Old Second Bancorp (OSBC) in Aurora, Ill., joined the growing list of banks benefiting from the recapture of its deferred-tax asset valuation allowance.
The $2 billion-asset company earned $73 million in the third quarter, including a $70 million benefit tied to its deferred-tax asset. Including the cost of preferred stock dividends, the company earned $2.2 million in the second quarter and lost $1.1 million a year earlier.
Old Second's net interest income fell 2% from a year earlier, to $14.3 million. Loan growth was restrained by competition from other lenders and low demand from small-business customers, Chairman Bill Skoglund said in a press release Wednesday. The net interest margin compressed 19 basis points from a year earlier, to 3.25%.
Noninterest income fell 21% from a year earlier, to $7.8 million. Old Second's residential mortgage business was stung by higher market interest rates, Skoglund said.
Noninterest expenses fell 16% from a year earlier, to $20.9 million. Lower foreclosure-related costs contributed to the decline.
The company added $1.8 million to its earnings by reversing its loan-loss provision. It did not have a loan-loss provision a year earlier.
Old Second was released from a 2011 consent order issued by the Office of the Comptroller of the Currency earlier this month. The order required it to reduce credit risk and maintain a minimum Tier 1 capital ratio of at least 8.75%, among other requirements.
The company reported a 10.07% Tier 1 capital ratio at Sept. 30.