EX-99.1 2 tmb-20250122xex99d1.htm EX-99.1

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(NASDAQ:OSBC) | Exhibit 99.1
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Contact: | Bradley S. Adams | For Immediate Release
​ | Chief Financial Officer | January 22, 2025
​ | (630) 906-5484 | ​

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Old Second Bancorp, Inc. Reports Fourth Quarter 2024 Net Income of $19.1 Million,

or $0.42 per Diluted Share

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AURORA, IL, January 22, 2025 – Old Second Bancorp, Inc. (the “Company,” “Old Second,” “we,” “us,” and “our”) (NASDAQ: OSBC), the parent company of Old Second National Bank (the “Bank”), today announced financial results for the fourth quarter of 2024. Our net income was $19.1 million, or $0.42 per diluted share, for the fourth quarter of 2024, compared to net income of $23.0 million, or $0.50 per diluted share, for the third quarter of 2024, and net income of $18.2 million, or $0.40 per diluted share, for the fourth quarter of 2023. Adjusted net income, a non-GAAP financial measure that excludes certain nonrecurring items, as applicable, was $20.3 million, or $0.44 per diluted share, for the fourth quarter of 2024, compared to $23.3 million, or $0.51 per diluted share, for the third quarter of 2024, and $19.1 million, or $0.42 per diluted share, for the fourth quarter of 2023. The adjusting item impacting the fourth quarter of 2024 included $1.5 million of transaction-related expenses due to the early December 2024 purchase of five branches from First Merchants Bank (“FRME”). The adjusting items impacting the third quarter of 2024 included $471,000 of FRME transaction-related expenses; the adjusting items impacting the fourth quarter of 2023 results included $1.2 million of nonrecurring litigation expense. See the discussion entitled “Non-GAAP Presentations” below and the tables beginning on page 17 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

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Net income decreased $3.8 million in the fourth quarter of 2024 compared to the third quarter of 2024. The decrease was primarily due to a $1.5 million increase in provision for credit losses, as well as a $5.0 million increase in noninterest expense in the fourth quarter of 2024, compared to the prior linked quarter. These reductions to the current quarter’s net income were partially offset by a $1.0 million increase in net interest and dividend income and a $1.0 million increase in noninterest income. Net income increased $885,000 in the fourth quarter of 2024 compared to the fourth quarter of 2023, primarily due to a decrease of $4.5 million in provision for credit losses, an increase in noninterest income of $2.9 million, and an increase in net interest income of $349,000. The year over year fourth quarter increase is partially offset by a $7.3 million increase in noninterest expenses.

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Operating Results

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| ● | Fourth quarter 2024 net income was $19.1 million, reflecting a $3.8 million decrease from the third quarter of 2024, and an increase of $885,000 from the fourth quarter of 2023. Adjusted net income, as defined above, was $20.3 million for the fourth quarter of 2024, a decrease of $3.0 million from adjusted net income for the third quarter of 2024, and an increase of $1.2 million from adjusted net income for the fourth quarter of 2023.

| ● | Net interest and dividend income was $61.6 million for the fourth quarter of 2024, reflecting an increase of $1.0 million, or 1.7%, from the third quarter of 2024, and an increase of $349,000, or 0.6%, from the fourth quarter of 2023.

| ● | We recorded a net provision for credit losses of $3.5 million in the fourth quarter of 2024 compared to a net provision for credit losses of $2.0 million in the third quarter of 2024, and a net provision for credit losses of $8.0 million in the fourth quarter of 2023.

| ● | Noninterest i ncome was $11.6 million for the fourth quarter of 2024, an increase of $1.0 million, or 9.7%, compared to $10.6 million for the third quarter of 2024, and an increase of $2.9 million, or 33.0%, compared to $8.7 million for the fourth quarter of 2023.

| ● | Noninterest expense was $44.3 million for the fourth quarter of 2024, an increase of $5.0 million, or 12.8%, compared to $39.3 million for the third quarter of 2024, and an increase of $7.3 million, or 19.7%, compared to $37.0 million for the fourth quarter of 2023.

1

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| ● | We had a provision for income tax of $6.3 million for the fourth quarter of 2024, compared to a provision for income tax of $6.9 million for the third quarter of 2024 and a provision for income tax of $6.7 million for the fourth quarter of 2023. The effective tax rate for each of the periods presented was 24.7%, 23.1%, and 26.9%, respectively. The reduction in the effective tax rate in the third and fourth quarters of 2024, compared to the fourth quarter of 2023, reflects the new state ruling regarding tax rate apportionment factors related to income generated from securities or loans originated in other states.

| ● | On January 21, 2025, our Board of Directors declared a cash dividend of $0.06 per share of common stock, payable on February 10, 2025, to stockholders of record as of January 31, 2025.

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Financial Highlights

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Quarters Ended | ​
(Dollars in thousands) | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ | ​ | 2024 | ​ | 2024 | ​ | 2023 | ​
Balance sheet summary | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total assets | ​ | $ | 5,649,377 | ​ | $ | 5,671,760 | ​ | $ | 5,722,799 | ​
Total securities available-for-sale | ​ | ​ | 1,161,701 | ​ | ​ | 1,190,854 | ​ | ​ | 1,192,829 | ​
Total loans | ​ | ​ | 3,981,336 | ​ | ​ | 3,991,078 | ​ | ​ | 4,042,953 | ​
Total deposits | ​ | ​ | 4,768,731 | ​ | ​ | 4,465,424 | ​ | ​ | 4,570,746 | ​
Total liabilities | ​ | ​ | 4,978,343 | ​ | ​ | 5,010,370 | ​ | ​ | 5,145,518 | ​
Total equity | ​ | ​ | 671,034 | ​ | ​ | 661,390 | ​ | ​ | 577,281 | ​
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Total tangible assets | ​ | $ | 5,534,086 | ​ | $ | 5,575,789 | ​ | $ | 5,625,104 | ​
Total tangible equity | ​ | ​ | 555,743 | ​ | ​ | 565,419 | ​ | ​ | 479,586 | ​
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Income statement summary | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net interest income | ​ | $ | 61,584 | ​ | $ | 60,578 | ​ | $ | 61,235 | ​
Provision for credit losses | ​ | ​ | 3,500 | ​ | ​ | 2,000 | ​ | ​ | 8,000 | ​
Noninterest income | ​ | ​ | 11,610 | ​ | ​ | 10,581 | ​ | ​ | 8,729 | ​
Noninterest expense | ​ | ​ | 44,322 | ​ | ​ | 39,308 | ​ | ​ | 37,026 | ​
Net income | ​ | ​ | 19,110 | ​ | ​ | 22,951 | ​ | ​ | 18,225 | ​
Effective tax rate | ​ | ​ | 24.68 | % | ​ | 23.11 | % | ​ | 26.92 | %
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Profitability ratios | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Return on average assets (ROAA) | ​ | ​ | 1.34 | % | ​ | 1.63 | % | ​ | 1.27 | %
Return on average equity (ROAE) | ​ | ​ | 11.38 | ​ | ​ | 14.29 | ​ | ​ | 13.18 | ​
Net interest margin (tax-equivalent) | ​ | ​ | 4.68 | ​ | ​ | 4.64 | ​ | ​ | 4.62 | ​
Efficiency ratio | ​ | ​ | 57.12 | ​ | ​ | 53.38 | ​ | ​ | 50.82 | ​
Return on average tangible common equity (ROATCE) 1 | ​ | ​ | 13.79 | ​ | ​ | 17.14 | ​ | ​ | 16.43 | ​
Tangible common equity to tangible assets (TCE/TA) | ​ | ​ | 10.04 | ​ | ​ | 10.14 | ​ | ​ | 8.53 | ​
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Per share data | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Diluted earnings per share | ​ | $ | 0.42 | ​ | $ | 0.50 | ​ | $ | 0.40 | ​
Tangible book value per share | ​ | ​ | 12.38 | ​ | ​ | 12.61 | ​ | ​ | 10.73 | ​
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Company capital ratios 2 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital ratio | ​ | ​ | 12.82 | % | ​ | 12.86 | % | ​ | 11.37 | %
Tier 1 risk-based capital ratio | ​ | ​ | 13.34 | ​ | ​ | 13.39 | ​ | ​ | 11.89 | ​
Total risk-based capital ratio | ​ | ​ | 15.54 | ​ | ​ | 15.62 | ​ | ​ | 14.06 | ​
Tier 1 leverage ratio | ​ | ​ | 11.30 | ​ | ​ | 11.38 | ​ | ​ | 10.06 | ​
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Bank capital ratios 2, 3 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common equity tier 1 capital ratio | ​ | ​ | 12.89 | % | ​ | 13.49 | % | ​ | 12.32 | %
Tier 1 risk-based capital ratio | ​ | ​ | 12.89 | ​ | ​ | 13.49 | ​ | ​ | 12.32 | ​
Total risk-based capital ratio | ​ | ​ | 13.82 | ​ | ​ | 14.45 | ​ | ​ | 13.24 | ​
Tier 1 leverage ratio | ​ | ​ | 10.90 | ​ | ​ | 11.46 | ​ | ​ | 10.41 | ​

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1 See the discussion entitled “Non-GAAP Presentations” below and the table on page 18 that provides a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent.

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2 Both the Company and the Bank ratios are inclusive of a capital conservation buffer of 2.50%, and both are subject to the minimum capital adequacy guidelines of 7.00%, 8.50%, 10.50%, and 4.00% for the Common equity tier 1, Tier 1 risk-based, Total risk-based and Tier 1 leverage ratios, respectively.

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3 The prompt corrective action provisions are applicable only at the Bank level, and are 6.50%, 8.00%, 10.00%, and 5.00% for the Common equity tier 1, Tier 1 risk-based, Total risk-based and Tier 1 leverage ratios, respectively.

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Chairman, President and Chief Executive Officer Jim Eccher said “Old Second reported strong results in the fourth quarter of 2024 with exceptional profitability and positive trends in a number of verticals. Tangible book value per share increased by more than fifteen percent on a year over year basis inclusive of the dilution associated with a branch purchase transaction in the fourth quarter. We believe we are being proactive in addressing commercial loans facing deterioration from higher interest rates, declining appraisal values and cash flow pressures. Importantly, classified and criticized loans have declined meaningfully both year over year and linked quarter and are now at their lowest levels since June 2022. We have seen previously identified loans work toward resolution and the pace of upgrades relative to downgrades has improved dramatically. Losses realized in the fourth quarter in both the loan portfolio and in OREO write downs drive the expectation of further meaningful reduction in nonperforming assets early in 2025. Exceptional profitability has afforded Old Second the opportunity to aggressively address problem acquired credits and position us to deliver improved performance in 2025. Fourth quarter return on average assets and return on average tangible common equity were 1.34% and 13.79%, respectively, the tax equivalent net interest margin was stable at 4.68% and the efficiency ratio is a very healthy 57.12%. This strong bottom-line performance and a well-positioned balance sheet drove an increase in the tangible common equity capital ratio to 10.04% from 8.53% last year end, in light of the strength of the balance sheet and resilient income statement and margin trends. In summary, we are proud of the sustainability of our performance this year and believe we are well positioned to capitalize on growth opportunities that we believe will come our way in the near future.”

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Asset Quality & Earning Assets

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| ● | Nonperforming loans, comprised of nonaccrual loans plus loans past due 90 days or more and still accruing, totaled $30.3 million at December 31, 2024, $52.3 million at September 30, 2024, and $68.8 million at December 31, 2023. Nonperforming loans, as a percent of total loans, were 0.8% at December 31, 2024, 1.3% at September 30, 2024, and 1.7% at December 31, 2023. The decrease in the fourth quarter of 2024 for nonperforming loans is driven by net nonaccrual loans outflows of $23.3 million, partially offset by $1.3 million of net inflows of loans past due 90 days or more and still accruing. Nonaccrual loan outflows consist of $8.9 million paid off, largely driven by one commercial real estate – investor loan of $6.6 million, a $13.0 million commercial real estate – owner occupied relationship transferred to OREO, $8.3 million of partial principal reductions from payments, and $3.2 million of upgrades. The nonaccrual outflows were partially offset by additions of $10.0 million, primarily driven by one large commercial real estate – owner occupied relationship.

| ● | Total loans were $3.98 billion at December 31, 2024, reflecting a decrease of $9.7 million compared to September 30, 2024, and a decrease of $61.6 million compared to December 31, 2023. The decrease year over year was largely driven by the declines in commercial, commercial real estate-owner occupied and multifamily portfolios. Average loans (including loans held-for-sale) for the fourth quarter of 2024 totaled $4.00 billion, reflecting an increase of $36.3 million from the third quarter of 2024, and a decrease of $13.4 million from the fourth quarter of 2023.

| ● | Available-for-sale securities totaled $1.16 billion at December 31, 2024, compared to $1.19 billion at September 30, 2024 and December 31, 2023. The unrealized mark to market loss on securities totaled $68.6 million as of December 31, 2024, compared to $56.2 million as of September 30, 2024, and $84.2 million as of December 31, 2023, due to market interest rate fluctuations as well as changes year over year in the composition of the securities portfolio. During the quarter ended December 31, 2024, we had security purchases of $84.9 million, and security maturities, calls and paydowns of $101.2 million, compared to security purchases of $22.7 million and security calls and paydowns of $31.3 million during the quarter ended September 30, 2024. During the quarter ended December 31, 2023, we had security purchases of $9.2 million and $81.6 million of maturities, calls, and paydowns, which resulted in net realized losses of $2,000. We may continue to buy and sell strategically identified securities as opportunities arise.

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3

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Net Interest Income

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Analysis of Average Balances,
Tax Equivalent Income / Expense and Rates
(Dollars in thousands - unaudited)
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​ | ​ | Quarters Ended
​ | ​ | December 31, 2024 | ​ | September 30, 2024 | ​ | December 31, 2023
​ | ​ | Average | ​ | Income / | ​ | Rate | ​ | Average | ​ | Income / | ​ | Rate | ​ | Average | ​ | Income / | ​ | Rate
​ | ​ | Balance | ​ | Expense | ​ | % | ​ | Balance | ​ | Expense | ​ | % | ​ | Balance | ​ | Expense | ​ | %
Assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest earning deposits with financial institutions | ​ | $ | 49,757 | ​ | $ | 542 | ​ | 4.33 | ​ | $ | 48,227 | ​ | $ | 616 | ​ | 5.08 | ​ | $ | 47,865 | ​ | $ | 616 | ​ | 5.11
Securities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Taxable | ​ | ​ | 1,017,530 | ​ | ​ | 8,899 | ​ | 3.48 | ​ | ​ | 1,010,379 | ​ | ​ | 9,113 | ​ | 3.59 | ​ | ​ | 1,027,366 | ​ | ​ | 8,329 | ​ | 3.22
Non-taxable (TE)1 | ​ | ​ | 162,494 | ​ | ​ | 1,614 | ​ | 3.95 | ​ | ​ | 163,569 | ​ | ​ | 1,634 | ​ | 3.97 | ​ | ​ | 164,655 | ​ | ​ | 1,674 | ​ | 4.03
Total securities (TE)1 | ​ | ​ | 1,180,024 | ​ | ​ | 10,513 | ​ | 3.54 | ​ | ​ | 1,173,948 | ​ | ​ | 10,747 | ​ | 3.64 | ​ | ​ | 1,192,021 | ​ | ​ | 10,003 | ​ | 3.33
FHLBC and FRBC Stock | ​ | ​ | 27,493 | ​ | ​ | 562 | ​ | 8.13 | ​ | ​ | 30,268 | ​ | ​ | 497 | ​ | 6.53 | ​ | ​ | 34,371 | ​ | ​ | 647 | ​ | 7.47
Loans and loans held-for-sale1, 2 | ​ | ​ | 4,003,041 | ​ | ​ | 64,012 | ​ | 6.36 | ​ | ​ | 3,966,717 | ​ | ​ | 64,566 | ​ | 6.48 | ​ | ​ | 4,016,480 | ​ | ​ | 62,793 | ​ | 6.20
Total interest earning assets | ​ | ​ | 5,260,315 | ​ | ​ | 75,629 | ​ | 5.72 | ​ | ​ | 5,219,160 | ​ | ​ | 76,426 | ​ | 5.83 | ​ | ​ | 5,290,737 | ​ | ​ | 74,059 | ​ | 5.55
Cash and due from banks | ​ | ​ | 54,340 | ​ | ​ | - | ​ | - | ​ | ​ | 54,279 | ​ | ​ | - | ​ | - | ​ | ​ | 57,723 | ​ | ​ | - | ​ | -
Allowance for credit losses on loans | ​ | ​ | (45,040) | ​ | ​ | - | ​ | - | ​ | ​ | (42,683) | ​ | ​ | - | ​ | - | ​ | ​ | (50,023) | ​ | ​ | - | ​ | -
Other noninterest bearing assets | ​ | ​ | 395,043 | ​ | ​ | - | ​ | - | ​ | ​ | 384,386 | ​ | ​ | - | ​ | - | ​ | ​ | 396,297 | ​ | ​ | - | ​ | -
Total assets | ​ | $ | 5,664,658 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 5,615,142 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 5,694,734 | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities and Stockholders' Equity | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
NOW accounts | ​ | $ | 573,271 | ​ | $ | 644 | ​ | 0.45 | ​ | $ | 553,906 | ​ | $ | 714 | ​ | 0.51 | ​ | $ | 563,603 | ​ | $ | 595 | ​ | 0.42
Money market accounts | ​ | ​ | 722,491 | ​ | ​ | 3,128 | ​ | 1.72 | ​ | ​ | 693,315 | ​ | ​ | 3,260 | ​ | 1.87 | ​ | ​ | 692,720 | ​ | ​ | 2,200 | ​ | 1.26
Savings accounts | ​ | ​ | 899,846 | ​ | ​ | 880 | ​ | 0.39 | ​ | ​ | 895,086 | ​ | ​ | 886 | ​ | 0.39 | ​ | ​ | 985,614 | ​ | ​ | 517 | ​ | 0.21
Time deposits | ​ | ​ | 692,001 | ​ | ​ | 5,606 | ​ | 3.22 | ​ | ​ | 651,663 | ​ | ​ | 5,539 | ​ | 3.38 | ​ | ​ | 497,472 | ​ | ​ | 2,833 | ​ | 2.26
Interest bearing deposits | ​ | ​ | 2,887,609 | ​ | ​ | 10,258 | ​ | 1.41 | ​ | ​ | 2,793,970 | ​ | ​ | 10,399 | ​ | 1.48 | ​ | ​ | 2,739,409 | ​ | ​ | 6,145 | ​ | 0.89
Securities sold under repurchase agreements | ​ | ​ | 39,982 | ​ | ​ | 75 | ​ | 0.75 | ​ | ​ | 45,420 | ​ | ​ | 93 | ​ | 0.81 | ​ | ​ | 28,526 | ​ | ​ | 51 | ​ | 0.71
Other short-term borrowings | ​ | ​ | 204,783 | ​ | ​ | 2,527 | ​ | 4.91 | ​ | ​ | 305,489 | ​ | ​ | 4,185 | ​ | 5.45 | ​ | ​ | 390,652 | ​ | ​ | 5,429 | ​ | 5.51
Junior subordinated debentures | ​ | ​ | 25,773 | ​ | ​ | 289 | ​ | 4.46 | ​ | ​ | 25,773 | ​ | ​ | 270 | ​ | 4.17 | ​ | ​ | 25,773 | ​ | ​ | 290 | ​ | 4.46
Subordinated debentures | ​ | ​ | 59,457 | ​ | ​ | 546 | ​ | 3.65 | ​ | ​ | 59,436 | ​ | ​ | 547 | ​ | 3.66 | ​ | ​ | 59,372 | ​ | ​ | 546 | ​ | 3.65
Senior notes | ​ | ​ | - | ​ | ​ | - | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | -
Notes payable and other borrowings | ​ | ​ | - | ​ | ​ | - | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | -
Total interest bearing liabilities | ​ | ​ | 3,217,604 | ​ | ​ | 13,695 | ​ | 1.69 | ​ | ​ | 3,230,088 | ​ | ​ | 15,494 | ​ | 1.91 | ​ | ​ | 3,243,732 | ​ | ​ | 12,461 | ​ | 1.52
Noninterest bearing deposits | ​ | ​ | 1,712,106 | ​ | ​ | - | ​ | - | ​ | ​ | 1,691,450 | ​ | ​ | - | ​ | - | ​ | ​ | 1,838,325 | ​ | ​ | - | ​ | -
Other liabilities | ​ | ​ | 67,067 | ​ | ​ | - | ​ | - | ​ | ​ | 54,453 | ​ | ​ | - | ​ | - | ​ | ​ | 63,971 | ​ | ​ | - | ​ | -
Stockholders' equity | ​ | ​ | 667,881 | ​ | ​ | - | ​ | - | ​ | ​ | 639,151 | ​ | ​ | - | ​ | - | ​ | ​ | 548,706 | ​ | ​ | - | ​ | -
Total liabilities and stockholders' equity | ​ | $ | 5,664,658 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 5,615,142 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 5,694,734 | ​ | ​ | ​ | ​ | ​
Net interest income (GAAP) | ​ | ​ | ​ | ​ | $ | 61,584 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 60,578 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 61,235 | ​ | ​
Net interest margin (GAAP) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4.66 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4.62 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4.59
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net interest income (TE)1 | ​ | ​ | ​ | ​ | $ | 61,934 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 60,932 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 61,598 | ​ | ​
Net interest margin (TE)1 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4.68 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4.64 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4.62
Interest bearing liabilities to earning assets | ​ | ​ | 61.17 | % | ​ | ​ | ​ | ​ | ​ | ​ | 61.89 | % | ​ | ​ | ​ | ​ | ​ | ​ | 61.31 | % | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

1 Tax equivalent (TE) basis is calculated using a marginal tax rate of 21% in 2024 and 2023. See the discussion entitled “Non-GAAP Presentations” below and the tables beginning on page 17 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

2 Interest income from loans is shown on a tax equivalent basis, which is a non-GAAP financial measure as discussed in the table on page 17, and includes loan fee income of $140,000 for the fourth quarter of 2024, loan fee expense of $155,000 for the third quarter of 2024, and loan fee expense of $922,000 for the fourth quarter of 2023. Nonaccrual loans are included in the above stated average balances.

The decreased yield of 11 basis points on interest earning assets compared to the linked period was driven by repricing within the loan and taxable securities portfolios. 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.

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4

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The year over year increase of 17 basis points on interest earning assets was primarily driven by overall increases to benchmark interest rates over the past twelve months, primarily impacting variable rate loans and securities. Average balances of securities available for sale decreased $12.0 million in the fourth quarter of 2024 compared to the prior year like quarter, while the tax equivalent yield on the securities available for sale portfolio increased 21 basis points year over year due to variable security rate resets.

Average balances of interest-bearing deposit accounts have increased moderately since the third quarter of 2024 through the fourth quarter of 2024, from $2.79 billion to $2.89 billion, as NOW, money market, savings, and time account average balances all increased due to the deposits acquired from the FRME branch purchase. We have continued to control the cost of funds over the periods reflected by slowing the pace of change with the rate of overall interest-bearing deposits decreasing to 141 basis points for the quarter ended December 31, 2024, from 148 basis points for the quarter ended September 30, 2024, but the cost of deposits increased from 89 basis points for the quarter ended December 31, 2023. A 15 basis point decrease in the cost of money market funds for the quarter ended December 31, 2024 compared to the prior linked quarter, and a 46 basis point increase compared to the prior year like quarter, drove a significant portion of the overall decrease from the prior linked quarter and the increase from the prior year like quarter. Although there was an increase in transactional account average balances from the prior year like quarter for NOW and savings accounts, average rates paid on these combined balances remained relatively steady. Average rates paid on time deposits for the quarter ended December 31, 2024 decreased by 16 basis points and increased 96 basis points in the quarter over linked quarter and year over year quarters, respectively, primarily due to CD rate specials that were offered.

Borrowing costs decreased in the fourth quarter of 2024, compared to the third quarter of 2024, primarily due to the $100.7 million decrease in average other short-term borrowings stemming from a decrease in average daily FHLB advances over the prior linked quarter as a majority of this borrowing was paid down in December 2024. The decrease of $185.9 million year over year of average FHLB advances was based on daily liquidity needs, and was the primary driver of the $2.9 million decrease to interest expense on other short-term borrowings. Subordinated and junior subordinated debt interest expense were essentially flat over each of the periods presented.

Our net interest margin, for both GAAP and TE presentations, was relatively static over the periods presented above. Our net interest margin (GAAP) increased four basis points to 4.66% for the fourth quarter of 2024, compared to 4.62% for the third quarter of 2024, and increased seven basis points compared to 4.59% for the fourth quarter of 2023. Our net interest margin (TE) increased four basis points to 4.68% for the fourth quarter of 2024, compared to 4.64% for the third quarter of 2024, and increased six basis points compared to 4.62% for the fourth quarter of 2023. The increase in the fourth quarter of 2024, compared to the prior linked quarter, was driven by market interest rates as well as the composition of assets and liabilities. Although interest income and expense both decreased compared to the prior linked quarter, interest expense decreased at a higher rate leading to increased net interest income. The net interest margin increased in the fourth quarter of 2024, compared to the prior year like quarter, primarily due to higher security and loan yields on lower average balances, partially offset by the increase in costs of interest-bearing deposits. See the discussion entitled “Non-GAAP Presentations” and the tables beginning on page 17 that provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

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5

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Noninterest Income

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4th Quarter 2024 | ​
Noninterest Income | ​ | Three Months Ended | ​ | Percent Change From | ​
(Dollars in thousands) | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ |  | 2024 |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Wealth management | ​ | $ | 3,299 | ​ | $ | 2,787 | ​ | $ | 2,600 | ​ | 18.4 | ​ | 26.9 | ​
Service charges on deposits | ​ | ​ | 2,657 | ​ | ​ | 2,646 | ​ | ​ | 2,527 | ​ | 0.4 | ​ | 5.1 | ​
Residential mortgage banking revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Secondary mortgage fees | ​ | ​ | 88 | ​ | ​ | 84 | ​ | ​ | 58 | ​ | 4.8 | ​ | 51.7 | ​
MSRs mark to market gain (loss) | ​ | ​ | 385 | ​ | ​ | (964) | ​ | ​ | (1,277) | ​ | 139.9 | ​ | 130.1 | ​
Mortgage servicing income | ​ | ​ | 475 | ​ | ​ | 466 | ​ | ​ | 495 | ​ | 1.9 | ​ | (4.0) | ​
Net gain on sales of mortgage loans | ​ | ​ | 516 | ​ | ​ | 507 | ​ | ​ | 366 | ​ | 1.8 | ​ | 41.0 | ​
Total residential mortgage banking revenue | ​ | ​ | 1,464 | ​ | ​ | 93 | ​ | ​ | (358) | ​ | N/M | ​ | (508.9) | ​
Securities losses, net | ​ | ​ | - | ​ | ​ | (1) | ​ | ​ | (2) | ​ | (100.0) | ​ | (100.0) | ​
Change in cash surrender value of BOLI | ​ | ​ | 767 | ​ | ​ | 860 | ​ | ​ | 541 | ​ | (10.8) | ​ | 41.8 | ​
Death benefit realized on BOLI | ​ | ​ | - | ​ | ​ | 12 | ​ | ​ | - | ​ | (100.0) | ​ | N/M | ​
Card related income | ​ | ​ | 2,572 | ​ | ​ | 2,589 | ​ | ​ | 2,511 | ​ | (0.7) | ​ | 2.4 | ​
Other income | ​ | ​ | 851 | ​ | ​ | 1,595 | ​ | ​ | 910 | ​ | (46.6) | ​ | (6.5) | ​
Total noninterest income | ​ | $ | 11,610 | ​ | $ | 10,581 | ​ | $ | 8,729 | ​ | 9.7 | ​ | 33.0 | ​

​

N/M - Not meaningful.

​

Noninterest income increased $1.0 million, or 9.7%, in the fourth quarter of 2024, compared to the third quarter of 2024, and increased $2.9 million, or 33.0%, compared to the fourth quarter of 2023. The increase from the third quarter of 2024 was primarily driven by a $1.4 million increase in residential mortgage banking revenue due to an increase of $1.3 million in MSRs mark to market valuation. Also contributing to the increase during the quarter was a $512,000 increase in wealth management income primarily due to growth in estate fees. Partially offsetting the increase in noninterest income from the prior quarter was a $744,000 decrease in other income primarily due to various refunds and incentive bonuses received in the third quarter of 2024.

The increase in noninterest income of $2.9 million in the fourth quarter of 2024, compared to the fourth quarter of 2023, is primarily due to a $1.8 million increase in residential mortgage banking revenue mainly due to a $1.7 million increase in MSRs mark to market valuations, a $699,000 increase in wealth management income primarily due to growth in advisory fees and estate fees, and a $226,000 increase in the cash surrender value of BOLI.

​

6

​

Noninterest Expense

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 4th Quarter 2024 | ​
Noninterest Expense | ​ | Three Months Ended | ​ | Percent Change From | ​
(Dollars in thousands) | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ |  | 2024 |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Salaries | ​ | $ | 18,130 | ​ | $ | 17,665 | ​ | $ | 16,738 | ​ | 2.6 | ​ | 8.3 | ​
Officers' incentive | ​ | ​ | 3,089 | ​ | ​ | 2,993 | ​ | ​ | 1,450 | ​ | 3.2 | ​ | 113.0 | ​
Benefits and other | ​ | ​ | 4,394 | ​ | ​ | 4,018 | ​ | ​ | 3,217 | ​ | 9.4 | ​ | 36.6 | ​
Total salaries and employee benefits | ​ | ​ | 25,613 | ​ | ​ | 24,676 | ​ | ​ | 21,405 | ​ | 3.8 | ​ | 19.7 | ​
Occupancy, furniture and equipment expense | ​ | ​ | 4,457 | ​ | ​ | 3,876 | ​ | ​ | 3,817 | ​ | 15.0 | ​ | 16.8 | ​
Computer and data processing | ​ | ​ | 2,659 | ​ | ​ | 2,375 | ​ | ​ | 2,291 | ​ | 12.0 | ​ | 16.1 | ​
FDIC insurance | ​ | ​ | 628 | ​ | ​ | 632 | ​ | ​ | 583 | ​ | (0.6) | ​ | 7.7 | ​
Net teller & bill paying | ​ | ​ | 575 | ​ | ​ | 570 | ​ | ​ | 564 | ​ | 0.9 | ​ | 2.0 | ​
General bank insurance | ​ | ​ | 327 | ​ | ​ | 320 | ​ | ​ | 301 | ​ | 2.2 | ​ | 8.6 | ​
Amortization of core deposit intangible asset | ​ | ​ | 716 | ​ | ​ | 570 | ​ | ​ | 603 | ​ | 25.6 | ​ | 18.7 | ​
Advertising expense | ​ | ​ | 280 | ​ | ​ | 299 | ​ | ​ | 383 | ​ | (6.4) | ​ | (26.9) | ​
Card related expense | ​ | ​ | 1,497 | ​ | ​ | 1,458 | ​ | ​ | 1,338 | ​ | 2.7 | ​ | 11.9 | ​
Legal fees | ​ | ​ | 660 | ​ | ​ | 202 | ​ | ​ | 228 | ​ | 226.7 | ​ | 189.5 | ​
Consulting & management fees | ​ | ​ | 883 | ​ | ​ | 480 | ​ | ​ | 556 | ​ | 84.0 | ​ | 58.8 | ​
Other real estate owned expense, net | ​ | ​ | 2,019 | ​ | ​ | 242 | ​ | ​ | 218 | ​ | 734.3 | ​ | 826.1 | ​
Other expense | ​ | ​ | 4,008 | ​ | ​ | 3,608 | ​ | ​ | 4,739 | ​ | 11.1 | ​ | (15.4) | ​
Total noninterest expense | ​ | $ | 44,322 | ​ | $ | 39,308 | ​ | $ | 37,026 | ​ | 12.8 | ​ | 19.7 | ​
Efficiency ratio (GAAP)1 | ​ | ​ | 57.12 | % | ​ | 53.38 | % | ​ | 50.82 | % | ​ | ​ | ​ | ​
Adjusted efficiency ratio (non-GAAP)2 | ​ | ​ | 54.61 | % | ​ | 52.31 | % | ​ | 48.76 | % | ​ | ​ | ​ | ​

​

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, 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, and acquisition expenses, 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, 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 Presentations” below and the table on page 17 that provides a reconciliation of this non-GAAP financial measure to the most comparable GAAP equivalent.

​

Noninterest expense for the fourth quarter of 2024 increased $5.0 million, or 12.8%, compared to the third quarter of 2024, and increased $7.3 million, or 19.7%, compared to the fourth quarter of 2023. The increase in the fourth quarter of 2024 compared to the third quarter of 2024, was attributable to a $937,000 increase in salaries and employee benefits, with increases reflected primarily in officers’ incentives due to a higher projection of year end accruals based on our bank’s performance utilizing measures previously approved by our compensation committee, deferred executive compensation due to changes in market interest rates, and increases in salaries based on increased base salary rates. Also contributing to the increase in noninterest expense in the fourth quarter of 2024 was a $581,000 increase in occupancy, furniture and equipment, a $284,000 increase in computer and data processing expenses, a $403,000 increase in consulting & management fees, and a $400,000 increase in other expenses, all due to transaction-related costs incurred related to our purchase of five bank branches from FRME. Other notable increases during the quarter consisted of a $458,000 increase in legal fees due to loan related legal costs, and a $1.8 million increase in other real estate owned expense, net, as a $1.7 million OREO valuation reserve expense was recorded based on valuation write downs on two of our OREO properties.

​

The year over year increase in noninterest expense is primarily attributable to a $4.2 million increase in salaries and employee benefits, primarily due to increases in annual base salary rates, officers’ incentives, and deferred employee compensation due to market interest rate changes. Also contributing to the increase was a $640,000 increase in occupancy, furniture and equipment, a $368,000 increase in computer and data processing, and a $327,000 increase in consulting & management fees, all primarily due to transaction-related costs incurred related to our branch purchase from FRME. Other increases year over year were a $432,000 increase in legal fees due to loan related legal costs, and a $1.8 million increase in other real estate owned expense, net, as a $1.7 million OREO valuation reserve expense was recorded based on valuation write downs on two of our OREO properties. Partially offsetting the increases in noninterest expense in the fourth quarter of 2024, compared to the fourth quarter of 2023, was a $731,000 decrease in other expenses primarily due to a $1.2 million litigation expense recorded in the fourth quarter of 2023 related to an overdraft case, which was settled in 2025 at the total that was originally accrued in 2023.

​

7

​

Earning Assets

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | December 31, 2024 | ​
Loans | ​ | As of | ​ | Percent Change From | ​
(Dollars in thousands) | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ |  | 2024 |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Commercial | ​ | $ | 800,476 | ​ | $ | 814,668 | ​ | $ | 841,697 | ​ | (1.7) | ​ | (4.9) | ​
Leases | ​ | ​ | 491,748 | ​ | ​ | 458,317 | ​ | ​ | 398,223 | ​ | 7.3 | ​ | 23.5 | ​
Commercial real estate – investor | ​ | ​ | 1,078,829 | ​ | ​ | 1,045,060 | ​ | ​ | 1,034,424 | ​ | 3.2 | ​ | 4.3 | ​
Commercial real estate – owner occupied | ​ | ​ | 683,283 | ​ | ​ | 718,265 | ​ | ​ | 796,538 | ​ | (4.9) | ​ | (14.2) | ​
Construction | ​ | ​ | 201,716 | ​ | ​ | 206,458 | ​ | ​ | 165,380 | ​ | (2.3) | ​ | 22.0 | ​
Residential real estate – investor | ​ | ​ | 49,598 | ​ | ​ | 50,332 | ​ | ​ | 52,595 | ​ | (1.5) | ​ | (5.7) | ​
Residential real estate – owner occupied | ​ | ​ | 206,949 | ​ | ​ | 208,227 | ​ | ​ | 226,248 | ​ | (0.6) | ​ | (8.5) | ​
Multifamily | ​ | ​ | 351,325 | ​ | ​ | 375,394 | ​ | ​ | 401,696 | ​ | (6.4) | ​ | (12.5) | ​
HELOC | ​ | ​ | 103,388 | ​ | ​ | 102,611 | ​ | ​ | 103,237 | ​ | 0.8 | ​ | 0.1 | ​
Other1 | ​ | ​ | 14,024 | ​ | ​ | 11,746 | ​ | ​ | 22,915 | ​ | 19.4 | ​ | (38.8) | ​
Total loans | ​ | $ | 3,981,336 | ​ | $ | 3,991,078 | ​ | $ | 4,042,953 | ​ | (0.2) | ​ | (1.5) | ​

​

1 Other class includes consumer loans and overdrafts.

​

Total loans decreased by $9.7 million at December 31, 2024, compared to September 30, 2024, and decreased $61.6 million for the year over year period. The decrease in total loans in the fourth quarter of 2024 compared to the prior linked quarter was due to increased paydowns, net of originations, over the fourth quarter, primarily in commercial real estate-owner occupied and multifamily loans, and increased transfers into OREO for $13.0 million. The year over year reduction in loans is primarily due to paydowns, net of originations, in commercial real estate – owner occupied of $113.3 million, commercial of $41.2 million, multifamily of $50.4 million, partially offset by lease originations, net of paydowns, of $93.5 million, commercial real estate – investor loan growth of $44.4 million and construction loan growth of $36.3 million. Increases were noted in the leases segment in the fourth quarter of 2024 compared to the prior linked quarter and compared to the prior year like period primarily due to an expansion of this product line over the past year.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | December 31, 2024
Securities | ​ | As of | ​ | Percent Change From
(Dollars in thousands) | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​ | September 30, | ​ | December 31,
​ |  | 2024 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Securities available-for-sale, at fair value | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. Treasury | ​ | $ | 194,143 | ​ | $ | 194,188 | ​ | $ | 169,574 | ​ | (0.0) | ​ | 14.5
U.S. government agencies | ​ | ​ | 37,814 | ​ | ​ | 37,976 | ​ | ​ | 56,959 | ​ | (0.4) | ​ | (33.6)
U.S. government agency mortgage-backed | ​ | ​ | 100,277 | ​ | ​ | 96,413 | ​ | ​ | 106,370 | ​ | 4.0 | ​ | (5.7)
States and political subdivisions | ​ | ​ | 215,456 | ​ | ​ | 224,795 | ​ | ​ | 227,065 | ​ | (4.2) | ​ | (5.1)
Collateralized mortgage obligations | ​ | ​ | 368,616 | ​ | ​ | 384,271 | ​ | ​ | 392,544 | ​ | (4.1) | ​ | (6.1)
Asset-backed securities | ​ | ​ | 62,303 | ​ | ​ | 63,947 | ​ | ​ | 68,436 | ​ | (2.6) | ​ | (9.0)
Collateralized loan obligations | ​ | ​ | 183,092 | ​ | ​ | 189,264 | ​ | ​ | 171,881 | ​ | (3.3) | ​ | 6.5
Total securities available-for-sale | ​ | $ | 1,161,701 | ​ | $ | 1,190,854 | ​ | $ | 1,192,829 | ​ | (2.4) | ​ | (2.6)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

​

Our securities available-for-sale portfolio totaled $1.16 billion as of December 31, 2024, reflecting a decrease of $29.2 million from September 30, 2024, and a decrease of $31.1 million since December 31, 2023. The portfolio’s decrease in the fourth quarter of 2024, compared to the prior quarter-end, was due to $101.2 million in maturities, calls, and paydowns, as well as an increase in unrealized losses of $12.4 million, partially offset by $84.9 million in purchases. Net unrealized losses at December 31, 2024 were $68.6 million, compared to $56.2 million at September 30, 2024 and $84.2 million at December 31, 2023. The year over year decrease in net unrealized losses is due to changes in the market interest rate environment as well as the impact of security paydowns and purchases undertaken to further reduce the portfolio’s interest rate sensitivity. The portfolio continues to consist of high quality fixed-rate and floating-rate securities, with more than 99% of publicly issued securities rated AA or better.

