Exhibit 99.1

 

Old Second Bancorp, Inc.		For Immediate Release
(NASDAQ: OSBC)		October 23, 2013

 

Contact:	J. Douglas Cheatham
	Chief Financial Officer
	(630) 906-5484

 

Old Second Bancorp, Inc. Announces Third Quarter Net Income of $72.9 Million

 

Reversal of valuation allowance against deferred tax assets resulted in a $70 million benefit

Net income before taxes of $2.9 million for the quarter

 

Regulatory Consent Order (OCC) terminated

 

Loan loss reserve release reflects stabilized and improved credit quality

 

AURORA, IL, October 23, 2013 — Old Second Bancorp, Inc. (the “Company” or “Old Second”) (NASDAQ: OSBC), parent company of Old Second National Bank (the “Bank”), today announced financial results for the third quarter of 2013.  The Company reported net income of $72.9 million after a $70.0 million benefit from the reversal of the valuation allowance against deferred tax assets.  Income before taxes for the quarter, reflecting the benefit of a $1.8 million reversal in loan loss reserve, totaled $2.9 million.  These results compare to net income of $3.5 million in the second quarter of this year and $120,000 in the third quarter of 2012.  The Company’s net income available to common shareholders of $71.6 million, or $5.08 per diluted share ($0.11 per share excluding the reversal of the valuation allowance against deferred tax assets), for the quarter compared to net loss available to common shareholders of $1.1 million or $(0.08) per diluted share, in the third quarter of 2012.

 

The Company reported net income of $81.9 million for the first nine months of 2013 ($11.9 million income before taxes excluding the reversal of the valuation allowance against the deferred tax assets), compared to a net loss of $1.6 million in the same period of 2012.  The Company’s net income available to common shareholders of $78.0 million, or $5.52 per diluted share ($0.56 per share excluding the reversal of the valuation allowance against the deferred tax assets), for the first nine months of 2013 compared to a net loss available to common shareholders of $5.3 million, or $(0.37) per diluted share, in the first nine months of 2012.

 

Chairman Bill Skoglund said “Results for the third quarter and for the first nine months of 2013 reflect ongoing progress in our return to enduring profitability.  Improvements in overall real estate markets in our market areas were offset by intense competition from other financial institutions and low loan demand from our small business customers resulting in restrained loan growth.  Further, the move to a higher market interest rate environment pressured our residential mortgage business in the same manner as seen nationwide.”

 

Mr. Skoglund continued “Our momentum is building as our bankers solidify existing relationships and add to pipelines with current and prospective customers.  Our organization becomes stronger as problems from past decisions are resolved — evidenced by the action taken in the third quarter to reverse the reserve against our deferred tax assets and by this month’s decision of the Office of the Comptroller of Currency to terminate the Consent Order under which we’ve been operating.  Nonaccrual loans are down to $43.6 million from $77.5 million at December 31, 2012 and $58.2 million at June 30, 2013.  Similarly, other real estate owned declined to $49.1 million from $72.4 million at year end 2012 and $59.5 million at June 30, 2013.  Our mission remains robust improvement in earnings per share from greater revenues in all our products coupled with disciplined expense management.”

 

1

 

2013 Financial Highlights/Overview

 

Operating Environment

 

·      Loan growth prospects reasonably improving.  Overall loan growth goal not yet attained.

·      Loyal deposit customers and value added customer service maintains deposit base.

·      Troubled real estate owned and real estate markets stabilizing.

·      Marketable securities portfolio managed to utilize liquid funds in low interest rate environment.

 

Earnings

 

·      Third quarter income before taxes of $2.9 million compared to income before taxes of $120,000 in the third quarter of 2012.  The increase was primarily due to the release of $1.8 million in loan loss reserves and reduced other real owned estate expenses.

·      Net income available to common shareholders of $71.6 million for the third quarter reflected the benefit of the reversal of the valuation allowance against the deferred tax assets.

·      In 2013, income before taxes declined from $3.5 million in the second quarter to $2.9 million in the third quarter.  This decline primarily resulted from a $1.6 million, or 56.3%, reduction in residential mortgage revenue, and reduced gains on securities sales from $745,000 in the second quarter to a $7,000 loss in the third quarter.

·      The tax-equivalent net interest margin was 3.25% during the third quarter of 2013 compared to 3.44% in the same quarter of 2012.  The third quarter of 2013 margin was an increase of 18 basis points compared to the second quarter of 2013.

·      Noninterest income of $29.5 million was $1.7 million lower in the first nine months of 2013 compared to the same period of 2012, reflecting reduced residential mortgage revenue, service charges on deposits, and lease revenue from other real estate owned (“OREO”).

·      Noninterest expenses of $65.2 million were 9.4% lower in the first nine months of 2013 than in the same period of 2012, reflecting overall expense control and reduced expenses in most categories.  Notable reductions are found in OREO expenses (down $6.9 million year over year essentially on still elevated but improved valuation adjustment expense, general bank insurance and the partial accounting recovery of some legal fees paid on OREO.

 

Capital

 

		September 30,		June 30,		Percent
		2013		2013		Change
The Bank’s leverage capital ratio		11.08	%	10.40	%	0.68	%
The Bank’s total risk-based capital ratio		17.08	%	16.30	%	0.78	%
The Company’s leverage capital ratio		7.11	%	5.46	%	1.65	%
The Company’s total risk-based capital ratio		15.15	%	14.70	%	0.45	%
The Company’s tangible common equity to tangible assets		3.33	%	(0.18	)%	3.51	%

 

Asset Quality & Earning Assets

 

·      Nonperforming loans declined $34.8 million (42.2%) during the nine months ending September 30, 2013 to $47.8 million, from $82.6 million as of December 31, 2012.  Nonperforming loans declined primarily because of successful negotiations by our staff with guarantors and movement to OREO, as well as loans being upgraded to accruing status when the financial condition of borrowers improved.

 

·      OREO declined from $72.4 million at December 31, 2012, to $49.1 million at September 30, 2013.  OREO dispositions totaling $30.9 million in the nine month period ending September 30, 2013 were somewhat offset by new OREO and improvements to existing OREO of $14.3

 

2

 

million.  Valuation write-downs of properties held for sale reduced the reported total by $6.7 million with related expense recognized.

 

·      Securities available-for-sale decreased $206.4 million during 2013 to $373.5 million from $579.9 million at December 31, 2012 with the third quarter reclassification of $258.1 million to the held-to-maturity category.  In all prior periods, all securities were held as available for sale.  At $269.0 million (72.0% of the September 30, 2013 available-for-sale portfolio), of asset-backed securities were the largest component of the available-for-sale portfolio and total securities holdings as of September 30, 2013.  The Company’s asset-backed securities were heavily oriented to those backed by student loan debt guaranteed by the U.S. Department of Education.

 

3

 

Net Interest Income

 

ANALYSIS OF AVERAGE BALANCES,

TAX EQUIVALENT INTEREST AND RATES

Three Months ended September 30, 2013, and 2012

(Dollar amounts in thousands - unaudited)

 

		2013								2012
		Average								Average
		Balance			Interest			Rate		Balance			Interest			Rate
Assets
Interest bearing deposits		$	36,456		$	22		0.24	%	$	46,138		$	29		0.25	%
Securities:
Taxable		605,546			3,113			2.06		404,855			1,868			1.85
Non-taxable (tax equivalent)		13,937			228			6.54		9,518			151			6.35
Total securities		619,483			3,341			2.16		414,373			2,019			1.95
Dividends from FRB and FHLB stock		10,292			76			2.95		11,984			77			2.57
Loans and loans held-for-sale (1)		1,088,936			14,382			5.17		1,230,180			16,279			5.18
Total interest earning assets		1,755,167			17,821			3.99		1,702,675			18,404			4.24
Cash and due from banks		19,584			—			—		31,850			—			—
Allowance for loan losses		(34,197		)	—			—		(40,823		)	—			—
Other noninterest bearing assets		190,836			—			—		228,859			—			—
Total assets		$	1,931,390							$	1,922,561
Liabilities and Stockholders’ Equity
NOW accounts		$	283,192		$	63		0.09	%	$	270,908		$	65		0.10	%
Money market accounts		311,213			104			0.13		321,762			137			0.17
Savings accounts		225,825			39			0.07		213,927			51			0.09
Time deposits		493,722			1,674			1.35		526,314			1,973			1.49
Interest bearing deposits		1,313,952			1,880			0.57		1,332,911			2,226			0.66
Securities sold under repurchase agreements		21,646			1			0.02		7,164			1			0.06
Other short-term borrowings		15,707			5			0.12		652			—			—
Junior subordinated debentures		58,378			1,336			9.15		58,378			1,243			8.52
Subordinated debt		45,000			209			1.82		45,000			223			1.94
Notes payable and other borrowings		500			4			3.13		500			5			3.91
Total interest bearing liabilities		1,455,183			3,435			0.94		1,444,605			3,698			1.02
Noninterest bearing deposits		366,889			—			—		380,226			—			—
Other liabilities		37,466			—			—		28,130			—			—
Stockholders’ equity		71,852			—			—		69,600			—			—
Total liabilities and stockholders’ equity		$	1,931,390							$	1,922,561
Net interest income (tax equivalent)					$	14,386							$	14,706
Net interest income (tax equivalent) to total earning assets								3.25	%							3.44	%
Interest bearing liabilities to earning assets		82.91		%						84.84		%

