Press Release

Old National's Strong 2nd Quarter Driven by Robust Commercial Loan Growth and Net Interest Margin Expansion

Company Release - 7/26/2022 8:00 AM ET

EVANSVILLE, Ind., July 26, 2022 (GLOBE NEWSWIRE) --  

Old National Bancorp (NASDAQ: ONB) reports 2Q22 net income applicable to common shares of $111.0 million, diluted EPS of $0.38. Adjusted net income applicable to common shares 1 of $134.6 million,
or $0.46 per diluted common share.

CEO COMMENTARY:

“As evidenced by a 17% increase in annualized loan growth and strong net interest margin expansion, this was a very robust earnings quarter for Old National,” said CEO Jim Ryan. “We are especially pleased with the growth opportunities that are taking shape in our Chicagoland market as we begin to realize the full potential of our recently completed merger."

SECOND QUARTER HIGHLIGHTS 2 :

Net Income

  • Net income applicable to common shares of $111.0 million; adjusted net income applicable to common shares1 of $134.6 million
  • Earnings per diluted common share ("EPS") of $0.38; adjusted EPS1 of $0.46
   
Net Interest Income/NIM

  • Net interest income on a fully taxable equivalent basis1 of $341.8 million
  • Net interest margin on a fully taxable equivalent basis1 ("NIM") of 3.33%, up 45 basis points ("bps")
   
Operating Performance



  • Pre-provision net revenue1 (“PPNR”) of $153.5 million; adjusted PPNR1 of $191.7 million
  • Noninterest expense of $277.4 million; adjusted noninterest expense1 of $239.3 million
  • Efficiency ratio1 of 62.7%; adjusted efficiency ratio1 of 53.9%
   
Loans and Credit Quality















  • End-of-period total loans3 of $29.6 billion, up 17.0% annualized compared to $28.4 billion at March 31, 2022
  • Total commercial loans increased 17.9% annualized, excluding Paycheck Protection Program ("PPP") loans1
  • Total consumer loans4 increased 21.9% annualized
  • Second quarter total commercial production of $2.2 billion
  • June 30 commercial loan pipeline of $5.9 billion
  • Provision for credit losses ("provision") of $9.2 million
  • Net charge-offs of $1.8 million, or 2 bps of average loans
  • Non-performing loans of 0.78% of total loans
 
Return Profile & Capital
  • Return on average tangible common equity1 of 16.9%; adjusted return on average tangible common equity1 of 20.4%
   
Notable Items

  • $36.6 million of merger-related charges
  • $1.5 million of tax credit amortization

Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the Non-GAAP reconciliations contained in this release Certain comparisons to prior period are not meaningful due to the full quarter impact of the merger with First Midwest Bancorp, Inc. ("First Midwest") Includes loans held for sale Includes consumer and residential real estate loans

RESULTS OF OPERATIONS

Old National Bancorp ("Old National") reported second quarter 2022 net income applicable to common shares of $111.0 million, or $0.38 per diluted share.

Included in the second quarter were pre-tax charges of $36.6 million related to the February 15, 2022 merger with First Midwest. Excluding these charges and debt securities gains from the current quarter, adjusted net income was $134.6 million, or $0.46 per diluted share.

LOANS
Robust broad-based commercial and consumer loan growth.

  • Period-end total loans3 were $29.6 billion at June 30, 2022, up 17.0% annualized from $28.4 billion at March 31, 2022, driven by strong commercial and consumer loan production.
  • PPP loans decreased $123.8 million to $81.6 million at June 30, 2022, compared to $205.3 million at March 31, 2022.
  • Excluding PPP loans, total loans increased 19.1%, annualized, and total commercial loans increased 17.9%, annualized.
  • Total commercial loan production in the second quarter was $2.2 billion; period-end commercial pipeline totaled $5.9 billion.
  • Consumer loans grew $86.0 million, or 12.9% annualized, to $2.8 billion and residential mortgage loans grew $372.9 million, or 26.1% annualized, to $6.1 billion, driven by strong production which was partially offset by acquired transactional portfolio run-off.
  • Average total loans in the second quarter were $28.9 billion, an increase of $8.1 billion from the first quarter of 2022, driven by the full quarter impact of the merger with First Midwest, as well as organic loan growth.

DEPOSITS
Strong deposit franchise with stable balances.

  • Period-end total deposits were $35.5 billion at June 30, 2022, consistent with $35.6 billion at March 31, 2022.
  • The gradual deployment of commercial and retail deposits was partially offset by the seasonal increase in municipal deposits.
  • On average, total deposits in the second quarter increased to $35.8 billion, compared to $26.9 billion for the first quarter of 2022, due primarily to the full quarter impact of the merger.

NET INTEREST INCOME AND MARGIN
Strong loan growth, the higher rate environment and the full quarter impact of the merger favorably impact net interest income and margin.

  • Net interest income on a fully taxable equivalent basis increased to $341.8 million in the second quarter of 2022 compared to $226.6 million in the first quarter of 2022, driven by the full quarter impact of the merger, loan growth, higher interest rates, higher accretion income, and an additional day in the quarter.
  • Net interest margin on a fully taxable equivalent basis increased 45 bps to 3.33% compared to 2.88% in the first quarter of 2022.
  • PPP interest and net fees combined were $1.7 million, or less than 1 bp of net interest margin, in the second quarter of 2022 compared to $3.7 million, or 3 bps of net interest margin, in the first quarter of 2022.
  • Accretion income on loans and borrowings was $35.0 million, or 34 bps of net interest margin, in the second quarter of 2022 compared to $15.9 million, or 20 bps of net interest margin, in the first quarter of 2022.
  • Interest collected on nonaccrual loans was $3.2 million, or 3 bps of net interest margin, in the second quarter of 2022 compared to $1.1 million, or 1 bp of net interest margin, in the first quarter of 2022.
  • Cost of total deposits continue to be low at 0.06%, increasing 1 bp in the second quarter of 2022 and the cost of total interest-bearing deposits increased just 2 bps to 0.09%.

