Old Second Bancorp’s first quarter was marked by robust revenue growth but increased credit costs, which weighed on profitability and drove a negative market reaction. Management pointed to elevated loan charge-offs—most notably from the powersports portfolio and select commercial real estate exposures in downtown Chicago—as the primary causes of weaker non-GAAP profit. CEO James L. Eccher described the quarter as “mixed,” citing disappointment with credit trends but highlighting the bank’s “exceptionally strong” net interest margin and core franchise performance. Management also noted that some credit issues stemmed from broader economic pressures and sector-specific headwinds, such as declining office property valuations and consumer softness in powersport lending.
Is now the time to buy OSBC? Find out in our full research report (it’s free for active Edge members).
Old Second Bancorp (OSBC) Q1 CY2026 Highlights:
- Revenue: $94.09 million vs analyst estimates of $93.42 million (28.1% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.49 vs analyst expectations of $0.51 (4.7% miss)
- Adjusted Operating Income: $34.38 million vs analyst estimates of $41.97 million (36.5% margin, 18.1% miss)
- Market Capitalization: $1.08 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Old Second Bancorp’s Q1 Earnings Call
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Jeffrey Allen Rulis (D.A. Davidson): Asked if higher charge-offs in powersports represented a pull-forward of losses or a new normal. CEO James L. Eccher responded that powersports losses should moderate due to seasonality, though they may remain somewhat elevated compared to historical levels.
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Jeffrey Allen Rulis (D.A. Davidson): Inquired whether the margin outlook incorporated the payoff of subordinated debt and assumptions about the rate environment. CFO Bradley S. Adams explained that there is flexibility to pay down or refinance, and he expects continued margin stability regardless of near-term rate changes.
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Brandon Rudd (Stephens Inc.): Sought more detail on the uptick in nonperforming loans. Eccher attributed this to a single commercial and industrial loan affected by supply chain and tariff challenges, while overall classified assets declined.
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Nathan James Race (Piper Sandler): Questioned how management is addressing persistent credit noise and if the worst is behind them. Eccher admitted credit improvement is “not always linear,” but said most problem credits have been identified and are being worked out.
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David Conrad (KBW): Requested a breakdown of loan growth expectations between commercial and powersports. Eccher and Darin Campbell, Head of National Specialty Lending, indicated both segments should see single-digit growth, with powersports benefiting from a shift in product mix and tighter underwriting.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace and composition of loan growth across commercial and powersports portfolios, (2) whether net charge-offs and nonperforming loans begin to stabilize or decline as management expects, and (3) the impact of continued expense discipline and share repurchases on capital ratios. Broader economic and industry factors, such as commercial real estate trends and consumer lending demand, will also be key indicators to watch.
Old Second Bancorp currently trades at $20.92, down from $21.21 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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