Old Second Bancorp (OSBC): A Diamond in the Rough Among Ken Fisher’s Finance Picks?

Old Second Bancorp (OSBC), a regional bank with a focus on Midwestern markets, has recently caught investor attention after being highlighted in promotional material tied to billionaire investor Ken Fisher’s 2025 finance stock picks. While the company’s inclusion in Fisher’s portfolio has sparked interest, the reality of its positioning and upside potential requires a closer look. Let’s dissect the facts.

Ken Fisher’s Connection: More Than a Slogan?

The claim that OSBC is among Ken Fisher’s “top finance picks” originates from promotional content emphasizing AI-driven investment opportunities. However, SEC filings reveal a nuanced truth: As of Q2 2024, Fisher’s firm, Fisher Asset Management, did not hold OSBC in its top holdings or new positions. The first documented ownership appeared only in April 2025 filings, where Fisher held 108,023 shares (0.24% of OSBC’s equity), valued at $1.6 million.

While this position is modest compared to tech giants like Apple or Microsoft, it’s a clear vote of confidence. Fisher’s selective approach often targets overlooked firms with structural advantages—a profile OSBC may fit.

Financial Performance: Beating Expectations, but at What Cost?

OSBC delivered strong results in Q1 2025, outperforming analyst estimates:
- EPS of $0.45 vs. a forecasted $0.44.
- Revenue of $73.1 million, exceeding expectations by $2.1 million.
- Net Interest Margin (NIM) expanded to 4.88%, a 20-basis-point sequential improvement, driven by disciplined deposit pricing and reduced credit losses.

Credit quality also improved, with nonperforming assets down 27% since late 2024 and criticized loans dropping 42% year-over-year. However, OSBC’s revenue growth of just 0.04% lagged industry peers, and its net margin of 27.65% trails competitors, signaling room for operational efficiency gains.

Analyst Sentiment: Bullish, but With Nuance

Analysts maintain a Strong Buy consensus, with an average 12-month price target of $22.67—a 45% upside from recent prices. Key highlights include:
- Raymond James: Lowered its target to $21.00 (from $22.00) but reaffirmed the rating, citing margin resilience and credit cleanup.
- KBW/Stephens: Maintain Overweight ratings, emphasizing OSBC’s conservative capital structure (debt-to-equity ratio of 0.12) and strategic loan portfolio shifts.

Despite optimism, risks linger. The merger with Evergreen Bank Group could strain integration efforts, and loan demand remains fragile amid tariff and rate uncertainty.

Valuation: A Bargain or a Trap?

OSBC’s P/E ratio of 7.98x and market cap of $691 million suggest undervaluation relative to its peers. Analysts at InvestingPro rank it as a “Most Undervalued Stock,” citing a “GREAT” financial health score and sustainable dividend growth (20% over the past year).

Yet, the stock’s recent dip to $15.46 post-earnings—despite strong results—hints at investor caution. Buyers must weigh near-term risks against long-term opportunities, such as potential buybacks post-merger and margin stabilization.

Conclusion: The Case for OSBC’s Upside Potential

Old Second Bancorp’s inclusion in Ken Fisher’s portfolio, even at a small stake, signals strategic interest. Backed by improving credit metrics, margin resilience, and a 45% analyst-driven upside, OSBC appears positioned for growth. Key catalysts include:
1. Margin Expansion: NIM at 4.88% is a competitive advantage in a low-rate environment.
2. Mergers & Buybacks: The Evergreen merger could unlock capital flexibility and shareholder returns.
3. Analyst Consensus: A Strong Buy rating from 3 out of 4 analysts, with no “Sell” views.

Risks remain, particularly loan demand volatility and execution risks in the Evergreen merger. Yet, OSBC’s low valuation, solid fundamentals, and institutional support make it a compelling speculative play for investors willing to tolerate moderate risk. At current levels, the stock offers a high reward-to-risk ratio—a diamond in the rough, indeed.

Final Take:
Old Second Bancorp (OSBC) checks many boxes for a hidden gem: Ken Fisher’s nod, strong Q1 results, and a conservative balance sheet. While not a slam-dunk for conservative investors, the 45% upside potential and improving fundamentals make it a watchlist-worthy pick for those betting on regional banking resilience.

Data as of April 2025. Past performance does not guarantee future results.