CREDIT QUALITY
Strong credit quality continues to be a hallmark of the Old National franchise.

  • Provision expense in the second quarter of 2022 was $9.2 million, compared to $97.6 million in the first quarter of 2022, which included $96.3 million of Current Expected Credit Losses ("CECL") Day 1 non-purchased credit deteriorated ("non-PCD") provision expense related to the allowance for credit losses established on acquired non-PCD loans as a result of the merger with First Midwest.
  • Net charge-offs in the second quarter were $1.8 million, or 2 bps of average loans, compared to net charge-offs of $2.8 million in the first quarter of 2022, or 5 bps of average loans.
  • 30+ day delinquencies were 0.17% at the end of the second quarter, down from 0.34% at the end of the first quarter.
  • Non-performing loans improved as a percentage of total loans to 0.78% from 0.88% at the end of the first quarter due to the merger.
  • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of June 30, 2022, the remaining discount on these acquired loans was $131 million.
  • The allowance for credit losses stood at $288.0 million, or 0.97% of total loans at June 30, 2022, compared to 0.99% at March 31, 2022.

NONINTEREST INCOME
Increase driven by the full quarter impact of the merger.

  • Total noninterest income for the second quarter of 2022 was $89.1 million, an increase of $23.9 million from the first quarter of 2022, driven by the full quarter impact of the merger.
  • Mortgage banking revenue was impacted by the higher rate environment, lower gain on sale margins and a higher mix of portfolio production.
  • Other income higher primarily due to equity investment returns and recoveries on previously charged-off acquired loans.

NONINTEREST EXPENSE
Increase due primarily to full quarter impact of operating costs associated with the merger; efficiency ratio improved.

  • Noninterest expense for the second quarter of 2022 was $277.4 million and included $36.6 million of merger-related charges, as well as $1.5 million of tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the second quarter was $239.3 million, compared to $172.9 million in the first quarter of 2022, up due primarily to the full quarter impact of the merger, as well as higher incentive accruals reflective of strong performance.
  • The second quarter efficiency ratio was 62.7%, while the adjusted efficiency ratio was 53.9% compared to 57.7% for the first quarter of 2022.

INCOME TAXES

  • On a fully taxable equivalent basis, income tax expense in the second quarter was $29.3 million, resulting in a 20.3% FTE tax rate, compared to 15.2% in the first quarter of 2022, reflective of higher pre-tax net income.
  • Income tax expense included $1.5 million of tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

  • Preliminary total risk-based capital was 12.03% and preliminary regulatory Tier 1 capital was 10.63%, impacted by strong loan growth, partly offset by retained earnings.
  • Tangible common equity to tangible assets was 6.20% at the end of the second quarter compared to 6.51% in the first quarter of 2022, driven by the higher rate environment's impact on unrealized losses within the investment portfolio.
  • The Company did not repurchase any shares of common stock during the quarter.
  • A low loan to deposit ratio of 83.2%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

HEALTH SAVINGS ACCOUNTS SALE
As previously disclosed on June 27, 2022, Old National Bank, a wholly-owned subsidiary of Old National Bancorp, entered into a Custodial Transfer and Asset Purchase Agreement with UMB Bank, n.a. (“UMB”), pursuant to which UMB will acquire Old National Bank’s business of acting as a qualified custodian for, and administering, health savings accounts. Old National Bank serves as custodian for health savings accounts comprised of both investment accounts and deposit accounts. Upon completion of the sale, UMB will pay Old National a premium on deposit account balances transferred at closing, or approximately $95 million based on June 30, 2022 balances. Subject to customary closing conditions and regulatory approval, the parties anticipate completing the sale in the fourth quarter of 2022.

NON-GAAP RECONCILIATIONS
See the "Use of Non-GAAP Financial Measures" section presented later in this release for a discussion of these non-GAAP financial measures.

($ in millions, except EPS, shares in 000s) 2Q22 Adjustments 4 Adjusted 2Q22
Total Revenues (FTE) $ 430.9   $ 0.1   $ 431.0  
Less: Provision for Credit Losses   9.2         9.2  
Less: Noninterest Expenses   (277.4 )   36.6     (240.8 )
Income before Income Taxes (FTE) $ 144.3   $ 36.7   $ 181.0  
Income Taxes (FTE)   (29.3 )   (13.1 )   (42.4 )
Net Income (loss) $ 115.0   $ 23.6   $ 138.6  
Preferred Dividends   (4.0 )       (4.0 )
Net Income (loss) applicable to common shares $ 111.0   $ 23.6   $ 134.6  
Weighted Average Diluted Shares Outstanding   291,881         291,881  
Earnings Per Common Share - Diluted $ 0.38   $ 0.08   $ 0.46  

4 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state)

($ in millions) 2Q22 1Q22
Net Interest Income $ 337.5   $ 222.8  
Add: FTE Adjustment   4.3     3.8  
Net Interest Income (FTE) $ 341.8   $ 226.6  
Average Earning Assets $ 41,003.3   $ 31,483.6  
Net Interest Margin (FTE)   3.33 %   2.88 %


($ in millions) 2Q22 1Q22
Net Interest Income $ 337.5 $ 222.8  
Add: FTE Adjustment   4.3   3.8  
Net Interest Income (FTE) $ 341.8 $ 226.6  
Add: Total Noninterest Income   89.1   65.2  
Less: Noninterest Expense   277.4   226.7  
Pre-Provision Net Revenue $ 153.5 $ 65.1  
Less: Debt Securities (Gains)/Losses   0.1   (0.3 )
Add: Merger-Related Charges   36.6   52.3  
Add: Amortization of Tax Credit Investments   1.5   1.5  
Adjusted Pre-Provision Net Revenue $ 191.7 $ 118.6  


($ in millions, end of period balances) 2Q22 1Q22
Commercial Loans $ 20,721.0   $ 19,962.0  
Less: PPP Loans   (81.6 )   (205.3 )
Commercial Loans, excluding PPP Loans $ 20,639.4   $ 19,756.7  
Consumer and Residential Real Estate Loans   8,833.0     8,374.3  
Total Loans, excluding PPP Loans $ 29,472.4   $ 28,131.0  


($ in millions) 2Q22 1Q22
Noninterest Expense $ 277.4   $ 226.7  
Less: Merger-Related Charges   (36.6 )   (52.3 )
Noninterest Expense less Charges $ 240.8   $ 174.4  
Less: Amortization of Tax Credit Investments   (1.5 )   (1.5 )
Adjusted Noninterest Expense $ 239.3   $ 172.9  
Less: Intangible Amortization   (7.2 )   (4.8 )
Adjusted Noninterest Expense Less Intangible Amortization $ 232.1   $ 168.1  
Net Interest Income $ 337.5   $ 222.8  
FTE Adjustment   4.3     3.8  
Net Interest Income (FTE) $ 341.8   $ 226.6  
Total Noninterest Income   89.1     65.2  
Total Revenue (FTE) $ 430.9   $ 291.8  
Less: Debt Securities (Gains)/Losses   0.1     (0.3 )
Adjusted Total Revenue (FTE) $ 431.0   $ 291.5  
Efficiency Ratio   62.7 %   76.2 %
Adjusted Efficiency Ratio   53.9 %   57.7 %

                

($ in millions) 2Q22 1Q22
Net (Loss) Income Applicable to Common Shares $ 111.0   $ (29.6 )
Add: Intangible Amortization (net of tax4)   5.4     3.9  
Tangible Net (Loss) Income Applicable to Common Shares $ 116.3   $ (25.7 )
Less: Securities (Gains)/Losses (net of tax4)   0.1     (0.2 )
Add: Provision for credit losses - CECL Day 1 non-PCD provision expense5 (net of tax4)       78.6  
Add: Merger-Related Charges (net of tax4)   23.5     42.8  
Adjusted Tangible Net Income Applicable to Common Shares $ 139.9   $ 95.5  
Average Shareholders’ Common Equity   4,886.2     4,101.2  
Less: Average Goodwill   (1,992.9 )   (1,476.7 )
Less: Average Intangibles   (144.1 )   (73.9 )
Average Tangible Shareholders’ Common Equity $ 2,749.2   $ 2,550.6  
Return on Average Common Equity   9.1 % (2.9)   %
Adjusted Return on Average Common Equity   11.0 %   8.9 %
Return on Average Tangible Common Equity   16.9 % (4.0)   %
Adjusted Return on Average Tangible Common Equity   20.4 %   15.0 %

5 Provision for Credit Losses adjustment refers to the initial increase in allowance for credit losses required
on acquired non-PCD loans through the provision for credit losses as a result of the completed merger

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, July 26, 2022, to review second quarter 2022 financial results. The live audio webcast link and 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. To listen to the live conference call, dial U.S. (844) 200-6205 or International (929) 526-1599, Access code 498391. A replay of the call will also be available from noon Central Time on July 26 through August 9. To access the replay, dial U.S. (866) 813-9403 or international +44 (204) 525-0658, Access code 946843.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the sixth largest commercial bank headquartered in the Midwest. With approximately $46 billion of assets and $28 billion of assets under management, Old National ranks among the top 35 banking companies based in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for eleven consecutive years.  Since its founding in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients and in the communities it serves. 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
The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. 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.

The Company presents EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity, all adjusted for certain notable items. These items include the CECL Day 1 non-PCD provision expense, merger related charges associated with completed acquisitions, and net securities gains. Management believes excluding these items from EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger related charges and the CECL Day 1 non-PCD provision expense from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these items from these metrics may enhance comparability for peer comparison purposes.

The Company presents loans excluding PPP loans. Management believes that excluding PPP loans is useful as it facilitates better comparability between periods. PPP loans are fully guaranteed by the Small Business Administration and are expected to be forgiven if the applicable criteria are met. Additionally, management believes excluding PPP loans from this item may enhance comparability for peer comparison.

Income tax expense, provision for credit losses, and the certain notable items listed above are excluded from the calculation of pre-provision net revenues, adjusted due to the fluctuation in income before income tax and the level of provision for credit losses required. Management believes pre-provision net revenues, adjusted may be useful in assessing the Company's underlying operating performance and their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The Company presents adjusted noninterest expense, which excludes merger related charges, ONB Way charges and amortization of tax credit investments. Management believes that excluding these items from noninterest expense may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes.

In management's view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

FORWARD-LOOKING STATEMENTS
This communication 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’s financial condition, results of operations, asset and credit quality trends, profitability and business plans or opportunities. Forward-looking statements can be identified by the use of the words "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "should," and "will," 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. There are a number of factors that could cause actual results or outcomes to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: the continued impact of the COVID-19 pandemic on our business as well as the business of our customers; competition; government legislation, regulations and policies; ability of Old National to execute its business plan, including the completion of the integration related to the merger between Old National and First Midwest and the achievement of the synergies and other benefits from the merger; changes in economic conditions which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations; disruptive technologies in payment systems and other services traditionally provided by banks; failure or disruption of our information systems; computer hacking and other cybersecurity threats; other matters discussed in this communication; and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2021 and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date of this communication and are not guarantees of future results or performance, and Old National does not undertake an obligation to update these forward-looking statements to reflect events or conditions after the date of this communication.

CONTACTS:    
Media: Kathy Schoettlin   Investors: Lynell Walton
(812) 465-7269   (812) 464-1366
Kathy.Schoettlin@oldnational.com   Lynell.Walton@oldnational.com


             
Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
             
  Three Months Ended   Six Months Ended
  June 30, March 31, June 30,   June 30, June 30,
    2022     2022     2021       2022     2021  
Income Statement            
Net interest income $ 337,472   $ 222,785   $ 149,927     $ 560,257   $ 298,047  
Tax equivalent adjustment (1)   4,314     3,772     3,470       8,086     6,970  
Net interest income - tax equivalent basis   341,786     226,557     153,397       568,343     305,017  
Provision for credit losses   9,245     97,569     (4,929 )     106,814     (22,285 )
Noninterest income   89,117     65,240     51,508       154,357     108,220  
Noninterest expense   277,395     226,756     129,618       504,151     247,358  
Net income (loss) available to common shareholders   110,952     (29,603 )   62,786       81,349     149,604  
             
             
Per Common Share Data            
Weighted average diluted shares   291,881     227,002     165,934       260,253     165,821  
Net income (loss) (diluted) $ 0.38   $ (0.13 ) $ 0.38     $ 0.31   $ 0.90  
Cash dividends   0.14     0.14     0.14       0.28     0.28  
Common dividend payout ratio (2)   37 % (108)        %   37 %     90 %   31 %
Book value $ 16.51   $ 17.03   $ 18.05     $ 16.51   $ 18.05  
Stock price   14.79     16.38     17.61       14.79     17.61  
Tangible common book value (3)   9.23     9.71     11.55       9.23     11.55  
             
             
Performance Ratios            
Return on average assets   1.0 % (0.3)   %   1.1 %     0.4 %   1.3 %
Return on average common equity   9.1 % (2.9)   %   8.4 %     3.6 %   10.0 %
Return on average tangible common equity (3)   16.9 % (4.0)   %   13.6 %     6.8 %   16.2 %
Net interest margin (FTE)   3.33 %   2.88 %   2.91 %     3.13 %   2.93 %
Efficiency ratio (4)   62.7 %   76.2 %   62.1 %     68.1 %   58.8 %
Net charge-offs (recoveries) to average loans   0.02 %   0.05 % (0.01)        %     0.04 %   0.00 %
Allowance for credit losses to ending loans   0.97 %   0.99 %   0.79 %     0.97 %   0.79 %
Non-performing loans to ending loans   0.78 %   0.88 %   1.03 %     0.78 %   1.03 %
             
             
Balance Sheet (EOP)            
Total loans $ 29,553,648   $ 28,336,244   $ 13,784,677     $ 29,553,648   $ 13,784,677  
Total assets   45,748,355     45,834,648     23,675,666       45,748,355     23,675,666  
Total deposits   35,538,975     35,607,390     17,868,911       35,538,975     17,868,911  
Total borrowed funds   4,384,411     4,347,560     2,559,113       4,384,411     2,559,113  
Total shareholders' equity   5,078,783     5,232,114     2,991,118       5,078,783     2,991,118  
             
             
Capital Ratios (3)            
Risk-based capital ratios (EOP):            
Tier 1 common equity   9.90 %   10.04 %   11.95 %     9.90 %   11.95 %
Tier 1   10.63 %   10.79 %   11.95 %     10.63 %   11.95 %
Total   12.03 %   12.19 %   12.73 %     12.03 %   12.73 %
Leverage ratio (to average assets)   8.19 %   10.58 %   8.38 %     8.19 %   8.38 %
             
Total equity to assets (averages)   11.22 %   12.03 %   12.61 %     11.57 %   12.69 %
Tangible common equity to tangible assets   6.20 %   6.51 %   8.47 %     6.20 %   8.47 %
             
             
Nonfinancial Data            
Full-time equivalent employees   4,196     4,333     2,465       4,196     2,465  
Banking centers   266     267     162       266     162  
             
(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.        
(2) Cash dividends per common share divided by net income per common share (basic).  
(3) Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.  
June 30, 2022 capital ratios are preliminary.            
(4) 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 PCD - Purchased credit deteriorated


             
Income Statement (unaudited)
($ and shares in thousands, except per share data)
             
  Three Months Ended   Six Months Ended
  June 30, March 31, June 30,   June 30, June 30,
    2022     2022     2021       2022     2021  
Interest income $ 354,358   $ 235,505   $ 160,458     $ 589,863   $ 319,695  
Less: interest expense   16,886     12,720     10,531       29,606     21,648  
Net interest income   337,472     222,785     149,927       560,257     298,047  
Provision for credit losses   9,245     97,569     (4,929 )     106,814     (22,285 )
Net interest income after provision for credit losses   328,227     125,216     154,856       453,443     320,332  
             
