Breaking Down Old Second Bancorp, Inc. (OSBC) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments in regional banks? Have you been wondering how Old Second Bancorp, Inc. (OSBC) is navigating the current financial landscape? In 2024, the company reported a net income of $19.1 million for the fourth quarter, or $0.42 per diluted share, and a full year net income of $85.3 million, or $1.87 per diluted share, so how do these figures stack up against previous periods and analyst expectations? With key metrics like a net interest margin of 4.68% and a tangible common equity ratio of 10.04%, alongside strategic moves such as the acquisition of five branches from First Merchants Bank, there's a lot to unpack. Let's dive into a detailed analysis of OSBC's financial health, exploring the essential insights that can inform your investment decisions.

Old Second Bancorp, Inc. (OSBC) Revenue Analysis

A detailed look at Old Second Bancorp, Inc.'s (OSBC) revenue streams is essential for investors aiming to understand the bank's financial health and stability. The analysis includes the primary sources of revenue, historical growth rates, and the contribution of different business segments.

Old Second Bancorp, Inc. primarily generates revenue through:

• Net Interest Income: The difference between the revenue generated from interest-bearing assets (like loans) and the expenses associated with paying interest on liabilities (like deposits).
• Non-Interest Income: Revenue derived from fees for services, such as wealth management, transaction fees, and other banking services.

Analyzing the year-over-year revenue growth rate provides insights into the bank's performance and its ability to increase its earnings. Examining historical trends helps to understand whether the bank is experiencing consistent growth, decline, or cyclical patterns.

For example, let's consider hypothetical revenue figures (Note: These are not the actual figures for Old Second Bancorp, Inc. but are used for illustrative purposes):

In this example, the bank shows consistent revenue growth, although the growth rate decreased from 10% in 2022 to 6.67% in 2024. Monitoring these trends is crucial for assessing the bank's growth trajectory.

Different business segments contribute varying amounts to Old Second Bancorp, Inc.’s overall revenue. Key segments to consider include:

• Commercial Banking: Revenue from loans, deposits, and other services offered to businesses.
• Retail Banking: Revenue from services offered to individual customers, including mortgages, personal loans, and deposit accounts.
• Wealth Management: Fees generated from managing and advising clients on their investments.

Understanding the contribution of each segment helps identify where the bank's strengths lie and where there may be opportunities for improvement. Shifts in revenue streams can indicate strategic changes, market trends, or specific challenges the bank is addressing. Significant changes may include:

• Increased reliance on non-interest income: This could indicate a strategic shift to diversify revenue sources and reduce dependence on interest rates.
• Decline in a specific segment: This might signal challenges in that particular market, such as increased competition or changing customer preferences.

For further insights into the values and mission that guide Old Second Bancorp, Inc., refer to Mission Statement, Vision, & Core Values of Old Second Bancorp, Inc. (OSBC).

Old Second Bancorp, Inc. (OSBC) Profitability Metrics

Analyzing Old Second Bancorp, Inc. (OSBC)'s profitability involves examining its gross profit, operating profit, and net profit margins to understand its financial health and operational efficiency. Trends in these metrics over time provide insights into the company's ability to manage costs and generate profits.

Here's a breakdown of key profitability metrics:

• Gross Profit: As of December 31, 2024, Old Second Bancorp Inc. reported total interest income of $293.44 million and total interest expense of $91.44 million. This results in a net interest income (before provision for credit losses) of $202.00 million.
• Operating Profit: Old Second Bancorp Inc. reported an operating income of $67.49 million for the year 2024.
• Net Profit Margin: The net income available to common shareholders for 2024 was $46.47 million.

A comparison of these profitability ratios with industry averages helps to benchmark Old Second Bancorp, Inc. (OSBC)'s performance against its peers, revealing its competitive positioning. Analyzing operational efficiency, such as cost management and gross margin trends, further illuminates the company's ability to control expenses and maximize profits.

To provide a clearer picture, here is a table summarizing the profitability metrics for Old Second Bancorp, Inc. (OSBC) based on the available data:

These figures provide a snapshot of Old Second Bancorp, Inc. (OSBC)’s financial performance and can be crucial for investors assessing the bank's financial health.

Further insights and analysis can be found at Breaking Down Old Second Bancorp, Inc. (OSBC) Financial Health: Key Insights for Investors.

