8-K - OSBC - Equibles

United States

Securities And Exchange Commission Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 17, 2024

(Exact name of registrant as specified in its charter)


Delaware	000-10537	36-3143493
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

37 South River Street Aurora , Illinois **** 60507 (Address of principal executive offices) (Zip code)

(630) 892-0202(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ **** Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

<br><br>
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	OSBC	The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On April 17, 2024, Old Second Bancorp, Inc. (the “Company’s”) issued a press release announcing its financial results for the first quarter ended March 31, 2024, along with certain other financial information. Copies of the Company’s press release and loan portfolio disclosures are attached as Exhibits 99.1 and 99.2, respectively.

Item 9.01 Financial Statements and Exhibits


Exhibit No.		Description
99.1		Press Release of Old Second Bancorp, Inc. dated April 17, 2024

99.2		Loan Portfolio Disclosures for Old Second Bancorp, Inc. dated March 31, 2024

104		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	OLD SECOND BANCORP, INC.


Dated: April 17, 2024	By:	/s/ Bradley S. Adams
		Bradley S. Adams
		Executive Vice President,
		Chief Operating Officer and
		Chief Financial Officer

Old Second Bancorp, Inc



(NASDAQ:OSBC)		Exhibit 99.1

Contact:	Bradley S. Adams	For Immediate Release
	Chief Financial Officer	April 17, 2024
	(630) 906-5484

Old Second Bancorp, Inc. Reports First Quarter 2024 Net Income of $21.3 Million,

or $0.47 per Diluted Share

AURORA, IL, April 17, 2024 – Old Second Bancorp, Inc. (the “Company,” “Old Second,” “we,” “us,” and “our”) (NASDAQ: OSBC), the parent company of Old Second National Bank (the “Bank”), today announced financial results for the first quarter of 2024. Our net income was $21.3 million, or $0.47 per diluted share, for the first quarter of 2024, compared to net income of $18.2 million, or $0.40 per diluted share, for the fourth quarter of 2023, and net income of $23.6 million, or $0.52 per diluted share, for the first quarter of 2023. Adjusted net income, a non-GAAP financial measure that excludes certain nonrecurring items, as applicable, was $21.3 million, or $0.47 per diluted share, for the first quarter of 2024, compared to $19.1 million, or $0.42 per diluted share, for the fourth quarter of 2023, and $23.4 million, or $0.52 per share, for the first quarter of 2023. There were no adjusting items impacting the first quarter of 2024; significant adjusting items impacting the fourth quarter of 2023 results included a $1.2 million litigation reserve related to prior years’ overdraft fee compliance. See the discussion entitled “Non-GAAP Presentations” below and the tables beginning on page 17 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Net income increased $3.1 million in the first quarter of 2024 compared to the fourth quarter of 2023. The increase was primarily due to the decrease of $4.5 million in provision for credit losses and the $1.8 million increase in noninterest income primarily due to a more favorable mark on the fair value of mortgage servicing rights, which were partially offset by a $1.5 million decrease in net interest and dividend income, a $1.2 million increase in noninterest expense and a $518,000 increase in provision for income taxes. Net income decreased $2.3 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to a decrease in net interest income of $4.3 million year over year driven by contraction in the securities portfolio, as well as higher market rates and increased short-term borrowing. The higher market rates and increased borrowing resulted in a $7.5 million increase to interest expense.

Operating Results

●	First quarter 2024 net income was $21.3 million, reflecting a $3.1 million increase from the fourth quarter 2023, and a decrease of $2.3 million from the first quarter of 2023. Adjusted net income, as defined above, was $21.3 million for the first quarter of 2024, an increase of $2.2 million from adjusted net income for the fourth quarter of 2023, and a decrease of $2.1 million from adjusted net income for the first quarter of 2023.
●	Net interest and dividend income was $59.8 million for the first quarter of 2024, reflecting a decrease of $1.5 million, or 2.4%, from the fourth quarter of 2023, and a decrease of $4.3 million, or 6.7%, from the first quarter of 2023.
---	---
●	We recorded a net provision for credit losses of $3.5 million in the first quarter of 2024, compared to a net provision for credit losses of $8.0 million in the fourth quarter of 2023, and a net provision for credit losses of $3.5 million in the first quarter of 2023.
---	---
●	Noninterest income was $10.5 million for the first quarter of 2024, an increase of $1.8 million, or 20.3%, compared to $8.7 million for the fourth quarter of 2023, and an increase of $3.2 million, or 42.9%, compared to $7.4 million for the first quarter of 2023.
---	---

●	Noninterest expense was $38.2 million for the first quarter of 2024, an increase of $1.2 million, or 3.3% compared to $37.0 million for the fourth quarter of 2023, and an increase of $2.3 million, or 6.5%, compared to $35.9 million for the first quarter of 2023.
●	We had a provision for income tax of $7.2 million for the first quarter of 2024, compared to a provision for income tax of $6.7 million for the fourth quarter of 2023 and a provision of $8.4 million for the first quarter of 2023. The effective tax rate for each of the periods presented was 25.3%, 26.9%, and 26.3%, respectively.
---	---
●	On April 16, 2024, our Board of Directors declared a cash dividend of $0.05 per share of common stock, payable on May 6, 2024, to stockholders of record as of April 26, 2024.
---	---

Financial Highlights


	Quarters Ended
(Dollars in thousands)	March 31,			December 31,			March 31,
	2024			2023			2023
Balance sheet summary
Total assets	$	5,616,072		$	5,722,799		$	5,920,283
Total securities available-for-sale		1,168,797			1,192,829			1,455,068
Total loans		3,969,411			4,042,953			4,003,354
Total deposits		4,608,275			4,570,746			4,897,220
Total liabilities		5,019,913			5,145,518			5,423,413
Total equity		596,159			577,281			496,870

Total tangible assets	$	5,518,957		$	5,625,104		$	5,820,751
Total tangible equity		499,044			479,586			397,338

Income statement summary
Net interest income	$	59,783		$	61,235		$	64,086
Provision for credit losses		3,500			8,000			3,501
Noninterest income		10,501			8,729			7,350
Noninterest expense		38,241			37,026			35,922
Net income		21,312			18,225			23,607
Effective tax rate		25.33	%		26.92	%		26.26	%

Profitability ratios
Return on average assets (ROAA)		1.51	%		1.27	%		1.62	%
Return on average equity (ROAE)		14.56			13.18			19.86
Net interest margin (tax-equivalent)		4.58			4.62			4.74
Efficiency ratio		53.59			50.82			47.52
Return on average tangible common equity (ROATCE)		17.80			16.43			25.54
Tangible common equity to tangible assets (TCE/TA)		9.04			8.53			6.83

Per share data
Diluted earnings per share	$	0.47		$	0.40		$	0.52
Tangible book value per share		11.13			10.73			8.90

Company capital ratios^1^
Common equity tier 1 capital ratio		12.02	%		11.37	%		9.91	%
Tier 1 risk-based capital ratio		12.55			11.89			10.43
Total risk-based capital ratio		14.79			14.06			12.79
Tier 1 leverage ratio		10.47			10.06			8.56

Bank capital ratios ^1, 2^
Common equity tier 1 capital ratio		13.06	%		12.32	%		11.98	%
Tier 1 risk-based capital ratio		13.06			12.32			11.98
Total risk-based capital ratio		14.03			13.24			13.10
Tier 1 leverage ratio		10.89			10.41			9.83

^1^^^Both the Company and the Bank ratios are inclusive of a capital conservation buffer of 2.50%, and both are subject to the minimum capital adequacy guidelines of 7.00%, 8.50%, 10.50%, and 4.00% for the Common equity tier 1, Tier 1 risk-based, Total risk-based and Tier 1 leverage ratios, respectively.

^2^The prompt corrective action provisions are applicable only at the Bank level, and are 6.50%, 8.00%, 10.00%, and 5.00% for the Common equity tier 1, Tier 1 risk-based, Total risk-based and Tier 1 leverage ratios, respectively.

