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Old Second Bancorp (OSBC) AI Stock Analysis

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OSBC

Old Second Bancorp

(NASDAQ:OSBC)

Rating:76Outperform
Price Target:
$21.00
â–²(19.25%Upside)
Old Second Bancorp's overall stock score reflects its strong financial performance and positive corporate events, particularly the recent merger, which bolsters its market position. Technical analysis shows mixed signals, with potential undervaluation providing an attractive entry point. The earnings call sentiment is optimistic but cautious due to some financial challenges.
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. SPDR S&P 500 ETF (SPY)

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 its banking operations. The company earns money via interest income from loans offered to individuals and businesses, such as commercial loans, residential mortgages, and consumer loans. Additionally, it gains revenue through interest on securities in its investment portfolio. Non-interest income is a significant component of its revenue model, derived from service charges on deposit accounts, fees from trust and wealth management services, mortgage banking income, and other financial service fees. The bank also benefits from strategic partnerships and relationships with local businesses and community organizations, which help to expand its customer base and enhance its market presence.

Old Second Bancorp Earnings Call Summary

Earnings Call Date:Jul 23, 2025
(Q2-2025)
|
% Change Since: -5.32%|
Next Earnings Date:Oct 15, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong net income, improved net interest margins, and successful loan growth, alongside efficient cost management and optimism regarding the Evergreen Bank acquisition. Despite these positives, there were notable expenses and slight decreases in loan yields. The overall sentiment leans towards optimism with some caution due to these challenges.
Q2-2025 Updates
Positive Updates
Strong Net Income and Return on Assets
Net income was $21.8 million or $0.48 per diluted share. Return on assets was 1.53%, and return on average tangible common equity was 15.29%.
Increase in Tangible Equity and Common Equity Tier 1
The tangible equity ratio increased by 49 basis points from last quarter, and by 144 basis points over the year. Common equity Tier 1 increased to 13.77% from 13.47% last quarter.
Net Interest Margin Performance
Net interest margin improved 22 basis points year-over-year on a tax equivalent basis, and the pre-provision net revenues increased.
Loan Growth and Asset Quality
Total loans increased by $58.4 million with stable asset quality, and nonperforming assets remained flat.
Efficient Cost Management
Noninterest expenses were $1.1 million less than the prior quarter, and the tax equivalent efficiency ratio was 54.54%.
Positive Outlook on Evergreen Bank Acquisition
The Evergreen Bank acquisition is expected to enhance profitability with cost savings on target and potentially higher earnings expectations.
Negative Updates
MSR Mark-to-Market Losses and Merger-Related Expenses
Second quarter earnings were impacted by $531,000 in MSR mark-to-market losses and $810,000 in merger-related expenses.
Slight Decrease in Loan Yields
Tax equivalent loan yields decreased by 3 basis points from the last quarter and 4 basis points year-over-year.
Higher Noninterest Expenses Year-Over-Year
Noninterest expenses increased by $5.5 million year-over-year due to higher salaries, employee benefits, occupancy costs, and core deposit intangibles.
Higher Loan-to-Deposit Ratio at Evergreen Bank Acquisition
Evergreen Bank had a loan-to-deposit ratio just over 90%, which is higher than Old Second's standalone figures.
Company Guidance
During Old Second Bancorp's second-quarter 2025 earnings call, several key metrics were highlighted. The company reported net income of $21.8 million, equivalent to $0.48 per diluted share. The return on assets was noted at 1.53%, while the return on average tangible common equity was 15.29%. The tax equivalent efficiency ratio stood at 54.54%. Despite merger-related expenses of $810,000 and MSR mark-to-market losses of $531,000, the company's profitability remained strong. The tangible equity ratio increased by 49 basis points from the previous quarter, reaching 10.83%. The common equity Tier 1 ratio rose to 13.77%, and the loan-to-deposit ratio was 83.3%. Net interest margin on a tax-equivalent basis decreased by 3 basis points from the prior quarter, settling at 4.85%. Moreover, the company experienced a $1.2 million in gross charge-offs, primarily linked to a single credit, and a $1.4 million increase in the allowance for credit losses on loans, which amounted to $43 million or 1.08% of total loans.

