OLD SECOND BANCORP INC Debt Disclosure

Note 9: Borrowings

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The following table is a summary of borrowings as of December 31, 2025:

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¹ See Note 10: Junior Subordinated Debentures

² Long-term FHLBC advance, net of purchase accounting adjustment

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The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities.  These transactions consistently mature within 1 to 90 days from the transaction date and are governed by sweep repurchase agreements.  All sweep repurchase agreements are treated as financings secured by U.S. government agencies, collateralized mortgage obligations, mortgage-backed securities and/or highly-rated issues of State and political subdivisions, and had a carrying amount of $23.8 million and $36.7 million at December 31, 2025 and 2024, respectively.  The average amount and weighted average rate for the year ended December 31, 2025, was $31.7 million and 0.72% with the maximum month-end amount recorded at $47.3 million at June 30, 2025. The average amount and weighted average rate for the year ended December 31, 2024, was $38.2 million and 0.88% with the maximum month-end amount recorded at $53.9 million at September 30, 2024. The fair value of the pledged collateral was $74.0 million and $73.6 million at December 31, 2025, and December 31, 2024, respectively.  At December 31, 2025, there were no customers with secured balances exceeding 10% of stockholders’ equity.

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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. As of December 31, 2025, the Bank had $215.0 million in short-term advances outstanding under the FHLBC. There were $20.0 million in short-term advances as of December 31, 2024. In addition, the Company had assumed $14.8 million in long-term borrowings due to the acquisition of Bancorp Financial. FHLBC stock held at December 31, 2025, was valued at $11.3 million, and any potential FHLBC advances were collateralized by loans and securities with a principal balance of $1.50 billion, which carried a FHLBC-calculated combined value of $987.5 million. As of December 31, 2024, FHLBC stock owned by the Bank was valued at $4.5 million and the principal balance of loans and securities pledged was $1.41 billion.  Based on the total amount of loans and securities pledged, the Bank had a total borrowing capacity at the FHLBC of $987.5 million and a remaining funding availability of $756.2 million on December 31, 2025.

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In the second quarter of 2021, we entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers pursuant to which we sold and issued $60.0 million in aggregate principal amount of our 3.50% Fixed-to-Floating Rate Subordinated Notes due April 15, 2031 (the “Notes”).  We sold the Notes to eligible purchasers in a private offering, and the proceeds of this issuance are intended to be used for general corporate purposes, which may include, without limitation, the redemption of existing senior debt, common stock repurchases and strategic acquisitions.  The Notes bear interest at a fixed annual rate of 3.50% through April 14, 2026, payable semi-annually in arrears.  As of April 15, 2026, forward, the interest rate on the Notes will generally reset quarterly to a rate equal to Three-Month Term SOFR (as defined by the Note) plus 273 basis points, payable quarterly in arrears.  The Notes have a stated maturity of April 15, 2031, and are redeemable, in whole are in part, on April 15, 2026, or any interest payment date thereafter, and at any time upon the occurrence of certain events.  The subordinated debentures outstanding, net of deferred issuance costs, totaled $59.6 million and $59.5 million as of December 31, 2025 and 2024, respectively.

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The Company 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.  This line of credit has not been utilized since early 2019.

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Scheduled maturities and weighted average rates of borrowings for the years ended December 31, were as follows:

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