Old Second Bancorp (OSBC) came out with quarterly earnings of $0.46 per share, missing the Zacks Consensus Estimate of $0.48 per share. This compares to earnings of $0.56 per share a year ago. These figures are adjusted for non-recurring items. Old Second Bancorp, which belongs to the Zacks Banks - Midwest industry, posted revenues of $70.82 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1.12%. This compares to year-ago revenues of $71.8 million. The company has topped c ...

N/M - Not meaningful. Noninterest income increased $626,000, or 5.96%, in the second quarter of 2024, compared to the first quarter of 2024, and increased $2.9 million, or 35.3%, compared to the second quarter of 2023. The increase from the first quarter of 2024 was primarily driven by a $218,000 increase in wealth management income, an $893,000 death benefit realized on BOLI, and a $201,000 increase in card related income. Partially offsetting the increase in noninterest income from the prior quarter was a ...

Core Insights - The consensus EPS estimate for Old Second Bancorp has remained unchanged over the last 30 days, indicating analysts' reassessment of their forecasts [1] - Analysts predict a year-over-year decline in quarterly earnings to $0.48 per share, representing a 14.3% decrease [6] - Revenue is expected to decline by 2.5% year-over-year, with an estimated total of $70.03 million [6] Financial Metrics - The 'Net Interest Margin' is projected to be 4.6%, consistent with the same quarter last year [3] - The 'Total interest earning assets - Average Balance' is estimated at $5.24 billion, down from $5.53 billion a year ago [4] - 'Net interest and dividend income' is forecasted to be $59.51 million, a decrease from $63.58 million in the previous year [5] - The 'Efficiency Ratio' is expected to reach 52.4%, compared to 46.8% in the same quarter last year [9] - 'Total noninterest income' is projected at $10.37 million, an increase from $8.22 million a year ago [10] - The estimated 'Net Interest Income (FTE)' is $59.79 million, down from $64.45 million in the same quarter last year [11]

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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 000-10537 (Exact name of Registrant as specified in its charter) of incorporation or organization) Delaware 36-3143493 (State or ...

[Financial Highlights & Executive Summary](index=1&type=section&id=Financial%20Highlights%20%26%20Executive%20Summary) The company reported strong financial results for the quarter, highlighting key performance indicators and strategic achievements [First Quarter 2024 Performance Overview](index=1&type=section&id=First%20Quarter%202024%20Performance%20Overview) Old Second Bancorp reported strong Q1 2024 results with net income of $21.3 million, driven by profitability and capital growth | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | **Net Income (GAAP)** | $21.3 million | $18.2 million | $23.6 million | | **Diluted EPS (GAAP)** | $0.47 | $0.40 | $0.52 | | **Adjusted Net Income (Non-GAAP)** | $21.3 million | $19.1 million | $23.4 million | | **Adjusted Diluted EPS (Non-GAAP)** | $0.47 | $0.42 | $0.52 | - The sequential increase in net income from Q4 2023 was primarily driven by a **$4.5 million** decrease in the provision for credit losses and a **$1.8 million** increase in noninterest income. The year-over-year decrease was mainly due to a **$4.3 million** decline in net interest income caused by securities portfolio contraction and higher funding costs[16](index=16&type=chunk) - CEO Jim Eccher emphasized the company's strong performance, noting exceptional profitability (ROAA **1.51%**, ROATCE **17.8%**), a resilient net interest margin, and favorable asset quality trends. He also highlighted a **25%** year-over-year increase in tangible book value per share and a Common Equity Tier 1 ratio exceeding **12%**[26](index=26&type=chunk) - The Board of Directors declared a cash dividend of **$0.05** per share of common stock, payable