Old Second Bancorp | research notes

Old Second Bancorp: A Leading Financial Institution in the Midwest

Old Second Bancorp, Inc. is a financial holding company headquartered in Aurora, Illinois. It is the parent company of Old Second National Bank, a community bank with over 40 branches in Illinois, Wisconsin, and Michigan.

History and Background

Old Second Bancorp was founded in 1923 as Fox River State Bank in Elgin, Illinois. Over the years, the company has grown through acquisitions and organic expansion, establishing a strong presence in the Midwest. In 2003, the company went public and changed its name to Old Second Bancorp.

Products and Services

Old Second Bancorp offers a wide range of financial products and services to both individuals and businesses. These include:

• Personal banking (checking, savings, loans)
• Business banking (loans, deposits, cash management)
• Commercial banking (lending, equipment financing)
• Wealth management (investments, planning)
• Mortgage lending

Financial Performance

Old Second Bancorp has consistently delivered strong financial performance. The company's net income has grown steadily in recent years, and it has maintained a solid capital position. In 2022, the company reported net income of $136.4 million.

Community Involvement

Old Second Bancorp is committed to supporting the communities it serves. The company sponsors numerous non-profit organizations and events, and its employees volunteer their time in local schools and charities.

Leadership

Old Second Bancorp is led by President and CEO James S. Eccher, who has over 30 years of experience in the financial industry. The company's board of directors includes a mix of experienced business leaders and financial experts.

Mission and Values

Old Second Bancorp's mission is to "be the leading financial institution in the Midwest by providing exceptional customer service, innovative products, and a commitment to our communities." The company's core values include:

• Customer Focus
• Integrity
• Teamwork
• Innovation
• Community Involvement

Conclusion

Old Second Bancorp is a well-established and financially sound financial institution that plays a vital role in the Midwest. With a focus on customer service, community involvement, and financial innovation, the company is well-positioned for continued growth and success in the years to come.

Business Model of Old Second Bancorp

Old Second Bancorp is a financial holding company that provides a range of banking and financial services to customers in Illinois and Wisconsin. The company's business model is centered around three core areas:

• Commercial Banking: Old Second provides a variety of commercial banking products and services to small businesses, mid-sized companies, and large corporations. These services include lending, cash management, and international banking.
• Retail Banking: Old Second offers a full range of retail banking products and services to individuals and families. These services include checking and savings accounts, mortgages, and consumer loans.
• Wealth Management: Old Second provides investment management, financial planning, and trust services to high-net-worth individuals and families.

Advantages to Competitors

Old Second Bancorp has several advantages over its competitors, including:

• Strong local presence: Old Second has a long history of operating in Illinois and Wisconsin, and it has built strong relationships with customers and businesses in these communities.
• Diversified revenue streams: Old Second's business model is diversified across commercial banking, retail banking, and wealth management, which helps to reduce its risk profile.
• Focus on customer service: Old Second emphasizes providing excellent customer service, and it has received numerous awards for its commitment to customer satisfaction.
• Strong financial performance: Old Second has a history of strong financial performance, and it has consistently outperformed its competitors in terms of profitability and return on assets.

Additional Advantages

In addition to the advantages listed above, Old Second Bancorp also benefits from the following:

• Scale: Old Second is one of the largest banks in Illinois and Wisconsin, which gives it significant economies of scale.
• Technology: Old Second has invested heavily in technology, which enables it to provide its customers with a wide range of convenient and innovative banking services.
• Regulatory compliance: Old Second has a strong commitment to regulatory compliance, and it has a long history of operating in a safe and sound manner.

Outlook of Old Second Bancorp

Financial Performance:

• Strong Financial Results: Old Second Bancorp has consistently reported solid financial performance, with increasing revenue and earnings in recent quarters.
• High Return on Assets (ROA) and Return on Equity (ROE): The company maintains high levels of profitability, with ROA and ROE consistently above industry averages.
• Strong Capitalization: Old Second Bancorp has a strong capital position, exceeding regulatory requirements and providing a cushion against potential losses.

Business Strategy:

• Focus on Core Banking: The company focuses primarily on traditional banking services, including commercial and retail banking, as well as wealth management.
• Geographic Expansion: Old Second Bancorp has been expanding its geographic reach, primarily through acquisitions, to diversify its revenue base and gain market share.
• Technology Investments: The company is investing heavily in technology to improve customer experience, enhance efficiency, and reduce operating costs.

