Annual Report Reveals Mixed 2025 Results with Major Acquisition Driving Growth Amidst Rising Nonperforming Loans
Summary
Old Second Bancorp reported a decline in 2025 GAAP net income and EPS, despite significant asset and loan growth from a major acquisition, with a notable increase in nonperforming loans and credit loss provisions.
Key Events
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Net Income and EPS Decline
Net income available to common stockholders decreased to $80.3 million ($1.62 diluted EPS) in 2025 from $85.3 million ($1.87 diluted EPS) in 2024, primarily due to acquisition-related costs and higher credit loss provisions.
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Significant Acquisition Completed
The company completed its acquisition of Bancorp Financial, Inc. on July 1, 2025, adding approximately $1.43 billion in total assets, $1.20 billion in loans, and $1.23 billion in deposits. The consideration paid totaled $189.4 million, consisting of 7.9 million shares of common stock and $48.9 million in cash.
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Deterioration in Asset Quality
Nonperforming loans increased by 74.4% to $52.8 million in 2025 from $30.3 million in 2024. The provision for credit losses also significantly increased to $27.6 million in 2025 from $12.8 million in 2024, partly due to the acquisition and increased charge-offs in the newly acquired powersport loan segment.
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Dividend Increase and Share Repurchase
The Board of Directors declared a cash dividend of $0.07 per share, an increase from $0.06 in the prior quarter. A share repurchase program was re-authorized in January 2026 for up to 1,908,042 shares, following the repurchase of 326,854 shares in 2025.
Analysis
Old Second Bancorp's 2025 annual report highlights significant balance sheet expansion driven by the Bancorp Financial acquisition, which added $1.43 billion in assets and $1.20 billion in loans. However, GAAP net income and diluted EPS declined year-over-year, and the provision for credit losses more than doubled to $27.6 million. Nonperforming loans also saw a substantial 74.4% increase to $52.8 million, indicating a deterioration in asset quality. While the company increased its quarterly dividend and re-authorized a share repurchase program, the negative trends in profitability and asset quality, alongside increased operating expenses related to the acquisition, present a mixed financial picture for investors.
At the time of this filing, OSBC was trading at $20.24 on NASDAQ in the Finance sector, with a market capitalization of approximately $1.1B. The 52-week trading range was $14.14 to $22.00. This filing was assessed with neutral market sentiment and an importance score of 7 out of 10.