AURORA, IL / ACCESS Newswire / October 22, 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 third quarter of 2025. Our net income was $9.9 million, or $0.18 per diluted share, for the third quarter of 2025, compared to net income of $21.8 million, or $0.48 per diluted share, for the second quarter of 2025, and net income of $23.0 million, or $0.50 per diluted share, for the third quarter of 2024. Results as of and for the period ending September 30, 2025 were significantly impacted by the acquisition of Bancorp Financial, Inc ("Bancorp Financial") and its wholly owned subsidiary, Evergreen Bank Group, which closed effective July 1, 2025.

Adjusted net income, a non-GAAP financial measure that excludes certain nonrecurring items, as applicable, was $28.4 million, or $0.53 per diluted share, for the third quarter of 2025, compared to $22.8 million, or $0.50 per diluted share, for the second quarter of 2025, and $24.0 million, or $0.52 per diluted share, for the third quarter of 2024. The pre-tax adjusting items impacting the third quarter of 2025 included the exclusion of $13.2 million of day two provision for credit losses recorded with our acquisition of Bancorp Financial, $389,000 of mortgage servicing rights ("MSRs") mark to market losses, $430,000 of death benefits realized on BOLI, and $11.5 million of transaction-related expenses, net of gains on branch sales, primarily from our acquisition of Bancorp Financial. The adjusting items impacting the second quarter of 2025 included the exclusion of $531,000 of MSRs mark to market losses and $810,000 of transaction-related expenses due to our acquisition of Bancorp Financial. The adjusting item impacting the third quarter of 2024 included the exclusion of $964,000 of MSRs mark to market losses and a $12,000 death benefit related adjustment to BOLI. See the discussion entitled "Non-GAAP Presentations" below and the tables beginning on page 18 of the full earnings release found at www.oldsecond.com, under the investor relations tab, that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Net income decreased $12.0 million in the third quarter of 2025 compared to the second quarter of 2025. The decrease was primarily due to a $10.3 million increase in interest expense due to a rise in deposit and borrowing balances from our acquisition of Bancorp Financial, a $17.2 million increase in provision for credit losses related to $13.2 million of day two valuations from our acquisition of Bancorp Financial and $6.5 million of provision expense, compared to $2.5 million in the prior linked quarter, related to loan growth as well as the impact of current period charge offs primarily in powersports and lease segments as well as a downgrade of one large commercial credit. In addition, a $19.7 million increase in noninterest expense was recorded in the third quarter of 2025, compared to the prior linked quarter, mainly due to costs incurred related to our acquisition of Bancorp Financial. The decreases to the current quarter's net income were partially offset by a $28.8 million increase in interest and dividend income, primarily due to an increase in loan income from the loan portfolio acquired from Bancorp Financial, a $2.2 million increase in noninterest income, and a $4.2 million decrease in provision for income taxes. Net income decreased $13.1 million in the third quarter of 2025 compared to the third quarter of 2024, primarily due to an increase of $5.8 million in interest expense, a $17.7 million increase in provision for credit losses, and a $23.9 million increase in noninterest expense, all stemming from our acquisition of Bancorp Financial. The decreases in net income compared to the prior year like quarter were partially offset by a $28.0 million increase in interest and dividend income, a $2.5 million increase in noninterest income, and a $3.7 million decrease in provision for income taxes.

Operating Results

• Third quarter 2025 net income was $9.9 million, reflecting a $12.0 million decrease from the second quarter of 2025, and a decrease of $13.1 million from the third quarter of 2024. Adjusted net income, as defined above, was $28.4 million for the third quarter of 2025, an increase of $5.5 million from adjusted net income for the second quarter of 2025, and an increase of $4.3 million from adjusted net income for the third quarter of 2024.

• Net interest and dividend income was $82.8 million for the third quarter of 2025, reflecting an increase of $18.5 million, or 28.9%, from the second quarter of 2025, and an increase of $22.2 million, or 36.6%, from the third quarter of 2024.

• We recorded a net provision for credit losses of $19.7 million in the third quarter of 2025 compared to a net provision for credit losses of $2.5 million in the second quarter of 2025 and net provision for credit losses of $2.0 million in the third quarter of 2024. Provision for credit loss expense in the third quarter of 2025 included the impact of the Bancorp Financial day two purchase accounting.

• Noninterest income was $13.1 million for the third quarter of 2025, an increase of $2.2 million, or 20.3%, compared to $10.9 million for the second quarter of 2025, and an increase of $2.5 million, or 23.9%, compared to $10.6 million for the third quarter of 2024.

• Noninterest expense was $63.2 million for the third quarter of 2025, an increase of $19.7 million, or 45.5%, compared to $43.4 million for the second quarter of 2025, and an increase of $23.9 million, or 60.7%, compared to $39.3 million for the third quarter of 2024.

• We had a provision for income tax of $3.2 million for the third quarter of 2025, compared to a provision for income tax of $7.4 million for the second quarter of 2025 and a provision for income tax of $6.9 million for the third quarter of 2024. The effective tax rate for each of the periods presented was 24.5%, 25.3%, and 23.1%, respectively.

• On October 21, 2025, our Board of Directors declared a cash dividend of $0.07 per share of common stock, payable on November 10, 2025, to stockholders of record as of October 31, 2025.

Financial Highlights

¹ See the discussion entitled "Non-GAAP Presentations" below and the table on page 19 found in the full earnings release at www.oldsecond.com, under the investor relations tab, 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 "On July 1, 2025, 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 are extremely excited to welcome Evergreen Bank customers and employees to the Old Second team and pleased to deliver solid core business results in the first quarter inclusive of the acquisition. We are very encouraged about the trends and momentum in both our new and existing businesses including strong loan growth, encouraging pipelines and excellent core profitability. The systems integration of the two companies was completed without significant disruption and we continue to believe the combination will deliver exceptional value in the years ahead. Our initial estimates on earnings accretion at the announcement of the transaction appear conservative as asset yields are exceeding our expectations and our teams are continuing to make progress on operational efficiencies. We believe that the combination is exceptionally rare, for its size, in that book value dilution was relatively minimal and the deal itself substantially improves both our interest rate sensitivity position and already strong profitability. Third quarter return on average assets and return on average tangible common equity, adjusted to exclude acquisition related purchase accounting and deal costs, were 1.61% and 16.69%, respectively, the tax equivalent net interest margin was impressive at 5.05% and the efficiency ratio was a very healthy 52.10%."

"The balance sheet as of September 30, 2025 is strong, liquid and well reserved with a common equity tier 1 ratio of 12.44%, a loan to deposit ratio of 91% and loan loss reserves to total loans of 1.43%. Based on the strength of the balance sheet and resilient income statement trends, Old Second elected in this fourth quarter to increase the common dividend by 17%, as we continue to regularly deliver dividend growth commensurate with the bank's performance. We believe Old Second is well prepared for any economic environment and has the resources and momentum to focus on growth and additional strategic opportunities as they present themselves. We are excited for the future and proud of our progress in building a better Old Second for our customers, communities and stockholders."

Asset Quality & Earning Assets

• Nonperforming loans, comprised of nonaccrual loans plus loans past due 90 days or more and still accruing, totaled $48.0 million at September 30, 2025, $32.2 million at June 30, 2025, and $52.3 million at September 30, 2024. Nonperforming loans, as a percent of total loans, was 0.9% at September 30, 2025, 0.8% at June 30, 2025, and 1.3% at September 30, 2024. The $15.7 million increase in the third quarter of 2025 for nonperforming loans is driven by a $13.5 million increase to loans past due 90 days or more and still accruing, primarily comprised of two legacy relationships, the largest of which is in the process of renewal, as well as $2.3 million of powersport loans. Nonaccrual loans increased $2.2 million, due to inflows of $5.3 million, primarily related to one commercial real estate - investor relationship of $1.2 million, partially offset by outflows of $3.1 million. Nonaccrual loan outflows include an $859,000 loan processed for repossession, $764,000 of partial principal reductions from payments and partial charge-offs on loans, and $853,000 of loans charged off.

• Total loans were $5.27 billion at September 30, 2025, reflecting an increase of $1.27 billion compared to both June 30, 2025 and September 30, 2024. The increase from both prior periods is primarily driven by the $1.19 billion of loans acquired in our acquisition of Bancorp Financial. The loans acquired provided a significant increase to our consumer lending portfolio including the new powersport loan segment. Excluding loans purchased from the Bancorp Financial acquisition, organic loan growth, net of paydowns, totaled $72.3 million, or 1.8%, compared to June 30, 2025 total loans. Average loans (including loans held-for-sale) for the third quarter of 2025 totaled $5.22 billion, reflecting an increase of $1.26 billion from the second quarter of 2025, and an increase of $1.25 billion from the third quarter of 2024.

• Available-for-sale securities totaled $1.16 billion at September 30, 2025, compared to $1.18 billion at June 30, 2025 and $1.19 billion at September 30, 2024. The unrealized mark to market loss on securities totaled $47.7 million as of September 30, 2025, compared to $54.7 million as of June 30, 2025, and $56.2 million as of September 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 September 30, 2025, we had security purchases of $21.2 million, security sales of $7.5 million, excluding the sale of Bancorp Financial's $117.6 million available-for-sale securities portfolio after the acquisition closed, and security maturities, calls and paydowns of $41.1 million, compared to security purchases of $79.6 million and security maturities, calls and paydowns of $53.2 million during the quarter ended June 30, 2025. During the quarter ended September 30, 2024, we had security purchases of $22.7 million and $31.3 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 8 of the full earnings release found at www.oldsecond.com, 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 18 of the full earnings release found at www.oldsecond.com, under the investor relations tab, 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 our acquisition of 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 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 government shutdowns, 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, October 23, 2025, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss our third quarter 2025 financial results. Investors may listen to our call via telephone by dialing 888-506-0062, using Entry Code: 740004. 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 October 30, 2025, by dialing 877-481-4010, using Conference ID: 53047.

Contact:

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

SOURCE: Old Second Bancorp Inc.