Company: OSBC
Filing Date: 2025-02-26
Form Type: 425
Source: 0000357173-25-000023
Chunk: 2

Company: OLD SECOND BANCORP INC
Filing Date: 2025-02-26
Form: 425
Chunk 2
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 result in higher funding costs for Old Second, but also substantially higher asset yields. I anticipate we will have opportunities in the future to improve profitability even beyond the levels illustrated in the presentation by acquiring additional deposit franchises in and adjacent to our markets. That will be a renewed focus going forward.

With that said, I'd like to move into the presentation. If you begin on Page 5 of the investor deck, you'll see a summary of why we believe the partnership between our two companies is so compelling. It will enhance our competitive position with complementary distribution in the western suburbs of Chicago. This transaction will improve an already exceptional profitability profile, despite the impact of recent interest rate cuts, most importantly, without changing who we are or negatively impacting the strength of the balance sheet.

On Slide 6, we walk through some of the reasons why we believe this transaction will deliver value to our shareholders of both companies, not the least of which is the familiarity of these two companies have with each other and the markets that we operate in.

Slide 7 through 10 provide an overview of Evergreen for those of you that may not be so familiar. Evergreen has been historically a very profitable and fast-growing company. In addition to providing full banking services in the Chicago market, Evergreen operates two national power sport lending divisions. Freedom Road Financial and Performance Finance that finance affinity motorcycles and off-road powersport products. Two-thirds of Evergreen's loan portfolio is comprised of these consumer power sport loans with December 2024 originations yielding 9.5%.

Unlike old second, Evergreen typically performs better in lower interest rate environments by maintaining comparatively high loan yields without adding duration as you can see on Slide 10. This business will be highly complementary to the strength of Old Second. We have found that asset quality has been remarkably predictable relative to other consumer lending asset classes, and the affinity nature of the lending drives outperformance. The end result is extremely attractive risk-adjusted returns in a business that we have long admired.

I'll now turn it over to Brad, who will provide some color on the financial implications of the transaction. Brad?

Bradley Adams - EVP, Chief Operating & Chief Financial Officer, Old Second Bancorp, Inc.

Thank you, Jim, and good morning, everybody. I'll present a few financial highlights of the merger and then turn it back over to Jim. This merger will result in pro forma old second ownership for Evergreen shareholders of approximately 15%. The overall economics to Old Second and the combined shareholder base are extremely compelling and are driven