Chairman, President and Chief Executive Officer Jim Eccher said “Old Second reported strong results in the first quarter with exceptional profitability and stable to improving trends. Return on average assets and return on average tangible common equity came in at 1.51% and 17.8%, respectively, and the efficiency ratio remains strong at just over 53% despite seasonally high expenses. The net interest margin is proving to be quite resilient despite volatility in market interest rates and asset quality continues to trend favorably with continuing positive migration and no surprises in the first quarter. Over the year ago quarter, our tangible book value per share has increased by 25% and our common equity Tier 1 ratio now exceeds 12% from under 10% just a year ago. The strength of our balance sheet today, combined with exceptional profitability, provides us the flexibility to continue to invest for growth while evaluating the potential to return capital to stockholders in the near term. In short, balance sheet flexibility, combined with continuing strength in core banking trends, gives me confidence Old Second can deliver another strong year in 2024 for our stockholders, communities and employees. I have never been more excited for the future of Old Second.”

Asset Quality & Earning Assets

●	Nonperforming loans, comprised of nonaccrual loans plus loans past due 90 days or more and still accruing, totaled $65.1 million at March 31, 2024, $68.8 million at December 31, 2023, and $64.5 million at March 31, 2023. Nonperforming loans, as a percent of total loans, were 1.6% at March 31, 2024, 1.7% at December 31, 2023, and 1.6% at March 31, 2023. The decrease in the first quarter of 2024 is driven by a partial charge-off of $3.9 million for a commercial real estate-owner occupied loan.
●	Total loans were $3.97 billion at March 31, 2024, reflecting a decrease of $73.5 million compared to December 31, 2023, and a decrease of $33.9 million compared to March 31, 2023. The decrease year over year was largely driven by the declines in commercial and commercial real estate-owner occupied portfolios. Average loans (including loans held-for-sale) for the first quarter of 2024 totaled $4.02 billion, reflecting an increase of $2.9 million from the fourth quarter of 2023 and an increase of $86.9 million from the first quarter of 2023.
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●	Available-for-sale securities totaled $1.17 billion at March 31, 2024, compared to $1.19 billion at December 31, 2023, and $1.46 billion at March 31, 2023. The unrealized mark to market loss on securities totaled $85.0 million as of March 31, 2024, compared to $84.2 million as of December 31, 2023, and $105.6 million as of March 31, 2023, due to market interest rate fluctuations as well as changes year over year in the composition of the securities portfolio. During the quarter ended March 31, 2024, we had security purchases of $15.7 million, security maturities of $2.0 million, paydowns of $30.7 million, and sales of $5.3 million, resulting in net realized gains of $1,000, compared to security purchases of $9.2 million, paydowns of $25.6 million, no sales of securities and $55.9 million of maturities and calls during the quarter ended December 31, 2023, which resulted in net realized losses of $2,000. During the quarter ended March 31, 2023, we had $4.2 million of security purchases, $37.7 million of security paydowns, calls and maturities, and security sales of $66.2 million, which resulted in net realized losses of $1.7 million. We may continue to buy and sell strategically identified securities as opportunities arise.
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Net Interest Income


Analysis of Average Balances,
Tax Equivalent Income / Expense and Rates
(Dollars in thousands - unaudited)

	Quarters Ended
	March 31, 2024						December 31, 2023						March 31, 2023
	Average			Income /		Rate	Average			Income /		Rate	Average			Income /		Rate
	Balance			Expense		%	Balance			Expense		%	Balance			Expense		%
Assets
Interest earning deposits with financial institutions	$	48,088		$	610	5.10	$	47,865		$	616	5.11	$	49,310		$	585	4.81
Securities:
Taxable		1,016,112			8,092	3.20		1,027,366			8,329	3.22		1,330,295			10,735	3.27
Non-taxable (TE)^1^		166,776			1,653	3.99		164,655			1,674	4.03		173,324			1,693	3.96
Total securities (TE)^1^		1,182,888			9,745	3.31		1,192,021			10,003	3.33		1,503,619			12,428	3.35
FHLBC and FRBC Stock		31,800			635	8.03		34,371			647	7.47		24,905			280	4.56
Loans and loans held-for-sale^1, 2^		4,019,377			62,698	6.27		4,016,480			62,793	6.20		3,932,492			57,228	5.90
Total interest earning assets		5,282,153			73,688	5.61		5,290,737			74,059	5.55		5,510,326			70,521	5.19
Cash and due from banks		54,533			-	-		57,723			-	-		55,140			-	-
Allowance for credit losses on loans		(44,295)			-	-		(50,023)			-	-		(49,398)			-	-
Other noninterest bearing assets		384,332			-	-		396,297			-	-		382,579			-	-
Total assets	$	5,676,723					$	5,694,734					$	5,898,647

Liabilities and Stockholders' Equity
NOW accounts	$	553,844		$	829	0.60	$	563,603		$	595	0.42	$	601,030		$	242	0.16
Money market accounts		689,996			2,575	1.50		692,720			2,200	1.26		833,823			828	0.40
Savings accounts		958,645			633	0.27		985,614			517	0.21		1,126,040			79	0.03
Time deposits		558,463			4,041	2.91		497,472			2,833	2.26		434,655			664	0.62
Interest bearing deposits		2,760,948			8,078	1.18		2,739,409			6,145	0.89		2,995,548			1,813	0.25
Securities sold under repurchase agreements		30,061			86	1.15		28,526			51	0.71		31,080			9	0.12
Other short-term borrowings		332,198			4,557	5.52		390,652			5,429	5.51		200,833			2,345	4.74
Junior subordinated debentures		25,773			280	4.37		25,773			290	4.46		25,773			279	4.39
Subordinated debentures		59,393			546	3.70		59,372			546	3.65		59,308			546	3.73
Senior notes		-			-	-		-			-	-		44,599			994	9.04
Notes payable and other borrowings		-			-	-		-			-	-		5,400			87	6.53
Total interest bearing liabilities		3,208,373			13,547	1.70		3,243,732			12,461	1.52		3,362,541			6,073	0.73
Noninterest bearing deposits		1,819,476			-	-		1,838,325			-	-		2,002,801			-	-
Other liabilities		60,024			-	-		63,971			-	-		51,279			-	-
Stockholders' equity		588,850			-	-		548,706			-	-		482,026			-	-
Total liabilities and stockholders' equity	$	5,676,723					$	5,694,734					$	5,898,647
Net interest income (GAAP)				$	59,783					$	61,235					$	64,086
Net interest margin (GAAP)						4.55						4.59						4.72

Net interest income (TE)^1^				$	60,141					$	61,598					$	64,448
Net interest margin (TE)^1^						4.58						4.62						4.74
Interest bearing liabilities to earning assets		60.74	%					61.31	%					61.02	%

^1^ Tax equivalent (TE) basis is calculated using a marginal tax rate of 21% in 2024 and 2023. See the discussion entitled “Non-GAAP Presentations” below and the tables beginning on page 17 that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

^2^ Interest income from loans is shown on a tax equivalent basis, which is a non-GAAP financial measure as discussed in the table on page 17, and includes loan fee expense of $867,000 for the first quarter of 2024, loan fee expense of $922,000 for the fourth quarter of 2023, and loan fee expense of $730,000 the first quarter of 2023. Nonaccrual loans are included in the above stated average balances.

The increased yield of six basis points on interest earning assets compared to the linked period was driven by repricing within the loan portfolio, and, to a lesser extent, the growth in the average balance of loans over the quarter. In addition, rates paid on FHLB dividends increased quarter over linked quarter. Changes in the market interest rate environment impact earning assets at varying intervals depending on the repricing timeline of loans, as well as the securities maturity, paydown and purchase activities.

The year over year increase of 42 basis points on interest earning assets was primarily driven by significant increases to benchmark interest rates over the past twelve months, primarily impacting variable rate loans. This increase was partially offset by the reduction in securities available for sale income during the quarter ended March 31, 2024, compared to the prior quarter and year over year quarter, as both security volumes and rates decreased.

Average balances of interest-bearing deposit accounts have increased steadily since the fourth quarter of 2023 through the first quarter of 2024, from $2.74 billion to $2.76 billion, as time deposits increased due to CD rate specials, partially offset by reductions in other deposit categories as customers sought higher yielding products. We have continued to control the cost of funds over the periods reflected, with the rate of overall interest-bearing deposits increasing to 118 basis points for the quarter ended March 31, 2024, from 89 basis points for the quarter ended December 31, 2023, and from 25 basis points for the quarter ended March 31, 2023. A 24 basis point increase in the cost of money market funds for the quarter ended March 31, 2024 compared to prior linked quarter, and a 110 basis point increase compared to the prior year like quarter were both due to select deposit account exception pricing, and drove a significant portion of the overall increase. Average rates paid on time deposits for the quarter ended March 31, 2024 increased by 65 basis points and 229 basis points in the quarter over linked quarter and year over year quarters, respectively, primarily due to CD rate specials we offered.

Borrowing costs decreased in the first quarter of 2024, compared to the fourth quarter of 2023, primarily due to the $58.5 million decrease in average other short-term borrowings stemming from a decrease in average FHLB advances over the prior quarter. The increase of $131.4 million year over year of average FHLB advances was based on daily liquidity needs, and was the primary driver of the $2.2 million increase to interest expense due to other short-term borrowings. Subordinated and junior subordinated debt interest expense were essentially flat over each of the periods presented. Senior notes had the most significant interest expense decrease year over year, as we redeemed all of the $45.0 million senior notes, net of deferred issuance costs, in June 2023, resulting in senior notes having no balance after that time. In February 2023, we paid off the remaining balance of $9.0 million on the original $20.0 million term note issued in 2020, resulting in notes payable and other borrowings having no balance after that time.

Our net interest margin (GAAP) decreased four basis points to 4.55% for the first quarter of 2024, compared to 4.59% for the fourth quarter of 2023, and decreased 17 basis points compared to 4.72% for the first quarter of 2023. Our net interest margin (TE) decreased four basis points to 4.58% for the first quarter of 2024, compared to 4.62% for the fourth quarter of 2023, and decreased 16 basis points compared to 4.74% for the first quarter of 2023. The decrease in the first quarter of 2024, compared to the prior quarter, is driven by higher interest expense due to the current interest rate environment and its effect on interest bearing deposits. The decrease in the first quarter of 2024, compared to the prior year like quarter, is primarily due to an increase in market interest rates, and the related increase in costs of interest-bearing liabilities. See the discussion entitled “Non-GAAP Presentations” and the tables beginning on page 17 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Noninterest Income


										First Quarter 2024
Noninterest Income	Three Months Ended									Percent Change From
(Dollars in thousands)	March 31,			December 31,			March 31,			December 31,		March 31,
	2024		****	2023		****	2023		****	2023	****	2023
Wealth management	$	2,561		$	2,600		$	2,270		(1.5)		12.8
Service charges on deposits		2,415			2,527			2,424		(4.4)		(0.4)
Residential mortgage banking revenue
Secondary mortgage fees		50			58			59		(13.8)		(15.3)
MSRs mark to market gain (loss)		94			(1,277)			(525)		107.4		117.9
Mortgage servicing income		488			495			516		(1.4)		(5.4)
Net gain on sales of mortgage loans		314			366			306		(14.2)		2.6
Total residential mortgage banking revenue		946			(358)			356		364.2		165.7
Securities gains (losses), net		1			(2)			(1,675)		150.0		100.1
Change in cash surrender value of BOLI		1,172			541			242		116.6		384.3
Card related income		2,376			2,511			2,244		(5.4)		5.9
Other income		1,030			910			1,489		13.2		(30.8)
Total noninterest income	$	10,501		$	8,729		$	7,350		20.3		42.9

Noninterest income increased $1.8 million, or 20.3%, in the first quarter of 2024, compared to the fourth quarter of 2023, and increased $3.2 million, or 42.9%, compared to the first quarter of 2023. The increase from the fourth quarter of 2023 was primarily driven by a $1.3 million increase in residential mortgage banking revenue primarily due to MSRs mark to market gains and a $631,000 increase in the cash surrender value of BOLI, both of which were due to market interest rate changes in the first quarter, as well as a $120,000 increase in other income, partially offset by a $39,000 decrease in wealth management income, a $112,000 decrease in service charges on deposits, and a $135,000 decrease in card related income.

The increase in noninterest income of $3.2 million in the first quarter of 2024, compared to the first quarter of 2023, is primarily due to a $291,000 increase in wealth management income primarily due to an increase in advisory fees, a $590,000 increase in mortgage banking revenue mainly due to a $619,000 increase in MSRs mark to market gain, $1,000 of realized gains on sales of securities in the first quarter of 2024 compared to realized losses on the sale of securities of $1.7 million in the first quarter of 2023, a $930,000 increase in the cash surrender value of BOLI, and a $132,000 increase in card related income. These increases were partially offset by a $459,000 decrease in other income, as the 2023 period included a one-time credit from a software vendor of $457,000.

Noninterest Expense


										First Quarter 2024
Noninterest Expense	Three Months Ended									Percent Change From
(Dollars in thousands)	March 31,			December 31,			March 31,			December 31,		March 31,
	2024		****	2023		****	2023		****	2023	****	2023
Salaries	$	17,647		$	16,738		$	16,087		5.4		9.7
Officers' incentive		2,148			1,450			1,827		48.1		17.6
Benefits and other		4,517			3,217			4,334		40.4		4.2
Total salaries and employee benefits		24,312			21,405			22,248		13.6		9.3
Occupancy, furniture and equipment expense		3,927			3,817			3,475		2.9		13.0
Computer and data processing		2,255			2,291			1,774		(1.6)		27.1
FDIC insurance		667			583			584		14.4		14.2
Net teller & bill paying		521			564			502		(7.6)		3.8
General bank insurance		309			301			305		2.7		1.3
Amortization of core deposit intangible asset		580			603			624		(3.8)		(7.1)
Advertising expense		192			383			142		(49.9)		35.2
Card related expense		1,277			1,338			1,216		(4.6)		5.0
Legal fees		226			228			319		(0.9)		(29.2)
Consulting & management fees		336			556			790		(39.6)		(57.5)
Other real estate owned expense, net		46			218			306		(78.9)		(85.0)
Other expense		3,593			4,739			3,637		(24.2)		(1.2)
Total noninterest expense	$	38,241		$	37,026		$	35,922		3.3		6.5
Efficiency ratio (GAAP)^1^		53.59	%		50.82	%		47.52	%
Adjusted efficiency ratio (non-GAAP)^2^		53.09	%		48.76	%		47.66	%

^1^The efficiency ratio shown in the table above is a GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits and OREO expenses, divided by the sum of net interest income and total noninterest income less net gains or losses on securities and mark to market gains or losses on MSRs.

^2^ The adjusted efficiency ratio shown in the table above is a non-GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits, OREO expenses, litigation expense, and net of gains on branch sales, if applicable, divided by the sum of net interest income on a fully tax equivalent basis, total noninterest income less net gains or losses on securities, mark to market gains or losses on MSRs, and includes a tax equivalent adjustment on the change in cash surrender value of BOLI. See the discussion entitled “Non-GAAP Presentations” below and the table on page 18 that provides a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent.

Noninterest expense for the first quarter of 2024 increased $1.2 million, or 3.3%, compared to the fourth quarter of 2023, and increased $2.3 million, or 6.5%, compared to the first quarter of 2023. The increase in the first quarter of 2024 compared to the fourth quarter of 2023 was attributable to a $2.9 million increase in salaries and employee benefits, with increases reflected primarily in restricted stock expense, officers’ incentives, payroll taxes, and deferred executive compensation due to changes in market interest rates. Also contributing to the increase in the first quarter of 2024 was a $110,000 increase in occupancy, furniture and equipment and an $84,000 increase in FDIC insurance. Partially offsetting the increase in noninterest expense in the first quarter of 2024 compared to the fourth quarter of 2023 was a $191,000 decrease in advertising expense, a $61,000 decrease in card related expense, a $220,000 decrease in consulting & management fees, a $172,000 decrease in OREO related expense, and a $1.1 million decrease in other expense due to a $1.2 million litigation expense recorded in the fourth quarter of 2023 for a pending overdraft fee compliance claim.

