Old Second Bancorp, Inc. (OSBC): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Old Second Bancorp, Inc.'s business mix post-merger, so let's map their segments onto the BCG Matrix to see where the capital should defintely flow. We've identified clear Stars like Wealth Management, showing 26% fee income growth, and a core Net Interest Margin hitting a strong 5.05%, signaling real power. Meanwhile, the Cash Cows-like the stable Commercial and Industrial lending and core deposits-are funding the fight, but we must address the Dogs, such as the low-yielding securities portfolio slated for sale, and the concerning Question Marks like the Powersport segment, which saw $5.1 million in charge-offs in Q3 2025. This map shows exactly where Old Second Bancorp, Inc. needs to invest for growth and where it needs to cut losses right now.

Background of Old Second Bancorp, Inc. (OSBC)

You're looking at Old Second Bancorp, Inc. (OSBC), which is headquartered in Aurora, Illinois. This company operates as the bank holding company for Old Second National Bank, and you can find its common stock trading on The Nasdaq Stock Market under the ticker OSBC. Honestly, it's a well-established player in the Illinois banking scene, having recently celebrated 150 years of operation back in 2021.

The biggest news for Old Second Bancorp, Inc. in 2025 was definitely the completion of its merger with Bancorp Financial, Inc., which became effective on July 1, 2025. This deal brought Bancorp Financial's subsidiary, Evergreen Bank Group, into the fold, merging it into Old Second National Bank. The integration of key leadership from Bancorp Financial onto the Old Second boards shows they are moving fast to combine operations.

When you look at the combined scale post-merger, based on proforma figures as of March 31, 2025, the entity boasts approximately $6.98 billion in total assets. That's a solid jump from the $5.65 billion in assets Old Second held at the end of 2024. The combined operations span 56 locations across the downtown, west, and south suburban markets of Chicago.

The core business remains full-service banking, covering consumer and commercial lending, trust services, and wealth management. What's interesting is that the acquisition from Bancorp Financial added a significant $1.19 billion loan portfolio, which specifically expanded their consumer lending and introduced the powersport segment into their offerings. Plus, you should note their specialized unit, O2 Sponsor Finance, which is active in providing Senior Secured Credit Facilities.

Looking at the recent performance, for the third quarter of 2025, Old Second Bancorp reported a net income of $9.9 million, translating to $0.18 per diluted share. That quarter saw net interest and dividend income hit $82.8 million, marking a 28.9% increase year-over-year, which is a strong signal of the merger's impact on revenue generation. On the shareholder side, the company has maintained its 1.39% dividend yield for 10 consecutive years now.

Old Second Bancorp, Inc. (OSBC) - BCG Matrix: Stars

You're looking at the units within Old Second Bancorp, Inc. (OSBC) that are currently dominating high-growth segments. These are the businesses that command significant relative share and are pouring cash into maintaining that lead. For OSBC, the Star quadrant is currently defined by a few key, high-momentum areas.

The Wealth Management and Trust Services division is definitely showing Star characteristics. We saw fee income growth of 26% year-over-year, which clearly signals a high-growth market and an increasing relative share for OSBC within that space. To give you a concrete idea of the momentum, the dollar increase in wealth management income compared to the third quarter of 2024 was $728,000, driven by growth in advisory and estate fees. This unit needs investment to keep pace with that market expansion.

The strategic push in the Expanded Chicago Market Presence is another key area. The bank now reports operating 56 locations in the area. This footprint is positioning Old Second Bancorp, Inc. to become the second-largest community bank in that region, setting the stage for substantial future share gains. It's a classic Star play: invest heavily now to secure a dominant position before the market matures.

The core profitability engine, the Core Net Interest Margin (NIM) performance, is exceptionally strong, which supports the high-growth units. For the third quarter of 2025, the NIM expanded to a robust 5.05% on a tax equivalent basis. This is a significant jump from the 4.64% reported in the third quarter of 2024, signaling a high-performing core asset base that generates the necessary capital to fund these growth initiatives.

Finally, the Organic Loan Growth demonstrates the ability to expand the base portfolio even while integrating major acquisitions. In the third quarter of 2025, the company added $72.3 million in organic loan growth, which is important because the total loan portfolio grew by $1.27 billion, largely due to the acquisition of Bancorp Financial. Keeping that organic engine running is crucial for long-term health.

