Old Second Bancorp’s third quarter results missed Wall Street’s expectations, as modest revenue growth was offset by a notable increase in net loan charge-offs. Management attributed the underwhelming performance to a large, previously flagged commercial and industrial credit, which drove higher loan losses. CEO James Eccher emphasized that, despite these challenges, the quarter saw significant improvement in key credit metrics such as reductions in classified and criticized loans. He noted, “We think we have turned the corner… and feel as good about the loan book today as we have in several years.”

Is now the time to buy OSBC? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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 Q3 earnings call

• Nathan Race (Piper Sandler) asked about the sustainability of lower charge-offs going forward. CEO James Eccher expressed confidence, citing significant reductions in criticized and classified loans and stating, “We think we have turned the corner.”
• Nathan Race (Piper Sandler) inquired about net interest margin expectations amid increased deposit pricing competition. CFO Bradley Adams explained that the margin could decline by around 5 basis points due to higher funding costs and share repurchases but believes margins will remain above 3.25%.
• Nathan Race (Piper Sandler) questioned the bank’s future appetite for share buybacks versus M&A. Adams replied that capital is sufficient to continue buybacks while also remaining ready for smaller, strategic acquisitions.
• Jeff Rulis (D.A. Davidson) asked whether higher rates are impacting loan demand or credit quality, especially in the powersports segment. Head of National Specialty Lending Darin Campbell said application volumes are up, and Eccher noted that short loan durations and ongoing stress testing help mitigate repricing risk.
• Brian Martin (Janney Capital) queried about the expense outlook and whether credit resolution offers a tailwind. Adams responded that while there are always moving parts in expenses, keeping growth in the 3-4% range is a positive achievement given ongoing cost pressures.

Catalysts in upcoming quarters

Looking ahead, the StockStory team will watch (1) whether credit quality improvements are sustained, particularly regarding reductions in criticized and classified loans; (2) the impact of new lending partnerships, especially Ducati USA, on loan growth and originations; and (3) how deposit growth and pricing trends affect net interest margin in a competitive funding environment. Execution on expense discipline and strategic capital deployment will also be key markers of success.

Old Second Bancorp currently trades at $24.77, in line with $24.87 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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