 

(1)  Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 19 and includes fees of $793,000 and $498,000 for the third quarter of 2013 and 2012, respectively.  Nonaccrual loans are included in the above stated average balances.

 

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

 

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ANALYSIS OF AVERAGE BALANCES,

TAX EQUIVALENT INTEREST AND RATES

Nine Months ended September 30, 2013, and 2012

(Dollar amounts in thousands - unaudited)

 

		2013								2012
		Average								Average
		Balance			Interest			Rate		Balance			Interest			Rate
Assets
Interest bearing deposits		$	49,676		$	91		0.24	%	$	48,871		$	89		0.24	%
Securities:
Taxable		574,761			8,109			1.88		365,549			5,222			1.90
Non-taxable (tax equivalent)		14,912			679			6.07		10,417			467			5.98
Total securities		589,673			8,788			1.99		375,966			5,689			2.02
Dividends from FRB and FHLB stock		10,742			228			2.83		12,562			228			2.42
Loans and loans held-for-sale (1)		1,116,964			43,327			5.12		1,293,533			51,741			5.26
Total interest earning assets		1,767,055			52,434			3.92		1,730,932			57,747			4.39
Cash and due from banks		24,110			—			—		27,528			—			—
Allowance for loan losses		(37,122		)	—			—		(46,824		)	—			—
Other noninterest bearing assets		196,298			—			—		236,281			—			—
Total assets		$	1,950,341							$	1,947,917
Liabilities and Stockholders’ Equity
NOW accounts		$	290,691		$	192		0.09	%	$	275,712		$	204		0.10	%
Money market accounts		319,876			342			0.14		311,046			438			0.19
Savings accounts		226,193			121			0.07		211,331			165			0.10
Time deposits		498,846			5,327			1.43		565,183			6,920			1.64
Interest bearing deposits		1,335,606			5,982			0.60		1,363,272			7,727			0.76
Securities sold under repurchase agreements		22,206			2			0.01		4,502			2			0.06
Other short-term borrowings		20,000			24			0.16		4,635			4			0.11
Junior subordinated debentures		58,378			3,937			8.99		58,378			3,660			8.36
Subordinated debt		45,000			610			1.79		45,000			684			2.00
Notes payable and other borrowings		500			12			3.16		500			13			3.42
Total interest bearing liabilities		1,481,690			10,567			0.95		1,476,287			12,090			1.09
Noninterest bearing deposits		359,438			—			—		373,975			—			—
Other liabilities		35,432			—			—		25,629			—			—
Stockholders’ equity		73,781			—			—		72,026			—			—
Total liabilities and stockholders’ equity		$	1,950,341							$	1,947,917
Net interest income (tax equivalent)					$	41,867							$	45,657
Net interest income (tax equivalent) to total earning assets								3.17	%							3.52	%
Interest bearing liabilities to earning assets		83.85		%						85.29		%

 

(1)  Interest income from loans is shown on a tax equivalent basis as discussed in the table on page 19 and includes fees of $2.0 million and $1.4 million for the first nine months of 2013 and 2012, respectively.  Nonaccrual loans are included in the above stated average balances.

 

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

 

Net interest and dividend income decreased $3.9 million, from $45.4 million in the first nine months of 2012, to $41.6 million in the first nine months of 2013.  Average earning assets increased $36.1 million, or 2.1%, from $1.73 billion in the first nine months of 2012, to $1.77 billion in the first nine months of 2013 as a result of growth in investment securities.  Management continued to emphasize asset quality in marketable securities purchases and new loan originations continued to be limited.  Average loans, including loans held-for-sale, decreased $176.6 million from the first nine months of 2012 to the first nine months of 2013.  The net interest margin was 3.25% for the third quarter of 2013 compared to 3.44% on this metric for the third quarter of 2012.

 

5

 

Asset Quality

 

		Three Months Ended						Year to Date
Loan Charge-offs, net of (recoveries)		September 30,						September 30,
(in thousands)		2013			2012			2013			2012
Real estate-construction
Homebuilder		$	(5	)	$	(151	)	$	(307	)	$	768
Land		44			(57		)	42			(723		)
Commercial speculative		—			(1,130		)	(49		)	668
All other		(1		)	45			—			165
Total real estate-construction		38			(1,293		)	(314		)	878
Real estate-residential
Investor		2,218			187			2,133			3,234
Owner occupied		350			343			401			1,440
Revolving and junior liens		817			481			1,867			1,290
Total real estate-residential		3,385			1,011			4,401			5,964
Real estate-commercial, nonfarm
Owner general purpose		(5		)	(39		)	(43		)	1,100
Owner special purpose		(5		)	62			(148		)	1,288
Non-owner general purpose		—			119			(156		)	4,492
Non-owner special purpose		73			—			(751		)	78
Retail properties		265			137			(277		)	4,038
Total real estate-commercial, nonfarm		328			279			(1,375		)	10,996
Real estate-commercial, farm		—			—			—			—
Commercial		(31		)	(20		)	204			78
Other		25			52			84			108
		$	3,745		$	29		$	3,000		$	18,024

 

Charge-offs for third quarter 2013 were primarily from previously established specific reserves on nonaccrual loans deemed uncollectible.  Charge-off activity continued to improve for the year to date period in 2013 compared to the same year to date period in 2012, reflecting an improved economy in our target markets and past work done on loan quality improvement.

 

		Nonperforming Loans as of									September 30, 2013 Dollar change From
		September 30,			June 30,			September 30,			June 30,			September 30,
(in thousands)		2013			2013			2012			2013			2012
Real estate-construction		$	5,928		$	6,303		$	16,035		$	(375	)	$	(10,107	)
Real estate-residential:
Investor		8,307			13,662			13,007			(5,355		)	(4,700		)
Owner occupied		6,212			7,927			14,875			(1,715		)	(8,663		)
Revolving and junior liens		2,543			3,431			3,306			(888		)	(763		)
Real estate-commercial, nonfarm		24,754			31,190			55,642			(6,436		)	(30,888		)
Real estate-commercial, farm		—			53			1,790			(53		)	(1,790		)
Commercial		29			104			1,157			(75		)	(1,128		)
		$	47,773		$	62,670		$	105,812		$	(14,897	)	$	(58,039	)

 

Nonperforming loans consist of nonaccrual loans, nonperforming restructured accruing loans and loans 90 days or greater past due still accruing.  The largest decrease in the nonperforming loans since September 30, 2012 was in the real estate-commercial, nonfarm segment as this segment’s upgrades and migration to OREO were greater than the migration of loans to nonperforming status.

 

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		Classified loans as of									September 30, 2013 Dollar Change From
		September 30,			June 30,			September 30,			June 30,			September 30,
(in thousands)		2013			2013			2012			2013			2012
Real estate-construction		$	6,236		$	7,005		$	22,387		$	(769	)	$	(16,151	)
Real estate-residential:
Investor		10,642			13,968			16,406			(3,326		)	(5,764		)
Owner occupied		7,292			11,008			17,684			(3,716		)	(10,392		)
Revolving and junior liens		3,675			5,086			5,053			(1,411		)	(1,378		)
Real estate-commercial, nonfarm		40,832			43,827			73,720			(2,995		)	(32,888		)
Real estate-commercial, farm		—			53			1,790			(53		)	(1,790		)
Commercial		264			705			1,748			(441		)	(1,484		)
Other		1			1			5			—			(4		)
		$	68,942		$	81,653		$	138,793		$	(12,711	)	$	(69,851	)

 

Classified loans include nonaccrual, performing troubled debt restructurings and all other loans considered substandard.  All three components are down since September 30, 2012.  Classified assets include both classified loans and OREO.  Management monitors a ratio of classified assets to the sum of Bank Tier 1 capital and the allowance for loan and lease loss reserve.  This ratio reflects another measure of overall improvement in loan related asset quality.  The decline in both classified loans and OREO as well as improved Tier 1 capital in the third quarter improved this ratio for the eleventh straight quarter.

 

 

7

 

Allowance for Loan and Lease Losses

 

Below is a reconciliation for the activity for the periods indicated (in thousands):

 

		Three Months Ending
		9/30/2013			6/30/2013			9/30/2012
Allowance at beginning of quarter		$	35,042		$	38,634		$	40,286
Charge-offs:
Commercial		29			25			2
Real estate - commercial		851			1,018			355
Real estate - construction		53			894			909
Real estate - residential		3,594			1,014			1,230
Consumer and other loans		168			134			186
Total charge-offs		4,695			3,085			2,682
Recoveries:
Commercial		60			25			22
Real estate - commercial		523			505			76
Real estate - construction		15			480			2,202
Real estate - residential		209			179			219
Consumer and other loans		143			104			134
Total recoveries		950			1,293			2,653
Net charge-offs (recoveries)		3,745			1,792			29
(Release) provision for loan losses		(1,750		)	(1,800		)	—
Allowance at end of quarter		$	29,547		$	35,042		$	40,257
Average total loans (exclusive of loans held-for-sale)		$	1,085,487		$	1,113,315		$	1,222,829
Net charge-offs to average loans		0.35		%	0.16		%	0.00		%
Allowance at quarter end to average loans		2.72		%	3.15		%	3.29		%
Ending balance: Individually evaluated for impairment		$	2,150		$	5,036		$	7,585
Ending balance: Collectively evaluated for impairment		$	27,397		$	30,006		$	32,672

 

The coverage ratio of the allowance for loan losses to nonperforming loans was 61.9% as of September 30, 2013, which reflects an increase from 55.9% as of June 30, 2013.  A decrease of $14.9 million in nonperforming loans in the three months drove the overall coverage ratio change.  Management updated the estimated specific allocations in the third quarter after receiving more recent appraisals for detailed collateral valuations or information on cash flow trends related to the impaired credits.  Management determined the estimated amount to provide in the allowance for loan losses based upon a number of considerations, including loan growth or contraction, the quality and composition of the loan portfolio and loan loss experience.  The latter item was also weighted more heavily based upon recent loss experience.  The construction and development (“C & D”) portfolio, which has accounted for significant losses in previous periods, has had diminished adverse migration and the remaining credits are exhibiting more stable credit characteristics.  Management believes that adequate reserves have been established for the inherent risk of loss in the C & D portfolio.

 

Management regularly reviews the performance of the higher risk pool within commercial real estate loans and adjusts the population and the related loss factors taking into account adverse market trends, including collateral valuation, as well as assessments of the credits in that pool.  Those assessments capture management’s estimate of the potential for adverse migration to an impaired status as well as its estimation of what the potential valuation impact from that migration would be if it were to occur.  The amount of assets subject to this pool factor decreased by 36.5% at September 30, 2013, as compared to December 31, 2012.  Management has also observed that many stresses in those credits were generally attributable to cyclical economic events that were showing some signs of stabilization.  Those signs included a reduction in loan migration to watch status, as well as a decrease in 30 to 89 day past due loans and some stabilization in values of certain properties.

 

The above changes in estimates were made by management to be consistent with observable trends within loan portfolio segments and in conjunction with market conditions and credit review administration activities.  Several environmental factors are also evaluated on an ongoing basis and are

 

8

 

included in the assessment of the adequacy of the allowance for loan losses. Management determined that an overall improvement in loan asset quality justified a $1.8 million loan loss reserve release in the third quarter.  When measured as a percentage of loans outstanding, the total allowance for loan losses decreased from 3.33% of total loans as of September 30, 2012, to 2.74% of total loans at September 30, 2013.  In management’s judgment, an adequate allowance for estimated losses has been established for inherent losses at September 30, 2013; however, there can be no assurance that actual losses will not exceed the estimated amounts in the future.

 

Other Real Estate Owned

 

OREO decreased $10.4 million, from $59.5 million at June 30, 2013, to $49.1 million at September 30, 2013.  Disposition activity and valuation writedowns in the third quarter more than offset numerous but smaller dollar additions to OREO, leading to this overall decrease.  In the third quarter of 2013, management successfully managed OREO transactions as shown below.  As a result, OREO holdings in all categories (vacant land suitable for farming, single family residences, lots suitable for development, multi-family and commercial property) were down in the quarter.  Overall, a net gain on sale of $608,000 was realized in the third quarter.

