin was 3.63% during the third quarter of 2011 compared to 3.60% in the same quarter of 2010, and reflected an increase of 4 basis points compared to the second quarter of 2011.
  • Noninterest income of $26.8 million was $7.0 million lower in the first nine months of 2011 than in the first nine months of 2010 reflecting lower securities gains, deposit service charges, and mortgage sale revenues. Results for 2010 also included the nonrecurring revenues on bank owned life insurance and litigation related income. Excluding the nonrecurring revenue recorded in the 2010 period, noninterest income decreased by $3.4 million year to date 2011.
  • Noninterest expenses of $71.8 million were $2.0 million lower in the first nine months of 2011 than in the first nine months of 2010 reflecting flat or reduced expenses in most categories.

Capital
  • Bank leverage capital ratio increased from 8.10% to 9.52% in the first nine months of 2011.
  • Bank total capital ratio increased from 11.63% to 12.98% in the first nine months of 2011.
  • Company leverage ratio increased from 4.74% to 5.18% in the first nine months of 2011.
  • Company total capital ratio increased from 11.46% to 12.37% in the first nine months of 2011.
  • Company tangible common equity to tangible assets decreased from 0.28% in the second quarter of 2011 to 0.15% in the third quarter of 2011 and declined from 0.40% at year end 2010.

Asset Quality/Balance Sheet Overview
  • Nonperforming loans declined $89.5 million (39.1%) during the first nine months of 2011 to $139.3 million as of September 30, 2011, from $228.9 million as of December 31, 2010 and declined $40.1 million (22.4%) during the quarter from $179.4 million as of June 30, 2011.
  • The provision for loan loss expense decreased to $3.0 million for the third quarter ended September 30, 2011, compared to $11.8 million in the same period in 2010.
  • Loans that were classified as performing but 30 to 89 days past due and still accruing interest decreased to $10.0 million at September 30, 2011, from $13.9 million at December 31, 2010, and $17.6 million at September 30, 2010.
  • Securities available-for-sale increased $39.5 million in the first nine months of 2011 to $188.2 million from $148.6 million with no impact on current liquidity profile.

Non-GAAP Presentations: Management has traditionally disclosed certain non-GAAP ratios to evaluate and measure the Company’s performance, including a net interest margin calculation. The net interest margin is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Management believes this measure provides investors with information regarding balance sheet profitability. Management also presents an efficiency ratio that is non-GAAP. The efficiency ratio is calculated by dividing adjusted noninterest expense by the sum of net interest income on a tax equivalent basis and adjusted noninterest income. Management believes this measure provides investors with information regarding the Company’s operating efficiency and how management evaluates performance internally. Consistent with industry practice, management also disclosed the tangible common equity to tangible assets and the Tier 1 common equity to risk weighted assets in the discussion immediately above and in the following tables. The tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Forward Looking Statements: This report may contain forward-looking statements. Forward looking statements are identifiable by the inclusion of such qualifications as expects, intends, believes, may, likely or other indications that the particular statements are not based upon facts but are rather based upon the Company’s beliefs as of the date of this release. Actual events and results may differ significantly from those described in such forward-looking statements, due to changes in the economy, interest rates or other factors. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. For additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results, please review our filings with the Securities and Exchange Commission.
       
 
Financial Highlights (unaudited)
In thousands, except share data As of and for the As of and for the
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Summary Statements of Operations:
Net interest and dividend income $ 15,922 $ 19,461 $ 48,933 $ 60,457
Provision for loan losses 3,000 11,825 7,500 75,668
Noninterest income 8,508 14,695 26,846 33,810
Noninterest expense 22,820 23,555 71,776 73,783
Benefit for income taxes - (1,136 ) - (23,159 )
Net loss (1,390 ) (88 ) (3,497 ) (32,025 )
Net loss available to common stockholders (2,580 ) (1,223 ) (7,021 ) (35,419 )
 
