Old Second profit rises to $28.9 million, earnings per share miss estimates
Key Facts
Old Second Bancorp reported net income of $28.9 million for the third quarter of 2026, with higher reported profit and improved credit metrics, while earnings per share fell short of analysts' estimates. Reported diluted earnings per share were $0.56, according to the bank's statement published through ACCESS Newswire, compared with an analyst estimate of $0.58 cited by Investing.com. The bank had reported net income of $28.2 million in the second quarter, according to its previous earnings release published on its investor relations website. Reported diluted earnings per share were $0.54 at the time, improving in the third quarter alongside the increase in net income. Adjusted diluted earnings per share were $0.55 in the third quarter, unchanged from the second quarter, according to the current statement. The sequential increase in reported profit thus accompanied flat adjusted earnings per share, with the two measures showing different trends during the period.
Revenue totaled $97.1 million in the third quarter of 2026, compared with a consensus forecast of $98.22 million, according to Investing.com. Revenue thus also missed expectations, alongside reported earnings per share falling short of analysts' estimates for the same period. In its income-generating operations, net interest and dividend income totaled $84.0 million during the quarter, according to the bank's statement. The net interest margin, calculated on a tax-equivalent basis, reached 5.27%, compared with 5.23% in the second quarter, according to Investing.com's comparison with the previous period's results. The bank attributed the strength of the margin to loan yields that more than offset higher funding costs, allowing the margin to rise sequentially despite the increase in those costs.
On credit, the provision for credit losses totaled $6.8 million in the third quarter, according to Old Second's statement. The bank said charge-offs outside motorsports loans were concentrated primarily in two loans associated with a single commercial relationship, identifying the concentration within this portion of realized losses. Meanwhile, the ratio of nonperforming loans to total loans declined at the end of the third quarter from its level at the end of the second quarter. The bank put the comparison at "0.76% versus 1.08%" in its statement, alongside an improvement in another portfolio quality metric. The ratio of regulatory criticized loans to total loans fell to 1.88% from 3.05% in the previous quarter, extending the improvement to both nonperforming and regulatory criticized loans.
In lending, the loan balance at the end of the third quarter declined by $7.8 million from the end of the second quarter, according to the statement. The bank attributed the decline primarily to commercial loans and investor commercial real estate loans. At the same time, average loans during the third quarter increased by $4.0 million from the previous quarter. The average loan measure that the bank reported as increasing includes loans held for sale, as part of its measure of lending activity during the period. The decline in the quarter-end balance thus accompanied an increase in the quarterly average, while loan yields supported the interest margin in the same period's results.
The latest results follow a second quarter in which revenue exceeded analysts' expectations, according to Investing.com's report on that period's results. Revenue at the time totaled $96.59 million, compared with expectations of $94.85 million. Comparing the two periods, third-quarter revenue rose sequentially, but shifted from beating expectations in the second quarter to missing them in the third quarter. For the shares, Investing.com cited a closing price of $24.87 in its earnings report published in October 2026. For the next announced shareholder payment, the bank set November 9, 2026 as the cash dividend payment date, according to its statement.