Market Position:

• Strong Market Share in Illinois and Wisconsin: Old Second Bancorp holds a significant market share in its core markets of Illinois and Wisconsin.
• Growing Presence in Michigan: The company recently acquired Northern States Financial Corp. in Michigan, expanding its footprint in the Midwest.
• Focus on Business Banking: Old Second Bancorp is particularly strong in business banking, providing a range of financial services to small and medium-sized enterprises (SMEs).

Growth Prospects:

• Organic Growth: The company expects to continue growing organically through customer acquisition, new product offerings, and cross-selling.
• Acquisitions: Old Second Bancorp is actively pursuing acquisitions to expand its geographic reach and enhance its product and service capabilities.
• Business Banking Expansion: The company sees significant growth opportunities in its business banking segment, particularly in targeted industries such as healthcare and manufacturing.

Risks:

• Interest Rate Volatility: Changes in interest rates could impact Old Second Bancorp's net interest margin and loan demand.
• Economic Downturn: A recession could lead to increased loan losses and reduced loan originations.
• Regulatory Environment: Changes in banking regulations could impose additional costs and constrain business operations.

Valuation:

• Price-to-Book (P/B) Ratio: Old Second Bancorp's P/B ratio is slightly above industry average, reflecting its strong financial performance and growth potential.
• Price-to-Earnings (P/E) Ratio: The company's P/E ratio is also slightly above average, indicating that investors are willing to pay a premium for its earnings growth.

Analyst Consensus:

• Most analysts have a positive outlook on Old Second Bancorp, citing its strong financial performance, growth prospects, and solid management team.
• Analysts expect the company to continue delivering solid financial results and expanding its market share in the Midwest.

Similar Companies to Old Second Bancorp

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• Reason Customers Like: Community-focused banking with competitive rates, a wide range of products, and exceptional customer service.

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3. 1st Source Bank: https://www.1stsource.com/

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5. First Merchants Corporation: https://www.firstmerchants.com/

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7. JPMorgan Chase & Co.: https://www.jpmorganchase.com/

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8. Bank of America Corporation: https://www.bankofamerica.com/

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9. Wells Fargo & Company: https://www.wellsfargo.com/

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Old Second Bancorp

Early History:

• 1874: Aurora National Bank is founded in Aurora, Illinois.
• 1921: Aurora National Bank consolidates with First National Bank to form Old Second National Bank.
• 1956: Old Second National Bank acquires four additional banks.

Growth and Merger Activity:

• 1970s: Old Second National Bank expands into other Illinois counties.
• 1985: Old Second Bancorp is formed as the holding company for Old Second National Bank.
• 1990s-2000s: Old Second Bancorp acquires numerous banks and expands its geographic footprint into Wisconsin, Indiana, and Kentucky.

Recent History:

• 2008: Old Second Bancorp receives significant government assistance during the financial crisis.
• 2011: Old Second Bancorp completes a restructuring plan and exits government conservatorship.
• 2015: Old Second Bancorp acquires NBD Bank of Dixon, Illinois.
• 2016: Old Second Bancorp acquires State Bank of Antioch, Illinois.
• 2017: Old Second Bancorp acquires Green Bay Bancorp, Inc.

Present Day:

Old Second Bancorp is currently a regional financial services company headquartered in Aurora, Illinois. It operates as the parent company of Old Second National Bank, offering a range of financial products and services including:

• Personal and commercial banking
• Wealth management
• Mortgage lending
• Credit cards

As of 2023, Old Second Bancorp has over $6 billion in assets and 45 banking offices in Illinois, Wisconsin, Indiana, and Kentucky.

Recent Timelines of Old Second Bancorp

2023

• March 7: Old Second Bancorp announces the appointment of James J. Smith as its new President and CEO, effective June 1, 2023.
• February 14: Old Second Bancorp reports fourth quarter and full year 2022 financial results.

2022

• November 17: Old Second Bancorp completes the acquisition of Community First Bank.
• October 24: Old Second Bancorp announces the signing of an agreement to acquire Community First Bank.
• July 28: Old Second Bancorp reports second quarter 2022 financial results.
• April 26: Old Second Bancorp reports first quarter 2022 financial results.

2021

• October 26: Old Second Bancorp reports third quarter 2021 financial results.
• July 30: Old Second Bancorp reports second quarter 2021 financial results.
• April 29: Old Second Bancorp reports first quarter 2021 financial results.

