Q2 Profit Rises, But Nonperforming Loans Surge and Deposit Outflows Accelerate
OSBC sits 55% above its 52-week low of $16.535 on light trading volume (0.3× avg).
Summary
Old Second Bancorp reported higher Q2 net income and an expanded net interest margin, but faced rising nonperforming loans, decreased credit loss coverage, and significant deposit outflows. The CEO also initiated a new 10b5-1 selling plan.
Key Events · Earnings and Guidance · OSBC
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Q2 2026 Financial Results
Net income for Q2 2026 was $28.2 million ($0.54 diluted EPS), an increase from $25.6 million ($0.48 diluted EPS) in Q1 2026 and $21.8 million ($0.48 diluted EPS) in Q2 2025.
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Net Interest Margin Expansion
Net Interest Margin (GAAP) increased to 5.21% in Q2 2026, up from 5.12% in Q1 2026 and 4.83% in Q2 2025, driven by higher loan yields.
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Rising Nonperforming Loans
Nonperforming loans increased by 6.9% quarter-over-quarter and 75.2% year-over-year to $56.5 million. Nonperforming loans as a percentage of total loans rose to 1.1% from 1.0% in Q4 2025 and 0.8% in Q2 2025.
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Decreased ACL Coverage
The Allowance for Credit Losses (ACL) on loans decreased slightly to $70.4 million from $72.3 million in Q4 2025, resulting in a lower ACL to NPL coverage ratio of 124.6% (down from 136.9% in Q4 2025).
Analysis · OSBC · Finance
Old Second Bancorp reported increased net income and an expanded net interest margin for Q2 2026, indicating strong profitability. However, these positive results are overshadowed by continued deterioration in asset quality, with nonperforming loans rising significantly and the allowance for credit losses coverage decreasing. The company also experienced notable deposit outflows, necessitating increased short-term borrowings. While capital ratios remain robust, the asset quality trends and CEO's new selling plan present a mixed outlook for investors.
At the time of this filing, OSBC was trading at $25.69 on NASDAQ in the Finance sector, with a market capitalization of approximately $1.3B. The 52-week trading range was $16.54 to $26.04. This filing was assessed with negative market sentiment and an importance score of 7 out of 10.