Old Second Bancorp Raises Quarterly Dividend 14.3% to $0.08

Old Second Bancorp, Inc. raised its quarterly dividend to $0.08 a share from $0.07, an increase of 14.3%. OSBC shares trade ex-dividend on October 30, 2026, with payment scheduled for November 9, 2026.

Why the dividend changed

The increase accompanied a period of stronger earnings and capital generation rather than a stock split, special dividend or merger-related adjustment. Old Second’s latest earnings release reported third-quarter net income of $28.9 million, or $0.56 per diluted share, following second-quarter net income of $28.2 million, or $0.54 per diluted share. The progression gave the board a larger earnings base from which to raise the regular distribution. Old Second’s investor-relations page lists the third-quarter release dated October 21, 2026.

Management had already signaled confidence in the bank’s capital position after the second quarter. Chairman, President and Chief Executive Officer Jim Eccher cited strong revenue, margin performance and operating efficiency, as well as a better tangible common equity capital ratio. The bank also repurchased 732,000 shares during that quarter, showing that dividends were one part of a broader capital-return program. The second-quarter earnings release said management viewed the balance sheet as well positioned for the second half.

The Bancorp Financial acquisition is an important part of the operating context. Old Second said the transaction expanded its loan portfolio and lifted net interest income, while also adding employees, operating costs and consumer-credit expenses. The acquisition therefore increased the bank’s earnings capacity but also introduced integration and credit-management demands. Old Second’s second-quarter Form 10-Q identified the acquired loan portfolio as the main source of year-over-year loan growth.

Dividend track record

The new rate extends a recent pattern of measured quarterly increases. Old Second paid $0.06 on each of the four ex-dividend dates from October 25, 2024, through July 25, 2025. It then moved to $0.07 beginning with the October 31, 2025, ex-dividend date and maintained that rate for the next three payments through July 31, 2026. The move to $0.08 is therefore another step-up in the regular distribution, not a catch-up payment or special distribution.

Full-year totals show an uneven but improving record. Annual dividends rose from $0.04 in 2020 to $0.16 in 2021, a 300.0% increase, and reached $0.20 in 2022 after rising 25.0%. The total remained unchanged at $0.20 in 2023 before increasing 5.0% to $0.21 in 2024 and 19.1% to $0.25 in 2025.

Old Second has raised its dividend for 2 consecutive years, with 43.1% annual growth over five years. That rapid growth partly reflects the low 2020 starting point. The last annual cut occurred in 2009, leaving a long interval since the previous reduction but a relatively short current growth streak.

Is the dividend covered?

The dividend consumes 15% of earnings. That leaves most reported profit available for retained capital, loan growth, credit-loss absorption and share repurchases. For a regional bank, those competing uses matter because regulatory capital and credit quality can constrain distributions even when current earnings cover the payment.

SmarterDividends rates the dividend A with a safety score of 82, meaning very safe within the 80-100 range. The grade reflects the low earnings payout and indicates a substantial current coverage cushion. It does not remove exposure to changes in credit losses, funding costs, regulatory capital requirements or acquisition performance.

Yield and valuation

At a share price of $24.41, the new $0.32 annual dividend produces a 1.30% forward yield. That is well below the Financial Services sector median forward yield of 5.83%. The increase improves cash income, but OSBC remains a lower-yielding name relative to the broader sector. A holder of 100 shares would receive $32.00 in annual dividend income at the new rate.

SmarterDividends estimates fair value at $30.28 and classifies the shares as undervalued, representing 24% upside to that estimate. The stock’s one-year price return was a 29.6% gain, which helps explain why the forward yield remains modest despite the higher distribution.

What to watch

The immediate calendar item is the October 30, 2026, ex-dividend date. Investors must own shares before that date to receive the November 9, 2026, payment under standard settlement rules.

Subsequent earnings reports will show whether the larger earnings base persists after the Bancorp Financial acquisition. Integration costs, loan growth and deposit pricing will be important because each affects retained earnings and capital available for dividends.

Credit performance also warrants attention. Old Second’s second-quarter filing described elevated net charge-offs tied largely to two previously downgraded commercial relationships, while classified assets declined. Future disclosures on nonperforming loans, charge-offs and capital ratios will provide the clearest operating context for the new payout.