Exceptional Financial Services at Old Second Bancorp

As a valued customer of Old Second Bancorp, I couldn't be happier with the exceptional financial services I have received.

Friendly and Knowledgeable Staff

From the moment I stepped into their branch, I was greeted with warm smiles and attentive staff. They took the time to understand my financial needs and offered tailored solutions that perfectly aligned with my goals.

Competitive Rates and Low Fees

Old Second Bancorp continuously impresses me with their competitive rates and low fees. Their deposit accounts offer substantial yields, while their loan rates are highly favorable. This has enabled me to optimize my savings and reduce my debt burden.

Innovative Digital Banking

Their cutting-edge digital banking platform makes managing my finances a breeze. I can conveniently deposit checks, set up automatic payments, and view my account balances all from my smartphone or tablet. The app is user-friendly and secure, giving me peace of mind.

Community Involvement

Old Second Bancorp is deeply committed to the communities it serves. Their involvement in local events and support for non-profit organizations demonstrates their dedication to giving back. As a customer, I am proud to support a company that values its community as much as it does its customers.

Personalized Service

What sets Old Second Bancorp apart is their personalized approach to banking. My financial advisor, [Advisor's Name], has consistently exceeded my expectations with their proactive communication and tailored recommendations. They understand my unique financial situation and provide guidance that helps me achieve my financial aspirations.

Highly Recommended

Without hesitation, I highly recommend Old Second Bancorp to anyone seeking exceptional financial services. Their friendly staff, competitive rates, innovative digital banking, community involvement, and personalized service make them a true standout in the industry. As a satisfied customer, I am confident that they will continue to surpass my expectations for years to come.

Discover Financial Stability and Growth with Old Second Bancorp

In the ever-changing economic landscape, choosing a financial partner that provides stability, growth, and exceptional service is crucial. Old Second Bancorp stands out as a trusted financial institution offering a comprehensive range of banking and financial services to individuals, businesses, and communities.

Financial Strength and Stability

Old Second Bancorp is known for its financial strength and stability. The company has consistently maintained a high credit rating, reflecting the soundness of its financial operations. Its substantial capital base ensures our ability to withstand economic downturns and support our customers' financial needs.

Comprehensive Banking Services

We offer a full suite of personal and business banking services to meet your financial goals. From checking and savings accounts to mortgages, loans, and wealth management, we provide tailored solutions to help you manage your finances effectively.

Exceptional Customer Service

At Old Second Bancorp, we pride ourselves on delivering exceptional customer service. Our dedicated team of financial advisors and bankers is committed to understanding your needs and providing personalized guidance to help you achieve your financial objectives. We are accessible through multiple channels, including online banking, mobile banking, and our convenient network of branches.

Community Involvement

We believe in giving back to the communities we serve. Old Second Bancorp actively supports local businesses, non-profit organizations, and community initiatives that contribute to the growth and well-being of our communities.

Convenient Online Access

Our website, Website Link, provides convenient 24/7 access to your financial accounts. Manage your finances on the go, pay bills, transfer funds, and connect with our support team directly.

Why Choose Old Second Bancorp?

• Financial strength and stability
• Comprehensive banking services
• Exceptional customer service
• Community involvement
• Convenient online access

Whether you are looking to save for the future, grow your business, or manage your day-to-day finances, Old Second Bancorp is the trusted financial partner you can rely on. Visit our website today to explore our full range of services and see how we can help you achieve your financial goals.

Name: Fiserv, Inc.

Website: https://www.fiserv.com/

Services Provided:

Fiserv provides a comprehensive suite of financial technology solutions and services to banks, credit unions, and other financial institutions. These services include:

• Core banking: Fiserv offers a range of core banking systems that support account processing, loan origination, and other essential banking functions.
• Payments: Fiserv provides payment processing solutions for businesses and consumers, including mobile payments, online banking, and check processing.
• Risk and compliance: Fiserv offers a variety of risk management and compliance solutions, including fraud detection, anti-money laundering, and regulatory reporting.
• Investment services: Fiserv provides investment management and brokerage services to banks and other financial institutions.
• Digital banking: Fiserv offers a range of digital banking solutions, including mobile banking, online banking, and self-service kiosks.
• Data analytics: Fiserv provides data analytics solutions that help financial institutions gain insights from their data and improve their decision-making.

Fiserv is a major supplier of technology and services to Old Second Bancorp, providing a range of solutions that support the bank's operations and growth.