 

		Three Months Ended						Year to Date
		September 30,						September 30,
(in thousands)		2013			2012			2013			2012
Beginning balance		$	59,465		$	89,671		$	72,423		$	93,290
Property additions		3,015			7,594			14,196			26,944
Development improvements		10			131			60			646
Less:
Property disposals		11,463			4,829			30,928			20,517
Period valuation adjustments		1,961			4,474			6,685			12,270
Other real estate owned		$	49,066		$	88,093		$	49,066		$	88,093

 

The OREO valuation reserve decreased to $24.6 million, which was 33.4% of gross OREO at September 30, 2013.  The valuation reserve represented 24.9% and 30.3% of gross OREO at September 30, 2012 and December 31, 2012, respectively.  In management’s judgment, an adequate property valuation allowance has been established to present OREO at current estimates of fair value less costs to sell; however, there can be no assurance that additional losses will not be incurred on disposition or updates to valuation in the future.

 

OREO Properties by Type

 

		September 30, 2013					June 30, 2013					September 30, 2012
(in thousands)		Amount			% of Total		Amount			% of Total		Amount			% of Total
Single family residence		$	6,585		13%		$	8,161		14%		$	10,642		12%
Lots (single family and commercial)		18,993			39%		23,781			40%		29,638			34%
Vacant land		3,135			6%		3,266			5%		7,325			8%
Multi-family		2,194			5%		2,210			4%		9,447			11%
Commercial property		18,159			37%		22,047			37%		31,041			35%
Total OREO properties		$	49,066		100%		$	59,465		100%		$	88,093		100%

 

9

 

Net OREO Aging

 

		September 30, 2013					June 30, 2013					September 30, 2012
(in thousands)		Amount			% of Total		Amount			% of Total		Amount			% of Total
0-90 Days		$	3,012		6%		$	4,025		7%		$	7,249		8%
91-180 Days		3,033			6%		3,086			5%		2,654			3%
181 Days - 1 Year		4,968			10%		6,380			11%		18,036			21%
1 Year to 2 Years		10,569			22%		20,356			34%		44,836			51%
2 Years to 3 Years		20,738			42%		17,404			29%		10,507			12%
3 Years to 4 Years		5,189			11%		4,529			8%		4,663			5%
4 Years +		1,557			3%		3,685			6%		148			0%
Total		$	49,066		100%		$	59,465		100%		$	88,093		100%

 

As part of our OREO management process, we age or track the time that OREO is held for sale.  The table above shows that, in total, where 32% of our OREO at September 30, 2012, had been held for less than one year, that percentage dropped to 22% at September 30, 2013.  When properties are tracked as being held for one to three years, the percentage of total OREO in those categories rose to 64% at September 30, 2013, essentially unchanged from 63% at September 30, 2012.  While the dollar totals held for more than three years were smaller than other aging categories, a similar trend was found in properties held in OREO for more than three years (14% as of September 30, 2013, an increase of 9% from September 30, 2012) with approximately $1.6 million held for over four years at September 30, 2013.

 

While newer properties additions to our OREO have slowed, some items held in OREO have been slow to sell leading to the above aging trend.  Properties held for longer periods can be a source of incremental cost as they age on the market.

 

Noninterest Income

 

		Three Months Ended									September 30, 2013 Dollar Change From
		September 30,			June 30,			September 30,			June 30,			September 30,
(in thousands)		2013			2013			2012			2013			2012
Noninterest income
Trust income		$	1,494		$	1,681		$	1,489		$	(187	)	$	5
Service charges on deposits		1,904			1,799			1,982			105			(78		)
Residential mortgage revenue		1,232			2,821			2,699			(1,589		)	(1,467		)
Securities gains, net		(7		)	745			513			(752		)	(520		)
Increase in cash surrender value of bank-owned life insurance		419			372			425			47			(6		)
Death benefit realized on bank-owned life insurance		6			375			—			(369		)	6
Debit card interchange income		873			900			788			(27		)	85
Lease revenue from other real estate owned		309			257			840			52			(531		)
Net gain on sales of other real estate owned		608			386			20			222			588
Other income		1,549			1,147			1,592			402			(43		)
Total noninterest income		$	8,387		$	10,483		$	10,348		$	(2,096	)	$	(1,961	)

 

Noninterest income is down in the third quarter from the second quarter as a result of sharply lower residential mortgage revenue and gains on securities sales.  Other income increased in the third quarter from the second quarter on recognition in income of a forfeited purchase deposit from a loan sale where the purchaser did not complete the sale as contractually required.  Similar results are found in the year over year comparison except that other income was essentially flat.

 

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