Old Second Bancorp, Inc. (OSBC): Business Model Canvas [Dec-2025 Updated]

You're looking to cut through the noise and see exactly how Old Second Bancorp, Inc. (OSBC) is structured after that big acquisition, especially now that they've posted Q3 2025 results showing a 5.05% Net Interest Margin alongside $63.2 million in noninterest expense tied to integration. As someone who has mapped out bank strategies for decades, I can tell you their model hinges on balancing a $7.0 billion asset base and 56 Chicago-area branches with high-touch commercial lending and new segments like powersport loans. This canvas breaks down the nine essential blocks-from their key activity of integrating assets to their revenue streams totaling $82.8 million in Net Interest Income-giving you the precise blueprint for understanding their current risk/reward profile. Dive in below to see the actionable components of their operating model right now.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Key Partnerships

You're looking at how Old Second Bancorp, Inc. (OSBC) structures its external relationships to drive growth and manage operations as of late 2025. These partnerships are critical, especially following the major acquisition earlier in the year.

Private Equity firms for O2 Sponsor Finance deals

The O2 Sponsor Finance division, a part of Old Second National Bank, actively partners with private equity firms to provide senior secured credit facilities for acquisitions and recapitalizations in the lower middle market. O2 Sponsor Finance generally targets businesses with revenues between $10 million and $100 million and EBITDA ranging from $2 million to $10 million.

Here are some of the notable financing activities involving Private Equity partners in 2025:

This activity shows Old Second Bancorp, Inc. is using its lending capacity to support external sponsors in executing their investment theses.

Technology vendors for core banking and digital platforms

While specific vendor names aren't always public, the successful integration of systems is a key partnership outcome. The completion of the systems and brand conversion for Evergreen Bank Group on October 20, 2025, required deep coordination with technology providers to unify platforms.

• Integration of former Evergreen Bank Group branches into Old Second National Bank systems completed by October 20, 2025.
• Former Evergreen customers gained full access to Old Second's robust online and mobile banking platforms.

Correspondent banks for liquidity and service offerings

Managing liquidity is always key, and Old Second Bancorp, Inc. adjusts its reliance on external funding sources based on its balance sheet structure, which changed significantly post-merger. The funding mix adjustments following the acquisition impacted short-term borrowings.

• Average Federal Home Loan Bank (FHLB) advances decreased by $279.5 million year-over-year as of the third quarter of 2025.
• This FHLB advance reduction was the primary driver for a $3.9 million decrease in interest expense on other short-term borrowings in Q3 2025.
• In the first quarter of 2025, correspondent bank account yields saw a slight reduction compared to the prior linked period.

Bancorp Financial, Inc. (Evergreen Bank Group) for post-merger integration

The merger with Bancorp Financial, Inc., effective July 1, 2025, fundamentally reshaped Old Second Bancorp, Inc.'s scale and market presence. The transaction valued Bancorp Financial common stock at an implied purchase price of approximately $197 million, with shareholders receiving 2.5814 shares of Old Second common stock and $15.93 in cash per share.

The combined entity, on a proforma basis as of March 31, 2025, reported:

• Total Assets of $6.98 billion.
• Total Deposits of $5.95 billion.
• Total Loans of $5.09 billion.

The integration finalized on October 20, 2025, bringing the total operating locations to 56 across the Chicago area markets, with former Evergreen customers now banking at 55 Old Second locations.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Key Activities

Core commercial and consumer lending operations are central to Old Second Bancorp, Inc.'s (OSBC) activities, evidenced by the Net Interest Margin (GAAP) reaching 5.03% in the third quarter of 2025, up from 4.83% in the previous quarter. The tax equivalent net interest margin for Q3 2025 was 5.05%. Organic loan growth, excluding the recent acquisition, totaled $72.3 million, representing an 1.8% increase compared to June 30, 2025, showing underlying business health.

