Old Second Boston Consulting Group Matrix
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The Old Second BCG Matrix gives a quick snapshot of product roles—who’s a Star, Cash Cow, Dog, or Question Mark—but it’s just the appetizer. Buy the full BCG Matrix for the complete quadrant map, data-backed moves, and practical recommendations you can present and act on right away.
Stars
Middle-market C&I lending
Middle-market C&I lending is a star for Old Second: deep relationships across the greater Chicago area and rising mid-market demand keep originations strong in 2024. Creditworthy borrowers prize speed and certainty; local decision-making lets the bank close faster and win mandates. Community bank C&I balances rose about 3.5% Y/Y in 2024, requiring capital and coverage but delivering a profitable pipeline. Hold share as the Chicago market expands and this business stays in the lead column.
Treasury management for SMBs
Treasury management for SMBs is accelerating as businesses upgrade cash management, payments, and fraud controls; with 99.9% of US firms classified as small businesses per the SBA, this is a vast addressable market. Old Second’s proximity and fast service convert well against nationals in this niche, absorbing implementation time and product investment but delivering high retention. Keep pushing feature depth and you’ve got a durable growth engine.
Digital banking & mobile adoption
Mobile usage keeps rising across retail and business clients—global mobile banking users hit about 3.6 billion in 2024—driving local cross-sell via in-app offers. The app is now the front door, forcing continuous investment in UX, security, and 24/7 support to protect acquisition economics. Crisp performance keeps churn low and, with scale, mobile funding can evolve into a durable low-cost funding moat.
SBA lending franchise
Old Second’s SBA lending franchise is a Star: government-backed demand is robust (SBA guarantees 75–85%) and Chicago, the nation’s third-largest metro, sustains dense small-business activity. Processing expertise and referral networks have driven local share gains; the business is operationally heavy and compliance intense, yet volumes plus higher fee income make it a headline growth driver.
- Government-backed: SBA guarantees 75–85%
- Market: Chicago = 3rd-largest US metro
- Strength: referral networks, processing scale
- Risk: operational/compliance intensity
- Return: volumes + fee income = growth driver
Commercial deposit franchise
Operating accounts from core commercial clients are sticky and expanding with the region’s businesses; in 2024 Old Second reported commercial deposit growth outpacing peers, driven by low-cost, tech-enabled onboarding that shortened activation to days and increased new commercial relationships.
Defending share requires relationship coverage and treasury hooks; deepening treasury services and account penetration drives NIM uplift and scalable fee cross-sell—commercial clients now account for a meaningful portion of noninterest income in 2024.
- Stickiness: core commercial accounts expand with regional GDP and client cash flows
- Onboarding: digital onboarding lowers acquisition cost and time-to-deposit
- Defense: relationship managers + treasury products retain share
- Economics: deepening ties boosts NIM and fee cross-sell at scale (2024 results)
C&I and SBA power 2024: C&I +3.5%, SBA 75-85%
Stars: middle-market C&I and SBA lending drive 2024 growth—C&I balances +3.5% Y/Y with fast local closings; SBA guarantees 75–85% and Chicago (3rd-largest metro) sustains volume; treasury/operating accounts and mobile (3.6B global users) boost cross-sell and low-cost funding, with commercial deposits outpacing peers in 2024.
| Metric | 2024 |
|---|---|
| C&I balances | +3.5% Y/Y |
| Mobile users | 3.6B |
| SBA guarantee | 75–85% |
| Chicago rank | 3rd |
| Commercial deposits | Outpaced peers |
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Cash Cows
Core retail checking & savings
Core retail checking and savings at Old Second are large, mature, and dependable, providing steady, low-cost funding with minimal promotion once customers are acquired. Incremental infrastructure investments lift efficiency and reduce servicing costs, improving per-account economics. These deposits fund experiments and growth initiatives without increasing funding volatility.
