Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q4 2023 Earnings Presentation
30 slides from Old National Bancorp's earnings presentation, Jan 23, 2024
Slide 1: 4th Quarter 2023 Financial Review
4th Quarter 2023 Financial Review January 23, 2024
Slide 2: 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 3: 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 4: Additional Statements
Additional Statements Additional Information and Where To Find It In connection with the proposed Merger, Old National has filed with the SEC a preliminary Registration Statement on Form S-4 that includes a Proxy Statement of CapStar and a Prospectus of Old National, as well as other relevant docume
Slide 5: Record 2023 Highlights
Record 2023 Highlights Reported Adjusted1 Highlights EPS $1.94 $2.05 ▪ Strong reported results and record adjusted1 EPS, ROATCE, and efficiency ratio Net Income $566 $599 Key Performance Drivers Return on Average Assets 1.21% 1.28% ▪ Granular, peer-leading deposit franchise with Return on Average TC
Slide 6: Strong Fourth-Quarter 2023 Highlights
Strong Fourth-Quarter 2023 Highlights Reported Adjusted1 Key Performance Drivers EPS $0.44 $0.46 ▪ Granular, peer-leading deposit franchise with Net Income $128 $135 growth in core deposits of 0.4% and low total deposit beta of 35% Return on Average Assets 1.09% 1.14% ▪ Net interest income performan
Slide 7: Liquid, Well-Capitalized Balance Sheet
Liquid, Well-Capitalized Balance Sheet % Change End of Period Balances 4Q23 3Q23 4Q22 4Q23 vs. 3Q23 4Q23 vs. 4Q22 Available-for-sale securities, at fair value $6,713 $6,415 $6,774 5% (1)% Held-to-maturity securities, at amortized cost $3,013 $3,028 $3,089 —% (2)% Total loans1 $33,024 $32,700 $31,136
Slide 8: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Up 6% YoY $31,136 $32,700 $33,024 Total loans1 • Disciplined growth of $324 million,+1.0% from 3Q23 6.06% • Commercial growth of $311 million, +1.3% 5.98% • $1.3 billion total production 5.08% • $870 million on balance sheet • $1.7 billion total pipeline 4
Slide 9: Peer-Leading Deposit Franchise
Peer-Leading Deposit Franchise Period End Total Deposits Key Performance Drivers $35.0 $37.3 $1.2 $37.2 $1.0 • Period end deposits consistent; core deposits up $0.2 $3.2 $3.9 $3.6 0.4% $13.6 $13.5 $13.5 • Includes normal seasonal patterns in public funds; down ~$340 million $19.1 • Noninterest-beari
Slide 10: Fourth-Quarter 2023 Results
Fourth-Quarter 2023 Results % Change 4Q23 3Q23 4Q22 4Q23 vs. 3Q23 4Q23 vs. 4Q22 Net Interest Income (FTE)1,2 $370 $381 $397 (3%) (7%) Provision for credit losses 12 19 11 (37%) 9% 1 Adjusted noninterest income 79 81 74 (2%) 7% Gain on sale of Visa Class B restricted shares 22 — — N/M N/M Gain on sal
Slide 11: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Key Performance Drivers • Net interest income1 decrease reflective of the $397 $381 rate environment $370 • NIM1 decreased 10 bps vs. 3Q23 • Strong low-cost deposit franchise; total deposit costs of 185 bps 3.85% • Low cycle to date t
Slide 12: Noninterest Income
Noninterest Income 4Q23 3Q23 4Q22 Key Performance Drivers Bank Fees $29 $29 $29 • Increase in wealth fees more than offset by lower mortgage fees and capital markets Wealth Fees 28 27 26 • 4Q23 mortgage activity • Production was $194 million2 Mortgage Fees 4 5 4 ▪ 92% purchase / 8% refi ▪ 55% sold i
Slide 13: Noninterest Expense
Noninterest Expense 4Q23 3Q23 4Q22 Key Performance Drivers • Salaries & employee benefits higher in Salary & Employee Benefits $137 $127 $131 4Q23 resulting from $10 million year-to- date performance-driven incentive Occupancy & Equipment 35 34 34 accrual true-up • Other expense higher due to an add
Slide 14: Credit Quality
Credit Quality Asset Quality Net Charge-Offs 0.25% 0.81% 0.80% 0.83% 0.24% 0.12% 0.05% 0.19% 0.18% 0.03% 0.22% 0.05% 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 30+ Day Delinquency Non-Performing Loans ONB ONB, excluding PCD Allowance for Credit Losses 1 $337 $3 $339 Key Performance Drivers $(1) • Net charge-offs
Slide 15: Strong Capital Position
Strong Capital Position 4Q231 3Q23 4Q22 Key Performance Drivers • 4Q23 ratios increased due to strong retained CET1 capital to RWA 10.70% 10.41% 10.03% earnings • HTM securities pre-tax unrealized losses of Tier 1 capital to RWA 11.35% 11.06% 10.71% $412 million (~$309 million net of tax) • No share
Slide 16: Net Interest Income Outlook
Net Interest Income Outlook 2024 Net Interest Income Outlook Gradually Managing to $1,527 $1,482 ~ $40 ~ $80 ~ $1,530 Neutral Rate Risk Position ~ $(2) 4Q ~$(70) • 55% of loans are variable/floating-rate $370 • ~$4.8 billion fixed-rate loans and securities expected to reprice over NTM 3Q $381 • 30%
Slide 17: Outlook (includes CapStar)
2 Outlook (includes CapStar) 1Q24 Outlook Full-Year 2024 Outlook (Vs. 4Q23 baseline annualized) EOP loans up 12% - 13% up 1% - 2% (up 4% - 6% excl. CapStar) (Including HFS) Total revenue (FTE basis)1 up ~4% down 1% - 2% (flat to down 1% excl. CapStar) (4Q23 baseline: $450 million) Net interest incom
Slide 18: Appendix
Appendix Lo OLD NATIONAL BANCORP’
Slide 19: CRE Non-Owner Occupied Details
CRE Non-Owner Occupied Details CRE NOO - Office CRE NOO CRE NOO 4% of Total Loans Maturing <18 Mos. Maturing <18 Mos. Current Int. Rate Int. Rate <4% ~1% of Total Loans Suburban and other Office 2% Central Business $1.4 District $0.4 Other billion <1% >4% $2.7 billion <4% billion Multifamily Medical
Slide 20: Granular, Long-Tenured Deposit Base
Granular, Long-Tenured Deposit Base Average Core Account Balance Deposit Highlights • Insured deposits2 >70% of total deposits $1.5mm • Granular low-cost deposit franchise • Top 20 deposit clients represents only 6% $1.0mm of total deposits; weighted average tenure > 30 years; ~75% collateralized or
Slide 21: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact (excludes pending acquisition of CapStar Financial Holdings, Inc.) 1,2 Contractual Accretion Accretion on acquired loans and borrowings • $6 million recognized in 4Q23 $20 • $20 million contractual for 2024 $17 $13 2024 2025 2026 1 Projected Remaining Loan Dis
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q23 3Q23 4Q22 Net interest income $364.4 $375.1 $391.1 FTE Adjustment 6.1 5.8 5.4 Net interest income (FTE) $370.5 $380.9 $396.5 Add: Fee income 100.1 81.0 165.0 Total revenue (FTE) $470.6 $461.9 $561.5 Less: Provision for credit losses (11.6) (19.1) (11.4) Less: Noninterest
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q23 3Q23 4Q22 Noninterest income $100.1 $81.0 $165.0 Less: Debt securities losses 0.8 0.2 0.2 Less: Gain on sale of Visa Class B restricted shares (21.6) 0.0 0.0 Less: Gain on sale of health savings accounts 0.0 0.0 (90.7) Adjusted noninterest income $79.3 $81.2 $74.5 Nonint
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q23 3Q23 4Q22 Noninterest Expense $284.2 $244.8 $282.7 Less: Intangible amortization (5.9) (6.0) (6.8) Noninterest expense, excluding intangible amortization 278.3 238.8 275.9 Adjustments: Less: FDIC Special Assessment (19.1) 0.0 0.0 Less: Merger-related charges (5.4) (6.3)
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q23 3Q23 4Q22 Net income applicable to common shares $128.5 $143.8 $196.7 Add: Intangibles amortization, net of tax 4.4 4.6 5.1 Tangible net income applicable to common shares $132.9 $148.4 $201.8 Total adjustments, net of tax $6.1 $5.4 $(32.4) Adjusted net income applicable
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q23 3Q23 4Q22 Shareholders' equity $5,562.9 $5,239.5 $5,128.6 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 5,319.2 4,995.8 4,884.9 Less: Goodwill and other intangible assets (2,101.0) (2,106.8) (2,125.1) Tangible shareholders' common equity 3,21
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2023 Net interest income $1,503.1 FTE Adjustment 23.4 Net interest income (FTE) $1,526.5 Add: Fee income 333.4 Total revenue (FTE) $1,859.9 Less: Provision for credit losses (58.9) Less: Noninterest expense (1,026.3) Income before income taxes $774.7 Less: Income taxes (FTE)
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2023 Noninterest Expense $1,026.3 Less: Intangible amortization (24.2) Noninterest expense, excluding intangible amortization 1,002.1 Adjustments: Less: FDIC special assessment (19.1) Less: Merger-related charges (28.7) Less: Contract termination charges (4.4) Less: Louisvill
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2023 Net income $581.9 Total adjustments, net of tax 33.4 Adjusted net income $615.3 Average assets $48,152.2 Return on average assets 1.21% Adjusted return on average assets 1.28% Net income applicable to common shares $565.8 Add: Intangible amortization, net of tax1 18.1 Ta
Slide 30: 2023 Peer Group
2023 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