Here's a quick look at the key metrics supporting the Star classification for these units:

These Stars consume cash to fuel their high growth, but if they maintain their market share until the high-growth phase slows, they are the ones that transition into the reliable Cash Cows of the future. The current strategy is clearly focused on investing in these areas.

The operational highlights reinforcing this Star status include:

• Wealth Management income increase over Q3 2024: $728,000
• NIM increase from Q3 2024 to Q3 2025: 41 basis points
• Total Loan Growth in Q3 2025: $1.27 billion
• Adjusted Net Income for Q3 2025: $28.4 million

Finance: draft 13-week cash view by Friday.

Old Second Bancorp, Inc. (OSBC) - BCG Matrix: Cash Cows

You're looking at the established, reliable engines of Old Second Bancorp, Inc. These are the business segments that command a high market share in markets that aren't expanding rapidly, meaning they don't require massive new investment to maintain their position. They are the primary source of the cash needed to fund the rest of the company's strategy.

Traditional Commercial and Industrial (C&I) Lending fits this profile perfectly. This segment provides stable, high-quality interest income within a mature regional market. For the third quarter of 2025, the total Net Interest and Dividend Income, heavily influenced by core lending, reached $82.8 million. This consistent interest stream is the hallmark of a Cash Cow, generating predictable cash flow without the need for aggressive market expansion spending.

The funding advantage supporting this lending operation comes from the Core Deposit Base. Despite shifts in the broader market, Old Second Bancorp, Inc. maintained a strong funding position. As of September 30, 2025, the pro forma loan-to-deposit ratio stood at 91.4%. This ratio shows that the bank effectively uses its deposits to fund its loan book, a sign of efficient capital deployment. Total deposits reached $5.76 billion in Q3 2025, providing a solid foundation.

Another reliable revenue stream is Service Charges on Deposits. This is low-volatility income that confirms customer engagement in the mature deposit market. For Q3 2025, this revenue source increased by a healthy amount, showing a year-over-year increase of a little better than 10%, specifically growing by $274,000 compared to the prior year like quarter. This small, consistent growth is exactly what you want from a Cash Cow component.

The Commercial Real Estate (CRE) Portfolio remains a foundational asset class, typical for a community bank structure. While it requires maintenance, its high market share in established local markets keeps it in this quadrant. Management projects this portfolio to remain below the peer group average, reported at 208% of total risk-based capital. This suggests a conservative, yet profitable, stance on a core asset class, milking gains passively rather than aggressively chasing high-growth, high-risk development.

Here's a quick look at the key metrics underpinning the Cash Cow status for Old Second Bancorp, Inc. as of the end of Q3 2025:

The activities that generate the necessary cash flow for Old Second Bancorp, Inc. can be summarized by these characteristics:

• Maintain high market share in established deposit and loan segments.
• Generate strong Net Interest Margin (NIM) of 5.05% (TE basis).
• Utilize a large, stable funding base totaling $5.76 billion in deposits.
• Invest minimally in promotion, focusing instead on infrastructure to improve efficiency.
• Produce reliable fee income, with Service Charges on Deposits up $274,000 YoY.

Old Second Bancorp, Inc. (OSBC) - BCG Matrix: Dogs

Dogs are business units or products with a low market share operating in low-growth markets. These segments frequently tie up capital without generating significant returns, making them candidates for divestiture or minimizing focus. For Old Second Bancorp, Inc. (OSBC), the elements categorized here are those showing strain, high integration costs, or low current yields following recent strategic moves.

The impact of recent acquisitions, while strategically important for growth, has introduced elements that currently fit the Dog profile due to associated costs and credit quality adjustments. For instance, the reported GAAP Net Income for the third quarter of 2025 was $9.9 million, or $0.18 per diluted share, a significant drop from the $21.8 million reported in the second quarter of 2025. This lower bottom-line result reflects the drag from integration and legacy asset issues.

Consider the cost structure associated with managing these lower-performing areas. Noninterest Expense for the third quarter of 2025 rose to $63.2 million, representing a 60.7% increase compared to the $39.3 million reported in the third quarter of 2024. This sharp increase in operating costs, driven partly by acquisition-related expenses, highlights the cash consumption aspect of these segments.