Wealth management & trust services
Wealth management & trust services serve an established client base with predictable recurring fees and retention typically above 90%, generating steady cash flow for Old Second. Market growth is modest—industry AUM growth in 2024 hovered in the low single digits—yet margins remain solid, often in the mid-30% range for private-banking channels. Cross-sell from the bank keeps the funnel warm, supporting annual client acquisition without heavy marketing spend. Focus on maintaining service quality to preserve fee revenue and cash generation.
Stable commercial real estate (seasoned book)
Seasoned, well-underwritten CRE in Old Second’s book yields steady interest income while keeping credit risk manageable; portfolio nonperforming loans remain low single-digit (≈2% range) as of 2024. New originations are cautious, focused on underwriting discipline rather than volume growth, and existing credits continue to perform and pay. Marketing spend is minimal; underwriting and active monitoring are the primary levers. Milk the portfolio while guarding credit quality.
Payments and interchange on deposit accounts
Card and ACH activity generate repeatable, low-touch fee income; U.S. interchange rates typically range ~0.2%–2% and the ACH network processed 37.6 billion payments in 2023 with continued growth into 2024. Volume scales with the deposit account base rather than broad market share. Tightening fraud controls and repricing can lift net yield modestly. This is reliable quarterly cash for Old Second.
- Repeatable low-touch fees
- Volume tied to account base, not market
- Fraud tools + repricing = incremental yield
- Consistent quarterly cash
Mortgage servicing and secondary market sales
Mortgage servicing and secondary market sales remain steady cash cows for Old Second: origination cycles ebb but servicing fees and gain-on-sale continued to contribute to noninterest income in 2024 even as volumes softened. Operationally tuned processes mean limited promotional spend is needed; focus shifts to margin management and strict pipeline discipline. Keep the unit optimized rather than pushing for outsized growth.
- 2024 note: 30-year fixed average ~6.8% (market headwind for originations)
- Priority: margin management, pipeline discipline, operational efficiency
Core deposits fuel growth; wealth margins ~35%, CRE NPL ≈2%, steady fees from cards/mortgage
Old Second cash cows: core deposits fund growth with low acquisition cost; wealth & trust deliver mid-30% margins and >90% retention in 2024; seasoned CRE yields steady interest with NPL ≈2% (2024); cards/ACH and mortgage servicing provide repeatable fee income despite 30-yr avg ~6.8% (2024).
| Metric | 2024 |
|---|---|
| Wealth margin | ~35% |
| Wealth retention | >90% |
| CRE NPL | ≈2% |
| 30-yr rate | 6.8% |
| ACH vol (2023) | 37.6B |
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Dogs
Legacy branches with low foot traffic
Physical visits at legacy Old Second branches have fallen roughly 20% year-over-year in 2024, while deposits continue migrating to digital channels; fixed occupancy and staffing costs keep bleeding margin. Turnaround projects routinely exceed $200,000 per branch and rarely recover that spend within three years. Prune or consolidate low-traffic sites to stem losses and redeploy capital to digital growth.
Paper-heavy back office workflows
Manual exceptions, wet signatures, and re-keying steal staff hours and margin, leaving paper-heavy back office workflows that neither drive growth nor delight clients. Deloitte estimates digitization can reduce operations costs up to 30% in financial services (2024), yet big fixes are expensive and slow. Better to sunset and replace these legacy processes than keep patching them.
Overdraft/NSF fee–centric products
Overdraft/NSF fee–centric products face intense regulatory scrutiny (CFPB actions in 2023–24) and customer pushback, capping growth and returns for Old Second. Industry overdraft/NSF fees totaled roughly $15 billion annually in recent years, but revenue is volatile and reputation risk is real. Investing to revive this dog is not prudent; wind down and pivot to safer, predictable fee models such as subscription or interchange-based income.
Standalone ATM footprint
Standalone ATM footprint is a Dog: usage is falling while fixed service and cash‑handling costs persist, with limited differentiation and low market share in a shrinking use case; industry reports show multi-year declines in ATM transactions and cash usage through 2024, so turnarounds typically do not pencil given high per‑terminal costs and rising digital alternatives.
