Old Second Bancorp, Inc. (NASDAQ:OSBC) Q3 2023 Earnings Conference Call October 19, 2023 11:00 AM ET

Company Participants

James Eccher - Chairman, President and Chief Executive Officer

Bradley Adams - Chief Operating Officer and Chief Financial Officer

Conference Call Participants

Jeff Rulis - D.A. Davidson

Terence McEvoy - Stephens

Christopher McGratty - KBW

Nathan Race - Piper Sandler

David Long - Raymond James

Brian Martin - Janney

Operator

Good morning, everyone, and thank you for joining us today for Old Second Bancorp Incorporated Third Quarter 2023 Earnings Call. On the call today are Jim Eccher, the company’s Chairman, President and Chief Executive Officer; Brad Adams, the company’s Chief Operating Officer and 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 Mr. Jim Eccher.

James Eccher

Good morning, and thank you for joining us today. As customary, I have several prepared opening remarks, we’ll give my overview of the quarter, then I’ll turn it over to Brad for additional details. I will then conclude with certain summary comments and thoughts about the future before we open it up to Q&A.

Net income was $24.3 million or $0.54 per diluted share in the third quarter. Adjusted net income was $24.8 million or $0.55 per diluted share in the third quarter. On the same adjusted basis, return on assets was 1.70% and third quarter 2023 return on average tangible common equity was 22.80% and the tax equivalent efficiency ratio was 50.08%.

Third quarter earnings were negatively impacted by $924,000 in pretax securities losses on strategic security sales as well as $629,000 in net deconversion and liquidation costs related to the Visa credit card portfolio sale last year. The combined impact of these 2 items reduced diluted earnings per share by $0.03 in the third quarter.