Old Second Bancorp 10Q 2005 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 0 -10537

OLD SECOND BANCORP, INC.

(Exact name of Registrant as specified in its charter)

Delaware		36-3143493
(State or other jurisdiction		(I.R.S. Employer Identification Number)
of incorporation or organization)

37 South River Street, Aurora, Illinois		60507
(Address of principal executive offices)		(Zip Code)

(630) 892-0202

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: As of August 1, 2005, the Registrant had outstanding 16,570,117 shares of common stock, $1.00 par value per share.

OLD SECOND BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)

	(Unaudited)
	June 30,			December 31,
	2005			2004
Assets
Cash and due from banks	$	63,610		$	58,600
Interest bearing balances with banks	35			62
Cash and cash equivalents	63,645			58,662
Securities available for sale	453,595			452,942
Loans held for sale	12,392			16,597
Loans	1,631,903			1,509,076
Allowance for loan losses	15,525			15,495
Net loans	1,616,378			1,493,581
Premises and equipment, net	38,086			36,208
Mortgage servicing rights	1,337			317
Goodwill, net	2,130			2,130
Core deposit intangible assets, net	533			711
Bank owned life insurance	21,104			20,670
Accrued interest and other assets	27,340			21,843
Total assets	$	2,236,540		$	2,103,661

Liabilities
Deposits:
Demand	$	256,170		$	250,328
Savings	849,134			763,637
Time	804,216			784,884
Total deposits	1,909,520			1,798,849
Securities sold under repurchase agreements	52,131			45,242
Other short-term borrowings	73,153			75,786
Junior subordinated debentures	31,625			31,625
Notes payable	2,700			2,700
Accrued interest and other liabilities	22,887			14,471
Total liabilities	2,092,016			1,968,673

Stockholders’ Equity
Preferred stock, no par value; authorized 300,000 shares; none issued	—			—
Common stock, $1.00 par value; authorized 20,000,000 shares; issued 16,570,117 in 2005 and 16,489,908 in 2004; outstanding 13,497,889 in 2005 and 13,417,680 in 2004	16,570			16,497
Additional paid-in capital	13,732			12,480
Retained earnings	165,410			156,025
Accumulated other comprehensive income (loss)	(850		)	324
Treasury stock, at cost, 3,072,228 shares in 2005 and 2004	(50,338		)	(50,338		)
Total stockholders’ equity	144,524			134,988
Total liabilities and stockholders’ equity	$	2,236,540		$	2,103,661

See accompanying notes to consolidated financial statements.

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except share data)

	(Unaudited)						(Unaudited)
	Three months ended						Six months ended
	June 30,						June 30,
	2005			2004			2005			2004
Interest income
Loans, including fees	$	24,946		$	20,028		$	47,960		$	39,624
Loans held for sale	189			249			362			363
Securities:
Taxable	2,842			2,555			5,592			5,380
Tax-exempt	1,207			763			2,331			1,481
Federal funds sold	3			6			3			7
Interest bearing deposits	1			1			1			1
Total interest income	29,188			23,602			56,249			46,856
Interest expense
Savings deposits	2,672			1,327			4,951			2,641
Time deposits	5,942			4,277			11,632			8,288
Repurchase agreements	296			79			507			173
Other short-term borrowings	1,176			379			1,785			750
Junior subordinated debentures	597			635			1,214			1,252
Notes payable	27			3			50			8
Total interest expense	10,710			6,700			20,139			13,112
Net interest income	18,478			16,902			36,110			33,744
Provision for loan losses	400			—			363			—
Net interest income after provision for loan losses	18,078			16,902			35,747			33,744
Noninterest income
Trust income	1,629			1,491			3,278			2,864
Service charges on deposits	2,109			1,824			3,909			3,532
Secondary mortgage fees	287			271			471			468
Gain on sale of loans	1,484			1,680			2,878			2,897
Securities gains (losses), net	(1		)	(251		)	(5		)	389
Bank owned life insurance	215			220			434			220
Other income	1,382			1,192			2,612			2,268
Total noninterest income	7,105			6,427			13,577			12,638
Noninterest expense
Salaries and employee benefits	8,980			8,285			18,100			16,711
Occupancy expense, net	983			892			1,594			1,838
Furniture and equipment expense	1,183			1,235			2,449			2,254
Amortization of core deposit intangible assets	89			89			178			178
Litigation settlement	—			1,750			—			1,750
Other expense	4,175			2,995			8,088			6,284
Total noninterest expense	15,410			15,246			30,409			29,015
Income before income taxes	9,773			8,083			18,915			17,367
Provision for income taxes	3,203			2,562			6,156			5,776
Net income	$	6,570		$	5,521		$	12,759		$	11,591
Share and per share information:
Basic earnings per share	$	0.49		$	0.41		$	0.95		$	0.86
Diluted earnings per share	$	0.48		$	0.41		$	0.94		$	0.86
Dividends paid per share	$	0.13		$	0.12		$	0.25		$	0.22

See accompanying notes to consolidated financial statements.

