Old Second Bancorp, Inc. (NASDAQ:OSBC) Q1 2024 Results Conference Call April 18, 2024 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
Nick Moutafakis - KBW
Brandon Rud - Stephens Inc
Brian Martin - Janney

Operator

Good morning, everyone, and thank you for joining us today for Old Second Bancorp's First Quarter 2024 Earnings Call. On the call today are Jim Eccher, the company's Chairman, President and CEO; Brad Adams, the company's COO and CFO; 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 also 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. The floor is yours.

Jim Eccher

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

Net income was $21.3 million or $0.47 per diluted share in the first quarter. Return on assets was 1.51%, and first quarter 2024 return on average tangible common equity was 17.8%, and the tax equivalent efficiency ratio of 3.09%.

First quarter earnings were negatively impacted by $3.5 million of provision for credit losses, which reduced after-tax earnings by $0.06 per share. However, profitability Old Second remains exceptionally strong and balance sheet strengthening continues with our tangible common equity ratio increasing by 51 basis points linked quarter to 9.04%.

Common equity Tier 1 crossed 12% this quarter, and we feel very good about profitability and our balance sheet positioning at this point. Our financials continue to be positively impacted by higher market interest rates. Pre-provision net revenues remained stable and exceptionally strong. For the first quarter of 2024 compared to the prior like year period, income on earning assets increased $3.2 million or 4.5%, while interest expense increased $7.5 million.