The year over year increase in noninterest expense is primarily attributable to a $2.1 million increase in salaries and employee benefits, primarily due to increases in annual base salary rates, restricted stock expense, officers’ incentives, and deferred employee compensation due to market interest rate changes. Also contributing to the increase was a $452,000 increase in occupancy, furniture and equipment, primarily due to branch remodeling and partially offset by net gains on sales of branches in 2023, a $481,000 increase in computer and data processing primarily due to core processor credits received in 2023, an $83,000 increase in FDIC insurance, a $50,000 increase in advertising expense, and a $61,000 increase in card related expense. Partially offsetting the increase in noninterest expense in the first quarter of 2024, compared to the first quarter of 2023, was a $93,000 decrease in legal fees, a $454,000 decrease in consulting & management fees, and a $260,000 decrease in OREO related expenses. 7

Earning Assets


							March 31, 2024
Loans	As of						Percent Change From
(Dollars in thousands)	March 31,		December 31,		March 31,		December 31,		March 31,
	2024		2023		2023		2023	****	2023
Commercial	$	796,552	$	841,697	$	851,737	(5.4)		(6.5)
Leases		425,615		398,223		285,831	6.9		48.9
Commercial real estate – investor		1,018,382		1,034,424		1,056,787	(1.6)		(3.6)
Commercial real estate – owner occupied		782,603		796,538		870,115	(1.7)		(10.1)
Construction		169,174		165,380		174,683	2.3		(3.2)
Residential real estate – investor		51,522		52,595		56,720	(2.0)		(9.2)
Residential real estate – owner occupied		220,223		226,248		217,855	(2.7)		1.1
Multifamily		387,479		401,696		358,991	(3.5)		7.9
HELOC		98,762		103,237		104,941	(4.3)		(5.9)
Other^1^		19,099		22,915		25,694	(16.7)		(25.7)
Total loans	$	3,969,411	$	4,042,953	$	4,003,354	(1.8)		(0.8)

^1^Other class includes consumer loans and overdrafts.

Total loans decreased by $73.5 million at March 31, 2024, compared to December 31, 2023, and decreased $33.9 million for the year over year period. The reduction in total loans in the first quarter of 2024 compared to the prior linked quarter was due to a total $59.4 million of payoffs on seven larger loans, as well as the usual seasonal decline in first quarter originations. The reduction in loans year over year is also due to the higher interest rate environment starting in the late first quarter of 2023, which resulted in a slowdown of loan originations beginning in the latter half of 2023. Reductions were primarily noted in the commercial and commercial real estate – owner occupied.


										March 31, 2024
Securities		As of								Percent Change From
(Dollars in thousands)		March 31,			December 31,			March 31,		December 31,		March 31,
	****	2024		****	2023		****	2023		2023	****	2023
Securities available-for-sale, at fair value
U.S. Treasury		$	171,000		$	169,574		$	214,734	0.8		(20.4)
U.S. government agencies			56,979			56,959			56,703	0.0		0.5
U.S. government agency mortgage-backed			101,075			106,370			121,938	(5.0)		(17.1)
States and political subdivisions			225,227			229,335			233,506	(1.8)		(3.5)
Corporate bonds			-			-			9,762	-		(100.0)
Collateralized mortgage obligations			379,603			392,544			454,106	(3.3)		(16.4)
Asset-backed securities			64,222			66,166			189,753	(2.9)		(66.2)
Collateralized loan obligations			170,691			171,881			174,566	(0.7)		(2.2)
Total securities available-for-sale		$	1,168,797		$	1,192,829		$	1,455,068	(2.0)		(19.7)

Our securities portfolio totaled $1.17 billion fair market value as of March 31, 2024, a decrease of $24.0 million from $1.19 billion as of December 31, 2023, and a decrease of $286.3 million since March 31, 2023. The portfolio reduction of $24.0 million in the first quarter of 2024, compared to the prior quarter-end, was due to paydowns of $30.7 million, sales of $5.3 million and further declines in market value of $877,000, partially offset by $15.7 million in purchases. Net unrealized losses at March 31, 2024 were $85.0 million, compared to $84.2 million at December 31, 2023 and $105.6 million at March 31, 2023. The year over year decrease in net unrealized losses is due to changes in the market interest rate environment as well as the impact of security sales undertaken to further reduce the portfolio’s interest rate sensitivity. The portfolio continues to consist of high quality fixed-rate and floating-rate securities, with more than 99% of publicly issued securities rated AA or better.

Asset Quality


										March 31, 2024
Nonperforming assets	As of									Percent Change From
(Dollars in thousands)	March 31,			December 31,			March 31,			December 31,	March 31,
	2024		****	2023		****	2023		****	2023	2023
Nonaccrual loans	$	64,324		$	67,583		$	63,561		(4.8)	1.2
Loans past due 90 days or more and still accruing interest		789			1,196			966		(34.0)	(18.3)
Total nonperforming loans		65,113			68,779			64,527		(5.3)	0.9
Other real estate owned		5,123			5,123			1,255		-	308.2
Total nonperforming assets	$	70,236		$	73,902		$	65,782		(5.0)	6.8



30-89 days past due loans and still accruing interest	$	21,183		$	13,668		$	24,770
Nonaccrual loans to total loans		1.6	%		1.7	%		1.6	%
Nonperforming loans to total loans		1.6	%		1.7	%		1.6	%
Nonperforming assets to total loans plus OREO		1.8	%		1.8	%		1.6	%
Purchased credit-deteriorated loans to total loans		1.1	%		1.4	%		1.8	%

Allowance for credit losses	$	44,113		$	44,264		$	53,392
Allowance for credit losses to total loans		1.1	%		1.1	%		1.3	%
Allowance for credit losses to nonaccrual loans		68.6	%		65.5	%		84.0	%

Nonperforming loans consist of nonaccrual loans and loans 90 days or more past due and still accruing interest. Purchased credit-deteriorated (“PCD”) loans acquired in our acquisitions of West Suburban and ABC Bank totaled $45.3 million, net of purchase accounting adjustments, at March 31, 2024. PCD loans that meet the definition of nonperforming loans are included in our nonperforming disclosures. Nonperforming loans to total loans was 1.6% as of March 31, 2024, 1.7% as of December 31, 2023, and 1.6% as of March 31, 2023. Nonperforming assets to total loans plus OREO was 1.8% as of March 31, 2024 and December 31, 2023, and 1.6% as of March 31, 2023. Our allowance for credit losses to total loans was 1.1% as of March 31, 2024 and December 31, 2023 and 1.3% as of March 31, 2023.

The following table shows classified loans by segment, which include nonaccrual loans, PCD loans if the risk rating so indicates, and all other loans considered substandard, for the following periods.


										March 31, 2024
Classified loans		As of								Percent Change From
(Dollars in thousands)		March 31,			December 31,			March 31,		December 31,		March 31,
	****	2024		****	2023		****	2023		2023	****	2023
Commercial		$	15,243		$	8,414		$	22,662	81.2		(32.7)
Leases			595			818			906	(27.3)		(34.3)
Commercial real estate – investor			43,154			43,798			52,615	(1.5)		(18.0)
Commercial real estate – owner occupied			61,267			54,613			37,545	12.2		63.2
Construction			7,119			17,155			241	(58.5)		N/M
Residential real estate – investor			1,299			1,331			1,702	(2.4)		(23.7)
Residential real estate – owner occupied			3,168			3,216			3,618	(1.5)		(12.4)
Multifamily			1,959			1,775			3,348	10.4		(41.5)
HELOC			1,648			1,664			2,635	(1.0)		(37.5)
Other^1^			-			-			2	-		(100.0)
Total classified loans		$	135,452		$	132,784		$	125,274	2.0		8.1

N/M - Not meaningful.

^1^Other class includes consumer loans and overdrafts.

Classified loans as of March 31, 2024 increased by $2.7 million from December 31, 2023, and increased by $10.2 million from March 31, 2023. The net increases from the fourth quarter of 2023 were primarily driven by additions of $15.9 million, the majority of which consisted of three relationships totaling $14.7 million. Commercial loans were the majority of the additions, consisting of seven loans totaling $11.6 million. These increases in classified loans in the first quarter were offset by $6.4 million of upgraded loans, $3.9 million of charge-offs, $1.7 million of principal reductions from payments, and $1.2 million of paid off loans. Remediation work continues on these credits, with the goal of cash flow improvements with increased tenancy. Reductions in construction classified loans were noted in the first quarter of 2024 from the linked quarter due to ongoing remediation efforts.

Allowance for Credit Losses on Loans and Unfunded Commitments

At March 31, 2024, our allowance for credit losses (“ACL”) on loans totaled $44.1 million, and our ACL on unfunded commitments, included in other liabilities, totaled $2.7 million. In the first quarter of 2024, we recorded provision expense of $3.5 million based on historical loss rate updates, our assessment of nonperforming loan metrics and trends, as well as estimated future credit losses. The first quarter’s provision expense consisted of a $3.5 million provision for credit losses on loans, and a $44,000 reversal of provision for credit losses on unfunded commitments. The decrease in ACL on unfunded commitments was primarily due to an adjustment of historical benchmark assumptions, such as funding rates and the period used to forecast those rates, within the ACL calculation. We recorded net charge-offs of $3.7 million in the first quarter of 2024, which reduced the ACL. The majority of the first quarter charge-offs were specific to one borrower within the commercial real estate portfolio on which we had existing specific allocations within the ACL of $3.9 million at December 31, 2023. The fourth quarter 2023 provision expense of $8.0 million consisted of a $8.0 million provision for credit losses on loans, and a $6,000 provision for credit losses on unfunded commitments. We recorded net charge-offs of $15.5 million in the fourth quarter of 2023. In the first quarter of 2023, we recorded provision expense of $3.5 million based on our assessment of nonperforming loan metrics and trends and estimated future credit losses. The $3.5 million provision expense consisted of a $4.7 million provision for credit losses on loans and a $1.2 million reversal of provision for credit losses on unfunded commitments. We recorded net charge-offs of $740,000 in the first quarter of 2023, which reduced the ACL. Our ACL on loans to total loans was 1.1% as of March 31, 2024 and December 31, 2023 and 1.3% as of March 31, 2023.

The ACL on unfunded commitments totaled $2.7 million as of March 31, 2024 and December 31, 2023, and $3.8 million as of March 31, 2023.

Net Charge-off Summary


Loan charge–offs, net of recoveries	Quarters Ended
(Dollars in thousands)	March 31,		% of	December 31,		% of	March 31,		% of
	2024		Total ^2^	2023		Total ^2^	2023		Total ^2^
Commercial	$	(58)	(1.6)	$	71	0.5	$	(124)	(16.8)
Leases		(40)	(1.1)		(8)	(0.1)		873	118.0
Commercial real estate – Investor		(67)	(1.8)		4,951	32.0		(17)	(2.3)
Commercial real estate – Owner occupied		3,868	104.7		10,443	67.5		(2)	(0.3)
Residential real estate – Investor		(2)	(0.1)		(3)	-		(19)	(2.6)
Residential real estate – Owner occupied		(8)	(0.2)		(8)	(0.1)		(10)	(1.4)
HELOC		(17)	(0.5)		(17)	(0.1)		(29)	(3.9)
Other^1^		19	0.6		31	0.3		68	9.3
Net charge–offs / (recoveries)	$	3,695	100.0	$	15,460	100.0	$	740	100.0

^1^Other class includes consumer loans and overdrafts.

^2^^^Represents the percentage of net charge-offs attributable to each category of loans.

Gross charge-offs for the first quarter of 2024 were $4.0 million, compared to $16.0 million for the fourth quarter of 2023 and $1.0 million for the first quarter of 2023. Gross recoveries were $293,000 for the first quarter of 2024, compared to $491,000 for the fourth quarter of 2023, and $282,000 for the first quarter of 2023. Continued recoveries are indicative of the ongoing aggressive efforts by management to effectively manage and resolve prior charge-offs.

Deposits

Total deposits were $4.61 billion at March 31, 2024, an increase of $37.5 million, or 0.8%, compared to $4.57 billion at December 31, 2023, primarily due to a large increase in certificate of deposits of $58.7 million, an increase of $4.4 million in NOW accounts, and an increase of $25.1 million in money market accounts. These increases were partially offset by a decline in non-interest bearing deposits of $35.0 million and a decline in savings of $15.8 million. The bulk of the linked quarter increase in deposit balances occurred in March 2024. Total quarterly average deposits decreased $417.9 million, or 8.4%, in the year over year period, driven by declines in our average demand deposits of $183.3 million, and savings, NOW and money markets combined of $358.4 million.

Borrowings

As of March 31, 2024, we had $220.0 million in other short-term borrowings due to short-term FHLB advances, compared to $405.0 million at December 31, 2023, and $315.0 million as of March 31, 2023.

Non-GAAP Presentations

Management has disclosed in this earnings release certain non-GAAP financial measures to evaluate and measure our performance, including the presentation of adjusted net income, net interest income and net interest margin on a fully taxable equivalent basis, and our efficiency ratio calculations on a taxable equivalent basis. The net interest margin fully taxable equivalent is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Consistent with industry practice, management has disclosed the efficiency ratio including and excluding certain items, which is discussed in the noninterest expense presentation on page 7.

We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe these measures provide investors with information regarding balance sheet profitability, and we believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing, and comparing past, present and future periods.

These non-GAAP financial measures should not be considered as a substitute for GAAP financial measures, and we strongly encourage investors to review the GAAP financial measures included in this earnings release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this earnings release with other companies’ non-GAAP financial measures having the same or similar names. The tables beginning on page 17 provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.

Cautionary Note Regarding Forward-Looking Statements

**** This earnings release and statements by our management may contain forward-looking statements within the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by words such as “should,” “anticipate,” “expect,” “estimate,” “intend,” “believe,” “may,” “likely,” “will,” “forecast,” “project,” “looking forward,” “optimistic,” “hopeful,” “potential,” “progress,” “prospect,” “remain,” “deliver,” “continue,” “trend,” “momentum,” “remainder,” “beyond,” “and “near” or other statements that indicate future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the economic outlook, loan growth, deposit trends and funding, asset-quality trends, balance sheet growth, and building capital. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements, (1) the strength of the United States economy in general and the strength of the local economies in which we conduct our operations may be different than expected; (2) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (3) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action; (4) risks related to future acquisitions, if any, including execution and integration risks; (5) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on us; (6) changes in interest rates, which has and may continue to affect our deposit and funding costs, net income, prepayment 11

penalty income, mortgage banking income, and other future cash flows, or the market value of our assets, including our investment securities; (7) elevated inflation which causes adverse risk to the overall economy, and could indirectly pose challenges to our clients and to our business; and (8) the adverse effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics, war or terrorist activities, essential utility outages, deterioration in the global economy, instability in the credit markets, disruptions in our customers’ supply chains or disruption in transportation. Additional risks and uncertainties are contained in the “Risk Factors” and forward-looking statements disclosure in our most recent Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q. The inclusion of this forward-looking information should not be construed as a representation by us or any person that future events, plans, or expectations contemplated by us will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Conference Call

We will host a call on Thursday, April 18, 2024, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss our first quarter 2024 financial results. Investors may listen to our call via telephone by dialing 888-506-0062, using Entry Code: 259215. Investors should call into the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.

A replay of the call will be available until 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on April 25, 2024, by dialing 877-481-4010, using Conference ID: 50298. 12

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)


		(unaudited)
		March 31,		December 31,
	****	2024		2023
Assets
Cash and due from banks		$	48,841	$	55,534
Interest earning deposits with financial institutions			49,253		44,611
Cash and cash equivalents			98,094		100,145
Securities available-for-sale, at fair value			1,168,797		1,192,829
Federal Home Loan Bank Chicago (“FHLBC”) and Federal Reserve Bank Chicago (“FRBC”) stock			28,518		33,355
Loans held-for-sale			1,072		1,322
Loans			3,969,411		4,042,953
Less: allowance for credit losses on loans			44,113		44,264
Net loans			3,925,298		3,998,689
Premises and equipment, net			81,290		79,310
Other real estate owned			5,123		5,123
Mortgage servicing rights, at fair value			10,564		10,344
Goodwill			86,478		86,478
Core deposit intangible			10,637		11,217
Bank-owned life insurance (“BOLI”)			110,490		109,318
Deferred tax assets, net			31,699		31,077
Other assets			58,012		63,592
Total assets		$	5,616,072	$	5,722,799

Liabilities
Deposits:
Noninterest bearing demand		$	1,799,927	$	1,834,891
Interest bearing:
Savings, NOW, and money market			2,221,696		2,207,949
Time			586,652		527,906
Total deposits			4,608,275		4,570,746
Securities sold under repurchase agreements			33,546		26,470
Other short-term borrowings			220,000		405,000
Junior subordinated debentures			25,773		25,773
Subordinated debentures			59,403		59,382
Other liabilities			72,916		58,147
Total liabilities			5,019,913		5,145,518

Stockholders’ Equity
Common stock			44,908		44,705
Additional paid-in capital			203,129		202,223
Retained earnings			412,388		393,311
Accumulated other comprehensive loss			(63,361)		(62,781)
Treasury stock			(905)		(177)
Total stockholders’ equity			596,159		577,281
Total liabilities and stockholders’ equity		$	5,616,072	$	5,722,799

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except share data)


		(unaudited)
		Three Months Ended March 31,
	****	2024		****	2023		****
Interest and dividend income
Loans, including fees		$	62,673		$	57,210
Loans held-for-sale			14			12
Securities:
Taxable			8,092			10,735
Tax exempt			1,306			1,337
Dividends from FHLBC and FRBC stock			635			280
Interest bearing deposits with financial institutions			610			585
Total interest and dividend income			73,330			70,159
Interest expense
Savings, NOW, and money market deposits			4,037			1,149
Time deposits			4,041			664
Securities sold under repurchase agreements			86			9
Other short-term borrowings			4,557			2,345
Junior subordinated debentures			280			279
Subordinated debentures			546			546
Senior notes			-			994
Notes payable and other borrowings			-			87
Total interest expense			13,547			6,073
Net interest and dividend income			59,783			64,086
Provision for credit losses			3,500			3,501
Net interest and dividend income after provision for credit losses			56,283			60,585
Noninterest income
Wealth management			2,561			2,270
Service charges on deposits			2,415			2,424
Secondary mortgage fees			50			59
Mortgage servicing rights mark to market gain (loss)			94			(525)
Mortgage servicing income			488			516
Net gain on sales of mortgage loans			314			306
Securities gains (losses), net			1			(1,675)
Change in cash surrender value of BOLI			1,172			242
Card related income			2,376			2,244
Other income			1,030			1,489
Total noninterest income			10,501			7,350
Noninterest expense
Salaries and employee benefits			24,312			22,248
Occupancy, furniture and equipment			3,927			3,475
Computer and data processing			2,255			1,774
FDIC insurance			667			584
Net teller & bill paying			521			502
General bank insurance			309			305
Amortization of core deposit intangible			580			624
Advertising expense			192			142
Card related expense			1,277			1,216
Legal fees			226			319
Consulting & management fees			336			790
Other real estate expense, net			46			306
Other expense			3,593			3,637
Total noninterest expense			38,241			35,922
Income before income taxes			28,543			32,013
Provision for income taxes			7,231			8,406
Net income		$	21,312		$	23,607

Basic earnings per share		$	0.48		$	0.53
Diluted earnings per share			0.47			0.52
Dividends declared per share			0.05			0.05


Ending common shares outstanding	44,845,629	44,665,127
Weighted-average basic shares outstanding	44,758,559	44,619,118
Weighted-average diluted shares outstanding	45,523,884	45,316,598

Old Second Bancorp, Inc. and Subsidiaries

Quarterly Consolidated Average Balance

(In thousands, unaudited)


			2023												2024
Assets	****	1st Qtr		****	2nd Qtr		****	3rd Qtr		****	4th Qtr		****	1st Qtr
Cash and due from banks		$	55,140		$	56,191		$	57,279		$	57,723		$	54,533
Interest earning deposits with financial institutions			49,310			50,309			49,737			47,865			48,088
Cash and cash equivalents			104,450			106,500			107,016			105,588			102,621

Securities available-for-sale, at fair value			1,503,619			1,404,664			1,295,211			1,192,021			1,182,888
FHLBC and FRBC stock			24,905			34,029			35,954			34,371			31,800
Loans held-for-sale			813			1,150			1,641			1,709			746
Loans			3,931,679			4,039,052			4,009,218			4,014,771			4,018,631
Less: allowance for credit losses on loans			49,398			53,480			54,581			50,023			44,295
Net loans			3,882,281			3,985,572			3,954,637			3,964,748			3,974,336

Premises and equipment, net			72,649			72,903			74,707			78,472			80,493
Other real estate owned			1,508			1,132			472			2,004			5,123
Mortgage servicing rights, at fair value			11,127			10,741			11,066			11,317			10,455
Goodwill			86,477			86,477			86,477			86,477			86,477
Core deposit intangible			13,327			12,709			12,119			11,502			10,913
Bank-owned life insurance ("BOLI")			106,655			107,028			107,786			108,616			109,867
Deferred tax assets, net			42,237			37,774			39,072			42,754			31,323
Other assets			48,599			50,812			52,360			55,155			49,681
Total other assets			382,579			379,576			384,059			396,297			384,332
Total assets		$	5,898,647		$	5,911,491		$	5,778,518		$	5,694,734		$	5,676,723

Liabilities
Deposits:
Noninterest bearing demand		$	2,002,801		$	1,920,448		$	1,867,201		$	1,838,325		$	1,819,476
Interest bearing:
Savings, NOW, and money market			2,560,893			2,437,096			2,324,613			2,241,937			2,202,485
Time			434,655			436,524			466,250			497,472			558,463
Total deposits			4,998,349			4,794,068			4,658,064			4,577,734			4,580,424

Securities sold under repurchase agreements			31,080			25,575			24,945			28,526			30,061
Other short-term borrowings			200,833			402,527			427,174			390,652			332,198
Junior subordinated debentures			25,773			25,773			25,773			25,773			25,773
Subordinated debentures			59,308			59,329			59,350			59,372			59,393
Senior notes			44,599			44,134			-			-			-
Notes payable and other borrowings			5,400			-			-			-			-
Other liabilities			51,279			48,434			53,164			63,971			60,024
Total liabilities			5,416,621			5,399,840			5,248,470			5,146,028			5,087,873

Stockholders' equity
Common stock			44,705			44,705			44,705			44,705			44,787
Additional paid-in capital			201,397			200,590			201,344			201,824			202,688
Retained earnings			324,785			346,042			368,732			389,776			405,201
Accumulated other comprehensive loss			(86,736)			(78,940)			(84,167)			(87,358)			(63,365)
Treasury stock			(2,125)			(746)			(566)			(241)			(461)
Total stockholders' equity			482,026			511,651			530,048			548,706			588,850
Total liabilities and stockholders' equity		$	5,898,647		$	5,911,491		$	5,778,518		$	5,694,734		$	5,676,723

Total Earning Assets		$	5,510,326		$	5,529,204		$	5,391,761		$	5,290,737		$	5,282,153
Total Interest Bearing Liabilities			3,362,541			3,430,958			3,328,105			3,243,732			3,208,373

Old Second Bancorp, Inc. and Subsidiaries

Quarterly Consolidated Statements of Income

(In thousands, except per share data, unaudited)



	2023												2024
	1st Qtr		****	2nd Qtr		****	3rd Qtr		****	4th Qtr		****	1st Qtr
Interest and Dividend Income
Loans, including fees	$	57,210		$	61,561		$	62,665		$	62,751		$	62,673
Loans held-for-sale		12			19			29			31			14
Securities:
Taxable		10,735			9,930			8,946			8,329			8,092
Tax exempt		1,337			1,337			1,333			1,322			1,306
Dividends from FHLB and FRBC stock		280			396			597			647			635
Interest bearing deposits with financial institutions		585			643			659			616			610
Total interest and dividend income		70,159			73,886			74,229			73,696			73,330
Interest Expense
Savings, NOW, and money market deposits		1,149			1,742			2,558			3,312			4,037
Time deposits		664			1,156			1,982			2,834			4,041
Securities sold under repurchase agreements		9			7			27			50			86
Other short-term borrowings		2,345			5,160			5,840			5,429			4,557
Junior subordinated debentures		279			281			245			290			280
Subordinated debentures		546			546			547			546			546
Senior notes		994			1,414			-			-			-
Notes payable and other borrowings		87			-			-			-			-
Total interest expense		6,073			10,306			11,199			12,461			13,547
Net interest and dividend income		64,086			63,580			63,030			61,235			59,783
Provision for credit losses		3,501			2,000			3,000			8,000			3,500
Net interest and dividend income after provision for credit losses		60,585			61,580			60,030			53,235			56,283
Noninterest Income
Wealth management		2,270			2,458			2,475			2,600			2,561
Service charges on deposits		2,424			2,362			2,504			2,527			2,415
Secondary mortgage fees		59			76			66			58			50
Mortgage servicing rights mark to market (loss) gain		(525)			96			281			(1,277)			94
Mortgage servicing income		516			499			519			495			488
Net gain (loss) on sales of mortgage loans		306			398			407			366			314
Securities (losses) gains, net		(1,675)			(1,547)			(924)			(2)			1
Change in cash surrender value of BOLI		242			418			919			541			1,172
Card related income		2,244			2,690			2,606			2,511			2,376
Other income		1,489			773			1,024			910			1,030
Total noninterest income		7,350			8,223			9,877			8,729			10,501
Noninterest Expense
Salaries and employee benefits		22,248			21,798			23,115			21,405			24,312
Occupancy, furniture and equipment		3,475			3,639			3,506			3,817			3,927
Computer and data processing		1,774			1,290			1,922			2,291			2,255
FDIC insurance		584			794			744			583			667
Net teller & bill paying		502			515			534			564			521
General bank insurance		305			306			300			301			309
Amortization of core deposit intangible		624			618			616			603			580
Advertising expense		142			103			93			383			192
Card related expense		1,216			1,222			1,347			1,338			1,277
Legal fees		319			283			97			228			226
Consulting & management fees		790			520			549			556			336
Other real estate expense, net		306			(98)			(27)			218			46
Other expense		3,637			3,840			4,627			4,739			3,593
Total noninterest expense		35,922			34,830			37,423			37,026			38,241
Income before income taxes		32,013			34,973			32,484			24,938			28,543
Provision for income taxes		8,406			9,411			8,149			6,713			7,231
Net income	$	23,607		$	25,562		$	24,335		$	18,225		$	21,312

Basic earnings per share (GAAP)	$	0.53		$	0.57		$	0.55		$	0.40		$	0.48
Diluted earnings per share (GAAP)		0.52			0.56			0.54			0.40			0.47
Dividends paid per share		0.05			0.05			0.05			0.05			0.05

Reconciliation of Non-GAAP Financial Measures

The tables below provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the periods indicated. Dollar amounts below in thousands:


	Quarters Ended
	March 31,			December 31,		March 31,
	2024		****	2023		2023
Net Income
Income before income taxes (GAAP)	$	28,543		$	24,938	$	32,013
Pre-tax income adjustments:
Litigation related expenses		-			1,200		-
Losses/(gains) on branch sales, net		-			19		(306)
Adjusted net income before taxes		28,543			26,157		31,707
Taxes on adjusted net income		7,231			7,041		8,326
Adjusted net income (non-GAAP)	$	21,312		$	19,116	$	23,381

Basic earnings per share (GAAP)	$	0.48		$	0.40	$	0.53
Diluted earnings per share (GAAP)		0.47			0.40		0.52
Adjusted basic earnings per share excluding acquisition-related costs (non-GAAP)		0.48			0.43		0.52
Adjusted diluted earnings per share excluding acquisition-related costs (non-GAAP)		0.47			0.42		0.52


	Quarters Ended
	March 31,			December 31,			March 31,
	2024		****	2023			2023
Net Interest Margin
Interest income (GAAP)	$	73,330		$	73,696		$	70,159
Taxable-equivalent adjustment:
Loans		11			11			6
Securities		347			352			356
Interest income (TE)		73,688			74,059			70,521
Interest expense (GAAP)		13,547			12,461			6,073
Net interest income (TE)	$	60,141		$	61,598		$	64,448
Net interest income (GAAP)	$	59,783		$	61,235		$	64,086
Average interest earning assets	$	5,282,153		$	5,290,737		$	5,510,326
Net interest margin (TE)		4.58	%		4.62	%		4.74	%
Net interest margin (GAAP)		4.55	%		4.59	%		4.72	%


	GAAP									Non-GAAP
		Three Months Ended									Three Months Ended
	March 31,			December 31,			March 31,			March 31,			December 31,			March 31,
	2024			2023			2023			2024			2023			2023
Efficiency Ratio / Adjusted Efficiency Ratio

Noninterest expense	$	38,241		$	37,026		$	35,922		$	38,241		$	37,026		$	35,922
Less amortization of core deposit		580			603			624			580			603			624
Less other real estate expense, net		46			218			306			46			218			306
Less litigation related expense		N/A			N/A			N/A			-			1,200			-
Less losses/(gains) on branch sales, net		N/A			N/A			N/A			-			19			(306)
Noninterest expense less adjustments	$	37,615		$	36,205		$	34,992		$	37,615		$	34,986		$	35,298

Net interest income	$	59,783		$	61,235		$	64,086		$	59,783		$	61,235		$	64,086
Taxable-equivalent adjustment:
Loans		N/A			N/A			N/A			11			11			6
Securities		N/A			N/A			N/A			347			352			356
Net interest income including adjustments		59,783			61,235			64,086			60,141			61,598			64,448
Noninterest income		10,501			8,729			7,350			10,501			8,729			7,350
Less securities gains (losses)		1			(2)			(1,675)			1			(2)			(1,675)
Less MSRs mark to market gains (losses)		94			(1,277)			(525)			94			(1,277)			(525)
Taxable-equivalent adjustment:
Change in cash surrender value of BOLI		N/A			N/A			N/A			311			144			64
Noninterest income (excluding) / including adjustments		10,406			10,008			9,550			10,717			10,152			9,614

Net interest income including adjustments plus noninterest income (excluding) / including adjustments	$	70,189		$	71,243		$	73,636		$	70,858		$	71,750		$	74,062
Efficiency ratio / Adjusted efficiency ratio		53.59	%		50.82	%		47.52	%		53.09	%		48.76	%		47.66	%

N/A - Not applicable.


	Quarters Ended
	March 31,			December 31,			March 31,
	2024			2023			2023
Return on Average Tangible Common Equity Ratio

Net income (GAAP)	$	21,312		$	18,225		$	23,607

Income before income taxes (GAAP)	$	28,543		$	24,938		$	32,013
Pre-tax income adjustments:
Amortization of core deposit intangibles		580			603			624
Net income, excluding intangibles amortization, before taxes		29,123			25,541			32,637
Taxes on net income, excluding intangible amortization, before taxes		7,378			6,875			8,570
Net income, excluding intangibles amortization (non-GAAP)	$	21,745		$	18,666		$	24,067


Total Average Common Equity	$	588,850			548,706		$	482,026
Less Average goodwill and intangible assets		97,390			97,979			99,804
Average tangible common equity (non-GAAP)	$	491,460		$	450,727		$	382,222


Return on average common equity (GAAP)		14.56	%		13.18	%		19.86	%
Return on average tangible common equity (non-GAAP)		17.80	%		16.43	%		25.54	%

Exhibit 99.2


	Old Second Bancorp, Inc. Loan Portfolio Disclosures As of June 30, 2020

Loan Portfolio Composition Loan Portfolio Characteristics Balance Outstanding (000’s) $2,052,336 Total Commitment (000’s) $2,539,355 Average Loan Commitment $352,024 Number of Payment Deferrals /Modifications 449 Payment Modification Rate (% of Total Commitment)* 9.03% Loan Portfolio Characteristics • Lending focused on full relationship, small and middle market businesses • Well diversified by industry with minimal exposure to high risk industries • Repayment analysis based on primary operating cash flow, supported by secondary and tertiary repayment sources • Full global cash flow and sensitivity analysis performed on all relationships over $1 million in exposure • Dedicated Leasing, C&I, CRE, Healthcare and Professional Service lending teams Commercial & Industrial 28% Construction 6% CRE Investor 21% CRE Owner- Occupied Farm Land 13% 1% Residential Investor 3% Residential Owner-Occupied 5% HELOC 10% Leasing 5% Multifamily 8% Loan Type IL 81% CA 2% NY 2% WI 4% MI 2% MA 1% Other States 8% Geography* *Based on primary property collateral if available, otherwise borrower address. *Excludes $133.89 million in PPP loans

Commercial and Industrial (includes Leasing) Commercial and Industrial Portfolio Characteristics Balance Outstanding (000’s) $574,935 Total Commitment (000’s) $838,075 Average Loan Commitment $351,247 Number of Payment Deferrals /Modifications 164 Payment Modification Rate (% of Total Commitment)* 6.16%* Weighted Average Seasoning 3.50 years Commercial and Industrial Portfolio Characteristics • Lending focused on full relationship, small and middle market businesses • Well diversified by industry with limited exposure to Accommodation and Food Services and Entertainment industries • Repayment analysis based on primary operating cash flow, supported by secondary and tertiary repayment sources • Full global cash flow and sensitivity analysis performed on all relationships over $1 million in exposure • Dedicated Leasing, C&I, Healthcare and Professional Service lending teams • Modest exposure to syndicated or leveraged loans DuPage County (IL) 11% Kane County (IL) 26% Kendall County (IL) 2% Cook County (IL) 23% Will County (IL) 7% IL Other 2% CA 2% MA 3% MI 3% NY 6% TX 2% WI 2% Other States 11% Geography* *Based on primary property collateral if available, otherwise borrower address. Accomodation and Food Services 2% Agriculture 3% Health Care 8% Information and Finance 13% Manufacturing 18% Administration and Support 2% Construction 15% Other Services 2% Professional Services 6% Rental and Leasing 7% Retail Trade 4% Transportation and Warehousing 6% Wholesale Trade 13% Industry *Excludes $133.89 million in PPP loans


	CRE Owner-Occupied CRE Owner-Occupied Portfolio Characteristics Balance Outstanding (000’s) $343,982 Total Commitment (000’s) $357,453 Average Loan Commitment $549,928 Number of Payment Deferrals /Modifications 72 Payment Modification Rate (% of Total Commitment) 15.97% Weighted Average Seasoning 6.13 years Commercial and Industrial Portfolio Characteristics • Lending focused on full relationship, small and middle market businesses • Well diversified by industry with limited exposure to the Accommodation and Food Service and Entertainment industries • Repayment analysis based on primary operating cash flow, supported by secondary and tertiary repayment sources • Full global cash flow and sensitivity analysis performed on all relationships over $1 million in exposure • Dedicated C&I, Healthcare and Professional Service lending teams DuPage County (IL) 14% Kane County (IL) 28% Kendall County (IL) 5% Cook County (IL) 32% Will County (IL) 17% IL Other 2% Out of State 2% Geography* *Based on primary property collateral if available, otherwise borrower address. Accomodation and Food Services 3% Agriculture 3% Entertainment 7% Education 3% Health Care 9% Information and Finance 1% Manufacturing 10% Administration and Support 1% Construction 4% Other Services 23% Professional Services 4% Rental and Leasing 9% Retail Trade 18% Transportation and Warehousing 1% Wholesale Trade 3% Industry

CRE Owner-Occupied CRE Owner-Occupied Portfolio Characteristics Balance Outstanding (000’s) $343,982 Total Commitment (000’s) $357,453 Average Loan Commitment $549,928 Number of Payment Deferrals /Modifications 72 Payment Modification Rate (% of Total Commitment) 15.97% Weighted Average Seasoning 6.13 years Commercial and Industrial Portfolio Characteristics • Lending focused on full relationship, small and middle market businesses • Well diversified by industry with limited exposure to the Accommodation and Food Service and Entertainment industries • Repayment analysis based on primary operating cash flow, supported by secondary and tertiary repayment sources • Full global cash flow and sensitivity analysis performed on all relationships over $1 million in exposure • Dedicated C&I, Healthcare and Professional Service lending teams DuPage County (IL) 14% Kane County (IL) 28% Kendall County (IL) 5% Cook County (IL) 32% Will County (IL) 17% IL Other 2% Out of State 2% Geography* *Based on primary property collateral if available, otherwise borrower address. Accomodation and Food Services 3% Agriculture 3% Entertainment 7% Education 3% Health Care 9% Information and Finance 1% Manufacturing 10% Administration and Support 1% Construction 4% Other Services 23% Professional Services 4% Rental and Leasing 9% Retail Trade 18% Transportation and Warehousing 1% Wholesale Trade 3% Industry


	CRE Investor (includes Multifamily) CRE Investor Portfolio Characteristics Balance Outstanding (000’s) $723,235 Total Commitment (000’s) $735,069 Average Loan Commitment $1,287,336 Number of Payment Deferrals /Modifications 56 Payment Modification Rate (% of Total Commitment) 11.22% Weighted Average Seasoning 4.41 years CRE Investor Portfolio Characteristics • Lending focused on full relationship and strong sponsorship • Well diversified by property type with limited exposure to high-risk real estate sectors (Hotel, Restaurant, Recreational and “Big Box” Retail) • Repayment analysis based on strong net operating income, supported by secondary and tertiary repayment sources • Full global cash flow and sensitivity analysis performed on all relationships over $1 million in exposure • Secured by seasoned properties with stabilized cash flow • Dedicated CRE and Healthcare lending teams Hotel 2% Industrial 13% Medical Office 2% Mini Storage 2% Mixed-Use 3% Office 16% Restaurant 2% Retail 15% Senior Housing 14% Multifamily 27% National Drugstore Chain 4% CRE Type DuPage County (IL) 12% Kane County (IL) 8% Cook County (IL) 47% Will County (IL) 7% IL Other 5% WI 8% MI 3% OH 2% CA 2% Other States 6% Geography* *Based on primary property collateral if available, otherwise borrower address.

CRE Investor (includes Multifamily) CRE Investor Portfolio Characteristics Balance Outstanding (000’s) $723,235 Total Commitment (000’s) $735,069 Average Loan Commitment $1,287,336 Number of Payment Deferrals /Modifications 56 Payment Modification Rate (% of Total Commitment) 11.22% Weighted Average Seasoning 4.41 years CRE Investor Portfolio Characteristics • Lending focused on full relationship and strong sponsorship • Well diversified by property type with limited exposure to high-risk real estate sectors (Hotel, Restaurant, Recreational and “Big Box” Retail) • Repayment analysis based on strong net operating income, supported by secondary and tertiary repayment sources • Full global cash flow and sensitivity analysis performed on all relationships over $1 million in exposure • Secured by seasoned properties with stabilized cash flow • Dedicated CRE and Healthcare lending teams Hotel 2% Industrial 13% Medical Office 2% Mini Storage 2% Mixed-Use 3% Office 16% Restaurant 2% Retail 15% Senior Housing 14% Multifamily 27% National Drugstore Chain 4% CRE Type DuPage County (IL) 12% Kane County (IL) 8% Cook County (IL) 47% Will County (IL) 7% IL Other 5% WI 8% MI 3% OH 2% CA 2% Other States 6% Geography* *Based on primary property collateral if available, otherwise borrower address.