Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2023)
42 slides from Old National Bancorp's investor presentation, May 2023
Slide 1: Investment Thesis
Investment Thesis Financial Data as of March 31, 2023 Dated: May 2023
Slide 2: Executive Summary
Executive Summary Slides 5 —14 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements These materials contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contain
Slide 4: Non-GAAP Financial Measures
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
Slide 5: The Best of Offense and Defense
The Best of Offense and Defense 2 Financial data as of or for the quarter ended March 31, 2023, except as noted 1 Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 2 Includes the estimate of Old
Slide 6: Commitment to Excellence
7 Commitment to Excellence Bloomberg Gender-Equality Index 2023 Moopy’s INVESTORS SERVICE — BESTIPUACELTOIWORICFOR a” NATIONAL ORGANIZATION ON ADIN | eel| OIE: Ged 100% DISABILITY EQUALITY INDEX = OLD NATIONAL BANCORP 6
Slide 7: Snapshot of Old National
Snapshot of Old National Summary1 Company Description Headquarters Evansville, IN • 6th largest commercial bank headquartered in Market Cap $3,632 Midwest - top 35 banking company based in the U.S. by assets P/ TBV 125% • 256 branches and 348 ATMs Dividend Yield 4.5% LTM Average Daily Volume (Actual
Slide 8: Accomplished an Exceptional Transformation
Accomplished an Exceptional Transformation Loans Deposits Adj. PPNR2 ($ in billions) ($ in billions) ($ in millions) $35 $861 $33 $15 $12 $326 $11 $9 $202 1 1 1 2016 2019 2023E 2016 2019 2023E 2016 2019 2023E 2016-2023E CAGR 23% Adj. EPS2 Adj. PPNR / Avg. Earning Assets2 Adj. ROATCE2 19% 16% $2.05 2
Slide 9: ONB - A Premier Midwest Banking Franchise
ONB - A Premier Midwest Banking Franchise Growth and return profiles positioned for above-peer performance 12% of total franchise 8% of total Positioned to be the Midwest’s leading franchise financial services provider 5% of total franchise 0.3% of total franchise Continue to expand our footprint an
Slide 10: Stable Deposit Base
Stable Deposit Base Total Deposits Average Total Deposits $35.0 $34.9 $35.8 $35.8 $35.4 $34.9 $3.3 $2.8 $2.5 $2.5 $2.7 $3.6 $26.9 $13.8 $14.0 $1.7 $12.7 $12.6 $12.4 $11.5 $9.3 $18.0 $18.1 $20.6 $20.8 $20.3 $19.8 $15.9 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 Period-End Balances Retail Commercial Public Tr
Slide 11: Granular, Long-Tenured Deposit Base
Granular, Long-Tenured Deposit Base Average Core Account Balance Deposit Highlights • Uninsured deposits2 ~30% of total deposits $1.5mm • Granular low-cost core deposit franchise $938k • Top 20 deposit clients represents only 4.8% of total deposits; ~60% collateralized $16k $22k $0-$250k >$250k 1 ON
Slide 12: Ample Funding & Liquidity
Ample Funding & Liquidity Total Funding Funding & Liquidity Highlights $40.6 $41.7 $3.0 $4.2 • Ample liquidity sources of $15.7 billion, covering ~150% of uninsured deposits4 $20.1 $19.8 • $10.3 billion of immediate liquidity sources includes cash and cash $11.9 $11.0 equivalents, FHLB, BTFP and Fed
Slide 13: Granular & Diversified Loan Portfolio
1 Granular & Diversified Loan Portfolio Total Loans Other Consumer CRE Non-Owner Home Equity 5% 3% Occupied 30% of Total Loans Office 4% of Total Loans Residential Real Multifamily Estate 13% 21% Suburban and other CRE Non- 1% Central $31.8 Owner Occupied $9.6 Office $1.3 Business billion 4% Medical
Slide 14: Outlook
Outlook Category Outlook Loans • Loan growth consistent with our pipelines in the mid single digit range for the remainder of FY2023 Net Interest Income / • Net interest income expected to be 9-12% higher than FY2022; margin will continue to be under Net Interest Margin pressure and dependent upon f
Slide 15: Financial Details
Financial Details Financial Data as of March 31, 2023
Slide 16: First-Quarter 2023 Highlights
First-Quarter 2023 Highlights Adj. Return on EPS / Net Income Adj. EPS1 / Net Income Avg. Assets / TCE1 $0.49 / $0.54 / 1.39% / 23.4% $143 million $159 million Total Cost of Deposits / Uninsured Coverage Adj. Efficiency Ratio1 Total Deposit Beta Ratio2 72 bps / 15% ~150% 48.8% ▪ Granular low-cost de
Slide 17: First-Quarter 2023 Results
First-Quarter 2023 Results 1Q23 vs. 1Q23 4Q22 1Q221 4Q22 1Q221 Net Interest Income (FTE)2,3 $ 387 $ 396 $ 227 (2)% 70% 4 Provision for credit losses 13 11 109 18% (88)% Noninterest income excl. net securities (losses) gains, and gain on sale of HSAs2 76 74 65 3% 17% Net securities (losses) gains and
Slide 18: Liquid, Well-Capitalized Balance Sheet
Liquid, Well-Capitalized Balance Sheet 1Q23 vs. End of Period Balances 1Q23 4Q22 1Q221 4Q22 1Q221 Cash and cash equivalents $ 1,114 $ 728 $ 1,977 53% (44)% Equity securities, at fair value 72 53 67,555 36% 7% Available-for-sale securities, at fair value 6,687 6,774 8,751 (1)% (24)% Held-to-maturity
Slide 19: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans Total loans Up 12% YoY • Disciplined growth of $698 million, +2% $29,554 $30,529 $31,124 $31,822 from 4Q22 $28,336 • Commercial growth of $694 million, +3% • Total consumer1 growth of $4 million 5.42% 5.08% 4.54% 4.01% 3.64% 1Q22 2Q22 3Q22 4Q22 1Q23 % Loan
Slide 20: Commercial Loan Production & Pipeline
Commercial Loan Production & Pipeline Total Production Other CRE Non-Owner $34 Occupied 46% of Total Production Corporate Multifamily 19% $601 CRE - Non-OO $1.8 $835 $835 Office billion Other million 2% 6% Retail 5% Warehouse/ Industrial Business 14% Banking $198 CRE - OO $137 Production & Pipeline
Slide 21: Credit Continues to be Strong
Credit Continues to be Strong 30+ Day Delinquency Net Charge-offs 0.21% 0.19% 0.05% 0.05% 0.05% 0.14% 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 4Q22 1Q23 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 4Q22 1Q23 ONB ONB, excluding PCD Non-Performing Loans Key Performance Drivers • Stable net charge-offs of 5 bps excluding
Slide 22: Allowance for Credit Losses
Allowance for Credit Losses 1 Allowance for Credit Losses $336 $2 $7 $333 Key Model Inputs $(12) • Unchanged 100% weighting toward Moody’s S-3 scenario • Economic assumptions (upper bound) • GDP (-3.1%) • Unemployment (7.1%) • BBB Spread / 10Y Treasury (2.6x) Allowance Portfolio Mix Economic Growth
Slide 23: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Key Performance Drivers $396 $387 $382 $10 $8 • Net interest income decreased $9 million $342 $25 • NIM1 decreased 16 bps vs. 4Q22 • Strong low-cost deposit franchise; total $35 deposit costs of 72 bps • Low total deposit beta cycle t
Slide 24: Noninterest Income
Noninterest Income Adjusted Noninterest Income 1 Key Performance Drivers $89 • Higher investment/wealth fees and capital $81 markets partially offset by lower bank $16 $74 $76 fees $11 $65 $7 $10 $12 • Bank fees down due to full quarter impact $9 $10 $6 $5 $7 of the HSA sale and service charge $5 $4
Slide 25: Noninterest Expense
Noninterest Expense Adjusted Noninterest Expense1 Key Performance Drivers $241 $240 • 1Q23 adjusted noninterest expense1 well $235 $235 controlled $40 $44 $47 $51 • Salaries & employee benefits lower, 4Q22 higher due to performance-driven $175 $28 $24 $22 $23 incentive accrual true-ups $26 $33 $33 $
Slide 26: Capital
Capital Capital Ratios 1Q22 2Q22 3Q22 4Q22 1Q23 CET1 capital to RWA 10.04 % 9.90 % 9.88 % 10.03 % 9.98 % Tier 1 capital to RWA 10.79 % 10.63 % 10.58 % 10.71 % 10.64 % Total capital to RWA 12.19 % 12.03 % 11.84 % 12.02 % 11.96 % TCE to tangible assets 6.51 % 6.20 % 5.82 % 6.18 % 6.37 % Key Performanc
Slide 27: Appendix
Appendix oS OLD NATIONAL BANCORP?’
