AURORA, IL / ACCESS Newswire / October 21, 2026 / Old Second Bancorp, Inc. (the "Company," "Old Second," "we," "us," and "our") (NASDAQ:OSBC), the parent company of Old Second National Bank (the "Bank"), today announced financial results for the third quarter of 2026. Our net income was $28.9 million, or $0.56 per diluted share, for the third quarter of 2026, compared to net income of $28.2 million, or $0.54 per diluted share, for the second quarter of 2026. Adjusted net income1 was $28.5 million, or adjusted diluted earnings per share1 of $0.55, for the third quarter of 2026, compared to adjusted net income1 of $28.7 million, or adjusted diluted earnings per share1 of $0.55, for the second quarter of 2026.
Notable Items2
- Net interest and dividend income was $84.0 million, reflecting an increase of $720,000, or 0.86%.
- Net interest margin (NIM) on a fully tax-equivalent basis1 was 5.27%, an increase of four basis points.
- Provision for credit losses of $6.8 million compared to $7.5 million, a decrease of $750,000.
- Noninterest income was $13.1 million, a decrease of $191,000, or 1.44%, compared to $13.3 million.
- Noninterest expense was $51.6 million, an increase of $370,000, or 0.72%, compared to $51.3 million.
- Efficiency ratio increased 62 basis points to 52.34%; adjusted efficiency ratio was 52.06%1.
- Provision for income tax of $9.8 million, compared to $9.7 million, with an effective tax rate of 25.31% and 25.53%, respectively.
- Return on average assets of 1.69%, compared to 1.65%.
- Return on average tangible common equity (ROATCE)1 of 15.77%; adjusted ROATCE1 of 15.53%.
- On October 20, 2026, our Board of Directors declared a cash dividend of $0.08 per share of common stock, payable on November 9, 2026, to stockholders of record as of October 30, 2026.
Chairman, President and Chief Executive Officer Jim Eccher said, "Old Second reported strong results in the third quarter of 2026 led by robust margin performance and disciplined operating efficiency. Loan losses remained higher than we wanted this quarter due to one previously identified commercial relationship, but the trends are extremely encouraging with nonperforming and classified loans declining by 30% and 44%, respectively. Criticized loans, an early indicator of future credit trends, also improved significantly during the quarter and now stand at just 1.88% of total loans, compared to 3.05% last quarter. Criticized assets also declined significantly quarter over quarter, decreasing to 1.91% of total loans from 3.08% in the previous quarter. Profitability remains excellent with the tax-equivalent net interest margin increasing by four basis points this quarter to 5.27%, which demonstrates the benefits of a strong core deposit base and diversified loan portfolio. This level of performance and a strong capital position afforded Old Second the opportunity to repurchase 1.5 million common shares this quarter, or approximately 3% of all outstanding shares. Third quarter return on average assets and return on average tangible common equity were 1.69% and 15.77%, respectively, and the efficiency ratio was a very healthy 52.34%. Based on the strength of the balance sheet and income statement trends, Old Second elected in this fourth quarter to increase the common dividend by 14%, as we continue to regularly deliver dividend growth commensurate with the bank's performance. We are proud of our performance for the quarter, believe we have turned the corner on credit and look forward to delivering solid results to our stockholders for the remainder of the year."
Results of Operations:
Our net income was $28.9 million, or $0.56 per diluted share, for the third quarter of 2026, compared to net income of $28.2 million, or $0.54 per diluted share.
Net Interest Margin continued to be strong and nominal increases in the cost of funds were outweighed by stronger yields on loans during the quarter.
- Net interest margin on a fully tax-equivalent1 basis improved four basis points, to 5.27%.
- Loan yields increased three basis points on higher average loan balances during the quarter but investment yields decreased five basis points driven by maturities and paydowns of securities.
- Cost of funds increased two basis points to 1.23%, driven by higher costs on deposits, discussed below, as well as other short-term borrowings due to higher average FHLB overnight borrowings.
Noninterest Income decreased $191,000, or 1.44%, in the third quarter of 2026.
- Mortgage banking income increased in the period mainly due to $623,000 of mortgage servicing rights ("MSR") mark to market gains compared to $152,000 of losses in the previous quarter, primarily the result of increased rates during the quarter.
- The cash surrender value of BOLI decreased $673,000 in the current quarter primarily due to market rate changes impacting company-owned life insurance, which is included within the same line item.
Noninterest Expense increased $370,000, or 0.72%.
- Salaries and employee benefits increased $743,000, driven by higher salaries, officer incentive accruals, and employee insurance premiums, partially offset by decreases in payroll taxes and deferred compensation expense due to market interest rate changes.
- Occupancy, furniture and equipment increased $166,000 due to an increase in real estate taxes and office equipment maintenance.
- Advertising and marketing expense increased $120,000 due to a 2026 brand awareness campaign.
- Professional fees increased $257,000 due to consulting and management fees related to the 2026 brand awareness campaign as well as an increase in loan-related legal fees.
- Other expenses decreased $868,000 primarily due to decreases in director deferred compensation expense stemming from market interest rate changes, a decrease in litigation expense as two nonrecurring items with limited exposure were recorded in the prior quarter, and a decrease in miscellaneous expenses as the previous quarter included an accrual related to powersport loan gap insurance refunds due to customers related to loan prepayments.
- Efficiency ratio for the quarter was 52.34% compared to 51.72% and the adjusted efficiency ratio1 was 52.06% compared to 50.80%.
Loans decreased $7.8 million driven primarily by decreases in commercial and commercial real estate - investor.
- Total loans were $5.24 billion.
- Average loans (including loans held-for-sale) for the third quarter of 2026 totaled $5.23 billion, reflecting an increase of $4.0 million.
Credit Quality key performance metrics improved significantly during the quarter, although charge-offs were higher than expected and were concentrated in a single commercial relationship.
- Nonperforming loans totaled $39.6 million compared to $56.5 million. The $16.8 million decrease reflects a $17.2 million decline in nonaccrual loans partially offset by a slight increase to loans past due 90 days or more accruing. Nonaccrual changes include $9.1 million of net principal paydowns, $6.2 million of full charge-offs, and $3.3 million of partial charge-offs, partially offset by $1.4 million of additions to nonaccrual.
- Nonperforming loans to total loans was 0.76% compared to 1.08%.
- Classified loans totaled $74.2 million compared to $132.1 million.
- Criticized loans (special mention, substandard and doubtful) to total loans was 1.88% compared to 3.05%. The quarter-over-quarter decrease is driven by a decrease of $3.4 million in special mention loans, a decrease of $17.2 million of nonaccrual loans, and a decrease of $40.7 million in substandard accruing.
- Provision for credit losses of $6.8 million was driven by $3.1 million of net charge-offs related to powersport loans, and non-powersport charge-offs were primarily isolated to two commercial loans on a single relationship.
Deposits experienced declines in noninterest bearing as well as declines in time deposits as higher-rate brokered deposits and other exception-priced time deposits assumed from Bancorp Financial, Inc. rolled off.
- Total deposits were $5.33 billion, a decrease of $117.1 million, or 2.15%.
- Cost of deposits increased two basis points to 1.02% as the cost of NOW, money market, and savings accounts all reflected increases, which were partially offset by a five basis point decline in the cost of time deposits.
- Average interest-bearing deposits decreased $55.5 million and average noninterest bearing deposits decreased $22.6 million.
Capital decreased due to share repurchases and an increase in accumulated other comprehensive unrealized loss on available-for-sale securities, partially offset by strong net income.
- Stockholders' equity decreased $24.3 million primarily due to $3.6 million of dividends declared, an $11.5 million increase in the unrealized losses on securities and swaps due to market interest rate increases, and a $39.2 million increase in treasury stock from share repurchases, net of stock award vestings, partially offset by net income of $28.9 million.
- Share repurchases of 1,533,104 shares at an average price paid per share of $25.76 during the third quarter, for a total reduction to capital of $39.5 million, including excise taxes.
- ROATCE1 was 15.77% compared to 15.58%.
- Tangible common equity to tangible assets1 was 11.00% compared to 11.19%.
Cautionary Note Regarding Forward-Looking Statements
This earnings release and statements by our management may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "should," "anticipate," "expect," "estimate," "intend," "believe," "may," "likely," "will," "forecast," "project," "looking forward," "optimistic," "hopeful," "potential," "progress," "prospect," "remain," "deliver," "continue," "trend," "momentum," "remainder," "beyond," "build," and "near" or other statements that indicate future events or expectations. Examples of forward-looking statements include, but are not limited to, statements regarding the economic outlook, balance sheet growth, building capital, credit quality trends, the adequacy of our allowance for credit losses, and future share repurchases. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
- the strength of the United States economy in general and the strength of the local economies in which we conduct our operations may be different than expected;
- the rate of delinquencies and amounts of charge-offs, the level of the allowance for credit losses, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses;
- adverse developments in the commercial real estate market, including increased vacancy rates, declining property values, or borrower distress, particularly in the office sector, which could result in increased credit losses or require additional provisions;
- changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action;
- risks related to pending or future acquisitions, if any, including execution and integration risks;
- adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on us;
- changes in interest rates, which have affected and may continue to affect our deposit and funding costs, net income, prepayment penalty income, mortgage banking income, and other future cash flows, or the market value of our assets, including our investment securities;
- elevated inflation which causes adverse risk to the overall economy, and could indirectly pose challenges to our clients and to our business; and
- the adverse effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as trade disputes, epidemics and pandemics, war or terrorist activities, essential utility outages, deterioration in the global economy, instability in the credit markets, disruptions in our customers' supply chains or disruptions in transportation, and disruptions caused by widespread cybersecurity incidents.
Additional risks and uncertainties are contained in the "Risk Factors" and forward-looking statements disclosures in our most recent Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q. The inclusion of this forward-looking information should not be construed as a representation by us or any person that future events, plans, or expectations contemplated by us will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Conference Call
We will host a call on Thursday, October 22, 2026, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss our third quarter 2026 financial results. Investors may listen to our earnings call via a live webcast by accessing the link provided below, or alternatively, on the Events section of the Old Second Investor Relations website (https://investors.oldsecond.com/events). Investors are encouraged to register at the webcast link at least 10 minutes prior to the scheduled start of the call.
Webcast URL: https://www.webcaster5.com/Webcast/Page/2239/54568
A replay of the webcast will be available under the Events section of the Old Second Investor Relations website (https://investors.oldsecond.com/events) for up to one year after the earnings call date.
Non-GAAP Presentations
We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision-making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets or by adjusting certain items that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully tax-equivalent basis. We believe these measures provide investors with information regarding balance sheet profitability, and we believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing, and comparing past, present and future periods.
These non-GAAP financial measures should not be considered as a substitute for GAAP financial measures, and we strongly encourage investors to review the GAAP financial measures included in this earnings release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this earnings release with other companies' non-GAAP financial measures having the same or similar names. The tables beginning on page 13, found in the full earnings release at www.oldsecond.com under the Investor Relations tab, provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.
Management has disclosed in this earnings release certain non-GAAP financial measures to evaluate and measure our performance, including the presentation of adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, net interest income and net interest margin on a fully tax-equivalent basis, our adjusted efficiency ratio, tangible common equity to tangible assets, and return on average tangible common equity, including on an adjusted basis. The net interest margin on a fully tax-equivalent basis is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. The tangible measures exclude goodwill and other intangible assets, and management believes they are useful in evaluating our capital adequacy and the return generated on our tangible capital base. Consistent with industry practice, management has disclosed the efficiency ratio including and excluding certain items, which is discussed in the efficiency ratio presentation on page 14, found in the full earnings release at www.oldsecond.com, under the Investor Relations tab.
Financial Highlights
| Quarters Ended | |||||||||||||||||||
(Dollars in thousands - unaudited) | September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2026 | 2026 | 2026 | 2025 | 2025 | |||||||||||||||
Balance sheet summary | ||||||||||||||||||||
Total assets | $ | 6,778,591 | $ | 6,870,305 | $ | 6,849,221 | $ | 6,902,675 | $ | 6,991,754 | ||||||||||
Total securities available-for-sale | 978,576 | 1,040,760 | 1,115,443 | 1,090,523 | 1,157,480 | |||||||||||||||
Total loans | 5,238,057 | 5,245,870 | 5,185,237 | 5,252,131 | 5,264,505 | |||||||||||||||
Total deposits | 5,327,564 | 5,444,688 | 5,564,999 | 5,596,069 | 5,760,250 | |||||||||||||||
Total liabilities | 5,900,039 | 5,967,494 | 5,955,924 | 6,005,907 | 6,125,069 | |||||||||||||||
Total equity | 878,552 | 902,811 | 893,297 | 896,768 | 866,685 | |||||||||||||||
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Total tangible assets | $ | 6,629,195 | $ | 6,719,760 | $ | 6,697,509 | $ | 6,749,787 | $ | 6,836,565 | ||||||||||
Total tangible equity | 729,156 | 752,266 | 741,585 | 743,880 | 711,496 | |||||||||||||||
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Income statement summary | ||||||||||||||||||||
Net interest income | $ | 84,049 | $ | 83,329 | $ | 81,144 | $ | 83,051 | $ | 82,775 | ||||||||||
Provision for credit losses | 6,750 | 7,500 | 9,500 | 3,000 | 19,653 | |||||||||||||||
Noninterest income | 13,070 | 13,261 | 12,630 | 12,154 | 13,109 | |||||||||||||||
Noninterest expense | 51,622 | 51,252 | 50,210 | 52,935 | 63,163 | |||||||||||||||
Net income | 28,940 | 28,179 | 25,585 | 28,787 | 9,871 | |||||||||||||||
Effective tax rate | 25.31 | % | 25.53 | % | 24.89 | % | 26.69 | % | 24.46 | % | ||||||||||
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Profitability ratios | ||||||||||||||||||||
Return on average assets (ROAA) | 1.69 | % | 1.65 | % | 1.51 | % | 1.64 | % | 0.56 | % | ||||||||||
Return on average equity (ROAE) | 12.76 | 12.57 | 11.43 | 12.92 | 4.61 | |||||||||||||||
Net interest margin (tax-equivalent) 1 | 5.27 | 5.23 | 5.14 | 5.09 | 5.05 | |||||||||||||||
Efficiency ratio | 52.34 | 51.72 | 52.40 | 53.98 | 64.46 | |||||||||||||||
Return on average tangible common equity (ROATCE) 1 | 15.77 | 15.58 | 14.20 | 16.15 | 6.16 | |||||||||||||||
Tangible common equity to tangible assets (TCE/TA) 1 | 11.00 | 11.19 | 11.07 | 11.02 | 10.41 | |||||||||||||||
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Per share data | ||||||||||||||||||||
Diluted earnings per share | $ | 0.56 | $ | 0.54 | $ | 0.48 | $ | 0.54 | $ | 0.18 | ||||||||||
Tangible book value per share | 14.75 | 14.77 | 14.35 | 14.12 | 13.51 | |||||||||||||||
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Company capital ratios 3 | ||||||||||||||||||||
Common equity tier 1 capital ratio | 13.13 | % | 13.28 | % | 13.13 | % | 12.99 | % | 12.44 | % | ||||||||||
Tier 1 risk-based capital ratio | 13.56 | 13.70 | 13.55 | 13.41 | 12.85 | |||||||||||||||
Total risk-based capital ratio | 15.05 | 15.26 | 15.64 | 15.46 | 15.10 | |||||||||||||||
Tier 1 leverage ratio | 11.99 | 12.05 | 11.88 | 11.70 | 11.21 | |||||||||||||||
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Bank capital ratios 3, 4 | ||||||||||||||||||||
Common equity tier 1 capital ratio | 13.65 | % | 13.72 | % | 13.80 | % | 13.17 | % | 13.14 | % | ||||||||||
Tier 1 risk-based capital ratio | 13.65 | 13.72 | 13.80 | 13.17 | 13.14 | |||||||||||||||
Total risk-based capital ratio | 14.63 | 14.77 | 14.88 | 14.22 | 14.39 | |||||||||||||||
Tier 1 leverage ratio | 12.05 | 12.05 | 12.09 | 11.49 | 11.45 | |||||||||||||||
1 See the discussion entitled "Non-GAAP Presentations" above and the full earnings release, found at www.oldsecond.com, under the Investor Relations tab, that provides a reconciliation of all non-GAAP financial measures to the most comparable GAAP equivalents.
2 All comparisons throughout this release are on a linked-quarter basis, unless otherwise noted.
3 Both the Company and the Bank ratios are inclusive of a capital conservation buffer of 2.50%, and both are subject to the minimum capital adequacy guidelines of 7.00%, 8.50%, 10.50%, and 4.00% for the Common equity tier 1, Tier 1 risk-based, Total risk-based and Tier 1 leverage ratios, respectively.
4 The prompt corrective action provisions are applicable only at the Bank level, and are 6.50%, 8.00%, 10.00%, and 5.00% for the Common equity tier 1, Tier 1 risk-based, Total risk-based and Tier 1 leverage ratios, respectively.
CONTACT:
Bradley S. Adams
Chief Financial Officer
(630) 906-5484
SOURCE: Old Second Bancorp Inc.
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