Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q3 2022 Earnings Presentation
44 slides from Old National Bancorp's earnings presentation, November 2022
Slide 1: Investment Thesis
Investment Thesis FINANCIAL DATA AS OF September 30, 2022 DATED: November 2022
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. These statements include, but are not limited to, descriptions of Old National’s financial condition, results of operations, assets, cre
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: Commitment to Excellence
Commitment to Excellence ETHISPHERE Moobpy’s INVESTORS SERVICE Bloomberg Gender- Equality 2022 a, SIETHICAL, aicomPANies’ ISS QualityScore |cOMMmive! WWW.ETHISPHERE.COM Ht sdb 11-TIME HONOREE = DEE: (te) Eo NATIONAL ORGANIZATION ON | ADIN ISABILI MPLOYER 100% DISABILITY EQUALITY INDEX = OLD NATIONAL
Slide 6: Commitment to Corporate Social Responsibility
Commitment to Corporate Social Responsibility Old National’s 2021 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 7: ESG At A Glance - 2021
7 ESG At A Glance - 2021 in Strengthening and Supporting Our Communities in Community Reinvestment Act (CRA)-eligible community ] ©) = development loans that supported affordable housing, & economic development and community revitalization/stabilization lion 1 H ] ] H in Affordable Housing Program (
Slide 8: Snapshot of Old National
Snapshot of Old National Summary1 Company Description Headquarters Evansville, IN • 6th largest commercial bank headquartered in Market Cap $5,676 Midwest - top 35 banking company based in the U.S. by assets P/ TBV 221 % • 263 branches and 355 ATMs Dividend Yield 2.9 % LTM Average Daily Volume (Actu
Slide 9: Accomplished an Exceptional Transformation
Accomplished an Exceptional Transformation Loans Deposits Adj. PPNR2 ($ in billions) ($ in billions) ($ in millions) $36 $33 $953 $15 $12 $11 $9 $326 $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 $2.28 2.33% 22%
Slide 10: ONB - A Premier Midwest Banking Franchise
ONB - A Premier Midwest Banking Franchise Completed Merger February 15, 2022 (ONB + FMBI) 12% of total Growth and return profiles positioned for franchise above-peer performance 8% of total franchise 5% of total franchise Positioned to be the Midwest’s leading financial services provider 0.3% of tot
Slide 11: Meaningful Upside
Meaningful Upside Price / TBV Key Performance Catalysts1 • Strong commercial pipeline of $5.4 billion As of 06/30/2022 1.7x • Asset sensitivity better than peers 1.5x • Deposit betas better than peers (22% last cycle); cycle to date deposit beta of 5% ONB ^KRX • ~$109 million of merger cost saves •
Slide 12: Quality Low-Cost Deposit Franchise
Quality Low-Cost Deposit Franchise Deposit Mix Cost of Deposits 0.80% Time Deposits Money Market 7% 16% 0.54% 0.30% 0.32% 0.48% 0.29% Demand Savings Deposits 0.19% 0.18% 0.10% 0.08% 0.13% 0.12% 18% 34% 0.06% 0.05% 0.06% 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 NOW 25% ONB Peer Median Deposit Gro
Slide 13: Granular & Diversified Loan Portfolio
1,2 Granular & Diversified Loan Portfolio Other HELOC Consumer 4% Senior Housing Self Storage 6% 2% 1% Mixed Use Other 4% 11% CRE Non- Single Family Use Residential Owner 4% Real Estate Occupied 21% 29% Warehouse/ Industrial Multifamily 12% 40% Retail C&I CRE Owner 11% Office 30% Occupied 15% 12% 2%
Slide 14: Outlook
Outlook Category Outlook Loans / Deposits • Commercial pipeline heading into 4Q bodes well for future growth, albeit at a potentially slower pace than 3Q • ~$400 million of deposits expected to exit mid-November with sale of health savings account (“HSA”) business Net Interest Income / • Net interes
Slide 15: Financial Details
Financial Details FINANCIAL DATA AS OF September 30, 2022
Slide 16: Third-Quarter 2022 Highlights
Third-Quarter 2022 Highlights EPS / Net Income Adj. EPS1/Net Income1 Adj. ROA1 $0.47 / $0.51 / $136 million $150 million 1.35% 24% Increase QoQ 11% Increase QoQ Adj. ROATCE1 Total Loan Growth1,2 Adj. Eff. Ratio1 22.6% 14% 50.7% ▪ Significant net interest margin (FTE)1 expansion of 38 bps, reflective
Slide 17: Third-Quarter 2022 Results
Third-Quarter 2022 Results Performance Drivers - Impacted by Merger 3Q22 2Q22 3Q21 Completed Mid 1Q22 • Strong total loan growth1 of 14%, annualized; commercial End of period total loans1 $30,485 $29,472 $13,230 up 17% and consumer up 7% • Higher balance in municipals; commercial and retail End of p
Slide 18: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Up 10% YoY Historical Combined 2 Total loans1 $30,485 $27,634 $27,792 $28,131 $29,472 • Growth of $1.0 billion, +14% annualized • Commercial growth of $856 million, 4.54% +17% annualized • Total consumer3 growth of $157 million, 4.01% +7% annualized; drive
Slide 19: Commercial Loans
Commercial Loans Total Commercial Loans1 Up 11% YoY Historical Combined 2 $20,639 $21,495 $19,757 $19,348 $19,422 Total commercial loans1 • Growth of $856 million, +17% annualized • Well distributed across markets and products • +17% commercial and industrial • +15% commercial real estate 3Q21 4Q21
Slide 20: Commercial Loan Production
Commercial Loan Production Strong $2.4 billion of production throughout the entire commercial loan portfolio and across the combined expanded market footprint Production by Product Line Production by RM Location $25 $238 $501 $254 $25 $954 $1,159 $161 $462 $223 $261 $251 $303 CRE - Non-OO CRE - OO I
Slide 21: Deposits / Funding
Deposits / Funding Total Deposits Historical Combined 1 $35,142 $35,551 $35,813 $35,843 $35,538 $36,054 Deposit balances stable compared $2,479 $2,393 to 2Q22 • Increase in municipal deposits; $26,905 commercial and retail deposits stable $12,388 $12,400 Deposit costs continue to be low • 3Q22 total
Slide 22: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Key Performance Drivers $382 $2 • Net interest income increased $40 million $342 $25 • NIM increased 38 bps vs. 2Q22 $2 $35 • Robust loan growth2 of +14% annualized $227 • Commercial of +17% annualized $4 $16 • Total consumer3 of +7%
Slide 23: Asset Liability Management
Asset Liability Management 1 Net Interest Margin Sensitivity Well-positioned for Rising Rates Projection Actual Range • 57% of loans are variable/floating-rate 3.71% 3.71%-3.81% • 89% reprice in 3 months or less 0.13% 0.25% 3.33% • Peer leading deposit franchise 0.34% • Noninterest bearing deposits
Slide 24: Noninterest Income
Noninterest Income Adjusted Noninterest Income 1 Key Performance Drivers $89 • Lower wealth management fees resulting $81 from current market conditions $16 • Mortgage banking continues to be $11 $65 $7 impacted by higher rate environment; $9 $10 $6 lower production and gain on sale $54 $5 $5 $51 $4
Slide 25: Noninterest Expense
Noninterest Expense 1 Adjusted Noninterest Expense Key Performance Drivers $241 • 3Q22 adjusted noninterest expense well $239 $225 controlled $38 $45 $15 • Salaries impacted by ~$4 million of lower $173 $28 $24 deferred loan origination costs and $24 $33 $33 $123 $22 ~$3 million of year-to-date ince
Slide 26: Credit
Credit 30+ Day Delinquency Net Charge-offs 0.46% 0.10% 0.08% 0.02% 0.22% 0.00% 0.02% 0.17% 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 ONB ONB, excluding PCD Peer Average ONB Peer Average Key Performance Drivers • Stable net charge-offs at 2 bps excludin
Slide 27: Allowance for Credit Losses
Allowance for Credit Losses Allowance for Credit Losses $9 $302 $288 $3 $2 Key Model Inputs • Economic assumptions (upper bound) • GDP (-6.0%) • Unemployment (7.2%) • BBB Spread / 10Y Treasury (2.9x) • Commercial Asset Quality Ratings • Consumer Credit Bureau Score • Loan To Value Allowance Portfoli
Slide 28: Capital
Capital Key Performance Drivers 3Q21 4Q21 1Q22 2Q22 3Q221 • 3Q22 ratios stable as robust loan growth and merger related charges substantially offset Capital Ratios: strong retained earnings • Total capital impacted by the CET1 capital to RWA 12.08 % 12.04 % 10.04 % 9.90 % 9.88 % phase-out of ~$30 mi
Slide 29: Appendix
Appendix oS OLD NATIONAL BANCORP?’
Slide 30: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings $24 • $25 million recognized in 3Q22 $19 • $10 million contractual for 4Q22 $10 4Q 2022 2023 2024 1 Remaining Loan Discount Discount on acquired loan portfolio • $112 million remaining as of
Slide 31: 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 32: 2021 Executive Compensation
2021 Executive Compensation • Tied to long term shareholder value Short Term Incentive Plan Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Long Term Incentive Plan Performance Measure Weight Performance-based (50% TSR & 50% ROATCE) 75% Service-based 25% 32
Slide 33: 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 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 2Q22 3Q22 Net interest income (FTE) $155.1 $341.8 $381.5 Add: Fee income 54.5 89.1 80.4 Total revenue (FTE) $209.6 $430.9 $461.9 Less: Provision for credit losses 4.6 (9.2) (11.3) Less: Noninterest expense (121.3) (277.4) (266.7) Income before income taxes $92.9 $144.3 $
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Net interest income (FTE) $155.1 $150.2 $226.6 $341.8 $381.5 Add: Fee income 54.5 51.5 65.2 89.1 80.4 Total revenue (FTE) $209.6 $201.7 $291.8 $430.9 $461.9 Less: Noninterest expense (121.3) (131.9) (226.7) (277.4) (266.7) Pre-Provision Net Revenue (P
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Noninterest expense $121.3 $131.9 $226.7 $277.4 $266.7 Less: Intangible amortization (2.8) (2.6) (4.8) (7.2) (7.1) Noninterest expense, excluding intangible amortization 118.5 129.3 221.9 270.2 259.6 Adjustments: Less: Merger related charges (1.4) (6.
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Net interest income $151.6 $146.8 $222.8 $337.5 $376.5 FTE adjustment 3.5 3.4 3.8 4.3 5.0 Net interest income (FTE) $155.1 $150.2 $226.6 $341.8 $381.5 Average earnings assets $21,228.6 $21,670.7 $31,483.6 $41,003.3 $41,180.0 Net interest margin 2.86 %
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 4Q22 Old National commercial loans $9,796 $9,772 $19,962 $20,721 $21,539 Less: Old National PPP loans (355) (169) (205) (82) (44) Legacy First Midwest commercial loans1 10,291 10,050 0 0 0 Less: Legacy First Midwest PPP loans (384) (231) 0 0 0 Historical c
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q22 GAAP shareholders’ common equity $4,699.7 Less: Goodwill and intangible assets (2,135.8) Tangible shareholder’s common equity $2,563.9 Common shares issued and outstanding 292.9 Tangible common book value $8.75 GAAP shareholders’ common equity $4,699.7 Less: Goodwill and
Slide 40: 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 41: 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 42: 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 43: 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 Bank CADE Comerica Incorporated CMA F.N.B. Corporation FNB First Horizon Corporation FH
Slide 44: 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 44