Slide 28: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings • $8 million recognized in 1Q23 $20 • $16 million contractual for remainder of 2023 $18 $16 2Q-4Q 2023 2024 2025 1 Projected Remaining Loan Discount Discount on acquired loan portfolio $84 •
Slide 29: Commitment to Strong Corporate Governance
Commitment to Strong Corporate Governance • Stock ownership guidelines have been established for executive officers as follows: Position or Salary Target Ownership Guidelines Chief Executive Officer 5X salary in stock or 200,000 shares Chief Operating Officer 4X salary in stock or 100,000 shares Sal
Slide 30: 2022 Executive Compensation
2022 Executive Compensation • Tied to long-term shareholder value Short-Term Incentive Plan Performance Measure Weight Corporate EPS 70% ROATCE 15% Merger-Related Cost Savings 15% Long-Term Equity Compensation Performance Measure Weight Performance-based (50% TSR & 50% ROATCE) CEO 60% All other NEO’
Slide 31: Board of Directors
Board of Directors Director Market Background Barbara A. Boigegrain Chicago, IL Former CEO and General Secretary of Wespath Benefits and Investments Former Senior Vice President and CFO of RLI Corp. (NYSE), a specialty insurer serving diverse niche Thomas L. Brown Chicago, IL property, casualty and
Slide 32: Commitment to Corporate Social Responsibility
Commitment to Corporate Social Responsibility Old National’s 2022 Environmental, Social and Governance (“ESG”) Report showcases our commitment to: • Strong corporate governance • Putting our clients at the center of all we do • Investing in our team members • Diversity, equity and inclusion • Streng
Slide 33: ESG At A Glance - 2022
7 ESG AtA Glance - 2022 5 0 0 § in Community Reinvestment Act (CRA)-ellgible rj community development loans that supported affordable housing, economic development In Affordable Housing Program (AHP) grants $870,000 trois trerevera tome oan sank 46,739 and community revitalization/stabilization in C
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q22 4Q22 1Q23 Net interest income (FTE) $226.6 $396.5 $387.1 Add: Fee income 65.2 165.0 70.7 Total revenue (FTE) $291.8 $561.5 $457.8 Less: Provision for credit losses (108.7) (11.4) (13.4) Less: Noninterest expense (215.6) (282.7) (250.7) Income before income taxes $(32.5)
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q22 2Q22 3Q22 4Q22 1Q23 Noninterest expense $215.6 $277.5 $262.4 $282.7 $250.7 Less: Intangible amortization (4.8) (7.2) (7.1) (6.8) (6.2) Noninterest expense, excluding intangible amortization 210.8 270.3 255.3 275.9 244.5 Adjustments: Less: Merger related charges1 (41.3) (
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q22 2Q22 3Q22 4Q22 1Q23 Net interest income $222.8 $337.5 $376.5 $391.1 $381.5 FTE adjustment 3.8 4.3 5.0 5.4 5.6 Net interest income (FTE) $226.6 $341.8 $381.5 $396.5 $387.1 Average earnings assets $31,483.6 $41,003.3 $41,180.0 $41,206.7 $41,941.9 Net interest margin 2.83 %
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q22 2Q22 3Q22 4Q22 1Q23 Noninterest income $65.2 $89.1 $80.4 $165.0 $70.7 Less: Gain on sale of health savings accounts 0.0 0.0 0.0 (90.7) 0.0 Less: Debt securities (gains) losses (0.3) 0.1 0.2 0.2 5.2 Adjusted noninterest income $64.9 $89.2 $80.6 $74.5 $75.9 Noninterest exp
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2016 2019 Net interest income (FTE) $424.0 $617.2 Add: Fee income 252.8 199.3 Total revenue (FTE) $676.8 $816.5 Less: Noninterest expense 454.1 508.5 PPRN $222.7 $308.0 Adjustments: Debt securities gains $(5.8) $(1.9) Gain on sale of insurance (41.9) 0.0 Gain on repurchased b
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2016 2019 Net interest income (FTE) $424.0 $617.2 Add: Fee income 252.8 199.3 Total revenue (FTE) $676.8 $816.5 Less: Provision for credit losses (0.9) (4.7) Less: Noninterest expense (454.1) (508.5) Income before income taxes $221.8 $303.3 Less: Income taxes (FTE) 87.5 65.1
Slide 40: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2016 2019 Net income applicable to common shares $134.3 $238.2 Add: Intangible amortization (net of tax)1 8.1 12.8 Tangible net income applicable to common shares $142.4 $251.0 Less: Debt securities gains (net of tax)1 $(3.8) $(1.4) Less: Gain on sale of insurance (net of tax
Slide 41: Peer Group
Peer Group Like-size, publicly-traded financial services companies, serving comparable demographics with comparable services as Old National Bancorp Associated Banc-Corp ASB BOK Financial Corporation BOKF Cadence Bancorporation CADE Comerica Incorporated CMA F.N.B. Corporation FNB First Horizon Corp
Slide 42: Old National Investor Relations Contact
Old National Investor Relations Contact Additional information can be found on the Investor Relations web pages at www.oldnational.com Investor Inquiries: Lynell J. Walton, CPA SVP - Director of Investor Relations 812-464-1366 lynell.walton@oldnational.com 42
Old National Bancorp — Investor Presentation (May 2023) on 6ix