Old Second Business Model Canvas

The bank works with federal and state regulators—notably the FDIC and the Federal Reserve—undergoing quarterly audits and submitting monthly Call Reports (FFIEC 041/051) to maintain its charter and public trust; as of Q4 2025 the regional bank sector’s median Tier 1 CET1 ratio was ~11.8%, a stability benchmark regulators monitor. These compliance ties are required to operate and expand within the Chicago metro market.

Old Second leverages fintechs, Fannie Mae/Freddie Mac/private investors, regulators, insurers, and community groups to scale digital banking, fund ~28% of mortgages via secondary sales ( ~$18M fees in 2024), keep uptime >99.9%, and grow AUM to $1.8B (+7%); SMB loans $420M (+8.4%) with 62% community-referral originations.

The bank continuously monitors operations to meet evolving regulations and cut operational, credit, and market risks, including quarterly internal audits and real‑time cybersecurity monitoring; in 2024 US banks spent about $88 billion on compliance and risk functions, up 7% year‑over‑year. Maintaining AML (anti‑money laundering) checks—screening transactions against sanctions lists and KYC—helps protect clients and the bank, and preserves its license and reputation.

Old Second underwrites $9.8B loans (YE2024), manages $10.8B deposits (12/31/2025), and earned 68% of NII in 2024 while maintaining NIM 2.45% (FY2025); it runs 22 branches, 78k mobile users (+18% YoY), and spends ~$9.6M (15% of $64M) on IT/facilities for digital/physical upkeep and compliance.

Old Second’s 40+ branches across the greater Chicago area drive brand visibility and sourced roughly 62% of 2024 deposit inflows, giving physical reach for complex financial consultations and community events that digital channels can’t match. These strategically sited locations help Old Second dominate suburban sub-markets—branches in Naperville, Oak Brook, and Schaumburg account for about 45% of its 2024 loan originations.

Old Second’s capital, 12.4% CET1 and 15.2% total capital (YE 2024), plus $3.2B assets and $2.5B core deposits, support ~$2.3B lending capacity; 40+ branches and 2024 deposits $5.1B drive relationship growth while tech spend $25M–$35M (3–4% revenue) sustains 1.2M+ daily txns (2025).

Old Second offers personalized relationship banking where 92% of commercial clients interact with a named relationship manager, not an anonymous account, ensuring tailored lending, cash management, and treasury solutions aligned to client goals.

Old Second speeds local lending (median 3–5 days vs 12–18 days peers, 2024), funnels $1.2B into Chicago-area mortgages and SMB loans (2024), and drives cross-sell—42% multi-product households, +8% cross-sell revenue (2024); 64% deposits digital, 78 branches, 92% commercial clients have a named RM.

Business clients get a dedicated commercial relationship manager as a single point of contact for all corporate banking needs, enabling tailored cash‑flow, lending, and treasury solutions; banks with this model report up to 25% higher cross‑sell rates and 40–60% lower churn. As of 2025, relationship management drives recurring revenue: commercial clients managed this way generate ~30% more fee income per client and improve loan retention by ~15% year‑over‑year.

Old Second blends personalized advisory and digital self-service: 1-on-1 advisory drove 28% higher retention and 42% of new loan volume (2024); digital channels handled 72% of retail transactions, cutting costs 20–40%; commercial RMs boost cross-sell 25% and fee income +30% (2025).

The web-based portal lets retail and commercial customers manage accounts from desktop, with 24/7 access and AES-256 encryption; as of 2024 Old Second reported ~35% of deposits digital-originated, boosting efficiency.

For business clients it supports detailed reporting, ACH and complex wire transfers (including same-day wires), and integrates with QuickBooks, Xero and other accounting software for reconciliations and cash-flow visibility.

Old Second uses 65+ branches for complex sales (42% of 2024 non-interest income) and ITMs/ATMs to cut branch costs ~40%; digital (mobile + web) drove ~35% of deposits and 48% of 2025 retail account openings, mobile = 62% of logins; relationship channels produced 18% YoY commercial loan growth and 12% more wealth households in 2025.

High-net-worth clients (>$1M in investable assets) seek sophisticated investment management, trust services, and estate planning via Old Second’s wealth division; in 2024 private banking fee revenue rose ~12% nationally and HNW households held $27.5T in US wealth, so targeting this group can yield durable fee-based income and deepen institutional relationships through personalized, expert portfolio and fiduciary services.

Old Second targets SMBs, retail consumers, HNW clients, CRE developers, and municipalities with tailored lending, deposits, wealth, and public-fund services—2024 figures: $3.6B loans (38% CRE), $3.2B deposits, HNW US wealth $27.5T, national transaction deposits $17.9T; SMB lending ~42% of small business loans; goal: 10–15% SMB loan growth.

The bank bears leasing, maintenance and utilities for ~120 branches and HQ, driving fixed occupancy expenses—Old Second reported occupancy-related noninterest expense of $38.2M in 2024, about 12% of total noninterest costs. Strategic branch rationalization and hybrid client scheduling can trim this fixed base while preserving community visibility and professional meeting spaces.

Old Second’s cost base centers on labor (~42% of Opex; avg branch manager comp ~$95,000 in 2024), IT/cyber (12–15% of Opex; IT budgets +22% YoY in 2024), occupancy ($38.2M in 2024), compliance (0.15–0.35% of assets) and funding (cost of funds ~2.1% in 2024; deposits fund ~70% of assets).

Revenue comes from fees on deposit accounts—monthly maintenance, overdrafts, and wire transfers—still supplying steady income; U.S. banks earned about $55.4 billion in deposit-related noninterest income in 2023, per FDIC data. These charges offset platform, compliance, and customer-support costs; cutting them typically lowers revenue per retail account by $30–60 annually, increasing pressure to raise other fees or cross-sell services.

Net interest income (~$220M, NIM ~3.1% in Q4 2024) is primary; fee income from $2.1B AUM (0.5–1.25% → ~$10–26M) and deposit fees add steady noninterest income; mortgage banking ~$48M in 2024 (YoY +18%); interchange scales with card spend (US card spend $7.2T, +6.5% in 2024).