Company: OSBC
Filing Date: 2025-02-26
Form Type: 425
Source: 0000357173-25-000023
Chunk: 8

Company: OLD SECOND BANCORP INC
Filing Date: 2025-02-26
Form: 425
Chunk 8
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 Chris McGratty with KBW. Your line is live.

Q:Hey, this is Andrew Leischner on for Chris McGratty. So, post deal close, you'll still be running with strong capital levels at about 12% CET1. I know you spoke about the potential for acquiring deposits, but how are you thinking about further capital deployment opportunities once you get through this merger closing integration. Thanks.

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

Yes. So, we're still in the same world, right? I mean I think we've been answering capital and capital return questions for the better part of two years. And my hope is that people understand how we think about it. The cost of carry is still low. The opportunity cost is still very high. There have been a few M&A transactions, but those that have been announced off and come with a corresponding capital raise. In my mind, what we've been doing is largely just a timing difference between when a capital raise and the nature of the capital raise and doing M&A.

Everybody seems to think there is an M&A wave coming. I don't know if that's true or not. I can tell you that balance sheet marks for the vast majority of potential would-be sellers are quite onerous. And that means the U.S. capital is king. And as we pointed out earlier that in that respect, this deal is very unique. I think that our strategy would be the same. Buyback is certainly an option. Additional M&A is certainly an option. But I would hope by now that people understand that our primary focus is earning a very strong ROTCE. And if for some reason, trends indicate we're not doing that, then capital gets returned. No change.

Q:Okay. Great. Thank you. And I see you gave the annual power sports originations in the deck, but how should we be thinking about loan growth expectations for the pro forma company post deal close?

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

Higher than we were before, which I think on our last earnings call, we said something in the low to mid-single digits is the last guidance we gave. I mean originations, as you see there, it is a short duration book. So, it requires a high level of originations to stay flat, but we do believe there is growth opportunity.

Q:Got it. Thank you. I will step back