Wealth management fees   19,304     14,630     10,734       33,934     20,442  
Service charges on deposit accounts   21,144     14,726     8,514       35,870     16,638  
Debit card and ATM fees   10,402     6,899     5,583       17,301     10,726  
Mortgage banking revenue   6,522     7,245     7,827       13,767     24,352  
Investment product fees   8,568     7,322     6,042       15,890     11,906  
Capital markets income   7,261     4,442     5,871       11,703     9,586  
Company-owned life insurance   4,571     3,524     2,783       8,095     5,497  
Other income   11,430     6,110     3,462       17,540     6,388  
Gains (losses) on sales of debt securities   (85 )   342     692       257     2,685  
Total noninterest income   89,117     65,240     51,508       154,357     108,220  
             
Salaries and employee benefits   161,817     124,147     72,640       285,964     140,757  
Occupancy   26,496     21,019     14,054       47,515     28,926  
Equipment   7,550     5,168     4,506       12,718     8,475  
Marketing   9,119     4,276     2,632       13,395     4,694  
Data processing   25,883     18,762     11,697       44,645     24,050  
Communication   5,878     3,417     2,411       9,295     5,289  
Professional fees   6,336     19,791     8,528       26,127     11,252  
FDIC assessment   4,699     2,575     1,226       7,274     2,833  
Amortization of intangibles   7,170     4,811     2,909       11,981     5,984  
Amortization of tax credit investments   1,525     1,516     1,813       3,041     3,015  
Other expense   20,922     21,274     7,202       42,196     12,083  
Total noninterest expense   277,395     226,756     129,618       504,151     247,358  
             
Income (loss) before income taxes   139,949     (36,300 )   76,746       103,649     181,194  
Income tax expense (benefit)   24,964     (8,714 )   13,960       16,250     31,590  
Net income (loss) $ 114,985   $ (27,586 ) $ 62,786     $ 87,399   $ 149,604  
Preferred dividends   (4,033 )   (2,017 )         (6,050 )    
Net income (loss) applicable to common shares $ 110,952   $ (29,603 ) $ 62,786     $ 81,349   $ 149,604  
             
Diluted Earnings Per Common Share            
Net income (loss) $ 0.38   $ (0.13 ) $ 0.38     $ 0.31   $ 0.90  
             
Average Common Shares Outstanding            
Basic   290,862     227,002     165,175       259,108     165,086  
Diluted   291,881     227,002     165,934       260,253     165,821  
             
Common shares outstanding at end of period   292,893     292,959     165,732       292,893     165,732  
             


 


 
End of Period Balance Sheet (unaudited)
($ in thousands)
  June 30,   March 31,   June 30,
    2022       2022       2021  
Assets          
Federal Reserve Bank account $ 334,570     $ 1,545,389     $ 287,446  
Money market investments   7,774       12,419       15,294  
Investments:          
Treasury and government-sponsored agencies   2,461,173       2,527,568       1,657,079  
Mortgage-backed securities   5,976,921       6,086,853       3,280,983  
States and political subdivisions   1,839,333       1,840,823       1,567,931  
Other securities   719,223       735,550       441,037  
Total investments   10,996,650       11,190,794       6,947,030  
Loans held for sale, at fair value   26,217       39,376       50,121  
Loans:          
Commercial   8,923,983       8,624,253       3,802,943  
Commercial and agriculture real estate   11,796,503       11,337,735       6,187,318  
Consumer:          
Home equity   1,097,852       1,080,885       549,951  
Other consumer loans   1,656,253       1,587,216       1,029,409  
Subtotal of commercial and consumer loans   23,474,591       22,630,089       11,569,621  
Residential real estate   6,079,057       5,706,155       2,215,056  
Total loans   29,553,648       28,336,244       13,784,677  
Total earning assets   40,918,859       41,124,222       21,084,568  
           
Allowance for credit losses on loans   (288,003 )     (280,507 )     (109,444 )
Non-earning Assets:          
Cash and due from banks   455,620       418,744       188,391  
Premises and equipment, net   586,031       584,113       484,879  
Operating lease right-of-use assets   192,196       201,802       72,207  
Goodwill and other intangible assets   2,131,815       2,144,609       1,077,024  
Company-owned life insurance   769,595       766,291       459,565  
Other assets   982,242       875,374       418,476  
Total non-earning assets   5,117,499       4,990,933       2,700,542  
Total assets $ 45,748,355     $ 45,834,648     $ 23,675,666  
           
Liabilities and Equity          
Noninterest-bearing demand deposits $ 12,388,379     $ 12,463,136     $ 6,142,724  
Interest-bearing:          
Checking and NOW accounts   8,473,510       8,296,337       4,921,430  
Savings accounts   6,796,152       6,871,767       3,675,701  
Money market accounts   5,373,318       5,432,139       2,126,537  
Other time deposits   2,479,304       2,544,011       1,002,519  
Total core deposits   35,510,663       35,607,390       17,868,911  
Brokered deposits   28,312              
Total deposits   35,538,975       35,607,390       17,868,911  
           
Federal funds purchased and interbank borrowings   1,561       1,721       1,523  
Securities sold under agreements to repurchase   476,173       509,275       396,129  
Federal Home Loan Bank advances   3,283,963       3,239,357       1,891,143  
Other borrowings   622,714       597,207       270,318  
Total borrowed funds   4,384,411       4,347,560       2,559,113  
Operating lease liabilities   215,188       234,049       81,333  
Accrued expenses and other liabilities   530,998       413,535       175,191  
Total liabilities   40,669,572       40,602,534       20,684,548  
Preferred stock, common stock, surplus, and retained earnings   5,647,916       5,570,313       2,928,856  
Accumulated other comprehensive income (loss), net of tax   (569,133 )     (338,199 )     62,262  
Total shareholders' equity   5,078,783       5,232,114       2,991,118  
Total liabilities and shareholders' equity $ 45,748,355     $ 45,834,648     $ 23,675,666  
 


                         
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
                         
                         
    Three Months Ended   Three Months Ended   Three Months Ended
    June 30, 2022   March 31, 2022   June 30, 2021
    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   $ 1,088,005   $ 1,830 0.67 %   $ 1,336,404   $ 308 0.09 %   $ 232,723   $ 48 0.08 %
Investments:                        
Treasury and government-sponsored agencies     2,487,717     11,818 1.90 %     2,195,470     8,219 1.50 %     1,637,396     5,967 1.46 %
Mortgage-backed securities     6,008,470     33,534 2.23 %     4,869,038     24,377 2.00 %     3,287,254     15,067 1.83 %
States and political subdivisions     1,834,189     14,571 3.18 %     1,738,652     13,637 3.14 %     1,503,447     12,364 3.29 %
Other securities     723,279     5,467 3.02 %     605,552     4,144 2.74 %     439,197     2,690 2.45 %
Total investments     11,053,655     65,390 2.37 %     9,408,712     50,377 2.14 %     6,867,294     36,088 2.10 %
Loans: (2)                        
Commercial     8,692,646     95,743 4.36 %     5,893,907     55,283 3.75 %     4,019,553     34,715 3.42 %
Commercial and agriculture real estate     11,547,958     113,545 3.89 %     8,749,162     77,408 3.54 %     6,146,057     57,655 3.71 %
Consumer:                        
Home equity     1,000,373     11,256 4.51 %     783,729     7,355 3.81 %     538,999     4,201 3.13 %
Other consumer loans     1,715,550     19,222 4.49 %     1,320,923     14,560 4.47 %     1,034,439     9,747 3.78 %
Subtotal commercial and consumer loans     22,956,527     239,766 4.19 %     16,747,721     154,606 3.74 %     11,739,048     106,318 3.63 %
Residential real estate loans     5,905,151     51,686 3.50 %     3,990,716     33,986 3.41 %     2,256,215     21,474 3.81 %
                         
Total loans     28,861,678     291,452 4.01 %     20,738,437     188,592 3.64 %     13,995,263     127,792 3.62 %
                         
Total earning assets   $ 41,003,338   $ 358,672 3.48 %   $ 31,483,553   $ 239,277 3.04 %   $ 21,095,280   $ 163,928 3.09 %
                         
Less: Allowance for credit losses on loans     (282,943 )         (168,175 )         (117,020 )    
                         
Non-earning Assets:                        
Cash and due from banks   $ 277,283         $ 268,836         $ 238,326      
Other assets     4,735,701           3,480,640           2,520,937      
                         
Total assets   $ 45,733,379         $ 35,064,854         $ 23,737,523      
                         
Interest-Bearing Liabilities:                        
Checking and NOW accounts   $ 8,445,683   $ 1,786 0.08 %   $ 6,784,653   $ 596 0.04 %   $ 4,948,773   $ 513 0.04 %
Savings accounts     6,835,675     673 0.04 %     5,302,015     589 0.05 %     3,647,952     492 0.05 %
Money market accounts     5,317,300     1,027 0.08 %     3,778,682     691 0.07 %     2,081,286     433 0.08 %
Other time deposits     2,491,998     1,627 0.26 %     1,745,153     1,318 0.31 %     1,024,777     1,293 0.51 %
Total interest-bearing core deposits     23,090,656     5,113 0.09 %     17,610,503     3,194 0.07 %     11,702,788     2,731 0.09 %
Brokered deposits     7,447     74 0.00 %         0.00 %     9,890     1 0.05 %
Total interest-bearing deposits     23,098,103     5,187 0.09 %     17,610,503     3,194 0.07 %     11,712,678     2,732 0.09 %
                         
Federal funds purchased and interbank borrowings     1,222     2 0.47 %     1,113     0.01 %     1,460     0.02 %
Securities sold under agreements to repurchase     466,885     85 0.07 %     449,939     96 0.09 %     406,251     95 0.09 %
Federal Home Loan Bank advances     3,053,423     6,925 0.91 %     2,589,984     5,963 0.93 %     1,906,078     5,218 1.10 %
Other borrowings     611,772     4,687 3.06 %     432,434     3,467 3.21 %     269,259     2,486 3.69 %
Total borrowed funds     4,133,302     11,699 1.14 %     3,473,470     9,526 1.11 %     2,583,048     7,799 1.21 %
                         
Total interest-bearing liabilities   $ 27,231,405   $ 16,886 0.25 %   $ 21,083,973   $ 12,720 0.24 %   $ 14,295,726   $ 10,531 0.30 %
                         
Noninterest-Bearing Liabilities and Shareholders' Equity                        
Demand deposits   $ 12,714,946         $ 9,294,876         $ 6,140,424      
Other liabilities     657,128           467,589           308,680      
Shareholders' equity     5,129,900           4,218,416           2,992,693      
                         
Total liabilities and shareholders' equity   $ 45,733,379         $ 35,064,854         $ 23,737,523      
                         
Net interest rate spread       3.23 %       2.80 %       2.79 %
                         
Net interest margin (FTE)       3.33 %       2.88 %       2.91 %
                         
FTE adjustment     $ 4,314       $ 3,772       $ 3,470  
                         
(1) Interest income is reflected on a FTE.  
(2) Includes loans held for sale.  
 


                 
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
                 
                 
    Six Months Ended   Six Months Ended
    June 30, 2022   June 30, 2021
    Average Income (1)/ Yield/   Average Income (1)/ Yield/
Earning Assets:   Balance Expense Rate   Balance Expense Rate
Money market and other interest-earning                
investments   $ 1,211,518   $ 2,138 0.36 %   $ 301,025   $ 136 0.09 %
Investments:                
Treasury and government-sponsored agencies     2,342,401     20,038 1.71 %     1,397,791     10,852 1.55 %
Mortgage-backed securities     5,441,902     57,910 2.13 %     3,299,713     30,900 1.87 %
States and political subdivisions     1,786,684     28,208 3.16 %     1,490,865     24,564 3.30 %
Other securities     664,741     9,611 2.89 %     446,266     5,433 2.44 %
Total investments   $ 10,235,728   $ 115,767 2.26 %   $ 6,634,635   $ 71,749 2.16 %
Loans: (2)                
Commercial     7,301,008     151,026 4.11 %     3,997,281     70,282 3.50 %
Commercial and agriculture real estate     10,156,292     190,952 3.74 %     6,063,872     113,401 3.72 %
Consumer:                
Home equity     892,649     18,611 4.20 %     541,510     8,353 3.11 %
Other consumer loans     1,519,327     33,782 4.48 %     1,046,518     19,923 3.84 %
Subtotal commercial and consumer loans     19,869,276     394,371 4.00 %     11,649,181     211,959 3.67 %
Residential real estate loans     4,953,222     85,673 3.46 %     2,264,988     42,821 3.78 %
                 
Total loans     24,822,498     480,044 3.86 %     13,914,169     254,780 3.65 %
                 
Total earning assets   $ 36,269,744   $ 597,949 3.29 %   $ 20,849,829   $ 326,665 3.13 %
                 
Less: Allowance for credit losses     (225,876 )         (125,398 )    
                 
Non-earning Assets:                
Cash and due from banks   $ 273,083         $ 263,336      
Other assets     4,111,637           2,503,865      
                 
Total assets   $ 40,428,588         $ 23,491,632      
                 
Interest-Bearing Liabilities:                
Checking and NOW accounts   $ 7,619,757   $ 2,381 0.06 %   $ 4,906,530   $ 1,124 0.05 %
Savings accounts     6,073,081     1,262 0.04 %     3,572,057     979 0.06 %
Money market accounts     4,552,241     1,719 0.08 %     2,034,577     855 0.08 %
Other time deposits     2,120,638     2,945 0.28 %     1,052,856     2,902 0.56 %
Total interest-bearing core deposits     20,365,717     8,307 0.08 %     11,566,020     5,860 0.10 %
Brokered deposits     3,744     74 3.99 %     83,427     31 0.08 %
Total interest-bearing deposits     20,369,461     8,381 0.08 %     11,649,447     5,891 0.10 %
                 
Federal funds purchased and interbank borrowings     1,168     2 0.25 %     1,303     0.00 %
Securities sold under agreements to repurchase     458,459     181 0.08 %     402,478     215 0.11 %
Federal Home Loan Bank advances     2,822,984     12,888 0.92 %     1,915,661     10,627 1.12 %
Other borrowings     522,599     8,154 3.12 %     266,152     4,915 3.69 %
Total borrowed funds     3,805,210     21,225 1.12 %     2,585,594     15,757 1.23 %
                 
Total interest-bearing liabilities     24,174,671     29,606 0.25 %     14,235,041     21,648 0.31 %
                 
Noninterest-Bearing Liabilities and Shareholders' Equity                
Demand deposits   $ 11,014,359         $ 5,949,412      
Other liabilities     562,882           325,781      
Shareholders' equity     4,676,676           2,981,398      
                 
Total liabilities and shareholders' equity   $ 40,428,588         $ 23,491,632      
                 
Net interest rate spread       3.04 %       2.82 %
                 
Net interest margin (FTE)       3.13 %       2.93 %
                 
FTE adjustment     $ 8,086       $ 6,970  
                 
(1) Interest income is reflected on a FTE.
(2) Includes loans held for sale.                
 


             
Asset Quality (EOP) (unaudited)
($ in thousands)
             
  Three Months Ended   Six Months Ended
  June 30, March 31, June 30,   June 30, June 30,
    2022     2022
    2021       2022     2021  
Allowance for credit losses on loans:            
Beginning allowance for credit losses $ 280,507   $ 107,341   $ 114,037     $ 107,341   $ 131,388  
Allowance established for acquired PCD loans       78,531           78,531      
             
Provision for credit losses(1)   9,254     97,409     (4,929 )     106,663     (22,285 )
             
Gross charge-offs   (4,096 )   (4,664 )   (980 )     (8,760 )   (2,550 )
Gross recoveries   2,338     1,890     1,316       4,228     2,891  
Net (charge-offs) recoveries   (1,758 )   (2,774 )   336       (4,532 )   341  
             
Ending allowance for credit losses $ 288,003   $ 280,507   $ 109,444     $ 288,003   $ 109,444  
             
Net charge-offs (recoveries) / average loans(2)   0.02 %   0.05 % (0.01)        %     0.04 %   0.00 %
             
Average loans outstanding(2) $ 28,847,003   $ 20,725,313   $ 13,984,295     $ 24,808,593   $ 13,900,371  
             
EOP loans outstanding(2)   29,553,648     28,336,244     13,784,677       29,553,648     13,784,677  
             
Allowance for credit losses / EOP loans(2)   0.97 %   0.99 %   0.79 %     0.97 %   0.79 %
             
Underperforming Assets:            
Loans 90 Days and over (still accruing) $ 882   $ 1,646   $ 9     $ 882   $ 9  
             
