Old Second Bancorp (OSBC) 8-K/A Financial Statements and Exhibits

Exhibit 99.4

UNAUDITED PRO FORMA
CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION

The following tables show the condensed combined financial information for each of Old Second Bancorp, Inc. (“Old Second”) and West Suburban Bancorp, Inc. (“West Suburban”), as well as unaudited pro forma condensed combined financial information for Old Second and West Suburban reflecting the merger as of and for the nine months ended September 30, 2021, and pro forma adjustments described in the accompanying notes.

Except as otherwise noted in the footnotes to the tables, (a) the financial information included under the “Old Second Historical” column is derived from and should be read in conjunction with Old Second’s historical unaudited interim condensed financial statements and accompanying notes included in Old Second’s Quarterly Report on Form 10-Q for the period ended September 30, 2021, and (b) the financial information under the “West Suburban Historical” column is derived from and should be read in conjunction with West Suburban’s historical unaudited condensed financial statements and accompanying notes for the period ended September 30, 2021, which are filed as Exhibit 99.2 to Old Second’s Current Report on Form 8-K/A filed on February 15, 2022.

The unaudited pro forma condensed combined financial information has been prepared to give effect to the following:

● The acquisition of West Suburban by Old Second under the provision of Financial Accounting Standard Board (FASB) Accounting Standards Codification, ASC 805, “Business Combinations” where the sale of assets and liability of West Suburban will be recorded by Old Second at their respective fair values as of the date the merger is completed;

● The distribution of shares of Old Second common stock to West Suburban shareholders in exchange for shares of West Suburban common stock (based on a 42.413 exchange ratio) and $271.15 in cash per share, without interest;

● Certain reclassifications to conform historical West Suburban financial information presentation to Old Second; and

● Transaction costs in connection with the merger.

The accompanying unaudited pro forma condensed combined balance sheet as of September 30, 2021 combines the historical consolidated balance sheets of Old Second and West Suburban, presenting the merger as if it had been consummated on September 30, 2021. The unaudited pro forma condensed combined income statements for the nine months ended September 30, 2021, combine the historical consolidated income statements of Old Second and West Suburban, presenting the merger as if it had been consummated on January 1, 2020. You should read the accompanying Notes to the Unaudited Pro Forma Condensed Combined Balance Sheet and Income Statements.

The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purposes only, and does not necessarily indicate the financial results of the combined company had Old Second and West Suburban actually been combined as of the dates indicated and at the beginning of the periods presented, nor does it necessarily indicate the results of operations in future periods of the future financial position of the combined entities, which could differ materially from those shown in this information. The unaudited pro forma condensed combined financial information does not reflect the benefits of expected synergies, anticipated cost savings, or other factors that may result as a consequence of the merger. The unaudited pro forma condensed combined financial information also does not consider any potential effect of changes in market conditions or interest rates on revenues or the impact of changes in Old Second’s stock price. As explained in more detail in the accompanying notes, the preliminary allocation of the pro forma purchase price reflected in the pro forma condensed combined financial information is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the merger.

As of the date of these pro formas, Old Second has not yet completed the valuation analysis and calculations at the level of detail required to obtain the necessary estimates of the fair market values of the West Suburban assets to be acquired or liabilities to be assumed, other than a preliminary estimate for intangible assets and certain financial assets and liabilities. Therefore, certain West Suburban assets and liabilities are presented at their respective carrying amounts and should be considered preliminary values. A final determination of the fair values of West Suburban’s assets and liabilities will be obtained based on actual West Suburban’s actual asset and liabilities as of the closing date. Actual adjustments may differ from the amounts reflected in the unaudited pro forma condensed combined financial information, and the differences may be material.

Due to the preliminary estimates for the pro forma purchase price and valuation analysis as noted above, the pro forma adjustments presented are to be considered preliminary and subject to change as additional information becomes available, and the final closing balances are known. The preliminary pro forma adjustments have been presented solely for the purpose of providing the unaudited pro forma condensed combined financial information.

A final determination of the fair value of West Suburban’s assets and liabilities will be based on West Suburban’s actual assets and liabilities as of the closing date. Any changes in the fair values of the net assets or total purchase consideration as compared with the information shown in the unaudited pro forma condensed combined financial information may change the amount of the total purchase consideration allocated to goodwill, deferred taxes and other assets and liabilities and may impact the combined company’s statement of income.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
	September 30, 2021
					Purchase Accounting Adjustments
							Other,
(in Thousands)	Historical		Historical		Fair Value		Including			Proforma
	Old Second		West Suburban		Marks		Financing		Reference	Combined
Assets
Cash and cash equivalents	$	519,253	$	132,807	$	-	$	(100,679)	A	$	551,381
Investment securities		715,188		1,125,208		(9,303)		-	B		1,831,093
Federal Home Loan Bank Chicago ("FHLBC") and Federal Reserve Bank Chicago ("FRBC") stock		9,917		3,340		-		-			13,257
Loans held-for-sale		3,009		-		-		-			3,009
Loans		1,867,942		1,549,649		(9,012)		-	C		3,408,579
Less: allowance for credit losses on loans		26,949		19,108		(7,033)		12,232	D, E		51,256
Net loans		1,840,993		1,530,541		(1,979)		(12,232)			3,357,323
Premises and equipment, net		44,120		50,909		(2,807)		-	F		92,222
Goodwill and core deposit intangible		20,433		713		68,365		-	G, H		89,511
Bank-owned life insurance ("BOLI")		64,265		40,120		-		-			104,385
Other assets		57,954		18,558		1,097		11,704	I		89,313
Total assets	$	3,275,132	$	2,902,196	$	55,373	$	(101,207)		$	6,131,494
Liabilities
Noninterest bearing deposits	$	1,037,638	$	388,847	$	-	$	-		$	1,426,485
Interest bearing deposits		1,676,691		2,245,433		3,137			J		3,925,261
Total deposits		2,714,329		2,634,280		3,137		-			5,351,746
Short-term borrowings		42,962		5,000		-		-			47,962
Long-term debt		149,572		-		-		-			149,572
Other liabilities		47,037		16,838		1,693		31,000	K		96,568
Total liabilities		2,953,900		2,656,118		4,830		31,000			5,645,848
Stockholders’ Equity
Common stock		34,957		3,086		(3,086)		9,748	A, L		44,705
Additional paid-in capital		121,074		12,079		(12,079)		80,372	M		201,446
Retained earnings		262,513		227,646		(227,646)		(29,288)	N, O		233,225
Accumulated other comprehensive income		12,249		3,267		(3,267)		-			12,249
Treasury stock		(109,561)		-		-		103,582	L		(5,979)
Total stockholders’ equity		321,232		246,078		(246,078)		164,414			485,646
Total liabilities and stockholders’ equity	$	3,275,132	$	2,902,196	$	(241,248)	$	195,414		$	6,131,494
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
	For the Nine Months Ended September 30, 2021
	Historical		Historical		Fair Value			Pro Forma
(in Thousands, except for per share data)	Old Second		West Suburban		Adjustments		Reference	Combined
Interest and dividend income
Loans, including fees	$	64,337	$	44,018	$	3,420	P	$	111,775
Loans held-for-sale		132		-		-			132
Investment securities		9,133		10,799					19,932
Other		774		81		-			855
Total interest and dividend income		74,376		54,898		3,420			132,694
Interest expense
Deposits		1,906		3,282		(1,350)	Q		3,838
Borrowings		4,355		44		-			4,399
Total interest expense		6,261		3,326		(1,350)			8,237
Net interest and dividend income		68,115		51,572		4,770			124,457
Provision for credit losses		(8,000)		250		-	E		(7,750)
Net interest and dividend income after provision for credit losses		76,115		51,322		4,770			132,207
Noninterest income
Trust income		6,912		902		-			7,814
Service charges on deposits		3,784		1,972		-			5,756
Mortgage banking revenue		10,080		-		-			10,080
BOLI related income		1,163		446		-			1,609
Card related income		4,737		2,950		-			7,687
Other income, including securities gains/(losses), net		1,883		11,347		-			13,230
Total noninterest income		28,559		17,617		-			46,176
Noninterest expense
Salaries and employee benefits		39,366		22,296		-			61,662
Occupancy, furniture and equipment		7,188		12,147		-			19,335
Computer and data processing		4,079		3,882		-			7,961
Merger-related expense		-		-		-			-
Other expense		14,635		5,729		2,216	R		22,580
Total noninterest expense		65,268		44,054		2,216			111,538
Income before income taxes		39,406		24,885		2,554			66,845
Provision for income taxes		10,295		6,582		715	S		17,592
Net income	$	29,111	$	18,303	$	1,839		$	49,253
Basic earnings per share	$	1.01	$	47.31				$	1.08
Diluted earnings per share		0.99		47.31					1.07
Dividends declared per share		0.11		10.00					0.11

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1: Basis of Presentation

The proforma condensed combined financial information and explanatory notes have been prepared to illustrate the effects of the merger under the acquisition method of accounting with Old Second as the acquirer. The pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily indicate the financial condition or results of the combined companies had the companies actually been combined at the beginning of the periods presented, nor does it necessarily indicate the results of operations in future periods or the future financial position of the combined company. Under the acquisition method of accounting, the assets and liabilities of West Suburban, as of the effective date of the merger, will be recorded by Old Second at their respective fair values and the excess of the merger consideration over the fair value of West Suburban’s net assets will be allocated to goodwill.

The merger provides that West Suburban shareholders will receive (a) $271.15 cash consideration for each share of West Suburban common stock they hold immediately prior to the merger, and (b) 42.413 shares of Old Second common stock for each share of West Suburban common stock they hold immediately prior to the merger. The implied value of the merger consideration to West Suburban shareholders is $792.83 per share, or a total of $294.4 million, based on the closing stock price of Old Second common stock of $12.30 per share as of November 30, 2021.

The pro forma allocation of the purchase price presented in the pro forma condensed combined financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded at the time the merger is consummated. Adjustments may include, but are not limited to, changes in (a) West Suburban’s balance sheet and operating results through the effective time of the merger; (b) the aggregate value of the merger consideration paid if the share price of the Old Second common stock varies from the assumed $12.30 per share; (c) total merger related expenses and implementation costs vary from currently estimated amounts included herein; and (d) the underlying values of assets and liabilities if market and credit conditions differ from current assumptions.

Note 2: Preliminary Purchase Price

The pro forma adjustments include the estimated purchase accounting entries to record the merger transaction. The excess of the purchase price over the fair value of net assets acquired, net of deferred taxes, is allocated to goodwill. Estimated fair value adjustments included in the pro forma condensed combined financial statement are based upon available information and certain assumptions considered reasonable, and may be revised as additional information becomes available.

The following table summarizes the determination of the purchase price consideration from the November 30, 2021, price, and its impact on the preliminary goodwill estimate.

		November 30, 2021
Stock Consideration:
Common shares of West Suburban		371,304
Exchange ratio		42.413
Old Second common shares issued		15,748,117
Price per share of Old Second common stock as of November 30, 2021	$	12.30
Preliminary fair value of consideration for common stock	$	193,701,834
Cash Consideration:
Common shares of West Suburban		371,304
Fixed cash consideration rate per share	$	271.15
Preliminary fair value of cash consideration	$	100,679,080
Total pro forma purchase price consideration	$	294,380,913
Preliminary goodwill	$	51,352,913

West Suburban Net Assets at Fair Value		September 30, 2021
(in thousands)
Assets
Cash and cash equivalents	$	132,807
Investment securities		1,115,905
FHLBC and FRBC stock		3,340
Loans held-for-sale		-
Net loans		1,528,562
Premises and equipment, net		48,102
Core deposit intangible		14,772
BOLI		40,120
Other assets		20,368
Total assets acquired	$	2,903,976
Liabilities
Noninterest bearing deposits	$	388,847
Interest bearing deposits		2,248,570
Total deposits		2,637,417
Short-term borrowings		5,000
Long-term debt		-
Other liabilities		18,531
Total liabilities assumed		2,660,948
Net assets acquired	$	243,028
Preliminary goodwill	$	51,353

Note 3: Pro Forma Adjustments to Unaudited Condensed Combined Financial Information

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on preliminary assumptions and valuations, which are subject to change.

(A) Adjustments to cash to reflect the estimated cash component of the merger consideration of $100.7 million, based on 371,304 shares of West Suburban common stock outstanding as of November 30, 2021.

(B) Adjustment to West Suburban held-to-maturity investment securities to reflect the estimated fair value based on estimates of expected cash flows and current interest rates.

(C) Adjustment to West Suburban loans reflects estimated fair value adjustments, which include the adjustment for the credit component of the loan portfolio, the purchased credit deteriorated (“PCD”) loan CECL gross up, and the adjustment related to current interest rates and liquidity. There were no unaccreted discounts or premiums on acquired loans on West Suburban’s books to reverse. The adjustment includes the following:

(in thousands)		September 30, 2021
Estimate of fair value adjustments for the credit component on acquired loans	$	(24,210)
Estimate of PCD loan CECL gross-up		12,075
Estimate of fair value related to current interest rates and liquidity		3,123
Net fair value pro forma loan adjustments	$	(9,012)

(D) Adjustments to allowance for credit losses include the following:

(in thousands)		September 30, 2021
Reversal of historical West Suburban allowance for loan and lease losses	$	(19,108)
Increase in allowance for credit losses for gross-up for estimate of lifetime credit losses for PCD loans		12,075
Total fair value adjustments to allowance for credit losses		(7,033)
Provision for estimated lifetime credit losses for non-PCD loans		12,232
Total transaction accounting adjustments to allowance for credit losses	$	5,199

(E) Provision for estimated lifetime credit losses for non-PCD loans of $12.2 million to be recorded immediately following the consummation of the merger.

(F) Adjustment to reflect preliminary estimate of fair value of premises and equipment.

(G) Adjustment to eliminate the historical goodwill of West Suburban of $713,000 and to record estimated goodwill associated with the merger of $51.4 million.

(H) Adjustment to record an estimated core deposit intangible $14.8 million associated with the merger.

(I) Adjustments to deferred tax assets to reflect the effects of the acquisition accounting adjustments, the $12.2 million provision for credit losses for non-PCD loans and $31.0 million estimated professional, legal and other contractually-obligated merger expenses. The tax effect of acquisition related adjustments is calculated at a 28% tax rate.

(J) Adjustment to reflect preliminary estimate of fair value of interest-bearing deposits with maturities.

(K) Adjustment to other liabilities to reflect estimated deferred tax liabilities related to the effects of acquisition adjustments, as well as estimated accruals for merger-related professional, legal and other contractually obligated merger expenses expected to be incurred.

(L) Adjustment of $(3.1) million to eliminate historical West Suburban common stock and to record the issuance of 9.7 million shares of newly issued Old Second common stock, at $1.00 par value per share, and 6.0 million shares of Old Second common stock held in treasury at a historical cost of $103.6 million, to holders of West Suburban common stock, based on 371,304 shares of West Suburban common stock outstanding on November 30, 2021, multiplied by the exchange ratio of 42.413 shares of Old Second common stock for each share of West Suburban common stock.

Shares to be issued from treasury stock 5,997,911

Shares to be issued from common stock9,750,206

Total Old Second common stock to be issued15,748,117

(M) Adjustment to eliminate West Suburban additional paid-in capital of $12.1 million and to reflect the issuance of Old Second common stock in excess of par value of $80.4 million.

(N) Adjustment to eliminate the retained earnings and the accumulated other comprehensive income of West Suburban.

(O) Adjustment to reflect the after-tax impact to retained earnings of the day two provision for credit losses, as well as the estimated accruals for merger-related professional, legal and other contractually obligated merger expenses expected to be incurred.

(P) Adjustments to record estimated accretion of discounts on loans associated with the merger.

(Q) Adjustments to record estimated amortization of premiums on interest-bearing deposits associated with the merger.

(R) Adjustments to record estimated amortization of core deposit premium associated with the merger.

(S) Adjustments due to the tax effect of the day two provision for credit losses, as well as the estimated accruals for merger-related professional, legal and other contractually obligated merger expenses expected to be incurred, calculated at a 28% tax rate