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Old Second Bancorp
OSBC
#5863
Rank
$1.24 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$25.12
Share price
0.08%
Change (1 day)
36.30%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. Old Second Bancorp
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2026 Q3

Old Second Bancorp - 10-Q quarterly report FY2026 Q3


Text size:
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Table of Contents

I

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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​

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☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

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THE SECURITIES EXCHANGE ACT OF 1934

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For the quarterly period ended September 30, 2026

OR

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☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

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SECURITIES EXCHANGE ACT OF 1934

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For transition period from          to          

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Commission File Number 000-10537

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Graphic

(Exact name of Registrant as specified in its charter)

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​

​

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Delaware

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36-3143493

(State or other jurisdiction

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(I.R.S. Employer Identification Number)

of incorporation or organization)

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37 South River Street, Aurora, Illinois     60507

(Address of principal executive offices) (Zip Code)

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(630) 892-0202

(Registrant’s telephone number, including area code)

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Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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Securities registered pursuant to Section 12(b) of the Act:

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Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

OSBC

The Nasdaq Stock Market

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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒        No ☐

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Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐

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Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

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Large accelerated filer☒Accelerated filer☐

Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐

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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. ☐

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Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2).

Yes ☐        No ☒

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As of November 3, 2026, the Registrant has 49,440,752 shares of common stock outstanding at $1.00 par value per share.

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Table of Contents

OLD SECOND BANCORP, INC.

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Form 10-Q Quarterly Report

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Table of Contents

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​

Cautionary Note Regarding Forward-Looking Statements

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PART I

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​

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Page Number

Item 1.

Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

44

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

68

Item 4.

Controls and Procedures

69

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PART II

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​

​

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Item 1.

Legal Proceedings

70

Item 1A.

Risk Factors

70

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

71

Item 4.

Mine Safety Disclosures

71

Item 5.

Other Information

71

Item 6.

Exhibits

72

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​

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Signatures

73

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2

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

​

This report and other publicly available documents of Old Second Bancorp, Inc. (“Old Second” or the “Company”) contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including, but not limited to, management’s expectations regarding future plans, strategies and financial performance, including regulatory developments, industry and economic trends and estimates and assumptions underlying accounting policies. Forward-looking statements are based on our current beliefs, expectations, assumptions, and on information currently available and may be identified by the use of words such as “expects,” “intends,” “believes,” “may,” “will,” “would,” “could,” “should,” “plan,” “anticipate,” “estimate,” “forecasts,” “possible,” “implies,” “likely” or the negative thereof as well as other similar words and expressions of the future.  Forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict as to timing, extent, likelihood and degree of occurrence, which could cause our actual results to differ materially from those anticipated in or by such statements. Potential risks and uncertainties include, but are not limited to, the following:

​

●our ability to execute our growth strategy;
●negative economic conditions that adversely affect the economy, real estate values, the job market and other factors nationally and in our market area, in each case that may affect our liquidity and the performance of our loan portfolio;
●risks with respect to our ability to successfully expand and integrate businesses and operations that we acquire, as well as our ability to identify and complete future mergers or acquisitions;
●the financial success and viability of the borrowers of our commercial loans, including adverse developments in the commercial real estate market, such as increased vacancy rates, declining property values, refinancing risk as loans mature, or borrower distress, particularly in the office sector;
●changes in U.S. monetary policy, including increases in market interest rates that could raise our cost of funds faster than the yields on our loans and securities, or reductions in market interest rates that could cause yields on our loans and securities to decline faster than our cost of funds, the level and volatility of interest rates, the capital markets and other market conditions that may affect, among other things, our liquidity and the value of our assets and liabilities;
●competitive pressures from other financial service businesses and from nontraditional financial technology (“FinTech”) companies, including providers of digital assets and payment stablecoins;
●any negative perception of our reputation or financial strength;
●our ability to raise additional capital on acceptable terms when needed;
●our ability to raise cost-effective funding to support business plans when needed;
●our ability to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations;
●adverse effects on our information technology systems resulting from system failures, human error, cyberattacks or fraud, including risks from the use of AI by threat actors;
●risks associated with data privacy laws and regulations;
●risks associated with the development and use of AI;
●adverse effects of cyberattacks or failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors and those vendors performing a service on our behalf;
●the impact of any claims or legal actions, including any effect on our reputation;
●losses incurred in connection with repurchases and indemnification payments related to mortgages;
●the soundness of other financial institutions and other counter-party risk;
●changes in accounting standards, rules and interpretations and the related impact on our financial statements;
●our ability to receive dividends from our subsidiaries;
●a decrease in our regulatory capital ratios or negative changes in our capital position;
●adverse federal or state tax assessments, or changes in tax laws or policies;
●risks associated with actual or potential litigation or investigations by customers, regulatory agencies or others;
●legislative or regulatory changes, particularly changes in regulation of financial services companies;
●increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the current regulatory environment;
●risks associated with complex and changing regulatory environments, including, among others, with respect to data privacy, artificial intelligence, information security, climate change or other environmental, social and governance matters, and labor matters, relating to our operations;
●changes in political and economic conditions, including potential disruptions resulting from U.S. federal government funding lapses, shutdowns, or related fiscal policy uncertainty;

3

Table of Contents

●the adverse effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, including epidemics and pandemics; wars, terrorism and other geopolitical conflicts or instability, including the war in Ukraine, the ongoing conflict involving the United States, Israel and Iran and other conflicts in the Middle East, political and economic instability and military and diplomatic developments involving Venezuela, and tensions between China and Taiwan; essential utility outages; disruptions to global energy markets or critical shipping routes; deterioration in global economic conditions; instability in the credit markets; disruptions to our customers’ supply chains or transportation network; and disruptions caused by widespread cybersecurity incidents;
●changes in trade policy, trade disputes and any related tariffs, including their effects on our customers’ costs, supply chains and ability to repay their loans; and
●each of the factors and risks under the heading “Risk Factors” in our 2025 Annual Report on Form 10-K and in subsequent filings we make with the SEC.

​

Because our ability to predict results or the actual effect of future plans or strategies is inherently uncertain, there can be no assurances that future actual results will correspond to any forward-looking statements, and you should not rely on any forward-looking statements. Additionally, all statements in this Form 10-Q, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events, except as required by applicable law.

​

4

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

​

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)

​

​

​

​

​

​

​

​

​

(unaudited)

​

​

​

​

​

September 30, 

​

December 31, 

​

  ​ ​ ​

2026

  ​ ​ ​

2025

Assets

​

​

​

​

​

​

Cash and due from banks

​

$

42,155

​

$

51,665

Interest earning deposits with financial institutions

​

​

65,948

​

​

72,360

Cash and cash equivalents

​

​

108,103

​

​

124,025

Securities available-for-sale, at fair value

​

​

978,576

​

​

1,090,523

Federal Home Loan Bank of Chicago (“FHLBC”) and Federal Reserve Bank of Chicago (“FRBC”) stock

​

​

40,811

​

​

32,025

Loans held-for-sale

​

​

1,407

​

​

3,645

Loans

​

​

5,238,057

​

​

5,252,131

Less: allowance for credit losses on loans

​

​

64,189

​

​

72,301

Net loans

​

​

5,173,868

​

​

5,179,830

Premises and equipment, net

​

​

83,364

​

​

86,645

Other real estate owned, net

​

​

-

​

​

1,427

Mortgage servicing rights, at fair value

​

​

10,690

​

​

9,459

Goodwill

​

​

129,196

​

​

129,196

Core deposit intangible (“CDI”)

​

​

20,200

​

​

23,692

Bank-owned life insurance (“BOLI”)

​

​

134,288

​

​

130,481

Deferred tax assets, net

​

​

33,260

​

​

31,276

Other assets

​

​

64,828

​

​

60,451

Total assets

​

$

6,778,591

​

$

6,902,675

​

​

​

​

​

​

​

Liabilities

​

​

​

​

​

​

Deposits:

​

​

​

​

​

​

Noninterest bearing demand

​

$

1,671,745

​

$

1,739,117

Interest bearing:

​

​

​

​

​

​

Savings, NOW, and money market

​

​

2,772,737

​

​

2,745,540

Time

​

​

883,082

​

​

1,111,412

Total deposits

​

​

5,327,564

​

​

5,596,069

Securities sold under repurchase agreements

​

​

29,908

​

​

23,769

Other short-term borrowings

​

​

395,000

​

​

215,000

Junior subordinated debentures

​

​

25,774

​

​

25,774

Subordinated debentures

​

​

29,808

​

​

59,552

Notes payable and other borrowings

​

​

9,893

​

​

14,825

Other liabilities

​

​

82,092

​

​

70,918

Total liabilities

​

​

5,900,039

​

​

6,005,907

​

​

​

​

​

​

​

Stockholders’ Equity

​

​

​

​

​

​

Common stock

​

​

53,015

​

​

53,015

Additional paid-in capital

​

​

340,751

​

​

341,451

Retained earnings

​

​

609,074

​

​

537,231

Accumulated other comprehensive loss, net

​

​

(43,395)

​

​

(28,738)

Treasury stock

​

​

(80,893)

​

​

(6,191)

Total stockholders’ equity

​

​

878,552

​

​

896,768

Total liabilities and stockholders’ equity

​

$

6,778,591

​

$

6,902,675

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

December 31, 2025

​

Common

​

Common

​

Stock

  ​ ​ ​

Stock

Par value

$

1.00

​

$

1.00

Shares authorized

​

120,000,000

​

​

120,000,000

Shares issued

​

53,015,496

​

​

53,015,496

Shares outstanding

​

49,417,867

​

​

52,669,223

Treasury shares

​

3,597,629

​

​

346,273

​

See accompanying notes to consolidated financial statements.

​

5

Table of Contents

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(unaudited)

​

(unaudited)

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

Interest and dividend income

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans, including fees

​

$

91,356

​

$

91,301

​

$

268,339

​

$

214,850

​

Loans held-for-sale

​

​

31

​

​

31

​

​

136

​

​

92

​

Securities:

​

​

​

​

​

​

​

​

​

​

​

​

​

Taxable

​

​

8,416

​

​

9,872

​

​

26,453

​

​

29,058

​

Tax exempt

​

​

1,079

​

​

1,235

​

​

3,366

​

​

3,724

​

Dividends from FHLBC and FRBC stock

​

​

672

​

​

381

​

​

1,719

​

​

1,127

​

Interest earning deposits with financial institutions

​

​

537

​

​

1,255

​

​

1,613

​

​

4,027

​

Total interest and dividend income

​

​

102,091

​

​

104,075

​

​

301,626

​

​

252,878

​

Interest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

Savings, NOW, and money market deposits

​

​

8,105

​

​

9,043

​

​

22,764

​

​

19,562

​

Time deposits

​

​

5,757

​

​

10,896

​

​

19,173

​

​

20,233

​

Securities sold under repurchase agreements

​

​

44

​

​

60

​

​

134

​

​

184

​

Other short-term borrowings

​

​

3,145

​

​

308

​

​

7,925

​

​

325

​

Junior subordinated debentures

​

​

269

​

​

288

​

​

854

​

​

864

​

Subordinated debentures

​

​

542

​

​

547

​

​

1,763

​

​

1,639

​

Notes payable and other borrowings

​

​

180

​

​

158

​

​

491

​

​

158

​

Total interest expense

​

​

18,042

​

​

21,300

​

​

53,104

​

​

42,965

​

Net interest and dividend income

​

​

84,049

​

​

82,775

​

​

248,522

​

​

209,913

​

Provision for credit losses

​

​

6,750

​

​

19,653

​

​

23,750

​

​

24,553

​

Net interest and dividend income after provision for credit losses

​

​

77,299

​

​

63,122

​

​

224,772

​

​

185,360

​

Noninterest income

​

​

​

​

​

​

​

​

​

​

​

​

​

Wealth management

​

​

3,682

​

​

3,515

​

​

10,693

​

​

9,707

​

Service charges on deposits

​

​

3,134

​

​

3,202

​

​

9,339

​

​

9,238

​

Secondary mortgage fees

​

​

101

​

​

92

​

​

388

​

​

249

​

Mortgage servicing rights mark to market gain (loss)

​

​

623

​

​

(389)

​

​

319

​

​

(1,490)

​

Mortgage servicing income

​

​

467

​

​

469

​

​

1,428

​

​

1,421

​

Net gain on sales of mortgage loans

​

​

363

​

​

620

​

​

1,558

​

​

1,634

​

Securities losses, net

​

​

(1)

​

​

(1)

​

​

(1)

​

​

(1)

​

Change in cash surrender value of BOLI

​

​

796

​

​

1,175

​

​

3,347

​

​

2,363

​

Death benefit realized on BOLI

​

​

-

​

​

430

​

​

-

​

​

430

​

Card related income

​

​

2,479

​

​

2,581

​

​

7,312

​

​

7,355

​

Other income

​

​

1,426

​

​

1,415

​

​

4,578

​

​

3,302

​

Total noninterest income

​

​

13,070

​

​

13,109

​

​

38,961

​

​

34,208

​

Noninterest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

Salaries and employee benefits

​

​

30,846

​

​

39,723

​

​

90,622

​

​

93,666

​

Occupancy, furniture and equipment

​

​

5,284

​

​

4,937

​

​

15,773

​

​

13,962

​

Computer and data processing

​

​

3,258

​

​

4,002

​

​

9,850

​

​

9,042

​

FDIC insurance

​

​

746

​

​

854

​

​

2,264

​

​

2,124

​

Net teller & bill paying

​

​

754

​

​

691

​

​

2,194

​

​

2,019

​

General bank insurance

​

​

355

​

​

437

​

​

1,059

​

​

1,095

​

Amortization of core deposit intangible

​

​

1,149

​

​

1,251

​

​

3,492

​

​

3,310

​

Advertising and marketing expense

​

​

603

​

​

650

​

​

1,637

​

​

1,334

​

Card related expense

​

​

1,589

​

​

1,708

​

​

4,712

​

​

4,577

​

Professional fees

​

​

1,417

​

​

3,145

​

​

3,876

​

​

5,398

​

Consumer credit expense

​

​

1,725

​

​

1,368

​

​

4,967

​

​

1,408

​

Other real estate expense, net

​

​

(30)

​

​

128

​

​

(164)

​

​

2,036

​

Other expense

​

​

3,926

​

​

4,269

​

​

12,802

​

​

11,116

​

Total noninterest expense

​

​

51,622

​

​

63,163

​

​

153,084

​

​

151,087

​

Income before income taxes

​

​

38,747

​

​

13,068

​

​

110,649

​

​

68,481

​

Provision for income taxes

​

​

9,807

​

​

3,197

​

​

27,945

​

​

16,958

​

Net income

​

$

28,940

​

$

9,871

​

$

82,704

​

$

51,523

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic earnings per share

​

$

0.57

​

$

0.19

​

$

1.61

​

$

1.08

​

Diluted earnings per share

​

​

0.56

​

​

0.18

​

​

1.58

​

​

1.06

​

Dividends declared per share

​

​

0.07

​

​

0.06

​

​

0.21

​

​

0.18

​

​

See accompanying notes to consolidated financial statements.

​

6

Table of Contents

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(unaudited)

​

(unaudited)

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​ ​ ​

2025

Net Income

​

$

28,940

​

$

9,871

​

$

82,704

​

$

51,523

​

​

​

​

​

​

​

​

​

​

​

​

​

Unrealized holding (losses) gains on available-for-sale securities arising during the period

​

​

(17,629)

​

​

6,948

​

​

(22,179)

​

​

20,893

Related tax benefit (expense)

​

​

4,936

​

​

(1,947)

​

​

6,210

​

​

(5,851)

Holding (losses) gains, after tax, on available-for-sale securities

​

​

(12,693)

​

​

5,001

​

​

(15,969)

​

​

15,042

​

​

​

​

​

​

​

​

​

​

​

​

​

Less: Reclassification adjustment for the net gains realized during the period

​

​

​

​

​

​

​

​

​

​

​

​

Net realized losses

​

​

(1)

​

​

(1)

​

​

(1)

​

​

(1)

Related tax benefit

​

​

-

​

​

-

​

​

-

​

​

-

Net realized losses after tax

​

​

(1)

​

​

(1)

​

​

(1)

​

​

(1)

Other comprehensive (loss) income on available-for-sale securities

​

​

(12,692)

​

​

5,002

​

​

(15,968)

​

​

15,043

​

​

​

​

​

​

​

​

​

​

​

​

​

Changes in fair value of derivatives used for cash flow hedges

​

​

1,608

​

​

179

​

​

1,822

​

​

569

Related tax expense

​

​

(450)

​

​

(49)

​

​

(511)

​

​

(158)

Other comprehensive income on cash flow hedges

​

​

1,158

​

​

130

​

​

1,311

​

​

411

​

​

​

​

​

​

​

​

​

​

​

​

​

Total other comprehensive (loss) income

​

​

(11,534)

​

​

5,132

​

​

(14,657)

​

​

15,454

Total comprehensive income

​

$

17,406

​

$

15,003

​

$

68,047

​

$

66,977

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

Accumulated

​

Total

​

​

Unrealized Gain

​

Unrealized Gain

​

Accumulated Other

​

​

(Loss) on Securities

​

(Loss) on Derivative

​

Comprehensive

(unaudited)

​

Available-for-Sale

​

Instruments

​

Income/(Loss)

For the Three Months Ended

​

​

​

​

​

​

​

​

​

Balance, July 1, 2025

​

$

(39,371)

​

$

1,945

​

$

(37,426)

Other comprehensive income, net of tax

​

​

5,002

​

​

130

​

​

5,132

Balance, September 30, 2025

​

$

(34,369)

​

$

2,075

​

$

(32,294)

​

​

​

​

​

​

​

​

​

​

Balance, July 1, 2026

​

$

(34,286)

​

$

2,425

​

$

(31,861)

Other comprehensive (loss) income, net of tax

​

​

(12,692)

​

​

1,158

​

​

(11,534)

Balance, September 30, 2026

​

$

(46,978)

​

$

3,583

​

$

(43,395)

​

​

​

​

​

​

​

​

​

​

For the Nine Months Ended

​

​

​

​

​

​

​

​

​

Balance, January 1, 2025

​

$

(49,412)

​

$

1,664

​

$

(47,748)

Other comprehensive income, net of tax

​

​

15,043

​

​

411

​

​

15,454

Balance, September 30, 2025

​

$

(34,369)

​

$

2,075

​

$

(32,294)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance, January 1, 2026

​

$

(31,010)

​

$

2,272

​

$

(28,738)

Other comprehensive (loss) income, net of tax

​

​

(15,968)

​

​

1,311

​

​

(14,657)

Balance, September 30, 2026

​

$

(46,978)

​

$

3,583

​

$

(43,395)

​

​

​

​

​

​

​

​

​

​

​

See accompanying notes to consolidated financial statements.

​

7

Table of Contents

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

​

​

​

​

​

​

​

​

​

​

​

(unaudited)

​

​

Nine Months Ended September 30, 

​

​

2026

  ​ ​ ​

2025

​

Cash flows from operating activities

​

​

​

​

​

​

​

Net income

​

$

82,704

​

$

51,523

​

Adjustments to reconcile net income to net cash provided by operating activities:

​

​

​

​

​

​

​

Net premium / discount amortization on securities

​

​

1,273

​

​

1,398

​

Securities losses, net

​

​

1

​

​

1

​

Provision for credit losses

​

​

23,750

​

​

24,553

​

Originations of loans held-for-sale

​

​

(71,680)

​

​

(55,547)

​

Proceeds from sales of loans held-for-sale

​

​

74,527

​

​

56,624

​

Net gains on sales of mortgage loans

​

​

(1,558)

​

​

(1,634)

​

Mortgage servicing rights mark to market (gain) loss

​

​

(319)

​

​

1,490

​

Net accretion of purchase accounting adjustments and other discounts on loans

​

​

(484)

​

​

(1,771)

​

Net change in cash surrender value of BOLI

​

​

(3,347)

​

​

(2,363)

​

Net (gains) losses on sale of other real estate owned

​

​

(175)

​

​

160

​

Provision for other real estate owned valuation losses

​

​

10

​

​

681

​

Depreciation of fixed assets and amortization of leasehold improvements

​

​

5,178

​

​

4,464

​

Change in operating lease right-of-use asset

​

​

(2,728)

​

​

1,073

​

Net gains on disposal and transfer of fixed assets

​

​

-

​

​

(457)

​

Amortization of core deposit intangibles

​

​

3,492

​

​

3,310

​

Change in current income taxes

​

​

(6,428)

​

​

(4,568)

​

Deferred tax expense (benefit)

​

​

3,716

​

​

(6,755)

​

Change in accrued interest receivable and other assets

​

​

1,452

​

​

3,119

​

Accretion of purchase accounting adjustment on time deposits

​

​

(74)

​

​

(609)

​

Change in accrued interest payable and other liabilities

​

​

14,269

​

​

74

​

Change in operating lease payable

​

​

2,504

​

​

(829)

​

Stock based compensation

​

​

4,267

​

​

4,087

​

Net cash provided by operating activities

​

​

130,350

​

​

78,024

​

Cash flows from investing activities

​

​

​

​

​

​

​

Proceeds from maturities and calls, including pay down of securities available-for-sale

​

​

273,959

​

​

200,648

​

Proceeds from sales of securities available-for-sale

​

​

-

​

​

125,892

​

Purchases of securities available-for-sale

​

​

(185,465)

​

​

(183,758)

​

Net purchases of FHLBC/FRBC stock

​

​

(8,786)

​

​

(6,883)

​

Net change in loans

​

​

(17,936)

​

​

(85,358)

​

Purchases of BOLI policies

​

​

(460)

​

​

(460)

​

Proceeds from claims on BOLI, net of claims receivable

​

​

-

​

​

433

​

Proceeds from sales of other real estate owned, net of participations

​

​

2,224

​

​

19,349

​

Proceeds from disposition of premises and equipment

​

​

76

​

​

1,593

​

Net purchases of premises and equipment

​

​

(2,053)

​

​

(3,624)

​

Cash received from acquisition, net

​

​

-

​

​

10,529

​

Net cash provided by investing activities

​

​

61,559

​

​

78,361

​

Cash flows from financing activities

​

​

​

​

​

​

​

Net change in deposits

​

​

(268,431)

​

​

(240,394)

​

Net change in securities sold under repurchase agreements

​

​

6,139

​

​

(12,367)

​

Net change in other short-term borrowings

​

​

180,000

​

​

129,500

​

Redemption of subordinated debentures

​

​

(30,000)

​

​

-

​

Repayment of notes payable

​

​

(5,000)

​

​

-

​

Vesting of restricted stock, net of excise taxes

​

​

53

​

​

-

​

Dividends paid on common stock

​

​

(10,870)

​

​

(8,552)

​

Purchase of treasury stock

​

​

(79,722)

​

​

(7,376)

​

Net cash used in financing activities

​

​

(207,831)

​

​

(139,189)

​

Net change in cash and cash equivalents

​

​

(15,922)

​

​

17,196

​

Cash and cash equivalents at beginning of period

​

​

124,025

​

​

99,329

​

Cash and cash equivalents at end of period

​

$

108,103

​

$

116,525

​

​

​

​

​

​

​

​

​

​

See accompanying notes to consolidated financial statements.

​

8

Table of Contents

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in

Stockholders’ Equity

(In thousands, except share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

Number of

​

​

​

​

Additional

​

​

​

​

Other

​

​

​

​

Total

(unaudited)

Common Shares

​

Common

​

Paid-In

​

Retained

​

Comprehensive

​

Treasury

​

Stockholders’

​

  ​ ​ ​

Outstanding

​

Stock

  ​ ​ ​

Capital

  ​ ​ ​

Earnings

  ​ ​ ​

Loss

  ​ ​ ​

Stock

  ​ ​ ​

Equity

For the Three Months Ended

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance, July 1, 2025

​

45,056,183

​

$

45,094

​

$

206,207

​

$

505,419

​

$

(37,426)

​

$

(645)

​

$

718,649

Net income

​

​

​

​

​

​

​

​

​

​

9,871

​

​

​

​

​

​

​

​

9,871

Other comprehensive income, net of tax

​

​

​

​

​

​

​

​

​

​

​

​

​

5,132

​

​

​

​

​

5,132

Dividends declared on common stock, ($0.06 per share)

​

​

​

​

​

​

​

​

​

​

(3,159)

​

​

​

​

​

​

​

​

(3,159)

Acquisitions, Bancorp Financial

​

7,921,084

​

​

7,921

​

​

132,599

​

​

​

​

​

​

​

​

​

​

​

140,520

Vesting of restricted stock

​

14,122

​

​

​

​

​

(254)

​

​

​

​

​

​

​

​

254

​

​

-

Stock based compensation

​

​

​

​

​

​

​

1,556

​

​

​

​

​

​

​

​

​

​

​

1,556

Purchase of treasury stock from stock repurchase program

​

(326,854)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(5,884)

​

​

(5,884)

Balance, September 30, 2025

​

52,664,535

​

$

53,015

​

$

340,108

​

$

512,131

​

$

(32,294)

​

$

(6,275)

​

$

866,685

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance, July 1, 2026

​

50,938,962

​

$

53,015

​

$

339,616

​

$

583,701

​

$

(31,861)

​

$

(41,660)

​

$

902,811

Net income

​

​

​

​

​

​

​

​

​

​

28,940

​

​

​

​

​

​

​

​

28,940

Other comprehensive loss, net of tax

​

​

​

​

​

​

​

​

​

​

​

​

​

(11,534)

​

​

​

​

​

(11,534)

Dividends declared on common stock, ($0.07 per share)

​

​

​

​

​

​

​

​

​

​

(3,567)

​

​

​

​

​

​

​

​

(3,567)

Vesting of restricted stock, net of excise taxes

​

12,595

​

​

​

​

​

(280)

​

​

​

​

​

​

​

​

282

​

​

2

Stock based compensation

​

​

​

​

​

​

​

1,415

​

​

​

​

​

​

​

​

​

​

​

1,415

Purchase of treasury stock from taxes withheld on stock awards

​

(586)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(15)

​

​

(15)

Purchase of treasury stock from stock repurchase program

​

(1,533,104)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(39,500)

​

​

(39,500)

Balance, September 30, 2026

​

49,417,867

​

$

53,015

​

$

340,751

​

$

609,074

​

$

(43,395)

​

$

(80,893)

​

$

878,552

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

Number of

​

​

​

​

Additional

​

​

​

​

Other

​

​

​

​

Total

(unaudited)

Common Shares

​

Common

​

Paid-In

​

Retained

​

Comprehensive

​

Treasury

​

Stockholders’

​

​

Outstanding

​

Stock

  ​ ​ ​

Capital

  ​ ​ ​

Earnings

  ​ ​ ​

Loss

  ​ ​ ​

Stock

  ​ ​ ​

Equity

For the Nine Months Ended

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance, January 1, 2025

​

44,873,467

​

$

44,908

​

$

205,284

​

$

469,165

​

$

(47,748)

​

$

(575)

​

$

671,034

Net income

​

​

​

​

​

​

​

​

​

​

51,523

​

​

​

​

​

​

​

​

51,523

Other comprehensive income, net of tax

​

​

​

​

​

​

​

​

​

​

​

​

​

15,454

​

​

​

​

​

15,454

Dividends declared on common stock, ($0.18 per share)

​

​

​

​

​

​

​

​

​

​

(8,557)

​

​

​

​

​

​

​

​

(8,557)

Acquisitions, Bancorp Financial

​

7,921,084

​

​

7,921

​

​

132,599

​

​

​

​

​

​

​

​

​

​

​

140,520

Vesting of restricted stock

​

279,737

​

​

186

​

​

(1,862)

​

​

​

​

​

​

​

​

1,676

​

​

-

Stock based compensation

​

​

​

​

​

​

​

4,087

​

​

​

​

​

​

​

​

​

​

​

4,087

Purchase of treasury stock from taxes withheld on stock awards

​

(82,899)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(1,492)

​

​

(1,492)

Purchase of treasury stock from stock repurchase program

​

(326,854)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(5,884)

​

​

(5,884)

Balance, September 30, 2025

​

52,664,535

​

$

53,015

​

$

340,108

​

$

512,131

​

$

(32,294)

​

$

(6,275)

​

$

866,685

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance, January 1, 2026

​

52,669,223

​

$

53,015

​

$

341,451

​

$

537,231

​

$

(28,738)

​

$

(6,191)

​

$

896,768

Net income

​

​

​

​

​

​

​

​

​

​

82,704

​

​

​

​

​

​

​

​

82,704

Other comprehensive loss, net of tax

​

​

​

​

​

​

​

​

​

​

​

​

​

(14,657)

​

​

​

​

​

(14,657)

Dividends declared on common stock, ($0.21 per share)

​

​

​

​

​

​

​

​

​

​

(10,861)

​

​

​

​

​

​

​

​

(10,861)

Vesting of restricted stock, net of excise taxes

​

259,997

​

​

​

​

​

(4,967)

​

​

​

​

​

​

​

​

5,020

​

​

53

Stock based compensation

​

​

​

​

​

​

​

4,267

​

​

​

​

​

​

​

​

​

​

​

4,267

Purchase of treasury stock from taxes withheld on stock awards

​

(70,207)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(1,446)

​

​

(1,446)

Purchase of treasury stock from stock repurchase program

​

(3,441,146)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(78,276)

​

​

(78,276)

Balance, September 30, 2026

​

49,417,867

​

$

53,015

​

$

340,751

​

$

609,074

​

$

(43,395)

​

$

(80,893)

​

$

878,552

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

9

Table of Contents

Old Second Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data, unaudited)

​

​

Note 1 – Basis of Presentation and Changes in Significant Accounting Policies

​

The accounting policies followed in the preparation of the interim consolidated financial statements are consistent with those used in the preparation of the annual financial information. The interim consolidated financial statements reflect all normal and recurring adjustments that are necessary, in the opinion of management, for a fair statement of results for the interim period presented. Results for the period ended September 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These interim consolidated financial statements and accompanying notes are unaudited and should be read in conjunction with the audited financial statements and notes included in Old Second Bancorp, Inc.’s (the “Company”) annual report on Form 10-K for the year ended December 31, 2025. Unless otherwise indicated, dollar amounts in the tables contained in the notes to the consolidated financial statements are in thousands. Certain items in prior periods have been reclassified to conform to the current presentation.

​

The Company’s consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”) and follow general practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the consolidated financial statements. Future changes in information may affect these estimates, assumptions, and judgments, which, in turn, may affect amounts reported in the consolidated financial statements.

​

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 SEC’s 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 2024-03 – On November 4, 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Specifically, they will be required to: (1) Disclose the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. (2) Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements. (3) Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. (4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and is not expected to have a material impact on the financial statements of the Company.  

​

ASU 2025-01 – On January 6, 2025, the FASB issued ASU 2025-01 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date.” ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, which dates were clarified in ASU 2025-01. This ASU is not expected to have a material impact on the financial statements of the Company.

​

10

Table of Contents

​

ASU 2025-03 – On May 12, 2025, the FASB issued ASU 2025-03 “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity.” This ASU revises current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. The amendments require an entity to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance). If an entity adopts ASU No. 2025-03 in an interim reporting period, it should adopt it as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period. An entity should apply ASU 2025-03 on a prospective basis to all business combinations that have an acquisition date that occurs on or after the date of initial application of ASU 2025-03. ASU 2025-03 is not expected to have a material impact on the financial statements of the Company.

​

ASU 2025-08 – On November 12, 2025, the FASB issued ASU 2025-08 “Financial Instruments—Credit Losses (Topic 326): Purchased Loans.” This ASU expands the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. ASU 2025-08 is effective for interim and annual periods in fiscal years beginning after December 15, 2026, and is applied prospectively. Early adoption is permitted.

​

Old Second has elected not to early adopt ASU 2025-08 at this time. When adopted, the standard will be adopted prospectively; thus, the accounting for previously completed business combinations will not be impacted. However, adopting this accounting standard is anticipated to have a material impact on the accounting for purchased loans, compared to previous business combinations, on any business combination completed after adoption.

​

ASU 2025-11 – On December 8, 2025, the FASB issued ASU 2025-11 “Interim Reporting (Topic 270): Narrow-Scope Improvements.” This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The amendments in this ASU: i) clarify that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with GAAP; ii) create a comprehensive list in FASB ASC Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP; iii) incorporate a disclosure principle, which is modeled after previous SEC guidance, that requires entities to disclose events and changes that occur after the end of the most recent fiscal year that have a material impact on the entity; and iv) improve guidance about information included in and the format of interim financial statements. The amendments in this ASU are effective for public business entities for interim periods within annual periods beginning after December 15, 2027. ASU 2025-11 is not expected to have a material impact on the financial statements of the Company.

​

ASU 2025-12 – On December 17, 2025, the FASB issued ASU 2025-12 “Codification Improvements”. The amendments in this ASU update the FASB ASC for a broad range of topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments in the ASU, which addresses 33 issues, affect a wide variety of topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. The amendments in this ASU are effective for all entities for annual periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance. ASU 2025-12 is not expected to have a material impact on the financial statements of the Company.

​

Changes in Significant Accounting Policies

​

Significant accounting policies are presented in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. These policies, along with the disclosures presented in the other financial statement notes and, in this discussion, provide information on how significant assets and liabilities are valued in the consolidated financial statements and how those values are determined. During the third quarter of 2026, the Company had no changes to significant accounting policies or estimates.

​

Subsequent Events

​

​

Dividends

​

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; dividends of $4.0 million will be paid to stockholders on November 9, 2026.

​

Executive Retirement

​

On October 14, 2026, Gary Collins, Vice Chairman of the Company and the Bank, notified the Company of his decision to retire effective October 31, 2026. In connection with his retirement, the Company and Mr. Collins entered into a Separation and General Release Agreement, as described in the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2026.

​

11

Table of Contents

​

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 Oak Brook, 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 Company’s common stock, plus $15.93 of cash. This resulted in merger consideration of $189.4 million, based on the closing price of the Company’s common stock on the date of acquisition, which consisted of 7.9 million shares of the Company’s 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 assumptions related to discount rates, expected future cash flows, market conditions and other future events that are often subjective in nature and may require adjustments for additional information received during the measurement period, which expired July 1, 2026.  None of the $36.0 million of goodwill recorded is expected to be deductible for income tax purposes.

​

The following table provides the purchase price allocation as of the July 1, 2025, acquisition of Bancorp Financial for the assets acquired and liabilities assumed at their estimated fair values as of the purchase date, as recorded by the Company:

​

​

​

​

​

Bancorp Financial Transaction Summary

As of Date of Transaction

​

​

​

​

​

​

July 1, 2025

Assets

​

​

​

Cash and due from banks

​

$

59,385

Securities available-for-sale and held-to-maturity, at fair value

​

​

119,117

FHLBC stock

​

​

1,958

Loans, net of purchase accounting adjustments

​

​

1,195,739

Premises and equipment

​

​

2,513

Core deposit intangible

​

​

6,206

Bank-owned life insurance ("BOLI")

​

​

13,916

Deferred tax assets

​

​

13,642

Other assets

​

​

14,764

Total assets

​

$

1,427,240

​

​

​

​

Liabilities

​

​

​

Noninterest bearing demand

​

$

73,744

Interest bearing deposits

​

​

1,158,778

Total deposits

​

​

1,232,522

Short-term borrowings

​

​

15,500

Long-term debt

​

​

14,800

Deferred tax liabilities

​

​

-

Other liabilities

​

​

10,978

Total liabilities

​

​

1,273,800

​

​

​

​

Cash consideration paid

​

​

48,884

Stock issued for acquisition

​

​

140,520

Total consideration

​

​

189,404

Total liabilities assumed and cash consideration received for transaction

​

$

1,463,204

Goodwill

​

$

35,964

12

Table of Contents

​

Expenses related to the Bancorp Financial acquisition totaled $875,000 and $12.9 million for the nine months ended September 30, 2026 and 2025, respectively. The expenses related to the acquisition are reported within noninterest expense based on the line items impacted, which are primarily salaries and employee benefits, occupancy, furniture and equipment, computer and data processing, legal fees, and other expense in the Consolidated Statements of Income. As of June 30, 2026, all acquisition related expenses have been reported and the measurement period is closed.

​

Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered purchased credit deteriorated (“PCD”) loans. For PCD loans, the initial estimate of expected credit losses was recognized in the allowance for credit losses (“ACL”) on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans purchased as part of the Bancorp Financial acquisition which were individually evaluated and determined to be PCD loans at acquisition.

​

​

​

​

​

​

​

As of

Bancorp Financial Acquired PCD Loans

​

July 1, 2025

Par value of acquired loans

​

$

89,870

Allowance for credit losses

​

​

(17,540)

Non-credit premium

​

​

722

Purchase price of PCD loans at acquisition

​

$

73,052

​

​

13

Table of Contents

​

Note 3 – Securities

​

Our investment portfolio serves the liquidity needs and income objectives of the Company. While the portfolio serves as an important component of the overall liquidity management at the Bank, portions of the portfolio also serve as income producing assets. The size and composition of the portfolio reflects liquidity needs, loan demand and interest income objectives. Portfolio size and composition will be adjusted from time to time. While a significant portion of the portfolio consists of readily marketable securities to address liquidity, other parts of the portfolio may reflect funds invested pending future loan demand or to maximize interest income without undue interest rate risk.

​

Investments are comprised primarily of debt securities, which are classified as securities available-for-sale and are carried at fair value. Unrealized gains and losses, net of tax, on securities available-for-sale are reported as a separate component of equity. This balance sheet component changes as interest rates and market conditions change. Unrealized gains and losses are not included in the calculation of regulatory capital.

​

In addition, non-marketable equity investments include Federal Home Loan Bank of Chicago (“FHLBC”) and Federal Reserve Bank of Chicago (“FRBC”) stock and are reported separately on the Consolidated Balance Sheets. FHLBC stock was recorded at $20.1 million as of September 30, 2026, and $11.3 million as of December 31, 2025. FRBC stock was recorded at $20.7 million at September 30, 2026 and December 31, 2025. Our FHLBC stock is necessary to maintain access to FHLBC advances.

​

The following tables summarize the amortized cost and fair value of the securities portfolio at September 30, 2026, and December 31, 2025, and the corresponding amounts of gross unrealized gains and losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross

​

Gross

​

​

​

​

​

Amortized

​

Unrealized

​

Unrealized

​

Fair

September 30, 2026

  ​ ​ ​

Cost1

  ​ ​ ​

Gains

  ​ ​ ​

Losses

​

Value

Securities available-for-sale

​

​

​

​

​

​

​

​

​

U.S. Treasury

​

$

149,225

​

$

54

​

$

(1,206)

​

$

148,073

U.S. government agencies

​

​

40,490

​

​

-

​

​

(1,381)

​

​

39,109

U.S. government agencies mortgage-backed

​

​

84,741

​

​

-

​

​

(9,906)

​

​

74,835

States and political subdivisions

​

​

190,475

​

​

3

​

​

(13,206)

​

​

177,272

Collateralized mortgage obligations

​

​

367,105

​

​

241

​

​

(38,556)

​

​

328,790

Asset-backed securities

​

​

38,757

​

​

231

​

​

(1,593)

​

​

37,395

Collateralized loan obligations

​

​

172,317

​

​

76

​

​

(62)

​

​

172,331

Equity securities

​

​

714

​

​

57

​

​

-

​

​

771

Total securities available-for-sale

​

$

1,043,824

​

$

662

​

$

(65,910)

​

$

978,576

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross

​

Gross

​

​

​

​

​

Amortized

​

Unrealized

​

Unrealized

​

Fair

December 31, 2025

  ​ ​ ​

Cost1

  ​ ​ ​

Gains

  ​ ​ ​

Losses

​

Value

Securities available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Treasury

​

$

164,296

​

$

1,564

​

$

-

​

$

165,860

U.S. government agencies

​

​

29,421

​

​

-

​

​

(245)

​

​

29,176

U.S. government agencies mortgage-backed

​

​

95,899

​

​

-

​

​

(7,119)

​

​

88,780

States and political subdivisions

​

​

213,366

​

​

450

​

​

(7,441)

​

​

206,375

Collateralized mortgage obligations

​

​

388,774

​

​

1,102

​

​

(30,571)

​

​

359,305

Asset-backed securities

​

​

46,600

​

​

423

​

​

(1,207)

​

​

45,816

Collateralized loan obligations

​

​

194,552

​

​

151

​

​

(239)

​

​

194,464

Equity securities

​

​

684

​

​

63

​

​

-

​

​

747

Total securities available-for-sale

​

$

1,133,592

​

$

3,753

​

$

(46,822)

​

$

1,090,523

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Excludes accrued interest receivable of $5.7 million at September 30, 2026, and $6.9 million at December 31, 2025, that is recorded in other assets on the Consolidated Balance Sheets.

​

​

14

Table of Contents

​

The fair value, amortized cost and weighted average yield of debt securities at September 30, 2026, by contractual maturity, are listed in the table below. Securities not due at a single maturity date are shown separately.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted

​

​

​

​

​

​

​

Amortized

​

Average

​

​

Fair

​

Securities available-for-sale

  ​ ​ ​

Cost

  ​ ​ ​

Yield

​

  ​ ​ ​

Value

  ​

Due in one year or less

​

$

73,396

​

4.41

%

​

$

73,321

​

Due after one year through five years

​

​

114,683

​

3.85

​

​

​

112,046

​

Due after five years through ten years

​

​

135,214

​

3.57

​

​

​

126,467

​

Due after ten years

​

​

56,897

​

3.12

​

​

​

52,620

​

​

​

​

380,190

​

3.75

​

​

​

364,454

​

Mortgage-backed and collateralized mortgage obligations

​

​

451,846

​

2.87

​

​

​

403,625

​

Asset-backed securities

​

​

38,757

​

3.81

​

​

​

37,395

​

Collateralized loan obligations

​

​

172,317

​

5.03

​

​

​

172,331

​

Equity securities

​

​

714

​

-

​

​

​

771

​

Total securities available-for-sale

​

$

1,043,824

​

3.58

%

​

$

978,576

​

​

At September 30, 2026, the Company had no securities issued from any one originator, other than the U.S. Government and its agencies, which individually amounted to over 10% of the Company’s stockholders’ equity.

​

Securities with unrealized losses with no corresponding allowance for credit losses at September 30, 2026, and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands except for number of securities):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less than 12 months

​

12 months or more

​

​

​

​

​

​

​

​

September 30, 2026

​

in an unrealized loss position

​

in an unrealized loss position

​

Total

​

​

Number of

​

Unrealized

​

Fair

​

Number of

​

Unrealized

​

Fair

​

Number of

​

Unrealized

​

Fair

Securities available-for-sale

  ​ ​ ​

Securities

  ​ ​

Losses

  ​ ​

Value

  ​ ​

Securities

  ​ ​

Losses

  ​ ​

Value

  ​ ​

Securities

  ​ ​

Losses

  ​ ​

Value

U.S. Treasuries

​

8

​

$

1,206

​

$

108,154

​

-

​

$

-

​

$

-

​

8

​

$

1,206

​

$

108,154

U.S. government agencies

​

1

​

​

1,358

​

​

38,329

​

4

​

​

23

​

​

779

​

5

​

​

1,381

​

​

39,108

U.S. government agencies mortgage-backed

​

1

​

​

719

​

​

9,783

​

124

​

​

9,187

​

​

64,677

​

125

​

​

9,906

​

​

74,460

States and political subdivisions

​

38

​

​

1,430

​

​

99,865

​

19

​

​

11,776

​

​

69,984

​

57

​

​

13,206

​

​

169,849

Collateralized mortgage obligations

​

15

​

​

1,095

​

​

61,448

​

125

​

​

37,461

​

​

246,303

​

140

​

​

38,556

​

​

307,751

Asset-backed securities

​

2

​

​

18

​

​

1,272

​

13

​

​

1,575

​

​

30,645

​

15

​

​

1,593

​

​

31,917

Collateralized loan obligations

​

10

​

​

57

​

​

61,550

​

1

​

​

5

​

​

4,995

​

11

​

​

62

​

​

66,545

Total securities available-for-sale

​

75

​

$

5,883

​

$

380,401

​

286

​

$

60,027

​

$

417,383

​

361

​

$

65,910

​

$

797,784

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less than 12 months

​

12 months or more

​

​

​

​

​

​

​

​

December 31, 2025

​

in an unrealized loss position

​

in an unrealized loss position

​

Total

​

​

Number of

​

Unrealized

​

​

Fair

​

Number of

​

Unrealized

​

​

Fair

​

Number of

​

Unrealized

​

​

Fair

Securities available-for-sale

  ​ ​ ​

Securities

  ​ ​

Losses

  ​ ​

​

Value

  ​ ​

Securities

  ​ ​

Losses

  ​ ​

​

Value

  ​ ​

Securities

  ​ ​

Losses

  ​ ​

​

Value

U.S. government agencies

​

-

​

$

-

​

$

-

​

7

​

$

245

​

$

29,176

​

7

​

$

245

​

$

29,176

U.S. government agencies mortgage-backed

​

1

​

​

36

​

​

10,572

​

126

​

​

7,083

​

​

78,208

​

127

​

​

7,119

​

​

88,780

States and political subdivisions

​

1

​

​

4

​

​

5,046

​

29

​

​

7,437

​

​

104,483

​

30

​

​

7,441

​

​

109,529

Collateralized mortgage obligations

​

5

​

​

19

​

​

6,287

​

130

​

​

30,552

​

​

288,228

​

135

​

​

30,571

​

​

294,515

Asset-backed securities

​

7

​

​

139

​

​

14,927

​

7

​

​

1,068

​

​

20,164

​

14

​

​

1,207

​

​

35,091

Collateralized loan obligations

​

12

​

​

239

​

​

87,299

​

-

​

​

-

​

​

-

​

12

​

​

239

​

​

87,299

Total securities available-for-sale

​

26

​

$

437

​

$

124,131

​

299

​

$

46,385

​

$

520,259

​

325

​

$

46,822

​

$

644,390

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

15

Table of Contents

​

Each quarter, we perform an analysis to determine if any of the unrealized losses on securities available-for-sale are comprised of credit losses as compared to unrealized losses due to market interest rate adjustments. Our assessment includes a review of the unrealized loss for each security issuance held; the financial condition and near-term prospects of the issuer, including external credit ratings and recent downgrades; and our ability and intent to hold the security for a period of time sufficient for a recovery in value. We also consider the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies. The portfolio continues to consist of a mix of fixed and floating-rate, high quality securities, largely rated AA (or better), displaying an overall effective duration of approximately 2.5 years.

​

The following table presents net realized gains (losses) on securities available-for-sale for the three and nine months ended:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

Nine Months Ended

​

​

​

​

​

​

September 30, 

​

​

September 30, 

​

​

​

Securities available-for-sale

  ​ ​ ​

2026

  ​ ​ ​

2025

​

2026

  ​ ​ ​

2025

​

  ​ ​ ​

​

Proceeds from sales of securities 1

​

$

-

​

$

125,892

​

$

-

​

$

125,892

​

​

​

Gross realized gains on securities

​

​

-

​

​

-

​

​

-

​

​

-

​

​

​

Gross realized losses on securities

​

 

(1)

​

 

(1)

​

 

(1)

​

 

(1)

​

​

​

Net realized losses

​

$

(1)

​

$

(1)

​

$

(1)

​

$

(1)

​

​

​

Income tax benefit on net realized losses

​

$

-

​

$

-

​

$

-

​

$

-

​

​

​

Effective tax rate applied

​

​

N/M

​

​

N/M

​

​

N/M

​

​

N/M

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

N/M – Not meaningful.

​

1 2025 values include $118.4 million of proceeds on the sale of securities acquired from Bancorp Financial, which is a reflection of the fair value on the acquisition date.

​

As of September 30, 2026, securities valued at $629.1 million were pledged for borrowings and for other purposes, a decrease from $679.5 million of securities pledged at year end 2025.

​

Note 4 – Loans and Allowance for Credit Losses on Loans

​

Major classifications of loans were as follows:

​

​

​

​

​

​

​

​

​

  ​ ​ ​

September 30, 2026

  ​ ​ ​

December 31, 2025

Commercial

​

$

867,362

​

$

842,130

Leases

​

​

554,370

​

​

548,256

Commercial real estate – investor

​

​

1,131,857

​

​

1,212,384

Commercial real estate – owner occupied

​

​

684,169

​

​

706,567

Construction

​

​

153,491

​

​

173,630

Residential real estate – investor

​

​

65,679

​

​

70,225

Residential real estate – owner occupied

​

​

247,515

​

​

230,432

Multifamily

​

​

370,431

​

​

339,131

HELOC

​

​

245,938

​

​

235,293

Powersport

​

​

689,229

​

​

696,959

Other 1

​

​

228,016

​

​

197,124

Total loans

​

​

5,238,057

​

​

5,252,131

Allowance for credit losses on loans

​

​

(64,189)

​

​

(72,301)

Net loans 2

​

$

5,173,868

​

$

5,179,830

​

1 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts in this table and in subsequent tables within Note 4 – Loans and Allowance for Credit Losses on Loans.

​

2 Excludes accrued interest receivable of $24.0 million and $23.5 million at September 30, 2026, and December 31, 2025, respectively, that is recorded in other assets on the Consolidated Balance Sheets.

​

​

16

Table of Contents

​

It is the policy of the Company to review each prospective credit prior to making a loan in order to determine if an adequate level of security or collateral has been obtained. The type of collateral, when required, will vary from liquid assets to real estate. The Company seeks to ensure access to collateral, in the event of borrower default, through adherence to lending laws, the Company’s lending standards and credit monitoring procedures. Although the Bank makes loans primarily within its market area, there are no significant concentrations of loans where the customers’ ability to honor loan terms is dependent upon a single economic sector. The real estate related categories listed above represent 55.3% and 56.5% of the portfolio at September 30, 2026, and December 31, 2025, respectively, and include a mix of owner occupied and non-owner occupied commercial real estate, residential, construction and multifamily loans.

​

The following tables represent the activity in the allowance for credit losses for loans, or the ACL, for the three and nine months ended September 30, 2026 and 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Provision for

​

​

​

​

​

​

​

​

Beginning

​

(Release of)

​

​

​

​

​

Ending

Allowance for credit losses

  ​ ​

Balance

  ​ ​

Credit Losses 1

  ​ ​

Charge-offs

  ​ ​

Recoveries

  ​ ​

Balance

Three months ended September 30, 2026

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

$

14,337

​

$

3,902

​

$

9,352

​

$

181

​

$

9,068

Leases

​

​

2,312

​

​

257

​

​

174

​

​

2

​

​

2,397

Commercial real estate – investor

​

​

19,489

​

​

(867)

​

​

-

​

​

14

​

​

18,636

Commercial real estate – owner occupied

​

​

4,635

​

​

(1,892)

​

​

-

​

​

1

​

​

2,744

Construction

​

​

1,138

​

​

(19)

​

​

-

​

​

-

​

​

1,119

Residential real estate – investor

​

​

566

​

​

(36)

​

​

-

​

​

3

​

​

533

Residential real estate – owner occupied

​

​

1,490

​

​

499

​

​

-

​

​

10

​

​

1,999

Multifamily

​

​

1,503

​

​

13

​

​

-

​

​

-

​

​

1,516

HELOC

​

​

3,358

​

​

19

​

​

-

​

​

10

​

​

3,387

Powersport

​

​

16,816

​

​

4,631

​

​

4,017

​

​

884

​

​

18,314

Other

​

​

4,736

​

​

28

​

​

429

​

​

141

​

​

4,476

Total

​

$

70,380

​

$

6,535

​

$

13,972

​

$

1,246

​

$

64,189

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Amount does not include the provision for unfunded commitment liability.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Provision for

​

​

​

​

​

​

​

​

Beginning

​

(Release of)

​

​

​

​

​

Ending

Allowance for credit losses

  ​ ​

Balance

  ​ ​

Credit Losses 1

  ​ ​

Charge-offs

  ​ ​

Recoveries

  ​ ​

Balance

Nine months ended September 30, 2026

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

$

11,183

​

$

11,337

​

$

13,682

​

$

230

​

$

9,068

Leases

​

​

2,370

​

​

740

​

​

832

​

​

119

​

​

2,397

Commercial real estate – investor

​

​

21,672

​

​

3,673

​

​

6,752

​

​

43

​

​

18,636

Commercial real estate – owner occupied

​

​

4,583

​

​

(1,846)

​

​

-

​

​

7

​

​

2,744

Construction

​

​

1,527

​

​

(408)

​

​

-

​

​

-

​

​

1,119

Residential real estate – investor

​

​

759

​

​

(232)

​

​

-

​

​

6

​

​

533

Residential real estate – owner occupied

​

​

1,879

​

​

82

​

​

-

​

​

38

​

​

1,999

Multifamily

​

​

1,493

​

​

23

​

​

-

​

​

-

​

​

1,516

HELOC

​

​

3,628

​

​

(271)

​

​

2

​

​

32

​

​

3,387

Powersport

​

​

17,449

​

​

10,718

​

​

12,270

​

​

2,417

​

​

18,314

Other

​

​

5,758

​

​

(178)

​

​

1,398

​

​

294

​

​

4,476

Total

​

$

72,301

​

$

23,638

​

$

34,936

​

$

3,186

​

$

64,189

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Amount does not include the provision for unfunded commitment liability.

​

​

17

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance

​

Provision for

​

​

​

​

​

​

​

​

Beginning

​

Established for

​

(Release of)

​

​

​

​

​

Ending

Allowance for credit losses

  ​ ​

Balance

  ​ ​

PCD Loans

  ​ ​

Credit Losses 1

  ​ ​

Charge-offs

  ​ ​

Recoveries

  ​ ​

Balance

Three months ended September 30, 2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

$

7,185

​

$

37

​

$

3,505

​

$

452

​

$

67

​

$

10,342

Leases

​

​

2,280

​

​

-

​

​

971

​

​

848

​

​

-

​

​

2,403

Commercial real estate – investor

​

​

16,922

​

​

1,954

​

​

2,086

​

​

-

​

​

15

​

​

20,977

Commercial real estate – owner occupied

​

​

7,748

​

​

-

​

​

682

​

​

-

​

​

2

​

​

8,432

Construction

​

​

2,879

​

​

-

​

​

(1,412)

​

​

-

​

​

46

​

​

1,513

Residential real estate – investor

​

​

565

​

​

-

​

​

200

​

​

-

​

​

2

​

​

767

Residential real estate – owner occupied

​

​

1,926

​

​

309

​

​

(337)

​

​

-

​

​

7

​

​

1,905

Multifamily

​

​

1,707

​

​

-

​

​

204

​

​

181

​

​

-

​

​

1,730

HELOC

​

​

1,770

​

​

128

​

​

1,750

​

​

-

​

​

19

​

​

3,667

Powersport

​

​

-

​

​

10,431

​

​

9,555

​

​

3,685

​

​

705

​

​

17,006

Other

​

​

8

​

​

4,681

​

​

2,411

​

​

880

​

​

75

​

​

6,295

Total

​

$

42,990

​

$

17,540

​

$

19,615

​

$

6,046

​

$

938

​

$

75,037

​

1 Amount does not include the provision for unfunded commitment liability.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance

​

Provision for

​

​

​

​

​

​

​

​

Beginning

​

Established for

​

(Release of)

​

​

​

​

​

Ending

Allowance for credit losses

  ​ ​

Balance

  ​ ​

PCD Loans

  ​ ​

Credit Losses 1

  ​ ​

Charge-offs

  ​ ​

Recoveries

  ​ ​

Balance

Nine months ended September 30, 2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

$

7,813

​

$

37

​

$

7,384

​

$

5,023

​

$

131

​

$

10,342

Leases

​

​

2,136

​

​

-

​

​

1,205

​

​

955

​

​

17

​

​

2,403

Commercial real estate – investor

​

​

14,528

​

​

1,954

​

​

4,452

​

​

-

​

​

43

​

​

20,977

Commercial real estate – owner occupied

​

​

10,036

​

​

-

​

​

(1,568)

​

​

47

​

​

11

​

​

8,432

Construction

​

​

3,581

​

​

-

​

​

(1,630)

​

​

834

​

​

396

​

​

1,513

Residential real estate – investor

​

​

553

​

​

-

​

​

208

​

​

-

​

​

6

​

​

767

Residential real estate – owner occupied

​

​

1,509

​

​

309

​

​

42

​

​

-

​

​

45

​

​

1,905

Multifamily

​

​

1,876

​

​

-

​

​

35

​

​

181

​

​

-

​

​

1,730

HELOC

​

​

1,578

​

​

128

​

​

1,920

​

​

-

​

​

41

​

​

3,667

Powersport

​

​

-

​

​

10,431

​

​

9,555

​

​

3,685

​

​

705

​

​

17,006

Other

​

​

9

​

​

4,681

​

​

2,521

​

​

1,082

​

​

166

​

​

6,295

Total

​

$

43,619

​

$

17,540

​

$

24,124

​

$

11,807

​

$

1,561

​

$

75,037

​

1 Amount does not include the provision for unfunded commitment liability.

​

At September 30, 2026, our allowance for credit losses (“ACL”) on loans totaled $64.2 million, and our ACL on unfunded commitments, included in other liabilities, totaled $2.2 million. During the first nine months of 2026, we recorded net provision for credit losses on loans and unfunded commitments of $23.8 million. The provision was mostly driven by increased commercial, commercial real estate, and powersport charge-offs. Charge-offs for the nine-month period ending September 30, 2026 were largely comprised of a $6.8 million charge-off in the commercial real estate-investor portfolio on two relationships; one is a downtown Chicago office building that was restructured to accommodate lower rents based on office market demand; the second is an office property outside Chicago experiencing a declining occupancy rate. In addition, a commercial charge-off of $13.7 million was recorded related to the warehouse and distribution business, and elevated powersport net charge-offs totaling $9.9 million. The ACL on loans excludes an allowance for unfunded commitments of $2.2 million as of September 30, 2026, $2.1 million as of December 31, 2025, and $2.3 million as of September 30, 2025, which is recorded within other liabilities on the Consolidated Balance Sheets.

​

​

18

Table of Contents

​

Generally, the Bank considers a loan to be collateral dependent when, based on current information and events, it is probable that foreclosure could be initiated. Additionally, the Bank will review all loans meeting the criteria for individual analysis, to determine if repayment or satisfaction of the loan is expected through the sale of collateral. This will generally be the case for credits with high loan-to-value ratios. Exceptions to this policy would include loans with guarantors or sponsors that have the means and willingness to support the obligation. Non-accruing loans with an outstanding balance of $500,000 or more are assessed on an individual loan level basis. When a financial asset is deemed collateral-dependent, the level of credit loss is measured by the difference between amortized cost of the financial asset and the fair value of collateral adjusted for estimated cost to sell. The Company had $28.0 million and $40.9 million of collateral dependent loans secured by real estate or business assets as of September 30, 2026, and December 31, 2025, respectively.

​

The following tables present the collateral dependent loans and the related ACL allocated by classification of loans as of September 30, 2026, and December 31, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accounts

​

​

​

​

​

​

​

ACL

September 30, 2026

​

Real Estate

​

Receivable

​

Equipment

​

Equity Interests

​

Total

​

Allocation

Commercial

​

$

-

​

$

2,405

​

$

-

​

$

4,150

​

$

6,555

​

$

2,238

Leases

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Commercial real estate – investor

​

​

8,390

​

​

-

​

​

-

​

​

-

​

​

8,390

​

​

5,035

Commercial real estate – owner occupied

​

​

9,483

​

​

-

​

​

-

​

​

-

​

​

9,483

​

​

-

Construction

​

​

1,469

​

​

-

​

​

-

​

​

-

​

​

1,469

​

​

8

Residential real estate – investor

​

​

78

​

​

-

​

​

-

​

​

-

​

​

78

​

​

-

Residential real estate – owner occupied

​

​

966

​

​

-

​

​

-

​

​

-

​

​

966

​

​

-

Multifamily

​

​

843

​

​

-

​

​

-

​

​

-

​

​

843

​

​

-

HELOC

​

​

206

​

​

-

​

​

-

​

​

-

​

​

206

​

​

-

Powersport

​

​

-

​

​

-

​

​

-

​

​

​

​

​

-

​

​

-

Other

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Total

​

$

21,435

​

$

2,405

​

$

-

​

$

4,150

​

$

27,990

​

$

7,281

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accounts

​

​

​

​

​

​

​

ACL

December 31, 2025

​

Real Estate

​

Receivable

​

Equipment

​

Equity Interests

​

Total

​

Allocation

Commercial

​

$

-

​

$

5,960

​

$

2,055

​

$

-

​

$

8,015

​

$

762

Leases

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Commercial real estate – investor

​

​

11,345

​

​

-

​

​

-

​

​

-

​

​

11,345

​

​

5,682

Commercial real estate – owner occupied

​

​

19,809

​

​

-

​

​

-

​

​

-

​

​

19,809

​

​

-

Construction

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Residential real estate – investor

​

​

26

​

​

-

​

​

-

​

​

-

​

​

26

​

​

-

Residential real estate – owner occupied

​

​

844

​

​

-

​

​

-

​

​

-

​

​

844

​

​

-

Multifamily

​

​

782

​

​

-

​

​

-

​

​

-

​

​

782

​

​

-

HELOC

​

​

53

​

​

-

​

​

-

​

​

-

​

​

53

​

​

-

Powersport

​

​

-

​

​

-

​

​

-

​

​

​

​

​

-

​

​

-

Other

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Total

​

$

32,859

​

$

5,960

​

$

2,055

​

$

-

​

$

40,874

​

$

6,444

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

An aged analysis of past due loans by classification of loans was as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

90 days or

​

​

​

​

​

​

​

​

90 Days or

​

​

​

​

​

​

​

​

​

​

Greater Past

​

​

30-59 Days

​

60-89 Days

​

Greater Past

​

Total Past

​

​

​

​

​

​

​

Due and

September 30, 2026

​

Past Due

  ​ ​ ​

Past Due

  ​ ​ ​

Due

  ​ ​ ​

Due

  ​ ​ ​

Current

  ​ ​ ​

Total Loans

  ​ ​ ​

Accruing

Commercial

​

$

2,560

​

​

-

​

​

4,930

​

​

7,490

​

​

859,872

​

$

867,362

​

$

121

Leases

​

​

842

​

​

49

​

​

1,014

​

​

1,905

​

​

552,465

​

​

554,370

​

​

-

Commercial real estate – investor

​

​

8,604

​

​

1,156

​

​

8,712

​

​

18,472

​

​

1,113,385

​

​

1,131,857

​

​

-

Commercial real estate – owner occupied

​

​

3,611

​

​

322

​

​

8,331

​

​

12,264

​

​

671,905

​

​

684,169

​

​

-

Construction

​

​

9,780

​

​

-

​

​

1,585

​

​

11,365

​

​

142,126

​

​

153,491

​

​

-

Residential real estate – investor

​

​

403

​

​

465

​

​

433

​

​

1,301

​

​

64,378

​

​

65,679

​

​

-

Residential real estate – owner occupied

​

​

165

​

​

279

​

​

887

​

​

1,331

​

​

246,184

​

​

247,515

​

​

276

Multifamily

​

​

595

​

​

695

​

​

1,154

​

​

2,444

​

​

367,987

​

​

370,431

​

​

-

HELOC

​

​

2,684

​

​

283

​

​

672

​

​

3,639

​

​

242,299

​

​

245,938

​

​

-

Powersport

​

​

11,487

​

​

3,909

​

​

2,681

​

​

18,077

​

​

671,152

​

​

689,229

​

​

2,583

Other

​

​

548

​

​

95

​

​

145

​

​

788

​

​

227,228

​

​

228,016

​

​

77

Total

​

$

41,279

​

$

7,253

​

$

30,544

​

$

79,076

​

$

5,158,981

​

$

5,238,057

​

$

3,057

​

​

19

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

90 days or

​

​

​

​

​

​

​

​

90 Days or

​

​

​

​

​

​

​

​

​

​

Greater Past

​

​

30-59 Days

​

60-89 Days

​

Greater Past

​

Total Past

​

​

​

​

​

​

​

Due and

December 31, 2025

​

Past Due

  ​ ​ ​

Past Due

  ​ ​ ​

Due

  ​ ​ ​

Due

  ​ ​ ​

Current

  ​ ​ ​

Total Loans

  ​ ​ ​

Accruing

Commercial

​

$

565

​

​

-

​

​

4,746

​

​

5,311

​

​

836,819

​

$

842,130

​

$

1,241

Leases

​

​

2,116

​

​

595

​

​

1,677

​

​

4,388

​

​

543,868

​

​

548,256

​

​

471

Commercial real estate – investor

​

​

10,604

​

​

89

​

​

-

​

​

10,693

​

​

1,201,691

​

​

1,212,384

​

​

-

Commercial real estate – owner occupied

​

​

7,176

​

​

819

​

​

11,389

​

​

19,384

​

​

687,183

​

​

706,567

​

​

250

Construction

​

​

1,546

​

​

1,349

​

​

635

​

​

3,530

​

​

170,100

​

​

173,630

​

​

-

Residential real estate – investor

​

​

120

​

​

699

​

​

152

​

​

971

​

​

69,254

​

​

70,225

​

​

-

Residential real estate – owner occupied

​

​

7,983

​

​

562

​

​

757

​

​

9,302

​

​

221,130

​

​

230,432

​

​

141

Multifamily

​

​

404

​

​

313

​

​

1,070

​

​

1,787

​

​

337,344

​

​

339,131

​

​

-

HELOC

​

​

5,219

​

​

441

​

​

451

​

​

6,111

​

​

229,182

​

​

235,293

​

​

-

Powersport

​

​

13,796

​

​

4,860

​

​

2,778

​

​

21,434

​

​

675,525

​

​

696,959

​

​

2,710

Other

​

​

1,873

​

​

702

​

​

217

​

​

2,792

​

​

194,332

​

​

197,124

​

​

66

Total

​

$

51,402

​

$

10,429

​

$

23,872

​

$

85,703

​

$

5,166,428

​

$

5,252,131

​

$

4,879

​

The table presents all nonaccrual loans as of September 30, 2026, and December 31, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

December 31, 2025

Nonaccrual loan detail

  ​ ​ ​

Nonaccrual loans

  ​ ​ ​

Nonaccrual loans with no ACL

​

Nonaccrual loans

  ​ ​ ​

Nonaccrual loans with no ACL

Commercial

​

$

7,251

​

$

696

​

$

8,520

​

$

5,520

Leases

​

​

1,729

​

​

1,729

​

​

2,428

​

​

2,428

Commercial real estate – investor

​

​

8,740

​

​

350

​

​

11,377

​

​

32

Commercial real estate – owner occupied

​

​

10,228

​

​

10,228

​

​

19,493

​

​

19,493

Construction

​

​

1,736

​

​

1,616

​

​

737

​

​

737

Residential real estate – investor

​

​

1,030

​

​

1,030

​

​

681

​

​

681

Residential real estate – owner occupied

​

​

2,183

​

​

2,183

​

​

1,711

​

​

1,711

Multifamily

​

​

1,254

​

​

1,254

​

​

1,494

​

​

1,494

HELOC

​

​

2,160

​

​

2,160

​

​

1,222

​

​

1,222

Powersport

​

​

145

​

​

145

​

​

68

​

​

68

Other

​

​

123

​

​

123

​

​

221

​

​

221

Total

​

$

36,579

​

$

21,514

​

$

47,952

​

$

33,607

​

The Company recognized $20,000 and $52,000 of interest on nonaccrual loans during the three months ended and nine months ended September 30, 2026, and $53,000 and $108,000 of interest on nonaccrual loans during the three months ended and nine months ended September 30, 2025, respectively.