Old Second Bancorp, Inc. (OSBC) is a bank holding company headquartered in Aurora, Illinois. Its primary banking subsidiary is Old Second National Bank, which operates over 200 full-service banking centers in Illinois, Wisconsin, and Michigan. OSBC has a diverse customer base that includes a wide range of individuals, businesses, and organizations.

Here are some of the main customer segments of Old Second Bancorp:

• Individuals: OSBC serves individuals through a variety of products and services, including checking and savings accounts, loans, mortgages, and wealth management services.
• Businesses: OSBC provides a wide range of banking and financial services to businesses of all sizes. These services include commercial lending, cash management, and treasury management.
• Municipalities: OSBC provides financial services to municipalities and other government entities. These services include financing for infrastructure projects, public safety initiatives, and other community development initiatives.
• Nonprofit organizations: OSBC provides financial services to nonprofit organizations. These services include financing for capital projects, operating expenses, and special events.

Here are some examples of specific downstream companies that Old Second Bancorp serves:

• Agricultural businesses
• Construction companies
• Educational institutions
• Healthcare providers
• Manufacturing companies
• Retail businesses
• Technology companies

Old Second Bancorp is committed to providing its customers with high-quality service and tailored financial solutions. The company's website is www.osb.com.

Key Revenue Streams of Old Second Bancorp

Old Second Bancorp (NASDAQ: OSBC) generates revenue through the following primary business segments:

1. Net Interest Income

• Estimated Annual Revenue: $283.4 million (2022)

Net interest income represents the difference between the interest earned on loans and investments and the interest paid on deposits and other liabilities. It is the core revenue driver for Old Second Bancorp and accounts for approximately 89% of its total revenue.

2. Non-Interest Income

• Estimated Annual Revenue: $35.1 million (2022)

Non-interest income includes revenue from various sources, such as:

• Service charges: Fees charged for account maintenance, ATM transactions, and other banking services.
• Loan origination fees: Fees charged for processing and underwriting new loans.
• Investment banking fees: Commissions and fees earned from underwriting and distributing debt and equity securities.
• Trust and wealth management fees: Fees earned from managing investment portfolios and providing financial planning services.

3. Gains on Investments

• Estimated Annual Revenue: $4.8 million (2022)

Gains on investments represent the increase in the fair value of Old Second Bancorp's investment portfolio, primarily comprised of government securities and mortgage-backed securities.

4. Other Income

• Estimated Annual Revenue: $1.9 million (2022)

Other income includes revenue from miscellaneous sources, such as property rentals and insurance commissions.

Estimated Total Annual Revenue: $325.2 million

The estimated annual revenue figures are based on Old Second Bancorp's financial statements for the year ended December 31, 2022. It is important to note that actual revenue may vary from these estimates due to factors such as changes in interest rates, loan demand, and economic conditions.

Title: Key Partners of Old Second Bancorp

Introduction: Old Second Bancorp, Inc. is a bank holding company based in Aurora, Illinois. The company provides a range of financial services to individuals and businesses through its subsidiary, Old Second National Bank. Old Second Bancorp has partnered with several key organizations to enhance its products and services and expand its reach.

List of Key Partners:

1. Fiserv, Inc.

• Website: www.fiserv.com
• Services: Provides technology solutions for financial institutions, including core banking, digital banking, and payment processing.

2. CoreLogic, Inc.

• Website: www.corelogic.com
• Services: Provides data and analytics on the housing market, including property valuations, risk assessments, and foreclosure data.

3. Fiserv CarClarity

• Website: www.carclarity.com
• Services: Provides vehicle data and analytics to financial institutions, enabling them to offer tailored financing and protection products.

4. S&P Global Market Intelligence

• Website: www.spglobal.com/marketintelligence
• Services: Provides financial data and insights, including company financials, credit ratings, and industry trends.

5. Dun & Bradstreet

• Website: www.dnb.com
• Services: Provides business credit reports and risk management solutions, helping Old Second Bancorp assess the creditworthiness of potential borrowers.

6. LexisNexis Risk Solutions

• Website: www.lexisnexis.com/risk-solutions
• Services: Provides identity verification and fraud prevention solutions, helping Old Second Bancorp protect its customers from identity theft and fraud.

Benefits of Partnerships:

These partnerships provide Old Second Bancorp with several benefits, including:

• Access to innovative technologies and data
• Enhanced risk management capabilities
• Improved customer service and convenience
• Expansion into new markets
• Increased efficiency and cost savings

Conclusion:

Old Second Bancorp's key partners play a crucial role in supporting the company's growth and success. By collaborating with these organizations, Old Second Bancorp is able to offer a comprehensive range of financial products and services while mitigating risks and enhancing customer experiences.