Integrating acquired assets and operational efficiencies is a major activity, following the closing of the acquisition of Bancorp Financial, Inc. and its subsidiary, Evergreen Bank Group, effective July 1, 2025. This integration required recording significant day two provision for credit losses of $13.2 million and transaction-related expenses of $11.5 million (net of gains on branch sales) in Q3 2025. The integration of Evergreen Bank Group was reported as complete by October 20, 2025.

Managing a $5.27 billion loan portfolio as of September 30, 2025, is a key function. This portfolio size reflects a $1.27 billion increase from June 30, 2025. The loan portfolio growth was primarily driven by the $1.19 billion of loans acquired through the Bancorp Financial acquisition, which also expanded consumer lending to include the new powersport loan segment.

Providing specialized Sponsor Finance and Wealth Management services involves active deal execution. O2 Sponsor Finance was noted for providing Senior Secured Credit Facilities in October 2025 and September 2025 to support acquisitions by private equity firms.

Maintaining strong regulatory compliance and capital levels requires constant monitoring against minimum requirements. The company elected to increase the common dividend by 17% in the fourth quarter, reflecting balance sheet strength.

Here's a look at the key regulatory capital ratios as of September 30, 2025, compared to the minimum required levels for the Company:

The loan loss reserves to total loans ratio stood at 1.43% at the end of Q3 2025. The loan-to-deposit ratio was 91% as of September 30, 2025.

Key compliance and capital management metrics include:

• Tangible Common Equity to Tangible Assets (TCE/TA) ratio was 10.41% at September 30, 2025.
• The TCE/TA ratio declined by 42 basis points from the prior quarter's 10.83%.
• The Bank's Common Equity Tier 1 capital ratio was 13.14%.
• The Bank is subject to prompt corrective action minimums of 6.50% for CET1.
• The Company's expected Stress Capital Buffer (SCB) requirement based on 2025 stress results, starting in October 2025, is 2.6 percent.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Key Resources

You're looking at the core assets Old Second Bancorp, Inc. uses to execute its business strategy as of late 2025. These aren't just line items; they are the engine room of the bank, especially following the significant integration of Bancorp Financial earlier in the year.

The physical footprint remains a critical resource. Old Second Bancorp, Inc. operates a network of 56 physical branch locations across the downtown, west, and south suburban Chicago markets, a number solidified by the July 1, 2025, merger completion. This physical presence is backed by a strong balance sheet foundation. As of September 2025, total assets stood at approximately $6.99 Billion USD.

Capital strength is definitely one of the most important resources for any bank, and Old Second Bancorp, Inc. maintains a robust position. The Common Equity Tier 1 ratio, a key measure of a bank's core capital strength, was reported at 12.44% as of September 30, 2025. That ratio is well above regulatory minimums, giving the bank significant capacity for lending and absorbing unexpected stress. Here's a quick look at some of those core figures:

The funding structure relies heavily on deposits for stability. The proforma balance sheet following the merger showed $5.95 billion in deposits. This base supports the lending activities, evidenced by the loan-to-deposit ratio of 91.4% at the end of Q3 2025.

Beyond the balance sheet numbers, the human capital is essential. The integration brought in experienced leadership, with the former CEO and CFO of Bancorp Financial joining the Old Second Bancorp, Inc. board of directors. This strengthens the internal capabilities across key revenue-generating areas. You can see the core elements of this resource base here:

• Physical Network: 56 operating branch locations in the Chicago area.
• Capital Strength: Common Equity Tier 1 ratio of 12.44%.
• Deposit Funding: Total deposits of $5.95 billion (proforma).
• Expertise: Experienced commercial lending and wealth management teams, bolstered by recent executive integration.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Value Propositions

You're looking at the core offerings Old Second Bancorp, Inc. (OSBC) puts on the table for its customers and the market as of late 2025. It's a blend of traditional local service backed by specialized, high-yield capabilities.

Full-service community banking with a regional footprint

Old Second Bancorp, Inc. delivers full-service banking, including customary consumer and commercial products. This is anchored by Old Second National Bank, headquartered in Aurora, Illinois. As of September 30, 2025, the pro forma size reflected total assets of approximately $7.0 billion, with total deposits reaching $5.7 billion and total loans at $5.2 billion. The regional footprint includes operations in Kane, Kendall, DeKalb, DuPage, LaSalle, Cook, and Will Counties in Illinois, with 53 locations as of December 31, 2024.

The value proposition here is comprehensive service delivery:

• Customary consumer and commercial products and services.
• Electronic banking, including web and mobile banking.
• Safe deposit operations and corporate cash management.

Specialized lending products, including the new powersport loan segment

The loan portfolio is significantly enhanced by strategic acquisitions, bringing in specialized, higher-yielding assets. The new powersport loan segment, integrated through the Bancorp Financial acquisition, is a key differentiator. The acquired portfolio from Evergreen Bank Group showed strong yields, with powersports loans recording an average rate of 9.48% on Fourth Quarter 2024 originations. Total loans increased by $1.27 billion from the previous quarter, primarily due to the acquisition of $1.19 billion in loans with Bancorp Financial.

High Net Interest Margin (TE) of 5.05% in Q3 2025

A major financial value proposition is the bank's strong profitability on its lending activities relative to interest paid on deposits. For the third quarter of 2025, the tax equivalent net interest margin (TE) was 5.05%. This represented a 20 basis point increase from the second quarter of 2025 and a 41 basis point increase compared to the third quarter of 2024. Net interest and dividend income for Q3 2025 reached $82.8 million.

Here's a quick look at the margin performance:

Dedicated Sponsor Finance division for middle-market companies

O2 Sponsor Finance, a division of Old Second National Bank, provides cash flow-based loans nationally to lower middle-market businesses. This division focuses on supporting private equity sponsors, independent sponsors, and family offices. Since 2005, the team has executed leveraged buyouts with over 100 private equity sponsors, closing more than $4.0 billion in loan commitments in the lower middle market. Target businesses typically have between $2 million and $10 million in EBITDA and revenues between $10 million and $100 million.

O2 Sponsor Finance offers specific products for these transactions:

• Senior Secured Credit Facilities.
• Term Loans.
• Revolving Lines of Credit.
• Delayed Draw Term Loans.

Comprehensive wealth management and trust services

Old Second Bancorp, Inc. extends its services beyond traditional lending and deposits to include fiduciary and advisory roles. The Bank provides trust services and wealth management services for individual, corporate, and not-for-profit clients. Richard A. Gartelmann, Jr. serves as Executive Vice President, Wealth Management. These services complement the core banking offerings, providing clients with a full spectrum of financial planning and asset stewardship.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Customer Relationships

You're looking at how Old Second Bancorp, Inc. keeps its customers engaged following the major integration of the Evergreen Bank Group, which finalized its systems conversion on October 20, 2025. The bank's foundation rests on deep, local connections.

Personal, relationship-based service through branch staff

The physical footprint is central to the relationship model. Following the acquisition and integration of Bancorp Financial's subsidiary, Old Second National Bank now operates across 55 locations throughout the Chicagoland area as of October 20, 2025. This expansion across Cook, DeKalb, DuPage, Kane, Kendall, LaSalle, and Will counties reinforces the commitment to community-centered service. The emphasis remains on relationships with individual customers and small to medium-sized businesses supported by branch staff.

Dedicated relationship managers for commercial and wealth clients

For commercial and higher-value clients, the model shifts from general branch support to focused attention. While the exact count of dedicated relationship managers isn't public, the structure supports this by segmenting services for commercial, industrial, and real estate lending opportunities. This structure is designed to maintain the high-touch service expected by these segments, which form a stable, loyal core deposit base.

Self-service digital and mobile banking platforms

The relationship strategy is augmented by modern digital access. Customers now have full access to Old Second's robust online and mobile banking platforms. This self-service layer provides convenience and flexibility for routine financial management, complementing the in-person service.

Here's a quick look at the scale and recent growth impacting the customer base and service delivery:

High-touch advisory model for trust and wealth services

The trust and wealth management segment operates on a high-touch advisory model. This includes trust administration and services for personal and corporate trusts, plus employee benefit plan administration. The focus on advisory services is concrete: wealth management income saw a $412,000 increase in the third quarter of 2025 over the second quarter of 2025, driven by growth in advisory and estate planning. This growth in fee-based income confirms the traction of this specialized relationship approach. The bank also utilizes River Street Advisors, LLC, formed in May 2010, to provide investment advisory/management services.

If onboarding for new commercial clients takes longer than expected post-integration, relationship retention risk rises.

Finance: draft the Q4 2025 noninterest income projection, isolating wealth management contribution, by next Tuesday.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Channels

You're looking at how Old Second Bancorp, Inc. (OSBC) gets its value proposition to its customers across different touchpoints as of late 2025. This is a mix of traditional brick-and-mortar presence and modern digital access, heavily influenced by the recent acquisition activity.

Physical branch network across the Chicago metropolitan area

The physical network is anchored by the Old Second National Bank, which, following the July 1, 2025, merger with Bancorp Financial, Inc., operates 56 locations across Chicago's downtown, west, and south suburban markets as of the third quarter of 2025. This physical footprint is key for relationship banking and serving the core community base.

The bank's physical presence is supported by its overall scale:

• Total Assets as of September 30, 2025: $7.0 billion.
• Total Deposits as of September 30, 2025: $5.76 billion.
• Total Loans as of September 30, 2025: $5.2 billion.

Digital banking (online and mobile applications)

Old Second National Bank supports its customer base with a full complement of electronic banking services. This includes standard web banking and mobile banking platforms, alongside services for corporate clients such as corporate cash management. These digital channels are essential for transaction processing and customer convenience, though specific adoption rates for late 2025 aren't publicly detailed in the latest reports.

O2 Sponsor Finance direct origination team

The O2 Sponsor Finance division acts as a specialized channel, directly originating loans to lower middle market businesses across the United States, often in partnership with private equity sponsors. This team focuses on cash flow-based loans for leveraged buyouts, refinances, and recapitalizations. The division had a very busy second-half of 2025 with significant new financing activity reported as of December 1, 2025.

Here's a look at the scale and focus of this origination channel:

The division actively supports transactions, such as providing senior secured credit facilities for the acquisition of EventLink Group in December 2025 and Formula Corp in September 2025.

ATMs and third-party payment networks

While Old Second Bancorp, Inc. provides an extensive variety of services, specific, current figures for the total number of proprietary ATMs or the extent of their participation in third-party payment networks as of late 2025 are not explicitly detailed in the recent Q3 2025 financial disclosures. The bank's general service offering includes customary consumer products, which implicitly rely on standard ATM and payment infrastructure.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Customer Segments

You're looking at the customer base for Old Second Bancorp, Inc. (OSBC) right after integrating Bancorp Financial, which closed July 1, 2025. This combination significantly expanded their footprint across the Chicago area.

The combined entity, as of March 31, 2025, on a proforma basis, managed total assets of approximately $6.98 billion, with total loans reaching $5.09 billion, supported by $5.95 billion in deposits across 56 locations in the downtown, west, and south suburban Chicago market. By the end of the third quarter of 2025 (September 30, 2025), total loans grew to $5.27 billion, with an organic growth rate of 1.8% over the linked quarter.

Retail consumers in the suburban Chicago market

This segment forms the core deposit and consumer lending base, now strengthened by the integration of Evergreen Bank Group customers. They use standard consumer products and electronic banking services.

• Operating locations serving this segment: 56.
• Total deposits managed by the combined entity (proforma as of 03/31/2025): $5.95 billion.
• The loan portfolio includes consumer lending, which saw growth post-acquisition.

Small-to-mid-sized businesses (SMBs) and commercial real estate investors

This group drives a significant portion of the commercial loan book. The loan portfolio composition shows growth in commercial and industrial (C&I) and commercial real estate-investor and construction portfolios. The acquisition from Bancorp Financial also introduced a new powersport loan segment.

The loan-to-deposit ratio stood at 91.4% as of September 30, 2025.

High-net-worth individuals utilizing wealth and trust services

This segment is served through trust services and wealth management offerings. While the absolute Assets Under Management (AUM) isn't explicitly stated for Q3 2025, the wealth management income saw a notable increase.

• Wealth management income increased by $412,000 in Q3 2025 compared to Q2 2025.
• Wealth management balances reported for Q2 2025 were $3,103 million.
• Services include trust services and an extensive variety of additional services tailored to individual customers.

Private equity firms and their portfolio companies (via O2 Sponsor Finance)

O2 Sponsor Finance, a division of Old Second National Bank, targets the lower middle market, often in conjunction with private equity sponsors. The core team has closed more than 300 transactions with over $4.0 billion in loan commitments since 2005.

The typical client profile for O2 Sponsor Finance involves companies with:

• EBITDA size between $2 million and $10 million.
• Sales typically less than $100 million.

The financing provided focuses on senior cash flow loans with a typical hold size ranging from $5 million to $30 million per transaction, with syndication capabilities up to $75 million. They recently provided facilities to support an acquisition by Paceline Equity Partners and Serata Capital Partners on December 1, 2025.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Cost Structure

The Cost Structure for Old Second Bancorp, Inc. (OSBC) in late 2025 is heavily influenced by the recent acquisition of Bancorp Financial, Inc. and its subsidiary, Evergreen Bank Group, which closed on July 1, 2025. Noninterest expense for the third quarter of 2025 reached $63.2 million, representing a 60.7% increase compared to the third quarter of 2024. This period saw a net provision for credit losses of $19.7 million, which included the impact of the Bancorp Financial day two purchase accounting adjustments.

Here's a quick look at some key third quarter 2025 expense metrics:

Interest expense on deposits and borrowings saw a notable increase following the acquisition. Compared to the third quarter of 2024, total interest expense increased by $5.8 million. Quarter-over-quarter, interest expense on average interest-bearing liabilities rose by $10.3 million from the second quarter of 2025, driven by higher deposit and borrowing balances assumed in the merger.

Personnel and compensation costs are now spread across an expanded footprint. Following the integration completion on October 20, 2025, former Evergreen customers gained access to Old Second's network of 55 locations across the Chicagoland area. The third quarter 2025 noninterest expense included a $12.8 million increase in salaries and employee benefits compared to the linked quarter, with $8.4 million of that increase directly attributable to change in control, retention, and severance payouts related to the Bancorp Financial acquisition. This reflects the immediate cost of integrating the larger workforce.

You should track these cost drivers closely:

• Acquisition-related noninterest expense, including transaction costs.
• Interest expense sensitivity to funding mix post-merger.
• Personnel costs tied to the new 55-branch structure.
• The $19.7 million provision for credit losses in Q3 2025.

Finance: draft 13-week cash view by Friday.

Old Second Bancorp, Inc. (OSBC) - Canvas Business Model: Revenue Streams

Old Second Bancorp, Inc.'s revenue streams in late 2025 are primarily driven by core banking activities, significantly bolstered by recent strategic acquisitions.

Net Interest and Dividend Income, the largest component, totaled $82.8 million in Q3 2025, representing a 28.9% increase from Q2 2025 and a 36.6% increase from Q3 2024.

This interest income is generated across the loan portfolio, which saw a total increase of $1.27 billion in loans, largely from the acquisition of Bancorp Financial. The core lending revenue streams include:

• Interest income from Commercial loans.
• Interest income from Real Estate loans.
• Interest income from Consumer loans.

Noninterest Income was reported at $13.1 million for the third quarter of 2025, which was a 20.3% increase compared to the second quarter of 2025. The components of this stream include service charges and wealth fees, as detailed below:

The acquisition of Bancorp Financial, effective July 1, 2025, specifically brought in the powersport loan portfolio, contributing to the overall loan growth and interest income expansion. Fees from wealth management and trust services are a key part of the noninterest income, with wealth management fees showing strong growth.

The total reported revenue for Q3 2025 was $95.88 million.

You can see the primary revenue drivers here:

• Net Interest and Dividend Income: $82.8 million.
• Noninterest Income: $13.1 million.

Finance: draft 13-week cash view by Friday.