Old Second Bancorp Q3 2026 net income rises to $28.9M
Credit indicators improved quarter over quarter, with criticized loans at 1.88% of total loans and charge-offs concentrated in one commercial relationship.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Old Second Bancorp, Inc. (OSBC) reported third-quarter 2026 net income of $28.9 million, or $0.56 per diluted share, compared with $28.2 million and $0.54 in the second quarter. Third-quarter 2025 net income was $9.9 million, or $0.18 per diluted share. Adjusted net income was $28.5 million, or $0.55 per diluted share, compared with $28.7 million and $0.55 in the second quarter.
The tax-equivalent net interest margin rose four basis points from the prior quarter to 5.27%. Nonperforming loans and classified loans declined 30% and 44%, respectively, during the quarter; criticized loans were 1.88% of total loans, versus 3.05% in the second quarter. Net charge-offs were $12.7 million, compared with $9.2 million in the second quarter, and were concentrated in one previously identified commercial relationship.
Old Second repurchased 1.5 million common shares during the quarter, approximately 3% of all outstanding shares, and elected in the fourth quarter to increase the common dividend by 14%. Third-quarter return on average assets was 1.69%, while the efficiency ratio was 52.34%.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointQ3 2026 net income: $28.9 million, versus $9.9 million in Q3 2025.
- Moderate point. Forward-looking: it has not happened yet and may not happen.14% common dividend increase elected in the fourth quarter.
Negative
- Moderate pointQ3 net charge-offs: $12.7 million, versus $5.1 million in Q3 2025.
Filing Explained
At
8-K Event Classification
Key Figures
Key Terms
tax-equivalent net interest margin financial
nonperforming loans financial
criticized loans financial
classified loans financial
Earnings Snapshot
FAQ
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What was OSBC's net income in the third quarter of 2026?
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I
United States
Securities And Exchange Commission
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact as specified in its charter)
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(
(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):
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On October 21, 2026, Old Second Bancorp, Inc. (the “Company’s”) issued a press release announcing its financial results for the third quarter ended September 30, 2026, along with certain other financial information. Copies of the Company’s press release and loan portfolio disclosures are attached as Exhibits 99.1 and 99.2, respectively.
Item 9.01 Financial Statements and Exhibits
Exhibit No. | Description | |
99.1 | Press Release of Old Second Bancorp, Inc. dated October 21, 2026 | |
99.2 | Loan Portfolio Disclosures for Old Second Bancorp, Inc. dated September 30, 2026 | |
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
2
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
OLD SECOND BANCORP, INC. | ||
Dated: October 21, 2026 | By: | /s/ Bradley S. Adams |
Bradley S. Adams | ||
Executive Vice President, | ||
Chief Operating Officer and | ||
Chief Financial Officer | ||
3
| | |
(NASDAQ:OSBC) | Exhibit 99.1 | |
| | |
Contact: | Bradley S. Adams | For Immediate Release |
| Chief Financial Officer | October 21, 2026 |
| (630) 906-5484 | |
Old Second Bancorp, Inc. Reports Third Quarter 2026 Net Income of $28.9 Million,
or $0.56 per Diluted Share
AURORA, IL, October 21, 2026 – 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 2026. Our net income was $28.9 million, or $0.56 per diluted share, for the third quarter of 2026, compared to net income of $28.2 million, or $0.54 per diluted share, for the second quarter of 2026. Adjusted net income1 was $28.5 million, or adjusted diluted earnings per share1 of $0.55, for the third quarter of 2026, compared to adjusted net income1 of $28.7 million, or adjusted diluted earnings per share1 of $0.55, for the second quarter of 2026.
Notable Items2
| ● | Net interest and dividend income was $84.0 million, reflecting an increase of $720,000, or 0.86%. |
| ● | Net interest margin (NIM) on a fully tax-equivalent basis1 was 5.27%, an increase of four basis points. |
| ● | Provision for credit losses of $6.8 million compared to $7.5 million, a decrease of $750,000. |
| ● | Noninterest income was $13.1 million, a decrease of $191,000, or 1.44%, compared to $13.3 million. |
| ● | Noninterest expense was $51.6 million, an increase of $370,000, or 0.72%, compared to $51.3 million. |
| ● | Efficiency ratio increased 62 basis points to 52.34%; adjusted efficiency ratio was 52.06%1. |
| ● | Provision for income tax of $9.8 million, compared to $9.7 million, with an effective tax rate of 25.31% and 25.53%, respectively. |
| ● | Return on average assets of 1.69%, compared to 1.65%. |
| ● | Return on average tangible common equity (ROATCE)1 of 15.77%; adjusted ROATCE1 of 15.53%. |
| ● | On October 20, 2026, our Board of Directors declared a cash dividend of $0.08 per share of common stock, payable on November 9, 2026, to stockholders of record as of October 30, 2026. |
Chairman, President and Chief Executive Officer Jim Eccher said, “Old Second reported strong results in the third quarter of 2026 led by robust margin performance and disciplined operating efficiency. Loan losses remained higher than we wanted this quarter due to one previously identified commercial relationship, but the trends are extremely encouraging with nonperforming and classified loans declining by 30% and 44%, respectively. Criticized loans, an early indicator of future credit trends, also improved significantly during the quarter and now stand at just 1.88% of total loans, compared to 3.05% last quarter. Criticized assets also declined significantly quarter over quarter, decreasing to 1.91% of total loans from 3.08% in the previous quarter. Profitability remains excellent with the tax-equivalent net interest margin increasing by four basis points this quarter to 5.27%, which demonstrates the benefits of a strong core deposit base and diversified loan portfolio. This level of performance and a strong capital position afforded Old Second the opportunity to repurchase 1.5 million common shares this quarter, or approximately 3% of all outstanding shares. Third quarter return on average assets and return on average tangible common equity were 1.69% and 15.77%, respectively, and the efficiency ratio was a very healthy 52.34%. Based on the strength of the balance sheet and income statement trends, Old Second elected in this fourth quarter to increase the common dividend by 14%, as we continue to regularly deliver dividend growth commensurate with the bank’s performance. We are proud of our performance for the quarter, believe we have turned the corner on credit and look forward to delivering solid results to our stockholders for the remainder of the year.”
| 1 | Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the non-GAAP reconciliation contained in this release. |
| 2 | All comparisons throughout this release are on a linked-quarter basis, unless otherwise noted. |
Results of Operations:
Our net income was $28.9 million, or $0.56 per diluted share, for the third quarter of 2026, compared to net income of $28.2 million, or $0.54 per diluted share.
Net Interest Margin continued to be strong and nominal increases in the cost of funds were outweighed by stronger yields on loans during the quarter.
| ● | Net interest margin on a fully tax-equivalent1 basis improved four basis points, to 5.27%. |
| ● | Loan yields increased three basis points on higher average loan balances during the quarter but investment yields decreased five basis points driven by maturities and paydowns of securities. |
| ● | Cost of funds increased two basis points to 1.23%, driven by higher costs on deposits, discussed below, as well as other short-term borrowings due to higher average FHLB overnight borrowings. |
Noninterest Income decreased $191,000, or 1.44%, in the third quarter of 2026.
| ● | Mortgage banking income increased in the period mainly due to $623,000 of mortgage servicing rights (“MSR”) mark to market gains compared to $152,000 of losses in the previous quarter, primarily the result of increased rates during the quarter. |
| ● | The cash surrender value of BOLI decreased $673,000 in the current quarter primarily due to market rate changes impacting company-owned life insurance, which is included within the same line item. |
Noninterest Expense increased $370,000, or 0.72%.
| ● | Salaries and employee benefits increased $743,000, driven by higher salaries, officer incentive accruals, and employee insurance premiums, partially offset by decreases in payroll taxes and deferred compensation expense due to market interest rate changes. |
| ● | Occupancy, furniture and equipment increased $166,000 due to an increase in real estate taxes and office equipment maintenance. |
| ● | Advertising and marketing expense increased $120,000 due to a 2026 brand awareness campaign. |
| ● | Professional fees increased $257,000 due to consulting and management fees related to the 2026 brand awareness campaign as well as an increase in loan-related legal fees. |
| ● | Other expenses decreased $868,000 primarily due to decreases in director deferred compensation expense stemming from market interest rate changes, a decrease in litigation expense as two nonrecurring items with limited exposure were recorded in the prior quarter, and a decrease in miscellaneous expenses as the previous quarter included an accrual related to powersport loan gap insurance refunds due to customers related to loan prepayments. |
| ● | Efficiency ratio for the quarter was 52.34% compared to 51.72% and the adjusted efficiency ratio1 was 52.06% compared to 50.80%. |
Loans decreased $7.8 million driven primarily by decreases in commercial and commercial real estate – investor.
| ● | Total loans were $5.24 billion. |
| ● | Average loans (including loans held-for-sale) for the third quarter of 2026 totaled $5.23 billion, reflecting an increase of $4.0 million. |
Credit Quality key performance metrics improved significantly during the quarter, although charge-offs were higher than expected and were concentrated in a single commercial relationship.
| ● | Nonperforming loans totaled $39.6 million compared to $56.5 million. The $16.8 million decrease reflects a $17.2 million decline in nonaccrual loans partially offset by a slight increase to loans past due 90 days or more accruing. Nonaccrual changes include $9.1 million of net principal paydowns, $6.2 million of full charge-offs, and $3.3 million of partial charge-offs, partially offset by $1.4 million of additions to nonaccrual. |
| ● | Nonperforming loans to total loans was 0.76% compared to 1.08%. |
| ● | Classified loans totaled $74.2 million compared to $132.1 million. |
| ● | Criticized loans (special mention, substandard and doubtful) to total loans was 1.88% compared to 3.05%. The quarter-over-quarter decrease is driven by a decrease of $3.4 million in special mention loans, a decrease of $17.2 million of nonaccrual loans, and a decrease of $40.7 million in substandard accruing. |
| ● | Provision for credit losses of $6.8 million was driven by $3.1 million of net charge-offs related to powersport loans, and non-powersport charge-offs were primarily isolated to two commercial loans on a single relationship. |
| 1 | Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the non-GAAP reconciliation contained in this release. |
2
Deposits experienced declines in noninterest bearing as well as declines in time deposits as higher-rate brokered deposits and other exception-priced time deposits assumed from Bancorp Financial, Inc. rolled off.
| ● | Total deposits were $5.33 billion, a decrease of $117.1 million, or 2.15%. |
| ● | Cost of deposits increased two basis points to 1.02% as the cost of NOW, money market, and savings accounts all reflected increases, which were partially offset by a five basis point decline in the cost of time deposits. |
| ● | Average interest-bearing deposits decreased $55.5 million and average noninterest bearing deposits decreased $22.6 million. |
Capital decreased due to share repurchases and an increase in accumulated other comprehensive unrealized loss on available-for-sale securities, partially offset by strong net income.
| ● | Stockholders’ equity decreased $24.3 million primarily due to $3.6 million of dividends declared, an $11.5 million increase in the unrealized losses on securities and swaps due to market interest rate increases, and a $39.2 million increase in treasury stock from share repurchases, net of stock award vestings, partially offset by net income of $28.9 million. |
| ● | Share repurchases of 1,533,104 shares at an average price paid per share of $25.76 during the third quarter, for a total reduction to capital of $39.5 million, including excise taxes. |
| ● | ROATCE1 was 15.77% compared to 15.58%. |
| ● | Tangible common equity to tangible assets1 was 11.00% compared to 11.19%. |
| 1 | Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the non-GAAP reconciliation contained in this release. |
3
Cautionary Note Regarding Forward-Looking Statements
This earnings release and statements by our management may contain forward-looking statements within the meaning of 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 events or expectations. Examples of forward-looking statements include, but are not limited to, statements regarding the economic outlook, balance sheet growth, building capital, credit quality trends, the adequacy of our allowance for credit losses, and future share repurchases. 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:
| ● | 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; |
| ● | the rate of delinquencies and amounts of charge-offs, the level of the allowance for credit losses, 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; |
| ● | adverse developments in the commercial real estate market, including increased vacancy rates, declining property values, or borrower distress, particularly in the office sector, which could result in increased credit losses or require additional provisions; |
| ● | changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action; |
| ● | risks related to pending or future acquisitions, if any, including execution and integration risks; |
| ● | 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; |
| ● | changes in interest rates, which have affected 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; |
| ● | elevated inflation which causes adverse risk to the overall economy, and could indirectly pose challenges to our clients and to our business; and |
| ● | 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 disruptions in transportation, and disruptions caused by widespread cybersecurity incidents. |
Additional risks and uncertainties are contained in the “Risk Factors” and forward-looking statements disclosures 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 22, 2026, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss our third quarter 2026 financial results. Investors may listen to our earnings call via a live webcast by accessing the link provided below, or alternatively, on the Events section of the Old Second Investor Relations website (https://investors.oldsecond.com/events). Investors are encouraged to register at the webcast link at least 10 minutes prior to the scheduled start of the call.
Webcast URL: https://www.webcaster5.com/Webcast/Page/2239/54568
A replay of the webcast will be available under the Events section of the Old Second Investor Relations website (https://investors.oldsecond.com/events) for up to one year after the earnings call date.
4
Non-GAAP Presentations
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 or by adjusting certain items that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully tax-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 13 provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.
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, adjusted diluted earnings per share, adjusted return on average assets, net interest income and net interest margin on a fully tax-equivalent basis, our adjusted efficiency ratio, tangible common equity to tangible assets, and return on average tangible common equity, including on an adjusted basis. The net interest margin on a fully tax-equivalent basis is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. The tangible measures exclude goodwill and other intangible assets, and management believes they are useful in evaluating our capital adequacy and the return generated on our tangible capital base. Consistent with industry practice, management has disclosed the efficiency ratio including and excluding certain items, which is discussed in the efficiency ratio presentation on page 14.
5
Financial Highlights
| | Quarters Ended | | |||||||||||||
(Dollars in thousands - unaudited) | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | |||||
Balance sheet summary | | | | | | | | | | | | | | | | |
Total assets | | $ | 6,778,591 | | $ | 6,870,305 | | $ | 6,849,221 | | $ | 6,902,675 | | $ | 6,991,754 | |
Total securities available-for-sale | | | 978,576 | | | 1,040,760 | | | 1,115,443 | | | 1,090,523 | | | 1,157,480 | |
Total loans | | | 5,238,057 | | | 5,245,870 | | | 5,185,237 | | | 5,252,131 | | | 5,264,505 | |
Total deposits | | | 5,327,564 | | | 5,444,688 | | | 5,564,999 | | | 5,596,069 | | | 5,760,250 | |
Total liabilities | | | 5,900,039 | | | 5,967,494 | | | 5,955,924 | | | 6,005,907 | | | 6,125,069 | |
Total equity | | | 878,552 | | | 902,811 | | | 893,297 | | | 896,768 | | | 866,685 | |
| | | | | | | | | | | | | | | | |
Total tangible assets | | $ | 6,629,195 | | $ | 6,719,760 | | $ | 6,697,509 | | $ | 6,749,787 | | $ | 6,836,565 | |
Total tangible equity | | | 729,156 | | | 752,266 | | | 741,585 | | | 743,880 | | | 711,496 | |
| | | | | | | | | | | | | | | | |
Income statement summary | | | | | | | | | | | | | | | | |
Net interest income | | $ | 84,049 | | $ | 83,329 | | $ | 81,144 | | $ | 83,051 | | $ | 82,775 | |
Provision for credit losses | | | 6,750 | | | 7,500 | | | 9,500 | | | 3,000 | | | 19,653 | |
Noninterest income | | | 13,070 | | | 13,261 | | | 12,630 | | | 12,154 | | | 13,109 | |
Noninterest expense | | | 51,622 | | | 51,252 | | | 50,210 | | | 52,935 | | | 63,163 | |
Net income | | | 28,940 | | | 28,179 | | | 25,585 | | | 28,787 | | | 9,871 | |
Effective tax rate | | | 25.31 | % | | 25.53 | % | | 24.89 | % | | 26.69 | % | | 24.46 | % |
| | | | | | | | | | | | | | | | |
Profitability ratios | | | | | | | | | | | | | | | | |
Return on average assets (ROAA) | | | 1.69 | % | | 1.65 | % | | 1.51 | % | | 1.64 | % | | 0.56 | % |
Return on average equity (ROAE) | | | 12.76 | | | 12.57 | | | 11.43 | | | 12.92 | | | 4.61 | |
Net interest margin (tax-equivalent) 1 | | | 5.27 | | | 5.23 | | | 5.14 | | | 5.09 | | | 5.05 | |
Efficiency ratio | | | 52.34 | | | 51.72 | | | 52.40 | | | 53.98 | | | 64.46 | |
Return on average tangible common equity (ROATCE) 1 | | | 15.77 | | | 15.58 | | | 14.20 | | | 16.15 | | | 6.16 | |
Tangible common equity to tangible assets (TCE/TA) 1 | | | 11.00 | | | 11.19 | | | 11.07 | | | 11.02 | | | 10.41 | |
| | | | | | | | | | | | | | | | |
Per share data | | | | | | | | | | | | | | | | |
Diluted earnings per share | | $ | 0.56 | | $ | 0.54 | | $ | 0.48 | | $ | 0.54 | | $ | 0.18 | |
Tangible book value per share | | | 14.75 | | | 14.77 | | | 14.35 | | | 14.12 | | | 13.51 | |
| | | | | | | | | | | | | | | | |
Company capital ratios 2 | | | | | | | | | | | | | | | | |
Common equity tier 1 capital ratio | | | 13.13 | % | | 13.28 | % | | 13.13 | % | | 12.99 | % | | 12.44 | % |
Tier 1 risk-based capital ratio | | | 13.56 | | | 13.70 | | | 13.55 | | | 13.41 | | | 12.85 | |
Total risk-based capital ratio | | | 15.05 | | | 15.26 | | | 15.64 | | | 15.46 | | | 15.10 | |
Tier 1 leverage ratio | | | 11.99 | | | 12.05 | | | 11.88 | | | 11.70 | | | 11.21 | |
| | | | | | | | | | | | | | | | |
Bank capital ratios 2, 3 | | | | | | | | | | | | | | | | |
Common equity tier 1 capital ratio | | | 13.65 | % | | 13.72 | % | | 13.80 | % | | 13.17 | % | | 13.14 | % |
Tier 1 risk-based capital ratio | | | 13.65 | | | 13.72 | | | 13.80 | | | 13.17 | | | 13.14 | |
Total risk-based capital ratio | | | 14.63 | | | 14.77 | | | 14.88 | | | 14.22 | | | 14.39 | |
Tier 1 leverage ratio | | | 12.05 | | | 12.05 | | | 12.09 | | | 11.49 | | | 11.45 | |
1 See the discussion entitled “Non-GAAP Presentations” above and the tables on pages 13 and 15 that provide 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.
6
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands - unaudited)
| | Quarters Ended | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | |||||
Assets | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 42,155 | | $ | 47,964 | | $ | 48,100 | | $ | 51,665 | | $ | 53,099 |
Interest earning deposits with financial institutions | | | 65,948 | | | 95,369 | | | 67,627 | | | 72,360 | | | 63,426 |
Cash and cash equivalents | | | 108,103 | | | 143,333 | | | 115,727 | | | 124,025 | | | 116,525 |
Securities available-for-sale, at fair value | | | 978,576 | | | 1,040,760 | | | 1,115,443 | | | 1,090,523 | | | 1,157,480 |
Federal Home Loan Bank Chicago (“FHLBC”) and Federal Reserve Bank Chicago (“FRBC”) stock | | | 40,811 | | | 40,125 | | | 31,350 | | | 32,025 | | | 28,282 |
Loans held-for-sale | | | 1,407 | | | 2,349 | | | 4,344 | | | 3,645 | | | 1,463 |
Loans | | | 5,238,057 | | | 5,245,870 | | | 5,185,237 | | | 5,252,131 | | | 5,264,505 |
Less: allowance for credit losses on loans | | | 64,189 | | | 70,380 | | | 72,126 | | | 72,301 | | | 75,037 |
Net loans | | | 5,173,868 | | | 5,175,490 | | | 5,113,111 | | | 5,179,830 | | | 5,189,468 |
Premises and equipment, net | | | 83,364 | | | 84,505 | | | 85,634 | | | 86,645 | | | 87,714 |
Other real estate owned, net | | | - | | | 622 | | | 632 | | | 1,427 | | | 6,416 |
Mortgage servicing rights, at fair value | | | 10,690 | | | 9,825 | | | 9,579 | | | 9,459 | | | 9,549 |
Goodwill | | | 129,196 | | | 129,196 | | | 129,196 | | | 129,196 | | | 130,262 |
Core deposit intangible ("CDI") | | | 20,200 | | | 21,349 | | | 22,516 | | | 23,692 | | | 24,927 |
Bank-owned life insurance (“BOLI”) | | | 134,288 | | | 133,493 | | | 131,563 | | | 130,481 | | | 129,057 |
Deferred tax assets, net | | | 33,260 | | | 28,689 | | | 31,321 | | | 31,276 | | | 33,374 |
Other assets | | | 64,828 | | | 60,569 | | | 58,805 | | | 60,451 | | | 77,237 |
Total assets | | $ | 6,778,591 | | $ | 6,870,305 | | $ | 6,849,221 | | $ | 6,902,675 | | $ | 6,991,754 |
| | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | |
Noninterest bearing demand | | $ | 1,671,745 | | $ | 1,746,755 | | $ | 1,755,548 | | $ | 1,739,117 | | $ | 1,738,028 |
Interest bearing: | | | | | | | | | | | | | | | |
Savings, NOW, and money market | | | 2,772,737 | | | 2,771,532 | | | 2,795,038 | | | 2,745,540 | | | 2,763,990 |
Time | | | 883,082 | | | 926,401 | | | 1,014,413 | | | 1,111,412 | | | 1,258,232 |
Total deposits | | | 5,327,564 | | | 5,444,688 | | | 5,564,999 | | | 5,596,069 | | | 5,760,250 |
Securities sold under repurchase agreements | | | 29,908 | | | 23,241 | | | 23,130 | | | 23,769 | | | 24,290 |
Other short-term borrowings | | | 395,000 | | | 375,000 | | | 200,000 | | | 215,000 | | | 165,000 |
Junior subordinated debentures | | | 25,774 | | | 25,774 | | | 25,774 | | | 25,774 | | | 25,774 |
Subordinated debentures | | | 29,808 | | | 29,798 | | | 59,574 | | | 59,552 | | | 59,531 |
Notes payable and other borrowings | | | 9,893 | | | 14,850 | | | 14,837 | | | 14,825 | | | 14,812 |
Other liabilities | | | 82,092 | | | 54,143 | | | 67,610 | | | 70,918 | | | 75,412 |
Total liabilities | | | 5,900,039 | | | 5,967,494 | | | 5,955,924 | | | 6,005,907 | | | 6,125,069 |
| | | | | | | | | | | | | | | |
Stockholders’ Equity | | | | | | | | | | | | | | | |
Common stock | | | 53,015 | | | 53,015 | | | 53,015 | | | 53,015 | | | 53,015 |
Additional paid-in capital | | | 340,751 | | | 339,616 | | | 338,418 | | | 341,451 | | | 340,108 |
Retained earnings | | | 609,074 | | | 583,701 | | | 559,129 | | | 537,231 | | | 512,131 |
Accumulated other comprehensive loss, net | | | (43,395) | | | (31,861) | | | (31,095) | | | (28,738) | | | (32,294) |
Treasury stock | | | (80,893) | | | (41,660) | | | (26,170) | | | (6,191) | | | (6,275) |
Total stockholders’ equity | | | 878,552 | | | 902,811 | | | 893,297 | | | 896,768 | | | 866,685 |
Total liabilities and stockholders’ equity | | $ | 6,778,591 | | $ | 6,870,305 | | $ | 6,849,221 | | $ | 6,902,675 | | $ | 6,991,754 |
| | | | | | | | | | | | | | | |
7
Old Second Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except share data - unaudited)
| | Three Months Ended | | | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | | |||||
Interest and dividend income | | | | | | | | | | | | | | | | | |
Loans, including fees | | $ | 91,356 | | $ | 89,845 | | $ | 87,138 | | $ | 90,925 | | $ | 91,301 | | |
Loans held-for-sale | | | 31 | | | 62 | | | 43 | | | 35 | | | 31 | | |
Securities: | | | | | | | | | | | | | | | | | |
Taxable | | | 8,416 | | | 9,088 | | | 8,949 | | | 9,136 | | | 9,872 | | |
Tax exempt | | | 1,079 | | | 1,132 | | | 1,155 | | | 1,219 | | | 1,235 | | |
Dividends from FHLBC and FRBC stock | | | 672 | | | 535 | | | 512 | | | 390 | | | 381 | | |
Interest earning deposits with financial institutions | | | 537 | | | 527 | | | 549 | | | 598 | | | 1,255 | | |
Total interest and dividend income | | | 102,091 | | | 101,189 | | | 98,346 | | | 102,303 | | | 104,075 | | |
Interest expense | | | | | | | | | | | | | | | | | |
Savings, NOW, and money market deposits | | | 8,105 | | | 7,512 | | | 7,147 | | | 7,906 | | | 9,043 | | |
Time deposits | | | 5,757 | | | 6,199 | | | 7,217 | | | 8,665 | | | 10,896 | | |
Securities sold under repurchase agreements | | | 44 | | | 40 | | | 50 | | | 45 | | | 60 | | |
Other short-term borrowings | | | 3,145 | | | 2,989 | | | 1,791 | | | 1,644 | | | 308 | | |
Junior subordinated debentures | | | 269 | | | 289 | | | 296 | | | 288 | | | 288 | | |
Subordinated debentures | | | 542 | | | 675 | | | 546 | | | 546 | | | 547 | | |
Notes payable and other borrowings | | | 180 | | | 156 | | | 155 | | | 158 | | | 158 | | |
Total interest expense | | | 18,042 | | | 17,860 | | | 17,202 | | | 19,252 | | | 21,300 | | |
Net interest and dividend income | | | 84,049 | | | 83,329 | | | 81,144 | | | 83,051 | | | 82,775 | | |
Provision for credit losses | | | 6,750 | | | 7,500 | | | 9,500 | | | 3,000 | | | 19,653 | | |
Net interest and dividend income after provision for credit losses | | | 77,299 | | | 75,829 | | | 71,644 | | | 80,051 | | | 63,122 | | |
Noninterest income 1 | | | | | | | | | | | | | | | | | |
Wealth management | | | 3,682 | | | 3,628 | | | 3,383 | | | 3,537 | | | 3,515 | | |
Service charges on deposits | | | 3,134 | | | 3,075 | | | 3,130 | | | 3,125 | | | 3,202 | | |
Secondary mortgage fees | | | 101 | | | 166 | | | 121 | | | 123 | | | 92 | | |
Mortgage servicing rights mark to market gain (loss) | | | 623 | | | (152) | | | (152) | | | (428) | | | (389) | | |
Mortgage servicing income | | | 467 | | | 464 | | | 497 | | | 444 | | | 469 | | |
Net gain on sales of mortgage loans | | | 363 | | | 640 | | | 555 | | | 657 | | | 620 | | |
Securities gains (losses), net | | | (1) | | | - | | | - | | | 8 | | | (1) | | |
Change in cash surrender value of BOLI | | | 796 | | | 1,469 | | | 1,082 | | | 834 | | | 1,175 | | |
Death benefit realized on BOLI | | | - | | | - | | | - | | | - | | | 430 | | |
Card related income | | | 2,479 | | | 2,483 | | | 2,350 | | | 2,548 | | | 2,581 | | |
Other income | | | 1,426 | | | 1,488 | | | 1,664 | | | 1,306 | | | 1,415 | | |
Total noninterest income | | | 13,070 | | | 13,261 | | | 12,630 | | | 12,154 | | | 13,109 | | |
Noninterest expense 1 | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 30,846 | | | 30,103 | | | 29,673 | | | 30,996 | | | 39,723 | | |
Occupancy, furniture and equipment | | | 5,284 | | | 5,118 | | | 5,371 | | | 5,092 | | | 4,937 | | |
Computer and data processing | | | 3,258 | | | 3,217 | | | 3,375 | | | 4,798 | | | 4,002 | | |
FDIC insurance | | | 746 | | | 759 | | | 759 | | | 720 | | | 854 | | |
Net teller & bill paying | | | 754 | | | 724 | | | 716 | | | 701 | | | 691 | | |
General bank insurance | | | 355 | | | 351 | | | 353 | | | 354 | | | 437 | | |
Amortization of core deposit intangible | | | 1,149 | | | 1,167 | | | 1,176 | | | 1,235 | | | 1,251 | | |
Advertising and marketing expense | | | 603 | | | 483 | | | 551 | | | 437 | | | 650 | | |
Card related expense | | | 1,589 | | | 1,604 | | | 1,519 | | | 1,652 | | | 1,708 | | |
Professional fees | | | 1,417 | | | 1,160 | | | 1,299 | | | 1,265 | | | 3,145 | | |
Consumer credit expense | | | 1,725 | | | 1,720 | | | 1,522 | | | 1,451 | | | 1,368 | | |
Other real estate expense, net | | | (30) | | | 52 | | | (186) | | | 81 | | | 128 | | |
Other expense | | | 3,926 | | | 4,794 | | | 4,082 | | | 4,153 | | | 4,269 | | |
Total noninterest expense | | | 51,622 | | | 51,252 | | | 50,210 | | | 52,935 | | | 63,163 | | |
Income before income taxes | | | 38,747 | | | 37,838 | | | 34,064 | | | 39,270 | | | 13,068 | | |
Provision for income taxes | | | 9,807 | | | 9,659 | | | 8,479 | | | 10,483 | | | 3,197 | | |
Net income | | $ | 28,940 | | $ | 28,179 | | $ | 25,585 | | $ | 28,787 | | $ | 9,871 | | |
| | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.57 | | $ | 0.55 | | $ | 0.49 | | $ | 0.55 | | $ | 0.19 | | |
Diluted earnings per share | | | 0.56 | | | 0.54 | | | 0.48 | | | 0.54 | | | 0.18 | | |
Dividends declared per share | | | 0.07 | | | 0.07 | | | 0.07 | | | 0.07 | | | 0.06 | | |
| | | | | | | | | | | | | | | | | |
Ending common shares outstanding | | | 49,417,867 | | | 50,938,962 | | | 51,665,660 | | | 52,669,224 | | | 52,664,535 | | |
Weighted-average basic shares outstanding | | | 50,302,629 | | | 51,250,245 | | | 52,450,306 | | | 52,667,899 | | | 52,686,391 | | |
Weighted-average diluted shares outstanding | | | 51,145,790 | | | 52,120,337 | | | 53,303,072 | | | 53,480,431 | | | 53,509,690 | | |
1 Certain items in prior periods have been reclassified to conform to the current presentation.
8
Analysis of Average Balances, | ||||||||||||||||||||||||
Tax Equivalent Income / Expense and Rates | ||||||||||||||||||||||||
(Dollars in thousands - unaudited) | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| | Quarters Ended | ||||||||||||||||||||||
| | September 30, 2026 | | June 30, 2026 | | September 30, 2025 | ||||||||||||||||||
| | Average | | Income / | | Rate | | Average | | Income / | | Rate | | Average | | Income / | | Rate | ||||||
| | Balance | | Expense | | % | | Balance | | Expense | | % | | Balance | | Expense | | % | ||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | |
Interest earning deposits with financial institutions | | $ | 65,381 | | $ | 537 | | 3.26 | | $ | 64,839 | | $ | 527 | | 3.26 | | $ | 119,619 | | $ | 1,255 | | 4.16 |
Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 891,503 | | | 8,416 | | 3.75 | | | 955,176 | | | 9,088 | | 3.82 | | | 1,016,279 | | | 9,872 | | 3.85 |
Non-taxable (TE)1 | | | 129,636 | | | 1,366 | | 4.18 | | | 140,876 | | | 1,433 | | 4.08 | | | 149,621 | | | 1,563 | | 4.14 |
Total securities (TE)1 | | | 1,021,139 | | | 9,782 | | 3.80 | | | 1,096,052 | | | 10,521 | | 3.85 | | | 1,165,900 | | | 11,435 | | 3.89 |
FHLBC and FRBC Stock | | | 38,576 | | | 672 | | 6.91 | | | 36,676 | | | 535 | | 5.85 | | | 25,961 | | | 381 | | 5.82 |
Loans and loans held-for-sale1, 2 | | | 5,227,120 | | | 91,400 | | 6.94 | | | 5,223,093 | | | 89,921 | | 6.91 | | | 5,217,349 | | | 91,342 | | 6.95 |
Total interest earning assets | | | 6,352,216 | | | 102,391 | | 6.40 | | | 6,420,660 | | | 101,504 | | 6.34 | | | 6,528,829 | | | 104,413 | | 6.34 |
Cash and due from banks | | | 45,146 | | | - | | - | | | 46,700 | | | - | | - | | | 51,357 | | | - | | - |
Allowance for credit losses on loans | | | (70,983) | | | - | | - | | | (72,418) | | | - | | - | | | (72,354) | | | - | | - |
Other noninterest earning assets | | | 460,566 | | | - | | - | | | 457,995 | | | - | | - | | | 491,421 | | | - | | - |
Total assets | | $ | 6,786,945 | | | | | | | $ | 6,852,937 | | | | | | | $ | 6,999,253 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | $ | 721,922 | | $ | 1,102 | | 0.61 | | $ | 717,468 | | $ | 897 | | 0.50 | | $ | 668,439 | | $ | 825 | | 0.49 |
Money market accounts | | | 961,994 | | | 4,704 | | 1.94 | | | 948,319 | | | 4,400 | | 1.86 | | | 954,964 | | | 4,979 | | 2.07 |
Savings accounts | | | 1,098,934 | | | 2,299 | | 0.83 | | | 1,109,381 | | | 2,215 | | 0.80 | | | 1,175,011 | | | 3,239 | | 1.09 |
Time deposits | | | 905,298 | | | 5,757 | | 2.52 | | | 968,464 | | | 6,199 | | 2.57 | | | 1,347,455 | | | 10,896 | | 3.21 |
Interest bearing deposits | | | 3,688,148 | | | 13,862 | | 1.49 | | | 3,743,632 | | | 13,711 | | 1.47 | | | 4,145,869 | | | 19,939 | | 1.91 |
Securities sold under repurchase agreements | | | 24,059 | | | 44 | | 0.73 | | | 21,337 | | | 40 | | 0.75 | | | 33,382 | | | 60 | | 0.71 |
Other short-term borrowings | | | 321,413 | | | 3,145 | | 3.88 | | | 312,803 | | | 2,989 | | 3.83 | | | 25,978 | | | 308 | | 4.70 |
Junior subordinated debentures | | | 25,774 | | | 269 | | 4.14 | | | 25,774 | | | 289 | | 4.50 | | | 25,774 | | | 288 | | 4.43 |
Subordinated debentures | | | 29,803 | | | 542 | | 7.22 | | | 34,373 | | | 675 | | 7.88 | | | 59,521 | | | 547 | | 3.65 |
Notes payable and other borrowings | | | 13,938 | | | 180 | | 5.12 | | | 14,844 | | | 156 | | 4.22 | | | 14,806 | | | 158 | | 4.23 |
Total interest bearing liabilities | | | 4,103,135 | | | 18,042 | | 1.74 | | | 4,152,763 | | | 17,860 | | 1.73 | | | 4,305,330 | | | 21,300 | | 1.96 |
Noninterest bearing deposits | | | 1,722,851 | | | - | | - | | | 1,745,475 | | | - | | - | | | 1,782,193 | | | - | | - |
Other liabilities | | | 61,430 | | | - | | - | | | 55,582 | | | - | | - | | | 61,732 | | | - | | - |
Stockholders' equity | | | 899,529 | | | - | | - | | | 899,117 | | | - | | - | | | 849,998 | | | - | | - |
Total liabilities and stockholders' equity | | $ | 6,786,945 | | | | | | | $ | 6,852,937 | | | | | | | $ | 6,999,253 | | | | | |
Net interest income (GAAP) | | | | | $ | 84,049 | | | | | | | $ | 83,329 | | | | | | | $ | 82,775 | | |
Net interest margin (GAAP) | | | | | | | | 5.25 | | | | | | | | 5.21 | | | | | | | | 5.03 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income (TE)1 | | | | | $ | 84,349 | | | | | | | $ | 83,644 | | | | | | | $ | 83,113 | | |
Net interest margin (TE)1 | | | | | | | | 5.27 | | | | | | | | 5.23 | | | | | | | | 5.05 |
Interest bearing liabilities to earning assets | | | 64.59 | % | | | | | | | 64.68 | % | | | | | | | 65.94 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
1 Tax equivalent (TE) basis is calculated using a marginal tax rate of 21% in 2026 and 2025. See the discussion entitled “Non-GAAP Presentations” above and the tables beginning on page 13 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
2 Interest income from loans is shown on a TE basis, which is a non-GAAP financial measure as discussed in the table on page 13, and includes loan fee income of $1.8 million for the third quarter of 2026, loan fee income of $2.0 million for the second quarter of 2026, and loan fee income of $1.2 million for the third quarter of 2025. Nonaccrual loans are included in the above stated average balances.
9
Loans and Credit Quality
Loans | | Quarters Ended | |||||||||||||
(Dollars in thousands) | | September 30, | | June 30, | | March 31, | | December 31, | | | September 30, | ||||
| | 2026 | | 2026 | | 2026 | | 2025 | | | 2025 | ||||
Commercial | | $ | 867,362 | | $ | 913,527 | | $ | 845,278 | | $ | 842,130 | | $ | 786,095 |
Leases | | | 554,370 | | | 537,197 | | | 539,116 | | | 548,256 | | | 550,201 |
Commercial real estate – investor | | | 1,131,857 | | | 1,159,168 | | | 1,169,318 | | | 1,212,384 | | | 1,257,328 |
Commercial real estate – owner occupied | | | 684,169 | | | 667,645 | | | 702,986 | | | 706,567 | | | 680,412 |
Construction | | | 153,491 | | | 153,553 | | | 143,563 | | | 173,630 | | | 176,387 |
Residential real estate – investor | | | 65,679 | | | 65,133 | | | 69,763 | | | 70,225 | | | 69,362 |
Residential real estate – owner occupied | | | 247,515 | | | 242,768 | | | 239,711 | | | 230,432 | | | 231,547 |
Multifamily | | | 370,431 | | | 363,352 | | | 357,131 | | | 339,131 | | | 378,213 |
HELOC | | | 245,938 | | | 239,307 | | | 235,637 | | | 235,293 | | | 234,885 |
Powersport | | | 689,229 | | | 683,939 | | | 674,116 | | | 696,959 | | | 715,498 |
Other1 | | | 228,016 | | | 220,281 | | | 208,618 | | | 197,124 | | | 184,577 |
Total loans | | $ | 5,238,057 | | $ | 5,245,870 | | $ | 5,185,237 | | $ | 5,252,131 | | $ | 5,264,505 |
1 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.
| | | | | | | | | | | | | | |||
Nonperforming assets | | Quarters Ended | | |||||||||||||
(Dollars in thousands) | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | |||||
Nonaccrual loans | | $ | 36,579 | | $ | 53,747 | | $ | 62,636 | | $ | 47,952 | | $ | 34,126 | |
Loans past due 90 days or more and still accruing interest | |
| 3,057 | |
| 2,736 | |
| 12,868 | |
| 4,879 | |
| 13,859 | |
Total nonperforming loans | |
| 39,636 | |
| 56,483 | |
| 75,504 | |
| 52,831 | | | 47,985 | |
Other real estate owned | |
| - | |
| 622 | |
| 632 | |
| 1,427 | |
| 6,416 | |
Repossessed assets 1 | |
| 1,279 | |
| 819 | |
| 858 | |
| 1,363 | |
| 2,088 | |
Total nonperforming assets | | $ | 40,915 | | $ | 57,924 | | $ | 76,994 | | $ | 55,621 | | $ | 56,489 | |
| | | | | | | | | | | | | | | | |
30-89 days past due loans and still accruing interest | | $ | 43,553 | | $ | 22,499 | | $ | 50,036 | | $ | 52,169 | | $ | 22,415 | |
Nonaccrual loans to total loans | | | 0.70 | % | | 1.02 | % | | 1.21 | % | | 0.91 | % | | 0.65 | % |
Nonperforming loans to total loans | | | 0.76 | % | | 1.08 | % | | 1.46 | % | | 1.01 | % | | 0.91 | % |
Nonperforming assets to total loans plus OREO and repossessed assets | | | 0.78 | % | | 1.10 | % | | 1.48 | % | | 1.06 | % | | 1.07 | % |
Purchased credit-deteriorated loans to total loans | | | 1.00 | % | | 1.19 | % | | 1.35 | % | | 1.50 | % | | 1.61 | % |
| | | | | | | | | | | | | | | | |
Allowance for credit losses | | $ | 64,189 | | $ | 70,380 | | $ | 72,126 | | $ | 72,301 | | $ | 75,037 | |
Allowance for credit losses to total loans | | | 1.23 | % | | 1.34 | % | | 1.39 | % | | 1.38 | % | | 1.43 | % |
Allowance for credit losses to nonaccrual loans | | | 175.48 | % | | 130.95 | % | | 115.15 | % | | 150.78 | % | | 219.88 | % |
1 Repossessed assets are reported in other assets.
10
The following table shows classified loans by segment, which include nonaccrual loans, purchased credit deteriorated (“PCD”) loans if the risk rating so indicates, and all other loans considered substandard, for the following periods.
Classified loans | | Quarters Ended | |||||||||||||
(Dollars in thousands) | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | |||||
Commercial | | $ | 13,190 | | $ | 39,646 | | $ | 50,640 | | $ | 51,587 | | $ | 50,680 |
Leases | | | 1,729 | | | 2,930 | | | 2,604 | | | 2,428 | | | 1,277 |
Commercial real estate – investor | | | 12,730 | | | 11,262 | | | 14,959 | | | 14,245 | | | 2,853 |
Commercial real estate – owner occupied | | | 26,546 | | | 58,582 | | | 60,594 | | | 64,081 | | | 72,020 |
Construction | | | 12,866 | | | 12,976 | | | 12,983 | | | 11,421 | | | 1,612 |
Residential real estate – investor | | | 1,030 | | | 662 | | | 1,012 | | | 1,142 | | | 1,228 |
Residential real estate – owner occupied | | | 2,249 | | | 2,076 | | | 1,886 | | | 1,897 | | | 1,839 |
Multifamily | | | 1,254 | | | 1,197 | | | 1,489 | | | 1,494 | | | 1,183 |
HELOC | | | 2,355 | | | 2,250 | | | 1,832 | | | 1,466 | | | 1,538 |
Powersport | | | 145 | | | 198 | | | 204 | | | 68 | | | - |
Other1 | | | 154 | | | 318 | | | 369 | | | 270 | | | 30 |
Total classified loans | | $ | 74,248 | | $ | 132,097 | | $ | 148,572 | | $ | 150,099 | | $ | 134,260 |
1 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.
Loan charge-offs, net of recoveries | Quarters Ended | |||||||||||||
(Dollars in thousands) | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | |||||
| 2026 | | 2026 | | 2026 | | 2025 | | 2025 | |||||
Commercial | $ | 9,171 | | $ | 2,983 | | $ | 1,298 | | $ | (44) | | $ | 385 |
Leases | | 172 | | | 344 | | | 197 | | | 15 | | | 848 |
Commercial real estate – investor | | (14) | | | 2,804 | | | 3,919 | | | (14) | | | (15) |
Commercial real estate – owner occupied | | (1) | | | (1) | | | (5) | | | 1,125 | | | (2) |
Construction | | - | | | - | | | - | | | - | | | (46) |
Residential real estate – investor | | (3) | | | (1) | | | (2) | | | (1) | | | (2) |
Residential real estate – owner occupied | | (10) | | | (21) | | | (7) | | | (11) | | | (7) |
Multifamily | | - | | | - | | | - | | | - | | | 181 |
HELOC | | (10) | | | (14) | | | (6) | | | (49) | | | (19) |
Powersport | | 3,133 | | | 2,826 | | | 3,894 | | | 4,466 | | | 2,980 |
Other 1 | | 288 | | | 328 | | | 488 | | | 494 | | | 805 |
Net charge-offs (recoveries) | $ | 12,726 | | $ | 9,248 | | $ | 9,776 | | $ | 5,981 | | $ | 5,108 |
1 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.
11
Old Second Bancorp, Inc. and Subsidiaries
Quarterly Consolidated Average Balance
(In thousands - unaudited)
| | Quarters Ended | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | |||||
Assets | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 45,146 | | $ | 46,700 | | $ | 48,252 | | $ | 52,040 | | $ | 51,357 |
Interest earning deposits with financial institutions | | | 65,381 | | | 64,839 | | | 67,571 | | | 66,430 | | | 119,619 |
Cash and cash equivalents | | | 110,527 | | | 111,539 | | | 115,823 | | | 118,470 | | | 170,976 |
Securities available-for-sale, at fair value | | | 1,021,139 | | | 1,096,052 | | | 1,115,493 | | | 1,129,633 | | | 1,165,900 |
Federal Home Loan Bank Chicago (“FHLBC”) and Federal Reserve Bank Chicago (“FRBC”) stock | | | 38,576 | | | 36,676 | | | 31,540 | | | 30,085 | | | 25,961 |
Loans held-for-sale | | | 1,815 | | | 3,280 | | | 2,023 | | | 3,254 | | | 1,975 |
Loans | | | 5,225,305 | | | 5,219,813 | | | 5,205,721 | | | 5,275,389 | | | 5,215,374 |
Less: allowance for credit losses on loans | | | 70,983 | | | 72,418 | | | 71,869 | | | 73,718 | | | 72,354 |
Net loans | | | 5,154,322 | | | 5,147,395 | | | 5,133,852 | | | 5,201,671 | | | 5,143,020 |
Premises and equipment, net | | | 84,252 | | | 85,395 | | | 86,260 | | | 87,449 | | | 88,304 |
Other real estate owned, net | | | 616 | | | 626 | | | 853 | | | 4,410 | | | 6,464 |
Mortgage servicing rights, at fair value | | | 9,899 | | | 9,693 | | | 9,383 | | | 9,490 | | | 9,632 |
Goodwill | | | 129,196 | | | 129,196 | | | 129,196 | | | 130,135 | | | 127,873 |
Core deposit intangible ("CDI") | | | 20,758 | | | 21,916 | | | 23,073 | | | 24,281 | | | 25,539 |
Bank-owned life insurance (“BOLI”) | | | 133,768 | | | 132,046 | | | 130,930 | | | 130,151 | | | 128,870 |
Deferred tax assets, net | | | 29,477 | | | 31,296 | | | 30,342 | | | 32,705 | | | 30,375 |
Other assets | | | 52,600 | | | 47,827 | | | 50,396 | | | 58,443 | | | 74,364 |
Total assets | | $ | 6,786,945 | | $ | 6,852,937 | | $ | 6,859,164 | | $ | 6,960,177 | | $ | 6,999,253 |
| | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | |
Noninterest bearing demand | | $ | 1,722,851 | | $ | 1,745,475 | | $ | 1,738,504 | | $ | 1,781,374 | | $ | 1,782,193 |
Interest bearing: | | | | | | | | | | | | | | | |
Savings, NOW, and money market | | | 2,782,850 | | | 2,775,168 | | | 2,762,746 | | | 2,764,609 | | | 2,798,414 |
Time | | | 905,298 | | | 968,464 | | | 1,062,623 | | | 1,179,966 | | | 1,347,455 |
Total deposits | | | 5,410,999 | | | 5,489,107 | | | 5,563,873 | | | 5,725,949 | | | 5,928,062 |
Securities sold under repurchase agreements | | | 24,059 | | | 21,337 | | | 24,795 | | | 23,464 | | | 33,382 |
Other short-term borrowings | | | 321,413 | | | 312,803 | | | 189,056 | | | 159,565 | | | 25,978 |
Junior subordinated debentures | | | 25,774 | | | 25,774 | | | 25,774 | | | 25,774 | | | 25,774 |
Subordinated debentures | | | 29,803 | | | 34,373 | | | 59,564 | | | 59,542 | | | 59,521 |
Notes payable and other borrowings | | | 13,938 | | | 14,844 | | | 14,831 | | | 14,819 | | | 14,806 |
Other liabilities | | | 61,430 | | | 55,582 | | | 73,284 | | | 67,078 | | | 61,732 |
Total liabilities | | | 5,887,416 | | | 5,953,820 | | | 5,951,177 | | | 6,076,191 | | | 6,149,255 |
| | | | | | | | | | | | | | | |
Stockholders’ Equity | | | | | | | | | | | | | | | |
Common stock | | | 53,015 | | | 53,015 | | | 53,015 | | | 53,015 | | | 53,015 |
Additional paid-in capital | | | 340,227 | | | 339,145 | | | 340,459 | | | 340,870 | | | 339,612 |
Retained earnings | | | 598,284 | | | 573,158 | | | 551,491 | | | 526,910 | | | 500,075 |
Accumulated other comprehensive loss, net | | | (33,884) | | | (31,113) | | | (26,361) | | | (30,594) | | | (36,823) |
Treasury stock | | | (58,113) | | | (35,088) | | | (10,617) | | | (6,215) | | | (5,881) |
Total stockholders’ equity | | | 899,529 | | | 899,117 | | | 907,987 | | | 883,986 | | | 849,998 |
Total liabilities and stockholders’ equity | | $ | 6,786,945 | | $ | 6,852,937 | | $ | 6,859,164 | | $ | 6,960,177 | | $ | 6,999,253 |
| | | | | | | | | | | | | | | |
Total Earning Assets | | $ | 6,352,216 | | $ | 6,420,660 | | $ | 6,422,348 | | $ | 6,504,791 | | $ | 6,528,829 |
Total Interest Bearing Liabilities | | | 4,103,135 | | | 4,152,763 | | | 4,139,389 | | | 4,227,739 | | | 4,305,330 |
| | | | | | | | | | | | | | | |
12
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:
Net Income and Earnings Per Share - GAAP and Adjusted | | Three Months Ended | | | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | | |||||
| | | | | | | | | | | | | | | | | |
Income before income taxes (GAAP) | | $ | 38,747 | | $ | 37,838 | | $ | 34,064 | | $ | 39,270 | | $ | 13,068 | | |
Pre-tax income adjustments: | | | | | | | | | | | | | | | | | |
Provision for credit losses - Day Two | | | - | | | - | | | - | | | - | | | 13,153 | | |
Securities losses (gains), net | | | 1 | | | - | | | - | | | (8) | | | 1 | | |
Death benefit related to BOLI | | | - | | | - | | | - | | | - | | | (430) | | |
MSR (gains) losses | | | (623) | | | 152 | | | 152 | | | 428 | | | 389 | | |
Acquisition related costs, net of gains on branch sales | | | - | | | 526 | | | 349 | | | 2,296 | | | 11,508 | | |
Adjusted net income before taxes | | | 38,125 | | | 38,516 | | | 34,565 | | | 41,986 | | | 37,689 | | |
Taxes on adjusted net income | | | 9,649 | | | 9,832 | | | 8,604 | | | 11,208 | | | 9,326 | | |
Adjusted net income (non-GAAP) | | $ | 28,476 | | $ | 28,684 | | $ | 25,961 | | $ | 30,778 | | $ | 28,363 | | |
| | | | | | | | | | | | | | | | | |
Basic earnings per share (GAAP) | | $ | 0.57 | | $ | 0.55 | | $ | 0.49 | | $ | 0.55 | | $ | 0.19 | | |
Diluted earnings per share (GAAP) | | | 0.56 | | | 0.54 | | | 0.48 | | | 0.54 | | | 0.18 | | |
Adjusted basic earnings per share (non-GAAP) | | | 0.57 | | | 0.56 | | | 0.49 | | | 0.59 | | | 0.54 | | |
Adjusted diluted earnings per share (non-GAAP) | | | 0.55 | | | 0.55 | | | 0.49 | | | 0.58 | | | 0.53 | | |
| | | | | | | | | | | | | | | | | |
Total average assets | | | 6,786,945 | | | 6,852,937 | | | 6,859,164 | | | 6,960,177 | | | 6,999,253 | | |
| | | | | | | | | | | | | | | | | |
Return on average assets (GAAP) | | | 1.69 | % | | 1.65 | % | | 1.51 | % | | 1.64 | % | | 0.56 | % | |
Adjusted return on average assets (non-GAAP) | | | 1.66 | % | | 1.68 | % | | 1.53 | % | | 1.75 | % | | 1.61 | % | |
| | Quarters Ended | | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | |||||
Net Interest Margin | | | | | | | | | | | | | | | | |
Interest income (GAAP) | | $ | 102,091 | | $ | 101,189 | | $ | 98,346 | | $ | 102,303 | | $ | 104,075 | |
Taxable-equivalent adjustment: | | | | | | | | | | | | | | | | |
Loans | | | 13 | | | 14 | | | 13 | | | 9 | | | 10 | |
Securities | | | 287 | | | 301 | | | 307 | | | 324 | | | 328 | |
Interest income (TE) | | | 102,391 | | | 101,504 | | | 98,666 | | | 102,636 | | | 104,413 | |
Interest expense (GAAP) | | | 18,042 | | | 17,860 | | | 17,202 | | | 19,252 | | | 21,300 | |
Net interest income (TE) | | $ | 84,349 | | $ | 83,644 | | $ | 81,464 | | $ | 83,384 | | $ | 83,113 | |
Net interest income (GAAP) | | $ | 84,049 | | $ | 83,329 | | $ | 81,144 | | $ | 83,051 | | $ | 82,775 | |
Average interest earning assets | | $ | 6,352,216 | | $ | 6,420,660 | | $ | 6,422,348 | | $ | 6,504,791 | | $ | 6,528,829 | |
Net interest margin (GAAP) | | | 5.25 | % | | 5.21 | % | | 5.12 | % | | 5.07 | % | | 5.03 | % |
Net interest margin (TE) | | | 5.27 | % | | 5.23 | % | | 5.14 | % | | 5.09 | % | | 5.05 | % |
13
| | GAAP | | |||||||||||||
| | Three Months Ended | | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | |||||
Efficiency Ratio (GAAP) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Noninterest expense | | $ | 51,622 | | $ | 51,252 | | $ | 50,210 | | $ | 52,935 | | $ | 63,163 | |
Less amortization of core deposit intangibles | | | 1,149 | | | 1,167 | | | 1,176 | | | 1,235 | | | 1,251 | |
Less other real estate expense, net | | | (30) | | | 52 | | | (186) | | | 81 | | | 128 | |
Less acquisition related costs, net of gains on branch sales | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | |
Noninterest expense less adjustments | | $ | 50,503 | | $ | 50,033 | | $ | 49,220 | | $ | 51,619 | | $ | 61,784 | |
| | | | | | | | | | | | | | | | |
Net interest income | | $ | 84,049 | | $ | 83,329 | | $ | 81,144 | | $ | 83,051 | | $ | 82,775 | |
Taxable-equivalent adjustment: | | | | | | | | | | | | | | | | |
Loans | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | |
Securities | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | |
Net interest income including adjustments | | | 84,049 | | | 83,329 | | | 81,144 | | | 83,051 | | | 82,775 | |
Noninterest income | | | 13,070 | | | 13,261 | | | 12,630 | | | 12,154 | | | 13,109 | |
Less death benefit related to BOLI | | | - | | | - | | | - | | | - | | | 430 | |
Less securities (losses) gains | | | (1) | | | - | | | - | | | 8 | | | (1) | |
Less MSRs mark to market gains (losses) | | | 623 | | | (152) | | | (152) | | | (428) | | | (389) | |
Taxable-equivalent adjustment: | | | | | | | | | | | | | | | | |
Change in cash surrender value of BOLI | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | |
Noninterest income including adjustments | | | 12,448 | | | 13,413 | | | 12,782 | | | 12,574 | | | 13,069 | |
| | | | | | | | | | | | | | | | |
Net interest income including adjustments plus noninterest income including adjustments | | $ | 96,497 | | $ | 96,742 | | $ | 93,926 | | $ | 95,625 | | $ | 95,844 | |
Efficiency ratio (GAAP) | | | 52.34 | % | | 51.72 | % | | 52.40 | % | | 53.98 | % | | 64.46 | % |
N/A - Not applicable.
| | Non-GAAP | | |||||||||||||
| | Three Months Ended | | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | |||||
Adjusted Efficiency Ratio (non-GAAP) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Noninterest expense | | $ | 51,622 | | $ | 51,252 | | $ | 50,210 | | $ | 52,935 | | $ | 63,163 | |
Less amortization of core deposit intangibles | | | 1,149 | | | 1,167 | | | 1,176 | | | 1,235 | | | 1,251 | |
Less other real estate expense, net | | | (30) | | | 52 | | | (186) | | | 81 | | | 128 | |
Less acquisition related costs, net of gains on branch sales | | | - | | | 526 | | | 349 | | | 2,296 | | | 11,508 | |
Noninterest expense less adjustments | | $ | 50,503 | | $ | 49,507 | | $ | 48,871 | | $ | 49,323 | | $ | 50,276 | |
| | | | | | | | | | | | | | | | |
Net interest income | | $ | 84,049 | | $ | 83,329 | | $ | 81,144 | | $ | 83,051 | | $ | 82,775 | |
Taxable-equivalent adjustment: | | | | | | | | | | | | | | | | |
Loans | | | 13 | | | 14 | | | 13 | | | 9 | | | 10 | |
Securities | | | 287 | | | 301 | | | 307 | | | 324 | | | 328 | |
Net interest income including adjustments | | | 84,349 | | | 83,644 | | | 81,464 | | | 83,384 | | | 83,113 | |
Noninterest income | | | 13,070 | | | 13,261 | | | 12,630 | | | 12,154 | | | 13,109 | |
Less death benefit related to BOLI | | | - | | | - | | | - | | | - | | | 430 | |
Less securities (losses) gains | | | (1) | | | - | | | - | | | 8 | | | (1) | |
Less MSRs mark to market gains (losses) | | | 623 | | | (152) | | | (152) | | | (428) | | | (389) | |
Taxable-equivalent adjustment: | | | | | | | | | | | | | | | | |
Change in cash surrender value of BOLI | | | 212 | | | 390 | | | 288 | | | 222 | | | 312 | |
Noninterest income including adjustments | | | 12,660 | | | 13,803 | | | 13,070 | | | 12,796 | | | 13,381 | |
| | | | | | | | | | | | | | | | |
Net interest income including adjustments plus noninterest income including adjustments | | $ | 97,009 | | $ | 97,447 | | $ | 94,534 | | $ | 96,180 | | $ | 96,494 | |
Adjusted efficiency ratio (non-GAAP) | | | 52.06 | % | | 50.80 | % | | 51.70 | % | | 51.28 | % | | 52.10 | % |
14
| | Quarters Ended | | |||||||||||||
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | |||||
| | 2026 | | 2026 | | 2026 | | 2025 | | 2025 | | |||||
Adjusted Return on Average Tangible Common Equity Ratio | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net income (GAAP) | | $ | 28,940 | | $ | 28,179 | | $ | 25,585 | | $ | 28,787 | | $ | 9,871 | |
| | | | | | | | | | | | | | | | |
Income before income taxes (GAAP) | | $ | 38,747 | | $ | 37,838 | | $ | 34,064 | | $ | 39,270 | | $ | 13,068 | |
Pre-tax income adjustments: | | | | | | | | | | | | | | | | |
Provision for credit losses - Day Two | | | - | | | - | | | - | | | - | | | 13,153 | |
Securities losses (gains), net | | | 1 | | | - | | | - | | | (8) | | | 1 | |
MSR (gains) losses | | | (623) | | | 152 | | | 152 | | | 428 | | | 389 | |
Acquisition related costs, net of gains on branch sales | | | - | | | 526 | | | 349 | | | 2,296 | | | 11,508 | |
Death benefit realized on BOLI | | | - | | | - | | | - | | | - | | | (430) | |
Amortization of core deposit intangibles | | | 1,149 | | | 1,167 | | | 1,176 | | | 1,235 | | | 1,251 | |
Adjusted net income, excluding intangibles amortization, before taxes | | | 39,274 | | | 39,683 | | | 35,741 | | | 43,221 | | | 38,940 | |
Taxes on adjusted net income | | | 9,940 | | | 10,130 | | | 8,896 | | | 11,538 | | | 9,632 | |
Adjusted net income (non-GAAP) | | $ | 29,334 | | $ | 29,553 | | $ | 26,845 | | $ | 31,683 | | $ | 29,308 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total Average Common Equity | | $ | 899,529 | | $ | 899,117 | | $ | 907,987 | | $ | 883,986 | | $ | 849,998 | |
Less average goodwill and intangible assets | | | 149,954 | | | 151,112 | | | 152,269 | | | 154,416 | | | 153,412 | |
Average tangible common equity (non-GAAP) | | $ | 749,575 | | $ | 748,005 | | $ | 755,718 | | $ | 729,570 | | $ | 696,586 | |
| | | | | | | | | | | | | | | | |
Total Common Equity | | $ | 878,552 | | $ | 902,811 | | $ | 893,297 | | $ | 896,768 | | $ | 866,685 | |
Less goodwill and intangible assets | | | 149,396 | | | 150,545 | | | 151,712 | | | 152,888 | | | 155,189 | |
Tangible common equity | | $ | 729,156 | | $ | 752,266 | | $ | 741,585 | | $ | 743,880 | | $ | 711,496 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 6,778,591 | | $ | 6,870,305 | | $ | 6,849,221 | | $ | 6,902,675 | | $ | 6,991,754 | |
Less goodwill and intangible assets | | | 149,396 | | | 150,545 | | | 151,712 | | | 152,888 | | | 155,189 | |
Tangible assets | | $ | 6,629,195 | | $ | 6,719,760 | | $ | 6,697,509 | | $ | 6,749,787 | | $ | 6,836,565 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Return on average common equity (GAAP) | | | 12.76 | % | | 12.57 | % | | 11.43 | % | | 12.92 | % | | 4.61 | % |
Return on average tangible common equity (non-GAAP) | | | 15.77 | % | | 15.58 | % | | 14.20 | % | | 16.15 | % | | 6.16 | % |
Adjusted return on average tangible common equity (non-GAAP) | | | 15.53 | % | | 15.85 | % | | 14.41 | % | | 17.23 | % | | 16.69 | % |
Tangible common equity to tangible assets | | | 11.00 | % | | 11.19 | % | | 11.07 | % | | 11.02 | % | | 10.41 | % |
15
| 1 Loan Portfolio Disclosures AS OF SEPTEMBER 30, 2026 Exhibit 99.2 |
| 2 Portfolio Segment Outstanding Classified Allowance Commercial (incl. Leases) $1,422 $15 1.05% Commercial Real Estate Investor $1,132 $13 1.64% Commercial Real Estate Owner Occ. $684 $27 0.40% Construction $154 $13 0.73% Residential Real Estate $313 $3 0.81% Multifamily $370 $1 0.41% HELOC $246 $2 1.37% Powersport $689 - 2.70% Other (less than $100 million) $228 - 2.01% Total $5,238 $74 1.23% Construction 3% Commercial RE Investor 22% Commercial RE Owner Occ. 13% Commercial (inc. Leases) 27% Multifamily 7% Residential Real Estate 6% HELOC 5% Other (less than $100 million) 4% Powersport 13% Loan Portfolio Composition (in millions) Q3 2026 Loan Portfolio Disclosures Total Loans and Allowance for Credit Losses Trend (in millions) $3,940 $3,999 $5,265 $5,252 $5,185 $5,246 $5,238 $42 $43 $75 $72 $72 $70 $64 $- $10 $20 $30 $40 $50 $60 $70 $80 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 3/31/2025 6/30/2025 9/30/2025 12/31/2025 3/31/2026 6/30/2026 9/30/2026 Total Loans ACL |
| 3 Criticized Loans (in millions) 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% $- $50 $100 $150 $200 $250 $300 $350 3/31/23 6/30/23 9/30/23 12/31/23 3/31/24 6/30/24 9/30/24 12/31/24 3/31/25 6/30/25 9/30/25 12/31/25 3/31/26 6/30/26 9/30/26 Office CRE Healthcare Other Criticized Loans/ Total Loans Q3 2026 Loan Portfolio Disclosures $4,988 $632 $622 $1,498 $6,416 $1,427 $234 $2,088 $1,363 $858 $819 $1,279 $- $2,000 $4,000 $6,000 $8,000 $10,000 6/30/25 9/30/25 12/31/25 3/31/26 6/30/26 9/30/26 OREO OREO Under Contract Repossessed Assets OREO and Repossessed Assets (in thousands) |
| 4 Participation / Syndication Portfolio Mix (in millions) Participation / Syndication Portfolio Exposure (in millions) Parti / Syndi Portfolio Outstanding SNC Classified Manufacturing C&I $39 - - Multifamily $36 - - Retail CRE $26 - - Healthcare $24 - - Office CRE $17 - - Hotel CRE $15 - - Administration C&I $15 - - Construction C&I $15 - - Other (under $10 million) $26 $7 - Total Purchased $213 $7 - Manufacturing C&I Multifamily 18% 17% Retail CRE 12% Healthcare 11% Office CRE 8% Other 34% $543 $463 $362 $285 $213 14.2% 11.1% 8.9% 4.5% 4.1% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $- $100 $200 $300 $400 $500 $600 12/31/2022 12/31/2023 12/31/2024 12/31/2025 9/30/2026 Outstanding % of Total Commitments Q3 2026 Loan Portfolio Disclosures |
| 5 Property Type Outstanding LTV Classified Allowance Retail $341 54% $2 1.01% Industrial $243 49% - 1.06% Office $152 68% - 2.22% Senior Living $109 58% - 1.11% Parking Garage $76 49% - 0.85% Hotel $67 61% - 1.52% Other (under $50 million) $144 68% $11 4.51% Total $1,132 57% $13 1.64% Commercial Real Estate Investor Portfolio Composition (in millions) Retail 30% Office 13% Industrial 21% Parking Garage 7% Hotel 6% Senior Living 10% Other (under $50 million) 13% Illinois 55% Wisconsin 6% Texas 7% North Carolina 4% Georgia 3% Tennessee 3% Oklahoma 3% Other (under $30 million) 19% State Outstanding LTV Classified Illinois $622 60% $11 Texas $82 55% - Wisconsin $66 61% - North Carolina $49 49% - Oklahoma $34 61% - Georgia $32 57% - Tennessee $31 51% $2 Other (under $30 million) $216 49% - Total $1,132 57% $13 Q3 2026 Loan Portfolio Disclosures |
| 6 Location Outstanding LTV Classified Allowance Illinois $124 70% - 2.49% Chicago $22 74% - 2.42% Suburban $102 69% - 2.40% Oklahoma $15 64% - 0.84% Colorado $6 51% - 0.84% Oregon $4 73% - 0.84% Georgia $2 59% - 0.84% Wisconsin $1 63% - 0.84% Total $152 68% - 2.22% Office Commercial Real Estate Investor Portfolio Composition (in millions) Illinois - Chicago 14% Illinois - Suburban 67% Oklahoma 10% Other (less than $5 million) 5% Colorado 4% Office Commercial Real Estate Investor Risk Profile (in millions) Q3 2026 Loan Portfolio Disclosures $36 $66 $18 $32 $- $20 $40 $60 $80 < 1 year 1-3 years 3-5 years > 5 years Maturity Outstanding LTV DSCR < 1 year $32 81% 1.33x 1-3 years $58 80% 1.41x 3-5 years $14 57% 1.56x > 5 years $30 54% 1.54x Total $134 71% 1.44x Office Commercial Real Estate by Loan Maturity Office Commercial Real Estate > $1 million |
| 7 Industry Outstanding Classified Allowance Health Care, Social Services $275 $2 0.22% Other Services $75 $4 0.44% Retail Trade $62 - 0.34% Manufacturing $57 - 0.30% Real Estate, Leasing $33 - 0.23% Wholesale Trade $34 - 0.13% Accommodation, Food Service $31 $7 1.64% Arts, Entertainment $26 $2 0.37% Other (under $20 million) $91 $12 0.76% Total $684 $27 0.40% Manufacturing 8% Accommodation, Food Service 5% Retail Trade 9% Real Estate, Leasing 5% Healthcare 40% Other Services 11% Wholesale Trade 5% Other (under $30 million) 17% Commercial Real Estate Owner-Occupied Portfolio Composition (in millions) Health Care, Social Outstanding Classified Allowance Assisted Living $137 $2 0.22% Memory Care $62 - 0.26% Skilled Nursing $53 - 0.16% Child Care $6 - 0.31% Other (under $5 million) $17 - 0.19% Total $275 $2 0.22% Skilled Nursing 19% Assisted Living 50% Memory Care 23% Child Care 2% Other (under $5 million) 6% Q3 2026 Loan Portfolio Disclosures |
| 8 Commercial & Industrial Outstanding Classified Manufacturing $411 - Construction $229 $5 Administrative, Waste Service $180 - Professional $126 - Finance, Insurance $102 - Transportation, Warehousing $93 - Real Estate, Leasing $76 - Health Care, Social Services $56 $1 Wholesale Trade $44 $3 Other (under $20 million) $105 $6 Total $1,422 $15 Commercial (including Leases) Portfolio Composition (in millions) Construction 16% Manufacturing 29% Transportation, Warehousing 7% Finance, Insurance 7% Professional 9% Administration, Waste Service 13% Real Estate, Leasing 5% Other (under $60 million) 14% Commercial Revolving Line Utilization (outstanding in millions) $653 $587 $574 $658 $717 $718 $756 $737 55% 52% 53% 55% 57% 57% 60% 58% 30% 35% 40% 45% 50% 55% 60% 65% 70% $400 $450 $500 $550 $600 $650 $700 $750 $800 12/31/24 3/31/25 6/30/25 9/30/25 12/31/25 3/31/26 6/30/26 9/30/26 Q3 2026 Loan Portfolio Disclosures |
| 9 Origination Tier Outstanding Weighted FICO Portfolio APR % Tier 1 $366 777 7.99% Tier 2 $130 711 10.24% Tier 3 $80 684 12.77% Tier 4 $39 660 14.73% Tier 5 $74 606 17.01% Total $689 730 10.24% Powersport Portfolio Composition (in millions) Tier 1 53% Tier 2 19% Tier 3 11% Tier 4 6% Tier 5 11% Historical Contribution Margin Q3 2026 Loan Portfolio Disclosures Contribution Margin (1) 2023 (EBG) 2024 (EBG) 12/31/2025 3/31/2026 6/30/2026 9/30/2026 Portfolio APR 8.13% 9.02% 9.82% 10.14% 10.20% 10.24% Net Promo Accretion 0.41% 0.74% 1.03% 1.30% 1.33% 1.17% Participation -0.87% -0.87% -0.91% -1.08% -1.12% -1.00% Net Loss -1.11% -1.39% -1.76% -2.06% -1.80% -1.80% Net Contribution Margin 6.56% 7.52% 8.19% 8.30% 8.62% 8.60% (1) Historical contribution margin represents Evergreen Bank Group (EBG) performance through 6/30/2025. Contribution margin presented after 6/30/2025 excludes purchase accounting adjustments. Asset Type Outstanding % of Total Portfolio APR % New $521 76% 9.57% Used $168 24% 12.46% Total $689 10.24% |
| 10 Net Charge-offs (Recoveries) (in thousands) Portfolio 12/31/2025 (Q) 3/31/2026 (Q) 6/30/2026 (Q) 9/30/2026 (Q) 9/30/2026 (TTM) NCO(R) % Commercial (incl. Leases) ($29) $1,495 $3,327 $9,343 $14,136 0.99% Commercial Real Estate Investor ($14) $3,919 $2,804 ($14) $6,695 0.59% Commercial Real Estate Owner Occupied $1,125 ($5) ($1) ($1) $1,118 0.16% Construction - - - - - 0.00% Residential Real Estate ($12) ($9) ($22) ($13) ($56) (0.02%) Multifamily - - - - - 0.00% HELOC ($49) ($6) ($14) ($10) ($79) (0.03%) Powersport $4,466 $3,894 $2,826 $3,133 $14,319 2.08% Other $494 $488 $328 $288 $1,598 0.70% Total $5,981 $9,776 $9,248 $12,726 $37,731 0.72% 9/30/2025 12/31/2025 3/31/2026 6/30/2026 9/30/2026 Beginning ACL Balance $42,990 $75,037 $72,301 $72,126 $70,380 Day 1 Credit Mark (PCD) $17,540 - - - - Day 2 Credit Mark (Non-PCD) $13,153 - - - - Plus: Provision $6,462 $3,245 $9,602 $7,502 $6,535 Less: Net Charge-off (Recovery) $5,108 $5,981 $9,776 $9,248 $12,726 Ending ACL Balance $75,037 $72,301 $72,126 $70,380 $64,189 Allowance for Credit Losses Quarterly Rollforward(2) (in thousands) Q3 2026 Loan Portfolio Disclosures (2) The Allowance for Credit Losses presented excludes the Allowance for Unfunded Commitments, which totaled $2.2 million as of September 30, 2026 and is reported within other liabilities on the Statements of Condition. |