Key Ratios (annualized):
Return on average assets (0.28 %) (0.01 %) (0.23 %) (1.73 %)
Return to common stockholders on average assets (0.52 %) (0.20 %) (0.46 %) (1.91 %)
Return on average equity (6.84 %) (0.21 %) (5.81 %) (23.54 %)
Return on average common equity (100.92 %) (5.16 %) (91.98 %) (42.09 %)
Net interest margin (non-GAAP tax equivalent) 1 3.63 % 3.60 % 3.57 % 3.67 %
Efficiency ratio (non-GAAP tax equivalent) 1 70.79 % 59.97 % 73.06 % 61.32 %
Tangible common equity to tangible assets 2 0.15 % 3.75 % 0.15 % 3.75 %
Tier 1 common equity to risk weighted assets 2 0.22 % 1.14 % 0.22 % 1.14 %
Company total capital to risk weighted assets 3 12.37 % 11.37 % 12.37 % 11.37 %
Company tier 1 capital to risk weighted assets 3 6.39 % 7.64 % 6.39 % 7.64 %
Company tier 1 capital to average assets 5.18 % 6.30 % 5.18 % 6.30 %
Bank total capital to risk weighted assets 3 12.98 % 11.41 % 12.98 % 11.41 %
Bank tier 1 capital to risk weighted assets 3 11.70 % 10.13 % 11.70 % 10.13 %
Bank tier 1 capital to average assets 9.52 % 8.38 % 9.52 % 8.38 %
 
Per Share Data:
Basic loss per share ($0.18 ) ($0.09 ) ($0.49 ) ($2.52 )
Diluted loss per share ($0.18 ) ($0.09 ) ($0.49 ) ($2.52 )
Dividends declared per share $ 0.00 $ 0.00 $ 0.00 $ 0.02
Common book value per share $ 0.55 $ 6.60 $ 0.55 $ 6.60
Tangible common book value per share $ 0.20 $ 6.19 $ 0.20 $ 6.19
Ending number of shares outstanding 14,034,991 13,911,475 14,034,991 13,911,475
Average number of shares outstanding 14,034,991 13,911,596 14,014,841 13,920,628
Diluted average shares outstanding 14,217,216 14,028,832 14,222,392 14,085,198
 
End of Period Balances:
Loans $ 1,423,957 $ 1,815,667 $ 1,423,957 $ 1,815,667
Deposits 1,728,034 2,002,558 1,728,034 2,002,558
Stockholders' equity 78,278 161,569 78,278 161,569
Total earning assets 1,714,809 2,028,190 1,714,809 2,028,190
Total assets 1,940,704 2,297,904 1,940,704 2,297,904
 
Average Balances:
Loans $ 1,483,109 $ 1,868,053 $ 1,569,422 $ 1,943,004
Deposits 1,746,854 2,090,457 1,832,242 2,144,899
Stockholders' equity 80,649 163,603 80,479 181,888
Total earning assets 1,751,347 2,160,359 1,843,264 2,240,199
Total assets 1,959,914 2,392,049 2,043,061 2,473,144
 

[For complete financial results, go to the investor relations section under 8-K filings at www.oldsecond.com ]

1 Tabular disclosures of the tax equivalent calculation including the net interest margin and efficiency ratio for the quarters ending September 30, 2011, and 2010, respectively, are presented on page 19.

2 The information to reconcile GAAP measures and the ratios of Tier 1 capital, total capital, tangible common equity or Tier 1 common equity, as applicable, to average total assets, risk-weighted assets or tangible assets, as applicable, are presented on page 20.

3 The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Those agencies define the basis for these calculations including the prescribed methodology for the calculation of the amount of risk-weighted assets.
       
 
Financial Highlights, continued (unaudited)
In thousands, except share data
 
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
 
Asset Quality
Charge-offs $ 10,898 $ 26,395 $ 30,977 $ 76,294
Recoveries   1,732     1,775     7,021     4,250  
Net charge-offs $ 9,166   $ 24,620   $ 23,956   $ 72,044  
Provision for loan losses 3,000 11,825 7,500 75,668
Allowance for loan losses to loans 4.20 % 3.75 % 4.20 % 3.75 %
 
As of (audited)
September 30, December 31,
2011 2010 2010
Nonaccrual loans 1 $ 122,111 $ 209,876 $ 212,225
Restructured loans 13,596 16,187 15,637
Loans past due 90 days   3,634     2,335     1,013  
Nonperforming loans 139,341 228,398 228,875
Other real estate 100,554 54,577 75,613
Receivable from swap terminations   -     2,169     3,520  
Nonperforming assets $ 239,895   $ 285,144   $ 308,008  
 
1 Includes $15.8 million and $26.7 million in nonaccrual restructured loans at September 30, 2011,

and 2010, respectively.
 
Major Classifications of Loans As of (audited)
September 30, December 31,
2011 2010 2010
Commercial and industrial $ 107,589 $ 178,283 $ 149,552
Real estate - commercial 730,554 864,095 821,101
Real estate - construction 77,958 154,433 129,601
Real estate - residential 489,985 586,443 557,635
Installment 4,187 5,562 4,949
Overdraft 409 565 739
Lease financing receivables 2,223 3,052 2,774
Other   11,242     24,061     24,487  
1,424,147 1,816,494 1,690,838
Unearned origination fees, net   (190 )   (827 )   (709 )
$ 1,423,957   $ 1,815,667   $ 1,690,129  
 
 
Major Classifications of Deposits As of (audited)
September 30, December 31,
2011 2010 2010
Noninterest bearing $ 347,154 $ 312,738 $ 330,846
Savings 191,721 177,448 180,127
NOW accounts 258,216 384,439 304,287
Money market accounts 287,228 318,961 297,702
Certificates of deposits of less than $100,000 408,236 495,677 491,234
Certificates of deposits of $100,000 or more   235,479     313,295     304,332  
$ 1,728,034   $ 2,002,558   $ 1,908,528  
 
 
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
   
(unaudited) (audited)
September 30, December 31,
2011 2010
Assets
Cash and due from banks $ 29,337 $ 28,584
Interest bearing deposits with financial institutions 79,334 69,492
Federal funds sold   -     682  
Cash and cash equivalents 108,671 98,758
Securities available-for-sale 188,187 148,647
Federal Home Loan Bank and Federal Reserve Bank stock 14,050 13,691
Loans held-for-sale 9,281 10,655
Loans 1,423,957 1,690,129
Less: allowance for loan losses   59,852     76,308  
Net loans 1,364,105 1,613,821
Premises and equipment, net 51,972 54,640
Other real estate owned, net 100,554 75,613
Mortgage servicing rights, net 3,605 3,897
Core deposit and other intangible asset, net 4,814 5,525
Bank-owned life insurance (BOLI) 52,096 50,966
Other assets   43,369     47,708  
Total assets $ 1,940,704   $ 2,123,921  
 
Liabilities
Deposits:
Noninterest bearing demand $ 347,154 $ 330,846
Interest bearing:
Savings, NOW, and money market 737,165 782,116
Time   643,715     795,566  
Total deposits 1,728,034 1,908,528
Securities sold under repurchase agreements 2,631 2,018
Other short-term borrowings 4,315 4,141
Junior subordinated debentures 58,378 58,378
Subordinated debt 45,000 45,000
Notes payable and other borrowings 500 500
Other liabilities   23,568     21,398  
Total liabilities 1,862,426 2,039,963
 
Stockholders' Equity
Preferred stock 70,622 69,921
Common stock 18,628 18,467
Additional paid-in capital 65,714 65,209
Retained earnings 21,314 28,335
Accumulated other comprehensive loss (3,107 ) (3,130 )
Treasury stock   (94,893 )   (94,844 )
Total stockholders' equity   78,278     83,958  
Total liabilities and stockholders' equity $ 1,940,704   $ 2,123,921  
 
 
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share data)
       
