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Regulatory & Capital Matters

9 Months Ended

Sep. 30, 2025

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, 2025, the Bank exceeded those thresholds.

At September 30, 2025, the Bank’s Tier 1 capital leverage ratio was 11.45%, an increase of 55 basis points from December 31, 2024, and is above the 8.00% Board of Directors’ guideline. The Bank’s total capital ratio was 14.39%, an increase of 57 basis points from December 31, 2024, 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, 2025, and December 31, 2024.

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, 2024, under the heading “Supervision and Regulation.”

At September 30, 2025, and December 31, 2024, the Company, on a consolidated basis, exceeded the minimum thresholds to be considered “well capitalized” under current regulatory defined capital ratios.

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, 2025
Common equity tier 1 capital to risk weighted assets
Consolidated	$	746,583	12.44	%	$	420,103	7.00	%		N/A	N/A
Old Second National Bank		787,478	13.14			419,509	7.00		$	389,544	6.50	%
Total capital to risk weighted assets
Consolidated		906,617	15.10			630,429	10.50			N/A	N/A
Old Second National Bank		862,376	14.39			629,253	10.50			599,288	10.00
Tier 1 capital to risk weighted assets
Consolidated		771,583	12.85			510,386	8.50			N/A	N/A
Old Second National Bank		787,478	13.14			509,404	8.50			479,439	8.00
Tier 1 capital to average assets
Consolidated		771,583	11.21			275,320	4.00			N/A	N/A
Old Second National Bank		787,478	11.45			275,101	4.00			343,877	5.00

December 31, 2024
Common equity tier 1 capital to risk weighted assets
Consolidated	$	607,294	12.82	%	$	331,596	7.00	%		N/A	N/A
Old Second National Bank		610,285	12.89			331,419	7.00		$	307,747	6.50	%
Total capital to risk weighted assets
Consolidated		736,492	15.54			497,630	10.50			N/A	N/A
Old Second National Bank		654,484	13.82			497,256	10.50			473,577	10.00
Tier 1 capital to risk weighted assets
Consolidated		632,294	13.34			402,886	8.50			N/A	N/A
Old Second National Bank		610,285	12.89			402,438	8.50			378,765	8.00
Tier 1 capital to average assets
Consolidated		632,294	11.30			223,821	4.00			N/A	N/A
Old Second National Bank		610,285	10.90			223,958	4.00			279,947	5.00

¹Amounts 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.”

In connection with our adoption of CECL on January 1, 2020, we elected to utilize the five-year CECL transition. As of January 1, 2025, the five-year CECL transition was complete. As of September 30, 2025, the above capital measures of the Company do not include a modified CECL transition adjustment.

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, 2025, the Bank had capacity to pay dividends of $96.6 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.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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