8-K

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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): July 17, 2024

(Exact name of registrant as specified in its charter)

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

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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:

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

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Item 2.02 Results of Operations and Financial Condition

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On July 17, 2024, Old Second Bancorp, Inc. (the “Company’s”) issued a press release announcing its financial results for the second quarter ended June 30, 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.

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Item 9.01 Financial Statements and Exhibits

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Exhibit No.	​	Description
99.1	​	Press Release of Old Second Bancorp, Inc. dated July 17, 2024
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99.2	​	Loan Portfolio Disclosures for Old Second Bancorp, Inc. dated June 30, 2024
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104	​	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

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2

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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.

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​	OLD SECOND BANCORP, INC.
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Dated: July 17, 2024	By:	/s/ Bradley S. Adams
​	​	Bradley S. Adams
​	​	Executive Vice President,
​	​	Chief Operating Officer and
​	​	Chief Financial Officer

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3

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Old Second Bancorp, Inc

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(NASDAQ:OSBC)		Exhibit 99.1
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Contact:	Bradley S. Adams	For Immediate Release
​	Chief Financial Officer	July 17, 2024
​	(630) 906-5484	​

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Old Second Bancorp, Inc. Reports Second Quarter 2024 Net Income of $21.9 Million,

or $0.48 per Diluted Share

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AURORA, IL, July 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 second quarter of 2024.  Our net income was $21.9 million, or $0.48 per diluted share, for the second quarter of 2024, compared to net income of $21.3 million, or $0.47 per diluted share, for the first quarter of 2024, and net income of $25.6 million, or $0.56 per diluted share, for the second quarter of 2023. Adjusted net income, a non-GAAP financial measure that excludes certain nonrecurring items, as applicable, was $21.0 million, or $0.46 per diluted share, for the second quarter of 2024, compared to $21.3 million, or $0.47 per diluted share, for the first quarter of 2024, and $25.6 million, or $0.56 per share, for the second quarter of 2023. The adjusting item impacting the second quarter of 2024 was an $893,000 death benefit related to BOLI; the adjusting item impacting the second quarter of 2023 results included $29,000 of pre-tax losses from branch sales.  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 $579,000 in the second quarter of 2024 compared to the first quarter of 2024. The increase was primarily due to a $626,000 increase in noninterest income and a $364,000 decrease in noninterest expense, partially offset by a $93,000 decrease in net interest and dividend income, a $250,000 increase in provision for credit losses, and a $68,000 increase in provision for income taxes. Net income decreased $3.7 million in the second quarter of 2024 compared to the second quarter of 2023, primarily due to a decrease in net interest income of $3.9 million year over year driven by a $3.2 million increase to interest expense as a result of higher interest rates offered on deposits, as well as a reduction in interest and dividend income as the securities portfolio decreased $162.0 million during the last twelve months. Also contributing to the decrease in net income compared to the prior year like quarter was an increase in provision for credit losses of $1.8 million.

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Operating Results

●	Second quarter 2024 net income was $21.9 million, reflecting a $579,000 increase from the first quarter of 2024, and a decrease of $3.7 million from the second quarter of 2023.  Adjusted net income, as defined above, was $21.0 million for the second quarter of 2024, a decrease of $314,000 from adjusted net income for the first quarter of 2024, and a decrease of $4.6 million from adjusted net income for the second quarter of 2023.
●	Net interest and dividend income was $59.7 million for the second quarter of 2024, reflecting a decrease of $93,000, or 0.2%, from the first quarter of 2024, and a decrease of $3.9 million, or 6.1%, from the second quarter of 2023.
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●	We recorded a net provision for credit losses of $3.8 million in the second quarter of 2024 compared to a net provision for credit losses of $3.5 million in the first quarter of 2024, and a net provision for credit losses of $2.0 million in the second quarter of 2023.
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●	Noninterest income was $11.1 million for the second quarter of 2024, an increase of $626,000, or 6.0%, compared to $10.5 million for the first quarter of 2024, and an increase of $2.9 million, or 35.3%, compared to $8.2 million for the second quarter of 2023.  An $893,000 death benefit on a BOLI contract was recorded in the second quarter of 2024, which did not occur in either comparative period, and $1.5 million of securities losses, net, was recorded in the second quarter of 2023; no security sales occurred in the second quarter of 2024.
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1

●	Noninterest expense was $37.9 million for the second quarter of 2024, a decrease of $364,000, or 1.0% compared to $38.2 million for the first quarter of 2024, and an increase of $3.0 million, or 8.7%, compared to $34.8 million for the second quarter of 2023.
●	We had a provision for income tax of $7.3 million for the second quarter of 2024, compared to a provision for income tax of $7.2 million for the first quarter of 2024 and a provision of $9.4 million for the second quarter of 2023. The effective tax rate for each of the periods presented was 25.0%, 25.3%, and 26.9%, respectively.
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●	On July 16, 2024, our Board of Directors declared a cash dividend of $0.05 per share of common stock, payable on August 5, 2024, to stockholders of record as of July 26, 2024.
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Financial Highlights

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​	​	​	​	​	​	​	​	​	​	​
​	​	Quarters Ended								​
(Dollars in thousands)	​	June 30,		​	March 31,		​	June 30,		​
​	​	2024		​	2024		​	2023		​
Balance sheet summary	​	​	​	​	​	​	​	​	​	​
Total assets	​	$	5,662,700	​	$	5,616,072	​	$	5,883,942	​
Total securities available-for-sale	​	​	1,173,661	​	​	1,168,797	​	​	1,335,622	​
Total loans	​	​	3,976,595	​	​	3,969,411	​	​	4,015,525	​
Total deposits	​	​	4,521,728	​	​	4,608,275	​	​	4,717,582	​
Total liabilities	​	​	5,043,365	​	​	5,019,913	​	​	5,369,987	​
Total equity	​	​	619,335	​	​	596,159	​	​	513,955	​
​	​	​	​	​	​	​	​	​	​	​
Total tangible assets	​	$	5,566,159	​	$	5,518,957	​	$	5,785,028	​
Total tangible equity	​	​	522,794	​	​	499,044	​	​	415,041	​
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Income statement summary	​	​	​	​	​	​	​	​	​	​
Net interest income	​	$	59,690	​	$	59,783	​	$	63,580	​
Provision for credit losses	​	​	3,750	​	​	3,500	​	​	2,000	​
Noninterest income	​	​	11,127	​	​	10,501	​	​	8,223	​
Noninterest expense	​	​	37,877	​	​	38,241	​	​	34,830	​
Net income	​	​	21,891	​	​	21,312	​	​	25,562	​
Effective tax rate	​	​	25.01	%	​	25.33	%	​	26.91	%
​	​	​	​	​	​	​	​	​	​	​
Profitability ratios	​	​	​	​	​	​	​	​	​	​
Return on average assets (ROAA)	​	​	1.57	%	​	1.51	%	​	1.73	%
Return on average equity (ROAE)	​	​	14.55	​	​	14.56	​	​	20.04	​
Net interest margin (tax-equivalent)	​	​	4.63	​	​	4.58	​	​	4.64	​
Efficiency ratio	​	​	53.29	​	​	53.59	​	​	46.84	​
Return on average tangible common equity (ROATCE)	​	​	17.66	​	​	17.80	​	​	25.30	​
Tangible common equity to tangible assets (TCE/TA)	​	​	9.39	​	​	9.04	​	​	7.17	​
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Per share data	​	​	​	​	​	​	​	​	​	​
Diluted earnings per share	​	$	0.48	​	$	0.47	​	$	0.56	​
Tangible book value per share	​	​	11.66	​	​	11.13	​	​	9.29	​
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Company capital ratios^1^	​	​	​	​	​	​	​	​	​	​
Common equity tier 1 capital ratio	​	​	12.41	%	​	12.02	%	​	10.29	%
Tier 1 risk-based capital ratio	​	​	12.94	​	​	12.55	​	​	10.80	​
Total risk-based capital ratio	​	​	15.12	​	​	14.79	​	​	13.16	​
Tier 1 leverage ratio	​	​	10.96	​	​	10.47	​	​	8.96	​
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Bank capital ratios ^1, 2^	​	​	​	​	​	​	​	​	​	​
Common equity tier 1 capital ratio	​	​	13.50	%	​	13.06	%	​	11.70	%
Tier 1 risk-based capital ratio	​	​	13.50	​	​	13.06	​	​	11.70	​
Total risk-based capital ratio	​	​	14.42	​	​	14.03	​	​	12.83	​
Tier 1 leverage ratio	​	​	11.43	​	​	10.89	​	​	9.70	​

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^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.

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^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. 2

Chairman, President and Chief Executive Officer Jim Eccher said “Old Second reported strong results in the second quarter with exceptional profitability and significant improvement in asset quality metrics. We are reaching resolution on a number of problem loans identified in prior periods and continue to monitor trends very closely. Nonperforming and classified assets at Old Second are at their lowest levels since year end 2022 and we expect further improvement this year. Our industry continues to experience significant stress in a number of real estate lending verticals, but I believe Old Second has been proactive in identifying and addressing potential problems. The rest of the bank continues to perform well with return on average assets and return on average tangible common equity at 1.57% and 17.66%, respectively, and the efficiency ratio is at 53.29%. The net interest margin increased by five basis points this quarter to a very strong 4.63% and our tangible book value per share increased by 19% linked quarter annualized and 26% year over year.  Loan growth has been tepid through the second quarter, but we are optimistic trends are improving based on recent activity and the current strength of our pipelines. Our focus remains on compounding tangible book value and maintaining strong returns on equity. We believe this level of performance is sustainable in this environment and the balance sheet remains exceptionally well positioned to capitalize on growth opportunities that may come our way in the near future.”

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Asset Quality & Earning Assets

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●	Nonperforming loans, comprised of nonaccrual loans plus loans past due 90 days or more and still accruing, totaled $46.9 million at June 30, 2024, $65.1 million at March 31, 2024, and $61.2 million at June 30, 2023.  Nonperforming loans, as a percent of total loans, were 1.2% at June 30, 2024, 1.6% at March 31, 2024, and 1.5% at June 30, 2023.  The decrease in the second quarter of 2024 is driven by note sales and payoffs during the quarter, as well as charge-offs of $5.9 million on six loans, a $3.4 million transfer of two related loans to other real estate owned, and two non-performing loan upgrades with an aggregate balance of $2.2 million.
●	Total loans were $3.98 billion at June 30, 2024, reflecting an increase of $7.2 million compared to March 31, 2024, and a decrease of $38.9 million compared to June 30, 2023. The decrease year over year was largely driven by the declines in commercial, commercial real estate-investor and commercial real estate-owner occupied portfolios.  Average loans (including loans held-for-sale) for the second quarter of 2024 totaled $3.96 billion, reflecting a decrease of $60.9 million from the first quarter of 2024 and a decrease of $81.7 million from the second quarter of 2023.
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●	Available-for-sale securities totaled $1.17 billion at June 30, 2024 and March 31, 2024, compared to $1.34 billion at June 30, 2023.  The unrealized mark to market loss on securities totaled $82.6 million as of June 30, 2024, compared to $85.0 million as of March 31, 2024, and $112.4 million as of June 30, 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 June 30, 2024, we had security purchases of $142.2 million, security maturities of $95.0 million, and paydowns of $44.0 million, compared to security purchases of $15.7 million, security maturities of $2.0 million, paydowns of $30.7 million, and sales of $5.3 million during the quarter ended March 31, 2024, which resulted in net realized gains of $1,000.  During the quarter ended June 30, 2023, we had no security purchases, $36.3 million of security paydowns, calls and maturities, and security sales of $74.0 million, which resulted in net realized losses of $1.5 million.  We may continue to buy and sell strategically identified securities as opportunities arise.
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Net Interest Income

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Analysis of Average Balances,
Tax Equivalent Income / Expense and Rates
(Dollars in thousands - unaudited)
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​	​	Quarters Ended
​	​	June 30, 2024							​	March 31, 2024							​	June 30, 2023
​	​	Average		​	Income /		​	Rate	​	Average		​	Income /		​	Rate	​	Average		​	Income /		​	Rate
​	​	Balance		​	Expense		​	%	​	Balance		​	Expense		​	%	​	Balance		​	Expense		​	%
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest earning deposits with financial institutions	​	$	50,740	​	$	625	​	4.95	​	$	48,088	​	$	610	​	5.10	​	$	50,309	​	$	643	​	5.13
Securities:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Taxable	​	​	1,016,187	​	​	8,552	​	3.38	​	​	1,016,112	​	​	8,092	​	3.20	​	​	1,231,994	​	​	9,930	​	3.23
Non-taxable (TE)^1^	​	​	163,243	​	​	1,636	​	4.03	​	​	166,776	​	​	1,653	​	3.99	​	​	172,670	​	​	1,692	​	3.93
Total securities (TE)^1^	​	​	1,179,430	​	​	10,188	​	3.47	​	​	1,182,888	​	​	9,745	​	3.31	​	​	1,404,664	​	​	11,622	​	3.32
FHLBC and FRBC Stock	​	​	27,574	​	​	584	​	8.52	​	​	31,800	​	​	635	​	8.03	​	​	34,029	​	​	396	​	4.67
Loans and loans held-for-sale^1, 2^	​	​	3,958,504	​	​	62,180	​	6.32	​	​	4,019,377	​	​	62,698	​	6.27	​	​	4,040,202	​	​	61,591	​	6.11
Total interest earning assets	​	​	5,216,248	​	​	73,577	​	5.67	​	​	5,282,153	​	​	73,688	​	5.61	​	​	5,529,204	​	​	74,252	​	5.39
Cash and due from banks	​	​	54,286	​	​	-	​	-	​	​	54,533	​	​	-	​	-	​	​	56,191	​	​	-	​	-
Allowance for credit losses on loans	​	​	(43,468)	​	​	-	​	-	​	​	(44,295)	​	​	-	​	-	​	​	(53,480)	​	​	-	​	-
Other noninterest bearing assets	​	​	388,392	​	​	-	​	-	​	​	384,332	​	​	-	​	-	​	​	379,576	​	​	-	​	-
Total assets	​	$	5,615,458	​	​	​	​	​	​	$	5,676,723	​	​	​	​	​	​	$	5,911,491	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities and Stockholders' Equity	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
NOW accounts	​	$	570,523	​	$	639	​	0.45	​	$	553,844	​	$	829	​	0.60	​	$	600,957	​	$	312	​	0.21
Money market accounts	​	​	691,214	​	​	2,915	​	1.70	​	​	689,996	​	​	2,575	​	1.50	​	​	762,967	​	​	1,245	​	0.65
Savings accounts	​	​	934,161	​	​	763	​	0.33	​	​	958,645	​	​	633	​	0.27	​	​	1,073,172	​	​	185	​	0.07
Time deposits	​	​	610,705	​	​	4,961	​	3.27	​	​	558,463	​	​	4,041	​	2.91	​	​	436,524	​	​	1,156	​	1.06
Interest bearing deposits	​	​	2,806,603	​	​	9,278	​	1.33	​	​	2,760,948	​	​	8,078	​	1.18	​	​	2,873,620	​	​	2,898	​	0.40
Securities sold under repurchase agreements	​	​	37,430	​	​	83	​	0.89	​	​	30,061	​	​	86	​	1.15	​	​	25,575	​	​	7	​	0.11
Other short-term borrowings	​	​	242,912	​	​	3,338	​	5.53	​	​	332,198	​	​	4,557	​	5.52	​	​	402,527	​	​	5,160	​	5.14
Junior subordinated debentures	​	​	25,773	​	​	288	​	4.49	​	​	25,773	​	​	280	​	4.37	​	​	25,773	​	​	281	​	4.37
Subordinated debentures	​	​	59,414	​	​	546	​	3.70	​	​	59,393	​	​	546	​	3.70	​	​	59,329	​	​	546	​	3.69
Senior notes	​	​	-	​	​	-	​	-	​	​	-	​	​	-	​	-	​	​	44,134	​	​	1,414	​	12.85
Notes payable and other borrowings	​	​	-	​	​	-	​	-	​	​	-	​	​	-	​	-	​	​	-	​	​	-	​	-
Total interest bearing liabilities	​	​	3,172,132	​	​	13,533	​	1.72	​	​	3,208,373	​	​	13,547	​	1.70	​	​	3,430,958	​	​	10,306	​	1.20
Noninterest bearing deposits	​	​	1,769,543	​	​	-	​	-	​	​	1,819,476	​	​	-	​	-	​	​	1,920,448	​	​	-	​	-
Other liabilities	​	​	68,530	​	​	-	​	-	​	​	60,024	​	​	-	​	-	​	​	48,434	​	​	-	​	-
Stockholders' equity	​	​	605,253	​	​	-	​	-	​	​	588,850	​	​	-	​	-	​	​	511,651	​	​	-	​	-
Total liabilities and stockholders' equity	​	$	5,615,458	​	​	​	​	​	​	$	5,676,723	​	​	​	​	​	​	$	5,911,491	​	​	​	​	​
Net interest income (GAAP)	​	​	​	​	$	59,690	​	​	​	​	​	​	$	59,783	​	​	​	​	​	​	$	63,580	​	​
Net interest margin (GAAP)	​	​	​	​	​	​	​	4.60	​	​	​	​	​	​	​	4.55	​	​	​	​	​	​	​	4.61
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net interest income (TE)^1^	​	​	​	​	$	60,044	​	​	​	​	​	​	$	60,141	​	​	​	​	​	​	$	63,946	​	​
Net interest margin (TE)^1^	​	​	​	​	​	​	​	4.63	​	​	​	​	​	​	​	4.58	​	​	​	​	​	​	​	4.64
Interest bearing liabilities to earning assets	​	​	60.81	%	​	​	​	​	​	​	60.74	%	​	​	​	​	​	​	62.05	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

^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 $936,000 for the second quarter of 2024, loan fee expense of $867,000 for the first quarter of 2024, and loan fee expense of $242,000 for the second 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 and taxable securities portfolios. In addition, FHLB dividend rates 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.

