The 5 Most Interesting Analyst Questions From Old Second Bancorp's Q4 Earnings Call

Old Second Bancorp’s fourth quarter delivered results that aligned with Wall Street’s revenue expectations, while non-GAAP earnings per share outpaced analyst forecasts. Management attributed the quarter’s performance to strong net interest margin, prudent cost control, and ongoing benefits from the integration of recent acquisitions. CEO Jim Eccher noted that the company’s “exceptionally strong net interest margin at 5.09%” was a key driver, alongside an increased tangible equity ratio and steady asset quality. However, management also highlighted higher net charge-offs in the Powersports portfolio, acknowledging, “losses given default are running a bit higher than we expected,” though they emphasized contribution margins in that segment remain robust.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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 Q4 Earnings Call

• Jeff Rulis (D.A. Davidson) asked about the persistence of cost savings and whether there would be a tailwind to expenses in 2026. COO and CFO Brad Adams responded that there is a tailwind, driven by moderated benefits costs and further savings from branch closures and efficiency initiatives.
• Jeff Rulis (D.A. Davidson) followed up on credit risk in Powersports, asking if higher charge-offs would persist. CEO Jim Eccher acknowledged elevated charge-offs are expected in coming quarters due to the nature of the business but emphasized strong contribution margins and manageable risk.
• Adam Kroll (Piper Sandler) questioned net interest margin sustainability amid future rate cuts. Adams projected the margin should remain around 5%, with current funding structure providing some buffer, but cautioned that future asset allocation decisions could affect outcomes.
• Adam Kroll (Piper Sandler) also inquired about deposit strategy and the timeline for reducing brokered deposits. Adams stated that $300–400 million of funding needs to be replaced and that the current funding mix is temporarily beneficial but will transition to core deposits over time.
• Terence McEvoy (Stephens) requested insight into the Powersports borrower profile and seasonality of charge-offs. Head of National Specialty Lending Darin Campbell explained that borrowers have high average FICO scores, with seasonal risk patterns consistent over decades and charge-offs typically elevated at year-end.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be monitoring (1) the pace of core deposit replacement as brokered funding continues to run off, (2) the trajectory of net charge-offs and contribution margins within the Powersports portfolio, and (3) the ability to sustain mid-single-digit loan growth against the backdrop of legacy portfolio runoff. Execution on expense control initiatives and early signs of asset quality improvement will also be closely watched.

Old Second Bancorp currently trades at $19.81, down from $21.47 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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