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Old Second Bancorp, Inc. (NASDAQ: OSBC) is a bank holding company headquartered in Aurora, Illinois, with a storied history dating back to 1871. Through its principal subsidiary, Old Second National Bank, the company offers a comprehensive suite of consumer and commercial banking services tailored to meet the diverse needs of individuals, businesses, and institutions. Operating across multiple counties in the Chicago metropolitan area, Old Second is deeply rooted in its communities, blending modern banking solutions with a steadfast commitment to local economic growth.
Core Business Areas
Old Second Bancorp operates across several key business segments, providing:
- Retail Banking: Services include checking and savings accounts, money market accounts, certificates of deposit, and individual retirement accounts.
- Lending Solutions: The company offers a wide array of lending products, including commercial loans, industrial loans, real estate financing, agricultural loans, installment loans, and lines of credit. Specialized lending services, such as sponsor finance, further diversify its portfolio.
- Wealth Management and Trust Services: Old Second provides estate planning, investment management, and fiduciary services, catering to high-net-worth individuals and institutional clients.
- Additional Services: The bank also offers safe deposit boxes, treasury management, merchant services, and remote deposit capture, alongside digital banking solutions for personal and business use.
Market Position and Competitive Edge
Old Second Bancorp is strategically positioned as a leading community-focused institution in northern Illinois. Its competitive advantages include:
- Community Commitment: With a history spanning over 150 years, the company has built strong, lasting relationships with its customers and communities.
- Diversified Revenue Streams: The bank generates income through interest, fees, and other non-interest earnings, ensuring financial stability across economic cycles.
- Resilient Balance Sheet: Fiscal discipline and a strong credit rating underscore its ability to navigate challenging economic conditions.
- Innovative Financing Solutions: Through its O2 Sponsor Finance division, Old Second supports private equity sponsors and family offices, showcasing its expertise in cash flow-based lending for lower middle-market businesses.
Industry Context and Challenges
Operating within the highly competitive financial services sector, Old Second faces challenges such as fluctuating interest rates, regulatory compliance, and evolving customer expectations. However, its robust capital position, diversified offerings, and local expertise enable it to adapt and thrive amidst these challenges.
Commitment to Excellence
Old Second Bancorp's enduring legacy is a testament to its unwavering focus on financial responsibility, community engagement, and customer-centric innovation. By blending traditional banking values with modern technologies, the company continues to deliver exceptional value to its stakeholders.
Old Second Bancorp reported a fourth quarter 2022 net income of $23.6 million, or $0.52 per diluted share, a significant increase from $19.5 million in Q3 2022 and a recovery from a $9.1 million loss in Q4 2021. The net interest and dividend income rose to $64.1 million, up 15.3% from Q3 2022 and 124.1% year-over-year. Adjusted net income, excluding acquisition costs, was $24.1 million. A provision for credit losses declined to $1.5 million. The dividend of $0.05 per share is payable on February 6, 2023. The company's capital ratios indicate a solid financial position and effective asset management.
Old Second Bancorp (NASDAQ: OSBC) reported a net income of $19.5 million or $0.43 per diluted share for Q3 2022, marking an increase from $12.2 million in Q2 2022 and $8.4 million in Q3 2021. The surge in net income is attributed to net interest and dividend income of $55.6 million, reflecting a year-over-year increase of 145.7%. However, the company faced a net provision for credit losses of $4.5 million due to rising loan balances. Additionally, nonperforming loans rose to $52.9 million, raising concerns for investors.
O2 Sponsor Finance, a division of Old Second National Bank, has provided senior secured credit facilities to support Prospect Partners in the recapitalization of Blackwood Solutions. Blackwood, established in 2016, offers electric utility services, including transportation and logistics management in over 20 states. With its asset-based model, Blackwood aims to deliver exceptional service to major electric utility customers. The partnership highlights O2's role in facilitating growth in the utility service sector.
Old Second Bancorp announced that its division, O2 Sponsor Finance, provided $41.5 million in senior secured credit facilities to support Borgman Capital's acquisition of Dairyfood USA. This acquisition enhances the product portfolio and customer base of Borgman's portfolio company, Gilman Cheese Corporation, which specializes in processed cheeses. Dairyfood USA is recognized for producing a variety of private label products and is the largest producer of smoked Gouda in the U.S. The collaboration aims to strengthen their market position and operational synergies.
Old Second Bancorp announced that its O2 Sponsor Finance division provided over $22.8 million in secured financing to assist Cairngorm Capital Partners and SageHome Inc. with their acquisition of New Bath Today Inc. This acquisition aims to enhance services for aging seniors by bridging healthcare and home modification. SageHome specializes in home services allowing seniors to live independently, while New Bath Today focuses on bathroom renovations, particularly for safety. The deal anticipates growth in the senior living market.
Gregory S. Pike has been appointed as Executive Vice President and Chief Credit Officer at Old Second National Bank, effective April 29, 2022. With over 20 years of experience in commercial credit, Pike will oversee the bank's credit administration, investment analysis, and risk management functions. His prior roles include Senior Vice President at First American Bank and Managing Director at BMO Harris Bank. Old Second Bancorp, the parent company, operates the bank which has been in business for 150 years and trades under the symbol OSBC on NASDAQ.
Old Second National Bank has enhanced its partnership with Jack Henry to bolster its digital growth strategy. The collaboration is expected to yield operational efficiencies and advanced banking services by utilizing Jack Henry's technology, including the Banno Digital Platform and jhaEnterprise Workflow. This expansion follows a seven-year modernization journey to upgrade Old Second's technology infrastructure. The bank aims to better serve its customers with innovative fintech solutions via Jack Henry's extensive network of partners.
Old Second Bancorp (NASDAQ:OSBC) has received an Outstanding rating from the Office of the Comptroller of the Currency (OCC) in its recent Community Reinvestment Act (CRA) Performance Evaluation for 2018-2020. This rating reflects Old Second's commitment to supporting low- and moderate-income individuals and communities. Key highlights include significant community development lending and innovative support for LMI borrowers during the COVID pandemic. The bank aims to continue its efforts in economic growth and affordable housing, with substantial investments in community enhancement.
Sylvia Balogh has been promoted to Executive Vice President of Retail Banking at Old Second National Bank, overseeing 48 branches in the Chicago Metro area. With over 25 years of banking experience, her expertise includes regional sales management and business banking. Balogh joined Old Second in 2019 and previously held senior roles at Fifth Third Bank and Byline Bank. Old Second Bancorp, headquartered in Aurora, Illinois, celebrated its 150-year anniversary in 2021. The company's stock trades under the symbol OSBC.
Old Second Bank has launched O2 Sponsor Finance in Chicago, enhancing its position in the banking sector. This new division, led by seasoned professionals, will target lower middle market companies with revenues between $10 million and $100 million, providing senior cash flow loans and secured credit facilities. As of September 30, 2021, Old Second had approximately $6.2 billion in assets. The recent merger with West Suburban Bancorp is expected to create additional value for shareholders. The team brings a strong track record, having delivered over $3 billion in commitments to private equity sponsors.
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