Old Second Bancorp(US:OSBC) Yahoo Finance·2026-01-22 16:10Core Insights - Old Second Bancorp reported strong fourth-quarter performance with a tax-equivalent net interest margin of 5.09%, an increase of 41 basis points year-over-year and 4 basis points from the previous quarter [1] - The company achieved a return on assets (ROA) of 1.64% and a return on average tangible common equity (ROCCE) of 16.15%, with earnings per share up approximately 30% compared to the previous year [2][4] - The net income for the fourth quarter was reported at $28.8 million, or $0.54 per diluted share, with adjustments leading to a net income of $30.8 million, or $0.58 per diluted share [3][6] Financial Performance - The company experienced a decline in deposit costs, with the total cost of deposits falling to 1.15% from 1.33% in the prior quarter, contributing to the strong net interest margin [7] - Non-interest income decreased slightly from the prior quarter but was higher than the year-ago quarter, driven by increases in wealth management fees and service charges [18] - Total non-interest expense declined by $10.2 million from the prior quarter, including a significant decrease in acquisition-related costs [21] Loan and Deposit Trends - Old Second's loan-to-deposit ratio increased to 93.9%, up from 91.4% in the prior quarter, although total loans decreased by $12.4 million [10] - Average loans increased by $60 million, or 1.2%, from the linked quarter, while average deposits declined by approximately $200 million [11] - The company is targeting mid-single-digit loan growth for 2026 despite expected continued runoff in certain commercial real estate participations [5][13] Credit Quality and Charge-offs - The company recorded $6 million in net loan charge-offs during the fourth quarter, with approximately 75% attributed to the power sports and owner-occupied commercial real estate portfolios [14][16] - Non-performing loans increased by $4.8 million, and classified assets rose by $10 million during the quarter [14] - Management expects elevated charge-offs in the power sports segment in the near term due to a higher interest-rate environment, but remains optimistic about the contribution margin in that portfolio [15][16] Capital and Future Outlook - Tangible book value per share increased to $14.12, and the tangible equity ratio rose to 11.02% at year-end [23] - The company anticipates expense growth of around 3% in 2026, moderated by realized cost savings, while also planning for potential share repurchases [22][24] - Management expressed confidence in the integration of Evergreen and aims to drive organic balance sheet growth [24]