Old Second Bancorp Reports Strong Q1 2026 Earnings Despite Soft Asset Quality Trends
Old Second Bancorp, Inc. reported strong first quarter (Q1) 2026 earnings, with net income of $25.6 million or $0.48 per diluted share, despite soft asset quality trends.
In a recent conference call, James L. Eccher, Chairman, President and CEO of Old Second Bancorp, provided an overview of the quarter's performance. "Our financial performance continued to reflect an exceptionally strong net interest margin at 5.14% for the first quarter," he stated, which is a five basis point improvement from last quarter and a 26 basis point increase over the prior like quarter on a tax equivalent basis.
However, asset quality trends softened during the quarter, with non-performing loans increasing by $22.7 million, while classified assets declined by $2.8 million. Despite this, the company recorded $9.8 million in net loan charge-offs in the first quarter, primarily due to charge-offs related to commercial real estate, powersports, and warehousing and distribution businesses.
Bradley S. Adams, COO and CFO of Old Second Bancorp, noted that "the decrease in yield in comparison to the prior quarter is primarily a function of Fed rate cuts working through the portfolio." This led to a tax equivalent loan yields decline of five basis points during the first quarter 2026 compared to the linked quarter.
Notably, tangible book value per share increased to $14.35 as of March 31st, 2026 from $14.12 as of December 31st, 2025. The tangible equity ratio also increased five basis points from last quarter, from 11.02% to 11.07%, and is 73 basis points higher than the like period one year ago.
Old Second Bancorp's Q1 2026 earnings were impacted by $9.8 million of net loan charge-offs, which primarily included a commercial real estate investor charge-off of $3.9 million, a commercial and industrial charge-off of $1.3 million in the warehousing and distribution space, and net charge-offs related to the Powersports business totaling $3.9 million.
"We're pleased with our quarterly results, despite some softness in asset quality trends," said James L. Eccher. "Our strong net interest margin and increasing tangible book value per share demonstrate our company's continued financial strength."
Overall, Old Second Bancorp's Q1 2026 earnings report highlights the company's resilience in a challenging economic environment.
