Old Second Bundle
How did Old Second become a leading community bank in Chicagoland?
Old Second evolved from an 1871 Aurora lender into a diversified community bank through steady growth, conservative risk management, and strategic M&A, most notably the 2021–2022 West Suburban Bank acquisition that roughly doubled its scale.
Founded in 1871 to finance farms and merchants in the Fox River Valley, Old Second expanded into deposits, C&I, CRE, mortgage, consumer, wealth, and trust services; by year-end 2024 it reported assets near $6.5–7.0 billion and loans about $5.0–5.5 billion.
What is Brief History of Old Second Company? From a single-branch lender to a scaled community franchise, key milestones include incorporation of Old Second Bancorp in 1982 and the transformative West Suburban Bank deal in 2021–2022. See Old Second Porter's Five Forces Analysis
What is the Old Second Founding Story?
Old Second National Bank was founded on March 17, 1871, in Aurora, Illinois, by local merchants, mill owners and attorneys to provide stable deposits and commercial credit for the industrializing Fox River corridor during the post–Civil War boom and Chicago rebuilding era.
Founding Story
Organizers pooled local capital to formalize banking services for farmers, grain dealers, rail-linked manufacturers and retailers, launching operations from a modest downtown Aurora office.
- Founded on March 17, 1871 in Aurora, Illinois, amid regional industrial growth and postwar expansion.
- Initial capitalization sourced from founder subscriptions and community investors under 19th-century national bank charter norms.
- Early business model: core deposits, short-term commercial notes, agricultural lending secured by land and inventory, and correspondent banking.
- First loans targeted grain warehouse operators and machinists serving railroads; conservative underwriting and deposit cultivation established the bank's culture.
The name Old Second signaled continuity with earlier local banking efforts, and early leadership focused on conservative lending to overcome liquidity constraints while supporting local commerce and agriculture; see a related profile at Target Market of Old Second.
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What Drove the Early Growth of Old Second?
Old Second's early growth and expansion followed the Chicago rail nexus, serving merchants, local manufacturers and accumulating trust business; by the 1920s it was a principal Kane County lender and preserved capital through the Depression.
Late 19th–Early 20th century
Deposit growth was driven by merchants tied to Chicago's rail network; the bank added trust and estate services as local wealth rose and began financing small manufacturers, establishing itself as a primary lender in Kane County by the 1920s.
Great Depression resilience
Disciplined credit policies and capital preservation allowed the bank to weather the 1930s, maintaining liquidity and local lending capacity when many peers contracted, reinforcing its role in community banking history.
Post–World War II expansion (1945–1970s)
Suburbanization around Aurora drove mortgage and consumer lending; the bank opened branches across western suburbs, launched installment auto lending, and secured municipal and school-district deposits as stable, low-cost funding sources.
Commercial and small-business focus
Small-business lending and expanded branch access deepened relationships with local commerce, supporting regional economic growth and increasing deposit and loan volumes throughout DuPage and Kane Counties.
Holding company formation (1982)
Old Second Bancorp, Inc. was created as the parent holding company in 1982 to provide capital flexibility for acquisitions and organic growth, enabling expansion into CRE lending, treasury management and wealth services during the 1980s–1990s.
Technology and product expansion
Branch additions, ATM deployments and product diversification in the 1990s broadened the bank's mid-market client share, complementing commercial real estate and treasury offerings to drive fee income and deepen client relationships.
2000s: measured growth and crisis response
Measured CRE and C&I growth across DuPage, Kane, Kendall and Will counties was combined with tightened underwriting during the 2008–2010 crisis; nonperforming assets were worked out and capital rebuilt via earnings retention and balance-sheet optimization.
Digital banking introduction
Digital banking capabilities were introduced and upgraded post-crisis to defend deposits, improve customer experience and support emerging digital channel usage among retail and commercial clients.
Scale step-change (2021–2022)
The acquisition of West Suburban Bank (founded 1962; roughly $2.9 billion in assets pre-deal) materially increased branch density in DuPage County and expanded low-cost relationship deposits, boosting scale and client coverage.
Post-integration (through 2024)
Following integration, the combined franchise operated with approximately $6.5–7.0 billion in assets, a larger commercial team, expanded treasury and mortgage platforms, and improved operating leverage and run-rate efficiency.
For additional strategic context and marketing insights on the bank's expansion and positioning see Marketing Strategy of Old Second
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What are the key Milestones in Old Second history?
Milestones, Innovations and Challenges of Old Second Company trace a century of suburban growth, trust and wealth services, holding‑company formation, digital transformation and a transformational 2021–2022 acquisition that materially expanded Chicagoland scale and low‑cost funding.
| Year | Milestone |
|---|---|
| Early 1900s | Established trust and wealth services for affluent suburban clients, laying foundations for fiduciary revenue streams |
| Post‑WWII (1940s–1960s) | Steady suburban branch expansion across Illinois and the Midwest to serve growing commuter communities |
| 1982 | Formation of the holding company to support diversified banking and non‑bank financial services |
| 2010s | Multiple digital waves: mobile banking, online account opening, RDC and early treasury portals |
| 2021–2022 | Acquisition of West Suburban Bank, adding scale, core deposits and deeper Chicagoland suburban footprint |
Innovation concentrated on scalable treasury and middle‑market services, data‑driven relationship profitability, and end‑to‑end digital onboarding for consumers and SMBs.
Digital Onboarding
Launched online account opening and e‑signature workflows in the 2010s to shorten acquisition times and reduce branch friction for consumers and SMBs.
Mobile & Remote Deposit Capture
Rolled out mobile banking and RDC to support remote customers, increasing deposit stickiness and electronic transaction volumes.
Middle‑Market Treasury Platform
Built scalable treasury portals and sweep/lockbox integrations to capture C&I operating accounts and grow fee income from payments digitization.
Data & Analytics for Profitability
Implemented enhanced data analytics to measure relationship profitability and guide targeted marketing and banker coverage models.
Payments & Fee Diversification
Expanded payments capabilities and commercial card services to increase non‑interest income and treasury fee diversification.
Acquisition Integration Playbook
Developed an integration framework during the 2021–2022 West Suburban acquisition to capture cross‑sell and deposit migration opportunities.
Challenges included surviving the Great Depression, navigating the S&L and early‑1990s credit cycles, withstanding the 2008 global financial crisis, and absorbing balance‑sheet pressure from the 2023–2024 rapid rate hikes that stressed deposit pricing and securities marks.
Credit Cycle Resilience
A conservative credit culture and disciplined underwriting limited nonperforming assets and net charge‑offs relative to peers during stress periods; management actively repriced assets and moderated duration risk.
Funding & Deposit Mix
Strategically shifted funding toward core operating and treasury relationships after rapid rate increases to reduce reliance on rate‑sensitive sources and preserve net interest margin.
CRE Concentration Management
Maintained close monitoring and tighter underwriting for CRE exposure following lessons from prior cycles to limit downside in commercial real estate downturns.
Capital & Dividend Strategy
Preserved capital: CET1 and total risk‑based ratios remained above well‑capitalized thresholds during recent volatility, enabling continued dividend payments and shareholder returns.
Acquisition Integration Risk
Focused on integration rigor after the West Suburban deal to ensure deposit retention, expense synergies and realization of projected fee growth.
Strategic Lessons
Sustained underwriting discipline, prioritized core operating deposits over rate‑sensitive funds, and emphasized tech enablement aligned with broader community banking consolidation and resilience trends.
For a focused look at the bank's revenue mix and model, see Revenue Streams & Business Model of Old Second.
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What is the Timeline of Key Events for Old Second?
Timeline and Future Outlook of the Old Second Company traces its founding in 1871 through key growth, capital actions, digital modernization, and selective M&A, projecting disciplined balance-sheet and deposit-focused expansion supported by treasury, wealth, and mortgage fee income.
| Year | Key Event |
|---|---|
| 1871 | Old Second National Bank founded in Aurora, Illinois, to finance local commerce and agriculture. |
| 1900s–1920s | Added trust and estate services and grew with rail-linked manufacturing and retail. |
| 1930s | Navigated the Great Depression with conservative underwriting and liquidity management. |
| 1945–1965 | Expanded into suburbs and introduced consumer installment and mortgage lending in western suburbs. |
| 1982 | Old Second Bancorp, Inc. formed as the bank holding company to support capital flexibility and M&A. |
| 1990s | Expanded branches and ATMs while building commercial, treasury, and wealth offerings. |
| 2008–2010 | Managed through the global financial crisis, reducing NPAs and fortifying capital and credit processes. |
| 2015–2019 | Accelerated digital banking rollout including mobile, remote deposit capture, and treasury platforms. |
| Dec 2021–2022 | Acquired West Suburban Bank (~$2.9B assets), roughly doubling scale in DuPage and nearby counties. |
| 2023 | Integrated operations and focused on core deposit growth and treasury fee income amid rising rates. |
| 2024 | Reported assets approximately $6.5–7.0B, loans $5.0–5.5B, deposits $5.8–6.2B with capital ratios well-capitalized. |
Strategic Focus
Focus on core operating deposits, middle-market C&I, disciplined CRE, and fee growth in treasury, wealth, and mortgage banking to drive sustainable revenue.
Digital Modernization
Continue investments in commercial onboarding, API-based payments, and fraud/risk analytics to defend and grow relationship deposits and improve client experience.
M&A Optionality
Prudent, contiguous Chicagoland acquisitions targeting sub-10% tangible book dilution and <3-year earnback to add core funding and operating leverage.
Balance-Sheet Discipline
Maintain strong CET1, optimize securities duration, emphasize variable-rate C&I with robust covenants, and actively manage rate and liquidity risk.
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