​

8

​

Asset Quality

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | December 31, 2024
Nonperforming assets | ​ | As of | ​ | Percent Change From
(Dollars in thousands) | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​ | September 30, | ​ | December 31,
​ |  | 2024 |  | 2024 |  | 2023 |  | 2024 | ​ | 2023
Nonaccrual loans | ​ | $ | 28,851 | ​ | $ | 52,171 | ​ | $ | 67,583 | ​ | (44.7) | ​ | (57.3)
Loans past due 90 days or more and still accruing interest | ​ |  | 1,436 | ​ |  | 109 | ​ |  | 1,196 | ​ | N/M | ​ | 20.1
Total nonperforming loans | ​ |  | 30,287 | ​ |  | 52,280 | ​ |  | 68,779 | ​ | (42.1) | ​ | (56.0)
Other real estate owned | ​ |  | 21,617 | ​ |  | 8,202 | ​ |  | 5,123 | ​ | 163.6 | ​ | 322.0
Total nonperforming assets | ​ | $ | 51,904 | ​ | $ | 60,482 | ​ | $ | 73,902 | ​ | (14.2) | ​ | (29.8)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
30-89 days past due loans and still accruing interest | ​ | $ | 11,702 | ​ | $ | 28,480 | ​ | $ | 13,668 | ​ | ​ | ​ | ​
Nonaccrual loans to total loans | ​ | ​ | 0.7 | % | ​ | 1.3 | % | ​ | 1.7 | % | ​ | ​ | ​
Nonperforming loans to total loans | ​ | ​ | 0.8 | % | ​ | 1.3 | % | ​ | 1.7 | % | ​ | ​ | ​
Nonperforming assets to total loans plus OREO | ​ | ​ | 1.3 | % | ​ | 1.5 | % | ​ | 1.8 | % | ​ | ​ | ​
Purchased credit-deteriorated loans to total loans | ​ | ​ | 0.4 | % | ​ | 0.4 | % | ​ | 1.4 | % | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Allowance for credit losses | ​ | $ | 43,619 | ​ | $ | 44,422 | ​ | $ | 44,264 | ​ | ​ | ​ | ​
Allowance for credit losses to total loans | ​ | ​ | 1.1 | % | ​ | 1.1 | % | ​ | 1.1 | % | ​ | ​ | ​
Allowance for credit losses to nonaccrual loans | ​ | ​ | 151.2 | % | ​ | 85.1 | % | ​ | 65.5 | % | ​ | ​ | ​

​

N/M - Not meaningful.

​

Nonperforming loans consist of nonaccrual loans and loans 90 days or more past due and still accruing interest. Purchased credit-deteriorated (“PCD”) loans acquired in our acquisitions of West Suburban and ABC Bank totaled $15.0 million, net of purchase accounting adjustments, at December 31, 2024. No PCD loans were acquired with our FRME branch acquisition. PCD loans that meet the definition of nonperforming loans are included in our nonperforming disclosures. Nonperforming loans to total loans was 0.8% as of December 31, 2024, 1.3% as of September 30, 2024, and 1.7% as of December 31, 2023. Nonperforming assets to total loans plus OREO was 1.3% as of December 31, 2024, 1.5% as of September 30, 2024, and 1.8% as of December 31, 2023. Our allowance for credit losses to total loans was 1.1% as of December 31, 2024, September 30, 2024, and December 31, 2023.

The following table shows classified loans by segment, which include nonaccrual loans, PCD loans if the risk rating so indicates, and all other loans considered substandard, for the following periods.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | December 31, 2024 | ​
Classified loans | ​ | As of | ​ | Percent Change From | ​
(Dollars in thousands) | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ |  | 2024 |  | 2024 |  | 2023 |  | 2024 |  | 2023 | ​
Commercial | ​ | $ | 24,748 | ​ | $ | 35,043 | ​ | $ | 8,414 | ​ | (29.4) | ​ | 194.1 | ​
Leases | ​ | ​ | 523 | ​ | ​ | 746 | ​ | ​ | 818 | ​ | (29.9) | ​ | (36.1) | ​
Commercial real estate – investor | ​ | ​ | 14,489 | ​ | ​ | 21,652 | ​ | ​ | 43,798 | ​ | (33.1) | ​ | (66.9) | ​
Commercial real estate – owner occupied | ​ | ​ | 27,619 | ​ | ​ | 41,820 | ​ | ​ | 54,613 | ​ | (34.0) | ​ | (49.4) | ​
Construction | ​ | ​ | 19,351 | ​ | ​ | 5,765 | ​ | ​ | 17,155 | ​ | 235.7 | ​ | 12.8 | ​
Residential real estate – investor | ​ | ​ | 1,690 | ​ | ​ | 1,180 | ​ | ​ | 1,331 | ​ | 43.2 | ​ | 27.0 | ​
Residential real estate – owner occupied | ​ | ​ | 1,851 | ​ | ​ | 2,612 | ​ | ​ | 3,216 | ​ | (29.1) | ​ | (42.4) | ​
Multifamily | ​ | ​ | 1,165 | ​ | ​ | 3,269 | ​ | ​ | 1,775 | ​ | (64.4) | ​ | (34.4) | ​
HELOC | ​ | ​ | 547 | ​ | ​ | 736 | ​ | ​ | 1,664 | ​ | (25.7) | ​ | (67.1) | ​
Other1 | ​ | ​ | 10 | ​ | ​ | - | ​ | ​ | - | ​ | N/M | ​ | N/M | ​
Total classified loans | ​ | $ | 91,993 | ​ | $ | 112,823 | ​ | $ | 132,784 | ​ | (18.5) | ​ | (30.7) | ​

​

N/M - Not meaningful.

​

1 Other class includes consumer loans and overdrafts.

​

​

9

​

Classified loans as of December 31, 2024 decreased by $20.8 million from September 30, 2024, and decreased by $40.8 million from December 31, 2023. The net decrease from the third quarter of 2024 was primarily driven by outflows of $9.4 million of paid off loans, $6.1 million of loans upgraded, $9.7 million of principal reductions from payments, and $13.0 million transferred to OREO. The decrease in classified loans in the fourth quarter of 2024 was partially offset by additions of $17.3 million, primarily driven by one construction loan totaling $13.6 million. Remediation work continues on these credits, with the goal of cash flow improvements with increased tenancy.

​

Allowance for Credit Losses on Loans and Unfunded Commitments

​

At December 31, 2024, our allowance for credit losses (“ACL”) on loans totaled $43.6 million, and our ACL on unfunded commitments, included in other liabilities, totaled $1.9 million. In the fourth quarter of 2024, we recorded provision expense of $3.5 million based on historical loss rate updates, our assessment of nonperforming loan metrics and trends, as well as estimated future credit losses. The fourth quarter’s provision expense consisted of a $4.1 million provision for credit losses on loans, and a $600,000 reversal of provision for credit losses on unfunded commitments. The decrease in ACL on unfunded commitments was primarily due to an adjustment to historical benchmark assumptions, such as funding rates and the period used to forecast those rates, within the ACL calculation. We recorded net charge offs of $4.9 million in the fourth quarter of 2024, primarily within the commercial portfolio. The third quarter 2024 provision expense of $2.0 million consisted of a $2.0 million provision for credit losses on loans, and an immaterial provision for credit losses on unfunded commitments. We recorded net recoveries of $155,000 in the third quarter of 2024. In the fourth quarter of 2023, we recorded a provision expense of $8.0 million, which consisted of an $8.0 million provision for credit losses on loans and an immaterial provision for credit losses on unfunded commitments. We recorded net charge-offs of $15.5 million in the fourth quarter of 2023. Our ACL on loans to total loans was 1.1% as of December 31, 2024, September 30, 2024, and December 31, 2023.

​

The ACL on unfunded commitments totaled $1.9 million as of December 31, 2024, $2.5 million as of September 30, 2024, and $2.7 million as of December 31, 2023.

​

Net Charge-off Summary

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loan charge–offs, net of recoveries | Quarters Ended
(Dollars in thousands) | December 31, | ​ | % of | ​ | September 30, | ​ | % of | ​ | December 31, | ​ | % of
​ | 2024 | ​ | Total 2 | ​ | 2024 | ​ | Total 2 | ​ | 2023 | ​ | Total 2
Commercial | $ | 8,621 | ​ | 176.1 | ​ | $ | (7) | ​ | 4.5 | ​ | $ | 71 | ​ | 0.5
Leases | ​ | (38) | ​ | (0.8) | ​ | ​ | 43 | ​ | (27.7) | ​ | ​ | (8) | ​ | (0.1)
Commercial real estate – Investor | ​ | (173) | ​ | (3.5) | ​ | ​ | (149) | ​ | 96.1 | ​ | ​ | 4,951 | ​ | 32.0
Commercial real estate – Owner occupied | ​ | (3,739) | ​ | (76.4) | ​ | ​ | (44) | ​ | 28.4 | ​ | ​ | 10,443 | ​ | 67.5
Construction | ​ | - | ​ | - | ​ | ​ | - | ​ | - | ​ | ​ | - | ​ | -
Residential real estate – Investor | ​ | (2) | ​ | - | ​ | ​ | (18) | ​ | 11.6 | ​ | ​ | (3) | ​ | -
Residential real estate – Owner occupied | ​ | 234 | ​ | 4.8 | ​ | ​ | (11) | ​ | 7.1 | ​ | ​ | (8) | ​ | (0.1)
Multifamily | ​ | - | ​ | - | ​ | ​ | - | ​ | - | ​ | ​ | - | ​ | -
HELOC | ​ | (45) | ​ | (0.9) | ​ | ​ | (14) | ​ | 9.0 | ​ | ​ | (17) | ​ | (0.1)
Other 1 | ​ | 37 | ​ | 0.7 | ​ | ​ | 45 | ​ | (29.0) | ​ | ​ | 31 | ​ | 0.3
Net charge–offs / (recoveries) | $ | 4,895 | ​ | 100.0 | ​ | $ | (155) | ​ | 100.0 | ​ | $ | 15,460 | ​ | 100.0
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

1 Other class includes consumer loans and overdrafts.

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

​

Gross charge-offs for the fourth quarter of 2024 were $8.9 million, compared to $165,000 for the third quarter of 2024 and $16.0 million for the fourth quarter of 2023. Gross recoveries were $4.1 million for the fourth quarter of 2024, compared to $320,000 for the third quarter of 2024, and $491,000 for the fourth quarter of 2023. Continued recoveries are indicative of the ongoing aggressive efforts by management to effectively manage and resolve prior charge-offs, however, recoveries cannot be forecasted or expected at the same pace in the future.

​

10

​

​

Deposits

​

Total deposits were $4.77 billion at December 31, 2024, an increase of $303.3 million, or 6.8%, compared to $4.47 billion at September 30, 2024, primarily due to increases in noninterest bearing deposits of $35.9 million, $46.3 million in savings, $72.5 million in NOW accounts, $70.7 million in money market accounts, and $77.9 million in time deposits. The overall increase in deposits was primarily due to the acquisition of FRME’s five Illinois branches. Average deposits for the quarter to date ending December 31, 2024 increased $114.3 million compared to September 30, 2024. Total quarterly average deposits for the year over year period increased $22.0 million, or 0.5%, driven by an increase in average time deposits of $194.5 million, and NOW and money markets combined of $39.4 million, partially offset by decreases in our average demand deposits of $126.2 million, and savings accounts of $85.8 million. The bulk of the increase in total deposits in the fourth quarter of 2024 occurred in December, driven primarily by the acquisition of the FRME branches.

​

Borrowings

​

As of December 31, 2024, we had $20.0 million in other short-term borrowings due to short-term FHLB advances, compared to $335.0 million as of September 30, 2024, and $405.0 million as of December 31, 2023. The large decrease in short-term FHLB advances at December 31, 2024 is due to an influx of cash resulting from the acquisition of the five FRME branches on December 6, 2024, which allowed us to utilize the purchased deposits for lower cost funding.

​

Non-GAAP Presentations

​

Management has disclosed in this earnings release certain non-GAAP financial measures to evaluate and measure our performance, including the presentation of adjusted net income, net interest income and net interest margin on a fully taxable equivalent basis, and our efficiency ratio calculations on a taxable equivalent basis. The net interest margin fully taxable equivalent is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Consistent with industry practice, management has disclosed the efficiency ratio including and excluding certain items, which is discussed in the noninterest expense presentation on page 7.

We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe these measures provide investors with information regarding balance sheet profitability, and we believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing, and comparing past, present and future periods.

These non-GAAP financial measures should not be considered as a substitute for GAAP financial measures, and we strongly encourage investors to review the GAAP financial measures included in this earnings release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this earnings release with other companies’ non-GAAP financial measures having the same or similar names. The tables beginning on page 17 provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP equivalent.

​

11

​

Cautionary Note Regarding Forward-Looking Statement s

​

This earnings release and statements by our management may contain forward-looking statements within the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by words such as “should,” “anticipate,” “expect,” “estimate,” “intend,” “believe,” “may,” “likely,” “will,” “forecast,” “project,” “looking forward,” “optimistic,” “hopeful,” “potential,” “progress,” “prospect,” “remain,” “deliver,” “continue,” “trend,” “momentum,” “remainder,” “beyond,” “and “near” or other statements that indicate future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the economic outlook, loan growth, deposit trends and funding, asset-quality trends, balance sheet growth, and building capital. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements, (1) the strength of the United States economy in general and the strength of the local economies in which we conduct our operations may be different than expected; (2) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (3) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action; (4) risks related to pending or future acquisitions, if any, including execution and integration risks; (5) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on us; (6) changes in interest rates, which has and may continue to affect our deposit and funding costs, net income, prepayment penalty income, mortgage banking income, and other future cash flows, or the market value of our assets, including our investment securities; (7) elevated inflation which causes adverse risk to the overall economy, and could indirectly pose challenges to our clients and to our business; and (8) the adverse effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics, war or terrorist activities, essential utility outages, deterioration in the global economy, instability in the credit markets, disruptions in our customers’ supply chains or disruption in transportation, and disruptions caused from widespread cybersecurity incidents. Additional risks and uncertainties are contained in the “Risk Factors” and forward-looking statements disclosure in our most recent Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q. The inclusion of this forward-looking information should not be construed as a representation by us or any person that future events, plans, or expectations contemplated by us will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

​

Conference Call

​

We will host a call on Thursday, January 23, 2025, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss our fourth quarter 2024 financial results. Investors may listen to our call via telephone by dialing 888-506-0062, using Entry Code: 894547. Investors should call into the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.

​

A replay of the call will be available until 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on January 30, 2025, by dialing 877-481-4010, using Conference ID: 51807.

12

​

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | (unaudited) | ​ | ​ | ​
​ | ​ | December 31, | ​ | December 31,
​ |  | 2024 |  | 2023
Assets | ​ | ​ | ​ | ​ | ​ | ​
Cash and due from banks | ​ | $ | 52,175 | ​ | $ | 55,534
Interest earning deposits with financial institutions | ​ | ​ | 47,154 | ​ | ​ | 44,611
Cash and cash equivalents | ​ | ​ | 99,329 | ​ | ​ | 100,145
Securities available-for-sale, at fair value | ​ | ​ | 1,161,701 | ​ | ​ | 1,192,829
Federal Home Loan Bank Chicago (“FHLBC”) and Federal Reserve Bank Chicago (“FRBC”) stock | ​ | ​ | 19,441 | ​ | ​ | 33,355
Loans held-for-sale | ​ | ​ | 1,556 | ​ | ​ | 1,322
Loans | ​ | ​ | 3,981,336 | ​ | ​ | 4,042,953
Less: allowance for credit losses on loans | ​ | ​ | 43,619 | ​ | ​ | 44,264
Net loans | ​ | ​ | 3,937,717 | ​ | ​ | 3,998,689
Premises and equipment, net | ​ | ​ | 87,311 | ​ | ​ | 79,310
Other real estate owned | ​ | ​ | 21,617 | ​ | ​ | 5,123
Mortgage servicing rights, at fair value | ​ | ​ | 10,374 | ​ | ​ | 10,344
Goodwill | ​ | ​ | 93,260 | ​ | ​ | 86,478
Core deposit intangible | ​ | ​ | 22,031 | ​ | ​ | 11,217
Bank-owned life insurance (“BOLI”) | ​ | ​ | 112,751 | ​ | ​ | 109,318
Deferred tax assets, net | ​ | ​ | 26,619 | ​ | ​ | 31,077
Other assets | ​ | ​ | 55,670 | ​ | ​ | 63,592
Total assets | ​ | $ | 5,649,377 | ​ | $ | 5,722,799
​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities | ​ | ​ | ​ | ​ | ​ | ​
Deposits: | ​ | ​ | ​ | ​ | ​ | ​
Noninterest bearing demand | ​ | $ | 1,704,920 | ​ | $ | 1,834,891
Interest bearing: | ​ | ​ | ​ | ​ | ​ | ​
Savings, NOW, and money market | ​ | ​ | 2,315,134 | ​ | ​ | 2,207,949
Time | ​ | ​ | 748,677 | ​ | ​ | 527,906
Total deposits | ​ | ​ | 4,768,731 | ​ | ​ | 4,570,746
Securities sold under repurchase agreements | ​ | ​ | 36,657 | ​ | ​ | 26,470
Other short-term borrowings | ​ | ​ | 20,000 | ​ | ​ | 405,000
Junior subordinated debentures | ​ | ​ | 25,773 | ​ | ​ | 25,773
Subordinated debentures | ​ | ​ | 59,467 | ​ | ​ | 59,382
Other liabilities | ​ | ​ | 67,715 | ​ | ​ | 58,147
Total liabilities | ​ | ​ | 4,978,343 | ​ | ​ | 5,145,518
​ | ​ | ​ | ​ | ​ | ​ | ​
Stockholders’ Equity | ​ | ​ | ​ | ​ | ​ | ​
Common stock | ​ | ​ | 44,908 | ​ | ​ | 44,705
Additional paid-in capital | ​ | ​ | 205,284 | ​ | ​ | 202,223
Retained earnings | ​ | ​ | 469,165 | ​ | ​ | 393,311
Accumulated other comprehensive loss | ​ | ​ | (47,748) | ​ | ​ | (62,781)
Treasury stock | ​ | ​ | (575) | ​ | ​ | (177)
Total stockholders’ equity | ​ | ​ | 671,034 | ​ | ​ | 577,281
Total liabilities and stockholders’ equity | ​ | $ | 5,649,377 | ​ | $ | 5,722,799
​ | ​ | ​ | ​ | ​ | ​ | ​

​

13

​

​

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except share data)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | (unaudited) | ​ | (unaudited) | ​
​ | ​ | Three Months Ended December 31, | ​ | Year Ended December 31,
​ |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Interest and dividend income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans, including fees | ​ | $ | 63,967 | ​ | $ | 62,751 | ​ | $ | 253,319 | ​ | $ | 244,187 | ​
Loans held-for-sale | ​ | ​ | 34 | ​ | ​ | 31 | ​ | ​ | 94 | ​ | ​ | 91 | ​
Securities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Taxable | ​ | ​ | 8,899 | ​ | ​ | 8,329 | ​ | ​ | 34,656 | ​ | ​ | 37,940 | ​
Tax exempt | ​ | ​ | 1,275 | ​ | ​ | 1,322 | ​ | ​ | 5,164 | ​ | ​ | 5,329 | ​
Dividends from FHLBC and FRBC stock | ​ | ​ | 562 | ​ | ​ | 647 | ​ | ​ | 2,278 | ​ | ​ | 1,920 | ​
Interest bearing deposits with financial institutions | ​ | ​ | 542 | ​ | ​ | 616 | ​ | ​ | 2,393 | ​ | ​ | 2,503 | ​
Total interest and dividend income | ​ | ​ | 75,279 | ​ | ​ | 73,696 | ​ | ​ | 297,904 | ​ | ​ | 291,970 | ​
Interest expense | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Savings, NOW, and money market deposits | ​ | ​ | 4,652 | ​ | ​ | 3,312 | ​ | ​ | 17,866 | ​ | ​ | 8,761 | ​
Time deposits | ​ | ​ | 5,606 | ​ | ​ | 2,834 | ​ | ​ | 20,147 | ​ | ​ | 6,636 | ​
Securities sold under repurchase agreements | ​ | ​ | 75 | ​ | ​ | 50 | ​ | ​ | 337 | ​ | ​ | 93 | ​
Other short-term borrowings | ​ | ​ | 2,527 | ​ | ​ | 5,429 | ​ | ​ | 14,607 | ​ | ​ | 18,774 | ​
Junior subordinated debentures | ​ | ​ | 289 | ​ | ​ | 290 | ​ | ​ | 1,127 | ​ | ​ | 1,095 | ​
Subordinated debentures | ​ | ​ | 546 | ​ | ​ | 546 | ​ | ​ | 2,185 | ​ | ​ | 2,185 | ​
Senior notes | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 2,408 | ​
Notes payable and other borrowings | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 87 | ​
Total interest expense | ​ | ​ | 13,695 | ​ | ​ | 12,461 | ​ | ​ | 56,269 | ​ | ​ | 40,039 | ​
Net interest and dividend income | ​ | ​ | 61,584 | ​ | ​ | 61,235 | ​ | ​ | 241,635 | ​ | ​ | 251,931 | ​
Provision for credit losses | ​ | ​ | 3,500 | ​ | ​ | 8,000 | ​ | ​ | 12,750 | ​ | ​ | 16,501 | ​
Net interest and dividend income after provision for credit losses | ​ | ​ | 58,084 | ​ | ​ | 53,235 | ​ | ​ | 228,885 | ​ | ​ | 235,430 | ​
Noninterest income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Wealth management | ​ | ​ | 3,299 | ​ | ​ | 2,600 | ​ | ​ | 11,426 | ​ | ​ | 9,803 | ​
Service charges on deposits | ​ | ​ | 2,657 | ​ | ​ | 2,527 | ​ | ​ | 10,226 | ​ | ​ | 9,817 | ​
Secondary mortgage fees | ​ | ​ | 88 | ​ | ​ | 58 | ​ | ​ | 287 | ​ | ​ | 259 | ​
Mortgage servicing rights mark to market gain (loss) | ​ | ​ | 385 | ​ | ​ | (1,277) | ​ | ​ | (723) | ​ | ​ | (1,425) | ​
Mortgage servicing income | ​ | ​ | 475 | ​ | ​ | 495 | ​ | ​ | 1,942 | ​ | ​ | 2,029 | ​
Net gain on sales of mortgage loans | ​ | ​ | 516 | ​ | ​ | 366 | ​ | ​ | 1,805 | ​ | ​ | 1,477 | ​
Securities losses, net | ​ | ​ | - | ​ | ​ | (2) | ​ | ​ | - | ​ | ​ | (4,148) | ​
Change in cash surrender value of BOLI | ​ | ​ | 767 | ​ | ​ | 541 | ​ | ​ | 3,619 | ​ | ​ | 2,120 | ​
Death benefit realized on BOLI | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 905 | ​ | ​ | - | ​
Card related income | ​ | ​ | 2,572 | ​ | ​ | 2,511 | ​ | ​ | 10,114 | ​ | ​ | 10,051 | ​
Other income | ​ | ​ | 851 | ​ | ​ | 910 | ​ | ​ | 4,218 | ​ | ​ | 4,196 | ​
Total noninterest income | ​ | ​ | 11,610 | ​ | ​ | 8,729 | ​ | ​ | 43,819 | ​ | ​ | 34,179 | ​
Noninterest expense | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Salaries and employee benefits | ​ | ​ | 25,613 | ​ | ​ | 21,405 | ​ | ​ | 98,025 | ​ | ​ | 88,566 | ​
Occupancy, furniture and equipment | ​ | ​ | 4,457 | ​ | ​ | 3,817 | ​ | ​ | 16,159 | ​ | ​ | 14,437 | ​
Computer and data processing | ​ | ​ | 2,659 | ​ | ​ | 2,291 | ​ | ​ | 9,473 | ​ | ​ | 7,277 | ​
FDIC insurance | ​ | ​ | 628 | ​ | ​ | 583 | ​ | ​ | 2,543 | ​ | ​ | 2,705 | ​
Net teller & bill paying | ​ | ​ | 575 | ​ | ​ | 564 | ​ | ​ | 2,244 | ​ | ​ | 2,115 | ​
General bank insurance | ​ | ​ | 327 | ​ | ​ | 301 | ​ | ​ | 1,268 | ​ | ​ | 1,212 | ​
Amortization of core deposit intangible | ​ | ​ | 716 | ​ | ​ | 603 | ​ | ​ | 2,440 | ​ | ​ | 2,461 | ​
Advertising expense | ​ | ​ | 280 | ​ | ​ | 383 | ​ | ​ | 1,243 | ​ | ​ | 721 | ​
Card related expense | ​ | ​ | 1,497 | ​ | ​ | 1,338 | ​ | ​ | 5,555 | ​ | ​ | 5,123 | ​
Legal fees | ​ | ​ | 660 | ​ | ​ | 228 | ​ | ​ | 1,326 | ​ | ​ | 927 | ​
Consulting & management fees | ​ | ​ | 883 | ​ | ​ | 556 | ​ | ​ | 2,496 | ​ | ​ | 2,415 | ​
Other real estate expense, net | ​ | ​ | 2,019 | ​ | ​ | 218 | ​ | ​ | 2,220 | ​ | ​ | 399 | ​
Other expense | ​ | ​ | 4,008 | ​ | ​ | 4,739 | ​ | ​ | 14,756 | ​ | ​ | 16,843 | ​
Total noninterest expense | ​ | ​ | 44,322 | ​ | ​ | 37,026 | ​ | ​ | 159,748 | ​ | ​ | 145,201 | ​
Income before income taxes | ​ | ​ | 25,372 | ​ | ​ | 24,938 | ​ | ​ | 112,956 | ​ | ​ | 124,408 | ​
Provision for income taxes | ​ | ​ | 6,262 | ​ | ​ | 6,713 | ​ | ​ | 27,692 | ​ | ​ | 32,679 | ​
Net income | ​ | $ | 19,110 | ​ | $ | 18,225 | ​ | $ | 85,264 | ​ | $ | 91,729 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic earnings per share | ​ | $ | 0.42 | ​ | $ | 0.40 | ​ | $ | 1.90 | ​ | $ | 2.05 | ​
Diluted earnings per share | ​ | ​ | 0.42 | ​ | ​ | 0.40 | ​ | ​ | 1.87 | ​ | ​ | 2.02 | ​
Dividends declared per share | ​ | ​ | 0.06 | ​ | ​ | 0.05 | ​ | ​ | 0.21 | ​ | ​ | 0.20 | ​

​

​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Ending common shares outstanding | ​ | 44,873,467 | ​ | 44,697,917 | ​ | 44,873,467 | ​ | 44,697,917
Weighted-average basic shares outstanding | ​ | 44,856,870 | ​ | 44,694,200 | ​ | 44,828,290 | ​ | 44,663,722
Weighted-average diluted shares outstanding | ​ | 45,671,352 | ​ | 45,409,232 | ​ | 45,639,351 | ​ | 45,395,010

​

​

14

Old Second Bancorp, Inc. and Subsidiaries

Quarterly Consolidated Average Balance

(In thousands, unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | 2023 | ​ | ​ | 2024
Assets |  | 1st Qtr |  | 2nd Qtr |  | 3rd Qtr |  | 4th Qtr |  | 1st Qtr | ​ | 2nd Qtr |  | 3rd Qtr | ​ | 4th Qtr
Cash and due from banks | ​ | $ | 55,140 | ​ | $ | 56,191 | ​ | $ | 57,279 | ​ | $ | 57,723 | ​ | $ | 54,533 | ​ | $ | 54,286 | ​ | $ | 54,279 | ​ | $ | 54,340
Interest earning deposits with financial institutions | ​ | ​ | 49,310 | ​ | ​ | 50,309 | ​ | ​ | 49,737 | ​ | ​ | 47,865 | ​ | ​ | 48,088 | ​ | ​ | 50,740 | ​ | ​ | 48,227 | ​ | ​ | 49,757
Cash and cash equivalents | ​ | ​ | 104,450 | ​ | ​ | 106,500 | ​ | ​ | 107,016 | ​ | ​ | 105,588 | ​ | ​ | 102,621 | ​ | ​ | 105,026 | ​ | ​ | 102,506 | ​ | ​ | 104,097
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Securities available-for-sale, at fair value | ​ | ​ | 1,503,619 | ​ | ​ | 1,404,664 | ​ | ​ | 1,295,211 | ​ | ​ | 1,192,021 | ​ | ​ | 1,182,888 | ​ | ​ | 1,179,430 | ​ | ​ | 1,173,948 | ​ | ​ | 1,180,024
FHLBC and FRBC stock | ​ | ​ | 24,905 | ​ | ​ | 34,029 | ​ | ​ | 35,954 | ​ | ​ | 34,371 | ​ | ​ | 31,800 | ​ | ​ | 27,574 | ​ | ​ | 30,268 | ​ | ​ | 27,493
Loans held-for-sale | ​ | ​ | 813 | ​ | ​ | 1,150 | ​ | ​ | 1,641 | ​ | ​ | 1,709 | ​ | ​ | 746 | ​ | ​ | 1,050 | ​ | ​ | 1,557 | ​ | ​ | 2,027
Loans | ​ | ​ | 3,931,679 | ​ | ​ | 4,039,052 | ​ | ​ | 4,009,218 | ​ | ​ | 4,014,771 | ​ | ​ | 4,018,631 | ​ | ​ | 3,957,454 | ​ | ​ | 3,965,160 | ​ | ​ | 4,001,014
Less: allowance for credit losses on loans | ​ | ​ | 49,398 | ​ | ​ | 53,480 | ​ | ​ | 54,581 | ​ | ​ | 50,023 | ​ | ​ | 44,295 | ​ | ​ | 43,468 | ​ | ​ | 42,683 | ​ | ​ | 45,040
Net loans | ​ | ​ | 3,882,281 | ​ | ​ | 3,985,572 | ​ | ​ | 3,954,637 | ​ | ​ | 3,964,748 | ​ | ​ | 3,974,336 | ​ | ​ | 3,913,986 | ​ | ​ | 3,922,477 | ​ | ​ | 3,955,974
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Premises and equipment, net | ​ | ​ | 72,649 | ​ | ​ | 72,903 | ​ | ​ | 74,707 | ​ | ​ | 78,472 | ​ | ​ | 80,493 | ​ | ​ | 82,332 | ​ | ​ | 82,977 | ​ | ​ | 84,364
Other real estate owned | ​ | ​ | 1,508 | ​ | ​ | 1,132 | ​ | ​ | 472 | ​ | ​ | 2,004 | ​ | ​ | 5,123 | ​ | ​ | 4,657 | ​ | ​ | 7,471 | ​ | ​ | 20,136
Mortgage servicing rights, at fair value | ​ | ​ | 11,127 | ​ | ​ | 10,741 | ​ | ​ | 11,066 | ​ | ​ | 11,317 | ​ | ​ | 10,455 | ​ | ​ | 10,754 | ​ | ​ | 10,137 | ​ | ​ | 10,060
Goodwill | ​ | ​ | 86,477 | ​ | ​ | 86,477 | ​ | ​ | 86,477 | ​ | ​ | 86,477 | ​ | ​ | 86,477 | ​ | ​ | 86,477 | ​ | ​ | 86,477 | ​ | ​ | 88,320
Core deposit intangible | ​ | ​ | 13,327 | ​ | ​ | 12,709 | ​ | ​ | 12,119 | ​ | ​ | 11,502 | ​ | ​ | 10,913 | ​ | ​ | 10,340 | ​ | ​ | 9,768 | ​ | ​ | 12,799
Bank-owned life insurance ("BOLI") | ​ | ​ | 106,655 | ​ | ​ | 107,028 | ​ | ​ | 107,786 | ​ | ​ | 108,616 | ​ | ​ | 109,867 | ​ | ​ | 110,440 | ​ | ​ | 110,901 | ​ | ​ | 112,243
Deferred tax assets, net | ​ | ​ | 42,237 | ​ | ​ | 37,774 | ​ | ​ | 39,072 | ​ | ​ | 42,754 | ​ | ​ | 31,323 | ​ | ​ | 32,969 | ​ | ​ | 25,666 | ​ | ​ | 23,549
Other assets | ​ | ​ | 48,599 | ​ | ​ | 50,812 | ​ | ​ | 52,360 | ​ | ​ | 55,155 | ​ | ​ | 49,681 | ​ | ​ | 50,423 | ​ | ​ | 50,989 | ​ | ​ | 43,572
Total other assets | ​ | ​ | 382,579 | ​ | ​ | 379,576 | ​ | ​ | 384,059 | ​ | ​ | 396,297 | ​ | ​ | 384,332 | ​ | ​ | 388,392 | ​ | ​ | 384,386 | ​ | ​ | 395,043
Total assets | ​ | $ | 5,898,647 | ​ | $ | 5,911,491 | ​ | $ | 5,778,518 | ​ | $ | 5,694,734 | ​ | $ | 5,676,723 | ​ | $ | 5,615,458 | ​ | $ | 5,615,142 | ​ | $ | 5,664,658
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deposits: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Noninterest bearing demand | ​ | $ | 2,002,801 | ​ | $ | 1,920,448 | ​ | $ | 1,867,201 | ​ | $ | 1,838,325 | ​ | $ | 1,819,476 | ​ | $ | 1,769,543 | ​ | $ | 1,691,450 | ​ | $ | 1,712,106
Interest bearing: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Savings, NOW, and money market | ​ | ​ | 2,560,893 | ​ | ​ | 2,437,096 | ​ | ​ | 2,324,613 | ​ | ​ | 2,241,937 | ​ | ​ | 2,202,485 | ​ | ​ | 2,195,898 | ​ | ​ | 2,142,307 | ​ | ​ | 2,195,608
Time | ​ | ​ | 434,655 | ​ | ​ | 436,524 | ​ | ​ | 466,250 | ​ | ​ | 497,472 | ​ | ​ | 558,463 | ​ | ​ | 610,705 | ​ | ​ | 651,663 | ​ | ​ | 692,001
Total deposits | ​ | ​ | 4,998,349 | ​ | ​ | 4,794,068 | ​ | ​ | 4,658,064 | ​ | ​ | 4,577,734 | ​ | ​ | 4,580,424 | ​ | ​ | 4,576,146 | ​ | ​ | 4,485,420 | ​ | ​ | 4,599,715
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Securities sold under repurchase agreements | ​ | ​ | 31,080 | ​ | ​ | 25,575 | ​ | ​ | 24,945 | ​ | ​ | 28,526 | ​ | ​ | 30,061 | ​ | ​ | 37,430 | ​ | ​ | 45,420 | ​ | ​ | 39,982
Other short-term borrowings | ​ | ​ | 200,833 | ​ | ​ | 402,527 | ​ | ​ | 427,174 | ​ | ​ | 390,652 | ​ | ​ | 332,198 | ​ | ​ | 242,912 | ​ | ​ | 305,489 | ​ | ​ | 204,783
Junior subordinated debentures | ​ | ​ | 25,773 | ​ | ​ | 25,773 | ​ | ​ | 25,773 | ​ | ​ | 25,773 | ​ | ​ | 25,773 | ​ | ​ | 25,773 | ​ | ​ | 25,773 | ​ | ​ | 25,773
Subordinated debentures | ​ | ​ | 59,308 | ​ | ​ | 59,329 | ​ | ​ | 59,350 | ​ | ​ | 59,372 | ​ | ​ | 59,393 | ​ | ​ | 59,414 | ​ | ​ | 59,436 | ​ | ​ | 59,457
Senior notes | ​ | ​ | 44,599 | ​ | ​ | 44,134 | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | -
Notes payable and other borrowings | ​ | ​ | 5,400 | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | -
Other liabilities | ​ | ​ | 51,279 | ​ | ​ | 48,434 | ​ | ​ | 53,164 | ​ | ​ | 63,971 | ​ | ​ | 60,024 | ​ | ​ | 68,530 | ​ | ​ | 54,453 | ​ | ​ | 67,067
Total liabilities | ​ | ​ | 5,416,621 | ​ | ​ | 5,399,840 | ​ | ​ | 5,248,470 | ​ | ​ | 5,146,028 | ​ | ​ | 5,087,873 | ​ | ​ | 5,010,205 | ​ | ​ | 4,975,991 | ​ | ​ | 4,996,777
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stockholders' equity | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common stock | ​ | ​ | 44,705 | ​ | ​ | 44,705 | ​ | ​ | 44,705 | ​ | ​ | 44,705 | ​ | ​ | 44,787 | ​ | ​ | 44,908 | ​ | ​ | 44,908 | ​ | ​ | 44,908
Additional paid-in capital | ​ | ​ | 201,397 | ​ | ​ | 200,590 | ​ | ​ | 201,344 | ​ | ​ | 201,824 | ​ | ​ | 202,688 | ​ | ​ | 203,654 | ​ | ​ | 204,558 | ​ | ​ | 205,356
Retained earnings | ​ | ​ | 324,785 | ​ | ​ | 346,042 | ​ | ​ | 368,732 | ​ | ​ | 389,776 | ​ | ​ | 405,201 | ​ | ​ | 424,262 | ​ | ​ | 443,435 | ​ | ​ | 462,631
Accumulated other comprehensive loss | ​ | ​ | (86,736) | ​ | ​ | (78,940) | ​ | ​ | (84,167) | ​ | ​ | (87,358) | ​ | ​ | (63,365) | ​ | ​ | (66,682) | ​ | ​ | (52,907) | ​ | ​ | (44,251)
Treasury stock | ​ | ​ | (2,125) | ​ | ​ | (746) | ​ | ​ | (566) | ​ | ​ | (241) | ​ | ​ | (461) | ​ | ​ | (889) | ​ | ​ | (843) | ​ | ​ | (763)
Total stockholders' equity | ​ | ​ | 482,026 | ​ | ​ | 511,651 | ​ | ​ | 530,048 | ​ | ​ | 548,706 | ​ | ​ | 588,850 | ​ | ​ | 605,253 | ​ | ​ | 639,151 | ​ | ​ | 667,881
Total liabilities and stockholders' equity | ​ | $ | 5,898,647 | ​ | $ | 5,911,491 | ​ | $ | 5,778,518 | ​ | $ | 5,694,734 | ​ | $ | 5,676,723 | ​ | $ | 5,615,458 | ​ | $ | 5,615,142 | ​ | $ | 5,664,658
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total Earning Assets | ​ | $ | 5,510,326 | ​ | $ | 5,529,204 | ​ | $ | 5,391,761 | ​ | $ | 5,290,737 | ​ | $ | 5,282,153 | ​ | $ | 5,216,248 | ​ | $ | 5,219,160 | ​ | $ | 5,260,315
Total Interest Bearing Liabilities | ​ | ​ | 3,362,541 | ​ | ​ | 3,430,958 | ​ | ​ | 3,328,105 | ​ | ​ | 3,243,732 | ​ | ​ | 3,208,373 | ​ | ​ | 3,172,132 | ​ | ​ | 3,230,088 | ​ | ​ | 3,217,604

​

​

​

15

​

​

Old Second Bancorp, Inc. and Subsidiaries

Quarterly Consolidated Statements of Income

(In thousands, except per share data, unaudited)

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2023 | ​ | 2024
​ |  | 1st Qtr |  | 2nd Qtr |  | 3rd Qtr |  | 4th Qtr |  | 1st Qtr | ​ | 2nd Qtr |  | 3rd Qtr | ​ | 4th Qtr
Interest and Dividend Income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans, including fees | ​ | $ | 57,210 | ​ | $ | 61,561 | ​ | $ | 62,665 | ​ | $ | 62,751 | ​ | $ | 62,673 | ​ | $ | 62,151 | ​ | $ | 64,528 | ​ | $ | 63,967
Loans held-for-sale | ​ | ​ | 12 | ​ | ​ | 19 | ​ | ​ | 29 | ​ | ​ | 31 | ​ | ​ | 14 | ​ | ​ | 19 | ​ | ​ | 27 | ​ | ​ | 34
Securities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Taxable | ​ | ​ | 10,735 | ​ | ​ | 9,930 | ​ | ​ | 8,946 | ​ | ​ | 8,329 | ​ | ​ | 8,092 | ​ | ​ | 8,552 | ​ | ​ | 9,113 | ​ | ​ | 8,899
Tax exempt | ​ | ​ | 1,337 | ​ | ​ | 1,337 | ​ | ​ | 1,333 | ​ | ​ | 1,322 | ​ | ​ | 1,306 | ​ | ​ | 1,292 | ​ | ​ | 1,291 | ​ | ​ | 1,275
Dividends from FHLB and FRBC stock | ​ | ​ | 280 | ​ | ​ | 396 | ​ | ​ | 597 | ​ | ​ | 647 | ​ | ​ | 635 | ​ | ​ | 584 | ​ | ​ | 497 | ​ | ​ | 562
Interest bearing deposits with financial institutions | ​ | ​ | 585 | ​ | ​ | 643 | ​ | ​ | 659 | ​ | ​ | 616 | ​ | ​ | 610 | ​ | ​ | 625 | ​ | ​ | 616 | ​ | ​ | 542
Total interest and dividend income | ​ | ​ | 70,159 | ​ | ​ | 73,886 | ​ | ​ | 74,229 | ​ | ​ | 73,696 | ​ | ​ | 73,330 | ​ | ​ | 73,223 | ​ | ​ | 76,072 | ​ | ​ | 75,279
Interest Expense | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Savings, NOW, and money market deposits | ​ | ​ | 1,149 | ​ | ​ | 1,742 | ​ | ​ | 2,558 | ​ | ​ | 3,312 | ​ | ​ | 4,037 | ​ | ​ | 4,317 | ​ | ​ | 4,860 | ​ | ​ | 4,652
Time deposits | ​ | ​ | 664 | ​ | ​ | 1,156 | ​ | ​ | 1,982 | ​ | ​ | 2,834 | ​ | ​ | 4,041 | ​ | ​ | 4,961 | ​ | ​ | 5,539 | ​ | ​ | 5,606
Securities sold under repurchase agreements | ​ | ​ | 9 | ​ | ​ | 7 | ​ | ​ | 27 | ​ | ​ | 50 | ​ | ​ | 86 | ​ | ​ | 83 | ​ | ​ | 93 | ​ | ​ | 75
Other short-term borrowings | ​ | ​ | 2,345 | ​ | ​ | 5,160 | ​ | ​ | 5,840 | ​ | ​ | 5,429 | ​ | ​ | 4,557 | ​ | ​ | 3,338 | ​ | ​ | 4,185 | ​ | ​ | 2,527
Junior subordinated debentures | ​ | ​ | 279 | ​ | ​ | 281 | ​ | ​ | 245 | ​ | ​ | 290 | ​ | ​ | 280 | ​ | ​ | 288 | ​ | ​ | 270 | ​ | ​ | 289
Subordinated debentures | ​ | ​ | 546 | ​ | ​ | 546 | ​ | ​ | 547 | ​ | ​ | 546 | ​ | ​ | 546 | ​ | ​ | 546 | ​ | ​ | 547 | ​ | ​ | 546
Senior notes | ​ | ​ | 994 | ​ | ​ | 1,414 | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | -
Notes payable and other borrowings | ​ | ​ | 87 | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | -
Total interest expense | ​ | ​ | 6,073 | ​ | ​ | 10,306 | ​ | ​ | 11,199 | ​ | ​ | 12,461 | ​ | ​ | 13,547 | ​ | ​ | 13,533 | ​ | ​ | 15,494 | ​ | ​ | 13,695
Net interest and dividend income | ​ | ​ | 64,086 | ​ | ​ | 63,580 | ​ | ​ | 63,030 | ​ | ​ | 61,235 | ​ | ​ | 59,783 | ​ | ​ | 59,690 | ​ | ​ | 60,578 | ​ | ​ | 61,584
Provision for credit losses | ​ | ​ | 3,501 | ​ | ​ | 2,000 | ​ | ​ | 3,000 | ​ | ​ | 8,000 | ​ | ​ | 3,500 | ​ | ​ | 3,750 | ​ | ​ | 2,000 | ​ | ​ | 3,500
Net interest and dividend income after provision for credit losses | ​ | ​ | 60,585 | ​ | ​ | 61,580 | ​ | ​ | 60,030 | ​ | ​ | 53,235 | ​ | ​ | 56,283 | ​ | ​ | 55,940 | ​ | ​ | 58,578 | ​ | ​ | 58,084
Noninterest Income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Wealth management | ​ | ​ | 2,270 | ​ | ​ | 2,458 | ​ | ​ | 2,475 | ​ | ​ | 2,600 | ​ | ​ | 2,561 | ​ | ​ | 2,779 | ​ | ​ | 2,787 | ​ | ​ | 3,299
Service charges on deposits | ​ | ​ | 2,424 | ​ | ​ | 2,362 | ​ | ​ | 2,504 | ​ | ​ | 2,527 | ​ | ​ | 2,415 | ​ | ​ | 2,508 | ​ | ​ | 2,646 | ​ | ​ | 2,657
Secondary mortgage fees | ​ | ​ | 59 | ​ | ​ | 76 | ​ | ​ | 66 | ​ | ​ | 58 | ​ | ​ | 50 | ​ | ​ | 65 | ​ | ​ | 84 | ​ | ​ | 88
Mortgage servicing rights mark to market (loss) gain | ​ | ​ | (525) | ​ | ​ | 96 | ​ | ​ | 281 | ​ | ​ | (1,277) | ​ | ​ | 94 | ​ | ​ | (238) | ​ | ​ | (964) | ​ | ​ | 385
Mortgage servicing income | ​ | ​ | 516 | ​ | ​ | 499 | ​ | ​ | 519 | ​ | ​ | 495 | ​ | ​ | 488 | ​ | ​ | 513 | ​ | ​ | 466 | ​ | ​ | 475
Net gain on sales of mortgage loans | ​ | ​ | 306 | ​ | ​ | 398 | ​ | ​ | 407 | ​ | ​ | 366 | ​ | ​ | 314 | ​ | ​ | 468 | ​ | ​ | 507 | ​ | ​ | 516
Securities (losses) gains, net | ​ | ​ | (1,675) | ​ | ​ | (1,547) | ​ | ​ | (924) | ​ | ​ | (2) | ​ | ​ | 1 | ​ | ​ | - | ​ | ​ | (1) | ​ | ​ | -
Change in cash surrender value of BOLI | ​ | ​ | 242 | ​ | ​ | 418 | ​ | ​ | 919 | ​ | ​ | 541 | ​ | ​ | 1,172 | ​ | ​ | 820 | ​ | ​ | 860 | ​ | ​ | 767
Death benefit realized on BOLI | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 893 | ​ | ​ | 12 | ​ | ​ | -
Card related income | ​ | ​ | 2,244 | ​ | ​ | 2,690 | ​ | ​ | 2,606 | ​ | ​ | 2,511 | ​ | ​ | 2,376 | ​ | ​ | 2,577 | ​ | ​ | 2,589 | ​ | ​ | 2,572
Other income | ​ | ​ | 1,489 | ​ | ​ | 773 | ​ | ​ | 1,024 | ​ | ​ | 910 | ​ | ​ | 1,030 | ​ | ​ | 742 | ​ | ​ | 1,595 | ​ | ​ | 851
Total noninterest income | ​ | ​ | 7,350 | ​ | ​ | 8,223 | ​ | ​ | 9,877 | ​ | ​ | 8,729 | ​ | ​ | 10,501 | ​ | ​ | 11,127 | ​ | ​ | 10,581 | ​ | ​ | 11,610
Noninterest Expense | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Salaries and employee benefits | ​ | ​ | 22,248 | ​ | ​ | 21,798 | ​ | ​ | 23,115 | ​ | ​ | 21,405 | ​ | ​ | 24,312 | ​ | ​ | 23,424 | ​ | ​ | 24,676 | ​ | ​ | 25,613
Occupancy, furniture and equipment | ​ | ​ | 3,475 | ​ | ​ | 3,639 | ​ | ​ | 3,506 | ​ | ​ | 3,817 | ​ | ​ | 3,927 | ​ | ​ | 3,899 | ​ | ​ | 3,876 | ​ | ​ | 4,457
Computer and data processing | ​ | ​ | 1,774 | ​ | ​ | 1,290 | ​ | ​ | 1,922 | ​ | ​ | 2,291 | ​ | ​ | 2,255 | ​ | ​ | 2,184 | ​ | ​ | 2,375 | ​ | ​ | 2,659
FDIC insurance | ​ | ​ | 584 | ​ | ​ | 794 | ​ | ​ | 744 | ​ | ​ | 583 | ​ | ​ | 667 | ​ | ​ | 616 | ​ | ​ | 632 | ​ | ​ | 628
Net teller & bill paying | ​ | ​ | 502 | ​ | ​ | 515 | ​ | ​ | 534 | ​ | ​ | 564 | ​ | ​ | 521 | ​ | ​ | 578 | ​ | ​ | 570 | ​ | ​ | 575
General bank insurance | ​ | ​ | 305 | ​ | ​ | 306 | ​ | ​ | 300 | ​ | ​ | 301 | ​ | ​ | 309 | ​ | ​ | 312 | ​ | ​ | 320 | ​ | ​ | 327
Amortization of core deposit intangible | ​ | ​ | 624 | ​ | ​ | 618 | ​ | ​ | 616 | ​ | ​ | 603 | ​ | ​ | 580 | ​ | ​ | 574 | ​ | ​ | 570 | ​ | ​ | 716
Advertising expense | ​ | ​ | 142 | ​ | ​ | 103 | ​ | ​ | 93 | ​ | ​ | 383 | ​ | ​ | 192 | ​ | ​ | 472 | ​ | ​ | 299 | ​ | ​ | 280
Card related expense | ​ | ​ | 1,216 | ​ | ​ | 1,222 | ​ | ​ | 1,347 | ​ | ​ | 1,338 | ​ | ​ | 1,277 | ​ | ​ | 1,323 | ​ | ​ | 1,458 | ​ | ​ | 1,497
Legal fees | ​ | ​ | 319 | ​ | ​ | 283 | ​ | ​ | 97 | ​ | ​ | 228 | ​ | ​ | 226 | ​ | ​ | 238 | ​ | ​ | 202 | ​ | ​ | 660
Consulting & management fees | ​ | ​ | 790 | ​ | ​ | 520 | ​ | ​ | 549 | ​ | ​ | 556 | ​ | ​ | 336 | ​ | ​ | 797 | ​ | ​ | 480 | ​ | ​ | 883
Other real estate expense, net | ​ | ​ | 306 | ​ | ​ | (98) | ​ | ​ | (27) | ​ | ​ | 218 | ​ | ​ | 46 | ​ | ​ | (87) | ​ | ​ | 242 | ​ | ​ | 2,019
Other expense | ​ | ​ | 3,637 | ​ | ​ | 3,840 | ​ | ​ | 4,627 | ​ | ​ | 4,739 | ​ | ​ | 3,593 | ​ | ​ | 3,547 | ​ | ​ | 3,608 | ​ | ​ | 4,008
Total noninterest expense | ​ | ​ | 35,922 | ​ | ​ | 34,830 | ​ | ​ | 37,423 | ​ | ​ | 37,026 | ​ | ​ | 38,241 | ​ | ​ | 37,877 | ​ | ​ | 39,308 | ​ | ​ | 44,322
Income before income taxes | ​ | ​ | 32,013 | ​ | ​ | 34,973 | ​ | ​ | 32,484 | ​ | ​ | 24,938 | ​ | ​ | 28,543 | ​ | ​ | 29,190 | ​ | ​ | 29,851 | ​ | ​ | 25,372
Provision for income taxes | ​ | ​ | 8,406 | ​ | ​ | 9,411 | ​ | ​ | 8,149 | ​ | ​ | 6,713 | ​ | ​ | 7,231 | ​ | ​ | 7,299 | ​ | ​ | 6,900 | ​ | ​ | 6,262
Net income | ​ | $ | 23,607 | ​ | $ | 25,562 | ​ | $ | 24,335 | ​ | $ | 18,225 | ​ | $ | 21,312 | ​ | $ | 21,891 | ​ | $ | 22,951 | ​ | $ | 19,110
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic earnings per share (GAAP) | ​ | $ | 0.53 | ​ | $ | 0.57 | ​ | $ | 0.55 | ​ | $ | 0.40 | ​ | $ | 0.48 | ​ | $ | 0.48 | ​ | $ | 0.52 | ​ | $ | 0.42
Diluted earnings per share (GAAP) | ​ | ​ | 0.52 | ​ | ​ | 0.56 | ​ | ​ | 0.54 | ​ | ​ | 0.40 | ​ | ​ | 0.47 | ​ | ​ | 0.48 | ​ | ​ | 0.50 | ​ | ​ | 0.42
Dividends paid per share | ​ | ​ | 0.05 | ​ | ​ | 0.05 | ​ | ​ | 0.05 | ​ | ​ | 0.05 | ​ | ​ | 0.05 | ​ | ​ | 0.05 | ​ | ​ | 0.05 | ​ | ​ | 0.06

