The following is a summary of the Old Second Bancorp, Inc. (OSBC) Q1 2024 Earnings Call Transcript:
Financial Performance:
Old Second Bancorp reported Q1 2024 net income of $21.3 million or $0.47 per diluted share.
The company's return on assets was 1.51% and return on average tangible common equity was 17.8%.
Total loans decreased by $73.5 million from the prior linked quarter due to some large credits pay-offs.
First-quarter earnings were impacted negatively by $3.5 million of provision for credit losses, reducing after-tax earnings by $0.06 per share.
The tangible common equity ratio increased by 51 basis points linked quarter, standing at 9.04%.
Noninterest income growth noted in Bank-Owned Life Insurance (BOLI) and mortgage banking income.
Business Progress:
Old Second Bancorp is focusing on managing liquidity, building capital, and enhancing long-term commercial loan origination capability.
The organization plans to balance the earnings asset mix, reducing overall sensitivity to interest rates, and expand its fixed-rate product portfolio.
Classified and criticized loans have depreciated by almost 31% from the previous year, showing efficient credit risk management.
The company plans to grow the securities portfolio, potentially adding around $100 to $300 million over the next 12 months.
Expectations remain for another strong financial year in 2024 and also aerial growth in the loan portfolio.
Despite challenges, emphasis remains on managing stress in office and healthcare areas, along with a significant portion of classified loans being purchase participations and SNC credits.
No major plans for M&As are expected, with focus diverted to reinvestment into higher yielding opportunities and prospects for loan growth.
Old Second Bancorp targets to maintain the balance sheet average rather than the period end, without planned shrinkage.
More details: Old Second Bancorp IR
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