On April 23, 2025, Old Second Bancorp Inc (OSBC, Financial) released its 8-K filing detailing the financial results for the first quarter of 2025. The company reported a net income of $19.8 million, or $0.43 per diluted share, aligning with the analyst estimate of $0.43 per share. This performance reflects a slight increase from the fourth quarter of 2024, where net income was $19.1 million, or $0.42 per diluted share. However, it represents a decrease from the first quarter of 2024, which saw a net income of $21.3 million, or $0.47 per diluted share.
Company Overview
Old Second Bancorp Inc is a bank holding company providing a range of consumer and commercial banking products. These include demand, money market, savings, time deposit, and individual retirement accounts, as well as various lending services. The company operates primarily in the community banking segment, generating revenue through interest, commission, payments, and other income.
Performance and Challenges
The first quarter of 2025 saw Old Second Bancorp Inc's net income increase by $720,000 compared to the previous quarter, primarily due to a $1.1 million decrease in provision for credit losses and a $3.0 million decrease in interest expense. However, these gains were partially offset by a $1.7 million decrease in interest and dividend income and a $1.4 million decrease in noninterest income. Compared to the first quarter of 2024, net income decreased by $1.5 million, largely due to a $6.3 million increase in noninterest expense.
Financial Achievements
Old Second Bancorp Inc's net interest and dividend income for the first quarter of 2025 was $62.9 million, marking a 2.1% increase from the fourth quarter of 2024 and a 5.2% increase from the first quarter of 2024. The company's net interest margin (GAAP) improved to 4.85%, up from 4.66% in the previous quarter and 4.55% in the same quarter last year. These improvements are significant as they reflect the company's ability to manage its interest income and expenses effectively, a critical factor for banks.
Income Statement and Key Metrics
Noninterest income for the first quarter of 2025 was $10.2 million, a decrease from both the fourth quarter of 2024 and the first quarter of 2024. Noninterest expense increased slightly from the previous quarter to $44.5 million and saw a significant year-over-year increase of 16.4%. The efficiency ratio, a measure of the bank's overhead as a percentage of its revenue, was reported at a healthy 56.46%.
Strategic Developments and Commentary
Chairman, President, and CEO Jim Eccher commented, "Old Second reported strong results in the first quarter of 2025 led by exceptional margin performance and disciplined operating efficiency. Tangible book value per share increased by more than 15% on both a linked quarter annualized and year-over-year basis despite the dilution associated with a branch purchase transaction in the fourth quarter of 2024."
In February 2025, Old Second Bancorp Inc announced an agreement to acquire Evergreen Bank Group, a move expected to enhance the company's consumer lending capabilities and strengthen its competitive position in the Chicago area.
Analysis and Conclusion
Old Second Bancorp Inc's first quarter results demonstrate its ability to maintain stable earnings despite challenges such as increased noninterest expenses. The company's strategic acquisition of Evergreen Bank Group is poised to diversify its revenue streams and enhance its market position. As the bank continues to manage its interest margins and operational efficiency, it remains well-positioned to deliver value to its shareholders.
Explore the complete 8-K earnings release (here) from Old Second Bancorp Inc for further details.