on May 6, 2024[23](index=23&type=chunk) [Operating Results Analysis](index=6&type=section&id=Operating%20Results%20Analysis) Analysis of the company's operational performance, including net interest income, noninterest income, and expenses [Net Interest Income](index=6&type=section&id=Net%20Interest%20Income) Net interest income decreased to $59.8 million in Q1 2024, with NIM compressing to 4.55% due to rising funding costs | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | **Net Interest Income (GAAP)** | $59.8 million | $61.2 million | $64.1 million | | **Net Interest Margin (GAAP)** | 4.55% | 4.59% | 4.72% | | **Net Interest Margin (TE)** | 4.58% | 4.62% | 4.74% | - The yield on interest-earning assets increased by **6 basis points** compared to the linked quarter, driven by loan portfolio repricing. However, this was more than offset by rising funding costs[34](index=34&type=chunk) - The cost of interest-bearing deposits increased to **1.18%** in Q1 2024, up from **0.89%** in Q4 2023 and **0.25%** in Q1 2023. This was driven by exception pricing on select money market accounts and higher rates offered on time deposits to attract funds[38](index=38&type=chunk) - Borrowing costs decreased quarter-over-quarter due to a **$58.5 million** reduction in the average balance of other short-term borrowings (FHLB advances)[39](index=39&type=chunk) [Noninterest Income](index=9&type=section&id=Noninterest%20Income) Noninterest income significantly increased to $10.5 million in Q1 2024, driven by MSR adjustments and BOLI income | Noninterest Income Component | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Wealth management | $2,561 thousand | $2,600 thousand | $2,270 thousand | | Service charges on deposits | $2,415 thousand | $2,527 thousand | $2,424 thousand | | Residential mortgage banking revenue | $946 thousand | ($358 thousand) | $356 thousand | | MSRs mark to market gain (loss) | $94 thousand | ($1,277 thousand) | ($525 thousand) | | Securities gains (losses), net | $1 thousand | ($2 thousand) | ($1,675 thousand) | | Change in cash surrender value of BOLI | $1,172 thousand | $541 thousand | $242 thousand | | **Total Noninterest Income** | **$10,501 thousand** | **$8,729 thousand** | **$7,350 thousand** | - The **$1.8 million** sequential increase was primarily driven by a **$1.3 million** positive swing in residential mortgage banking revenue (due to MSRs mark-to-market gains) and a **$631,000** increase in BOLI income[42](index=42&type=chunk) [Noninterest Expense](index=10&type=section&id=Noninterest%20Expense) Noninterest expense rose to $38.2 million in Q1 2024, primarily due to increased salaries and benefits, impacting the efficiency ratio | Noninterest Expense Component | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $24,312 thousand | $21,405 thousand | $22,248 thousand | | Occupancy, furniture and equipment | $3,927 thousand | $3,817 thousand | $3,475 thousand | | Computer and data processing | $2,255 thousand | $2,291 thousand | $1,774 thousand | | **Total Noninterest Expense** | **$38,241 thousand** | **$37,026 thousand** | **$35,922 thousand** | | **Efficiency Ratio (GAAP)** | **53.59%** | **50.82%** | **47.52%** | - The sequential increase was primarily attributable to a **$2.9 million** rise in salaries and employee benefits, driven by restricted stock expense, officers' incentives, payroll taxes, and deferred executive compensation[50](index=50&type=chunk) - The year-over-year increase was mainly due to a **$2.1 million** increase in salaries and benefits, a **$452,000** increase in occupancy expenses, and a **$481,000** increase in computer and data processing costs[44](index=44&type=chunk) [Provision for Credit Losses](index=13&type=section&id=Provision%20for%20Credit%20Losses) Provision for credit losses decreased to $3.5 million in Q1 2024, with net charge-offs of $3.7 million from a single CRE borrower - The company recorded a provision for credit losses of **$3.5 million** in Q1 2024, compared to **$8.0 