Key Cost Structure of Old Second Bancorp

1. Interest Expense

• Estimated annual cost: $260 million
• Represents the largest expense category for Old Second Bancorp, accounting for approximately 40% of total expenses.
• Includes interest paid on deposits and other borrowings.

2. Salaries and Benefits

• Estimated annual cost: $120 million
• Comprises compensation and benefits for employees, including salaries, bonuses, health insurance, and retirement contributions.

3. Occupancy and Equipment

• Estimated annual cost: $40 million
• Includes rent or lease payments for office space, as well as depreciation and maintenance costs for equipment and facilities.

4. Marketing and Advertising

• Estimated annual cost: $25 million
• Encompasses expenses related to marketing campaigns, advertising, and public relations initiatives.

5. Technology and Systems

• Estimated annual cost: $20 million
• Includes the costs of maintaining and upgrading computer systems, software, and other technology infrastructure.

6. Professional Services

• Estimated annual cost: $15 million
• Covers expenses for services provided by external consultants, lawyers, and auditors.

7. Regulatory and Legal

• Estimated annual cost: $10 million
• Includes legal fees, compliance costs, and regulatory assessments.

8. Other Expenses

• Estimated annual cost: $20 million
• Comprises a variety of other expenses, such as insurance, utilities, travel, and entertainment.

9. Provision for Credit Losses

• Estimated annual cost: $15 million
• Represents the expense for estimated losses on loans and other credit facilities.

10. Depreciation and Amortization

• Estimated annual cost: $10 million
• Includes non-cash expenses related to the depreciation of fixed assets and amortization of intangible assets.

Total Estimated Annual Cost: Approximately $650 million

Sales Channels and Estimated Annual Sales of Old Second Bancorp

Branch Banking

• Physical Branches: Old Second Bancorp operates a network of approximately 50 physical branches located throughout Illinois, Wisconsin, and Michigan.
• Estimated Annual Sales: Not publicly disclosed.

Online Banking

• Website: Customers can access online banking services through Old Second Bancorp's website, allowing them to view account balances, make transactions, and pay bills.
• Mobile Banking: Customers can manage their accounts through the Old Second Bancorp mobile banking app, available for iOS and Android devices.
• Estimated Annual Sales: Not publicly disclosed.

Mortgage Lending

• Retail Mortgages: Old Second Bancorp offers a range of mortgage products, including conventional loans, FHA loans, and VA loans, primarily through its branch network.
• Wholesale Mortgages: The company also sells mortgages to other banks and financial institutions through its wholesale mortgage division.
• Estimated Annual Sales: $1.2 billion (2022)

Commercial Lending

• Commercial Real Estate Loans: Old Second Bancorp provides financing for commercial real estate projects, including office buildings, retail space, and industrial properties.
• Business Loans: The company offers a variety of business loans, including working capital loans, equipment loans, and lines of credit.
• Estimated Annual Sales: $1.6 billion (2022)

Other Sales Channels

• Wealth Management: Old Second Bancorp provides wealth management services, including investment advisory services, trust and estate planning, and retirement planning.
• Insurance: The company offers insurance products, such as auto insurance, homeowners insurance, and life insurance, through its partnership with MetLife.
• Estimated Annual Sales: Not publicly disclosed.

Total Estimated Annual Sales

The total estimated annual sales of Old Second Bancorp for 2022 are approximately $2.8 billion, with mortgage lending and commercial lending accounting for the majority of its revenue. However, it's important to note that these figures are estimates and may vary slightly from the actual reported results.

Old Second Bancorp is a bank holding company headquartered in Aurora, Illinois. It operates 74 retail banking offices and 77 ATMs in northern Illinois and northwest Indiana. As of December 31, 2023, the company had approximately $6.6 billion in assets, $4.8 billion in deposits, and $4.0 billion in loans.

Customer Segments

Old Second Bancorp's customer segments include:

• Consumers: Individuals and families who use the company's banking services for personal use. This segment includes checking and savings accounts, credit cards, mortgages, and other consumer lending products.
• Businesses: Small businesses, corporations, and other organizations that use the company's banking services for their business needs. This segment includes business checking and savings accounts, commercial loans, and other business lending products.
• Municipalities: Local governments and other public entities that use the company's banking services for their financial needs. This segment includes government checking and savings accounts, municipal bonds, and other public finance products.

Estimated Annual Sales

Old Second Bancorp does not disclose its estimated annual sales by customer segment. However, the company's total revenue for the year ended December 31, 2023 was $483 million.

Value Proposition of Old Second Bancorp

Target Customers:

• Individuals and small businesses
• Businesses with annual revenues up to $50 million
• Individuals and families seeking financial planning and wealth management services

Value Proposition:

• Local Decision-Making: Old Second Bancorp operates as a community bank, with local employees making decisions that are tailored to the needs of customers in the bank's markets. This allows for personalized service and quick responsiveness to changing customer needs.

• Strong Financial Performance: Old Second Bancorp has a history of strong financial performance, including:

  • Consistent asset and loan growth
  • Strong credit quality
  • High levels of capital and liquidity
  • Return on assets and equity that consistently exceed industry averages

• Broad Range of Products and Services: Old Second Bancorp offers a comprehensive suite of financial products and services, including:

  • Personal checking and savings accounts
  • Business loans and lines of credit
  • Residential and commercial mortgages
  • Wealth management and investment services
  • Trust and estate planning

• Convenient Access: Old Second Bancorp provides convenient access to its products and services through:

  • A network of over 200 branches in Illinois, Wisconsin, and Michigan
  • Online and mobile banking
  • 24/7 customer service

• Commitment to Community: Old Second Bancorp is deeply committed to the communities it serves. The bank supports local businesses, non-profit organizations, and community development initiatives.

Competitive Advantages:

• Local Presence: Old Second Bancorp's local presence and decision-making capabilities give it a competitive advantage over national banks that may not fully understand the nuances of the bank's markets.
• Financial Strength: The bank's strong financial performance provides a foundation for continued growth and stability.
• Breadth of Offerings: Old Second Bancorp's broad range of products and services allows it to meet the diverse financial needs of its target customers.
• Customer Service: The bank's commitment to personalized service and convenience sets it apart from its competitors.
• Community Involvement: Old Second Bancorp's deep involvement in its communities helps it build strong relationships with customers and reinforces its value proposition as a trusted financial partner.

Credit Risk:

• Loan Concentration: Old Second Bancorp (OSB) has a high concentration in commercial real estate loans, which are more susceptible to economic downturns and fluctuations in property values. This concentration makes OSB's loan portfolio more vulnerable to losses in the event of a real estate market correction.
• Residential Mortgage Portfolio: OSB also has a significant residential mortgage portfolio, which is exposed to risks associated with the housing market, including rising interest rates, foreclosures, and declining home prices.
• Impaired Loans: OSB has a relatively high level of impaired loans, which indicates that a significant portion of its loan portfolio is considered risky. Impaired loans can lead to loan losses and reduce the bank's overall profitability.

Market Risk:

• Interest Rate Risk: OSB's net interest margin is sensitive to changes in interest rates. Rising interest rates can reduce the bank's net interest income, which is a major source of revenue.
• Equity Market Risk: OSB's investment portfolio includes investments in equity securities, which are subject to market fluctuations. Declines in the stock market can negatively impact the bank's earnings and capital levels.

Operational Risk:

• Cybersecurity Risk: Old Second Bancorp faces cybersecurity risks, including data breaches, cyberattacks, and fraud. These risks can damage the bank's reputation, lead to financial losses, and disrupt its operations.
• Compliance Risk: OSB operates in a highly regulated industry and must comply with numerous laws and regulations. Failure to comply can result in penalties, fines, and reputational damage.
• Credit Concentration Risk: Old Second Bancorp has a significant concentration of its deposits in a few large commercial customers. The loss of a major depositor could have a negative impact on the bank's funding and liquidity.

Liquidity Risk:

• Deposit Concentration: OSB has a relatively high concentration of deposits in large time deposits, which are less stable than demand deposits. This concentration increases the bank's exposure to deposit withdrawals, which can lead to liquidity challenges.
• Loan-to-Deposit Ratio: OSB has a relatively high loan-to-deposit ratio, which indicates that the bank relies heavily on borrowed funds to fund its operations. This can make the bank more susceptible to liquidity risks in the event of a deposit outflow.

Reputational Risk:

• Negative Publicity: Old Second Bancorp has faced negative publicity in the past related to its lending practices and regulatory compliance issues. Negative publicity can damage the bank's reputation and make it more difficult to attract customers and investors.