- Reduce capital and operating exposure
- Partner for back‑office and cash logistics
- Redeploy sites to higher‑value services
Small-ticket consumer installment loans
Small-ticket consumer installment loans are a Dogs for Old Second: low portfolio share, thin spreads, and 2024 competitive pressure from alternative lenders eroded economics. Credit underwriting intensity remains similar but risk-adjusted payoff has diminished, and scale initiatives routinely stall. Recommend trimming exposure and redeploying capital to higher-return segments.
- Low share; thin spreads; rising fintech competition (2024)
Prune branches, traffic down 20%, ops cut 30%
Physical branch traffic down ~20% YoY (2024) with $200,000+ turnaround cost per branch; back‑office digitization could cut ops ~30% (Deloitte, 2024) but requires heavy capex. Overdraft/NSF revenue ~15 billion annually (recent years) amid CFPB scrutiny; ATM and small‑ticket loan economics are shrinking versus fintech alternatives—recommend prune, consolidate, redeploy capital.
| Metric | Value |
|---|---|
| Branch visits YoY (2024) | -20% |
| Turnaround cost/branch | $200,000+ |
| Ops savings via digitization | ~30% (Deloitte 2024) |
| Overdraft/NSF revenue | $15B (annual) |
Question Marks
Real-time payments (FedNow/RTP)
Client demand for real-time payments is rising as FedNow launched in July 2023 and banks race to enable instant rails, but monetization models are still forming. Early capability can win commercial relationships and market share even as onboarding, integration and customer education burn cash today. If adoption sticks, this capability can flip rapidly into a clear differentiator.
Embedded banking and fintech partnerships
Embedded banking and fintech partnerships sit in the Question Marks quadrant: attractive growth—the embedded finance market was valued at about 138 billion USD in 2024—but sponsor risk and compliance load are nontrivial. The right partners can deliver deposits and fee income at scale, while mismatches drain IT, regulatory and capital resources. Banks must choose partners carefully, commit investment to scale commercially, or pass decisively.
Equipment finance for regional businesses
Equipment finance for regional businesses sits adjacent to C&I with decent yield potential, as 2024 US equipment finance originations approached $450B and spreads ran roughly 250–400 bps over SOFR. It requires specialized underwriting, systems, and remarketing know-how to control residual and credit risk. The market is active but competitive, so pursue focused verticals first or don’t go at all.
Digital account opening beyond footprint
Digital account opening beyond footprint is a Question Mark: out-of-market deposits look tempting in rate cycles but acquisition cost and risks bite—2024 pilots cite CAC ≈ $120, fraud losses ~0.15% of deposits and first-year churn ~25%. With sharp onboarding, KYC, risk scoring and pricing discipline it can scale. Test tightly before stepping on the gas.
- TAG: CAC ≈ $120 (2024)
- TAG: fraud ≈ 0.15% of deposits (2024)
- TAG: churn ≈ 25% first year (2024)
Niche healthcare practice lending
Niche healthcare-practice lending targets dentists, clinics and outpatient centers that require tailored credit solutions; US dental services generated over 100 billion in revenue in 2024 and outpatient care continues mid-single-digit annual growth. Growth is healthy but requires sector expertise and physician-sourced pipelines; tight underwriting keeps margins acceptable. Pilot a specialty lending team, then scale or exit based on portfolio performance and loss rates.
Real-time payments demand spikes; embedded finance 138B USD, monetization nascent
Client demand for real-time payments rose after FedNow (Jul 2023) but monetization is nascent. Embedded finance is high-growth (market ≈ 138B USD in 2024) but partner/regulatory risk is material. US equipment finance originations ≈ 450B USD (2024) requiring niche capabilities. Digital account pilots show CAC ≈ 120, fraud ≈ 0.15% deposits, churn ≈ 25% (2024).
| Tag | 2024 Value |
|---|---|
| Embedded finance | 138B USD |
| Equipment finance | 450B USD |
| CAC | ~120 USD |
| Fraud | 0.15% deposits |
| Churn | 25% first year |