​ 4

The year over year increase of 28 basis points on interest earning assets was primarily driven by increases to benchmark interest rates over the past twelve months, primarily impacting variable rate loans. Increases to market rates also impacted securities available for sale income during the quarter ended June 30, 2024. Average balances of securities available for sale decreased $225.2 million in the second quarter of 2024 compared to the prior year like quarter, but the tax equivalent yield on the securities available for sale portfolio increased fifteen basis points year over year due to variable security rate resets.

Average balances of interest-bearing deposit accounts have increased steadily since the first quarter of 2024 through the second quarter of 2024, from $2.76 billion to $2.81 billion, as NOW and money market account average balances increased as well as time deposits average balance increases due to CD rate specials. The increase in average balances of interest-bearing deposit accounts was partially offset by reductions in savings accounts 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 133 basis points for the quarter ended June 30, 2024, from 118 basis points for the quarter ended March 31, 2024, and from 40 basis points for the quarter ended June 30, 2023. A 20 basis point increase in the cost of money market funds for the quarter ended June 30, 2024 compared to the prior linked quarter, and a 105 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. The increase in transactional account average balances for the linked quarter were slightly offset by a 15 basis point decrease on NOW accounts driven by a large commercial deposit customer moving into an off-balance sheet sweep product, which reduced the overall rates paid on exception priced NOW accounts. Average rates paid on time deposits for the quarter ended June 30, 2024 increased by 36 basis points and 221 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 second quarter of 2024, compared to the first quarter of 2024, primarily due to the $89.3 million decrease in average other short-term borrowings stemming from a decrease in average FHLB advances over the prior quarter. The decrease of $159.6 million year over year of average FHLB advances was based on daily liquidity needs, and was the primary driver of the $1.8 million decrease to interest expense on 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.

Our net interest margin (GAAP) increased five basis points to 4.60% for the second quarter of 2024, compared to 4.55% for the first quarter of 2024, and decreased one basis point compared to 4.61% for the second quarter of 2023.  Our net interest margin (TE) increased five basis points to 4.63% for the second quarter of 2024, compared to 4.58% for the first quarter of 2024, and decreased one basis point compared to 4.64% for the second quarter of 2023.  The increase in the second quarter of 2024, compared to the prior quarter, was driven by market rates as well as the composition of assets and liabilities as interest income and expense remained relatively flat compared to the prior quarter while there was a $65.9 million reduction in interest earning assets. Matured securities were replaced with higher yielding positions and the decrease in average loans was primarily driven by lower yielding or nonaccrual credits. Higher deposit expense was offset by lower borrowing expense due to a decline in average other short-term borrowing. The decrease in the second 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 deposits. 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.

​ 5

​

Noninterest Income

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	2nd Quarter 2024			​
Noninterest Income	​	Three Months Ended								​	Percent Change From			​
(Dollars in thousands)	​	June 30,		​	March 31,		​	June 30,		​	March 31,	​	June 30,	​
​		2024		****	2024		****	2023		****	2024	****	2023
Wealth management	​	$	2,779	​	$	2,561	​	$	2,458	​	8.5	​	13.1	​
Service charges on deposits	​	​	2,508	​	​	2,415	​	​	2,362	​	3.9	​	6.2	​
Residential mortgage banking revenue	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Secondary mortgage fees	​	​	65	​	​	50	​	​	76	​	30.0	​	(14.5)	​
MSRs mark to market (loss) gain	​	​	(238)	​	​	94	​	​	96	​	(353.2)	​	(347.9)	​
Mortgage servicing income	​	​	513	​	​	488	​	​	499	​	5.1	​	2.8	​
Net gain on sales of mortgage loans	​	​	468	​	​	314	​	​	398	​	49.0	​	17.6	​
Total residential mortgage banking revenue	​	​	808	​	​	946	​	​	1,069	​	14.6	​	(24.4)	​
Securities gains (losses), net	​	​	-	​	​	1	​	​	(1,547)	​	100.0	​	100.0	​
Change in cash surrender value of BOLI	​	​	820	​	​	1,172	​	​	418	​	(30.0)	​	96.2	​
Death benefit realized on BOLI	​	​	893	​	​	-	​	​	-	​	N/M	​	N/M	​
Card related income	​	​	2,577	​	​	2,376	​	​	2,690	​	8.5	​	(4.2)	​
Other income	​	​	742	​	​	1,030	​	​	773	​	(28.0)	​	(4.0)	​
Total noninterest income	​	$	11,127	​	$	10,501	​	$	8,223	​	6.0	​	35.3	​

​

N/M - Not meaningful.

​

Noninterest income increased $626,000, or 5.96%, in the second quarter of 2024, compared to the first quarter of 2024, and increased $2.9 million, or 35.3%, compared to the second quarter of 2023.  The increase from the first quarter of 2024 was primarily driven by a $218,000 increase in wealth management income, an $893,000 death benefit realized on BOLI, and a $201,000 increase in card related income. Partially offsetting the increase in noninterest income from the prior quarter was a $138,000 decrease in residential mortgage banking revenue primarily due to a decrease of $332,000 in MSRs mark to market valuation, and a $352,000 decrease in the cash surrender value of BOLI, both of which were due to market interest rate changes, while MSRs were also impacted by a slight increase in prepayment speeds in the second quarter. Also offsetting the increase in noninterest income from the prior quarter was a $288,000 decrease in other income primarily due to a $172,000 incentive related to check order volumes received in the first quarter of 2024.

The increase in noninterest income of $2.9 million in the second quarter of 2024, compared to the second quarter of 2023, is primarily due to a $321,000 increase in wealth management income, a $146,000 increase in service charges on deposits, no security sales activity in the second quarter of 2024 compared to losses on the sale of securities of $1.5 million in the second quarter of 2023, a $402,000 increase in the cash surrender value of BOLI due to changes in market interest rates, and an $893,000 death benefit realized on BOLI. These increases were partially offset by a $261,000 decrease in residential mortgage banking revenue mainly due to a decrease of $334,000 in MSRs mark to market valuation, and a $113,000 decrease in card related income.

​ 6

Noninterest Expense

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	2nd Quarter 2024			​
Noninterest Expense	​	Three Months Ended								​	Percent Change From			​
(Dollars in thousands)	​	June 30,		​	March 31,		​	June 30,		​	March 31,	​	June 30,	​
​		2024		****	2024		****	2023		****	2024	****	2023
Salaries	​	$	17,997	​	$	17,647	​	$	16,310	​	2.0	​	10.3	​
Officers' incentive	​	​	1,482	​	​	2,148	​	​	2,397	​	(31.0)	​	(38.2)	​
Benefits and other	​	​	3,945	​	​	4,517	​	​	3,091	​	(12.7)	​	27.6	​
Total salaries and employee benefits	​	​	23,424	​	​	24,312	​	​	21,798	​	(3.7)	​	7.5	​
Occupancy, furniture and equipment expense	​	​	3,899	​	​	3,927	​	​	3,639	​	(0.7)	​	7.1	​
Computer and data processing	​	​	2,184	​	​	2,255	​	​	1,290	​	(3.1)	​	69.3	​
FDIC insurance	​	​	616	​	​	667	​	​	794	​	(7.6)	​	(22.4)	​
Net teller & bill paying	​	​	578	​	​	521	​	​	515	​	10.9	​	12.2	​
General bank insurance	​	​	312	​	​	309	​	​	306	​	1.0	​	2.0	​
Amortization of core deposit intangible asset	​	​	574	​	​	580	​	​	618	​	(1.0)	​	(7.1)	​
Advertising expense	​	​	472	​	​	192	​	​	103	​	145.8	​	358.3	​
Card related expense	​	​	1,323	​	​	1,277	​	​	1,222	​	3.6	​	8.3	​
Legal fees	​	​	238	​	​	226	​	​	283	​	5.3	​	(15.9)	​
Consulting & management fees	​	​	797	​	​	336	​	​	520	​	137.2	​	53.3	​
Other real estate owned expense, net	​	​	(87)	​	​	46	​	​	(98)	​	(289.1)	​	(11.2)	​
Other expense	​	​	3,547	​	​	3,593	​	​	3,840	​	(1.3)	​	(7.6)	​
Total noninterest expense	​	$	37,877	​	$	38,241	​	$	34,830	​	(1.0)	​	8.7	​
Efficiency ratio (GAAP)^1^	​	​	53.29	%	​	53.59	%	​	46.84	%	​	​	​	​
Adjusted efficiency ratio (non-GAAP)^2^	​	​	52.68	%	​	53.09	%	​	46.49	%	​	​	​	​

​

^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, death benefit realized on BOLI, 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, death benefit realized on BOLI, 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 second quarter of 2024 decreased $364,000, or 1.0%, compared to the first quarter of 2024, and increased $3.0 million, or 8.7%, compared to the second quarter of 2023.  The decrease in the second quarter of 2024 compared to the first quarter of 2024 was attributable to a $888,000 decrease in salaries and employee benefits, with decreases 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 decrease in the second quarter of 2024 was a $71,000 decrease in computer and data processing expenses, a $51,000 decrease in FDIC insurance, and a $133,000 reduction in other real estate owned expense, net, as a gain of $259,000 was recorded on an OREO sale in the second quarter of 2024. Partially offsetting the decreases in noninterest expense in the second quarter of 2024 compared to the first quarter of 2024 was a $57,000 increase in net teller & bill paying expenses, a $280,000 increase in advertising expense primarily due to a new overdraft disclosure mailed to retail deposit customers, and a $461,000 increase in consulting & management fees primarily driven by ongoing systems projects and a deposit compliance matter.

The year over year increase in noninterest expense is primarily attributable to a $1.6 million increase in salaries and employee benefits, primarily due to increases in annual base salary rates, restricted stock expense, and deferred employee compensation due to market interest rate changes.  Also contributing to the increase was a $260,000 increase in occupancy, furniture and equipment due to facilities improvements year over year, an $894,000 increase in computer and data processing primarily due to credits from our core data provider in the prior year period, a $369,000 increase in advertising expense, a $101,000 increase in card related expense, and a $277,000 increase in consulting & management fees. Partially offsetting the increases in noninterest expense in the second quarter of 2024, compared to the second quarter of 2023, was a $178,000 decrease in FDIC insurance, a $45,000 decrease in legal fees, and a $293,000 decrease in other expenses. 7

Earning Assets

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	June 30, 2024			​
Loans	​	As of								​	Percent Change From			​
(Dollars in thousands)	​	June 30,		​	March 31,		​	June 30,		​	March 31,	​	June 30,	​
​		2024			2024			2023			2024	****	2023
Commercial	​	$	809,443	​	$	796,552	​	$	820,027	​	1.6	​	(1.3)	​
Leases	​	​	452,957	​	​	425,615	​	​	314,919	​	6.4	​	43.8	​
Commercial real estate – investor	​	​	1,014,345	​	​	1,018,382	​	​	1,080,073	​	(0.4)	​	(6.1)	​
Commercial real estate – owner occupied	​	​	745,938	​	​	782,603	​	​	824,277	​	(4.7)	​	(9.5)	​
Construction	​	​	185,634	​	​	169,174	​	​	189,058	​	9.7	​	(1.8)	​
Residential real estate – investor	​	​	50,371	​	​	51,522	​	​	55,935	​	(2.2)	​	(9.9)	​
Residential real estate – owner occupied	​	​	218,974	​	​	220,223	​	​	218,205	​	(0.6)	​	0.4	​
Multifamily	​	​	388,743	​	​	387,479	​	​	383,184	​	0.3	​	1.5	​
HELOC	​	​	99,037	​	​	98,762	​	​	102,058	​	0.3	​	(3.0)	​
Other^1^	​	​	11,153	​	​	19,099	​	​	27,789	​	(41.6)	​	(59.9)	​
Total loans	​	$	3,976,595	​	$	3,969,411	​	$	4,015,525	​	0.2	​	(1.0)	​

​

^1^Other class includes consumer loans and overdrafts.

​

Total loans increased by $7.2 million at June 30, 2024, compared to March 31, 2024, and decreased $38.9 million for the year over year period.  The increase in total loans in the second quarter of 2024 compared to the prior linked quarter was due to increased originations over the second quarter.  The year over year reduction in loans is primarily due to $59.4 million of payoffs on seven larger loans, partially offset by a slower pace of originations over the past twelve months due to the higher interest rate environment. Increases were noted in the leases segment in the current quarter compared to the prior linked quarter and compared to the prior year like period primarily due to an expansion of this product line over the past year.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	June 30, 2024
Securities	​	As of								​	Percent Change From
(Dollars in thousands)	​	June 30,		​	March 31,		​	June 30,		​	March 31,	​	June 30,
​	****	2024		****	2024		****	2023			2024	****	2023
Securities available-for-sale, at fair value	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. Treasury	​	$	191,274	​	$	171,000	​	$	214,613	​	11.9	​	(10.9)
U.S. government agencies	​	​	37,298	​	​	56,979	​	​	55,981	​	(34.5)	​	(33.4)
U.S. government agency mortgage-backed	​	​	96,872	​	​	101,075	​	​	115,140	​	(4.2)	​	(15.9)
States and political subdivisions	​	​	220,265	​	​	222,742	​	​	227,599	​	(1.1)	​	(3.2)
Corporate bonds	​	​	-	​	​	-	​	​	4,882	​	-	​	(100.0)
Collateralized mortgage obligations	​	​	386,055	​	​	379,603	​	​	407,495	​	1.7	​	(5.3)
Asset-backed securities	​	​	64,877	​	​	66,707	​	​	136,254	​	(2.7)	​	(52.4)
Collateralized loan obligations	​	​	177,020	​	​	170,691	​	​	173,658	​	3.7	​	1.9
Total securities available-for-sale	​	$	1,173,661	​	$	1,168,797	​	$	1,335,622	​	0.4	​	(12.1)
​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Our securities available-for-sale portfolio totaled $1.17 billion as of June 30, 2024, reflecting no material change from March 31, 2024, and a decrease of $162.0 million since June 30, 2023. The portfolio’s increase of $4.9 million in the second quarter of 2024, compared to the prior quarter-end, was due to purchases of $142.2 million, primarily consisting of U.S. Treasury, collateralized mortgage obligations and collateralized loan obligations, partially offset by $95.0 million in maturities and $44.0 million in paydowns. Net unrealized losses at June 30, 2024 were $82.6 million, compared to $85.0 million at March 31, 2024 and $112.4 million at June 30, 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.

​ 8

Asset Quality

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	June 30, 2024
Nonperforming assets	​	As of								​	Percent Change From
(Dollars in thousands)	​	June 30,		​	March 31,		​	June 30,		​	March 31,	​	June 30,
​		2024		****	2024		****	2023		****	2024	​	2023
Nonaccrual loans	​	$	41,957	​	$	64,324	​	$	60,925	​	(34.8)	​	(31.1)
Loans past due 90 days or more and still accruing interest	​		4,909	​		789	​		308	​	522.2	​	N/M
Total nonperforming loans	​		46,866	​		65,113	​		61,233	​	(28.0)	​	(23.5)
Other real estate owned	​		6,920	​		5,123	​		761	​	35.1	​	809.3
Total nonperforming assets	​	$	53,786	​	$	70,236	​	$	61,994	​	(23.4)	​	(13.2)
​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
30-89 days past due loans and still accruing interest	​	$	16,728	​	$	21,183	​	$	12,449	​	​	​	​
Nonaccrual loans to total loans	​	​	1.1	%	​	1.6	%	​	1.5	%	​	​	​
Nonperforming loans to total loans	​	​	1.2	%	​	1.6	%	​	1.5	%	​	​	​
Nonperforming assets to total loans plus OREO	​	​	1.4	%	​	1.8	%	​	1.5	%	​	​	​
Purchased credit-deteriorated loans to total loans	​	​	0.8	%	​	1.1	%	​	1.6	%	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance for credit losses	​	$	42,269	​	$	44,113	​	$	55,314	​	​	​	​
Allowance for credit losses to total loans	​	​	1.1	%	​	1.1	%	​	1.4	%	​	​	​
Allowance for credit losses to nonaccrual loans	​	​	100.7	%	​	68.6	%	​	90.8	%	​	​	​

​

N/M - Not meaningful.

​

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 $30.4 million, net of purchase accounting adjustments, at June 30, 2024.  PCD loans that meet the definition of nonperforming loans are included in our nonperforming disclosures.  Nonperforming loans to total loans was 1.2% as of June 30, 2024, 1.6% as of March 31, 2024, and 1.5% as of June 30, 2023. Nonperforming assets to total loans plus OREO was 1.4% as of June 30, 2024, 1.8% as of March 31, 2024, and 1.5% as of June 30, 2023. Our allowance for credit losses to total loans was 1.1% as of June 30, 2024 and March 31, 2024, and 1.4% as of June 30, 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.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	June 30, 2024			​
Classified loans	​	As of								​	Percent Change From			​
(Dollars in thousands)	​	June 30,		​	March 31,		​	June 30,		​	March 31,	​	June 30,	​
​	****	2024		****	2024		****	2023			2024	****	2023	​
Commercial	​	$	19,142	​	$	15,243	​	$	22,245	​	25.6	​	(13.9)	​
Leases	​	​	284	​	​	595	​	​	974	​	(52.3)	​	(70.8)	​
Commercial real estate – investor	​	​	36,939	​	​	43,154	​	​	57,041	​	(14.4)	​	(35.2)	​
Commercial real estate – owner occupied	​	​	48,387	​	​	61,267	​	​	38,495	​	(21.0)	​	25.7	​
Construction	​	​	5,740	​	​	7,119	​	​	116	​	(19.4)	​	N/M	​
Residential real estate – investor	​	​	1,343	​	​	1,299	​	​	1,714	​	3.4	​	(21.6)	​
Residential real estate – owner occupied	​	​	2,734	​	​	3,168	​	​	3,660	​	(13.7)	​	(25.3)	​
Multifamily	​	​	6,810	​	​	1,959	​	​	1,191	​	247.6	​	471.8	​
HELOC	​	​	1,025	​	​	1,648	​	​	2,152	​	(37.8)	​	(52.4)	​
Other^1^	​	​	1	​	​	-	​	​	-	​	N/M	​	N/M	​
Total classified loans	​	$	122,405	​	$	135,452	​	$	127,588	​	(9.6)	​	(4.1)	​

​

N/M - Not meaningful.

​

^1^Other class includes consumer loans and overdrafts.

​

​ 9

Classified loans as of June 30, 2024 decreased by $13.0 million from March 31, 2024, and decreased by $5.2 million from June 30, 2023. The net decrease from the first quarter of 2024 was primarily driven by outflows of $10.6 million of paid off loans, $6.0 million of charge-offs, $4.8 million of principal reductions from payments, $3.4 million transferred to OREO, and $2.4 million of loan upgrades. The decrease in classified loans in the second quarter was offset by additions of $14.0 million, primarily consisting of five commercial loans totaling $7.0 million and nine multifamily loans from a single relationship totaling $5.4 million. Remediation work continues on these credits, with the goal of cash flow improvements with increased tenancy.

​

Allowance for Credit Losses on Loans and Unfunded Commitments

​

At June 30, 2024, our allowance for credit losses (“ACL”) on loans totaled $42.3 million, and our ACL on unfunded commitments, included in other liabilities, totaled $2.5 million.  In the second quarter of 2024, we recorded provision expense of $3.8 million based on historical loss rate updates, our assessment of nonperforming loan metrics and trends, as well as estimated future credit losses. The second quarter’s provision expense consisted of a $3.9 million provision for credit losses on loans, and a $199,000 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 $5.8 million in the second quarter of 2024 primarily within the commercial real estate portfolio, which reduced the ACL. The first quarter 2024 provision expense of $3.5 million 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. We recorded net charge-offs of $3.7 million in the first quarter of 2024. In the second quarter of 2023, we recorded provision expense of $2.0 million, which consisted of a $2.4 million provision for credit losses on loans and a $427,000 reversal of provision for credit losses on unfunded commitments. We recorded net charge-offs of $505,000 in the second quarter of 2023, which reduced the ACL. Our ACL on loans to total loans was 1.1% as of June 30, 2024 and March 31, 2024, and 1.4% as of June 30, 2023.

​

The ACL on unfunded commitments totaled $2.5 million as of June 30, 2024, $2.7 million as of March 31, 2024, and $3.1 million as of June 30, 2023.

​

Net Charge-off Summary

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loan charge–offs, net of recoveries	Quarters Ended
(Dollars in thousands)	June 30,		​	% of	​	March 31,		​	% of	​	June 30,		​	% of
​	2024		​	Total ^2^	​	2024		​	Total ^2^	​	2023		​	Total ^2^
Commercial	$	(19)	​	(0.3)	​	$	(58)	​	(1.6)	​	$	298	​	59.0
Leases	​	81	​	1.4	​	​	(40)	​	(1.1)	​	​	(7)	​	(1.4)
Commercial real estate – Investor	​	4,560	​	78.7	​	​	(67)	​	(1.8)	​	​	51	​	10.1
Commercial real estate – Owner occupied	​	1,162	​	20.1	​	​	3,868	​	104.7	​	​	198	​	39.2
Residential real estate – Investor	​	(3)	​	(0.1)	​	​	(2)	​	(0.1)	​	​	(5)	​	(1.0)
Residential real estate – Owner occupied	​	(9)	​	(0.2)	​	​	(8)	​	(0.2)	​	​	(36)	​	(7.1)
HELOC	​	(15)	​	(0.3)	​	​	(17)	​	(0.5)	​	​	(24)	​	(4.8)
Other^1^	​	37	​	0.7	​	​	19	​	0.6	​	​	30	​	6.0
Net charge–offs / (recoveries)	$	5,794	​	100.0	​	$	3,695	​	100.0	​	$	505	​	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 second quarter of 2024 were $6.0 million, compared to $4.0 million for the first quarter of 2024 and $733,000 for the second quarter of 2023.  Gross recoveries were $217,000 for the second quarter of 2024, compared to $293,000 for the first quarter of 2024, and $228,000 for the second quarter of 2023.  Continued recoveries are indicative of the ongoing aggressive efforts by management to effectively manage and resolve prior charge-offs, however recoveries cannot be forecasted or expected at the same pace in the future.

​ 10

​

Deposits

​

Total deposits were $4.52 billion at June 30, 2024, a decrease of $86.5 million, or 1.9%, compared to $4.61 billion at March 31, 2024, primarily due to a decrease in non-interest bearing deposits of $71.4 million primarily driven by one large public funds customer, a decrease of $46.7 million in savings, and a decrease of $13.6 million in NOW and money market accounts. These declines were partially offset by an increase in time deposits of $45.2 million. Total quarterly average deposits for the year over year period decreased $217.9 million, or 4.5%, driven by declines in our average demand deposits of $150.9 million, and savings, NOW and money markets combined of $241.2 million, partially offset by an increase of $174.2 in average time deposits. The decline in total deposits in the second quarter of 2024 was less than the decline in the second quarter of 2023, and was primarily due to depositor real estate tax payments and other seasonal reductions.

​

Borrowings

​

As of June 30, 2024, we had $330.0 million in other short-term borrowings due to short-term FHLB advances, compared to $220.0 million at March 31, 2024, and $485.0 million as of June 30, 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 11

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 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, and disruptions caused from widespread cybersecurity incidents. 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, July 18, 2024, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss our second quarter 2024 financial results.  Investors may listen to our call via telephone by dialing 888-506-0062, using Entry Code: 230168.  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 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on July 25, 2024, by dialing 877-481-4010, using Conference ID: 50796. 12

​

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)

​

​	​	​	​	​	​	​
​	​	(unaudited)		​	​	​
​	​	June 30,		​	December 31,
​	****	2024			2023
Assets	​	​	​	​	​	​
Cash and due from banks	​	$	54,888	​	$	55,534
Interest earning deposits with financial institutions	​	​	66,004	​	​	44,611
Cash and cash equivalents	​	​	120,892	​	​	100,145
Securities available-for-sale, at fair value	​	​	1,173,661	​	​	1,192,829
Federal Home Loan Bank Chicago (“FHLBC”) and Federal Reserve Bank Chicago (“FRBC”) stock	​	​	32,005	​	​	33,355
Loans held-for-sale	​	​	2,291	​	​	1,322
Loans	​	​	3,976,595	​	​	4,042,953
Less: allowance for credit losses on loans	​	​	42,269	​	​	44,264
Net loans	​	​	3,934,326	​	​	3,998,689
Premises and equipment, net	​	​	82,871	​	​	79,310
Other real estate owned	​	​	6,920	​	​	5,123
Mortgage servicing rights, at fair value	​	​	10,488	​	​	10,344
Goodwill	​	​	86,478	​	​	86,478
Core deposit intangible	​	​	10,063	​	​	11,217
Bank-owned life insurance (“BOLI”)	​	​	110,535	​	​	109,318
Deferred tax assets, net	​	​	28,710	​	​	31,077
Other assets	​	​	63,460	​	​	63,592
Total assets	​	$	5,662,700	​	$	5,722,799
​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​
Deposits:	​	​	​	​	​	​
Noninterest bearing demand	​	$	1,728,487	​	$	1,834,891
Interest bearing:	​	​	​	​	​	​
Savings, NOW, and money market	​	​	2,161,426	​	​	2,207,949
Time	​	​	631,815	​	​	527,906
Total deposits	​	​	4,521,728	​	​	4,570,746
Securities sold under repurchase agreements	​	​	46,542	​	​	26,470
Other short-term borrowings	​	​	330,000	​	​	405,000
Junior subordinated debentures	​	​	25,773	​	​	25,773
Subordinated debentures	​	​	59,425	​	​	59,382
Other liabilities	​	​	59,897	​	​	58,147
Total liabilities	​	​	5,043,365	​	​	5,145,518
​	​	​	​	​	​	​
Stockholders’ Equity	​	​	​	​	​	​
Common stock	​	​	44,908	​	​	44,705
Additional paid-in capital	​	​	204,012	​	​	202,223
Retained earnings	​	​	432,037	​	​	393,311
Accumulated other comprehensive loss	​	​	(60,769)	​	​	(62,781)
Treasury stock	​	​	(853)	​	​	(177)
Total stockholders’ equity	​	​	619,335	​	​	577,281
Total liabilities and stockholders’ equity	​	$	5,662,700	​	$	5,722,799
​	​	​	​	​	​	​