Old Second Bancorp, Inc. (OSBC) Debt vs. Equity Structure

Understanding Old Second Bancorp, Inc. (OSBC)'s approach to financing its growth involves examining its debt levels, debt-to-equity ratio, and recent financing activities. This provides insights into the company's financial strategy and risk profile.

As of December 31, 2024, Old Second Bancorp, Inc. (OSBC) reported total assets of $7.14 billion. The company's liabilities consisted of deposits of $5.64 billion, short-term borrowings of $15.0 million, and long-term debt of $73.2 million. This indicates a significant reliance on deposits to fund its operations, with a smaller portion funded by debt.

The debt-to-equity ratio is a key metric for assessing a company's financial leverage. As of December 31, 2024, Old Second Bancorp, Inc. (OSBC) had a total shareholders' equity of $834.6 million. Using the provided debt figures, we can calculate different debt-to-equity ratios:

• Total Debt-to-Equity: (Short-term Debt + Long-term Debt) / Equity = ($15.0 million + $73.2 million) / $834.6 million = 0.106
• Long-Term Debt-to-Equity: $73.2 million / $834.6 million = 0.088

A debt-to-equity ratio of 0.106 suggests that Old Second Bancorp, Inc. (OSBC) relies more on equity than debt to finance its assets, indicating a conservative capital structure compared to some of its peers. The specific industry standards for debt-to-equity ratios can vary, but a lower ratio generally implies less financial risk.

Here's a summary of Old Second Bancorp, Inc. (OSBC)'s key financial data as of December 31, 2024:

Analyzing Old Second Bancorp, Inc. (OSBC)'s balance sheet, the bank maintains a strong equity position relative to its debt. This capital structure offers a buffer against potential financial downturns. The bank's reliance on deposits as a primary funding source reflects a traditional banking model, emphasizing customer relationships and stability.

For more insights into Old Second Bancorp, Inc. (OSBC)'s values, see: Mission Statement, Vision, & Core Values of Old Second Bancorp, Inc. (OSBC).

Old Second Bancorp, Inc. (OSBC) Liquidity and Solvency

Analyzing Old Second Bancorp, Inc. (OSBC)'s financial health requires a close look at its liquidity and solvency positions. These metrics provide insights into the company's ability to meet its short-term obligations and long-term financial stability.

Liquidity Ratios:

The current and quick ratios are essential for assessing a company's ability to cover its short-term liabilities with its most liquid assets. For Old Second Bancorp, Inc. (OSBC), these ratios offer a snapshot of its immediate financial health.

• Current Ratio: A higher current ratio indicates better liquidity. It is calculated by dividing current assets by current liabilities.
• Quick Ratio: Similar to the current ratio but excludes inventory, providing a more conservative view of liquidity.

As of the fiscal year 2024, Old Second Bancorp, Inc. (OSBC) reported a current ratio of 0.81. This indicates that the company has $0.81 of current assets for every $1 of current liabilities. The quick ratio for the same period was 0.73, suggesting a slightly more constrained immediate liquidity position when excluding less liquid assets.

Working Capital Trends:

Monitoring the trends in working capital—the difference between current assets and current liabilities—helps to understand the operational efficiency and short-term financial health of Old Second Bancorp, Inc. (OSBC). Declining working capital could signal potential issues in managing short-term obligations.

Cash Flow Statements Overview:

Cash flow statements provide a comprehensive view of all cash inflows and outflows, categorized into operating, investing, and financing activities. Analyzing these trends is crucial for understanding Old Second Bancorp, Inc. (OSBC)'s financial sustainability.

• Operating Cash Flow: Indicates the cash generated from the company's core business operations.
• Investing Cash Flow: Includes cash from the purchase and sale of long-term assets.
• Financing Cash Flow: Covers cash from debt, equity, and dividends.

In 2024, Old Second Bancorp, Inc. (OSBC) reported net cash from operating activities of $33.9 million, net cash used for investing activities of $55.1 million, and net cash from financing activities of $35.2 million. These figures highlight how the company is generating cash from its operations while strategically investing and managing its capital structure.

Potential Liquidity Concerns or Strengths:

While Old Second Bancorp, Inc. (OSBC) demonstrates positive cash flow from operations, the negative investing cash flow indicates significant investments in long-term assets. Monitoring these trends over time is essential to ensure that investments yield expected returns and do not strain liquidity. The company's current ratio below 1 suggests that it may need to manage its short-term liabilities carefully.

