What drove OSBC's earnings surge in Q4 2024?

Old Second Bancorp Inc. (OSBC) experienced a slight earnings surge in Q4 2024, driven primarily by strategic initiatives and robust financial performance. Here are the key factors contributing to its success: 1. **Branch Acquisition**: The completion of the Chicagoland branch transaction with First Merchants Bank added five Illinois branch locations, enhancing Old Second's branch network and expanding its market presence. This strategic move likely boosted deposits and provided opportunities for future loan growth. 2. **Commercial Loan Origination**: Old Second Bancorp focused on liquidity management and capital building, enhancing its commercial loan origination capabilities. This shift likely led to increased loan volumes, particularly in commercial and lease portfolios. 3. **Dividend Increase**: The company announced a 20% increase in its common dividend, reflecting strong profitability and a well-capitalized balance sheet. This move likely attracted income-focused investors and underscored the bank's confidence in its earnings stability. 4. **Strong Net Interest Income**: Despite modest loan growth, net interest income increased by 1.5% to $60.6 million for Q3 2024. This growth in interest income is a positive indicator of the bank's ability to generate earnings from its interest-bearing assets. 5. **Efficient Cost Management**: Old Second Bancorp managed expenses effectively, with a projected expense growth of 3-5% next year, primarily driven by salaries and benefits. This suggests that the bank is focused on maintaining a stable cost structure while investing in growth areas. In summary, OSBC's Q4 2024 earnings surge was driven by strategic branch acquisitions, enhanced commercial loan capabilities, a robust dividend policy, strong net interest income, and efficient cost management. These factors combined to support the bank's financial performance and growth prospects.