Non-performing loans:            
Nonaccrual loans(3)   214,924     227,925     128,268       214,924     128,268  
TDRs still accruing   15,665     20,999     14,222       15,665     14,222  
Total non-performing loans   230,589     248,924     142,490       230,589     142,490  
             
Foreclosed assets   12,618     19,713     520       12,618     520  
             
Total underperforming assets $ 244,089   $ 270,283   $ 143,019     $ 244,089   $ 143,019  
             
Classified and Criticized Assets:            
Nonaccrual loans(3)   214,924     227,925     128,268       214,924     128,268  
Substandard accruing loans   490,566     518,341     160,995       490,566     160,995  
Loans 90 days and over (still accruing)   882     1,646     9       882     9  
Total classified loans - "problem loans" $ 706,372   $ 747,912   $ 289,272     $ 706,372   $ 289,272  
             
Other classified assets   25,004     24,676     4,305       25,004     4,305  
Criticized loans - "special mention loans"   452,835     507,689     228,264       452,835     228,264  
             
Total classified and criticized assets $ 1,184,211   $ 1,280,277   $ 521,841     $ 1,184,211   $ 521,841  
             
Non-performing loans / EOP loans(2)   0.78 %   0.88 %   1.03 %     0.78 %   1.03 %
             
Allowance to non-performing loans   125 %   113 %   77 %     125 %   77 %
             
Under-performing assets / EOP loans(2)   0.83 %   0.95 %   1.04 %     0.83 %   1.04 %
             
EOP total assets $ 45,748,355   $ 45,834,648   $ 23,675,666     $ 45,748,355   $ 23,675,666  
             
Under-performing assets / EOP assets   0.53 %   0.59 %   0.60 %     0.53 %   0.60 %
             
EOP - End of period actual balances            
(1) Excludes $0.2 million of expense to establish an allowance on held-to-maturity securities during the first quarter of 2022.
(2) Excludes loans held for sale.        
(3) Includes non-accruing TDRs totaling $24.3 million at June 30, 2022, $23.8 million at March 31, 2022, and $13.6 million at June 30, 2021.
TDR - Troubled debt restructuring
             


             
Non-GAAP Measures (unaudited)
($ in thousands)
             
  Three Months Ended   Six Months Ended
  June 30, March 31, June 30,   June 30, June 30,
    2022     2022     2021       2022     2021  
Actual End of Period Balances            
GAAP shareholders' common equity $ 4,835,064   $ 4,988,395   $ 2,991,118     $ 4,835,064   $ 2,991,118  
             
Deduct:            
Goodwill   1,991,534     1,997,157     1,036,994       1,991,534     1,036,994  
Intangibles   140,281     147,452     40,030       140,281     40,030  
    2,131,815     2,144,609     1,077,024       2,131,815     1,077,024  
             
Tangible shareholders' common equity $ 2,703,249   $ 2,843,786   $ 1,914,094     $ 2,703,249   $ 1,914,094  
             
Average Balances            
GAAP shareholders' common equity $ 4,886,181   $ 4,101,206   $ 2,992,693     $ 4,495,862   $ 2,981,398  
             
Deduct:            
Goodwill   1,992,860     1,476,726     1,036,994       1,736,227     1,036,994  
Intangibles   144,104     73,898     41,410       109,195     42,901  
    2,136,964     1,550,624     1,078,404       1,845,422     1,079,895  
             
Average tangible shareholders' common equity $ 2,749,217   $ 2,550,582   $ 1,914,289     $ 2,650,440   $ 1,901,503  
             
Actual End of Period Balances            
GAAP assets $ 45,748,355   $ 45,834,648   $ 23,675,666     $ 45,748,355   $ 23,675,666  
             
Add:            
Trust overdrafts       1     24           24  
             
Deduct:            
Goodwill   1,991,534     1,997,157     1,036,994       1,991,534     1,036,994  
Intangibles   140,281     147,452     40,030       140,281     40,030  
    2,131,815     2,144,609     1,077,024       2,131,815     1,077,024  
             
Tangible assets $ 43,616,540   $ 43,690,040   $ 22,598,666     $ 43,616,540   $ 22,598,666  
             
Risk-weighted assets (2) $ 33,662,205   $ 32,341,335   $ 15,971,711     $ 33,662,205   $ 15,971,711  
             
GAAP net income (loss) applicable to common shares $ 110,952   $ (29,603 ) $ 62,786     $ 81,349   $ 149,604  
             
Add:            
Amortization of intangibles (net of tax)   5,378     3,934     2,182       9,312     4,488  
             
shares $ 116,330   $ (25,669 ) $ 64,968     $ 90,661   $ 154,092  
             
Tangible Ratios            
Return on average tangible common equity   16.93 % (4.03)        %   13.58 %     6.84 %   16.21 %
Tangible common equity to tangible assets   6.20 %   6.51 %   8.47 %     6.20 %   8.47 %
Tangible common equity to risk-weighted assets (2)   8.03 %   8.79 %   11.98 %     8.03 %   11.98 %
Tangible common book value (1)   9.23     9.71     11.55       9.23     11.55  
             
Tangible common equity presentation includes other comprehensive income as is common in other company releases.  
(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.  
             
Tier 1 common equity (2) $ 3,333,380   $ 3,246,482   $ 1,908,053     $ 3,333,380   $ 1,908,053  
             
Risk-weighted assets (2)   33,662,205     32,341,335     15,971,711       33,662,205     15,971,711  
             
Tier 1 common equity to risk-weighted assets (2)   9.90 %   10.04 %   11.95 %     9.90 %   11.95 %
             
(2) June 30, 2022 figures are preliminary.            
             

 


Primary Logo

Source: Old National Bancorp