OLD SECOND BANCORP INC (OSBC): Results of Operations and Financial Condition
OLD SECOND BANCORP INC (OSBC) filed an SEC Form 8-K — Results of Operations and Financial Condition. (NASDAQ:OSBC) Exhibit 99.1 Contact: Bradley S. Adams For Immediate Release Chief Financial Officer October 21, 2026 (630) 906-5484 Old Second Bancorp, Inc. Reports Third Quarter 2026 Net Income of $28.9 Million, or $0.56 per Diluted Share AUR
How this was made
The 30-second read
Why it matters
The earnings beat and dividend hike provide a fresh catalyst for short‑term price movement, though the scale is modest.
Market read
Primary earnings disclosure for a regional bank; modest but actionable information for traders focused on banking stocks.
What to watch
Potential exposure to a single commercial loan loss could surface later, and higher noninterest expense may weigh on future profitability.
Old Second Bancorp, Inc. Reports Third Quarter 2026 Net Income of $28.9 Million, or $0.56 per Diluted Share
Net income rose to $28.9 million from $28.2 million in the linked quarter, tax-equivalent net interest margin expanded to 5.27%, and classified loans and nonperforming loans declined sharply. Deposit runoff, elevated charge-offs concentrated in a commercial relationship, and a lower adjusted net income of $28.5 million temper the result.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest and dividend income, third quarter of 2026GAAP | $84.05M | increase of $720,000, or 0.86% | – |
| Net interest income, tax-equivalent, third quarter of 2026non-GAAP | $84.35M | – | – |
| Net interest margin, third quarter of 2026GAAP | 5.25% | – | – |
| Net interest margin, tax-equivalent, third quarter of 2026non-GAAP | 5.27% | increase of four basis points | – |
| Provision for credit losses, third quarter of 2026GAAP | $6.75M | decrease of $750,000 | – |
| Noninterest income, third quarter of 2026GAAP | $13.07M | decrease of $191,000, or 1.44% | – |
| Noninterest expense, third quarter of 2026GAAP | $51.62M | increase of $370,000, or 0.72% | – |
| Income before income taxes, third quarter of 2026GAAP | $38.75M | – | – |
| Provision for income taxes, third quarter of 2026GAAP | $9.81M | – | – |
| Effective tax rate, third quarter of 2026GAAP | 25.31% | – | – |
| Net income, third quarter of 2026GAAP | $28.94M | – | – |
| Adjusted net income, third quarter of 2026non-GAAP | $28.48M | – | – |
| Diluted earnings per share, third quarter of 2026GAAP | $0.56 | – | – |
| Adjusted diluted earnings per share, third quarter of 2026non-GAAP | $0.55 | – | – |
| Return on average assets, third quarter of 2026GAAP | 1.69% | – | – |
| Return on average tangible common equity, third quarter of 2026non-GAAP | 15.77% | – | – |
| Adjusted return on average tangible common equity, third quarter of 2026non-GAAP | 15.53% | – | – |
| Efficiency ratio, third quarter of 2026GAAP | 52.34% | increased 62 basis points | – |
| Adjusted efficiency ratio, third quarter of 2026non-GAAP | 52.06% | – | – |
| Total assets, September 30, 2026GAAP | $6.78B | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $108.1M | – | – |
| Total loans, September 30, 2026GAAP | $5.24B | decreased $7.8 million | – |
| Total deposits, September 30, 2026GAAP | $5.33B | decrease of $117.1 million, or 2.15% | – |
| Total stockholders’ equity, September 30, 2026GAAP | $878.6M | – | – |
| Tangible common equity to tangible assets, September 30, 2026non-GAAP | 11.00% | – | – |
| Nonperforming loans, September 30, 2026other | $39.64M | $16.8 million decrease | – |
| Nonperforming loans to total loans, September 30, 2026other | 0.76% | – | – |
| Classified loans, September 30, 2026other | $74.25M | – | – |
| Criticized loans to total loans, September 30, 2026other | 1.88% | – | – |
| Net charge-offs (recoveries), third quarter of 2026other | $12.73M | – | – |
| Allowance for credit losses, September 30, 2026GAAP | $64.19M | – | – |
| Allowance for credit losses to total loans, September 30, 2026GAAP | 1.23% | – | – |
| Common equity tier 1 capital ratio, September 30, 2026other | 13.13% | – | – |
| Total risk-based capital ratio, September 30, 2026other | 15.05% | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Share repurchases of 1,533,104 shares at an average price paid per share of $25.76 during the third quarter, for a total reduction to capital of $39.5 million, including excise taxes.
- On October 20, 2026, the Board of Directors declared a cash dividend of $0.08 per share of common stock, payable on November 9, 2026, to stockholders of record as of October 30, 2026.
- Dividends declared per share were $0.07 for the third quarter of 2026.
What drove it
- Net interest margin on a fully tax-equivalent basis improved four basis points to 5.27% as nominal increases in the cost of funds were outweighed by stronger yields on loans.
- Loan yields increased three basis points on higher average loan balances, while investment yields decreased five basis points driven by maturities and paydowns of securities.
- Mortgage banking income benefited from $623,000 of mortgage servicing rights mark to market gains, compared to $152,000 of losses in the previous quarter.
- Noninterest expense increased due to higher salaries, officer incentive accruals, employee insurance premiums, real estate taxes, office equipment maintenance, advertising, consulting and management fees, and loan-related legal fees.
- Nonperforming and classified loans declined due in part to paydowns and charge-offs in a previously identified commercial relationship.
Concerns
- Provision for credit losses was $6.8 million and net charge-offs were $12.7 million; non-powersport charge-offs were primarily isolated to two commercial loans on a single relationship.
- Total deposits decreased $117.1 million, or 2.15%, as noninterest-bearing deposits and time deposits declined.
- Cost of deposits increased two basis points to 1.02%, while other short-term borrowings increased to $395,000 from $375,000.
- Stockholders’ equity decreased $24.3 million, including a $39.2 million increase in treasury stock from share repurchases, net of stock award vestings, and an $11.5 million increase in unrealized losses on securities and swaps.
What to watch
- Whether total loans recover from $5.24 billion following the $7.8 million linked-quarter decline driven primarily by commercial and commercial real estate – investor loans.
- Deposit retention and funding costs following the runoff of higher-rate brokered deposits and other exception-priced time deposits assumed from Bancorp Financial, Inc.
- Future credit losses and provisioning after $12.7 million of net charge-offs and the resolution of the single commercial relationship.
- Sustainability of the 5.27% tax-equivalent net interest margin as loan yields, deposit costs, and FHLB overnight borrowings change.
- Capital levels following the repurchase of 1,533,104 shares and the increase in the common dividend to $0.08 per share.
Balance sheet and cash flow
- Cash and cash equivalents were $108,103 at September 30, 2026, compared to $143,333 at June 30, 2026.
- Total assets were $6,778,591 at September 30, 2026, compared to $6,870,305 at June 30, 2026.
- Total deposits were $5,327,564 at September 30, 2026, compared to $5,444,688 at June 30, 2026.
- Other short-term borrowings were $395,000 at September 30, 2026, compared to $375,000 at June 30, 2026.
- Total stockholders’ equity was $878,552 at September 30, 2026, compared to $902,811 at June 30, 2026.
Analysis
Old Second reported third-quarter GAAP net income of $28.9 million, or $0.56 per diluted share, compared with $28.2 million, or $0.54 per diluted share, in the second quarter. Adjusted net income was $28.5 million, compared with $28.7 million, while adjusted diluted earnings per share remained $0.55. GAAP return on average assets improved to 1.69% from 1.65%, and GAAP return on average equity improved to 12.76 from 12.57.
The core earnings trend was led by net interest and dividend income of $84.0 million, up $720,000, or 0.86%, on a linked-quarter basis. Tax-equivalent net interest margin expanded four basis points to 5.27%. Loan yields increased three basis points, while the cost of funds increased two basis points to 1.23%. Average loans, including loans held-for-sale, increased $4.0 million, although ending total loans decreased $7.8 million to $5.24 billion, driven primarily by commercial and commercial real estate – investor balances.
Credit measures improved materially, but charge-offs remained the principal issue. Nonperforming loans fell to $39.6 million from $56.5 million, classified loans declined to $74.2 million from $132.1 million, and criticized loans to total loans fell to 1.88% from 3.05%. The company recorded a $6.8 million provision for credit losses and $12.7 million of net charge-offs. Management stated that non-powersport charge-offs were primarily isolated to two commercial loans on a single relationship, while powersport-related net charge-offs were $3.1 million.
Funding and capital moved lower during the quarter. Total deposits decreased $117.1 million, or 2.15%, to $5.33 billion, including declines in noninterest-bearing and time deposits as higher-rate brokered and exception-priced time deposits rolled off. Stockholders’ equity decreased to $878.6 million from $902.8 million. The company repurchased 1,533,104 shares at an average price of $25.76, resulting in a $39.5 million reduction to capital including excise taxes, and subsequently declared a $0.08 per-share cash dividend payable November 9, 2026. No forward financial guidance was provided.
Management, verbatim
Old Second reported strong results in the third quarter of 2026 led by robust margin performance and disciplined operating efficiency. Loan losses remained higher than we wanted this quarter due to one previously identified commercial relationship, but the trends are extremely encouraging with nonperforming and classified loans declining by 30% and 44%, respectively.
Jim Eccher, Chairman, President and Chief Executive Officer
Profitability remains excellent with the tax-equivalent net interest margin increasing by four basis points this quarter to 5.27%, which demonstrates the benefits of a strong core deposit base and diversified loan portfolio.
Jim Eccher, Chairman, President and Chief Executive Officer
Not in the filing
stated, not guessed- Forward financial guidance, including revenue, margin, expense, tax-rate, loan-growth, deposit-growth, provision, or capital-return outlook
- Prior guidance comparison, as no previous outlook was provided
- Operating cash flow
- Free cash flow
- Revenue and gross margin, which are not reported as line items for this bank filing
- Reportable operating segments and segment revenue
- Management-provided year-over-year percentage changes for most reported metrics
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Old Second Bancorp (NASDAQ:OSBC) filed an 8‑K reporting its Q3 2026 results, including net income, margin metrics, and a dividend increase.
Ticker impact
Quarterly earnings release reporting Q3 2026 net income of $28.9M, dividend increase and share repurchase.
likely upward pressure as investors price in stronger margins and higher dividend.
Net income rose quarter‑over‑quarter, NIM improved, and board raised dividend 14%, supporting a bullish reaction.
Market effects
Banking sector may see modest confidence from a regional bank improving credit quality and raising dividends.
Midwest regional banks could benefit from similar margin trends.
Limited to U.S. regional banking niche.
Counterpoint
The modest earnings improvement may not be enough to offset broader rate‑sensitive pressure on banks.
Key entities
- ExecutiveJim Eccher
Chairman, President and CEO who commented on the results.
