Old Second Bancorp, Inc. (NASDAQ:OSBC) Q2 2022 Earnings Conference Call July 28, 2022 11:00 AM ET

Company Participants

Jim Eccher - Chief Executive Officer

Brad Adams - Chief Financial Officer

Gary Collins - Vice Chairman of the Board

Conference Call Participants

David Long - Raymond James

Nathan Race - Piper Sandler

Christopher McGratty - Keefe, Bruyette, & Woods

Manuel Navas - D.A. Davidson

Brian Martin - Janney Montgomery Scott LLC

Operator

Good morning, everyone, and thank you for joining us today for Old Second Bancorp, Inc.'s Second Quarter 2022 Earnings Call. On the call today is Jim Eccher, the company's CEO; Gary Collins, the Vice Chairman of our Board; and the company's CFO, Brad Adams. [Operator Instructions].

I will start with a reminder that Old Second's comments today may 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.

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

Now I will turn the floor over to Jim Eccher. The floor is yours.

Jim Eccher

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

Net income was $12.2 million or $0.27 per diluted share in the second quarter of 2022. Net income adjusted to exclude West Suburban acquisition-related costs, and net gains from branch sales was $13.8 million or $0.31 per share in the second quarter. On a same adjusted basis, return on assets was 0.90%, returns on tangible common equity was 15.94%, and the efficiency ratio was 62.69%.

Earnings in the quarter were favorably impacted by an increase in net interest income of $4 million, but offset by a minimal MSR valuation mark-to-market gain compared to last quarter's MSR mark-to-market gain of $3 million and net losses on mortgages sold due to the sharp increase in interest rates.