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Old Second Bancorp (OSBC)
NASDAQ:OSBC
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Old Second Bancorp
(NASDAQ:OSBC)
74Outperform
Positive Factors
Asset Quality
OSBC has successfully reduced non-performing assets by nearly 30% and narrowed net charge-offs since peak levels.
Net Interest Margin
OSBC's current NIM of 4.63% is over 100bp above small and mid cap peers, so despite greater than previously assumed NIM headwinds, margin at OSBC is still a relative strength.
Profitability Metrics
The bank's conservative credit approach, superior deposit franchise and above peer profitability metrics remain intact.
Negative Factors
Asset Sensitivity
Downgrading shares of OSBC to NEUTRAL, predominantly based on the bank's less favorable asset sensitive balance sheet position.
Credit Environment
Credit progress and deposit strength catalysts are likely to be overlooked or minimized should the market's attention turn to 'risk-on' credit names and/or banks with a greater ability to lower deposit costs.
Earnings Outlook
Lowering earnings outlook for OSBC to reflect added NIM pressure tied to the Fed's more aggressive rate cut path.
Old Second Bancorp (OSBC) vs. S&P 500 (SPY)
Market Cap
$719.40M
Dividend Yield1.39%
Average Volume (3M)227.43K
Price to Earnings (P/E)8.7
Beta (1Y)0.81
Revenue Growth1.64%
EPS Growth-6.70%
CountryUS
Employees877
SectorFinancial
Sector Strength85
IndustryBanks - Regional
Share Statistics
EPS (TTM)1.83
Shares Outstanding45,047,150
10 Day Avg. Volume202,135
30 Day Avg. Volume227,426
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.16
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit2.79
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$20.40Price Target Upside25.23% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Old Second Bancorp Business Overview & Revenue Model
Company DescriptionOld Second Bancorp, Inc. operates as the bank holding company for Old Second National Bank that provides community banking services. It provides demand, NOW, money market, savings, time deposit, individual retirement, and checking accounts, as well as certificate of deposit accounts. The company also offers commercial loans; lease financing receivables; commercial real estate loans; construction loans; residential real estate loans, such as residential first mortgage and second mortgage loans; home equity line of credit; consumer loans, including motor vehicle, home improvement, and signature loans; installment and agricultural loans; residential mortgages; and overdraft checking. Further, it provides safe deposit services; trust and wealth management services; and money orders, cashier's checks, foreign currency, direct deposits, discount brokerage, debit and credit cards, and other services, as well as acquires the U.S. treasury notes and bonds. In addition, the company offers online and mobile banking; corporate cash management products, including remote and mobile deposits capture, investment sweep accounts, zero balance accounts, automated tax payments, automatic teller machines access, telephone banking, lockbox accounts, automated clearing house transactions, account reconciliation, controlled disbursement, detail and general information reporting, foreign and domestic wire transfers, and vault services for currency and coin; and investment, agency, and custodial services for individual, corporate, and not-for-profit clients. It operates through 63 banking centers in Cook, DeKalb, DuPage, Kane, Kendall, LaSalle, and Will counties in Illinois. Old Second Bancorp, Inc. was incorporated in 1981 and is headquartered in Aurora, Illinois.
How the Company Makes MoneyOld Second Bancorp generates revenue primarily through the interest income earned from its lending activities. The bank provides various types of loans, including commercial and industrial loans, commercial real estate loans, construction loans, residential real estate loans, and consumer loans. Interest on these loans constitutes a significant portion of the company's income. In addition to interest income, Old Second Bancorp earns revenue from fees and service charges associated with its deposit accounts and other banking services. The bank also generates non-interest income from wealth management and trust services, which include investment advisory and estate planning services. Furthermore, Old Second Bancorp has partnerships and relationships with financial institutions and service providers that enhance its product offerings and contribute to its earnings.
Old Second Bancorp Financial Statement Overview
Summary
Old Second Bancorp exhibits strong financial performance with consistent revenue and net income growth, a solid equity base, and effective cash flow management. However, the variability in balance sheet components and potential cash flow volatility pose some concerns.Income Statement
Old Second Bancorp has shown consistent revenue growth over the years, with a substantial increase in total revenue from 2020 to 2024. The net profit margin has been robust, averaging above 20% in recent years. However, the EBIT and EBITDA margins are not available for the latest year, which slightly limits the analysis. Nevertheless, the strong net income growth trajectory suggests solid profitability.78
Positive
Balance Sheet
The balance sheet of Old Second Bancorp is marked by a strong equity base, with the equity ratio consistently above 10% over the years. The debt-to-equity ratio is notably low for 2024, indicating a conservative leverage approach. The return on equity is commendable, reflecting effective utilization of equity capital. However, fluctuations in total assets and liabilities suggest some variability in balance sheet stability.72
Positive
Cash Flow
Operating cash flow has shown a healthy increase in 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio is above 1, highlighting efficient cash conversion. Despite positive free cash flow growth, the large swings in investing and financing cash flows could indicate potential volatility in cash management strategies.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 297.90M | 291.97M | 244.92M | 133.46M | 127.04M | Gross Profit |
| 297.90M | 291.97M | 244.92M | 133.46M | 127.04M | EBIT |
| -178.38M | 124.41M | 105.95M | 27.87M | 37.41M | EBITDA |
| 0.00 | 131.35M | 98.26M | 31.66M | 40.70M | Net Income Common Stockholders |
| 85.26M | 91.73M | 67.41M | 20.04M | 27.82M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.21B | 1.29B | 1.65B | 2.44B | 826.08M | Total Assets |
| 5.65B | 5.72B | 5.89B | 6.21B | 3.04B | Total Debt |
| 20.00M | 490.15M | 228.66M | 148.54M | 93.54M | Net Debt |
| -32.17M | 390.01M | 113.48M | -603.57M | -236.36M | Total Liabilities |
| 4.98B | 5.15B | 5.43B | 148.54M | 93.54M | Stockholders Equity |
| 671.03M | 577.28M | 461.14M | 502.02M | 307.09M |
| Cash Flow | Free Cash Flow | |||
| 131.53M | 104.03M | 93.01M | 29.01M | 22.07M | Operating Cash Flow |
| 131.53M | 116.40M | 97.34M | 31.05M | 25.99M | Investing Cash Flow |
| 322.70M | 161.56M | -432.78M | 132.92M | -103.81M | Financing Cash Flow |
| -455.05M | -292.99M | -301.50M | 258.24M | 357.09M |
Old Second Bancorp Technical Analysis
Negative
16.29
Price Trends
16.33
Negative
17.29
Negative
16.89
Negative
Market Momentum
-0.11
Negative
54.26
Neutral
88.65
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OSBC, the sentiment is Negative. The current price of 16.29 is above the 20-day moving average (MA) of 15.12, below the 50-day MA of 16.33, and below the 200-day MA of 16.89, indicating a neutral trend. The MACD of -0.11 indicates Negative momentum. The RSI at 54.26 is Neutral, neither overbought nor oversold. The STOCH value of 88.65 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OSBC.