​ 13

​

​

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except share data)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	(unaudited)					​	(unaudited)					​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,
​	****	2024		****	2023		****	2024		****	2023		****
Interest and dividend income	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans, including fees	​	$	62,151	​	$	61,561	​	$	124,824	​	$	118,771	​
Loans held-for-sale	​	​	19	​	​	19	​	​	33	​	​	31	​
Securities:	​	​	​	​	​	​	​	​	​	​	​	​	​
Taxable	​	​	8,552	​	​	9,930	​	​	16,644	​	​	20,665	​
Tax exempt	​	​	1,292	​	​	1,337	​	​	2,598	​	​	2,674	​
Dividends from FHLBC and FRBC stock	​	​	584	​	​	396	​	​	1,219	​	​	676	​
Interest bearing deposits with financial institutions	​	​	625	​	​	643	​	​	1,235	​	​	1,228	​
Total interest and dividend income	​	​	73,223	​	​	73,886	​	​	146,553	​	​	144,045	​
Interest expense	​	​	​	​	​	​	​	​	​	​	​	​	​
Savings, NOW, and money market deposits	​	​	4,317	​	​	1,742	​	​	8,354	​	​	2,891	​
Time deposits	​	​	4,961	​	​	1,156	​	​	9,002	​	​	1,820	​
Securities sold under repurchase agreements	​	​	83	​	​	7	​	​	169	​	​	16	​
Other short-term borrowings	​	​	3,338	​	​	5,160	​	​	7,895	​	​	7,505	​
Junior subordinated debentures	​	​	288	​	​	281	​	​	568	​	​	560	​
Subordinated debentures	​	​	546	​	​	546	​	​	1,092	​	​	1,092	​
Senior notes	​	​	-	​	​	1,414	​	​	-	​	​	2,408	​
Notes payable and other borrowings	​	​	-	​	​	-	​	​	-	​	​	87	​
Total interest expense	​	​	13,533	​	​	10,306	​	​	27,080	​	​	16,379	​
Net interest and dividend income	​	​	59,690	​	​	63,580	​	​	119,473	​	​	127,666	​
Provision for credit losses	​	​	3,750	​	​	2,000	​	​	7,250	​	​	5,501	​
Net interest and dividend income after provision for credit losses	​	​	55,940	​	​	61,580	​	​	112,223	​	​	122,165	​
Noninterest income	​	​	​	​	​	​	​	​	​	​	​	​	​
Wealth management	​	​	2,779	​	​	2,458	​	​	5,340	​	​	4,728	​
Service charges on deposits	​	​	2,508	​	​	2,362	​	​	4,923	​	​	4,786	​
Secondary mortgage fees	​	​	65	​	​	76	​	​	115	​	​	135	​
Mortgage servicing rights mark to market (loss) gain	​	​	(238)	​	​	96	​	​	(144)	​	​	(429)	​
Mortgage servicing income	​	​	513	​	​	499	​	​	1,001	​	​	1,015	​
Net gain on sales of mortgage loans	​	​	468	​	​	398	​	​	782	​	​	704	​
Securities (losses) gains, net	​	​	-	​	​	(1,547)	​	​	1	​	​	(3,222)	​
Change in cash surrender value of BOLI	​	​	820	​	​	418	​	​	1,992	​	​	660	​
Death benefit realized on BOLI	​	​	893	​	​	-	​	​	893	​	​	-	​
Card related income	​	​	2,577	​	​	2,690	​	​	4,953	​	​	4,934	​
Other income	​	​	742	​	​	773	​	​	1,772	​	​	2,262	​
Total noninterest income	​	​	11,127	​	​	8,223	​	​	21,628	​	​	15,573	​
Noninterest expense	​	​	​	​	​	​	​	​	​	​	​	​	​
Salaries and employee benefits	​	​	23,424	​	​	21,798	​	​	47,736	​	​	44,046	​
Occupancy, furniture and equipment	​	​	3,899	​	​	3,639	​	​	7,826	​	​	7,114	​
Computer and data processing	​	​	2,184	​	​	1,290	​	​	4,439	​	​	3,064	​
FDIC insurance	​	​	616	​	​	794	​	​	1,283	​	​	1,378	​
Net teller & bill paying	​	​	578	​	​	515	​	​	1,099	​	​	1,017	​
General bank insurance	​	​	312	​	​	306	​	​	621	​	​	611	​
Amortization of core deposit intangible	​	​	574	​	​	618	​	​	1,154	​	​	1,242	​
Advertising expense	​	​	472	​	​	103	​	​	664	​	​	245	​
Card related expense	​	​	1,323	​	​	1,222	​	​	2,600	​	​	2,438	​
Legal fees	​	​	238	​	​	283	​	​	464	​	​	602	​
Consulting & management fees	​	​	797	​	​	520	​	​	1,133	​	​	1,310	​
Other real estate expense, net	​	​	(87)	​	​	(98)	​	​	(41)	​	​	208	​
Other expense	​	​	3,547	​	​	3,840	​	​	7,140	​	​	7,477	​
Total noninterest expense	​	​	37,877	​	​	34,830	​	​	76,118	​	​	70,752	​
Income before income taxes	​	​	29,190	​	​	34,973	​	​	57,733	​	​	66,986	​
Provision for income taxes	​	​	7,299	​	​	9,411	​	​	14,530	​	​	17,817	​
Net income	​	$	21,891	​	$	25,562	​	$	43,203	​	$	49,169	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Basic earnings per share	​	$	0.48	​	$	0.57	​	$	0.96	​	$	1.10	​
Diluted earnings per share	​	​	0.48	​	​	0.56	​	​	0.95	​	​	1.08	​
Dividends declared per share	​	​	0.05	​	​	0.05	​	​	0.05	​	​	0.10	​

​

​

​

​	​	​	​	​	​	​	​	​
Ending common shares outstanding	​	44,849,591	​	44,665,127	​	44,849,591	​	44,665,127
Weighted-average basic shares outstanding	​	44,846,848	​	44,665,127	​	44,802,704	​	44,642,250
Weighted-average diluted shares outstanding	​	45,682,239	​	45,424,418	​	45,603,062	​	45,370,806

​

​ 14

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		​	2nd Qtr
Cash and due from banks	​	$	55,140	​	$	56,191	​	$	57,279	​	$	57,723	​	$	54,533	​	$	54,286
Interest earning deposits with financial institutions	​	​	49,310	​	​	50,309	​	​	49,737	​	​	47,865	​	​	48,088	​	​	50,740
Cash and cash equivalents	​	​	104,450	​	​	106,500	​	​	107,016	​	​	105,588	​	​	102,621	​	​	105,026
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Securities available-for-sale, at fair value	​	​	1,503,619	​	​	1,404,664	​	​	1,295,211	​	​	1,192,021	​	​	1,182,888	​	​	1,179,430
FHLBC and FRBC stock	​	​	24,905	​	​	34,029	​	​	35,954	​	​	34,371	​	​	31,800	​	​	27,574
Loans held-for-sale	​	​	813	​	​	1,150	​	​	1,641	​	​	1,709	​	​	746	​	​	1,050
Loans	​	​	3,931,679	​	​	4,039,052	​	​	4,009,218	​	​	4,014,771	​	​	4,018,631	​	​	3,957,454
Less: allowance for credit losses on loans	​	​	49,398	​	​	53,480	​	​	54,581	​	​	50,023	​	​	44,295	​	​	43,468
Net loans	​	​	3,882,281	​	​	3,985,572	​	​	3,954,637	​	​	3,964,748	​	​	3,974,336	​	​	3,913,986
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Premises and equipment, net	​	​	72,649	​	​	72,903	​	​	74,707	​	​	78,472	​	​	80,493	​	​	82,332
Other real estate owned	​	​	1,508	​	​	1,132	​	​	472	​	​	2,004	​	​	5,123	​	​	4,657
Mortgage servicing rights, at fair value	​	​	11,127	​	​	10,741	​	​	11,066	​	​	11,317	​	​	10,455	​	​	10,754
Goodwill	​	​	86,477	​	​	86,477	​	​	86,477	​	​	86,477	​	​	86,477	​	​	86,477
Core deposit intangible	​	​	13,327	​	​	12,709	​	​	12,119	​	​	11,502	​	​	10,913	​	​	10,340
Bank-owned life insurance ("BOLI")	​	​	106,655	​	​	107,028	​	​	107,786	​	​	108,616	​	​	109,867	​	​	110,440
Deferred tax assets, net	​	​	42,237	​	​	37,774	​	​	39,072	​	​	42,754	​	​	31,323	​	​	32,969
Other assets	​	​	48,599	​	​	50,812	​	​	52,360	​	​	55,155	​	​	49,681	​	​	50,423
Total other assets	​	​	382,579	​	​	379,576	​	​	384,059	​	​	396,297	​	​	384,332	​	​	388,392
Total assets	​	$	5,898,647	​	$	5,911,491	​	$	5,778,518	​	$	5,694,734	​	$	5,676,723	​	$	5,615,458
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Deposits:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Noninterest bearing demand	​	$	2,002,801	​	$	1,920,448	​	$	1,867,201	​	$	1,838,325	​	$	1,819,476	​	$	1,769,543
Interest bearing:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Savings, NOW, and money market	​	​	2,560,893	​	​	2,437,096	​	​	2,324,613	​	​	2,241,937	​	​	2,202,485	​	​	2,195,898
Time	​	​	434,655	​	​	436,524	​	​	466,250	​	​	497,472	​	​	558,463	​	​	610,705
Total deposits	​	​	4,998,349	​	​	4,794,068	​	​	4,658,064	​	​	4,577,734	​	​	4,580,424	​	​	4,576,146
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Securities sold under repurchase agreements	​	​	31,080	​	​	25,575	​	​	24,945	​	​	28,526	​	​	30,061	​	​	37,430
Other short-term borrowings	​	​	200,833	​	​	402,527	​	​	427,174	​	​	390,652	​	​	332,198	​	​	242,912
Junior subordinated debentures	​	​	25,773	​	​	25,773	​	​	25,773	​	​	25,773	​	​	25,773	​	​	25,773
Subordinated debentures	​	​	59,308	​	​	59,329	​	​	59,350	​	​	59,372	​	​	59,393	​	​	59,414
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	​	​	68,530
Total liabilities	​	​	5,416,621	​	​	5,399,840	​	​	5,248,470	​	​	5,146,028	​	​	5,087,873	​	​	5,010,205
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stockholders' equity	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Common stock	​	​	44,705	​	​	44,705	​	​	44,705	​	​	44,705	​	​	44,787	​	​	44,908
Additional paid-in capital	​	​	201,397	​	​	200,590	​	​	201,344	​	​	201,824	​	​	202,688	​	​	203,654
Retained earnings	​	​	324,785	​	​	346,042	​	​	368,732	​	​	389,776	​	​	405,201	​	​	424,262
Accumulated other comprehensive loss	​	​	(86,736)	​	​	(78,940)	​	​	(84,167)	​	​	(87,358)	​	​	(63,365)	​	​	(66,682)
Treasury stock	​	​	(2,125)	​	​	(746)	​	​	(566)	​	​	(241)	​	​	(461)	​	​	(889)
Total stockholders' equity	​	​	482,026	​	​	511,651	​	​	530,048	​	​	548,706	​	​	588,850	​	​	605,253
Total liabilities and stockholders' equity	​	$	5,898,647	​	$	5,911,491	​	$	5,778,518	​	$	5,694,734	​	$	5,676,723	​	$	5,615,458
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Earning Assets	​	$	5,510,326	​	$	5,529,204	​	$	5,391,761	​	$	5,290,737	​	$	5,282,153	​	$	5,216,248
Total Interest Bearing Liabilities	​	​	3,362,541	​	​	3,430,958	​	​	3,328,105	​	​	3,243,732	​	​	3,208,373	​	​	3,172,132

​

​ 15

​

​

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		​	2nd Qtr
Interest and Dividend Income	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans, including fees	​	$	57,210	​	$	61,561	​	$	62,665	​	$	62,751	​	$	62,673	​	$	62,151
Loans held-for-sale	​	​	12	​	​	19	​	​	29	​	​	31	​	​	14	​	​	19
Securities:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Taxable	​	​	10,735	​	​	9,930	​	​	8,946	​	​	8,329	​	​	8,092	​	​	8,552
Tax exempt	​	​	1,337	​	​	1,337	​	​	1,333	​	​	1,322	​	​	1,306	​	​	1,292
Dividends from FHLB and FRBC stock	​	​	280	​	​	396	​	​	597	​	​	647	​	​	635	​	​	584
Interest bearing deposits with financial institutions	​	​	585	​	​	643	​	​	659	​	​	616	​	​	610	​	​	625
Total interest and dividend income	​	​	70,159	​	​	73,886	​	​	74,229	​	​	73,696	​	​	73,330	​	​	73,223
Interest Expense	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Savings, NOW, and money market deposits	​	​	1,149	​	​	1,742	​	​	2,558	​	​	3,312	​	​	4,037	​	​	4,317
Time deposits	​	​	664	​	​	1,156	​	​	1,982	​	​	2,834	​	​	4,041	​	​	4,961
Securities sold under repurchase agreements	​	​	9	​	​	7	​	​	27	​	​	50	​	​	86	​	​	83
Other short-term borrowings	​	​	2,345	​	​	5,160	​	​	5,840	​	​	5,429	​	​	4,557	​	​	3,338
Junior subordinated debentures	​	​	279	​	​	281	​	​	245	​	​	290	​	​	280	​	​	288
Subordinated debentures	​	​	546	​	​	546	​	​	547	​	​	546	​	​	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	​	​	13,533
Net interest and dividend income	​	​	64,086	​	​	63,580	​	​	63,030	​	​	61,235	​	​	59,783	​	​	59,690
Provision for credit losses	​	​	3,501	​	​	2,000	​	​	3,000	​	​	8,000	​	​	3,500	​	​	3,750
Net interest and dividend income after provision for credit losses	​	​	60,585	​	​	61,580	​	​	60,030	​	​	53,235	​	​	56,283	​	​	55,940
Noninterest Income	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Wealth management	​	​	2,270	​	​	2,458	​	​	2,475	​	​	2,600	​	​	2,561	​	​	2,779
Service charges on deposits	​	​	2,424	​	​	2,362	​	​	2,504	​	​	2,527	​	​	2,415	​	​	2,508
Secondary mortgage fees	​	​	59	​	​	76	​	​	66	​	​	58	​	​	50	​	​	65
Mortgage servicing rights mark to market (loss) gain	​	​	(525)	​	​	96	​	​	281	​	​	(1,277)	​	​	94	​	​	(238)
Mortgage servicing income	​	​	516	​	​	499	​	​	519	​	​	495	​	​	488	​	​	513
Net gain on sales of mortgage loans	​	​	306	​	​	398	​	​	407	​	​	366	​	​	314	​	​	468
Securities (losses) gains, net	​	​	(1,675)	​	​	(1,547)	​	​	(924)	​	​	(2)	​	​	1	​	​	-
Change in cash surrender value of BOLI	​	​	242	​	​	418	​	​	919	​	​	541	​	​	1,172	​	​	820
Death benefit realized on BOLI	​	​	-	​	​	-	​	​	-	​	​	-	​	​	-	​	​	893
Card related income	​	​	2,244	​	​	2,690	​	​	2,606	​	​	2,511	​	​	2,376	​	​	2,577
Other income	​	​	1,489	​	​	773	​	​	1,024	​	​	910	​	​	1,030	​	​	742
Total noninterest income	​	​	7,350	​	​	8,223	​	​	9,877	​	​	8,729	​	​	10,501	​	​	11,127
Noninterest Expense	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Salaries and employee benefits	​	​	22,248	​	​	21,798	​	​	23,115	​	​	21,405	​	​	24,312	​	​	23,424
Occupancy, furniture and equipment	​	​	3,475	​	​	3,639	​	​	3,506	​	​	3,817	​	​	3,927	​	​	3,899
Computer and data processing	​	​	1,774	​	​	1,290	​	​	1,922	​	​	2,291	​	​	2,255	​	​	2,184
FDIC insurance	​	​	584	​	​	794	​	​	744	​	​	583	​	​	667	​	​	616
Net teller & bill paying	​	​	502	​	​	515	​	​	534	​	​	564	​	​	521	​	​	578
General bank insurance	​	​	305	​	​	306	​	​	300	​	​	301	​	​	309	​	​	312
Amortization of core deposit intangible	​	​	624	​	​	618	​	​	616	​	​	603	​	​	580	​	​	574
Advertising expense	​	​	142	​	​	103	​	​	93	​	​	383	​	​	192	​	​	472
Card related expense	​	​	1,216	​	​	1,222	​	​	1,347	​	​	1,338	​	​	1,277	​	​	1,323
Legal fees	​	​	319	​	​	283	​	​	97	​	​	228	​	​	226	​	​	238
Consulting & management fees	​	​	790	​	​	520	​	​	549	​	​	556	​	​	336	​	​	797
Other real estate expense, net	​	​	306	​	​	(98)	​	​	(27)	​	​	218	​	​	46	​	​	(87)
Other expense	​	​	3,637	​	​	3,840	​	​	4,627	​	​	4,739	​	​	3,593	​	​	3,547
Total noninterest expense	​	​	35,922	​	​	34,830	​	​	37,423	​	​	37,026	​	​	38,241	​	​	37,877
Income before income taxes	​	​	32,013	​	​	34,973	​	​	32,484	​	​	24,938	​	​	28,543	​	​	29,190
Provision for income taxes	​	​	8,406	​	​	9,411	​	​	8,149	​	​	6,713	​	​	7,231	​	​	7,299
Net income	​	$	23,607	​	$	25,562	​	$	24,335	​	$	18,225	​	$	21,312	​	$	21,891
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Basic earnings per share (GAAP)	​	$	0.53	​	$	0.57	​	$	0.55	​	$	0.40	​	$	0.48	​	$	0.48
Diluted earnings per share (GAAP)	​	​	0.52	​	​	0.56	​	​	0.54	​	​	0.40	​	​	0.47	​	​	0.48
Dividends paid per share	​	​	0.05	​	​	0.05	​	​	0.05	​	​	0.05	​	​	0.05	​	​	0.05

​

​ 16

​

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								​
​	​	June 30,		​	March 31,		​	June 30,		​
​		2024		****	2024		​	2023		​
Net Income	​	​	​	​	​	​	​	​	​	​
Income before income taxes (GAAP)	​	$	29,190	​	$	28,543	​	$	34,973	​
Pre-tax income adjustments:	​	​	​	​	​	​	​	​	​	​
Death benefit related to BOLI	​	​	(893)	​	​	-	​	​	-	​
Losses on branch sales, net	​	​	-	​	​	-	​	​	29	​
Adjusted net income before taxes	​	​	28,297	​	​	28,543	​	​	35,002	​
Taxes on adjusted net income	​	​	7,299	​	​	7,231	​	​	9,419	​
Adjusted net income (non-GAAP)	​	$	20,998	​	$	21,312	​	$	25,583	​
​	​	​	​	​	​	​	​	​	​	​
Basic earnings per share (GAAP)	​	$	0.48	​	$	0.48	​	$	0.57	​
Diluted earnings per share (GAAP)	​	​	0.48	​	​	0.47	​	​	0.56	​
Adjusted basic earnings per share (non-GAAP)	​	​	0.46	​	​	0.48	​	​	0.58	​
Adjusted diluted earnings per share (non-GAAP)	​	​	0.46	​	​	0.47	​	​	0.56	​

​

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Quarters Ended								​
​	​	June 30,		​	March 31,		​	June 30,		​
​		2024		****	2024		​	2023		​
Net Interest Margin	​	​	​	​	​	​	​	​	​	​
Interest income (GAAP)	​	$	73,223	​	$	73,330	​	$	73,886	​
Taxable-equivalent adjustment:	​	​	​	​	​	​	​	​	​	​
Loans	​	​	10	​	​	11	​	​	11	​
Securities	​	​	344	​	​	347	​	​	355	​
Interest income (TE)	​	​	73,577	​	​	73,688	​	​	74,252	​
Interest expense (GAAP)	​	​	13,533	​	​	13,547	​	​	10,306	​
Net interest income (TE)	​	$	60,044	​	$	60,141	​	$	63,946	​
Net interest income (GAAP)	​	$	59,690	​	$	59,783	​	$	63,580	​
Average interest earning assets	​	$	5,216,248	​	$	5,282,153	​	$	5,529,204	​
Net interest margin (TE)	​	​	4.63	%	​	4.58	%	​	4.64	%
Net interest margin (GAAP)	​	​	4.60	%	​	4.55	%	​	4.61	%

​

​ 17

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	GAAP								​	Non-GAAP								​
​	​	​	Three Months Ended							​	​	Three Months Ended							​
​	​	June 30,		​	March 31,		​	June 30,		​	June 30,		​	March 31,		​	June 30,		​
​	​	2024		​	2024		​	2023		​	2024		​	2024		​	2023		​
Efficiency Ratio / Adjusted Efficiency Ratio	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Noninterest expense	​	$	37,877	​	$	38,241	​	$	34,830	​	$	37,877	​	$	38,241	​	$	34,830	​
Less amortization of core deposit	​	​	574	​	​	580	​	​	618	​	​	574	​	​	580	​	​	618	​
Less other real estate expense, net	​	​	(87)	​	​	46	​	​	(98)	​	​	(87)	​	​	46	​	​	(98)	​
Less losses on branch sales, net	​	​	N/A	​	​	N/A	​	​	N/A	​	​	-	​	​	-	​	​	29	​
Noninterest expense less adjustments	​	$	37,390	​	$	37,615	​	$	34,310	​	$	37,390	​	$	37,615	​	$	34,281	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net interest income	​	$	59,690	​	$	59,783	​	$	63,580	​	$	59,690	​	$	59,783	​	$	63,580	​
Taxable-equivalent adjustment:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans	​	​	N/A	​	​	N/A	​	​	N/A	​	​	10	​	​	11	​	​	11	​
Securities	​	​	N/A	​	​	N/A	​	​	N/A	​	​	344	​	​	347	​	​	355	​
Net interest income including adjustments	​	​	59,690	​	​	59,783	​	​	63,580	​	​	60,044	​	​	60,141	​	​	63,946	​
Noninterest income	​	​	11,127	​	​	10,501	​	​	8,223	​	​	11,127	​	​	10,501	​	​	8,223	​
Less death benefit related to BOLI	​	​	893	​	​	-	​	​	-	​	​	893	​	​	-	​	​	-	​
Less securities gains (losses)	​	​	-	​	​	1	​	​	(1,547)	​	​	-	​	​	1	​	​	(1,547)	​
Less MSRs mark to market (losses) gains	​	​	(238)	​	​	94	​	​	96	​	​	(238)	​	​	94	​	​	96	​
Taxable-equivalent adjustment:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Change in cash surrender value of BOLI	​	​	N/A	​	​	N/A	​	​	N/A	​	​	456	​	​	311	​	​	111	​
Noninterest income (excluding) / including adjustments	​	​	10,472	​	​	10,406	​	​	9,674	​	​	10,928	​	​	10,717	​	​	9,785	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net interest income including adjustments plus noninterest income (excluding) / including adjustments	​	$	70,162	​	$	70,189	​	$	73,254	​	$	70,972	​	$	70,858	​	$	73,731	​
Efficiency ratio / Adjusted efficiency ratio	​	​	53.29	%	​	53.59	%	​	46.84	%	​	52.68	%	​	53.09	%	​	46.49	%

​

N/A - Not applicable.

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Quarters Ended								​
​	​	June 30,		​	December 31,		​	June 30,		​
​	​	2024			2023		​	2023		​
Return on Average Tangible Common Equity Ratio	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​
Net income (GAAP)	​	$	21,891	​	$	21,312	​	$	25,562	​
​	​	​	​	​	​	​	​	​	​	​
Income before income taxes (GAAP)	​	$	29,190	​	$	28,543	​	$	34,973	​
Pre-tax income adjustments:	​	​	​	​	​	​	​	​	​	​
Amortization of core deposit intangibles	​	​	574	​	​	580	​	​	618	​
Net income, excluding intangibles amortization, before taxes	​	​	29,764	​	​	29,123	​	​	35,591	​
Taxes on net income, excluding intangible amortization, before taxes	​	​	7,443	​	​	7,378	​	​	9,577	​
Net income, excluding intangibles amortization (non-GAAP)	​	$	22,321	​	$	21,745	​	$	26,014	​
​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​
Total Average Common Equity	​	$	605,253	​	​	588,850	​	$	511,651	​
Less Average goodwill and intangible assets	​	​	96,817	​	​	97,390	​	​	99,186	​
Average tangible common equity (non-GAAP)	​	$	508,436	​	$	491,460	​	$	412,465	​
​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​
Return on average common equity (GAAP)	​	​	14.55	%	​	14.56	%	​	20.04	%
Return on average tangible common equity (non-GAAP)	​	​	17.66	%	​	17.80	%	​	25.30	%

​ 18

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

​

​

​

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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.

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