Old Second Bancorp (OSBC) Q2 2025 earnings summary

Executive summary

• Net income for Q2 2025 was $21.8 million ($0.48 per diluted share), flat year-over-year, with a return on assets of 1.53% and return on average tangible common equity of 15.29%.

• Adjusted net income (excluding nonrecurring items) was $22.8 million ($0.50 per diluted share), up from $21.2 million in Q2 2024 and $19.8 million in Q1 2025.

• Profitability remained strong despite MSR mark-to-market losses and merger-related expenses.

• The Evergreen Bank Group and Bancorp Financial, Inc. acquisitions closed July 1, 2025, with integration underway and cost savings on target.

• Book value and tangible equity rates increased, with tangible equity up 49 basis points from last quarter and 144 basis points year-over-year.

Financial highlights

• Net interest and dividend income rose to $64.2 million in Q2 2025, up 2.1% sequentially and 7.6% year-over-year, driven by higher securities yields and lower borrowing costs.

• Pre-provision net revenues increased quarter-over-quarter.

• Noninterest income was $10.9 million, up 6.8% from Q1 2025 but down 2.1% from Q2 2024.

• Noninterest expense was $43.4 million, down 2.4% sequentially but up 14.6% year-over-year, with an efficiency ratio of 54.54% (tax equivalent, adjusted) and 55.99% (GAAP).

• Total loans grew by $58.4 million from last quarter, driven by construction and lease portfolios.

Outlook and guidance

• Management is optimistic for the remainder of 2025, expecting continued strong profitability, margin durability, and loan growth despite a softer business outlook.

• Loan growth is expected to be low to mid-single digits for 2025, with strong origination in Q2 and anticipated growth in Q3.

• Margin outlook is flat to slightly positive, with a long-term floor raised to approximately 4.25%.

• The company remains well-capitalized and positioned to navigate uncertain macroeconomic conditions, with robust liquidity and disciplined expense management.

• ROA is expected to remain around 1.50% in a stable rate environment.