Old Second Bancorp Risk Analysis
Old Second Bancorp disclosed 59 risk factors in its most recent earnings report. Old Second Bancorp reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Old Second Bancorp Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $754.73M | 10.01 | 14.24% | 3.38% | 6.98% | 5.97% | |
77 Outperform | $710.71M | 14.11 | 10.08% | 3.22% | 2.49% | 4.48% | |
75 Outperform | $706.71M | 10.80 | 16.05% | 3.12% | 8.80% | 30.31% | |
74 Outperform | $719.40M | 8.73 | 12.98% | 1.39% | 1.64% | -6.70% | |
71 Outperform | $666.70M | 9.29 | 17.91% | 0.05% | 26.40% | 24.62% | |
69 Neutral | $705.42M | 12.22 | 10.94% | 4.01% | 4.39% | 4.94% | |
64 Neutral | $12.65B | 9.74 | 8.04% | 17044.64% | 12.65% | -5.11% |
* Financial Sector Average
Performance Comparison
OSBC
Old Second Bancorp
16.29
2.13
15.04%
CPF
Central Pacific Financial
26.58
6.54
32.63%
FCBC
First Community Bancshares
38.78
5.94
18.09%
NBN
Northeast Bancorp
82.03
27.08
49.28%
MCBS
MetroCity Bankshares
28.45
4.27
17.66%
HBT
HBT Financial
23.86
5.35
28.90%
Old Second Bancorp Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q1-2025)
| % Change Since: 5.78%|
Next Earnings Date:Jul 16, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong financial performance with significant profitability metrics and improvements in interest expense and criticized loans. However, challenges such as provisions for credit losses and decreased loan portfolios were noted. Overall, the positive aspects slightly outweigh the negative ones.Q1-2025 Updates
Positive Updates
Strong Profitability Metrics
Net income was $19.8 million or $0.43 per diluted share in the first quarter of 2025, with a return on average tangible common equity of 14.70% and return on assets of 1.42%.
Improved Interest Expense
Interest expense on average interest-bearing liabilities decreased by $2.9 million or 21.3%, primarily due to deposit acquisitions and paying down higher rate borrowings.
Loan-to-Deposit Ratio Improvement
The loan-to-deposit ratio improved to 81.2% from 83.5% last quarter and 86.1% a year ago.
Reduction in Criticized Loans
Total criticized loans decreased by 42% or $84 million year-over-year, reaching their lowest levels in three years.
Noninterest Income Growth
Noninterest income saw growth in wealth management fees by 20.6% and service charges on deposits by 12.6% compared to the prior year.
Exceptional Net Interest Margin
Net interest margin improved by 30 basis points year-over-year and by 20 basis points compared to the prior linked quarter.
Negative Updates
Provision for Credit Losses
A $2.4 million provision for credit losses was recorded in the absence of significant loan growth, reducing after-tax earnings by $0.04 per diluted share.
Loan Portfolio Decrease
Total loans decreased by $41.1 million from the prior linked quarter, with net paydowns in commercial real estate and multifamily portfolios.
Gross Loan Charge-Offs
Recorded $4.4 million of gross loan charge-offs in the first quarter, including a significant charge-off of $3.4 million on one C&I loan.
Mortgage Banking Income Decrease
Mortgage banking income decreased primarily due to mortgage servicing rights mark-to-market valuations.
Company Guidance
During the Old Second Bancorp, Inc.'s First Quarter 2025 Earnings Call, the company reported a net income of $19.8 million, or $0.43 per diluted share, with a return on assets (ROA) of 1.42%. The return on average tangible common equity was 14.70%, and the tax equivalent efficiency ratio stood at 55.48%. The quarter saw a provision for credit losses of $2.4 million, impacting after-tax earnings by $0.04 per diluted share. The tangible common equity ratio increased 30 basis points to 10.34%, and the Common Equity Tier 1 ratio rose to 13.47%. Despite a $41.1 million decrease in total loans from the previous quarter, net interest margin improved 30 basis points year-over-year. Noninterest income grew, with wealth management fees up 20.6% and service charges on deposits increasing by 12.6%. The company highlighted a strong deposit growth of $84 million, contributing to a favorable loan-to-deposit ratio of 81.2%. Management discussed potential impacts of macroeconomic factors and emphasized their focus on liquidity, capital management, and commercial loan origination to sustain profitability.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.