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16

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Reconciliation of Non-GAAP Financial Measures

The tables below provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the periods indicated. Dollar amounts below in thousands:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Quarters Ended | ​
​ | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ |  | 2024 |  | 2024 | ​ | 2023 | ​
Net Income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Income before income taxes (GAAP) | ​ | $ | 25,372 | ​ | $ | 29,851 | ​ | $ | 24,938 | ​
Pre-tax income adjustments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Litigation related expenses | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 1,200 | ​
Death benefit related to BOLI | ​ | ​ | - | ​ | ​ | (12) | ​ | ​ | - | ​
Merger related costs, net of losses on branch sales | ​ | ​ | 1,521 | ​ | ​ | 471 | ​ | ​ | 19 | ​
Adjusted net income before taxes | ​ | ​ | 26,893 | ​ | ​ | 30,310 | ​ | ​ | 26,157 | ​
Taxes on adjusted net income | ​ | ​ | 6,637 | ​ | ​ | 7,009 | ​ | ​ | 7,041 | ​
Adjusted net income (non-GAAP) | ​ | $ | 20,256 | ​ | $ | 23,301 | ​ | $ | 19,116 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic earnings per share (GAAP) | ​ | $ | 0.42 | ​ | $ | 0.52 | ​ | $ | 0.40 | ​
Diluted earnings per share (GAAP) | ​ | ​ | 0.42 | ​ | ​ | 0.50 | ​ | ​ | 0.40 | ​
Adjusted basic earnings per share (non-GAAP) | ​ | ​ | 0.46 | ​ | ​ | 0.52 | ​ | ​ | 0.43 | ​
Adjusted diluted earnings per share (non-GAAP) | ​ | ​ | 0.44 | ​ | ​ | 0.51 | ​ | ​ | 0.42 | ​

​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Quarters Ended | ​
​ | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ |  | 2024 |  | 2024 | ​ | 2023 | ​
Net Interest Margin | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest income (GAAP) | ​ | $ | 75,279 | ​ | $ | 76,072 | ​ | $ | 73,696 | ​
Taxable-equivalent adjustment: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans | ​ | ​ | 11 | ​ | ​ | 11 | ​ | ​ | 11 | ​
Securities | ​ | ​ | 339 | ​ | ​ | 343 | ​ | ​ | 352 | ​
Interest income (TE) | ​ | ​ | 75,629 | ​ | ​ | 76,426 | ​ | ​ | 74,059 | ​
Interest expense (GAAP) | ​ | ​ | 13,695 | ​ | ​ | 15,494 | ​ | ​ | 12,461 | ​
Net interest income (TE) | ​ | $ | 61,934 | ​ | $ | 60,932 | ​ | $ | 61,598 | ​
Net interest income (GAAP) | ​ | $ | 61,584 | ​ | $ | 60,578 | ​ | $ | 61,235 | ​
Average interest earning assets | ​ | $ | 5,260,315 | ​ | $ | 5,219,160 | ​ | $ | 5,290,737 | ​
Net interest margin (TE) | ​ | ​ | 4.68 | % | ​ | 4.64 | % | ​ | 4.62 | %
Net interest margin (GAAP) | ​ | ​ | 4.66 | % | ​ | 4.62 | % | ​ | 4.59 | %

​

​

17

​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | GAAP | ​ | Non-GAAP | ​
​ | ​ | ​ | Three Months Ended | ​ | ​ | Three Months Ended | ​
​ | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ | ​ | 2024 | ​ | 2024 | ​ | 2023 | ​ | 2024 | ​ | 2024 | ​ | 2023 | ​
Efficiency Ratio / Adjusted Efficiency Ratio | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Noninterest expense | ​ | $ | 44,322 | ​ | $ | 39,308 | ​ | $ | 37,026 | ​ | $ | 44,322 | ​ | $ | 39,308 | ​ | $ | 37,026 | ​
Less amortization of core deposit | ​ | ​ | 716 | ​ | ​ | 570 | ​ | ​ | 603 | ​ | ​ | 716 | ​ | ​ | 570 | ​ | ​ | 603 | ​
Less other real estate expense, net | ​ | ​ | 2,019 | ​ | ​ | 242 | ​ | ​ | 218 | ​ | ​ | 2,019 | ​ | ​ | 242 | ​ | ​ | 218 | ​
Less litigation related expense | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 1,200 | ​
Less merger related costs, net of losses on branch sales | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | 1,521 | ​ | ​ | 471 | ​ | ​ | 19 | ​
Noninterest expense less adjustments | ​ | $ | 41,587 | ​ | $ | 38,496 | ​ | $ | 36,205 | ​ | $ | 40,066 | ​ | $ | 38,025 | ​ | $ | 34,986 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net interest income | ​ | $ | 61,584 | ​ | $ | 60,578 | ​ | $ | 61,235 | ​ | $ | 61,584 | ​ | $ | 60,578 | ​ | $ | 61,235 | ​
Taxable-equivalent adjustment: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | 11 | ​ | ​ | 11 | ​ | ​ | 11 | ​
Securities | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | 339 | ​ | ​ | 343 | ​ | ​ | 352 | ​
Net interest income including adjustments | ​ | ​ | 61,584 | ​ | ​ | 60,578 | ​ | ​ | 61,235 | ​ | ​ | 61,934 | ​ | ​ | 60,932 | ​ | ​ | 61,598 | ​
Noninterest income | ​ | ​ | 11,610 | ​ | ​ | 10,581 | ​ | ​ | 8,729 | ​ | ​ | 11,610 | ​ | ​ | 10,581 | ​ | ​ | 8,729 | ​
Less death benefit related to BOLI | ​ | ​ | - | ​ | ​ | 12 | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 12 | ​ | ​ | - | ​
Less securities losses | ​ | ​ | - | ​ | ​ | (1) | ​ | ​ | (2) | ​ | ​ | - | ​ | ​ | (1) | ​ | ​ | (2) | ​
Less MSRs mark to market gains (losses) | ​ | ​ | 385 | ​ | ​ | (964) | ​ | ​ | (1,277) | ​ | ​ | 385 | ​ | ​ | (964) | ​ | ​ | (1,277) | ​
Taxable-equivalent adjustment: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Change in cash surrender value of BOLI | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | 203 | ​ | ​ | 232 | ​ | ​ | 144 | ​
Noninterest income (excluding) / including adjustments | ​ | ​ | 11,225 | ​ | ​ | 11,534 | ​ | ​ | 10,008 | ​ | ​ | 11,428 | ​ | ​ | 11,766 | ​ | ​ | 10,152 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net interest income including adjustments plus noninterest income (excluding) / including adjustments | ​ | $ | 72,809 | ​ | $ | 72,112 | ​ | $ | 71,243 | ​ | $ | 73,362 | ​ | $ | 72,698 | ​ | $ | 71,750 | ​
Efficiency ratio / Adjusted efficiency ratio | ​ | ​ | 57.12 | % | ​ | 53.38 | % | ​ | 50.82 | % | ​ | 54.61 | % | ​ | 52.31 | % | ​ | 48.76 | %

​

​

N/A - Not applicable.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Quarters Ended | ​
​ | ​ | December 31, | ​ | September 30, | ​ | December 31, | ​
​ | ​ | 2024 |  | 2024 | ​ | 2023 | ​
Return on Average Tangible Common Equity Ratio | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income (GAAP) | ​ | $ | 19,110 | ​ | $ | 22,951 | ​ | $ | 18,225 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Income before income taxes (GAAP) | ​ | $ | 25,372 | ​ | $ | 29,851 | ​ | $ | 24,938 | ​
Pre-tax income adjustments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amortization of core deposit intangibles | ​ | ​ | 716 | ​ | ​ | 570 | ​ | ​ | 603 | ​
Net income, excluding intangibles amortization, before taxes | ​ | ​ | 26,088 | ​ | ​ | 30,421 | ​ | ​ | 25,541 | ​
Taxes on net income, excluding intangible amortization, before taxes | ​ | ​ | 6,439 | ​ | ​ | 7,032 | ​ | ​ | 6,875 | ​
Net income, excluding intangibles amortization (non-GAAP) | ​ | $ | 19,649 | ​ | $ | 23,389 | ​ | $ | 18,666 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total Average Common Equity | ​ | $ | 667,881 | ​ | ​ | 639,151 | ​ | $ | 548,706 | ​
Less Average goodwill and intangible assets | ​ | ​ | 101,119 | ​ | ​ | 96,245 | ​ | ​ | 97,979 | ​
Average tangible common equity (non-GAAP) | ​ | $ | 566,762 | ​ | $ | 542,906 | ​ | $ | 450,727 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Return on average common equity (GAAP) | ​ | ​ | 11.38 | % | ​ | 14.29 | % | ​ | 13.18 | %
Return on average tangible common equity (non-GAAP) | ​ | ​ | 13.79 | % | ​ | 17.14 | % | ​ | 16.43 | %

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18