Old Second Bancorp (OSBC) Q3 2025 earnings summary

Executive summary

• Net income for Q3 2025 was $9.9 million ($0.18 per diluted share), down from $23.0 million in Q3 2024, mainly due to acquisition-related costs and purchase accounting adjustments; adjusted net income was $28.4 million ($0.53 per diluted share), up from $24.0 million in Q3 2024, excluding acquisition-related items.

• Completed the acquisition of Bancorp Financial and Evergreen Bank Group on July 1, 2025, adding $1.43 billion in assets, $1.19 billion in loans, and $1.23 billion in deposits, and expanding into new markets and product lines.

• Tangible book value per share increased, and tangible equity ratio declined only modestly despite the acquisition.

• Announced a 17% increase in the quarterly dividend to $0.07 per share, payable in Q4 2025.

Financial highlights

• Net interest and dividend income rose to $83 million, up 29% sequentially and 37% year-over-year, driven by acquisitions and organic loan growth.

• Net interest margin (NIM) was 5.05% (tax-equivalent), up from 4.85% in Q2 2025 and 4.64% in Q3 2024.

• Noninterest income increased 23.9% year-over-year to $13.1 million, with gains in wealth management, BOLI, and mortgage banking revenue.

• Noninterest expense surged 60.7% to $63.2 million, mainly due to $11.8 million in acquisition costs and higher salaries, benefits, and technology expenses.

• Provision for credit losses was $19.7 million in Q3 2025, up from $2.0 million in Q3 2024, reflecting acquisition-related adjustments and higher charge-offs in the powersport and lease portfolios.

Outlook and guidance

• Core expense growth expected around 4% into 2026, excluding Evergreen impacts.

• Management expects low to mid-single-digit loan growth heading into 2026.

• Margin expected to remain flat even with potential Fed rate cuts; NIM not expected to fall below 4.50% at a 3% Fed funds rate.

• Reserve levels for credit losses to remain elevated around $140 million, reflecting the new loan mix.

• Management expects continued strong core profitability and operational efficiencies from the Bancorp Financial integration.