Old Second Raises Quarterly Dividend 14% After Buybacks

The Tip Desk · November 8, 2026 · 3 min read

Net income was $28.9 million, or $0.56 a share, as the tax-equivalent net interest margin reached 5.27% and the board lifted the common dividend to $0.08 a share.

Old Second Bancorp (OSBC), the parent of Old Second National Bank, reported third-quarter 2026 net income of $28.9 million, or $0.56 a share, up from $28.2 million, or $0.54 a share, in the second quarter.

The suburban Chicago lender said the board declared a cash dividend of $0.08 a share, payable Nov. 9, 2026, a 14% increase from the $0.07 dividend declared after the second quarter. Chairman, President and Chief Executive Officer Jim Eccher said the company elected the increase in the fourth quarter based on balance-sheet and income-statement trends.

Net interest and dividend income was $84.0 million, up $720,000, or 0.86%, after a $2.2 million, or 2.69%, increase in the prior quarter. The fully tax-equivalent net interest margin expanded 4 bps to 5.27%, following a 9 bps expansion to 5.23% in the second quarter. Loan yields rose 3 bps on higher average loan balances. Investment yields fell 5 bps on maturities and paydowns. Cost of funds increased 2 bps to 1.23% on higher deposit costs and higher average FHLB overnight borrowings.

Total loans were $5.24 billion, down $7.8 million, driven primarily by decreases in commercial and commercial real estate–investor. Average loans including held-for-sale were $5.23 billion. Total deposits fell $117.1 million, or 2.15%, to $5.33 billion, with declines in noninterest-bearing and time deposits as higher-rate brokered and exception-priced time deposits assumed from Bancorp Financial rolled off. Cost of deposits increased 2 bps to 1.02%.

Credit metrics improved even as the provision stayed elevated. Nonperforming loans fell $16.8 million to $39.6 million, or 0.76% of loans from 1.08%, including a $17.2 million decline in nonaccrual loans. Classified loans fell to $74.2 million from $132.1 million. Criticized loans declined to 1.88% of total loans from 3.05%, and criticized assets to 1.91% from 3.08%. Eccher said loan losses remained higher than the company wanted due to one previously identified commercial relationship.

The provision for credit losses was $6.8 million, down $750,000 from $7.5 million, after a $2.0 million decrease in the second quarter. The company said the $6.8 million was driven by $3.1 million of net charge-offs related to powersport loans, with non-powersport charge-offs primarily isolated to two commercial loans on a single relationship.

Noninterest income decreased $191,000, or 1.44%, to $13.1 million, reversing a $631,000, or 5.00%, increase in the second quarter. Mortgage banking income increased mainly due to $623,000 of mortgage servicing rights mark-to-market gains compared with $152,000 of losses in the prior quarter. The cash surrender value of BOLI decreased $673,000.

Noninterest expense increased $370,000, or 0.72%, to $51.6 million. Salaries and employee benefits rose $743,000, occupancy $166,000, advertising $120,000, and professional fees $257,000, while other expenses fell $868,000. The efficiency ratio increased 62 bps to 52.34%, reversing a 68 bps decrease to 51.72% in the second quarter.

Return on average assets rose to 1.69% from 1.65%. Return on average tangible common equity was 15.77%. The company repurchased 1,533,104 shares at an average $25.76, a $39.5 million capital reduction including excise taxes, or about 3% of outstanding shares, versus 732,000 shares in the prior quarter. Tangible common equity to tangible assets declined to 11.00% from 11.19%. Stockholders’ equity decreased $24.3 million.

Eccher said the company believes it has turned the corner on credit and looks forward to delivering solid results for the remainder of the year.