Old Second Bancorp, Inc. (NASDAQ:OSBC) Q2 2024 Earnings Conference Call July 18, 2024 10:00 AM ET

Company Participants

Jim Eccher - Chairman, President and CEO
Brad Adams - COO and CFO

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 Montgomery Scott

Operator

Good morning, everyone, and thank you for joining us today for Old Second Bancorp, Inc. Second 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.

Jim Eccher

Good morning, everyone, and thank you for joining us.

I have several prepared opening remarks and will give my overview of the quarter and then turn it over to Brad for additional details. I would like to conclude with certain summary comments and thoughts about the future before we open it up for questions.

Net income was $21.9 million or $0.48 per diluted share in the second quarter of 2024, the return on assets was 1.57%. Second quarter 2024 return on average tangible common equity was 17.66% and the tax equivalent efficiency ratio was 53.29%.

Second quarter 2024 earnings were negatively impacted by $3.8 million of provision for credit losses in the absence of significant loan growth, which reduced the after-tax earnings by $0.06 per diluted share.

However, despite this profitability, Old Second remains exceptionally strong, and balance sheet strengthening continues with our tangible equity ratio increasing by 35 basis points linked quarter to 9.39%. Common equity Tier 1 increased to 12.41% in the second quarter of 2024, 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.