Financial Analysis

"Note 2: Acquisition Completed Acquisitions Bancorp Financial On July 1, 2025, the Company completed its acquisition of Bancorp Financial and its wholly owned subsidiary, Evergreen Bank Group, based in Oakbrook, Illinois, with operations throughout our existing market footprint as well as a loan production office in Reno, Nevada. This acquisition brought increased scale and new markets to the Company, and provided new product offerings and line of business opportunities. At closing, the Company acquired $1.43 billion of assets, $1.20 billion of loans, $119.1 million of securities, and $1.23 billion of deposits, net of fair value adjustments. Under the terms of the merger agreement, each outstanding share of Bancorp Financial common stock was exchanged for 2.5814 shares of the Companys common stock, plus $15.93 of cash. This resulted in merger consideration of $189.4 million, based on the closing price of the Companys common stock on the date of acquisition, which consisted of 7.9 million shares of the Companys common stock and $48.9 million of cash. Goodwill of $36.0 million associated with the acquisition was recorded by the Company, which was the result of expected synergies, operational efficiencies and other factors. The acquisition of Bancorp Financial has been accounted for as a business combination. The Company recorded the estimate of fair value based on initial valuations available at July 1, 2025. The determination of estimated fair value required management to make …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Note 14: Commitments In the normal course of business, there are outstanding commitments that are not reflected in the Consolidated Financial Statements. Commitments include financial instruments that involve, to varying degrees, elements of credit, interest rate, and liquidity risk. In managements opinion, these do not represent unusual risks, and management does not anticipate significant losses as a result of these transactions. The Company uses the same credit policies in making commitments and conditional obligations for borrowers as it does for on-balance sheet instruments. The following table is a summary of financial instrument commitments as of December 31, were as follows: December 31, 2025 December 31, 2024 Fixed Variable Total Fixed Variable Total Letters of credit: Borrower: Financial standby $ 118 $ 26,769 $ 26,887 $ 188 $ 16,322 $ 16,510 Performance standby 512 8,666 9,178 552 10,207 10,759 630 35,435 36,065 740 26,529 27,269 Non-borrower: Performance standby - - - - 67 67 Total letters of credit $ 630 $ 35,435 $ 36,065 $ 740 $ 26,596 $ 27,336 Unused loan commitments $ 174,479 $ 592,658 $ 767,137 $ 163,282 $ 616,533 $ 779,815 The Bank occupies facilities under long-term operating leases, some of which include provisions for future rent increases. In addition, the Company leases space at sites that house automatic teller machines (ATMs). The Company also receives rental income on certain leased properties. As of December 31, 2025, aggregate future minimum rental …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Note 9: Borrowings The following table is a summary of borrowings as of December 31, 2025: 2025 2024 Securities sold under repurchase agreements $ 23,769 $ 36,657 Other short-term borrowings 215,000 20,000 Junior subordinated debentures 1 25,774 25,773 Subordinated debentures 59,552 59,467 Notes payable and other borrowings 2 14,825 - Total borrowings $ 338,920 $ 141,897 1 See Note 10: Junior Subordinated Debentures 2 Long-term FHLBC advance, net of purchase accounting adjustment The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature within 1 to 90 days from the transaction date and are governed by sweep repurchase agreements. All sweep repurchase agreements are treated as financings secured by U.S. government agencies, collateralized mortgage obligations, mortgage-backed securities and/or highly-rated issues of State and political subdivisions, and had a carrying amount of $23.8 million and $36.7 million at December 31, 2025 and 2024, respectively. The average amount and weighted average rate for the year ended December 31, 2025, was $31.7 million and 0.72% with the maximum month-end amount recorded at $47.3 million at June 30, 2025. The average amount and weighted average rate for the year ended December 31, 2024, was $38.2 million and 0.88% with the maximum month-end amount recorded at $53.9 million at September 30, 2024. The fair value of the pledged collateral was $74.0 mi …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Note 12: Equity Compensation Plans Stock-based awards are outstanding under the Companys 2019 Equity Incentive Plan, as amended and restated (the 2019 Plan). The 2019 Plan was originally approved at the May 2019 annual stockholders meeting and authorized 600,000 shares, and at the May 2021 annual stockholders meeting, the Company obtained stockholder approval to increase the number of shares of common stock authorized for issuance under the plan by 1,200,000 shares, from 600,000 shares to 1,800,000 shares. At the May 2025 annual stockholders meeting, the Company obtained stockholder approval to increase the number of shares of common stock authorized for issuance under the 2019 Plan by an additional 800,000 shares, from 1,800,000 shares to 2,600,000 shares. Following the approval of the 2019 Plan, no further awards will be granted under any other prior plan. The 2019 Plan authorizes the granting of qualified stock options, non-qualified stock options, restricted stock, restricted stock units, and stock appreciation rights (SARs). Awards may be granted to selected directors, officers, employees or eligible service providers under the 2019 Plan at the discretion of the Compensation Committee of the Companys Board of Directors. As of December 31, 2025, 1,310,160 shares remained available for issuance under the 2019 Plan. The Company has granted only restricted stock units under the 2019 Equity Incentive Plan. Generally, restricted stock and restricted stock units granted under t …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Note 16: Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy established by the Company also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs that may be used to measure fair value are: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date. Level 2: Significant observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a companys own view about the assumptions that market participants would use in pricing an asset or liability. At December 31, 2025, and December 31, 2024, there were no transfers between levels. The majority of securities are valued by external pricing services or dealer market participants and are classified in Level 2 of the fair value hierarchy. Both market and income valuation approaches are utilized. Quarterly, the Company evaluates the methodologies u …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Note 11: Income Taxes Income Taxes Paid ASU 2023-09 Disaggregation 2025 2024 2023 Federal $ 15,125 $ 17,943 $ 24,500 States & local Illinois 3,750 3,650 10,430 All other states & local 1,817 1,367 732 Foreign - - - Total net cash taxes paid in the current period $ 20,692 $ 22,960 $ 35,662 Pretax income is entirely related to domestic activities, the Company did not have any foreign operations. The components of income tax expense from continuing operations consisted of the following: 2025 2024 2023 Current tax expense: Federal $ 18,707 $ 22,011 $ 20,724 State 7,141 7,048 10,098 Total 25,848 29,059 30,822 Deferred tax expense (benefit): Federal 1,589 (1,419) 1,964 State 4 52 (107) Total 1,593 (1,367) 1,857 Net provision for income taxes from continuing operations $ 27,441 $ 27,692 $ 32,679 Effective tax rates differ from federal statutory rates applied to financial statement income for the years ended December 31, due to the following: 2025 2024 2023 Amount % of Pretax Income Amount % of Pretax Income Amount % of Pretax Income Tax computed at the statutory federal rate $ 22,628 21.0 % $ 23,721 21.0 % $ 26,126 21.0 % State and local income taxes, net of federal benefit 1 5,645 5.2 5,775 5.1 7,911 6.4 Nontaxable or nondeductible Items BOLI income (763) (0.7) (951) (0.8) (429) (0.3) Tax exempt interest, net (792) (0.7) (820) (0.7) (947) (0.8) Other adjustments Stock based compensation (226) (0.2) (139) (0.1) (132) (0.1) Other, net 949 0.9 106 - 150 0.1 Total tax at effect …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recent Accounting Pronouncements The following is a summary of recent accounting pronouncements that have impacted or could potentially affect the Company : ASU 2023-06 On October 9, 2023, the FASB issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SECs Disclosure Update and Simplification Initiative. The amendments in the ASU modify the disclosure or presentation requirements of a variety of topics in the codification. Certain of the amendments represent clarifications to, or technical corrections of, the current requirements. Each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. The amendments in this ASU are not expected to have a material impact on the financial statements of the Company. ASU 2023-09 On December 14, 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation, and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual basis the following information about …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Note 21: Employee Benefit Plans Old Second Bancorp, Inc. Employees 401(k) Savings Plan and Trust The Company sponsors a qualified, tax-exempt defined contribution plan (the 401(k) Plan) qualifying under section 401(k) of the Internal Revenue Code. Virtually all employees are eligible to participate after meeting certain age and service requirements. Eligible employees are permitted to contribute up to a dollar limit set by law of their compensation to the 401(k) Plan. For the years ended December 31, 2025, 2024 and 2023, a discretionary match equal to 100% of the first 3% and 50% of the next 2% was made to participants of the 401(k) Plan. Participants are 100% vested in the discretionary matching contributions. Participants can choose between several different