​

​

20

Table of Contents

​

Credit Quality Indicators

​

The Company categorizes loans into credit risk categories based on current financial information, overall debt service coverage, comparison to industry averages, historical payment experience, and current economic trends. This analysis includes loans with outstanding balances or commitments greater than $50,000 and excludes homogeneous loans such as home equity lines of credit, residential real estate – owner occupied, powersport, and other loan categories. Loans with a classified risk rating are reviewed quarterly regardless of size or loan type. The Company uses the following definitions for classified risk ratings:

​

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

​

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. The substandard credit quality indicator includes both problem loans that are currently performing and nonperforming loans.

​

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

​

Credits that are not covered by the definitions above are pass credits, which are not considered to be adversely rated.

​

For residential owner-occupied, HELOC, powersport, and the other loan portfolios, the Company evaluates credit quality based on the

aging status of the loan and by payment activity. Nonperforming loans are those that are either 90 days or more past due and accruing or

are on nonaccrual, and all other loans not meeting these criteria are considered performing as presented in the aging table above.

​

Credit quality indicators by loan classification and contractual loan origination date at September 30, 2026, were as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​

2026

  ​

2025

  ​

2024

  ​

2023

  ​

2022

  ​

Prior

  ​

Revolving
Loans

  ​

Revolving
Loans
Converted
To Term
Loans

  ​

Total

Commercial

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

153,732

​

$

166,397

​

$

201,949

​

$

96,767

​

$

14,056

​

$

13,111

​

$

198,988

​

$

-

​

$

845,000

Special Mention

​

​

-

​

​

-

​

​

772

​

​

-

​

​

-

​

​

-

​

​

8,400

​

​

-

​

​

9,172

Substandard

​

​

-

​

​

94

​

​

42

​

​

4,150

​

​

-

​

​

77

​

​

8,827

​

​

-

​

​

13,190

Total commercial

​

​

153,732

​

​

166,491

​

​

202,763

​

​

100,917

​

​

14,056

​

​

13,188

​

​

216,215

​

​

-

​

​

867,362

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Leases

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

174,359

​

​

188,896

​

$

118,836

​

​

50,188

​

​

13,015

​

​

7,347

​

​

-

​

​

-

​

​

552,641

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

95

​

​

856

​

​

778

​

​

-

​

​

-

​

​

-

​

​

1,729

Total leases

​

​

174,359

​

​

188,896

​

​

118,931

​

​

51,044

​

​

13,793

​

​

7,347

​

​

-

​

​

-

​

​

554,370

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate – investor

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

166,617

​

​

243,690

​

​

175,150

​

​

102,860

​

​

251,616

​

​

164,186

​

​

7,231

​

​

-

​

​

1,111,350

Special Mention

​

​

-

​

​

367

​

​

5,377

​

​

-

​

​

1,110

​

​

923

​

​

-

​

​

-

​

​

7,777

Substandard

​

​

-

​

​

-

​

​

4,464

​

​

101

​

​

3,164

​

​

1,075

​

​

-

​

​

-

​

​

8,804

Doubtful

​

​

-

​

​

-

​

​

3,926

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

3,926

Total commercial real estate – investor

​

​

166,617

​

​

244,057

​

​

188,917

​

​

102,961

​

​

255,890

​

​

166,184

​

​

7,231

​

​

-

​

​

1,131,857

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate – owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

167,753

​

​

174,933

​

​

54,598

​

​

61,893

​

​

51,501

​

​

124,220

​

​

14,535

​

​

749

​

​

650,182

Special Mention

​

​

-

​

​

5,763

​

​

-

​

​

1,678

​

​

-

​

​

-

​

​

-

​

​

-

​

​

7,441

Substandard

​

​

-

​

​

2,104

​

​

5,400

​

​

1,333

​

​

4,579

​

​

13,130

​

​

-

​

​

-

​

​

26,546

Total commercial real estate – owner occupied

​

​

167,753

​

​

182,800

​

​

59,998

​

​

64,904

​

​

56,080

​

​

137,350

​

​

14,535

​

​

749

​

​

684,169

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

21

Table of Contents

Credit quality indicators by loan classification and contractual loan origination date at September 30, 2026, continued:

​

  ​

2026

  ​

2025

  ​

2024

  ​

2023

  ​

2022

  ​

Prior

  ​

Revolving
Loans

  ​

Revolving
Loans
Converted
To Term
Loans

  ​

Total

Construction

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

11,964

​

​

81,304

​

​

25,328

​

​

475

​

​

21,013

​

​

541

​

​

-

​

​

-

​

​

140,625

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

101

​

​

1,936

​

​

885

​

​

9,930

​

​

14

​

​

-

​

​

-

​

​

12,866

Total construction

​

​

11,964

​

​

81,405

​

​

27,264

​

​

1,360

​

​

30,943

​

​

555

​

​

-

​

​

-

​

​

153,491

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential real estate – investor

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

12,210

​

​

7,466

​

​

5,314

​

​

2,816

​

​

12,652

​

​

22,606

​

​

1,585

​

​

-

​

​

64,649

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

1,030

​

​

-

​

​

-

​

​

1,030

Total residential real estate – investor

​

​

12,210

​

​

7,466

​

​

5,314

​

​

2,816

​

​

12,652

​

​

23,636

​

​

1,585

​

​

-

​

​

65,679

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential real estate – owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

38,973

​

​

40,981

​

​

9,626

​

​

23,066

​

​

34,207

​

​

97,234

​

​

1,179

​

​

-

​

​

245,266

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

-

​

​

140

​

​

353

​

​

1,756

​

​

-

​

​

-

​

​

2,249

Total residential real estate – owner occupied

​

​

38,973

​

​

40,981

​

​

9,626

​

​

23,206

​

​

34,560

​

​

98,990

​

​

1,179

​

​

-

​

​

247,515

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Multifamily

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

77,290

​

​

53,853

​

​

25,135

​

​

58,710

​

​

90,138

​

​

63,856

​

​

195

​

​

-

​

​

369,177

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

-

​

​

-

​

​

943

​

​

311

​

​

-

​

​

-

​

​

1,254

Total multifamily

​

​

77,290

​

​

53,853

​

​

25,135

​

​

58,710

​

​

91,081

​

​

64,167

​

​

195

​

​

-

​

​

370,431

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

HELOC

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

3,602

​

​

2,330

​

​

1,659

​

​

1,379

​

​

1,338

​

​

4,132

​

​

229,143

​

​

-

​

​

243,583

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

60

​

​

-

​

​

-

​

​

293

​

​

2,002

​

​

-

​

​

2,355

Total HELOC

​

​

3,602

​

​

2,330

​

​

1,719

​

​

1,379

​

​

1,338

​

​

4,425

​

​

231,145

​

​

-

​

​

245,938

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Powersport

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

255,043

​

​

221,436

​

​

110,125

​

​

66,120

​

​

28,533

​

​

7,827

​

​

-

​

​

-

​

​

689,084

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

9

​

​

51

​

​

46

​

​

14

​

​

25

​

​

-

​

​

-

​

​

145

Total Powersport

​

​

255,043

​

​

221,445

​

​

110,176

​

​

66,166

​

​

28,547

​

​

7,852

​

​

-

​

​

-

​

​

689,229

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

72,941

​

​

62,426

​

​

23,309

​

​

14,925

​

​

42,671

​

​

5,662

​

​

5,928

​

​

-

​

​

227,862

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

-

​

​

85

​

​

68

​

​

1

​

​

-

​

​

-

​

​

154

Total other

​

​

72,941

​

​

62,426

​

​

23,309

​

​

15,010

​

​

42,739

​

​

5,663

​

​

5,928

​

​

-

​

​

228,016

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

1,134,484

​

​

1,243,712

​

​

751,029

​

​

479,199

​

​

560,740

​

​

510,722

​

​

458,784

​

​

749

​

​

5,139,419

Special Mention

​

​

-

​

​

6,130

​

​

6,149

​

​

1,678

​

​

1,110

​

​

923

​

​

8,400

​

​

-

​

​

24,390

Substandard

​

​

-

​

​

2,308

​

​

12,048

​

​

7,596

​

​

19,829

​

​

17,712

​

​

10,829

​

​

-

​

​

70,322

Doubtful

​

​

-

​

​

-

​

​

3,926

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

3,926

Total loans

​

$

1,134,484

​

$

1,252,150

​

$

773,152

​

$

488,473

​

$

581,679

​

$

529,357

​

$

478,013

​

$

749

​

$

5,238,057

​

​

​

22

Table of Contents

Credit quality indicators by loan classification and loan origination date at December 31, 2025, were as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​

2025

  ​

2024

  ​

2023

  ​

2022

  ​

2021

  ​

Prior

  ​

Revolving
Loans

  ​

Revolving
Loans
Converted
To Term
Loans

  ​

Total

Commercial

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

275,155

​

$

161,529

​

$

94,487

​

$

22,843

​

$

8,699

​

$

9,730

​

$

214,846

​

$

125

​

$

787,414

Special Mention

​

​

-

​

​

-

​

​

-

​

​

212

​

​

-

​

​

-

​

​

2,917

​

​

-

​

​

3,129

Substandard

​

​

231

​

​

926

​

​

19,241

​

​

3,611

​

​

291

​

​

-

​

​

27,287

​

​

-

​

​

51,587

Total commercial

​

​

275,386

​

​

162,455

​

​

113,728

​

​

26,666

​

​

8,990

​

​

9,730

​

​

245,050

​

​

125

​

​

842,130

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Leases

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

247,515

​

​

172,825

​

$

84,533

​

​

27,993

​

​

10,164

​

​

2,038

​

​

-

​

​

-

​

​

545,068

Special Mention

​

​

-

​

​

-

​

​

374

​

​

263

​

​

123

​

​

-

​

​

-

​

​

-

​

​

760

Substandard

​

​

-

​

​

214

​

​

469

​

​

1,745

​

​

-

​

​

-

​

​

-

​

​

-

​

​

2,428

Total leases

​

​

247,515

​

​

173,039

​

​

85,376

​

​

30,001

​

​

10,287

​

​

2,038

​

​

-

​

​

-

​

​

548,256

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate – investor

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

296,219

​

​

217,761

​

​

120,630

​

​

255,701

​

​

199,993

​

​

99,144

​

​

6,371

​

​

-

​

​

1,195,819

Special Mention

​

​

82

​

​

-

​

​

-

​

​

-

​

​

41

​

​

2,197

​

​

-

​

​

-

​

​

2,320

Substandard

​

​

-

​

​

9,703

​

​

1,677

​

​

1,690

​

​

-

​

​

1,175

​

​

-

​

​

-

​

​

14,245

Total commercial real estate – investor

​

​

296,301

​

​

227,464

​

​

122,307

​

​

257,391

​

​

200,034

​

​

102,516

​

​

6,371

​

​

-

​

​

1,212,384

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial real estate – owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

193,988

​

​

76,480

​

​

67,749

​

​

76,670

​

​

106,107

​

​

103,545

​

​

10,309

​

​

-

​

​

634,848

Special Mention

​

​

-

​

​

-

​

​

161

​

​

3,542

​

​

2,153

​

​

1,782

​

​

-

​

​

-

​

​

7,638

Substandard

​

​

58

​

​

-

​

​

20,929

​

​

8,996

​

​

20,252

​

​

13,846

​

​

-

​

​

-

​

​

64,081

Total commercial real estate – owner occupied

​

​

194,046

​

​

76,480

​

​

88,839

​

​

89,208

​

​

128,512

​

​

119,173

​

​

10,309

​

​

-

​

​

706,567

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Construction

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

53,522

​

​

48,906

​

​

31,121

​

​

27,500

​

​

332

​

​

828

​

​

-

​

​

-

​

​

162,209

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

102

​

​

-

​

​

1,454

​

​

9,526

​

​

-

​

​

339

​

​

-

​

​

-

​

​

11,421

Total construction

​

​

53,624

​

​

48,906

​

​

32,575

​

​

37,026

​

​

332

​

​

1,167

​

​

-

​

​

-

​

​

173,630

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential real estate – investor

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

13,993

​

​

5,729

​

​

3,677

​

​

15,256

​

​

15,288

​

​

10,743

​

​

4,397

​

​

-

​

​

69,083

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

-

​

​

-

​

​

461

​

​

681

​

​

-

​

​

-

​

​

1,142

Total residential real estate – investor

​

​

13,993

​

​

5,729

​

​

3,677

​

​

15,256

​

​

15,749

​

​

11,424

​

​

4,397

​

​

-

​

​

70,225

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential real estate – owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

42,941

​

​

11,580

​

​

25,594

​

​

35,826

​

​

30,264

​

​

81,123

​

​

1,207

​

​

-

​

​

228,535

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

151

​

​

202

​

​

142

​

​

1,402

​

​

-

​

​

-

​

​

1,897

Total residential real estate – owner occupied

​

​

42,941

​

​

11,580

​

​

25,745

​

​

36,028

​

​

30,406

​

​

82,525

​

​

1,207

​

​

-

​

​

230,432

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Multifamily

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

56,753

​

​

20,133

​

​

50,464

​

​

96,747

​

​

70,496

​

​

40,926

​

​

2,118

​

​

-

​

​

337,637

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

124

​

​

892

​

​

313

​

​

165

​

​

-

​

​

-

​

​

1,494

Total multifamily

​

​

56,753

​

​

20,133

​

​

50,588

​

​

97,639

​

​

70,809

​

​

41,091

​

​

2,118

​

​

-

​

​

339,131

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

HELOC

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

2,888

​

​

2,192

​

​

1,700

​

​

1,646

​

​

278

​

​

4,480

​

​

220,643

​

​

-

​

​

233,827

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

240

​

​

1,226

​

​

-

​

​

1,466

Total HELOC

​

​

2,888

​

​

2,192

​

​

1,700

​

​

1,646

​

​

278

​

​

4,720

​

​

221,869

​

​

-

​

​

235,293

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Powersport

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

323,072

​

​

180,099

​

​

114,212

​

​

57,740

​

​

17,237

​

​

4,531

​

​

-

​

​

-

​

​

696,891

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

22

​

​

44

​

​

-

​

​

-

​

​

2

​

​

-

​

​

-

​

​

68

Total Powersport

​

​

323,072

​

​

180,121

​

​

114,256

​

​

57,740

​

​

17,237

​

​

4,533

​

​

-

​

​

-

​

​

696,959

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

81,405

​

​

31,889

​

​

19,599

​

​

48,615

​

​

1,729

​

​

7,282

​

​

6,335

​

​

-

​

​

196,854

Special Mention

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Substandard

​

​

-

​

​

-

​

​

163

​

​

74

​

​

27

​

​

6

​

​

-

​

​

-

​

​

270

Total other

​

​

81,405

​

​

31,889

​

​

19,762

​

​

48,689

​

​

1,756

​

​

7,288

​

​

6,335

​

​

-

​

​

197,124

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

​

1,587,451

​

​

929,123

​

​

613,766

​

​

666,537

​

​

460,587

​

​

364,370

​

​

466,226

​

​

125

​

​

5,088,185

Special Mention

​

​

82

​

​

-

​

​

535

​

​

4,017

​

​

2,317

​

​

3,979

​

​

2,917

​

​

-

​

​

13,847

Substandard

​

​

391

​

​

10,865

​

​

44,252

​

​

26,736

​

​

21,486

​

​

17,856

​

​

28,513

​

​

-

​

​

150,099

Total loans

​

$

1,587,924

​

$

939,988

​

$

658,553

​

$

697,290

​

$

484,390

​

$

386,205

​

$

497,656

​

$

125

​

$

5,252,131

​

23

Table of Contents

The following vintage tables present the amortized cost basis of non-risk rated loans by class and year of origination, based on the Company’s credit quality indicator for such loans as of September 30, 2026 and December 31, 2025. For these loan classes, the Company monitors credit quality based on performing and nonperforming status rather than internal risk ratings.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

  ​

2026

  ​

2025

  ​

2024

  ​

2023

  ​

2022

  ​

Prior

  ​

Revolving
Loans

  ​

Revolving
Loans
Converted
To Term
Loans

  ​

Total

Residential real estate – owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

$

38,973

​

​

40,981

​

​

9,626

​

​

23,066

​

​

34,207

​

​

97,024

​

​

1,179

​

$

-

​

$

245,056

Nonperforming

​

​

-

​

​

-

​

​

-

​

​

140

​

​

353

​

​

1,966

​

​

-

​

​

-

​

​

2,459

Total Residential real estate – owner occupied

​

​

38,973

​

​

40,981

​

​

9,626

​

​

23,206

​

​

34,560

​

​

98,990

​

​

1,179

​

​

-

​

​

247,515

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

HELOC

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

3,602

​

​

2,330

​

​

1,659

​

​

1,379

​

​

1,338

​

​

4,152

​

​

229,318

​

​

-

​

​

243,778

Nonperforming

​

​

-

​

​

-

​

​

60

​

​

-

​

​

-

​

​

273

​

​

1,827

​

​

-

​

​

2,160

Total HELOC

​

​

3,602

​

​

2,330

​

​

1,719

​

​

1,379

​

​

1,338

​

​

4,425

​

​

231,145

​

​

-

​

​

245,938

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Powersport

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

254,709

​

​

220,694

​

​

109,561

​

​

65,695

​

​

28,178

​

​

7,664

​

​

-

​

​

-

​

​

686,501

Nonperforming

​

​

334

​

​

751

​

​

615

​

​

471

​

​

369

​

​

188

​

​

-

​

​

-

​

​

2,728

Total Powersport

​

​

255,043

​

​

221,445

​

​

110,176

​

​

66,166

​

​

28,547

​

​

7,852

​

​

-

​

​

-

​

​

689,229

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

72,917

​

​

62,426

​

​

23,308

​

​

14,931

​

​

42,671

​

​

5,635

​

​

5,928

​

​

-

​

​

227,816

Nonperforming

​

​

24

​

​

-

​

​

1

​

​

79

​

​

68

​

​

28

​

​

-

​

​

-

​

​

200

Total Other

​

​

72,941

​

​

62,426

​

​

23,309

​

​

15,010

​

​

42,739

​

​

5,663

​

​

5,928

​

​

-

​

​

228,016

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total non-risk rated loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

370,201

​

​

326,431

​

​

144,154

​

​

105,071

​

​

106,394

​

​

114,475

​

​

236,425

​

​

-

​

​

1,403,151

Nonperforming

​

​

358

​

​

751

​

​

676

​

​

690

​

​

790

​

​

2,455

​

​

1,827

​

​

-

​

​

7,547

Total non-risk rated loans

​

$

370,559

​

​

327,182

​

​

144,830

​

​

105,761

​

​

107,184

​

​

116,930

​

​

238,252

​

​

-

​

​

1,410,698

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

  ​

2025

  ​

2024

  ​

2023

  ​

2022

  ​

2021

  ​

Prior

  ​

Revolving
Loans

  ​

Revolving
Loans
Converted
To Term
Loans

  ​

Total

Residential real estate – owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

$

42,941

​

$

11,580

​

$

25,594

​

$

35,826

​

$

30,264

​

$

81,168

​

$

1,207

​

$

-

​

$

228,580

Nonperforming

​

​

-

​

​

-

​

​

151

​

​

202

​

​

142

​

​

1,357

​

​

-

​

​

-

​

​

1,852

Total Residential real estate – owner occupied

​

​

42,941

​

​

11,580

​

​

25,745

​

​

36,028

​

​

30,406

​

​

82,525

​

​

1,207

​

​

-

​

​

230,432

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

HELOC

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

2,888

​

​

2,192

​

​

1,700

​

​

1,646

​

​

278

​

​

4,499

​

​

220,868

​

​

-

​

​

234,071

Nonperforming

​

​

-

​

​

-

​

​

-

​

​

​

​

​

​

​

​

221

​

​

1,001

​

​

-

​

​

1,222

Total HELOC

​

​

2,888

​

​

2,192

​

​

1,700

​

​

1,646

​

​

278

​

​

4,720

​

​

221,869

​

​

-

​

​

235,293

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Powersport

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

322,369

​

​

179,391

​

​

113,725

​

​

57,266

​

​

17,026

​

​

4,404

​

​

-

​

​

-

​

​

694,181

Nonperforming

​

​

703

​

​

730

​

​

531

​

​

474

​

​

211

​

​

129

​

​

-

​

​

-

​

​

2,778

Total Powersport

​

​

323,072

​

​

180,121

​

​

114,256

​

​

57,740

​

​

17,237

​

​

4,533

​

​

-

​

​

-

​

​

696,959

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

81,405

​

​

31,889

​

​

19,596

​

​

48,615

​

​

1,730

​

​

7,267

​

​

6,335

​

​

-

​

​

196,837

Nonperforming

​

​

-

​

​

-

​

​

166

​

​

74

​

​

26

​

​

21

​

​

​

​

​

-

​

​

287

Total Other

​

​

81,405

​

​

31,889

​

​

19,762

​

​

48,689

​

​

1,756

​

​

7,288

​

​

6,335

​

​

-

​

​

197,124

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total non-risk rated loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performing

​

​

449,603

​

​

225,052

​

​

160,615

​

​

143,353

​

​

49,298

​

​

97,338

​

​

228,410

​

​

-

​

​

1,353,669

Nonperforming

​

​

703

​

​

730

​

​

848

​

​

750

​

​

379

​

​

1,728

​

​

1,001

​

​

-

​

​

6,139

Total non-risk rated loans

​

$

450,306

​

​

225,782

​

​

161,463

​

​

144,103

​

​

49,677

​

​

99,066

​

​

229,411

​

​

-

​

​

1,359,808

​

24

Table of Contents

The gross charge-offs activity by loan type and year of origination for the nine months ended September 30, 2026 and 2025, were as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2026

  ​

2026

  ​

2025

  ​

2024

  ​

2023

  ​

2022

  ​

Prior

  ​

Total

Commercial

​

$

-

​

​

-

​

​

34

​

​

13,640

​

​

-

​

​

8

​

$

13,682

Leases

​

​

-

​

​

57

​

​

167

​

​

10

​

​

596

​

​

2

​

​

832

Commercial real estate – investor

​

​

-

​

​

1,175

​

​

-

​

​

1,645

​

​

-

​

​

3,932

​

​

6,752

Commercial real estate – owner occupied

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Construction

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Residential real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Residential real estate – owner occupied

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Multifamily

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

HELOC

​

​

-

​

​

-

​

​

-

​

​

2

​

​

-

​

​

-

​

​

2

Powersport

​

​

813

​

​

4,333

​

​

3,103

​

​

2,072

​

​

1,356

​

​

593

​

​

12,270

Other

​

​

10

​

​

12

​

​

-

​

​

141

​

​

1,012

​

​

223

​

​

1,398

Total

​

$

823

​

$

5,577

​

$

3,304

​

$

17,510

​

$

2,964

​

$

4,758

​

$

34,936

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2025

  ​

2025

  ​

2024

  ​

2023

  ​

2022

  ​

2021

  ​

Prior

  ​

Total

Commercial

​

$

-

​

​

176

​

​

3,452

​

​

-

​

​

1,386

​

​

9

​

$

5,023

Leases

​

​

-

​

​

-

​

​

85

​

​

854

​

​

-

​

​

16

​

​

955

Commercial real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Commercial real estate – owner occupied

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

47

​

​

47

Construction

​

​

-

​

​

-

​

​

-

​

​

834

​

​

-

​

​

-

​

​

834

Residential real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Residential real estate – owner occupied

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Multifamily

​

​

-

​

​

181

​

​

-

​

​

-

​

​

-

​

​

-

​

​

181

HELOC

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Powersport

​

​

589

​

​

1,172

​

​

896

​

​

689

​

​

222

​

​

117

​

​

3,685

Other

​

​

-

​

​

80

​

​

29

​

​

166

​

​

4

​

​

803

​

​

1,082

Total

​

$

589

​

$

1,609

​

$

4,462

​

$

2,543

​

$

1,612

​

$

992

​

$

11,807

​

The Company had $2.5 million and $379,000 in residential real estate loans in the process of foreclosure as of September 30, 2026, and December 31, 2025, respectively.

​

25

Table of Contents

​

There were 36 loans modified during the nine-month period ending September 30, 2026, totaling $40.5 million in aggregate, which were experiencing financial difficulty. Of the 36 loans modified in the first nine months of 2026, three loans had also been modified in prior periods. There were 39 loans modified during the nine-month period ending September 30, 2025, totaling $56.1 million in aggregate, which were experiencing financial difficulty.

​

The following tables present the amortized cost basis of loans at September 30, 2026, and September 30, 2025, that were both experiencing financial difficulty and modified during the three and nine months ended September 30, 2026, and September 30, 2025, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2026

​

Term Modification

​

Combination - Term, Interest Rate  and Payment Modification 1

​

Payment Modification 1

​

Combination - Interest Rate and Payment Modification 1

​

Combination - Term and Interest Rate Modification

​

Combination - Term and Payment Modification 1

​

Total Loans Modified

​

% of Total Loan Classification Modified to Total Loan Classification

​

Commercial

​

$

-

​

$

-

​

$

-

​

$

-

​

$

-

​

$

-

​

$

-

​

-

%

Commercial real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

-

​

Commercial real estate – owner occupied

​

​

22,613

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

22,613

​

3.3

​

Construction

​

​

586

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

586

​

0.4

​

Multifamily

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

-

​

HELOC

​

​

117

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

117

​

0.0

​

Powersport

​

​

-

​

​

41

​

​

-

​

​

5

​

​

-

​

​

1

​

​

47

​

0.0

​

Other

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

0.0

​

Total

​

$

23,316

​

$

41

​

$

-

​

$

5

​

$

-

​

$

1

​

$

23,363

​

0.4

%

1 Payment modifications are either contractual delays in payment or a modification of the payment amount.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2026

​

Term Modification

​

Combination - Term, Interest Rate  and Payment Modification 1

​

Payment Modification 1

​

Combination - Interest Rate and Payment Modification 1

​

Combination - Term and Interest Rate Modification

​

Combination - Term and Payment Modification 1

​

Total Loans Modified

​

% of Total Loan Classification Modified to Total Loan Classification

​

Commercial

​

$

6,672

​

$

-

​

$

-

​

$

-

​

$

-

​

$

2,405

​

$

9,077

​

1.0

%

Commercial real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

7,773

​

​

-

​

​

7,773

​

0.7

​

Commercial real estate – owner occupied

​

​

22,613

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

22,613

​

3.3

​

Construction

​

​

586

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

586

​

0.4

​

Multifamily

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

-

​

HELOC

​

​

263

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

263

​

0.1

​

Powersport

​

​

-

​

​

171

​

​

-

​

​

5

​

​

-

​

​

1

​

​

177

​

0.0

​

Other

​

​

-

​

​

8

​

​

-

​

​

-

​

​

-

​

​

-

​

​

8

​

0.0

​

Total

​

$

30,134

​

$

179

​

$

-

​

$

5

​

$

7,773

​

$

2,406

​

$

40,497

​

0.8

%

1 Payment modifications are either contractual delays in payment or a modification of the payment amount.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2025

​

Term Modification

​

Combination - Term, Interest Rate  and Payment Modification 1

​

Payment Modification 1

​

Interest Rate Modification

​

Combination - Term and Interest Rate Modification

​

Combination - Term and Payment Modification 1

​

Total Loans Modified

​

% of Total Loan Classification Modified to Total Loan Classification

​

Commercial

​

$

5,025

​

$

-

​

$

1,550

​

$

-

​

$

1,551

​

$

6,174

​

$

14,300

​

1.8

%

Commercial real estate – investor

​

​

1,645

​

​

-

​

​

-

​

​

-

​

​

-

​

​

34

​

​

1,679

​

0.1

​

Commercial real estate – owner occupied

​

​

6,273

​

​

-

​

​

-

​

​

-

​

​

-

​

​

1,122

​

​

7,395

​

1.1

​

Construction

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

-

​

Multifamily

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

-

​

HELOC

​

​

20

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

20

​

0.0

​

Powersport

​

​

-

​

​

51

​

​

-

​

​

8

​

​

-

​

​

-

​

​

59

​

0.0

​

Other

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

27

​

​

27

​

0.0

​

Total

​

$

12,963

​

$

51

​

$

1,550

​

$

8

​

$

1,551

​

$

7,357

​

$

23,480

​

0.4

%

​

1 Payment modifications are either contractual delays in payment or a modification of the payment amount.

​

​

26

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2025

​

Term Modification

​

Combination - Term, Interest Rate  and Payment Modification 1

​

Payment Modification 1

​

Combination - Interest Rate and Payment Modification 1

​

Combination - Term and Interest Rate Modification

​

Combination - Term and Payment Modification 1

​

Total Loans Modified

​

% of Total Loan Classification Modified to Total Loan Classification

​

Commercial

​

$

10,464

​

$

-

​

$

1,550

​

$

-

​

$

1,551

​

$

6,174

​

$

19,739

​

2.5

%

Commercial real estate – investor

​

​

1,645

​

​

-

​

​

-

​

​

-

​

​

12,251

​

​

34

​

​

13,930

​

1.1

​

Commercial real estate – owner occupied

​

​

19,124

​

​

-

​

​

-

​

​

-

​

​

-

​

​

3,197

​

​

22,321

​

3.3

​

Construction

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

-

​

Multifamily

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

-

​

HELOC

​

​

20

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

20

​

0.0

​

Powersport

​

​

-

​

​

51

​

​

-

​

​

8

​

​

-

​

​

-

​

​

59

​

0.0

​

Other

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

27

​

​

27

​

0.0

​

Total

​

$

31,253

​

$

51

​

$

1,550

​

$

8

​

$

13,802

​

$

9,432

​

$

56,096

​

1.1

%

1 Payment modifications are either contractual delays in payment or a modification of the payment amount.

​

The Company closely monitors the performance of loan modifications to borrowers experiencing financial difficulty. The following tables present the performance of loans that have been modified in the last twelve months as of September 30, 2026, and September 30, 2025.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

30-59 days past due

​

60-89 Days Past Due

​

90 Days or Greater Past Due

​

Total Past Due

​

Current

​

Total Modifications

Commercial

​

$

2,405

​

$

-

​

$

-

​

$

2,405

​

$

6,672

​

$

9,077

Leases

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Commercial real estate – investor

​

​

-

​

​

-

​

​

8,390

​

​

8,390

​

​

7,773

​

​

16,163

Commercial real estate – owner occupied

​

​

1,661

​

​

-

​

​

7,587

​

​

9,248

​

​

19,955

​

​

29,203

Construction

​

​

-

​

​

-

​

​

-

​

​

-

​

​

586

​

​

586

Residential real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Residential real estate – owner occupied

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Multifamily

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

HELOC

​

​

-

​

​

-

​

​

-

​

​

-

​

​

328

​

​

328

Powersport

​

​

12

​

​

4

​

​

6

​

​

22

​

​

162

​

​

184

Other

​

​

-

​

​

-

​

​

-

​

​

-

​

​

8

​

​

8

Total

​

$

4,078

​

$

4

​

$

15,983

​

$

20,065

​

$

35,484

​

$

55,549

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2025

​

30-59 days past due

​

60-89 Days Past Due

​

90 Days or Greater Past Due

​

Total Past Due

​

Current

​

Total Modifications

Commercial

​

$

3,520

​

$

-

​

$

1,609

​

$

5,129

​

$

14,610

​

$

19,739

Leases

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Commercial real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

13,930

​

​

13,930

Commercial real estate – owner occupied

​

​

2,136

​

​

-

​

​

19,063

​

​

21,199

​

​

1,122

​

​

22,321

Construction

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Residential real estate – investor

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Residential real estate – owner occupied

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

Multifamily

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

HELOC

​

​

-

​

​

-

​

​

-

​

​

-

​

​

20

​

​

20

Powersport

​

​

-

​

​

-

​

​

-

​

​

-

​

​

59

​

​

59

Other

​

​

-

​

​

-

​

​

-

​

​

-

​

​

27

​

​

27

Total

​

$

5,656

​

$

-

​

$

20,672

​

$

26,328

​

$

29,768

​

$

56,096

​

​

​

​

​

27

Table of Contents

The following tables summarize the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and nine months ended September 30, 2026 and September 30, 2025. The financial impact of these modifications was immaterial.

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2026

​

Weighted-Average Term Extension (In Months)

​

Weighted-Average Interest Rate Change

​

Weighted-Average Delay of Payment (In Months)

Commercial

​

​

-

​

​

-

%

​

​

-

Commercial real estate – investor

​

​

-

​

​

-

​

​

​

-

Commercial real estate – owner occupied

​

​

9.45

​

​

-

​

​

​

-

Construction

​

​

8.00

​

​

-

​

​

​

-

HELOC

​

​

22.00

​

​

-

​

​

​

-

Powersport

​

​

19.83

​

​

(2.42)

​

​

​

-

Other

​

​

-

​

​

-

​

​

​

-

Total

​

​

9.49

​

​

(2.42)

%

​

​

-

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2026

​

Weighted-Average Term Modification (In Months)

​

Weighted-Average Interest Rate Change

​

Weighted-Average Delay of Payment (In Months)

Commercial

​

​

11.97

​

​

-

%

​

​

-

Commercial real estate – investor

​

​

42.00

​

​

2.10

​

​

​

-

Commercial real estate – owner occupied

​

​

9.45

​

​

-

​

​

​

-

Construction

​

​

8.00

​

​

-

​

​

​

-

HELOC

​

​

23.11

​

​

-

​

​

​

-

Powersport

​

​

11.15

​

​

(2.26)

​

​

​

-

Other

​

​

1.00

​

​

(3.10)

​

​

​

-

Total

​

​

16.34

​

​

2.00

%

​

​

-

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2025

​

Weighted-Average Term Extension (In Months)

​

Weighted-Average Interest Rate Change

​

Weighted-Average Delay of Payment (In Months)

Commercial

​

​

7.48

​

​

1.50

%

​

​

6.00

Commercial real estate – investor

​

​

8.94

​

​

-

​

​

​

-

Commercial real estate – owner occupied

​

​

12.94

​

​

-

​

​

​

-

Construction

​

​

-

​

​

-

​

​

​

-

HELOC

​

​

24.00

​

​

-

​

​

​

-

Powersport

​

​

14.62

​

​

(8.94)

​

​

​

-

Other

​

​

24.00

​

​

-

​

​

​

-

Total

​

​

9.48

​

​

1.12

%

​

​

6.00

​

​

​

​

​

​

​

​

​

​

​

​

Nine months ended September 30, 2025

​

Weighted-Average Term Extension (In Months)

​

Weighted-Average Interest Rate Change

​

Weighted-Average Delay of Payment (In Months)

Commercial

​

​

6.24

​

​

1.50

%

​

​

2.70

Commercial real estate – investor

​

​

8.99

​

​

(1.00)

​

​

​

-

Commercial real estate – owner occupied

​

​

8.36

​

​

-

​

​

​

-

Construction

​

​

-

​

​

-

​

​

​

-

HELOC

​

​

24.00

​

​

-

​

​

​

-

Powersport

​

​

14.62

​

​

(8.94)

​

​

​

-

Other

​

​

24.00

​

​

-

​

​

​

-

Total

​

​

7.83

​

​

(0.75)

%

​

​

2.70

​

​

Note 5 – Other Real Estate Owned

​

Details related to the activity in the other real estate owned (“OREO”) portfolio, net of valuation reserve, for the periods presented are itemized in the following table:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Nine Months Ended

​

  ​ ​ ​

September 30, 

  ​ ​ ​

September 30, 

Other real estate owned

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

​

2025

Balance at beginning of period

​

$

622

​

$

6,486

​

$

1,427

​

$

21,617

Property additions, net of participation sold

​

​

-

​

​

-

​

​

632

​

​

4,989

Less:

​

​

​

​

​

​

​

​

​

​

​

​

Carrying value of property disposals, net of participation sold

​

​

622

​

​

-

​

​

2,049

​

​

19,509

Period valuation adjustments

​

​

-

​

​

70

​

​

10

​

​

681

Balance at end of period

​

$

-

​

$

6,416

​

$

-

​

$

6,416

28

Table of Contents

​

Activity in the valuation allowance was as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Three Months Ended

​

Nine Months Ended

​

  ​ ​ ​

September 30, 

  ​ ​ ​

September 30, 

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​

2025

Balance at beginning of period

​

$

10

​

$

562

​

$

632

​

$

1,862

Provision for valuation reserves

​

​

-

​

​

70

​

​

10

​

​

681

Reductions taken on sales

​

​

(10)

​

​

-

​

​

(642)

​

​

(1,911)

Balance at end of period

​

$

-

​

$

632

​

$

-

​

$

632

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses related to OREO, net of lease revenue, include:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Nine Months Ended

​

​

September 30, 

  ​ ​ ​

September 30, 

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

​

2025

(Gain) loss on sales, net

​

$

(77)

​

$

-

​

$

(175)

​

$

160

Provision for valuation reserves

​

​

-

​

​

70

​

​

10

​

​

681

Operating expense (1)

​

​

47

​

​

201

​

​

3

​

​

1,721

Less:

​

​

​

​

​

​

​

​

​

​

​

​

Lease revenue

​

​

-

​

​

143

​

​

2

​

​

526

Net OREO (income) expense

​

$

(30)

​

$

128

​

$

(164)

​

$

2,036

​

1 Operating expense for the nine months ended September 30, 2026 includes a $235,000 net gain on transfer as the fair value less cost to sell on one property transfer exceeded the book value of the loan.

​

Note 6 – Deposits

​

Major classifications of deposits were as follows:

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

September 30, 2026

  ​ ​ ​

December 31, 2025

  ​

Noninterest bearing demand

​

$

1,671,745

​

$

1,739,117

​

Savings

​

​

1,090,082

​

​

1,121,888

​

NOW accounts

​

​

693,157

​

​

693,573

​

Money market accounts

​

​

989,498

​

​

930,079

​

Certificates of deposit of less than $100,000

​

​

395,591

​

​

489,879

​

Certificates of deposit of $100,000 through $250,000

​

​

327,747

​

​

412,655

​

Certificates of deposit of more than $250,000

​

​

159,744

​

​

208,878

​

Total deposits

​

$

5,327,564

​

$

5,596,069

​

​

​

​

​

​

​

​

​

​

Note 7 – Borrowings

​

The following table is a summary of borrowings as of September 30, 2026, and December 31, 2025. Junior subordinated debentures are discussed in more detail in Note 8:

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

September 30, 2026

  ​ ​ ​

December 31, 2025

  ​

Securities sold under repurchase agreements

​

$

29,908

​

$

23,769

​

Other short-term borrowings

​

​

395,000

​

​

215,000

​

Junior subordinated debentures1

​

​

25,774

​

​

25,774

​

Subordinated debentures

​

​

29,808

​

​

59,552

​

Notes payable and other borrowings2

​

​

9,893

​

​

14,825

​

Total borrowings

​

$

490,383

​

$

338,920

​

​

​

​

​

​

​

​

​

​

1 See Note 8: Junior Subordinated Debentures.

2 Long-term FHLBC advances, net of purchase accounting adjustment.

​

​

29

Table of Contents

​

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 $29.9 million at September 30, 2026, and $23.8 million at December 31, 2025. The average amount and weighted average rate for the quarter ended September 30, 2026 was $24.1 million and 0.73% with the maximum month-end amount recorded at $29.9 million at September 30, 2026. The average amount and weighted average rate for the quarter ended September 30, 2025 was $33.4 million and 0.71% with the maximum month-end amount recorded at $34.8 million at July 31, 2025. The fair value of the pledged collateral was $54.0 million at September 30, 2026, and $74.0 million at December 31, 2025. At September 30, 2026, there were no customers with secured balances exceeding 10% of stockholders’ equity.

​

The Company’s 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 the book value of eligible pledged assets after application of FHLBC margins and collateral valuation adjustments. The outstanding balance of our short-term FHLBC advances was $395.0 million as of September 30, 2026, and $215.0 million as of December 31, 2025. The outstanding balance of our long-term FHLBC advances, net of purchase accounting adjustments, was $9.9 million as of September 30, 2026, and $14.8 million as of December 31, 2025. On September 14, 2026, the FHLBC exercised its option to require repayment of $5.0 million of long-term putable FHLBC advances assumed in the Bancorp Financial acquisition, and the advances were repaid. As a result, the remaining $31,000 of unamortized purchase accounting adjustments related to those advances was recognized as interest expense in the third quarter of 2026.  FHLBC stock held at September 30, 2026, was valued at $20.1 million, and any potential FHLBC advances were collateralized by loans and securities with a principal balance of $1.43 billion, which carried a FHLBC-calculated combined collateral value of $950.9 million. The Company had excess collateral of $544.6 million available to secure borrowings at September 30, 2026.

​

In the second quarter of 2021, we issued $60.0 million in aggregate principal amount of our 3.50% Fixed-to-Floating Rate Subordinated Notes due April 15, 2031 (the “Notes”). The Company used the net proceeds from the offering for general corporate purposes. The Notes bear interest at a fixed annual rate of 3.50%, from and including the date of issuance to but excluding April 15, 2026, payable semi-annually in arrears. From and including April 15, 2026, to, but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to Three-Month Term Secured Overnight Financing Rate (“SOFR”) plus 273 basis points, payable quarterly in arrears. On April 15, 2026, we redeemed $30.0 million of the total $60.0 million subordinated debt held, which was the same date this debt changed from a 3.50% fixed rate to Three-Month Term SOFR plus 273 basis points. The rate in effect at September 30, 2026 is 6.48%. As of September 30, 2026, we had $29.8 million of subordinated debentures outstanding, and as of December 31, 2025, we had $59.6 million of subordinated debentures outstanding, net of deferred issuance cost.

​

The Company also has an undrawn line of credit of $30.0 million with a correspondent bank to be used for short-term funding needs; advances under this line can be outstanding up to 360 days from the date of issuance.

​

Note 8 – Junior Subordinated Debentures

​

The Company issued $25.0 million of cumulative trust preferred securities through a private placement completed by an unconsolidated subsidiary, Old Second Capital Trust II, in April 2007. These trust preferred securities mature in 30 years, but subject to regulatory approval, can be called in whole or in part on a quarterly basis commencing June 15, 2017. The quarterly cash distributions on the securities were fixed at 6.77% through June 15, 2017, and now have a floating rate of 150 basis points over three-month SOFR. Upon conversion to a floating rate, a cash flow hedge was initiated which resulted in the total interest rate paid on the debt of 4.14% for the quarter ended September 30, 2026, and 4.43% for the quarter ended September 30, 2025. The Company issued a $25.8 million subordinated debenture to Old Second Capital Trust II in return for the aggregate net proceeds of this trust preferred offering. The interest rate and payment frequency on the debenture are equivalent to the cash distribution basis on the trust preferred securities.

​

The junior subordinated debentures issued by the Company are disclosed on the Consolidated Balance Sheets, and the related interest expense for each issuance is included in the Consolidated Statements of Income. As of September 30, 2026, and December 31, 2025, the remaining unamortized debt issuance costs related to the junior subordinated debentures were less than $1,000 and are included as a reduction to the balance of the junior subordinated debentures on the Consolidated Balance Sheets. The remaining deferred issuance costs on the junior subordinated debentures related to the issuance of Old Second Capital Trust II will be amortized to interest expense over the remainder of the 30-year term of the notes and are included in the Consolidated Statements of Income.

​

Note 9 – Equity Compensation Plans

​

Stock-based awards are outstanding under the Company’s 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.

​

30

Table of Contents

​

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 Company’s Board of Directors. As of September 30, 2026, 1,090,669 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, but the Compensation Committee of the Company’s Board of Directors has discretionary authority to change the terms of particular awards including the vesting schedule.

​

Under the 2019 Plan, unless otherwise provided in an award agreement, upon the occurrence of a change in control, all equity awards then held by the participant will become fully exercisable immediately and all stock awards and cash incentive awards will become fully earned and vested immediately if, (i) the 2019 Plan is not an obligation of the successor entity following a change in control or (ii) the 2019 Plan is an obligation of the successor entity following a change in control and the participant incurs a termination of service without cause or for good reason following the change in control. Notwithstanding the immediately preceding sentence, if the vesting of an award is conditioned upon the achievement of performance measures, then such vesting will generally be subject to the following: if, at the time of the change in control, the performance measures are less than 50% attained (pro rata based upon the time of the period through the change in control), the award will become vested and exercisable on a fractional basis with the numerator being equal to the percentage of attainment and the denominator being 50%; and if, at the time of the change in control, the performance measures are at least 50% attained (pro rata based upon the time of the period through the change in control), the award will become fully earned and vested immediately upon the change in control.

​

Awards of restricted stock under the 2019 Plan generally entitle holders to voting and dividend rights upon grant and are subject to forfeiture until certain restrictions have lapsed including employment for a specific period. Awards of restricted stock units under the 2019 Plan are also subject to forfeiture until certain restrictions have lapsed including employment for a specific period, but do not entitle holders to voting rights until the restricted period ends and shares are transferred in connection with the units.

​

There were 308,543 and 314,886 restricted stock units issued under the 2019 Plan during the nine months ended September 30, 2026, and September 30, 2025, respectively. Compensation expense is recognized over the vesting period of the restricted stock units based on the market value of the award on the issue date. Total compensation cost, including related dividend equivalent expense, that has been recorded for the 2019 Plan was $4.6 million for the nine months ended September 30, 2026, and $4.2 million for the nine months ended September 30, 2025. The tax benefit recorded was $1.2 million for each of the nine months ended September 30, 2026 and September 30, 2025, respectively.

​

A summary of changes in the Company’s unvested restricted awards for the nine months ended September 30, 2026, is as follows:

​

​

​

​

​

​

​

​

​

September 30, 2026

​

​

​

​

Weighted

​

​

Restricted

​

Average

​

​

Stock Shares

​

Grant Date

​

  ​ ​ ​

and Units

  ​ ​ ​

Fair Value

Unvested at January 1

​

812,179

​

$

16.31

Granted

​

308,543

​

​

20.69

Vested

​

(259,997)

​

​

17.41

Forfeited

​

(18,845)

​

​

17.28

Unvested at September 30

​

841,880

​

$

17.55

​

​

​

​

​

​

​

Total unrecognized compensation cost of restricted awards was $7.0 million as of September 30, 2026, which is expected to be recognized over a weighted-average period of 1.90 years.

​

31

Table of Contents

Note 10 – Earnings Per Share

​

The earnings per share, both basic and diluted, are as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

Basic earnings per share:

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted-average common shares outstanding

​

​

50,302,629

​

​

52,686,391

​

​

51,326,527

​

​

47,597,529

​

Net income

​

$

28,940

​

$

9,871

​

$

82,704

​

$

51,523

​

Basic earnings per share

​

$

0.57

​

$

0.19

​

$

1.61

​

$

1.08

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Diluted earnings per share:

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted-average common shares outstanding

​

​

50,302,629

​

​

52,686,391

​

​

51,326,527

​

​

47,597,529

​

Dilutive effect of unvested restricted awards 1

​

​

843,161

​

​

823,299

​

​

855,304

​

​

787,754

​

Diluted average common shares outstanding

​

​

51,145,790

​

​

53,509,690

​

​

52,181,831

​

​

48,385,283

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net Income

​

$

28,940

​

$

9,871

​

$

82,704

​

$

51,523

​

Diluted earnings per share

​

$

0.56

​

$

0.18

​

$

1.58

​

$

1.06

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Includes the common stock equivalents for restricted share rights that are dilutive.

​

​

​

Note 11 – Regulatory & Capital Matters

​

The Bank is subject to the risk-based capital regulatory guidelines, which include the methodology for calculating the risk-weighted Bank assets, developed by the Office of the Comptroller of the Currency (the “OCC”) and the other bank regulatory agencies. In connection with the current risk-based capital regulatory guidelines, the Bank’s Board of Directors has established an internal guideline requiring the Bank to maintain a Tier 1 leverage capital ratio at or above eight percent (8%) and a total risk-based capital ratio at or above twelve percent (12%). At September 30, 2026, the Bank exceeded those thresholds.

​

At September 30, 2026, the Bank’s Tier 1 capital leverage ratio was 12.05%, an increase of 56 basis points from December 31, 2025, and is above the 8.00% Board of Directors’ guideline. The Bank’s total capital ratio was 14.61%, an increase of 39 basis points from December 31, 2025, and also above the Board of Directors’ guideline of 12.00%.

​

Bank holding companies are generally required to maintain minimum levels of capital in accordance with capital guidelines implemented by the Board of Governors of the Federal Reserve System. The general bank and holding company capital adequacy guidelines are shown in the accompanying table, as are the capital ratios of the Company and the Bank, as of September 30, 2026, and December 31, 2025.

​

The Basel III Rules are applicable to all banking organizations that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as to bank and savings and loan holding companies, other than “small bank holding companies,” which are generally holding companies with consolidated assets of less than $3.0 billion. A detailed discussion of the Basel III Rules is included in Part I, Item 1 of the Company’s Form 10-K for the year ended December 31, 2025, under the heading “Supervision and Regulation.”

​

At September 30, 2026, and December 31, 2025, Old Second Bancorp, Inc. and its bank subsidiary exceeded the regulatory minimums and Old Second National Bank met the regulatory definition of “well capitalized” based on the most recent regulatory definition.

​

32

Table of Contents

Capital levels and industry defined regulatory minimum required levels are as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Minimum Capital

​

Well Capitalized

​

​

​

​

​

​

​

​

​

Adequacy with Capital

​

Under Prompt Corrective

​

​

​

Actual

​

Conservation Buffer, if applicable1

​

Action Provisions2

​

​

  ​ ​ ​

Amount

  ​ ​ ​

Ratio

  ​ ​ ​

Amount

  ​ ​ ​

Ratio

  ​ ​ ​

Amount

  ​ ​ ​

Ratio

​

September 30, 2026

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common equity tier 1 capital to risk weighted assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

$

775,387

​

13.13

%

​

$

413,382

​

7.00

%

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

804,176

​

13.63

​

​

​

413,003

​

7.00

​

​

$

383,503

​

6.50

%

Total capital to risk weighted assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

​

888,314

​

15.05

​

​

​

619,754

​

10.50

​

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

862,103

​

14.61

​

​

​

619,581

​

10.50

​

​

​

590,077

​

10.00

​

Tier 1 capital to risk weighted assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

​

800,387

​

13.56

​

​

​

501,718

​

8.50

​

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

804,176

​

13.63

​

​

​

501,504

​

8.50

​

​

​

472,004

​

8.00

​

Tier 1 capital to average assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

​

800,387

​

11.99

​

​

​

267,018

​

4.00

​

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

804,176

​

12.05

​

​

​

266,946

​

4.00

​

​

​

333,683

​

5.00

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common equity tier 1 capital to risk weighted assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

$

774,990

​

12.99

%

​

$

417,624

​

7.00

%

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

785,569

​

13.17

​

​

​

417,539

​

7.00

​

​

$

387,714

​

6.50

%

Total capital to risk weighted assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

​

922,259

​

15.46

​

​

​

626,373

​

10.50

​

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

847,838

​

14.22

​

​

​

626,041

​

10.50

​

​

​

596,229

​

10.00

​

Tier 1 capital to risk weighted assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

​

799,990

​

13.41

​

​

​

507,078

​

8.50

​

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

785,569

​

13.17

​

​

​

507,011

​

8.50

​

​

​

477,187

​

8.00

​

Tier 1 capital to average assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Consolidated

​

​

799,990

​

11.70

​

​

​

273,501

​

4.00

​

​

​

N/A

​

N/A

​

Old Second National Bank

​

​

785,569

​

11.49

​

​

​

273,479

​

4.00

​

​

​

341,849

​

5.00

​

​

1 Amounts are shown inclusive of a capital conservation buffer of 2.50%.

2 The prompt corrective action provisions are only applicable at the Bank level. The Bank exceeded the general minimum regulatory requirements to be considered “well capitalized.”

​

Dividend Restrictions

​

In addition to the above requirements, banking regulations and capital guidelines generally limit the amount of dividends that may be paid by a bank without prior regulatory approval. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s profits, combined with the retained profit of the previous two years, subject to the capital requirements described above. As of September 30, 2026, the Bank had capacity to pay dividends of $71.0 million to the Company without prior regulatory approval. Pursuant to the Basel III rules, the Bank must keep a capital conservation buffer of 2.50% above the regulatory minimum capital requirements, which must consist entirely of Common Equity Tier 1 capital in order to avoid additional limitations on capital distributions and certain other payments.

​

​

33

Table of Contents

​

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 company’s 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, 2026 and September 30, 2025.

​

The 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 assets and liabilities using Level 2 techniques at fair value as of September 30, 2026, and December 31, 2025:

​

●Government-sponsored agency debt securities are primarily priced using available market information through processes such as benchmark spreads, market valuations of like securities, like securities groupings, and matrix pricing.
●Other government-sponsored agency securities, mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMO”), and some of the actively traded real estate mortgage investment conduits and collateralized mortgage obligations are priced using available market information including benchmark yields, prepayment speeds, spreads, volatility of similar securities and trade date.
●State and political subdivisions are largely grouped by characteristics (e.g., geographical data and source of revenue in trade dissemination systems). Because some securities are not traded daily and due to other grouping limitations, active market quotes are often obtained using benchmarking for like securities. For securities where quoted prices or market prices are not available, fair value is calculated using discounted cash flows or other market indicators (Level 3).
●Asset-backed collateralized loan obligations (“CLO”), and asset-backed securities (“ABS”) were priced using data from a pricing matrix supported by our bond accounting service provider and are therefore considered Level 2 valuations. For securities where quoted prices or market prices are not available, fair value is calculated using discounted cash flows or other market indicators (Level 3).
●Residential mortgage loans available for sale in the secondary market are carried at fair market value. The fair value of loans held-for-sale is determined using quoted secondary market prices for similar loans.
●Mortgage banking derivatives, e.g., residential mortgage loans with locked interest rates to be sold in the secondary market and forward commitments for the future delivery of mortgage loans to third-party investors, as well as forward commitments for future delivery of MBS, are considered derivatives. Fair values are estimated based on observable changes in mortgage interest rates including prices for MBS from the date of the commitment and do not typically involve significant judgments by management.
●The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income to derive the resultant value. The Company is able to compare the valuation model inputs, such as the discount rate, prepayment speeds, weighted average delinquency and foreclosure/bankruptcy rates to widely available published industry data for reasonableness.
●Interest rate swap positions, both assets and liabilities, are based on valuation pricing models using an income approach reflecting readily observable market parameters such as interest rate yield curves.

​

​

34

Table of Contents

​

Assets and Liabilities Measured at Fair Value on a Recurring Basis:

​

The tables below present the balance of assets and liabilities at September 30, 2026 and December 31, 2025, respectively, measured by the Company at fair value on a recurring basis:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

  ​ ​ ​

Level 1

  ​ ​ ​

Level 2

  ​ ​ ​

Level 3

  ​ ​ ​

Total

Assets:

​

​

​

​

​

​

​

​

​

​

​

​

Securities available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Treasury

​

$

148,073

​

$

-

​

$

-

​

$

148,073

U.S. government agencies

​

​

-

​

​

39,109

​

​

-

​

​

39,109

U.S. government agencies mortgage-backed

​

​

-

​

​

74,835

​

​

-

​

​

74,835

States and political subdivisions

​

​

-

​

​

170,770

​

​

6,502

​

​

177,272

Collateralized mortgage obligations

​

​

-

​

​

328,790

​

​

-

​

​

328,790

Asset-backed securities

​

​

-

​

​

32,248

​

​

5,147

​

​

37,395

Collateralized loan obligations

​

​

-

​

​

172,331

​

​

-

​

​

172,331

Equity securities

​

​

-

​

​

771

​

​

-

​

​

771

Loans held-for-sale

​

​

-

​

​

1,407

​

​

-

​

​

1,407

Mortgage servicing rights

​

​

-

​

​

-

​

​

10,690

​

​

10,690

Interest rate derivatives 1

​

​

-

​

​

7,009

​

​

-

​

​

7,009

Total

​

$

148,073

​

$

827,270

​

$

22,339

​

$

997,682

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

Interest rate swap agreements, including risk participation agreements

​

$

-

​

$

2,027

​

$

-

​

$

2,027

Mortgage banking derivatives

​

​

-

​

​

20

​

​

-

​

​

20

Total

​

$

-

​

$

2,047

​

$

-

​

$

2,047

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Interest rate derivatives include interest rate swaps, a rate cap and risk participation agreements.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

  ​ ​ ​

Level 1

  ​ ​ ​

Level 2

  ​ ​ ​

Level 3

  ​ ​ ​

Total

Assets:

​

​

​

​

​

​

​

​

​

​

​

​

Securities available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Treasury

​

$

165,860

​

$

-

​

$

-

​

$

165,860

U.S. government agencies

​

​

-

​

​

29,176

​

​

-

​

​

29,176

U.S. government agencies mortgage-backed

​

​

-

​

​

88,780

​

​

-

​

​

88,780

States and political subdivisions

​

​

-

​

​

199,428

​

​

6,947

​

​

206,375

Collateralized mortgage obligations

​

​

-

​

​

359,305

​

​

-

​

​

359,305

Asset-backed securities

​

​

-

​

​

40,966

​

​

4,850

​

​

45,816

Collateralized loan obligations

​

​

-

​

​

194,464

​

​

-

​

​

194,464

Equity securities

​

​

-

​

​

747

​

​

-

​

​

747

Loans held-for-sale

​

​

-

​

​

3,645

​

​

-

​

​

3,645

Mortgage servicing rights

​

​

-

​

​

-

​

​

9,459

​

​

9,459

Interest rate derivatives 1

​

​

-

​

​

4,321

​

​

-

​

​

4,321

Mortgage banking derivatives

​

​

-

​

​

31

​

​

-

​

​

31

Total

​

$

165,860

​

$

920,863

​

$

21,256

​

$

1,107,979

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

Interest rate swap agreements, including risk participation agreements

​

$

-

​

$

1,157

​

$

-

​

$

1,157

Total

​

$

-

​

$

1,157

​

$

-

​

$

1,157

​

1 Interest rate derivatives include interest rate swaps, a rate cap and risk participation agreements.

​

​

35

Table of Contents

​

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 2026

​

​

Securities available-for-sale

​

​

​

​

​

​

​

States and

​

Mortgage

​

​

Asset-backed

​

Political

​

Servicing

​

  ​ ​

Securities

​

Subdivisions

  ​ ​

Rights

Beginning balance January 1, 2026

​

$

4,850

​

$

6,947

​

$

9,459

Transfers out of Level 3

​

​

-

​

​

-

​

​

-

Total gains or losses

​

​

​

​

​

​

​

​

​

Included in earnings

​

​

-

​

​

-

​

​

814

Included in other comprehensive income

​

​

(142)

​

​

(438)

​

​

-

Purchases, issuances, sales, and settlements

​

​

​

​

​

​

​

​

​

Purchases

​

​

873

​

​

-

​

​

-

Issuances

​

​

-

​

​

-

​

​

912

Settlements

​

​

(434)

​

​

(7)

​

​

(495)

Ending balance September 30, 2026

​

$

5,147

​

$

6,502

​

$

10,690

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 2025

​

​

​

​

Securities available-for-sale

​

​

​

​

​

​

​

​

States and

​

Mortgage

​

​

​

Asset-backed

​

Political

​

Servicing

​

​

  ​ ​ ​

Securities

​

Subdivisions

  ​ ​ ​

Rights

  ​ ​ ​

Beginning balance January 1, 2025

​

$

3,254

​

$

11,896

​

$

10,374

​

Transfers out of Level 3

​

​

-

​

​

-

​

​

-

​

Total gains or losses

​

​

​

​

​

​

​

​

​

​

Included in earnings

​

​

-

​

​

-

​

​

(1,143)

​

Included in other comprehensive income

​

​

(16)

​

​

(335)

​

​

-

​

Purchases, issuances, sales, and settlements

​

​

​

​

​

​

​

​

​

​

Purchases

​

​

1,702

​

​

-

​

​

-

​

Issuances

​

​

-

​

​

-

​

​

665

​

Settlements

​

​

(340)

​

​

(120)

​

​

(347)

​

Ending balance September 30, 2025

​

$

4,600

​

$

11,441

​

$

9,549

​

​

The following table and commentary present quantitative and qualitative information about Level 3 fair value measurements as of September 30, 2026:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted

Measured at fair value

​

​

​

​

​

​

Significant Unobservable

​

​

​

Average

on a recurring basis:

  ​ ​

Fair Value

  ​ ​

Valuation Methodology

  ​ ​

Inputs

  ​ ​

Range of Input

  ​ ​

of Inputs

​

​

​

​

​

​

​

​

​

​

​

​

​

States and political subdivisions

​

$

6,502

​

Discounted Cash Flow

​

Discount Rate

​

4.7 - 4.8%

​

4.7

%

​

​

​

​

​

​

​

Liquidity Premium

​

0.5 - 0.5%

​

0.5

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Asset-backed securities

​

$

5,147

​

Discounted Cash Flow

​

Discount Rate

​

6.2 - 10.4%

​

6.7

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage servicing rights

​

$

10,690

​

Discounted Cash Flow

​

Discount Rate

​

9.0 - 9.0%

​

9.0

%

​

​

​

​

​

​

​

Prepayment Speed

​

5.4 - 24.6%

​

7.5

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

36

Table of Contents

​

The following table and commentary present quantitative and qualitative information about Level 3 fair value measurements as of December 31, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted

Measured at fair value

​

​

​

​

​

​

Significant Unobservable

​

​

​

Average

on a recurring basis:

  ​ ​

Fair Value

  ​ ​

Valuation Methodology

  ​ ​

Inputs

  ​ ​

Range of Input

  ​ ​

of Inputs

​

​

​

​

​

​

​

​

​

​

​

​

​

States and political subdivisions

​

$

6,947

​

Discounted Cash Flow

​

Discount Rate

​

3.5 - 3.6%

​

3.5

%

​

​

​

​

​

​

​

Liquidity Premium

​

0.5 - 0.5%

​

0.5

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Asset-backed securities

​

$

4,850

​

Discounted Cash Flow

​

Discount Rate

​

4.9 - 4.9%

​

4.9

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage servicing rights

​

$

9,459

​

Discounted Cash Flow

​

Discount Rate

​

9.0 - 9.0%

​

9.0

%

​

​

​

​

​

​

​

Prepayment Speed

​

0.0 - 33.2%

​

8.2

%

​

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis:

​

The Company may be required, from time to time, to measure certain other assets at fair value on a nonrecurring basis in accordance with GAAP. These assets consist of individually evaluated loans and OREO. The following is a description of the techniques used to measure these assets using Level 3 techniques at fair value as of September 30, 2026, and December 31, 2025:

​

●The fair value of individually evaluated loans with specific allocations of the allowance for credit losses is essentially based on recent real estate appraisals or the fair value of the collateralized asset. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are made in the appraisal process by the appraisers to reflect differences between the available comparable sales and income data. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
●Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (“OREO”) are measured at fair value, less costs to sell. Fair values are based on third-party appraisals of the property, resulting in a Level 3 classification, or an executed pending sales contract. In cases where the carrying amount exceeds the fair value, less costs to sell, a valuation loss is recognized.

​

​

For assets measured at fair value on a nonrecurring basis at September 30, 2026 and December 31, 2025, respectively, the following tables provide the level of valuation assumptions used to determine each valuation and the carrying value of the related assets:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

  ​ ​ ​

Level 1

  ​ ​ ​

Level 2

  ​ ​ ​

Level 3

  ​ ​ ​

Total

Individually evaluated loans1

​

$

-

​

$

-

​

$

20,709

​

$

20,709

Other real estate owned, net2

​

​

-

​

​

-

​

​

-

​

​

-

Total

​

$

-

​

$

-

​

$

20,709

​

$

20,709

​

1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral or another form of third-party valuation for collateral-dependent loans, which had a carrying amount of $28.0 million and a valuation allowance of $7.3 million, resulting in an increase of specific allocations within the allowance for credit losses on loans of $837,000 for the nine months ended September 30, 2026.

​

2 OREO is measured at the lower of carrying or fair value less costs to sell. As of September 30, 2026, the Company is not carrying any OREO.

​

37

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

  ​ ​ ​

Level 1

  ​ ​ ​

Level 2

  ​ ​ ​

Level 3

  ​ ​ ​

Total

Individually evaluated loans1

​

$

-

​

$

-

​

$

34,430

​

$

34,430

Other real estate owned, net2

​

​

-

​

​

-

​

​

1,427

​

​

1,427

Total

​

$

-

​

$

-

​

$

35,857

​

$

35,857

​

1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of

collateral for collateral-dependent loans and to a lesser extent the discounted cash flow, which had a carrying amount of $40.9 million and a valuation allowance of $6.4 million, resulting in a decrease of specific allocations within the allowance for credit losses on loans of $747,000 for the year December 31, 2025.

2 OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $1.4 million at December 31, 2025, which is made up of the outstanding balance of $2.1 million, net of a valuation allowance of $632,000.

​

The Company has estimated the fair values of these assets based primarily on Level 3 inputs. OREO and individually evaluated loans are generally valued using the fair value of collateral provided by third-party appraisals. These valuations include assumptions related to cash flow projections, discount rates, and recent comparable sales. The numerical ranges of unobservable inputs for these valuation assumptions are not meaningful.

​

Note 13 – Fair Values of Financial Instruments

​

The carrying amount and estimated fair values of financial instruments were as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

​

Carrying

​

Fair

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Amount

  ​ ​ ​

Value

  ​ ​ ​

Level 1

  ​ ​ ​

Level 2

  ​ ​ ​

Level 3

Financial assets:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and due from banks

​

$

42,155

​

$

42,155

​

$

42,155

​

$

-

​

$

-

Interest earning deposits with financial institutions

​

​

65,948

​

​

65,948

​

​

65,948

​

​

-

​

​

-

Securities available-for-sale

​

​

978,576

​

​

978,576

​

​

148,073

​

​

818,854

​

​

11,649

FHLBC and FRBC stock

​

​

40,811

​

​

40,811

​

​

-

​

​

40,811

​

​

-

Loans held-for-sale

​

​

1,407

​

​

1,407

​

​

-

​

​

1,407

​

​

-

Net loans

​

​

5,173,868

​

​

5,038,129

​

​

-

​

​

-

​

​

5,038,129

Mortgage servicing rights

​

​

10,690

​

​

10,690

​

​

-

​

​

-

​

​

10,690

Interest rate swap and rate cap agreements

​

​

7,002

​

​

7,002

​

​

-

​

​

7,002

​

​

-

Interest receivable on securities and loans

​

​

29,721

​

​

29,721

​

​

-

​

​

29,721

​

​

-

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Financial liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest bearing deposits

​

$

1,671,745

​

$

1,671,745

​

$

1,671,745

​

$

-

​

$

-

Interest bearing deposits

​

​

3,655,819

​

​

3,646,913

​

​

-

​

​

3,646,913

​

​

-

Securities sold under repurchase agreements

​

​

29,908

​

​

29,908

​

​

-

​

​

29,908

​

​

-

Other short-term borrowings

​

​

395,000

​

​

395,000

​

​

-

​

​

395,000

​

​

-

Junior subordinated debentures

​

​

25,774

​

​

21,521

​

​

-

​

​

21,521

​

​

-

Subordinated debentures

​

​

29,808

​

​

28,908

​

​

-

​

​

28,908

​

​

-

Note payable and other borrowings

​

​

9,893

​

​

9,875

​

​

-

​

​

9,875

​

​

-

Interest rate swap and rate cap agreements

​

​

2,025

​

​

2,025

​

​

-

​

​

2,025

​

​

-

Interest rate lock commitments and forward contracts

​

​

20

​

​

20

​

​

-

​

​

20

​

​

-

Interest payable on deposits and borrowings

​

​

3,979

​

​

3,979

​

​

-

​

​

3,979

​

​

-

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

38

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

Carrying

​

Fair

​

​

​

​

​

​

​

  ​ ​ ​

Amount

  ​ ​ ​

Value

  ​ ​ ​

Level 1

  ​ ​ ​

Level 2

  ​ ​ ​

Level 3

Financial assets:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and due from banks

​

$

51,665

​

$

51,665

​

$

51,665

​

$

-

​

$

-

Interest earning deposits with financial institutions

​

​

72,360

​

​

72,360

​

​

72,360

​

​

-

​

​

-

Securities available-for-sale

​

​

1,090,523

​

​

1,090,523

​

​

165,860

​

​

912,866

​

​

11,797

FHLBC and FRBC stock

​

​

32,025

​

​

32,025

​

​

-

​

​

32,025

​

​

-

Loans held-for-sale

​

​

3,645

​

​

3,645

​

​

-

​

​

3,645

​

​

-

Net loans

​

​

5,179,830

​

​

5,032,472

​

​

-

​

​

-

​

​

5,032,472

Mortgage servicing rights

​

​

9,459

​

​

9,459

​

​

-

​

​

-

​

​

9,459

Interest rate swap and rate cap agreements

​

​

4,298

​

​

4,298

​

​

-

​

​

4,298

​

​

-

Interest rate lock commitments and forward contracts

​

​

31

​

​

31

​

​

-

​

​

31

​

​

-

Interest receivable on securities and loans

​

​

30,344

​

​

30,344

​

​

-

​

​

30,344

​

​

-

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Financial liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest bearing deposits

​

$

1,739,117

​

$

1,739,117

​

$

1,739,117

​

$

-

​

$

-

Interest bearing deposits

​

​

3,856,952

​

​

3,850,530

​

​

-

​

​

3,850,530

​

​

-

Securities sold under repurchase agreements

​

​

23,769

​

​

23,769

​

​

-

​

​

23,769

​

​

-

Other short-term borrowings

​

​

215,000

​

​

215,000

​

​

-

​

​

215,000

​

​

-

Junior subordinated debentures

​

​

25,774

​

​

21,522

​

​

-

​

​

21,522

​

​

-

Subordinated debentures

​

​

59,552

​

​

57,973

​

​

-

​

​

57,973

​

​

-

Note payable and other borrowings

​

​

14,825

​

​

15,049

​

​

-

​

​

15,049

​

​

-

Interest rate swap and rate cap agreements

​

​

1,143

​

​

1,143

​

​

-

​

​

1,143

​

​

-

Interest payable on deposits and borrowings

​

​

5,451

​

​

5,451

​

​

-

​

​

5,451

​

​

-

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Note 14 – Derivatives, Hedging Activities and Financial Instruments with Off-Balance Sheet Risk

​

Risk Management Objective of Using Derivatives

​

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which is determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s loan portfolio.

​

Cash Flow Hedges of Interest Rate Risk

​

The Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. The aggregate fair value of the swaps is recorded in other assets or other liabilities with changes in fair value recorded in other comprehensive income, net of tax. The amount included in other comprehensive income would be reclassified to current earnings should all or a portion of the hedge no longer be considered effective. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest income or interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income or expense as interest payments are received on the variable rate loan pools or paid on the Company’s fixed-rate borrowings.

​

There are no interest rate swaps as of September 30, 2026 and December 31, 2025, designated as cash flow hedges of certain variable rate commercial and commercial real estate loan pools. All of the interest rate swap cash flow hedges on loans held in 2025 matured during the third quarter of 2025.

​

39

Table of Contents

​

An interest rate swap with a notional amount of $25.8 million as of September 30, 2026 and December 31, 2025, is designated as a cash flow hedge of junior subordinated debentures and was executed to pay fixed and receive variable rate cash flows. The hedge was determined to be effective during all periods presented and the Company expects the hedge to remain effective during the remaining terms of the swap.

​

During the next twelve months, the Company estimates that an additional $483,000 will be reclassified as an increase to interest expense.

​

Non-designated Hedges

​

Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps and rate cap agreements with commercial banking customers to facilitate their respective risk management strategies. The notional amounts of interest rate swaps with its loan customers as of September 30, 2026 and December 31, 2025 were $90.3 million and $125.8 million, respectively. Those interest rate swaps and rate cap agreements are simultaneously hedged by offsetting derivatives that the Company executes with a third-party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

​

At September 30, 2026, the Company had no cash collateral pledged and held $6.7 million of cash pledged from two correspondent financial institutions to support the interest rate swap activity during 2026. At December 31, 2025, the Company had $660,000 of cash collateral pledged with one correspondent financial institution and held $3.5 million of cash pledged from one correspondent financial institution to support the interest rate swap activity during 2025. No investment securities were required to be pledged to any correspondent financial institution during the first nine months of 2026 or during 2025. The Company offsets derivative assets and liabilities that are subject to a master netting arrangement.

​

The Company also grants mortgage loan interest rate lock commitments to borrowers, subject to normal loan underwriting standards. The interest rate risk associated with these loan interest rate lock commitments is managed with contracts for future deliveries of loans as well as selling forward mortgage-backed securities contracts. Loan interest rate lock commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The notional amount of these commitments at September 30, 2026 and December 31, 2025 was $13.6 million and $14.8 million, respectively. Commitments to originate residential mortgage loans held-for-sale and forward commitments to sell residential mortgage loans or forward MBS contracts are considered derivative instruments and changes in the fair value are recorded to mortgage banking revenue. Fair values are estimated based on observable changes in mortgage interest rates including mortgage-backed securities prices from the date of the commitment.

​

​

40

Table of Contents

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025:

​

Fair Value of Derivative Instruments

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

No. of Trans.

​

Notional Amount $

​

Balance Sheet Location

Fair Value $

​

Balance Sheet Location

Fair Value $

Derivatives designated as hedging instruments

​

​

​

​

​

​

​

​

​

Interest rate swap agreements

1

​

25,774

​

Other Assets

4,977

​

Other Liabilities

-

Total derivatives designated as hedging instruments

​

​

​

​

​

4,977

​

​

-

​

​

​

​

​

​

​

​

​

​

Derivatives not designated as hedging instruments

​

​

​

​

​

​

​

​

​

Interest rate swaps with commercial loan customers

10

​

90,280

​

Other Assets

2,025

​

Other Liabilities

2,025

Interest rate lock commitments and forward contracts

36

​

13,624

​

Other Assets

-

​

Other Liabilities

20

Other contracts

4

​

46,996

​

Other Assets

7

​

Other Liabilities

2

Total derivatives not designated as hedging instruments

​

​

​

​

​

2,032

​

​

2,047

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

No. of Trans.

​

Notional Amount $

​

Balance Sheet Location

Fair Value $

​

Balance Sheet Location

Fair Value $

Derivatives designated as hedging instruments

​

​

​

​

​

​

​

​

​

Interest rate swap agreements

1

​

25,774

​

Other Assets

3,155

​

Other Liabilities

-

Total derivatives designated as hedging instruments

​

​

​

​

​

3,155

​

​

-

​

​

​

​

​

​

​

​

​

​

Derivatives not designated as hedging instruments

​

​

​

​

​

​

​

​

​

Interest rate swaps with commercial loan customers and rate cap

12

​

125,808

​

Other Assets

1,143

​

Other Liabilities

1,143

Interest rate lock commitments and forward contracts

40

​

14,790

​

Other Assets

31

​

Other Liabilities

-

Other contracts

5

​

63,080

​

Other Assets

23

​

Other Liabilities

14

Total derivatives not designated as hedging instruments

​

​

​

​

​

1,197

​

​

1,157

​

Disclosure of the Effect of Fair Value and Cash Flow Hedge Accounting

​

The fair value and cash flow hedge accounting related to derivatives covered under ASC Subtopic 815-20 impacted Accumulated Other Comprehensive Income (“AOCI”) and the Income Statement. The gain recognized in AOCI on derivatives designated as hedging instruments totaled $3.6 million as of September 30, 2026 and $2.1 million as of September 30, 2025. The amount of the gain reclassified from AOCI to net interest income on the Income Statement was $219,000 for the nine months ended September 30, 2026, and the amount of the loss reclassified from AOCI was $1.7 million for the nine months ended September 30, 2025.

​

Credit-risk-related Contingent Features

​

For derivative transactions involving counterparties who are lending customers of the Company, the derivative credit exposure is managed through the normal credit review and monitoring process, which may include collateralization, financial covenants and/or financial guarantees of affiliated parties. Agreements with such customers require that losses associated with derivative transactions receive payment priority from any funds recovered should a customer default and ultimate disposition of collateral or guarantees occur.

​

Credit exposure to broker/dealer counterparties is managed through agreements with each derivative counterparty that require collateralization of fair value gains owed by such counterparties. Some small degree of credit exposure exists due to timing differences between when a gain may occur and the subsequent point in time that collateral is delivered to secure that gain. This is monitored by the Company and procedures are in place to minimize this exposure. Such agreements also require the Company to collateralize counterparties in circumstances wherein the fair value of the derivatives results in loss to the Company.

​

​

41

Table of Contents

​

Other provisions of such agreements include the definition of certain events that may lead to the declaration of default and/or the early termination of the derivative transaction(s):

​

●If the Company either defaults or is capable of being declared in default on any of its indebtedness (exclusive of deposit obligations), then the Company could also be declared in default on its derivative obligations.
●If a merger occurs that materially changes the Company's creditworthiness in an adverse manner.
●If certain specified adverse regulatory actions occur, such as the issuance of a Cease and Desist Order, or citations for actions considered Unsafe and Unsound or that may lead to the termination of deposit insurance coverage by the FDIC.

​

The Bank also issues letters of credit, which are conditional commitments that guarantee the performance of a customer to a third-party. The credit risk involved and collateral obtained in issuing letters of credit are essentially the same as that involved in extending loan commitments to our customers. In addition to customer-related commitments, the Company is responsible for letter of credit commitments that relate to properties held in OREO. The following table represents the Company’s contractual commitments due to letters of credit as of September 30, 2026 and December 31, 2025.

​

The following table is a summary of letter of credit commitments:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

December 31, 2025

​

​

  ​ ​ ​

Fixed

  ​ ​ ​

Variable

  ​ ​ ​

Total

  ​ ​ ​

Fixed

  ​ ​ ​

Variable

  ​ ​ ​

Total

  ​

Letters of credit:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Borrower:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Financial standby

​

$

45

​

$

27,393

​

$

27,438

​

$

118

​

$

26,769

​

$

26,887

​

Performance standby

​

​

564

​

​

7,617

​

​

8,181

​

​

512

​

​

8,666

​

​

9,178

​

​

​

​

609

​

​

35,010

​

​

35,619

​

​

630

​

​

35,435

​

​

36,065

​

Non-borrower:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performance standby

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

​

-

​

Total letters of credit

​

$

609

​

$

35,010

​

$

35,619

​

$

630

​

$

35,435

​

$

36,065

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Unused loan commitments

​

$

178,996

​

$

580,432

​

$

759,428

​

$

174,479

​

$

592,658

​

$

767,137

​

​

As of September 30, 2026, the Company evaluated current market conditions, including any impacts related to market interest rate changes and unused line of credit utilization trends during the third quarter of 2026, and based on that analysis under the CECL methodology, the Company determined credit losses related to unfunded commitments totaled $2.2 million. The resultant increase in the ACL for unfunded commitments of $112,000 for the first nine months of 2026 from $2.1 million as of December 31, 2025 was primarily driven by adjustments to historical benchmark assumptions, such as the funding rates and the period used to forecast those rates within the ACL calculation. The Company will continue to assess the credit risk at least quarterly, and adjust the allowance for unfunded commitments, which is carried within other liabilities on our Consolidated Balance Sheets, as needed, with the appropriate offsetting entry to the provision for credit losses on our Consolidated Statements of Income.

​

​

42

Table of Contents

​

Note 15 – Segment Information

​

Various identifiable operating segments provide a variety of revenue streams including loans, deposits, and wealth management services. The Company’s 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: Basis of Presentation and Changes in 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 Company’s business along with budget to actual results in assessing the Company’s 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 provided consolidated income and expense, assets, liabilities, and equity, in the same manner that is presented publicly on the Consolidated Statements of Income and Consolidated Balance Sheets, to assess performance and allocate resources throughout the Company. Further, additional internal financial information is provided to the CODM in order to assess credit quality in each of our lending segments. Accordingly, the Company has determined that it has only one reportable segment, Community Banking.

​

​

​

43

Table of Contents

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

Overview

​

The following discussion provides additional information regarding our operations for the three and nine months ended September 30, 2026, compared to the three and nine months ended September 30, 2025, as well as our operations for the three months ended September 30, 2026, compared to the three months ended June 30, 2026. The following discussion also provides additional information regarding our financial condition at September 30, 2026, compared to December 31, 2025. This discussion should be read in conjunction with our consolidated financial statements as well as the financial and statistical data appearing elsewhere in this report and our Form 10-K for the year ended December 31, 2025. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of future results. Dollar amounts presented in the following tables are in thousands, except per share data, and September 30, 2026 and 2025 amounts are unaudited. Certain items in prior periods have been reclassified to conform to the current presentation.

​

In this report, unless the context suggests otherwise, references to the “Company,” “we,” “us,” and “our” mean the combined business of Old Second Bancorp, Inc. and its subsidiary bank, Old Second National Bank (the “Bank”).

​

We have made, and will continue to make, various forward-looking statements with respect to financial and business matters. Comments regarding our business that are not historical facts are considered forward-looking statements that involve inherent risks and uncertainties. Actual results may differ materially from those contained in these forward-looking statements. For additional information regarding our cautionary disclosures, see the “Cautionary Note Regarding Forward-Looking Statements” in this report.

​

Business Overview

​

The Company is a bank holding company headquartered in Aurora, Illinois. Through our wholly-owned subsidiary bank, Old Second National Bank, a national banking organization also headquartered in Aurora, Illinois, we offer a wide range of financial services through our 54 banking centers located in Cook, DeKalb, DuPage, Kane, Kendall, LaSalle and Will counties in Illinois. These banking centers offer access to a full range of traditional retail and commercial banking services including treasury management operations as well as fiduciary and wealth management services. We focus our business on establishing and maintaining relationships with our clients while maintaining a commitment to provide for the financial services needs of the communities in which we operate. We emphasize relationships with individual customers as well as small to medium-sized businesses throughout our market area. We also have extensive wealth management services, which include a registered investment advisory platform in addition to trust administration and trust services related to personal and corporate trusts and employee benefit plan administration services.

​

On July 1, 2025, we completed our previously announced acquisition of Bancorp Financial, Inc. (“Bancorp Financial”), pursuant to the agreement and plan of merger dated February 24, 2025. At the effective time of the acquisition, Bancorp Financial merged with and into the Company, with the Company continuing as the surviving corporation. Immediately following the merger, Evergreen Bank Group (“Evergreen”), an Illinois-chartered banking corporation and wholly-owned subsidiary of Bancorp Financial, merged with and into Old Second National Bank, with the Bank continuing as the surviving bank. Under the terms of the merger agreement, each share of Bancorp Financial common stock outstanding immediately prior to the effective time was converted into the right to receive 2.5814 shares of Old Second common stock and $15.93 in cash, without interest, with cash paid in lieu of any fractional shares.

​

As of July 1, 2025, Bancorp Financial had approximately $1.43 billion of total assets, $1.20 billion of total loans, and $1.23 billion of total deposits. The consideration paid totaled $189.4 million and consisted of 7.9 million shares of Old Second common stock and $48.9 million in cash. The systems conversion was successfully completed in October 2025. As of June 30, 2026, all acquisition related expenses have been reported and the measurement period is closed.

​

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by noninterest income, such as service charges, wealth management fees, loan fees, gains from the sale of newly originated loans, gains or losses on investments and certain other noninterest related items. Our principal operating expenses, aside from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, data processing expenses and provision for credit losses.

 

We are significantly impacted by prevailing economic conditions, including federal monetary and fiscal policies, and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing and the interest rate pricing competition from other lending institutions.

44

Table of Contents

​

As of September 30, 2026, all of our capital ratios were in excess of all regulatory requirements. While we believe that we have sufficient capital to withstand an extended economic recession, our reported and regulatory capital ratios could be adversely impacted by credit losses.

​

Financial Overview

​

Net income for the third quarter of 2026 was $28.9 million, or $0.56 per diluted share, compared to $28.2 million, or $0.54 per diluted share, for the second quarter of 2026, and $9.9 million, or $0.18 per diluted share, for the third quarter of 2025. Net income increased compared to the prior year like quarter, primarily due to the absence of acquisition related expense, and the Day Two non-PCD provision recorded in connection with the Bancorp Financial acquisition in the 2025 period. Variances in the year over year period included a decrease of $3.3 million in interest expense, a decrease of $12.9 million in provision for credit losses, and a decrease of $11.5 million in noninterest expense, partially offset by a $2.0 million decrease in interest and dividend income and a $6.6 million increase in provision for income taxes. Net income in the third quarter of 2026 was negatively impacted by provision for credit losses of $6.8 million, compared to $7.5 million and $19.7 million recorded in the second quarter of 2026 and third quarter of 2025, respectively. The $19.7 million recorded in the third quarter of 2025 was due to purchase accounting adjustments and the Day Two non-PCD provision for loan losses recorded of $13.2 million. Adjusted net income, a non-GAAP financial measure that excludes mortgage servicing rights mark to market gains or losses, net securities gains or losses, and acquisition related costs, net of gains on branch sales, as applicable, was $28.5 million for the third quarter of 2026, compared to $28.7 million for the second quarter of 2026, and $28.4 million for the third quarter of 2025.

​

See the discussion entitled “Non-GAAP Financial Measures” below, as well as the table below, which provides a reconciliation of this non-GAAP measure to the most comparable GAAP equivalents:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net Income and Earnings Per Share - GAAP and Adjusted

​

Three Months Ended

​

​

​

Nine Months Ended

​

​

September 30, 

​

June 30, 

​

September 30, 

​

​

​

September 30, 

​

  ​ ​ ​

2026

  ​ ​ ​

2026

​

2025

​

​

  ​ ​ ​

2026

​

2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Income before income taxes (GAAP)

​

$

38,747

​

$

37,838

​

$

13,068

​

​

​

$

110,649

​

$

68,481

​

Pre-tax income adjustments:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Provision for credit losses - Day Two

​

​

-

​

​

-

​

​

13,153

​

​

​

​

-

​

​

13,153

​

Securities losses, net

​

​

1

​

​

-

​

​

1

​

​

​

​

1

​

​

1

​

Death benefit related to BOLI

​

​

-

​

​

-

​

​

(430)

​

​

​

​

-

​

​

(430)

​

MSR (gains) losses

​

​

(623)

​

​

152

​

​

389

​

​

​

​

(319)

​

​

1,490

​

Acquisition related costs, net of gains on branch sales

​

​

-

​

​

526

​

​

11,508

​

​

​

​

875

​

​

12,772

​

Adjusted net income before taxes

​

​

38,125

​

​

38,516

​

​

37,689

​

​

​

​

111,206

​

​

95,467

​

Taxes on adjusted net income

​

​

9,649

​

​

9,832

​

​

9,326

​

​

​

​

28,085

​

​

23,675

​

Adjusted net income (non-GAAP)

​

$

28,476

​

$

28,684

​

$

28,363

​

​

​

$

83,121

​

$

71,792

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic earnings per share (GAAP)

​

$

0.57

​

$

0.55

​

$

0.19

​

​

​

$

1.61

​

$

1.08

​

Diluted earnings per share (GAAP)

​

​

0.56

​

​

0.54

​

​

0.18

​

​

​

​

1.58

​

​

1.06

​

Adjusted basic earnings per share (non-GAAP)

​

​

0.57

​

​

0.56

​

​

0.54

​

​

​

​

1.62

​

​

1.51

​

Adjusted diluted earnings per share (non-GAAP)

​

​

0.55

​

​

0.55

​

​

0.53

​

​

​

​

1.59

​

​

1.48

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total average assets

​

​

6,786,945

​

​

6,852,937

​

​

6,999,253

​

​

​

​

6,832,751

​

​

6,141,208

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (GAAP)

​

​

1.69

%

​

1.65

%

​

0.56

%

​

​

​

1.62

%

​

1.12

%

Adjusted return on average assets (non-GAAP)

​

​

1.66

​

​

1.68

​

​

1.61

​

​

​

​

1.63

​

​

1.56

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

The following provides an overview of some of the factors impacting our financial performance for the three-month period ended September 30, 2026, compared to the like period ended September 30, 2025:

​

●Net interest and dividend income was $84.0 million for the third quarter of 2026, compared to $82.8 million for the third quarter of 2025. The increase in net interest and dividend income in the third quarter of 2026 was primarily driven by the $3.3 million reduction in interest expense due to the decrease in time deposit costs as higher rate brokered CDs and other exception-priced time deposits from legacy accounts as well as those assumed in the acquisition of Bancorp Financial continuing to roll off. Partially offsetting the increase in net interest and dividend income in the third quarter of 2026 was a $2.0 million decrease in interest and dividend income primarily due to the decrease in securities income.

​

●We recorded a net provision for credit losses on loans and leases of $6.8 million in the third quarter of 2026, driven by quarterly net charge-offs of $12.7 million. We recorded a net provision for credit losses of $19.7 million in the third quarter of 2025, driven by the Day Two non-PCD provision for credit losses of $13.2 million and a standard provision expense of $6.5 million.

​

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Table of Contents

●Noninterest income was $13.1 million for the third quarter of 2026, compared to $13.1 million for the third quarter of 2025, which is a decrease of $39,000, or 0.3%. Variances in noninterest income include a decrease in the cash surrender value of BOLI as a result of a decline in the market value of our COLI policies due primarily to less favorable market interest rates. Further, variances in noninterest income during the quarter, compared to the prior year like quarter, were due to $430,000 in death benefits realized on BOLI in 2025 compared to none in 2026. Partially offsetting the decrease to noninterest income were increases in wealth management fee income due to growth in assets under management, and residential mortgage banking revenue primarily due to MSR mark to market gains of $623,000, compared to $389,000 of losses in the third quarter of 2025.

​

●Noninterest expense was $51.6 million for the third quarter of 2026, compared to $63.2 million for the third quarter of 2025, a decrease of $11.5 million, or 18.3%. The decrease in noninterest expense in the third quarter of 2026, compared to the prior year like quarter, was primarily due to the Bancorp Financial acquisition and the corresponding acquisition costs, net of gains on branch sales of $11.5 million that were recorded in the prior year like quarter. These acquisition costs included higher salaries and employee benefits, computer and data processing, professional fees, and other expense in the prior year like quarter.

​

●We had a provision for income tax expense of $9.8 million for the third quarter of 2026, compared to a provision for income tax expense of $3.2 million for the third quarter of 2025. The effective tax rate for these two periods was 25.3% and 24.5%, respectively.

​

●As of September 30, 2026, total loans decreased by $14.1 million compared to the year ended December 31, 2025, and decreased $26.4 million compared to September 30, 2025.

​

●Nonaccrual loans totaled $36.6 million as of September 30, 2026, which is a decrease of $11.4 million compared to December 31, 2025, but an increase of $2.5 million compared to September 30, 2025. The decrease in nonaccrual loans as of September 30, 2026, compared to December 31, 2025, was primarily due to outflows of $6.9 million of paid off nonaccrual loans, $9.3 million of charged-off loans, $3.5 million of upgraded loans, $148,000 transferred to repossessed assets, $235,000 transferred to OREO, and $16.5 million of reduction of principal from payments and partial charge-offs, partially offset by inflows of $25.1 million on 103 loans, consisting primarily of 21 commercial loans totaling $18.6 million. The increase in nonaccrual loans year over year is partially due to two larger credits which moved to nonperforming status in the first quarter, offset with charge-offs taken in the second quarter and third quarter of 2026 within the commercial loan types. These two credits had an aggregate balance of $16.5 million, in the first quarter, before related charge-offs of $3.0 million in the second quarter, and additional charge-offs of $9.3 million taken in the third quarter. The increase in loans past due 90 days or more was driven primarily by the two commercial credits previously mentioned. Nonperforming loans as a percent of total loans was 0.8% as of September 30, 2026, compared to 1.0% as of December 31, 2025, and 0.9% as of September 30, 2025. Classified assets decreased to $75.5 million as of September 30, 2026, reflecting a decrease of $77.4 million, or 50.6%, from December 31, 2025, and a decrease of $67.2 million, or 47.1%, from September 30, 2025.

​

Critical Accounting Estimates

​

Our consolidated financial statements are prepared based on the application of accounting policies in accordance with generally accepted accounting principles (“GAAP”) and follow general practices within the banking industry. These policies require reliance on estimates and assumptions which may prove inaccurate or are subject to variations. These estimates, assumptions, and judgments are based on information available as of the date of the consolidated financial statements. Future changes in information may affect these estimates, assumptions, and judgments, which, in turn, may affect amounts reported in the consolidated financial statements. Changes in underlying factors, assumptions, or estimates could have a material impact on our future financial condition and results of operations.

​

Of the significant accounting policies used in the preparation of our consolidated financial statements, we have identified certain items as critical accounting policies based on the associated estimates, assumptions, judgments and complexity. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our critical accounting policies or the estimates made pursuant to those policies during the most recent quarter from those disclosed in our 2025 Annual Report on Form 10-K.

​

​

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Table of Contents

​

Non-GAAP Financial Measures

​

This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the presentation of net interest income and net interest margin on a tax equivalent (“TE”) basis, adjusted net income, adjusted basic and diluted earnings per share, and our adjusted efficiency ratio. Management believes that the presentation of these non-GAAP financial measures (a) provides important supplemental information that contributes to a proper understanding of our operating performance, (b) enables a more complete understanding of factors and trends affecting our business, and (c) allows investors to evaluate our performance in a manner similar to management, the financial services industry, bank stock analysts, and bank regulators. Management uses non-GAAP measures as follows: in the preparation of our operating budgets, monthly financial performance reporting, and in our presentation of our performance to investors. However, we acknowledge that these non-GAAP financial measures have a number of limitations. Limitations associated with non-GAAP financial measures include the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. These measures should not be considered an alternative to our GAAP results. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is presented below or alongside the first instance where each non-GAAP financial measure is used.

Results of Operations

​

Overview

​

Three months ended September 30, 2026 and 2025

Our income before taxes was $38.7 million in the third quarter of 2026, compared to $13.1 million in the third quarter of 2025. Net interest and dividend income increased $1.3 million, and provision for credit losses decreased $12.9 million in the third quarter of 2026, compared to the like 2025 quarter. Noninterest income decreased nominally while noninterest expense declined $11.5 million. The noninterest expense decrease of $11.5 million is primarily due to an $8.9 million decrease in salary and employee benefits expense primarily attributable to Bancorp Financial acquisition related costs for change in control, retention and severance payments. Also contributing to the decrease in noninterest expense was a $744,000 decrease in computer and data processing, a $1.7 million decrease in professional fees, and a $343,000 decrease in other expenses, which were all primarily driven by the Bancorp Financial acquisition costs that were recorded in the third quarter of 2025. Our net income was $28.9 million, or $0.56 per diluted share, for the third quarter of 2026, compared to net income of $9.9 million, or $0.18 per diluted share, for the third quarter of 2025. We continue to monitor macroeconomic conditions, interest rate risk, expense levels, and daily liquidity.

​

Nine months ended September 30, 2026 and 2025

Our income before taxes was $110.6 million for the nine months ended September 30, 2026, compared to $68.5 million for the nine months ended September 30, 2025. This increase in pretax income was primarily due to a $38.6 million increase in net interest and dividend income, an $803,000 decrease in provision for credit losses, and a $4.8 million increase in noninterest income, partially offset by a $2.0 million increase in noninterest expense. Provision for income taxes increased $11.0 million. Our net income was $82.7 million, or $1.58 per diluted share, for the nine months ended September 30, 2026, compared to net income of $51.5 million, or $1.06 per diluted share, for the same period of 2025.

​

Net interest and dividend income was $248.5 million for the nine months ended September 30, 2026, compared to $209.9 million for the same period of 2025. The $38.6 million increase was primarily driven by an increase in loan related income and fees of $53.5 million primarily due to the loan portfolio acquired from Bancorp Financial, as well as a rise in market interest rates. Partially offsetting the increase in net interest and dividend income was an increase of $10.1 million in interest expense in the first nine months of 2026, compared to the first nine months of 2025, driven by an increase in deposit costs due to the deposits assumed in the Bancorp Financial acquisition and an increasing rate environment. Also contributing to the rise in interest expense was an increase in other short-term borrowings expense due to a higher FHLBC advance volume based on liquidity needs in the 2026 period, as total deposits have declined $432.7 million year over year as of September 30, 2026.

47

Table of Contents

​

Net Interest Income

​

Net interest income, which is our primary source of earnings, is the difference between income earned on interest-earning assets, such as loans and investment securities, accretion income on purchased loans, dividend income earned on certain equity investments, and expense incurred on interest-bearing liabilities, such as deposits and borrowings. Net interest income depends upon the relative mix of interest-earning assets and interest-bearing liabilities, the ratio of interest-earning assets to total assets and of interest-bearing liabilities to total funding sources, and movements in market interest rates. Our net interest income can be significantly influenced by a variety of factors, including overall loan demand, economic conditions, credit risk, the amount of nonearning assets including nonperforming loans and OREO, the amounts of and rates at which assets and liabilities reprice, variances in prepayment of loans and securities, early withdrawal of deposits, exercise of call options on borrowings or securities, a general rise or decline in interest rates, changes in the slope of the yield-curve, and balance sheet growth or contraction.

​

Three months ended September 30, 2026 and 2025

​

Net interest and dividend income was $84.0 million in the third quarter of 2026, compared to $82.8 million in the third quarter of 2025. The $1.3 million increase was driven by a decrease of $3.3 million in interest expenses in the third quarter of 2026 driven by lower deposit costs on decreased average balances, primarily related to time deposits, partially offset by increased short-term borrowing costs due to higher average FHLBC advance balances based on liquidity needs. A net decrease of $2.0 million in interest income in the third quarter of 2026 negatively impacted net interest and dividend income compared to the third quarter of 2025, driven by a decrease in securities income due to paydowns and maturities coupled with market rate changes. Loan interest income was effectively flat relative to the prior year like quarter.

​

The year over year yield increase of 6 basis points on interest earning assets was primarily driven by higher FHLBC and FRBC dividend yields. Average balances of loans and loans held for sale increased $9.8 million in the third quarter of 2026 compared to the prior year like quarter, but showed a nominal decrease to the tax equivalent yield on the loan portfolio of 1 basis point year over year. Average balances of securities available for sale decreased $144.8 million in the third quarter of 2026 compared to the prior year like quarter, and showed a decrease to the tax equivalent yield on the securities available for sale portfolio of nine basis points year over year.

​

The cost of interest bearing deposits decreased 42 basis points for the quarter ended September 30, 2026, from 191 basis points for the quarter ended September 30, 2025. A 69-basis point decrease in the cost of time deposits drove a significant portion of the overall decrease from the prior year like quarter, primarily due to the decrease in average time deposits of $442.2 million as higher rate brokered CDs and other exception-priced time deposits, including those from the Bancorp Financial acquisition, have rolled off. In addition, money market and savings accounts reflected decreases of 13 basis points and 26 basis points, respectively. We will continue to control the cost of funds by monitoring market activity as well as allowing previously mentioned exception-priced deposits and the brokered CDs acquired from Bancorp Financial to runoff naturally.

​

The increase of $295.4 million year over year of average FHLBC advances was based on daily liquidity needs and was the primary driver of the $2.8 million increase to interest expense on other short-term borrowings. The elevated short-term borrowings balance is anticipated to continue, assuming continued loan growth and securities reinvestment. The decrease of $868,000 year over year of average notes payable and other borrowings was due to a $5.0 million option on FHLBC long-term putable advances assumed in the Bancorp Financial acquisition being exercised during the third quarter of 2026. This led to a $22,000 increase to interest expense on notes payable and other borrowings as $31,000 of additional expense was recorded in the quarter from the remaining purchase accounting adjustments (“PAA”) on the exercised debt. The $29.7 million decrease in average subordinated debt was due to the $30.0 million partial redemption in the second quarter of 2026, which reduced the prior $60.0 million principal balance then outstanding. Junior subordinated debt interest expense was essentially flat over each of the periods presented.

​

Our net interest margin (GAAP) increased 22 basis points to 5.25% for the three months ended September 30, 2026, compared to 5.03% for the three months ended September 30, 2025. Our net interest margin (TE) increased 22 basis points to 5.27% for the three months ended September 30, 2026, compared to 5.05% for the three months ended September 30, 2025. The increase in the current period, compared to the prior year like period, is primarily due to lower cost of funds and lower average deposit balances. See the discussion entitled “Non-GAAP Financial Measures,” above, and the table under “Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures” that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

​

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Table of Contents

​

Three months ended September 30, 2026 and June 30, 2026

​

The increased yield of 6 basis points on interest earning assets for the three months ended September 30, 2026 as compared to the linked period was primarily driven by the increased yields on loans and dividends from the FHLBC and FRBC. Total average interest earning assets decreased $68.4 million in the third quarter of 2026, compared to the prior linked quarter, driven by a $74.9 million reduction in securities available-for-sale. Changes in the market interest rate environment impact earning assets at varying intervals depending on the repricing timeline of loans, as well as the securities maturity, paydown and purchase activities.

​

Average balances of interest bearing deposit accounts have decreased $55.5 million since the second quarter of 2026 through the third quarter of 2026, from $3.74 billion to $3.69 billion. The decrease is driven by a $63.2 million decrease in time deposits as exception priced deposits run off, and a $10.4 million decrease in savings accounts. Partially offsetting the decrease in average balances of interest bearing deposit accounts was a $4.5 million increase in lower cost NOW accounts and a $13.7 million increase in money market accounts. The significant decline in time deposit average balances led to the $442,000 decrease in time deposit interest expense, compared to the prior linked quarter, which mitigated the net $151,000 total increase in deposit interest expense, as all other deposit category interest costs increased. As a result, NOW, money market, and savings deposits were the primary drivers in the increase in the costs of interest bearing deposits from 147 basis points for the quarter ended June 30, 2026, to 149 basis points for the quarter ended September 30, 2026.

​

Borrowing costs increased in the third quarter of 2026, compared to the second quarter of 2026. Changes in our borrowing costs are generally driven by fluctuations in balances and related rates on other short-term borrowings, which are overnight FHLBC advances; these fluctuations are based on the daily liquidity needs during the period. The increase in borrowing expense over the prior linked period was primarily due to the $8.6 million increase in average balance of other short-term borrowings and the resulting increase in interest expense.  Partially offsetting the increase in borrowing costs was a $133,000 decrease in subordinated debt interest expense as the partial redemption of subordinated debt occurred in the second quarter of 2026 and resulted in the acceleration of debt issuance costs of $213,000.

​

Our net interest margin, for both GAAP and tax equivalent (“TE”) presentations, showed slight growth over the prior linked quarter, as discussed above. Our net interest margin (GAAP) increased four basis points to 5.25% for the third quarter of 2026, compared to 5.21% for the second quarter of 2026. Our net interest margin (TE) increased four basis points to 5.27% for the third quarter of 2026, compared to 5.23% for the second quarter of 2026. The increase in net interest margin for the third quarter of 2026, compared to the prior linked quarter, was driven by the increase in yields on loans and loans held for sale and dividends from the FHLBC and FRBC, partially offset by a nominal increase in the cost of interest bearing liabilities. See the discussion entitled “Non-GAAP Financial Measures,” above, and the table under “Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures” that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

​

​

49

Table of Contents

​

Nine months ended September 30, 2026 and 2025

​

The year over year increase of 38 basis points on interest earning assets was primarily driven by increased yields on loans and loans held for sale due to the Bancorp Financial acquisition in July 2025. Average securities available-for-sale decreased $101.8 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, due to maturities, calls, and paydowns, net of purchases, during the year over year period. Due to market interest rate changes year over year, securities available-for-sale interest income yields were nominally lower in the nine months ended September 30, 2026, and lower average balances led to an overall decrease in securities income to $30.7 million for the nine months ended September 30, 2026, compared to $33.8 million for the like 2025 period. Average loans, including loans held for sale, increased $835.8 million in the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, due to the Bancorp Financial acquisition. Increased loan yields and higher average balances resulted in $268.5 million of tax equivalent loan interest income in the nine months ended September 30, 2026, compared to $215.0 million in the like 2025 period. Due to average loan growth and deposit attrition over the past year, average interest earning deposits with financial institutions also decreased in the year over year like period, resulting in a $2.4 million decline in interest income on these interest earning deposits.

​

Average balances of interest bearing deposit accounts have increased noticeably for the nine month period year over year. For the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, average interest bearing deposits increased from $3.46 billion to $3.75 billion, driven by the Bancorp Financial acquisition, with these increases reflected in all deposit categories. The cost of overall interest bearing deposits decreased by 5 basis points, to 149 basis points from 154 basis points for the year over year period. A 30 basis point decrease in the cost of time deposits was the primary driver behind the interest bearing deposit rate decrease and was a result of the continued runoff of previously exception-priced deposits and brokered CDs assumed from the Bancorp Financial acquisition. The decrease in time deposit rates paid was partially offset by growth in rates paid for savings and NOW accounts.

​

Our borrowing interest expense increased over the past year due to higher FHLBC advance volumes as well as borrowings assumed in the Bancorp Financial acquisition. This resulted in an increase in average borrowings of $245.8 million compared to the nine months ended September 30, 2025, with an accompanying increase of $8.0 million of interest expense on borrowings. Subordinated debt average balances decreased by $18.4 million in the year over year period as a partial redemption of $30.0 million of the principal balance occurred in the second quarter of 2026. At the same time as the partial redemption, the subordinated debt rate changed from fixed to floating and $213,000 of issuance costs were recognized, resulting in a $124,000 increase in interest expense on lower average balances compared to the prior year like period. Junior subordinated debt interest expense remained flat over the periods presented.

​

Our net interest margin (GAAP) increased 28 basis points to 5.19% for the nine months ended September 30, 2026, compared to 4.91% for the nine months ended September 30, 2025. Our net interest margin (TE) increased 27 basis points to 5.21% for the nine months ended September 30, 2026, compared to 4.94% for the nine months ended September 30, 2025. The increase in the current period, compared to the prior year like period, is primarily due to the Bancorp Financial acquisition and the resulting increase in loan yields, partially offset by higher interest expense related to the larger average deposit balances and interest on other short-term borrowings. See the discussion entitled “Non-GAAP Financial Measures,” above, and the table under “Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures” that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

​

We continue to observe competitive pressure to maintain reduced interest rates on loans retained at renewal. While our loan prices are targeted to achieve certain returns on equity, significant competition for commercial and industrial loans as well as commercial real estate loans has put pressure on loan yields, and our stringent underwriting standards limit our ability to make higher-yielding loans in these loan types.

​

​

50

Table of Contents

​

The following tables set forth certain information relating to our average consolidated balance sheets and reflect the yield on average earning assets and cost of average interest bearing liabilities for the periods indicated. These yields reflect the related interest, on an annualized basis, divided by the average balance of assets or liabilities over the applicable period. Average balances are derived from daily balances. For purposes of discussion, net interest income and net interest income to total earning assets in the following tables have been adjusted to a non-GAAP TE basis using a marginal rate of 21% in 2026 and 2025 to compare returns more appropriately on tax-exempt loans and securities to other earning assets.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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

Dividends from FHLBC and FRBC

​

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 debt

​

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 Represents a non-GAAP financial measure. See the discussion entitled “Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures” on page 53 that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent. Tax equivalent basis is calculated using a marginal tax rate of 21% in 2026 and 2025, respectively.

​

2 Interest income from loans is shown on a tax equivalent basis, which is a non-GAAP financial measure, as discussed under “Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures,” 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.

​

​

51

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Analysis of Average Balances,

Tax Equivalent Income / Expense and Rates

(Dollars in thousands - unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 

​

2026

​

2025

​

Average

​

Income /

​

Rate

​

Average

​

Income /

​

Rate

​

Balance

​

Expense

​

%

​

Balance

​

Expense

​

%

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest earning deposits with financial institutions

$

65,922

​

$

1,613

​

3.27

​

$

127,957

​

$

4,027

​

4.21

Securities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Taxable

​

938,340

​

​

26,453

​

3.77

​

​

1,027,625

​

​

29,058

​

3.78

Non-taxable (TE)1

​

138,876

​

​

4,261

​

4.10

​

​

151,412

​

​

4,714

​

4.16

Total securities (TE)1

​

1,077,216

​

​

30,714

​

3.81

​

​

1,179,037

​

​

33,772

​

3.83

Dividends from FHLBC and FRBC

​

35,623

​

​

1,719

​

6.45

​

​

21,558

​

​

1,127

​

6.99

Loans and loans held-for-sale 1, 2

​

5,219,390

​

​

268,515

​

6.88

​

​

4,383,633

​

​

214,970

​

6.56

Total interest earning assets

​

6,398,151

​

​

302,561

​

6.32

​

​

5,712,185

​

​

253,896

​

5.94

Cash and due from banks

​

46,688

​

​

-

​

-

​

​

50,590

​

​

-

​

-

Allowance for credit losses on loans

​

(71,753)

​

​

-

​

-

​

​

(52,586)

​

​

-

​

-

Other noninterest earning assets

​

459,665

​

​

-

​

-

​

​

431,019

​

​

-

​

-

Total assets

$

6,832,751

​

​

​

​

​

​

$

6,141,208

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities and Stockholders' Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

NOW accounts

$

712,449

​

$

2,822

​

0.53

​

$

650,183

​

$

2,135

​

0.44

Money market accounts

​

952,187

​

​

13,252

​

1.86

​

​

863,537

​

​

12,292

​

1.90

Savings accounts

​

1,109,025

​

​

6,690

​

0.81

​

​

1,019,104

​

​

5,135

​

0.67

Time deposits

​

978,219

​

​

19,173

​

2.62

​

​

925,184

​

​

20,233

​

2.92

Interest bearing deposits

​

3,751,880

​

​

41,937

​

1.49

​

​

3,458,008

​

​

39,795

​

1.54

Securities sold under repurchase agreements

​

23,395

​

​

134

​

0.77

​

​

34,439

​

​

184

​

0.71

Other short-term borrowings

​

274,909

​

​

7,925

​

3.85

​

​

9,231

​

​

325

​

4.71

Junior subordinated debentures

​

25,774

​

​

854

​

4.43

​

​

25,773

​

​

864

​

4.48

Subordinated debentures

​

41,137

​

​

1,763

​

5.73

​

​

59,500

​

​

1,639

​

3.68

Notes payable and other borrowings

​

14,534

​

​

491

​

4.52

​

​

4,990

​

​

158

​

4.23

Total interest bearing liabilities

​

4,131,629

​

​

53,104

​

1.72

​

​

3,591,941

​

​

42,965

​

1.60

Noninterest bearing deposits

​

1,735,553

​

​

-

​

-

​

​

1,738,576

​

​

-

​

-

Other liabilities

​

63,389

​

​

-

​

-

​

​

63,472

​

​

-

​

-

Stockholders' equity

​

902,180

​

​

-

​

-

​

​

747,219

​

​

-

​

-

Total liabilities and stockholders' equity

$

6,832,751

​

​

​

​

​

​

$

6,141,208

​

​

​

​

​

Net interest income (GAAP)

​

​

​

$

248,522

​

​

​

​

​

​

$

209,913

​

​

Net interest margin (GAAP)

​

​

​

​

​

​

5.19

​

​

​

​

​

​

​

4.91

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income (TE)1

​

​

​

$

249,457

​

​

​

​

​

​

$

210,931

​

​

Net interest margin (TE)1

​

​

​

​

​

​

5.21

​

​

​

​

​

​

​

4.94

Interest bearing liabilities to earning assets

​

64.58

%

​

​

​

​

​

​

62.88

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Represents a non-GAAP financial measure. See the discussion entitled “Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures” on page 53 that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent. Tax equivalent basis is calculated using a marginal tax rate of 21% in 2026 and 2025, respectively.

​

2 Interest income from loans is shown on a tax equivalent basis, which is a non-GAAP financial measure, as discussed in the table “Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures,” and includes loan fee income of $5.7 million and loan fee income of $2.1 million for the nine months ended September 30, 2026 and 2025, respectively. Nonaccrual loans are included in the above-stated average balances.

​

​

52

Table of Contents

​

Reconciliation of Tax-Equivalent (TE) Non-GAAP Financial Measures

​

Net interest and dividend income (TE) and net interest income (TE) to average interest earning assets are non-GAAP measures that have been adjusted on a TE basis using a marginal rate of 21% for 2026 and 2025 to compare returns more appropriately on tax-exempt loans and securities to other earning assets. The table below provides a reconciliation of each non-GAAP (TE) measure to the GAAP equivalent for the periods indicated:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

Nine Months Ended

​

​

​

September 30, 

​

June 30, 

​

September 30, 

​

​

September 30, 

​

Net Interest Margin

  ​ ​ ​

2026

  ​ ​ ​

2026

​

2025

​

  ​ ​ ​

2026

​

2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income (GAAP)

​

$

102,091

​

$

101,189

​

$

104,075

​

​

$

301,626

​

$

252,878

​

Taxable-equivalent adjustment:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

13

​

​

14

​

​

10

​

​

​

40

​

​

28

​

Securities

​

​

287

​

​

301

​

​

328

​

​

​

895

​

​

990

​

Interest and dividend income (TE)

​

​

102,391

​

​

101,504

​

​

104,413

​

​

​

302,561

​

​

253,896

​

Interest expense (GAAP)

​

​

18,042

​

​

17,860

​

​

21,300

​

​

​

53,104

​

​

42,965

​

Net interest income (TE)

​

$

84,349

​

$

83,644

​

$

83,113

​

​

$

249,457

​

$

210,931

​

Net interest income (GAAP)

​

$

84,049

​

$

83,329

​

$

82,775

​

​

$

248,522

​

$

209,913

​

Average interest earning assets

​

$

6,352,216

​

$

6,420,660

​

$

6,528,829

​

​

$

6,398,151

​

$

5,712,185

​

Net interest margin (GAAP)

​

​

5.25

%

​

5.21

%

​

5.03

%

​

​

5.19

%

​

4.91

%

Net interest margin (TE)

​

​

5.27

%

​

5.23

%

​

5.05

%

​

​

5.21

%

​

4.94

%

​

​

​

​

Noninterest Income

​

Three months ended September 30, 2026 and 2025

​

The following table details the major components of noninterest income for the periods presented:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

Noninterest Income

​

Three Months Ended

​

Percent Change From

​

​

​

September 30, 

​

June 30, 

​

September 30, 

​

June 30, 

​

September 30, 

​

​

  ​ ​ ​

2026

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​ ​ ​

2025

 

Wealth management

​

$

3,682

​

$

3,628

​

$

3,515

​

1.5

​

4.8

​

Service charges on deposits

​

​

3,134

​

​

3,075

​

​

3,202

​

1.9

​

(2.1)

​

Residential mortgage banking revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Secondary mortgage fees

​

​

101

​

​

166

​

​

92

​

(39.2)

​

9.8

​

MSRs mark to market gain (loss)

​

​

623

​

​

(152)

​

​

(389)

​

509.9

​

(260.2)

​

Mortgage servicing income

​

​

467

​

​

464

​

​

469

​

0.6

​

(0.4)

​

Net gain on sales of mortgage loans

​

​

363

​

​

640

​

​

620

​

(43.3)

​

(41.5)

​

Total residential mortgage banking revenue

​

​

1,554

​

​

1,118

​

​

792

​

39.0

​

96.2

​

Securities losses, net

​

​

(1)

​

​

-

​

​

(1)

​

N/M

​

-

​

Change in cash surrender value of BOLI

​

​

796

​

​

1,469

​

​

1,175

​

(45.8)

​

(32.3)

​

Death benefit realized on BOLI

​

​

-

​

​

-

​

​

430

​

-

​

(100.0)

​

Card related income

​

​

2,479

​

​

2,483

​

​

2,581

​

(0.2)

​

(4.0)

​

Other income

​

​

1,426

​

​

1,488

​

​

1,415

​

(4.2)

​

0.8

​

Total noninterest income

​

$

13,070

​

$

13,261

​

$

13,109

​

(1.4)

​

(0.3)

​

​

N/M – Not meaningful.

​

53

Table of Contents

​

Noninterest income decreased $191,000, or 1.4%, in the third quarter of 2026, compared to the second quarter of 2026, and decreased $39,000, or 0.3%, compared to the third quarter of 2025. The decrease from the second quarter of 2026 was primarily driven by a $673,000 decrease in the cash surrender value of BOLI due to changes in market interest rates, primarily on COLI investments. Partially offsetting the decrease during the third quarter of 2026, compared to the second quarter of 2026, was a $436,000 increase in mortgage banking income due to an MSR mark to market gain of $623,000 in the third quarter of 2026, compared to a $152,000 loss in the second quarter of 2026.

​

The decrease in noninterest income of $39,000 in the third quarter of 2026, compared to the third quarter of 2025, is primarily due to a $379,000 decrease in the cash surrender value of BOLI due to changes in market interest rates, primarily on COLI investments. Also contributing to the decrease in noninterest income during the third quarter of 2026 was $430,000 of death benefits realized on BOLI in the 2025 period, compared to none in the 2026 period, and a $102,000 decrease in card related income compared to the prior year. Partially offsetting the decreases to noninterest income during the quarter was a $167,000 increase in wealth management income from growth in advisory, agent, 12b-1 fees, and personal trust fees, and a $762,000 increase in residential mortgage banking revenue, primarily due to a $1.0 million increase in MSRs mark to market valuations.

​

Nine months ended September 30, 2026 and 2025

​

​

​

​

​

​

​

​

​

​

Noninterest Income

​

Nine Months Ended

​

​

​

​

September 30, 

​

September 30, 

​

Percent

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

Change

Wealth management

​

$

10,693

​

$

9,707

​

10.2

Service charges on deposits

​

​

9,339

​

​

9,238

​

1.1

Residential mortgage banking revenue

​

​

​

​

​

​

​

​

Secondary mortgage fees

​

​

388

​

​

249

​

55.8

MSRs mark to market gain (loss)

​

​

319

​

​

(1,490)

​

121.4

Mortgage servicing income

​

​

1,428

​

​

1,421

​

0.5

Net gain on sales of mortgage loans

​

​

1,558

​

​

1,634

​

(4.7)

Total residential mortgage banking revenue

​

​

3,693

​

​

1,814

​

103.6

Securities losses, net

​

​

(1)

​

​

(1)

​

-

Change in cash surrender value of BOLI

​

​

3,347

​

​

2,363

​

41.6

Death benefit realized on BOLI

​

​

-

​

​

430

​

(100.0)

Card related income

​

​

7,312

​

​

7,355

​

(0.6)

Other income

​

​

4,578

​

​

3,302

​

38.6

Total noninterest income

​

$

38,961

​

$

34,208

​

13.9

​

Noninterest income increased $4.8 million, or 13.9%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. This increase was primarily driven by a $986,000 increase in wealth management income, a $101,000 increase in service charges on deposits, and a $1.9 million increase in mortgage banking revenue, comprised primarily of a $1.8 million increase in MSRs mark to market valuations. In addition, noninterest income for the nine month period ended September 30, 2026, compared to the like 2025 period, increased due to a $984,000 increase in the cash surrender value of BOLI due to market interest rate changes, primarily on COLI investments, and a $1.3 million increase in other income primarily driven by growth in powersport and consumer loan fees provided by the acquired Bancorp Financial loan portfolio. Partially offsetting the increase in noninterest income for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was $430,000 in death benefits realized on BOLI in 2025; no like death benefit was recorded for the nine month period in 2026.

​

​

54

Table of Contents

​

Noninterest Expense

​

Three months ended September 30, 2026 and 2025

​

The following table details the major components of noninterest expense for the periods presented:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

Noninterest Expense

​

Three Months Ended

​

Percent Change From

​

​

​

September 30, 

​

June 30, 

​

September 30, 

​

June 30, 

​

September 30, 

​

​

  ​ ​ ​

2026

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​ ​ ​

2025

 

Salaries

​

$

22,900

​

$

22,332

​

$

31,360

​

2.5

​

(27.0)

​

Officers' incentive

​

​

2,710

​

​

2,240

​

​

3,279

​

21.0

​

(17.4)

​

Benefits and other

​

​

5,236

​

​

5,531

​

​

5,084

​

(5.3)

​

3.0

​

Total salaries and employee benefits

​

​

30,846

​

​

30,103

​

​

39,723

​

2.5

​

(22.3)

​

Occupancy, furniture and equipment

​

​

5,284

​

​

5,118

​

​

4,937

​

3.2

​

7.0

​

Computer and data processing

​

​

3,258

​

​

3,217

​

​

4,002

​

1.3

​

(18.6)

​

FDIC insurance

​

​

746

​

​

759

​

​

854

​

(1.7)

​

(12.6)

​

Net teller & bill paying

​

​

754

​

​

724

​

​

691

​

4.1

​

9.1

​

General bank insurance

​

​

355

​

​

351

​

​

437

​

1.1

​

(18.8)

​

Amortization of core deposit intangible

​

​

1,149

​

​

1,167

​

​

1,251

​

(1.5)

​

(8.2)

​

Advertising and marketing expense

​

​

603

​

​

483

​

​

650

​

24.8

​

(7.2)

​

Card related expense

​

​

1,589

​

​

1,604

​

​

1,708

​

(0.9)

​

(7.0)

​

Professional fees

​

​

1,417

​

​

1,160

​

​

3,145

​

22.2

​

(54.9)

​

Consumer credit expense

​

​

1,725

​

​

1,720

​

​

1,368

​

0.3

​

26.1

​

Other real estate owned expense, net

​

​

(30)

​

​

52

​

​

128

​

(157.7)

​

(123.4)

​

Other expense

​

​

3,926

​

​

4,794

​

​

4,269

​

(18.1)

​

(8.0)

​

Total noninterest expense

​

$

51,622

​

$

51,252

​

$

63,163

​

0.7

​

(18.3)

​

Efficiency ratio (GAAP)1

​

​

52.34

%

​

51.72

%

​

64.46

%

​

​

​

​

Adjusted efficiency ratio (non-GAAP)2

​

​

52.06

%

​

50.80

%

​

52.10

%

​

​

​

​

​

1 The efficiency ratio shown in the table above is a GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits and OREO expenses, divided by the sum of net interest income and total noninterest income less net gains or losses on securities, death benefit realized on BOLI, as applicable, and mark to market gains or losses on MSRs.

​

2 The adjusted efficiency ratio shown in the table above is a non-GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits, OREO expenses, acquisition expense, net of gains or losses on branch sales, as applicable, divided by the sum of net interest income on a fully tax equivalent basis, total noninterest income less net gains or losses on securities, death benefit realized on BOLI, as applicable, mark to market gains or losses on MSRs, and includes a tax equivalent adjustment on the change in cash surrender value of BOLI. See the discussion entitled “Non-GAAP Financial Measures” above and the table under “Reconciliation of Adjusted Efficiency Ratio Non-GAAP Financial Measures” that provides a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent.

​

Noninterest expense for the third quarter of 2026 increased $370,000, or 0.7%, compared to the second quarter of 2026, but decreased $11.5 million, or 18.3%, compared to the third quarter of 2025. The increase in the third quarter of 2026, compared to the second quarter of 2026, was driven by a $743,000 increase in salaries and employee benefits with increases reflected primarily in salaries, officer incentive accruals, and insurance premiums. Also contributing to the increase was a $166,000 increase in occupancy, furniture and equipment due to increases in real estate taxes and office equipment maintenance, a $120,000 increase in advertising and marketing expense due to costs associated with a 2026 brand awareness campaign, and a $257,000 increase in professional fees due to consulting and management fees related to the 2026 brand awareness campaign as well as an increase in loan related legal fees. Partially offsetting the increase in noninterest expense for the third quarter of 2026, compared to the second quarter of 2026, was an $868,000 decrease in other expense primarily due to decreases in director deferred compensation expense, decreases in non-legal commercial expenses, a decrease in litigation expense as two non-recurring and unrelated customer disputes with limited exposure were recorded last 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.

​

​

55

Table of Contents

​

The year over year decrease in noninterest expense is primarily attributable to an $8.9 million decrease in salaries and employee benefits, primarily attributable to Bancorp Financial acquisition related costs for change in control, retention and severance payments. Also contributing to the decrease in noninterest expense year over year was a $744,000 decrease in computer and data processing expenses, a $1.7 million decrease in professional fees, and a $343,000 decrease in other expense primarily due to Bancorp Financial acquisition-related costs in the prior year period.

​

Nine months ended September 30, 2026 and 2025

​

​

​

​

​

​

​

​

​

​

Noninterest Expense

​

Nine Months Ended

​

​

​

​

September 30, 

​

September 30, 

​

Percent

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

Change

Salaries

​

$

67,165

​

$

69,283

​

(3.1)

Officers' incentive

​

​

6,602

​

​

8,999

​

(26.6)

Benefits and other

​

​

16,855

​

​

15,384

​

9.6

Total salaries and employee benefits

​

​

90,622

​

​

93,666

​

(3.2)

Occupancy, furniture and equipment

​

​

15,773

​

​

13,962

​

13.0

Computer and data processing

​

​

9,850

​

​

9,042

​

8.9

FDIC insurance

​

​

2,264

​

​

2,124

​

6.6

Net teller & bill paying

​

​

2,194

​

​

2,019

​

8.7

General bank insurance

​

​

1,059

​

​

1,095

​

(3.3)

Amortization of core deposit intangible

​

​

3,492

​

​

3,310

​

5.5

Advertising and marketing expense

​

​

1,637

​

​

1,334

​

22.7

Card related expense

​

​

4,712

​

​

4,577

​

2.9

Professional fees

​

​

3,876

​

​

5,398

​

(28.2)

Consumer credit expense

​

​

4,967

​

​

1,408

​

N/M

Other real estate owned expense, net

​

​

(164)

​

​

2,036

​

(108.1)

Other expense

​

​

12,802

​

​

11,116

​

15.2

Total noninterest expense

​

$

153,084

​

$

151,087

​

1.3

Efficiency ratio (GAAP)1

​

​

52.15

%

​

59.44

%

​

Adjusted efficiency ratio (non-GAAP)2

​

​

51.52

%

​

53.87

%

​

​

N/M – Not meaningful.

​

1 The efficiency ratio shown in the table above is a GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits and OREO expenses, divided by the sum of net interest income and total noninterest income less net gains or losses on securities, death benefit realized on BOLI, as applicable, and mark to market gains or losses on MSRs.

​

2 The adjusted efficiency ratio shown in the table above is a non-GAAP financial measure calculated as noninterest expense, excluding amortization of core deposits, OREO expenses, acquisition expense, net of gains or losses on branch sales, as applicable, divided by the sum of net interest income on a fully tax equivalent basis, total noninterest income less net gains or losses on securities, death benefit realized on BOLI, as applicable, mark to market gains or losses on MSRs, and includes a tax equivalent adjustment on the change in cash surrender value of BOLI. See the discussion entitled “Non-GAAP Financial Measures” above and the table under “Reconciliation of Adjusted Efficiency Ratio Non-GAAP Financial Measures” that provides a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent.

​

Noninterest expense for the nine months ended September 30, 2026, increased $2.0 million, or 1.3%, compared to the nine months ended September 30, 2025, primarily due to a $1.8 million increase in occupancy, furniture and equipment, an $808,000 increase in computer and data processing expense, a $3.6 million increase in consumer credit expense, and a $1.7 million increase in other expense, which are all primarily due to the effect of the Bancorp Financial acquisition and the corresponding growth in expenses. Partially offsetting the increases year over year were a $3.0 million decrease in salaries and employee benefits primarily due to 2025 payments for change in control, retention and severance on the acquisition of Bancorp Financial and other acquisition-related costs, as well as a decrease in the officer incentive accrual for 2026 due to certain performance metrics falling short of target, a $1.5 million decrease in professional fees as the prior year included Bancorp Financial acquisition related costs, and a $2.2 million decrease in other real estate owned expense, net, as all OREO properties have been sold since the third quarter of 2025, resulting in a reduction of expenses.

​

Efficiency Ratio

​

The efficiency ratio presented above and reconciled below measures how much it costs an institution to generate one dollar of revenue. We utilize this measure in evaluating employee performance incentives as well as in comparison against peer performance, to set and assess operational standards. The following table provides a reconciliation of the non-GAAP efficiency ratio to the most comparable GAAP equivalent.

56

Table of Contents

​

Reconciliation of Adjusted Efficiency Ratio Non-GAAP Financial Measures

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

GAAP

​

Non-GAAP

​

​

​

​

Three Months Ended

​

​

Three Months Ended

​

​

​

September 30, 

​

June 30, 

​

September 30, 

​

September 30, 

​

June 30, 

​

September 30, 

​

​

​

2026

​

2026

​

2025

​

2026

​

2026

​

2025

​

Efficiency Ratio / Adjusted Efficiency Ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest expense

​

$

51,622

​

$

51,252

​

$

63,163

​

$

51,622

​

$

51,252

​

$

63,163

​

Less amortization of core deposit

​

​

1,149

​

​

1,167

​

​

1,251

​

​

1,149

​

​

1,167

​

​

1,251

​

Less other real estate expense, net 

​

​

(30)

​

​

52

​

​

128

​

​

(30)

​

​

52

​

​

128

​

Less acquisition related costs, net of losses on branch sales

​

​

N/A

​

​

N/A

​

​

N/A

​

​

-

​

​

526

​

​

11,508

​

Noninterest expense less adjustments

​

$

50,503

​

$

50,033

​

$

61,784

​

$

50,503

​

$

49,507

​

$

50,276

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income

​

$

84,049

​

$

83,329

​

$

82,775

​

$

84,049

​

$

83,329

​

$

82,775

​

Taxable-equivalent adjustment:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

N/A

​

​

N/A

​

​

N/A

​

​

13

​

​

14

​

​

10

​

Securities

​

​

N/A

​

​

N/A

​

​

N/A

​

​

287

​

​

301

​

​

328

​

Net interest income including adjustments

​

​

84,049

​

​

83,329

​

​

82,775

​

​

84,349

​

​

83,644

​

​

83,113

​

Noninterest income

​

​

13,070

​

​

13,261

​

​

13,109

​

​

13,070

​

​

13,261

​

​

13,109

​

Less death benefit related to BOLI

​

​

-

​

​

-

​

​

430

​

​

-

​

​

-

​

​

430

​

Less securities losses, net

​

​

(1)

​

​

-

​

​

(1)

​

​

(1)

​

​

-

​

​

(1)

​

Less MSRs mark to market gains (losses)

​

​

623

​

​

(152)

​

​

(389)

​

​

623

​

​

(152)

​

​

(389)

​

Change in cash surrender value of BOLI

​

​

N/A

​

​

N/A

​

​

N/A

​

​

212

​

​

390

​

​

312

​

Noninterest income including adjustments

​

​

12,448

​

​

13,413

​

​

13,069

​

​

12,660

​

​

13,803

​

​

13,381

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income including adjustments plus noninterest income including adjustments

​

$

96,497

​

$

96,742

​

$

95,844

​

$

97,009

​

$

97,447

​

$

96,494

​

Efficiency ratio / Adjusted efficiency ratio

​

​

52.34

%

​

51.72

%

​

64.46

%

​

52.06

%

​

50.80

%

​

52.10

%

​

N/A - not applicable

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

GAAP

​

Non-GAAP

​

​

​

Nine Months Ended

​

​

Nine Months Ended

​

​

September 30, 

​

September 30, 

​

​

September 30, 

​

September 30, 

​

​

​

2026

​

2025

​

​

2026

​

2025

​

Efficiency Ratio / Adjusted Efficiency Ratio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(Dollars in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest expense

​

$

153,084

​

$

151,087

​

​

$

153,084

​

$

151,087

​

Less amortization of core deposit intangible

​

​

3,492

​

​

3,310

​

​

​

3,492

​

​

3,310

​

Less other real estate expense, net

​

​

(164)

​

​

2,036

​

​

​

(164)

​

​

2,036

​

Less acquisition related costs, net of losses on branch sales

​

​

N/A

​

​

N/A

​

​

​

875

​

​

12,772

​

Noninterest expense less adjustments

​

$

149,756

​

$

145,741

​

​

$

148,881

​

$

132,969

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income

​

$

248,522

​

$

209,913

​

​

$

248,522

​

$

209,913

​

Taxable-equivalent adjustment:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

N/A

​

​

N/A

​

​

​

40

​

​

28

​

Securities

​

​

N/A

​

​

N/A

​

​

​

895

​

​

990

​

Net interest income including adjustments

​

​

248,522

​

​

209,913

​

​

​

249,457

​

​

210,931

​

Noninterest income

​

​

38,961

​

​

34,208

​

​

​

38,961

​

​

34,208

​

Less death benefit related to BOLI

​

​

-

​

​

430

​

​

​

-

​

​

430

​

Less securities losses, net

​

​

(1)

​

​

(1)

​

​

​

(1)

​

​

(1)

​

Less MSRs mark to market gains (losses)

​

​

319

​

​

(1,490)

​

​

​

319

​

​

(1,490)

​

Taxable-equivalent adjustment:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Change in cash surrender value of BOLI

​

​

N/A

​

​

N/A

​

​

​

890

​

​

628

​

Noninterest income including adjustments

​

​

38,643

​

​

35,269

​

​

​

39,533

​

​

35,897

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income including adjustments plus noninterest income including adjustments

​

$

287,165

​

$

245,182

​

​

$

288,990

​

$

246,828

​

Efficiency ratio / Adjusted efficiency ratio

​

​

52.15

%

​

59.44

%

​

​

51.52

%

​

53.87

%

​

N/A - not applicable

​

57

Table of Contents

​

​

Income Taxes

​

We recorded income tax expense of $9.8 million for the third quarter of 2026 on $38.7 million of pretax income, compared to income tax expense of $9.7 million on $37.8 million of pretax income in the second quarter of 2026, and income tax expense of $3.2 million on $13.1 million of pretax income in the third quarter of 2025. Our effective tax rate was 25.3% in the third quarter of 2026, 25.5% for the second quarter of 2026, and 24.5% for the third quarter of 2025.

​

We recorded income tax expense of $27.9 million for the nine months ended September 30, 2026, on $110.6 million of pretax income, compared to income tax expense of $17.0 million on $68.5 million of pretax income for the nine months ended September 30, 2025. Our effective tax rate was 25.3% for the nine months ended September 30, 2026, compared to 24.8% for the like 2025 period.

​

Income tax expense reflected all relevant statutory tax rates and GAAP accounting. There were no significant changes in our ability to utilize our deferred tax assets during the quarter ended September 30, 2026. We had no valuation reserve on the deferred tax assets as of September 30, 2026.

​

Financial Condition

​

Total assets decreased $124.1 million to $6.78 billion at September 30, 2026, from $6.90 billion at December 31, 2025, due primarily to the decrease of $111.9 million in securities available-for-sale and a decrease of $14.1 million in total loans. We continue to actively assess potential investment opportunities to utilize our excess liquidity. Total deposits were $5.33 billion at September 30, 2026, a decrease of $268.5 million from December 31, 2025.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

Securities

​

As of

​

Percent Change From

​

​

September 30, 

​

December 31, 

​

September 30, 

​

December 31, 

​

September 30, 

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2025

  ​ ​ ​

2025

  ​ ​ ​

2025

Securities available-for-sale, at fair value

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Treasuries

​

$

148,073

​

$

165,860

​

$

190,670

​

(10.7)

​

(22.3)

U.S. government agencies

​

​

39,109

​

​

29,176

​

​

38,264

​

34.0

​

2.2

U.S. government agencies mortgage-backed

​

​

74,835

​

​

88,780

​

​

93,051

​

(15.7)

​

(19.6)

States and political subdivisions

​

​

177,272

​

​

206,375

​

​

210,675

​

(14.1)

​

(15.9)

Collateralized mortgage obligations

​

​

328,790

​

​

359,305

​

​

378,236

​

(8.5)

​

(13.1)

Asset-backed securities

​

​

37,395

​

​

45,816

​

​

47,802

​

(18.4)

​

(21.8)

Collateralized loan obligations

​

​

172,331

​

​

194,464

​

​

198,098

​

(11.4)

​

(13.0)

Equity securities

​

​

771

​

​

747

​

​

684

​

3.2

​

12.7

Total securities

​

$

978,576

​

$

1,090,523

​

$

1,157,480

​

(10.3)

​

(15.5)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Securities available-for-sale decreased $111.9 million as of September 30, 2026, compared to December 31, 2025, and decreased $178.9 million compared to September 30, 2025. The decrease in the portfolio during 2026 was driven by paydowns totaling $171.4 million, along with maturities and calls totaling $102.6 million and a $22.2 million increase in unrealized losses on securities available-for-sale. This was partially offset by $185.5 million in purchases. We continue to position the portfolio in higher credit quality, shorter duration securities with an appropriate mix of fixed- and floating-rate exposures.

​

58

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

Loans

As of

​

Percent Change From

​

September 30, 

​

December 31, 

​

September 30, 

​

December 31, 

​

September 30, 

​

2026

​

2025

​

2025

​

2025

  ​ ​ ​

2025

Commercial

$

867,362

​

$

842,130

​

$

786,095

​

3.0

​

10.3

Leases

​

554,370

​

​

548,256

​

​

550,201

​

1.1

​

0.8

Commercial real estate – investor

​

1,131,857

​

​

1,212,384

​

​

1,257,328

​

(6.6)

​

(10.0)

Commercial real estate – owner occupied

​

684,169

​

​

706,567

​

​

680,412

​

(3.2)

​

0.6

Construction

​

153,491

​

​

173,630

​

​

176,387

​

(11.6)

​

(13.0)

Residential real estate – investor

​

65,679

​

​

70,225

​

​

69,362

​

(6.5)

​

(5.3)

Residential real estate – owner occupied

​

247,515

​

​

230,432

​

​

231,547

​

7.4

​

6.9

Multifamily

​

370,431

​

​

339,131

​

​

378,213

​

9.2

​

(2.1)

HELOC

​

245,938

​

​

235,293

​

​

234,885

​

4.5

​

4.7

Powersport

​

689,229

​

​

696,959

​

​

715,498

​

(1.1)

​

(3.7)

Other 1

​

228,016

​

​

197,124

​

​

184,577

​

15.7

​

23.5

Total loans

$

5,238,057

​

$

5,252,131

​

$

5,264,505

​

(0.3)

​

(0.5)

​

1 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

​

Total loans were $5.24 billion as of September 30, 2026, a decrease of $14.1 million from December 31, 2025. The decrease in total loans in the first nine months of 2026, compared to December 31, 2025, was primarily due to paydowns, net of originations, in commercial real estate – investor, commercial real estate – owner occupied, construction, and powersport. Total loans decreased $26.4 million compared to September 30, 2025, mostly driven by paydowns, net of originations, in commercial real estate – investor, construction, and powersport. As required by CECL, the balance (or amortized cost basis) of purchased credit deteriorated loans, or PCD loans (discussed below) is carried on a gross basis, rather than net of the associated credit loss estimate, and the expected credit losses for PCD loans are estimated and separately recognized as part of the allowance for credit losses, or ACL. Refer to Item 1. Note 1. Recent Accounting Pronouncements, for discussion of ASU 2025-08, which the Company has elected not to early adopt and which will impact how purchased loans are recorded for any future acquisitions completed after adoption.

​

The powersport loan portfolio provides a more balanced loan portfolio overall by broadening the scope of our consumer lending and offering a higher yield in a lower rate environment. The initial credit considerations for powersport loans rely more heavily on FICO scores compared to other loan types in our loan portfolio. During the nine months ended September 30, 2026, we originated $301.2 million of powersport loans with a weighted average yield of 10.41%. As of September 30, 2026, the weighted average FICO score, at the time of origination, of the entire powersport portfolio is 728.

​

​

​

​

​

​

​

​

​

​

Weighted

​

September 30, 

​

Average

​

2026

​

FICO

Tier 1

$

365,545

​

777

Tier 2

​

130,053

​

711

Tier 3

​

80,235

​

684

Tier 4

​

38,932

​

660

Tier 5

​

74,464

​

606

Total Powersport

$

689,229

​

728

​

The following table sets forth the total of powersport by collateral type:

​

​

​

​

​

​

​

​

September 30, 

​

% of

​

​

2026

​

Total

​

New

$

520,927

​

75.6

%

Used

​

168,302

​

24.4

​

Total Powersport

$

689,229

​

100.0

%

​

​

59

Table of Contents

​

The quality of our loan portfolio is impacted not only by our credit decisions but also by the economic health of the communities in which we operate. Since we are located in a corridor with significant open space and undeveloped real estate, real estate lending (including commercial real estate, construction, residential, multifamily, and HELOCs) has been and continues to be a sizeable portion of our portfolio. These categories comprised 55.4% of the portfolio as of September 30, 2026, compared to 56.5% of the portfolio as of December 31, 2025. At September 30, 2026, our outstanding commercial real estate loans and undrawn commercial real estate commitments, excluding owner occupied real estate, were equal to 208.5% of the Bank’s Tier 1 capital plus allowance for credit losses, a decrease from 220.3% at December 31, 2025. We continue to oversee and seek to manage our loan portfolio in accordance with interagency guidance on risk management.

​

Asset Quality

Nonperforming loans consist of nonaccrual loans and loans 90 days or greater past due. Nonperforming loans decreased by $13.2 million to $39.6 million at September 30, 2026, from $52.8 million at December 31, 2025, and decreased by $8.3 million from $48.0 million at September 30, 2025. The decrease from December 31, 2025 and September 30, 2025 was mostly driven by non-accrual charge-offs for a commercial relationship in the third quarter of 2026 and a larger paydown for a commercial real estate – investor relationship. Purchased credit deteriorated loans (“PCD”) are purchased loans that, as of the date of acquisition, we determined had experienced a more-than-insignificant deterioration in credit quality since origination. PCD loans are included in our nonperforming loan disclosures, if such loans otherwise meet the definition of a nonperforming loan. Total PCD loans are $52.5 million, of which $1.8 million meet the definition of nonperforming, as of September 30, 2026 and $78.6 million, of which $3.4 million meet the definition of nonperforming, as of December 31, 2025. Management continues to carefully monitor loans considered to be in a classified status. Nonperforming loans as a percent of total loans were 0.8% as of September 30, 2026, 1.0% as of December 31, 2025, and 0.9% as of September 30, 2025. The distribution of our nonperforming loans is shown in the following table.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

Nonperforming Loans

As of

​

Percent Change From

​

​

September 30, 

​

December 31, 

​

September 30, 

​

December 31, 

​

September 30, 

​

​

2026

​

2025

​

2025

​

2025

​

2025

​

Commercial

$

7,372

​

$

9,761

​

$

13,293

​

(24.5)

​

​

(44.5)

​

​

Leases

​

1,729

​

​

2,899

​

​

1,277

​

(40.4)

​

​

35.4

​

​

Commercial real estate – investor

​

8,740

​

​

11,377

​

​

2,853

​

(23.2)

​

​

206.3

​

​

Commercial real estate – owner occupied

​

10,228

​

​

19,743

​

​

23,236

​

(48.2)

​

​

(56.0)

​

​

Construction

​

1,736

​

​

737

​

​

344

​

135.5

​

​

404.7

​

​

Residential real estate – investor

​

1,030

​

​

681

​

​

749

​

51.2

​

​

37.5

​

​

Residential real estate – owner occupied

​

2,459

​

​

1,852

​

​

1,649

​

32.8

​

​

49.1

​

​

Multifamily

​

1,254

​

​

1,494

​

​

1,183

​

(16.1)

​

​

6.0

​

​

HELOC

​

2,160

​

​

1,222

​

​

1,035

​

76.8

​

​

108.7

​

​

Powersport

​

2,728

​

​

2,778

​

​

2,230

​

(1.8)

​

​

22.3

​

​

Other 1

​

200

​

​

287

​

​

136

​

(30.3)

​

​

47.1

​

​

Total nonperforming loans

$

39,636

​

$

52,831

​

$

47,985

​

(25.0)

​

​

(17.4)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

​

​

60

Table of Contents

​

The components of our nonperforming assets are shown in the following table:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

Nonperforming Assets

​

As of

​

Percent Change From

​

​

September 30, 

​

December 31, 

​

September 30, 

​

December 31, 

​

September 30, 

​

  ​

2026

  ​

2025

  ​

2025

  ​

2025

​

2025

Nonaccrual loans

​

$

36,579

​

$

47,952

​

$

34,126

​

(23.7)

​

7.2

Loans past due 90 days or more and still accruing interest

​

 

3,057

​

 

4,879

​

 

13,859

​

(37.3)

​

(77.9)

Total nonperforming loans

​

 

39,636

​

 

52,831

​

 

47,985

​

(25.0)

​

(17.4)

Other real estate owned

​

 

-

​

 

1,427

​

 

6,416

​

(100.0)

​

(100.0)

Repossessed assets 1

​

 

1,279

​

 

1,363

​

 

2,088

​

(6.2)

​

(38.7)

Total nonperforming assets

​

$

40,915

​

$

55,621

​

$

56,489

​

(26.4)

​

(27.6)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

30-89 days past due loans and still accruing interest

​

$

43,553

​

$

52,169

​

$

22,415

​

​

​

​

Nonaccrual loans to total loans

​

​

0.7

%

​

0.9

%

​

0.6

%

​

​

​

Nonperforming loans to total loans

​

​

0.8

%

​

1.0

%

​

0.9

%

​

​

​

Nonperforming assets to total loans plus OREO and repossessed assets

​

​

0.8

%

​

1.1

%

​

1.1

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for credit losses

​

$

64,189

​

$

72,301

​

$

75,037

​

​

​

​

Allowance for credit losses to total loans

​

​

1.2

%

​

1.4

%

​

1.4

%

​

​

​

Allowance for credit losses to nonaccrual loans

​

​

175.5

%

​

150.8

%

​

219.9

%

​

​

​

​

1 Repossessed assets are reported within other assets.

​

Loan charge-offs, net of recoveries, for the third quarter of 2026 as compared to the prior linked quarter and year over year quarter are shown in the following table:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loan Charge–offs, Net of Recoveries

Three Months Ended

​

September 30, 

​

% of

​

June 30, 

​

% of

​

September 30, 

​

% of

​

2026

​

Total1

​

2026

​

Total1

​

2025

​

Total1

Commercial

$

9,171

​

72.1

​

$

2,983

​

32.3

​

$

385

​

7.5

Leases

​

172

​

1.3

​

​

344

​

3.7

​

​

848

​

16.6

Commercial real estate – investor

​

(14)

​

(0.1)

​

​

2,804

​

30.3

​

​

(15)

​

(0.3)

Commercial real estate – owner occupied

​

(1)

​

-

​

​

(1)

​

-

​

​

(2)

​

-

Construction

​

-

​

-

​

​

-

​

-

​

​

(46)

​

(0.9)

Residential real estate – investor

​

(3)

​

-

​

​

(1)

​

-

​

​

(2)

​

-

Residential real estate – owner occupied

​

(10)

​

(0.1)

​

​

(21)

​

(0.2)

​

​

(7)

​

(0.1)

Multifamily

​

-

​

-

​

​

-

​

-

​

​

181

​

3.5

HELOC

​

(10)

​

(0.1)

​

​

(14)

​

(0.2)

​

​

(19)

​

(0.4)

Powersport

​

3,133

​

24.6

​

​

2,826

​

30.6

​

​

2,980

​

58.3

Other 2

​

288

​

2.3

​

​

328

​

3.5

​

​

805

​

15.8

Net charge–offs (recoveries)

$

12,726

​

100.0

​

$

9,248

​

100.0

​

$

5,108

​

100.0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Represents the percentage of net charge-offs attributable to each category of loans.

2 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

​

Net charge-offs, reported in the above table, reflect continuing management attention to credit quality and remediation efforts. There was an increase of $3.8 million in gross charge-offs, as compared to the linked quarter, primarily due to larger charge-offs taken on a single commercial relationship and slight increase in powersport charges-offs. Powersport loans are measured for asset quality at origination based on FICO scores, then based on past due status through the life of the loan, and charge-off occurs once a loan is past due 120 days. We have continued our conservative loan valuations and aggressive recovery efforts on prior charge-offs.

​

​

61

Table of Contents

​

Classified loans include nonaccrual loans, accruing substandard, and doubtful loans. Classified assets include classified loans, OREO, and repossessed assets. Loans classified as substandard are inadequately protected by either the current net worth and ability to meet payment obligations of the obligor, or by the collateral pledged to secure the loan, if any. These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and carry the distinct possibility that we will sustain some loss if the deficiencies remain uncorrected. Loans classified as doubtful have all the weaknesses inherent as those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

​

The following table shows classified assets by classification for the following periods:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

Classified Assets

As of

​

Percent Change From

​

September 30, 

​

December 31, 

​

September 30, 

​

December 31, 

​

September 30, 

​

2026

​

2025

​

2025

​

2025

​

2025

Commercial

$

13,190

​

$

51,587

​

$

50,680

​

(74.4)

​

​

(74.0)

​

Leases

​

1,729

​

​

2,428

​

​

1,277

​

(28.8)

​

​

35.4

​

Commercial real estate – investor

​

12,730

​

​

14,245

​

​

2,853

​

(10.6)

​

​

346.2

​

Commercial real estate – owner occupied

​

26,546

​

​

64,081

​

​

72,020

​

(58.6)

​

​

(63.1)

​

Construction

​

12,866

​

​

11,421

​

​

1,612

​

12.7

​

​

698.1

​

Residential real estate – investor

​

1,030

​

​

1,142

​

​

1,228

​

(9.8)

​

​

(16.1)

​

Residential real estate – owner occupied

​

2,249

​

​

1,897

​

​

1,839

​

18.6

​

​

22.3

​

Multifamily

​

1,254

​

​

1,494

​

​

1,183

​

(16.1)

​

​

6.0

​

HELOC

​

2,355

​

​

1,466

​

​

1,538

​

60.6

​

​

53.1

​

Powersport

​

145

​

​

68

​

​

-

​

113.2

​

​

N/M

​

Other

​

154

​

​

270

​

​

30

​

(43.0)

​

​

413.3

​

Total classified loans

​

74,248

​

​

150,099

​

​

134,260

​

(50.5)

​

​

(44.7)

​

Other real estate owned

​

-

​

​

1,427

​

​

6,416

​

(100.0)

​

​

(100.0)

​

Repossessed assets 1

​

1,279

​

​

1,363

​

​

2,088

​

(6.2)

​

​

(38.7)

​

Total classified assets

$

75,527

​

$

152,889

​

$

142,764

​

(50.6)

​

​

(47.1)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

N/M - Not meaningful

1 Repossessed assets are reported within other assets.

​

Total classified loans decreased $75.9 million as of September 30, 2026, from December 31, 2025, and by $60.0 million compared to September 30, 2025. The decrease in classified loans since December 31, 2025, is due to outflows from classified loans of $100.5 million, offset by additions of $24.6 million. Outflows consisted of $29.7 million of loans paid off, $42.9 million of classified loans upgraded, $17.1 million of principal reductions through payments and partial charge-offs, $10.5 million of loans fully charged off, $235,000 of loans transferred into OREO, and $148,000 of loans transferred to repossessed assets.  Based on information received during the third quarter of 2026, it became necessary to downgrade a portion of one commercial real estate – investor credit to doubtful. Classified assets decreased as of September 30, 2026, compared to December 31, 2025, due to the decreases to classified loans and a total decrease of $1.5 million related to OREO and repossessed assets. The $67.2 million decrease in classified assets as of September 30, 2026, compared to September 30, 2025, is primarily due to the classified loan decrease of $60.0 million, noted above, and a $7.2 million decrease in OREO and repossessed assets. Classified loans since September 30, 2025 had additions of $67.0 million and were offset by outflows of $127.0 million which consisted of $54.1 million of loans paid off, $43.0 million of classified loans upgraded, $10.5 million of loans charged off, $19.1 million of net principal reductions and partial charge-offs, $235,000 transferred to OREO, and $148,000 repossessed. Management monitors a ratio of classified assets to the sum of Bank Tier 1 capital and the ACL on loans as another measure of overall change in loan related asset quality, which is referred to as the “classified assets ratio.” The classified assets ratio was 8.70% for the period ended September 30, 2026, compared to 17.82% as of December 31, 2025, and 16.55% as of September 30, 2025.

​

Allowance for Credit Losses on Loans

​

The provision for credit losses, which includes a provision for losses on unfunded commitments, is a charge to earnings to maintain the allowance for credit losses (“ACL”) at a level consistent with management’s assessment of expected losses in the loan portfolio at the balance sheet date.

​

​

62

Table of Contents

​

At September 30, 2026, our ACL on loans totaled $64.2 million, and our ACL on unfunded commitments, included in other liabilities, totaled $2.2 million. In the third quarter of 2026, we recorded a provision expense on loans of $6.5 million driven by increased charge-offs to one commercial relationship. Further, we recorded a $216,000 provision expense on unfunded commitments, primarily due to the increase to the loss rates as a result of the qualitative factor adjustment made specific to the remaining life of certain portfolios within the ACL calculation. These adjustments resulted in a $6.8 million net expense to the provision for credit losses for the third quarter of 2026.

Management estimates the amount of provision required on a quarterly basis and records the appropriate provision expense, or release of expense, to maintain an adequate reserve for all potential and estimated credit losses on loans, leases and unfunded commitments. The ACL on loans totaled $64.2 million as of September 30, 2026, $72.3 million as of December 31, 2025, and $75.0 million as of September 30, 2025. Our ACL on loans to total loans was 1.2% as of September 30, 2026, and 1.4% as of both December 31, 2025 and September 30, 2025. See Item 7 – Critical Accounting Estimates in the Management Discussion and Analysis in our 2025 Annual Report on Form 10-K for discussion of our ACL methodology on loans. Allocations of the ACL may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged off.

Below is a reconciliation of the activity in the allowance for credit losses on loans for the periods indicated:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

Nine Months Ended

​

​

September 30, 

​

June 30, 

​

September 30, 

​

September 30, 

​

September 30, 

​

​

2026

​

2026

​

2025

​

2026

​

2025

​

Allowance at beginning of period

$

70,380

​

​

$

72,126

​

​

$

42,990

​

​

$

72,301

​

​

$

43,619

​

​

Charge–offs:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

9,352

​

​

​

3,002

​

​

​

452

​

​

​

13,682

​

​

​

5,023

​

​

Leases

​

174

​

​

​

346

​

​

​

848

​

​

​

832

​

​

​

955

​

​

Commercial real estate – investor

​

-

​

​

​

2,819

​

​

​

-

​

​

​

6,752

​

​

​

-

​

​

Commercial real estate – owner occupied

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

​

47

​

​

Construction

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

​

834

​

​

Residential real estate – investor

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

Residential real estate – owner occupied

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

Multifamily

​

-

​

​

​

-

​

​

​

181

​

​

​

-

​

​

​

181

​

​

HELOC

​

-

​

​

​

-

​

​

​

-

​

​

​

2

​

​

​

-

​

​

Powersport

​

4,017

​

​

​

3,592

​

​

​

3,685

​

​

​

12,270

​

​

​

3,685

​

​

Other 1

​

429

​

​

​

412

​

​

​

880

​

​

​

1,398

​

​

​

1,082

​

​

Total charge–offs

​

13,972

​

​

​

10,171

​

​

​

6,046

​

​

​

34,936

​

​

​

11,807

​

​

Recoveries:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

181

​

​

​

19

​

​

​

67

​

​

​

230

​

​

​

131

​

​

Leases

​

2

​

​

​

2

​

​

​

-

​

​

​

119

​

​

​

17

​

​

Commercial real estate – investor

​

14

​

​

​

15

​

​

​

15

​

​

​

43

​

​

​

43

​

​

Commercial real estate – owner occupied

​

1

​

​

​

1

​

​

​

2

​

​

​

7

​

​

​

11

​

​

Construction

​

-

​

​

​

-

​

​

​

46

​

​

​

-

​

​

​

396

​

​

Residential real estate – investor

​

3

​

​

​

1

​

​

​

2

​

​

​

6

​

​

​

6

​

​

Residential real estate – owner occupied

​

10

​

​

​

21

​

​

​

7

​

​

​

38

​

​

​

45

​

​

Multifamily

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

​

-

​

​

HELOC

​

10

​

​

​

14

​

​

​

19

​

​

​

32

​

​

​

41

​

​

Powersport

​

884

​

​

​

766

​

​

​

705

​

​

​

2,417

​

​

​

705

​

​

Other 1

​

141

​

​

​

84

​

​

​

75

​

​

​

294

​

​

​

166

​

​

Total recoveries

​

1,246

​

​

​

923

​

​

​

938

​

​

​

3,186

​

​

​

1,561

​

​

Net charge-offs

​

12,726

​

​

​

9,248

​

​

​

5,108

​

​

​

31,750

​

​

​

10,246

​

​

Day 1 PCD credit evaluation

​

-

​

​

​

-

​

​

​

17,540

​

​

​

-

​

​

​

17,540

​

​

Provision for credit losses on loans 2

​

6,535

​

​

​

7,502

​

​

​

19,615

​

​

​

23,638

​

​

​

24,124

​

​

Allowance at end of period

$

64,189

​

​

$

70,380

​

​

$

75,037

​

​

$

64,189

​

​

$

75,037

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Average total loans (exclusive of loans held–for–sale)

$

5,225,305

​

​

$

5,219,813

​

​

$

5,215,551

​

​

$

5,217,018

​

​

$

4,381,793

​

​

Annualized net charge–offs to average loans

​

0.97

%

​

​

0.71

%

​

​

0.39

%

​

​

0.81

%

​

​

0.31

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 The “Other” classification includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

2 Amount does not include the provision for unfunded commitment liability.

​

63

Table of Contents

​

The coverage ratio of the ACL on loans to nonperforming loans was 161.9% as of September 30, 2026, which was an increase from the coverage ratio of 136.9% as of December 31, 2025 and from 156.4% as of September 30, 2025. Annualized net charge-offs to average loans increased slightly in the current quarter at 0.97% for the quarter ended September 30, 2026, compared to 0.71% for the quarter ended June 30, 2026 and was an increase from the prior year quarter of 0.39% as of September 30, 2025.

​

In management’s judgment, an adequate ACL has been established to encompass the current lifetime expected credit losses at September 30, 2026, as well as general changes in lending policy, procedures and staffing, and other external factors. However, there can be no assurance that actual losses will not exceed the estimated amounts in the future, based on unforeseen economic events, changes in business climates and the condition of collateral at the time of default and repossession. Continued volatility in the economic environment stemming from the impacts of and response to inflation, tariffs, potential recession, and the war in Ukraine and the war in Iran, and the associated effects on our customers, or other factors, such as changes in business climates and the condition of collateral at the time of default or repossession, may revise our current expectations of future credit losses in future reporting periods.

​

Other Real Estate Owned

​

As of September 30, 2026, there were no OREO properties held, reflecting a decrease from $1.4 million at December 31, 2025, and a decrease from $6.4 million at September 30, 2025. There was one sale totaling $622,000 for the three months ended September 30, 2026. The remaining valuation was cleared along with this sale. There was no valuation adjustment in the fourth quarter of 2025 and we recorded a valuation adjustment of $70,000 in the third quarter of 2025.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

OREO

Three Months Ended

​

Percent Change From

​

September 30, 

​

December 31, 

​

September 30, 

​

December 31, 

​

September 30, 

​

2026

​

2025

​

2025

​

2025

​

2025

Balance at beginning of period

$

622

​

$

6,416

​

$

6,486

​

(90.3)

​

​

(90.4)

​

Property additions, net of transfer adjustments

​

-

​

​

-

​

​

-

​

-

​

​

-

​

Less:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Proceeds from property disposals, net of participation purchase and of gains/losses

​

622

​

​

4,989

​

​

-

​

(87.5)

​

​

N/M

​

Period valuation adjustments

​

-

​

​

-

​

​

70

​

-

​

​

(100.0)

​

Balance at end of period

$

-

​

$

1,427

​

$

6,416

​

(100.0)

​

​

(100.0)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

N/M – Not meaningful.

​

When OREO is held, management records the property at the lower of its carrying amount or fair value less estimated costs to sell. Subsequent valuations are updated, as necessary, until the property is sold, and additional losses may be recognized based on changes in estimated fair value or costs to sell.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

OREO Properties by Type

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

December 31, 2025

​

September 30, 2025

​

​

Amount

​

% of Total

​

​

Amount

​

% of Total

​

​

Amount

​

% of Total

Commercial property

​

-

​

-

​

​

1,427

​

100

​

​

6,416

​

100

Total other real estate owned

$

-

​

-

​

$

1,427

​

100

​

$

6,416

​

100

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

64

Table of Contents

Deposits and Borrowings

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

Deposits

As of

​

Percent Change From

​

September 30, 

​

December 31, 

​

September 30, 

​

December 31, 

​

September 30, 

​

2026

​

2025

​

2025

​

2025

  ​ ​ ​

2025

Noninterest bearing demand

$

1,671,745

​

$

1,739,117

​

$

1,738,028

​

(3.9)

​

(3.8)

Savings

​

1,090,082

​

​

1,121,888

​

​

1,142,947

​

(2.8)

​

(4.6)

NOW accounts

​

693,157

​

​

693,573

​

​

661,627

​

(0.1)

​

4.8

Money market accounts

​

989,498

​

​

930,079

​

​

959,416

​

6.4

​

3.1

Certificates of deposit of less than $100,000

​

395,591

​

​

489,879

​

​

550,747

​

(19.2)

​

(28.2)

Certificates of deposit of $100,000 through $250,000

​

327,747

​

​

412,655

​

​

459,186

​

(20.6)

​

(28.6)

Certificates of deposit of more than $250,000

​

159,744

​

​

208,878

​

​

248,299

​

(23.5)

​

(35.7)

Total deposits

$

5,327,564

​

$

5,596,069

​

$

5,760,250

​

(4.8)

​

(7.5)

​

Total deposits were $5.33 billion at September 30, 2026, which reflects a $268.5 million decrease from total deposits of $5.60 billion at December 31, 2025, and a decrease of $432.7 million from total deposits of $5.76 billion at September 30, 2025. The decrease in deposits at September 30, 2026, compared to December 31, 2025, was primarily due to decreases in noninterest bearing deposits of $67.4 million, savings and NOW accounts of $32.2 million, and time deposits of $228.3 million, primarily due to the roll off of higher rate brokered deposits and other exception-priced time deposits acquired from the Bancorp Financial acquisition. These decreases were offset by an increase in money market accounts of $59.4 million. The decrease in deposits compared to September 30, 2025 was primarily seasonal in nature. We have used FHLBC advances to replace a portion of these deposit outflows, which has increased our interest expense on other short-term borrowings. We expect brokered and exception-priced time deposits to roll off at a slower pace and anticipate that our reliance on short-term borrowings will continue at a similar rate.

​

The decrease in deposits at September 30, 2026, compared to September 30, 2025, stemmed primarily from attrition of time deposits assumed in the acquisition of Bancorp Financial. Total quarterly average deposits decreased $517.1 million, or 8.7%, in the year over year period, primarily driven by a decrease in average time deposits of $442.2 million, savings accounts of $76.1 million, and noninterest bearing deposits of $59.3 million. These decreases were offset by an increase in money market accounts of $7.0 million and NOW accounts of $53.5 million. Included in our quarterly average time deposits for the three months ended September 30, 2026, are $28.0 million of brokered deposits, compared to $96.9 million for the like period of 2025. Brokered deposits totaling $115.0 million were assumed in the acquisition of Bancorp Financial, and we expect these deposits to run-off by early 2028. Accordingly, as of September 30, 2026, we have $27.1 million of brokered deposits remaining.

​

The following table presents estimated insured and uninsured deposits at September 30, 2026, and December 31, 2025, by deposit type, as well as the weighted average rates for each year to date ending period.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2026

​

​

December 31, 2025

​

Total Deposits

​

Insured Deposits

​

Uninsured Deposits

​

Average Rate Paid

​

Total Deposits

​

Insured Deposits

​

Uninsured Deposits

​

Average Rate Paid

Noninterest bearing demand   

$

1,671,745

​

$

1,112,323

​

$

559,422

​

-

%

​

$

1,739,117

​

$

1,141,542

​

$

597,575

​

-

%

Savings

​

1,090,082

​

​

990,240

​

​

99,842

​

0.81

​

​

​

1,121,888

​

​

1,025,941

​

​

95,947

​

0.73

​

NOW accounts

​

693,157

​

​

474,089

​

​

219,068

​

0.53

​

​

​

693,573

​

​

495,397

​

​

198,176

​

0.45

​

Money market accounts

​

989,498

​

​

568,425

​

​

421,073

​

1.86

​

​

​

930,079

​

​

548,289

​

​

381,790

​

1.90

​

Time deposits

​

883,082

​

​

745,530

​

​

137,552

​

2.62

​

​

​

1,111,412

​

​

937,045

​

​

174,367

​

2.92

​

Total

$

5,327,564

​

$

3,890,607

​

$

1,436,957

​

1.02

%

​

$

5,596,069

​

$

4,148,214

​

$

1,447,855

​

1.06

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Collateralized public funds

$

237,145

​

$

16,551

​

$

220,594

​

​

​

​

$

219,939

​

$

15,832

​

$

204,107

​

​

​

​

Total deposits decreased 4.8% to $5.33 billion at September 30, 2026 from $5.60 billion at December 31, 2025, primarily reflecting lower time deposit balances. The average rate paid on deposits decreased to 1.02% at September 30, 2026 from 1.06% at December 31, 2025, primarily due to the repricing of higher-cost time deposits and a favorable shift in deposit mix. Noninterest-bearing deposits remained approximately 31% of total deposits, supporting a stable and low-cost funding base.

​

​

65

Table of Contents

In addition to deposits, we used other liquidity sources for our funding needs in all periods presented, such as repurchase agreements and other short-term borrowings with the FHLBC. Our borrowings at the FHLBC require the Bank to be a member and invest in the stock of the FHLBC, and total borrowings are generally limited to the lower of 35% of total assets or the book value of eligible pledged assets after application of FHLBC margins and collateral valuation adjustments. Securities sold under repurchase agreements totaled $29.9 million at September 30, 2026, a $6.1 million, or 25.8% increase from $23.8 million at December 31, 2025, and an increase of $5.6 million, or 23.1%, from September 30, 2025. There were outstanding short-term FHLBC borrowings of $395.0 million as of September 30, 2026, compared to $215.0 million as of December 31, 2025, and $165.0 million as of September 30, 2025.

​

We are also indebted on $25.8 million of junior subordinated debentures, net of deferred issuance costs, as of September 30, 2026, which are related to the trust preferred securities issued by its statutory trust subsidiary, Old Second Capital Trust II (“Trust II”). The Trust II issuance converted from fixed to floating rate at three month LIBOR, which is now three month Term SOFR, plus 150 basis points beginning June 15, 2017. Upon conversion to a floating rate, we initiated a cash flow hedge which resulted in net year to date interest rate paid on this debt of 4.43% as of September 30, 2026, as compared to 6.77%, which was the rate paid during the period prior to the June 15, 2017, rate reset.

​

In the second quarter of 2021, we issued $60.0 million in aggregate principal amount of our 3.50% Fixed-to-Floating Rate Subordinated Notes due April 15, 2031 (the “Notes”) in a private offering. On April 15, 2026, we redeemed $30.0 million aggregate principal amount of the Notes, and the interest rate on the remaining Notes converted from a fixed rate of 3.50% to a floating rate that resets quarterly at three-month Term SOFR plus 273 basis points, payable quarterly in arrears. The remaining Notes mature on April 15, 2031, and are redeemable, in whole or in part, on any interest payment date, and at any time upon the occurrence of certain events. As of September 30, 2026, we had $29.8 million of subordinated debentures outstanding, net of deferred issuance costs. See Note 7. Borrowings for additional information.

​

Capital

​

As of September 30, 2026, total stockholders’ equity was $878.6 million, a decrease of $18.2 million from $896.8 million as of December 31, 2025. The decrease was primarily attributable to the increase in repurchase of treasury stock by $74.7 million during the first nine months of 2026 as well as an increase of $14.7 million in accumulated other comprehensive loss, and $10.9 million of dividends declared to our common stockholders, partially offset by net income of $82.7 million. During the first nine months of 2026, we repurchased 3,441,146 shares for $78.3 million under our stock repurchase program and withheld 70,207 shares with a value of $1.4 million to satisfy tax withholding obligations related to restricted stock unit vestings. These transactions were partially offset by the issuance of 172,366 shares related to restricted stock unit vestings, with a value of $3.2 million, and 87,631 shares related to performance-based restricted stock unit vestings, with a value of $1.8 million. Total stockholders’ equity also decreased as a result of a $14.7 million increase in unrealized net losses on available-for-sale securities and swaps, recorded within accumulated other comprehensive loss, driven by changes in market interest rates during the period. Total stockholders’ equity at September 30, 2026 increased $11.9 million compared to September 30, 2025, primarily due to the accumulation of earnings and partially offset by treasury stock repurchased since September 2025.

​

The following table shows the regulatory capital ratios and the current well capitalized regulatory requirements for the Company and the Bank as of the dates indicated:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Minimum Capital

​

Well Capitalized

​

​

​

​

​

​

​

​

​

​

​

Adequacy with

​

Under Prompt

​

​

​

​

​

​

​

​

​

​

​

Capital Conservation

​

​

Corrective Action

​

September 30, 

​

December 31, 

​

September 30, 

​

​

Buffer, if applicable1

​

Provisions2

​

2026

​

2025

​

2025

The Company

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common equity tier 1 capital ratio

​

7.00

%

​

N/A

​

​

13.13

%

​

12.99

%

​

12.44

%

Total risk-based capital ratio

​

10.50

​

​

N/A

​

​

15.05

​

​

15.46

​

​

15.10

​

Tier 1 risk-based capital ratio

​

8.50

​

​

N/A

​

​

13.56

​

​

13.41

​

​

12.85

​

Tier 1 leverage ratio

​

4.00

​

​

N/A

​

​

11.99

​

​

11.70

​

​

11.21

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

The Bank

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common equity tier 1 capital ratio

​

7.00

%

​

6.50

%

​

13.63

%

​

13.17

%

​

13.14

%

Total risk-based capital ratio

​

10.50

​

​

10.00

​

​

14.61

​

​

14.22

​

​

14.39

​

Tier 1 risk-based capital ratio

​

8.50

​

​

8.00

​

​

13.63

​

​

13.17

​

​

13.14

​

Tier 1 leverage ratio

​

4.00

​

​

5.00

​

​

12.05

​

​

11.49

​

​

11.45

​

​

1 Amounts are shown inclusive of a capital conservation buffer of 2.50%.

2 The prompt corrective action provisions are only applicable at the Bank level.

​

N/A - Not applicable

​

66

Table of Contents

​

As of September 30, 2026, the Bank exceeded the minimum capital ratios to be deemed “well capitalized” and met the capital conservation buffer requirements. In addition to the above regulatory ratios, our GAAP common equity to total assets ratio, which is used as a performance measure for capital analysis and peer comparisons, decreased from 12.99% at December 31, 2025, to 12.96% at September 30, 2026. Our GAAP tangible common equity to tangible assets ratio was 11.00% at September 30, 2026, compared to 11.02% as of December 31, 2025.

​

​

Liquidity

​

Liquidity is our ability to fund operations, to meet depositor withdrawals, to provide for customers’ credit needs, and to meet maturing obligations and existing commitments. Our liquidity principally depends on our cash flows from operating activities, investment in and maturity of assets, changes in balances of deposits and borrowings, and our ability to borrow funds. Through the third quarter of 2026, we experienced a decrease in loans and deposits. We managed the change in our funding through an increase in average borrowings from the FHLBC through September 30, 2026, compared to the prior year end. We seek to ensure our funding needs are met by maintaining a level of liquidity through asset and liability management. We monitor our borrowing capacity at the FHLBC as part of our liquidity management process as supervised by our Asset and Liability Committee (“ALCO”) and reviewed by our Board of Directors. In addition, our senior management team monitors cash balances daily to ensure we have adequate liquidity to meet our operational and financing needs. As of September 30, 2026, our cash on hand liquidity totaled $108.1 million, a decrease of $15.9 million from cash balances held as of December 31, 2025.

​

Net cash inflows from operating activities were $130.4 million during the first nine months of 2026, compared with net cash inflows of $78.0 million in the same period of 2025.  Funds used to originate loans held-for-sale, net of proceeds from sales of loans held-for-sale, resulted in inflows for the first nine months of 2026, and were a source of inflows in the like period of 2025. Interest paid, net of interest received, combined with changes in other assets and liabilities were a source of inflows for the nine months ended September 30, 2026 and 2025. The management of investing and financing activities, as well as market conditions, determines the level and the stability of net interest cash flows. Management’s policy is to mitigate the impact of changes in market interest rates to the extent possible, as part of the balance sheet management process.

​

Net cash inflows from investing activities were $61.6 million in the nine months ended September 30, 2026, compared to net cash inflows of $78.4 million in the same period in 2025. The Bancorp Financial acquisition in July 2025 resulted in net cash inflows of $10.5 million for the nine months ended September 30, 2025. In the first nine months of 2026, securities transactions accounted for net inflows of $88.5 million, and the principal change on loans accounted for net outflows of $17.9 million. In the first nine months of 2025, securities transactions accounted for net inflows of $142.8 million, and principal on loans funded, net of paydowns, accounted for net outflows of $85.4 million.

​

Net cash outflows from financing activities in the nine months ended September 30, 2026, were $207.8 million, compared with net cash outflows of $139.2 million in the nine months ended September 30, 2025. Net deposit outflows in the first nine months of 2026 were $268.4 million compared to net deposit outflows of $240.4 million in the first nine months of 2025. Other short-term borrowings had $180.0 million of net cash inflows in the first nine months of 2026, compared to net cash inflows of $129.5 million for other short-term borrowings in the first nine months of 2025. Changes in securities sold under repurchase agreements accounted for inflows of $6.1 million and outflows of $12.4 million for the nine months ended September 30, 2026 and 2025, respectively. A partial redemption of subordinated debentures resulted in $30.0 million of net cash outflows for the nine months ended September 30, 2026. Dividends paid on our common stock totaled $10.9 million for the nine months ended September 30, 2026, and $8.6 million for the nine months ended September 30, 2025. The purchase of treasury stock in the first nine months of 2026 due to shares acquired with equity award vestings as well as share repurchases resulted in outflows of $79.7 million, compared to cash outflows of $7.4 million in the first nine months of 2025 related to shares acquired from equity award vestings as well as share repurchases.

​

67

Table of Contents

Cash and cash equivalents for the nine months ended as of September 30, 2026 totaled $108.1 million, as compared to $124.0 million as of December 31, 2025, and $116.5 million as of September 30, 2025. The decrease in cash and cash equivalents for the nine months ended September 30, 2026, as compared to the prior year end, was primarily attributable to decreases in deposits as well as share repurchases, partially offset by the maturities, calls, and paydowns of securities available-for-sale as well as the utilization of short-term borrowings through FHLBC advances. In addition to cash and cash equivalents on hand or held as deposits with other financial institutions, we rely on funding sources from customer deposits, cash flows from securities available-for-sale and loans, and a line of credit with the FHLBC to meet potential liquidity needs. These sources of liquidity are immediately available to satisfy any funding requirements due to depositor or borrower demands through the ordinary course of our business. Additional sources of funding available include a $30.0 million undrawn line of credit held by the Company with a third-party financial institution, as well as unpledged securities available-for-sale.

​

​

​

​

Item 3. Quantitative and Qualitative Disclosures about Market Risk

​

Interest Rate Risk

​

We are subject to interest rate risk arising from changes in rates affecting assets (loans and securities), liabilities (deposits and borrowings), and off-balance sheet derivative instruments (interest rate swaps). Changes in interest rates may materially affect the fair value of financial instruments, cash flows, and net interest income. Like most financial institutions, we are exposed to changes in both short- and long-term interest rates.

​

We manage interest rate risk within limits established by our asset-liability policy to reduce the impact of interest rate changes on earnings. We are exposed to credit, liquidity, and interest rate risk, but are not subject to significant foreign currency or commodity price risk. Our Asset and Liability Committee (“ALCO”) manages interest rate risk by structuring on- and off-balance sheet positions, including the use of interest rate swaps, as discussed in Note 18 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. The ALCO reviews asset-liability modeling and interest rate risk analyses and reports to the Board of Directors at least quarterly. We also maintain a Risk Committee, chaired by our Chief Risk Officer, which reports at least quarterly to senior management and the Board of Directors on compliance with established risk tolerance limits and significant changes in risk exposures. The Risk Committee oversees our enterprise risk management framework. Our interest rate risk exposures at September 30, 2026, and December 31, 2025, are summarized in the table below.

​

As of September 30, 2026, the balance sheet remained moderately asset-sensitive, as variable-rate assets generally reprice more quickly than our longer-duration, lower-beta deposit base. Changes in interest rates and yield curve dynamics may affect net interest income, funding costs, and the value of interest-sensitive financial instruments. The Bank continues to monitor its liquidity position, as discussed under “Liquidity”, above.

​

The Federal Open Market Committee raised the federal funds target range by 25 basis points to 3.75% to 4.00% at its September 2026 meeting. Forward market rates increased during the quarter, while the yield curve steepened modestly as longer-term rates rose relative to shorter-term rates, reflecting evolving market expectations for future monetary policy. As of September 30, 2026, the forward curve implied one additional 25 basis point increase in December 2026. Changes in the shape of the yield curve may affect asset yields, funding costs, and net interest income differently than the parallel rate shock assumptions used in our interest rate risk modeling.

​

Net interest income is influenced by economic conditions, regulatory actions, asset and liability repricing characteristics, customer behavior, competitive pricing pressures, yield curve dynamics, basis risk between indices such as SOFR and Prime, and changes in balance sheet composition.

​

We utilize simulation analysis to estimate the impact of interest rate scenarios on net interest income. The model incorporates expected cash flows, repricing characteristics, and embedded options within assets and liabilities. Earnings at risk are calculated by comparing net interest income under a stable-rate scenario to net interest income under alternative rate scenarios.

​

As of September 30, 2026, our net interest income profile remained moderately asset-sensitive and positioned to benefit from rising interest rates. Compared to December 31, 2025, modeled earnings sensitivity increased modestly across rising-rate scenarios, primarily due to higher levels of interest-earning cash and other short-duration assets resulting from principal repayments, maturities, calls, prepayments, and amortization. Consistent with this balance sheet position, modeled net interest income is expected to increase under rising-rate scenarios and decrease under declining-rate scenarios, as reflected in the sensitivity analysis below. Actual results may differ due to customer behavior, deposit repricing, prepayment activity, changes in balance sheet composition, and market conditions.

​

​

68

Table of Contents

​

The following analysis assumes an instantaneous and parallel shift in interest rates of 0.5%, 1.0%, and 2.0% and does not reflect potential changes in customer behavior, balance sheet composition, or management actions that may occur in response to changing market conditions.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Analysis of Net Interest Income Sensitivity

​

​

Immediate Changes in Rates

(Dollars in thousands)

​

  ​ ​ ​

(2.0)

%

​

  ​ ​ ​

(1.0)

%

  ​ ​ ​

  ​

(0.5)

%

  ​ ​ ​

  ​

0.5

%

  ​ ​ ​

  ​

1.0

%

  ​ ​ ​

  ​

2.0

%

September 30, 2026

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Dollar change

​

$

(38,247)

​

​

$

(19,250)

​

​

$

(9,595)

​

​

$

9,249

​

​

$

18,552

​

​

$

33,742

​

Percent change

​

​

(11.0)

%

​

​

(5.5)

%

​

​

(2.7)

%

​

​

2.6

%

​

​

5.3

%

​

​

9.7

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Dollar change

​

$

(35,505)

​

​

$

(18,190)

​

​

$

(9,026)

​

​

$

8,817

​

​

$

17,732

​

​

$

31,490

​

Percent change

​

​

(10.6)

%

​

​

(5.4)

%

​

​

(2.7)

%

​

​

2.6

%

​

​

5.3

%

​

​

9.4

%

​

The amounts and assumptions used in the simulation model are not intended to be indicative of actual future results. Actual results may differ materially from simulated outcomes due to differences in the timing, frequency, and magnitude of interest rate changes, changes in balance sheet composition, evolving market conditions, and management actions taken in response to those conditions. Interest rate sensitivity estimates also incorporate assumptions regarding deposit repricing characteristics and customer behavior that may differ from actual experience, particularly in changing competitive and interest rate environments. In addition, the simulated results do not reflect the impact of any potential management actions that could be implemented to mitigate interest rate risk.

​

Effects of Inflation

​

In management’s opinion, changes in interest rates have a greater impact on our financial condition than inflation; however, we monitor both. The annual U.S. inflation rate increased to 3.7% in September 2026, compared to 3.5% in June 2026, while core CPI remained unchanged at 2.6%. Recent inflation trends have been influenced by volatility in energy prices and broader geopolitical developments. Elevated inflation may contribute to higher funding costs, increased operating expenses, changes in customer borrowing behavior, and pressure on the financial condition of certain borrowers. Inflation at current levels has not had a material adverse impact on our consolidated financial condition or results of operations.

​

Item 4. Controls and Procedures

​

Evaluation of Disclosure Controls and Procedures

​

The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2026. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2026, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

​

There were no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

​

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

​

69

Table of Contents

PART II - OTHER INFORMATION

​

Item 1. Legal Proceedings

​

The Company and its subsidiaries, from time to time, are involved in collection suits in the ordinary course of business against its debtors and are defendants in legal actions arising from normal business activities. Management, after consultation with legal counsel, believes that the ultimate liabilities, if any, resulting from these actions will not have a material adverse effect on the financial position of the Bank or on the consolidated financial position of the Company.

​

Item 1A. Risk Factors

​

Investing in shares of our common stock involves certain risks, including those identified and described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as well as cautionary statements contained in this Quarterly Report on Form 10-Q, including those under the caption “Cautionary Note Regarding Forward-Looking Statements.”

​

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

​

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

​

(a) Sales of Unregistered Securities – None

(b) Use of Proceeds – Not applicable

(c) Issuer Purchases of Securities:

​

Stock Repurchases

​

In January 2026, our board of directors authorized the repurchase of up to 1,908,042 shares of our common stock for an aggregate amount not to exceed $43.9 million through December 31, 2026 (the “2026 Repurchase Program”). The Company received notice of non-objection from the Federal Reserve Bank of Chicago in January 2026. Repurchases could be made through open market purchases, trading plans established in accordance with SEC rules, privately negotiated transactions or other means. We completed the 2026 Repurchase Program in May 2026, and no shares remain available for repurchase under the program.

​

In June 2026, our board of directors authorized the repurchase of up to 2,546,674 shares of our common stock for an aggregate amount not to exceed $61.2 million through June 30, 2027 (the “2026-2027 Repurchase Program”). The Company received notice of non-objection from the Federal Reserve Bank of Chicago in June 2026. Repurchases may be made through open market purchases, trading plans established in accordance with SEC rules, privately negotiated transactions or other means.

​

The actual means and timing of any repurchases, quantity of purchased shares and prices will be, subject to certain limitations, at the discretion of management and will depend on a number of factors, including, without limitation, market prices of our common stock, general market and economic conditions, and applicable legal and regulatory requirements. Repurchases under the 2026-2027 Repurchase Program may be initiated, discontinued, suspended or restarted at any time provided that repurchases under the 2026-2027 Repurchase Program, after June 30, 2027, would require Federal Reserve non-objection or approval. We are not obligated to repurchase any shares under the 2026-2027 Repurchase Program.

​

​

70

Table of Contents

​

During the third quarter of 2026, the Company repurchased 1,533,104 shares at an average price of $25.76 per share for a total reduction to capital of $39.5 million, including excise taxes, as these shares are held in treasury stock.

​

The following table presents our stock repurchases for the quarter ended September 30, 2026:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Number of

​

Maximum Number

​

​

Total

​

​

​

​

Shares Purchased

​

of Shares that May

​

​

Number of

​

​

Average

​

as Part of Publicly

​

Yet Be

​

​

Shares

​

​

Price Paid

​

Announced Plans

​

Purchased Under

​

​

Purchased (a)

​

​

per Share (b)

​

or Programs (c)1

​

the Plans or Programs (d)

July 1, 2026 - July 31, 2026

​

-

​

$

-

​

-

​

2,546,674

August 1, 2026 - August 31, 2026

​

1,064,709

​

​

25.78

​

1,064,709

​

1,481,965

September 1, 2026 - September 30, 2026

​

468,395

​

​

25.73

​

468,395

​

1,013,570

Total

​

1,533,104

​

$

25.76

​

1,533,104

​

1,013,570

​

​

​

​

​

​

​

​

​

​

​

1 We announced the 2026 Repurchase Program in a Current Report on Form 8-K filed on January 29, 2026. Although the program was scheduled to expire on December 31, 2026, no shares remained available for repurchase as of June 30, 2026. We announced the new 2026-2027 Repurchase Program in a Current Report on Form 8-K filed on June 25, 2026. The new program expires on June 30, 2027, and 2,546,674 shares became available for repurchase beginning July 27, 2026.

​

Item 3. Defaults Upon Senior Securities

​

None.

​

Item 4. Mine Safety Disclosures

​

Not applicable.

​

Item 5. Other Information

​

Trading Plans

​

During the quarter ended September 30, 2026, none of the Company’s directors or officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is defined in Item 408(a) of Regulation S-K.

​

​

71

Table of Contents

Item 6. Exhibits

​

Exhibits:

​

​

​

​

10.1

Separation and General Release Agreement, dated as of October 17, 2026, by and between Old Second Bancorp, Inc. and Gary Collins.*

​

​

31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).

​

​

31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).

​

​

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

​

​

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

​

​

101

Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets at September 30, 2026, and December 31, 2025; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2026 and 2025; (iii) Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2026 and 2025; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025; (v) Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.

​

​

104

Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).

​

​

​

​

​

​

​

* Management contract or compensatory plan or agreement.

​

​

72

Table of Contents

SIGNATURES

​

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 thereunto duly authorized.

​

​

​

​

​

​

OLD SECOND BANCORP, INC.

​

​

​

​

​

BY:

/s/ James L. Eccher

​

​

James L. Eccher

​

​

Chairman, President and Chief Executive Officer

​

​

(principal executive officer)

​

​

​

​

​

BY:

/s/ Bradley S. Adams

​

​

Bradley S. Adams

​

​

Executive Vice President,

Chief Operating Officer and Chief Financial Officer

​

​

(principal financial and accounting officer)

​

​

​

​

DATE: November 4, 2026

​

​

73

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