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Old Second Bancorp Inc. (NASDAQ:OSBC), an Illinois-based financial institution with a market capitalization of $815 million, has announced a new stock repurchase program authorized by its Board of Directors. The company revealed on Tuesday that it may buy back up to $39.1 million of its common stock.
According to InvestingPro data, the bank has demonstrated strong financial performance with a "GREAT" overall health score and an impressive 35% price return over the past six months.
The Federal Reserve Bank of Chicago has given a non-objection to the program on Monday, clearing the way for the repurchases. The bank stated that the stock buybacks could occur through various methods, including open market purchases, prearranged trading plans in line with SEC rules, private transactions, or other means. Trading at a P/E ratio of 9.64 and offering a dividend yield of 1.29%, the company has maintained dividend payments for nine consecutive years.
Management retains discretion over the specifics of the repurchase program, including the timing, number of shares to be bought, and the price paid for the shares. These decisions will be guided by market conditions, stock prices, economic factors, and legal requirements.
The program is flexible, and the bank can start, stop, or modify the repurchases at any time. However, any repurchases after December 31, 2025, would require additional non-objection or approval from the Federal Reserve.
Old Second Bancorp has clarified that there is no obligation to repurchase any specific number of shares and that the program may be discontinued at the company's discretion.
This move comes as part of the company's capital management strategy and reflects its commitment to enhancing shareholder value. The repurchase program is based on a press release statement and is subject to change based on the company's performance and market conditions.
Based on InvestingPro's Fair Value analysis, the stock appears slightly overvalued at current levels, with analyst price targets ranging from $18 to $23. Discover more insights and 6 additional ProTips for OSBC in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Old Second Bancorp reported robust financial results for the third quarter of 2024, with net income reaching $23 million. The company also demonstrated improved profitability metrics, such as a return on assets of 1.63% and a return on average tangible common equity of 17.14%. In addition, Old Second Bancorp announced a 20% increase in its common dividend, signaling confidence in its financial performance.
The company's credit quality improved significantly, with substandard and criticized loans decreasing from a peak of nearly $300 million in early 2023 to $187.6 million. Total (EPA:TTEF) loans increased by $14.5 million from the previous quarter, primarily in commercial, lease, and construction portfolios. However, the company acknowledged challenges in a competitive deposit pricing environment influenced by fixed income markets.
Old Second Bancorp expressed caution regarding future interest rate cuts and market volatility, emphasizing a focus on maintaining a stable long-term balance sheet. The company plans to close a branch acquisition in early December, which is expected to bolster deposits.
Looking ahead, Old Second Bancorp aims for mid-single-digit organic loan growth and projects expense growth of 3-5% next year, primarily driven by salaries and benefits. Despite some challenges, including a recent $14 million non-performing loan identification, these are the recent developments for Old Second Bancorp.
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