(unaudited) (unaudited)
Three Months Ended Year to Date
September 30, September 30,
2011 2010 2011 2010
Interest and Dividend Income
Loans, including fees $ 19,800 $ 24,521 $ 61,765 $ 76,291
Loans held-for-sale 72 115 198 295
Securities, taxable 928 1,261 2,691 3,714
Securities, tax exempt 114 210 383 1,644
Dividends from Federal Reserve Bank and Federal Home Loan Bank stock 73 66 216 184
Federal funds sold - 1 1 2
Interest bearing deposits with financial institutions   58     42     197     102  
Total interest and dividend income 21,045 26,216 65,451 82,232
Interest Expense
Savings, NOW, and money market deposits 327 819 1,275 3,404
Time deposits 3,436 4,622 11,220 14,469
Securities sold under repurchase agreements - 4 - 27
Other short-term borrowings - - - 18
Junior subordinated debentures 1,155 1,072 3,401 3,216
Subordinated debt 201 234 610 632
Notes payable and other borrowings   4     4     12     9  
Total interest expense   5,123     6,755     16,518     21,775  
Net interest and dividend income 15,922 19,461 48,933 60,457
Provision for loan losses   3,000     11,825     7,500     75,668  
Net interest and dividend income (expense) after provision for loan losses 12,922 7,636 41,433 (15,211 )
Noninterest Income
Trust income 1,657 1,746 5,156 5,255
Service charges on deposits 2,157 2,238 6,021 6,542
Secondary mortgage fees 269 473 732 1,034
Mortgage servicing loss, net of changes in fair value (328 ) (322 ) (221 ) (876 )
Net gain on sales of mortgage loans 1,314 3,328 3,667 6,716
Securities (loss) gains, net (63 ) 620 588 2,374
Increase in cash surrender value of bank-owned life insurance 233 519 1,130 1,210
Death benefit realized on bank-owned life insurance - 938 - 938
Debit card interchange income 775 699 2,259 2,086
Lease revenue from other real estate owned 1,060 429 2,537 1,389
Net gain on sales of other real estate owned 297 199 933 697
Litigation related income - 2,645 - 2,645
Other income   1,137     1,183     4,044     3,800  
Total noninterest income 8,508 14,695 26,846 33,810
Noninterest Expense
Salaries and employee benefits 7,985 9,227 25,494 27,170
Occupancy expense, net 1,273 1,236 3,928 3,998
Furniture and equipment expense 1,405 1,511 4,340 4,694
FDIC insurance 1,032 848 3,884 3,803
General bank insurance 845 165 2,496 438
Amortization of core deposit and other intangible asset 276 282 711 847
Advertising expense 311 353 731 1,048
Debit card interchange expense 394 349 1,091 996
Legal fees 924 964 2,907 2,189
Other real estate expense 5,353 5,354 16,618 18,627
Other expense   3,022     3,266     9,576     9,973  
Total noninterest expense   22,820     23,555     71,776     73,783  
Loss before income taxes (1,390 ) (1,224 ) (3,497 ) (55,184 )
Benefit for income taxes   -     (1,136 )   -     (23,159 )
Net loss $ (1,390 ) $ (88 ) $ (3,497 ) $ (32,025 )
Preferred stock dividends and accretion   1,190     1,135     3,524     3,394  
Net loss available to common stockholders $ (2,580 ) $ (1,223 ) $ (7,021 ) $ (35,419 )
 
Basic loss per share $ (0.18 ) $ (0.09 ) $ (0.49 ) $ (2.52 )
Diluted loss per share (0.18 ) (0.09 ) (0.49 ) (2.52 )
Dividends declared per share - - - 0.02
 
 
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
Three Months ended September 30, 2011, and 2010
(Dollar amounts in thousands - unaudited)
           
2011 2010
Average

 
Average

 
Balance Interest Rate Balance Interest Rate
Assets
Interest bearing deposits $ 91,178 $ 58 0.25 % $ 72,447 $ 42 0.23 %
Federal funds sold - - - 2,927 1 0.13
Securities:
Taxable 144,581 928 2.57 172,603 1,261 2.92
Non-taxable (tax equivalent)   12,172     176 5.78   21,517     323 6.00
Total securities 156,753 1,104 2.82 194,120 1,584 3.26
Dividends from FRB and FHLB stock 14,050 73 2.08 13,690 66 1.93
Loans and loans held-for-sale 1   1,489,366     19,899 5.23   1,877,175     24,650 5.14
Total interest earning assets 1,751,347 21,134 4.73 2,160,359 26,343 4.78
Cash and due from banks 32,264 - - 36,368 - -
Allowance for loan losses (65,660 ) - - (82,045 ) - -
Other noninterest bearing assets   241,963     - -   277,367     - -
Total assets $ 1,959,914   $ 2,392,049  
 
Liabilities and Stockholders' Equity
NOW accounts $ 259,505 $ 95 0.15 % $ 403,062 $ 240 0.24 %
Money market accounts 285,712 164 0.23 340,450 428 0.50
Savings accounts 193,267 68 0.14 187,367 151 0.32
Time deposits   663,613     3,436 2.05   837,111     4,622 2.19
Interest bearing deposits 1,402,097 3,763 1.06 1,767,990 5,441 1.22
Securities sold under repurchase agreements 1,930 - - 13,587 4 0.12
Other short-term borrowings 2,865 - - 3,111 - -
Junior subordinated debentures 58,378 1,155 7.91 58,378 1,072 7.35
Subordinated debt 45,000 201 1.75 45,000 234 2.03
Notes payable and other borrowings   500     4 3.13   500     4 3.13
Total interest bearing liabilities 1,510,770 5,123 1.35 1,888,566 6,755 1.42
Noninterest bearing deposits 344,757 - - 322,467 - -
Other liabilities 23,738 - - 17,413 - -
Stockholders' equity   80,649     - -   163,603     - -
Total liabilities and stockholders' equity $ 1,959,914   $ 2,392,049  
Net interest income (tax equivalent) $ 16,011 $ 19,588

Net interest income (tax equivalent) to total earning assets
3.63 % 3.60 %
Interest bearing liabilities to earning assets   86.26 %   87.42 %
 

[For complete financial results, go to the investor relations section under 8-K filings at www.oldsecond.com ]

1. Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 19 and includes fees of $448,000 and $641,000 for the third quarter of 2011 and 2010, respectively. Nonaccrual loans are included in the above stated average balances.

Note: Tax equivalent basis is calculated using a marginal tax rate of 35%.
 
 
ANALYSIS OF AVERAGE BALANCES,
TAX EQUIVALENT INTEREST AND RATES
Nine Months ended September 30, 2011, and 2010
(Dollar amounts in thousands - unaudited)
           

2011

2010
Average

 
Average

 
Balance Interest Rate Balance Interest Rate
Assets
Interest bearing deposits $ 105,618 $ 197 0.25 % $ 59,495 $ 102 0.23 %
Federal funds sold 713 1 0.18 2,138 2 0.12
Securities:
Taxable 134,596 2,691 2.67 159,221 3,714 3.11
Non-taxable (tax equivalent)   13,364     590 5.89   55,156     2,529 6.11
Total securities 147,960 3,281 2.96 214,377 6,243 3.88
Dividends from FRB and FHLB stock 13,934 216 2.07 13,392 184 1.83
Loans and loans held-for-sale 1   1,575,039     62,024 5.19   1,950,797     76,653 5.18
Total interest earning assets 1,843,264 65,719 4.70 2,240,199 83,184 4.90
Cash and due from banks 34,023 - - 37,060 - -
Allowance for loan losses (73,201 ) - - (74,029 ) - -
Other noninterest bearing assets   238,975     - -   269,914     - -
Total assets $ 2,043,061   $ 2,473,144  
 
Liabilities and Stockholders' Equity
NOW accounts $ 265,126 $ 347 0.17 % $ 410,701 $ 934 0.30 %
Money market accounts 297,603 670 0.30 373,468 1,895 0.68
Savings accounts 191,256 258 0.18 187,336 575 0.41
Time deposits   724,219     11,220 2.07   854,632     14,469 2.26
Interest bearing deposits 1,478,204 12,495 1.13 1,826,137 17,873 1.31
Securities sold under repurchase agreements 1,911 - - 18,649 27 0.19
Other short-term borrowings 2,900 - - 5,664 18 0.42
Junior subordinated debentures 58,378 3,401 7.77 58,378 3,216 7.35
Subordinated debt 45,000 610 1.79 45,000 632 1.85
Notes payable and other borrowings   500     12 3.16   500     9 2.37
Total interest bearing liabilities 1,586,893 16,518 1.39 1,954,328 21,775 1.49
Noninterest bearing deposits 354,038 - - 318,762 - -
Other liabilities 21,651 - - 18,166 - -
Stockholders' equity   80,479     - -   181,888     - -
Total liabilities and stockholders' equity $ 2,043,061   $ 2,473,144  
Net interest income (tax equivalent) $ 49,201 $ 61,409

Net interest income (tax equivalent) to total earning assets
3.57 % 3.67 %
Interest bearing liabilities to earning assets   86.09 %   87.24 %
 

[For complete financial results, go to the investor relations section under 8-K filings at www.oldsecond.com ]

1. Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 19 and includes fees of $1.7 million and $1.9 million for the first nine months of 2011 and 2010, respectively. Nonaccrual loans are included in the above stated average balances.

Note: Tax equivalent basis is calculated using a marginal tax rate of 35%.

