Old Second Bancorp, Inc. (NASDAQ:OSBC) Q1 2023 Earnings Conference Call April 20, 2023 11:00 AM ET

Company Participants

Jim Eccher - Chairman, President, & CEO

Brad Adams - CFO

Gary Collins - Vice Chairman

Conference Call Participants

Nathan Race - Piper Sandler

Terry McEvoy - Stephens

Nick Moutafakis - KBW

Brian Martin - Janney

Operator

Good morning, everyone, and thank you for joining us today for Old Second Bancorp, Inc.'s First Quarter 2023 Earnings Call. On the call today is Jim Eccher, the Company's Chairman, President, and Chief Executive Officer; Brad Adams, the Company's Chief Financial Officer; and Gary Collins, the Vice Chairman of our Board.

I will start with a reminder that Old Second's comments today will contain forward-looking statements about the company's business, strategies and prospects, which are based on management's existing expectations in the current economic environment. These statements are not a guarantee of future performance and results may differ materially from those projected. Management would ask you to refer to the company's SEC filings for a full discussion of the company's Risk Factors. The company does not undertake any duty to update such forward-looking statements.

On today's call, we will be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in our earnings release, which is available on our website at oldsecond.com on the homepage and under the Investor Relations tab.

Now I will turn it over to Jim Eccher.

Jim Eccher

Good morning and thank you for joining us today. I have several prepared opening remarks and I'll give you my overview of the quarter and then turn it over to Brad for additional detail. I will then conclude with certain summary comments and thoughts about the future before we open it up for questions.

Net income was $23.6 million or $0.52 per diluted share in the first quarter of 2023. Adjusted net income was $23.4 million, also $0.52 per diluted share in the first quarter. On the same adjusted basis, return on assets was 1.61%. First quarter return on average tangible common equity was 25.54% and the tax equivalent efficiency ratio was 47.66%.

First quarter earnings were negatively impacted by a combined $2.2 million in pre-tax securities losses and fair value adjustments for mortgage servicing rights. The combinations of these two impacts reduced earnings per share by $0.04 in the first quarter.

Financial results continue to be favorably impacted by elevated market interest rates with a 55.4% increase in net interest income or $22.9 million over the first quarter of 2022 compared to the prior year like quarter. Due to manageable funding and cost increases along with significant expansion in asset yields across the balance sheet.