Old Second Bancorp Financial Statement Overview

Summary
Old Second Bancorp displays strong profitability with a consistent increase in net income, high gross and net profit margins, and effective leverage management. However, revenue growth volatility and a decline in cash equivalents pose potential risks.
Income Statement
85
Very Positive
Old Second Bancorp demonstrates strong profitability with a consistent increase in net income over the years. The TTM data shows a healthy gross profit margin of approximately 89.8% and net profit margin of 27.0%, indicating efficient cost management. However, revenue growth has been somewhat volatile, with a recent dip compared to previous periods, which may be a concern if the trend continues.
Balance Sheet
80
Positive
The company's financial position is stable with a strong equity base as evidenced by a solid equity ratio of approximately 12.1% in TTM. The debt-to-equity ratio is low at 0.18, suggesting prudent leverage management. Return on equity is impressive at 12.1%, showcasing effective deployment of equity capital. However, the continual decrease in cash equivalents may require monitoring.
Cash Flow
78
Positive
Operating cash flow has remained robust, supporting a healthy operating cash flow to net income ratio of 1.21 in TTM. Although free cash flow has slightly declined, it remains positive, indicating good liquidity. The free cash flow to net income ratio of 1.11 in TTM implies strong cash generation relative to net profits.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue336.17M321.03M255.24M141.89M139.51M
Gross Profit267.15M264.49M238.37M129.11M116.63M
EBITDA122.12M131.35M98.43M31.66M40.70M
Net Income85.26M91.73M67.41M20.04M27.82M
Balance Sheet
Total Assets5.65B5.72B5.89B6.21B3.04B
Cash, Cash Equivalents and Short-Term Investments1.26B1.29B1.65B2.45B826.08M
Total Debt141.90M516.63M260.81M198.88M160.52M
Total Liabilities4.98B5.15B5.43B5.71B2.73B
Stockholders Equity671.03M577.28M461.14M502.03M307.09M
Cash Flow
Free Cash Flow120.75M104.03M93.01M29.01M22.07M
Operating Cash Flow131.53M116.40M97.34M31.05M25.99M
Investing Cash Flow322.70M161.56M-432.78M132.92M-103.81M
Financing Cash Flow-455.05M-292.99M-301.50M258.24M357.09M

Old Second Bancorp Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price17.61
Price Trends
50DMA
17.49
Positive
100DMA
16.75
Positive
200DMA
17.26
Positive
Market Momentum
MACD
0.09
Positive
RSI
42.48
Neutral
STOCH
13.31
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OSBC, the sentiment is Neutral. The current price of 17.61 is below the 20-day moving average (MA) of 18.48, above the 50-day MA of 17.49, and above the 200-day MA of 17.26, indicating a neutral trend. The MACD of 0.09 indicates Positive momentum. The RSI at 42.48 is Neutral, neither overbought nor oversold. The STOCH value of 13.31 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$707.50M14.189.91%8.72%0.89%-2.22%
79
Outperform
$779.10M9.6919.16%0.04%33.02%33.76%
78
Outperform
$809.12M10.5914.08%3.11%4.86%7.89%
76
Outperform
$793.44M9.6012.51%1.36%1.99%-2.80%
71
Outperform
$753.66M11.5615.67%3.23%4.94%20.77%
71
Outperform
$737.79M12.2711.16%3.88%2.82%6.88%
67
Neutral
$17.06B11.249.31%3.84%11.08%-3.39%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OSBC
Old Second Bancorp
17.28
1.31
8.20%
CPF
Central Pacific Financial
26.77
1.88
7.55%
FCBC
First Community Bancshares
36.94
-4.11
-10.01%
NBN
Northeast Bancorp
100.87
32.38
47.28%
MCBS
MetroCity Bankshares
27.99
-0.74
-2.58%
HBT
HBT Financial
24.97
3.45
16.03%

Old Second Bancorp Corporate Events

Executive/Board ChangesM&A Transactions
Old Second Bancorp Completes Merger with Bancorp Financial
Positive
Jul 1, 2025

On July 1, 2025, Old Second Bancorp completed its merger with Bancorp Financial, resulting in Evergreen Bank Group merging into Old Second National Bank. This merger expands Old Second’s assets, deposits, and loans, and strengthens its presence in the Chicago market. The merger also led to the appointment of Darin Campbell and Jill Voss to the boards of Old Second and its subsidiary bank, enhancing leadership and strategic direction.

The most recent analyst rating on (OSBC) stock is a Hold with a $17.00 price target. To see the full list of analyst forecasts on Old Second Bancorp stock, see the OSBC Stock Forecast page.

M&A TransactionsShareholder Meetings
Old Second Bancorp Merger Receives Stockholder Approval
Neutral
Jun 18, 2025

On June 18, 2025, Bancorp Financial, Inc. received stockholder approval for its merger with Old Second Bancorp, Inc., a move initially announced on February 25, 2025. The merger is anticipated to finalize on July 1, 2025, pending the fulfillment of standard closing conditions, potentially impacting the company’s operations and market positioning.

The most recent analyst rating on (OSBC) stock is a Hold with a $17.00 price target. To see the full list of analyst forecasts on Old Second Bancorp stock, see the OSBC Stock Forecast page.

Shareholder MeetingsRegulatory Filings and Compliance
Old Second Bancorp Doubles Authorized Common Stock Shares
Neutral
May 28, 2025

On May 23, 2025, Old Second Bancorp, Inc. filed a Certificate of Amendment to increase its authorized common stock shares from 60,000,000 to 120,000,000. This amendment was approved by stockholders at the annual meeting on May 20, 2025, potentially impacting the company’s capital structure and shareholder value.

The most recent analyst rating on (OSBC) stock is a Hold with a $17.00 price target. To see the full list of analyst forecasts on Old Second Bancorp stock, see the OSBC Stock Forecast page.

M&A TransactionsRegulatory Filings and Compliance
Old Second Bancorp Gains Approval for Merger
Positive
May 22, 2025

On May 22, 2025, Old Second Bancorp, Inc. announced it received regulatory approvals for its merger with Bancorp Financial, Inc., a significant step towards enhancing its financial strength and competitive position in the Chicago metropolitan market. The merger, expected to close in July 2025, aims to create a stronger institution that benefits stockholders and improves service capabilities, pending Bancorp Financial stockholder approval and other customary conditions.

The most recent analyst rating on (OSBC) stock is a Hold with a $17.00 price target. To see the full list of analyst forecasts on Old Second Bancorp stock, see the OSBC Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Old Second Bancorp Holds Annual Stockholders Meeting
Neutral
May 20, 2025

On May 20, 2025, Old Second Bancorp, Inc. held its Annual Meeting of Stockholders, where approximately 83.83% of the outstanding shares were represented. During the meeting, stockholders elected Edward Bonifas, Gary Collins, Keith Kotche, and Jill York as Class III directors for a term expiring in 2028, and voted on five additional proposals, including a non-binding advisory vote on executive compensation.

The most recent analyst rating on (OSBC) stock is a Hold with a $17.00 price target. To see the full list of analyst forecasts on Old Second Bancorp stock, see the OSBC Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
Old Second Bancorp Hosts Annual Stockholders Meeting
Neutral
May 20, 2025

On May 20, 2025, Old Second Bancorp, Inc. held its Annual Stockholders Meeting, where a presentation was made available to shareholders and investors through the company’s website. This meeting is significant for stakeholders as it provides insights into the company’s operations and strategic direction.

The most recent analyst rating on (OSBC) stock is a Hold with a $17.00 price target. To see the full list of analyst forecasts on Old Second Bancorp stock, see the OSBC Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 29, 2025