Old Second Bancorp (OSBC) Q2 2026 earnings summary

Executive summary

• Net income for Q2 2026 was $28.2 million ($0.54 per diluted share), with adjusted net income at $28.7 million ($0.55 per share) excluding MSR valuation and acquisition costs, both up from Q1 2026.

• Return on assets was 1.65%, and return on average tangible common equity reached 15.58%.

• Tangible book value per share rose to $14.77 from $14.35 sequentially, with double-digit annualized growth.

• Asset quality improved with a 25% decline in non-performing assets and a 30% reduction in special mention loans; nonperforming loans fell to $56.5 million (1.08% of total loans).

• Board declared a $0.07 per share dividend, payable August 10, 2026.

Financial highlights

• Net interest income increased to $83.3 million, up from $81.1 million last quarter and nearly 30% year-over-year.

• Net interest margin was 5.23%, up 9 bps sequentially and 38 bps year-over-year.

• Total loans grew by $60.6 million in Q2, reversing prior seasonal declines, driven by commercial, construction, multifamily, powersport, and consumer segments.

• Non-interest income rose 5% sequentially and 21.7% year-over-year, driven by wealth management and mortgage banking.

• Total non-interest expense increased $1 million from the prior quarter, mainly due to higher incentive and insurance costs.

Outlook and guidance

• Management targets low to mid-single digit loan growth for 2026 and expects continued strong performance with a well-positioned balance sheet.

• Margin expected to remain elevated but may contract slightly in the second half; guidance for Q3 and Q4 margin is 5.18% and 5.15%, respectively.

• Fee income expected to grow at a low single-digit rate, with potential for mid-single digits if mortgage banking improves.

• Contribution margin in National Specialty Lending expected to remain high through 2026, with modest decline in 2027.

• Focus remains on delivering improved results in the second half of the year.