Here's a summary of key liquidity metrics for Old Second Bancorp, Inc. (OSBC) in 2024:

For further insights into investor behavior and stock performance, see: Exploring Old Second Bancorp, Inc. (OSBC) Investor Profile: Who’s Buying and Why?

Old Second Bancorp, Inc. (OSBC) Valuation Analysis

Determining whether Old Second Bancorp, Inc. (OSBC) is overvalued or undervalued involves analyzing several key financial metrics and market indicators. These include price ratios, stock performance, dividend information, and analyst ratings. Let's delve into each of these aspects to provide a comprehensive valuation analysis.

Here's a breakdown of key valuation metrics for Old Second Bancorp, Inc.:

• Price-to-Earnings (P/E) Ratio: OSBC has a P/E ratio of 7.90. For the past year, the Forward P/E has been as high as 10.39 and as low as 7.12, with a median of 8.81.
• Price-to-Book (P/B) Ratio: The company's P/B ratio is 0.98. Over the past 52 weeks, OSBC's P/B has been as high as 1.30 and as low as 0.98, with a median of 1.15.
• Price-to-Cash Flow (P/CF) Ratio: OSBC has a P/CF ratio of 6.88. Over the past year, OSBC's P/CF has been as high as 9.42 and as low as 6.31, with a median of 8.
• EV/EBITDA: Total Enterprise Value to EBITDA (ttm) is not available.

These metrics suggest that OSBC may be undervalued compared to its industry peers, as indicated by its lower P/E and P/B ratios.

Old Second Bancorp, Inc. (OSBC)'s stock price has fluctuated over the past year. The 52-week range is $13.26 to $19.46. As of April 17, 2025, the stock price was $14.78.

Here is an overview of Old Second Bancorp, Inc. (OSBC)'s stock performance over various periods:

• Today's Range: $14.63 x $14.95
• 1-Month: -11.78
• 3-Month: -16.33
• 1-Year: 7.92

The stock has shown positive growth over the past year but has experienced declines in recent months.

Old Second Bancorp, Inc. (OSBC) offers dividends, providing additional insight into its valuation:

• Dividend Yield: The current dividend yield is 1.62%.
• Dividends Per Share: The annual dividend payout is $0.24.
• Payout Ratio: The payout ratio is 11.17%.
• Ex-Dividend Date: The last ex-dividend date was January 31, 2025.

The dividend yield is a modest but stable return for investors. The company has been paying dividends consistently, with recent increases in the annual payout.

Analysts' opinions can offer further guidance on stock valuation:

• Consensus Rating: Old Second Bancorp has a consensus rating of 'Buy'.
• Average Rating Score: The company's average rating score is 3.00, based on 3 buy ratings, 1 hold rating, and no sell ratings.
• Price Target: The consensus price target is $20.8, suggesting a potential upside of 42.76% from the latest price.
• Analyst Coverage: Old Second Bancorp has been the subject of 2 research reports in the past 90 days.

Analysts generally have a positive outlook on Old Second Bancorp, Inc. (OSBC), with a consensus 'Buy' rating and a notable potential upside based on price targets. Keefe, Bruyette & Woods, Inc. maintained a Buy rating with a price of $24 on February 27, 2025.

For additional insights into Old Second Bancorp, Inc. (OSBC)'s mission, vision, and core values, you can visit: Mission Statement, Vision, & Core Values of Old Second Bancorp, Inc. (OSBC).

Based on the data available, Old Second Bancorp, Inc. (OSBC) appears to be potentially undervalued. The low P/E and P/B ratios, combined with positive analyst ratings and a reasonable dividend yield, suggest that the stock may offer value to investors. However, it is essential to consider individual investment goals and conduct further due diligence before making any investment decisions.

Old Second Bancorp, Inc. (OSBC) Risk Factors

Several internal and external factors could significantly impact Old Second Bancorp, Inc. (OSBC)'s financial health. These risks span industry competition, regulatory changes, and broader market conditions. Understanding these potential challenges is crucial for investors.

Industry Competition: The banking sector is highly competitive. OSBC faces competition from other banks, credit unions, and non-bank financial service providers. These competitors often vie for the same customer base, potentially impacting OSBC's ability to grow its loan portfolio and maintain its deposit base. Intense competition can lead to pricing pressures, affecting net interest margins and overall profitability.

Regulatory Changes: Banks are heavily regulated, and changes in regulations can significantly affect OSBC's operations and financial performance. Regulatory bodies such as the Federal Reserve and the Consumer Financial Protection Bureau (CFPB) can introduce new rules related to capital requirements, lending practices, and consumer protection. Compliance with these regulations can be costly and may require adjustments to business practices. For example, changes in capital adequacy ratios could force OSBC to hold more capital, limiting its ability to lend and invest.

Market Conditions: Economic downturns, changes in interest rates, and other market conditions can all pose risks to OSBC. A recession could lead to increased loan defaults and reduced demand for banking services. Fluctuations in interest rates can affect the bank's net interest margin, which is the difference between the interest income it earns on loans and the interest it pays on deposits. Rising interest rates may also dampen borrowing activity, impacting loan growth.

In addition to these broad risks, specific operational, financial, and strategic risks are often highlighted in OSBC's earnings reports and filings. These can include:

• Credit Risk: The risk that borrowers may default on their loans is a persistent concern for any bank. Factors such as changes in employment rates and economic conditions can impact borrowers' ability to repay their debts.
• Interest Rate Risk: As mentioned earlier, changes in interest rates can significantly affect OSBC's profitability. Banks must manage the mismatch between the repricing of their assets (loans) and liabilities (deposits).
• Liquidity Risk: This is the risk that OSBC may not have enough liquid assets to meet its obligations. Maintaining sufficient liquidity is crucial to ensure the bank can meet deposit withdrawals and other financial commitments.
• Operational Risk: This category includes risks related to fraud, cyberattacks, and other internal control failures. Banks must invest in robust security measures and internal controls to mitigate these risks.

Mitigation strategies are crucial for managing these risks. While specific strategies can vary, common approaches include:

• Diversification: Spreading loans across different industries and geographic regions can reduce credit risk.
• Hedging: Using financial instruments to protect against interest rate fluctuations.
• Stress Testing: Conducting simulations to assess the bank's ability to withstand adverse economic conditions.
• Compliance Programs: Implementing robust compliance programs to adhere to regulatory requirements.

For more insights, check out: Breaking Down Old Second Bancorp, Inc. (OSBC) Financial Health: Key Insights for Investors

Old Second Bancorp, Inc. (OSBC) Growth Opportunities

Old Second Bancorp, Inc. (OSBC) faces a dynamic landscape of growth opportunities driven by strategic initiatives, market conditions, and competitive advantages. Understanding these factors is crucial for investors assessing the bank's future potential.

Key growth drivers for Old Second Bancorp, Inc. (OSBC) include:

• Strategic Acquisitions: Pursuing strategic acquisitions to expand market presence and customer base.
• Organic Growth Initiatives: Focusing on organic growth through enhanced customer relationships and service offerings.
• Digital Transformation: Investing in digital technologies to improve operational efficiency and customer experience.
• Market Expansion: Expanding into new geographic markets or business segments to diversify revenue streams.

While specific revenue growth projections and earnings estimates are subject to market conditions and internal forecasts, analyzing past performance and current strategic initiatives can provide insights. In 2024, Old Second Bancorp, Inc. (OSBC) reported:

Strategic initiatives and partnerships play a vital role in driving future growth. These may include:

• Technology Investments: Partnering with fintech companies to enhance digital banking capabilities.
• Community Engagement: Participating in community development programs to strengthen local presence and reputation.
• Product Innovation: Introducing new financial products and services to meet evolving customer needs.

Old Second Bancorp, Inc. (OSBC) possesses several competitive advantages that position it for sustained growth:

• Strong Local Presence: Established relationships and brand recognition in key markets.
• Experienced Management Team: A seasoned leadership team with a proven track record.
• Sound Financial Position: A strong capital base and prudent risk management practices.
• Customer-Centric Approach: A focus on providing personalized service and building long-term customer relationships.

For more insights into the investor profile of Old Second Bancorp, Inc. (OSBC), consider exploring: Exploring Old Second Bancorp, Inc. (OSBC) Investor Profile: Who’s Buying and Why?