OSBC Stock Forecast & Price Target

Old Second Bancorp is supported by improving asset quality, with NPLs down 30% sequentially to $39.6 million, classified loans down 44%, and management indicating 3Q likely marked the end of the credit cleanup cycle. Earnings power also looks durable, as NII rose to $84.3 million and NIM expanded to 5.27% despite deposit competition, while the bank still expects NIM to hold above 5.20% near term. The company’s appeal is further reinforced by strong capital ratios, top-tier profitability of 1.7% operating ROA and 15% ROTCE, and a flexible excess capital base that has already enabled significant buybacks and leaves room for tuck-in M&A.

Old Second Bancorp is facing a weak fundamental setup as 3Q26 operating EPS of $0.55 missed consensus at $0.58, while reported EPS of $0.56 was helped only modestly by a -$0.6M MSR fair-value adjustment. Core fee income fell 7% quarter over quarter to $12.4M and came in 7% below expectations, with lower BOLI income only partly offset by steadier mortgage and wealth management revenue, while higher operating expenses also pressured PPNR. Its outlook is further constrained by concentration risk in Illinois, approximately 46% commercial real estate exposure, and an asset-sensitive balance sheet that could face headwinds if rates rise further.