OSBC Stock Forecast & Price Target

Old Second Bancorp is attractive because 3Q showed clear credit inflection, with NPLs down 30% sequentially to 0.76% of loans, classified loans down 44% to 1.42%, and criticism trending lower, supporting the view that the asset quality clean-up is nearing completion. Profitability also remains exceptional, as NII reached $84.3M with NIM expanding to 5.27% for a fifth straight quarter, while the company still generated a 1.7% operating ROA and 15% ROTCE despite modest funding pressure. The outlook is further strengthened by strong capital and shareholder returns, including a 13.1% CET1 ratio, 1.5M shares repurchased in 3Q, and management’s capacity to keep buying back stock while pursuing tuck-in M&A.

Old Second Bancorp is facing a weaker fundamental backdrop because 3Q26 operating EPS of $0.55 missed the $0.58 consensus estimate, while reported EPS of $0.56 was helped by only a modest $0.6M MSR fair value adjustment. The shortfall was driven by softer core fee income and higher operating expenses, and PPNR came in 2% below consensus, reinforcing concerns about earnings quality and operating leverage. Its outlook is also constrained by concentration risks, with most business in Illinois and about 46% of loans tied to commercial real estate, while an asset-sensitive balance sheet could face further headwinds from rate hikes.