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 was $30.8 million ($0.58 per share), reflecting higher core earnings and excluding notable items.

• Return on average tangible common equity was 16.15%, with adjusted return at 17.23%; tax equivalent efficiency ratio was 53.98% (GAAP) and 51.28% (adjusted).

• Integration of recent acquisitions and core systems conversion completed, with strong operational performance and optimism for 2026.

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

Financial highlights

• Net interest margin (NIM) was 5.09% for Q4 2025, up 4 basis points sequentially and 41 basis points year-over-year.

• Net interest and dividend income for Q4 2025 was $83.1 million, up 0.3% sequentially and 34.9% year-over-year.

• Total loans decreased $12.4 million from last quarter, but ended Q4 2025 at $5.25 billion, up $1.27 billion year-over-year, mainly from the Bancorp Financial acquisition.

• Allowance for credit losses on loans was $72.3 million (1.38% of total loans), down from $75 million (1.43%) last quarter; allowance to total loans was 1.4% at quarter-end.

• Non-interest income increased $544,000 year-over-year, with notable growth in wealth management and deposit service fees; noninterest income was $12.2 million, up 4.7% year-over-year.

• Total non-interest expenses declined $10.2 million from the prior quarter, 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 some tail-end cost savings from integration expected in 2026.

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

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

• 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.