Old Second Bancorp Reports Sharp Rise in Nonperforming Loans and Credit Loss Provisions in Q1, Despite Share Repurchases
OSBC sits 30% above its 52-week low of $16.21.
Summary
Old Second Bancorp reported a sharp increase in nonperforming loans and credit loss provisions in Q1 2026, signaling deteriorating asset quality, despite ongoing share repurchases and a debt redemption.
Key Events · Earnings and Guidance · OSBC
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Nonperforming Loans Surge
Nonperforming loans increased by $22.7 million, or 42.9%, to $75.5 million in Q1 2026 compared to $52.8 million in Q4 2025. Nonperforming loans as a percent of total loans rose to 1.5% from 1.0%.
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Credit Loss Provisions Jump
The provision for credit losses significantly increased to $9.5 million in Q1 2026, up from $3.0 million in Q4 2025 and $2.4 million in Q1 2025, driven by increased charge-offs and a commercial relationship downgrade.
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Net Income Declines Quarter-over-Quarter
Net income for Q1 2026 was $25.6 million ($0.48 diluted EPS), a decrease from $28.8 million ($0.54 diluted EPS) in Q4 2025, but an increase from $19.8 million ($0.43 diluted EPS) in Q1 2025.
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Share Repurchases Executed
The company repurchased 1,175,859 shares for $23.1 million during Q1 2026 under its previously announced $43.9 million repurchase program.
Analysis · OSBC · Finance
Old Second Bancorp's Q1 2026 results reveal a significant deterioration in asset quality, with nonperforming loans surging by 42.9% quarter-over-quarter to $75.5 million. This was accompanied by a substantial increase in the provision for credit losses to $9.5 million, up from $3.0 million in the prior quarter, and higher net charge-offs. While the company executed $23.1 million in share repurchases and redeemed $30.0 million in subordinated debt, these positive capital actions are overshadowed by the accelerating credit quality concerns. Investors should closely monitor future trends in loan performance and credit loss reserves, as these metrics indicate increasing risk in the loan portfolio.
At the time of this filing, OSBC was trading at $21.12 on NASDAQ in the Finance sector, with a market capitalization of approximately $1.1B. The 52-week trading range was $16.21 to $22.43. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.