XML 32 R19.htm IDEA: XBRL DOCUMENT
v3.20.2

Regulatory & Capital Matters | 9 Months Ended
--- | ---
Sep. 30, 2020
Regulatory & Capital Matters |
Regulatory & Capital Matters | Note 11 – Regulatory & Capital Matters ​ The Bank is subject to the risk-based capital regulatory guidelines, which include the methodology for calculating the risk-weighted Bank assets, developed by the Office of the Comptroller of the Currency (the “OCC”) and the other bank regulatory agencies. In connection with the current risk-based capital regulatory guidelines, the Bank’s Board of Directors has established an internal guideline requiring the Bank to maintain a Tier 1 leverage capital ratio at or above eight percent (8%) and a total risk-based capital ratio at or above twelve percent (12%). At September 30, 2020, the Bank exceeded those thresholds. ​ At September 30, 2020, the Bank’s Tier 1 capital leverage ratio was 10.90%, a decrease of 160 basis points from December 31, 2019, but is well above the 8.00% objective. The reduction in the Tier 1 capital leverage ratio is primarily due to a $30.0 million dividend the Bank paid the Company in March 2020.The Bank’s total capital ratio was 15.49%, an increase of 26 basis points from December 31, 2019, and also well above the objective of 12.00%. ​ Bank holding companies are generally required to maintain minimum levels of capital in accordance with capital guidelines implemented by the Board of Governors of the Federal Reserve System. The general bank and holding company capital adequacy guidelines are shown in the accompanying table, as are the capital ratios of the Company and the Bank, as of September 30, 2020, and December 31, 2019. ​ In July 2013, the U.S. federal banking authorities issued final rules (the “Basel III Rules”) establishing more stringent regulatory capital requirements for U.S. banking institutions, which went into effect on January 1, 2015. The Basel III Rules are applicable to all banking organizations that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as to bank and savings and loan holding companies, other than “small bank holding companies” generally holding companies with consolidated assets of less than $3 billion. The Company is currently considered a “small bank holding company.” A detailed discussion of the Basel III Rules is included in Part I, Item 1 of the Company’s Form 10-K for the year ended December 31, 2019, under the heading “Supervision and Regulation.” ​ At September 30, 2020, and December 31, 2019, the Company, on a consolidated basis, exceeded the minimum thresholds to be considered “well capitalized” under current regulatory defined capital ratios. ​ Capital levels and industry defined regulatory minimum required levels are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Minimum Capital | ​ | Well Capitalized | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Adequacy with Capital | ​ | Under Prompt Corrective | ​
​ | ​ | Actual | ​ | Conservation Buffer, if applicable1 | ​ | Action Provisions2 | ​
​ |  | Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio | ​
September 30, 2020 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | $ | 269,874 | ​ | 11.97 | % | ​ | $ | 157,821 | ​ | 7.000 | % | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 319,662 | ​ | 14.24 | ​ | ​ | ​ | 157,137 | ​ | 7.000 | ​ | ​ | $ | 145,913 | ​ | 6.50 | %
Total capital to risk weighted assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | ​ | 323,041 | ​ | 14.33 | ​ | ​ | ​ | 236,701 | ​ | 10.500 | ​ | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 347,723 | ​ | 15.49 | ​ | ​ | ​ | 235,706 | ​ | 10.500 | ​ | ​ | ​ | 224,482 | ​ | 10.00 | ​
Tier 1 capital to risk weighted assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | ​ | 294,874 | ​ | 13.08 | ​ | ​ | ​ | 191,623 | ​ | 8.500 | ​ | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 319,662 | ​ | 14.24 | ​ | ​ | ​ | 190,809 | ​ | 8.500 | ​ | ​ | ​ | 179,585 | ​ | 8.00 | ​
Tier 1 capital to average assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | ​ | 294,874 | ​ | 10.07 | ​ | ​ | ​ | 117,130 | ​ | 4.00 | ​ | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 319,662 | ​ | 10.90 | ​ | ​ | ​ | 117,307 | ​ | 4.00 | ​ | ​ | ​ | 146,634 | ​ | 5.00 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2019 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital to risk weighted assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | $ | 251,477 | ​ | 11.14 | % | ​ | $ | 158,020 | ​ | 7.000 | % | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 322,496 | ​ | 14.35 | ​ | ​ | ​ | 157,315 | ​ | 7.000 | ​ | ​ | $ | 146,078 | ​ | 6.50 | %
Total capital to risk weighted assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | ​ | 327,886 | ​ | 14.53 | ​ | ​ | ​ | 236,944 | ​ | 10.500 | ​ | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 342,280 | ​ | 15.23 | ​ | ​ | ​ | 235,978 | ​ | 10.500 | ​ | ​ | ​ | 224,741 | ​ | 10.00 | ​
Tier 1 capital to risk weighted assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | ​ | 308,102 | ​ | 13.65 | ​ | ​ | ​ | 191,858 | ​ | 8.500 | ​ | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 322,496 | ​ | 14.35 | ​ | ​ | ​ | 191,026 | ​ | 8.500 | ​ | ​ | ​ | 179,789 | ​ | 8.00 | ​
Tier 1 capital to average assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Consolidated | ​ | ​ | 308,102 | ​ | 11.93 | ​ | ​ | ​ | 103,303 | ​ | 4.00 | ​ | ​ | ​ | N/A | ​ | N/A | ​
Old Second Bank | ​ | ​ | 322,496 | ​ | 12.50 | ​ | ​ | ​ | 103,199 | ​ | 4.00 | ​ | ​ | ​ | 128,998 | ​ | 5.00 | ​
​ 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. The Bank exceeded the general minimum regulatory requirements to be considered “well capitalized.” ​ As part of its response to the impact of the COVID-19 pandemic, in the first quarter of 2020, U.S. federal regulatory authorities issued an interim final rule that provided banking organizations that adopted CECL during the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five-year transition in total). In connection with our adoption of CECL on January 1, 2020, we have elected to utilize the five-year CECL transition. The cumulative amount that is not recognized in regulatory capital, in addition to the $3.8 million Day 1 impact of CECL adoption, will be phased in at 25% per year beginning January 1, 2022. As of September 30, 2020, the capital measures of the Company exclude $5.7 million, which is the Day 1 impact to retained earnings and 25% of the $10.4 million increase in the allowance for credit losses in the first nine months of 2020, excluding PCD loans. ​ ​ Dividend Restrictions ​ In addition to the above requirements, banking regulations and capital guidelines generally limit the amount of dividends that may be paid by a bank without prior regulatory approval. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s profits, combined with the retained profit of the previous two years, subject to the capital requirements described above. Pursuant to the Basel III rules that came into effect January 1, 2015, and were fully phased in as of January 1, 2019, the Bank must keep a capital conservation buffer of 2.50% above the new regulatory minimum capital requirements, which must consist entirely of Common Equity Tier 1 capital in order to avoid additional limitations on capital distributions and certain other payments. ​ Stock Repurchase Program ​ In September 2019, our board of directors authorized the repurchase of up to 1,494,826 shares of our common stock (the “Repurchase Program”). Repurchases by us under the Repurchase Program may be made from time to time through open market purchases, trading plans established in accordance with SEC rules, privately negotiated transactions, or by other means. During the first, second and third quarters of 2020, we repurchased 312,723 shares, 145,932 shares, and 137,756 shares of our common stock at weighted average prices of $7.06 per share, $6.97 per share, and $8.34 per share, respectively, pursuant to the Repurchase Program.

X
- References No definition available. + Details
Name: | us-gaap_BankingAndThriftInterestAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1F -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958575-112826 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -Subparagraph (c)(2) -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958568-112826 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958568-112826 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958569-112826 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -Subparagraph (a)(2) -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958568-112826 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -Subparagraph (a)(1) -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958568-112826 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958568-112826 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1D -URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958573-112826 + Details
Name: | us-gaap_RegulatoryCapitalRequirementsUnderBankingRegulationsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration