Old Second Bancorp (OSBC) Q4 2025 earnings summary

Executive summary

• Reported GAAP net income of $28.8 million ($0.54 per diluted share) for Q4 2025, up from $9.9 million in Q3 2025 and $19.1 million in Q4 2024; adjusted net income excluding notable items was $30.8 million ($0.58 per share).

• Results benefited from lower acquisition costs, reduced provision for credit losses, and decreased noninterest expense.

• Return on average tangible common equity was 16.15%, with a tax equivalent efficiency ratio of 53.98%.

• Tangible book value per share rose to $14.12, and tangible equity ratio increased to 11.02%.

• Integration of recent acquisitions and core systems conversion completed, supporting operational strength.

Financial highlights

• Net interest margin (NIM) reached 5.09%, up 4 bps sequentially and 41 bps year-over-year.

• Net interest income was $83.1 million, up 0.3% sequentially and 34.9% year-over-year; loan yields declined 11 bps sequentially but rose 48 bps year-over-year.

• Total loans ended Q4 2025 at $5.25 billion, up $1.27 billion year-over-year, mainly from the Bancorp Financial acquisition; average loans increased $60 million (1.2%) sequentially.

• Loan-to-deposit ratio increased to 93.9% from 91.4% last quarter.

• Non-interest expenses declined $10.2 million sequentially, mainly due to lower acquisition-related costs; noninterest expense dropped 16.2% sequentially to $52.9 million.

Outlook and guidance

• Targeting mid-single digit loan growth for 2026; Powersports vertical expected to grow slightly less.

• Expense growth projected at approximately 3% year-over-year, with further cost savings expected as integration finalizes.

• Net interest margin expected to remain around 5% for the full year 2026, with some potential modest decline in Q1.

• Management expects continued strong core earnings and profitability, with optimism for further growth in 2026 due to improved loan and deposit spreads and balance sheet flexibility.

• Share repurchase program anticipated to begin soon, with opportunistic execution.