The credit quality of certain legacy or acquired commercial relationships requires significant management attention, which is a hallmark of a Dog. The Allowance for Credit Losses (ACL) on loans increased to $75 million as of September 30, 2025, up from $43 million at June 30, 2025. Furthermore, the provision for credit loss expense in the third quarter of 2025 included a day two provision on non-PCD loans of $13.2 million pre-tax, or $0.19 per diluted share, directly tied to the Evergreen acquisition.

The repositioning of the securities portfolio, which management noted involved turnover of older, lower-yielding securities, suggests a segment that was yielding little in the current rate environment. While specific NIB deposit mix projections are not confirmed in the latest filings, the overall pressure on GAAP earnings suggests low-share, low-growth components are weighing on performance.

Here are key financial metrics from the third quarter of 2025 that illustrate the pressures associated with these lower-performing segments:

Management is actively addressing these areas through integration and asset repositioning. The strategy involves selling acquired assets and replacing low-yielding securities. The total deposits reached $5.76 billion, a 20.0% increase from the second quarter of 2025, largely due to the Bancorp Financial acquisition, which also added $1.19 billion of loans in the third quarter.

The required actions for these Dog-like components include:

• Minimize management attention on expensive turn-around plans.
• Focus on efficient integration of acquired assets.
• Continue planned turnover of low-yielding securities.
• Monitor the $75 million ACL closely.

The adjusted net income of $28.4 million for the third quarter of 2025, or $0.53 per diluted share, shows the core business strength when acquisition noise is excluded, underscoring why the GAAP results are treated as a temporary drag from these specific units.

Old Second Bancorp, Inc. (OSBC) - BCG Matrix: Question Marks

You're looking at the newer, high-growth areas of Old Second Bancorp, Inc. that are demanding capital right now, which is exactly what we expect from Question Marks in the BCG framework. These units are in markets that management sees potential in, but they haven't yet proven consistent, profitable returns, especially following the July 1, 2025, acquisition of Bancorp Financial.

Consider the Powersport Loan Segment, which was added via the Bancorp Financial acquisition. While the overall asset yields for Old Second Bancorp, Inc. were strong, with the tax-equivalent net interest margin expanding to 5.05% in Q3 2025, this segment is clearly facing near-term headwinds. The uncertainty in its long-term profitability is highlighted by the fact that net charge-offs for the third quarter of 2025 reached $5.1 million, which was noted as being concentrated in Powersport. That level of charge-off demands immediate attention to see if this segment can quickly move toward Star status or if it risks becoming a Dog.

The Acquired Solar Loan Portfolio is another area fitting this profile. While specific data on this book is sparse in the latest reports, it is grouped within the 'Other' category of classified loans. This 'Other' category, which also includes consumer loans like collector cars, showed a balance of $36.4 million as of September 30, 2025, within the total classified loan figure. Management's active look to sell or reposition this low-coupon book suggests they are deciding whether to invest heavily to improve its return profile or divest it entirely.

The financial strain from integrating new growth, alongside credit quality issues, directly impacted the bottom line. GAAP net income for the third quarter of 2025 fell to $9.9 million. This result was heavily influenced by significant non-recurring charges, including a day-two Provision for Credit Losses (PCL) of $13.2 million related to the acquired loans and $11.5 million in transaction-related costs. Honestly, these high costs of growth make you question the immediate return on the capital deployed into these new ventures.

The need for capital allocation decisions is underscored by the rise in Classified Loans. This metric demands immediate attention because it reflects assets requiring active management. You can see the quarter-over-quarter pressure clearly here:

The increase in total classified loans to $134.3 million was driven by inflows of $62.9 million, which included 14 loans acquired from Bancorp Financial. The decision you face is whether to inject more capital into these high-growth, high-risk areas-like the Powersport segment-to quickly gain market share, or to cut losses now before they fully transition into Dogs consuming more cash.

Here's a quick look at the key drivers tying into these Question Marks:

• GAAP Net Income for Q3 2025: $9.9 million.
• Total Noninterest Expense increase QoQ: 45.5%.
• Day Two Provision for Credit Losses: $13.2 million.
• Transaction-related Costs: $11.5 million.

Finance: draft 13-week cash view by Friday.