million** in Q4 2023 and **$3.5 million** in Q1 2023[19](index=19&type=chunk) - The Q1 provision consisted of a **$3.5 million** provision for loans and a **$44,000** reversal of provision for unfunded commitments[60](index=60&type=chunk) - Net charge-offs were **$3.7 million** in Q1 2024. The majority of these charge-offs were specific to one commercial real estate borrower, for which a **$3.9 million** specific allocation existed within the ACL at the end of 2023[60](index=60&type=chunk) [Balance Sheet and Asset Quality Analysis](index=5&type=section&id=Balance%20Sheet%20and%20Asset%20Quality%20Analysis) Overview of the company's financial position, focusing on loan portfolio, asset quality, and funding sources [Loans and Securities](index=5&type=section&id=Loans%20and%20Securities) Total loans decreased to $3.97 billion due to payoffs, and the securities portfolio contracted with widened unrealized losses | Loan Category | March 31, 2024 | Dec 31, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Commercial | $796.6 million | $841.7 million | (5.4)% | | Commercial real estate – investor | $1,018.4 million | $1,034.4 million | (1.6)% | | Commercial real estate – owner occupied | $782.6 million | $796.5 million | (1.7)% | | Leases | $425.6 million | $398.2 million | 6.9% | | **Total Loans** | **$3,969.4 million** | **$4,043.0 million** | **(1.8)%** | - The quarterly reduction in total loans was attributed to **$59.4 million** in payoffs on seven larger loans and a typical seasonal decline in first-quarter originations[52](index=52&type=chunk) - The securities portfolio decreased by **$24.0 million** QoQ to **$1.17 billion**. Net unrealized losses were **$85.0 million** at quarter-end, compared to **$84.2 million** at December 31, 2023[53](index=53&type=chunk) [Asset Quality](index=5&type=section&id=Asset%20Quality) Asset quality remained stable, with nonperforming loans decreasing to $65.1 million and classified loans modestly increasing | Asset Quality Metric | March 31, 2024 | Dec 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | Nonperforming loans | $65.1 million | $68.8 million | $64.5 million | | Nonperforming loans to total loans | 1.6% | 1.7% | 1.6% | | Allowance for credit losses (ACL) | $44.1 million | $44.3 million | $53.4 million | | ACL to total loans | 1.1% | 1.1% | 1.3% | - The decrease in nonperforming loans during Q1 2024 was driven by a partial charge-off of **$3.9 million** for a commercial real estate-owner occupied loan[27](index=27&type=chunk) - Classified loans increased by **$2.7 million** from the prior quarter, primarily due to additions of **$15.9 million** (largely three relationships), which were partially offset by **$6.4 million** in upgrades and **$3.9 million** in charge-offs[59](index=59&type=chunk) [Deposits and Borrowings](index=14&type=section&id=Deposits%20and%20Borrowings) Total deposits grew to $4.61 billion, driven by CDs, while non-interest bearing deposits declined and borrowings decreased - Total deposits increased by **$37.5 million (0.8%)** QoQ to **$4.61 billion**. The growth was led by a **$58.7 million** increase in certificates of deposits, while non-interest bearing deposits declined by **$35.0 million**[65](index=65&type=chunk) - Short-term borrowings, consisting of FHLB advances, decreased significantly to **$220.0 million** as of March 31, 2024, compared to **$405.0 million** at the end of 2023[66](index=66&type=chunk) [Capital Position](index=3&type=section&id=Capital%20Position) Review of the company's capital adequacy and regulatory ratios, demonstrating financial strength [Capital Ratios](index=3&type=section&id=Capital%20Ratios) The company's capital position strengthened, with CET1 ratio improving to 12.02% and TCE/TA ratio increasing to 9.04% | Capital Ratio | March 31, 2024 | Dec 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | **Company Ratios** | | | | | Common equity tier 1 | 12.02% | 11.37% | 9.91% | | Tier 1 risk-based capital | 12.55% | 11.89% | 10.43% | | Total risk-based capital | 14.79% | 14.06% | 12.79% | | Tier 1 leverage | 10.47% | 10.06% | 8.56% | | **Other Ratios** | | | | | TCE / TA | 9.04% | 8.53% | 6.83% | | Tangible book value per share | $11.13 | $10.73 | $8.90 | [Financial Statements](index=17&type=section&id=Financial%20Statements) Presentation of the company's consolidated financial statements, including balance sheets and income statements [Consolidated Balance Sheets](index=17&type=section&id=Consolidated%20Balance%20Sheets) Unaudited consolidated balance sheets show total assets at $5.62 billion, a decrease driven by lower loans and securities | (In thousands) | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $98,094 | $100,145 | | Securities available-for-sale | $1,168,797 | $1,192,829 | | Net loans | $3,925,298 | $3,998,689 | | **Total assets** | **$5,616,072** | **$5,722,799** | | **Liabilities & Equity** | | | | Total deposits | $4,608,275 | $4,570,746 | | Other short-term borrowings | $220,000 | $405,000 | | **Total liabilities** | **$5,019,913** | **$5,145,518** | | **Total stockholders' equity** | **$596,159** | **$577,281** | [Consolidated Statements of Income](index=18&type=section&id=Consolidated%20Statements%20of%20Income) Unaudited consolidated statements of income show Q1 2024 net income at $21.3 million, impacted by lower net interest income and higher noninterest expense | (In thousands, except per share) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net interest and dividend income | $59,783 | $64,086 | | Provision for credit losses | $3,500 | $3,501 | | Noninterest income | $10,501 | $7,350 | | Noninterest expense | $38,241 | $35,922 | | Income before income taxes | $28,543 | $32,013 | | **Net income** | **$21,312** | **$23,607** | | **Diluted earnings per share** | **$0.47** | **$0.52** | [Quarterly Financial Data](index=19&type=section&id=Quarterly%20Financial%20Data) Key unaudited financial data for the past five quarters shows declining total assets and moderating net income | (In thousands) | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | $5,676,723 | $5,694,734 | $5,778,518 | $5,911,491 | $5,898,647 | | **Total Deposits** | $4,580,424 | $4,577,734 | $4,658,064 | $4,794,068 | $4,998,349 | | **Net Interest Income** | $59,783 | $61,235 | $63,030 | $63,580 | $64,086 | | **Net Income** | $21,312 | $18,225 | $24,335 | $25,562 | $23,607 | [Non-GAAP Reconciliations](index=21&type=section&id=Non-GAAP%20Reconciliations) Reconciliation of non-GAAP financial measures to their most comparable GAAP equivalents for enhanced transparency [Reconciliation of Non-GAAP Measures](index=21&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) Detailed reconciliations of non-GAAP financial measures to GAAP counterparts provide additional insight into performance - The company considers select non-GAAP financial measures useful for decision-making and evaluating period-to-period comparisons by excluding items not indicative of primary business operating results[2](index=2&type=chunk) | Reconciliation (In thousands) | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | **Net Income (GAAP)** | **$21,312** | **$18,225** | **$23,607** | | Pre-tax adjustments: | | | | | Litigation related expenses | - | $1,200 | - | | Losses/(gains) on branch sales, net | - | $19 | ($306) | | **Adjusted Net Income (Non-GAAP)** | **$21,312** | **$19,116** | **$23,381** | | Performance Ratios (Non-GAAP) | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net interest margin (TE) | 4.58% | 4.62% | 4.74% | | Adjusted efficiency ratio | 53.09% | 48.76% | 47.66% | | Return on avg. tangible common equity | 17.80% | 16.43% | 25.54% |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-10537 (Exact name of registrant as specified in its charter) Delaware 36-3143493 (State of or other jurisdiction of incorporat ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 000-10537 (Exact name of Registrant as specified in its charter) (State or other jurisdiction (I.R.S. Employer Identification ...