investment options under the 401(k) Plan, including shares of the Companys common stock. An additional component of the 401(k) Plan arrangement allows the Company to make annual discretionary profit-sharing contributions based on the Companys profitability in a given year, and on each participants annual compensation. The Company elected not to make a discretionary profit-sharing contribution for the years end December 31, 2025, 2024 and 2023. The total expense relating to the 401(k) Plan was approximately $2.7 million in 2025, $2.3 million in 2024 and $2.2 million in 2023. Old Second Bancorp, Inc. Voluntary Deferred Compensation Plan for Executives and Directors The Company sponsors a deferred compensation plan, which …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Note 22: Segment Information Various identifiable operating segments provide a variety of revenue streams including loans, deposits, and wealth management services. The Companys Chief Operating Decision Maker (CODM) is the Chief Financial Officer. Through our wholly-owned subsidiary, Old Second National Bank, we offer a wide variety of community banking services primarily throughout the Chicagoland area, including commercial and consumer lending and deposit services, and a wide array of wealth management services. The accounting policies for the services discussed here are the same as those described in Note 1: Summary of Significant Accounting Policies. We earn interest income on portfolio loans, fee income on loan originations and commitments, fees charged on certain deposit accounts, as well as fees related to wealth management services. Although information is available on each of the individual revenue streams, the CODM manages, allocates resources, and evaluates performance on a company-wide basis. The CODM uses consolidated net income to evaluate the financial performance of the Companys business along with budget to actual results in assessing the Companys performance and in determining the allocation of resources whether it be to reinvest in the Company or deploy capital in order to maximize shareholder value. The chief operating decision maker uses consolidated net income and return on average assets to benchmark the Company against competitors as well as against pr …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Note 2 Acquisition Completed Acquisitions Bancorp Financial On July 1, 2025, the Company completed its acquisition of Bancorp Financial and its wholly owned subsidiary, Evergreen Bank Group, based in Oakbrook, Illinois, with operations throughout our existing market footprint as well as Nevada. This acquisition brought increased scale and new markets to the Company, and provided new product offerings and line of business opportunities. At closing, the Company acquired $1.43 billion of assets, $1.19 billion of loans, $119.1 million of securities, and $1.23 billion of deposits, net of fair value adjustments. Under the terms of the merger agreement, each outstanding share of Bancorp Financial common stock was exchanged for 2.5814 shares of the Companys common stock, plus $15.93 of cash. This resulted in merger consideration of $189.4 million, based on the closing price of the Companys common stock on the date of acquisition, which consisted of 7.9 million shares of the Companys common stock and $48.9 million of cash. Goodwill of $37.0 million associated with the acquisition was recorded by the Company, which was the result of expected synergies, operational efficiencies and other factors. The acquisition of Bancorp Financial has been accounted for as a business combination. The Company recorded the estimate of fair value based on initial valuations available at July 1, 2025. The determination of estimated fair value required management to make assumptions related to discount ra …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Note 7 Borrowings The following table is a summary of borrowings as of September 30, 2025, and December 31, 2024. Junior subordinated debentures are discussed in more detail in Note 8: September 30, 2025 December 31, 2024 Securities sold under repurchase agreements $ 24,290 $ 36,657 Other short-term borrowings 165,000 20,000 Junior subordinated debentures 1 25,774 25,773 Subordinated debentures 59,531 59,467 Other borrowings 2 14,812 - Total borrowings $ 289,407 $ 141,897 1 See Note 8: Junior Subordinated Debentures. 2 Long-term FHLBC advance. The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature overnight from the transaction date and are governed by sweep repurchase agreements. All sweep repurchase agreements are treated as financings secured by U.S. government agencies and collateralized mortgage-backed securities, and had a carrying amount of $24.3 million at September 30, 2025, and $36.7 million at December 31, 2024. The fair value of the pledged collateral was $74.0 million at September 30, 2025, and $73.6 million at December 31, 2024. At September 30, 2025, there were no customers with secured balances exceeding 10% of stockholders equity. The Companys borrowings at the FHLBC require the Bank to be a member and invest in the stock of the FHLBC. Total borrowings are generally limited to the lower of 35% of total assets or 60% of the book value of certain mortgage loans. …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Note 9 Equity Compensation Plans Stock-based awards are outstanding under the Companys 2019 Equity Incentive Plan, as amended and restated (the 2019 Plan). The 2019 Plan was originally approved at the May 2019 annual stockholders meeting and authorized 600,000 shares, and at the May 2021 annual stockholders meeting, the Company obtained stockholder approval to increase the number of shares of common stock authorized for issuance under the 2019 Plan by 1,200,000 shares, from 600,000 shares to 1,800,000 shares. At the May 2025 annual stockholders meeting, the Company obtained stockholder approval to increase the number of shares of common stock authorized for issuance under the 2019 Plan by an additional 800,000 shares, from 1,800,000 shares to 2,600,000 shares. Following the approval of the 2019 Plan, no further awards will be granted under any other prior plan. The 2019 Plan authorizes the granting of qualified stock options, non-qualified stock options, restricted stock, restricted stock units, and stock appreciation rights (SARs), to date only restricted stock units have been awarded. Awards may be granted to selected directors, officers, employees or eligible service providers under the 2019 Plan at the discretion of the Compensation Committee of the Companys Board of Directors. As of September 30, 2025, 1,313,601 shares remained available for issuance under the 2019 Plan. Generally, restricted stock units granted under the 2019 Plan vest three years from the grant date, b …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Note 12 Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy established by the Company also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs that may be used to measure fair value are: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date. Level 2: Significant observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a companys own view about the assumptions that market participants would use in pricing an asset or liability. There were no transfers between levels during the nine-month period ended September 30, 2025, and September 30, 2024 . Company has certain assets and liabilities measured at fair value. The majority of those assets and liabilities are measured using Level 2 measurement methods. The following is a description of the techniques used to measure all asse …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Recent Accounting Pronouncements The following is a summary of recent accounting pronouncements that have impacted or could potentially affect the Company : ASU 2023-06 On October 9, 2023, the FASB issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SECs Disclosure Update and Simplification Initiative. The amendments in the ASU modify the disclosure or presentation requirements of a variety of topics in the codification. Certain of the amendments represent clarifications to, or technical corrections of, the current requirements. Each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. The amendments in this ASU are not expected to have a material impact on the financial statements of the Company. ASU 2023-09 On December 14, 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation, and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual basis the following information about …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Note 15 Segment Information Various identifiable operating segments provide a variety of revenue streams including loans, deposits, and wealth management services. The Companys Chief Operating Decision Maker (CODM) is the Chief Financial Officer. Through our wholly-owned subsidiary, the Bank, we offer a wide variety of community banking services primarily throughout the Chicagoland area, including commercial and consumer lending and deposit services, and a wide array of wealth management services. The accounting policies for the services discussed here are the same as those described in Note 1: Summary of Significant Accounting Policies. We earn interest income on portfolio loans, fee income on loan originations and commitments, fees charged on certain deposit accounts, as well as fees related to wealth management services. Although information is available on each of the individual revenue streams, the CODM manages, allocates resources, and evaluates performance on a company-wide basis. The CODM uses consolidated net income to evaluate the financial performance of the Companys business along with budget to actual results in assessing the Companys performance and in determining the allocation of resources whether it be to reinvest in the Company or deploy capital in order to maximize shareholder value. The CODM uses consolidated net income and return on average assets to benchmark the Company against competitors as well as against prior periods. On a regular basis the CODM is …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing