Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q1 2024 Earnings Presentation
43 slides from Old National Bancorp's earnings presentation, May 7, 2024
Slide 1: 1st Quarter 2024 Investment Thesis
Exhibit 99.1 1st Quarter 2024 Investment Thesis May 7, 2024
Slide 2: Executive Summary
Slides 5 — 15 Executive Summary
Slide 3: Forward-Looking Statements
3 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 conta
Slide 4: Non-GAAP Financial Measures
4 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 ar
Slide 5: Corporate Strategy
5 Corporate Strategy Old National’s primary strategic objective is to be a top quartile performing “basic bank” that is a primary, trusted partner to our clients in the communities we serve, and a highly respected, highly valued employer that continually empowers our team members to grow, develop an
Slide 6: Snapshot of Old National
6 Snapshot of Old National Key Financial Metrics2 Cost of Total Deposits 201 bps Cycle to Date Total Deposit Beta 38% Insured deposits to Total Deposits4 >70% Loan-to-Deposit Ratio3 89% Price / Tangible Book Value $11.10 Efficiency Ratio As Reported/ Adjusted2 58.3% / 53.4% Net Charge-Offs / Average
Slide 7: The Best of Offense and Defense
7 Financial data as of or for the quarter ended 3/31/2024, 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 National Bank federally uninsured de
Slide 8: Low-Risk Balance Sheet Relative to Peers
8 0.27% 1.89% 0.32% 6.19% 3-Year 15-Year 74% 80% 87% 88% 76% Lower Quartile Average Upper Quartile Peer Max ONB 3 and 15-Year Cumulative NCOs / Avg. Loans2Risk-Weighted Assets / Total Assets1 ONB Peer Average Financial data as of or for the quarter ended 3/31/2024, except as noted 1 Peer Group data
Slide 9: ONB is Building Capital Faster than Peers
9 ONB is Building Capital Faster than Peers 1.3% 1.3% 1.2% 1.2% 1.1% 1.1% 1.1% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.8% 0.8% 0.7% 0.7% HWC WTFC WBS COLB ONB FNB UMBF BOKF PNFP CADE WAL SNV FHN ASB ZION CMA VLY 16.9% 16.7% 15.6% 15.5% 15.4% 14.8% 14.7% 13.4% 13.3% 12.9% 12.8% 12.5% 11.8% 11.7% 11.5% 11.4%
Slide 10: Strong TBV Per Share Growth Glidepath
10 $7.67 $7.62 $8.30 $8.37 $9.00 $10.35 $11.43 $11.70 $9.42 $11.00 $11.10 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1Q2024 Strong TBV Per Share Growth Glidepath TBV Per Share CAGR (%) ex. AOCI2 Old National KRX 3-Year 9.0% 8.9% (3.8)% Incl. AOCI 1.3% Incl. AOCI 5-Year 7.0% 7.0% 2.2% Incl. AO
Slide 11: ONB has Dramatically Enhanced Franchise Value
11 ONB has Dramatically Enhanced Franchise Value 2013 2024E $10 $54 $6 $291 $1.05 $1.84 $7.85 $12.18 67% 55% ~2,600 ~4,3003 169 2811,3 $42.7 $135.43,4 463k 4.7M $40,663 $74,910 Assets ($B) AUM ($B) Core EPS 2 TBV Per Share Efficiency Ratio Headcount Branches Deposits / Branch ($M)4 Avg MSA Pop. Medi
Slide 12: Partnership with CapStar Financial Holdings, Inc.
12 Partnership with CapStar Financial Holdings, Inc. Expanding Nashville Presence; Positioned for Growth in Highly Attractive Markets Leverage ONB Capabilities in Growth Markets Financially Compelling Low Risk CapStar is a dynamic $3 billion asset bank with top 10 deposit market share in Nashville M
Slide 13: Peer-Leading Deposit Franchise
13 Average Total Deposits $34.9 $37.2 $37.1 $23.4 $27.2 $27.8 $11.5 $10.0 $9.3 IB NIB 1Q23 4Q23 1Q24 % Peer-Leading Deposit Franchise Key Performance Drivers • Period end deposits up $464.2 million, or 5.0% annualized • Business checking and public funds showing normal seasonal outflow patterns • To
Slide 14: Quarterly NII Outlook
14 Quarterly NII Outlook $363 $390 $398 $404 1Q24 (Actual) 2Q24 3Q24 4Q24 Net Interest Income Outlook Managing to Neutral Rate Risk Position • 54% of loans are variable/floating-rate • ~$4.7 billion fixed-rate loans and securities expected to reprice over NTM • 32% of total deposits are exception pr
Slide 15: Outlook (includes CapStar)
15 Outlook (includes CapStar)2 2Q24 Outlook Full-Year 2024 Outlook EOP loans (Including HFS) up 5% - 7%, annualized, excl. CapStar up 5% - 7%, excl. CapStar Net interest income (FTE basis)1 ~$390 million ~$1,555 million Noninterest income1 ~$85 million ~$335 million Noninterest expense1 ~$265 millio
Slide 16: Financial Details
Financial Details Data as of March 31, 2024
Slide 17: Strong First-Quarter 2024 Highlights
17 Strong First-Quarter 2024 Highlights $ in Millions, except per share data 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 loans held-for-sale NCOs - net charge-offs PCD - purch
Slide 18: Liquid, Well-Capitalized Balance Sheet
18 1Q24 4Q23 1Q23 % Change End of Period Balances 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Available-for-sale securities, at fair value $6,792 $6,713 $6,687 1% 2% Held-to-maturity securities, at amortized cost $3,001 $3,013 $3,071 —% (2)% Total loans1 $33,643 $33,024 $31,822 2% 6% Total assets $49,535 $49,090 $4
Slide 19: Total Loans and Earning Assets
19 $31,822 $33,024 $33,643 1Q23 4Q23 1Q24 6.07% % 6.06% Loan Yields Total Loans and Earning Assets Total loans1 • Disciplined growth of $619 million,+7.5% annualized from 4Q23 • Commercial growth of $635 million, +10.8% annualized • $1.1 billion total commercial production • 71% of commercial produc
Slide 20: First-Quarter 2024 Results
20 $ in millions, except per-share data 1 Non-GAAP financial measures that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 2 Fully Taxable Equivalent Basis 3 Includes merger-related expenses and a contract termination charge
Slide 21: Net Interest Income & Net Interest Margin
21 $ in millions 1 Fully Taxable Equivalent Basis; Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation NIM - Net interest margin IB - interest-bearing NTM - Next 12 months 1 Net Interest Income $3
Slide 22: Noninterest Income
22 Noninterest Income $ in millions 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 Residential mortgage production includes quick home refinance product 1Q24 4Q23 1Q23 Bank Fees $28 $29 $
Slide 23: Noninterest Expense
23 Noninterest Expense $ in millions 1 Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation Key Performance Drivers • Salaries & employee benefits lower due to performance-driven incentive accrual
Slide 24: Allowance for Credit Losses
24 Allowance for Credit Losses $339 $7 $5 $(5) $346 Allowance 12/31/23 Economic Forecast & Other Assumptions Loan Growth Unfunded Commitments Allowance 3/31/2024 1.03% Credit Quality Asset Quality 0.14% 0.22% 0.16% 0.74% 0.83% 0.98% 30+ Day Delinquency Non-Performing Loans 1Q23 4Q23 1Q24 $ in millio
Slide 25: Conservative Lending Limit/Risk Grades
25 Conservative Lending Limit/Risk Grades $ in millions 1 Data as of 3/31/2024 Borrower Asset Quality Rating In-House Direct Lending Limit (Risk Grades) 0 - Investment Grade $100.0 1 - Minimal Grade $100.0 2 - Modest Grade $87.5 3 - Average Risk $75.0 4 - Monitor $60.0 5 - Weak Monitor $45.0 6 - Wat
Slide 26: CRE Non-Owner Occupied Details
26 Multifamily Office Other$0.4 billion >4% <4% Office CRE NOO Portfolio • Granular portfolio and balanced across footprint • Average loan size of $3.0 million • CBD across 13 cities in our footprint • Weighted Averages2 ▪ LTV of ~64% ▪ DSC of ~1.20x ▪ Occupancy of ~85% CRE Non-Owner Occupied Detail
Slide 27: Granular, Long-Tenured Deposit Base
27 Core Deposit Tenure 27% 25%21% 27% <5 years 5-15 years 15-25 years >25 years 73% >5 years Brokered Deposits/ Total Deposits 10.4% 3.2% 2.7% Peers - 4Q23 Peer Avg - 4Q23 ONB - 1Q24 ONB - 4Q23 Deposit Highlights • Insured deposits2 >70% of total deposits • Granular low-cost deposit franchise • Top
Slide 28: Strong Capital Position
28 Key Performance Drivers • Ratios increased as retained earnings more than offset strong loan growth • HTM securities pre-tax unrealized losses of $454 million (~$340 million net of tax) • No shares of common stock repurchased during 1Q24 • Strong capital position validated by internal stress test
Slide 29: Appendix
Appendix = OLD NATIONAL BANCORP’
Slide 30: Projected Acquisition Accounting Impact
30 Accretion on acquired loans and borrowings • $5 million recognized in 1Q24 • $15 million contractual for remainder of 2024 Discount on acquired loan portfolio • $75 million remaining as of 3/31/2024 • $59 million related to First Midwest Contractual Accretion $15 $17 $14 2Q-4Q 2024 2025 2026 Proj
Slide 31: Commitment to Strong Corporate Governance
31 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 Salary equal to or greater than $250,000 3X salary in stock or 50,000 shares • Stock ownership guidelines have been established
Slide 32: Commitment to Excellence
Commitment to Excellence Bloomberg Gender-Equality Index 2023 > | LEADING A DISABILITY EMPLOYER — BEST PLACE TO WORK FOR pm feel | DISABILITY INCLUSION fo ISS ESG > 100 DISABILITY EQUALITY INDEX Moopy’s INVESTORS SERVICE Corporate Engagement AWARD OF CEO FOR DIVERSITY & INCLUSION a OLD NATIONAL BANC
Slide 33: Commitment to Corporate Social Responsibility
33 Old National’s 2023 Environmental, Social and Governance (“ESG”) Report showcases our commitment to: • Strong risk management and corporate governance principles • Putting our clients at the center of all we do • Investing in our team members • Diversity, equity and inclusion • Strengthening our
Slide 34: ESG At A Glance - 2023
ESG At A Glance - 2023 In Community Reinvestment Act (CRA)-ellgible community development loans that supported affordable housing, economic development, community services for low- and moderate-income people, and revitaltzation/stabilization of low- and moderate-income communities $564 MILLION $3.3
Slide 35: 2023 Executive Compensation
35 • Tied to long-term shareholder value 2023 Executive Compensation TSR - total shareholder return ROATCE - return on average tangible common equity NEO - Named executive officers KRX - “KBW” Nasdaq Regional Bank Index Short-Term Incentive Compensation Performance Measure Weight Adjusted EPS 100% P
Slide 36: Board of Directors
36 Annual Elected each year for Stock Ownership Robust ownership guidelines Election one-year term 93% Independent 47% Racial minority and gender diversity 80% Other public company Lead Independent Since 2016, Rebecca Skillman has experience Director served as Lead Independent Director Barbara A. Bo
Slide 37: Non-GAAP Reconciliation
37 1Q24 4Q23 1Q23 Net interest income $356.5 $364.4 $381.6 FTE Adjustment 6.3 6.1 5.6 Net interest income (FTE) $362.7 $370.5 $387.2 Add: Fee income 77.5 100.1 70.7 Total revenue (FTE) $440.2 $470.6 $457.9 Less: Provision for credit losses (18.9) (11.6) (13.4) Less: Noninterest expense (262.3) (284.
Slide 38: Non-GAAP Reconciliation
38 1Q24 4Q23 1Q23 Noninterest income $77.5 $100.1 $70.7 Less: Debt securities losses 0.0 0.8 5.2 Less: Gain on sale of Visa Class B restricted shares 0.0 (21.6) 0.0 Adjusted noninterest income $77.5 $79.3 $75.9 Noninterest expense $262.3 $284.2 $250.7 Less: Distribution of excess pension assets (13.
Slide 39: Non-GAAP Reconciliation
39 1Q24 4Q23 1Q23 Noninterest Expense $262.3 $284.2 $250.7 Less: Intangible amortization (5.5) (5.9) (6.2) Noninterest expense, excluding intangible amortization 256.8 278.3 244.5 Adjustments: Less: Distribution of excess pension assets (13.3) 0.0 0.0 Less: FDIC Special Assessment (3.0) (19.1) 0.0 L
Slide 40: Non-GAAP Reconciliation
40 1Q24 4Q23 1Q23 Net income applicable to common shares $116.3 $128.5 $142.7 Add: Intangibles amortization, net of tax 4.1 4.4 4.6 Tangible net income applicable to common shares $120.4 $132.9 $147.3 Total adjustments, net of tax $14.5 $6.1 $16.5 Adjusted net income applicable to common shares, exc
Slide 41: Non-GAAP Reconciliation
41 1Q24 4Q23 1Q23 Shareholders' equity $5,595.4 $5,562.9 $5,277.4 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 5,351.7 5,319.2 5,033.7 Less: Goodwill and other intangible assets (2,095.5) (2,101.0) (2,118.9) Tangible shareholders' common equity 3,256.2 3,218.2 2,914.8 L
Slide 42: 2024 Peer Group
42 Associated Banc-Corp ASB BOK Financial Corporation BOKF Cadence Bancorporation CADE Columbia Banking System, Inc. COLB Comerica Incorporated CMA F.N.B. Corporation FNB First Horizon Corporation FHN Hancock Whitney Corporation HWC Pinnacle Financial Partners, Inc. PNFP Synovus Financial SNV UMB Fi
Slide 43: Old National Investor Relations Contact
43 Additional information can be found on the Investor Relations web pages at www.oldnational.com Investor Inquiries: Lynell J. Durchholz, CPA SVP - Director of Investor Relations 812-464-1366 lynell.durchholz@oldnational.com Old National Investor Relations Contact