Old Second Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Six Months Ended June 30, 2005 and 2004

(In thousands)

	(Unaudited)			(Unaudited)
	2005			2004
Cash flows from operating activities
Net income	$	12,759		$	11,591
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation	1,744			1,491
Change in mortgage servicing rights	57			(9		)
Provision for loan losses	363			—
Origination of loans held for sale	(192,346		)	(223,770		)
Proceeds from sale of loans held for sale	197,321			223,243
Gain on sale of loans held for sale	(1,847		)	—
Change in current income taxes payable	(651		)	(814		)
Purchase of bank owned life insurance	—			(20,000		)
Change in accrued interest receivable and other assets	(4,431		)	(2,829		)
Change in accrued interest payable and other liabilities	8,272			5,215
Premium amortization and discount accretion on securities	1,970			1,716
Securities gains (losses), net	5			(389		)
Amortization of core deposit intangible assets	178			178
Tax benefit from stock options exercised	408			159
Net cash provided (used) by operating activities	23,802			(4,218		)

Cash flows from investing activities
Proceeds from maturity of securities available for sale	62,874			64,010
Proceeds from sales of available for sale securities	—			—
Purchases of securities available for sale	(67,449		)	(78,367		)
Net change in loans	(123,160		)	(105,810		)
Sales of other real estate owned	(76		)	663
Net purchases of premises and equipment	(3,622		)	(1,926		)
Net cash used by investing activities	(131,433		)	(121,430		)

Cash flows from financing activities
Net change in deposits	110,671			184,561
Net change in repurchase agreements	6,889			(4,980		)
Net change in other borrowings	(2,633		)	(25,169		)
Proceeds from issuance of junior subordinate debentures	—			27
Proceeds from exercise of stock options	917			289
Dividends paid	(3,230		)	(2,680		)
Purchase of treasury stock	—			—
Net cash provided by financing activities	112,614			152,048
Net change in cash and cash equivalents	4,983			26,400
Cash and cash equivalents at beginning of period	58,662			55,168
Cash and cash equivalents at end of period	$	63,645		$	81,568
Supplemental cash flow information
Income taxes paid	$	6,807		$	6,333
Interest paid	19,677			12,618

See accompanying notes to consolidated financial statements.

Old Second Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Summary of Significant Accounting Policies

The accounting policies followed in the preparation of interim financial statements are consistent with those used in the preparation of annual financial information. The interim financial statements reflect all normal and recurring adjustments, which are necessary, in the opinion of management, for a fair statement of results for the interim period presented. Results for the period ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005. These interim financial statements should be read in conjunction with the audited financial statements and notes included in Old Second Bancorp, Inc.’s (the Company) 2004 Form 10-K. Unless otherwise indicated, amounts in the tables contained in the notes are in thousands. Certain items in prior periods have been reclassified to conform to the current presentation.

The Company’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles and follow general practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements. Future changes in information may affect these estimates, assumptions, and judgments, which, in turn, may affect amounts reported in the financial statements.

All significant accounting policies are presented in Note A to the consolidated financial statements for the year ended December 31, 2004. 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.

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, “Accounting for Stock- Based Compensation.” Statement 123 (R) supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends FASB Statement No. 95, “Statement of Cash Flows.” Generally, the approach in Statement 123 (R) is similar to the approach described in Statement 123. However, Statement 123 (R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. On April 14, 2005, the SEC announced it would provide for a phased-in implementation for the adoption of Statement 123 (R). Based on this guidance the Company is now required to adopt Statement 123 (R) on January 1, 2006.

As permitted by Statement 123, the Company accounts for share-based payments to employees using APB No. Opinion 25’s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options. Accordingly, the adoption of Statement 123 (R)’s fair value method will have a significant impact on results of operations, although it will have no impact on the overall financial position. The impact of adoption of Statement 123 (R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had the Company adopted Statement 123 (R) in prior periods, the impact of that standard would have approximated the impact of statement 123 as described in the disclosure of pro forma net income and earnings per share in Note A to the consolidated financial statements.

Note 2 – Securities

Securities available for sale are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
June 30, 2005:
U.S. Treasuries	$	999	$	—	$	9	$	990
U.S. Government agencies	297,484		435		2,513		295,406
States and political subdivisions	148,093		1,454		777		148,770
Mortgage backed and equity securities	8,428		1		—		8,429
	$	455,004	$	1,890	$	3,299	$	453,595
December 31, 2004:
U.S. Treasuries	$	998	$	—	$	6	$	992
U.S. Government agencies	313,768		850		1,449		313,169
States and political subdivisions	130,448		1,845		703		131,590
Mortgage backed and equity securities	7,190		1		—		7,191
	$	452,404	$	2,696	$	2,158	$	452,942

Note 3 – Loans

Major classifications of loans were as follows:

	June 30,			December 31,
	2005			2004
Commercial and industrial	$	174,255		$	171,058
Real estate - commercial	562,760			514,782
Real estate - construction	308,958			269,537
Real estate - residential	541,391			514,020
Installment	46,819			42,155
	1,634,183			1,511,552
Unearned origination fees	(2,280		)	(2,476		)
	$	1,631,903		$	1,509,076

Note 4 – Allowance for Loan Losses

Changes in the allowance for loan losses as of June 30, are summarized as follows:

	2005			2004
Balance, January 1	$	15,495		$	18,301
Provision for loan losses	363			—
Loans charged-off	(737		)	(215		)
Recoveries	404			228
Balance, end of period	$	15,525		$	18,314

Note 5 – Deposits

Major classifications of deposits were as follows:

	June 30,		December 31,
	2005		2004
Noninterest bearing	$	256,170	$	250,328
Savings	123,230		123,981
NOW accounts	278,531		234,757
Money market accounts	447,373		404,899
Certificates of deposit of less than $100,000	519,799		510,231
Certificates of deposit of $100,000 or more	284,417		274,653
	$	1,909,520	$	1,798,849

Note 6 – Borrowings

The following table is a summary of borrowings:

	June 30,		December 31,
	2005		2004
Securities sold under agreement to repurchase	$	52,131	$	45,242
Federal funds purchased	71,367		49,000
FHLB advances	—		25,000
Treasury tax and loans	1,786		1,969
Junior subordinated debentures	31,625		31,625
Note payable and other	2,700		2,517
	$	159,609	$	155,353

The Company enters into sales of securities under agreements to repurchase (repurchase agreements). These repurchase agreements are treated as financings. The dollar amounts of securities underlying the agreements remain in the asset accounts. Securities sold under agreements to repurchase consisted of U.S. government agencies at June 30, 2005 and December 31, 2004, and are held in third party pledge accounts.

The Company borrowings at the FHLB are limited to the lesser of 35% of total assets or 60% of the book value of certain mortgage loans. In addition, these notes were collateralized by FHLB stock of $1.1 million at December 31, 2004. The maturity date of the outstanding FHLB advance was March 1, 2005, and they were repaid on that date.

At June 30, 2005 and December 31, 2004, respectively, the period to date average balance of short-term borrowings totaled $154.7 million at a weighted average rate of 2.99% and $123.7 million at a weighted average rate of 1.40%. The increase in short-term borrowings was primarily the result of asset growth during 2005 that exceeded deposit growth. During 2005, loans and securities grew $123.5 million while deposits grew $110.7 million.

The Company is a Treasury Tax & Loan (TT&L) depository for the Federal Reserve Bank (FRB), and as such, it accepts TT&L deposits. The Company is allowed to hold these deposits for the FRB until they are called. The interest rate is the federal funds rate less 25 basis points. Securities with a face value greater than or equal to the amount borrowed are pledged as a condition of borrowing TT&L deposits. As of June 30, 2005 and December 31, 2004, the TT&L deposits were $1.8 million and $2.0 million, respectively.

The Company had a $20 million line of credit available with Marshall & Ilsley under which there was a $2.7 million outstanding balance as of December 31, 2004 and June 30, 2005. A revolving business note dated April 30, 2005 secures the line of credit and is guaranteed by the Company. The note provides that any outstanding principal will bear interest at the Company’s option, at the rate of either 1% over the previous month average (Federal Reserve targeted rate) federal funds rate or 0.90% over the adjusted interbank rate with a minimum interest rate of 2.20%. This borrowing is for general corporate purposes, including funding loans held for sale at the Old Second Mortgage Company subsidiary.

Note 7– Junior Subordinated Debentures

The Company completed the sale of $27.5 million of cumulative trust preferred securities by its unconsolidated subsidiary, Old Second Capital Trust I in June 2003. An additional $4.1 million of cumulative trust preferred securities was sold in the first week of July 2003. The costs associated with the tender offer of the cumulative trust preferred securities are being amortized over 30 years. Cash distributions on the securities are payable quarterly at an annual rate of 7.80% and are included in interest expense in the consolidated financial statements.

Note 8– Long-Term Incentive Plan

The Long-Term Incentive Plan (the “Incentive Plan”) authorizes the issuance of up to 1,333,000 shares of the Company’s common stock, including the granting of qualified stock options (“Incentive Stock Options”), nonqualified stock options, restricted stock and stock appreciation rights. Stock based awards may be granted to selected directors and officers or employees at the discretion of the board of directors. The Incentive Plan requires the exercise price of any incentive stock option issued to an employee to be at least equal to the fair market value of Company common stock on the date the option is granted. All stock options are granted for a maximum term of ten years, with vesting occurring over the first three years.

Nonqualified stock options may be granted to directors. These and other awards under the Incentive Plan may be granted subject to a vesting requirement and would become fully vested upon a merger or change in control of the Company. Since December 31, 1998, there have been no nonqualified stock options, stock appreciation rights, or restricted stock issued under the Incentive Plan.

A summary of activity in the Incentive Plan and options outstanding is included below:

	Quarter-ended
	June 30,				June 30,
	2005				2004
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Beginning outstanding	656,933		$	19.254	570,266		$	15.191
Granted	—		—		—		—
Exercised	(73,542	)	9.513		(29,600	)	9.587
Expired	—		—		—		—
Ending outstanding	583,391		$	20.482	540,666		$	15.497

Weighted average fair value of options granted during the period			$	—			$	—

The Company accounts for stock options in accordance with APB No. 25, as allowed under SFAS No. 123. No expense for stock options is recorded, as the grant price equals the market price of the stock at grant date. There were no stock options granted in 2005.

The following pro forma information presents net income and earnings per share had the fair value method of SFAS No. 123 been used to measure compensation cost for stock option plans.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Net income as reported	$	6,570	$	5,521	$	12,759	$	11,591
Pro forma net income	6,437		5,426		12,492		11,405
Basic earnings per share as reported	0.49		0.41		0.95		0.87
Pro forma basic earnings per share	0.48		0.41		0.93		0.85
Diluted earnings per share as reported	0.48		0.41		0.94		0.86
Pro forma diluted earnings per share	0.47		0.40		0.92		0.84

Note 9 – Earnings Per Share

Earnings per share is included below (share data not in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Basic earnings per share:
Weighted-average common shares outstanding	13,496,502		13,413,175		13,474,437		13,406,629
Net income available to common stockholders	$	6,570	$	5,521	$	12,759	$	11,591
Basic earnings per share	$	0.49	$	0.41	$	0.95	$	0.86

Diluted earnings per share:
Weighted-average common shares outstanding	13,496,502		13,413,175		13,474,437		13,406,629
Dilutive effect of stock options	163,912		134,130		171,864		135,970
Diluted average common shares outstanding	13,660,414		13,547,305		13,646,301		13,542,599
Net income available to common stockholders	$	6,570	$	5,521	$	12,759	$	11,591
Diluted earnings per share	$	0.48	$	0.41	$	0.94	$	0.86

Number of antidilutive options excluded from the diluted earnings per share calculation	137,000				137,000

Note 10 – Comprehensive Income

Comprehensive income is included below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Change in net holding gains on available for sale securities arising during the period	$	3,134		$	(8,184	)	$	(1,947	)	$	(5,972	)
Related tax expense	(1,249		)	3,257			773			2,377
Net unrealized gains / (losses)	1,885			(4,927		)	(1,174		)	(3,595		)

Less: Reclassification adjustment for the net gains (losses) realized during the period
Realized gains	5			—			5			640
Realized losses	(6		)	(251		)	(10		)	(251		)
Net realized gains (losses)	(1		)	(251		)	(5		)	389
Income tax (benefit) expense on net realized gains	(0		)	(100		)	(2		)	155
Net realized gains (losses) after tax	(1		)	(151		)	(3		)	234
Total other comprehensive income (loss)	$	1,884		$	(5,078	)	$	(1,177	)	$	(3,361	)

Note 11 – Retirement Plans

The Company has a tax-qualified noncontributory defined benefit retirement plan covering substantially all full-time and regular part-time employees of the Company. Generally, benefits are based on years of service and compensation. Certain participants in the defined benefit plan are also covered by an unfunded supplemental retirement plan. The purpose of the supplemental retirement plan is to extend full retirement benefits to individuals without regard to statutory limitations under tax-qualified plans.

	Six Months Ended
	June 30,
	Pension Benefits						Other Benefits
	2005			2004			2005		2004
Service cost	$	851,238		$	709,727		$	38,020	$	38,902
Interest cost	465,542			435,779			47,609		46,967
Expected return on plan assets	(434,962		)	(381,534		)	—		—
Amortization of transition obligation / (asset)	—			—			—		—
Amortization of prior service cost	(1,872		)	2,720			8,507		8,508
Recognized net actuarial (gain) / loss	142,446			111,449			24,472		33,292
Net periodic benefit cost	$	1,022,392		$	878,141		$	118,608	$	127,669

	2005		2004
Key assumptions:
Discount rate	5.50	%	5.80	%
Long-term rate of return on assets	7.50	%	7.50	%
Salary increases	5.00	%	5.00	%

The Company maintains tax-qualified contributory and non-contributory profit sharing plans covering substantially all full-time and regular part-time employees. The expense of these plans was $721,000 and $730,000 in the first half of 2005 and 2004, respectively.

Item 2. Managements’ Discussion and Analysis of Financial Condition and Results for Operations

Overview

Old Second Bancorp, Inc. (the Company) is a financial services company with its main headquarters located in Aurora, Illinois. The Company has offices located in Kane, Kendall, DeKalb, DuPage, LaSalle, and Will counties in Illinois. The Company provides financial services through its three subsidiary banks at its twenty-seven banking locations. Old Second Mortgage, which also conducts business as “Maple Park Mortgage”, provides mortgage-banking services at its four offices. Old Second Financial, Inc. provides insurance products. The Old Second National Bank of Aurora, the Company’s lead subsidiary bank, also engages in trust operations.

Results of Operations

The Company earned $0.94 diluted earnings per share in the first half of 2005, a 9.3% increase over the $0.86 earned in the first half of 2004. Net income was $12.8 million in the first half of 2005 compared with $11.6 million in the first half of 2004. This was a 10.3% increase in earnings. Net income for the second quarter of 2005 was $6.6 million, or $ 0.48 diluted earnings per share, compared with $5.5 million, or $0.41 diluted earnings per share in the second quarter of 2004. Continued loan growth and an increase in noninterest income contributed to the increase in earnings for the quarter. The return on equity decreased from 19.07% in the first six months of 2004, to 18.34% for the same period of 2005.

Net Interest Income

The increase in net income for the first half of 2005 was primarily the result of an increase in net interest income. Net interest income was $36.1 million and $33.7 million during the six months ended June 30, 2005 and 2004, respectively, an increase of 7.1%.

Management, in order to evaluate and measure performance, uses certain non-GAAP performance measures and ratios. These include taxable-equivalent net interest income (including its individual components) and net interest margin (including its individual components). Management believes that these measures and ratios provide users of the financial information with a more accurate view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency for comparison purposes. Other financial holding companies may define or calculate these measures and ratios differently. See the table below for supplemental data and the corresponding reconciliation to GAAP financial measures for the six months ended June 30, 2005 and 2004.

The following table sets forth certain information relating to the Company’s average consolidated balance sheets and reflects the yield on average earning assets and cost of average liabilities for the periods indicated. The rates are determined by dividing the related interest by the average balance of assets or liabilities. Average balances are derived from daily balances.

ANALYSIS OF AVERAGE BALANCES,

TAX EQUIVALENT INTEREST AND RATES

For periods ended June 30, 2005 and 2004

	2005							2004
	Average							Average
	Balance			Interest		Rate		Balance			Interest		Rate
Assets
Interest bearing deposits	$	567		$	1	0.45	%	$	300		$	1	1.01	%
Federal funds sold	215			3		3.03		1,263			7		1.08
Securities:
Taxable	329,107			5,592		3.40		317,747			5,379		3.39
Non-taxable (tax equivalent)	134,643			3,586		5.33		87,878			2,280		5.19
Total securities	463,750			9,178		3.96		405,625			7,659		3.78
Loans and loans held for sale	1,589,716			48,420		6.14		1,397,569			40,093		5.77
Total interest earning assets	2,054,248			57,602		5.65		1,804,757			47,760		5.32
Cash and due from banks	53,933			—		—		49,753			—		—
Allowance for loan losses	(15,517		)	—		—		(18,387		)	—		—
Other noninterest-bearing assets	86,532			—		—		66,197			—		—
Total assets	$	2,179,196						$	1,902,320

Liabilities and stockholder’s equity
Interest bearing transaction accounts	$	668,395		4,698		1.42		$	612,334		2,492		0.82
Savings accounts	126,309			253		0.40		122,523			149		0.24
Time deposits	792,427			11,632		2.96		631,171			8,288		2.64
Interest bearing deposits	1,587,131			16,583		2.11		1,366,028			10,929		1.61
Repurchase agreements	42,571			506		2.40		37,917			173		0.92
Federal funds purchased and other borrowed funds	112,104			1,786		3.21		115,147			750		1.31
Trust preferred debentures	31,625			1,214		7.74		31,625			1,252		7.80
Notes payable	2,700			50		3.73		724			8		2.19
Total interest bearing liabilities	1,776,131			20,139		2.29		1,551,441			13,112		1.70
Noninterest bearing deposits	248,092			—		—		216,039			—		—
Accrued interest and other liabilities	14,648			—		—		12,613			—		—
Stockholders’ equity	140,325			—		—		122,227			—		—
Total liabilities and stockholder’s equity	$	2,179,196						$	1,902,320
Net interest income (tax equivalent)				$	37,463						$	34,648
Net interest income (tax equivalent) to total earning assets						3.68	%						3.86	%
Interest bearing liabilities to earning assets	86.46		%					85.96		%

Notes: Nonaccrual loans are included in the above stated average balances.

Tax equivalent basis is calculated using a marginal tax rate of 35%.

Yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries are reviewed on a fully taxable-equivalent basis (“FTE”). In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004

(A) Interest income (GAAP)	$	29,188		$	23,602		$	56,249		$	46,856
Taxable-equivalent adjustment - Loans	52			52			98			106
Taxable-equivalent adjustment - Investments	650			411			1,255			798
Interest income - FTE	$	29,890		$	24,065		$	57,602		$	47,760
(B) Interest expense (GAAP)	10,710			6,700			20,139			13,112
Net interest income - FTE	$	19,180		$	17,365		$	37,463		$	34,648
(C) Net interest income - (GAAP) (A minus B)	$	18,478		$	16,902		$	36,110		$	33,744
Net interest margin (GAAP)	3.55		%	3.71		%	3.54		%	3.76		%
Net interest margin - FTE	3.68		%	3.81		%	3.68		%	3.86		%

Provision for Loan Losses

The Company recorded a $400,000 provision for loan losses in the second quarter of 2005. The Company did not make a provision for loan losses during the first nine months of 2004, and recorded a negative provision of $2.9 million in the fourth quarter of 2004. The determination by management to reduce the allowance for loan losses in 2004 was based on a comprehensive analysis that considered a number of factors, including the quality of the loan portfolio and favorable loan loss experience. Provisions for loan losses are made to provide for probable and estimable losses inherent in the loan portfolio. The provision reflects a number of factors, including the size of the loan portfolio, the amount of past due accruing loans (90 days or more), the amount of non-accrual loans and management’s overall view on current credit quality. Net charge-offs in the first half of 2005 were $333,000 compared with net recoveries of $13,000 in the first half of 2004. Total loan charge-offs were $737,000 during the first six months of 2005, compared with $215,000 during the first six months of 2004, while recoveries for the same periods were $404,000 and $228,000, respectively.

The allowance for loan losses represents management’s estimate of probable credit losses inherent in the loan portfolio. Determining the amount of the allowance for loan losses requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends and conditions, all of which may be susceptible to significant change. The loan portfolio also represents the largest asset type on the consolidated balance sheets.

One measure of the adequacy of the allowance for loan losses is the ratio of the allowance to total loans. The allowance for loan losses as a percentage of total loans was 0.95% as of June 30, 2005, compared to 1.03% as of December 31, 2004 and 1.28% as of June 30, 2004. In

management’s judgment, an adequate allowance for estimated losses has been established; however, there can be no assurance that such losses will not exceed the estimated amounts in the future.

Nonperforming loans of $6.3 million as of June 30, 2005, were up from $5.3 million as of December 31, 2004. Nonperforming loans include loans in nonaccrual status, renegotiated loans, and loans past due ninety days or more and still accruing. Nonaccrual loans increased from $5.1 million as of December 31, 2004 to $6.0 million as of June 30, 2005. The allowance for loan losses as a percentage of nonperforming loans was 245.07% at June 30, 2005 as compared to 295.42% as of December 31, 2004.

Past due and nonaccrual loans for the periods were as follows:

	For period ended
	6/30/05		12/31/04
Nonaccrual loans	$	5,961	$	5,129
Interest income recorded on nonaccrual loans	12		202
Interest income which would have been accrued on nonaccrual loans	218		344
Loans 90 days or more past due and still accruing interest	374		116

Noninterest Income

Noninterest income was $7.1 million during the second quarter of 2005 and $6.4 million during the second quarter of 2004, an increase of $700,000, or 10.9%, when compared to the second quarter of 2004. Noninterest income was $13.6 million during the first half of 2005, an increase of $1.0 million, or 7.9% over the $12.6 million of noninterest income for the same period in 2004. Trust income increased to $3.3 million in 2005, an increase of $400,000 from $2.9 million in 2004 primarily due to the growth in trust assets under management and higher estate fees. Service charges on deposits, the largest component of noninterest income, increased from $3.5 million in the first six months of 2004 to $3.9 million in the first half of 2005. Deposit service charges for the period increased as a result of deposit growth and an increase in service charge fees. The purchase of bank owned life insurance (BOLI) during the second quarter of 2004 resulted in noninterest income of $434,000 for the first six months of 2005 compared to $220,000 for the first half of 2004. Mortgage-related noninterest income, principally gains on sales of mortgage loans, totaled $3.3 million in the first six months of 2005 and $3.4 million in the same period of 2004.

Noninterest Expense

Noninterest expense was $15.4 million during the second quarter of 2005, an increase of $200,000, or 1.3%, from $15.2 million in the second quarter of 2004. Noninterest expense was $30.4 million during the first half of 2005, an increase of $1.4 million, or 4.8%, from $29.0 million in the first half of 2004. Salaries and benefits, the largest component of noninterest expense, was $18.1 million during the first half of 2005, an increase of $1.4 million, or 8.4%, from $16.7 million in the first half of 2004. The increase in salaries and benefits was related to increased staffing, branch expansion, and annual merit increases. Employee benefits increased in

the first half of 2005 by $400,000 or 9.1% over the same period in 2004. The increase in benefit expense was due primarily to higher employee healthcare insurance and retirement benefits. The full-time equivalent number of employees was 551 as of June 30, 2005, as compared with 546 one year earlier.

As the Company has expanded into and developed new markets, related facility and employee expenses have increased accordingly. There were three new branch openings in 2005, bringing the number of locations to twenty-seven bank branches and four mortgage offices. Net occupancy expenses were offset in the first half of 2005 by a reduction in the estimated accrual for occupancy related expenses.

Other expense increased from $6.3 million in the first six months of 2004 to $8.1 million in the first six months of 2005. Activities relating to branch and geographic expansion, marketing, as well as rising costs related to Sarbanes-Oxley compliance all contributed to the increase. Noninterest expense was higher in the second quarter of 2004 due to a $1.75 million charge for the settlement of a damage award.

Income Taxes

The Company’s provision for Federal and State of Illinois income taxes was $6.2 million and $5.8 million for the first halves of 2005 and 2004 respectively. The six-month period average effective income tax rate for 2005 and 2004 was 32.6% and 33.3%, respectively.

Financial Condition

Assets

Total assets were $2.24 billion as of June 30, 2005, an increase of $140.0 million, or 6.7%, from $2.10 billion as of December 31, 2004. Loans grew $120.0 million during the first six months of 2005. Securities increased by $700,000 during the same period to $453.6 million. Deposits increased by $110.0 million to $1.91 billion as of June 30, 2005.

Loans

Total loans were $1.63 billion as of June 30, 2005, an increase of $120.0 million, or 8.0%, from $1.51 billion as of December 31, 2004. The largest increase was in commercial real estate, which increased $48.0 million, or 9.3%. Construction and residential real estate loans increased $39.4 million and $27.4 million, respectively. These changes reflected the continuing loan demand in the markets in which the Company operates. The loan portfolio generally reflects the profile of the communities in which the Company operates. Because the Company is located in growing areas, real estate lending (including commercial, residential, and construction) is a significant portion of the portfolio. These categories comprised 86.5% of the portfolio as of June 30, 2005 and 85.9% of the portfolio as of December 31, 2004.

Securities

Securities totaled $453.6 million as of June 30, 2005, an increase of $700,000 from $452.9 million as of December 31, 2004. The net unrealized gains, net of deferred taxes, in the portfolio decreased from a net unrealized gain of $324,000 as of December 31, 2004 to a net unrealized loss of $850,000 as of June 30, 2005.

Deposits and Borrowings

Total deposits were $1.91 billion as of June 30, 2005, an increase of $110.0 million, or 6.1%, from $1.80 billion as of December 31, 2004. Demand deposits increased $5.9 million, or 2.4%, during 2005, from $250.3 million to $256.2 million. Savings deposits increased $85.5 million, or 11.2%, from $763.6 million to $849.1 million. Time deposits increased $19.3 million from $784.9 million to $804.2 million, or 2.5%. Pricing and sales strategies targeted growth in transactional deposit accounts and customer reinvestment of maturing time deposit balances in longer-term maturities. Successful selling efforts in these areas resulted in an increase in new account relationships and core funding sources.

Securities sold under repurchase agreements, which are typically of short-term duration, increased from $45.2 million as of December 31, 2004, to $52.1 million as of June 30, 2005 or 15.3%. Other short-term borrowings decreased slightly from $75.8 million to $73.2 million. The Company is currently maintaining liquid assets and delivering consistent growth in core funding to provide funding for loan growth.

Capital

The Company and its three subsidiary banks are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines provide for five classifications, the highest of which is well capitalized. The Company and its subsidiary banks were categorized as well capitalized as of June 30, 2005. The accompanying table shows the capital ratios of the Company and Old Second National Bank, the Company’s lead subsidiary bank, as of June 30, 2005 and December 31, 2004.

Capital levels and minimum required levels:

					Minimum Required				Minimum Required
					for Capital				to be Well
	Actual				Adequacy Purposes				Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2005:
Total capital to risk weighted assets
Consolidated	$	189,727	10.90	%	$	139,249	8.00	%	$	174,061	10.00	%
Old Second National Bank	129,528		11.15		92,935		8.00		116,169		10.00
Tier 1 capital to risk weighted assets
Consolidated	174,202		10.01		69,611		4.00		104,417		6.00
Old Second National Bank	118,440		10.19		46,493		4.00		69,739		6.00
Tier 1 capital to average assets
Consolidated	174,202		7.87		88,540		4.00		110,675		5.00
Old Second National Bank	118,440		7.70		61,527		4.00		76,909		5.00

December 31, 2004:
Total capital to risk weighted assets
Consolidated	$	177,554	11.06	%	$	128,430	8.00	%	$	160,537	10.00	%
Old Second National Bank	123,156		11.53		85,451		8.00		106,814		10.00
Tier 1 capital to risk weighted assets
Consolidated	162,059		10.09		64,245		4.00		96,368		6.00
Old Second National Bank	112,208		10.50		42,746		4.00		64,119		6.00
Tier 1 capital to average assets
Consolidated	162,059		7.85		82,578		4.00		103,222		5.00
Old Second National Bank	112,208		7.98		56,245		4.00		70,306		5.00

Liquidity and Market Risk

Liquidity is the Company’s ability to fund its operations, to meet depositor withdrawals, to provide for customer’s credit needs, to meet maturing obligations and its existing commitments, to withstand fluctuations in deposit levels, and to meet maturing obligations and existing commitments. The liquidity of the Company principally depends on cash flows from operating activities, investment in and maturity of assets, changes in balances of deposits and borrowings, and its ability to borrow funds in the money or capital markets.

Net cash inflows from operating activities were $23.8 million in the first six months of 2005, compared with net cash outflows of $4.2 million in the first six months of 2004. Interest received, net of interest paid, was the principal use of operating cash outflows in both periods reported. The increase in cash outflows for the first half of 2004 was primarily a result of the purchase of bank owned life insurance (BOLI) in the second quarter. Management of investing and financing activities, as well as market conditions, determines the level and the stability of net interest cash flows. Management’s policy is to mitigate the impact of changes in market interest rates to the extent possible, so that balance sheet growth is the principal determinant of growth in net interest cash flows.

Net cash outflows from investing activities were $131.4 million in the six months ended June 30, 2005, compared to $121.4 million a year earlier. In the first six months of 2005, securities transactions accounted for a net outflow of $4.6 million, and net principal disbursed on loans accounted for net outflows of $123.2 million. In the first six months of 2004, securities transactions accounted for a net outflow of $14.4 million, and net principal disbursed on loans accounted for net outflows of $105.8 million. Cash outflows for property and equipment were $3.6 million in 2005 compared to $1.9 million for the same period of 2004.

Cash inflows from financing activities in the first six months of 2005 were $112.6 million, which included an increase in deposits of $110.7 million and an increase in repurchase agreements of $ 6.9 million, offset by a $2.6 million decrease in other short-term borrowings. This compares with a net cash inflow of $152.0 million in the first six months of 2004, associated with an increase in deposits of $184.6 million offset by a decrease of $25.2 million in fed funds purchased and other short-term borrowings and a decrease in repurchase agreements of $5.0 million.

Interest Rate Risk

The impact of movements in general market interest rates on a financial institution’s financial condition, including capital adequacy, earnings, and liquidity, is known as interest rate risk. Interest rate risk is the Company’s primary market risk. As a financial institution, accepting and managing this risk is an inherent aspect of the Company’s business. However, safe and sound management of interest rate risk requires that it be maintained at prudent levels.

The Company analyzes interest rate risk by examining the extent to which assets and liabilities are interest rate sensitive. The interest sensitivity gap is defined as the difference between the amount of interest earning assets maturing or repricing within a specific time period, and the amount of interest-bearing liabilities maturing or repricing within that time period. A gap is considered positive when the amount of interest sensitive assets exceeds the amount of interest

sensitive liabilities. A gap is considered negative when the amount of interest sensitive liabilities exceeds the amount of interest sensitive assets. During a period of rising interest rates, a negative gap would tend to result in a decrease in net interest income, while a positive gap would tend to positively affect net interest income. The Company’s policy is to manage the balance sheet so that fluctuations in the net interest margin are minimized, regardless of the level of interest rates.

The accompanying table does not necessarily indicate the future impact of general interest rate movements on the Company’s net interest income, because the repricing of certain assets and liabilities is discretionary, and is subject to competitive and other pressures. As a result, assets and liabilities indicated as repricing within the same period may in fact reprice at different times and at different rate levels. Assets and liabilities are reported in the earliest time frame in which maturity or repricing may occur. Although securities available for sale are reported in the earliest time frame in which maturity or repricing may occur, these securities may be sold in response to changes in interest rates or liquidity needs.

Expected Maturity of Interest-Earning Assets and Interest-Bearing Liabilities

	Expected Maturity Dates
6/30/2005	1 Year			2 Years			3 Years			4 Years			5 Years			Thereafter			Total
Interest-earning Assets
Deposit with banks	$	35		$	—		$	—		$	—		$	—		$	—		$	35
Average interest rate	3.21		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	3.21		%

Federal funds sold	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Average interest rate	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%

Securities	$	59,435		$	87,224		$	62,907		$	47,785		$	37,051		$	159,193		$	453,595
Average interest rate	3.06		%	3.47		%	3.47		%	3.47		%	3.47		%	3.63		%	3.47		%

Fixed rate loans	$	109,418		$	119,887		$	98,089		$	226,636		$	98,488		$	98,377		$	750,895
Average interest rate	6.17		%	6.26		%	6.26		%	5.96		%	5.87		%	5.88		%	6.05		%

Adjustable rate loans	$	295,620		$	60,763		$	49,716		$	39,259		$	16,826		$	431,216		$	893,400
Average interest rate	6.54		%	6.22		%	6.22		%	6.05		%	6.05		%	5.65		%	6.04		%
Total	$	464,508		$	267,874		$	210,712		$	313,680		$	152,365		$	688,786		$	2,097,925

Interest-bearing Liabilities
Interest-bearing deposits	$	991,191		$	222,692		$	91,918		$	19,821		$	22,628		$	305,100		$	1,653,350
Average interest rate	2.02		%	3.10		%	3.41		%	3.64		%	4.20		%	0.58		%	2.03		%

Short-term borrowing	$	125,284		$	—		$	—		$	—		$	—		$	—		$	125,284
Average interest rate	2.84		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	2.84		%

Notes payable	$	2,700		$	—		$	—		$	—		$	—		$	—		$	2,700
Average interest rate	4.25		%	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	4.25		%

Junior subordinate debentures	$	—		$	—		$	—		$	—		$	—		$	31,625		$	31,625
Average interest rate	0.00		%	0.00		%	0.00		%	0.00		%	0.00		%	7.80		%	7.80		%
Total	$	1,119,175		$	222,692		$	91,918		$	19,821		$	22,628		$	336,725		$	1,812,959

Period gap	$	(654,667	)	$	45,182		$	118,794		$	293,859		$	129,737		$	352,061		$	284,966
Cumulative gap	(654,667		)	(609,485		)	(490,691		)	(196,832		)	(67,095		)	284,966

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended, as of June 30, 2005. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

There have been no significant changes in the Company’s disclosure controls or internal controls over financial reporting or in other factors that could significantly affect disclosure controls or internal controls over financial reporting.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions.

Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, the following:

• The strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of the Company’s assets.

• The economic impact of past and future terrorist attacks, acts of war or threats thereof, and the response of the United States to any such threats and attacks.

• The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters.

• The effects of changes in interest rates (including the effects of changes in the rate of prepayments of the Company’s assets) and the policies of the Board of Governors of the Federal Reserve System.

• The ability of the Company to compete with other financial institutions as effectively as the Company currently intends due to increases in competitive pressures in the financial services sector.

• The inability of the Company to obtain new customers and to retain existing customers.

• The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet.

• Technological changes implemented by the Company and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to the Company and its customers.

• The ability of the Company to develop and maintain secure and reliable electronic systems.

• The ability of the Company to retain key executives and employees and the difficulty that the Company may experience in replacing key executives and employees in an effective manner.

• Consumer spending and saving habits which may change in a manner that affects the Company’s business adversely.

• Business combinations and the integration of acquired businesses that may be more difficult or expensive than expected.

• The costs, effects and outcomes of existing or future litigation.

• Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board.

• The ability of the Company to manage the risks associated with the foregoing as well as anticipated.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results is included in the Company’s Form 10-K for the year ended December 31, 2004 and in its other filings with the Securities and Exchange Commission.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries have, from time to time, collection suits in the ordinary course of business against its debtors and are defendants in legal actions arising from normal business activities. Management, after consultation with legal counsel, believes that the ultimate liabilities, if any, resulting from those actions will not have a material adverse effect on the consolidated financial position of the Company and its subsidiaries.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders of the Company was held on April 19, 2005. At the meeting, stockholders voted to elect five nominees to the board of directors having staggered terms of service and to ratify the selection of Ernst & Young LLP as the Company’s independent auditors for the year ended December 31, 2005.

At the meeting, the stockholders elected Marvin Fagel, Barry Finn, William Kane, Kenneth Lindgren and Jesse Maberry to continue as directors with their terms expiring in 2008. Edward Bonifas, William Meyer, William B. Skoglund and Christine Sobek will continue as directors with their terms expiring in 2007. J. Douglas Cheatham, D. Chet McKee, Gerald Palmer, and James Carl Schmitz will also continue as directors with their terms expiring in 2006. The stockholders also ratified the selection of Ernst & Young LLP to serve as the Company’s independent auditors. The matters approved by stockholders at the meeting and the number of votes cast for, against or withheld (as well as the number of abstentions) as to each matter are set forth below:

1. The election of directors for terms expiring in 2008.

NOMINEE	FOR	WITHHOLD
Marvin Fagel	11,748,345	130,026
Barry Finn	11,441,171	437,200
William Kane	11,745,385	132,986
Kenneth Lindgren	11,742,368	136,003
Jesse Maberry	11,747,448	130,923

2. The ratification of Ernst & Young LLP, as the auditors for the year ending December 31, 2005.

FOR		AGAINST		ABSTAIN
11,636,216		154,641		37,305

Item 5. Other Information

None.

Item 6. Exhibits

Exhibits:

31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)

31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)

32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	OLD SECOND BANCORP, INC.


		BY:	/s/ William B. Skoglund
			William B. Skoglund

			Chairman of the Board, Director
			President and Chief Executive Officer (principal executive officer)


		BY:	/s/ J. Douglas Cheatham
			J. Douglas Cheatham

			Senior Vice-President and
			Chief Financial Officer, Director
			(principal financial officer)


DATE: August 5, 2005

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

Old Second Bancorp (OSBC) 10-Q2005 Q2 Quarterly report

Content analysis

Commission File Number 0 -10537

Note 1 – Summary of Significant Accounting Policies

Assets

Loans

Securities

Capital

Interest Rate Risk

PART II - OTHER INFORMATION

SIGNATURES