Old Second Bancorp, Inc. (OSBC): Marketing Mix Analysis [Dec-2025 Updated]

When you look at a regional bank like Old Second Bancorp, Inc., the strategy often seems simple, but the execution is everything. As a former head analyst, I can tell you that dissecting their 4Ps-from their core commercial lending product and their 35 physical banking centers in the Chicago suburbs, to their relationship-driven promotion and their key 3.50% Net Interest Margin target-gives you the clearest picture of their late-2025 positioning. Honestly, this isn't just about checking accounts; it's a focused play on local commercial relationships and disciplined pricing. Dive in below for the precise breakdown of how Old Second Bancorp, Inc. is playing the local game right now.

Old Second Bancorp, Inc. (OSBC) - Marketing Mix: Product

You're looking at the core offerings of Old Second Bancorp, Inc. (OSBC) as of late 2025, post-major acquisition. The product suite is built around commercial relationship banking, supported by a solid retail deposit base and specialized wealth services. Honestly, the product focus is clearly on growing that commercial loan book, which is where the real relationship value is built.

Core Commercial Lending, including C&I and Commercial Real Estate

The engine of Old Second Bancorp, Inc.'s product strategy is its commercial lending. Following the July 1, 2025, acquisition of Bancorp Financial, the loan portfolio saw significant expansion. As of September 30, 2025, the total loan portfolio size was substantially larger than the prior quarter, driven largely by the acquired assets. You should note that the growth in Q2 2025, before the full impact of the merger was realized, was already leaning toward commercial real estate-specifically investor and construction portfolios. The bank is managing this growth with a clear eye on credit quality, which is key for any analyst watching this space.

Here's a look at the loan portfolio dynamics around the reporting periods leading up to late 2025:

The loan-to-deposit ratio stood at 91.4% as of September 30, 2025, up from 83.3% the prior quarter, showing the bank is putting its expanded deposit base to work in lending. That's a tight, but manageable, leverage point for a community bank.

Comprehensive Retail Banking: Checking, Savings, and Money Market Accounts

The retail side is the foundation, providing the stable funding for the commercial loan growth. Old Second National Bank offers the standard suite of consumer deposit products, which includes demand, NOW, money market, savings, time deposit, individual retirement, and Health Savings Accounts. The growth in interest-bearing deposits has been steady, though the mix is shifting.

Here's what the deposit base looked like leading up to the merger and immediately after:

You can see the bank is managing the cost of funds, with the total cost of deposits at 82 basis points for Q1 2025. They're definitely focused on keeping that funding cost competitive.

Residential Mortgage Origination and Servicing for Local Homeowners

Residential mortgage origination and servicing is part of the offering for local homeowners, though its financial impact has been volatile recently. In Q1 2025, noninterest income saw a decrease largely due to the impact of mortgage servicing rights (MSRs) mark-to-market valuations. Excluding those MSR valuations, mortgage banking income was flat quarter-over-quarter in Q1 2025 compared to the linked period. The bank also recorded $389,000 in MSR mark-to-market losses in Q3 2025. It's a service they provide, but the accounting impact can mask the true origination/servicing volume.

Wealth Management and Trust Services for High-Net-Worth Clients

For high-net-worth clients, Old Second Bancorp, Inc. offers wealth management and trust services. This product line is showing clear, consistent growth in fee income, which is a positive sign for the non-interest income stream. The bank is actively growing its advisory and estate planning services.

Look at the fee income growth:

Trust services are explicitly listed as a core offering alongside wealth management. This segment is definitely contributing positively to the overall product revenue mix.

Digital Banking Tools for Mobile and Online Account Management

The product suite is rounded out with a full complement of electronic banking services. The Bank offers web and mobile banking, which you'd expect any modern financial institution to have, plus corporate cash management services tailored for business clients. While I don't have specific 2025 user adoption or transaction volume numbers, the presence of these tools is fundamental to serving both retail and commercial customers today.

Finance: draft 13-week cash view by Friday.

Old Second Bancorp, Inc. (OSBC) - Marketing Mix: Place

You're looking at how Old Second Bancorp, Inc. gets its services into the hands of its customers across Illinois. The distribution strategy centers on a dense, localized physical footprint supported by modern digital access. This approach helps them compete effectively in a fragmented market.

The primary focus for Old Second Bancorp, Inc. remains the greater Chicago metropolitan area and collar counties in Illinois. This core operating footprint includes offices in Cook, DeKalb, DuPage, Kane, Kendall, LaSalle, and Will counties. The recent strategic moves have solidified this regional concentration.

Following the merger with Bancorp Financial, which closed July 1, 2025, the combined entity significantly expanded its physical presence. As of the final systems and brand conversion on October 20, 2025, former Evergreen Bank Group branches now operate under the Old Second National Bank name, giving customers access to 55 locations throughout the Chicagoland area. This is up from the proforma count of 56 locations reported as of March 31, 2025, immediately following the merger close.

The scale of the operation, underpinned by this network, is substantial. Here's a quick look at the proforma balance sheet size that this distribution network supports as of March 31, 2025:

You'll find a strong presence in key suburban markets where the bank has deep roots. The headquarters is in Aurora, Illinois, and the expansion included key areas like the west and south suburban Chicago markets. While the exact number of ATMs isn't publically stated, the network is described as extensive across their core operating footprint, naturally complementing the 55 physical banking centers.

To be fair, physical locations aren't the whole story anymore. Old Second Bancorp, Inc. ensures customers have 24/7 access outside of those physical branches. The Bank offers a full complement of electronic banking services. This includes web and mobile banking capabilities, which are crucial for serving a modern, geographically dispersed customer base within the metro area.

Finance: draft 13-week cash view by Friday.

Old Second Bancorp, Inc. (OSBC) - Marketing Mix: Promotion

Promotion activities for Old Second Bancorp, Inc. center on reinforcing its community bank identity and communicating financial strength to diverse stakeholders, from local customers to investors.

• Community-focused advertising and local sponsorships to build trust.
• Relationship-based selling model, defintely prioritizing personal service.
• Targeted digital marketing for specific loan and deposit campaigns.
• Investor relations communications highlighting strong capital position.
• Cross-selling of wealth management services to existing commercial clients.

The investment in brand visibility included a specific push in the second quarter of 2025, with advertising expenses increasing by $153,000, primarily allocated to art production costs for a brand awareness campaign.

Investor relations communications focus on quantifiable strength metrics. The company highlighted its capital position following the July 1, 2025, acquisition of Bancorp Financial and its integration completion on October 20, 2025. The Common Equity Tier 1 ratio stood at 13.77% at the end of the second quarter of 2025, and the tangible equity ratio increased to 10.83% from the prior quarter.

The relationship-based model is supported by the ongoing provision of wealth management services, which are offered alongside customary consumer and commercial products.

Here are key financial figures from the third quarter of 2025, which underpin the capacity for these promotional efforts:

The commitment to the local market is further evidenced by the consistent shareholder return; Old Second Bancorp, Inc. has maintained dividend payments for 10 consecutive years.

The cross-selling strategy is integrated into the full suite of services, which includes trust services and an extensive variety of additional services tailored to individual customers.

Old Second Bancorp, Inc. (OSBC) - Marketing Mix: Price

Price, in the context of Old Second Bancorp, Inc. (OSBC), centers on the rates offered for deposits and loans, and the structure of service fees designed to generate non-interest income. You need to see how these elements stack up against the market to ensure competitive attractiveness.

For core funding sources, the cost of deposits is a primary pricing consideration. The total cost of deposits for Old Second Bancorp, Inc. saw an increase into the third quarter of 2025. Specifically, the total cost of deposits was 82 basis points for the first quarter of 2025, rising to 84 basis points in the second quarter of 2025, and further to 1.33% (or 133 basis points) for the third quarter of 2025. That third quarter cost was up from 0.84% in the linked quarter and 0.92% in the third quarter of 2024. This reflects the market's pricing pressure on attracting and retaining customer balances. In contrast, the cost of interest-bearing deposits in the first quarter of 2025 had been reduced to 128 basis points from 141 basis points at the end of 2024, showing active management of exception-priced deposits during that period.

Net Interest Margin (NIM) management is clearly a focus, though the actual performance is significantly above the mentioned target range. The GAAP Net Interest Margin (NIM) for Old Second Bancorp, Inc. was 4.85% in the first quarter of 2025 and 4.83% in the previous quarter. By the third quarter of 2025, the GAAP NIM had improved to 5.03%, with the Tax Equivalent NIM reaching 5.05%.

Loan pricing reflects the prevailing rate environment and the risk profile of the assets Old Second Bancorp, Inc. is originating or acquiring. For instance, the tax equivalent yield on loans in the second quarter of 2025 was 3 basis points lower compared to the first quarter of 2025. However, the overall yield on earning assets saw a significant boost in the third quarter of 2025, with a 66 basis points increase compared to the linked period, largely due to higher interest rate consumer credits and accretion on the portfolio acquired from Bancorp Financial, where the average yield prior to accretion was 8.65%.

Non-interest income is a material component of the overall pricing strategy, derived from service charges, fees, and wealth management activities. You can see the growth trajectory in these fee-based services:

• Wealth management fees grew 20.6% year-over-year in Q1 2025.
• Service charges on deposits grew 12.6% year-over-year in Q1 2025.
• Wealth management fees increased 11.7% year-over-year in Q2 2025.
• Service charges on deposits increased 11.2% year-over-year in Q2 2025.
• Total noninterest income rose 20.3% year-over-year in Q3 2025.

The total Net Interest and Dividend Income for the third quarter of 2025 reached $82.8 million.

The fee structure for deposit accounts, particularly checking accounts, is explicitly detailed for various services, which directly impacts the customer's cost of banking. Here's a look at some of the specific service charges from the Personal Deposit Service Fees schedule, revised March 3, 2025:

The fee structure for overdrafts is clearly defined based on the item amount and the balance overdrawn.