The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent. (Dollar amounts in thousands- unaudited)

   
Three Months Ended Year to Date
September 30, September 30,
2011   2010 2011   2010
Net Interest Margin

 

 

 

 
Interest income (GAAP) $ 21,045 $ 26,216 $ 65,451 $ 82,232
Taxable equivalent adjustment:
Loans 27 14 61 67
Securities   62     113     207     885  
Interest income (TE) 21,134 26,343 65,719 83,184
Interest expense (GAAP)   5,123     6,755     16,518     21,775  
Net interest income (TE) $ 16,011   $ 19,588   $ 49,201   $ 61,409  
Net interest income (GAAP) $ 15,922   $ 19,461   $ 48,933   $ 60,457  
Average interest earning assets $ 1,751,347 $ 2,160,359 $ 1,843,264 $ 2,240,199
Net interest margin (GAAP) 3.61 % 3.57 % 3.55 % 3.61 %
Net interest margin (TE) 3.63 % 3.60 % 3.57 % 3.67 %
 
 
Efficiency Ratio
Noninterest expense $ 22,820 $ 23,555 $ 71,776 $ 73,783

Less amortization of core deposit and other intangible asset
276 282 711 847
Less other real estate expense   5,353     5,354     16,618     18,627  
Adjusted noninterest expense 17,191 17,919 54,447 54,309
Net interest income (GAAP) 15,922 19,461 48,933 60,457
Taxable-equivalent adjustment:
Loans 27 14 61 67
Securities   62     113     207     885  
Net interest income (TE) 16,011 19,588 49,201 61,409
Noninterest income 8,508 14,695 26,846 33,810

Less death benefit related to bank-owned life insurance
- 938 - 938
Less litigation settlement income - 2,645 - 2,645
Less securities gain (loss), net (63 ) 620 588 2,374
Less gain on sale of OREO   297     199     933     697  

Adjusted noninterest income, plus net interest income (TE)
24,285 29,881 74,526 88,565
Efficiency ratio 70.79 % 59.97 % 73.06 % 61.32 %
   
(unaudited) (unaudited)
As of September 30, December 31,
2011   2010 2010
(dollars in thousands)
Tier 1 capital
Total stockholders' equity $ 78,278 $ 161,569 $ 83,958
Tier 1 adjustments:
Trust preferred securities 27,128 54,740 29,029
Cumulative other comprehensive loss 3,107 2,652 3,130
Disallowed intangible assets (4,814 ) (5,807 ) (5,525 )
Disallowed deferred tax assets (2,175 ) (66,739 ) (2,064 )
Other   (360 )   (245 )   (390 )
Tier 1 capital $ 101,164   $ 146,170   $ 108,138  
 
Total capital
Tier 1 capital $ 101,164 $ 146,170 $ 108,138
Tier 2 additions:
Allowable portion of allowance for loan losses 20,288 24,453 22,875

Additional trust preferred securities disallowed for tier 1 capital
29,497 1,885 27,596
Subordinated debt 45,000 45,000 45,000
Other Tier 2 capital components   (7 )   (7 )   (7 )
Total capital $ 195,942   $ 217,501   $ 203,602  
 
Tangible common equity
Total stockholders' equity $ 78,278 $ 161,569 $ 83,958
Less: Preferred equity 70,622 69,695 69,921
Intangible assets   4,814     5,807     5,525  
Tangible common equity $ 2,842   $ 86,067   $ 8,512  
 
Tier 1 common equity
Tangible common equity $ 2,842 $ 86,067 $ 8,512
Tier 1 adjustments:
Cumulative other comprehensive loss 3,107 2,652 3,130
Other   (2,535 )   (66,984 )   (2,454 )
Tier 1 common equity $ 3,414   $ 21,735   $ 9,188  
 
Tangible assets
Total assets $ 1,940,704 $ 2,297,904 $ 2,123,921
Less:
Intangible assets   4,814     5,807     5,525  
Tangible assets $ 1,935,890   $ 2,292,097   $ 2,118,396  
 
Total risk-weighted assets
On balance sheet $ 1,533,543 $ 1,840,794 $ 1,723,519
Off balance sheet   49,902     71,727     53,051  
Total risk-weighted assets $ 1,583,445   $ 1,912,521   $ 1,776,570  
 
Average assets
Total average assets for leverage $ 1,952,565 $ 2,319,257 $ 2,281,579

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