Old Second Bancorp Reports Strong Revenue Growth in Latest Quarter
Segments of revenue
Old Second Bancorp (OSBC) reported total interest and dividend income of $74.2 million for the third quarter of 2023, compared to $58.0 million in the same period last year. This growth was primarily driven by an increase in interest income from loans, including fees, which amounted to $62.7 million, up from $46.6 million in the third quarter of 2022. Additionally, interest income from loans held-for-sale increased slightly to $29,000. Income from securities also contributed to the revenue, with taxable securities generating $8.9 million and tax-exempt securities contributing $1.3 million. Dividends from FHLBC and FRBC stock added $597,000 to the total interest and dividend income. Interest income from deposits with financial institutions amounted to $659,000.
Old Second Bancorp demonstrated strong revenue growth in the latest quarter, with total interest and dividend income increasing by 27.7% compared to the same period last year. This growth was primarily attributed to higher yields on loans and loan growth. The company's management highlighted the positive impact of loan growth and increased interest income from loans, which contributed to the overall revenue growth. Additionally, the income from securities and dividends further supported the company's revenue performance.
While Old Second Bancorp experienced strong revenue growth, it also faced challenges in terms of higher funding and borrowing costs. The interest expense for the quarter amounted to $10.2 million, with savings, NOW, and money market deposits accounting for $2.6 million, and time deposits contributing $2.0 million. Other short-term borrowings increased to $5.8 million, reflecting higher borrowing costs. These challenges in managing interest expenses may impact the company's profitability.
Old Second Bancorp recorded a net provision for credit losses of $3.0 million in the third quarter of 2023. This provision was driven by an increase in the allowance for credit losses on loans, based on higher historical loss rates and loan growth. The company's assessment of credit risk and the need to strengthen its reserves contributed to the provision for credit losses.
Old Second Bancorp delivered a strong revenue performance in the latest quarter, with total interest and dividend income increasing by 27.7% compared to the same period last year. The growth was primarily driven by higher yields on loans, loan growth, and income from securities and dividends. However, the company also faced challenges in managing higher funding and borrowing costs, which may impact its profitability. The net provision for credit losses reflects the company's proactive approach to managing credit risk and strengthening its reserves. Overall, Old Second Bancorp's revenue growth demonstrates its ability to generate income from its core banking activities.