OSBC · Old Second Bancorp, Inc.

Old Second Bancorp’s Q1 2026 results reflect a mixed performance: strong net interest margin expansion (5.14%, +5 bps) and improved efficiency (52.40% ratio, -158 bps) were offset by elevated credit costs and loan contraction. The $9.5 million provision for credit losses—more than triple the prior quarter’s $3.0 million—was driven by powersport charge-offs and deterioration in two large commercial relationships, one tied to downtown Chicago office exposure and another to a cash-flow-dependent borrower. This contributed directly to the $3.2 million decline in net income and pushed nonperforming loans up 43% to $75.5 million (1.46% of total loans), with $9.8 million of those classified as >90 days past due but still accruing—a nuance management noted reflects active renewal efforts. Loan balances fell $66.9 million to $5.19 billion, led by reductions in commercial real estate, construction, and powersport portfolios, consistent with strategic de-risking. Deposit balances declined modestly ($31.1 million), but funding costs improved meaningfully—cost of deposits fell 10 bps to 1.05%, aided by runoff of higher-rate brokered time deposits acquired from Bancorp Financial. Management emphasized disciplined capital management: $23.1 million in share repurchases ($19.63 average price) and a $0.07 quarterly dividend were executed despite a $3.5 million reduction in stockholders’ equity, largely attributable to buybacks and AOCI losses. Tangible common equity ratio rose slightly to 11.07%, underscoring retained earnings strength. While ROATCE dipped to 14.20% (from 16.15%), the bank maintained solid capitalization and highlighted its ACL coverage of nonperforming loans at 95.53%, suggesting reserves remain adequate. No forward guidance was provided in the release; the focus remained on execution against existing strategy rather than new targets.