Financial Performance - Net income for Q2 2023 was $25.6 million, or $0.56 per diluted share, compared to $12.2 million, or $0.27 per diluted share in Q2 2022, reflecting significant growth driven by loan portfolio expansion and higher yields [146]. - Income before taxes for Q2 2023 was $35.0 million, up from $16.7 million in Q2 2022, driven by a $26.5 million increase in interest and dividend income [155]. - For the six months ended June 30, 2023, income before taxes was $67.0 million, compared to $33.1 million for the same period in 2022, with a $53.3 million increase in interest and dividend income [157]. - Net income for Q2 2023 was $25.6 million, or $0.56 per diluted share, compared to $12.2 million, or $0.27 per diluted share, in Q2 2022 [155]. Loan Growth - Total loans grew by $145.9 million in Q2 2023 compared to December 31, 2022, and by $390.5 million compared to Q2 2022, indicating a strong demand for lending services [153]. - Average loans increased by $529.7 million for the six months ended June 30, 2023, compared to the same period in 2022, driven by growth in commercial and multi-family portfolios [168]. - Total loans increased to $4.02 billion as of June 30, 2023, up $145.9 million from December 31, 2022, and $390.5 million from June 30, 2022 [205]. - The growth in total loans was primarily driven by increases in commercial real estate – investor ($92.4 million), multifamily ($59.5 million), and leases ($37.5 million) while commercial real estate – owner occupied saw a reduction of $30.6 million [205]. Interest Income and Margin - Net interest and dividend income increased to $63.6 million in Q2 2023 from $45.3 million in Q2 2022, primarily due to loan growth and higher yields, despite increased funding costs [146]. - Net interest margin (GAAP) for Q2 2023 decreased to 4.61% from 4.72% in Q1 2023, but increased from 3.16% in Q2 2022 [165]. - Net interest income (GAAP) for the second quarter of 2023 was $63,580, compared to $64,086 in the first quarter of 2023 [174]. - The company reported a net interest margin (TE) of 4.64% for the second quarter of 2023, slightly down from 4.74% in the first quarter [174]. Noninterest Income and Expenses - Noninterest income decreased to $8.2 million in Q2 2023 from $9.2 million in Q2 2022, impacted by $1.5 million in security losses due to strategic sales [148]. - Noninterest expenses decreased by $2.4 million, or 6.5%, to $34.8 million in Q2 2023, primarily due to reduced acquisition-related costs from the previous year [153]. - Total noninterest income for Q2 2023 was $8,223,000, with significant contributions from card-related income and residential mortgage banking revenue [180]. - Noninterest expense decreased by $1,100,000, or 3.0%, in Q2 2023 compared to Q1 2023, and decreased by $2,400,000, or 6.5%, compared to Q2 2022 [190]. Asset Quality and Credit Losses - Nonperforming loans as a percentage of total loans rose to 1.5% as of June 30, 2023, compared to 0.9% at December 31, 2022, indicating a deterioration in asset quality [153]. - The provision for credit losses was $2.0 million in Q2 2023, reflecting an increase in the allowance for credit losses based on updated historical loss rates and loan growth [147]. - The allowance for credit losses increased to $55.3 million as of June 30, 2023, compared to $49.5 million at December 31, 2022 [210]. - Nonperforming loans rose to $61.2 million as of June 30, 2023, an increase of $28.3 million from December 31, 2022, and $19.1 million from June 30, 2022 [207]. Deposits and Liquidity - Total deposits were $4.72 billion at June 30, 2023, a decrease of $393.1 million from December 31, 2022, primarily due to seasonal decreases in municipal deposits [201]. - The company has an unused capacity of $17.4 million at the Federal Reserve Discount Window as of June 30, 2023, indicating liquidity availability [145]. - Cash on hand liquidity totaled $112.6 million as of June 30, 2023, a decrease of $2.6 million from December 31, 2022 [242]. - The outstanding balance of short-term borrowings from the Federal Home Loan Bank of Chicago (FHLBC) was $485.0 million as of June 30, 2023, compared to $90.0 million as of December 31, 2022 [230]. Capital and Equity - Total stockholders' equity increased to $514.0 million as of June 30, 2023, up $52.9 million from $461.1 million as of December 31, 2022, driven by net income of $49.2 million [236]. - The common equity tier 1 capital ratio improved to 10.29% as of June 30, 2023, compared to 9.67% as of December 31, 2022 [237]. - The total risk-based capital ratio was 13.16% as of June 30, 2023, up from 12.52% as of December 31, 2022 [237]. - The GAAP common equity to total assets ratio increased from 7.83% at December 31, 2022, to 8.73% at June 30, 2023 [240]. Economic Environment and Interest Rates - The Federal Reserve's federal funds rate reached 5.25% after a 0.25% hike in July 2023, with expectations of interest rate cuts in 2024 [251]. - The annual US inflation rate slowed to 3.0% as of June 30, 2023, down from a peak of 9.1% [258]. - High inflation poses downside risks that could increase expenses and impact profits [258]. - The company believes that the risk of high inflation has been contained with minimal impact on financial results [258].