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Old Second Bancorp, Inc. Reports Second Quarter 2025 Net Income of $21.8 Million, or $0.48 per Diluted Share

AURORA IL / / July 23, 2025 / 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 2025. Our net income was $21.8 million, or $0.48 per diluted share, for the second quarter of 2025, compared to net income of $19.8 million, or $0.43 per diluted share, for the first quarter of 2025, and net income of $21.9 million, or $0.48 per diluted share, for the second quarter of 2024. Adjusted net income, a non-GAAP financial measure that excludes certain nonrecurring items, as applicable, was $22.8 million, or $0.50 per diluted share, for the second quarter of 2025, compared to $20.6 million, or $0.45 per diluted share, for the first quarter of 2025, and $21.2 million, or $0.46 per diluted share, for the second quarter of 2024. The pre-tax adjusting items impacting the second quarter of 2025 included the exclusion of $531,000 of mortgage servicing rights ("MSRs") mark to market losses, and $810,000 of transaction-related expenses primarily from our merger with Bancorp Financial, Inc. ("Bancorp Financial") that closed on July 1, 2025. The adjusting items impacting the first quarter of 2025 included the exclusion of $570,000 of MSRs mark to market losses and $454,000 of transaction-related expenses due to the Bancorp Financial merger and the First Merchants ("FRME") branch purchase, which occurred in December 2024. The adjusting item impacting the second quarter of 2024 included the exclusion of $238,000 of MSRs mark to market losses and an $893,000 death benefit related to BOLI. See the discussion entitled "Non-GAAP Presentations" below and the tables in the full earnings release found at under the investor relations tab, beginning on page 17 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Net income increased $2.0 million in the second quarter of 2025 compared to the first quarter of 2025. The increase was primarily due to a $1.7 million increase in interest and dividend income, a $697,000 increase in noninterest income, and a $1.1 million decrease in noninterest expense in the second quarter of 2025, compared to the prior linked quarter. The increases to the current quarter's net income were partially offset by a $343,000 increase in interest expense and a $1.0 million increase in provision for income taxes. Net income decreased $69,000 in the second quarter of 2025 compared to the second quarter of 2024, primarily due to an increase of $5.5 million in noninterest expense and a $229,000 decrease in noninterest income, partially offset by a $4.5 million increase in net interest and dividend income and a $1.3 million decrease in provision for credit losses.

Operating Results

• Noninterest expense was $43.4 million for the second quarter of 2025, a decrease of $1.1 million, or 2.4%, compared to $44.5 million for the first quarter of 2025, and an increase of $5.5 million, or 14.6%, compared to $37.9 million for the second quarter of 2024.

• We had a provision for income tax of $7.4 million for the second quarter of 2025, compared to a provision for income tax of $6.4 million for the first quarter of 2025 and a provision for income tax of $7.3 million for the second quarter of 2024. The effective tax rate for each of the periods presented was 25.3%, 24.3%, and 25.0%, respectively.

• On July 15, 2025, our Board of Directors declared a cash dividend of $0.06 per share of common stock, payable on August 4, 2025, to stockholders of record as of July 25, 2025.

Financial Highlights

¹ See the discussion entitled "Non-GAAP Presentations" below and the table in the full earnings release found at under the investor relations tab, on page 18 that provides a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent.

² 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.

³ 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 another quarter of strong results in the second quarter of 2025, led by exceptional margin performance and disciplined operating efficiency. Second quarter return on average assets and return on average tangible common equity were 1.53% and 15.29%, respectively, the tax equivalent net interest margin was strong at 4.85% and the efficiency ratio was a very healthy 55.99%. Tangible book value per share continues to compound at a double-digit rate and the balance sheet remains strong and liquid with a common equity tier 1 ratio of 13.77%, a loan to deposit ratio of 83% and cash and marketable securities in excess of 23% of total assets. We are extremely proud of our financial performance so far this year, and believe we are both well positioned to capitalize upon future growth opportunities and weather any economic challenges that may present themselves."

"On July 1, 2025, subsequent to the end of the quarter, we acquired Bancorp Financial, Inc., a $1.4 billion bank holding company headquartered in Oak Brook, Illinois and its subsidiary bank, Evergreen Bank Group. We believe the transaction will add meaningful consumer lending capabilities and enhance the flexibility and profitability of Old Second's balance sheet. The additional scale created by the merger and the new product and service offerings offer a tremendous opportunity to deliver great outcomes for our stockholders, customers, employees and communities. We are extremely excited to welcome Evergreen Bank customers and employees to the Old Second team."

Asset Quality & Earning Assets

• Nonperforming loans, comprised of nonaccrual loans plus loans past due 90 days or more and still accruing, totaled $32.2 million at June 30, 2025, $34.8 million at March 31, 2025, and $46.9 million at June 30, 2024. Nonperforming loans, as a percent of total loans, was 0.8% at June 30, 2025, 0.9% at March 31, 2025, and 1.2% at June 30, 2024. The $2.5 million decrease in the second quarter of 2025 for nonperforming loans is driven by nonaccrual loans outflows of $6.6 million primarily due to one relationship that was transferred to OREO, partially offset by inflows of $5.1 million, primarily driven by one commercial real estate - owner occupied relationship. Nonaccrual loan outflows consist of $799,000 of loans paid off, a $5.0 million loan transferred to OREO, $665,000 of partial principal reductions from payments and partial charge-offs on loans, $70,000 of loans fully charged off, and $59,000 of loans upgraded. The net $1.5 million decrease to nonaccrual loans in the second quarter of 2025, compared to the prior linked quarter, was also accompanied by a $1.1 million decrease to loans past due 90 days or more and still accruing.

• Total loans were $4.00 billion at June 30, 2025, reflecting an increase of $58.4 million compared to March 31, 2025, and an increase of $22.1 million compared to June 30, 2024. The increase from the prior quarter end as well as year over year was largely driven by the growth in leases, commercial real estate-investor and construction portfolios. Average loans (including loans held-for-sale) for the second quarter of 2025 totaled $3.96 billion, reflecting an increase of $1.6 million from the first quarter of 2025, and an increase of $2.1 million from the second quarter of 2024.

• Available-for-sale securities totaled $1.18 billion at June 30, 2025, compared to $1.15 billion at March 31, 2025 and $1.17 billion at June 30, 2024. The unrealized mark to market loss on securities totaled $54.7 million as of June 30, 2025, compared to $59.7 million as of March 31, 2025, and $82.6 million as of June 30, 2024, 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, 2025, we had security purchases of $79.6 million, and security maturities, calls and paydowns of $53.2 million, compared to security purchases of $82.9 million and security maturities, calls and paydowns of $106.3 million during the quarter ended March 31, 2025. During the quarter ended June 30, 2024, we had security purchases of $142.2 million and $139.0 million of maturities, calls, and paydowns. We may continue to buy and sell strategically identified securities as opportunities arise.

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 of the full earnings release found at under the investor relations tab.

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 of the full earnings release found at under the investor relations tab, which 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," "build," "and "near" or other statements that indicate future periods, such as "positioning" or "integration". Examples of forward-looking statements include, but are not limited to, statements regarding the economic outlook, balance sheet growth, building capital, and statements regarding the anticipated strategic and financial benefits of the merger with Bancorp Financial, including integration progress and competitive positioning. 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 pending or 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 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 trade disputes, 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 24, 2025, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss our second quarter 2025 financial results. Investors may listen to our call via telephone by dialing 888-506-0062, using Entry Code: 566890. 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 31, 2025, by dialing 877-481-4010, using Conference ID: 52648.

Contact:
Bradley S. Adams
Chief Financial Officer
(630) 906-5484

SOURCE: Old Second Bancorp Inc.