Company: OSBC
Filing Date: 2025-05-08
Form Type: 424B3
Source: 0001104659-25-046065
Chunk: 151

Company: OLD SECOND BANCORP INC
Filing Date: 2025-05-08
Form: 424B3
Chunk 151
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 Note 1 of our consolidated financial statements included elsewhere in this proxy statement/prospectus. These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Recent accounting pronouncements and standards that have impacted or could potentially affect us are also discussed in Note 1 of the consolidated financial statements.

#### Allowance for Credit Losses
The allowance for credit losses (“ACL”) represents management’s estimate of the expected credit losses over the expected contractual life of our loan portfolio. Determining the appropriateness of the ACL is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the ACL in future periods.

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The ACL involves critical accounting estimates because:

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changes in the provision for credit losses can materially affect our financial results;

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estimates relating to the ACL require us to project future borrower performance, including delinquency and charge-offs, along with, when applicable, collateral values, based on a reasonable and supportable forecast period utilizing forward-looking economic scenarios in order to estimate probability of default and loss given default;

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the ACL is influenced by factors outside of our control such as industry and business trends, geopolitical events and the effects of laws and regulations as well as economic conditions such as unemployment, interest rates, inflation, housing prices and GDP;

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considerable judgment is required to determine whether the model used to generate the ACL produces an estimate that is sufficient to encompass the current view of lifetime expected credit losses.

Because our estimates of the ACL involve judgments and are influenced by factors outside of our control, there is uncertainty inherent in these estimates. Changes in such estimates could significantly impact our ACL and provision for credit losses. A discussion of the factors driving changes in the amount of the ACL is included in the “Allowance for Credit Losses” section below.

#### Fair Value Measurements
Bancorp Financial determines the fair value of its assets and liabilities in accordance with accounting guidance that establishes a standard framework for measuring and disclosing fair value under GAAP. The use of fair values is required in determining the carrying values of certain assets and liabilities, as well as for specific disclosures. Fair value is an estimate of the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants