Press Release

Old National reports 4th quarter earnings of $74.1 million, or $0.44 per share

Company Release - 1/19/2021 8:00 AM ET

EVANSVILLE, Ind., Jan. 19, 2021 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 4Q20 net income of $74.1 million, diluted EPS of $0.44.
Adjusted 1 net income of $76.6 million, or $0.46 per diluted share.
Full-Year 2020 net income of $226.4 million, or $1.36 per diluted share.
Adjusted 1 Full-Year net income of $250.3 million, or $1.50 per diluted share.

CEO COMMENTARY:

"Our 4th quarter success capped a very strong year of earnings as our team members worked with passion and resiliency to serve our clients," said Chairman and CEO Jim Ryan. "Another significant factor was the successful implementation of our ONB Way growth strategy in 2020, which enabled us to effectively and efficiently serve all client segments with streamlined processes and enhanced technology. This led to a phenomenal year of commercial loan production and outstanding performance."

FOURTH QUARTER HIGHLIGHTS 2 :

Net income
•  Net income of $74.1 million
•  Earnings per diluted share of $0.44
   
Net interest
income/NIM

•  Net interest income on a fully taxable equivalent basis of $164.6 million compared to $149.0 million
•  Net interest margin on a fully taxable equivalent basis of 3.26% compared to 3.03%
   
Operating
Performance

•  Pre-provision net revenue1 (“PPNR”) of $80.8 million
•  Adjusted PPNR1 of $94.0 million, up 27.2% over fourth quarter of 2019
•  Noninterest expense of $142.3 million
•  Adjusted noninterest expense1 of $128.8 million
•  Efficiency ratio1 of 62.37%
•  Adjusted efficiency ratio1 of 56.35%
   
Loans and
Credit
Quality

•  End-of-period total loans3 of $13,849.7 million compared to $13,977.6 million
•  Total commercial loans increased $473.1 million, excluding the $536.2 million decline in PPP loans
•  Fourth-quarter total commercial production of $1,197.1 million
•  Provision for credit losses was a recapture of $1.1 million
•  December 31 pipeline of $2.1 billion
•  Net recoveries of $1.1 million compared to net recoveries of $3.0 million
•  Non-performing loans of 1.20% of total loans compared to 1.15%
   
Return
Profile
& Capital

•  Return on average common equity of 10.11%
•  Return on average tangible common equity1 of 16.57%
•  Adjusted return on average tangible common equity1 of 17.08%
•  No shares of common stock were repurchased during the current quarter
   
Notable
Items

•  $3.6 million in ONB Way charges
•  $9.9 million in tax credit amortization

1 Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non GAAP reconciliations contained in this release    2 Comparisons are on a linked-quarter basis, unless otherwise noted    3 Includes loans held for sale

RESULTS OF OPERATIONS

Old National Bancorp reported fourth quarter 2020 net income of $74.1 million, or $0.44 per diluted share.

Included in the fourth quarter were pre-tax charges of $3.6 million for the ONB Way. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $76.6 million, or $0.46 per diluted share.

LOANS
Strong commercial production continued; PPP loan forgiveness accelerated.

  • Period-end total loans were $13,849.7 million at December 31, 2020, a decrease of $127.9 million, or 3.7% annualized, when compared to the $13,977.6 million at September 30, 2020.
  • Excluding the $536.2 million decline in PPP loans during the quarter, total loans increased $408.3 million, or 13.1% annualized.
  • Excluding PPP loans, commercial and industrial loans increased $228.1 million, or 32.8% annualized.
  • Commercial real estate loans increased $245.0 million to $5,946.5 million, or 17.2% annualized growth.
  • Total commercial loan production in the fourth quarter was $1,197.1 million; period-end pipeline totaled $2.1 billion.
  • Consumer loans decreased $26.0 million to $1,635.1 million and residential mortgage loans decreased $16.9 million to $2,248.4 million.
  • Average total loans in the fourth quarter were $13,927.7 million, an increase of $78.8 million from the third quarter of 2020.
  • Excluding PPP loans, average total loans in the fourth quarter increased $333.9 million from the third quarter of 2020.

DEPOSITS
A low-cost core deposit franchise continues to be one of Old National’s strengths.

  • Period-end total deposits were $17,037.5 million at December 31, 2020, an increase of $531.0 million, or 12.9% annualized, when compared to the $16,506.5 million at September 30, 2020.
  • Interest-bearing checking deposits increased $288.6 million to $4,877.0 million at December 31, 2020.
  • Noninterest-bearing deposits increased $170.7 million to $5,633.7 million at December 31, 2020 from $5,463.0 million at September 30, 2020.
  • On average, total deposits in the fourth quarter were $16,810.6 million, compared to $16,436.8 million in the third quarter of 2020.

NET INTEREST INCOME AND MARGIN
Net interest income and margin benefit from accelerated PPP loan forgiveness; deposit and funding costs continue to decline.

  • Net interest income increased to $161.1 million in the fourth quarter of 2020.
  • The net interest margin on a fully taxable equivalent basis increased 23 basis points to 3.26% compared to 3.03% in the third quarter of 2020.
  • PPP interest and net fees combined were $22.6 million, or 26 basis points of net interest margin, in the fourth quarter of 2020 compared to $8.8 million, or a 5 basis points reduction to the net interest margin, in the third quarter of 2020.
  • Accretion income was $5.4 million, or 10 basis points of net interest margin, in the fourth quarter of 2020 compared to $5.4 million, or 11 basis points of net interest margin, in the third quarter of 2020. In the fourth quarter of 2020, accretion income was 2.4% of adjusted total revenue.
  • Interest collected on nonaccrual loans was $0.9 million, or 2 basis points of net interest margin, in the fourth quarter of 2020 compared to $1.0 million, or 2 basis point of net interest margin, in the third quarter of 2020.
  • The cost of total deposits declined 4 basis points to 0.09% in the fourth quarter of 2020 while the cost of total interest-bearing deposits decreased 6 basis points to 0.13%.

CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.

  • Old National recorded a provision recapture in the fourth quarter of 2020 of $1.1 million, compared to no provision recorded in the third quarter.
  • Net recoveries in the fourth quarter were $1.1 million, compared to net recoveries of $3.0 million in the third quarter.
  • 30-89 day delinquencies were 0.15% at the end of the fourth quarter.
  • Non-performing loans increased as a percentage of total loans to 1.20%.
  • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of December 31, 2020, the remaining discount on these acquired loans was $50.6 million.
  • The allowance for credit losses remained unchanged at $131.4 million, or 0.95% of total loans at December 31, 2020.

NONINTEREST INCOME
Noninterest income decreased due to lower securities gains and a seasonal decline in mortgage banking revenue.

  • Total noninterest income for the fourth quarter of 2020 was $58.5 million, a decrease of $6.2 million from the third quarter of 2020.
  • Mortgage banking revenue decreased $1.9 million when compared to the third quarter of 2020.
  • Gains on sales of debt securities decreased $4.8 million when compared to the third quarter of 2020.

NONINTEREST EXPENSE
Fourth quarter results demonstrate benefit of The ONB Way, helping drive positive operating leverage 1 .

  • Noninterest expense for the fourth quarter of 2020 was $142.3 million and included $3.6 million in ONB Way charges and $9.9 million in tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the fourth quarter was $128.8 million, compared to the $114.2 million in adjusted noninterest expense in the third quarter of 2020.
  • The fourth quarter of 2020 also included $8.1 million in additional incentive compensation which is included in adjusted noninterest expense defined above.
  • The fourth quarter efficiency ratio was 62.37%, while the adjusted efficiency ratio was 56.35%.
  • Adjusted operating leverage1 was +917 basis points for the fourth quarter of 2020 as compared to the fourth quarter of 2019.

INCOME TAXES

  • On a fully taxable-equivalent basis, income tax expense in the fourth quarter was $7.8 million, resulting in a 9.5% FTE tax rate.
  • Income tax expense included $13.6 million in tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

  • At the end of the fourth quarter, preliminary total risk-based capital was 12.69% and preliminary regulatory tier 1 capital was 11.75%.
  • Tangible common equity to tangible assets was 8.64% at the end of the fourth quarter compared to 8.58% in the third quarter of 2020.
  • The Company did not repurchase any shares of common stock during the fourth quarter.
  • A low loan to deposit ratio of 81.3%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s) 4Q20 Adjustments 4 Adjusted 4Q20
Total Revenues (FTE) $ 223.1     $ (0.3 )   $ 222.8    
Less: Provision for Credit Losses 1.1         1.1    
Less: Noninterest Expenses (142.3 )   3.6     (138.7 )  
Income before Income Taxes (FTE) $ 81.9     $ 3.3     $ 85.2    
Income Taxes (7.8 )   (0.8 )   (8.6 )  
Net Income $ 74.1     $ 2.5     $ 76.6    
Average Shares Outstanding 165,631         165,631    
Earnings Per Share - Diluted $ 0.44     $ 0.02     $ 0.46    

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions, except EPS, shares in 000s) 2020 Adjustments 4 Adjusted 2020
Total Revenues (FTE) $ 848.9     $ (10.8 )   $ 838.1    
Less: Provision for Credit Losses (38.4 )       (38.4 )  
Less: Noninterest Expenses (541.4 )   42.6     (498.8 )  
Income before Income Taxes (FTE) $ 269.1     $ 31.8     $ 300.9    
Income Taxes (42.7 )   (7.9 )   (50.6 )  
Net Income $ 226.4     $ 23.9     $ 250.3    
Average Shares Outstanding 166,177         166,177    
Earnings Per Share - Diluted $ 1.36     $ 0.14     $ 1.50    

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions) 4Q20 3Q20
Net Interest Income $ 161.1   $ 145.6  
Add: FTE Adjustment 3.5   3.4  
Net Interest Income (FTE) $ 164.6   $ 149.0  
Average Earning Assets $ 20,182.0   $ 19,654.3  
Net Interest Margin (FTE) 3.26 % 3.03 %


($ in millions) 4Q20 4Q19
Net Interest Income $ 161.1     $ 148.9    
Add: FTE Adjustment 3.5     3.3    
Net Interest Income (FTE) $ 164.6     $ 152.2    
Add: Total Noninterest Income 58.5     47.7    
Less: Noninterest Expense 142.3     134.7    
Pre-Provision Net Revenue $ 80.8     $ 65.2    
Less: Debt Securities Gains (0.2 )   (0.4 )  
Less: Gain on Branch Actions (0.1 )      
Add: ONB Way Charges 3.6     8.2    
Add: Merger and Integration Charges     0.2    
Add: Amortization of Tax Credit Investments 9.9     0.7    
Adjusted Pre-Provision Net Revenue $ 94.0     $ 73.9    


($ in millions) 4Q20 3Q20 4Q19 2020 2019
Noninterest Expense $ 142.3     $ 120.2     $ 134.7     $ 541.4     $ 508.5    
Less: ONB Way Charges (3.6 )   (2.9 )   (8.2 )   (42.6 )   (11.4 )  
Less: Merger and Integration Charges         (0.2 )       (6.0 )  
Noninterest Expense less Charges $ 138.7     $ 117.3     $ 126.3     $ 498.8     $ 491.1    
Less: Amortization of Tax Credit Investments (9.9 )   (3.1 )   (0.7 )   (18.8 )   (2.7 )  
Adjusted Noninterest Expense $ 128.8     $ 114.2     $ 125.6     $ 480.0     $ 488.4    
Less: Intangible Amortization (3.3 )   (3.4 )   (3.9 )   (14.1 )   (16.9 )  
Adjusted Noninterest Expense Less Intangible Amortization $ 125.5     $ 110.8     $ 121.7     $ 465.9     $ 471.5    
Net Interest Income $ 161.1     $ 145.6     $ 148.9     $ 596.1     $ 604.3    
FTE Adjustment 3.5     3.4     3.3     13.6     12.9    
Net Interest Income (FTE) $ 164.6     $ 149.0     $ 152.2     $ 609.7     $ 617.2    
Total Noninterest Income 58.5     64.7     47.7     239.2     199.3    
Total Revenue (FTE) $ 223.1     $ 213.7     $ 199.9     $ 848.9     $ 816.5    
Less: Debt Securities Gains/Losses (0.2 )   (4.9 )   (0.4 )   (10.8 )   (1.9 )  
Less: Gain on Branch Actions (0.1 )                  
Adjusted Total Revenue (FTE) $ 222.8     $ 208.8     $ 199.5     $ 838.1     $ 814.6    
Efficiency Ratio 62.37   % 55.93   % 65.57   % 62.91   % 60.35   %
Adjusted Efficiency Ratio 56.35   % 53.06   % 60.97   % 55.59   % 57.87   %
Operating Leverage5 (basis points) 598         (251 )    
Adjusted Operating Leverage6 (basis points) 917         460      

5 Year-over-year basis point change in noninterest expenses plus change in total revenue
6 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue

($ in millions) 4Q20 3Q20
Net Income $ 74.1     $ 77.9    
Add: Intangible Amortization (net of tax7) 2.4     2.6    
Tangible Net Income $ 76.5     $ 80.5    
Less: Securities Gains/Losses (net of tax7) (0.2 )   (3.7 )  
Add: Loss on Branch Actions (net of tax7) (0.1 )      
Add: ONB Way Charges (net of tax7) 2.7     2.2    
Adjusted Tangible Net Income $ 78.9     $ 79.0    
Average Total Shareholders’ Equity 2,932.6     2,889.5    
Less: Average Goodwill (1,037.0 )   (1,037.0 )  
Less: Average Intangibles (47.5 )   (50.9 )  
Average Tangible Shareholders’ Equity $ 1,848.1     $ 1,801.6    
Return on Average Tangible Common Equity 16.57   % 17.88   %
Adjusted Return on Average Tangible Common Equity 17.08   % 17.54   %

7 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, January 19, 2021, to review fourth-quarter 2020 financial results. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from Noon Central Time on January 19 through February 2. To access the replay, dial 1-855-859-2056, Conference ID Code 6389837.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest bank holding company headquartered in Indiana. With $23.0 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for nine consecutive years.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships and keeping our clients at the center of all we do. This is an approach to business that we call The ONB Way. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Minnesota and Wisconsin. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

USE OF NON-GAAP FINANCIAL MEASURES
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

FORWARD-LOOKING STATEMENT
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, descriptions of Old National Bancorp’s (“Old National’s”) financial condition, results of operations, asset and credit quality trends and profitability.  Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and “should,” and other words of similar meaning.  These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties, such as statements about the potential impacts of the COVID-19 pandemic. There are a number of factors that could cause actual results to differ materially from those in such statements.  Factors that might cause such a difference include, but are not limited to: the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses; market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business (including developments and volatility arising from the COVID-19 pandemic); competition; heightened regulatory and governmental oversight and scrutiny of Old National's business practices; current, pending or future government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan, including the anticipated impact from the ONB Way strategic plan that may differ from current estimates; changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements, including the impact of the CECL standard as well as changes to address the impact of COVID-19; new legal obligations or liabilities or unfavorable resolutions of litigations; disruptive technologies in payment systems and other services traditionally provided by banks; computer hacking and other cybersecurity threats; other matters discussed in this press release; and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC.  These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.



Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2020 2020 2019   2020 2019
Income Statement            
Net interest income $ 161,079     $ 145,573     $ 148,899     $ 596,094   $ 604,273  
Tax equivalent adjustment (1) 3,517     3,379     3,282     13,586   12,940  
Net interest income - tax equivalent basis 164,596     148,952     152,181     609,680   617,213  
Provision for loan losses (4) (1,100 )       1,264     38,395   4,747  
Noninterest income 58,552     64,759     47,726     239,274   199,317  
Noninterest expense 142,318     120,234     134,743     541,417   508,487  
Net income 74,120     77,944     49,185     226,409   238,206  
             
             
Per Common Share Data            
Weighted average diluted shares 165,631     165,419     170,186     166,177   172,687  
Net income (diluted) $ 0.44     $ 0.47     $ 0.29     $ 1.36   $ 1.38  
Cash dividends 0.14     0.14     0.13     0.56   0.52  
Common dividend payout ratio (2) 31   % 30   % 45 %   41 % 37 %
Book value $ 17.98     $ 17.67     $ 16.82     $ 17.98   $ 16.82  
Stock price 16.56     12.56     18.29     16.56   18.29  
Tangible common book value (3) 11.43     11.10     10.35     11.43   10.35  
             
             
Performance Ratios            
Return on average assets 1.30   % 1.40   % 0.97 %   1.04 % 1.19 %
Return on average common equity 10.11   % 10.79   % 6.94 %   7.87 % 8.57 %
Return on tangible common equity (3) 16.20   % 17.56   % 11.89 %   12.54 % 14.30 %
Return on average tangible common equity (3) 16.57   % 17.88   % 12.03 %   13.27 % 14.97 %
Net interest margin (FTE) 3.26   % 3.03   % 3.46 %   3.18 % 3.55 %
Efficiency ratio (5) 62.37   % 55.93   % 65.57 %   62.91 % 60.35 %
Net charge-offs (recoveries) to average loans (0.03 ) % (0.09 ) % 0.12 %   0.02 % 0.05 %
Allowance for loan losses to ending loans (4) 0.95   % 0.95   % 0.45 %   0.95 % 0.45 %
Non-performing loans to ending loans 1.20   % 1.15   % 1.19 %   1.20 % 1.19 %
             
             
Balance Sheet (EOP)            
Total loans $ 13,786,479     $ 13,892,509     $ 12,117,524     $ 13,786,479   $ 12,117,524  
Total assets   22,960,622       22,460,476       20,411,667       22,960,622     20,411,667  
Total deposits   17,037,453       16,506,494       14,553,397       17,037,453     14,553,397  
Total borrowed funds   2,676,554       2,725,731       2,744,728       2,676,554     2,744,728  
Total shareholders' equity   2,972,656       2,921,149       2,852,453       2,972,656     2,852,453  
             
             
Capital Ratios (3)            
Risk-based capital ratios (EOP):            
Tier 1 common equity 11.75   % 11.84   % 12.13 %   11.75 % 12.13 %
Tier 1 11.75   % 11.84   % 12.13 %   11.75 % 12.13 %
Total 12.69   % 12.81   % 12.99 %   12.69 % 12.99 %
Leverage ratio (to average assets) 8.20   % 8.15   % 8.88 %   8.20 % 8.88 %
             
Total equity to assets (averages) 12.83   % 12.97   % 14.01 %   13.20 % 13.88 %
Tangible common equity to tangible assets 8.64   % 8.58   % 9.09 %   8.64 % 9.09 %
             
             
Nonfinancial Data            
Full-time equivalent employees   2,445       2,484       2,709       2,445     2,709  
Banking centers   162       162       192       162     192  
             
(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.
(2) Cash dividends per share divided by net income per share (basic).
(3) Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures. December 31, 2020 capital ratios are preliminary.
(4) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.
(5) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.  
FTE - Fully taxable equivalent basis  EOP - End of period actual balances N/A - Not applicable




Income Statement (unaudited)
($ and shares in thousands, except per share data)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2020 2020 2019   2020 2019
Interest income $ 173,249     $ 160,086   $ 176,553     $ 663,308   $ 730,387  
Less: interest expense 12,170     14,513   27,654     67,214   126,114  
Net interest income 161,079     145,573   148,899     596,094   604,273  
Provision for loan losses (1) (1,100 )     1,264     38,395   4,747  
Net interest income after provision for loan losses 162,179     145,573   147,635     557,699   599,526  
             
Wealth management fees 9,259     9,239   9,468     36,806   37,072  
Service charges on deposit accounts 8,724     8,698   10,714     35,081   44,915  
Debit card and ATM fees 5,072     5,276   5,360     20,178   21,652  
Mortgage banking revenue 16,233     18,110   5,626     62,775   26,622  
Investment product fees 5,544     5,351   5,679     21,614   21,785  
Capital markets income 6,545     5,428   3,043     22,480   13,270  
Company-owned life insurance 3,153     2,830   2,937     12,031   11,539  
Other income 3,861     4,906   4,462     17,542   20,539  
Gains (losses) on sales of debt securities 161     4,921   437     10,767   1,923  
Total noninterest income 58,552     64,759   47,726     239,274   199,317  
             
Salaries and employee benefits 78,001     69,860   74,974     293,590   289,452  
Occupancy 13,008     13,930   14,184     55,316   55,255  
Equipment 3,778     3,754   3,958     16,690   16,903  
Marketing 3,242     2,140   3,631     10,874   15,898  
Data processing 12,362     9,628   9,080     41,086   37,589  
Communication 2,396     2,241   2,450     9,731   10,702  
Professional fees 4,834     3,083   9,986     15,755   22,854  
FDIC assessment 1,780     1,319   1,529     6,722   6,030  
Amortization of intangibles 3,244     3,459   3,946     14,091   16,911  
Amortization of tax credit investments 9,871     3,115   710     18,788   2,749  
Other expense 9,802     7,705   10,295     58,774   34,144  
Total noninterest expense 142,318     120,234   134,743     541,417   508,487  
             
Income before income taxes 78,413     90,098   60,618     255,556   290,356  
Income tax expense 4,293     12,154   11,433     29,147   52,150  
Net income $ 74,120     $ 77,944   $ 49,185     $ 226,409   $ 238,206  
             
Diluted Earnings Per Share            
Net income $ 0.44     $ 0.47   $ 0.29     $ 1.36   $ 1.38  
             
Average Common Shares Outstanding            
Basic   164,799       164,773     169,235       165,509     171,907  
Diluted   165,631       165,419     170,186       166,177     172,687  
                                   
Common shares outstanding at end of period   165,367       165,333     169,616       165,367     169,616  
             
(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.




Balance Sheet (unaudited)
($ in thousands)
  December 31,   September 30,   December 31,
  2020   2020   2019
Assets          
Federal Reserve Bank account $ 307,967       $ 87,682       $ 29,141    
Money market investments 13,537       13,437       12,430    
Investments:          
Treasury and government-sponsored agencies 852,196       501,771       610,666    
Mortgage-backed securities 3,339,098       3,382,280       3,183,861    
States and political subdivisions 1,492,162       1,426,495       1,275,643    
Other securities 458,639       462,958       485,862    
Total investments 6,142,095       5,773,504       5,556,032    
Loans held for sale, at fair value 63,250       85,091       46,898    
Loans:          
Commercial 3,956,422       4,264,568       2,890,296    
Commercial and agriculture real estate 5,946,512       5,701,493       5,166,792    
Consumer:          
Home equity 556,414       549,115       559,021    
Other consumer loans 1,078,709       1,112,034       1,167,126    
Subtotal of commercial and consumer loans 11,538,057       11,627,210       9,783,235    
Residential real estate 2,248,422       2,265,299       2,334,289    
Total loans 13,786,479       13,892,509       12,117,524    
   Total earning assets 20,313,328       19,852,223       17,762,025    
           
Allowance for loan losses (1) (131,388 )     (131,388 )     (54,619 )  
Non-earning Assets:          
Cash and due from banks 268,208       229,631       234,766    
Premises and equipment, net 464,408       463,253       490,925    
Operating lease right-of-use assets 76,197       77,482       95,477    
Goodwill and other intangible assets 1,083,008       1,086,252       1,097,099    
Company-owned life insurance 456,110       455,975       448,967    
Other assets 430,751       427,048       337,027    
Total non-earning assets 2,778,682       2,739,641       2,704,261    
   Total assets $ 22,960,622       $ 22,460,476       $ 20,411,667    
           
Liabilities and Equity          
Noninterest-bearing demand deposits $ 5,633,672       $ 5,463,007       $ 4,042,286    
Interest-bearing:          
Checking and NOW accounts 4,877,046       4,588,432       4,149,639    
Savings accounts 3,395,747       3,287,302       2,845,423    
Money market accounts 1,908,118       1,904,404       1,833,819    
Other time deposits 1,103,313       1,206,658       1,589,988    
   Total core deposits 16,917,896       16,449,803       14,461,155    
Brokered deposits 119,557       56,691       92,242    
   Total deposits 17,037,453       16,506,494       14,553,397    
           
Federal funds purchased and interbank borrowings 1,166       1,259       350,414    
Securities sold under agreements to repurchase 431,166       399,141       327,782    
Federal Home Loan Bank advances 1,991,435       2,087,648       1,822,847    
Other borrowings 252,787       237,683       243,685    
Total borrowed funds 2,676,554       2,725,731       2,744,728    
Operating lease liabilities 86,598       88,552       99,500    
Accrued expenses and other liabilities 187,361       218,550       161,589    
Total liabilities 19,987,966       19,539,327       17,559,214    
Common stock, surplus, and retained earnings 2,824,885       2,771,865       2,796,246    
Accumulated other comprehensive income (loss), net of tax 147,771       149,284       56,207    
Total shareholders' equity 2,972,656       2,921,149       2,852,453    
   Total liabilities and shareholders' equity $ 22,960,622       $ 22,460,476       $ 20,411,667    
 
(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.




Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
                         
    Three Months Ended   Three Months Ended   Three Months Ended
    December 31, 2020   September 30, 2020   December 31, 2019
    Average Income(1)/ Yield/   Average Income(1)/ Yield/   Average Income(1)/ Yield/
Earning Assets:   Balance Expense Rate   Balance Expense Rate   Balance Expense Rate
Money market and other interest-earning investments   $ 413,782   $ 126   0.12 %   $ 137,880   $ 59   0.17 %   $ 87,835   $ 530   2.39 %
Investments:                        
Treasury and government-sponsored agencies   648,314   2,937   1.81 %   454,005   2,457   2.17 %   546,266   3,547   2.60 %
Mortgage-backed securities   3,291,436   16,137   1.96 %   3,342,284   17,478   2.09 %   3,172,818   18,844   2.38 %
States and political subdivisions   1,437,890   12,008   3.34 %   1,383,765   11,860   3.43 %   1,211,850   11,133   3.67 %
Other securities   462,836   2,629   2.27 %   487,405   2,922   2.40 %   489,889   3,585   2.93 %
Total investments   5,840,476   33,711   2.31 %   5,667,459   34,717   2.45 %   5,420,823   37,109   2.74 %
Loans: (2)                        
Commercial   4,132,831   46,468   4.40 %   4,274,894   33,223   3.04 %   2,891,641   31,925   4.32 %
Commercial and agriculture real estate   5,829,912   58,334   3.92 %   5,546,486   55,891   3.94 %   5,129,638   66,959   5.11 %
Consumer:                        
Home equity   550,548   4,380   3.17 %   551,380   4,336   3.13 %   561,125   6,426   4.54 %
Other consumer loans   1,099,504   11,276   4.08 %   1,120,681   11,635   4.13 %   1,153,924   12,245   4.21 %
Subtotal commercial and consumer loans   11,612,795   120,458   4.13 %   11,493,441   105,085   3.64 %   9,736,328   117,555   4.79 %
Residential real estate loans   2,314,938   22,471   3.88 %   2,355,512   23,604   4.01 %   2,332,835   24,641   4.23 %
                         
Total loans   13,927,733   142,929   4.04 %   13,848,953   128,689   3.66 %   12,069,163   142,196   4.64 %
                         
Total earning assets   $ 20,181,991   $ 176,766   3.46 %   $ 19,654,292   $ 163,465   3.29 %   $ 17,577,821   $ 179,835   4.05 %
                         
Less: Allowance for loan losses (3)   (137,539 )       (132,447 )       (57,162 )    
                         
Non-earning Assets:                        
Cash and due from banks   $ 341,154         $ 346,343         $ 278,324      
Other assets   2,479,253         2,405,517         2,419,792      
                         
Total assets   $ 22,864,859         $ 22,273,705         $ 20,218,775      
                         
Interest-Bearing Liabilities:                        
Checking and NOW accounts   $ 4,708,568   $ 629   0.05 %   $ 4,607,427   $ 886   0.08 %   $ 4,121,021   $ 3,812   0.37 %
Savings accounts   3,329,494   487   0.06 %   3,232,375   634   0.08 %   2,842,996   1,586   0.22 %
Money market accounts   1,932,594   445   0.09 %   1,902,407   724   0.15 %   1,839,258   3,558   0.77 %
Other time deposits   1,158,715   2,189   0.75 %   1,253,058   2,852   0.91 %   1,642,773   6,101   1.47 %
Total interest-bearing core deposits   11,129,371   3,750   0.13 %   10,995,267   5,096   0.18 %   10,446,048   15,057   0.57 %
Brokered deposits   37,176   26   0.28 %   150,545   201   0.53 %   109,504   637   2.31 %
Total interest-bearing deposits   11,166,547   3,776   0.13 %   11,145,812   5,297   0.19 %   10,555,552   15,694   0.59 %
                         
Federal funds purchased and interbank borrowings   843     0.03 %   18,347   12   0.25 %   95,973   437   1.80 %
Securities sold under agreements to repurchase   438,272   125   0.11 %   385,149   160   0.16 %   337,786   469   0.55 %
Federal Home Loan Bank advances   2,089,519   5,953   1.13 %   2,021,468   6,709   1.32 %   1,843,357   8,359   1.80 %
Other borrowings   240,815   2,316   3.85 %   237,811   2,335   3.93 %   251,565   2,695   4.29 %
Total borrowed funds   2,769,449   8,394   1.21 %   2,662,775   9,216   1.38 %   2,528,681   11,960   1.88 %
                         
Total interest-bearing liabilities   13,935,996   12,170   0.35 %   13,808,587   14,513   0.42 %   13,084,233   27,654   0.84 %
                         
Noninterest-Bearing Liabilities and Shareholders' Equity                        
Demand deposits   $ 5,644,017         $ 5,291,037         $ 4,047,308      
Other liabilities   352,256         284,536         254,296      
Shareholders' equity   2,932,590         2,889,545         2,832,938      
                         
Total liabilities and shareholders' equity   $ 22,864,859         $ 22,273,705         $ 20,218,775      
                         
Net interest rate spread       3.11 %       2.87 %       3.21 %
                         
Net interest margin (FTE)       3.26 %       3.03 %       3.46 %
                         
FTE adjustment     $ 3,517         $ 3,379         $ 3,282    
                         
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.
(3) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.




Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
                 
    Twelve Months Ended   Twelve Months Ended
    December 31, 2020   December 31, 2019
    Average Income (1)/ Yield/   Average Income (1)/ Yield/
Earning Assets:   Balance Expense Rate   Balance Expense Rate
Money market and other interest-earning investments   $ 174,494     $ 568   0.33 %   $ 67,069     $ 1,670   2.49 %
Investments:                
Treasury and government-sponsored agencies   547,054     12,124   2.22 %   657,233     16,091   2.45 %
Mortgage-backed securities   3,246,520     70,611   2.17 %   2,866,600     73,835   2.58 %
States and political subdivisions   1,347,490     47,034   3.49 %   1,202,210     44,716   3.72 %
Other securities   485,430     11,990   2.47 %   495,847     16,138   3.25 %
Total investments   $ 5,626,494     $ 141,759   2.52 %   $ 5,221,890     $ 150,780   2.89 %
Loans: (2)                
Commercial   3,843,089     140,473   3.66 %   3,023,421     141,215   4.67 %
Commercial and agriculture real estate   5,477,562     234,670   4.28 %   5,044,623     275,853   5.47 %
Consumer:                
Home equity   553,570     18,561   3.35 %   566,232     28,515   5.04 %
Other consumer loans   1,131,028     46,661   4.13 %   1,180,898     48,681   4.12 %
Subtotal commercial and consumer loans   11,005,249     440,365   4.00 %   9,815,174     494,264   5.04 %
Residential real estate loans   2,352,444     94,202   4.00 %   2,281,047     96,613   4.24 %
                 
Total loans   13,357,693     534,567   4.00 %   12,096,221     590,877   4.88 %
                 
Total earning assets   $ 19,158,681     $ 676,894   3.53 %   $ 17,385,180     $ 743,327   4.28 %
                 
Less: Allowance for loan losses (3)   (115,321 )         (56,624 )      
                 
Non-earning Assets:                
Cash and due from banks   $ 327,053           $ 251,857        
Other assets   2,414,602           2,453,001        
                 
Total assets   $ 21,785,015           $ 20,033,414        
                 
Interest-Bearing Liabilities:                
Checking and NOW accounts   $ 4,464,027     $ 5,449   0.12 %   $ 3,902,765     $ 15,598   0.40 %
Savings accounts   3,113,435     3,156   0.10 %   2,878,135     8,142   0.28 %
Money market accounts   1,866,196     4,585   0.25 %   1,789,065     14,130   0.79 %
Other time deposits   1,337,269     14,013   1.05 %   1,748,552     27,400   1.57 %
Total interest-bearing core deposits   10,780,927     27,203   0.25 %   10,318,517     65,270   0.63 %
Brokered deposits   85,041     966   1.14 %   173,439     4,094   2.36 %
Total interest-bearing deposits   10,865,968     28,169   0.26 %   10,491,956     69,364   0.66 %
                 
Federal funds purchased and interbank borrowings   138,257     1,296   0.94 %   241,618     5,656   2.34 %
Securities sold under agreements to repurchase   375,961     854   0.23 %   342,654     2,517   0.73 %
Federal Home Loan Bank advances   2,055,155     27,274   1.33 %   1,775,987     37,452   2.11 %
Other borrowings   242,642     9,621   3.96 %   251,194     11,125   4.43 %
Total borrowed funds   2,812,015     39,045   1.39 %   2,611,453     56,750   2.17 %
                 
Total interest-bearing liabilities   13,677,983     67,214   0.49 %   13,103,409     126,114   0.96 %
                 
Noninterest-Bearing Liabilities and Shareholders' Equity                
Demand deposits   $ 4,945,506           $ 3,887,470        
Other liabilities   286,066           261,403        
Shareholders' equity   2,875,460           2,781,132        
                 
Total liabilities and shareholders' equity   $ 21,785,015           $ 20,033,414        
                 
Net interest rate spread       3.04 %       3.32 %
                 
Net interest margin (FTE)       3.18 %       3.55 %
                 
FTE adjustment     $ 13,586         $ 12,940    
                 
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.  
(3) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.




Asset Quality (EOP) (unaudited)
($ in thousands)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2020 2020 2019   2020 2019
             
Beginning allowance for loan losses $ 131,388     $ 128,394     $ 56,910       $ 54,619     $ 55,461    
Impact of adopting ASC 326 on 1/1/2020 (1)           N/A       41,347       N/A    
             
Provision for loan losses (1) (1,100 )       1,264       38,395     4,747    
             
Gross charge-offs (707 )   (4,169 )   (6,304 )     (15,553 )   (14,789 )  
Gross recoveries 1,807     7,163     2,749       12,580     9,200    
Net (charge-offs) recoveries 1,100     2,994     (3,555 )     (2,973 )   (5,589 )  
             
Ending allowance for loan losses (1) $ 131,388     $ 131,388     $ 54,619       $ 131,388     $ 54,619    
             
Net charge-offs (recoveries) / average loans (2) (0.03 ) % (0.09 ) % 0.12   %   0.02   % 0.05   %
             
Average loans outstanding (2) $ 13,910,145     $ 13,827,019     $ 12,058,109       $ 13,341,677     $ 12,087,429    
             
EOP loans outstanding (2) 13,786,479     13,892,509     12,117,524       13,786,479     12,117,524    
             
Allowance for loan losses / EOP loans (1)(2) 0.95   % 0.95   % 0.45   %   0.95   % 0.45   %
             
Underperforming Assets:            
Loans 90 Days and over (still accruing) $ 167     $ 90     $ 570       $ 167     $ 570    
             
Non-performing loans:            
Nonaccrual loans (3) 147,339     137,611     126,412       147,339     126,412    
TDRs still accruing 17,749     22,037     18,338       17,749     18,338    
Total non-performing loans 165,088     159,648     144,750       165,088     144,750    
             
Foreclosed properties 1,324     1,248     2,169       1,324     2,169    
             
Total underperforming assets $ 166,579     $ 160,986     $ 147,489       $ 166,579     $ 147,489    
             
Classified and Criticized Assets:            
Nonaccrual loans (3) 147,339     137,611     126,412       147,339     126,412    
Substandard accruing loans 157,276     189,524     169,689       157,276     169,689    
Loans 90 days and over (still accruing) 167     90     570       167     570    
Total classified loans - "problem loans" $ 304,782     $ 327,225     $ 296,671       $ 304,782     $ 296,671    
             
Other classified assets 3,706     3,860     2,933       3,706     2,933    
Criticized loans - "special mention loans" 287,192     272,859     234,841       287,192     234,841    
             
Total classified and criticized assets $ 595,680     $ 603,944     $ 534,445       $ 595,680     $ 534,445    
             
Non-performing loans / EOP loans (2) 1.20   % 1.15   % 1.19   %   1.20   % 1.19   %
             
Allowance to non-performing loans (1)(4) 80   % 82   % 38   %   80   % 38   %
             
Under-performing assets / EOP loans (2) 1.21   % 1.16   % 1.22   %   1.21   % 1.22   %
             
EOP total assets $ 22,960,622     $ 22,460,476     $ 20,411,667       $ 22,960,622     $ 20,411,667    
             
Under-performing assets / EOP assets 0.73   % 0.72   % 0.72   %   0.73   % 0.72   %
             
EOP - End of period actual balances            
(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.
(2) Excludes loans held for sale.
(3) Includes non-accruing TDRs totaling $14.9 million at December 31, 2020, $7.7 million at September 30, 2020, and $13.8 million at December 31, 2019.
(4) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded for 2019 quarter ends.




Non-GAAP Measures (unaudited)
($ in thousands)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2020 2020 2019   2020 2019
Actual End of Period Balances            
GAAP shareholders' equity $ 2,972,656   $ 2,921,149   $ 2,852,453     $ 2,972,656   $ 2,852,453  
             
Deduct:            
Goodwill   1,036,994     1,036,994     1,036,994       1,036,994     1,036,994  
Intangibles   46,014     49,258     60,105       46,014     60,105  
    1,083,008     1,086,252     1,097,099       1,083,008     1,097,099  
             
Tangible shareholders' equity $ 1,889,648   $ 1,834,897   $ 1,755,354     $ 1,889,648   $ 1,755,354  
             
Average Balances            
GAAP shareholders' equity $ 2,932,590   $ 2,889,545   $ 2,832,938     $ 2,875,460   $ 2,781,132  
             
Deduct:            
Goodwill   1,036,994     1,036,994     1,036,994       1,036,994     1,036,456  
Intangibles   47,536     50,926     61,963       52,740     68,244  
    1,084,530     1,087,920     1,098,957       1,089,734     1,104,700  
             
Average tangible shareholders' equity $ 1,848,060   $ 1,801,625   $ 1,733,981     $ 1,785,726   $ 1,676,432  
             
Actual End of Period Balances            
GAAP assets $ 22,960,622   $ 22,460,476   $ 20,411,667     $ 22,960,622   $ 20,411,667  
             
Add: